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HomeMy WebLinkAbout11-00260 03-28-2011 Audited FY2010 Financial StatementsCITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Basic Financial Statements September 30, 2010 (With Independent Auditor's Report Thereon) CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) September 30, 2010 Table of Contents Independent Auditor's Report Pa2es 1 Management's Discussion and Analysis (Required Supplementary Information) 2-7 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Balance Sheet — Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds 8 9 10 11 Notes to Basic Financial Statements 12-19 Required Supplementary Information (Unaudited): Budgetary Comparison Schedule — General Fund 20 Budgetary Comparison Schedule — Special Revenue Fund 21 Note to Required Supplementary Information 22 Other Reports: Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Management letter in Accordance with the Rules of the Auditor General of the State of Florida 23-24 25-26 Independent Auditor's Report SKJ & Co SANSON KLINE JACOMINO & COMPANY, LLP Certified Public Accountants & Consultants Independent Auditor's Report 5805 Blue Lagoon Drive Suite 220 Miami, Florida 33126 Tel. (305) 269-8633 Fax (305) 265-0652 www.sk[net.com The Board of Directors City of Miami Southeast Overtown Park West Redevelopment Agency: We have audited the accompanying basic financial statements of the governmental activities and each major fund of the City of Miami Southeast Overtown Park West Redevelopment Agency (the Agency), a component unit of the City of Miami, Florida (the City), as of and for the year ended September 30, 2010, which collectively comprise the Agency's basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the Agency'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 of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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 purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion. An audit 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 fmancial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Agency as of September 30, 2010, and the respective changes in financial position thereof for the year then ended in conformity with U.S. generally accepted accounting principles. In accordance with Government Auditing Standards, we have issued our report dated March 1, 2011 on our consideration of the Agency'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. The management's discussion and analysis on pages 2 through 6 and the budgetary comparison information on pages 19 through 21 are not a required part of the basic financial statements but are supplementary information required by U.S. generally accepted accounting principles. 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. V Vepthopfl� �� /- ci) March 1, 2011 1 Management's Discussion and Analysis CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Management's Discussion and Analysis - Unaudited September 30, 2010 This section of the City of Miami Southeast Overtown Park West Redevelopment Agency (the Agency) financial statements presents management's analysis of the financial performance for the fiscal year ended September 30, 2010. This discussion addresses whether or not the Agency as a whole is better off or worse off as a result of this year's activities. Overview The purpose of the Agency is to eliminate blight and slum conditions within the redevelopment area of the Agency, pursuant to the redevelopment plans of the Agency for new residential and commercial activity in the Southeast Overtown area. The Agency's primary source of revenue is tax -increment funds. This revenue is computed by applying the operating tax rate for the City and the County, multiplied by the increased value of property located within the boundaries of the redevelopment areas of the Agency, over the base property value, minus 5%. Both the City and the County are required to fund this amount annually without regard to tax collections or other obligations. On August 6, 2007, the City, County and The Children's Trust (the Trust) entered into an Interlocal Agreement with the Agency, whereby the Agency would receive from the Trust, on an annual basis, tax increment revenues derived from the imposition of a half -mil tax levied by the Trust against real property located within the redevelopment district (referred to as Trust revenues). The agency agreed to use the Trust revenues for debt service on, and other obligations relating to, existing debts of the Agency only after all other available tax increment revenues have been exhausted for such purpose, and to remit to the Trust on the last day of the Agency's fiscal year, all of the Trust revenues that are not needed for debt service on, or other obligations relating to, existing debts of the Agency. Further, the Agency's policy is set by a board of directors comprised of the five members of the City commission and are separate, distinct and independent from the governing body of the City; and it's management plan is executed by a small professional staff led by its executive director. Financial Highlights The assets of the Agency exceeded its liabilities at the close of its most recent fiscal year by $24,538,940. Of this amount, $5,209,083 was invested in capital assets net of related debt, $782,270 was restricted for debt service, and $17,865,766 was restricted by enabling legislation. This resulted in an excess of $681,821 (unrestricted net assets) available to meet the Agency's obligations to citizens in the Southeast Overtown area. At the close of the current fiscal year, the Agency's governmental funds reported combined ending fund balances of $19,454,465, a decrease of $1,396,684 in comparison with the prior year. Overview to the Financial Statements This discussion and analysis is intended to serve as an introduction to the Agency's basic financial statements. The Agency's basic financial statements are comprised of three components: • Government -wide financial statements • Fund financial statements • Notes to the basic financial statements 2 