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HomeMy Public PortalAboutCARF 2016.pdf VILLAGE OF KEY BISCAYNE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2016 VILLAGE OF KEY BISCAYNE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 Prepared by: THE FINANCE DEPARTMENT VILLAGE OF KEY BISCAYNE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 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) ................. 4-12 Basic Financial Statements Government-Wide Financial Statements: Statement of Net Position .....................................................................................................13 Statement of Activities ..........................................................................................................14 Fund Financial Statements: Governmental Fund Financial Statements: Balance Sheet .....................................................................................................................15 Statement of Revenues, Expenditures and Changes in Fund Balances .............................16 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ..........................17 Proprietary Fund Financial Statements: Statement of Net Position ..................................................................................................18 Statement of Revenues, Expenses and Changes in Net Position .......................................19 Statement of Cash Flows ...................................................................................................20 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Position ..................................................................................21 Statement of Changes in Fiduciary Net Position ...............................................................22 Notes to Basic Financial Statements .................................................................................. 23-67 Required Supplementary Information (Other Than MD&A) Budgetary Comparison Schedule – General Fund ......................................................................68 Notes to Budgetary Comparison Schedule .................................................................................69 Schedule of Funding Progress – Other Post-Employment Benefits ...........................................70 Schedule of Changes in the Village’s Net Pension Liability and Related Ratios – Pension Trust Fund .......................................................................................71 Schedule of Village Contributions – Pension Trust Fund ..........................................................72 Schedule of Investment Returns – Pension Trust Fund ..............................................................73 VILLAGE OF KEY BISCAYNE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 TABLE OF CONTENTS Statistical Section Net Position by Component ........................................................................................................74 Changes in Net Position ........................................................................................................ 75-76 Fund Balances of Governmental Funds ......................................................................................77 Changes in Fund Balances of Governmental Funds ...................................................................78 General Governmental Tax Revenues by Source .......................................................................79 Net Assessed Value and Estimated Actual Value of Taxable Property .....................................80 Property Tax Rates – Direct and Overlapping Governments .....................................................81 Principal Property Taxpayers ......................................................................................................82 Property Tax Levies and Collections ..........................................................................................83 Ratios of Outstanding Debt by Type ..........................................................................................84 Ratios of General Bonded Debt Outstanding .............................................................................84 Direct and Overlapping Governmental Activities Debt .............................................................86 Pledged Revenue Coverage ........................................................................................................87 Demographic and Economic Statistics .......................................................................................88 Principal Employers ....................................................................................................................89 Full-Time Equivalent Village Government Employees by Function .........................................90 Operating Indicators by Function/Program ................................................................................91 Capital Asset Statistics by Function/Program ............................................................................92 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 ................... 93-94 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida ................................................................................................................... 95-96 Independent Accountants’ Report on Compliance Pursuant to Section 218.415 Florida Statutes ........................................................................................................................97 INTRODUCTORY SECTION VILLAGE 0 F KEY BISCAYNE Village Council Mayra P. Lindsay, Mqyor Franklin H. Caplan, Vice Mqyor Luis F. de la Cruz Gary R. Gross Allison McCormick Brett G. Moss Katie Petros Director Vivian Parks Department of Finance and Administrative Services June 6, 2017 To the Honorable Mayor, Members of the Village Council and Citizens of the Village of Key Biscayne: Florida Statutes require that all units oflocal 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, 2016. 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 reporl is complele and reliable in all malerial respeds. 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, 2016 are free of material misstatement. 1 88 West Mcintyre Street • Suite 210 • Key Biscayne, Florida 33149 • (305) 365-8904 • Fax (305) 365-8936 MISSION STATEMENT: "TO PROVIDE A 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, 2016 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 of the 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 economic 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, 2015. This was the twenty third 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. lll 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, Acting Finance Director lV v VILLAGE OF KEY BISCAYNE, FLORIDA VILLAGE OFFICIALS As of SEPTEMBER 30, 2016 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 2016 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, 2016, 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, 2016, 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. 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 12, the budgetary comparison schedule, on pages 68 and 69, and the required supplementary information for OPEB and the pension trust fund on pages 70 to 73 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. 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. 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 6, 2017 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 June 6, 2017 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, 2016. 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 $88,625,610.  The Village’s total net position increased by $2,163,752 prior to the prior period adjustment. 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 $26,879,391, a decrease of $4,450,277 in comparison with the prior year. Overview of the Financial Statements This discussion and analysis is 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 13 and 14 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 15 to 17 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 18-20 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 21-22 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 23 to 67 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 obligations to provide pension benefits and other post-employment benefits to its employees. Required supplementary information can be found on pages 68 to 73 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 $88,625,610 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 $65,221,578. The Village of Key Biscayne uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Our analysis of the financial statements of the Village begins below. The Statement of Net Position and the Statement of Activities report information about the Village’s activities that will help answer questions about the financial position of the Village. A comparative analysis is provided with prior year information. Net Position A Summary of the Village’s Net Position is presented in Table A-1 and a Summary of the Changes in Net Position is presented in Table A-2. 2016 2015 2016 2015 2016 2015 Current assets 31,390,124$ 34,092,148$ 2,712,428$ 2,892,163$ 34,102,552$ 36,984,311$ Capital assets, net 77,544,233 73,384,971 20,548,697 20,678,937 98,092,930 94,063,908 Total Assets 108,934,357 107,477,119 23,261,125 23,571,100 132,195,482 131,048,219 Deferred Outflows of Resources 3,205,217 1,113,486 -- -- 3,205,217 1,113,486 Current liabilities 4,670,331 2,948,501 46,422 690,620 4,716,753 3,639,121 Noncurrent liabilities 32,337,298 33,335,554 9,302,484 9,165,592 41,639,782 42,501,146 Total Liabilities 37,007,629 36,284,055 9,348,906 9,856,212 46,356,535 46,140,267 Deferred Inflows of Resources 418,554 555,687 -- -- 418,554 555,687 Net investment in capital assets 51,961,356 54,854,783 13,260,222 12,995,027 65,221,578 67,849,810 Restricted 3,425,433 2,405,158 -- -- 3,425,433 2,405,158 Unrestricted 19,326,602 14,490,922 651,997 719,861 19,978,599 15,210,783 Total Net Position 74,713,391$ 71,750,863$ 13,912,219$ 13,714,888$ 88,625,610$ 85,465,751$ 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 an increase in property tax revenue. 2016 2015 2016 2015 2016 2015 Revenues Program revenues: Charges for services 6,060,520$ 6,218,633$ 1,560,724$ 1,540,486$ 7,621,244$ 7,759,119$ Operating grants and contributions 54,331 85,315 164,176 47,872 218,507 133,187 Capital grants and contributions 867,197 7,854,679 -- -- 867,197 7,854,679 General revenues: Property taxes 22,249,642 19,353,288 -- -- 22,249,642 19,353,288 Utility taxes 2,007,095 1,979,733 -- -- 2,007,095 1,979,733 Communications services tax 753,385 862,165 -- -- 753,385 862,165 Franchise fees 603,889 595,196 -- -- 603,889 595,196 Unrestricted intergovernmental revenue 1,955,183 1,901,774 -- -- 1,955,183 1,901,774 Investment income and miscellaneous 193,000 186,200 5,986 3,911 198,986 190,111 Total Revenues 34,744,242 39,036,983 1,730,886 1,592,269 36,475,128 40,629,252 Expenses General government 7,579,355 4,100,859 -- -- 7,579,355 4,100,859 Public Safety 13,390,298 9,449,086 -- -- 13,390,298 9,449,086 Parks and Recreation 5,388,588 4,850,623 -- -- 5,388,588 4,850,623 Public Works 2,078,721 1,823,897 -- -- 2,078,721 1,823,897 Building, Zoning and Planning 2,165,717 2,075,416 -- -- 2,165,717 2,075,416 Interest on long-term debt 796,152 816,313 -- -- 796,152 816,313 Stormwater -- -- 934,223 1,783,865 934,223 1,783,865 Solid waste collection -- -- 840,730 582,943 840,730 582,943 Sanitary sewer construction -- -- 1,137,592 1,120,166 1,137,592 1,120,166 Total Expenses 31,398,831 23,116,194 2,912,545 3,486,974 34,311,376 26,603,168 Change in Net Position before transfers 3,345,411 15,920,789 (1,181,659) (1,894,705) 2,163,752 14,026,084 Transfers (382,883) (343,884) 382,883 343,884 -- -- Changes in Net Position 2,962,528 15,576,905 (798,776) (1,550,821) 2,163,752 14,026,084 Net Position - Beginning, previously reported 71,750,863 61,078,260 13,714,888 15,265,709 85,465,751 76,343,969 Prior period adjustment -- (4,904,302) 996,107 -- 996,107 (4,904,302) Net Position - Beginning 71,750,863 56,173,958 14,710,995 15,265,709 86,461,858 71,439,667 Net Position - Ending 74,713,391$ 71,750,863$ 13,912,219$ 13,714,888$ 88,625,610$ 85,465,751$ 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 $798,776 after transfers prior to prior period adjustment. In fiscal 2016, the Stormwater and Sanitary Sewer funds both reflected decreases in net position as a result of depreciation. The Solid Waste Fund, showed a decrease of $188,275 due to an increase in contractual services. 