HomeMy WebLinkAboutSubmittal - Lourdes Blanco - Statement Letter and Information PackageSubmitted into the e
record f
It
si City Clerk
Lourdes Blanco Executive Director MSEA on
Good Morning Mr. Chairman
Good Morning Commissioners
I am here today to speak aboutSR 5
1. Commissioners, I believe that my rights as an employee of the City of Miami, Executive Director
of MSEA have been violated as appears from the following:
2. In February 23, 2018, the City of Miami Administration asked me to accept a position in Parks
and Recreation Dept., because someone else was taking over my position as Executive Director
of MSEA. After this happens, at the City Commission Meeting on March 8, 2018, City Attorney
Victoria Mendez request approval from the City Commission to authorize the independent
Auditor of the City of Miami, Mr. Theodore Guba, to do an Audit of MSEA. She says, I have
committed accounting and financial irregularities. City Attorney Victoria Mendez knows that
MSEA had just been audited by CPA Anthony Brunson, in January 15, 2018, as required by City
Ordinance Sec. 2-1021. City Attorney Victoria Mendez fails to inform you that this Audit, which
is the real Audit, has not been discussed in public and has not been approved by the MSEA
Board and the City Commission. Commissioners, today you are abolishing MSEA without
knowing if MSEA is transferring to the City of Miami leases and agreements that are valid and
enforceable, or that they can even be connected to signed contracts.
3. Mr. Theodore Guba does not conduct an Audit of MSEA, the report he writes is not subject to
GSAP. This document has not been discussed by anyone, and I was not given the opportunity to
respond to the final document. It took 4 months for this document to be made public, and when
it is made public, Joey Flechas from the Miami Herald, writes an article about the report
prepared by Mr. Theodore Guba. Family, Friends, my banker, a very prominent banker in Miami,
are concerned about whether I have done something wrong. This is the kind of impact this
article has made on people that know me, because the report provides an erroneous impression
that what is written is somehow a fault of mine. Mr. Guba, to make chaos and confusion
includes in his report discrepancies in budgets in the amount of $170 million in relationship with
other 14 authorities totally unrelated to MSEA. My name and reputation has been dragged in
the mud.
4. In September 27, 2011, Commissioner Frank Carollo confronts previous Executive Director Kirk
Menendez about the revenues not been properly recorded in MSEA"s budgets. Kirk Menendez
confirms to Commissioner Carollo, MSEA has in reserve funds $678,000.00 of which $107,460.00
are restrictive funds. In September 12, 2013, and in September 9, 2014, Commissioner Frank
Carollo questions why the reserves and $22,000.00 rent revenue that was supposed to be
received from the "Helipad" are not reflected in the budgets. City Manager Daniel Alfonso says
he has been informed that "any revenues derived from this facility are restrictive and must be
spent in the facility due to FAA requirements. Commissioners, the revenues derived from the
Watson Island Heliport and Chalks are not supposed to be restrictive funds. CPA Anthony
Brunson corrects and releases the restriction of the funds in the FY 2017 certified financial
statements that have been placed under a rug. The supposedly lost cashier's checks for Chalks
rent payments were delivered to me by Kirk Menendez in January 2015. The Heliport failed to
make any rent payments since the effective date of the agreement dated October 9, 2013, as
per requirements of the sublease Section 5.1 (a), until February 2015. The rents for both tenants
was not budgeted because the money was never deposited in a financial institution.
S. Budgets prepared by Kirk Menendez for fiscal years 2012-2015 omit MSEA's rent revenues and
reserve funds. Whether this was due to incompetency or not, City Attorney Victoria Mendez
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does not request for an Audit to be conducted to fiscally account for the rent revenues and
reserve funds. Commissioners, these are real accounting and financial irregularities.
For lack of time, I am only going to inform you about the first and last budget I prepared for
MSEA, actual revenues, and actual expenses incurred. Budget for FY 2016, actual Rev. plus
rollover funds $629,500.00, actual expenses $62,608.00, rollover funds $566,892.00, Budget for
FY 2018, actual Rev. plus rollover funds $677,150.00, actual expenses $93,600.00, rollover funds
$583,550.00. Grant funds are approved by the Board of Directors, are granted when the funds
are available, at the discretion of the Board and are not considered operating expenses, they are
deducted from MSEA reserve funds. For fiscal years 2016 and 2018 MSEA Board of Directors
granted $95,000.00, and $30,000.00.
Historically, employees of the City of Miami have been MSEA's Executive Directors. The salary
portion paid by the City of Miami has never been included in MSEA's budget.
MSEA is not been abolished for financial reasons, MSEA is been abolished for other reasons. I
urge you to request a complete forensic investigation by an external CPA firm to confirm
whether the report written about me by Mr. Theodore Guba, is correct or not. If it is not correct,
the City of Miami for the benefit of its residents and all of us here, should request from the
Miami Herald a retraction of what it is said about me in the article written by Joey Flechas
named: Audit. Miami City Hail employee paid two salaries for job that might not be necessary,
dated July 27, 2018.
Submitted into the public
record for item(s) S11.5
on 10/25/18 City Clerk
Miami Sport and Exhibition Authority [MSEA]
City of Miami
Actual Revenues
Actual Expenditures
Submitted into the public
record for item(s) 5R,5
on 10/25/18, City Cleric
I r'L- -:1, 1) b 1 of 1 �` b�
FY 2015-16 Budget
FY 2015-16 Actual
FY 2017-2818 Budget
FY 2017-20.18 Actual
Revenues
MSEA Watson Island Seaplane Base
$72,000
$72,000
$72,000
$72,000
Heliport
$45,600
$67,600
$80,517
$80,517 pilot fees in
arrears
MSEA prior year Rollover
$489,9001
$489,9D0 1
$524,6331
$524,633
Total Revenue and Rollover
$607,S001
$629,500
$677,1501
_
$677,150
Expenditures
Regular Salary & Wages
$30,000
$14,000
$50,000
$50,000
FICA Taxes
$1,300
$1,300
$3,800
$3,800
Retirement Contributions
Life & Health Insurance
$5,000
$5,000
$5,000
$5,000
Workers' Compensation
Professional Services -Legal
$500
Accounting and Auditing
$18,333
$18,333
$20,300
$13,500
Other Contractual Services
Travel & Per Diem
Communications & Related Services
$100
Bank Services
$550
$550
Postage
$50
$100
Car Allowance
$5,400
$5,400
$5,400
$5,400
Business Meeting Expenses
$1,500
$1,500
$2,000
Courier Delivery
$100
$100
Contingencies
$5,000
$5,000
General Insurance & Directors Liability
$13,000
$9,000
$9,000
$8,000
Advertising and Related Costs
Other Current Charges & Obligations
Office Supplies
$200
$200
Warehouse Storage
$4,500
$4,500
$4,500
$4,500
Phone/Tablet/ PC Allowance
$3,400
$3,400
$3,400
$3,400
Printing
$100
$100
Subscriptions, Memberships, Licenses,
Permits & Other
$500
$175
$500
Grants from Reserve Funds
$95,000
$158,000
$30,000
Expenditure Grand Total
$88,935
$62,608
$110,550
$93,600
Rollover funds to Reserve Funds
$566,892
$583,550
I r'L- -:1, 1) b 1 of 1 �` b�
December 4, 2014
Members of the Board of Directors
Miami sports and Exhibition Authority
Submitted into the public
record for item(s) 5R.5
on 10/25/18, City Clerk
Re: Miami's Watson Island Heliport Letter dated November 7, 2014
Executive Director,
In response to the letter dated November 7, 2014 From Mr. Paul Dudley, there are
certain items that must be clarified regarding the allegations made in the above
mentioned letter.
With regard to the section that states an alternative plan was "leaked" to Mr.
Dudley, that is not the case. Mr. Dudley was called on November 15`"`, the same
date the staff was discussing the undergrounding route with FP&L that would be
faster and less expensive to construct than what Mr. Dudley proposes. The
Department of Real Estate and Asset Management, along with a representative of
FPL explained to Mr. Dudley that routing the lines in the current location would be
a cost savings to MSEA as well as a faster alternative to the rerouting the lines
around the entire site. In addition, it was explained to Mr. Dudley that by routing
the lines in their current easement would not be detrimental to his development
nor would there be any constraints to his construction since this is standard
procedure for FP&L in congested areas and the length of fine being
undergrcunded was relatively short.
Our staff has confirmed both with the Building Department and FP&L that there
are no issues with building the lines underground at the proposed location. In
act, FP&L confirmed that existing FP&L duct banks run within the airport and
underneath the existing fuel farms. FP&L Distribution and Construction Standards
do not provide a fuel farm restriction. The National Electric Code (NEC) also does
not provide a fuel farm resitriction. We spoke to Mike Carey at Kimley Horn (Mr.
Dudley's engineering firm) who was unable to identify anyone at the building
department that said the project could not be approvied with the FP&L lines in the
proposed easement.
The following statement from the letter also is not accurate "...the last version of
the undergrounding plan was circulated to me. I was in agreement as it reflected
0! -z o -t- o ff. z, 3 CA 5-e 1 0 -�
what had been planned for years. Suddenly there appears to be a proposed new
plan that somehow manged to avoid being shown to us." The current location of
the lines have an existing easement recorded in OR Book 25598 Page 14115-1415
and executed October 30. 2007. This easement makes provisions that any future
— work toany overhea acs sties, other than repairs, those utilities would be
undergrounded. Therefore, it was only recently that anyone contemplated
rerouting the lines to a different location outside of the current easement area,
since the existing approved and recorded easement recorded more than seven (7)
years ago contemplated keeping the lines in their current location with the future
heliport development. By keeping the lines in the current location there is both a
cost savings and time savings for the City with regards to resurveying the site,
rerouting the lines and having to obtain new approvals from FP&L and the City for
new easements. Should the lines be rerouted, the delay in time could extend up
to three (3) additional months for ail of these items to be completed prior to any
work actually starting. We must also state, Mr. Dudley has recently met with FP&L
to establish new locations for their service point locations without notifying the
City.
With regards to additional expenses, the City was only responsible for the cost as
it related to two conduits regardless of which alignment is selected. FP&L would
be required to pay any and all additional costs related to the additional work. It is
7 currently estimated that MSEA's cost for the direct route of the two conduits would
be approximately $228,000, while the estimated cost for the alignment proposed
by Mr. Dudley is 8448,540.
The statement made by Mr. Dudley that the new pian would potentially reduce the
size of the hangar building is not accurate. The current location of the lines lie
within an easement that fall under the heliport landing pads. The Hangar and
Terminal buildings would never be allowed to encroach over the lines regardless
because the landing pads have set dimensions established by FAA and FDOT for
safety areas. Therefore by relocating the lines into their existing location would
not affect the the previously approved proposed building in any way.
It must also be clarified at this time that Mr. Dudley has failed to make any rent
payments for the property since the Effective Date of the Agreement dated
October 9, 2013 pursuant to the requirements of the Sublease Sectopm 5.1(a),
Originally Mr. Dudley claimed that he did not have full possession of the site due
to two trailers slightly encroaching on the property. Those trailers have since been
removed and Mr. Dudley has had the opportunity to enclose the site with a
security fence and remove the existing trees and clean up the property since then.
Mr. Dudley was requested to place the appropriate rent payments in escrow on
several occasions, however, no such proof of an account has been provided to
MSEAor the City at this time.
Sincerely,
�Y
Alice N. Bravo
Deputy City Manager/Chief of Infrastructure
Centennial
FDOT
1-215*1015
Submitted into the public
record for item(s) SR.5
on 10 25/18, City Clerk
Florida Department of Transportation
RICK SCOTT 1000 NW 1 i O' Avenue -IRM ROXOLD
GOVERNOR Miami, Florida 33172-5800 ROS RE ARY —
(.n
June 15, 2015 m = 71
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Mr. Aldo Bustamante, Assistant Director
Department of Real Estate and Asset Management C) r
City of Miami rra f
444 SW 2 Avenue, 3rd Floor rn� rV
Miami, Florida 33130 r`
frro
Dear Mr. Bustamante:
By way of this letter you are receiving notification from the Florida Department of Transportation on our
decision to redistribute the funds allocated in our work program for the Miami Heliport (Financial Project:
422742-1-94-01) for Fiscal Year 2017. The reason for our decision is based on the following:
On September 7, 2005, the City of Miami sent a notification letter explaining that Miami Heliport
was abandoned on August 19, 2005 in preparation for the development of the property as
Flagstone Island Gardens -
On May 1, 2008, the Miami Heliport was found to be abandoned during the annual licensing
inspection.
On July 12, 2006, the Airport License and Airport Site Approval Order for Miami Heliport were
revoked due to abandonment.
Section 332.007(6), FS restricts department participation in capital costs to "eligible public use
airports". Eligible public use airports are defined in the Aviation Project Handbook as open, public
use, and included in the Florida Aviation System Plan (FASP). Miami Heliport is closed and is not
included in the FASP. It is therefore not eligible.
Through several planning documents including the Airport Master Plan and Airport Layout Plan,
the City of Miami has indicated that it intends to convert the existing Miami Seaplane Base into
the Watson island Air Transportation Facility which will include facilities for both seaplanes and
helicopters. It appears that the City of Miami has taken no steps to move forward with this plan.