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Management's Discussion and Analysis - Unaudited September 30, 2010 In addition, the Agency reports, as required supplementary information, a budget to actual comparison and notes to the required supplementary information. Government -wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of the Agency's finances, in a manner similar to a private -sector business (i.e. economic resources and measurement focus). The statement of net assets presents information on all of the Agency's assets and liabilities, with the 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 Agency is improving or deteriorating. The statement of activities presents information showing how the Agency'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 the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. The government -wide financial statements may be found on pages 8 and 9 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 Agency, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All of the funds of the Agency are categorized as 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 fmancial statements, governmental fund financial statements focus on near -term inflows and outflows of expendable resources, as well as on balances of expendable 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 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 Agency maintains four individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Special Revenue Fund, Debt Service Fund and Capital Projects Fund. The basic governmental fund financial statements can be found on pages 10 and 11 of this report. 3 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Management's Discussion and Analysis - Unaudited September 30, 2010 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 basic financial statements can be found on pages 12 to 19 of this report. Budgetary Highlights The Agency adopts an annual budget on an individual fund basis. Budgetary comparison schedules have been provided for the General Fund and Special Revenue Fund to demonstrate compliance with the budget on pages 20 and 21, respectively, of this report. The following is a brief review of the significant variances between the original budget and final budget for the General Fund (please see budget to actual comparison on page 20): • The change in the original budget to the final budget for general government expenditures was a result of the repayment due to the City for administrative operating subsidies given to the Agency during the period beginning fiscal year 2000 and ending fiscal year 2005. • The change in the original budget to the final budget for transfers in was a result of the transfers of funds from the Special Revenue Fund to repay the City for administrative operating subsidies given to the Agency during the period beginning fiscal year 2000 and ending fiscal year 2005. There were no significant variances between the final budget and actual amounts reported for the General fund. The following is a brief review of the significant variances between the original budget and the final budget for the Special Revenue Fund (please see budget to actual comparison on page 21): • The change in the original budget to the final budget for tax increment revenues was a result of the higher than originally anticipated payout from the City and County. • The change in the original budget to the final budget for transfers out was a result of the transfers of funds to the General Fund to repay the City for administrative operating subsidies given to the Agency during the period beginning fiscal year 2000 and ending fiscal year 2005. The significant variance between the final budget and actual amounts reported for community redevelopment expenditures in the Special Revenue Fund is a result of redevelopment projects that either did not commence yet or were not yet completed as planned. Financial Analysis Government -wide Analysis Our analysis of the financial statements of the Agency begins below. The Statement of Net Assets and the Statement of Activities report information about the Agency's activities that will help answer questions about the position of the Agency. A comparative analysis is shown below. A summary of the Agency's net assets is presented in Table A-1 and a summary of changes in net assets is presented in Table A-2. 4 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Management's Discussion and Analysis - Unaudited September 30, 2010 Table A-1 Summary of Net Assets Current assets Capital assets, net Total assets Current liabilities Non -current liabilities Total liabilities Investment in capital assets, net of related debt Restricted Unrestricted Total net assets Fiscal Year Fiscal Year 2010 2009 $ 25,637,977 $ 21,547,504 8,542,947 8,624,492 34,180,924 30,171,996 6,183,512 696,355 3,458,472 3,660,812 9,641,984 4,357,167 5,209,083 5,090,628 18,648,036 20,406,071 681,821 318,130 $ 24,538,940 $ 25,814,829 • Current assets increased in the current year mainly as a result of the increase in tax increment revenue paid by the City and County. • Current liabilities increased in the current year as a result of the accrual for repayment to the City for administrative operating subsidies given to the Agency during the period beginning fiscal year 2000 and ending fiscal year 2005. • A portion of the Agency's net assets ($5,209,083) reflects its investment in capital assets (e.g. furniture and equipment, infrastructure and land), less any related outstanding debt used to acquire those assets. These assets are not available for future spending. • Another portion of the Agency's net assets ($18,648,036) represents resources that are subject to external restrictions on how they may be used. • The remaining portion of the Agency's net assets ($681,821) represents resources that are unrestricted and available for any lawful use by the Agency. Table A-2 Summary of Changes in Net Assets Fiscal Year Fiscal Year 2010 2009 Revenues: Intergovemmental: Operating Charges for services: Parking fees General revenues: Tax increment revenue Sale of property Interest revenue $ 998,703 $ 717,723 149,696 257,095 10,680,683 608,248 53,678 7,848,613 739,468 261,395 5 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Management's Discussion and Analysis - Unaudited September 30, 2010 Table A-2 (continued) Summary of Changes in Net Assets Fiscal Year Fiscal Year 2010 2009 Revenues (continued): General revenues (continued): Other 391,155 20,513 Total revenues 12,882,163 9,844,807 Expenses: General government 6,578,409 1,325,921 Community redevelopment 4,292,394 5,230,177 Interest on long-term debt 146,625 162,988 Transfer to primary government 3,140,624 Total expenses and transfers 14,158,052 6,719,086 Change in net assets Net assets, beginning of year Net assets, end of year (1,275,889) 3,125,721 25,814,829 22,689,108 $ 24,538,940 $ 25,814,829 • Tax increment revenue increased in the current year as a result of the increase in the payout by the City and the County. • General government expenditures increased in the current year as a result of the accrual for the repayment to the City for administrative operating subsidies given to the Agency during the period beginning fiscal year 2000 and ending fiscal year 2005. • Transfer to primary government increased in the current year as a result of the repayment of the bond proceeds back to the City that was originally provided to the Agency for the purchase of an office building. Individual Fund Analysis Fund balance for the General Fund increased from $445,078 at September 30, 2009 to $806,429 at September 30, 2010. The fund balance for the Special Revenue Fund increased from $16,483,835 at September 30, 2009 to $17,865,766 at September 30, 2010. Fund balance for the Debt Service Fund remained the same from September 30, 2009 to September 30, 2010. Fund balance for the Capital Projects Fund decreased from $3,139,966 at September 30, 2009 to $0 at September 30, 2010. Since the Agency only has governmental funds/activities, the changes in fund balance also explain the increases in net assets. The following are key factors in the changes in fund balances for 2010: • The increase in fund balance in the General Fund was mainly due to the increase in funding for general operations received from both the City of Miami Omni and Midtown Community Redevelopment Agencies. • The increase in fund balance in the Special Revenue Fund was mainly due to the increase in tax increment revenues and decrease in community redevelopment expenditures. 6 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Management's Discussion and Analysis - Unaudited September 30, 2010 • The decrease in fund balance in the Capital Projects Fund was a result of the repayment of the bond proceeds back to the City that was originally provided to the Agency for the purchase of an office building. Capital Assets As of September 30, 2010, the Agency's investment in capital assets, net of accumulated depreciation, amounted to $8,542,947, decreasing from $8,624,492 as of September 30, 2009. Summary of Capital Assets (Net of Depreciation) Land Furniture and equipment Infrastructure Total capital assets Fiscal Year 2010 $ 4,019,507 45,922 4,477,518 $ 8,542,947 Additional capital asset information can be found on page 15 of this report. Fiscal Year 2009 $ 3,944,507 15,687 4,664,298 $ 8,624,492 Debt Management As of September 30, 2010, the Agency had $3,333,864 of special obligation bonds and loans outstanding compared to $3,533,864 as of September 30, 2009. The bonds and loans are secured by a pledge of guaranteed entitlement revenue received from the State of Florida and the tax increment revenue amounts received from the City and County. No additional debt was issued during fiscal year 2010. Additional long-term debt information can be found on pages 16 and 17 of this report. Requests for Information This financial report is designed to provide a general overview of the Agency's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Executive Director, 49 N.W. 5th Street, Suite 100, Miami, Florida 33128. 7 Basic Financial Statements CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Statement of Net Assets September 30, 2010 Governmental Activities Assets Equity in pooled cash $ 24,844,302 Restricted cash 782,270 Due from other government 3,287 Interest receivable 8,118 Capital assets (net of accumulated depreciation): Land 4,019,507 Furniture and equipment 45,922 Infrastructure 4,477,518 Total assets 34,180,924 Liabilities Accounts payable and accrued liabilities 457,488 Due to other governments 5,726,024 Non -current liabilities: Due within one year: Bonds payable 220,000 Due in more than one year: Bonds payable 1,405,000 Notes payable 1,708,864 Compensated absences 124,608 Total liabilities 9,641,984 Net Assets Invested in capital assets, net of related debt 5,209,083 Restricted 18,648,036 Unrestricted 681,821 Total net assets $ 24,538,940 The accompanying notes are an integral part of the basic financial statements. 8 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Statement of Activities Year ended September 30, 2010 Governmental Activities Expenses: General government $ 6,578,409 Community redevelopment 4,292,394 Interest on long-term debt 146,625 Transfer to primary government 3,140,624 Total expenses and transfers 14,158,052 Program revenues: Intergovernmental revenue: Operating Charges for services: Parking fees 998,703 149,696 Net expense (13,009,653) General revenues: Tax increment revenue 10,680,683 Sale of property 608,248 Other 391,155 Interest revenue 53,678 Total general revenues 11,733,764 Change in net assets (1,275,889) Net assets - beginning of the year 25,814,829 Net assets - end of the year $ 24,538,940 The accompanying notes are an integral part of the basic financial statements. 