HomeMy Public PortalAboutComprehensive Annual Financial Report Fiscal Year Ended 09-30-06.tifVILLAGE OF KEY BISCAYNE, FLORIDA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED SEPTEMBER 30, 2006
Prepared by
THE FINANCE DEPARTMENT
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VILLAGE OF KEY BISCAYNE, FLORIDA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED SEPTEMBER 30, 2006
TABLE OF CONTENTS
I. INTRODUCTORY SECTION
PAGE
Letter of Transmittal i
Village Officials vi
Certificate of Achievement for Excellence in Financial Reporting vii
Organization Chart viii
II. FINANCIAL SECTION
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1-2
MANAGEMENT'S DISCUSSION AND ANALYSIS (Required Supplementary Information) 3-10
BASIC FINANCIAL STATEMENTS:
Government -Wide Financial Statements:
Statement of Net Assets
Statement of Activities
11
12
Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet 13
Statement of Revenues, Expenditures and Changes in Fund Balances 14
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 15
Proprietary Fund Financial Statements:
Statement of Net Assets 16
Statement of Revenues, Expenses and Changes in Net Assets 17
Statement of Cash Flows 18
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Assets 19
Statement of Changes in Fiduciary Net Assets 20
Notes to Basic Financial Statements 21-42
REQUIRED SUPPLEMENTARY INFORMATION (OTHER THAN MD&A)
Budgetary Comparison Schedule — General Fund 43
Note to Budgetary Comparison Schedule 44
Schedule of Funding Progress 45
Schedule of Employer Contributions 46
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VILLAGE OF KEY BISCAYNE, FLORIDA
TABLE OF CONTENTS
PAGE
III. STATISTICAL SECTION
Net Assets by Component — Last Three Fiscal Years 47
Changes in Net Assets — Last Three Fiscal Years 48-49
Fund Balances of Governmental Funds — Last Three Fiscal Years 50
Changes in Fund Balances of Governmental Funds — Last Three Fiscal Years 51
General Governmental Tax Revenues by Source — Last Ten Fiscal Years 52
Net Assessed Value and Estimated Actual Value of Taxable Property —
Last Ten Fiscal Years 53
Property Tax Rates — Direct and Overlapping Governments — Last Ten Fiscal Years 54
Principal Property Taxpayers — Current and Nine Years Ago 55
Property Tax Levies and Collections — Last Ten Fiscal Years 56
Ratios of Outstanding Debt by Type — Last Ten Fiscal Years 57
Ratios of General Bonded Debt Outstanding — Last Ten Fiscal Years 58
Direct and Overlapping Governmental Activities Debt 59
Pledged Revenue Coverage — Last Ten Fiscal Years 60
Demographic and Economic Statistics — Last Ten Fiscal Years 61
Principal Employers — Current and Nine Years Ago 62
Full -Time Equivalent Village Government Employees by Function —
Last Ten Fiscal Years 63
Operating Indicators by Function/Program — Last Ten Fiscal Years 64
Capital Asset Statistics by Function/Program — Last Ten Fiscal Years 65
IV. COMPLIANCE SECTION
Report of Independent Certified Public Accountants 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 66-67
Management Letter in Accordance with the Rules of the Auditor General of the
State of Florida 68-69
Report of Independent Certified Public Accountants on Compliance and Internal
Control over Compliance Applicable to Each Major Federal Program in Accordance
with OMB Circular A-133 70-71
Schedule of Expenditures of Federal Awards 72
Notes to the Schedule of Expenditures of Federal Awards 73
Summary Schedule of Prior Audit Findings 74
Schedule of Findings and Questioned Costs 75-79
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INTRODUCTORY SECTION
VILLAGE OF KEY BISCAYNE
Village Council
Robert L. Vernon, Mayor
Jorge E. Mendia, Vice Mayor
Michael Davey
Enrique Garcia
Steve Liedman
Thomas Thornton
Patricia Weinman
Pillage Manager
Jacqueline R. Menendez
Office of the Village Manager
February 15, 2007
To the Honorable Mayor, Members of the Village
Council and Citizens of the Village of Key Biscayne:
The Government Finance Officers Association (GFOA) recommends that all
units of local government publish, within six months of the close of each
fiscal year, 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 recommendation, we
hereby issue the comprehensive annual financial report of the Village of Key
Biscayne for the fiscal year ended September 30, 2006.
This report consists of management's representation concerning the finances
of the Village of Key Biscayne. Consequently, management assumes full
responsibility for the completeness and reliability of all of the information
presented in this report. To provide a reasonable basis for making these
representations, management of the Village of Key Biscayne has established a
comprehensive internal framework that is designed both to protect the
Village's assets from loss, theft, or misuse and to compile sufficient reliable
information for the preparation of the Village of Key Biscayne's financial
statements in conformity with GAAP. Because the cost of internal controls
should not outweigh their benefits, the Village of Key Biscayne's
comprehensive framework of internal controls has been designed to provide
reasonable, rather than absolute, assurance that the financial statements will be
free from material misstatement. As management, we assert that, to the best
of our knowledge and belief, this financial report is complete and reliable in
all material respects.
The firm of Rachlin Cohen & Holtz 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, 2006 are free of material misstatement. The independent audit
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88 West McIntyre Street • Suite 210 • Key Biscayne, Florida 33149 • (305) 365-5500 • Fax (305) 365-8936
MISSION STATEMENT 'TO PROVIDE A SAFE, QUAI ITY COMMUNITY ENVIRONMENT FOR ALL ISLANDERS THROUGH RESPONSIBLE GOVERNMENT'
www keybiscayne17 gov
involved examining, on a test basis, evidence supporting the amount 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
unqualified opinion that the Village of Key Biscayne's financial statements for the fiscal year
ended September 30, 2006, are fairly presented in conformity with GAAP. The independent
auditor's 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 MD&A and should be read in
conjunction with it. The Village of Key Biscayne's MD&A can be found immediately following
the report of the independent certified public accountants.
Profile of the Government
The Village of Key Biscayne, incorporated in 1991, is located on the southern most 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 11,100. The Village of Key Biscayne receives tax levies on real and personal
property located inside its boundaries.
The Village of Key Biscayne has operated under the council-manager form of government since
incorporation. Policymaking and legislative authority are vested in a governing council
consisting of the mayor and six other council members. The Council is responsible among other
things, for passing ordinances and resolutions, adopting the annual budget, appointing the
Village Manager and Village Clerk. 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 department within an individual fund. The Village Manager may make transfers of
appropriations within a department. Transfers of appropriations between departments or funds
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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 supplemental information section of this report.
Local Economy
The Village of Key Biscayne enjoys a favorable economic environment and local indicators 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 three
major shopping centers. There is no industrial area in the community.
Long -Term Financial Planning
The Village has completed all three phases of its Civic Center Project with the completion of a
new Village Hall/ Police Building, a new Fire Station, and most recently, the third phase, the
Village Community Center, opened in November 2004. Recent completion of a new bus shelter
at Crandon Blvd and Harbor Drive was the second and largest bus shelter in the Village. Several
public works projects have recently been completed yielding new sidewalks, street
improvements, park improvements, and a tree replacement program. A new capital project has
completed two of three phases to improve the safety of the major roadway through the Village on
Crandon Boulevard.
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.
Cash Management Policies and Practices
The Village's Cash Management strategy emphasizes immediate funds collection and deposit
into the appropriate fund utilizing ACH debit or wire transfer methods in over 90% of all funds
received. Cash is transferred to a centralized clearing account for all payments at the point of
payment. The clearing account maintains a zero balance exclusive of these transfers. Currently,
the Village's investment policy follows Chapter 218, Florida Statutes. Cash in any of the fund's
operating accounts are swept into an overnight repurchase agreement, properly collateralized in
accordance with Chapter 280, Florida statutes. Surplus cash is invested in certificates of deposit
with qualified depositories, and with the State Board of Administration. Investment objectives
are the preservation of principal, liquidity in accordance with planned cash flows, and return on
investment in that order.
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Risk Management
The Village is exposed to various risks of loss related to torts, theft of or damage to and
destruction of assets; errors and omissions; injuries to employees; and natural disasters. The
Village participates in the Florida League of Cities Municipal Insurance Trust for workers'
compensation, liability and property insurance. Flood insurance is provided by the Florida State
Flood Insurance Pool.
Pension Benefits
The Village of Key Biscayne sponsors a defined contribution 401(a) pension plan with the
International City Managers' Association, Retirement Corporation (ICMA). Each full time
employee can contribute up to six percent (6%) of his or her pay to the plan; the Village
contributes twelve percent (12%). In addition, the Village sponsors a 457 deferred compensation
plan in which the employees may contribute on a voluntary basis.
A defined benefit pension plan is available to all firefighters and sworn police officers. This plan
is under the direction of a separate board of trustees, two of which are police and fire department
employees. Complete details of this plan can be found in note 14 of the basic financial
statements.
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, 2005. This was the
fourteenth 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.
In addition, the Village also received the GFOA's Distinguished Budget presentation Award for
its annual budget document for the 2004-2005 fiscal year. This was the thirteenth consecutive
year that the Village has received this prestigious award. In order to qualify for the
Distinguished Budget Presentation Award, the Village's budget document was judged to be
proficient in several categories, including as a policy document, a financial plan, an operations
guide, and a communications device.
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 Rachlin Cohen &
Holtz LLP, our independent auditors, for their assistance and efforts in helping the Village prepare the
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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,
cqueline R. Mene
illage Manager
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Randolph G. White
Finance Director
VILLAGE OF KEY BISCAYNE, FLORIDA
VILLAGE OFFICIALS
SEPTEMBER 30, 2006
VILLAGE COUNCIL
Robert Oldakowski, Mayor
Robert Vernon, Vice -Mayor
Enrique Garcia
Steve Leidman
Jorge Mendia
Thomas Thornton
Patricia Weineman
VILLAGE MANAGER
Jacqueline R. Menendez
VILLAGE CLERK
Conchita H. Alvarez, CMC
VILLAGE ATTORNEY
Weiss Serota Helfman Pastoriza Cole & Boniske, P.A.
FINANCE DIRECTOR
Randolph G. White, P.A.
VILLAGE AUDITORS
Rachlin Cohen & Holtz LLP
Accountants • Advisors
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Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Village of Key Biscayne
Florida
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2005
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
President
-fdeAcz,
Executive Director
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VILLAGE OF KEY BISCAYNE
ORGANIZATIONAL CHART
The Village Manager, who reports directly to the Village Council, manages the Village
of Key Biscayne's day-to-day operations. The Village Manager appoints the Five
Department Heads.
Village Clerk
Special Master
VOTERS
OF
KEY BISCAYNE
Village
Council
Department of
Recreation
illage Manage
illage Attorne
Assistant to
Yillage Manager
Local Planning
Agency
Police/Fire
Retirement
Board
Department of
Building,
Zoning and
Planning
Building
Zoning
Planning
ode Assistanc
Department of
Public Safety
Fire Rescue
Police
Special Events
Sports and
Athletics
Programs
and Tours
Senior
Services
Department of
Public Works
illage Enginee
Contract
Su • ervisor
Storm water
Mana • ement
Refuse
Collection
and Recycling
Department of
Finance and
Administrative
Services
Finance/
Accountin
Personnel/
Benefits
Risk
Mana • ement
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Cohen
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Accountants Advisors
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Honorable Mayor, Village Council and Village Manager
Village of Key Biscayne, Florida
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 September 30, 2006 and for the fiscal year then ended, which collectively
comprise the Village's basic financial statements as listed in the table of contents. These financial
statements are the responsibility of the Village's management. 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
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 of material misstatement.
An audit includes consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on
the effectiveness of the Village's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes 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, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our 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 of Key Biscayne, Florida as of September
30, 2006 and the respective changes in the financial position and cash flows, where applicable, thereof
for the year then ended, in conformity with accounting principles generally accepted in the United States
In accordance with Government Auditing Standards, we have also issued a report dated February 15,
2007 on our consideration of the Village's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts, and 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 the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be considered in assessing the
results of our audit.
Rachlin Cohen & Holtz LLP
One Southeast Third Avenue • Tenth Floor • Miami, Florida 33131 • Phone 305.377.4228 • Fax 305.377.8331 • www.rachlin.com
An Independent Member of Baker Tilly International
M I A M I ■ FORT LAUDERDALE • WEST PALM BEAC H • STUART
Honorable Mayor, Village Council and Village Manager
Village of Key Biscayne, Florida
Page Two
Management's Discussion and Analysis and the required supplementary information on pages 3 through
10 and pages 43 through 46, respectively, are not a required part of the basic financial statements but are
supplementary information required by accounting principles generally accepted in the United States.
We have applied certain limited procedures, which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the required supplementary information.
However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Village of Key Biscayne's basic financial statements. The introductory section and
statistical tables are presented for purposes of additional analysis and are not a required part of the basic
financial statements. Similarly, the accompanying schedule of expenditures of federal awards is
presented for purposes of additional analysis as required by U.S. Office of Management and Budget
Circular A-133, Audits of States, Local Governments, and Non -Profit Organization, and is not a required
part of the basic financial statements. The schedule of expenditures of federal awards have been
subjected to the auditing procedures applied in the audit of the basic financial statements and in our
opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a
whole. The introductory section and statistical tables have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.
LzA.id(4, text,x/ it ffiel Lz,p
Miami, Florida
February 15, 2007
Cohen
&Holtz
Accountants Advisors
MANAGEMENT'S DISCUSSION AND ANALYSIS
(MD&A)
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, 2006. 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-v of
this report.