Current lease agreements at the Miami Seaplane Base restrict the ability of the seaplane base
from accommodating compatible public use aeronautical activities and could jeopardize the status
of Miami Seaplane Base {and the future Watson Island Air Transportation Facility} as a public use
airport.
For these reasons the Department will no longer support nor fund the aforementioned project. If you have
any questions regarding this decision or would like additional information, please do not hesitate to
contact me via email at Qus.oego(d)dot.state.fl.us or by phone at (305) 470-5197.
Sin e ely,
us Pego, P.E.
District Secretary
WWw.dot.state.f ms
Submitted into the public
record for item(s) 5R.5
on 10125/18, City Clerk
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MEMORANDUM
TO: Daniel Alfonso, City Manager
FROM- Tomas Regalado, Chairman, Miami Sports and Exhibition Authority (MSEA)
CC: Todd Hannan, City Clerk
CC: Lourdes B!anCcr, t'xeeutive Director, (V1SEA
DATE: January 24, 2017
As Chairman of the MSEA, I am submitting the Yearly Report to the City Manager and the City Clerk and,
in an oral way, it) the City Commission.
The MSEA Board is serving the purl)ose for which it was created, which is, basically, to promote and
sponsor events in the City of Miami that will serve the community.
Also, the Bcard is tasked through the Executive Director to administer certain properties in the Watson
Island area, specifically the Children's Museum, the heliport site and the sea -plane site.
Durino 2016, the Board of PASF.A has been dealing with different issues to finalize the two major projects
in parts of Watson Island, specifically the heliport and the sea -plane base.
MSEA generates its own budget and, with its budget sponsors different events that will serve the purpose
Of culture, tourism and sports,
As for the administration of the Board, the Executive Director will work in 2017 to update the Interlocal
Agreement between the City of Miami and MSEA. The JPA between the City and MSEA, that is part of tihis
Interlocal Agreement, is expired.
As we begin 2017, the MSEA hoard will continue to work with the administration to finalize major projects
that will elevate Miami to new levels to serve residents, visitors and tourists.
D)UJ"k*-V—I – cl-t2s> e a, 104,
Submitted into the public
record for item(s) SR.5
on 10/25/18, City Clerk
tt lafIT �t Cxrct
THEODORE P. GUaA, CPA, CIA, CFE �YtY ox
INDEPENDENT AUDITOR GENERAL �w
-i
k
illlr "rill Y
.July 24, 2018
Honorable Members of the City Commission
City of Miami
3500 Pan American Drive
Coconut Grove, Fl_ 33133-5504
Re: Review of the Miami Sports and Exhibition Authority (MSEA)
Report No. 18-07
Executive Summary
Telephone (305) 416-2044
E -Mail: tguba@ia miarnigov.com
We have completed a review of the revenues, expenditures, and operations at the Miami Sports
and Exhibition Authority (MSEA). The review was performed as a result of a request from the City
Manager to review MSEA, including any ,payments that have been made to the Executive Director,
and the protocols in place to ensure that payments are legal, accurate, and appropriate.
Our review included reviewing the City's and MSEA's relevant policies, and contractual
agreements among the City, MSEA, and MSEA's subtenants; examining sources of MSEA's
funding in relation to its establishment under Florida Statutes; reviewing MSEA's expenditures,
including to its grant recipients and employee, primarily from September 1, 2014 through
December 31, 2017. We also obtained and reviewed personnel records and performed other
procedures as necessary.
Based on our review, we noted the following;
1 The appointment of MSEA's Executive Director was not approved by the City Commission
as required by the City Code of Ordinances.
`� • The MSEA Executive Director did not meet the minimum educational requirements
established for the position.
• The MSEA Executive Director is paid salaries and benefits from two separate budgetable
entities, the Office of the City Manager and MSEA.
J MSEA did not furnish required monthly reports to the Mayor, City Commission and MSEA
! Board.
• MSEA lacked written policies and procedures regarding financial and operational controls.
• MSEA did not establish written policies and procedures governing grant expenditures and
related budgets.
OFFICE OF INDEPENDENT AUDITOR 5ENERAL/444 SW 2"° AVENUE, Tid FLOOR/MIAMI, FLORIDA 33130
Submitted into the public
record for item(s) SRS
on 10/25/1 City Clerk
MSEA no longer receives convention development taxes, and a joint participation
agreement that served as the basis of an Interlocal agreement between the City, the
Florida Department of Transportation and MSEA expired.
We also found that approved budgets totaling $170 million for 14 authorities, agencies, and trusts
were not included in the City's adopted budget book.
Details of our findings and recommendations are included on pages three through 16 of the report.
We appreciate the cooperation extended to us by all personnel contacted during the review.
Sincerely,
Theodore P. Guba, CPA, CIA, CFE
Independent Auditor General
Office of the Independent Auditor General
C: The Honorable Mayor Francis Suarez
Emilio T. Gonzalez, City Manager
Victoria Mendez, City Attorney
Todd Hannon, City Clerk
Joe Napoli, Deputy City Manager
John A. Greco, Deputy City Attorney
Barnaby Min, Deputy City Attorney
George Wysong, Assistant City Attorney, Supervisor
Sandra Bridgeman, Assistant City Manager/Chief Financial Officer
Nzeribe lhekwaba, Assistant City Manager/Chief of Operations
Fernando Casamayor, Assistant City Manager
Erica Paschal, Director, Finance Department
Angela Roberts, Director, Human Resources Department
Christopher Rose, Director, Office of Management and Budget
Daniel Rotenberg, Director, Department of Real Estate and Asset Management
Aldo Bustamante, Assistant Director, Department of Deal Estate and Asset Management
MSEA Board of Directors
Members of the Audit Advisory Committee
Audit Documentation File
Review conducted by; Robyn Sachs, CPA, CIA, CISA, CISSP, MBA
Information Systems Audit Administrator
Denning Zhang, CPA, Senior Staff Auditor
Submitted into the public
record for item(s) SR.5
on 10/25/18, City Clerk
REVIEW OF THE MIAMI SPORTS AND EXHIBITION AUTHORITY
(MSEA)
Report No. 18-07
TABLE OF CONTENTS
SCOPE, OBJECTIVES, AND METHODOLOGY ............................ ..,..,.'I
BACKGROUND..................................,......,..,..........................,.......... 2
FINDINGS AND RECOMMENDATIONS...........--......................................................................................3
FINDING 1: THE APPOINTMENT OF MSEA'S EXECUTIVE DIRECTOR WAS NOT APPROVED BY THE
CITY COMMISSION AS REQUIRED BY THE CITY CODE OF ORDINANCES............................................3
FINDING 2: THE MSEA EXECUTIVE DIRECTOR DID NOT MEET THE MINIMUM EDUCATIONAL.
REQUIREMENTS ESTABLISHED FOR THE POSITION................................................................................4
FINDING 3: THE MSEA EXECUTIVE DIRECTOR IS PAID SALARIES AND BENEFITS FROM TWO
SEPARATE BUDGETABLE ENTITIES, THE OFFICE OF THE CITY MANAGER AND MSEA................5
FINDING 4: MSEA DID NOT FURNISH REQUIRED MONTHLY REPORTS TO THE MAYOR, CITY
COMMISSION AND MSEA BOARD...................................................................................................................9
FINDING 5: MSEA LACKED WRITTEN POLICIES AND PROCEDURES REGARDING FINANCIAL AND
OPERATIONAL CONTROLS.. ................. ........ I ... —11111-- ... ............ ..... -- .................. - .... -- ... 9
FINDING 6: MSEA DID NOT ESTABLISH WRITTEN POLICIES AND PROCEDURES GOVERNING
GRANT EXPENDITURES AND RELATED BUDGETS..................................................................................11
FENDING 7: MSEA NO LONGER RECEIVES CONVENTION DEVELOPMENT TAXES, AND A JOINT
PARTICIPATION AGREEMENT THAT SERVED AS THE BASIS OF AN INTERLOCAL AGREEMENT
BETWEEN THE CITY, THE FDOT AND MSEA EXPIRED ....... --- ... -............. ..... --- ................................ 13
OTHER FINDINGS AND RECOMMENDATIONS...................................................................................... 14
OTHER FINDING 1: APPROVED BUDGETS TOTALING 5170 MILLION FOR 14 AUTHORITIES,
AGENCIES AND TRUSTS WERE NOT INCLUDED IN THE CITY'S ADOPTED OPERATIONAL BUDGET
BOOK----------- ................... --....... ............................. ....... ....... ............................. ..... ....... ...... .14
Submitted into the public
record for item(s) SR.S
on 10 25 18 City Clerk
SCOPE OBJECTIVES AND METHODOLOGY
This review was performed as a result of a request from the City Manager to review MSEA,
including any payments that have been made to the Executive Director, and the protocols in place
to ensure that payments are legal, accurate, and appropriate.
Our review procedures included reviewing the City's and MSEA's relevant policies, and
contractual agreements among the City, MSEA, and MSEA's subtenants; examining sources of
MSEA's funding in relation to its establishment under Florida Statutes; reviewing MSEA's
expenditures, including to its grant recipients and employee. The review primarily covered the
period from September 1, 2014 through December 31, 2017.
The review methodology also included the following.
■ Reviewing the State of Florida Statutes under which MSEA was established and the City
Ordinances under which it operates.
• Reviewing personnel records in the City's Department of Human Resources.
Reviewing MSEA's certified audit reports and financial statements.
• Interviews and inquiries of appropriate personnel outside of the MSEA.
■ Other review procedures as deemed necessary.
Submitted into the public
record for item(s) SRS
on 1012 18, City Clerk
BACKGROUND
On February 27, 2018, the City Manager requested that the Office of Independent Auditor General
(OIAG) review the Miami Sports and Exhibition Authority (MSEA) and any payments that have
been made by MSEA to its Executive Director. The City Manager stated that the Executive
Director was receiving payments from MSEA in addition to her salary from the City and that he
was unaware of any agreements authorizing dual payments to the Executive Director for her
position at MSEA. The City Manager asked the OIAG to determine whether MSEA has sufficient
protocols in place to ensure that payments are legal, accurate, and appropriate. On March 8,
2018, the City Commission discussed and approved the City Manager's request for the review
during a regular Commission meeting.
MSEA was established as an independent and autonomous agency and instrumentality of the
City pursuant to Ordinance No. 9662, adopted on July 28, 1983, in connection with former Florida
Statute Section 212.057 (1983), now repealed and superseded by Florida Statute Section
212.0305 — Convention Development Taxes (CDT). The City Code of Ordinances Chapter 2 --
Administration, Article XI — Boards, Committees, Commissions, Division 6 — Sports and Exhibition
Authority states that MSEA shall promote sports, conventions and exhibitions to the greatest
extent feasible, strive to generate and further community support to achieve this purpose, and
shall endeavor to attract professional sports franchises to utilize facilities in the city.
Currently, all CDT funding received by the City is used to pay off bonds that were issued to
construct the Miami Marlins Ballpark. MSEA receives its funding from two tenants of City -owned
properties on Watson Island. Its fiscal year 2018 budget designated the approximately $150,000
per year it collects from these tenants as grants that It may provide to recipients. MSEA's
budgeted administrative expenditures were $89,000, $88,935, $107,808 and $112,450 for fiscal
years 2015 through 2018, respectively.
The current MSEA Executive Director started her career with the City in December 2009 as a
Special Aide in the Office of the Mayor. Afterwards, she worked as an Administrative Aide II in
the City's Building Department and then as an Administrative Assistant in the International &
Intergovernmental Affairs Office. She was appointed by the MSEA Board of Directors as Interim
Director on December 4, 2014 and as Executive Director on July 21, 2015 and serves as MSEA's
only employee.
Submitted into the public
record for item(s) 5R.5
on 10/25/18, City Clerk
FINDINGS AND RECOMMENDATIONS
CONCLUSION:
Based on our review, we noted the following:
The appointment of MSEA's Executive Director was not approved by the City Commission
as required by the City Code of Ordinances.
• The MSEA Executive Director did not meet the minimum educational requirements
established for the position.
• The MSEA Executive Director is paid salaries and benefits from two separate budgetable
entities, the Office of the City Manager and MSEA.
• MSEA did not furnish required monthly reports to the Mayor, City Commission and MSEA
Board.
■ MSEA lacked written policies and procedures regarding financial and operational controls.
• MSEA did not establish written policies and procedures governing grant expenditures and
related budgets. — -
• MSEA no longer receives convention development taxes, and a joint participation
' agreement that served as the basis of an interlocal agreement between the City, the FDOT
l and MSEA expired.
We also found that approved budgets totaling $170 million for 14 authorities, agencies, and trusts
were not included in the City's adopted budget book.
_— etails of these results are described below and through page 16
FINDING 1: THE APPOINTMENT OF MSEA'S EXECUTIVE DIRECTOR WAS NOT
APPROVED BY THE CITY COMMISSION AS REQUIRED BY THE CITY CODE OF
ORDINANCES
Section 2-10115 of the City Code of Ordinances (City Code) states:
"There shall be a director who shall be appointed by the members of the authority subject to
approval by four-fifths vete of the city commission. Upon the effective date of the incumbent
director's resignation and thereafter, the members of the authority shall, within 90 days of such
vacancy, appoint a new director of the authority. Such appointment and the terms and conditions
of the new director's employment shall be subject to approval by a four-fifths vote by the city
commission."