9 Assets Equity in pooled cash Restricted cash Due from other government Interest receivable CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Balance Sheet Governmental Funds September 30, 2010 General Total Special Capital governmental revenue Debt service projects funds $ 6,140,114 18,704,188 3,287 8,118 782,270 24,844,302 782,270 3,287 8,118 Total assets 6,143,401 18,712,306 782,270 - 25,637,977 Liabilities and Fund Balances Liabilities: Accounts payable and accrued liabilities Due to other governments Total liabilities $ 65,655 391,833 - 457,488 5,271,317 454,707 - 5,726,024 5,336,972 846,540 - 6,183,512 Fund Balances: Reserved for encumbrances - 12,084,571 Reserved for debt service - - Reserved for capital projects - - Unreserved: Designated for redevelopment projects 5,829,529 Undesignated 806,429 (48,334) Total fund balances 782,270 12,084,571 782,270 5,829,529 758,095 806,429 17,865,766 782,270 19,454,465 Total liabilities and fund balances $ 6,143,401 18,712,306 782,270 Amounts reported for governmental activities in the statement of net assets consist of: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds: Bonds payable Notes payable Compensated absences (1,625,000) (1,708,864) (124,608) 8,542,947 (3,458,472) Net assets of governmental activities $ 24,538,940 The accompanying notes are an integral part of the basic financial statements. 10 CITY OF NHANH SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year ended September 30, 2010 General Total Special Capital governmental revenue Debt service projects funds Revenues: Tax increment revenues $ 822,384 9,858,299 - 10,680,683 Intergovernmental 698,703 300,000 998,703 Parking fees 149,696 - 149,696 Other 391,155 - 391,155 Interest 53,020 658 53,678 Total revenues 1,670,783 10,302,474 300,000 658 12,273,915 Expenditures: Current: General government Community redevelopment Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Transfer to primary government Sale of property Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending 6,580,749 4,210,849 6,580,749 4,210,849 200,000 146,625 6,580,749 4,210,849 200,000 146,625 346,625 11,138,223 (4,909,966) 6,091,625 (46,625) 658 1,135,692 5,271,317 46,625 5,271,317 (5,317,942) 608,248 (4,709,694) 46,625 361,351 1,381,931 445,078 16,483,835 782,270 5,317,942 (5,317,942) (3,140,624) (3,140,624) 608,248 (3,140,624) (2,532,376) (3,139,966) 3,139,966 (1,396,684) 20,851,149 $ 806,429 17,865,766 782,270 19,454,465 Net change in fund balances - total governmental funds (1,396,684) Amounts reported for governmental activities in the statement of activities are different because: The issuance of long-term debt provides current financial resources to governmental funds, while repayments on long-term debt consumes the curent financial resources of governmental funds: Payment of principal on long-term debt Items reported in the statement of activities do not require the use of current financial resources, and therefore, are not reported as expenditures in governmental funds: Decrease in compensated absences 200,000 2,340 The governmental funds reported 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: Expenditures for capital assets 761,519 Less: depreciation expense (693,264) 68,255 Loss on the disposal of capital assets is reported in the Statement of Activities, but is not reported in the fund financial statements. Change in net assets of governmental activities The accompanying notes are an integral part of the basic financial statements. 11 (149,800) (1,275,889) CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Notes to Basic Financial Statements September 30, 2010 1. Summary of Significant Accounting Policies This summary of the City of Miami Southeast Overtown Park West Redevelopment Agency (the Agency) significant accounting policies is presented to assist the reader in interpreting the basic financial statements. The policies are considered essential and should be read in conjunction with the basic financial statements. The accounting policies of the Agency conform to accounting principles generally accepted in the United States of America applicable to governmental units. This report, the accounting systems and classification of accounts conform to standards of the Governmental Accounting Standards Board (GASB), which is the accepted standard -setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies: A. Reporting Entity The Agency was established in 1983, by the City of Miami, Florida (the City) under the provisions of Section 163, Florida Statutes. The purpose of the Agency is to eliminate blight and slum conditions within the redevelopment area of the Agency pursuant to the redevelopment plans of the Agency for new residential and commercial activity in the Southeast Overtown area. The board of directors of the Agency is comprised of the five members of the City commission and are separate, distinct and independent from the governing body of the City. The City entered into Interlocal Cooperation Agreements, dated March 31, 1982, with Miami -Dade County, Florida (the County) and related ordinances of the City and County whereby tax increment revenue collected by the parties would be paid to the Agency and used in accordance with the approved budgets of the redevelopment plans and terms and conditions of the Interlocal Agreements for the benefit of the Agency. For financial reporting purposes, the Agency is a component unit of the City and is thus included in the City's comprehensive annual financial report as a blended component unit. 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 the nonfiduciary activities of the Agency. 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. The Agency does not have any business -type activities. 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 the governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements. 12 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Notes to Basic Financial Statements September 30, 2010 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. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental fund financial statements are reported using the current financial resource measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Agency considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally 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. Taxes 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. Only the portion due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. The Agency reports the following major governmental funds: • The General Fund is the Agency'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 Special Revenue Fund accounts for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted for specified purposes; • The Debt Service Fund accounts for the accumulation of resources for, and the payment of, bond principal and interest; and • The Capital Projects Fund accounts for the acquisition and/or construction of major capital facilities. When both restricted and unrestricted resources are available for use, it is the Agency's policy to use restricted resources first, then unrestricted resources as they are needed. D. Equity in Pooled Cash The Agency's cash, other than described below, is pooled together with the City's cash. All such cash is reflected as equity in pooled cash on the Agency's statement of net assets and governmental funds balance sheet. E. Restricted Net Assets The government -wide statement of net assets reports $18,648,036 of restricted net assets, of which $782,270 is restricted for debt service payments because their use is limited by applicable bond covenants and restrictions and $17,865,766 is restricted by enabling legislation (i.e. the use of tax increment funding for specific activities). 13 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Notes to Basic Financial Statements September 30, 2010 F. Capital Assets Capital assets, which include property, plant, and equipment are reported in the applicable governmental type activities column in the government -wide financial statements. Capital assets are defined by the Agency as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Capital assets of the Agency are depreciated using the straight-line method over the following estimated useful lives: Assets Years Furniture and equipment 5 Infrastructure 5-35 G. Long-term Obligations In the government -wide financial statements long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. H. 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. The description of each reserve indicates the purpose for which each was intended. Unreserved fund balance is the portion of fund equity available for any lawful use. I. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the fmancial statements and accompanying notes. Although these 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. 2. Cash Deposits At September 30, 2010, the Agency's cash consisted of equity in pooled cash of $24,844,302 and restricted cash of $782,270. The Agency's funds participate in the City's pool on a dollar equivalent and daily transaction basis. Interest income (which includes unrealized gains and losses) is distributed monthly based on a monthly average balance. Custodial Credit Risk is the risk that in the event of a bank failure, the Agency's deposits may not be returned to it. In addition to insurance provided by the Federal Deposit Insurance Corporation (FDIC), deposits are held in banking institutions approved by the State of Florida, State Treasurer to hold public funds. 14 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Notes to Basic Financial Statements September 30, 2010 2. Cash Deposits (continued) Under the Florida Statutes Chapter 280, "Florida Security for Public Deposits Act", the State Treasurer requires all 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. 3. Sale of Property On April 13, 2005, the Agency sold certain property to Bayview Towers Associates, LLC (Bayview) for a total purchase price of $2,600,000, of which $500,000 was paid upon closing. The remaining amount of $2,100,000 was due within two years from the date of closing, and was paid by Bayview upon the closing of each condominium unit sold by Bayview, whereby 7% of the gross purchase price of each condominium unit sold was paid to the Agency, up to the $2,100,000. Bayview is required to continue to pay the Agency 7% of the gross purchase price of each condominium unit sold thereafter. The total amount paid by Bayview during the fiscal year ended September 30, 2010 is $608,248. 4. Capital Assets Capital asset activity for the fiscal year ended September 30, 2010 was as follows: Balance Balance September Transfers/ Transfers/ September 30.2009 Additions Deletions 30.2010 Capital assets, not being depreciated: Land $ 3,944,507 Total capital assets, not being depreciated 3,944,507 75,000 4,019,507 75,000 4,019,507 Capital assets, being depreciated: Furniture and equipment 87,657 65,750 153,407 Infrastructure 9,052,600 664,543 (295,774) 9,421,369 Total capital assets, being depreciated 9,140,257 730,293 (295,774) 9,574,776 Less accumulated depreciation for: Furniture and equipment 71,970 35,515 - 107,485 Infrastructure 4,388,302 664,002 (108,453) 4,943,851 Total accumulated depreciation 4,460,272 699,517 (108,453) 5,051,336 Total capital assets, being depreciated, net 4,679,985 30,776 (187,321) 4,523,440 Total capital assets (net of accumulated depreciation) $ 8,624,492 105,776 (187,321) 8,542,947 During fiscal year 2010, depreciation expense in the amount of $693,264 was charged to Community Development. 15 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Notes to Basic Financial Statements September 30, 2010 5. Long -Term Obligations The changes in the long-term obligations for the year ended September 30, 2010 are summarized as follows: Balance Balance Amount due September September within one 30.2009 Additions Deletions 30.2010 year Community Redevelopment Revenue $ 1,825,000 - (200,000) 1,625,000 220,000 Bonds, Series 1990 Gran Central Loan 1,708,864 1,708,864 Compensated absences 126,948 (2,340) 124,608 Total long-term obligations $ 3,660,812 - (202,340) 3,458,472 220,000 A description of each obligation is as follows: (a) On November 8, 1990, the City issued $11,500,000 aggregate principal amount of Community Redevelopment Revenue Bonds, Series 1990, maturing through 2015, with interest rates ranging from 7.15% to 8.5%. These bonds are secured by a pledge of guaranteed entitlement revenue received from the State of Florida and the tax increment revenue amounts received from the City and County on the Southeast Overtown/Park West Redevelopment area. The proceeds of the bonds were used