Financial Highlights
• The assets of the Village of Key Biscayne exceeded its liabilities at the close of the most
recent fiscal year by $37,067,208 (net assets). Of this amount, all are either reserved or
designated.
• The Village's total net assets increased by $2,940,117, this increase is attributable to the
increase of property taxes received due to an increase in the assessed taxable values of
properties in the Village, increases in revenues from the Key Biscayne Community Center
programs and increased code compliance activities.
• At the close of the current fiscal year, the Village of Key Biscayne's governmental funds
reported an ending fund balance of $6,798,575, an increase of $800,924 in comparison with
the prior year. This entire total amount is either reserved or designated for spending at the
Council's direction.
• The Village incurred $3,450,000 of new long-term debt during the current fiscal year.
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the Village of Key
Biscayne's basic financial statements. The Village of Key Biscayne's basic financial statements
comprise three components: 1) government -wide financial statements, 2) fund financial
statements, and 3) notes to the financial statements. This report also contains other
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 assets presents information on all of the Village of Key Biscayne's assets
and liabilities, with a difference between the two reported as net assets. Over time, increases or
decreases in net assets may serve as a useful indicator of whether the financial position of the
Village of Key Biscayne is improving or deteriorating.
The statement of activities presents information showing how the government's net assets
changed during the most recent fiscal year. All changes in net assets 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
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Village of Key Biscayne include general government, public safety, public works, building
planning & zoning, and parks and recreation.
The government -wide financial statements include only the Village of Key Biscayne itself
(known as the primary government).
The government -wide financial statements can be found on pages 11 and 12 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 two fund categories, the governmental funds and the enterprise funds.
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 spend able resources as well as on
balances of spend able 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 four governmental funds, the general fund, a special
revenue fund and two capital projects funds.
The Village of Key Biscayne adopts an annual appropriated budget for its general fund. A
budgetary comparison statement has been provided for the general fund to demonstrate
compliance with this budget.
The basic governmental fund financial statements can be found on pages 13 to 15 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 16-18 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 19-20 of this report.
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Notes to the basic financial statements. The notes provide additional information that is
essential to a full understanding of the data provided in the government -wide and fund financial
statements. The notes to the financial statements can be found on pages 21 to 42 of this report.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents
certain required supplementary information concerning the Village's progress in funding its
obligation to provide pension benefits to its employees.
Required supplementary information can be found on pages 43 to 46 of this report.
Government -wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. In the case of the Village's, assets exceeded liabilities by $37,067,208 at the close of
the most recent fiscal year.
A portion of the Village's net assets, $70,866,285 or 88.77 %, reflects its investment in capital
assets (e.g., land and equipment). 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
Assets and the Statement of Activities report information about the Village's activities that will
help answer questions about the position of the Village. A comparative analysis is provided.
Governmental Activities. Governmental activities increased the Village of Key Biscayne fund
balance by approximately $800,924. This net overall increase was attributable to an increase in
property tax revenues due to increased assessed values of Key Biscayne real estate in general and
increased code enforcement activities. All other governmental activities increased fund balance
as follows:
• Property taxes increased by $1,469,987 (11.0 percent) during the year. Most of this
increase is the product of a minor number of new units completed and on the tax roll for the
first time, along with renovated homes with increased assessed values, and residential and
commercial resales.
• Most department salaries increased 8 percent due to the Village's salary step program,
which in fiscal year 2006 reflected a 5 percent increase in salaries and a 3 percent increase
for a cost of living increase.
• Debt service remained fairly level compared to the prior year, with a minor addition for
interest on new debt.
• The amount expended to the Village Attorney increased due to involvement with labor
negotiations with the Village's Fire Rescue Department that were unforeseen at budget
preparation time.
For the most part, increases in expenses closely paralleled inflation and growth in the scope of
services.
Net Assets
A summary of the Village's net assets is presented in Table A-1 and a summary of the changes in
net assets is presented in Table A-2.
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Table A - 1
Summary of Net Assets
Governmental Activities Business -type Activities Total
Current assets
Capital assets, net
Total assets
Current liabilities
Noncurrent liabilities
Investment in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets
2006 2005
$ 8,155,986 $ 8,130,755
62,377,577 57,936,791
70,533,563 66,067,546
3,561,695 2,083,737
33,009,069 33,069,703
28,676,266
359,899
4,926,634
$33,962,799
Revenues:
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
26,284,600
326,826
4,302,680
2006 2005 2006 2005
$ 809,571 $ 1,349,581 $ 8,965,557 $ 9,480,336
8,488,706 8,337,603 70,866,283 66,274,394
9,298,277 9,687,184 79,831,840 75,754,730
284,860 68,441 3,846,555 2,152,178
5,909,008 6,405,759 38,918,077 39,475,462
2,326,089 1,931,843
778,320 1,281,141
$30,914,106 $3,104,409 $3,212,984
31,002,355 28,216,443
359,899 326,826
5,704,954 5,583,821
$ 37,067,208 $ 34,127,090
Table A - 2
Summary of Changes in Net Assets
Governmental Activities Business -type Activities Total
2006 2005
2006 2005
2006 2005
$ 3,238,022 $ 2,907,492 $ 1,049,332 $ 1,052,444 $ 4,287,354 $ 3,959,936
3,559,753 650,679 - - 3,559,753 650,679
517,643 - - - 517,643
Property taxes 14,830,238 13,360,251
Utility taxes - 2,346,655 2,234,402
Franchise fees - 1,088,929 705,810
Intergovernmental 996,092 978,304
Investment income and
miscellaneous 45,527 41,050 351,866 578,318
Total revenues 26,366,028 21,891,849 1,094,859 1,093,494 27,460,887 22,985,343
Expenses:
General government
Public safety
Parks and recreation
Public works
Building, zoning and planning
Debt service
Stormwater
Solid waste collection
Sanitary sewer construction
Total expenses
14,830,238
2,346,655
1,088,929
996,092
13,360,251
2,234,402
705,810
978,304
306,339 537,268
4,252,037 2,914,734 4,252,037 2,914,734
9,222,766 9,240,670 - 9,222,766 9,240,670
2,849,434 2,614,785 2,849,434 2,614,785
4,004,651 2,189,673 4,004,651 2,189,673
1,547,042 1,235,175 - - 1,547,042 1,235,175
1,413,272 1,305,383 - 1,413,272 1,305,383
720,158 454,963 720,158 454,963
501,417 466,162 501,417 466,162
9,992 10,262 9,992 10,262
23,289,202 19,500,420 1,231,567 931,387 24,520,769 20,431,807
Changes in net assets before transfers 3,076,826 2,391,429 (136,708) 162,107 2,940,118 2,553,536
Transfers (28,133) (28,135) 28,133 28,135
Changes in net assets after transfers 3,048,693 2,363,294 (108,575) 190,242 2,940,1 18 2,553,536
Net assets, beginning 30,914,106 28,550,812 3,212,984 3,022,742 34,127,090 31,573,554
Net assets, ending $ 33,962,799 $ 30,914,106 $ 3,104,409 S 3,212,984 $ 37,067,208 $ 34,127,090
The government's net assets increased by $3,048,693 during the current fiscal year. This
increase represents the results of operations for a full 12 -month period with no capital
contributions from outside sources.
Business -type Activities
Business -type activities decreased the Village's net assets by $108,576.
-6-
• In fiscal 2006, one of the three business -type activities reflected operational profits.
• The Stormwater Utility Fund reflected an operating loss of $16,415, due mainly to
depreciation expense in the amount of $273,919.
• The Solid Waste Collection Fund reported a profit of $30,550.
• The Sanitary Sewer Construction Fund was dormant awaiting a resumption of construction activity.
Governmental Activities
Revenues by Sources- Governmental Activities
Intergovernmental,
$996,092 , 5%
Utility Taxes,
$2,346,655 , 12%
Franchise Fees,
$1,088,929 , 6%
Investment
Earnings,
$351,864 , 2%
Ad Valorem Taxes,
$14,830,238 , 75%
Charges for
Services,
$2,041,169 , 63%
-7-
Program Revenues
Program Expenses
Interest on Long
Term Debt,
$1,413,272 , 6%
Building, Zoning
and Planning,
$1,547,042 , 7%
Parks and
Recreation,
$2,849,434 , 12%
Fire, $4,947,149 ,J
22%
Licenses, Permits
& Fines,
$1,196,853 , 37%
Public Works,
$4,004,651 , 17%
Police, $4,275,617
, 18%
Business -type Activities
Revenues- Business Type Activities
Stormwater Charges,
$517,365 , 49% Solid Waste Charges,
r $531,967 , 51%
Expenses- Business Type Activities
General and
Administrative -
Stormwater, $533,780
, 52%
General and
AdministratiNte - Solid
Waste, $501,417 ,
48%
Financial Analysis of the Government's Funds
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 spend able 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 $6,874,310, an
increase of $1,120,033 in comparison with the prior year. All of this is either reserved or
designated for specific uses: (1) emergencies ($2,388,765), (2) Building Inspection Costs
($275,000), (3) Compensated Absences ($334,644), (4) Law Enforcement Seizures ($359,899),
(5) Playing Field Acquisitions ($456,403), (7) Working Capital Reserves ($600,000), (8)
Police/Administration Building Reserve ($5,890), (9) Fire Station Building Reserve ($5,890),
(10) Community Center Equipment Reserve ($50,000), (11) Fire Vehicles Replacement Reserve
-8-
($50,000), (12) Master Plan Initiatives ($1,403,597), (13) Capital Lease ($298,682), (14) Prepaid
Items ($170,539), (15) Roadway Improvements ($175,000), and Recreation Facilities
($300,000).
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 30.5 percent of total general fund expenditures.
A summary of the general fund's condensed balance sheet and statement of revenues,
expenditures and changes in fund balance is presented in Table B-1 and B-2 for September 30,
2006 and 2005, is shown as follows:
Table B-1
Summary of Condensed Balance Sheet
2006 2005
Total assets $ 8,045,610 $ 7,177,656
Total liabilities
Reserved or designated fund balance
Total liabilities and fund balance
$ 1,171,300 $ 1,423,379
6,874,310 5,754,277
$ 8,045,610 $ 7,177,656
Table B-2
Summary of Condensed Statement of Revenues,
Expenditures and Changes in Fund Balances
Total revenues
Total expenditures
Excess of revenues over expenditures
2006 2005
$25,264,190 $21,240,012
22,554,700 19,568,607
$ 2,709,490 $ 1,671,405
The Special Revenue Fund was established to account for the construction and future
maintenance of the Village's roadways. Bond revenue is the source of funding for construction
of roadways, while the local option gas tax funds maintenance and the transportation surtax
funds debt service.
At present, the fund shows a negative fund balance which will be corrected with the Series 2006
Roadway Improvement Revenue Bonds, issued in late December 2006.
The Capital Improvement Fund receives an annual budgeted transfer from the general fund to
fund capital construction of infrastructure at various locations on the island. All transfers are
allocated to specific projects by management and the council during the annual budgeting
process. The fund balance increased by $880,206 during the current fiscal period. Fund balance
is comprised of funds allocated to named projects with varied stages of completion.
General Fund Budgetary Highlights
There were no supplemental appropriations for the fiscal year ended September 30, 2006.
-9-
Capital Assets
As of September 30, 2006, the Village's capital assets net of accumulated depreciation amounted
to $70,866,283. The total increase in capital assets for the fiscal year was as follows:
Major capital asset events during the fiscal year included the following:
• Completion of the McIntyre and Crandon Intersection and Median Fountains
• Second year of the Village Tree Replacement Program
• Completion of drainage improvements on Harbor Drive
• Completion of the Crandon Blvd Improvement. Project, phase one
Additional information on the Village's capital assets can be found in Note 8 on pages 32-33 of
this report.
Debt Administration
At September 30, 2006, the Village had bonded debt outstanding of $39,248,577. Of this
amount, $5,785,000 represents bonds secured solely by specified revenue sources (Stormwater
revenue bonds). The remainder is special obligation bonds that are secured by non -ad Valorem
revenues through covenants to budget and appropriate.
The Village's total net debt outstanding increased by $1,992,213 due to the additional borrowing
required for Crandon Blvd. Phase 2 construction.
Additional information on the Village's long-term debt can be found in note 9 on pages 33-38 of
this report.
Economic Factors and Next Years Budgets and Rates
• The unemployment rate for Miami -Dade County is currently 4.5 percent, which is an
increase from a rate of 4.1 percent a year ago. This compares unfavorably to the state's
average unemployment rate of 3.3 percent and the national average rate of 4.6 percent. The
Village's average rate remained unchanged at 3.2 percent.
• The occupancy rate of the government's retail rentals and hospitality service industry has
remained stable for the past several years.
• Inflationary trends in the region compare favorably to national indices.
All of these factors were considered in preparing the Village of Key Biscayne's budget for the
2007 fiscal year.