During our fieldwork, we requested a legal opinion from the Office of the City Attorney {OCA}
concerning whether the above -referenced section of the City Code applied to the appointment of
the MSEA Interim Director and Executive Director. The OCA opined that the section of the City
Code was applicable, and copies of the legal opinion were furnished to the City Mayor and City
Manager,
On December 4, 2014, while working as an Administrative Assistant for the International &
Intergovernmental Affairs Office, she was appointed by the Board of Directors of MSEA as the
Interim Director. During the July 21, 2015 meeting, the MSEA board appointed her as Executive
Submitted into the public
record for item(s) SR.5
on ii] 25 18, City Clerk
Director. However, there is no evidence that she was subsequently approved by four -Fifths
(415ths) vote of the City Commission for either appointment. A four-fifths (415ths) vote of the City
Commission has been a requirement since February 15, 1990.
As a result of the lack of formal approval of her appointment as MSEA Executive Director by a
415ths vote of the City Commission, she may not have the authority to serve as MSEA Executive
Director.
RECOMMENDATION 1: OFFICE OF THE CITY MANAGER
We recommend that the Office of the City Manager request that the MSEA Board of Directors
reselect its Executive Director. Then, the Office of the City Manager should place an item on the
City Commission's agenda so that they may vote on the Board's appointment in accordance with
the ordinances governing MSEA.
• Management Response: The Office of the City Manager will recommend that the MSEA
Board of Directors reselect its Executive Director. The Office of the City Manager will then
place an item on the City Commission's agenda for their approval of the Board's
appointment.
• Implementation Date: September 1, 2018,
FINDING 2: THE MSEA EXECUTIVE DIRECTOR DID NOT MEET THE MINIMUM
EDUCATIONAL REQUIREMENTS ESTABLISHED FOR THE POSITION
The City has established the position of "Executive Director, MSEA: Executive Unclassified" in
the Office of the City Manager, As of June 2018, the job description states that the minimum
educational requirements for this executive position are a "Bachelor's degree and extensive (8-
12 years) experience in the field" or "an equivalent combination of education and experience
beyond a Bachelor's degree-"
The Executive Director was appointed on July 21, 2015, However, an application for employment
was not prepared and submitted for this position until January 3, 2017, on which she listed an
Associate of Arts degree from Miami -Dade College as her only college degree. An Associate of
Arts degree requires only two years of college, whereas a Bachelor's degree requires four years
of college. The City's Human Resources Department confirmed that she did not meet the
minimum educational requirements for the position.
We also verified with Human Resources that a Qualification Procedure Form, which is required
to be completed by Human Resources to ensure an applicant is qualified for a position, was not
completed. In the absence of a Bachelor's degree or a completed Qualification Procedure Form,
we asked Human Resources if a waiver of the minimum educational requirements had been
completed. However, no such waiver was submitted or approved. Finally, the Personnel Action
Form for the Executive Director position was approved by personnel in the Office of the City
Manager on May 30, 2017, with an effective date retroactive to the date of her appointment on
July 21, 2015.
Submitted into the public
record for item(s) SR.5
an 1b LS I8, City Cleric
RECOMMENDATION 2: OFFICE OF THE CITY MANAGER
We recommend that the Office of the City Manager in concert with Human Resources take
appropriate action to comply with City policies and procedures in regard to the educational
requirements of the MSEA Executive Director position.
Management Response: On March 14, 2018, the City Manager approved the directive
that the Department of Human Resources amend the equivalence clause for all City job
descriptions. The amended clause now has a combination of education and experience
beginning at the level of a high school diploma (or its equivalent). This clause allows the
candidates to qualify for position by substituting higher education for experience or
substituting more experience for less education.
Implementation Elate: Already in progress.
FINDING 3: THE MSEA EXECUTIVE DIRECTOR IS PAID SALARIES AND BENEFITS
FROM TWO SEPARATE BUDGETABLE ENTITIES, THE OFFICE OF THE CITY
MANAGER AND MSEA
As noted earlier, the current Executive Director was appointed as Interim Director during
December 2014. During the July 21, 2015 meeting of the MSEA Board of Directors, the former
Chairman made a motion to appoint the Interim Director as MSEA's Executive Director. After the
motion was passed by the MSEA Board, the Chairman stated that the "Executive Director was in
both budgets the City and MSEA, this will need to be fixed at midyear." Additionally, accounting
best practices require that salaries and other costs be allocated to the department or cost center
where services are performed.
SALARIES
Although the Executive Director received her regular salary through City payroll, she did not
receive any extra salary compensation from MSEA from December 2014 through September 30,
2015 (it should be noted that she was paid a cell phone allowance from both budgets during this
period). Starting in fiscal year 2016 and through 2018, the Executive Director was paid salaries
and benefits by both the Office of City Manager and MSEA. However, the 2016 through 2018
annual budgets for MSEA presented to the City Commission for approval only showed the salary
that was payable by MSEA; and the same budgets for the Office of the City Manager submitted
for approval disclosed only the salary payable by the Manager's Office. Neither budget disclosed
the total salary she received from both entities.
Further, we noted that on September 9, 2014, a First Budget Hearing Changes Memo in the fiscal
year 2014-15 Proposed Budget was approved. It stated that MSEA was to reimburse the City for
50% of the cost of the MSEA Executive Director's salary and 100% of the cost salary of an
Administrative Assistant I working for MSEA. The Changes Memo stated that reimbursements
due from MSEA for these two positions, both in the Office of the City Manager, totaled $170,800
($69,600 for one-half the Executive Director's salary and $101,200 for all of the Administrative
Assistant I's salary), The final adopted budget for the Office of the City Manager was amended
and reflected the $170,800 salary reimbursement due from MSEA. However, the City never
pursued collection of reimbursements and there was no mention or any change to this
reimbursement arrangement in the subsequent adopted budget books.
Submitted into the public
record for item(s) 5111.5
on 10/25/18, City Clerk
MSEA utilized an outside payroll company to process salary payments to the Executive Director
directly through MSEA's operating bank account. Unlike the City payroll, there were no
procedures in place for the outside payroll company to process the bi-weekly payroll. The outside
payroll company issued payments as directed by the Executive Director which agreed with the
budgeted salaries approved by the City Commission (see Table 1 below). As a benchmark, the
City's Administrative Policy Manual (APM) 5-78 "Pay Policy" requires the certification of Personnel
and Pay Action Forms prior to issuance of any salary payment, however, the Executive Director
and Human Resources were unable to produce a supporting job offer letter, employment
contract/agreement or Personnel Action Form that addressed the extra salary and subsequent
raises paid out of MSEA funds. However, she stated that the former City Manager and former
MSEA Chairman informed her that her salary would be paid both from the City and MSEA. We
attempted to confirm this statement by contacting the former City Manager via email, but no
response was provided. However, we obtained the audio recorded minutes for the July 21, 2015
and August 2, 2015 MSEA board of director meetings and found that the $14,000 salary payable
by MSEA to the Director was discussed and approved during the July 2015 meeting. During the
other meeting, the fiscal year 2016-17 budget was approved without any discussion of the
increase in the Executive Director's salary from $14,000 to $50,000. Our discussion with a MSEA
board member indicated that he was aware of her City salary in addition to her approved salary
in the MSEA budgets.
The table below shows the budgeted salaries for the Executive Director from the City and MSEA,
which have been paid per the budget, from fiscal 2015 through 2018.
Table 1. MSEA Executive Director Budgeted and Paid Salaries
Fiscal Year Fiscal Year Fiscal Year Fiscal Year
Salary Source 2015 2416 2017 2018 Total
MSEA $0 $14,000 $50,000 $50,000 $114,000
City of Miami ` 1 $61,440 1 $62,976 1 $62,976 1 $62,976 1 $250,368
Total Salaries $61,440 $76,976 $112,976 $112,976 $364,368
"The approved annual salary range is $60,386 - $113,867.
BENEFITS
According to the City's APM 3-01 "Cellular Telephone and Automobile Allowances," (established
on November 1, 2001 and subsequently updated) an "other executive" City employee may be
paid no more than: $300 per month or $3,600 yearly for an automobile allowance, and $100 per
month or $1,200 yearly for a cell phone allowance. Although she was paid in accordance with the
policy for her cell phone allowance paid by the City, she was paid in excess of policy limits for
additional cell phone and automobile allowance payments through MSEA. As the following
schedule indicates (Table 2), when aggregating the amounts, she was paid in excess of the City's
cell phone and automobile maximum allowances by a total of $4,290, $5,200 and $5,400 for 2015,
2016 and 2017, respectively. For the same period, she was paid a yearly amount of $5,000
through MSEA ($4,167 for fiscal year 2015) for Health and Life Insurance. which was in addition
to her Health and Life Insurance coverage paid through the City, having a yearly value of
approximately $23,000.
In fiscal year 2018, the car and cell phone allowances were combined into a single fine item in
the MSEA budget called "Fringe Benefits (car, tablet, cell phone)" in the yearly amount of $9,500.
Submitted into the public
record for item(s) SR.5
on 12 25 18 City Clerk
We reviewed MSEA and City statements of earnings and cancelled checks and verified that the
Executive Director received monthly payments in accordance with the budget. As a result, during
fiscal year 2018 she was allocated $5,900 in excess of the maximum payments allowed by the
cell phone and automobile allowance policy. She was also allocated $5,000 through MSEA for
additional insurance as noted above.
Table 2. Payments to MSEA Executive Director for Automobile, Cell Phone,
and Insurance
Fiscal
Fiscal Year
Fiscal
Fiscal
Year 2018
2015 `
Year 201E
Year 2017
(budgeted)
Total
MSEA Automobile
$4,500
$5,400
$5,400
$9,500
MSEA Cell Phone
$2,833
$3.400
$3,600
City Cell Phone
$957
$1,200
$1,200
$1,2.00
Total Auto and Cell
SUM
$10�
Phone
_canna
U2=
Allowable Auto Per
$3,000)
($3,600)
($3,600)
($3,500)
($13.800)
APM
Allowable Cell Phone
($1,000)
($1,200)
($1,200)
($1,200)
($4,600)
Per APM
Auto & Cell Allowance In
$
$4
Excess of City Policy
MSEA Payments for
Insurance in Excess of
$4,167
$5,000
$5,000
$5,000
$19„167
City Coverage
Total Excess:
$$ U
mm
$jam
—MM I
'Prorated from December 2014 start date
It should be noted our review of meeting minutes indicated that the City's Budget Director did not
address the dual funding of salary and benefits during his discussions of MSEA's 2016-2018
budgets with the City Commission. The Human Resources Department informed us that pursuant
to APM 1-90 "Outside Employment Request", as a result of receiving salary and fringe benefit
payments from MSEA, the MSEA Executive Director, as a City employee, was required to
complete and submit to the Office of the City Manager and Human Resources Department for
approval, the Outside Employment Request form and Miami -Dade County Outside Employment
Statement and Statement of Financial Interests. Review of her personnel file and confirmation
from the Human Resources Department indicated that these required forms were not submitted.
Also, the City did not formalize the arrangement with MSEA via a written agreement between the
two entities.
It should be noted that theCity's APMs cited in this finding do not govern IVISEA's
operations; they are used as benchmarks since MSEA does not have policies and
procedures, and elements of the dual compensation and benefits paid to the Director were
not disclosed and discussed prior to MSEA Board approval.
Submitted into the public
record for item(s) SR.5
on 10/25/18, City Clerk
RECOMMENDATION 3.1: OFFICE OF THE CITY MANAGER
We recommend that prior salaries and benefits paid to the Executive Director be reviewed for
appropriateness in light of the issues outlined in the findings. Should adjustments be made, the
fiscal year 201$ budgets should be amended, to reflect any material changes.
We further recommend that the Office of the City Manager establish and implement a formal,
written policy and procedure to address compensation arrangements, required
applications/disclosures, and the status of City positions for those City employees who are
"loaned out" to instrumentalities of the City, such as MSEA. The procedure should address how
to memorialize the arrangement by executing either a Memorandum of Understanding or
Interlocal Agreement between the City and the outside entity.
• Management Response: The Office of the City Manager agrees that MSEA will pay
salary and benefits to the MSEA Executive Director. The Office of the City Manager further
agrees to review the prior salaries and benefits paid to the Executive Director.
■ Implementation Date: August 15, 2018.
■ Management Response: The Office of the City Manager will establish and implement a
formal, written policy and procedure to address compensation arrangements, required
applications/disclosures, and the status of City positions for those City employees who are
"loaned out" to instrumentalities of the City addressing how to memorialize the
arrangement by executing either a Memorandum of Understanding or Interlocal
Agreement between the City and the outside entity.
• Implementation Date: November 1, 2018
RECOMMENDATION 3.2: OFFICE OF MANAGEMENT AND BUDGET
We recommend that the Office of Management and Budget request instrumentalities of the City
(i.e., authorities, trusts, panels, etc.) to disclose the full salary and benefits for all employees that
are funded by multiple budgeted entities prior to submitting their budget to the City Commission
for approval. Also, any salary adjustments for Directors of instrumentalities of the City in excess
of the across the board salary increases granted to general employees should be disclosed in the
budget documents to allow for discussion and approval by appropriate board members.
We further recommend that any significant changes to budget line items, such as a subsequent
change affecting the $170,800 budgeted in the fiscal year 2014-15 Adopted Budget Book for the
salary reimbursement to the City Manager's Office from MSEA, be disclosed in the relevant fiscal
year's adopted budget book or in a Budget Changes Memo.