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 $27,949,968, an increase of $397,876 in comparison with the prior year. The increase is primarily due the increase in property tax revenue. All balances have been categorized and set aside for the following uses: (1) Non-spendable: $443,084, (2) Restricted: $2,795,695 (3) Committed: $11,606,197 and (4) Assigned: $13,104,992. 10 The general fund is the chief operating fund of the Village of Key Biscayne. As a measure of the general fund’s liquidity, it may be useful to compare total fund balance to total fund expenditures. Total fund balance represents 98% of total general fund expenditures. A summary of the general fund’s balance sheet and statement of revenues, expenditures and changes in fund balance is presented in Table B-1 and B-2 for September 30, 2016 and 2015, is as follows: 2016 2015 Total Assets 30,610,340$ 30,096,138$ Total Liabilities 2,660,372$ 2,544,046$ Fund Balance Nonspendable 443,084 268,176 Restricted 2,795,695 1,875,857 Committed 11,606,197 13,538,053 Assigned 13,104,992 11,870,006 Total Fund Balance 27,949,968 27,552,092 Total Liabilities and Fund Balance 30,610,340$ 30,096,138$ 2016 2015 Total Revenues 33,624,225$ 37,963,199$ Total Expenditures 28,583,263 27,111,436 Excess 5,040,962 10,851,763 Total Other Financing Sources (Uses)(4,643,086) (2,199,507) Net Change in Fund Balance 397,876$ 8,652,256$ Table B-1 Summary of General Fund Balance Sheet Table B-2 Revenues, Expenditures and Changes in Fund Balances Summary of General Fund Statement of Overall total revenues in fiscal year 2015 was $37,963,199 as compared to $33,624,225 in 2016. The fluctutaion relates to the net effect of a non-recurring $7,000,000 contribution in 2015 and a decrease of licenses and permits revenue, and franchise fees in 2016 as compared to prior year. 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 2016, the Transportation Fund shows a fund balance of $1,044,004, of which $629,740 is restricted for transit projects. 11 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. Fiscal year 2016 reflects a negative unassigned balance of $2,114,581 due to an interlocal agreement with the Miami-Dade County School Board for the enhancement of shared playing fields. That balance is to be funded with future general fund surplus. General Fund Budgetary Highlights The only departments with a significant budget to actual negative 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, 2016, the Village’s capital assets net of accumulated depreciation amounted to $98,092,930 as compared to $95,060,015 as of September 30, 2015 prior to the adjustment of $996,107. Major capital asset events during the fiscal year included the following:  Open Space/Land purchase: 401 Hampton Lane  Establishment of Dog Park within Village Green  Continuation of Community Center Expansion  Resurfacing East of Crandon  Continuation of the Beach Renourishment program  Continuation of tree replacement  Uplighting LED replacement program  Public Safety - Body Cameras  Village-wide Phone System Upgrade Additional information on the Village’s capital assets can be found in Note 7 on pages 42-44 of this report. Debt Administration At September 30, 2016, the Village had bonded debt outstanding of $34,271,982 (composed of $24,969,498 in governmental activities and $9,302,484 of business-type activities) compared to $37,793,090 as of September 30, 2015. Of this amount, $3,737,354 represents bonds secured solely by specified revenue sources (Transportation Tax Revenue Bonds, Road Improvement Revenue Bonds and State Revolving Fund Loans). The remainder represents special obligation bonds that are secured by non-ad valorem revenues through covenants to budget and appropriate. Additional information on the Village’s long-term debt can be found in Note 8 on pages 45-55 of this report. Economic Factors and Next Year’s Budgets and Rates As the local and national economy continues to recover, commercial real estate in Miami-Dade continues to improve. Miami-Dade County is leading the way in attracting diverse new businesses to our area. Based on these indicators, the Village of Key Biscayne continues to manage a budget that is responsive to the needs of its community. Long term financial planning efforts continue, the Village has implemented a 5 year Strategic Plan to determine the priorities for the Village and the initial indicators needed to measure progress towards these priorities. 12 The unemployment rate for Miami-Dade County is 5.2%, which is a decrease from a rate of 6.0% a year ago. The state’s average unemployment rate is 4.9% as of September 30, 2016. All of these factors were considered during preparation of the Village of Key Biscayne’s budget for the 2017 fiscal year. The Village’s millage rate for fiscal year 2016 and fiscal year 2017 is 3.00. Requests for Information This financial report is designed to provide a general overview of the Village of Key Biscayne’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Village Manager, 88 West McIntyre Street, Key Biscayne, Florida, 33149. BASIC FINANCIAL STATEMENTS Business- Governmental type Activities Activities Total Assets Cash and cash equivalents 6,372,606$ 474,813$ 6,847,419$ Investments 20,010,821 -- 20,010,821 Receivables, net 960,425 478,403 1,438,828 Prepaid items and other assets 443,084 500 443,584 Internal balances 255,297 (255,297) -- Restricted assets: Cash and cash equivalents 1,067,134 -- 1,067,134 Investments 2,280,757 2,014,009 4,294,766 Capital assets not being depreciated 31,434,461 -- 31,434,461 Capital assets being depreciated, net 46,109,772 20,548,697 66,658,469 Total Assets 108,934,357 23,261,125 132,195,482 Deferred Outflows of Resources Pension 3,205,217 -- 3,205,217 Liabilities Accounts payable and accrued liabilities 3,415,207 46,422 3,461,629 Accrued interest payable 159,598 -- 159,598 Payable to pension plan 216,248 -- 216,248 Unearned revenue 879,278 -- 879,278 Noncurrent liabilities: Due within one year 3,956,525 666,076 4,622,601 Due in more than one year 23,747,511 8,636,408 32,383,919 Net pension liability 3,596,548 -- 3,596,548 Net OPEB obligation 1,036,714 -- 1,036,714 Total Liabilities 37,007,629 9,348,906 46,356,535 Deferred Inflows of Resources Pension 418,554 -- 418,554 Net Position Net investment in capital assets 51,961,356 13,260,222 65,221,578 Restricted: Building and zoning 2,259,562 -- 2,259,562 Transportation 629,740 -- 629,740 Law enforcement 200,016 -- 200,016 Fire rescue 336,115 -- 336,115 Unrestricted 19,326,602 651,997 19,978,599 Total Net Position 74,713,391$ 13,912,219$ 88,625,610$ VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF NET POSITION SEPTEMBER 30, 2016 The accompanying notes are an integral part of these financial statements. 13 Charges Operating Capital Business- for Grants and Grants and Governmental type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities General government 7,579,355$ 147,693$ --$ --$ (7,431,662)$ --$ (7,431,662)$ Police 6,240,840 -- -- -- (6,240,840) -- (6,240,840) Fire 7,149,458 165,106 -- -- (6,984,352) -- (6,984,352) Public works 2,078,721 -- -- 867,197 (1,211,524) -- (1,211,524) Building, zoning and planning 2,165,717 2,714,085 -- -- 548,368 -- 548,368 Parks and recreation 5,388,588 3,033,636 54,331 -- (2,300,621) -- (2,300,621) Interest on long-term debt 796,152 -- -- -- (796,152) -- (796,152) Total Governmental Activities 31,398,831 6,060,520 54,331 867,197 (24,416,783) -- (24,416,783) Business-type Activities Stormwater 934,223 908,269 164,176 -- -- 138,222 138,222 Sanitary sewer 1,137,592 -- -- -- -- (1,137,592) (1,137,592) Solid waste 840,730 652,455 -- -- -- (188,275) (188,275) Total Business-type Activities 2,912,545 1,560,724 164,176 -- -- (1,187,645) (1,187,645) Total 34,311,376$ 7,621,244$ 218,507$ 867,197$ (24,416,783) (1,187,645) (25,604,428) General Revenues Property taxes 22,249,642 -- 22,249,642 Franchise fees based on gross receipts 603,889 -- 603,889 Utility taxes 2,007,095 -- 2,007,095 Communications services tax 753,385 -- 753,385 Unrestricted intergovernmental revenue 1,955,183 -- 1,955,183 Unrestricted investment earnings 111,484 5,986 117,470 Miscellaneous 81,516 -- 81,516 Transfers (382,883) 382,883 -- Total General Revenues and Transfers 27,379,311 388,869 27,768,180 Change in Net Position 2,962,528 (798,776) 2,163,752 Net Position - Beginning 71,750,863 13,714,888 85,465,751 Prior Period Adjustment (See Note16) -- 996,107 996,107 Net Position - Beginning, Restated 71,750,863 14,710,995 86,461,858 Net Position - Ending 74,713,391$ 13,912,219$ 88,625,610$ VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 Net (Expense) Revenue and Program Revenues Changes in Net Position The accompanying notes are an integral part of these financial statements. 14 Transportation Total Special Capital Governmental General Revenue Improvements Funds Assets Cash and cash equivalents 6,131,094$ --$ 241,512$ 6,372,606$ Investments 18,509,037 -- 1,501,784 20,010,821 Receivables, net 757,191 201,952 1,282 960,425 Due from other funds 4,505,802 -- -- 4,505,802 Prepaid items 443,084 -- -- 443,084 Restricted cash and cash equivalents -- 935,898 131,236 1,067,134 Restricted investments 264,132 -- 2,016,625 2,280,757 Total Assets 30,610,340$ 1,137,850$ 3,892,439$ 35,640,629$ Liabilities Accounts payable and accrued liabilities 1,564,846$ --$ 1,850,361$ 3,415,207$ Due to other funds -- 93,846 4,156,659 4,250,505 Payable to pension plan 216,248 -- -- 216,248 Unearned revenue 879,278 -- -- 879,278 Total Liabilities 2,660,372 93,846 6,007,020 8,761,238 Fund Balances (Note 9) Non-spendable 443,084 -- -- 443,084 Restricted 2,795,695 629,740 -- 3,425,435 Committed 11,606,197 -- -- 11,606,197 Assigned 13,104,992 414,264 -- 13,519,256 Unassigned (Deficit) -- -- (2,114,581) (2,114,581) Total Fund Balances 27,949,968 1,044,004 (2,114,581) 26,879,391 Total Liabilities and Fund Balances 30,610,340$ 1,137,850$ 3,892,439$ 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 77,544,233 Deferred outflows and inflows of resources related to pensions are recorded in the statement of net position 2,786,663 Long-term liabilities, including bonds payable and accrued interest payable and OPEB obligation, are not due and payable in the current period and therefore not reported in the funds (Note 2) (28,900,348) The net pension liability is not due and payable in the current period and therefore is not reported in the governmental funds (3,596,548) Net Position of Governmental Activities 74,713,391$ VILLAGE OF KEY BISCAYNE, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2016 The accompanying notes are an integral part of these financial statements. 