mainly to refinance a $5,958,000 Section 108 HUD promissory note, to reimburse the City for moneys advanced to the Agency by the City in an amount not to exceed $750,000, and to finance the acquisition and clearing of certain real property and the construction of certain infrastructure improvements within the Southeast Overtown/Park West Redevelopment Area defined in the Phase I Development Programs of the Agency's Interlocal Agreement and related resolutions of the City and County. The bonds are secured by a pledge of $300,000 per year by the City from the proceeds of its Guaranteed Entitlement Revenue, in addition to the tax increment revenue received by the City and County. As a result, the City deposits $300,000 per year with the trustees of the bond indenture, which represents its portion of the state of Florida's shared revenue for the payment of principal and interest on the bonds. The principal and interest requirements on the special obligation bonds and loans are as follows: Principal Interest Total 2011 $ 220,000 128,775 348,775 2012 235,000 109,438 344,438 2013 255,000 88,613 343,613 2014 280,000 65,875 345,875 2015 305,000 41,012 346,012 2016 330,000 14,025 344,025 Total $ 1,625,000 447,738 2,072,737 16 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Notes to Basic Financial Statements September 30, 2010 5. Long -Term Obligations (continued) (b) On January 20, 1988, the City entered into a loan agreement with the Gran Central Corporation (GCC) to finance 50% of the cost to acquire a parcel of property within the SEOPW CRA Area and relocate and widen Northwest First Avenue between Northwest First Street and Northwest Eighth Street. The loan, in the amount of $1,708,864, does not bear interest and is payable from tax increment funds received from the City and County within a designated area defined in the loan documents on a junior and subordinate basis to the lien granted to holders of the $11,500,000 Community Redevelopment Revenue Bonds, Series 1990. GCC is to be fully repaid by the year 2008 with annual payments to be made to the extent funds are generated by tax increment revenue within the designated area, as defined in the loan document, is available after required payments for the Series 1990 Bonds debt service and any requirement of the reserve fund or reserve product, as defmed in the Series 1990 Bond indenture. GCC has subsequently been acquired by another company (referred to as the "predecessor company"), which has taken over the loan. The loan became due during fiscal year 2008. However, management believes that since no tax increment funds have been generated within the designated area, as defmed in the loan documents, no payment on the loan is required, and will only become due when any such tax increment funds have been generated within the designated area. Management of the Agency is still in the process of clarifying these terms with the predecessor company, but has been unsuccessful. 6. Tax Increment Revenue The Agency's primary source of revenue is tax -increment funds. This revenue is computed by applying the operating tax rate for the City and the County, multiplied by the increased value of property located within the boundaries of the redevelopment areas of the Agency, over the base property value, minus 5%. Both the City and the County are required to fund this amount annually without regard to tax collections or other obligations. On August 6, 2007, the City, County and The Children's Trust (the Trust) entered into an Interlocal Agreement with the Agency, whereby the Agency would receive from the Trust, on an annual basis, tax increment revenues derived from the imposition of a half -mil tax levied by the Trust against real property located within the redevelopment district (referred to as Trust revenues). The Agency agreed to use the Trust revenues for debt service on, and other obligations relating to, existing debts of the Agency only after all other available tax increment revenues have been exhausted for such purpose, and to remit to the Trust on the last day of the Agency's fiscal year, all of the Trust revenues that are not needed for debt service on, or other obligations relating to, existing debts of the Agency. As of September 30, 2010, the Agency recorded an amount due to the Trust totaling $454,707. 7. Parking Lease Revenue On February 23, 1988, the City and the Department of Off -Street Parking (DOSP), a discretely presented component unit of the City, entered into an agreement whereby DOSP leased certain lots surrounding the Miami Arena. The term of the lease agreement was for a period of five years, which commenced on June 1, 1988 and expired on June 1, 1993. DOSP paid the City $500,000 upon signing the lease agreement and agreed to pay annually as rent eighty-five percent (85%) of gross revenue earned net of operating expenses incurred on the operations of the leased lots for each respective lease year. 17 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Notes to Basic Financial Statements September 30, 2010 7. Parking Lease Revenue (continued) On October 20, 1993, the City and DOSP entered into an agreement to extend the lease term of the original agreement, which expired on June 1, 2000. Currently, the City and DOSP have extended the lease agreement to an undetermined amount of time. All of the lots leased to DOSP are within the limits of the Southeast Overtown district, and therefore, the City allocates all moneys received from DOSP to the Southeast Overtown district. 8. Interfund Transfers During 2010, there was a transfer of $46,625 from the special revenue fund to the debt service fund to cover debt service expenditures, and a transfer of $5,271,317 from the special revenue fund to the general fund for the eventual repayment to the City for administrative operating subsidies given to the Agency during the period beginning fiscal year 2000 and ending fiscal year 2005. 