Management Response: The Office of Management and Budget agrees that all budgets
submitted to the City Commission for approval should disclose the full salary and benefits
of all employees that are funded by multiple entities and will pursue this with ail employees
of all agencies and instrumentalities of the City of Miami.
The Office of Management and Budget will continue to disclose, to the extent possible,
any significant changes to budget line items (such as the subsequent change affecting the
Submitted into the public
record for item(s) SIR -5
on 10/2S/18 City Clerk
$170,800 budgeted in the fiscal year 2014-15 Adopted Budget Book for the salary
reimbursement to the City Manager's Office from MSEA).
• Implementation Date: Already in progress.
FINDING 4: MSEA DID NOT FURNISH REQUIRED MONTHLY REPORTS TO THE
MAYOR, CITY COMMISSION AND MSEA BOARD
Section 2-1015(b) of the City Code states, "The [MSEA Executive] director shall... furnish the
authority, the Mayor, and the City Commission a monthly report with respect to the operation,
maintenance and financial condition of the authority."
We requested copies of the above -referenced monthly reports from the Executive director,
MSEA's external Bookkeeper, and MSEA's external Certified Public Accountant, whom the
Executive Director stated may have prepared and provided the required reports. However, none
of those contacted could confirm that the reports were prepared or provided to the Mayor, City
Commission, and MSEA Board of Directors as required by the City Code. We also interviewed
two MSEA board of director members and both confirmed that the monthly reports were not
provided.
As a result of not complying with requirements established by City ordinances to prepare and
furnish reports with respect to the operations, maintenance and financial condition of MSEA, City
officials may lack information needed for decision-making, resulting in reduced ability of MSEA to
serve its citizens and carry out its mission.
RECOMMENDATION 4: OFFICE OF THE CITY MANAGER
We recommend that the monthly reports with respect to the operations, maintenance and financial
condition of the authority be prepared and distributed to the MSEA Board, the Mayor and City
Commission. Also, a review the monthly reports should be included as an agenda item for each
MSEA Board meeting.
• _Management Response: As noted in the recommendation, pursuant to Section 2-
1015(b) of the City Code, the "[MSEA Executive] director" is responsible for furnishing the
authority, Mayor, and City Commission with a monthly report that details "the operation,
maintenance and financial condition of the authority." We will work with the MSEA
Executive Director and Board of Directors to ensure monthly reports are generated.
• Implementation Date: Immediately.
FINDING 5: MSEA LACKED WRITTEN POLICIES AND PROCEDURES REGARDING
FINANCIAL AND OPERATIONAL CONTROLS
Section 2-1 D13(d )(2) of the City Code states,"the members of the authority shall make and adopt
bylaws and rules and regulations for the authority's governance [and for the operation,
governance,] and maintenance of its facilities." MSEA's bylaws state that the Executive Director's
duties shall be to supervise the Authority's day-to-day affairs and activities as the Chief Executive
Officer of the Authority: have general supervision over and be responsible for the operation and
Submitted into the public
record for itern(s) 5R.5
on 1D 25 18 City Clerk
maintenance of all Authority properties, activities, and facilities; and establish, amend and enforce
operating and personnel policies. Las_tl -the MSEA Executive Director's job description states
that the Executive Director "developsTrQcedures and implements policies; dev fe Bps-Th6 budget
and manages cost controls."
We requested copies of the policies and procedures required to be established by the City Code,
MSEA's bylaws and the MSEA Executive Director's job description and were informed by the
Executive Director that no such written policies and procedures existed. In the absence of
required written policies and procedures documents, we reviewed the individual expenditures of
MSEA to determine if they were well-controlled, and, at minimum, met the requirements of the
City's policies on local expenses including APM 1-77 "Travel on City Business." We found that
MSEA ordered lunches and refreshments from a local restaurant "Au Bon Pain." The total
expenditures paid to this restaurant for fiscal years 2016 and 2017 were $3,840 (10 instances)
and $2,039 (5 instances), respectively. MSEA did not document the business purpose and the
participants or group for each instance as required by APM 1-77. Since MSEA had one employee,
the Executive Director initiated all of these transactions. In this case, she ordered, received, and
paid for all goods and services. However, a MSEA Board member (who confirmed that the
restaurant expenditures were for business purposes) and the Executive Director both signed all
checks issued to pay for expenditures.
Further, we found that MSEA has separately incurred expenses for off-site records storage
services which were already procured by the City. MSEA paid Iron Mountain $3,839 and $4,108
in fiscal years 2016 and 2017, respectively, and allocated $4,700 in its fiscal year 2018 budget
for Iron Mountain "warehouse storage." However, the City has a contract with GRM Information
Management for off-site records storage and related services, from July 1, 2014 through June
2019. Because the Executive Director is a City employee in the Office of the City Manager, MSEA
should not pay separately for these services already procured by the City. During July 2017, the
Executive Director, sought to remove MSEA's records from Iron Mountain and place them in the
City's office space. However, the cost provided by Iron Mountain to move the records ($2,220)
was considered prohibitive and not budgeted by MSEA. Consequently, the records have not been
moved.
RECOMMENDATION 5.1: OFFICE OF THE CITY MANAGER
The Office of the City Manager should work with the responsible ;parties to establish and
plement the policies and procedures required by MSEA's by-laws and the. MSEA-Executive
Director's job description. `
Management Response: The Office of the City Manager will work with the responsible
parties to ensure that those parties establish and implement the policies and procedures
required by MSEA's by-laws and the MSEA Executive Director's job description. As
explained by the City Attorney's Office, the City Manager does not have the authority to
direct the Executive Director to take any action in her or his capacity as Executive Director.
Even though, under the current arrangement, she is a City Employee in the City Manager's
Office, the Manager may only direct her as a City employee, but not as the Executive
Director of MSEA. As also explained by the City Attorney's Office, only the MSEA Board
has that authority.
• Implementation Date: Immediately.
10
Submitted into the public
record for item(s) SR.5
on Ia 25 1$, City Clerk
RECOMMENDATION 5.2: OFFICE OF THE CITY MANAGER
Any meeting related expense should include documentation indicating the business purpose and
group or participants to ensure their propriety. Consideration should be given to process all
expenditures through the City's accounts payable section of the Finance Department to ensure
that they subject to the review and approval processes in place. Finally, MSEA should discontinue
the use of Iron Mountain and use GRM for off-site records services.
• Management Response: The Office of the City Manager agrees that any meeting -related
expense should include documentation indicating the business purpose and participants
to ensure their propriety. The Office of the City Manager will recommend to the MSEA
Board of Directors and Executive Director that they comply with the rules and procedures
of the City Procurement Cade,
Implementation Date: Already occurring,
FINDING 6: MSEA DID NOT ESTABLISH WRITTEN POLICIES AND PROCEDURES
GOVERNING GRANT EXPENDITURES AND RELATED BUDGETS
Written policies and procedures that govern the administration and oversight of MSEA's grants
awards should have been developed. These documents should describe the following, at
minimum:
How MSEA evaluates and selects grant recipients, such as qualification standards,
application requirements, identification of conflicts of interest, and compliance with all
applicable laws and rules governing grants.
MSEA's process for ensuring that grant recipients used the cash awards to further MSEA's
stated missions. Grants should be awarded on a reimbursement basis to ensure that the
grantee has performed actions necessary to receive the grant funds.
MSEA did not budget the dollar amount of grants it intended to disburse to qualified recipients
each year, even though its sources of funding (rents from subtenants and reserves) for the grants
it disburses were known, measureable, and available.
A review of MSEA's financial statements for fiscal years 2014 through 2017 indicated that it
disbursed grants of $20,000, $95,000, $87,500, and $57,500, respectively. However, the notes
to the financial statements disclosed that "grants to third parties are not budgeted." Also, we found
that none of the grants awarded were supported by an application to qualify recipients and funds
were disbursed by MSEA upfront rather than on a reimbursement basis. However, we confirmed
that the grants were approved by the MSEA Board.
11
Submitted into the public
record for item(s) SR -5
on 10 Z5 18, City Clerk
The table below shows the relationship between the grants MSEA awarded to the amounts it
budgeted for operating and capital expenditures.
Table 3. Budgeted Expenditures vs. Grants Awarded
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
Revenue
$30,200
2414
2015
2016
2017
Total
Budgeted Operating &
$66,000
$89,000
$88,935
$107,808
$351,743
Capital Expenditures
($42,301)
($7,886)
($7,460)
($94,284)
Grants Awarded
$20,000
$95,000
$87,500
$57,500
$260,000
% of Grants Awarded
to Budgeted
30%
106%
98'x/0
53%
74%
Expenditures
Number of Grants
2
8
7
5
22
During a discussion of MSEA's fiscal year 2018 proposed budget at the September 19, 2017 City
Commission meeting, the Commission decided that MSEA should budget for its grant
expenditures. The dollar amount budgeted for grants was set at the approximate amount of
MSEA's annual revenues of $150,000 from its subleases on Watson Island.
The deficit between revenues and total expenditures (grants plus all others expenditures,
including operating and capital costs) would be funded from MSEA's reserves, which were
$414,700 at the start of fiscal year 2018. MSEA's total fiscal year 2018 budget was $677,150
including expenditures of $112,450, grants $150,000 and reserves of $414,700. We noted that
MSEA has experienced fiscal deficits for FY 2014, 2015, 2016, and 2017„ respectively, as shown
in the table below.
Table 4. Revenue vs. Expenditures and Annual Budget Deficits
Fiscal Year
2014
Fiscal Year
2015
Fiscal Year Fiscal Year
2016 2017
Total
Revenue
$30,200
$103,064
$145,485
$152,854
$431,603
Expenditures
$66,837
$145,365
$153,371
$160,314
$525,887
Surplus (Deficit)
($36,637)
($42,301)
($7,886)
($7,460)
($94,284)
RECOMMENDATION 6: OFFICE OF THE CITY MANAGER
The Office of the City Manager should work with the responsible parties to establish policies and
procedures concerning the qualification for receiving grants on a reimbursement basis, formally
establish an amount (i.e., percentage of revenue, flat amount, etc.) of grants that it will pay each
year, and include the amount of grants in its annual budget. We also recommend that the MSEA
budget be adjusted to ensure that fiscal deficits are eliminated.
Management Response: The Office of the City Manager will work with the responsible
parties to establish policies and procedures concerning the qualification for receiving
grants on a reimbursement basis, formally establish an amount (i.e., percentage of
revenue, flat amount, etc.) of grants that it will pay each year, and include the amount of
grants in its annual budget. We also recommend that the MSEA budget be adjusted to
ensure that fiscal deficits are eliminated.
12
Submitted into the public
record for item(s) 511.5
on 10/25118, City Clerk
Implementation Date: Immediately...
FINDING 7: MSEA NO LONGER RECEIVES CONVENTION DEVELOPMENT TAXES,
AND A JOINT PARTICIPATION AGREEMENT THAT SERVED AS THE BASIS OF AN
INTERLOCAL AGREEMENT BETWEEN THE CITY, THE FDOT AND MSEA EXPIRED
In 1983, MSEA was established pursuant Florida Statute (F.S.) 212.057 (since repealed and
replaced by F.S. 212.0305) Convention Development Taxes (CDT). Paragraph two of the statute
states that "one of the principal purposes of the CDT is to promote tourism and the use of hotel
facilities by facilitating the improvement and construction of convention centers."
Section (4)(b)4.a. of the statute states that "as a condition precedent to receiving tCDTj funding,
the governing bodies of such municipalities shall designate or appoint an authority that shall have
the sole power to: (I) Approve the concept, location, program, and design of the facilities or
improvements to be built in accordance with this paragraph and to administer and disburse such
proceeds and any other related source of revenue." MSEA previously received and disbursed
portions of the City's share of the CDT imposed in the City and collected by Miami -Dade County
(County) pursuant to an Interlocal agreement among MSEA, the City and the County.
However, on March 23, 2009, this Interlocal agreement was terminated and replaced with a new
Interlocal agreement solely between the City and the County. Under the new agreement, currently
in effect, the County agreed to make CDT payments to the City through the year 2038 according
to a predetermined schedule for the construction of the Miami Martins Ballpark project. As
indicated in the City's fiscal year 2016 Comprehensive Annual Financial Report, 100% of the CDT
received by the City from the County were allocated to repaying bonds used for the construction
of the parking 'facilities for the Miami Marlins Ballpark.
Since all of the City's CDT is allocated to the Miami Marlins Ballpark project, MSEA now receives
its revenues by subleasing two City -owned waterfront properties on Watson Island — a seaplane
facility (Chalks Airline, Inc. — "Chalks") and a heliport (Linden Airport Services Corporation —
"Linden"). Nate that under an Interlocal agreement with the City, executed in 2001, MSEA entered
into a sublease with the Miami Children's Museum, also on City -owned waterfront property on
Watson Island. However, the museum is not a source of MSEA's funding as it pays $2 per year
in rent.
In 2013, the City and MSEA entered into another Interlocal agreement (a revision of a 1996
Interlocal agreement) centered on a Joint Participation Agreement (JPA) with the Florida
Department of Transportation. Pursuant to this Interlocal agreement, MSEA was to develop an
Air Transportation Facility on Watson Island. However, no such facility was constructed and the
JPA expired on June 30, 2016. Consequently, MSEA's external Certified Public Accountant (CPA)
noted in the fiscal year 2017 audited financial statements that, "the expired JPA and other lease
agreements held among the City of Miami, MSEA, and tenants of Watson island should be re-
visited as soon as time permits, to address the operational and/or development rights of each
stakeholder." However, at the conclusion of audit fieldwork, these leases had not been revisited
as recommended by the external CPA.