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
-10-
VILLAGE OF KEY BISCAYNE, FLORIDA
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2006
Business -
Governmental type
Activities Activities Total
ASSETS
Cash and cash equivalents $ 5,600,388 $ 931,310 $ 6,531,698
Receivables, net 898,076 443,950 1,342,026
Interest receivable 14,115 14,115
Prepaids 170,541 - 170,541
Internal balances 579,804 (579,804) -
Negative net pension obligation 142,067 - 142,067
Other assets 24,919 - 24,919
Restricted assets:
Cash and cash equivalents 369,261 - 369,261
Investments 370,930 - 370,930
Capital assets not being depreciated 27,025,802 888,937 27,914,739
Capital assets being depreciated, net 35,351,775 7,599,769 42,951,544
Total assets 70,533,563 9,298,277 79,831,840
LIABILITIES
Accounts payable and accrued liabilities
Accrued interest payable
Payable to pension plan
Unearned revenue
Noncurrent liabilities:
Due within one year
Due in more than one year
Total liabilities
790,085 13,259 803,344
387,319 387,319
130,680 - 130,680
269,658 17,992 287,650
1,983,953 253,609 2,237,562
33,009,069 5,909,008 38,918,077
36,570,764 6,193,868 42,764,632
NET ASSETS
Invested in capital assets, net of related debt 28,676,264 2,326,089 31,002,353
Restricted for law enforcement 359,899 359,899
Unrestricted 4,926,636 778,320 5,704,956
Total net assets $ 33,962,799 $ 3,104,409 $ 37,067,208
See notes to basic financial statements
-11-
VILLAGE OF KEY BISCAYNE, FL ORIDA
STATEME NT OF ACTIVITIES
FISCAL YEAR ENDE D SEPTEMBER 30, 2006
Functions/Pi ograms
Governmental activities:
General government
Public works
Police
File
Pal ks and recreation
Building, zoning and planning
Inte rest on long-term debt
Total gov ernmental activities
Business -type activities:
Stormwater
Solid waste
Sanitary sewer
Total business -type activities
Total
Charges
foi
Expenses Services
Program Revenues
Operating Capital
Grants and Grants and
Contributions Contributions
$ 4,252,037 $1,466,186 $ 997,274 $
4,004,651 - 2,379,102
4,275,617 40,719 -
4,947,149 50,392 95,978
2,849,434 1,512,923 87,399
1,547,042 167,802
1,413,272
23,289,202 3,238,022 3,559,753
720,158 517,365
501,417 531,967
9,993
1,231,568 1,049,332
$ 24,520,770 $4,287,354 $ 3,559,753 $
General revenues .
Pt operty taxes
Franchise fees based on gross receipts
Utility taxes
Communications services tax
Uniestncted intergovernmental revenue
Umestricted investment earnings
Transfers
Total general revenues
Change in net assets
Net assets, beginning
N et assets, ending
See notes to basic financial statements.
-12-
Net (E xpe nse) Revenue and
Changes in Net Assets
Business -
Governmental type
Activities Activities Total
$ (1,788,577) $
(1,625,549)
(4,234,898)
(4,800,779)
(1,249,112)
(1,379,240)
(1,413,272)
(16,491,427)
- $ (1,788,577)
(1,625,549)
(4,234,898)
(4,800,779)
(1,249,1 12)
(1,379,240)
(1,413,272)
(16,491,427)
(202,793)
30,550
(9,993)
(202,793)
30,550
(9,993)
(182,236) (182,236)
(16,491,427) (182,236) (16,673,663)
14,830,238
1,088,929
1,549,601
797,054
996,092
306,339
(28,133)
19,540,120
3,048,693
30,914,106
$ 33,962,799
45,527
28,133
73,660
(108,576)
3,212,985
$ 3,104,409
14,830,238
1,088,929
1,549,601
797,054
996,092
351,866
19,613,780
2,940,1 17
34,127,091
$ 37,067,208
VILLAGE OF KEY BISCAYNE, FLORIDA
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2006
Civic
Center Total
Special Capital (A Nonmaior Governmental
General Revenue Improvements Fund) Funds
ASSETS
Cash and cash equivalents
Receivables, net
Due from other funds
Prepaid items
Restricted cash and cash equivalents
Restricted investments
Total assets
$ 4,414,438 $ - $ 1,185,950 $ $ 5,600,388
793,115 104,961 - - 898,076
2,256,881 445,114 - 2,701,995
170,539 - - - 170,539
39,707 329,554 - 369,261
370,930 - - 370,930
$ 8,045,610 $ 434,515 $ 1,631,064 $ $ 10,11 1,189
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and
accrued liabilities $ 770,962 $ 19,123 $ - $ $ 790,085
Due to other funds - 1,912,141 210,050 - 2,122,191
Payable to pension plan 130,680 - - 130,680
Deferred revenue 269,658 - - 269,658
Total liabilities 1,171,300 1,931,264 210,050 - 3,312,614
Fund balances:
Reserved
Unreserved, undesignated reported in:
Special revenue fund
Capital improvements
Total fund balances (deficit)
Total liabilities and fund balances
6,874,310 - 6,874,310
- (1,496,749) - (1,496,749)
- 1,421,014 - 1,421,014
6,874,310 (1,496,749) 1,421,014 - 6,798,575
$ 8,045,610 $ 434,515 $ 1,631,064 $
Amounts reported for governmental activities in the statement of net assets are different because:
Capital assets used in governmental activities are not financial resources and, therefore,
are not reported in the funds
A negative net pension obligation (NPO) is not considered to represent a financial
asset and therefore is not reported in the governmental funds
Long-term liabilities, including bonds payable, are not due and payable in the current
period and therefore not reported in the funds
Net assets of governmental activities
62,377,577
142,067
(35,355,420)
$ 33,962,799
See notes to basic financial statements
-13-
VILLAGE OF KEY BISCAYNE, FLORIDA
STA 1bMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2006
Revenues:
Property taxes
Utility taxes
Communications Services tax
Franchise fees
Licenses and permits
Intergovernmental
Charges for services
Interest
Grants
Total revenues
Special
General Revenue
$14,830,238 $
1,549,601
797,054
l ,088,929
1,196,853
996,092
2,041,169
285,688
2,478,566
25,264,190
Expenditures:
Current:
General government 2,239,052
Fire 5,117,176
Police 4,388,362
Public works 4,002,609
Building, zoning and planning 1,544,696
Parks and recreation 2,634,887
Capital outlay
Debt service:
Principal 1,214,646
Interest and fiscal charges 1,413,272
Total expenditures 22,554,700
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Bonds issued
Total other financing
sources (uses)
Net change in fund balances
Fund balances (deficit), beginning
Fund balances (deficit), ending
759,991
10,217
87,399
857,607
Capital
Improvements
10,434
233,797
244,231
5,167,525 1,264,746
5,167,525 1,264,746
2,709,490 (4,309,918) (1,020,515)
(1,589,457)
1,390
3,450,000
1,730,193
(168,870)
Civic
Center Total
(A Nonmajor Governmental
Fund)
Funds
$ 14,830,238
1,549,601
797,054
1,088,929
1,196,853
1,756,083
2,041,169
306,339
2,799,762
26,366,028
2,239,052
5,117,176
4,388,362
- 4,002,609
- 1,544,696
2,634,887
6,432,271
1,214,646
1,413,272
28,986,971
(2,620,943)
- 1,731,583
(1,389) (1,759,716)
- 3,450,000
(1,589,457) 3,451,390 1,561,323 (1,389) 3,421,867
1,120,033
(858,528) 540,808 (1,389) 800,924
5,754,277 (638,221) 880,206 1,389 5,997,651
$ 6,874,310 $ (1,496,749) $ 1,421,014 $ - $ 6,798,575
See notes to basic financial statements.
-14-
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
FISCAL YEAR ENDED SEPTEMBER 30, 2006
Amounts reported for governmental activities in the statement of activities
(Page 12) are different because:
Net change in fund balances - total governmental funds (Page 14)
Governmental funds report capital outlays as expenditures. However, in the
statement of activities, the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense. This is the
amount by which capital outlays exceeded depreciation in the current period.
The details of the difference are as follows:
Capital outlay
Depreciation expense
Net adjustment
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
Revenue bonds issued
Net adjustment
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
Accrued interest expense
Negative net pension obligation
$ 5,884,962
(1,1 89,168)
1,397,897
(3,450,000)
(125,806)
(4,784)
(265,332)
$ 800,924
4,695,794
(2,052,103)
(395,922)
Change in net assets of governmental activities (Page 12) $ 3,048,693
See notes to basic financial statements.
-15-
VILLAGE OF KEY BISCAYNE, FLORIDA
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2006
Business -type Activities -
Enterprise Funds
Solid
Stormwater Sanitary Waste
Utility Sewer (A Nonmajor
System Construction Fund) Totals
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivables, net
Interest receivable
Total current assets
Noncurrent assets:
Capital assets not being depreciated
Capital assets being depreciated, net
Total noncurrent assets
Total assets
$ 891,566 $
129,382
14,115
1,035,063
7,599,769
888,937
7,599,769 888,937
$ 39,744 $ 931,310
314,568 443,950
14,115
354,312 1,389,375
888,937
7,599,769
8,488,706
8,634,832 888,937 354,312 9,878,081
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 8,607 4,652 13,259
Due to other funds 154,782 425,022 579,804
Deferred revenue - 17,992 17,992
Current portion of revenue bonds payable 235,000 18,609 253,609
Total current liabilities 398,389 448,283 17,992 864,664
Noncurrent liabilities:
Revenue bonds 5,550,000 - - 5,550,000
Revolving loan - 359,008 - 359,008
Total noncurrent liabilities 5,550,000 359,008 5,909,008
Total liabilities 5,948,389 807,291 17,992 6,773,672
NET ASSETS
Invested in capital assets, net of related debt 1,814,769 511,320 2,326,089
Unrestricted 871,674 (429,673) 336,319 778,320
Total net assets $ 2,686,443 $ 81,647 $ 336,319 $ 3,104,409
See notes to basic financial statements
-16-
VILLAGE OF KEY BISCAYNE, FLORIDA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
PROPRIETARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2006
Business -type Activities -
Enterprise Funds
Solid
Stormwater Sanitary Waste
Utility Sewer (A Nonrnajor
System Construction Fund) Totals
Operating revenues:
Charges for services
$ 517,365 $ $ 531,967 $1,049,332
Operating expenses:
General and administrative 259,861 - 501,417 761,278
Depreciation 273,919 - 273,919
Total operating expenses 533,780 - 501,417 1,035,197
Operating income (loss)
Non -operating revenues (expenses):
Interest income
Interest expense
Total non -operating revenues (expenses)
(16,415)
36,433
(186,378)
(9,991)
30,550 14,135
9,092 45,525
(196,369)
(149,945) (9,991) 9,092 (150,844)
Income (loss) before transfers (166,360) (9,991) 39,642 (136,709)
Transfers in - 28,133 - 28,133
Change in net assets (166,360) 18,142 39,642 (108,576)
Net assets, beginning 2,852,803 63,505 296,677 3,212,985
Net assets, ending $ 2,686,443 $ 81,647 $ 336,319 $ 3,104,409
See notes to basic financial statements
-17-
VILLAGE OF KEY BISCAYNE, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30. 2006
Business -type Activities -
Enterprise Funds
Solid
Stormwater Sanitary Waste
Utility Sewer (A Nonma_lor
System Construction Fund) Totals
Cash flows from operating activities:
Receipts from customers and users $ 517,366 $ 425,022 $ 543,457 $ 1,485,845
Payments to suppliers (90,767) - (626,451) (717,218)
Net cash provided (used) by operating activities 426,599 425,022 (82,994) 768,627
Cash flows from non -capital financing activities:
Transfers from other funds
Net cash provided by non -capital financing activities
Cash flows from capital and related financing activities:
Net payments on revolving loan
Payments for construction in progress
Interest paid
Net cash used by capital and related financing activities
Cash flows from investing activities -
Interest received
Net cash provided by investing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Reconciliation of operating income to net cash
provided by operating activities:
Operating income (loss)
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation
Provision for uncollectible accounts
Changes in operating assets and liabilities:
(increase) decrease in:
Accounts receivable
Interest receivable
Due from other funds
Increase (decrease) in:
Accounts payable
Deferred revenue
Due to other funds
Total adjustments
Net cash provided (used) by operating activities
28,133 28,133
28,133 - 28,133
(225,000) (18.142)
(425,022)
(186,378) (9,991)
(2,397)
(243,142)
(425,022)
(198,766)
(411.378) (453.155) (2,397) (866,930)
36,433 - 36,433
36,433 - 36,433
51,654 (85,391) (33,737)
839,912 - 125,135 965,047
$ 891,566 $ -
$ (16,415) $
39,744 $ 931,310
$ 30,550 $ 14,135
273,919 - - 273,919
11,490 11,490
383 - (92,860) (92.477)
4,879 - 4,879
14,467 - - 14,467
(5,416) - (42,834) (48,250)
11.060 11,060
154,782 425,022 (400) 579,404
443,014 425.022 (113,544) 754.492
$ 426,599 $ 425.022 $ (82,994) $ 768.627
See notes to basic financial statements
-18-
VILLAGE OF KEY BISCAYNE, FLORIDA
STATEMENT OF FIDUCIARY NET ASSETS
PENSION TRUST FUND
SEPTEMBER 30, 2006
ASSETS
Contributions receivable:
Village (including State) $ 428,657
Employees 37,501
Total contributions receivable 466,158
Investments, at fair value:
Money market funds
Common stocks
Mutual funds
Total investments
Total assets
LIABILITIES AND NET ASSETS
Liabilities
Net assets held in trust for pension benefits
See notes to basic financial statements.
-19-
217,626
3,335,991
3,835,083
7,388,700
7,854,858
$ 7,854,858
VILLAGE OF KEY BISCAYNE, FLORIDA
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
PENSION TRUST FUND
FISCAL YEAR ENDED SEPTEMBER 30, 2006
ADDITIONS
Contributions:
Plan members
Village (including State)
Total contributions
Investment earnings:
Net increase in the fair value of investments
Interest and dividends
Total investments earnings
Total additions
DEDUCTIONS
Benefits paid
Administrative expenses
Total deductions
Change in net assets
Net assets, beginning
Net assets, ending
See notes to basic financial statements.