15 Transportation Total Special Capital Governmental General Revenue Improvements Funds Revenues Property taxes 22,249,642$ --$ --$ 22,249,642$ Utility taxes 2,007,095 -- -- 2,007,095 Communications services tax 753,385 -- -- 753,385 Franchise fees 603,889 -- -- 603,889 Licenses and permits 2,484,872 -- -- 2,484,872 Intergovernmental 1,737,565 1,084,815 -- 2,822,380 Charges for services 3,548,985 -- -- 3,548,985 Interest 102,945 184 8,355 111,484 Grants 54,331 -- -- 54,331 Miscellaneous revenue and other 81,516 -- -- 81,516 Total Revenues 33,624,225 1,084,999 8,355 34,717,579 Expenditures Current: General government 3,547,716 31,790 203,525 3,783,031 Fire 6,895,590 -- -- 6,895,590 Police 5,957,079 -- -- 5,957,079 Public works 1,873,594 -- -- 1,873,594 Building, zoning and planning 2,074,777 -- -- 2,074,777 Parks and recreation 4,754,626 -- -- 4,754,626 Capital outlay 128,878 -- 6,809,972 6,938,850 Debt service: Principal 2,657,430 474,229 162,862 3,294,521 Interest and fiscal charges 693,573 123,681 5,321 822,575 Intergovernmental: Payment under interlocal agreement -- -- 2,390,330 2,390,330 Total Expenditures 28,583,263 629,700 9,572,010 38,784,973 Excess (deficiency) of revenues over expenditures 5,040,962 455,299 (9,563,655) (4,067,394) Other Financing Sources (Uses) Transfers in -- -- 4,260,203 4,260,203 Transfers out (4,643,086) -- -- (4,643,086) Total Other Financing Sources (Uses)(4,643,086) -- 4,260,203 (382,883) Net Change in Fund Balances 397,876 455,299 (5,303,452) (4,450,277) Fund Balances - Beginning 27,552,092 588,705 3,188,871 31,329,668 Fund Balances - Ending 27,949,968$ 1,044,004$ (2,114,581)$ 26,879,391$ VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 The accompanying notes are an integral part of these financial statements. 16 Amounts reported for governmental activities in the statement of activities (Page 14) are different because: Net change in fund balances - total governmental funds (Page 16) (4,450,277)$ Governmental funds report capital outlay 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 outlay in the current period. The details of the difference are as follows: Cost of assets 6,751,100$ Depreciation expense (2,591,838) 4,159,262 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 3,131,659 Capital lease payments 162,862 3,294,521 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 13,050 Accrued interest 26,423 Net OPEB obligation (126,083) Net pension liability (2,183,232) (2,269,842) Changes in the Village's pension deferred outflows and pension deferred inflows for the current year are not reported in the governmental funds but are reported in the statement of activities 2,228,864 Change in net position of governmental activities (Page 14)2,962,528$ 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, 2016 The accompanying notes are an integral part of these financial statements. 17 Stormwater Sanitary Utility Sewer Solid System Construction Waste Totals Assets Current Assets Cash and cash equivalents 300,073$ 160,543$ 14,197$ 474,813$ Accounts receivables, net 195,785 -- 282,618 478,403 Restricted investments 2,014,009 -- -- 2,014,009 Other assets 500 -- -- 500 Total Current Assets 2,510,367 160,543 296,815 2,967,725 Noncurrent Assets Capital assets being depreciated, net 6,689,981 13,858,716 -- 20,548,697 Total Noncurrent Assets 6,689,981 13,858,716 -- 20,548,697 Total Assets 9,200,348 14,019,259 296,815 23,516,422 Liabilities Current Liabilities Accounts payable and accrued liabilities 34,473 11,949 -- 46,422 Due to other funds 140,417 -- 114,880 255,297 Current portion of revolving loans -- 23,999 -- 23,999 Current portion of revenue bonds payable 320,000 322,077 -- 642,077 Total Current Liabilities 494,890 358,025 114,880 967,795 Noncurrent Liabilities Revenue bonds payable 5,325,000 3,167,923 -- 8,492,923 Revolving loans payable -- 143,485 -- 143,485 Total Noncurrent Liabilities 5,325,000 3,311,408 -- 8,636,408 Total Liabilities 5,819,890 3,669,433 114,880 9,604,203 Net Position Net investment in capital assets 3,058,990 10,201,232 -- 13,260,222 Unrestricted 321,468 148,594 181,935 651,997 Total Net Position 3,380,458$ 10,349,826$ 181,935$ 13,912,219$ Business-type Activities - Enterprise Funds VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2016 The accompanying notes are an integral part of these financial statements. 18 Stormwater Sanitary Utility Sewer Solid System Construction Waste Totals Operating Revenues Charges for services 908,269$ --$ 652,455$ 1,560,724$ Operating Expenses General and administrative 347,199 -- 840,730 1,187,929 Depreciation 378,556 989,908 -- 1,368,464 Total Operating Expenses 725,755 989,908 840,730 2,556,393 Operating Income (Loss)182,514 (989,908) (188,275) (995,669) Non-Operating Revenues (Expenses) Interest income 5,986 -- -- 5,986 Interest expense (208,468) (107,029) -- (315,497) Other debt service cost -- (40,655) -- (40,655) Total Non-Operating Revenues (Expenses)(202,482) (147,684) -- (350,166) Income (Loss) before Transfers (19,968) (1,137,592) (188,275) (1,345,835) Capital grant proceeds 164,176 -- -- 164,176 Transfers in -- 382,883 -- 382,883 Change in Net Position 144,208 (754,709) (188,275) (798,776) Net Position- Beginning,2,240,143 11,104,535 370,210 13,714,888 Prior Period Adjustment (See Note 16) 996,107 -- -- 996,107 Net Position- Beginning, Restated 3,236,250 11,104,535 370,210 14,710,995 Net Position - Ending 3,380,458$ 10,349,826$ 181,935$ 13,912,219$ 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, 2016 The accompanying notes are an integral part of these financial statements. 19 Stormwater Sanitary Utility Sewer System Construction Solid Waste Totals Cash Flows from Operating Activities Receipts from customers and users 935,207$ --$ 717,445$ 1,652,652$ Receipts for interfund services 55,986 -- -- 55,986 Payments to suppliers (417,006) -- (876,263) (1,293,269) Net Cash Provided (Used) by Operating Activities 574,187 -- (158,818) 415,369 Cash Flows from Non-Capital Financing Activities Transfers in from general fund -- 382,883 -- 382,883 Cash Flows from Capital and Related Financing Activities Grant proceeds 164,176 -- -- 164,176 Payments for construction of capital assets (242,117) -- -- (242,117) Payments on revenue bonds (310,000) -- -- (310,000) Proceeds from improvement bonds -- 3,490,000 -- 3,490,000 Payments on revolving loans -- (3,569,449) -- (3,569,449) Interest and fees paid on long term debt (208,468) (147,684) -- (356,152) Net Cash Used by Capital and Related Financing Activities (596,409) (227,133) -- (823,542) Cash Flows from Investing Activities Purchase of investments (5,986) -- -- (5,986) Interest received 5,986 -- -- 5,986 Net Cash Provided (Used) by Investing Activities -- -- -- -- Net Increase (Decrease) in Cash and Cash Equivalents (22,222) 155,750 (158,818) (25,290) Cash and Cash Equivalents - Beginning 322,295 4,793 173,015 500,103 Cash and Cash Equivalents - Ending 300,073$ 160,543$ 14,197$ 474,813$ Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) 182,514$ (989,908)$ (188,275)$ (995,669)$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 378,556 989,908 -- 1,368,464 Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable, net 26,964 -- (37,373) (10,409) Other assets (26) -- -- (26) Increase (decrease) in: Accounts payable and accrued liabilities (69,807) -- (48,050) (117,857) Due to other funds 55,986 -- 114,880 170,866 Total adjustments 391,673 989,908 29,457 1,411,038 Net Cash Provided (Used) by Operating Activities 574,187$ --$ (158,818)$ 415,369$ Business-type Activities - Enterprise Funds VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 The accompanying notes are an integral part of these financial statements. 20 Assets Investments Money market funds 460,634$ Common stocks 6,743,423 Mutual funds 20,290,063 Limited partnerships 1,386,150 Real Estate Open-End Fund 1,413,554 Investments held in the Share Plan 1,105,500 Investments held in the DROP Plan 1,192,485 Total Investments 32,591,809 Receivables Accrued income 10,440 Employer contributions 208,189 Employee contributions 43,963 State supplemental appropriation 34,223 Total Receivables 296,815 Total Assets 32,888,624 Liabilities Accounts payable and accrued liabilities 16,693 Net Position Restricted for Pension Benefits 32,871,931$ VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUND SEPTEMBER 30, 2016 The accompanying notes are an integral part of these financial statements. 21 Additions Contributions Plan members 606,697$ Village (including State) 720,142 Total Contributions 1,326,839 Investment Income Net appreciation in the fair value of investments 1,442,186 Net appreciation in the fair value of investments (Share and DROP) 146,751 Interest and dividends 1,059,021 Other 5,159 2,653,117 Less: investment expenses (78,553) Net Investment Income 2,574,564 Total Additions 3,901,403 Deductions Benefits paid 570,278 Refund of participant contributions 32,769 Administrative expenses 69,369 Total Deductions 672,416 Change in Net Position 3,228,987 Net Position Restricted for Pension Benefits Beginning of year 29,642,944 End of year 32,871,931$ VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PENSION TRUST FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 The accompanying notes are an integral part of these financial statements. 22 NOTES TO BASIC FINANCIAL STATEMENTS VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 23 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, 2016 24 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, 2016 25 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 major proprietary funds in the basic financial statements: The Stormwater Utility System Fund accounts for the construction and maintenance of the Village’s stormwater system. The Sanitary Sewer Construction Fund accounts for the development and construction of a municipal sanitary sewer system to the unsewered areas of the community. The Solid Waste 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, 2016 26 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, 2016: GASB Statement No. 72, Fair Value Measurement and Application This Statement addresses accounting and financial reporting issues related to fair value measurements of assets and liabilities. The Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The adoption of GASB 72 results in increased disclosures related to the fair value measurement of investments. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 27 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. Substantially all other investments, including pension investments, are recorded at fair value. Money market funds are reported at amortized cost. 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. 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 acquisition value at the date of donation. All infrastructure assets have been capitalized since inception of the Village. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 28 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED) 4. Capital Assets (continued) 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 2016. 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 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. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 29 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED) 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, 2016 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, 2016 30 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, deferred outflows related to 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, 2015. The amounts paid during fiscal year 2016 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, 2016 31 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. Unassigned fund balance. The Village, based on its charter, is not permitted to have unassigned/unreserved fund balance in the general fund. 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, 2016 32 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, 2016 33 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 and assigned fund balance). In order to calculate the amounts to report as restricted, committed and assigned 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. 