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Home My Public Portal AboutCAFR 2015.pdfVILLAGE OF KEY BISCAYNE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2015 PREPARED BY: THE FINANCE DEPARTMENT VILLAGE OF KEY BISCAYNE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 Prepared by: THE FINANCE DEPARTMENT VILLAGE OF KEY BISCAYNE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 TABLE OF CONTENTS Introductory Section Letter of Transmittal ................................................................................................................. i-iv Village Officials ............................................................................................................................v Certificate of Achievement for Excellence in Financial Reporting ............................................ vi Organization Chart ..................................................................................................................... vii Financial Section Independent Auditors’ Report .................................................................................................. 1-3 Management’s Discussion and Analysis (Required Supplementary Information) ................. 4-11 Basic Financial Statements Government-Wide Financial Statements: Statement of Net Position .....................................................................................................12 Statement of Activities ..........................................................................................................13 Fund Financial Statements: Governmental Fund Financial Statements: Balance Sheet .....................................................................................................................14 Statement of Revenues, Expenditures and Changes in Fund Balances .............................15 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ..........................16 Proprietary Fund Financial Statements: Statement of Net Position ..................................................................................................17 Statement of Revenues, Expenses and Changes in Net Position .......................................18 Statement of Cash Flows ...................................................................................................19 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Position ..................................................................................20 Statement of Changes in Fiduciary Net Position ...............................................................21 Notes to Basic Financial Statements .................................................................................. 22-62 Required Supplementary Information (Other Than MD&A) Budgetary Comparison Schedule – General Fund ......................................................................63 Notes to Budgetary Comparison Schedule .................................................................................64 Schedule of Funding Progress – Other Post-Employment Benefits ...........................................65 Schedule of Changes in the Village’s Net Pension Liability and Related Ratios – Pension Trust Fund .......................................................................................66 Schedule of Village Contributions – Pension Trust Fund ..........................................................67 Schedule of Investment Returns – Pension Trust Fund ..............................................................68 VILLAGE OF KEY BISCAYNE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 TABLE OF CONTENTS Statistical Section Net Position by Component ........................................................................................................69 Changes in Net Position ........................................................................................................ 70-71 Fund Balances of Governmental Funds ......................................................................................72 Changes in Fund Balances of Governmental Funds ...................................................................73 General Governmental Tax Revenues by Source .......................................................................74 Net Assessed Value and Estimated Actual Value of Taxable Property .....................................75 Property Tax Rates – Direct and Overlapping Governments .....................................................76 Principal Property Taxpayers ......................................................................................................77 Property Tax Levies and Collections ..........................................................................................78 Ratios of Outstanding Debt by Type ..........................................................................................79 Ratios of General Bonded Debt Outstanding .............................................................................80 Direct and Overlapping Governmental Activities Debt .............................................................81 Pledged Revenue Coverage ........................................................................................................82 Demographic and Economic Statistics .......................................................................................83 Principal Employers ....................................................................................................................84 Full-Time Equivalent Village Government Employees by Function .........................................85 Operating Indicators by Function/Program ................................................................................86 Capital Asset Statistics by Function/Program ............................................................................87 Reporting Section Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................... 88-89 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida ................................................................................................................... 90-91 Independent Accountants’ Report on Compliance Pursuant to Section 218.415 Florida Statutes ........................................................................................................................92 INTRODUCTORY SECTION Village Corutcil Mayra P Lindsay, MD/o/- Edward London, Vice Mayor Franklin H. Caplan Luis E de la Cruz Gary R. Gross Theodore Holloway Michael E. Kelly Director Vivian Parks VILLAGE OF KEY BISCAYNE Department of Finance and Administrative Services March 29, 2016 To the Honorable Mayor, Members of the Village Council and Citizens of the Village of Key Biscayne: Florida Statutes require that all units of local government publish a complete set of financial statements presented in conformity with Generally Accepted Accounting Principles (GAAP) in the United States and audited in accordance with auditing standards generally accepted in the United States and in accordance with Government Auditing Standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby present the Comprehensive Annual Financial Report (CAFR) of the Village of Key Biscayne for the fiscal year ended September 30, 2015. This report consists of management's representation concerning the finances of the Village of Key Biscayne. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this Report. To provide a reasonable basis for making these representations, management of the Village of Key Biscayne has established a comprehensive internal framework that is designed both to protect the Village's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Village of Key Biscayne's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Village of Key Biscayne's comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief this financial report is complete and reliable in all material respects. The firm of Marcum LLP, licensed certified public accountants has audited the Village of Key Biscayne's financial statements. The goal of the independent audit was to provide reasonable assurance that the basic financial statements of the Village of Key Biscayne for the fiscal year ended September 30, 2015 are free of material misstatement. i 88 West McIntyre Street • Suite 210 • Key Biscayne, Florida 33149 • (305) 365-8904 • Fax (305) 365-8936 MISSION STATEMENT:"TO PROVIDEA SAFE, QUALITY COMMUNITY ENVIRONMENT FOR ALL ISLANDERS THROUGH RESPONSIBLE GOVERNMENT." www.keybiscayne.fl.gov The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Village of Key Biscayne's financial statements for the fiscal year ended September 30, 2015 are fairly presented in conformity with GAAP. The independent auditors' report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Village of Key Biscayne's MD&A can be found immediately following the independent auditors' report. Profile of the Government The Village of Key Biscayne, incorporated in 1991, is located on the southernmost barrier island ofthe United States, Miami -Dade County, Florida approximately 7.5 miles off the coast of Miami, Florida. The Village of Key Biscayne occupies a land area of 1.25 square miles situated between Crandon Park and Bill Baggs State Recreation Area. The Village serves a population of approximately 13,000. The Village of Key Biscayne receives tax levies on real and personal property located inside its boundaries. The Village of Key Biscayne operates under the council-manager form of government. Policymaking and legislative authority are vested in a governing council consisting of the mayor and six other council members. The Council is responsible for, among other things, passing ordinances and resolutions, adopting the annual budget, appointing the Village Manager, the Village Clerk, and the Village Attorney. The Village Manager is responsible for carrying out the policies and ordinances of the Council, for overseeing the daily operations of the government, and for appointing the heads of various departments. The Village of Key Biscayne offers a wide range of services, including, police protection, fire and emergency medical service, public works maintenance, a full service building, planning and zoning department, parks and recreation activities, solid waste collection, and a comprehensive storm water management system. Certain services are provided through the County School System and the County Library System through Miami -Dade County. The annual budget serves as a foundation for the Village of Key Biscayne's financial planning and control. All departments of the Village are required to submit requests for appropriations to the Village Manager and these requests are the initiation of developing the proposed budget. The Village Manager then presents this proposed budget to the Council for review. The Council is required to hold public hearings on the proposed budget and to adopt a final budget no later than September 30, the close of the Village's fiscal year. The appropriated budget is prepared by fund and department. No department may legally expend in excess of the amount appropriated for that 11 department within an individual fund. The Village Manager may make transfers of appropriations within a department. Transfers of appropriations between departments or funds require the approval of the Village Council. The Village Council approves supplemental appropriations. Budget to actual comparisons are provided in this report for the general fund for which an appropriated annual budget has been adopted. The general fund, budget to actual report, is presented in the required supplementary information section of this report. Local Economy The Village of Key Biscayne enjoys a favorable economic environment and local indicators point to continued future stability. This exclusive community is comprised of well-educated and involved citizens who take a genuine interest in the social, business, cultural and governing aspects of their Village. The Village is comprised of affluent exclusive residential housing stock and shopping centers. There is no industrial area in the community. Property values continued to increase during the past year in keeping with nationwide trends. State economical growth will likely have a favorable impact on many of the Village's intergovernmental revenues such as sales tax and state revenue sharing. The Village continues to monitor operating expenses closely while seeking possible new revenue sources. Long -Term Financial Planning The Village utilizes a comprehensive living projection five years into the future to assess revenue trends and expenditure needs to assure a balanced stable financial program avoiding millage rate increases while addressing the various goals and objectives of the community. Additionally, the Village has modified its 5 -Year Capital Plan by prioritizing needs based on its expected available resources determined by its 5 -Year financial forecast. This effort is also identifying capital purchases that will be needed to continue its critical core public safety services, as well as other departmental needs. Financial Policies The Village of Key Biscayne has policies on Debt Limitation, Emergency Reserve Funds and Designation and Reservation of surplus fund. The allocation of surplus funds between committed and assigned fund balance is made at the discretion of the Village Council. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Village of Key Biscayne for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30, 2014. This was the twenty second consecutive year that the Village received this prestigious award. In order to be awarded a Certificate of Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program's requirements and are submitting it to the GFOA to determine its eligibility for another certificate. 111 The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of all departments of the Village of Key Biscayne. We would like to express our appreciation to all members of all of the departments who assisted and contributed to the preparation of this report. We would also like to express our appreciation to Marcum LLP, our independent auditors, for their assistance and efforts in helping the Village prepare the CAFR. Appreciation is also extended to the Mayor and the Village Council for their unfailing support for maintaining the highest standards of professionalism in the management of the Village of Key Biscayne's finances. Respectfully submitted, Vivian Parks Finance Director iv v VILLAGE OF KEY BISCAYNE, FLORIDA VILLAGE OFFICIALS As of SEPTEMBER 30, 2015 VILLAGE COUNCIL Mayra Peña Lindsay, Mayor Franklin H. Caplan, Vice Mayor Luis de la Cruz, Councilman Michael E. Kelly, Councilman Theodore J. Holloway, Councilman Edward London, Councilman James S. Taintor, Councilman VILLAGE MANAGER John C. Gilbert VILLAGE CLERK Conchita H. Alvarez, MMC VILLAGE ATTORNEY Weiss Serota Helfman Pastoriza Cole & Boniske, P.A. FINANCE DIRECTOR Vivian Parks INDEPENDENT AUDITORS Marcum LLP vi vii ORGANIZATION CHART 2015 FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT Marcum LLP n One Southeast Third Avenue n Suite 1100 n Miami, Florida 33131 n Phone 305.995.9600 n Fax 305.995.9601 n www.marcumllp.com 1 INDEPENDENT AUDITORS’ REPORT Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Village of Key Biscayne, Florida (the Village), as of and for the fiscal year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the Village’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Village’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Village’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 2 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Village, as of September 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of a Matter As described in Note 1 and Note 16 to the financial statements, the Village changed its method for accounting and financial reporting for pensions as a result of the adoption of Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions – an Amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an Amendment of GASB Statement No. 68, both effective October 1, 2014, which resulted in the Village restating net position for recognition of the Village’s pension related activity incurred prior to October 1, 2014. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 4 through 11, the budgetary comparison schedule, on pages 63 and 64, and the required supplementary information for OPEB and the pension trust fund on page 65 to 68 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village’s basic financial statements. 3 The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 29, 2016 on our consideration of the Village's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Village’s internal control over financial reporting and compliance. Miami, FL March 29, 2016 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 4 Management’s Discussion and Analysis As Management of the Village of Key Biscayne, we offer readers of the Village of Key Biscayne’s (the Village) financial statements this narrative overview and analysis of the financial activities of the Village of Key Biscayne for the fiscal year ended September 30, 2015. We encourage readers to consider information presented here in conjunction with additional information that we have furnished in our letter of transmittal which can be found on pages i-iv of this report. Financial Highlights  The assets and deferred outflows of resources of the Village of Key Biscayne exceeded its liabilities at the close of the most recent fiscal year resulting in a net position balance of $85,465,751.  The Village’s total net position increased by $14,026,084. Key components of the Village’s net position and changes in net position are reflected in the tables in the government-wide financial analysis section.  At the close of the current fiscal year, the Village’s governmental funds reported an ending fund balance of $31,329,668, an increase of $7,902,757 in comparison with the prior year. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the Village of Key Biscayne’s basic financial statements. The Village of Key Biscayne’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains required supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the Village of Key Biscayne’s finances, in a manner similar to a private sector business. The statement of net position presents information on all of the Village of Key Biscayne’s assets, liabilities, and deferred inflows/outflows with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating. The statement of activities presents information showing how the Village’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the Village of Key Biscayne that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Village of Key Biscayne include general government, public works, police, fire, parks and recreation and building planning and zoning. The government-wide financial statements include only the Village of Key Biscayne itself (known as the primary government). 