It should be noted that although MSEA was empowered to lease City -owned property
independently in accordance with its stated purpose to promote sports, its three subleases
(Chalks, Linden and the Children's Museum) of City -owned waterfront property on Watson Island
13
Submitted into the public
record for item(s) Si 5
on 10125118, City Clerk
were executed prior to the time when MSEA was explicitly subject to Section 29-B of the City
Charter "City -owned property sale or lease." On March 11, 2016, the City passed an ordinance to
ensure MSEA was subject to all provisions of the City Charter, including Section 29-B, As a result
of this legislation, MSEA shall not sell or lease waterfront property unless there is approval of a
majority of the votes cast by the electorate at a referendum, as required by Section 29-B.
RECOMMENDATION 7.1: OFFICE OF THE CITY MANAGER
We recommend that the Office of the City Manager with assistance from the Office of the City
Attorney examine MSEA's charter and evaluate the costs and benefits of MSEA's continued
existence under Florida Statute 212.0305 — Convention Development Taxes since MSEA no
longer receives CDT. They should determine whether or not other City entities, with specialized
expertise in grant administration and leases, such as the Office of Grants Administration and the
Department of Real Estate and Asset Management (DREAM), could more effectively and
efficiently absorb MSEA's current responsibilities of administering several grants and three leased
properties that generate approximately $150,000 in yearly income. Once a determination is made,
appropriate action, if any, should be taken.
■ Management Response: We will take these recommendations under advisement and
proceed accordingly. -
Implementation 'Date: Already occurring.
RECOMMENDATION 7.2: OFFICE OF THE CITY MANAGER
As noted by the external CPA, we recommend that the Office of the City Manager work with
DREAM and the Office of the City Attorney to address the operational and/or development rights
of each stakeholder given the expired JPA and other lease agreements between the City, MSEA
and tenants of Watson Island, and take appropriate action.
• Management Response: We will take these recommendations under advisement and
proceed accordingly.
• Implementation Date: Already occurring.
OTHER FINDINGS AND RECOMMENDATIONS
OTHER FINDING 1: APPROVED BUDGETS TOTALING $174 MILLION FOR 14
AUTHORITIES, AGENCIES AND TRUSTS WERE NOT INCLUDED IN THE CITY'S
ADOPTED OPERATIONAL BUDGET BOOK.
During the course of our audit, it came to our attention that although the City Commission
reviewed and approved budgets proposed by the various instrumentalities of the City including
authorities, agencies, trusts and boards, their adopted budgets were not included in the City's
Adopted Operating Budget Book. The proposed and adopted budgets for these 14 entities are
only available to the public in the agenda packet for the City Commission budget hearing during
which they were reviewed, discussed, and adopted by the City Commission. The agenda packet
is located on the Legislative Hub, while the City's adopted budget books are located on the Office
and Management and Budget (OMB) website. There is no link from the OMB website to the
14
Submitted into the public
record for item(s) 5R.5
on 1t] 25 18, City Clerk
Legislative Hub or any mention of how or where the public can access the budgets for these
entities. The approved budgeted revenues/expenditures for these entities for fiscal year 2017-18
totaled $170,819,866 as follows:
Table 5. Budgeted Revenues for City Entities, Fiscal Year 2018
ENTITY
Budgeted
Revenues
Omni Community Redevelopment Agency (CRA)
$53,387,872
Southeast Overtown Park West CRA
$46,290,074
Off -Street Parking Board/Miami Parking Authority
$32,001,894
Downtown Development Authority
$11,940,683
Bayfront Park Management Trust
$7,357,705
Midtown CRA
$6,628,404
Coconut Grove Business Improvement District (BID) Board
$3,453,577
General Employees' and Sanitation Employee' Retirement Trust
$3,377,792
Fire Fighters' and Police Officer's Retirement Trust
$2,086,709
Civilian Investigative Panel
$1,174.000
Virginia Key Beach Park Trust
$1,066,800
Wynwood BID Beard
$863,206
Miami Sports and Exhibition Authority
$677,150
Liberty City Trust
$514,000
TOTAL
$170,819,866
These organizations have a material impact on the City since some may receive millions of dollars
annually in City ad -valorem taxes and capital funding or transfer excess funds to the City. For
example, for fiscal year 2017-18, the Midtown. CRA budgeted a receivable of $4,072,446 due from
the City in ad -valorem taxes: and the Miami Parking Authority (MPA) budgeted excess funds of
$7,200,000 payable to the City.
Further, we noted that each entity is required to complete an Agenda Item Summary Form (Form)
in support of the proposed budget, incfuding line items for the "Total Fiscal Impact "Budget
Impact Analysis" and "Total Budget" for their operations. Although each entity is already assigned
a budget analyst from the City's OMB, our review of this form for four organizations (MPA,
Midtown CRA, MSEA and the Bayfront Park Management Trust) indicated that the information
provided for these line items was inconsistent between entities or left blank. For example, the
MPA did not disclose the capital funding received from the City and the Midtown CRA did not
disclose that it receives funding from the City ad -valorem taxes on the farm.
OTHER RECOMMENDATION 1: OFFICE OF MANAGEMENT AND BUDGET
To improve transparency, we recommend that the Adopted Budget Book and/or Office of
Management and Budget website include the adopted budgets for all of the City's authorities,
agencies, trusts, districts, boards and panels, 'including those that are listed in the City's Table
Organization, but whose budgets are not included in the Adopted Budget Book.
1s
Submitted into the public
record for item(s) 5R.5
on 10/25/18, City Clerk
Management Response: The Office of Management and Budget will include web links
to the proposed budgets of the City's authorities, agencies, trusts, districts, boards and
panels, including those that are listed in the City's Table Organization on the Office of
Management and Budget website. The links will be to both the City's legislative hub,
where the budgets are already included, and (to the extent possible) to the outside
agencies' website where the budgets may or may not be included.
These budgets will not be included in the Proposed or Adopted Budget Books.
Is Implementation Date September 1, 2418,
OTHER RECOMMENDATION 2: OFFICE OF MANAGEMENT AND BUDGET
We recommend that the Office of Management and Budget (OMB) communicate and provide
guidance to the City's entities on the purpose and proper completion of the Agenda Item Summary
Form and the information required for the "Budget Impact Analysis" and "Total Fiscal Impact"
disclosures, as well as budget presentation standards. We further recommend that the OMB
implement a review and monitoring process to ensure that proposed budgets submitted by the
entities to the Commissioners for approval are meaningful, consistent, and transparent.
Management Response: The Office of Management and Budget will continue to
communicate and provide guidance to the City's entities on the purpose and proper
completion of the Agenda Item Summary form and the information required for the
"Budget Impact Analysis" and "Total Fiscal Impact" disclosures and on budget
presentation standards. The Office of Management and Budget will continue to review and
monitor the proposed budgets submitted by the entities to the Commissioners for approval
are meaningful, consistent, and transparent.
• Implementation Date. Already occurring.
16
Submitted into the public
record for item(s) SR.5
on 10 2S S$ City Clerk
MIAMI SPORTS AND EXHIBITION AUTHORITY
(A Component Unit of the City of Miami, Florida)
BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(With Independent Auditor's Report Thereon)
Submitted into the public
record for item(s) SR.5
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10/25/18, City Clerk
(A Component Unit of the City of Miami, Florida
FOR THE YEAR ENDED SEPTEMBER 30, 2017
TABLE OF CONTENTS
FINANCIAL SECTION
PAGE(S)
Independent Auditors' Report..................................................................................................... 1-2
Basic Financial Statements:
Government -wide Financial Statements:
Statement of Net Position ................................. _............................................................... 3
Statementof Activities........................................................................................................ 4
Fund Financial Statements:
Balance Sheet— Governmental Fund................................................................................. 5
Statement of Revenues, Expenditures and
Changes in Fund Balances —Governmental Fund........................................................... 6
Statement of Net Position -- Proprietary Funds.................................................................. 7
Statement of Revenues, Expenses, and
Changes in Net Position --Proprietary Funds.................................................................. 8
Statement of Cash Flows — Proprietary Funds.................................................................... 9
Notes to the Basic Financial Statements...........................................................................14-21
Required Supplementary Information:
Budgetary Comparison Schedule..........................................................,................................. 22
Notes to the Budgetary Comparison Schedule....................................................................... 23
COMPLIANCE SECTION
Independent Auditors' Report on Internal Control Over
Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements
Performed in Accordance With Government Auditing Standards .................................... 24-25
Schedule of Findings and questioned Costs........................................................................... 26
Management Letter in Accordance with the
Rules of the Auditor General of the State of Florida.......................................................... 27-28
ANTHONYBRUNSON P.A.
1
k VIS .;�,
INDEPENDENT AUDITOR'S REPORT Submitted into the public
record for item(s) S9.5
The Board Members on 10 Z5 18 City Clerk
Miami Sports and Exhibition Authority
Report on the Financial Statements
We have audited the accompanying basic financial statements of the governmental activities, the
business -type activities, and each major fund of the Miami Sports and Exhibition Authority (the
Authority), a component unit of the City of Miami, Florida (the City), as of and for the year ended
September 30, 2017, and the related notes to the financial statements, which collectively comprise the
Authority's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error_
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of
the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Fort Lauderdale Office
333 1 -as Olas Wav f Ui -i
Fort I.audordale, FL ;33;11
T: (954) 01-1;571
i-' tlji�4lfe/'lhra�l,Ytit}lllll4}Il`.i'tllll
Miami Office
f)l 13ricklll Avenue Suite 900
'Miami. TL ;3131
T: 005) 789-6673
Submitted into the public
record for item(s) SR.S
on lf7 25 18 City Clerk
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, and each major
fund of the Authority as of September 30, 2017, and the respective changes in financial position and,
where applicable, cash flows thereof for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
Other Mutters
Required 5uppiementary Information
Accounting principles generally accepted in the United States of America require that the budgetary
comparison information an pages 22 and 23 be presented to supplement the basic financiai statements.
Such information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting for placing the
basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information For
consistency with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 15,
2018 on our consideration of the Authority'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 in considering the Authority's internal
control over financiA reporting.
Miami, FI rid
January 15, 2018
2
f��
Submitted into the public
retord for item(s) SR.5
on 10/25118 City Clerk
Basic Financial statements
Submitted into the public
record for item(s) SR.5
MIAMI SPORTS AND EXHIBITION AUTHORITY on W25118 18 City Clerk
(A Component Unit of the City of Miami, Florida)
STATEMENT OF NET POSITION
SEPTEMBER 30, 2017
(with summarized financial information for the fiscal year ended September 30, 2016)
Totals
Governmental Business- type
Activities Activities
2017 2015
ASSETS
Cash
$ 2,508 $ 770,033 $
772,541 $ 779,281
Other receivable
- 352
352 152
Prepaids
- -
- -
Total Assets
5 2,508 770.385 772,893 5 779,433
LIABILITIES
Accounts payable
$ 810 $ - $
810 $ 768
Deposits payable
- 250,000
250,000 250,000
Total Liabilities
810 250,000
250,810 250,768
NET POSITION
Restricted - - - -
Unrestricted 1,698 520,385 522,083 528,665
Total Net Position S 1,698 520.385 522.083 5 528,565
The accompanying notes are an integral part of the basic financial statements.
3
Submitted into the public
MIAMI SPORTS AND EXHIBITION AUTHORITY
(A Component Unit of the City of Miami, Florida)
STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017
record for item(s) SR.5
on 1l3 25 18 City Clerk
Program Net (Expenses) Revenues
Revenues and Changes in Net Position
Charges for Governmental
Business- type
Functions Expenses Services Activities
Activities
Total
Governmental Activities:
General government $ 102,768 $ - $ (102,768)
$ -
$ (102,768)
Culture and recreation 57.500 - (57,500)
-
(57,504)
Total governmental activities 1601,268 - (160,2L81
-
(160,268)
Business -type Activities:
Watson Island 46 152,854 -
152,808
152,808
Total business -type activities - 152,854 -
-
-
Total government_ - 160,314 S 152,854 (160,268]
152.808
7.460)
General Revenues:
Interest income 122
756
878
Transfers 153,475
(153.475)
-
Total general revenues, special items and transfers 153,597
(152,7191
878
Change in net position (6,671)
89
(6,582)
Net position, beginning of year _ 8,369
_ 530,296
528,665
Net position, end of year 1 698S
520,385
22 83
The accompanying nates are an integral part of the basic financial statements.
2
ASSETS
Cash
Submitted into the public
record for item(s) Sj .
on 10/25/18, City Clerk
MIAMI SPORTS AND EXHIBITION AUTHORITY
(A Component Unit of the City of Miami, Florida)
BALANCE SHEET - GOVERNMENTAL FUND
SEPTEMBER 30, 2017
(with summarized financial information for the fiscal year ended September 30, 201+6)
Total Assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Total liabilities
Fund Balances:
Unassigned
Total fund balances
Total Liabilities and Fund Balances
General Fund
2017 2016
$ 2,508 $ 9,137
$ 2,508 $ 9,137
$ 810
n-
1,698 —
1,698
1,698
$ 2,508
$ 758
-rn
The accompanying notes are an integral part of the basic financial statements.