-20-
$ 549,187
889,122
1,438,309
485,794
73,777
559,571
1,997,880
145,547
108,465
254,012
1,743,868
6,110,990
$7,854,858
NOTES TO BASIC FINANCIAL STATEMENTS
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
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 Flonda. 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 (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. 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 assets 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.
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.
-21-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
B. Government -Wide and Fund Financial Statements (Continued)
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.
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
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
(Continued)
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 Capital Improvement Fund accounts for the acquisition or construction of various
major capital projects.
The Special Revenue Fund accounts for the revenues received from the transportation
surtax and expenditures for related transportation costs.
The Village reports the following major proprietary fund in the basic financial statements:
The Stormwater Utility Fund accounts for the construction and maintenance of the
Village's stormwater system.
The Sanitary Sewer Fund accounts for the development and construction of a municipal
sanitary sewer system to the unsewered areas of the community.
Additionally, the Village reports the following 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.
Private -sector standards of accounting and financial reporting issued prior to December 1,
1989, generally are followed in both the government -wide and proprietary fund financial
statements to the extent that those standards do not conflict with or contradict guidance of the
Governmental Accounting Standards Board. The Village has the option of following
subsequent private -sector guidance for their business -type activities and enterprise funds,
subject to this same limitation. The Village has elected not to follow subsequent private -
sector guidance.
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.
-23-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
(Continued)
Proprietary funds distinguish operating revenues and expenses from nonoperatmng 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. Al] revenues and expenses not meeting this definition are reported as
nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the Village's policy
to use restricted resources first, then unrestricted resources as they are needed.
D. Assets, Liabilities, and Net Assets or Equity
1. Deposits and Investments
The Village's cash and cash equivalents include cash on hand, and certificates of deposit
with original maturities of three months or less from the date of acquisition and
investments with the State Board Investment Pool. The Investment Pool is recorded at its
value of the pool shares (2a-7 like pool) which is fair value. All other investments,
including pension investments, are recorded at fair value Fair value is determined by
quoted market prices.
2. Receivables and Payables
Activity 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. Capital assets
Capital assets, which include property, plant and equipment, 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. Capital assets are defined by the Village as assets with an initial, individual
cost of more than $750 and an estimated useful life in excess of one year. Such assets are
recorded at historical cost or estimated historical cost if purchased or constructed.
Donated capital assets are recorded at estimated fair market value at the date of donation
All infrastructure assets have been capitalized since inception of the Village.
-24-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
3. 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 2006.
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
4. 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 pnor to September 30, 2006 and were subsequently paid with current available
financial resources. The general fund typically is used to liquidate the liability for
compensated absences.
5. 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 assets. Bond premiums and discounts, as well as issuance costs,
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.
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
-25-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
5. Long -Term Obligations (Continued)
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.
6. 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 amounts of assets, liabilities, disclosures of contingent liabilities, revenues and
expenditures/expenses reported in the financial statements and accompanying notes.
These estimates include assessing the collectibility of receivables, the realization of
pension obligations and the useful lives of capital assets. Although these estimates as well
as all estimates are based on management's knowledge of current events and actions it
may undertake in the future, they may ultimately differ from actual results.
7. Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance
for amounts that are not available for appropriation or are legally restricted by outside
parties for use for a specific purpose. Designations of fund balance, where noted,
represent tentative management plans that are subject to change.
NOTE 2. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL
FUND BALANCE SHEET AND THE GOVERNMENT -WIDE STATEMENT OF NET
ASSETS
The governmental fund balance sheet includes a reconciliation between fund balance — total
governmental funds and net assets — governmental activities as reported in the government -wide
statement of net assets. One element of that reconciliation explains that long-term liabilities,
including bonds payable, are not due and payable in the current period and therefore are not
reported in the funds. The details of this $35,355,420 difference are as follows:
Bonds payable
Debt issuance cost
Capital leases payable
Compensated absences
Accrued interest payable
-26-
$ 33,085,960
(24,919)
615,347
1,291,713
387,319
$ 35,355,420
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 3. EXCESS OF EXPENDITURES OVER APPROPRIATIONS
The classification detail at which expenditures may not legally exceed appropriations is at the
department level. For the year ended September 30, 2006, expenditures exceeded appropriations
in the Fire Department by $158,352 and in the Police Department by $85,384, as presented in the
budgetary comparison schedule following the notes to the basic financial statements. These
overexpenditures were funded by revenues that were received in excess of estimated revenues.
NOTE 4. 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 insured or
collateralized with securities held by the entity or its agent in the entity's name.
Investments
The Village is authorized to invest in obligations of the U.S. Treasury, its agencies,
instrumentalities and the Local Government Surplus Funds Trust Fund administered by the
State Board of Administration. The investments follow the investment rules defined in
Florida Statutes Chapter 218.415. 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 nsk to which the funds are
exposed.
The Local Government Surplus Funds Trust Fund is governed by Ch. 19-7 of the Florida
Administrative Code, which identifies the Rules of the State Board of Administration (SBA).
These rules provide guidance and establish the general operating procedures for the
administration of the Local Government Surplus Funds Trust Fund. Additionally, the Office
of the Auditor General performs the operational audit of the activities and investments of the
State Board of Administration The Local Government Surplus Funds Trust Fund is not a
registrant with the Securities and Exchange Commission (SEC); however, the Board has
adopted operating procedures consistent with the requirements for a 2a-7 fund.
-27-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 4. DEPOSITS AND INVESTMENTS (Continued)
Investments — Village
As of September 30, 2006, the Village had the following investments with its corresponding
maturities in its portfolio:
Investment Maturities
(In Years)
Fair Less
Investments Value Than 1
Repurchase agreements $ 2,172,277 $ 2,172,277
Interest Rate Risk
Interest rate risk refers to the portfolio's exposure to fair value losses arising from
increasing interest rates. The Village 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.
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 (NRSRO) of the United States. The
Village's repurchase agreements are collateralized by U.S. agency obligations and were all
rated AAA under Standard & Poor's ratings and AAA under Moody's ratings. Excess
funds are also sent to the Local Government Surplus Funds Trust Fund administered by
the SBA. The SBA does not have a rating from a NRSRO.
Concentration of Credit Risk
As of September 30, 2006, the value of each position held in the Village's portfolio
comprised less than 5% of the Village investment assets.
Investments — Pension Plan
As of September 30, 2006, the Village's Defined Benefit Pension Plan had the following
investments with its corresponding maturities in its portfolio:
Investment Maturities (In Years)
Investments
Fair Less
Value Than 1 1-5 6-10 10+
Bond mutual funds $ 2.357.980 $ 228.724 $ 1,369,986 $ 495,176 $ 264,094
-28-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 4. DEPOSITS AND INVESTMENTS (Continued)
Investments — Pension Plan (Continued)
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.
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 investments to a rating no
lower than Standard & Poor's BBB or Moody's BAA.
The Plan's bond mutual funds were all rated "A" or better under Standard & Poor's ratings
and at least "A" under Moody'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, 2006, the value of each position held
in the Plan's portfolio comprised less than 5% of Plan investment assets.
Risks and Uncertainties
The Plan invests 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 statement of plan net assets. The Plan,
through its investment advisor, monitors the Plan's investment and the risks associated
therewith on a regular basis which the Plan believes minimizes these risks.
Plan contributions are made and the actuanal present value of accumulated plan benefits are
reported based on certain assumptions pertaining to interest rates, inflation rates and employee
demographics, all of which are subject to change. Due to uncertainties inherent in the
estimations and assumptions process, it is at least reasonably possible that changes in these
estimates and assumptions in the near term would be material to the financial statements
-29-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 5. RECEIVABLES
Receivables as of September 30, 2006 for the Village's individual major funds, nonmajor funds
and fiduciary fund in the aggregate, including the allowances for uncollectible accounts, are as
follows:
Special Storm- Solid Pension
General Revenue water Waste Trust Fund Total
Customers billed $ - $ - $ 129,382 $327,797 $ - $ 457,179
Contributions - 466,158 466,158
Property taxes 1 66,702 - - 166,702
Interest 1,658 - - 1,658
Intergovernmental 294,793 104,961 399,754
Other 329,962 - - - 329,962
Gross receivables 793,115 104,961 129,382 327,797 466,158 1,821,413
Less allowance for uncollectibles (13,229) (13,229)
Net total receivables $793,115 $104,96] $129,382 $ 314,568 $ 466,158 $ 1 ,808,184
NOTE 6. 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 l .
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, 2006,
there were no material delinquent taxes.
-30-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 7. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The composition of interfund balances as of September 30, 2006 is as follows:
Due from/to other funds:
Receivable Fund Payable Fund
General Special revenue
Capital improvement
Stormwater utility
Sanitary sewer
Capital improvements Stormwater utility
Sanitary sewer
Amount
$1,912,141
210,050
87,562
47,127
377,895
67,219
$ 2,701,995
The outstanding balances between funds result mainly from the time lag between the dates
that (1) interfund goods and services are provided or reimbursable expenditures occur, (2)
transactions are recorded in the accounting system, and (3) payments between funds are
made.
Interfund transfers
Transfers In
General Capital Special Sanitary
Fund Improvement Revenue Sewer Total
Transfers out:
General fund $ $ 1,561,323 $ - $ 28,134 $1,589,457
Civic center - 1,390 1,390
Capital improvement 168,870 - - 168,870
$168,870 $ 1,561,323 $ 1,390 $ 28,134 $ 1,759,717
Transfers are used to move unrestricted general fund revenues to finance various capital
projects in accordance with budgetary authorizations.
-31-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 8. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2006 was as follows:
Beginning
Balance Increases Decreases
Ending
Balance
Governmental activities:
Capital assets, not being depreciated:
Land $ 21,833,837 $ - $ - $ 21,833,837
Construction in progress 2,200,636 5,191,965 (2,200,636) 5,191,965
Total capital assets, not being depreciated 24,034,473 5,191,965 (2,200,636) 27,025,802
Capital assets, being depreciated:
Buildings
Improvements other than buildings
Furniture, fixtures and equipment
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Furniture, fixtures and equipment
Total accumulated depreciation
Total capital assets, being depreciated, net
Governmental activities capital assets, net
Business -type activities:
Capital assets, not being depreciated:
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Stormwater utility system
Total capital assets, being depreciated
Less accumulated depreciation for:
Stormwater utility system
Total accumulated depreciation
Total capital assets, being depreciated, net
Business -type activities capital assets, net
23,727,322
11,932,301
4,521,846
2,158,373
610,497
(130,245)
23,727,322
14,090,674
5,002,098
40,181,469 2,768,870 (130,245) 42,820,094
(1,458,449) (479,566)
(2,689,576) (304,815)
(2.131,126) (404,787)
(6,279,151) (1,189,168)
33,902,318 1,579,702
- (1,938,015)
(2,994,391)
(2,535,913)
(7,468,319)
(130,245) 35,351,775
$ 57,936,791 $ 6,771,667 $ (2,330,881) $ 62,377,577
$ 463,915 $ 425,022 $
463,915 425,022
10,056,660
10,056,660
(2,182,972)
(2,456,891)
7,599,769
$ 8,063,684
(273,919)
(273,919)
(273,919)
$ 151,103 $
$ 888,937
888,937
10,056,660
10,056,660
(2,456,891)
(2,456,891)
7,599,769
- $ 8,488,706
-32-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 8. CAPITAL ASSETS (Continued)
Depreciation expense was charged as functions/programs of the primary government as follows:
Governmental activities:
General government
Police
Fire
Public works
Building, zoning and planning
Parks
Total depreciation expenses - governmental activities
$ 420,874
l 44,064
271,273
2,033
6,832
344,092
$ 1,189,168
Business -type activities:
Stormwater $ 273,919
NOTE 9. LONG-TERM DEBT
The following is a summary of changes in long-term liabilities of the Village for governmental
activities for the year ended September 30, 2006:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities
Bonds payable.
Land acquisition and capital improvement
revenue bonds, Series 1999 $ 8,880,000 $ - $ (410,000) $ 8,470,000 $ 430,000
Land acquisition and capital improvement
revenue bonds, Series 2000 9,620,000 (400,000) 9,220,000 420,000
Capital improvement bonds, Series 2002 9,500,606 (404,646) 9,095,960 420,292
Land acquisition and capital improvement
revenue bonds, Series 2004 2,800,000 - 2,800,000 265,028
Transportation tax revenue bonds,
Series 2005
Total bonds payable
Other liabilities.
Capital leases 798,598 - (183,251) 615,347 194,859
Compensated absences 1,417,515 44,079 (169.885) 1,291,709 129,171
Total other liabilities 2,216,113 44,079 (353,136) 1,907,056 324.030
Governmental activities long-term liabilities $ 33,066,719 $ 3,494,079 $ (1.567,782) $ 34,993,016 $ 1.983,953
50,000 3.450,000 - 3,500,000 124,603
30.850,606 3,450,000 (1.214,646) 33,085,960 1.659,923
-33-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 9. LONG-TERM DEBT (Continued)
Land Acquisition and Capital Improvement Revenue Bonds
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. 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:
2007 $ 430,000 $ 389,223 $ 819,223
2008 455,000 368,359 823,359
2009 475,000 346,435 821,435
2010 500,000 323,449 823,449
2011 525,000 299,285 824,285
2012-2016 3,050,000 1,089,166 4,139,166
2017-2019 3,035,000 294,805 3,329,805
$3,110,722 $11,580,722
$ 8,470,000
Capital Improvement Revenue Bonds
On July 11, 2000, the Village issued a second series of $10,000,000 Capital Improvement
Revenue Bonds, Series 2000, 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 11,
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. Interest
accrues at 5.24% per annum.