5 The government-wide financial statements can be found on pages 12 and 13 of this report. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Village of Key Biscayne, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. The Village of Key Biscayne has three fund categories: governmental funds, proprietary funds and a fiduciary fund. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government- wide financial statements, governmental fund financial statement focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for the governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Village of Key Biscayne maintains three governmental funds, the general fund, a special revenue fund and a capital projects fund. The Village of Key Biscayne adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 14 to 16 of this report. Proprietary Funds. The Village maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Village uses enterprise funds to account for its Stormwater, Solid Waste Collection and Sanitary Sewer Construction operations. The basic proprietary fund financial statements can be found on pages 17-19 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the Village. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the Village’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 20-21 of this report. Notes to the basic financial statements. The notes provide additional information that is essential to a full understanding of the information provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 22 to 62 6 Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information including budgetary comparisons and the Village’s progress in funding its obligation to provide pension benefits and other post-employment benefits to its employees. Required supplementary information can be found on pages 63 to 68 of this report. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the Village of Key Biscayne, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $85,465,751 at the close of the most recent fiscal year. The portion of the Village’s net position that reflects its net investment in capital assets (e.g., land and equipment) is $67,849,810. The Village of Key Biscayne uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Our analysis of the financial statements of the Village begins below. The Statement of Net Position and the Statement of Activities report information about the Village’s activities that will help answer questions about the financial position of the Village. A comparative analysis is provided with prior year information. Net Position A summary of the Village’s Net Position is presented in Table A-1 and a Summary of the Changes in Net Position is presented in Table A-2. 2015 2014 2015 2014 2015 2014 Current assets 34,092,148$ 25,576,223$ 2,892,163$ 3,604,574$ 36,984,311$ 29,180,797$ Capital assets, net 73,384,971 72,482,311 20,678,937 21,985,489 94,063,908 94,467,800 Total Assets 107,477,119 98,058,534 23,571,100 25,590,063 131,048,219 123,648,597 Deferred Outflows of Resources 1,113,486 -- -- -- 1,113,486 -- Current liabilities 2,948,501 2,286,373 690,620 123,046 3,639,121 2,409,419 Noncurrent liabilities 33,335,554 34,620,457 9,165,592 10,201,308 42,501,146 44,821,765 Total Liabilities 36,284,055 36,906,830 9,856,212 10,324,354 46,140,267 47,231,184 Deferred Inflows of Resources 555,687 73,444 -- -- 555,687 73,444 Net investment in capital assets 54,854,783 51,406,773 12,995,027 13,788,293 67,849,810 65,195,066 Restricted 2,405,158 1,955,654 -- -- 2,405,158 1,955,654 Unrestricted 14,490,922 7,715,833 719,861 1,477,416 15,210,783 9,193,249 Total Net Position 71,750,863$ 61,078,260$ 13,714,888$ 15,265,709$ 85,465,751$ 76,343,969$ Table A - 1 Summary of Net Position Governmental Activities Business-type Activities Total 7 As demonstrated in Table A-1, Summary of Net Position, the Village’s current position increased throughout the year. The increase is mainly attributable to a $7 million developer contribution from the consultation project to be used for park and recreation purposes. 2015 2014 2015 2014 2015 2014 Revenues Program revenues: Charges for services 6,218,633$ 5,438,254$ 1,540,486$ 1,498,403$ 7,759,119$ 6,936,657$ Operating grants and contributions 85,315 97,970 47,872 -- 133,187 97,970 Capital grants and contributions 7,854,679 826,282 -- -- 7,854,679 826,282 General revenues: Property taxes 19,353,288 17,857,711 -- -- 19,353,288 17,857,711 Utility taxes 1,979,733 1,967,061 -- -- 1,979,733 1,967,061 Communications services tax 862,165 917,449 -- -- 862,165 917,449 Franchise fees 595,196 574,639 -- -- 595,196 574,639 Unrestricted intergovernmental revenue 1,901,774 1,902,177 -- -- 1,901,774 1,902,177 Investment income and miscellaneous 186,200 183,131 3,911 5,551 190,111 188,682 Total Revenues 39,036,983 29,764,674 1,592,269 1,503,954 40,629,252 31,268,628 Expenses General government 4,100,859 8,526,705 -- -- 4,100,859 8,526,705 Public Safety 9,449,086 14,185,888 -- -- 9,449,086 14,185,888 Parks and Recreation 4,850,623 4,623,868 -- -- 4,850,623 4,623,868 Public Works 1,823,897 1,798,163 -- -- 1,823,897 1,798,163 Building, Zoning and Planning 2,075,416 2,153,954 -- -- 2,075,416 2,153,954 Interest on long-term debt 816,313 962,167 -- -- 816,313 962,167 Stormwater -- -- 1,783,865 1,109,510 1,783,865 1,109,510 Solid waste collection -- -- 582,943 583,083 582,943 583,083 Sanitary sewer construction -- -- 1,120,166 1,126,907 1,120,166 1,126,907 Total Expenses 23,116,194 32,250,745 3,486,974 2,819,500 26,603,168 35,070,245 Change in Net Position before transfers 15,920,789 (2,486,071) (1,894,705) (1,315,546) 14,026,084 (3,801,617) Transfers (343,884) (257,134) 343,884 257,134 -- -- Changes in Net Position 15,576,905 (2,743,205) (1,550,821) (1,058,412) 14,026,084 (3,801,617) Net Position - Beginning, previously reported 61,078,260 63,821,465 15,265,709 16,324,121 76,343,969 80,145,586 Prior period adjustment (4,904,302) -- -- -- (4,904,302) -- Net Position - Beginning 56,173,958 63,821,465 15,265,709 16,324,121 71,439,667 80,145,586 Net Position - Ending 71,750,863$ 61,078,260$ 13,714,888$ 15,265,709$ 85,465,751$ 76,343,969$ Table A - 2 Summary of Changes in Net Position Governmental Activities Business-type Activities Total Business-type Activities Business-type activities decreased the Village’s net position by $1,550,821 after transfers. In fiscal 2015, the Stormwater and Sanitary Sewer funds both reflected decreases in net position as a result of depreciation. The Solid Waste Fund, showed an increase of $17,745 due to the collection of aged receivables. 8 Governmental Activities 9 Business-type Activities As noted earlier, the Village of Key Biscayne uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the Village of Key Biscayne’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Village’s financing requirements. At the end of the current fiscal year, fund balance of the general fund was $27,552,092, an increase of $8,652,256 in comparison with the prior year. The increase is primarily due the increase in property taxes and the $7 million developer contribution. All balances have been categorized and set aside for the following uses: (1) Non-spendable: $268,176, (2) Restricted: 1,875,857 (3) Committed: $13,538,053 and (4) Assigned: $11,870,006. Solid Waste, $582,943 , 17% Sanitary Sewer, $1,120,166 , 32% Stormwater, $1,783,865 , 51% Expenses ‐Business Type Activities Solid Waste Sanitary Sewer Stormwater 10 The general fund is the chief operating fund of the Village of Key Biscayne. As a measure of the general fund’s liquidity, it may be useful to compare total fund balance to total fund expenditures. Total fund balance represents 102% of total general fund expenditures. A summary of the general fund’s condensed balance sheet and statement of revenues, expenditures and changes in fund balance is presented in Table B-1 and B-2 for September 30, 2015 and 2014, is shown as follows: 2015 2014 Total Assets 30,096,138$ 20,624,596$ Total Liabilities 2,544,046$ 1,724,760$ Fund Balance Nonspendable 268,176 353,823 Restricted 1,875,857 1,485,319 Committed 13,538,053 5,304,153 Assigned 11,870,006 11,756,540 Total Fund Balance 27,552,092 18,899,835 Total Liabilities and Fund Balance 30,096,138$ 20,624,595$ 2015 2014 Total Revenues 37,963,199$ 28,726,551$ Total Expenditures 27,111,436 26,706,241 Excess 10,851,763 2,020,310 Total Other financing Sources (Uses)(2,199,507) (777,587) Net Change in Fund Balance 8,652,256$ 1,242,723$ Table B-1 Summary of Condensed General Fund Balance Sheet Table B-2 Revenues, Expenditures and Changes in Fund Balances Summary of Condensed General Fund Statement of The Transportation Special Revenue Fund was established to account for the construction and future maintenance of the Village’s roadways. County bridge toll revenues are the source of funding for construction of roadways, while the local option gas tax funds maintenance and the transportation surtax funds debt service. In 2015 the Transportation Fund shows a fund balance of $588,705, of which $529,301 is restricted for Transit projects. The Capital Improvement Fund historically receives an annual budgeted transfer of surplus funds from the general fund to subsidize capital construction of infrastructure throughout the island. For fiscal year 2015 a total of $3,188,871 was committed to the Capital Improvement Fund for specific projects as detailed in the Village’s Five Year Capital Improvement Plan. 11 General Fund Budgetary Highlights The only departments with a significant budget to actual variance were the Village Attorney and the Parks & Recreation Department. The principal cause of the difference in the Village Attorney department was due to litigation against the National Marine Manufacturers Association and the City of Miami in reference to the boat show, and in the Parks & Recreation Department the difference was caused by an increase in Professional Services program revenues, which is compensated for by an increase in Program revenues. Capital Assets As of September 30, 2015, the Village’s capital assets net of accumulated depreciation amounted to $94,063,908 as compared to $94,467,801 as of September 30, 2014. Major capital asset events during the fiscal year included the following:  Community Center Weight Room Equipment Replacement  Resurfacing East of Crandon  Playing Field Improvements  Village-wide Phone System Upgrade  Continuation of the Beach Renourishment program  Continuation of capital lease program - Public Safety Vehicles  Continuation of tree replacement  Uplighting LED replacement program  Commencement of Community Center Expansion  Ocean Drive and E. Heather additional golf cart parking Additional information on the Village’s capital assets can be found in Note 7 on pages 39-40 of this report. Debt Administration At September 30, 2015, the Village had bonded debt outstanding of $37,793,090 (composed of $28,101,157 in governmental activities and $9,691,933 of business-type activities) compared to $41,098,914 as of September 30, 2014. Of this amount, $7,781,032 represents bonds secured solely by specified revenue sources (Transportation Tax Revenue Bonds, Road Improvement Revenue Bonds and State Revolving Fund Loans). The remainder represents special obligation bonds that are secured by non-ad valorem revenues through covenants to budget and appropriate. Additional information on the Village’s long-term debt can be found in Note 8 on pages 41-50 of this report. Economic Factors and Next Year’s Budgets and Rates As the local and national economy continues to recover, commercial real estate in Miami-Dade continues to improve. Miami-Dade County is leading the way in attracting diverse new businesses to our area. Based on these indicators, the Village of Key Biscayne continues to manage a budget that is responsive to the needs of its community. Long term financial planning efforts continue, the Village has implemented a 5 year Strategic Plan to determine the priorities for the Village and the initial indicators needed to measure progress towards these priorities. The unemployment rate for Miami-Dade County is 6.0%, which is a decrease from a rate of 6.8% a year ago. The state’s average unemployment rate is 5.4% as of September 30, 2015. All of these factors were considered during preparation of the Village of Key Biscayne’s budget for the 2016 fiscal year. The Village’s millage rate for fiscal year 2015 and fiscal year 2016 is 3.00. Requests for Information This financial report is designed to provide a general overview of the Village of Key Biscayne’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Village Manager, 88 West McIntyre Street, Key Biscayne, Florida, 33149. BASIC FINANCIAL STATEMENTS Business- Governmental type Activities Activities Total Assets Cash and cash equivalents 13,334,094$ 500,103$ 13,834,197$ Investments 16,411,487 -- 16,411,487 Receivables, net 1,228,370 467,994 1,696,364 Prepaid expenses and other assets 312,964 474 313,438 Internal balances 84,431 (84,431) -- Restricted assets: Cash and cash equivalents 555,026 -- 555,026 Investments 2,165,776 2,008,023 4,173,799 Capital assets not being depreciated 28,312,236 -- 28,312,236 Capital assets being depreciated, net 45,072,735 20,678,937 65,751,672 Total Assets 107,477,119 23,571,100 131,048,219 Deferred Outflows of Resources Pension 1,113,486 -- 1,113,486 Liabilities Accounts payable and accrued liabilities 1,867,596 164,279 2,031,875 Accrued interest payable 186,021 -- 186,021 Unearned revenue 894,884 -- 894,884 Noncurrent liabilities: Due within one year 3,550,737 526,341 4,077,078 Due in more than one year 27,460,870 9,165,592 36,626,462 Net pension liability 1,413,316 -- 1,413,316 Net OPEB obligation 910,631 -- 910,631 Total Liabilities 36,284,055 9,856,212 46,140,267 Deferred Inflows of Resources Pension 555,687 -- 555,687 Net Position Net investment in capital assets 54,854,783 12,995,027 67,849,810 Restricted: Building and zoning 1,461,641 -- 1,461,641 Transportation 529,301 -- 529,301 Law enforcement 148,713 -- 148,713 Fire rescue 265,503 -- 265,503 Unrestricted 14,490,922 719,861 15,210,783 Total Net Position 71,750,863$ 13,714,888$ 85,465,751$ VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF NET POSITION SEPTEMBER 30, 2015 The accompanying notes are an integral part of these financial statements. 12 Charges Operating Capital Business- for Grants and Grants and Governmental type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities General government 4,100,859$ 157,868$ --$ --$ (3,942,991)$ --$ (3,942,991)$ Police 4,103,543 20,011 -- -- (4,083,532) -- (4,083,532) Fire 5,345,543 193,442 -- -- (5,152,101) -- (5,152,101) Public works 1,823,897 -- -- 7,854,679 6,030,782 -- 6,030,782 Building, zoning and planning 2,075,416 3,136,916 -- -- 1,061,500 -- 1,061,500 Parks and recreation 4,850,623 2,710,396 85,315 -- (2,054,912) -- (2,054,912) Interest on long-term debt 816,313 -- -- -- (816,313) -- (816,313) Total Governmental Activities 23,116,194 6,218,633 85,315 7,854,679 (8,957,567) -- (8,957,567) Business-type Activities Stormwater 1,783,865 939,798 -- 47,872 -- (796,195) (796,195) Sanitary sewer 1,120,166 -- -- -- -- (1,120,166) (1,120,166) Solid waste 582,943 600,688 -- -- -- 17,745 17,745 Total Business-type Activities 3,486,974 1,540,486 -- 47,872 -- (1,898,616) (1,898,616) Total 26,603,168$ 7,759,119$ 85,315$ 7,902,551$ (8,957,567) (1,898,616) (10,856,183) General Revenues Property taxes 19,353,288 -- 19,353,288 Franchise fees based on gross receipts 595,196 -- 595,196 Utility taxes 1,979,733 -- 1,979,733 Communications services tax 862,165 -- 862,165 Unrestricted intergovernmental revenue 1,901,774 -- 1,901,774 Unrestricted investment earnings 47,004 3,911 50,915 Miscellaneous 139,196 -- 139,196 Transfers (343,884) 343,884 -- Total General Revenues and Transfers 24,534,472 347,795 24,882,267 Change in Net Position 15,576,905 (1,550,821) 14,026,084 Net Position - Beginning 61,078,260 15,265,709 76,343,969 Prior Period Adjustment (See Note 16)(4,904,302) -- (4,904,302) Net Position - Beginning, Restated 56,173,958 15,265,709 71,439,667 Net Position - Ending 71,750,863$ 13,714,888$ 85,465,751$ Changes in Net AssetsProgram Revenues VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 Net (Expense) Revenue and The accompanying notes are an integral part of these financial statements. 13 Transportation Total Special Capital Governmental General Revenue Improvements Funds Assets Cash and cash equivalents 13,328,744$ --$ 5,350$ 13,334,094$ Investments 14,909,853 -- 1,501,634 16,411,487 Receivables, net 1,076,067 151,022 1,281 1,228,370 Due from other funds 355,957 74,461 -- 430,418 Prepaid items 268,176 -- 44,788 312,964 Restricted cash and cash equivalents -- 423,418 131,608 555,026 Restricted investments 157,341 -- 2,008,435 2,165,776 Total Assets 30,096,138$ 648,901$ 3,693,096$ 34,438,135$ Liabilities Accounts payable and accrued liabilities 1,574,701$ --$ 292,895$ 1,867,596$ Due to other funds 74,461 60,196 211,330 345,987 Unearned revenue 894,884 -- -- 894,884 Total Liabilities 2,544,046 60,196 504,225 3,108,467 Fund Balances (Note 9) Non-spendable 268,176 -- -- 268,176 Restricted 1,875,857 529,301 -- 2,405,158 Committed 13,538,053 -- 3,188,871 16,726,924 Assigned 11,870,006 59,404 -- 11,929,410 Unassigned -- -- -- -- Total Fund Balances 27,552,092 588,705 3,188,871 31,329,668 Total Liabilities and Fund Balances 30,096,138$ 648,901$ 3,693,096$ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 73,384,971 Deferred outflows and inflows of resources related to pensions are recorded in the statement of net position 557,799 Long-term liabilities, including bonds payable and accrued interest payable, are not due and payable in the current period and therefore not reported in the funds (Note 2) (32,108,259) A net pension liability is not due and payable in the current period, and therefore is not reported in the governmental funds (1,413,316) Net Position of Governmental Activities 71,750,863$ VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF NET POSITION GOVERNMENTAL FUNDS SEPTEMBER 30, 2015 The accompanying notes are an integral part of these financial statements. 