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 and accrued interest payable and OPEB obligation, are not due and payable in the current period and therefore are not reported in the funds. The details of this $28,900,348 difference, excluding the net pension liability which is separately disclosed, are as follows: Bonds payable 24,969,498$ Capital leases payable 148,314 Compensated absences 2,586,224 Accrued Interest payable 159,598 Net OPEB obligation 1,036,714 28,900,348$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 34 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 0.30% to 1.20% and with maturities ranging from 180 days to 1,095 days totaling $18,899,041 which are presented as investments in the accompanying financial statements. INVESTMENTS The Village’s investment policy follows the requirements of Florida Statutes Chapter 218.415, and attempts to promote, in order of priority, safety of principal, adequate liquidity, and maximization of total return. The Village’s investment policy authorizes investments in direct obligations of the U.S. Government, its agencies or instrumentalities. The Village is also authorized to invest in SEC registered money market mutual funds, insured or fully collateralized deposits, repurchase agreements secured by direct obligations of the U.S. Government, and authorized intergovernmental investment pools. The investment policy defined in the statutes attempts to promote, through state assistance, the maximization of net interest earnings on invested surplus funds of local units of governments while limiting the risk to which the funds are exposed. The Village maintains a separate investment policy for its pension plan. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 35 NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED) INVESTMENTS – VILLAGE As of September 30, 2016, the Village had the following fixed income investments measured at amortized cost, with the corresponding maturities in its portfolio: Investments Value 1-5 Repurchase Agreements 3,128,405$ 3,128,405$ (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 $3.1 million investment in repurchase agreements is held by the investment’s counterparty, not in the name of the Village. The Village’s investment policy does not have a limit on holding of securities by counterparties. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 36 NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED) INVESTMENTS – PENSION PLAN For the Village’s pension plan, Florida statutes and the Plan’s investment policy authorize the Trustees to invest funds in various investments. A Master Custodian Agreement is maintained whereby the investment securities are held in the Plan’s name by a financial institution acting as the Plan’s agent. The current target allocation of these investments are as follows: Authorized Investments Target % Allowable Range Large cap core equity 5.0%4% - 8% Large cap value equity 10.0%6% - 12% Large cap growth equity 10.0% 6% - 12% Mid-cap value equity 3.5% 2% - 5% Mid-cap growth equity 3.5% 2% - 5% Small-cap value equity 1.5% 1% - 3% Small-cap growth equity 1.5% 1% - 3% International equity 12.0% 5% - 25% Real estate investment trust 2.0% 0% - 4% Private real estate 10.0% 5% - 12% High yield 3.0% 0% - 5% Fixed income bonds 33.0% 25% - 64% Master limited partnerships 5.0%2% - 7% Total 100.0% As of September 30, 2016, the Village’s Pension Plan had the following fixed income investments with the corresponding maturities in its portfolio: Fair Less Investments Value Than 1 1-5 6-10 10+ Bond Mutual Funds 5,403,838$ --$ 2,553,465$ 1,661,851$ 1,188,522$ 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, 2016 37 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, 2016, 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, 2016 38 NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED) FAIR VALUE HIERARCHY The Plan categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Level 1 - Investments' fair values based on prices quoted in active markets for identical assets. Level 2 - Investments' fair values based on observable inputs for the assets either directly or indirectly, other than those considered Level 1 inputs, which may include quoted prices for identical assets in markets that are not considered to be active, and quoted prices of similar assets in active or inactive markets. Level 3 - Investments' fair values based upon unobservable inputs. The following is a description of the fair value techniques for the Plan's investments. Level 1 and Level 2 prices are obtained from various pricing sources by the Plan's custodian bank: Debt and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. This includes common stock, foreign stock, and mutual fund equities. The Plan has investments in alternative asset classes including limited partnerships and a core real estate fund, which hold a variety of investment vehicles that do not have readily available market quotations. These investments are measured at net asset value based on their proportionate share of the value of the investments as determined by the fund managers and are valued according to methodologies, which include pricing models, discounted cash flow models and similar techniques. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 39 NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED) FAIR VALUE HIERARCHY (CONTINUED) The following is a summary of the fair value hierarchy of the Plan investments as of September 30, 2016: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs 9/30/2016 (Level 1) (Level 2) (Level 3) Investments by Fair Value Level Equity securities Common stock 6,743,423$ 6,743,423$ --$ --$ International mutual fund 3,186,528 3,186,528 -- -- Fixed income mutual funds 5,403,838 5,403,838 -- -- Mutual fund equities 11,699,697 11,699,697 -- -- Mutual funds (DROP)1,192,485 1,192,485 -- -- Mutual funds (Share)1,105,500 1,105,500 -- -- Total investments at fair value 29,331,471 29,331,471 -- -- Investment Measured at Net Asset Value (NAV)* General limited partnership 799,188 Master limited partnership 586,962 Real estate open-end fund 1,413,554 Total investments measured at NAV 2,799,704 Money market funds (exempt)460,634 Total investments 32,591,809$ Fair Value Measurements Using * As required by GAAP, certain investments that are measured at net asset value have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total investment line item in the statement of fiduciary net position. The following table summarizes investments for which fair value is measured using the net asset value per share practical expedient, including their related unfunded commitments and redemption restrictions. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 40 NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED) FAIR VALUE HIERARCHY (CONTINUED) Investment Measured at NAV Redemption Redemption Fair Unfunded Frequency (if Notice Value Commitments Currently Eligible) Period General limited partnership (1)799,188$ --$ Monthly 5 days Master limited partnership (2)586,962 -- Daily 3 days Real estate open-end fund (3)1,413,554 -- Quarterly N/A 2,799,704$ 1.General Partnership - Mid Cap Growth. The Portfolio invests in a combination of securities of small-cap, mid-cap and large-cap companies. The Portfolio typically invests most of its assets in equity securities of U.S. companies, but may invest in foreign securities and American Depositary Receipts, including emerging market securities. 2.Master Limited Partnership. The Fund invests primarily in master limited partnerships as well as domestic common stocks or similar equity securities of high quality, financially secure companies listed on principal exchanges. 3.Real Estate Open-End Fund. The Trust Fund is an open-end, commingled real estate fund established as a means for the collective investment in real estate properties and loans by funds of retirement, pension, profit sharing, and other organizations that are exempt from federal income taxes. NOTE 4 – RECEIVABLES Receivables as of September 30, 2016 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 88,628$ --$ --$ 195,785$ 314,020$ --$ 598,433$ Contributions -- -- -- -- -- 286,375 286,375 Intergovernmental 663,551 201,952 -- -- -- -- 865,503 Other 5,012 -- 1,282 -- -- 10,440 16,734 Gross receivables 757,191 201,952 1,282 195,785 314,020 296,815 1,767,045 Less: Allowance for uncollectibles -- -- -- -- (31,402) -- (31,402) Net Total Receivables 757,191$ 201,952$ 1,282$ 195,785$ 282,618$ 296,815$ 1,735,643$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 41 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, 2016 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, 2016, there were no material delinquent taxes. NOTE 6 – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of September 30, 2016 is as follows: Due from/to other funds: Receivable Fund Payable Fund Amount General Transportation Special Revenue 93,846$ Capital Improvements 4,156,659 Stormwater Utility Systems 140,417 Solid Waste 114,880 4,505,802$ 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. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 42 NOTE 6 – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (CONTINUED) Interfund transfers: Transfers Out Transfer In Amount General Fund Capital Improvements 4,260,203$ General Fund Sanitary Sewer Construction 382,883 4,643,086$ Transfers are used to move unrestricted general fund revenues to finance various capital projects in accordance with budgetary authorizations. NOTE 7 – CAPITAL ASSETS Capital asset activity for the year fiscal ended September 30, 2016 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities Capital Assets, Not Being Depreciated Land 21,833,837$ 2,108,142$ --$ 23,941,979$ Construction in progress 6,478,399 3,161,183 (2,147,100) 7,492,482 Total Capital Assets, Not Being Depreciated 28,312,236 5,269,325 (2,147,100) 31,434,461 Capital Assets, Being Depreciated Buildings 25,439,572 262,358 -- 25,701,930 Improvements other than buildings 32,617,545 2,763,074 -- 35,380,619 Furniture, fixtures and equipment 10,350,389 603,443 -- 10,953,832 Total Capital Assets, Being Depreciated 68,407,506 3,628,875 -- 72,036,381 Less: Accumulated Depreciation for Buildings (6,413,576) (519,542) -- (6,933,118) Improvements other than buildings (9,026,808) (1,330,230) -- (10,357,038) Furniture, fixtures and equipment (7,894,387) (742,066) -- (8,636,453) Total Accumulated Depreciation (23,334,771) (2,591,838) -- (25,926,609) Total Capital Assets, Being Depreciated, Net 45,072,735 1,037,037 -- 46,109,772 Governmental Activities Capital Assets, Net 73,384,971$ 6,306,362$ (2,147,100)$ 77,544,233$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 43 NOTE 7 – CAPITAL ASSETS (CONTINUED) Beginning Ending Balance* Increases Decreases Balance Business-type Activities Capital Assets, Not Being Depreciated Construction in progress 996,107$ --$ (996,107)$ --$ Total Capital Assets, Not Being Depreciated 996,107 -- (996,107) -- Capital Assets, Being Depreciated Stormwater utility system 10,911,184 1,238,224 -- 12,149,408 Sanitary Sewer system 18,808,259 -- -- 18,808,259 Total Capital Assets, Being Depreciated 29,719,443 1,238,224 -- 30,957,667 Less: Accumulated Depreciation for Stormwater utility system (5,080,871) (378,556) -- (5,459,427) Sanitary Sewer system (3,959,635) (989,908) -- (4,949,543) Total Accumulated Depreciation (9,040,506) (1,368,464) -- (10,408,970) Total Capital Assets, Being Depreciated, Net 20,678,937 (130,240) -- 20,548,697 Business-type Activities Capital Assets, Net 21,675,044$ (130,240)$ (996,107)$ 20,548,697$ * Beginning balance includes $996,107 of construction in progress previously not reported at September 30, 2015. Refer to Prior Period Adjustment footnote number 16. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 44 NOTE 7 – CAPITAL ASSETS (CONTINUED) Depreciation expense was charged as functions/programs of the primary government as follows: Governmental Activities General government 1,105,211$ Police 273,525 Fire 283,073 Public works 205,127 Building, zoning and planning 90,940 Parks 633,962 Total Depreciation Expense - Governmental Activities 2,591,838$ Business-type Activities Stormwater Utility 378,556$ Sanitary Sewer 989,908 Total Depreciation Expense - Business-Type Activities 1,368,464$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 45 NOTE 8 – LONG-TERM DEBT The following is a summary of changes in long-term liabilities of the Village for governmental activities for the fiscal year ended September 30, 2016: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental Activities Bonds Payable Land acquisition and capital improvement revenue bonds, Series 1999 3,705,000$ --$ (670,000)$ 3,035,000$ 705,000$ Capital improvement revenue refunding bonds, Series 2011A 4,365,000 -- (690,000) 3,675,000 705,000 Capital improvement revenue refunding bonds, Series 2011B 4,835,000 -- (605,000) 4,230,000 635,000 Capital improvement and land acquisition revenue refunding bonds, Series 2011 1,270,000 -- (170,000) 1,100,000 160,000 Transportation tax revenue refunding bonds, Series 2011 2,085,658 -- (192,046) 1,893,612 196,736 Road improvement revenue bonds, Series 2006 1,958,441 -- (282,183) 1,676,258 289,205 School improvement revenue bonds, Series 2012 5,307,058 -- (272,430) 5,034,628 276,993 School improvement revenue bonds, Series 2014 4,575,000 -- (250,000) 4,325,000 260,000 Total Bonds Payable 28,101,157 -- (3,131,659) 24,969,498 3,227,934 Other Liabilities Capital leases 311,176 -- (162,862) 148,314 82,035 Compensated absences 2,599,274 1,270,015 (1,283,065) 2,586,224 646,556 Net OPEB obligation 910,631 129,728 (3,645) 1,036,714 -- Net pension liability 1,413,316 2,751,048 (567,816) 3,596,548 -- Total Other Liabilities 5,234,397 4,150,791 (2,017,388) 7,367,800 728,591 Governmental Activities Long- Term Liabilities 33,335,554$ 4,150,791$ (5,149,047)$ 32,337,298$ 3,956,525$ Long-term obligations related to governmental activities are generally liquidated from the general fund. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 46 NOTE 8 – LONG-TERM DEBT (CONTINUED) LAND ACQUISITION AND CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 1999 On July 23, 1999, the Village issued $10,000,000 Land Acquisition and Capital Improvement Revenue Bonds, Series 1999, the proceeds of which were used for the acquisition of property and financing of the construction of the Civic Center project. The bonds mature on July 23, 2019 with final payment due on December 1, 2019. The Village has pledged non-ad valorem revenues to secure payment of the principal and interest on the bonds. The bonds are due in annual principal installments. Interest accrues at 4.715% per annum. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2017 705,000$ 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 3,035,000$ 294,806$ 3,329,806$ CAPITAL IMPROVEMENT REVENUE REFUNDING BONDS, SERIES 2011A On June 13, 2011, the Village issued $6,890,000 of Capital Improvement Revenue Refunding Bonds, Series 2011A for the purpose of refunding the Village’s Capital Improvement Revenue Bonds, Series 2000. The bonds mature on December 1, 2020. The Village has pledged non-ad valorem revenues to secure payment of the principal and interest on the bonds. The bonds are due in annual principal installments on each December 1, commencing December 1, 2011. Interest accrues at 2.31% per annum. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 47 NOTE 8 – LONG-TERM DEBT (CONTINUED) CAPITAL IMPROVEMENT REVENUE REFUNDING BONDS, SERIES 2011A (CONTINUED) Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2017 705,000$ 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 3,675,000$ 216,044$ 3,891,044$ CAPITAL IMPROVEMENTS REVENUE REFUNDING BONDS, SERIES 2011B On August 1, 2011, the Village issued $7,130,000 of Capital Improvement Revenue Refunding Bonds, Series 2011B for the purpose of refunding the Village’s Capital Improvement Revenue Bonds, Series 2002. The bonds mature on November 1, 2022. The Village has pledged non-ad valorem revenues to secure payment of the principal and interest on the bonds. The bonds bear interest on the outstanding principal balance from its date of issuance payable quarterly on the first day of each February, May, August and November commencing November 1, 2011, at an interest rate equal to 2.41% per annum. Debt service to maturity is as follows: Principal Interest Total Fiscal Year Ending September 30 2017 635,000$ 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 680,000 31,933 711,933 2022-2023 925,000 16,237 941,237 4,230,000$ 336,405$ 4,566,405$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 48 NOTE 8 – LONG-TERM DEBT (CONTINUED) CAPITAL IMPROVEMENT AND LAND ACQUISITION REVENUE REFUNDING BONDS, SERIES 2011 On August 1, 2011, the Village issued the $1,865,000 Capital Improvement and Land Acquisition Revenue Refunding Bonds, Series 2011 for the purpose of refunding the Capital Improvement and Land Acquisition Revenue Bonds, Series 2004. The Village has pledged non-ad valorem revenues to secure payment of the principal and interest on the bonds. The bonds mature on November 1, 2022. The bonds bear interest on the outstanding principal balance from its date of issuance payable quarterly on the first day of each February, May, August and November, commencing November 1, 2011, at an interest rate equal to 2.41% per annum. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2017 160,000$ 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 195,000 8,375 203,375 2022-2023 230,000 4,218 234,218 1,100,000$ 88,447$ 1,188,447$ 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 $214,904, respectively. The bonds mature on July 1, 2025. The bonds bear interest on the outstanding principal balance from its date of issuance payable quarterly on each January 1, April 1, July 1 and October 1 commencing January 1, 2012, at an interest rate equal to 2.42% per annum. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 49 NOTE 8 – LONG-TERM DEBT (CONTINUED) TRANSPORTATION TAX REVENUE REFUNDING BONDS, SERIES 2011 (CONTINUED) Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2017 196,736$ 44,049$ 240,785$ 2018 201,540 39,245 240,785 2019 206,462 34,323 240,785 2020 211,505 29,281 240,786 2021 216,669 24,116 240,785 2022-2025 860,700 42,244 902,944 1,893,612$ 213,258$ 2,106,870$ 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 $1,873,673. For the current year, debt service and pledged revenues were $353,768 and $365,000, respectively. The bonds are due in quarterly principal installments. Interest accrues at 4.05% per annum. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2017 289,205$ 63,857$ 353,062$ 2018 300,353 51,976 352,329 2019 311,930 39,637 351,567 2020 323,954 26,823 350,777 2021 336,440 13,515 349,955 2022 114,376 1,607 115,983 1,676,258$ 197,415$ 1,873,673$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 50 NOTE 8 – LONG-TERM DEBT (CONTINUED) SCHOOL IMPROVEMENT REVENUE BONDS, SERIES 2012 On October 24, 2012, the Village issued $5,575,000 of School Improvement Revenue Bonds, Series 2012 for the purpose of providing a portion of the financing of a permanent secondary educational facility and recreational fields owned and operated by the School Board of Miami-Dade County for Village residents located at the Mast Academy campus as well as necessary renovations of the Key Biscayne K-8 Center, financing architectural, engineering, environmental, legal, and other planning costs related thereto, and paying cost of issuance of the bonds. The bonds mature on October 1, 2032. The bonds bear interest on the outstanding principal balance from its date of issuance payable semiannually on each April 1 and October 1 (the "interest payment dates") commencing April 1, 2013, at an interest rate equal to 3.35% per annum. The bonds require the Village to appropriate in its annual budget, from non-ad valorem revenues amounts sufficient to cover debt service. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2017 276,993$ 168,660$ 445,653$ 2018 281,633 159,380 441,013 2019 286,350 149,946 436,296 2020 291,146 14,353 305,499 2021 296,023 130,600 426,623 2022-2026 1,556,172 500,884 2,057,056 2027-2031 1,690,941 231,346 1,922,287 2032-2033 355,370 11,905 367,275 5,034,628$ 1,367,074$ 6,401,702$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 51 NOTE 8 – LONG-TERM DEBT (CONTINUED) SCHOOL IMPROVEMENT REVENUE BONDS, SERIES 2014 On July 1, 2014, the Village issued $4,575,000 of School Improvement Revenue Bonds, Series 2014 for the purpose of providing an additional portion of the financing of a permanent secondary educational facility and recreational fields owned and operated by the School Board of Miami-Dade County for Village residents located at the Mast Academy campus as well as necessary renovations of the Key Biscayne K-8 Center, financing architectural, engineering, environmental, legal, and other planning costs related thereto, and paying cost of issuance of the bonds. The bonds mature on October 1, 2029. The bonds bear interest on the outstanding principal balance from its date of issuance payable semi-annually on each April 1 and October 1 (the "interest payment dates") commencing October 1, 2014, at an interest rate equal to 2.76% per annum. The bonds require the Village to appropriate in its annual budget, from non-ad valorem revenues amounts sufficient to cover debt service. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2017 260,000$ 119,370$ 379,370$ 2018 265,000 112,194 377,194 2019 270,000 104,880 374,880 2020 280,000 97,248 377,248 2021 285,000 89,700 374,700 2022-2026 1,560,000 325,404 1,885,404 2027-2030 1,405,000 98,118 1,503,118 4,325,000$ 946,914$ 5,271,914$ 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. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 52 NOTE 8 – LONG-TERM DEBT (CONTINUED) CAPITAL LEASES (CONTINUED) Assets Machinery and equipment 947,025$ Accumulated depreciation (482,525) Carrying Value 464,500$ Future minimum lease payments and the present value of net minimum lease payments as of September 30, 2016 are as follows: Fiscal Year Ending September 30 2017 84,792$ 2018 34,133 2019 34,133 Total minimum lease payments 153,058 Less: amount representing interest 4,744 148,314$ The following is a summary of changes in long-term liabilities of the Village for business- type activities for the fiscal year ended September 30, 2016: 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 5,955,000$ --$ (310,000)$ 5,645,000$ 320,000$ Sewer improvement revenue bonds, Series 2016 -- 3,490,000 -- 3,490,000 322,077 Revolving loan, 1996 191,925 -- (24,441) 167,484 23,999 Revolving loan, 2009 3,545,008 -- (3,545,008) -- -- Total Bonds and Loans Payable 9,691,933 3,490,000 (3,879,449) 9,302,484 666,076 Business-type Activities Long-Term Liabilities 9,691,933$ 3,490,000$ (3,879,449)$ 9,302,484$ 666,076$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 53 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. 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 $908,269 and debt service was $518,468 for the fiscal year ended September 30, 2016. The bonds mature on October 1, 2029. The bonds bear interest on the outstanding principal balance from their date of issuance payable annually on each October 1 commencing October 1, 2014, at an interest rate equal to 3.35% per annum. Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2017 320,000$ 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 370,000 143,715 513,715 2022-2026 2,030,000 525,250 2,555,250 2027-2030 1,890,000 160,800 2,050,800 5,645,000$ 1,520,034$ 7,165,034$ 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 2016 was $28,134 and state revenue sharing was $306,790. The loan is payable in semi-annual payments over 20 years beginning on April 15, 2003 at an interest rate of 2.56% per annum. The loan matures on October 15, 2022. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 54 NOTE 8 – LONG-TERM DEBT (CONTINUED) STATE REVOLVING FUND LOAN, 1996 (CONTINUED) Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2017 23,999$ 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 26,570 1,565 28,135 2022-2023 41,144 1,058 42,202 167,484$ 15,389$ 182,873$ 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 loan was paid in full during fiscal year 2016, through the issuance of the Sewer Improvement Revenue Bonds, Series 2016. SEWER IMPROVEMENT REVENUE BONDS, SERIES 2016 On June 29, 2016, the Village issued $3,490,000 of Sewer Improvement Revenue Bonds, Series 2016 for the purpose of refinancing the State Revolving Fund Loan, 2009. The bonds require the Village to appropriate in its annual budget, from non-ad valorem revenue amounts sufficient to cover debt service. The bonds mature on February 15, 2030. The bonds bear interest on the outstanding principal balance from its date of issuance payable quarterly on each February 15 and August 15, commencing August 15, 2016, at an interest rate equal to 1.97% per annum. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 55 NOTE 8 – LONG-TERM DEBT (CONTINUED) SEWER IMPROVEMENT REVENUE BONDS, SERIES 2016 (CONTINUED) Debt service requirements to maturity are as follows: Principal Interest Total Fiscal Year Ending September 30 2017 322,077$ 74,471$ 396,548$ 2018 225,856 61,301 287,157 2019 230,327 56,830 287,157 2020 234,887 52,270 287,157 2021 239,537 47,620 287,157 2022-2026 1,270,723 165,063 1,435,786 2027-2030 966,593 38,457 1,005,050 3,490,000$ 496,012$ 3,986,012$ NOTE 9 – FUND BALANCE CLASSIFICATIONS As of September 30, 2016, 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 443,084$ Restricted Building inspections 2,259,562 Fire code violations 298,573 Fire grant revenue (UASI) 37,543 Law enforcement seizures 200,017 2,795,695$ Subtotal (Forward)3,238,779$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 56 NOTE 9 – FUND BALANCE CLASSIFICATIONS (CONTINUED) Subtotal (Forward)3,238,779$ Committed Emergencies 4,000,000$ Fire rescue transport fees 1,624,339 Labor negotiations 90,000 Open space land trust 5,891,858 11,606,197 Assigned Compensated absences 646,556 Working capital (surplus) 12,458,436 13,104,992 Total Fund Balance - General Fund 27,949,968$ Unassigned (Deficit) Capital improvement plan (2,114,581)$ Total Fund Balance - Capital Improvements (2,114,581)$ Restricted Transportation surtax 629,740$ Assigned 414,264 Total Fund Balance - Transportation Special Revenue 1,044,004$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 57 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 $398,000 and $23,000, 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 PERS is administered by a five member Board of Trustees, comprised of two members appointed by Village Council, one member elected by/from the police officer members, one member elected by/from the firefighter members and the fifth member is chosen by the majority of the four Trustees and formally appointed by the Village Council. The latest available actuarial valuation is as of October 1, 2015. 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. Amendments to the Plan must be authorized by the Village Council. 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. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 58 NOTE 11 – DEFINED BENEFIT PENSION PLAN (CONTINUED) PLAN DESCRIPTION (CONTINUED) 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. 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. 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, 2015 (date of the latest actuarial valuation), Plan membership consisted of the following: Inactive plan members and beneficiaries currently receiving benefits 30 Inactive plan members entitled but not yet receiving benefits 4 Active plan members 58 Total Members 92 VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 59 NOTE 11 – DEFINED BENEFIT PENSION PLAN (CONTINUED) 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 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 16.05% of covered payroll for the fiscal year ended September 30, 2016 which was determined by the October 1, 2014 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, 2016 is $1,105,500, 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, 2016 there were eleven (11) participants in the Plan. The balance in the Plan at September 30, 2016 is $1,192,485, 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, 2016 60 NOTE 12 –NET PENSION LIABILITY OF THE VILLAGE As of September 30, 2016, the Village reported a net pension liability (NPL) of $3,596,548, which was measured as of September 30, 2015 (GASB 68 measurement date). In accordance with GASB 67, information related to the PERS as of September 30, 2016 has also been disclosed. 2016 2015 Total pension liability 35,667,966$ 33,239,492$ Plan fiduciary net position (32,871,931) (29,642,944) Net pension liability 2,796,035$ 3,596,548$ Plan fiduciary net position as a percentage of total pension liability 92.16% 89.18% SIGNIFICANT ACTUARIAL ASSUMPTIONS The total pension liability of the Village was determined using the following actuarial assumptions: Measurement Date: September 30, 2016 September 30, 2015 Actuarial Valuation: October 1, 2014 October 1, 2014 Interest rates: Single discount rate 7.80% 7.85% 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 age, including inflation Mortality table 40% RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvement projected to all future years after 2000 using Scale BB; 60% 1983 Group Annuity Mortality Table for males and females 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. VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 61 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, 2016 and 2015 are summarized in the following table: Asset Class 2016 2015 Domestic equity 8.10% 8.10% International equity 3.10% 2.70% Fixed income 4.10% 4.40% Real estate 5.00% 5.80% Cash 0.00% 1.10% RATE OF RETURN For the fiscal years ended September 30, 2016 and 2015, the annual money-weighted rate of return on Plan investments, net of investment expense, was 9.03% and 0.10%, 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 fiscal years ended September 30, 2016 and 2015, a single discount rate of 7.80% and 7.85%, 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 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, 2016 62 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 (asset), 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 6.80% 7.80% 8.80% 2016 6,525,062$ 2,796,035$ (356,130)$ 6.85% 7.85% 8.85% 2015 7,101,786$ 3,596,548$ 628,451$ PENSION EXPENSE AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS For the fiscal year ended September 30, 2016, based on a September 30, 2015 measurement date, the Village recognized pension expense of approximately $734,000 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 $ 774,412 $ -- Differences between expected and actual experience 216,013 -- Change of assumptions 285,262 60,808 Net difference between projected and actual earnings on pension plan investments 1,929,530 357,746 Total $ 3,205,217 $ 418,554 VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 63 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, 2015 in the amount of $774,412 will be recognized as a reduction of the Village’s net pension liability in the fiscal year ended September 30, 2017. Beginning in fiscal year 2015, the remaining amounts related to differences between projected and actual earnings on pension plan investments are recognized over 5 years and the amounts related to changes in assumptions and differences between expected and actual experience are recognized over 5.4 years (average remaining service lives of all employees) as follows: Fiscal Year Ending September 30 Amount 2017 475,124$ 2018 475,124 2019 475,122 2020 566,979 2021 19,902 2,012,251$ 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, 2016 64 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 108,387$ Amortization of Unfunded Actuarial Accrued Liability 27,412 Annual Required Contribution (ARC) 135,799 Interest of Net OPEB Obligation 31,872 Adjustment to ARC (37,943) Annual OPEB Cost 129,728 Contributions Made (3,645) Increase in Net OPEB Obligation 126,083 Net OPEB Obligation, Beginning of Year 910,631 Net OPEB Obligation, End of Year 1,036,714$ VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 65 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 9/30/2016 9/30/2015 9/30/2014 Annual OPEB Cost 129,728$ 206,689$ 193,851$ Percentage of OPEB Cost Contributed 2.8% 11.2% 7.5% Net OPEB Obligation 1,036,714 910,631 726,997 FUNDED STATUS AND FUNDING PROGRESS The funded status of the plan as of October 1, 2015, 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 --$ 646,649$ 646,649$ 0.0% 7,421,258$ 8.71% 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, 2016 66 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, 2015 Actuarial cost method Entry Age, Normal Cost Method Amortization method Level % of Payroll, Closed (remaining amortization 24 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): 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, 2016 67 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 – CAPITAL ASSETS A prior period adjustment in the amount of $996,107 was recorded as a correction of an error in the Stormwater Utility System Fund. The amount is composed of construction in progress related invoices for service periods related to fiscal year 2015. Such invoices were improperly recorded as expenses in 2015. The adjustment properly capitalizes the amounts identified and restated beginning net position from $2,240,143 to $3,236,250. REQUIRED SUPPLEMENTARY INFORMATION Adjusted Variance Actual Amounts with Final Amounts Prior Year on a Budget - on a GAAP Reserves/ Budgetary Positive Original Final Basis Adjustments Basis (Negative) Revenues Property taxes 22,006,983$ 22,006,983$ 22,249,642$ --$ 22,249,642$ 242,659$ Utility taxes/communications services tax 2,679,538 2,679,538 2,760,480 -- 2,760,480 80,942 Franchise fees 595,000 595,000 603,889 -- 603,889 8,889 Licenses and permits 1,889,000 1,889,000 2,484,872 -- 2,484,872 595,872 Intergovernmental 1,252,941 1,252,941 1,737,565 363,071 2,100,636 847,695 Charges for services 3,313,850 3,313,850 3,548,985 -- 3,548,985 235,135 Interest 30,000 30,000 102,945 -- 102,945 72,945 Grants -- -- 54,331 -- 54,331 54,331 Miscellaneous income 52,000 52,000 81,516 -- 81,516 29,516 Total Revenues 31,819,312 31,819,312 33,624,225 363,071 33,987,296 2,167,984 Expenditures Current: General government: Elected officials 235,101 235,101 261,049 (25,948) 235,101 -- Village Clerk 358,464 358,464 325,312 -- 325,312 33,152 Administration 1,759,769 1,759,769 1,889,719 (129,950) 1,759,769 -- Village Attorney 710,000 710,000 1,072,473 (362,473) 710,000 -- Total general government 3,063,334 3,063,334 3,548,553 (518,371) 3,030,182 33,152 Public safety: Police 5,860,839 5,860,839 6,026,004 (137,178) 5,888,826 (27,987) Fire 6,837,417 6,837,417 6,917,376 (225,893) 6,691,483 145,934 Total public safety 12,698,256 12,698,256 12,943,380 (363,071) 12,580,309 117,947 Public works 1,746,550 1,746,550 1,886,011 (139,461) 1,746,550 -- Building, zoning and planning 1,981,007 1,981,007 2,079,176 (98,169) 1,981,007 -- Parks and recreation: Parks 1,348,852 1,348,852 1,216,875 -- 1,216,875 131,977 Community center 2,371,614 2,371,614 2,743,696 (250,000) 2,493,696 (122,082) Athletic division 654,071 654,071 814,569 -- 814,569 (160,498) Total parks and recreation 4,374,537 4,374,537 4,775,140 (250,000) 4,525,140 (150,603) Debt service: Principal 2,883,801 2,883,801 2,657,430 -- 2,657,430 226,371 Interest and fiscal charges 811,624 811,624 693,573 -- 693,573 118,051 Total Expenditures 27,559,109 27,559,109 28,583,263 (1,369,072) 27,214,191 344,918 Excess (Deficiency) of Revenues over Expenditures 4,260,203 4,260,203 5,040,962 (1,006,001) 6,773,105 2,512,902 Other Financing Sources (Uses) Appropriation of prior years': Reserves - working capital -- -- -- 907,832 907,832 907,832 Reserves - building division -- -- -- 98,169 98,169 98,169 Reserves - comp. absences -- -- -- -- -- -- Transfers in -- -- -- -- -- -- Transfers out (4,260,203) (4,260,203) (4,643,086) -- (4,643,086) (382,883) Total Other Financing Sources (Uses)(4,260,203) (4,260,203) (4,643,086) 1,006,001 (3,637,085) (623,118) Net Change in Fund Balances --$ --$ 397,876$ --$ 3,136,020$ (3,136,020)$ Budgeted Amounts VILLAGE OF KEY BISCAYNE, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 REQUIRED SUPPLEMENTARY INFORMATION See notes to budgetary comparison schedule. 