Debt service requirements to maturity are as follows:
Principal Interest Total
Fiscal year ending September 30:
2007 $ 420,000 $ 472,124 $ 892,124
2008 440,000 449,592 889,592
2009 465,000 425,881 890,881
2010 490,000 400,860 890,860
2011 515,000 374,529 889,529
2012-2016 3,005,000 1,427,769 4,432,769
2017-2020 3,885,000 529,895 4,414,895
$ 9,220,000 $ 4,080,650 $ 13,300,650
-34-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 9. LONG-TERM DEBT (Continued)
Capital Improvement Revenue Bonds (Continued)
On November 1, 2002, the Village issued Capital Improvement Revenue Bonds, Series 2002
for the purpose of financing a portion of the cost of construction and equipping of a
community center including a parking garage and swimming pool. The bonds mature on
November 1, 2022. Interest is due quarterly at a rate of 3.95% up to November 1, 2012.
From November 1, 2012 to maturity, the interest rate will become a variable rate based on
certain indices.
Debt service to maturity is as follows:
Principal Interest Total
Fiscal year ending September 30:
2007 $ 420,292
2008 435,584
2009 451,434
2010 467,860
2011 484,883
2012-2016 2,702,257
2017-2021 3,230,984
2022-2023 902,066
$ 9,095,360
Land Acquisition and Capital Improvement Revenue Bonds
$ 320,907
305,615
289,765
273,339
256,316
1,003,738
475,011
24,433
$ 2,949,124
$ 741,199
741,199
741,199
741,199
741,199
3,705,995
3,705,995
926,499
$12,044,484
On December 12, 2004, the Village issued $2,800,000 of capital improvement and land
acquisition revenue bonds, Senes 2004 for the purpose of completing the road construction
associated with the new administration, fire and community center buildings. 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 are due in quarterly principal
installments. Interest accrues at 3.83% per annum.
Debt service requirements to maturity are as follows:
Principal Interest Total
Fiscal year ending September 30.
2007 $ 265,028 $ 99,206 $ 364,234
2008 125,226 94,559 219,785
2009 130,053 89,732 219,785
2010 135,066 84,719 219,785
2011 140,272 79,513 219,785
2012-2016 786,753 312,171 1,098,924
2017-2021 950,528 148,396 1,098,924
2022-2023 267,074 7,658 274,732
$ 2,800,000 $ 915.954 $ 3,715,954
-35-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 9. LONG-TERM DEBT (Continued)
Transportation Tax Revenue Bonds
On July 15, 2005, the Village issued Transportation Tax Revenue Bonds, Series 2005, for the
purpose of financing a portion of the costs of road improvements within the Village (Crandon
Boulevard Improvements — Phase II). The issuance was established similar to bond
anticipation notes where the principal amount is the lesser of $3,500,000 or the advances
made under the bond. Only the amount advanced becomes an obligation of the Village.
During the fiscal year ended September, the Village drew down the remaining $3,450,000.
The bonds mature on July 1, 2025 and are due in quarterly principal installments. Interest
accrues at 4.09% per annum.
Debt service requirements to maturity are as follows:
Principal Interest Total
Fiscal year ending September 30:
2007 $ 124,603 $ 141,255 $ 265,858
2008 129,778 136,080 265,858
2009 135,168 130,690 265,858
2010 140,782 125,077 265,859
2011 146,629 119,230 265,859
2012-2016 829,707 499,584 1,329,291
2017-2021 1,016,921 312,370 1,329,291
2022-2025 976,412 87,020 1,063,432
$ 3,500,000 $1,551,306 $ 5,051,306
Capital Leases
On June 16, 2003, the Village entered into a Master Lease agreement, with a local financial
institution as lessee for financing the acquisition of Village vehicles and equipment for the
Fire -Rescue Department with a fair value of $880,963. The amount of the lease obligation is
$691,744 and final payment is due on November 15, 2009. Lease payments are due annually.
Interest accrues at 2.994% per annum.
On December 15, 2004, the Village entered into a Master Lease agreement for financing the
acquisition of Village vehicles and equipment for the Police Department with a fair value of
$378,413. The amount of the lease obligation is $380,726 and final payment is due on
December 15, 2007. Lease payments are due annually. Interest accrues at 3.85% per annum.
On January 10, 2005, the Village entered into a Master Lease agreement for financing the
acquisition of a Village vehicle and equipment for the Police Department with a fair value of
$23,744. The amount of the lease obligation is $23,744 and final payment is due on January
10. 2009. Lease payments are due annually. Interest accrues at 4.20% per annum.
-36-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 9. LONG-TERM DEBT (Continued)
Capital Leases (Continued)
The future minimum lease obligations and the net present value of the minimum lease
payments as of September 30, 2006 were as follows:
Fiscal year ending September 30:
2007 $ 214,928
2008 214,928
2009 114,287
2010 114,287
Total minimum lease payments 658,430
Less amount representing interest (43,083)
Present value of minimum lease payments $ 615,347
The following is a summary of changes in long-term liabilities of the Village for business -
type activities for the year ended September 30, 2006:
Due
Beginning Ending Within
Balance Additions Reductions Balance One Year
Business -type Activities
Bonds and loan payable:
Stormwater utility revenue bonds
Revolving loan
Total bonds and loan payable
Business -type activities
long-term liabilities
$ 6,010,000 $
395,758
6,405,758
- $ (225,000) $ 5,785,000 $ 235,000
- (18,141) 377,617 18,609
(243,141) 6,162,617 253,609
$ 6,405,758 $ - $ (243,141) $ 6,162,617 $ 253,609
Storm water Utility Revenue Bonds
On January 26, 1999, the Village issued $7,200,000 Stormwater Utility Revenue Bonds,
Series 1999, the proceeds of which were used to pay the principal of the $7,200,000 Bond
Anticipation Notes, Series 1995. The bonds mature on January 26, 2019. The Village has
pledged stormwater utility fees to secure payment of the principal and interest on the bonds.
The bonds are due in annual principal installments on October 1'. Interest accrues at 4.13%
per annum.
-37-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 9. LONG-TERM DEBT (Continued)
Storm water Utility Revenue Bonds (Continued)
Debt service requirements to maturity are as follows:
Principal Interest Total
Fiscal year ending September 30:
2007 $ 235,000
2008 350,000
2009 365,000
2010 385,000
2011 405,000
2012-2016 2,340,000
2017-2019 1,705,000
$ 5,785,000
$ 238,921
229,215
214,760
199,686
183,785
651,301
143,104
$1,860,772
(1) Debt service requirement for the fiscal year 2006 was paid in 2005.
Revolving Loan
$ 473,921
579,215
579,760
584,686
588,785
2,991,301
1,848,104
$7,645,772
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 proceeds were received in fiscal year 1998. 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.
Principal Interest Total
Fiscal year ending September 30:
2007 $ 18,609 $ 9,525 $ 28,134
2008 19,088 9,046 28,134
2009 19,580 8,554 28,134
2010 20,084 8,050 28,134
2011 20,602 7,532 28,134
2012-2016 111,25] 29,419 140,670
2017-2021 127,259 14,330 141,589
2022-2023 41,144 1,058 42,202
$ 377,617 $ 87,514 $465,13]
NOTE 10. COMMITMENTS AND CONTINGENCIES
Construction Commitments
As of September 30, 2006, the Village had outstanding construction commitments of
approximately $386,000 to complete Phase II of the Crandon Boulevard project.
-38-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 10. COMMITMENTS AND CONTINGENCIES (Continued)
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.
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.
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 11. RESERVED FUND BALANCES
As of September 30, 2006, fund balances in the general fund have been reserved for the
following purposes:
Emergencies $ 1,918,598
Master Plan initiatives 1,873,765
Working capital 600,000
Playing fields 456,403
Law enforcement seizures 359,899
Compensated absences 334,644
Recreation facilities 300,000
Capital lease 298,682
Building inspections 275,000
Roadway improvements 175,000
Prepaids 170,539
Community Center equipment 50,000
Fire vehicle replacements 50,000
Police/Administration building 5,890
Fire Station building 5,890
$ 6,874,310
-39-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 12. DEFICIT FUND BALANCE
The Special Revenue Fund has a deficit fund balance of $1,496,749 which will be funded from
the General Fund until the issuance of the Series 2006 Revenue Bonds in the amount of
$4,000,000 in December 2006 (see Note 15).
NOTE 13. 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). Under one Plan, which is available to Village employees, the Village contributes
12% and the employees contribute 6%. Under the second plan, which is available only to sworn
or certified police officers and firefighters, the Village contributes 12% and there is no employee
contribution. Beginning October 1, 1997, the police officers and firefighters, which elected to
participate in the defined benefit pension plan (see Note 14), were no longer eligible to
contribute to the 401(a) plan. Employer contributions for the fiscal year ended September 30,
2006 were $402,675 while the employee contributions were $132,725. Amendments to the Plan
must be authorized by the Village Council.
NOTE 14. DEFINED BENEFIT PENSION PLAN
Plan Description
Effective October 1, 1997, the Village established a single -employer Public Employee
Retirement System (PERS) to provide pension benefits for its police officers and firefighters.
The PERS is considered to be part of the Village's financial reporting entity and is included in
the Village's financial reports as a pension trust fund. The Plan was created under Village
Ordinance 97-21. The latest available actuarial valuation is as of October 1, 2005. The PERS
does not issue a stand-alone financial report for the Plan.
Under this plan, all full-time police officers and firefighters employed by the Village are
eligible to participate. The monthly retirement benefit is equal to 3% of the average final
compensation for each year of service. The calculation for the average final compensation is
computed as one -twelfth of the average salary of the five highest years within the last ten
years of credited service. Credited service is determined by the total number of years
employed by the Village since August 1, 1993. Amendments to the Plan must be authorized
by the Village Council.
Members are vested after 5 years of service. Vested employees may 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.
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 are recorded when paid
-40-
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 14. DEFINED BENEFIT PENSION PLAN (Continued)
Plan Description (Continued)
At October 1, 2005 (date of the latest actuarial valuation), Plan membership consisted of the
following:
Retirees and beneficiaries currently receiving benefits and terminated employees
entitled to benefits but not yet receiving them
11
Current employees:
Vested 34
Non -vested 34
Total 68
Funding Policy
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. The Village's contribution rate was 10.74% of covered payroll for the year ended
September 30, 2006. The participant contribution rate for the year ended September 20, 2006
was 10.5%. 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.
Annual Pension Cost and Net Pension Obligation
The annual pension cost and net pension obligation (asset) for the current year was as
follows:
Annual required contribution
Interest on net pension asset
Adjustment to annual required contribution
Annual pension cost
Contributions made
Decrease in net pension asset
Net pension asset, beginning of year
Net pension asset, end of year
-41-
$ 729,857
(12,417)
16,438
733,878
729,857
4,021
(146,088)
$ (142,067)
VILLAGE OF KEY BISCAYNE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 14. DEFINED BENEFIT PENSION PLAN (Continued)
Annual Pension Cost and Net Pension Obligation (Continued)
The annual required contribution for the current year was determined as part of the October 1,
2005 actuarial valuation using the entry age normal funding method. This method does not
identify and separately amortize unfunded actuarial liabilities. The actuarial assumptions
included (a) 8.5% investment rate of return (net of investment related expenses) and (b)
projected salary increases of 9.4 to 3.5% variable per year. Both (a) and (b) included an
inflation component of 4%. The actuarial value of assets was determined using the difference
between actual and expected return recognized over five years.
Trend Information
Annual Percentage Net Pension
Fiscal Year Pension of APC Obligation
Ended Cost (APC) Contributed (Asset)
9/30/2004 $ 574,165 110.9% $ (149,942)
9/30/2005 768,274 99.5% (146,088)
9/30/2006 733,878 99.5% (142,067)
NOTE 15. SUBSEQUENT EVENT
In December 2006, the Village issued $4,000,000 of 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), for financing architectural, engineering, environmental, legal and
other planning costs.