14 Transportation Total Special Capital Governmental General Revenue Improvements Funds Revenues Property taxes 19,353,288$ --$ --$ 19,353,288$ Utility taxes 1,979,733 -- -- 1,979,733 Communications services tax 862,165 -- -- 862,165 Franchise fees 595,196 -- -- 595,196 Licenses and permits 3,076,414 -- -- 3,076,414 Intergovernmental 1,686,870 1,069,583 -- 2,756,453 Charges for services 3,142,219 -- -- 3,142,219 Interest 42,803 130 4,071 47,004 Grants 85,315 -- -- 85,315 Contributions 7,000,000 -- -- 7,000,000 Miscellaneous income and other 139,196 -- -- 139,196 Total Revenues 37,963,199 1,069,713 4,071 39,036,983 Expenditures Current: General government 2,834,163 38,950 11,627 2,884,740 Fire 6,726,873 -- -- 6,726,873 Police 6,077,940 -- -- 6,077,940 Public works 1,752,803 -- -- 1,752,803 Building, zoning and planning 1,982,159 -- -- 1,982,159 Parks and recreation 4,258,750 -- -- 4,258,750 Capital outlay 314,304 -- 3,020,517 3,334,821 Debt service: Principal 2,337,942 458,224 124,533 2,920,699 Interest and fiscal charges 826,502 139,686 6,824 973,012 Intergovernmental: Payment under interlocal agreement -- -- 8,545 8,545 Total Expenditures 27,111,436 636,860 3,172,046 30,920,342 Excess (deficiency) of revenues over expenditures 10,851,763 432,853 (3,167,975) 8,116,641 Other Financing Sources (Uses) Capital lease -- -- 130,000 130,000 Transfers in -- -- 1,855,623 1,855,623 Transfers out (2,199,507) -- -- (2,199,507) Total Other Financing Sources (Uses)(2,199,507) -- 1,985,623 (213,884) Net Change in Fund Balances 8,652,256 432,853 (1,182,352) 7,902,757 Fund Balances - Beginning 18,899,836 155,852 4,371,223 23,426,911 Fund Balances - Ending 27,552,092$ 588,705$ 3,188,871$ 31,329,668$ VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are an integral part of these financial statements. 15 Amounts reported for governmental activities in the statement of activities (Page 12) are different because: Net change in fund balances - total governmental funds (Page 15) 7,902,757$ Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period. The details of the difference are as follows: Cost of assets 3,283,750$ Depreciation expense (2,381,090) 902,660 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. The detail of the differences are as follows: Debt payments 2,796,448 Capital lease payments 126,757 Issuance of debt - capital lease (130,000) 2,793,205 Some expenses reported in the statement of activities do not require current financial resources and, therefore, are not reported as expenditures in governmental funds. The details of the difference is: Compensated absences 88,648 Accrued interest 154,193 Net OPEB obligation (183,634) Net pension liability 4,681,623 4,740,830 Deferred outflow of resources and deferred inflow of resources related to the pension are not recognized in the governmental funds (762,547) Change in net position of governmental activities (Page 13) 15,576,905$ VILLAGE OF KEY BISCAYNE, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are an integral part of these financial statements. 16 Stormwater Sanitary Utility Sewer Solid System Construction Waste Totals Assets Current Assets Cash and cash equivalents 322,295$ 4,793$ 173,015$ 500,103$ Accounts receivables, net 222,749 -- 245,245 467,994 Restricted investments 2,008,023 -- -- 2,008,023 Other Assets 474 -- -- 474 Total Current Assets 2,553,541 4,793 418,260 2,976,594 Noncurrent Assets Capital assets being depreciated, net 5,830,313 14,848,624 -- 20,678,937 Total Noncurrent Assets 5,830,313 14,848,624 -- 20,678,937 Total Assets 8,383,854 14,853,417 418,260 23,655,531 Liabilities Current Liabilities Accounts payable and accrued liabilities 104,280 11,949 48,050 164,279 Due to other funds 84,431 -- -- 84,431 Current portion of revolving loans -- 216,341 -- 216,341 Current portion of revenue bonds payable 310,000 -- -- 310,000 Total Current Liabilities 498,711 228,290 48,050 775,051 Noncurrent Liabilities Revenue bonds 5,645,000 -- -- 5,645,000 Revolving loans -- 3,520,592 -- 3,520,592 Total Noncurrent Liabilities 5,645,000 3,520,592 -- 9,165,592 Total Liabilities 6,143,711 3,748,882 48,050 9,940,643 Net Position Net investment in capital assets 1,883,336 11,111,691 -- 12,995,027 Unrestricted 356,807 (7,156) 370,210 719,861 Total Net Position 2,240,143$ 11,104,535$ 370,210$ 13,714,888$ Business-type Activities - Enterprise Funds VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2015 The accompanying notes are an integral part of these financial statements. 17 Stormwater Sanitary Utility Sewer Solid System Construction Waste Totals Operating Revenues Charges for services 939,798$ --$ 600,688$ 1,540,486$ Operating Expenses General and administrative 1,257,677 -- 582,943 1,840,620 Depreciation 316,645 989,908 -- 1,306,553 Total Operating Expenses 1,574,322 989,908 582,943 3,147,173 Operating Income (Loss)(634,524) (989,908) 17,745 (1,606,687) Non-Operating Revenues (Expenses) Interest income 3,911 -- -- 3,911 Interest expense (209,543) (130,258) -- (339,801) Grant proceeds 47,872 -- -- 47,872 Total Non-Operating Revenues (Expenses)(157,760) (130,258) -- (288,018) Income (Loss) before Transfers (792,284) (1,120,166) 17,745 (1,894,705) Transfers in -- 343,884 -- 343,884 Change in Net Position (792,284) (776,282) 17,745 (1,550,821) Net Position- Beginning 3,032,427 11,880,817 352,465 15,265,709 Net Position - Ending 2,240,143$ 11,104,535$ 370,210$ 13,714,888$ Business-type Activities - Enterprise Funds VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are an integral part of these financial statements. 18 Stormwater Sanitary Utility Sewer System Construction Solid Waste Totals Cash Flows from Operating Activities Receipts from customers and users 949,769$ --$ 467,016$ 1,416,785$ Payments for interfund services (58,836) -- -- (58,836) Payments to suppliers (1,205,237) -- (594,150) (1,799,387) Net Cash Used by Operating Activities (314,304) -- (127,134) (441,438) Cash Flows from Non-Capital Financing Activities Transfers in from general fund -- 343,884 -- 343,884 Cash Flows from Capital and Related Financing Activities Grant proceeds 47,872 -- -- 47,872 Payments on revenue bonds (300,000) -- -- (300,000) Payments on revolving loans -- (209,376) -- (209,376) Interest paid (209,544) (130,257) -- (339,801) Net Cash Used by Capital and Related Financing Activities (461,672) (339,633) -- (801,305) Cash Flows from Investing Activities Purchase of investments (3,911) -- -- (3,911) Interest received 3,911 -- -- 3,911 Net Cash Provided (Used) by Investing Activities -- -- -- -- Net Increase (Decrease) in Cash and Cash Equivalents (775,976) 4,251 (127,134) (898,859) Cash and Cash Equivalents - Beginning 1,098,271 542 300,149 1,398,962 Cash and Cash Equivalents - Ending 322,295$ 4,793$ 173,015$ 500,103$ Reconciliation of Operating Income (Loss) to Net Cash Used by Operating Activities Operating income (loss) (634,524)$ (989,908)$ 17,745$ (1,606,687)$ Adjustments to reconcile operating income (loss) to net cash used by operating activities: Depreciation 316,645 989,908 -- 1,306,553 Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable, net 10,445 -- (37,407) (26,962) Other assets (474) -- -- (474) Due from other funds -- -- 345 345 Increase (decrease) in: Accounts payable and accrued liabilities 52,440 -- (11,207) 41,233 Due to other funds (58,836) -- (96,610) (155,446) Total adjustments 320,220 989,908 (144,879) 1,165,249 Net Cash Used by Operating Activities (314,304)$ --$ (127,134)$ (441,438)$ Business-type Activities - Enterprise Funds VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are an integral part of these financial statements. 19 Assets Investments, at fair value Money market funds 220,175$ Common stocks 7,394,412 Mutual funds 18,596,744 Limited partnerships 1,257,404 Investments held in the Share Plan 1,034,605 Investments held in the DROP Plan 708,987 Total Investments 29,212,327 Receivables Accrued income 23,542 State supplemental appropriation 456,253 Total Receivables 479,795 Total Assets 29,692,122 Liabilities Accounts payable and accrued liabilities 23,284 Deferred Inflows of Resources Advance contribution from employer 25,894 Total Liabilities and Deferred Inflows of Resources 49,178 Net Position Restricted for Pension Benefits 29,642,944$ VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUND SEPTEMBER 30, 2015 The accompanying notes are an integral part of these financial statements. 20 Additions Contributions Plan members 579,425$ Village (including State) 839,434 Total Contributions 1,418,859 Investment Income (Loss) Net depreciation in the fair value of investments (1,194,905) Net depreciation in the fair value of investments (Share and DROP) (41,429) Interest and dividends 1,214,603 Other 16,980 (4,751) Less: investment expenses (98,428) Net Investment Income (Loss)(103,179) Total Additions 1,315,680 Deductions Benefits paid 434,224 Refund of participant contributions 8,759 DROP distributions 219,274 Administrative expenses 85,607 Total Deductions 747,864 Change in Net Position 567,816 Net Position, Restricted for Pension Benefits Beginning of year 29,075,128 End of year 29,642,944$ VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PENSION TRUST FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are an integral part of these financial statements. 21 NOTES TO BASIC FINANCIAL STATEMENTS VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 22 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Village of Key Biscayne, Florida (the Village), located in Miami-Dade County, is a political subdivision of the State of Florida. The Village, which was incorporated in 1991, operates under a Council-Manager form of government. In addition to the general government function, the Village provides its residents with public works, public safety (police and fire), parks and recreation, building, zoning and planning functions, sanitation and stormwater management. The Village does not provide educational or hospital facilities; those services are provided by the Miami-Dade County School Board and Miami- Dade County, respectively. The financial statements of the Village have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Village’s accounting policies are described below: A. FINANCIAL REPORTING ENTITY The financial statements were prepared in accordance with GASB Statements related to The Financial Reporting Entity, which establishes standards for defining and reporting on the financial reporting entity. The definition of the financial reporting entity is based upon the concept that elected officials are accountable to their constituents for their actions. One of the objectives of financial reporting is to provide users of financial statements with a basis for assessing the accountability of the elected officials. The financial reporting entity consists of the Village, organizations for which the Village is financially accountable, and other organizations for which the nature and significance of their relationship with the Village are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. The Village is financially accountable for a component unit if it appoints a voting majority of the organization’s governing board and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the Village or has operational responsibility. Based upon the application of these criteria, there were no organizations that met the criteria described above. B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the Village. For the most part, the effect of interfund activity has been removed from these statements. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 23 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Village considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 24 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (CONTINUED) Property taxes, franchise fees and other taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Revenues for expenditure driven grants are recognized when the qualifying expenditures are incurred. All other revenue items are considered to be measurable and available only when cash is received by the Village. The Village reports the following major governmental funds: The General Fund is the Village’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Transportation Special Revenue Fund accounts for the revenues received from the transportation surtax and expenditures restricted for related transportation costs. The Capital Improvement Fund accounts for the acquisition or construction of various major capital projects. The Village reports the following proprietary funds in the basic financial statements: The Stormwater Utility System Fund (a major fund) accounts for the construction and maintenance of the Village’s stormwater system. The Sanitary Sewer Construction Fund (a major fund) accounts for the development and construction of a municipal sanitary sewer system to the unsewered areas of the community. The Solid Waste Fund (a major fund) accounts for the provision of solid waste disposal services to Village residents and businesses. Additionally, the Village reports the following fiduciary fund types: The Pension Trust Fund is used to account for the Village’s single-employer defined benefit pension plan covering substantially all of its police officers and firefighters. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 25 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (CONTINUED) As a general rule, the effect of interfund activity has been eliminated from the government- wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the Village’s various utility functions and various other functions. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Village’s stormwater utility, solid waste services and sanitary sewer construction funds are charges to customers for services. Operating expenses for enterprise funds include the costs of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. IMPLEMENTATION OF GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENTS The Village implemented the following GASB Statements during the year ended September 30, 2015: GASB Statement No. 68, Accounting and Financial Reporting for Pensions – An amendment of GASB Statement No. 27 This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements. This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68 VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 26 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. IMPLEMENTATION OF GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENTS (CONTINUED) This statement amends paragraph 137 of Statement No. 68 to require that, at transition, a government recognize a beginning deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the beginning net pension liability. E. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY 1. Deposits and Investments The Village’s cash and cash equivalents includes cash on hand, certificates of deposit with original maturities of three months or less from the date of acquisition and a repurchase agreement. All other investments, including pension investments, are recorded at fair value. Fair value is determined by quoted market prices. The Village’s and pension plan’s investments are governed by their respective investment policies. 2. Interfund Receivables and Payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to/from other funds”. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. 3. Receivables Receivables include amounts due from other governments and others for services provided by the Village. Receivables are recorded and revenues are recognized as earned or as specific program expenditures/expenses are incurred. Allowances, if any, for uncollectible receivables are based upon historical trends and the periodic aging of receivables. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 27 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED) 4. Capital Assets Capital assets, which include property, plant and equipment, intangible and infrastructure assets (e.g., utility plant, roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Tangible and intangible capital assets are defined by the Village as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the date of donation. All infrastructure assets have been capitalized since inception of the Village. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the asset constructed. No such costs were capitalized in 2015. Intangible assets consist of computer software, which was capitalized as an asset in prior years, and right of ways. The Village elected not to retroactively report all intangible assets. Capital assets of the Village are depreciated using the straight line method over the following estimated useful lives: Assets Years Buildings 25-50 Improvements other than buildings 10-50 Furniture, fixtures and equipment 10 Stormwater utility system 50 Sanitary sewer system 19 VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 28 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED) 5. Unearned/Unavailable Revenue Unavailable revenue is recorded for governmental fund revenues that are not both measurable and available. The Village does not report any unavailable revenue. In addition, inflows that do not yet meet the criteria for revenue recognition, such as community center membership dues collected in advance, are recorded as unearned revenue in the government-wide and the fund financial statements. Business tax receipts are classified as an unearned revenue in the government-wide and fund level financial statements. 6. Compensated Absences It is the Village’s policy to permit employees to accumulate within certain limits, earned but unused vacation time and sick leave, which will be paid to employees upon separation from Village service. All vacation and sick leave pay is accrued when incurred in the government-wide and proprietary fund financial statements. In the governmental funds, a liability is recorded only for vacation and sick leave payouts for employee separations that occurred prior to September 30, 2015 and were subsequently paid with current available financial resources. The general fund typically is used to liquidate the liability for compensated absences. 7. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line amortization method. The results of using this method do not differ significantly from the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issue costs are expensed as incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures as incurred. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 29 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED) 8. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Village reports within its government-wide statement of net position as deferred outflows amounts contributed during fiscal year 2015 into the Village of Key Biscayne Police Officers and Firefighters Retirement Plan as a result of the net pension liability associated with the Plan measured as of September 30, 2014. The amounts paid during fiscal year 2015 to the Plan will be reflected within the Village’s pension expense and related liability when the net pension liability is measured for the next fiscal year. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Within the government-wide statement of net position the Village reports as deferred inflows amounts representing the net difference between expected and actual results, changes in assumptions and projected and actual earnings of its pension plan. The amounts will be amortized over a five year closed period beginning in the year in which the difference occurred or over the remaining service lives of all employees, as applicable. 9. Fund Equity The Village follows accounting standards for fund balance reporting and governmental fund type definitions which establish criteria for classifying governmental fund balances into specifically defined classifications. Classifications are hierarchical and are based primarily on the extent to which the Village is bound to honor constraints on the specific purposes for which amounts in the funds may be spent. The Village’s accounting and finance policies are used to interpret the nature and/or requirements of the funds and their corresponding assignment of restricted, committed, assigned or unassigned. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 30 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED) 9. Fund Equity (continued) The Village reports the following classifications: Nonspendable fund balance. Nonspendable fund balances are amounts that are (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted fund balance. Restricted fund balances are amounts that can be spent only for specific purposes stipulated by (a) external resource providers such as creditors (by debt covenants), grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Committed fund balance. These amounts can only be used for the specific purposes determined by a formal action (Ordinance or Resolution, which are both equally binding) of the Village Council, the Village’s highest level of decision making authority. Commitments may be changed or removed only by the Village Council taking the same formal action (Ordinance/Resolution) that imposed the constraint originally. Resources accumulated pursuant to stabilization arrangements sometimes are reported in this category. Assigned fund balance. Assigned fund balances are amounts that are constrained by the Village’s intent to be used for specific purposes, but are neither restricted nor committed. Intent is established by the Village Manager to which the Council has delegated the authority to assign, modify or rescind amounts to be used for specific purposes. There is no formal policy which has been established by Council delegating this authority. This balance includes (a) all remaining amounts that are reported in governmental funds (other than the General Fund) that are not classified as nonspendable, restricted, or committed, and (b) amounts in the General Fund that are intended to be used for a specific purpose. Specific amounts that are not restricted or committed in a special revenue fund are assigned for the purposes in accordance with the nature of their fund type. Assignment within the General Fund conveys that the intended use of those amounts is for a specific purpose that is narrower than the general purposes of the Village itself. See Note 9 for the detail of the amounts included in the various fund balance classifications. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 31 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED) 10. Net Position Net position of the government-wide and proprietary funds are categorized as net investment in capital assets, restricted or unrestricted. Net investment in capital assets, is that portion of net position that relates to the Village’s capital assets reduced by accumulated depreciation and by any outstanding debt and deferred inflows/outflows incurred to acquire, construct or improve those assets, excluding unexpended proceeds. Restricted net position is that portion of net position that has been restricted for general use by external parties (creditors, grantors, contributors, or laws or regulations of other governments) or imposed by law through constitutional provisions or enabling legislation. Unrestricted net position consists of all net position that does not meet the definition of either of the other two components. 11. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 12. Flow Assumptions Net Position Flow Assumption Sometimes the Village will fund outlays for a particular purpose from both restricted and unrestricted resources. In order to calculate the amounts to report as restricted - net position and unrestricted – net position in the government-wide financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the Village’s policy to consider restricted – net position to have been depleted before unrestricted – net position is applied. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 32 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED) 12. Flow Assumptions (continued) Fund Balance Flow Assumption Sometimes the Village will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the Village’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance, if any, is applied last. NOTE 2 – EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET POSITION The governmental fund balance sheet includes a reconciliation between fund balance – total governmental funds and net position – governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains that long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. The details of this $32,108,259 difference, excluding the net pension liability which is separately disclosed, are as follows: Bonds payable 28,101,157$ Capital leases payable 311,176 Compensated absences 2,599,274 Accrued Interest payable 186,021 Net OPEB obligation 910,631 32,108,259$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 33 NOTE 3 – DEPOSITS AND INVESTMENTS DEPOSITS In addition to insurance provided by the Federal Depository Insurance Corporation, all deposits are held in banking institutions approved by the State Treasurer of the State of Florida to hold public funds. Under Florida Statutes Chapter 280, Florida Security for Public Deposits Act, the State Treasurer requires all Florida qualified public depositories to deposit with the Treasurer or another banking institution eligible collateral. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses. Accordingly, all amounts reported as deposits are deemed as insured or collateralized. The Village invests in certificates of deposit. The certificates bear an interest rate ranging from 0.12% to 0.80% and with maturities ranging from 188 days to 535 days totaling $14,965,210 which are presented as investments in the accompanying financial statements. INVESTMENTS The Village’s investment policy follows the requirements of Florida Statutes Chapter 218.415, and attempts to promote, in order of priority, safety of principal, adequate liquidity, and maximization of total return. The Village’s investment policy authorizes investments in direct obligations of the U.S. Government, its agencies or instrumentalities. The Village is also authorized to invest in SEC registered money market mutual funds, insured or fully collateralized deposits, repurchase agreements secured by direct obligations of the U.S. Government, and authorized intergovernmental investment pools. The investment policy defined in the statutes attempts to promote, through state assistance, the maximization of net interest earnings on invested surplus funds of local units of governments while limiting the risk to which the funds are exposed. The Village maintains a separate investment policy for its pension plan. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 34 NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED) INVESTMENTS – VILLAGE As of September 30, 2015, the Village had the following fixed income investments with the corresponding maturities in its portfolio: Fair Investments Value 1-5 Repurchase Agreements 5,620,076$ 5,620,076$ (In Years) Investment Maturities Interest Rate Risk Interest rate risk refers to the portfolio's exposure to fair value losses arising from increasing interest rates. The Village’s investment policy limits the maturities on fixed income holdings in the general and special revenue funds to two years and capital projects funds shall not exceed the lesser of the anticipated expenditures schedule or five years. Credit Risk State law and the Village’s investment policy limits investments in bonds, U.S. treasuries and agency obligations, or other evidences of indebtedness to the top ratings issued by nationally recognized statistical rating organizations of the United States. The Village is currently not invested in any of these types of investments. Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Village will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Village’s $5.6 million investment in repurchase agreements is held by the investment’s counterparty, not in the name of the Village. The Village’s investment policy does not have a limit on holding of securities by counterparties. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 35 NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED) INVESTMENTS – PENSION PLAN For the Village’s pension plan, Florida statutes and the Plan’s investment policy authorize the Trustees to invest funds in various investments. A Master Custodian Agreement is maintained whereby the investment securities are held in the Plan’s name by a financial institution acting as the Plan’s agent. The current target allocation of these investments at fair value is as follows: Authorized Investments Target % Allowable Range Large cap core equity 6.0%4% - 8% Large cap value equity 12.0%8% - 16% Large cap growth equity 12.0% 8% - 16% Mid-cap value equity 5.0% 2% - 7% Mid-cap growth equity 5.0% 2% - 7% Small-cap value equity 2.5% 1% - 5% Small-cap growth equity 2.5% 1% - 5% International equity 15.0% 5% - 25% Alternative - real estate (REIT) 5.0% 0% - 8% High yield 3.0% 0% - 5% Treasury Inflation Indexed Securities (TIPS) 2.0% 0% - 5% Fixed income securities 30.0%30% - 69% Total 100.0% As of September 30, 2015, the Village’s Defined Benefit Pension Plan had the following fixed income investments with the corresponding maturities in its portfolio: Fair Less Investments Value Than 1 1-5 6-10 10+ Bond Mutual Funds 9,223,524$ 459,832$ 2,298,450$ 5,606,634$ 858,608$ Investment Maturities (In Years) Interest Rate Risk Interest rate risk refers to the portfolio's exposure to fair value losses arising from increasing interest rates. The Plan does not have a formal investment policy that limits investment maturities as a means of managing its exposure to market value losses arising from increasing interest rates. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 36 NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED) INVESTMENTS – PENSION PLAN (CONTINUED) Credit Risk State law and the Plan’s investment policy limits investments in bonds, stocks, or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia, provided the corporation is listed on any one or more of the recognized national stock exchanges or on the National Market System of the NASDAQ Stock Market and in the case of bonds only, holds a rating in one of the three highest classifications by a major rating service. The Plan’s investment policy limits fixed income securities to a rating no lower than Standard & Poor's BBB or Moody’s BAA. The Plan's fixed income securities which are subject to a rating, were all rated "A" or better under Standard & Poor's ratings. Concentration of Credit Risk The Plan's investment policy prohibits equity and fixed income securities concentrations greater than 5% and 10%, respectively, in any one issuer with the exception of U.S. government or agency issues. As of September 30, 2015, the value of each position held in the Plan’s portfolio comprised less than 5% of Plan net position. RISKS AND UNCERTAINTIES The Village and the Plan invest in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements. The Village and the Plan, through its investment advisor, monitors the investments and the risks associated therewith on a regular basis which the Village and the Plan believes minimizes these risks. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 37 NOTE 4 – RECEIVABLES Receivables as of September 30, 2015 for the Village’s individual major funds, non-major funds and fiduciary fund in the aggregate, including the allowances for uncollectible accounts, are as follows: Special Capital Storm- Solid Pension General Revenue Improvements water Waste Trust Fund Total Customers billed 117,810$ --$ --$ 222,749$ 264,130$ --$ 604,689$ Contributions 410,342 -- -- -- -- 456,253 866,595 Intergovernmental 544,521 151,022 -- -- -- -- 695,543 Other 3,394 -- 1,281 -- -- 23,542 28,217 Gross receivables 1,076,067 151,022 1,281 222,749 264,130 479,795 2,195,044 Less: Allowance for uncollectibles -- -- -- -- (18,885) -- (18,885) Net Total Receivables 1,076,067$ 151,022$ 1,281$ 222,749$ 245,245$ 479,795$ 2,176,159$ NOTE 5 – PROPERTY TAXES Property values are assessed on a county-wide basis by the Miami-Dade County Property Appraiser as of January 1, the lien date, of each year and are due the following November 1. Taxable value of property within the Village is certified by the Property Appraiser and the Village levies a tax millage rate upon the taxable value, which will provide revenue required for the fiscal year beginning October 1. The millage rate assessed by the Village for the fiscal year ended September 30, 2015 was 3.00. Property taxes levied each November 1, by the Village and all other taxing authorities within the County, are centrally billed and collected by Miami-Dade County, with remittances to the Village of their proportionate share of collected taxes. Taxes for the fiscal year beginning October 1 are billed in the month of November, subject to a 1% per month discount for the period November through February, and are due no later than March 31. On April 1, unpaid amounts become delinquent with interest and penalties added thereafter. Beginning June 1, tax certificates representing delinquent taxes with interest and penalties are sold by Miami-Dade County, with remittance to the Village for its share of those receipts. At September 30, 2015, there were no material delinquent taxes. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 38 NOTE 6 – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of September 30, 2015 is as follows: Due from/to other funds: Receivable Fund Payable Fund Amount General Special Revenue 60,196$ Capital Improvements 211,330 Stormwater 84,431 355,957$ Special Revenue General 74,461$ The outstanding balances between funds result mainly from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Interfund transfers: Transfers Out Transfer In Amount General Fund Capital Improvements 1,855,623$ General Fund Sanitary Sewer 343,884 2,199,507$ Transfers are used to move unrestricted general fund revenues to finance various capital projects in accordance with budgetary authorizations. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 39 NOTE 7 – CAPITAL ASSETS Capital asset activity for the year ended September 30, 2015 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities Capital Assets, Not Being Depreciated Land 21,833,837$ --$ --$ 21,833,837$ Construction in progress 5,236,310 1,242,089 -- 6,478,399 Total Capital Assets, Not Being Depreciated 27,070,147 1,242,089 -- 28,312,236 Capital Assets, Being Depreciated Buildings 24,998,264 441,308 -- 25,439,572 Improvements other than buildings 32,267,483 350,062 -- 32,617,545 Furniture, fixtures and equipment 9,100,098 1,270,291 (20,000) 10,350,389 Total Capital Assets, Being Depreciated 66,365,845 2,061,661 (20,000) 68,407,506 Less: Accumulated Depreciation for Buildings (5,899,281) (514,295) -- (6,413,576) Improvements other than buildings (7,894,734) (1,132,074) -- (9,026,808) Furniture, fixtures and equipment (7,159,666) (734,721) -- (7,894,387) Total Accumulated Depreciation (20,953,681) (2,381,090) -- (23,334,771) Total Capital Assets, Being Depreciated, Net 45,412,164 (319,429) (20,000) 45,072,735 Governmental Activities Capital Assets, Net 72,482,311$ 922,660$ (20,000)$ 73,384,971$ Beginning Ending Balance Increases Decreases Balance Business-type Activities Capital Assets, Not Being Depreciated Construction in progress 142,302$ --$ (142,302)$ --$ Total Capital Assets, Not Being Depreciated 142,302 -- (142,302) -- Capital Assets, Being Depreciated Stormwater utility system 10,768,882 142,302 -- 10,911,184 Sanitary Sewer system 18,808,259 -- -- 18,808,259 Total Capital Assets, Being Depreciated 29,577,141 142,302 -- 29,719,443 Less: Accumulated Depreciation for Stormwater utility system (4,764,226) (316,645) -- (5,080,871) Sanitary Sewer system (2,969,727) (989,908) -- (3,959,635) Total Accumulated Depreciation (7,733,953) (1,306,553) -- (9,040,506) Total Capital Assets, Being Depreciated, Net 21,843,188 (1,164,251) -- 20,678,937 Business-type Activities Capital Assets, Net 21,985,490$ (1,164,251)$ (142,302)$ 20,678,937$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 40 NOTE 7 – CAPITAL ASSETS (CONTINUED) Depreciation expense was charged as functions/programs of the primary government as follows: Governmental Activities General government 1,061,517$ Police 298,667 Fire 264,682 Public works 71,094 Building, zoning and planning 93,257 Parks 591,873 Total Depreciation Expense - Governmental Activities 2,381,090$ Business-type Activities Stormwater Utility 316,645$ Sanitary Sewer 989,908 Total Depreciation Expense - Business-Type Activities 1,306,553$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 41 NOTE 8 – LONG-TERM DEBT The following is a summary of changes in long-term liabilities of the Village for governmental activities for the year ended September 30, 2015: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental Activities Bonds Payable Land acquisition and capital improvement revenue bonds, Series 1999 4,345,000$ --$ (640,000)$ 3,705,000$ 670,000$ Capital improvement revenue refunding bonds, Series 2011A 5,035,000 -- (670,000) 4,365,000 690,000 Capital improvement revenue refunding bonds, Series 2011B 5,440,000 -- (605,000) 4,835,000 605,000 Capital improvement and land acquisition revenue refunding bonds, Series 2011 1,425,000 -- (155,000) 1,270,000 170,000 Transportation tax revenue refunding bonds, Series 2011 2,273,126 -- (187,468) 2,085,658 192,046 Road improvement revenue bonds, Series 2006 2,229,479 -- (271,038) 1,958,441 278,472 School improvement revenue bonds, Series 2012 5,575,000 -- (267,942) 5,307,058 272,430 School improvement revenue bonds, Series 2013 4,575,000 -- -- 4,575,000 250,000 Total Bonds Payable 30,897,605 -- (2,796,448) 28,101,157 3,127,948 Other Liabilities Capital leases 307,933 130,000 (126,757) 311,176 162,862 Compensated absences 2,687,922 1,333,214 (1,421,862) 2,599,274 259,927 Net OPEB obligation 726,997 206,689 (23,055) 910,631 -- Net pension liability 6,094,939 3,085,137 (7,766,760) 1,413,316 -- Total Other Liabilities 9,817,791 4,755,040 (9,338,434) 5,234,397 422,789 Governmental Activities Long-Term Liabilities 40,715,396$ 4,755,040$ (12,134,882)$ 33,335,554$ 3,550,737$ Long-term obligations related to governmental activities are generally liquidated from the general fund. LAND ACQUISITION AND CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 1999 On July 23, 1999, the Village issued $10,000,000 Land Acquisition and Capital Improvement Revenue Bonds, Series 1999, the proceeds of which were used for the acquisition of property and financing of the construction of the Civic Center project. The bonds mature on July 23, 2019 with final payment due on December 1, 2019. The Village has pledged non-ad valorem revenues to secure payment of the principal and interest on the bonds. The bonds are due in annual principal installments. Interest accrues at 4.715% per annum. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 42 NOTE 8 – LONG-TERM DEBT (CONTINUED) LAND ACQUISITION AND CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 1999 (CONTINUED) Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2016 670,000$ 158,896$ 828,896$ 2017 705,000 126,480 831,480 2018 740,000 92,414 832,414 2019 775,000 56,698 831,698 2020 815,000 19,214 834,214 3,705,000$ 453,701$ 4,158,701$ CAPITAL IMPROVEMENT REVENUE REFUNDING BONDS, SERIES 2011A On June 13, 2011, the Village issued $6,890,000 of Capital Improvement Revenue Refunding Bonds, Series 2011A for the purpose of refunding the Village’s Capital Improvement Revenue Bonds, Series 2000. The bonds mature on December 1, 2020. The Village has pledged non-ad valorem revenues to secure payment of the principal and interest on the bonds. The bonds are due in annual principal installments on each December 1, commencing December 1, 2011. Interest accrues at 2.31% per annum. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2016 690,000$ 92,862$ 782,862$ 2017 705,000 76,750 781,750 2018 715,000 60,349 775,349 2019 735,000 43,601 778,601 2020 750,000 26,450 776,450 2021 770,000 8,894 778,894 4,365,000$ 308,906$ 4,673,906$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 43 NOTE 8 – LONG-TERM DEBT (CONTINUED) CAPITAL IMPROVEMENTS REVENUE REFUNDING BONDS, SERIES 2011B On August 1, 2011, the Village issued $7,130,000 of Capital Improvement Revenue Refunding Bonds, Series 2011B for the purpose of refunding the Village’s Capital Improvement Revenue Bonds, Series 2002. The bonds mature on November 1, 2022. The Village has pledged non-ad valorem revenues to secure payment of the principal and interest on the bonds. The bonds bear interest on the outstanding principal balance from its date of issuance payable quarterly on the first day of each February, May, August and November commencing November 1, 2011, at an interest rate equal to 2.41% per annum. Debt service to maturity is as follows: Principal Interest Total Fiscal Year Ending September 30 2016 605,000$ 110,438$ 715,438$ 2017 635,000 95,496 730,496 2018 650,000 80,102 730,102 2019 665,000 64,347 729,347 2020 675,000 48,290 723,290 2021-2023 1,605,000 48,170 1,653,170 4,835,000$ 446,844$ 5,281,844$ CAPITAL IMPROVEMENT AND LAND ACQUISITION REVENUE REFUNDING BONDS, SERIES 2011 On August 1, 2011, the Village issued the $1,865,000 Capital Improvement and Land Acquisition Revenue Refunding Bonds, Series 2011 for the purpose of refunding the Capital Improvement and Land Acquisition Revenue Bonds, Series 2004. The Village has pledged non-ad valorem revenues to secure payment of the principal and interest on the bonds. The bonds mature on November 1, 2022. The bonds bear interest on the outstanding principal balance from its date of issuance payable quarterly on the first day of each February, May, August and November, commencing November 1, 2011, at an interest rate equal to 2.41% per annum. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 44 NOTE 8 – LONG-TERM DEBT (CONTINUED) CAPITAL IMPROVEMENT AND LAND ACQUISITION REVENUE REFUNDING BONDS, SERIES 2011 (CONTINUED) Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2016 170,000$ 28,980$ 198,980$ 2017 160,000 25,064 185,064 2018 170,000 21,057 191,057 2019 170,000 16,960 186,960 2020 175,000 12,773 187,773 2021-2023 425,000 12,592 437,592 1,270,000$ 117,427$ 1,387,427$ TRANSPORTATION TAX REVENUE REFUNDING BONDS, SERIES 2011 On September 30, 2011, the Village issued $2,808,952 of Transportation Tax Revenue Refunding Bonds, Series 2011 for the purpose of refunding the Transportation Tax Revenue Bonds, Series 2005. The Village has pledged Transportation Surtax Revenues and Local Option Gas Tax revenues to secure payment of the principal and interest on the bonds in the amounts of $489,679 and $214,904, respectively. The bonds mature on July 1, 2025. The bonds bear interest on the outstanding principal balance from its date of issuance payable quarterly on each January 1, April 1, July 1 and October 1 commencing January 1, 2012, at an interest rate equal to 2.42% per annum. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2016 192,046$ 48,739$ 240,785$ 2017 196,736 44,049 240,785 2018 201,540 39,245 240,785 2019 206,462 34,323 240,785 2020 211,504 29,281 240,785 2021-2025 1,077,369 66,360 1,143,729 2,085,658$ 261,996$ 2,347,654$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 45 NOTE 8 – LONG-TERM DEBT (CONTINUED) ROAD IMPROVEMENT REVENUE BONDS, SERIES 2006 On December 14, 2006, the Village issued $4,000,000 Road Improvement Revenue Bonds, Series 2006, for the purpose of financing a portion of the costs of road improvements within the Village (Crandon Boulevard Improvements – Phase III), financing architectural, engineering, environmental, legal, and other planning costs. The bonds mature on December 1, 2021. The Village has pledged toll revenues to secure payment of the principal and interest on the bonds. Total principal and interest remaining on the bonds is $2,231,152. For the current year, debt service and pledged revenues were $357,125 and $365,000, respectively. The bonds are due in quarterly principal installments. Interest accrues at 4.05% per annum. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2016 278,472$ 75,297$ 353,768$ 2017 289,206 63,857 353,062 2018 300,353 51,976 352,329 2019 311,930 39,637 351,567 2020 323,953 26,823 350,776 2021-2022 454,527 15,122 469,649 1,958,441$ 272,711$ 2,231,152$ SCHOOL IMPROVEMENT REVENUE BONDS, SERIES 2012 On October 24, 2012, the Village issued $5,575,000 of School Improvement Revenue Bonds, Series 2012 for the purpose of providing a portion of the financing of a permanent secondary educational facility and recreational fields owned and operated by the School Board of Miami-Dade County for Village residents located at the Mast Academy campus as well as necessary renovations of the Key Biscayne K-8 Center, financing architectural, engineering, environmental legal, and other planning costs related thereto, and paying cost of issuance of the bonds. The bonds mature on October 1, 2032. The bonds bear interest on the outstanding principal balance from its date of issuance payable semiannually on each April 1 and October 1 (the "interest payment dates") commencing April 1, 2013, at an interest rate equal to 3.35% per annum. The bonds require the Village to appropriate in its annual budget, from non-ad valorem revenues amounts sufficient to cover debt service. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 46 NOTE 8 – LONG-TERM DEBT (CONTINUED) SCHOOL IMPROVEMENT REVENUE BONDS, SERIES 2012 (CONTINUED) Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2016 272,430$ 177,786$ 450,216$ 2017 276,993 168,660 445,653 2018 281,633 159,381 441,014 2019 286,350 149,946 436,296 2020 291,146 140,353 431,499 2021-2025 1,530,536 552,157 2,082,693 2026-2030 1,663,085 287,059 1,950,144 2031-2033 704,885 35,519 740,404 5,307,058$ 1,670,861$ 6,977,919$ SCHOOL IMPROVEMENT REVENUE BONDS, SERIES 2014 On July 1, 2014, the Village issued $4,575,000 of School Improvement Revenue Bonds, Series 2014 for the purpose of providing an additional portion of the financing of a permanent secondary educational facility and recreational fields owned and operated by the School Board of Miami-Dade County for Village residents located at the Mast Academy campus as well as necessary renovations of the Key Biscayne K-8 Center, financing architectural, engineering, environmental legal, and other planning costs related thereto, and paying cost of issuance of the bonds. The bonds mature on October 1, 2029. The bonds bear interest on the outstanding principal balance from its date of issuance payable semiannually on each April 1 and October 1 (the "interest payment dates") commencing October 1, 2014, at an interest rate equal to 2.76% per annum. The bonds require the Village to appropriate in its annual budget, from non-ad valorem revenues amounts sufficient to cover debt service. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 47 NOTE 8 – LONG-TERM DEBT (CONTINUED) SCHOOL IMPROVEMENT REVENUE BONDS, SERIES 2014 (CONTINUED) Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2016 250,000$ 63,135$ 313,135$ 2017 260,000 119,370 379,370 2018 265,000 112,194 377,194 2019 270,000 104,880 374,880 2020 280,000 97,428 377,428 2021-2025 1,515,000 367,218 1,882,218 2026-2030 1,735,000 146,004 1,881,004 4,575,000$ 1,010,229$ 5,585,229$ CAPITAL LEASES The Village has entered into lease purchase agreements for financing the acquisition of vehicles and equipment in the General Fund and Capital Improvement Fund. The lease agreements qualify as capital leases for accounting purposes and have been recorded at the present value of the future minimum lease payments as of the inception date. Assets Machinery and equipment 947,025$ Accumulated depreciation (135,649) Carrying Value 811,376$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 48 NOTE 8 – LONG-TERM DEBT (CONTINUED) CAPITAL LEASES (CONTINUED) Future minimum lease payments and the present value of net minimum lease payments as of September 30, 2015 are as follows: Fiscal Year Ending September 30 2016 84,792$ 2017 168,183 2018 34,133 2019 34,133 Total minimum lease payments 321,240 Less: amount representing interest 10,064 311,176$ The following is a summary of changes in long-term liabilities of the Village for business- type activities for the year ended September 30, 2015: Beginning Ending Due Within Balance Additions Reductions Balance One Year Business-type Activities Bonds and Loans Payable Stormwater utility refunding and improvement revenue bond, Series 2013 6,255,000$ --$ (300,000)$ 5,955,000$ 310,000$ Revolving loan, 1996 214,734 -- (22,809) 191,925 23,396 Revolving loan, 2009 3,731,575 -- (186,567) 3,545,008 192,945 Total Bonds and Loans Payable 10,201,309 -- (509,376) 9,691,933 526,341 Business-type Activities Long-Term Liabilities 10,201,309$ --$ (509,376)$ 9,691,933$ 526,341$ STORMWATER UTILITY REVENUE REFUNDING BONDS, SERIES 2011 On July 18, 2011, the Village issued $4,450,000 Stormwater Utility Revenue Refunding Bonds, Series 2011 for the purpose of refunding the Stormwater Utility Revenue Bonds, Series 1999. The bonds were refunded during fiscal year 2014, through the issuance of the Stormwater Utility Refunding and Improvement Revenue Bonds, Series 2013 (current refunding). VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 49 NOTE 8 – LONG-TERM DEBT (CONTINUED) STORMWATER UTILITY REFUNDING AND IMPROVEMENT REVENUE BONDS, SERIES 2013 On January 7, 2014, the Village issued $6,575,000 Stormwater Utility Refunding and Improvement Revenue Bonds, Series 2013 for the purpose of refunding the Stormwater Utility Revenue Refunding Bonds, Series 2011, financing improvements and replacements of drainage wells and outfalls for the Village’s Stormwater Utility System and paying costs of issuance of the Bonds. There was an economic loss of $168,123 and no cash flow savings on this refunding. The Village has pledged stormwater utility fees and non-ad valorem revenues to secure payment of the principal and interest on the bonds. Stormwater utility fees were $939,798 and debt service was $509,543 for the year ended September 30, 2015. The bonds mature on October 1, 2029. The Bonds bear interest on the outstanding principal balance from their date of issuance payable annually on each October 1 commencing October 1, 2014, at an interest rate equal to 3.35% per annum. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2016 310,000$ 199,493$ 509,493$ 2017 320,000 189,108 509,108 2018 335,000 178,388 513,388 2019 345,000 167,165 512,165 2020 355,000 155,608 510,608 2021-2025 1,965,000 591,108 2,556,108 2026-2030 2,325,000 238,658 2,563,658 5,955,000$ 1,719,527$ 7,674,527$ STATE REVOLVING FUND LOAN, 1996 In June 1996, the Village entered into a loan agreement in the amount of $887,983 for the financing of the planning and engineering of the proposed sanitary sewer construction project under a State Revolving Fund Loan. The loan is secured by the state revenue sharing funds. Debt service for fiscal year 2015 was $28,134 and state revenue sharing was $297,140. The loan is payable in semi-annual payments over 20 years beginning on April 15, 2003 at an interest rate of 2.56% per annum. The loan matures on October 15, 2022. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 50 NOTE 8 – LONG-TERM DEBT (CONTINUED) STATE REVOLVING FUND LOAN, 1996 (CONTINUED) Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2016 23,396$ 4,738$ 28,134$ 2017 23,999 4,135 28,134 2018 24,617 3,517 28,134 2019 25,252 2,882 28,134 2020 25,902 2,232 28,134 2021-2023 68,758 2,622 71,380 191,925$ 20,126$ 212,051$ STATE REVOLVING FUND LOAN, 2009 In June 2009, the Village entered into a revolving loan agreement with the State of Florida Department of Environmental Protection in an amount up to $5,150,000 plus $65,500 for a total of $5,215,500 for the financing of the sanitary sewer construction project. Total principal due under the loan was $5,318,500 which included loan servicing fees. The amortization schedule herein represents the total debt service to be paid under this loan agreement once all amounts are borrowed. The loan is secured by the communications service tax. Total debt service for fiscal year 2015 was $311,500 and the pledged revenue was $862,165. The loan is payable in semi-annual payments over 20 years beginning on August 15, 2010 and is payable each August 15 and February 15 at an interest rate of 3.39% per annum. The loan matures on February 15, 2030. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2016 192,945$ 118,554$ 311,500$ 2017 199,542 111,958 311,500 2018 206,363 105,136 311,500 2019 213,418 98,081 311,500 2020 220,715 90,785 311,500 2021-2025 1,222,051 335,447 1,557,498 2036-2030 1,289,975 111,774 1,401,749 3,545,008$ 971,736$ 4,516,744$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 51 NOTE 9 – FUND BALANCE CLASSIFICATIONS As of September 30, 2015, fund balances in the general fund and the capital improvements fund have been set aside for the following purposes. The Village, by its charter, cannot have any unassigned fund balance, therefore, many of the commitments/assignments are established to fund current operations, such as working capital. Nonspendable Prepaid items 268,176$ Restricted Building inspections 1,461,641 Fire code violations 221,023 Fire grant revenue (UASI) 44,480 Law enforcement seizures 148,713 1,875,857 Committed Emergencies 4,000,000 Fire rescue transport fees 1,448,053 Labor negotiations 90,000 Open space land trust 8,000,000 13,538,053 Assigned Compensated absences 603,640 Working capital (surplus) 11,266,366 11,870,006 Total Fund Balance - General Fund 27,552,092$ Committed Capital improvement plan 3,188,871$ 3,188,871 Total Fund Balance - Capital Improvements 3,188,871$ Restricted Transportation surtax 529,301$ Assigned 59,404 Total Fund Balance - Transportation Special Revenue 588,705$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 52 NOTE 10 – DEFINED CONTRIBUTION PLANS The Village as a single-employer contributes to the Village of Key Biscayne Money Purchase Plans, which are defined contribution plans created in accordance with Internal Revenue Code Section 401(a). The Plans are administered by a third party administrator. Under the first Plan, which is available to general employees, the Village contributes 12% and the employees contribute 6%. Under the second Plan, which is available only to the Village Manager, the Village contributes 12% and employee contributions are not required. Under the third plan, which is available only to sworn or certified police officers and firefighters, there are currently no employee or employer contributions. Original participants still have vested funds deposited in the third Plan. Total employer contributions into the general employees and the Village Manager’s plan were approximately $591,000 and $22,800, respectively. Amendments to the Plans must be authorized by the Village Council. NOTE 11 – DEFINED BENEFIT PENSION PLAN PLAN DESCRIPTION Effective October 1, 1997, the Village established the Village of Key Biscayne Police Officers and Firefighters Retirement Plan ( a single-employer Public Employee Retirement System - PERS) to provide pension benefits for its police officers and firefighters. The PERS is considered to be part of the Village’s financial reporting entity and is included in the Village’s financial reports as a pension trust fund. The Plan was created under Village Ordinance 97-21. The latest available actuarial valuation is as of October 1, 2014. The PERS does not issue a publicly available stand-alone financial report for the Plan. The Plan received a favorable IRS determination letter dated September 12, 2014. Under this Plan, all full-time firefighters and police officers employed by the Village are eligible to participate. Prior to March 11, 2014 for firefighters and August 26, 2014 for police officers, the monthly retirement benefit was equal to 3% of the average final compensation for each year of service. As of March 11, 2014, the monthly retirement benefit for firefighters is equal to 3% of average final compensation for the first fifteen years of credited service; 4% of average final compensation for each year of credit service in excess of fifteen years; and 2.75% of average final compensation earned after March 10, 2014. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 53 NOTE 11 – DEFINED BENEFIT PENSION PLAN (CONTINUED) PLAN DESCRIPTION (CONTINUED) As of August 26, 2014, the monthly retirement benefit for police officers is equal to 3% of average final compensation for each year of credited service earned before August 26, 2014 and 2.75% of average final compensation for each year of credit service earned after August 26, 2014. The calculation for the average final compensation is computed as one-twelfth of the average salary of the five highest years within the last ten years of credited service. Credited service is determined by the total number of years employed by the Village since August 1, 1993. Amendments to the Plan must be authorized by the Village Council. Prior to March 11, 2014 for firefighters and August 26, 2014 for police officers, vested employees could retire at the earlier of age 55 and the completion of five years of credited service or the age of 52 and the completion of 25 years of credited service, or at age 50 with 5 years of service with the benefit discounted 3% for each year under age 55. As of March 11, 2014 for firefighters and August 26, 2014 for police officers, vested employees may retire at the earlier of age 55 and the completion of ten years of credited service or the age of 52 and the completion of 25 years of credited service or when their age (computed in full months) plus credited service (computed in full months) equals 900 months (i.e. 75 years). Administrative costs of the Plan are financed through investment earnings. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Benefits and refunds are recorded when paid. Based on the October 1, 2014 (date of the latest actuarial valuation), Plan membership consisted of the following: Inactive plan members and beneficiaries currently receiving benefits 28 Inactive plan members entitled but not yet receiving benefits 5 Active plan members 59 Total Members 92 FUNDING POLICY The participant contribution rate is fixed by ordinance at 10.5%. The Village’s contribution rate is adjusted each year to an amount equal to the total pension cost for the year, as determined by the most recent actuarial valuation, less the amount of revenue received from the State of Florida pursuant to Chapters 175 and 185 of the Florida Statutes. Effective March 11, 2014 for firefighter participants and August 26, 2014 for VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 54 NOTE 11 – DEFINED BENEFIT PENSION PLAN (CONTINUED) FUNDING POLICY (CONTINUED) police officer participants, the Village’s annual contribution into the Plan shall not exceed 14% of the Plan’s covered payroll. As such, any required excess as determined by the actuarial valuation is covered by additional participant contributions. This funding policy is designed to limit the Village’s exposure to contribute to the Plan. State contributions are recognized as a revenue and expenditure in the General Fund. The Village’s (including the State) contribution rate was 19.15% of covered payroll for the fiscal year ended September 30, 2015 which was determined by the October 1, 2013 actuarial valuation. SHARE PLAN In fiscal year 2009, the Village created a Share Plan for firefighters. Prior to March 11, 2014, the Plan was funded by premium tax revenues from the State of Florida in excess of the amounts used to satisfy funding requirements of the defined benefit plan of the firefighters. Effective March 11, 2014, the Share Plan was closed, and as such, all premium tax revenues received pursuant to Chapter 175 are transferred into the PERS to reduce the Village’s contribution. The Plan is administered by ICMA Retirement Corporation. Benefits are paid to vested participants in a single lump sum or in equal installments. The investment balance of the Share Plan at September 30, 2015 is $1,034,605, which is accounted for in the pension trust fund. DROP PLAN In fiscal year 2009, the Village created a deferred retirement option plan (DROP) for the benefit of the firefighters that have reached their normal retirement date. Election in the DROP is voluntary. The maximum period of participation is five years. The DROP is funded by the participants’ retirement benefit that would be received if the participant had retired on the election date plus earnings thereon. Retirement benefits from the DROP can be paid in a single lump sum payment; equal monthly installments or an annuity. The Plan is administered by ICMA Retirement Corporation. As of September 30, 2015 there were ten (10) participants in the Plan. The balance in the Plan at September 30, 2015 is $708,987, which is accounted for in the pension trust fund. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 55 NOTE 12 –NET PENSION LIABILITY OF THE VILLAGE As of September 30, 2015, the Village reported a net pension liability (NPL) of $1,413,316, which was measured as of September 30, 2014 (measurement date). In accordance with GASB No. 67, information related to the PERS as of September 30, 2015 has been disclosed. 2015 2014 Total pension liability 33,239,492$ 30,488,444$ Plan fiduciary net position (29,642,944) (29,075,128) Net pension liability 3,596,548$ 1,413,316$ Plan fiduciary net position as a percentage of total pension liability 89.18% 95.36% SIGNIFICANT ACTUARIAL ASSUMPTIONS The total pension liability of the Village was determined using the following actuarial assumptions: Measurement Date: September 30, 2015 September 30, 2014 Actuarial Valuation: October 1, 2014 October 1, 2014 Interest rates: Single discount rate 7.85% 7.90% Inflation rate 3.50% 3.50% Salary Increases 3.5% to 9.25% depending on age, including inflation 3.5% to 9.25% depending on completed years of credited service Mortality table 30% RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvement projected to all future years after 2000 using Scale BB; 70% 1983 Group Annuity Mortality Table for males and females. 20% RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvement projected to all future years after 2000 using Scale BB; 80% 1983 Group Annuity Mortality Table for males and females. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 56 NOTE 12 –NET PENSION LIABILITY OF THE VILLAGE (CONTINUED) LONG-TERM EXPECTED RATE OF RETURN The long-term expected rate of return on pension plan investments was determined based upon the historical average (means returns) which best-estimate ranges of expected future real rates of return. In order to determine the real rates of return, it is necessary to subtract the expected inflation rate from the nominal investment return and investment expenses. The long-term expected rate of return for the Plan was calculated by weighting the expected future rates of return of each asset class by the corresponding target allocation percentages. Best estimates of real rates of return for each major asset class included in the Plan’s target asset allocation as of September 30, 2015 and 2014 are summarized in the following table: Asset Class 2015 2014 Domestic equity 8.10% 9.30% International equity 2.70% 3.00% Fixed income 4.40% 4.90% Real estate 5.80% 6.90% Cash 1.10% 1.30% RATE OF RETURN For the years ended September 30, 2015 and 2014, the annual money-weighted rate of return on Plan investments, net of investment expense, was 0.1% and 10.70%, respectively. The money-weighted rate of return expresses investment performance, net of investment manager and consultant expenses adjusted for the changing amounts actually invested. Inputs to the internal rate of return calculation are determined on a monthly basis. DISCOUNT RATE For the years ended September 30, 2015 and 2014, a single discount rate of 7.85% and 7.90%, respectively were used to measure the total pension liability. This single discount rate was based on the expected rate of return on Plan investments. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on Plan investments was applied to all periods of projected benefit payments to determine the total pension liability. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 57 NOTE 12 –NET PENSION LIABILITY OF THE VILLAGE (CONTINUED) SENSITIVITY OF THE NET PENSION LIABILITY TO CHANGES IN THE DISCOUNT RATE Below is a table providing the sensitivity of the net pension liability (asset) to changes in the discount rate. In particular, the table presents the Village’s net pension liability, if it were calculated using a single discount rate that is 1-percentage-point lower or 1- percentage-point higher than the single discount rate: Current Single As of 1% Discount Rate 1% September 30, Decrease Assumption Increase 6.85% 7.85% 8.85% 2015 7,101,786$ 3,596,548$ 628,451$ 6.90% 7.90% 8.90% 2014 4,714,453$ 1,413,316$ (1,389,137)$ PENSION EXPENSE AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS For the fiscal year ended September 30, 2015, based on a September 30, 2014 measurement date, the Village recognized pension expense of approximately $3.9 million related to the Plan. In addition, the Village reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows Description of Resources of Resources Village contribution subsequent to year end $ 839,434 $ -- Differences between expected and actual experience 279,547 -- Change of assumptions -- 78,693 Net difference between projected and actual earnings on pension plan investments -- 476,994 Total $1,118,981 $555,687 VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 58 NOTE 12 –NET PENSION LIABILITY OF THE VILLAGE (CONTINUED) PENSION EXPENSE AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (CONTINUED) The deferred outflow of resources, resulting from the Village’s contributions to the Plan subsequent to the measurement date of September 30, 2014 in the amount of $839,434 will be recognized as a reduction of the Village’s net pension liability in the fiscal year ended September 30, 2016. Beginning in fiscal year 2015, the remaining amounts related to differences between projected and actual earnings on pension plan investments are recognized over 5 years and the amounts related to changes in assumptions and differences between expected and actual experience are recognized over 5.4 years (average remaining service lives of all employees) as follows: Fiscal Year Ending September 30 Amount 2016 (73,599)$ 2017 (73,599) 2018 (73,599) 2019 (73,599) 2020 18,256 (276,140)$ NOTE 13 – OTHER POST-EMPLOYMENT BENEFITS PLAN DESCRIPTION The Village provides an optional single employer defined benefit post-employment healthcare plan to eligible individuals. The plan allows its employees and their beneficiaries, at their own cost, to continue to obtain health, dental and other insurance benefits upon retirement. The benefits of the plan conform to Florida Statutes, which are the legal authority for the plan. The plan has no assets and does not issue a separate financial report. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 59 NOTE 13 – OTHER POST-EMPLOYMENT BENEFITS (CONTINUED) FUNDING POLICY AND ANNUAL OPEB COST The Village does not directly make a contribution to the plan on behalf of retirees. Retirees and their beneficiaries pay the same group rates as are charged to the Village for active employees by its healthcare provider. However, the Village’s actuaries, in their actuarial valuation, calculate an offset to the cost of these benefits as an Employer Contribution, based upon an implicit rate subsidy. This offset equals the total age-adjusted costs paid by the Village or its active employees for coverage of the retirees and their dependents for the year net of the retiree’s own payments for the year. The annual other post-employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer, an amount actuarially determined in accordance with GASB pronouncements. The annual required contribution represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The annual OPEB cost for the Village for the current year and the related information is as follows: Required Contribution Rates Employer Pay-as-you-go Plan members N/A Normal Cost 171,741$ Interest on Normal Cost -- Amortization of Unfunded Actuarial Accrued Liability 38,583 Annual Required Contribution 210,324 Interest of Net OPEB Obligation 25,445 Adjustment to ARC (29,080) Annual OPEB Cost 206,689 Contributions Made (23,055) Increase in Net OPEB Obligation 183,634 Net OPEB Obligation, Beginning of Year 726,997 Net OPEB Obligation, End of Year 910,631$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 60 NOTE 13 – OTHER POST-EMPLOYMENT BENEFITS (CONTINUED) THREE-YEAR TREND INFORMATION The annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation is as follows: Fiscal Year Ended 9/30/2015 9/30/2014 9/30/2013 Annual OPEB Cost 206,689$ 193,851$ 181,872$ Percentage of OPEB Cost Contributed 11% 8% 2% Net OPEB Obligation 910,631 726,997 547,723 FUNDED STATUS AND FUNDING PROGRESS The funded status of the plan as of October 1, 2012, the date of the latest actuarial valuation is as follows: Actuarial UAAL Actuarial Accrued Unfunded as a % of Value of Liability AAL Funded Covered Covered Assets (AAL) - (UAAL) Ratio Payroll Payroll (a) (b) (b) - (a)(a) / (b) (c)(b - a) / c --$ 591,969$ 591,969$ 0.0% 8,172,962$ 7.24% The actuarial valuation for the calculation of OPEB involves estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The required schedule of funding progress presented as required supplementary information is designed to provide multi-year trend information to show whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. However, the Village has not contributed assets to the plan at this time. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 61 NOTE 13 – OTHER POST-EMPLOYMENT BENEFITS (CONTINUED) ACTUARIAL METHODS AND ASSUMPTIONS Projections of benefits are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the Village and the plan members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows: Valuation date October 1, 2012 Actuarial cost method Entry Age, Normal Cost Method Amortization method Level % of Payroll, Closed (remaining amortization 27 years) Actuarial assumptions: Investment rate of return* 3.50% compounded annually Projected salary increases* 6.00% - 9.40% Payroll growth assumptions 3.5 % *Includes inflation at 3% per year Healthcare cost trend rate(s): Insurance Premiums Select Rates 30.00% for 2013 and 7.50% to 8.00% for years thereafter Ultimate rate 5.41%** ** Includes an additional 0.41% trend representing our estimate of the ultimate effect of the Federal Excise Tax. NOTE 14 – RISK MANAGEMENT The Village is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions and natural disasters for which the Village carries commercial insurance. There was no reduction in insurance coverage from coverages in the prior year and there were no settlements that exceeded insurance coverage for each of the past three years. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 62 NOTE 15 – COMMITMENTS AND CONTINGENCIES LITIGATION The Village is involved in several lawsuits incidental to its operations, the outcome of which, in the opinion of management and legal counsel, would not have a material adverse effect on the financial condition of the Village. GRANTS CONTINGENCY Federal and State programs in which the Village participates are subject to audit by grantor agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. In the opinion of management, future disallowances of grant expenditures, if any, would not have a material adverse effect on the financial condition of the Village. NOTE 16 – PRIOR PERIOD ADJUSTMENT Due to the implementation of GASB Statements No. 68 and 71, the Village recorded a prior period adjustment in the governmental activities in the government-wide financial statements to eliminate the net pension asset, to record the net pension liability and deferred outflows of resources as of September 30, 2014. REQUIRED SUPPLEMENTARY INFORMATION Adjusted Variance Actual Amounts with Final Amounts Prior Year on a Budget - on a GAAP Reserves/ Budgetary Positive Original Final Basis Adjustments Basis (Negative) Revenues Property taxes 19,088,323$ 19,088,323$ 19,353,288$ --$ 19,353,288$ 264,965$ Utility taxes/communications services tax 2,882,617 2,882,617 2,841,898 -- 2,841,898 (40,719) Franchise fees 575,000 575,000 595,196 -- 595,196 20,196 Licenses and permits 2,123,282 2,123,282 3,076,414 -- 3,076,414 953,132 Intergovernmental 1,240,392 1,240,392 1,686,870 (26,561) 1,660,309 419,917 Charges for services 2,939,850 2,939,850 3,142,219 -- 3,142,219 202,369 Interest 15,000 15,000 42,803 -- 42,803 27,803 Grants -- -- 85,315 -- 85,315 85,315 Miscellaneous income 52,000 52,000 7,139,196 -- 7,139,196 7,087,196 Total Revenues 28,916,464 28,916,464 37,963,199 (26,561) 37,936,638 9,020,174 Expenditures Current: General government: Elected officials 233,601 233,601 195,993 -- 195,993 37,608 Village Clerk 380,228 380,228 354,000 -- 354,000 26,228 Administration 1,374,588 1,374,588 1,457,448 (82,860) 1,374,588 -- Village Attorney 535,000 535,000 832,297 (297,297) 535,000 -- Total general government 2,523,417 2,523,417 2,839,738 (380,157) 2,459,581 63,836 Public safety: Police 6,291,656 6,291,656 6,318,217 (26,561) 6,291,656 -- Fire 7,101,172 7,101,172 6,760,748 -- 6,760,748 340,424 Total public safety 13,392,828 13,392,828 13,078,965 (26,561) 13,052,404 340,424 Public works 1,760,594 1,760,594 1,757,564 -- 1,757,564 3,030 Building, zoning and planning 1,934,221 1,934,221 1,985,059 (50,838) 1,934,221 -- Parks and recreation: Parks 1,154,658 1,154,658 4,285,666 (250,000) 4,035,666 (2,881,008) Community center 2,264,983 2,264,983 -- -- -- 2,264,983 Athletic division 683,595 683,595 -- -- -- 683,595 Total parks and recreation 4,103,236 4,103,236 4,285,666 (250,000) 4,035,666 67,570 Debt service: Principal 2,547,318 2,547,318 2,337,942 -- 2,337,942 209,376 Interest and fiscal charges 799,221 799,221 826,502 (27,281) 799,221 -- Total Expenditures 27,060,835 27,060,835 27,111,436 (734,837) 26,376,599 684,236 Excess (Deficiency) of Revenues over Expenditures 1,855,629 1,855,629 10,851,763 (708,276) 11,560,039 9,704,410 Other Financing Sources (Uses) Appropriation of prior years': Reserves - working capital -- -- -- 627,750 -- -- Reserves - building division -- -- -- 17,953 -- -- Reserves - comp. absences -- -- -- 62,573 -- -- Transfers in -- -- -- -- -- -- Transfers out (2,171,373) (2,171,373) (2,199,507) -- (2,199,507) (28,134) Total Other Financing Sources (Uses)(2,171,373) (2,171,373) (2,199,507) 708,276 (2,199,507) 28,134 Net Change in Fund Balances (315,744)$ (315,744)$ 8,652,256$ --$ 9,360,532$ (9,676,276)$ Budgeted Amounts VILLAGE OF KEY BISCAYNE, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 REQUIRED SUPPLEMENTARY INFORMATION See note to budgetary comparison schedule. 