9. Special Benefit Plans (a) 401(a) Deferred Compensation Plan All employees, including executives and general employees, of the Agency are eligible, after one year of service, to join the ICMA Retirement Trust 401(a) Deferred Compensation Plan (the Plan). The Plan agreement requires the Agency to contribute 8% of each executive employee's earnable compensation, and 5% of each general employee's earnable compensation. Contributions by executive and general employees are not required. Participants may withdraw funds at retirement or upon separation based on a variety of payout options. The following information relates to the Agency's participation in the 401(a) Deferred Compensation Plan: Current year's payroll for executive employees $ 95,000 Current year's payroll for general employees 564,942 Current year's employer contributions for: Executive employees (8% rate) 7,378 General employees (5% rate) 19,452 (b) 457(b) Deferred Compensation Plan All employees, including executives and general employees, of the Agency are eligible to join the United States Conference of Mayors 457(b) Deferred Compensation Plan (the Plan). The Plan agreement requires the Agency to contribute 5% of each executive employee's earnable compensation, and is not required to contribute to general employee participants. Contributions by executive and general employees are not required. Participants may withdraw funds at retirement or upon separation based on a variety of payout options. The following information relates to the Agency's participation in the 457(b) Deferred Compensation Plan: Current year's payroll for executive employees Current year's employer contributions for: Executive employees (5% rate) $ 95,000 4,611 18 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Notes to Basic Financial Statements September 30, 2010 10. Commitment and Contingencies (a) The Agency is contractually obligated for approximately $8 1 million at September 30, 2010, for construction projects. (b) During 2010, the Agency committed to provide a grant to Camillus House for the construction of a new facility at an amount not to exceed $10,000,000. The grant, which will be funded by tax increment revenues, will be payable at $2,000,000 per year over a five year period from fiscal year 2011 through fiscal year 2016. (c) The Agency is a defendant in several legal actions. The outcome of these actions cannot be determined at this time. Management believes that any liability from these actions will not have a material effect on the Agency's financial condition. 11. Subsequent events Subsequent events are events or transactions that occur after the balance sheet date but before the financial statements are issued or are available to be issued. Subsequent events should be disclosed in the financial statements if exclusion of such disclosure would cause the fmancial statements to be misleading. The Agency evaluated subsequent events through March 1, 2011, the date the financial statements were available to be issued, and does not believe that there are any such events or transactions that require disclosure. 19 Required Supplementary Information CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Budgetary Comparison Schedule - General Fund (Required Supplementary Information - Unaudited) Year ended September 30, 2010 Budgeted amounts Original Final Revenues: Tax increment revenues $ 822,384 822,384 Intergovernmental 716,400 716,400 Parking fees Total revenues 1,538,784 1,538,784 Actual Variance with final budget - positive (negative) 822,384 - 698,703 (17,697) 149,696 149,696 1,670,783 131,999 Expenditures: Current: General government 1,643,891 6,915,208 6,580,749 334,459 Total expenditures 1,643,891 6,915,208 6,580,749 334,459 Excess (deficiency) of revenues over (under) expenditures (105,107) (5,376,424) (4,909,966) 466,458 Other financing sources (uses): Transfers in Net (budget reserve) carryover fund balance Total other financing sources (uses) Net change in fund balance 105,107 5,271,317 105,107 105,107 5,376,424 5,271,317 (105,107) 5,271,317 (105,107) 361,351 361,351 Fund balances - beginning 445,078 Fund balances - ending $ 806,429 The note to the required supplementary information is an integral part of this schedule. 20 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Budgetary Comparison Schedule - Special Revenue Fund (Required Supplementary Information - Unaudited) Year ended September 30, 2010 Revenues: Tax increment revenues Intergovernmental Other Interest Total revenues Expenditures: Current: Community redevelopment Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Proceeds from sale of land Net carryover fund balance Total other fmancing sources (uses) Net change in fund balance Fund balances - beginning Fund balances - ending Budgeted amounts Original Final $ 7,014,897 10,226,246 7,014, 897 10,226,246 24,378,737 21,600,610 24,378,737 21,600,610 (17,363,840) (11,374,364) (50,000) (5,621,317) - 611,846 17,413,840 16,383,835 17,363,840 11,374,364 $ - Actual 9,858,299 391,155 53,020 10,302,474 Variance with final budget - positive (negative) (367,947) 391,155 53,020 76,228 4,210,849 17,389,761 4,210, 849 17,389, 761 6,091,625 17,465,989 (5,317,942) 303,375 608,248 (3,598) - (16,383,835) (4,709,694) 1,381,931 16,483,835 $ 17,865,766 The note to the required supplementary information is an integral part of this schedule_ (16,084,058) 1,381,931 21 CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Note to Required Supplementary Information September 30, 2010 1. Budgetary Policy The Agency adopts an annual budget for the operations of the General Fund, Special Revenue Fund and Debt Service Fund. Capital Project funds are budgeted on a total project basis for which annual budgets are not available. In accordance with generally accepted accounting principles, budgetary comparison information is disclosed only for the General Fund and the Special Revenue Fund. The budgets are adopted on a basis consistent with U.S. generally accepted accounting principles. Budgetary control is maintained at the fund level. 