5
8,369
8,359
9 137
Submitted into the public
record for item(s) SR.5
on 1025 18 City Clerk
MIAMI SPORTS AND EXHIBITION AUTHORITY
(A Component Unit of the City of Miami, Florida)
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANES -
GOVERNMENTAL FUND
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017
(with summarized financial information for the fiscal year ended September 30, 2016)
General Fund
2017 2016
Revenues:
Interest income 122 $ 8
Total revenues 122 8
Expenditures:
General and administrative
83,768
46,847
Professional services
19,000
19,000
Culture and recreation
57,506
87,500
Total expenditures
160,268
153,347
Deficiency of revenues under expenditures
(160,146)
(153,339)
Other financing sources:
Transfers in
153,475
154,300
Net change in fund balances
(6,671)
961
Fund balances, beginning of year
8,369
7,408
Fund balances, end of year
$ 1,698
$ 8,369
The accompanying notes are an integral part of the basic financial statements.
0
Submitted into the public
record for item(s) SR.S
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10 25L1.8-, City Clerk
(A Component Unit of the City of Miami, Florida)
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
SEPTEMBER 30, 2017
(with summarized financial information for the fiscal year ended September 30, 2016)
ASSETS
Current assets:
Cash
Due from other fund
Other receivable
Total Assets
LIABILITIES AND NET POSITION
Current liabilities:
Due to other fund
Deposits payable
Total liabilities
Net position:
Restricted
Unrestricted
Total net positon
Total Liabilities and Net Positon
Business -type Activities - Enterprise Funds
Totals
Watson
Non CDT Fund Island Fund 2617
2016
$ 181,818 $ 588,215 $ 770,033 $ 770,144
25,603 - 25,603 77,278
- 352 352 152
207.421 S 588..567 S 795.9$8 L117-574
$ - $ 25,603 $ 25,603 $ 77,278
250,000 250.000 250,000
- 275,603 275,603 327,278
207,421 312,964 520.385 520,296
207,421 312,964 520.385 520,296
t 207.471 S 588.567 79 z,$ S 847.574
The accompanying notes are an integral part of the basic financial statements.
7
Submitted into the public
record for item(s) jR_.5
M IAMI SPORTS AN D EXH I BITSON AUTHORITY on 10/251 , City Clerk
(A Component Unit of the City of Miami, Florida)
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN NET POSITION -
PROPRIETARY FUNDS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017
(with summarized financial information for the fiscal year ended September 30, 2016)
The accompanying notes are an integral part of the basic financial statements.
M
Business -type Activities - Enterprise Funds
Totals
Non CDT
Watson
Fund
Isiand Fund
2017
2016
Operating revenues;
Rent revenue
$ 141,300
$ 141,300
$ 123,376
Pi[ot fee revenue
11,554
11,5S4
22,109
Total operating revenues
152,854
�152 854
145,485
Operating expenses:
General and administrative
46
46
24
Total operating expenses
46
46
24
Operating income
152,808
152,808
�145 461
Non-operating revenues (expenses):
Interest income
312
444
756
830
Total non-operating revenues
312
444
756
830
Income before transfers
312
153,252
153,564
146,291
Transfers out
(129,700)
(23,775)
(1U,,175
(154,300)
Change in net position
(129,388)
129,477
89
(8,009)
Net position, beginning of year
337,209
183,087
520 �296
S28,305
Net position, end of year
2_Q7 8_2 1
5 312.S64
$ 5_20
L 520-29
The accompanying notes are an integral part of the basic financial statements.
M
Submitted into the public
record for items) SR.5
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10/5118, City Cferk
(A Component Unit of the City of Miami, Florida)
STATEMENT CASH FLOWS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017
(with summarized financial information for the fiscal year ended September 30, 2016)
Net cash provided by (used in) operating activities $ 51,275 5 101,333S 152.608 191.655
The accompanying notes are an integral part of the basic financial statements.
9
Business -type Activities - Enterprise Funds
Non CDT
Watson
Totals
Fund
Island Fund
2017
2016
Cash flows from operating activities
Receipts from rent and deposits
$
$ 141,300
$ 141,300
$ 369,424
Receipts from pilot fee revenue
11,354
11,354
22,109
Receipts from litigation settlement
-
-
-
Net receipts (payments) from (to) other funds
51,275
(51,275)
-
-
Payments to suppliers for services
-
(46)
(46)
(199,878)
Net cash provided by (used in) operating activities
51,275
101,333
152,6(18
191,655
Cash flows from noncapital financing activities
Transfers to other funds
(129,700)
(23,775)
^(153,475)
(154,300)
Net cash used in noncapital financing activities
(129,7001
(23,775)
(153,475)
(154,300)
Cash flows from investing activities
Receipts from interest
312
444
756
830
Net cash provided by investing activities
312
444
7S6
830
Net increase (decrease) in cash
(78,113)
78,002
(111)
38,185
Cash - beginning of year
_ 259,931
510,213
770,144
731,959
Cash -end of year$_
181.818
S 588.21$
$ 770,033
$ 770.144
Reconciliation of operating income to net cash
provided by (used in) operating activities
Operating income
$ -
$ 152,808
$ 152,808
$ 145,461
Adjustments to reconcile operating income to net
cash provided by (used in) operating activities:
(Increase) decrease in assets:
Rent receivable
(200)
(200)
Due from other fund
51,275
(51,275)
-
(77,278)
Other receivable
-
(152)
Increase (decrease) in liabilities:
-
Accounts payable
(199,854)
Rent received in advance
-
-
-
(3,800)
Due to other fund
-
-
77,278
Deposits payable
-
-
250,000
Net cash provided by (used in) operating activities $ 51,275 5 101,333S 152.608 191.655
The accompanying notes are an integral part of the basic financial statements.
9
Submitted into the public
record for item(s) SR -5
on __ 25 18 City Clerk
Nates to the Basic Financial Statements
Submitted into the public
record for item(s) SR.5
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10/25/18, City Clerk
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
Note 1 - Summary of Significant Accounting Policies
This summary of the Miami Sports and Exhibition Authority ("MSEA" or "Authority") 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 Authority conform to U.S. generally accepted
accounting principles 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.
Organization and reporting entity
The Authority is an independent and autonomous agency and instrumentality of the City of
Miami, Florida (the City). The Authority was established by Ordinance No. 9662 adopted by the
City Commission on July 28, 1983 (as amended by City Ordinance No. 11155), pursuant to
Section 212.173015, Florida Statute, for the purpose of promoting the development of sports,
convention and exhibition facilities within the City and attracting professional sports franchises
and exhibitions to utilize the City's and/or the Authority's facilities.
For financial statement purposes, the Authority is a discretely presented component unit of the
City and is included in the City's Comprehensive Annual Financial Report. The Authority's
financial statements are not intended to present fairly the financial position and results of
operations of the City in conformity with U.S. generally accepted accounting principles.
Government -wide and fund financial statements
The government -wide financial Statements (i.e., the statement of position and the statement of
activities) report information on all the nonfiduciary activities of the Authority. 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 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. Progrom 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
10
Submitted into the public
record for item(s) SR.5
MIAMI SPORTS AND EXHIBITION AUTHORITY on 1025 18, City Clerk
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
Note 1- Summary of Significant Accounting Policies Cont'd
Government -wide and fund financial statements (cont'd)
Separate financial statements are provided for the Authority's governmental funds and
proprietary funds. Major individual governmental funds and major individual enterprise funds
are reported as separate columns in the fund financial statements.
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.
The governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are considered to
be available when they are coilectible within the current period or soon enough thereafter to
pay liabilities of the current period. For this purpose, the Authority considers revenues to be
available if they are collected within 50 days of the end of the current fiscal period.
Expenditures generally are recorded when the related fund liability is incurred. However, debt
service expenditures, as well as expenditures related to compensated absences and claims and
judgments, are recorded only when payment is due.
The proprietary fund financial statements are reported using the accrual basis of accounting in
order to recognize the flow of economic resources. Under this basis, revenues are recognized in
the period in which they are earned, expenses are recognized in the period in which they are
incurred, depreciation of capital assets is recognized, and all assets and liabilities associated
with the operation of the Authority are included in the statement of net position. Proprietary
funds distinguish operating revenues and expenses from non-operating 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 Authority enterprise funds are charges to customers for sales and
services. Operating expenses for enterprise funds include the cost of sales and services and
administrative expenses. All revenues and expenses not meeting this definition are reported as
non-operating revenues and expenses.
The Authority reports the following major governmental funds:
The General Fund is the Authority's primary operating fund. It accounts for all financial
resources used to fund the operations of the Authority, except those required to be accounted
for in another fund.
11
Submitted into the public
record for item(s) SR.S
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10/25118, City Clerk
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
Note 1- Summary of Sienificant Accountine Policies (Cont'd
Measurement foes, basis of accounting and financial statement presentation (cont'd)
The Authority reports the following major proprietary funds:
The Non -CDT Fund (the Project Development Fund) accounts for the activities of joint projects
undertaken by the Authority with other entities (private and/or nonprofit entities) that share
the Authority's cultural and recreational objectives;
IR The Watson rsiand Fund accounts for the activities related to the inter -local agreement
dated August 14, 1997 (amended and revised October 9, 2013) between the City and MSEA
for the management of revenue and expenses derived from Watson Island.
Assets, liabilities, and net position/fund balance
Cash and investments
The Authority's cash at September 30, 2017 consists of cash on hand and demand deposits. The
Authority is authorized to invest in obligations of the U.S. Treasury, its agencies,
instrumentalities and the State Board of Administration Investment Pool. GASB Statement No.
31, Accounting and Financial Reporting for Certain Investments and for External Investment
Pools, requires disclosure of investments at fair value and recognition of unrealized gains or
losses, if material, for investments with remaining maturities of more than one year at the time
of purchase. Investments with remaining maturities of one year or less at the time of purchased
are recorded at amortized cost. At September 30, 2017, the Authority had no investments.
Prepaid expenses
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid expenses in both the government -wide and fund financial statements.
Jnterfund receivables and payables
Activity between funds that is representative of lending/borrowing arrangements outstanding
at the end of the fiscal year is referred to as "due to/from other funds".
12
MIAMI SPORTS AND EXHIBITION AUTHORITY
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
Note 1 - Summary of Significant Accounting Policies (Cont'd)
Assets, liabilities, and net position/fund balance (cont'd)
Fund equity/ net positron
Fund equity
Submitted into the public
record for item(s) SR -5
on 10/25/18 City Clerk
GASB Statement No. 54, Fuad Balance Reporting and Governmental Fund Type Definitions,
establishes criteria for classifying fund balances into specifically defined classifications and
clarifies definitions for governmental fund types. Fund balances for governmental funds are
reported in classifications that comprise a hierarchy based primarily on the extent to which the
government is bound to honor constraints on the specific purposes for which amounts in those
funds can be spent, as follows:
Nonspendable fund balance - amounts that cannot be spent because they are either (a) not
in spendable form or (b) legally or contractually required to be maintained intact.
Restricted fund balance - amounts that are restricted to specific purposes when constraints
placed on the use of resources are either by (a) externally imposed by creditors (such as debt
covenants), grantors, contributors, or laws or regulations of other governments; or (b)
imposed by law through constitutional provisions or enabling legislations.
Committed fund balance - amounts that can only be used for specific purposes pursuant to
constraints imposed by formal action of the government's highest level of decision making
authority.
Assigned fund balance - amounts that are constrained by the government's intent to be
used for specific purposes, but are neither restricted nor committed.
Unassigned fund balance - amounts that have not been assigned to other funds and that
have not been restricted, committed, or assigned to specific purpose within the general
fund.
When froth restricted and unrestricted amounts are available for use, it is the Authority's
practice to use restricted resources first. Additionally, the Authority would first use
committed, then assigned, and lastly unassigned amounts of unrestricted fund balance.
13
Submitted into the public
record for item(s) 5R.5
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10 75 18 City Clerk
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 7017
Note 1- Summary of Significant Accounting Policies_ Cont'd
Assets, liabilities, and net position/fund balance (cont'd)
Fund equity/net position (cont'd)
Net position
The government -wide and proprietary funds financial statements utilize a net position
presentation. Net position can be categorized as net investment in capital assets, restricted, or
unrestricted. The first category represents capital assets, less accumulated depreciation and net
of any outstanding debt associated with the acquisition of capital assets. Restricted net position
represent amounts that are restricted by requirement of debt indenture or enabling legislation.
Unrestricted net position represents the net position of the Authority which is not restricted for
any project or purpose.
When both restricted and unrestricted resources are available for use, it is the Authority's
policy to use unrestricted resources first, and then restricted resources as they are needed.
Prior year total columns
Total columns for the prior year in the accompanying financial statements are presented only to
facilitate financial analysis. Data in these columns do not present the financial position, or
results of operations, in conformity with U.S. generally accepted accounting principles.
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 financial 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.
Change in Accounting Policy
An interlocal agreement was entered into on August 14, 1997 (amended and revised October 9,
2013) between MSEA and the City of Miami ("City"). In conjunction, a development agreement
and sublease agreement were entered into between MSEA and Linden Heliport Services, to
build a terminal facility for helicopter hangers, a landing pad, and fuel farm. Attached to the
agreements is a Joint Participation Agreement ("JPA") between the State of Florida Department
of Transportation and the City for partial funding of the construction of a heliport facility on
Watson Island. The Agreements established the Parties' obligations with respect to the
development and construction of the Watson Island Air Transportation Facility and related
financial compensation and commitments of the parties.