63 VILLAGE OF KEY BISCAYNE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO BUDGETARY COMPARISON SCHEDULE FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 64 NOTE 1 – BUDGETS AND BUDGETARY ACCOUNTING An annual appropriated budget is prepared for the General Fund. The Village prepares a budget for its capital projects fund; however, this budget is prepared as a project budget and not as annually appropriated budget. The Village follows these procedures in establishing the budgetary data reflected in the financial statements: (a) The Village Manager submits to Council a proposed operating budget for the ensuing fiscal year. The operating budget includes appropriations and the means of financing them with an explanation regarding each expenditure that is not of a routine nature. Public hearings are conducted to obtain taxpayer comments. (b) Prior to October 1, the budget is legally enacted through passage of an ordinance. (c) The Village Council, by motion, may make supplemental appropriations for the year up to the amount of revenues in excess of those estimated. During fiscal year ended September 30, 2015, there were no supplemental appropriations. (d) Formal budgetary integration is employed as a management control device for the General Fund. (e) The budget for the general fund is adopted on a basis consistent with generally accepted accounting principles (GAAP), except for certain unbudgeted expenditures of prior year reserves. (f) The Village Manager is authorized to transfer part or all of an encumbered appropriation balance within departments within a fund; however, any revisions that alter the total appropriations of any department or fund must be approved by the Village Council. The classification detail at which expenditures may not legally exceed appropriations is at the department level. (g) There were no budget amendments during fiscal year ended September 30, 2015. NOTE 2 – RECONCILIATION OF GAAP BASIS TO BUDGETARY BASIS Revenue Reported on a GAAP Basis 37,963,199$ Defined Benefit Pension plan contributions provided by the State of Florida, not budgeted by the Village (26,561) Revenues on a Budgetary Basis 37,936,638$ Expenditures Reported on a GAAP Basis 27,111,436$ Defined Benefit Pension plan contributions provided by the State of Florida, not budgeted by the Village (26,561) Adjustments for prior year reserves - Community Center (250,000) Payment for compensated absences (458,276) Expenditures on a Budgetary Basis 26,376,599$ Actuarial UAAL Actuarial Accrued Unfunded As % of Actual Value of Liability AAL Funded Covered Covered Valuation Assets (AAL) - (UAAL) Ration Payroll Payroll Date (a) (b) (b) - (a)(a) / (b) (c)(b - a) / c 10/1/2008* --$ 352,120$ 352,120$ 0.0% 7,612,399$ 4.63% 10/1/2012 -- 591,969 591,969 0.0% 8,172,962 7.24% VILLAGE OF KEY BISCAYNE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFITS SCHEDULE OF FUNDING PROGRESS *GASB Statement No. 45 was implemented for the fiscal year ended September 30, 2010. The October 1, 2008 actuarial valuation was the first valuation prepared for the OPEB Plan as it covered fiscal years ended September 30, 2010 and 2011. 65 September 30, September 30, 2015 2014 Total Pension Liability Service cost 905,151$ 1,325,960$ Interest 2,423,657 2,505,808 Benefit changes -- (4,253,914) Difference between actual and expected experience 413,544 343,081 Assumption changes 351,602 (96,578) Benefit payments (653,498) (447,084) Refunds (8,759) (99,486) Other (release of excess state reserves) (297,383) -- Net Change in Total Pension Liability 3,134,314 (722,213) Total Pension Liability - Beginning 30,105,178 31,210,657 Total Pension Liability - Ending (a)*33,239,492$ 30,488,444$ Plan Fiduciary Net Position Contributions - employer (from Village) 383,181$ 844,637$ Contributions - employer (from State) 456,253 475,709 Contributions - employee (including buyback contributions) 579,425 639,478 Net investment income (103,179) 2,632,785 Benefit payments (653,498) (447,084) Refunds (8,759) (99,486) Administrative expense (85,607) (86,629) Net Change in Plan Fiduciary Net Position 567,816 3,959,410 Plan Fiduciary Net Position - Beginning 29,075,128 25,115,718 Plan Fiduciary Net Position - Ending (b)29,642,944$ 29,075,128$ Net Pension Liability - Ending (a) - (b)3,596,548$ 1,413,316$ Plan Fiduciary Net Position as a Percentage of Total Pension Liability 89.18% 95.36% Covered Employee Payroll 7,830,225$ 7,905,232$ Net Pension Liability as a Percentage of Covered Employee Payroll 45.93% 17.88% SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY AND RELATED RATIOS *The total pension liability for fiscal year ending September 30, 2014 was revised as compared to the prior year financial, in order to incorporate the Plan's latest census data. This schedule is presented as required by accounting principles generally accepted in the United States of America, however, until a full 10-year trend is compiled, information is presented for those years available. VILLAGE OF KEY BISCAYNE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION PENSION TRUST FUND 66 Actual Contribution Actuarially Contribution as a % of Year Ending Determined Actual Deficiency Covered Covered September 30, Contribution Contribution (Excess) Payroll Payroll 2014 1,106,628$ 1,320,346$ (213,718)$ 7,905,232$ 16.70% 2015 934,532 839,434 95,098 * 7,830,225 10.72% Methods and Assumptions Used to Determine Contribution Rate for the year ending September 30, 2015: Valuation Date Notes Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Inflation Salary Increases Investment Rate of Return Retirement Age Mortality 5-year smoothed market This schedule is presented as required by accounting principles generally accepted in the United States of America, however, until a full 10-year trend is compiled, information is presented for those years available. 3.50% 3.50% to 9.25% depending on service 7.90% Experience-based table of rates that are specific to the type of eligibility condition 20% RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvement projected to all future years after 2000 using Scale BB; 80% Group Annuity Mortality Table for males and females. * The contribution deficiency for the fiscal year ending September 30, 2015 was made up by the release of excess state contribution reserve funds during the year. Actuarially determined contributions are calculated as of October 1, which is 24 months prior to the end of the year in which contributions are reported. Entry Age Normal Level Dollar, Closed October 1, 2013 VILLAGE OF KEY BISCAYNE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION PENSION TRUST FUND SCHEDULE OF VILLAGE CONTRIBUTIONS 15 years 67 September 30, September 30, 2015 2014 Annual Money-Weighted Rate of Return, Net of Investment Expense 0.10% 10.70% VILLAGE OF KEY BISCAYNE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION PENSION TRUST FUND SCHEDULE OF INVESTMENT RETURNS This schedule is presented as required by accounting principles generally accepted in the United States of America, however, until a full 10-year trend is compiled, information is presented for those years available. 68 STATISTICAL SECTION Contents Page Financial Trends These schedules contain trend information to help the reader understand how the Village's financial performance and well-being have changed over time. These schedules include: 69-73 Revenue Capacity These schedules contain information to help the reader assess the Village's most significant local revenue source, the property tax. 74-78 Debt Capacity These schedules present information to help the reader assess the affordability of the Village's current levels of outstanding debt and the Village's ability to issue additional debt in the future. 79-82 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Village's financial activities take place. 83-85 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Village's financial report relates to the services the Village provides and the activities it performs. 86-87 STATISTICAL SECTION This part of the Village of Key Biscayne's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Village's overall financial health. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Governmental activities Net investment in capital assets 28,676,266$ 31,422,358$ 36,139,953$ 38,482,243$ 41,377,118$ 43,428,433$ 44,373,229$ 43,714,666$ 51,426,773$ 54,854,783 Restricted 359,899 261,813 284,639 308,813 -- 1,170,247 500,137 3,138,445 3,455,654 2,405,158 Unrestricted 4,926,634 8,453,390 10,924,001 15,055,000 16,540,883 16,491,371 19,598,291 16,968,354 6,195,833 14,490,922 Total governmental activities net position 33,962,799 40,137,561 47,348,593 53,846,056 57,918,001 61,090,051 64,471,657 63,821,465 61,078,260 71,750,863 Business-type activities Net investment in capital assets 2,326,089 2,505,881 10,174,333 15,383,765 16,680,711 16,970,470 16,462,270 15,884,955 13,788,293 12,995,027 Restricted -- -- -- -- -- -- -- -- -- Unrestricted 778,320 432,133 (2,209,685) (346,721) 1,116,111 1,133,034 706,195 439,166 1,477,416 719,861 Total business-type activities net position 3,104,409 2,938,014 7,964,648 15,037,044 17,796,822 18,103,504 17,168,465 16,324,121 15,265,709 13,714,888 Total government Net investment in capital assets 31,002,355 33,928,239 46,314,286 53,866,008 58,057,829 60,398,903 60,835,499 59,599,621 65,215,066 67,849,810 Restricted 359,899 261,813 284,639 308,813 -- 1,170,247 500,137 3,138,445 3,455,654 2,405,158 Unrestricted 5,704,954 8,885,523 8,714,316 14,708,279 17,656,994 17,624,405 20,304,486 17,407,520 7,673,249 15,210,783 Total Government Net Position 37,067,208$ 43,075,575$ 55,313,241$ 68,883,100$ 75,714,823$ 79,193,555$ 81,640,122$ 80,145,586$ 76,343,969$ 85,465,751$ VILLAGE OF KEY BISCAYNE, FLORIDA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 69 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Expenses Governmental activities: General government 4,252,037$ 3,781,396$ 3,213,273$ 2,868,728$ 2,751,697$ 2,830,412$ 3,379,954$ 9,344,606$ 8,526,705$ 4,100,859 Police 4,275,617 4,651,660 5,272,383 5,258,243 5,360,548 6,853,329 5,818,890 6,065,025 6,362,729 4,103,543 Fire 4,947,149 5,257,789 6,399,665 6,523,753 6,762,228 5,685,278 7,299,320 7,024,661 7,823,159 5,345,543 Building, zoning and planning 1,547,042 1,447,968 1,529,272 1,540,507 1,611,119 1,714,303 1,808,574 2,306,446 2,153,954 2,075,416 Public works 4,004,651 1,589,444 2,046,776 1,914,119 1,614,443 1,719,526 1,736,803 2,221,905 1,798,163 1,823,897 Parks and recreation 2,849,434 3,077,624 3,633,233 4,090,555 4,134,830 4,232,147 4,201,578 4,175,408 4,623,868 4,850,623 Interest on long-term debt 1,413,272 1,505,253 1,436,481 1,447,387 1,366,437 1,217,874 843,965 935,242 962,167 816,313 Total governmental activities 23,289,202 21,311,134 23,531,083 23,643,292 23,601,302 24,252,869 25,089,084 32,073,293 32,250,745 23,116,194 Business-type activities: Stormwater system 720,158 693,135 911,500 779,856 603,262 815,402 689,287 715,836 1,109,510 1,783,865 Solid waste collection 501,417 571,246 619,823 618,155 585,927 546,534 563,995 574,686 583,083 582,943 Sanitary sewer 9,993 9,454 9,046 144,922 39,178 197,474 1,234,279 1,133,209 1,126,907 1,120,166 Total business-type activities 1,231,568 1,273,835 1,540,369 1,542,933 1,228,367 1,559,410 2,487,561 2,423,731 2,819,500 3,486,974 Total government expenses 24,520,770$ 22,584,969$ 25,071,452$ 25,186,225$ 24,829,669$ 25,812,279$ 27,576,645$ 34,497,024$ 35,070,245$ 26,603,168$ Program revenues Governmental activities: Charges for services: General government 1,466,186$ 1,389,163$ 1,320,004$ 237,315$ 181,992$ 169,307$ 177,574$ 140,587$ 160,800$ 157,868 Police 40,719 21,385 14,203 38,181 (1,479) 1,763 375 1,455 4,700 20,011 Fire 50,392 40,144 146,588 136,433 158,975 190,989 145,544 188,169 210,678 193,442 Parks and recreation 1,512,923 1,416,707 1,620,787 1,957,747 2,107,397 2,287,983 2,614,034 2,622,554 2,805,925 2,710,396 Building, zoning and planning 167,802 193,391 133,104 1,173,440 1,247,715 2,184,127 2,347,092 2,744,711 2,256,151 3,136,916 Operating grants and contributions 3,559,753 799,493 251,180 157,912 163,752 77,638 6,629 426,917 97,970 85,315 Capital grants and contributions -- -- -- 1,709,481 959,360 730,492 783,886 803,620 826,282 7,854,679 Total governmental activities program revenues 6,797,775 3,860,283 3,485,866 5,410,509 4,817,712 5,642,299 6,075,134 6,928,013 6,362,506 14,158,627 Business-type activities: Charges for services: Stormwater system 517,365 509,571 499,101 491,314 484,932 979,865 935,352 958,114 907,324 939,798 Solid waste collection 531,967 520,650 530,803 635,580 615,480 597,431 588,449 592,480 591,079 600,688 Capital grants and contributions: Stormwater system -- -- -- 331,319 172,164 -- -- -- -- 47,872 Sanitary sewer -- -- 5,460,763 6,971,311 2,501,287 258,500 -- -- -- -- Total business-type activities program revenues 1,049,332 1,030,221 6,490,667 8,429,524 3,773,863 1,835,796 1,523,801 1,550,594 1,498,403 1,588,358 Total program revenues 7,847,107$ 4,890,504$ 9,976,533$ 13,840,033$ 8,591,575$ 7,478,095$ 7,598,935$ 8,478,607$ 7,860,909$ 15,746,985$ (Continued) VILLAGE OF KEY BISCAYNE, FLORIDA LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) CHANGES IN NET POSITION 70 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Net (expense) revenue Governmental activities (16,491,427)$ (17,450,851)$ (20,045,217)$ (18,232,783)$ (18,783,590)$ (18,610,570)$ (19,013,950)$ (25,145,280)$ (25,888,239)$ (8,957,567)$ Business-type activities (182,236) (243,614) 4,950,298 6,886,591 2,545,496 276,386 (963,760) (873,137) (1,321,097) (1,898,616) Total net expense (16,673,663)$ (17,694,465)$ (15,094,919)$ (11,346,192)$ (16,238,094)$ (18,334,184)$ (19,977,710)$ (26,018,417)$ (27,209,336)$ (10,856,183)$ General revenues Governmental activities: Taxes: Property taxes 14,830,238$ 18,667,979$ 20,051,239$ 19,769,976$ 17,832,874$ 16,646,040$ 16,985,109$ 17,499,835$ 17,857,711$ 19,353,288 Utility taxes 1,549,601 1,467,392 1,534,379 1,555,748 1,655,032 1,705,238 1,727,651 1,789,909 1,967,061 1,979,733 Franchise fees 1,088,929 1,113,194 1,064,666 992,997 1,006,415 735,519 846,252 780,245 574,639 595,196 Communications services tax 797,054 763,801 1,226,423 1,091,734 1,029,087 964,324 946,399 1,010,931 917,449 862,165 Intergovernmental 996,092 1,000,265 2,265,243 1,348,324 1,391,242 1,575,314 1,667,597 1,772,208 1,902,177 1,901,774 Investment earnings 306,339 641,115 346,531 44,737 21,346 37,254 37,985 16,722 34,991 47,004 Miscellaneous -- -- -- 91,232 131,847 147,065 212,697 1,627,479 148,140 139,196 Transfers (28,133) (28,133) (28,134) (164,502) (212,308) (28,134) (28,134) (28,134) (257,134) (343,884) Total governmental activities 19,540,120 23,625,613 26,460,347 24,730,246 22,855,535 21,782,620 22,395,556 24,469,195 23,145,034 24,534,472 Business-type activities: Investment earnings 45,527 49,086 48,202 21,303 1,974 2,162 587 659 5,551 3,911 Transfers 28,133 28,133 28,134 164,502 212,308 28,134 28,134 28,134 257,134 343,884 Total business-type activities 73,660 77,219 76,336 185,805 214,282 30,296 28,721 28,793 262,685 347,795 Total general revenues 19,613,780$ 23,702,832$ 26,536,683$ 24,916,051$ 23,069,817$ 21,812,916$ 22,424,277$ 24,497,988$ 23,407,719$ 24,882,267$ Change in Net Position Governmental activities 3,048,693$ 6,174,762$ 6,415,130$ 6,497,463$ 4,071,945$ 3,172,050$ 3,381,606$ (676,085)$ (2,743,205)$ 15,576,905$ Business-type activities (108,576) (166,395) 5,026,634 7,072,396 2,759,778 306,682 (935,039) (844,344) (1,058,412) (1,550,821) Total change in Net Position 2,940,117$ 6,008,367$ 11,441,764$ 13,569,859$ 6,831,723$ 3,478,732$ 2,446,567$ (1,520,429)$ (3,801,617)$ 14,026,084$ CHANGES IN NET POSITION (Continued) LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) VILLAGE OF KEY BISCAYNE, FLORIDA 71 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General fund Non-spendable --$ --$ --$ --$ --$ 305,730$ 303,918$ 272,330$ 353,823$ 268,176$ Restricted -- -- -- -- -- 1,170,247 1,054,070 1,466,704 1,574,817 1,875,857 Committed -- -- -- -- -- 12,039,224 4,858,269 5,065,439 5,214,654 13,538,053 Assigned -- -- -- -- -- 4,028,870 8,178,544 10,852,640 11,756,540 11,870,006 Reserved 6,874,310 9,875,416 11,298,178 12,318,533 15,286,689 -- -- -- -- -- Unreserved -- -- -- -- -- -- -- -- -- -- Total General Fund 6,874,310 9,875,416 11,298,178 12,318,533 15,286,689 17,544,071 14,394,801 17,657,113 18,899,834 27,552,092 All other governmental funds Committed -- -- -- -- -- 3,665,259 6,060,286 4,240,104 4,371,204 3,188,871 Unassigned -- -- -- -- -- (1,077,816) (690,343) (278,254) (314,462) Restricted -- -- -- -- -- -- 573,701 1,671,741 470,334 529,301 Assigned 59,404 Unreserved, reported in: Special revenue fund (1,496,749) (2,482,196) (2,701,623) (1,501,382) (1,299,432) -- -- -- -- -- Capital projects funds 1,421,014 2,954,753 4,783,222 6,875,361 5,195,557 -- -- -- -- -- Total Other Governmental Funds (75,735) 472,557 2,081,599 5,373,979 3,896,125 2,587,443 5,943,644 5,633,591 4,527,076 3,777,576 Total Governmental Funds 6,798,575$ 10,347,973$ 13,379,777$ 17,692,512$ 19,182,814$ 20,131,514$ 20,338,445$ 23,290,704$ 23,426,911$ 31,329,668$ VILLAGE OF KEY BISCAYNE, FLORIDA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Note: The Village implemented GASB Statement No. 54 for the fiscal year ended September 30, 2011. 