-42-
REQUIRED SUPPLEMENTARY INFORMATION
VILLAGE OF KEY BISCAYNE, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
FISCAL YEAR ENDED SEPTEMBER 30. 2006
Variance
Actual Actual with Final
Amounts Prior Amounts on a Budget -
Budgeted Amounts on a GAAP Year Budgetary Positive
Original Final Basis Reserves Basis (Negative)
Revenues:
Property taxes $ 14,688,288 $ 14,688,288 $ 14,830.238 $ - $ 14,830,238 $ 141,950
Utility taxes 2,243,050 2,243,050 2,346,655 - 2,346,655 103,605
Franchise fees 700,000 700,000 1,088,929 - 1,088,929 388,929
Licenses and permits 919,945 919,945 1,196,853 - 1,196,853 276,908
Intergovernmental 882,500 882,500 996,092 - 996,092 113,592
Charges for services 1,454.596 1,454,596 2,041,169 - 2,041,169 586,573
Grants 7,500 7,500 2,478,566 - 2,478,566 2,471,066
Interest 225,000 225,000 285,688 - 285,688 60,688
Total revenues 21,120,879 21.120,879 25,264.190 - 25,264,190 4,143,311
Expenditures:
Current:
General government:
Elected officials 362,912 362.912 347,397 347.397 15,515
Village Clerk 372,937 372,937 334,587 - 334,587 38,350
Administration 1.167,943 1,167,942 1,206,162 (38.220) 1.167,942 -
Village Attorney 383.000 383,000 350,906 350,906 32,094
Total general government 2.286,792 2,286,791 2,239,052 (38,220) 2.200.832 85,959
Public safety:
Police 4,302,975 4,302,978 4,388,362 - 4,388.362 (85,384)
Fire 4,853,035 4,853.035 5,117,176 (105.789) 5,01 1.387 (158,352)
Total public safety 9,156.010 9.156.013 9,505,538 (105,789) 9,399,749 (243,736)
Public works 1,361,663 1,361,662 4,002,609 (3,11 1,1 14) 891,495 470,167
Building, zoning and planning 1,416.330 1,416,328 1,544,696 (128,368) 1.416,328
Parks and recreation 2.468.161 2,468,162 2,634,887 2,634,887 (166,725)
Debt service:
Principal 1,350,001 1,350,001 1,214,646 - 1,214,646 135,355
Interest and fiscal charges 1,351,729 1.351,729 1,413.272 - 1,413,272 (61,543)
Total expenditures 19,390,686 19,390,686 22.554,700 (3,383,491) 19,171,209 219,477
Excess of revenues
over expenditures 1,730,193 1,730,193 2,709,490 3,383.491 6.092,981 4,362,788
Other financing uses:
Appropriation of prior years'
fund balance - - - (3,383,491)
Transfers out (1,730,193) (1.730,193) (1,589,457) - - 1.730,193
Total other financing uses (1,730,193) (1.730.193) (1,589,457) (3,383.491) - 1.730,193
Net change in fund balances $ - $ - $ 1,120,033 $ - $ 6.092.981 $ 6.092,981
See note to budgetary companson schedule.
-43-
VILLAGE OF KEY BISCAYNE, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
NOTE TO BUDGETARY COMPARISON SCHEDULE
FISCAL YEAR ENDED SEPTEMBER 30, 2006
NOTE 1. BUDGETS AND BUDGETARY ACCOUNTING
An annual appropriated budget is prepared for the general fund. The Village prepares a budget
for its special revenue fund and its capital projects fund, however, these budgets are prepared as
project budgets and not as annually appropriated budgets.
The Village follows these procedures in establishing the budgetary data reflected in the financial
statements:
(a) The Village Manager submits to the 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.
(b) Public hearings are conducted to obtain taxpayer comments.
(c) Prior to October 1, the budget is legally enacted through passage of an ordinance.
(d) 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,
2006, there were no supplemental appropriations.
(e) Formal budgetary integration is employed as a management control device for the general
fund.
(f) 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 and for hurricane related expenditures.
(g) 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.
(h) There were no budget amendments during fiscal year ended September 30, 2006.
(i) Excess of expenditures over appropriations are described in the notes to the basic financial
statements. There is no overexpenditure in debt service as the principal and interest are
combined in preparation of the Village's budget. There is no overexpenditure in the parks
and recreation department as the Village Council allows for up to $250,000 of
overexpenditure without considering this a violation of the budget.
-44-
VILLAGE OF KEY BISCAYNE, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
PENSION TRUST FUND
SCHEDULE OF FUNDING PROGRESS
Actuarial
Accrued UAAL
Actuarial Liability Unfunded As % of
Actual Value of (AAL) - AAL Funded Covered Covered
Valuation Assets Entry Age (UAAL) Ration Payroll Payroll
Date (a) (b) - (a) (a) / (b) (b - a) / c
10/1/00 $1,296,095 $ 2,483,593 $1,187,498 52.2% $ 3,472,773 34.2%
10/1/01 1,824,306 4,394,237 2,569,931 41.5% 3,732,996 68.8%
10/1/02 2,360,957 5,430,198 3,069,241 43.5% 3,984,900 77.0%
10/1/03 3,309,812 6,678,603 3,368,791 49.6% 4,278,629 78 7%
10/1/04 4,400,914 8,021,413 3,620,499 54.9% 4,960,542 73.0%
10/1/05 5,703,772 9,379,732 3,675,960 60.8% 5,320,018 69.1%
-45-
VILLAGE OF KEY BISCAYNE, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
PENSION TRUST FUND
SCHEDULE OF EMPLOYER CONTRIBUTIONS
Year Annual
Ended Required Percentage
September 30, Contribution Contributed
2001 $ 45,199 296%
2002 377,777 88%
2003 465,562 100%
2004 515,437 100%
2005 764,420 100%
2006 729,857 100%
The information presented in the required supplemental schedule was determined as part of the actuarial
valuation at the date indicated. Additional information as of the latest actuarial valuation follows.
Valuation date 10/1/05
Actuarial cost method Entry age normal
Amortization method Level percent of pay, closed
Remaining amortization 30 years
Asset valuation method 5 year Smoothed Market value
Actuarial assumptions:
Investment rate of return* 8.5% per year compounded annually,
net of investment related expenses
Projected salary increases* 9.4 to 3.5% variable
Cost of living adjustments N/A
*Includes inflation at 4%
-46-
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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.
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 tune These schedules include: 47-51
Revenue Capacity
These schedules contain information to help the reader assess the Village's most significant local
revenue source, the property tax
Debt Capacity
52-56
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. 57-60
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.
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.
Sources: Unless otherwise noted, the information in these schedules is derived from the
comprehensive annual financial reports for the relevant year.
61-63
64-65
VILLAGE OF KEY BISCAYNE, FLORIDA
NET ASSETS BY COMPONENT
LAST THREE FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
Fiscal Year
Governmental activities:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total governmental activities net assets
Business -type activities:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total business -type activities net assets
Total government:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total government net assets
-47-
2004
$ 27,917,792
283,180
4,064,323
32,265,295
2005
$ 26,284,600
326,826
4,302,680
30,914,106
2006
$ 28,676,266
359,899
4,926,634
33,962,799
1,768,078 1,931,844 2,326,089
1,254,664 1,281,141 778,320
3,022,742 3,212,985 3,104,409
29,685,870
283,180
5,318,987
$ 35,288,037
28,216,444
326,826
5,583,821
$ 34,127,091
31,002,355
359,899
5,704,954
$ 37,067,208
VILLAGE OF KEY BISCAYNE, FLORIDA
CHANGES IN NET ASSETS
LAST THREE FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
Fiscal Year
2004
2005 2006
Expenses:
Governmental activities:
General government $ 1,712,899 $ 2,136,375 $ 2,239,052
Fire 4,462,601 4,749,407 5,117,176
Police 4,113,946 4,605,148 4,388,362
Building, zoning and planning 1,212,290 1,238,376 1,544,696
Public works 1,098,250 2.183,774 4,002,609
Parks and recreation 952,261 2,193,633 2,634,887
Principal on long-term debt 1,583,924 1,161,298 1,214,646
Interest on long-term debt 1,107,697 1,300,596 1,413,272
Issuance costs
Total governmental activities 16,243,868 19,568,607 22,554,700
Business -type activities:
Stormwater system
Solid waste collection
Sanitary sewer
Total business -type activities
Total government expenses
439,236 454,963
259,173 466,162
698,409 921,125
720,158
501,417
9,993
1,231,568
$ 16,942,277 $ 20,489,732 $ 23,786,268
Program revenues
Governmental activities:
Charges for services:
General government $ 961,100 $ 1,257,895 $ 1,466,186
Police 197,244 212,121 40,719
Fire 6,505 7,120 50,392
Parks and recreation 35,787 1,287,806 1,512,923
Building, zoning and planning 86,455 142,550 167,802
Operating grants and contributions - 650,679 3,559,753
Capital grants and contributions 524,736 - -
Total governmental activities program revenues 1,81 1,827 3,558,171 6,797,775
Business -type activities•
Charges for services:
Stormwater system
Solid waste collection
Operating grants and contributions
Capital grants and contributions
Total business -type activities program revenues
Total program revenues
-48-
520,729 - 517,365
284,900 - 531,967
805,629 - 1,049,332
2,617,456 $ 3,558.171 $ 7.847,107
(Continued)
VILLAGE OF KEY BISCAYNE, FLORIDA
CHANGES IN NET ASSETS
(Continued)
LAST THREE FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
Fiscal Year
Net (expense) revenue:
Governmental activities
Business -type activities
Total net expense
General revenues:
Governmental activities:
Taxes:
Property taxes
Utility taxes
Franchise fees
Communications services tax
Intergovernmental
Investment earnings
Miscellaneous
Transfers
Total governmental activities
Business -type activities:
Investment earnings
Transfers
Total business -type activities
Total general revenues
Change in net assets:
Governmental activities
Business -type activities
Total change in net assets
-49-
2004 2005
$ (14,432,041) $ (16,010,436)
107,220 (921,125)
$ (14,324,821) $ (16,931,561)
$ 12,770,711
1,448,481
677,203
770,637
821,883
110,562
126,607
(28,134)
16,697,950
21,235
28,134
49,369
$ 16,747,319
$ 2,265,909
156,589
$ 2,422,498
$ 13,360,251
1,488,002
705,810
746,400
978,304
255,611
281,657
(28,135)
17,787,900
41,050
28,135
69,185
$ 17,857,085
$ 1,777,464
(851,940)
$ 925,524
2006
$ (15,756,925)
(182,236)
$ (15,939,161)
$ 14,830,238
1,549,601
1,088,929
797,054
996,092
306,339
(28,133)
19,540,120
45,527
28,133
73,660
$ 19,613,780
$ 3,783,195
(108,576)
$ 3,674,619
VILLAGE OF KEY BISCAYNE, FLORIDA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST THREE FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
Fiscal Year
2004 2005 2006
General fund:
Reserved $ 4,952,188 $ 5,754,277 $ 6,874,310
Unreserved
Total general fund 4,952,188 5,754,277 6,874,310
All other governmental funds.
Reserved
Unreserved, reported in:
Special revenue funds
Capital projects funds
Total all other governmental funds
Total governmental funds
-50-
513,862 (638.221) (1,496,749)
(489,979) 881,595 1.421.014
23,883 243,374 (75,735)
$ 4,976.071 $ 5,997,651 $ 6,798,575
VILLAGE OF KEY BISCAYNE, FLORIDA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST THREE FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
Fiscal Year
2004 2005 2006
Revenues:
Ad valorem taxes $12,770,711 $13,360,251 $14,830,238
Franchise fees 1,447,840 1,452,210 1,885,983
Utility taxes 1,448,481 1,488,002 1,549,601
Licenses and permits 961,100 1,040,130 1,196,853
Intergovernmental revenue 1,031,805 1,495,947 1,7.56,083
Charges for services 325,651 1,867,362 2,041,169
Grants 650,679 2,799,762
Investment income 110,562 255,611 306,339
Miscellaneous 441,761 281,657
Total revenues 18,537,911 21,891,849 26,366,028
Expenditures:
Current:
General government 1,712,899 2,136,375 2,239,052
Fire 4,462,601 4,749,407 5,1 17,176
Police 4,113,946 4,605,148 4,388,362
Public works 1,098,250 2,183,774 4,002,609
Building, planning and zoning 1,212,290 1,238,376 1,544,696
Parks and recreation 952,261 2,193,633 2,634,887
Capital outlay 10,664,348 4,527,998 6,432,271
Debt service:
Principal retirement 1,583,924 1,161,298 1,214,646
Interest and other fiscal charges 1,135,384 1,300,596 1,413,272
Total expenditures 26,935,903 24,096,605 28,986,971
Excess (deficiency) of revenues over expenditures (8,397,992) (2,204,756) (2,620,943)
Other financing sources (uses).
Transfers in
Transfers out
Bonds issued
Capital lease proceeds
Total other financing sources (uses)
Net change in fund balances
Debt service as a percentage
of non -capital expenditures
-5I-
819,251
(847,385)
8,330,462
1,245,653
(1,273,788)
2,850,000
404,471
1,731,583
(1,759,716)
3,450,000
8,302,328 3,226,336 3,421,867
(95,664) $ 1,021,580 $ 800,924
10.10%
10.22% 9.07%
VILLAGE OF KEY BISCAYNE, FLORIDA
GENERAL GOVERNME NT AL TAX RE VENUES BY SOURCE
LAST TE N FISCAL YEARS
(MODIFIED ACCR UAL BASIS OF ACCOUNTING)
F►scal Ad Valorem
Year Taxes
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
$ 6,495,465
6,963,900
7,012,714
7,799,633
8,737,608
9,569,030
11,317,161
12,770,711
13,360,125
14,830,238
Franchise
Taxes
$ 667,815
709,067
740,03 I
729,998
738,513
639,072
611,502
677,203
705,810
1,088,929
Ut►l►ty
Taxes
$1,555,812
1,514,697
1,621,473
1,723,902
1,772,208
2,258,931
2,251,876
2,219,118
2,234,402
1,549,601
Souice: Village of Key Biscayne Finance Department
*Includes half cent sales tax and state revenue sharing
Inter-
g over nmental *
$ 766,638
843,812
807,924
889,704
930,169
971,136
999,391
1,031,805
1,140,599
1,756,083
Comm unications
Services Tax**
$
904,475
825,739
770,637
746,400
797,054
Total
$ 9,485,730
10,031,476
10,182,142
11,143,237
12,178,498
14,342,644
16,005,669
17,469,474
18,187,336
20,021,905
**Communications services taxes became effective October 1, 2001, replacing utility taxes and franchise fees on
telephone and cable TV
-52-
VILLAGE OF KEY BISCAYNE, FLORIDA
NET ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Real Property Total
Fiscal Year Total Net Direct
Ended Residential Commercial Personal Assessed Tax
September 301 Property Property Property Value Rate
1997 $1,917,487,798 $ 60,731,327 $ 24,830,107 $2,003,049,232 3.606
1998 1,941,484,664 62,523,036 24,166,508 2,028,174,208 3.606
1999 2,137,666,293 67,704,896 27,086,715 2,232,457,904 3.606
2000 2,394,282,542 75,832,533 28,934,086 2,499,049,161 3.606
2001 2,618,160,883 82,923,284 30,749,478 2,731,833,645 3.606
2002 3,128,872,469 99,098,715 31,948,797 3,259,919,981 3.606
2003 3,506,812,044 111,068,946 43,233,556 3,661,114,546 3.606
2004 3,713,841,630 117,626,058 43,867,688 3,875,335,376 3.606
2005 4,115,175,292 130,346,736 41,852,920 4,287,374,948 3.606
2006 5,421,393,923 166,638,240 47,020,078 5,635,052,241 3.606
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.