14
Submitted into the public
record for item(s) SR.5
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10/25/18 City Clerk
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
Note 1 - Summary of Significant Accounting Policies Cont'd
Assets, liabilities, and net position/fund balance (cont'd)
Change in Accounting Policy (cont'd)
As a result of the JPA, a restricted fund was established described as Watson Island Fund. There
was no funding ever received from the JPA towards development of the heliport. Hence, on
June 15, 2015, FDOT notified the City that their grant request in reference to the Heliport was
redistributed. Therefore, expiration of the City's ability to access said funding warrants a
change in MSEA's accounting policy in connection with these matters. As a result, the restricted
fund has been reclassified as an unrestricted fund. The prior year restricted fund balance is also
considered unrestricted.
Note 2 - Detailed Notes to Operations
Deposits
At September 30, 2017, the carrying amounts and bank balances of the Authority's deposits
totaled $772,541 and $779,281, respectiveiy.
Custodial Credit (tisk is the risk that in the event of a bank failure, the Authority'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. Under Florida Statutes, Chapter 2801, "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. Accordingly, all cash held by banks are fully collateralized or insured.
Fund balances
At September 301, 2017, the Authority's General Fund reported unassigned fund balance of
$1,698. As previously described, unassigned fund balance are amounts that have not been
assigned to other funds and have not been restricted, committed, or assigned for a specific
purpose.
Interlocal agreement
On August 14, 1997, and amended on October 9, 2013, the Authority entered into an Interlocal
Agreement with the City to construct, operate, manage, and maintain the Air Transportation
Facility on Watson Island. The initial term of the Interlocal Agreement is for 30 years, with two
additional renewal periods of 10 years each, at the City's option.
15
Submitted into the public
record for item(s) SR -5
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10 25 18, City Clerk
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
Note 2 - detailed Notes to Operations (Cont'd)
Interlocal agreement (cont'd)
In accordance with the Interlocal Agreement, rent is to be paid by the Authority to the City as
follows: 1) for the airport area, rent shall be established in accordance with the requirements of
the State Deed restrictions, funders, granters and any outstanding debt services, and Florida
Department of Transportation ("FDOT"), and the Federal Aviation Administration regulations as
they relate to the Air Transportation Facility; and 2) for the adjacent area, at such time as the
Authority develops, or procures the development of the adjacent area, the Authority shall not
convey any interest with respect to the adjacent area, unless i) the Authority receives fair
market rent in connection with any use of the Air Transportation Facility and its adjacent area,
and iij the Authority negotiates a payment to the City which guarantees a fair market return to
the City.
As of September 30, 2017, no such rent has been paid to the City as a result of the lack of
development and receipt of grant funds for the Heliport.
Lease and sublease agreements
Miami Children's Art Museum
On November 2, 2001, the Miami Children's Art Museum entered into a lease agreement with
the Authority to lease space on Watson Island. The terms of the agreement is for 45 years at
rent of $2.00 per year.
Linden Airport Services Corporation — Heliport Project
On October 9, 2013, Lindero Airport Services Corporation ("Linden"), d/b/a Watson Island
Heliport Corporation, entered into a 30 -year Sublease Agreement (the "Linden Sublease
Agreement") with the Authority to lease certain space on Watson Island to develop and
operate a heliport for the use and benefit of the general public. Upon expiration of the original
term, Linden has the option to extend the agreement for two 10 -year periods.
In conjunction with the Linden Sublease Agreement, Linden entered into a separate
Development Agreement with the Authority and the City, as consent and joinder, for the
construction of the helipad, to be paid by an initial $350,000 contribution from Linden,
available grant funds from the City, and the remaining construction costs to be paid by Linden.
16
Submitted into the public
reord far item(s) 5R.5
c
MIAMI SPORTS AND EXHIBITION AUTHORITY re or10/2,5118,City Clerk
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL' STATEMENTS
SEPTEMBER 30, 7017
Note 2 - Detailed Notes to Operations (Cont'd)
Lease and sublease agreements (cont'd)
Linden Airport Services Corporation — Heliport Project (cont'd)
In accordance with the Linden Sublease Agreement, rent to be paid by Linden to the Authority
shall be the greater of the minimum annual rent or percentage rent. Minimum annual rent is
determined as follows: i) $2,200 per month for lease years 1 and 2; ii) $3,800 per month for
lease year 3; iii) $5,500 per month for lease year 4; iv) $5,775 per month for lease years 5
through 9; v) $5,208 per month for lease years 10 through 19; vi) $6,705 per month for lease
years 20 through 25; and vii) $7,375 per month for lease year 26 and every lease year
thereafter. Percentage rent is determined as follows: i) 2.5% of gross revenues for lease years 1
and 2; ii) 5% of gross revenues for lease years 3 and 4; iii) 7.5% of gross revenues for lease years
5 through 9; iv) 8% of gross revenues for lease years 10 through 19; and v) 10% of gross
revenues for lease years 20 through 30. Rent revenue recognized on the Linden Sublease
Agreement during fiscal year 2016 totaled $25,400.
The Linden Sublease Agreement and the Development Agreement were simultaneously
amended twice during fiscal year 2015. in accordance with the second amendment to the
Linden Sublease Agreement, dated September 16, 2015, the Authority agreed to contribute up
to $200,000 towards the cost charged by Florida Power and Light to place all of the required
electrical utility lines underground at the heliport site.
Chalks Airlines, Inc.
On July 29, 2014, Chalks Airlines, Inc. ("Chalks") entered into an Amended and Restated Air
Terminal Facility Sublease Agreement (the "Chalks Sublease Agreement") with the Authority to
sublease certain space on Watson Island to operate an air transportation facility for the use and
benefit of the general public. Pursuant to a Settlement Agreement dated March 6, 2002 (the
"Settlement Agreement") by and between the Authority and Flying Boat, Inc. (d/b/a Chalks
Ocean Airways), the Authority and Flying Boat, Inc. (the "Original Tenant") entered into that
certain Air Terminal Facility Sublease, dated March 6, 2002 (the "Original Sublease"), which
Original Sublease has been assigned to Chalks. The Chalks Sublease Agreement amends and
restates the Original Sublease.
Chalks' initial plans for the leased property contemplate, at Chalks' own cost and expense,
tenant improvements to include the refurbishment and/or new construction of the existing air
transportation facility and the new construction of new facilities in one or more phases.
17
Submitted into the public
record for item(s) SR -5
MIAMI SPORTS AND EXHiBITION AUTHORITY on 10 25 18 City Clerk
(A Component Unit of the City of Miami, Florida)
NATES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
Note 2 - Detailed Notes to Operations (Cont'd)
Lease and sublease agreements (cont'd)
Chalks Airlines, Inc. (cont"d)
New facilities will include food and alcohol service establishments, a historical center, a media
room, commercial recreational indoor and/or open air retail businesses, other commercial,
educational and civic uses, as well as learning centers, and parking facilities. All designs for any
such tenant improvements are subject to review and approval by the Authority.
The initial rent to be paid by Chalks (the "Initial Construction Stage Rent") is $5,000 per month,
commencing on the effective date, and from that date through the earlier of (i) substantial
completion of the tenant improvements; or (ii) the receipt of a temporary or final certificate of
occupancy, whichever is obtained first (the "Rent Commencement Date"). If Chalks fails to open
the tenant improvements, including the restaurants (the "f=acility Opening"), as of the Rent
Commencement Date, the Initial Construction Stage Rent will increase to $20,833 per month
until such time as the Facility Opening occurs.
Commencing with the date the Facility Opening occurs through the expiration date of the
Chalks Sublease Agreement (i.e. October 18, 2043), Chalks shall pay the Authority as annual
rent, the greater of $500,000 or a percentage rent equal to the sum of (i) 5% of the pertinent
annual gross revenue attributable to Chalks' sale of fuel at the property, (ii) Chalks' or its
subtenant's gross revenue from the sale of food, beverage and alcohol per establishment, other
than the Air Transportation Facility, equal to 8% of the pertinent annual gross revenues from
such sale of food, beverage and alcohol over $300,000 but less than $500,000 and 10% of
annual gross revenues from such sale of food, beverage and alcohol of $500,000 or more, (iii)
109' of gross revenues from ticket or other sales for access at the historical center, media or
learning center, and (iv) 1% of the pertinent annual gross revenues (after deducting out any
other amounts of gross revenues paid pursuant to clauses (i) _ (iii) above, plus $15.86 per
square foot of the establishments used as retail portions of the Commercial Facilities). Rent
revenue recognized on the Chalks Sublease Agreement during fiscal year 2016 totaled $72,000.
Upon execution of the Chalks Sublease Agreement, Chalks paid a security deposit in the amount
of $250,000, which wasn't actually paid until fiscal year 2016. The security deposit is reported
on the statement of net position as deposits payable.
18
Submitted into the public
record for item(s) SR.S
MIAMI SPORTS AND EXHIBITION AUTHORITY
on 16 25 18 City Clerk
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2617
Nate 2 - Detailed Notes to Operations (Cont'd)
Interfund receivables, payables and transfers
At September 30, 2017, the Non CDT Fund reported a due to the Watson Island Fund, and the
Watson Island Fund reported a due from the Non CDT Fund, in the amount of $25,603. The
outstanding balance is a result of the time lag between the dates that payments between funds
are made.
During fiscal year 2017, the Non -CDT Fund transferred a total of $129,700 and Watson Island
Fund transferred $23,775 to the General Fund to cover operating expenditures.
Risk management
The Authority is exposed to various risks of losses related to torts; theft or damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters. The
Authority purchases commercial insurance for the risks of loss to which it is exposed. Policy
limits and deductibles are reviewed by management and established at amounts to provide
reasonable protection from significant financial loss. There were no losses or claims incurred
during the current fiscal year, and there were no settlements that exceeded insurance coverage
during the past three fiscal years.
New pronouncements issued
The following pronouncements have recently been issued by the GASB, but do not or will not
have a material impact on the financial statements of the Authority upon implementation:
GASB Statement No. 72, Fair Value Measurement and Application, which is effective for the
fiscal year ending September 30, 2017.
GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related
Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain
Previsions of GASB Statements 67 and 68, which is effective for the fiscal year ending
September 30, 2017.
GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than
Pension Plans, which is effective for the fiscal year ending September 30, 2017.
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits
Other Than Pensions, which is effective for the fiscal year ending September 30, 2018.
19
Submitted into the public
record for item(s) SR.S
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10/25/18 City Clerk
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
Note 2 - Detailed Notes to Ooerations {Cont'd
New pronouncements issued (cont'd)
GASB Statement No. 77, Tax Abatement Disclosures, which is effective for the fiscal year
ending September 30, 2017.
GASB Statement No. 78, Pensions Provided through Certain Multiple -Employer Defined
Benefit Pension Plans, which is effective for the fiscat year ending September 30, 2017.
GASB Statement No. 79, Certain External Investment Pools and Pool Participants, which is
effective for the fiscal year ending September 30, 2017,
GASB Statement No. 80, Blending Requirements for Certain Component units — an
amendment of GASB Statement No. 14, which is effective for the fiscal year ending
September 30, 2017.
GASB Statement No. 81, Irrevocable Split -Interest Agreements, which is effective for the
fiscal year ending September 30, 2018.
GASB Statement No. 82, Pension Issues — an amendment of GASB Statements No. 67, No.
68, and No. 73, which certain requirements are effective for the fiscal year ending
September 30, 2017, and certain other requirements effective for fiscal year ending
September 30, 2018.
GASB Statement No. 83, Certain Asset Retirement Obligations — Effective Date: The
requirements of this Statement are effective for reporting periods beginning after June 15,
2018. Earlier application is encouraged.
GASB Statement No. 84, Fiduciary Activities — Effective Date: The requirements of this
Statement are effective for reporting periods beginning after December 15, 2018. Earlier
application is encouraged.
GASB Statement No. 85, Omnibus 2017 — Effective Date: The provisions of this Statement
are effective for periods beginning after June 15, 2017. Earlier application is encouraged.
GASB Statement No. 86, Certain Debt Extinguishment Issues — Effective Date: The
requirements of this Statement are effective for reporting periods beginning after June 15,
2017. Earlier application is encouraged.
GASB Statement No. 87, Leases — Effective Date: For reporting periods beginning after
December 15, 2019.
20
Submitted into the public
record for item(s) SR,5
MIAMI SPURTS AND EXHIBITION AUTHORITY on 10115Z18, City Clerk
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2617
Note 2 - Detailed Notes to Operations iCont'd
Subsequent events
The Authority evaluated subsequent events through January 15, 2018. No subsequent events
were identified that require adjustment to or disclosure within the financial statements.
Note 3 - Other Matters
Chalks has filed a complaint against the City of Miami ("City") in connection with the its rights
under the Miami Seaplane Base License issued by the Florida Department of Transportation
("FDOT") and varied FAA applications submitted by the City under the auspices of the Miami
Seaplane Base's FDOT Airport license.
The declaratory action mentioned above is solely against the City of Miami and not MSEA.
However, this matter may impact agreement amongst Chalks, MSEA and the City.