72 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenues Ad valorem taxes 14,830,238$ 18,667,979$ 20,051,239$ 19,769,976$ 17,832,874$ 16,646,040$ 16,985,109$ 17,499,835$ 17,857,711$ 19,353,288 Franchise fees 1,885,983 1,113,194 1,064,666 992,997 1,006,415 735,519 846,252 780,245 574,639 595,196 Utility taxes/communication services tax 1,549,601 2,231,193 1,534,379 2,834,749 2,731,766 2,717,209 2,709,498 2,800,840 2,884,510 2,841,898 Licenses and permits 1,196,853 1,298,133 1,240,290 1,188,297 1,329,823 1,948,820 2,383,500 2,542,103 2,090,916 3,076,414 Intergovernmental revenue 1,756,083 1,593,718 3,189,251 3,047,844 2,089,015 2,305,806 2,451,483 2,575,828 2,728,459 2,756,453 Charges for services 2,041,169 1,762,657 1,994,396 2,354,819 2,364,777 2,885,349 2,901,119 3,155,373 3,347,338 3,142,219 Grants 2,799,762 206,040 251,180 167,873 425,339 77,638 6,629 426,917 97,970 85,315 Investment income 306,339 632,355 338,528 44,737 21,346 37,254 37,985 16,722 34,991 47,004 Contributions -- -- -- -- -- -- -- -- -- 7,000,000 Miscellaneous -- 8,762 8,003 26,232 131,848 147,065 212,697 1,627,479 148,140 139,196 Total revenues 26,366,028 27,514,031 29,671,932 30,427,524 27,933,203 27,500,700 28,534,272 31,425,342 29,764,674 39,036,983 Expenditures Current: General government 2,239,052 2,543,134 2,329,647 2,266,763 1,934,341 1,929,153 2,066,501 2,255,188 2,468,672 2,884,740 Fire 5,117,176 5,122,699 5,744,775 6,407,770 6,584,784 6,557,442 7,056,020 7,014,382 7,574,576 6,726,873 Police 4,388,362 4,590,962 4,863,765 5,116,158 5,093,601 5,312,977 5,453,853 5,750,069 6,018,581 6,077,940 Public works 4,002,609 1,587,460 1,720,689 1,914,119 1,608,193 1,711,868 1,727,203 1,826,782 1,732,554 1,752,803 Building, planning and zoning 1,544,696 1,455,193 1,513,019 1,540,507 1,602,651 1,702,541 1,777,349 1,842,175 2,064,687 1,982,159 Parks and recreation 2,634,887 2,830,020 3,367,638 3,730,084 3,717,935 3,799,408 3,764,570 4,092,835 4,170,205 4,258,750 Capital outlay 6,432,271 6,830,844 4,743,796 1,537,930 2,349,935 1,963,219 3,793,179 2,294,068 1,769,634 3,334,821 Intergovernmental: Payment under interlocal agreement -- -- -- -- -- -- -- -- 4,574,703 8,545 Debt service: Principal retirement 1,214,646 1,418,401 1,679,991 2,051,307 2,140,684 2,348,506 2,436,139 2,531,116 2,716,772 2,920,699 Interest and other fiscal charges 1,413,272 1,556,396 1,444,576 1,450,649 1,386,913 1,520,433 828,393 913,409 875,949 973,012 Total expenditures 28,986,971 27,935,109 27,407,896 26,015,287 26,419,037 26,845,547 28,903,207 28,520,024 33,966,333 30,920,342 Excess (deficiency) of revenues over expenditures (2,620,943) (421,078) 2,264,036 4,412,237 1,514,166 655,153 (368,935) 2,905,318 (4,201,659) 8,116,641 Other financing sources (uses) Transfers in 1,731,583 6,697,854 4,533,094 3,236,194 -- -- 5,816,222 -- 904,093 1,855,623 Transfers out (1,759,716) (6,725,988) (4,561,228) (3,400,696) (212,308) (28,134) (5,844,356) (28,134) (1,161,227) (2,199,507) Bonds issued 3,450,000 4,000,000 -- -- -- -- -- 5,575,075 4,575,000 -- Payment for interlocal agreement -- -- -- -- -- -- -- (5,500,000) -- -- Refunding bonds issued -- -- -- -- -- 18,693,952 -- -- -- -- Debt service - principal -- -- -- -- -- (18,693,952) -- -- -- -- Proceeds from sale of capital assets -- -- -- 65,000 -- -- -- -- -- -- Capital lease proceeds -- -- -- -- 188,444 321,681 604,000 -- 20,000 130,000 Total other financing sources (uses)3,421,867 3,971,866 (28,134) (99,502) (23,864) 293,547 575,866 46,941 4,337,866 (213,884) Net Change in Fund Balances 800,924$ 3,550,788$ 2,235,902$ 4,312,735$ 1,490,302$ 948,700$ 206,931$ 2,952,259$ 136,207$ 7,902,757$ Debt service as a percentage of non-capital expenditures 12% 14% 14% 14% 15% 16% 13% 13% 11% 14% VILLAGE OF KEY BISCAYNE, FLORIDA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 73 Fiscal Ad Valorem Franchise Utility Inter- Communications Year Taxes Taxes Taxes governmental Services Tax Total 2006 14,830,238$ 1,088,929$ 1,549,601$ 1,756,083$ 797,054$ 20,021,905$ 2007 18,667,979 1,113,194 1,467,392 1,593,718 763,801 23,606,084 2008 20,051,239 1,064,666 610,371 3,189,251 1,226,423 26,141,950 2009 19,769,976 992,997 1,555,748 3,047,844 1,091,734 26,458,299 2010 17,832,874 1,006,415 2,731,766 1,203,221 1,029,087 23,803,363 2011 16,646,040 735,519 1,705,238 1,358,573 1,011,971 21,457,341 2012 16,985,109 846,252 1,727,651 2,451,483 981,847 22,992,342 2013 17,499,835 780,245 1,789,909 2,575,828 1,010,931 23,656,748 2014 17,857,711 574,639 1,967,061 2,728,459 917,449 24,045,319 2015 19,353,288 595,196 1,979,733 2,756,453 862,165 25,546,835 VILLAGE OF KEY BISCAYNE, FLORIDA GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Source: Village of Key Biscayne Finance Department. 74 Total Fiscal Year Total Net Direct Ended Residential Commercial Personal Assessed Tax September 30, Property Property Property Value Rate 2006 4,115,175,292$ 130,346,736$ 45,993,012$ 4,287,674,948$ 3.606 2007 5,421,393,923 166,638,240 45,493,117 5,630,046,023 3.450 2008 6,173,257,097 294,540,559 43,847,470 6,514,112,802 3.200 2009 6,068,439,146 328,171,098 38,117,174 6,434,727,418 3.200 2010 5,593,947,239 302,747,017 39,521,761 5,936,216,017 3.200 2011 5,114,029,641 276,917,774 38,812,865 5,429,760,280 3.200 2012 5,458,639,449 281,666,505 41,574,020 5,522,872,647 3.200 2013 5,445,595,704 294,710,250 38,326,390 5,778,632,344 3.200 2014 5,800,745,002 313,747,054 37,410,973 6,151,903,029 3.000 2015 6,306,477,954 353,222,413 37,956,862 6,697,657,229 3.000 Source: Miami-Dade County Property Appraiser's Office. Note: Property in the Village is reassessed each year. Property is assessed at actual value, therefore, the assessed values are equal to actual value. Tax rates are per $1,000 of assessed value. Real Property VILLAGE OF KEY BISCAYNE, FLORIDA NET ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS 75 Florida South Total Debt Total Debt Total Inland Florida Direct and Fiscal Tax Roll General Debt Total Operating Service County Operating Service School Navigation Water Overlapping Year Year Operations Service Village Millage Millage Millage Millage Millage Millage District Management Other Rates 2006 2005 3.606 - 3.606 5.835 0.285 6.120 7.947 0.491 8.438 0.039 0.597 1.014 19.814 2007 2006 3.450 - 3.450 5.615 0.285 5.900 7.691 0.414 8.105 0.039 0.597 1.008 19.099 2008 2007 3.200 - 3.200 4.580 0.285 4.865 7.570 0.378 7.948 0.035 0.535 0.896 17.478 2009 2008 3.200 - 3.200 4.838 0.285 5.123 7.533 0.264 7.797 0.035 0.535 0.893 17.582 2010 2009 3.200 - 3.200 4.838 0.285 5.123 7.698 0.297 7.995 0.035 0.535 0.972 17.859 2011 2010 3.200 - 3.200 5.428 0.445 5.873 7.864 0.385 8.249 0.035 0.535 0.873 18.764 2012 2011 3.200 - 3.200 4.805 0.285 5.090 7.765 0.240 8.005 0.035 0.374 0.742 17.445 2013 2012 3.200 - 3.200 4.704 0.285 4.989 7.765 0.233 7.998 0.035 0.368 0.734 17.322 2014 2013 3.000 - 3.000 4.704 0.422 5.126 7.644 0.333 7.977 0.035 0.352 0.731 17.221 2015 2014 3.000 - 3.000 4.667 0.450 5.117 7.413 0.199 7.612 0.032 0.146 0.993 16.900 (1) Overlapping rates are those of local and county governments that apply to property owners within the Village of Key Biscayne. Not all overlapping rates apply to all Village of Key Biscayne property owners (i.e., the rates for special districts apply only to the proportion of the government's property owners whose property is located within the geographic boundaries of the special district). VILLAGE OF KEY BISCAYNE, FLORIDA PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Miami-Dade County Overlapping Rates (1)Village of Key Biscayne Miami-Dade Schools Note: All millage rates are based on $1 for every $1,000 of assessed value. Sources: Village of Key Biscayne Finance Department and Miami-Dade County Property Appraiser's Office. 76 Percent of Percent of Total Total Net Village Net Net Village Net Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Taxpayer Value Rank Value GB Hotel Partners LTD 64,500,000$ 1 0.96% Sonesta Beach Resort, LP 44,568,400$ 1 0.79% EDW A McCarthy-Archbishop 31,581,885 2 0.47% United Reat Estate Ventures 42,064,691 2 0.75% Red Dragon's Sands LTD 25,808,748 3 0.39% GB Hotel Partners LTD 34,700,000 3 0.62% Galleria of Key Biscayne Inc 23,205,985 4 0.35% 260 Cape Florida LLC 12,663,250 4 0.22% Edgardo Defortuna 19,361,292 5 0.29% Oceanclub Community Assoc 12,500,000 5 0.22% United Real Est Ventures Inc 18,624,111 6 0.28% Claudio & Yvonne Alvarez 9,202,584 6 0.16% Key Biscayne Presbyterian Church 14,913,044 7 0.22% Aurelio & Berta Fernandez 7,813,741 7 0.14% Vali Key LLC 14,300,000 8 0.21% Garflo Investments 7,361,525 8 0.13% Consultatio Key Biscayne LLC 14,300,000 9 0.21% Roger & Susana Khouri 6,979,000 9 0.12% 260 Cape Florida LLC 14,297,167 10 0.21% CSM Key Biscayne Equities L 6,438,569 10 0.11% 240,892,232$ 3.60%184,291,760$ 3.27% 2015 2006 VILLAGE OF KEY BISCAYNE, FLORIDA PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 77 Total Taxes Fiscal Year Levied for Collections in Ended Fiscal Percent Subsequent Percent September 30, Year Amount of Levy Year's Amount of Levy 2006 15,461,356 14,663,536 94.84% 166,702 14,830,238 95.92% 2007 19,423,659 18,358,012 94.51% 309,967 18,667,979 96.11% 2008 20,845,161 19,739,848 94.70% 311,391 20,051,239 96.19% 2009 20,591,128 19,389,610 94.16% 380,366 19,769,976 96.01% 2010 18,995,891 17,635,675 92.84% 197,199 17,832,874 93.88% 2011 17,375,233 16,305,810 93.85% 340,230 16,646,040 95.80% 2012 17,673,192 16,915,884 95.71% 69,225 16,985,109 96.11% 2013 18,491,624 17,418,348 94.20% 81,487 17,499,835 94.64% 2014 18,455,709 17,857,711 96.76% -- 17,857,711 96.76% 2015 20,092,972 19,353,288 96.32% -- 19,353,288 96.32% VILLAGE OF KEY BISCAYNE, FLORIDA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS the Fiscal Year Source: Village of Key Biscayne Finance Department and Miami-Dade County Tax Collector's Office. of the Levy to Date Total Collections Collected within 78 Fiscal Year General Percent of Debt Ended Obligation Revenue Loans Revenue Loans Household Per September 30, Bonds Bonds Payable Bonds Payable Total Income (1) Capita 2006 --$ 33,085,960$ --$ 5,785,000$ --$ 38,870,960$ 0.23% 3,664 2007 -- 31,695,102 -- 5,200,000 -- 36,895,102 0.25% 3,495 2008 -- 33,987,811 5,000,000 5,200,000 339,919 44,527,730 0.22% 4,232 2009 -- 32,040,160 -- 4,835,000 2,387,341 39,262,501 0.25% 3,730 2010 -- 29,950,678 -- 4,450,000 4,695,812 39,096,490 0.26% 3,166 2011 -- 27,757,222 -- 4,130,000 4,497,388 36,384,610 0.29% 2,946 2012 -- 25,543,132 -- 3,655,000 4,254,706 33,452,838 0.33% 2,662 2013 -- 28,759,034 -- 3,170,000 4,148,944 36,077,978 0.31% 2,900 2014 -- 30,897,605 -- 6,255,000 3,946,308 41,098,913 0.28% 3,307 2015 -- 28,101,157 -- 5,955,000 3,736,933 37,793,090 0.32% 2,939 Governmental Activities VILLAGE OF KEY BISCAYNE, FLORIDA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (1) household income amounts are disclosed on page 76 on the demographic schedule Business-Type Activities 79 VILLAGE OF KEY BISCAYNE, FLORIDA RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS The Village does not have general obligation debt. 80 Percentage Amount Net Applicable to Applicable to Debt the Village of the Village of Government Unit Outstanding Key Biscayne (1) Key Biscayne Direct: Village of Key Biscayne 28,101,157$ 100.00% 28,101,157$ Overlapping debt: Miami-Dade County 1,482,321,000 2.66% 39,470,086 Miami-Dade County School Board 175,096,000 1.18% 2,061,781 Subtotal, Overlapping Debt 41,531,867 Total Direct and Overlapping Debt 69,633,024$ (1) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values. Value that is within the Village's boundaries and dividing it by the County's and School Board's total taxable assessed value. This approach was also used for the other debt. 2015 VILLAGE OF KEY BISCAYNE, FLORIDA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Village. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the Village of Key Biscayne. This process recognizes that, when considering the Village's ability to issue and repay long- term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Sources: Data provided by the Miami-Dade County Finance Department and the Miami-Dade County School Board. 81 Fiscal Year Non- Ended Ad Valorem September 30, Revenues Principal Interest Coverage 2006 11,535,790$ 1,214,646$ 1,413,272$ 4.39 2007 8,846,052 1,418,401 1,556,396 2.97 2008 9,620,693 1,679,991 1,444,576 3.08 2009 10,657,548 2,051,307 1,450,649 3.04 2010 10,100,329 2,140,684 1,386,913 2.86 2011 10,854,660 2,348,506 1,520,433 2.81 2012 11,549,163 2,436,139 828,393 3.54 2013 11,906,963 2,531,116 913,409 3.46 2014 11,906,963 2,716,772 875,949 3.31 2015 19,683,695 2,920,699 973,012 5.06 VILLAGE OF KEY BISCAYNE, FLORIDA PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS Debt Service Source: Village of Key Biscayne Finance Department. 82 Median Per Capita Household Personal Unemployment Year Population (1) Income (1) Income (1) Rate (2) 2006 10,507 91,081$ 37,384$ 4.5% 2007 10,507 93,898 38,540 4.2% 2008 10,507 96,802 39,732 4.2% 2009 10,507 99,796 40,961 11.6% 2010 12,344 102,790 42,190 13.2% 2011 12,344 105,874 43,456 9.4% 2012 12,344 109,050 44,759 8.5% 2013 12,344 112,321 46,102 6.8% 2014 12,344 115,691 47,485 6.1% 2015 12,762 119,241 48,910 6.0% Sources: (1) City-data.com (2) United States Bureau of Labor Statistics VILLAGE OF KEY BISCAYNE, FLORIDA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS 83 Percentage of Percentage of Total Village Total Village Employer Employees (1) Rank Employment Employees Rank Employment Ritz Carlton Key Biscayne 1,500 1 not known 1,500 1 not known Winn Dixie Stores, Inc. 250 2 not known 250 3 not known Village of Key Biscayne 119 3 not known 100 4 not known All remaining employers are of an extremely small number Total 1,869 Source: Village of Key Biscayne Finance Department. 2003 information not available. Notes: (1) All amounts are estimated for timely inclusion in report. Requests for information received no response. VILLAGE OF KEY BISCAYNE, FLORIDA PRINCIPAL EMPLOYERS 2015 2006 CURRENT YEAR AND NINE YEARS AGO 84 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Number of Employees General government 6 6 6 8 7 7 7 7 7 9 Public safety 79 79 78 81 80 80 81 84 81 82 Building, planning and zoning 13 14 13 13 13 13 15 17 17 14 Public works 5 4 4 4 4 4 4 4 4 5 Parks and recreation 6 7 7 10 10 10 10 12 10 9 Total Number of Employees 109 110 108 116 114 114 117 124 119 119 Source: Village of Key Biscayne Finance Department budget. VILLAGE OF KEY BISCAYNE, FLORIDA FULL-TIME EQUIVALENT VILLAGE GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 85 Function/Program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Public safety: Police: Police personnel and officers 40 40 39 42 41 41 42 44 41 43 Police calls for service 13,006 35,412 36,190 37,002 34,935 37,646 31,214 26,836 24,556 30,475 Parking violations 801 996 776 824 523 563 638 676 440 506 Traffic violations 1,468 1,104 946 975 1,425 1,269 1,542 1,875 846 939 Fire: Fire personnel 39 39 39 39 39 39 39 40 40 39 Fire incidents 1,103 998 1,006 1,012 1,556 1,841 1,369 1,896 1,763 1,490 Fire inspections performed 269 220 305 229 267 469 323 469 739 667 Planning and development: Building permits issued 3,000 3,504 3,620 3,650 4,371 3,723 3,402 3,885 3,876 3,684 Business tax receipts issued 576 931 978 1,095 1,129 1,165 1,187 937 987 1,097 Culture and recreation: Number of building users 6,461 5,778 4,673 4,268 3,990 4,127 4,338 4,251 4,041 2,757 Solid waste: Residential accounts 1,200 1,200 1,299 1,298 1,302 1,292 1,264 1,254 1,250 1,302 Sources: Various Village Departments. LAST TEN FISCAL YEARS OPERATING INDICATORS BY FUNCTION/PROGRAM VILLAGE OF KEY BISCAYNE, FLORIDA 86 Function/Program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General government: Number of general government buildings 1 1 1 1 1 1 1 1 1 1 Public safety: Police: Police stations 1 1 1 1 1 1 1 1 1 1 Patrol units/divisions 3 3 3 3 3 3 3 3 3 3 Fire: Fire stations 1 1 1 1 1 1 1 1 1 1 Transportation: Miles of streets 22 22 22 22 22 22 22 22 22 22 Number of street lights 300 300 300 300 300 300 300 300 300 300 Number of traffic signals 4 4 4 4 4 4 4 4 4 4 Culture and recreation: Parks 3 3 3 3 3 3 3 3 3 3 Parks acreage 9 9 9 9 9 9 9 9 9 9 Community center 1 1 1 1 1 1 1 1 1 1 Swimming pools 1 1 1 1 1 1 1 1 1 1 Sources: Various Village Departments. VILLAGE OF KEY BISCAYNE, FLORIDA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 87 REPORTING SECTION Marcum LLP n One Southeast Third Avenue n Suite 1100 n Miami, Florida 33131 n Phone 305.995.9600 n Fax 305.995.9601 n www.marcumllp.com 88 INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Village of Key Biscayne, Florida (the Village), as of and for the fiscal year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the Village’s basic financial statements, and have issued our report thereon dated March 29, 2016. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Village's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Village’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Village’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Village’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 89 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Village's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the Village’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Village’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Miami, FL March 29, 2016 Marcum LLP n One Southeast Third Avenue n Suite 1100 n Miami, Florida 33131 n Phone 305.995.9600 n Fax 305.995.9601 n www.marcumllp.com 90 MANAGEMENT LETTER IN ACCORDANCE WITH THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida We have audited the financial statements of the Village of Key Biscayne, Florida (the Village), as of and for the fiscal year ended September 30, 2015, and have issued our report thereon dated March 29, 2016. Auditors’ Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter 10.550, Rules of the Auditor General. Other Reports We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Accountants’ Report on an examination conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated March 29, 2016, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations made in the preceding annual financial audit report. Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The Village of Key Biscayne, Florida was incorporated by the Laws of Florida Chapter 2889. There are no component units related to the Village. 91 Financial Condition Section 10.554(1)(i)5.a., Rules of the Auditor General, requires that we apply appropriate procedures and report the results of our determination as to whether or not the Village has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the Village did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management’s responsibility to monitor the Village’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. This assessment was done as of the fiscal year end. Annual Financial Report Section 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, requires that we apply appropriate procedures and report the results of our determination as to whether the annual financial report for the Village for the fiscal year ended September 30, 2015, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2015. In connection with our audit, we determined that these two reports were in agreement. Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal, State and other granting agencies, the Honorable Mayor, Village Council, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. Miami, FL March 29, 2016 Marcum LLP n One Southeast Third Avenue n Suite 1100 n Miami, Florida 33131 n Phone 305.995.9600 n Fax 305.995.9601 n www.marcumllp.com 92 INDEPENDENT ACCOUNTANTS’ REPORT ON COMPLIANCE PURSUANT TO SECTION 218.415 FLORIDA STATUTES Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida We have examined the Village of Key Biscayne, Florida’s (the Village) compliance with Section 218.415 Florida Statutes for the fiscal year ended September 30, 2015. Management is responsible for the Village’s compliance with those requirements. Our responsibility is to express an opinion on the Village’s compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Village’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Village’s compliance with specified requirements. In our opinion, the Village of Key Biscayne, Florida complied, in all material respects, with the aforementioned requirements for the fiscal year ended September 30, 2015. This report is intended solely for the information and use of management, Village Council, others within the Village and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. Miami, FL March 29, 2016