Source: Miami -Dade County Property Appraiser's Office.
-53-
VILLAGE OF KEY BISCAYNE, FLORIDA
PROPERTY TAX RATES - DIRECT AN D OVERLAPPIN G GOVERNMENTS
LAST TEN FISCAL YEARS
Fiscal
Yeai
Village of Key Biscayne
Overlapping Rates (I )
Miami -Dade County
Debt Total
Tax Roll General Debt Total Operating Service County
Year Operations Service Village Millage Millage Millage
1997 1996 3. 606
1998 1997 3. 606
1999 1998 3. 606
2000 1999 3.606
2001 2000 3.606
2002 2001 3. 606
2003 2002 3.606
2004 2003 3. 606
2005 2004 3.606
2006 2005 3.606
3 .606
3 .606
3 .606
3 .606
3.606
3.606
3. 606
3. 606
3. 606
3. 606
Miami -Dade Schools
Debt T otal
Operating Service School
Millage Millage Millage
Florida
Inland
Navigation
District
South
Florida
Water
Management
Total
Direct and
Overlapping
Other Rates
6.023 0.929 6 .952 9.356 1 .106 10.462 0.050 0 .597 0.416
6 .023 0.837 6.860 9.182 0 .978 10.160 0.047 0.597 0.434
5.809 0.816 6.625 8.654 0 .990 9.644 0 .044 0 .597 0.421
5.751 0 .653 6.404 8.702 0.915 9.617 0.041 0.597 0.451
5 .713 0.552 6.265 8.528 0.848 9.376 0 .039 0.697 0.451
5 .889 0.390 6.279 8.482 0 770 9 .252 0 039 0 .697 0 .451
5 .969 0.285 6.254 8.418 0 .682 9 .100 0 .039 0.597 1.086
5.935 0.285 6.220 8.090 0 .597 8.687 0 .039 0.597 1.030
5.835 0 .285 6.120 7.947 0.491 8 .438 0.039 0.597 1 .014
5.615 0 .285 5.900 7 .691 0 .414 8 .105 0 .039 0.597 3.659
Note' All millage rates are based on $1 for every $1,000 of assessed val ue .
Sources Village of Key Biscayne Finance Departmen t and Miami -Dade County Property Appraiser's Office .
22.083
21 .704
20 .937
20.716
20.434
20 .324
20.682
20.179
19.814
21.906
(I) 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 K ey Biscayne property owners (i.e. the rates for special districts apply only to the proportion of the government's property owners whose property is
lo cated within the geographic boundaries of the special district).
-54-
rr r IMO all. me MIMI mi. rr so am r amp err MO r r a rt — r
VILLAGE OF KEY BISCA YNE, FLO RI DA
PRINCIPAL PROPERTY TA XPAYERS
CURRENT YEAR AND NINE YEARS AGO
2006
Taxpayei
Sonesta Beach Resort
United Real Estate Ventures
GB Hotel Partners LTD
260 Cape Florida LLC
Ocean Club Community Assoc.
Claudio & Yvonne Alvarez
Aurelio & Berta Fernandez
Garflo Investments
Roger & Susana K hour►
CSM Key Biscayne Equities LLC
Net
Assessed
Value
$ 44,568,400
42,064,691
34,700,000
12,663,250
12,500,000
9,202,584
7,813,741
7,361,525
6,979,000
6,438,569
$ 184,291,760
Percent of
Total
Village Net
Assessed
Rank Value
1 0.79 %
2 0 .75%
3 0.62%
4 0.22%
5 0 .22%
6 0.16 %
7 0 .14%
0 .13%
9 0 .12%
10 0 .00%
8
3.15%
Source. Tax roll provided by Miami -Dade County Property Appraisers Office.
1997
Taxpayer
Ocean Club Key Biscayne
Grand Bay Residence of Key Bisc ayne
Sonesta Beach Hotel
GB Hotel Partners LTD
VMS Partnership LTD
Key Biscayne Shopping Center
Finivest Investment, et al Key Colony
Coldwell Banker
Florida P ower & Light
Red Dragon Sands, LTD
Perc ent of
Total
Net Village Net
Assessed Assessed
Value Rank Value
$ 61,893,774 1 2 77%
48,067,499 2 2.15 %
28,855,555 3 1.29%
16,842,465 4 0.75%
12,662,248 5 0.57%
9,263,589 6 0.41%
8,230,098 7 0.37%
6,385,810 8 0 .29%
5,805,342 9 0.26%
5,797,604 10 0.26%
$ 203,803,984 9.12%
-55-
VILLAGE OF KEY BISC AY NE, FL ORIDA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YE ARS
Fiscal Year
Ended
September 30,
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Total Taxes
Levied for
Fiscal
Year
$ 6,711,642
7,222,995
7,313,596
8,050,243
9,01 1,571
9,850,992
11,755,271
13,201,979
13,974,460
15,461,356
Collected within
the Fiscal Year
of the Levy
Amount
$ 6,495,465
6,948,521
7,012,714
7,799,633
8,738,608
9,515,138
11,317,160
12,869,711
13,360,251
14,830,238
Percent
of Levy
96.78%
96.20%
95.89%
96.89%
96 .97%
96 .59%
96.27%
97 .48%
95.60%
95.92%
Collections in
Subsequent
Year's
$ 9,743
10,423
10,519
11,699
13,108
14,273
16,976
19,305
20,040
22,245
Total Collections
to Date
Percent
Amount of Levy
$6,505,208 96.92%
6,958,944 96.34 %
7,023,233 96.03%
7,811,332 97.03 %
8,751,716 97 .12%
9,529,411 96.74%
11,334,136 96.42%
12,889,016 97.63%
13,380,291 95 .75 %
14,852,483 96.06%
Source: Village of Key Biscayne Finance Department and Miami -Dade County Tax Collecto►'s Office .
-56-
EINI EN E 111. E MN E S I I Sill I MR
VILL AGE OF KEY BISCAYNE, FLORI DA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YE ARS
Governme ntal Activities
B usiness -Type
Activities
Fiscal Year Ge neral Percent of
Ended Obligation Reven ue L oans Revenue Personal Per
September 30, Bo nds Bo nds Payable Bonds Total Income (1) Capita (1)
1997 $ - $7,675,000 $ - $ $7,675,000 0 .00% $
1998 6,850,000 - 6,850,000 0.00% -
1999 - 22,290,000 7,200,000 29,490,000 0.00% -
2000 - 21,220,000 - 7,065,000 28,285,000 0 .00% 2,742
2001 - 30,120,000 - 6,940,000 37,060,000 0 .00% 3,592
2002 - 29,935,000 - 6,810,000 36,745,000 0.00% 3,562
2003 29,271,000 - 6,625,000 35,896,000 0.00% 3,479
2004 - 29,164,892 - 6,430,000 35,594,892 0.00% 3,450
2005 30,850,606 - 6,010,000 36,860,606 0.00% 3,573
2006 - 33,085,960 - 5,785,000 38,870,960 0 .00% 3,768
Note: Details regarding the V illage's ou tstanding debt can be fo und in the notes to the fi nancial statements
(1) See the Schedule of Demographic an d Economic Statistics on page 61 f or perso nal income and pop ulation
data.
-57-
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UP I- UM MO E I UM AB MN M N- MI MP MO UP OS N 11111
Cohen
v2Holtz
Accountants Advisors
Report of Independent Certified Public Accountants 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 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 September 30, 2006 and for the year then ended which collectively comprise the Village's
basic financial statements, and have issued our report dated February 15, 2007. We conducted our audit
in accordance with auditing standards generally accepted in the United States and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the Village's internal control over financial
reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the
financial statements and not to provide an opinion on the internal control over financial reporting.
However, we noted a certain matter involving the internal control over financial reporting and its
operation that we consider to be a reportable condition. Reportable conditions involve matters corning to
our attention relating to significant deficiencies in the design or operation of the internal control over
financial reporting that, in our judgment, could adversely affect the Village's ability to initiate, record,
process, and report financial data consistent with the assertions of management in the financial
statements. The reportable condition is described in the accompanying schedule of findings and
questioned costs as items 06-01.
A material weakness is a reportable condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk that misstatements caused
by error or fraud in amounts that would be material in relation to the financial statements being audited
may occur and not be detected within a timely period by employees in the normal course of performing
their assigned functions. Our consideration of the internal control over financial reporting would not
necessarily disclose all matters in the internal control that might be reportable conditions, and,
accordingly, would not necessarily disclose all reportable conditions that are also considered to be
material weaknesses However, we believe that none of the reportable conditions described above is a
material weakness
-66-
Rachlin Cohen & Holtz LLP
One Southeast Third Avenue • Tenth Floor • Miami, Florida 33131 • Phone 305.377.4228 • Fax 305.377.8331 • www.rachlin.com
An Independent Member of Baker Tilly International
M I A M I • FORT LAUDERDALE • WEST PALM BEAC H • STUART
Honorable Mayor, Village Council and Village Manager
Village of Key Biscayne, Florida
Page Two
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Village's basic financial statements are free
of 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 matenal
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 instance of noncompliance that is required to be
reported under Government Auditing Standards.
However, we noted one immaterial instance of noncompliance that is presented in the accompanying
schedule of findings and questioned costs as item 06-02.
This report is intended solely for the information and use of the Mayor, Village Council, management
and regulatory agencies and is not intended to be and should not be used by anyone other than these
specified parties
coAe„„ aza5
Miami, Florida
February 15, 2007
-67-
Cohen
&Holtz
Accountants Advisors
Cohen
&Holtz
Accountants Advisors
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 year ended September 30, 2006, and have issued our report thereon dated February 15, 2007.
We conducted our audit in accordance with United States generally accepted auditing standards, and
Government Auditing Standards, issued by the Comptroller General of the United States and OMB
Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. We have issued
our Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting
and on Compliance and Other Matters and our Report of Independent Certified Public Accountants on
Compliance with Requirements Applicable to Each Major Federal Program and on Internal Control over
Compliance in Accordance with OMB Circular A-133 and Schedule of Findings and Questioned Costs.
Disclosures in these reports and schedule, which are dated February 15, 2007, should be considered in
conjunction with this management letter. Additionally, our audit was conducted in accordance with
provisions of Chapter 10 550, Rules of the Auditor General, which govern the conduct of local
governmental entity audits performed in the State of Florida and require that certain items be addressed
in this letter.
The Rules of the Auditor General (Section 10.554(l)(h)1.) require that we address in the management
letter, if not already addressed in the auditor's report on compliance and internal controls or schedule of
findings and questioned costs, whether or not recommendations made in the preceding annual financial
report have been followed The Village implemented the recommendations made in the preceding annual
financial audit report.
As required by the Rules of the Auditor General (Section 10.554(l)(h)2.), the scope of our audit included
a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds.
In connection with our audit, we determined that the Village complied with Section 218.415, Florida
Statutes
The Rules of the Auditor General (Section 10.554(1)(h)3.), require that we address in the management
letter any findings and recommendations to improve financial management, accounting procedures, and
internal controls In connection with our audit, the findings and recommendations are incorporated in the
accompanying schedule of findings and questioned costs
-68-
111
Rachlin Cohen & Holtz LLP
One Southeast Third Avenue • Tenth Floor • Miami, Florida 33131 • Phone 305.377 4228 • Fax 305.377.8331 • www.rachlin.com
An Independent Member of Baker Tilly International
M I A M I • FO RT LAU DERDALE • WEST PALM BEAC H • STUART
Honorable Mayor, Village Council and Village Manager
Village of Key Biscayne, Florida
Page Two
The Rules of the Auditor General (Section 10.554(l)(h)4.), require disclosure in the management letter
of the following matters if not already addressed in the auditor's reports on compliance and internal
controls or schedule of findings and questioned costs and are not clearly inconsequential: (I) violations
of laws, rules, regulations, and contractual provisions that have occurred, or are likely to have occurred;
(2) improper or illegal expenditures; (3) improper or inadequate accounting procedures (e.g., the
omission of required disclosures from the financials statements); (4) failures to properly record financial
transactions; and (5) other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or
that come to the attention of the auditor. In connection with our audit, the findings and recommendations
are incorporated in the accompanying schedule of findings and questioned costs.
The Rules of the Auditor General (Section 10.554(1)(h)5.), also require that the name or official title and
legal authority for the primary government and each component unit of the reporting entity be disclosed
in the management letter, unless disclosed in the notes of the financial statements. The Village was
incorporated by Laws of Florida 90-142. There are no component units related to the Village.
As required by the Rules of the Auditor General (Section 10.554(1)(h)6a.), a statement must be included
as to whether or not the local government entity has met one or more of the conditions described in
Section 218.503(1), Florida Statutes. 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.