68 VILLAGE OF KEY BISCAYNE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO BUDGETARY COMPARISON SCHEDULE FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 69 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, 2016, 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, 2016. NOTE 2 – RECONCILIATION OF GAAP BASIS TO BUDGETARY BASIS Revenue Reported on a GAAP Basis 33,624,225$ Defined Benefit Pension plan contributions provided by the State of Florida, not budgeted by the Village 363,071 Revenues on a Budgetary Basis 33,987,296$ Expenditures Reported on a GAAP Basis 28,583,263$ Defined Benefit Pension plan contributions provided by the State of Florida, not budgeted by the Village 363,071 Adjustments for prior year reserves - Community Center 250,000 Litigation - Special Council 362,473 Payment for compensated absences 393,528 Expenditures on a Budgetary Basis 27,214,191$ Actuarial UAAL Actuarial Accrued Unfunded As % of Actuarial 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% 10/1/2015 -- 646,649 646,649 0.0% 7,421,258 8.71% VILLAGE OF KEY BISCAYNE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFITS 70 2016 2015 2014 Total Pension Liability Service cost 892,483$ 905,151$ 1,325,960$ Interest 2,655,690 2,423,657 2,505,808 Benefit changes -- -- (4,253,914) Difference between actual and expected experience (678,816) 413,544 343,081 Assumption changes 368,874 351,602 (96,578) Benefit payments (570,278) (653,498) (447,084) Refunds (32,769) (8,759) (99,486) Other (release of excess state reserves) (206,710) (297,383) -- Net Change in Total Pension Liability 2,428,474 3,134,314 (722,213) Total Pension Liability - Beginning 33,239,492 30,105,178 31,210,657 Total Pension Liability - Ending (a)*35,667,966$ 33,239,492$ 30,488,444$ Plan Fiduciary Net Position Contributions - employer (from Village) 322,848$ 383,181$ 844,637$ Contributions - employer (from State) 397,294 456,253 475,709 Contributions - employee (including buyback contributions) 606,697 579,425 639,478 Net investment income 2,574,564 (103,179) 2,632,785 Benefit payments (570,278) (653,498) (447,084) Refunds (32,769) (8,759) (99,486) Administrative expense (69,369) (85,607) (86,629) Net Change in Plan Fiduciary Net Position 3,228,987 567,816 3,959,410 Plan Fiduciary Net Position - Beginning 29,642,944 29,075,128 25,115,718 Plan Fiduciary Net Position - Ending (b)32,871,931$ 29,642,944$ 29,075,128$ Net Pension Liability - Ending (a) - (b)2,796,035$ 3,596,548$ 1,413,316$ Plan Fiduciary Net Position as a Percentage of Total Pension Liability 92.16% 89.18% 95.36% Covered Employee Payroll 5,778,063$ 5,518,334$ 6,053,762$ Net Pension Liability as a Percentage of Covered Employee Payroll 48.39% 65.17% 23.35% SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY PENSION TRUST FUND 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 September 30, AND RELATED RATIOS 71 Actual Contribution Fiscal Actuarially Contribution as a % of Year Ended Determined Actual Deficiency Covered Covered September 30, Contribution Contribution (Excess) Payroll Payroll 2014 1,106,628$ 1,320,346$ (213,718)$ 6,053,762$ 21.81% 2015 934,532 839,434 95,098 * 5,518,334 15.21% 2016 926,852 720,142 206,710 * 5,778,063 12.46% Valuation Date Notes Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Inflation Salary Increases Investment Rate of Return Retirement Age Mortality Methods and Assumptions Used to Determine Contribution Rate for the fiscal year ending September 30, 2016: 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 7.85% Experience-based table of rates that are specific to the type of eligibility condition 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. * The contribution deficiencies for the fiscal years ending September 30, 2015 and September 30, 2016 were made up by the release of excess state contribution reserve funds and the use of prepaid employer contributions. 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, 2014 VILLAGE OF KEY BISCAYNE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION PENSION TRUST FUND SCHEDULE OF VILLAGE CONTRIBUTIONS 11 years 72 2016 2015 2014 Annual Money-Weighted Rate of Return, Net of Investment Expense 9.03% 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. September 30, 73 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: 74-78 Revenue Capacity These schedules contain information to help the reader assess the Village's most significant local revenue source, the property tax. 79-83 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. 84-87 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. 88-90 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. 91-92 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. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Governmental activities Net investment in capital assets 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$ 51,961,356$ Restricted 261,813 284,639 308,813 -- 1,170,247 500,137 3,138,445 3,455,654 2,405,158 3,425,433 Unrestricted 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 19,326,602 Total governmental activities net position 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 74,713,391 Business-type activities Net investment in capital assets 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 13,260,222 Unrestricted 432,133 (2,209,685) (346,721) 1,116,111 1,133,034 706,195 439,166 1,477,416 719,861 651,997 Total business-type activities net position 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 13,912,219 Total government Net investment in capital assets 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 65,221,578 Restricted 261,813 284,639 308,813 -- 1,170,247 500,137 3,138,445 3,455,654 2,405,158 3,425,433 Unrestricted 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 19,978,599 Total Government Net Position 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$ 88,625,610$ VILLAGE OF KEY BISCAYNE, FLORIDA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 74 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Expenses Governmental activities: General government 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$ 7,579,355$ Police 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 6,240,840 Fire 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 7,149,458 Public works 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 2,078,721 Building, zoning and planning 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 2,165,717 Parks and recreation 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 5,388,588 Interest on long-term debt 1,505,253 1,436,481 1,447,387 1,366,437 1,217,874 843,965 935,242 962,167 816,313 796,152 Total governmental activities 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 31,398,831 Business-type activities: Stormwater 693,135 911,500 779,856 603,262 815,402 689,287 715,836 1,109,510 1,783,865 934,223 Sanitary sewer 9,454 9,046 144,922 39,178 197,474 1,234,279 1,133,209 1,126,907 1,120,166 1,137,592 Solid waste 571,246 619,823 618,155 585,927 546,534 563,995 574,686 583,083 582,943 840,730 Total business-type activities 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 2,912,545 Total government expenses 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$ 34,311,376$ Program revenues Governmental activities: Charges for services: General government 1,389,163$ 1,320,004$ 237,315$ 181,992$ 169,307$ 177,574$ 140,587$ 160,800$ 157,868$ 147,693$ Police 21,385 14,203 38,181 (1,479) 1,763 375 1,455 4,700 20,011 - Fire 40,144 146,588 136,433 158,975 190,989 145,544 188,169 210,678 193,442 165,106 Building, zoning and planning 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 2,714,085 Parks and recreation 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 3,033,636 Operating grants and contributions 799,493 251,180 157,912 163,752 77,638 6,629 426,917 97,970 85,315 54,331 Capital grants and contributions -- -- 1,709,481 959,360 730,492 783,886 803,620 826,282 7,854,679 867,197 Total governmental activities program revenues 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 6,982,048 Business-type activities: Charges for services: Stormwater 509,571 499,101 491,314 484,932 979,865 935,352 958,114 907,324 939,798 908,269 Solid waste 520,650 530,803 635,580 615,480 597,431 588,449 592,480 591,079 600,688 652,455 Capital grants and contributions: Stormwater -- -- 331,319 172,164 -- -- -- -- 47,872 -- Sanitary sewer -- 5,460,763 6,971,311 2,501,287 258,500 -- -- -- -- -- Operating grants and contributions: Stormwater -- -- -- -- -- -- -- -- -- 164,176 Total business-type activities program revenues 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 1,724,900 Total program revenues 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$ 8,706,948$ (Continued) VILLAGE OF KEY BISCAYNE, FLORIDA LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) CHANGES IN NET POSITION 75 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Net (expense) revenue Governmental activities (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)$ (24,416,783)$ Business-type activities (243,614) 4,950,298 6,886,591 2,545,496 276,386 (963,760) (873,137) (1,321,097) (1,898,616) (1,187,645) Total net expense (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)$ (25,604,428)$ General revenues Governmental activities: Taxes: Property taxes 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$ 22,249,642$ Utility taxes 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 2,007,095 Franchise fees 1,113,194 1,064,666 992,997 1,006,415 735,519 846,252 780,245 574,639 595,196 603,889 Communications services tax 763,801 1,226,423 1,091,734 1,029,087 964,324 946,399 1,010,931 917,449 862,165 753,385 Intergovernmental 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 1,955,183 Investment earnings 641,115 346,531 44,737 21,346 37,254 37,985 16,722 34,991 47,004 111,484 Miscellaneous -- -- 91,232 131,847 147,065 212,697 1,627,479 148,140 139,196 81,516 Transfers (28,133) (28,134) (164,502) (212,308) (28,134) (28,134) (28,134) (257,134) (343,884) (382,883) Total governmental activities 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 27,379,311 Business-type activities: Investment earnings 49,086 48,202 21,303 1,974 2,162 587 659 5,551 3,911 5,986 Transfers 28,133 28,134 164,502 212,308 28,134 28,134 28,134 257,134 343,884 382,883 Total business-type activities 77,219 76,336 185,805 214,282 30,296 28,721 28,793 262,685 347,795 388,869 Total general revenues 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$ 27,768,180$ Change in Net Position Governmental activities 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$ 2,962,528$ Business-type activities (166,395) 5,026,634 7,072,396 2,759,778 306,682 (935,039) (844,344) (1,058,412) (1,550,821) (798,776) Total change in Net Position 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$ 2,163,752$ CHANGES IN NET POSITION (Continued) LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) VILLAGE OF KEY BISCAYNE, FLORIDA 76 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General fund Non-spendable --$ --$ --$ --$ 305,730$ 303,918$ 272,330$ 353,823$ 268,176$ 443,084$ Restricted -- -- -- -- 1,170,247 1,054,070 1,466,704 1,574,817 1,875,857 2,795,695 Committed -- -- -- -- 12,039,224 4,858,269 5,065,439 5,214,654 13,538,053 11,606,197 Assigned -- -- -- -- 4,028,870 8,178,544 10,852,640 11,756,540 11,870,006 13,104,992 Reserved 9,875,416 11,298,178 12,318,533 15,286,689 -- -- -- -- -- -- Unreserved -- -- -- -- -- -- -- -- -- -- Total General Fund 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 27,949,968 All other governmental funds Committed -- -- -- -- 3,665,259 6,060,286 4,240,104 4,371,204 3,188,871 629,740 Unassigned -- -- -- -- (1,077,816) (690,343) (278,254) (314,462) -- -- Restricted -- -- -- -- -- 573,701 1,671,741 470,334 