22 Other Reports SKJ & Co SANSON KLINE JACOMINO & COMPANY, LLP Certified Public Accountants & Consultants Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 5805 Blue Lagoon Drive Suite 220 Miami, Florida 33126 Tel. (305) 269-8633 Fax (305) 265-0652 www.sk[net.com The Board of Directors City of Miami Southeast Overtown Park West Redevelopment Agency: We have audited the basic financial statements of the City of Miami Southeast Overtown Park West Redevelopment Agency (the Agency) as of and for the year ended September 30, 2010, and have issued our report thereon dated March 1, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Agency's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be a material weakness, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency'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 material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. In addition, we issued a management letter to management of the Agency dated March 1, 2011, as required by the Rules of the Auditor General of the State of Florida. 23 SKJ & Co This report is intended solely for the information and use of the board of directors, management of the Agency, 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. vt—pf s-a7iam 370-feefre/- March 1, 2011 24 SKJ &Co SANSON KLINE JACOM NO & COMPANY, LLP Certified Public Accountants & Consultants Management Letter in Accordance with the Rules of the Auditor General of the State of Florida 5805 Blue Lagoon Drive Suite 220 Miami, Florida 33126 Tel. (305) 269-8633 Fax (305) 265-0652 www.skjnet.com The Board of Directors City of Miami Southeast Overtown Park West Redevelopment Agency: We have audited the financial statements of the City of Miami Southeast Overtown Park West Redevelopment Agency (the Agency), a Component Unit of the City of Miami, Florida, as of and for the fiscal year ended September 30, 2010 and have issued our report thereon dated March 1, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We have issued our Independent Auditors' Reports on Internal Control over Financial Reporting and on Compliance and Other Matters. Disclosures in those reports, which are dated March 1, 2011, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the 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, unless otherwise required to be reported in the report on compliance and internal controls or schedule of findings and questioned costs, this letter is required to include the following information. • Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report not otherwise addressed in the auditor's report pursuant to Section 10.557(3)(b)2., Rules of the Auditor General. See Appendix A to this report for a status of the prior year's recommendation. • Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our current year audit, we determined that the Agency complied with Section 218.415, Florida Statutes. • Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our current year audit, we did not have any such recommendations. • Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of provisions of contracts or grant agreements, or abuse that have occurred, or are likely to have occurred, that have an effect on the financial statement that is less than material but more than inconsequential. In connection with our current year audit, we noted no such violations. 25 SKJ &Co • Section 10.554(1)(i)5., Rules of the Auditor General, requires, based on professional judgment, the reporting of the following matters that have an inconsequential to the determination effect on the financial statement, considering both quantitative and qualitative factors: (a) violations of provisions of contracts or grant agreements, fraud, illegal acts, or abuse; and (b) deficiencies in internal control that are not significant deficiencies. In connection with our current year audit, we did not have any such findings. • Section 10.554(1)(i)6., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. Such disclosures are made in note 1 to the Agency's financial statements. • Section 10.554(1)(i)7.a., Rules of the Auditor General, requires a statement be included as to whether or not the local governmental entity has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our current year audit, we determined that the Agency did not meet any of the conditions described in Section 218.503(1), Florida Statutes. • Section 10.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether the annual financial reports for the Agency for the fiscal year ended September 30, 2010, 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, 2010. The Agency does not file a separate report with the State of Florida Department of Financial Services. The financial operations of the Agency are included in the basic financial statements of the City of Miami, Florida for the year ended September 30, 2010. • Sections 10.554(1)(i)7.c. and 10.556(7), Rules of the Auditor General, require that we apply financial condition assessment procedures. In connection with our current year audit, we applied financial condition 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. This management letter is intended solely for the information and use of the board of directors, management of the Agency, 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. V,Avloo&a, fe.t*sa40- 5prteli March 1, 2011 26 Appendix A CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY (A Component Unit of the City of Miami, Florida) Management Letter in Accordance With the Rules of the Auditor General of the State of Florida Year ended September 30, 2010 Status of Prior Year's Recommendation 2010-1 GASB Statement No. 54 Prior Year's Recommendation We recommend that management become familiar with GASB Statement No. 54, and be prepared to implement this pronouncement for the fiscal year ending September 30, 2011. However, if the City decides to implement GASB Statement No. 54 earlier than fiscal year ending September 30, 2011, the Authority will be required to early implement as well. Prior Year's Management's Response Management acknowledges the recommendation made. We will discuss this with the City and be prepared to implement GASB Statement No. 54 when the City does. Current Year's Status The City did not early implement GASB Statement No. 54 for the year ended September 30, 2010, but instead will implement it, as required, for the year ending September 30, 2011.