As required by the Rules of the Auditor General (Section 10.554(1)(h)6.b.), we determined that the
annual financial report for the Village for the fiscal year ended September 30, 2006, 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, 2006.
As required by the Rules of the Auditor General (Section 10.554(h)6.c. and 10.556(7)), we applied
financial assessment procedures. It is management's responsibility to monitor the entity'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. The assessment was done as of
the fiscal year end. There were no findings that identified deteriorating financial conditions.
This management letter is intended solely for the information of the Village Council, management, and
the State of Florida Office of the Auditor General, and is not intended to be and should not be used by
anyone other than these specified parties.
Acf/,",i �oa1.�. /J4-I LLP
Miami, Florida
February 15, 2007
-69-
Cohen
&Holtz
Accountants Advisors
Accountants y Advisors
Report of Independent Certified Public Accountants on
Compliance and Internal Control over Compliance Applicable to
Each Major Federal Program in Accordance with OMB Circular A-133
Honorable Mayor, Village Council and Village Manager
Village of Key Biscayne, Florida
Compliance
We have audited the compliance of the Village of Key Biscayne, Florida (the Village) with the types of
compliance requirements described in the U S. Office of Management and Budget (OMB) Circular A-133
Compliance Supplement, that are applicable to its major federal program for the year ended September 30,
2006. The Village's major federal program is identified in the summary of auditor's results section of
the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of
laws, regulations, contracts and grants applicable to its major federal program is the responsibility of the
Village's management. Our responsibility is to express an opinion on the Village's compliance based on
our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States; the standards applicable to financial audits contained in Government Auditing Standards,
Issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local
Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 require that we
plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have direct and material effect on a major federal
program occurred. An audit includes examining, on a test basis, evidence about the Village's compliance
with those requirements and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not
provide a legal determination on the Village's compliance with those requirements.
In our opinion, the Village complied, in all material aspects, with the requirements referred to above that
are applicable to its major federal program for the year ended September 30, 2006
Internal Control over Compliance
The management of the Village is responsible for establishing and maintaining effective internal control
over compliance with the requirements of laws, regulations, contracts and grants applicable to federal
programs In planning and performing our audit, we considered the Village's internal control over
compliance with requirements that could have a direct and material effect on a major federal program
-70-
Rachlin Cohen & Holtz LLP
One Southeast Third Avenue • Tenth Floor • Miami, Florida 33131 • Phone 305.377 4228 • Fax 305.377 8331 • www.rachlin.com
An Independent Member of Baker Tilly International
M I A M I • FORT LAUDERDALE • WEST PALM BEAC H • STUART
Honorable Mayor, Village Council and Village Manager
Village of Key Biscayne, Florida
Page Two
in order to determine our auditing procedures for the purpose of expressing our opinion on compliance
and to test and report on internal control over compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily disclose all matters in
the internal control that might be material weaknesses. A material weakness is a reportable condition in
which the design or operation of one or more of the internal control components does not reduce to a
relatively low level the risk that noncompliance with applicable requirements of laws, regulations,
contracts and grants caused by error or fraud that would be material in relation to a major federal
program being audited may occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. We noted no matters involving the internal control over
compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the Mayor, Village Council, management
and federal awarding agencies and pass -through entities and is not intended to be and should not be used
by anyone other than these specified parties.
ettht 2' / if6,1 LL P
Miami, Florida
February 15, 2007
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Cohen
ccl-Ioltz
Accountants Advisors
VILLAGE OF KEY BISCAYNE, FLORIDA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FISCAL YEAR ENDED SEPTEMBER 30, 2006
Grant/
CFDA Contract
Federal Grantor/Pass Through Grantor Programs Number Number
Department of Homeland Security
Federal Emergency Management Agency
Pass through State of Florida
Department of Community Affairs
Disaster Relief Funding Agreement - Wilma
Expenditures
97.036 06-WL-&K-11-23-02-863 $ 2,270,704
Total Expenditures of Federal Awards $ 2,270,704
See note to the schedule of expenditures of federal awards.
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VILLAGE OF KEY BISCAYNE, FLORIDA
NOTE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FISCAL YEAR ENDED SEPTEMBER 30, 2006
NOTE 1. BASIS OF PRESENTATION
The accompanying schedule of expenditures of federal awards includes the federal grant activity
of the Village of Key Biscayne and is presented on the accrual basis of accounting. The
information in this schedule is presented in accordance with the requirements of OMB Circular
A-133, Audits of States, Local Governments, and Non -Profit Organization. Therefore, some
amounts presented in this schedule may differ from amounts presented in, or used in the
preparation of the financial statements.
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VILLAGE OF KEY BISCAYNE, FLORIDA
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
FISCAL YEAR ENDED SEPTEMBER 30, 2006
PRIOR AUDIT FINDINGS AND STATUS
The following addresses the status of financial statement findings reported in the fiscal year ended
September 30, 2005 schedule of findings and questioned costs:
Matters that are not repeated in the accompanying schedule of findings and questioned costs
• Acquisition of a capital asset software system that will allow the Village to more effectively and
efficiently track and maintain their acquired and constructed capital assets
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VILLAGE OF KEY BISCAYNE, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FISCAL YEAR ENDED SEPTEMBER 30, 2006
SECTION I - SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of auditor's report issued: Unqualified Opinion
Internal control over financial reporting:
Material weakness(es) identified? yes X no
Reportable condition(s) identified not considered to be
material weakness? X yes none reported
Noncompliance material to financial statements noted?
Federal Awards ProRrams
yes X no
Internal control over the major programs:
Material weaknesses) identified? yes X no
Reportable condition(s) identified not considered to be
material weakness? yes X none reported
Type of auditor's report issued on compliance for the major
programs: Unqualified Opinion
Any audit findings disclosed that are required to be reported
in accordance with Circular A-133, Section .510(a)? yes X no
Identification of major federal awards program:
Federal Awards Program CFDA No.
Disaster Relief Funding Agreement 97.036
Dollar threshold used to distinguish between Type A and
Type B programs: $300,000
Auditee qualified as low risk auditee for audit of federal awards
programs? yes X no
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VILLAGE OF KEY BISCAYNE, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
SECTION II — FINANCIAL STATEMENT FINDINGS
Reportable Condition
06-01 Village Credit Cards
Condition
When performing a test over the process of the Village personnel and their use of Village issued credit
cards, we noted in various instances that there was no support attached or in adequate support attached to
the credit card statement identifying the business purpose of the transaction. In those instances, sign offs of
responsible officials were noted on the credit card statement In addition, we noted that the Village does not
have a written credit card policy so there is no standardized adherence to Village policies and procedures.
Criteria
The Village has the responsibility to safeguard their assets from loss or misuse.
Cause
Lack of adequate internal controls over credit cards stemming from lack of a written defined policy.
Even with a formal policy, internal controls would have to be in place to ensure compliance with the
stated policies.
Effect
Inadequately supported transactions of expenses paid with the Village credit cards
Reconznzendation
We recommend that the Village establish written policies and procedures for the proper safeguarding and
usage of the Village credit card. Examples of what the written policy may include are as follows
adequate oversight and internal controls should include safeguarding the actual credit card; ensuring only
authorized personnel have access to the credit card; sufficient documentation of all credit cards purchases
should be maintained in the form of invoices and/or receipts and in the rare instance where a receipt is
lost or cannot be obtained, s sign off by a responsible Village official; monthly credit cards statements
should be reconciled to the receipts on hand by a person other than the individual who are authorized to
use the credit card and documentation should support a valid business purpose; payments should be
remitted to the credit card vendor in a timely fashion to avoid late fees and charges. Subsequent to the
reporting of this matter, the Village prepared and provided the auditors a written policy.
Views of Responsible Officials and Planned Corrective Actions
The Village, since incorporation, has had a verbal policy governing credit card use between management
and department heads The policy is understood to require receipts and a department head approval for
all charges appearing on the periodic statement.
In the case where a receipt is not produced, the responsible department head will describe the nature of
the purchase and sign off its validity as a legitimate Village operating expense directly associated to
Village operations
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VILLAGE OF KEY BISCAYNE, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
SECTION II — FINANCIAL STATEMENT FINDINGS (Continued)
The Village has since put this policy into a written policy.
Compliance
06-02 Cash Disbursements
Condition
When performing our tests over cash disbursements, we noted one (1) instance where a check for $160,000
was not signed by two authorized signatories as prescribed by the Village's Resolution. Also, we noted two
(2) checks that were less than $10,000 each had no signature and were cashed by the bank. The three
checks noted above were to vendors of the Village and did not appear to be of an emergency nature.
Criteria
To comply with the Village's Resolution requiring two (2) signatures on each check issued for more than
$10,000 and prudent business practice would dictate that at least one signature on checks issued for less
than $10,000.
Effect
Although disbursements were determined to be business related expenses, the Village should ensure that
it has the controls in place to safeguard assets from loss or misuse.
Reconzmendation
We recommend that a person independent of the bank reconciliation should review all checks prior to
mailing to ensure checks contain the authorized signatory(ies), as required by the Village's resolution and
prudent business practice We did not audit the information provided below in the "Views of
Responsible Officials and Planned Corrective Actions".
Views of Responsible Officials and Planned Corrective Actions
One single check that exceeded $10,000 was released to a vendor without bearing two signatures.
A check in November 2005 in payment for Hurricane Wilma debris removal hauling was fully
documented with complete support This check was reviewed by the previous Mayor who signed the
check to the vendor In the haste and confusion of the aftermath of this devastating storm, the check was
hand delivered to the hauler without the signature of the manager or clerk The Manager did however
approve the payment by way of signature on the actual check request
This was a single incident in a field of over 3,500 checks issued during the year
SECTION III — FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
None
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VILLAGE OF KEY BISCAYNE, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
SECTION IV - NEW PRONOUNCEMENT
Governmental Accounting Standards Board Statement No. 45 — Accounting and Financial
Reporting by Employers for Post -Employment Benefits Other than Pensions
As part of the total compensation offered to attract and retain the services of qualified employees, many
state and local governmental employers, in addition to pensions, provide other post -employment benefits
(OPEB). OPEB includes post -employment healthcare, as well as other forms of post -employment
benefits when provided separately from a pension plan. The Governmental Accounting Standards Board
has issued Statement No. 45 which establishes standards for the measurement, recognition, and display
of OPEB expenses/expenditures and related liabilities (assets), note disclosures, and if applicable,
required supplementary information (RSI) in the financial reports of state and local governmental
employers.
Post -employment benefits (OPEB) are part of an exchange of salaries and benefits for employee services
rendered, and are taken after the employee's services have ended. From an accrual accounting
perspective, the cost of OPEB should be associated with the periods in which the exchange occurs, rather
than with the periods, often many years later, when benefits are paid or provided. However, in current
practice, most OPEB plans are financed on a pay-as-you-go basis, and financial statements generally do
not report financial effects of OPEB until the promised benefits are paid. As a result, current financial
reporting generally fails to recognize the cost of the benefits in periods when the related services are
received by the employer, provide information about the actuarial accrued liabilities for promised
benefits associated with past services and whether and to what extent those benefits have been funded
and provide information useful in assessing potential demands on the employer's future cash flows. This
Statement improves the relevance and usefulness of financial reporting by (a) requiring systematic,
accrual basis measurement and recognition of OPEB expense over a period that approximates employees'
years of service and (b) providing information about actuarial accrued liabilities associated with OPEB
and whether and to what extent progress is being made in funding the plan.
OPEB expenditures for governmental funds should be recognized on the modified accrual basis. The
amount recognized should be equal to the amount contributed to the plan or expected to be liquidated
with expendable available resources. Essentially, there is no change from current practice for
governmental funds. However, for government -wide financial statements, the accrual basis must be
used.
The accrual method will require the calculations to be made using actuarial computations and will result
in the recognition of a present value liability which measures the value of OPEB benefits earned by
employees during their tenure with the government and likely to be paid upon retirement. This
calculation will result in substantial amounts, due to the current cost of such benefits and their escalating
costs. It should also be emphasized that there is no requirement to fund these benefits with current
resources. The Statement merely requires the reporting of the value of the benefit primarily in the
government -wide financial statements. The computations can be extremely complex and the use of an
actuary will invariably be required.
An alternative measurement method exists for a sole employer in a plan with fewer than one hundred
total plan members (including employees in active service, terminated employees who have accumulated
benefits but are not yet receiving them, and retirees and beneficiaries currently receiving benefits) has the
option to apply a simplified alternative measurement method instead of obtaining actuarial valuations
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VILLAGE OF KEY BISCAYNE, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
NEW PRONOUNCEMENT (Continued)
This alternative method includes the same broad measurement steps as an actuarial valuation (projecting
future cash outlays for benefits, discounting projected benefits to present value, and allocating the
present value of benefits to periods using an actuarial cost method). However, it permits simplification
of certain assumptions to make the method potentially usable by nonspecialists.
The Statement would permit prospective implementation, that is, employers would be permitted to set the
beginning net OPEB obligation at zero as of the beginning of the initial year. Implementation would
occur in three phases based on the government's total annual revenues in the first fiscal year ending after
June 15, 1999. The definitions and cutoff points for that purpose otherwise would be the same as in
GASB's Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysis —
for State and Local Governments. For the District, this Statement is effective for the fiscal year ended
September 30, 2009.
Recommendation
The contents of this statement are highly complex and will require significant lead time to implement on
the respective implementation date. We would suggest that the Town obtain a thorough understanding of
the requirements and initiate planning for implementation in a prudent manner.
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