529,301 -- Assigned 59,404 414,264 Unreserved, reported in: Special revenue fund (2,482,196) (2,701,623) (1,501,382) (1,299,432) -- -- -- -- -- -- Capital projects funds 2,954,753 4,783,222 6,875,361 5,195,557 -- -- -- -- -- (2,114,581) Total Other Governmental Funds 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 (1,070,577) Total Governmental Funds 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$ 26,879,391$ 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 77 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Revenues Ad valorem taxes 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$ 22,249,642$ Franchise fees 1,113,194 1,064,666 992,997 1,006,415 735,519 846,252 780,245 574,639 595,196 603,889 Utility taxes/communication services tax 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 2,760,480 Licenses and permits 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 2,484,872 Intergovernmental revenue 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 2,822,380 Charges for services 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 3,548,985 Grants 206,040 251,180 167,873 425,339 77,638 6,629 426,917 97,970 85,315 54,331 Investment income 632,355 338,528 44,737 21,346 37,254 37,985 16,722 34,991 47,004 111,484 Contributions -- -- -- -- -- -- -- -- 7,000,000 -- Miscellaneous 8,762 8,003 26,232 131,848 147,065 212,697 1,627,479 148,140 139,196 81,516 Total revenues 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 34,717,579 Expenditures Current: General government 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 3,783,031 Fire 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 6,895,590 Police 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 5,957,079 Public works 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 1,873,594 Building, planning and zoning 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 2,074,777 Parks and recreation 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 4,754,626 Capital outlay 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 6,938,850 Intergovernmental: Payment under interlocal agreement -- -- -- -- -- -- -- 4,574,703 8,545 2,390,330 Debt service: Principal 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 3,294,521 Interest and other fiscal charges 1,556,396 1,444,576 1,450,649 1,386,913 1,520,433 828,393 913,409 875,949 973,012 822,575 Total expenditures 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 38,784,973 Excess (deficiency) of revenues over expenditures (421,078) 2,264,036 4,412,237 1,514,166 655,153 (368,935) 2,905,318 (4,201,659) 8,116,641 (4,067,394) Other financing sources (uses) Transfers in 6,697,854 4,533,094 3,236,194 -- -- 5,816,222 -- 904,093 1,855,623 4,260,203 Transfers out (6,725,988) (4,561,228) (3,400,696) (212,308) (28,134) (5,844,356) (28,134) (1,161,227) (2,199,507) (4,643,086) Bonds issued 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)3,971,866 (28,134) (99,502) (23,864) 293,547 575,866 46,941 4,337,866 (213,884) (382,883) Net Change in Fund Balances 3,550,788$ 2,235,902$ 4,312,735$ 1,490,302$ 948,700$ 206,931$ 2,952,259$ 136,207$ 7,902,757$ (4,450,277)$ Debt service as a percentage of non-capital expenditures 14% 14% 14% 15% 16% 13% 13% 11% 14% 13% VILLAGE OF KEY BISCAYNE, FLORIDA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 78 Fiscal Ad Valorem Franchise Utility Inter- Communications Year Taxes Taxes Taxes governmental Services Tax Total 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 2016 22,249,642 603,889 2,007,095 2,822,380 753,385 28,436,391 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. 79 Total Fiscal Year Total Net Direct Ended Residential Commercial Personal Assessed Tax September 30, Property Property Property Value Rate 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 2016 7,291,699,676 393,809,175 36,239,673 7,721,748,524 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 80 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 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 2016 2015 3.000 - 3.000 4.667 0.400 5.067 7.138 0.184 7.322 0.032 0.136 0.979 16.536 (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 $1,000 of assessed value. Sources: Village of Key Biscayne Finance Department and Miami-Dade County Property Appraiser's Office. 81 Percent of Percent of Total Total Net Village Net Net Village Net Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Taxpayer Value Rank Value GB Hotel Partners LTD 64,500,000$ 1 0.84% Sonesta Beach Resort, LP 44,568,400$ 1 1.04% Red Dragon's Sands LTD 25,808,748 2 0.33% United Reat Estate Ventures 42,064,691 2 0.98% Galleria of Key Biscayne Inc 23,205,985 3 0.30% GB Hotel Partners LTD 34,700,000 3 0.81% Edgardo Defortuna 19,311,292 4 0.25% 260 Cape Florida LLC 12,663,250 4 0.30% United Real Est Ventures Inc 18,624,111 5 0.24% Oceanclub Community Assoc 12,500,000 5 0.29% Vali Key LLC 14,300,000 6 0.19% Claudio & Yvonne Alvarez 9,202,584 6 0.21% Consultatio Key Biscayne LLC 14,300,000 7 0.19% Aurelio & Berta Fernandez 7,813,741 7 0.18% 260 Cape Florida LLC 14,297,167 8 0.19% Garflo Investments 7,361,525 8 0.17% Key Biscayne Presbyterian Church 14,000,000 9 0.18% Roger & Susana Khouri 6,979,000 9 0.16% JLK Global Fund US Inc 13,500,000 10 0.17% CSM Key Biscayne Equities L 6,438,569 10 0.15% 221,847,303$ 2.87%184,291,760$ 4.30% 2016 2007 VILLAGE OF KEY BISCAYNE, FLORIDA PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 82 Total Taxes Fiscal Year Levied for Collections in Ended Fiscal Percent Subsequent Percent September 30, Year Amount of Levy Year's Amount of Levy 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 19,686,090 17,857,711 90.71% -- 17,857,711 90.71% 2015 20,092,972 19,353,288 96.32% -- 19,353,288 96.32% 2016 23,165,246 22,249,642 96.05% -- 22,249,642 96.05% 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 83 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 2007 --$ 31,695,102$ --$ 5,200,000$ --$ 36,895,102$ 0.25% 3,511$ 2008 -- 33,987,811 5,000,000 5,200,000 339,919 44,527,730 0.22% 4,238 2009 -- 32,040,160 -- 4,835,000 2,387,341 39,262,501 0.25% 3,737 2010 -- 29,950,678 -- 4,450,000 4,695,812 39,096,490 0.26% 3,167 2011 -- 27,757,222 -- 4,130,000 4,497,388 36,384,610 0.29% 2,948 2012 -- 25,543,132 -- 3,655,000 4,254,706 33,452,838 0.33% 2,710 2013 -- 28,759,034 -- 3,170,000 4,148,944 36,077,978 0.31% 2,923 2014 -- 30,897,605 -- 6,255,000 3,946,308 41,098,913 0.28% 3,329 2015 -- 28,101,157 -- 5,955,000 3,736,933 37,793,090 0.32% 2,961 2016 -- 24,969,498 -- 9,135,000 167,484 34,271,982 0.43% 2,659 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 83 on the demographic schedule Business-type Activities 84 VILLAGE OF KEY BISCAYNE, FLORIDA RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS The Village does not have general obligation debt. 85 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 24,969,498$ 100.00% 24,969,498$ Overlapping debt: Miami-Dade County 1,597,781,000 2.42% 38,650,693 Miami-Dade County School Board 499,129,000 1.11% 5,554,061 Subtotal, Overlapping Debt 44,204,754 Total Direct and Overlapping Debt 69,174,252$ (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. 2016 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. 86 Fiscal Year Non- Ended Ad Valorem September 30, Revenues Principal Interest Coverage 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 2016 12,467,937 3,294,521 822,575 3.03 VILLAGE OF KEY BISCAYNE, FLORIDA PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS Debt Service Source: Village of Key Biscayne Finance Department. 87 Median Per Capita Household Personal Unemployment Year Population (1) Income (1) Income (1) Rate (2) 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% 2016 12,888 145,723 50,377 5.2% 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 88 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 116 3 not known 100 4 not known All remaining employers are of an extremely small number Total 1,866 Source: Village of Key Biscayne Finance Department. Notes: (1) All amounts are estimated for timely inclusion in report. Requests for information received no response. VILLAGE OF KEY BISCAYNE, FLORIDA PRINCIPAL EMPLOYERS 2016 2007 CURRENT YEAR AND NINE YEARS AGO 89 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Number of Employees General government 6 6 8 7 7 7 7 7 9 10 Public safety 79 78 81 80 80 81 84 81 82 78 Building, planning and zoning 14 13 13 13 13 15 17 17 14 14 Public works 4 4 4 4 4 4 4 4 5 4 Parks and recreation 7 7 10 10 10 10 12 10 910 Total Number of Employees 110 108 116 114 114 117 124 119 119 116 Source: Village of Key Biscayne Finance Department VILLAGE OF KEY BISCAYNE, FLORIDA FULL-TIME EQUIVALENT VILLAGE GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 90 Function/Program 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Public safety: Police: Police personnel and officers 40 39 42 41 41 42 44 41 43 43 Police calls for service 35,412 36,190 37,002 34,935 37,646 31,214 26,836 24,556 30,475 29,427 Parking violations 996 776 824 523 563 638 676 440 506 552 Traffic violations 1,104 946 975 1,425 1,269 1,542 1,875 846 939 956 Fire: Fire personnel 39 39 39 39 39 39 40 40 39 35 Fire incidents 998 1,006 1,012 1,556 1,841 1,369 1,896 1,763 1,490 1,908 Fire inspections performed 220 305 229 267 469 323 469 739 667 770 Planning and development: Building permits issued 3,504 3,620 3,650 4,371 3,723 3,402 3,885 3,876 3,684 3,501 Business tax receipts issued 931 978 1,095 1,129 1,165 1,187 937 987 1,097 1,219 Culture and recreation: Number of building users 5,778 4,673 4,268 3,990 4,127 4,338 4,251 4,041 4,110 4,179 Solid waste: Residential accounts 1,200 1,299 1,298 1,302 1,292 1,264 1,254 1,250 1,272 1,260 Sources: Various Village Departments. VILLAGE OF KEY BISCAYNE, FLORIDA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 91 Function/Program 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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 4 Parks acreage 9 9 9 9 9 9 9 9 9 10 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 92 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 93 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, 2016, and the related notes to the financial statements, which collectively comprise the Village’s basic financial statements, and have issued our report thereon dated June 6, 2017. 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. 94 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 June 6, 2017 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 95 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, 2016, and have issued our report thereon dated June 6, 2017. 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 Florida 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, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated June 6, 2017, 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. 96 Financial Condition Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require 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, require 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, 2016, 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, 2016. 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 June 6, 2017 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 97 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, 2016. Management is responsible for the Village’s compliance with the specified 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. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Village complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Village complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide 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 complied, in all material respects, with Section 218.415 Florida Statutes for the fiscal year ended September 30, 2016. This report is intended to describe our testing of compliance with Section 218.415 Florida Statutes and it is not suitable for any other purpose. Miami, FL June 6, 2017