21
Submitted into the public
record for item(s) SR.5
on 10125/18 City Clerk
Required Supplementary information
Submitted into the public
record for item(s) SR.5
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10 Zs I8 City Clerk
(A Component Unit of the City of Miami, Florida)
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND
(Required Supplementary information - Unaudited)
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017
Variance With
Budgeted amounts Final Budget -
Actual Positive
Original Final Bud eta Basis (Negative)
Revenues;
Interest income
Total revenues
-
Expenditures:
General and administration
89,500
Professional services
18,300
Total expenditures
107,800
Deficiency of revenues under expenditures
(107,800)
Other financing sources:
Transfers in
-
Carryover fund balance
107,800
Total other financing sources
107,800
Net change in fund balances
- $ 168 $ 168
168 16,8
89,500 83,814 5,686
18,300 19,000 700
107,800 102,814 4,986
(107,800) 102,6461 (5,154)
153,475 153,475
107,800 - -
107,800 _ 155,475 153,475
L --W-$29
The notes to the supplementary information are an integral part of this schedule.
22
Submitted into the public
record for item(s) SR.5
on 10125118 City Clerk
MIAMI SPORTS AND EXHIBITION AUTHORITY
(A Component Unit of the City of Miami, Florida)
NOTES TO THE BUDGETARY COMPARISON SCHEDULE
SEPTEMBER 30, 2017
Note 1- Budgetary information
In accordance with generally accepted accounting principles, budgetary comparison
information is disclosed only for the general fund.
Section 52.6-10 of the City's Code requires the Authority to annually submit to the City
Commission a general fund administrative budget request pertaining to operating
expenditures for approval. The annual operating budget for the general fund is adopted on a
basis consistent with generally accepted accounting principles. The annual budget may be
revised during the fiscal year subject to approval by the board of directors of the Authority
and the City Commission.
The legal level of budgetary control, the level at which expenditures may not exceed budget,
is in the aggregate.
Note 2 - Budget/GAAP Reconciliation
Adjustments necessary to convert the change in fund balance as of September 30, 2017 from
the budgetary basis of accounting to U.S. generally accepted accounting principles (GAAP)
basis of accounting is as follows:
Change in fund balance — budgetary basis $ 50,829
Less grants to third -parties (57,500)
Net change in fund balance — GAAP basis (6,671)
Grants to third -parties are not budgeted. However, such grants are approved by the board of
d i recto rs.
23
Submitted into the public
record for item(s) SR.5
on 10/25/18 City Clerk
COMPLIANCE SECTION
ANTHONY BRUNSON P.A.
t �
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS 13ASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
To the Board Members
Miami Sports and Exhibition Authority
We have audited, in accordance with the auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States, the financial statements of the
governmental activities, the business -type activities, and each major fund of the Miami Sports and
Exhibition Authority (the Authority) as of and for the year ended September 30, 2017, and the
related notes to the financial statements, which collectively comprise the Authority's basic financial
statements, and have issued our report thereon dated January 15, 2018.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Authority's
internal control over financial reporting (internal control) to determine the audit procedures
that are appropriate in the circumstances for the purpose of expressing our opinions on the
financial statements, but not for the purpose of expressing an opinion on the effectiveness of
the Authority's internal control. Accordingly, we do not express an opinion on the effectiveness
of the Authority's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct, misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be
prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency,
or a combination of deficiencies, in internal control that is less severe than a material weakness,
yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, we did identify a certain deficiency in internal control described in the accompanying
schedule of findings and questioned costs that we consider to be a significant deficiency.
Fort Lauderdale Office Miami Office
,33 [_as Olay lkay i CU 4
Foil Laadvi-d-,ile, FL w3 -MI
I: iLK4i 301-6� 71
LnCL a:
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SOI 13rickelI Avenue i Suite 900
Miami, FL3;l31
T' (305) 789-66e
submitted into the public
record for item(s) SR -5
on 10/25/18, City Clerk
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority's financial statements
are free from material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements, noncompliance with which
could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our
audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
The Authority's Response to Finding
The Authority's response to the finding identified in our audit is described in the accompanying
schedule of findings and questioned costs. The Authority's response was not subjected to the
auditing procedures applied in the audit of the financial statements and, accordingly, we express
no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the entity's internal control or on compliance. This report is an integral part of an audit performed
in accordance with Government Auditing Standards in considering the entity's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Miami, Flor da
January 15, 2018
r25
Submitted into the public
record for item(s) SR.5
MIAMI SPORTS AND EXHIBITION AUTHORITY on 10/25118, City Clerk
(A Component Unit of the City of Miami, Florida)
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SEPTEMBER 30, 2017
Section I —+Current Year Finding
2017-01 Amended Interlocal Agreement and Joint Participation Agreement (JPA)
(collectively referred to as "Agreement")
Condition
This Agreement impacts the rights and obligations of FDOT, the City of Miami and
Lessees within a project location describe as the "Watson Island Air Transportation
Facility" (Watson Island Fund). The JPA expired June 30, 2015.
Cause of Condition
As a result of the JPA's expiration and lack of development activity, uncertainty has
been created regarding the appropriateness of the "Watson Island Fund" and
specific rights of the facility's Lessees.
Potential Effect of Condition
Tenants who hold leases with MSEA potentially have had their operating and
development rights impacted.
Recommendation
The expired JPA and other lease agreements held among the City of Miami, MSE;,
and tenants of Watson Island should be re -visited as soon as time permits, to
address the operational and/or development rights of each stakeholder.
Client Response
MSEA agrees with the finding that the agreements need to be corrected to
accurately reflect the current status of MSEA's obligations under such agreements,
as there is no Watson Island Air Transportation Facility in existence.
I raised my concerns to the City Attorney's office about the financial statements
given that a letter was received from FDOT notifying the City of Miami the FDOT will
no longer support nor fund the project under the JPA.
on multiple occasions I met with the office of the City Attorney, the Chief Financial
Officer, and the Budget Director.
Section II — Prior Year Findings
There were no prior year audit recommendat;ons or findings.
26
ANTHONY BRUNSON P.A.
i
cs
MANAGEMENT LETTER IN ACCORDANCE WITH THE ¢� n
RULES OF THE AUDfTOR GENERAL OF THE STATE OF FLORIDA
o � V
The Board Members
Miami Sports and Exhibition Authority v o
We have audited the financial statements of the Miami Sports and Exhibition Authority (the 3
Authority), a component unit of the City of Miami, Florida, as of and for the fiscal year ended o
September 30, 2437, and have issued our report thereon dated January 15, 2018.
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 and Chapter 14.550,
Rules of the Florida Auditor General. We have issued our Independent Auditors' Reports on
Internal Control over Financial Reporting and on Compliance and Other Matters Based on an
Audit of the Financial Statements Performed in Accordance with Government Auditing
Standards. Disclosures in those reports, which are dated January 35, 2018, 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 governs the conduct of local governmental entity audits
perforated in the State of Florida. This letter includes the following information, which are not
included in the aforementioned auditor's reports:
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. There were no prior year
findings or recommendations made in the preceding annual financial audit report,
• 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 Authority
complied with Section 218.415, Florida Statutes.
Section 10.S54(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, recommendations are described in Section I of the Schedule of
Findings and Questioned Costs report.
Fort Lauderdale Office
33.3 Las t)las Wats I UU 4
Fart Liudcrdalt,. FL 3330
T: (954) 36 1 -65 71
iIl fZ; i, t. iIhL II,I"S➢llltIL ...',I'i
Miami Office
NO 1 13rickell A�-entre ! Suite. 900
Miami, Fl- 33131
T: ! 36.45) 789-66 i
Submitted into the public
record for item(s) 5R.5
an 1U 25 18 City Clerk
• Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address noncompliance
with provisions of contracts or grant agreements, fraud, illegal acts, or abuse, that have
occurred, or are likely to have occurred, that have an effect on the financial statements that is
less than material but which warrants the attention of those charged with governance. In
connection with our current year audit, we did not have any such findings.
• Section 10.554(1)(i)5., 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 I(A) to the Authority's financial statements.
■ Section 10.554(1)(i)6.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 Authority did not
meet any of the conditions described in Section 218.503(1), Florida Statutes.
• Section 10.554(1)(i)6.b., Rules of the Auditor General, requires that we determine whether
the annual financial reports for the Authority for the fiscal year ended September 30, 2017,
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, 2017. The Authority does not file a separate report with the State of
Florida Department of Financial Services. The financial operations of the Authority are
included in the basic financial statements of the City of Miami, Florida for the year ended
September 30, 2017.
• Sections 10.554(1)(i)6.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 Authority, and the State of Florida Office of the Auditor General,
and is not intended a and should not be used by anyone other than these specified parties.
r '
Miami, FI rid
January 15, 2 18
28
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1012312018
Audit of Miami government agency reveals issues I Miami Herald
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Submitted into the public
record for item(s) SR.5
on 10 25 18 City Clerk
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MIAMI-DADE COUNTY
Audit: Miami City Hall employee paid two salaries for
job that might not be necessary
BY JOEY FLECHAS
iflechas@miamiherald.com
July 27, 20118 09:15 PM
Updated July 29,201810:23 PM
A Miami City Hall employee was paid two salaries for three years while she single-handedly ran IL
an agency that city auditors suggest might be unnecessary, an internal review has found. h 117
By continuing to use this site, you give your consent to our use of cookies for analytics, personalization and ads. EYad
hUps://www.miamiheraid.com/news/local/community/miami-dade/article215641790.htmi 117
10123/2018 Audit of Miami government agency reveals issues I Miami Herald
Miami's independent auditor general issued a critical appraisal of the city and its tenuous
relationship with the Miami Sports and Exhibition Authority, a long-standing semi -autonomous
government agency with a budget of about $677,000 that no longer serves its original purpose of
promoting sports and conventions in the city.
The authority now acts as little more than a landlord for tenants on city -owned Watson Island,
which include the Miami Children's Museum and a few stalled projects — a seaplane base and a
heliport.
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The audit, requested earlier this year by City Manager Emilio Gonzalez, found that since 2017
the director, Lourdes Blanco, has been paid from two separate pots of public money — the
authority itself and the city's general fund — that combined for a total annual salary of $112,976.
Blanco recently sued the city when she stopped receiving the portion of her salary being paid by
the authority. She is still receiving payments from the city budget.
In the 16 -page review published Tuesday, city auditor Theodore P. Guba highlighted problems
with the agency's record-keeping, the lack of written policies and procedures for financial controls
and the payment of two salaries from different budgets to the executive director. The audit says
the director, Blanco, never received approval by the City Commission when she was appointed,
and she did not meet minimum educational requirements for the job.
https://www.miamiherald.comlnews/local/community/miami-dadelarticle215641790.htmI 2/7
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The audit, requested earlier this year by City Manager Emilio Gonzalez, found that since 2017
the director, Lourdes Blanco, has been paid from two separate pots of public money — the
authority itself and the city's general fund — that combined for a total annual salary of $112,976.
Blanco recently sued the city when she stopped receiving the portion of her salary being paid by
the authority. She is still receiving payments from the city budget.
In the 16 -page review published Tuesday, city auditor Theodore P. Guba highlighted problems
with the agency's record-keeping, the lack of written policies and procedures for financial controls
and the payment of two salaries from different budgets to the executive director. The audit says
the director, Blanco, never received approval by the City Commission when she was appointed,
and she did not meet minimum educational requirements for the job.
https://www.miamiherald.comlnews/local/community/miami-dadelarticle215641790.htmI 2/7
10123/9018 Audit of Miami government agency reveals issues I Miami Herald
Guba suggests the city take a hard look at whether it makes more sense for the city to abolish the
authority and absorb its landlord function. He also recommends the city be more transparent by
providing easier access to budgets from 13 other semi -autonomous agencies that are set up
similarly ---- governmental bodies that control about $170.8 million.
Blanco told the Miami Herald that she, the authority's only employee, is the victim of a "witch
hunt" and she is being persecuted for issues that extend beyond her responsibilities.
"I have done everything correct," she said. "I have done nothing wrong."
Since she was promoted from interim director to executive director of the authority in 2015,
Blanco — who came to the authority after working for the city — drew a salary from the
authority's budget and from the city's general fund budget. She also received health insurance
payments from both budgets, along with car and cellphone allowances.
The salary from the city manager's office totaled $62,976. The authority's portion of her earnings
started at $14,000 in 2016 and more than doubled to $50,000 in 2017 — a raise that the auditor
noted was approved without discussion by the authority's board.
"Our discussion with a ... board member indicated that he was aware of her city salary in addition
to her approved salary in the [authority] budgets," Guba wrote.
This board member is not named in Guba's audit, but the statement was refuted by two other
former board members -- including Mayor Francis Suarez.
"I was not aware," Suarez said Friday. The mayor, then a commissioner who questioned whether
the authority should exist, resigned from the board in 2016 when its composition was
restructured.
Another former member who served on the board for 11 years said on Friday that he only knew
of Blanco's salary from the authority.
"I had no idea she was also getting a check from the city manager," said Nathan Kurland, a
Coconut Grove activist.
Blanco maintains she was operating under an arrangement that is long-established and well-
known.
Submitted into the public
record for item(s) SR.S
on 10/25/18, City Clerk
https://www.miamiheraid.com/newsliocai/communitylmiami-dade/article2l5641790.html 317
1 412 312 0 1$ Audit of Miami government agency reveals issues I Miami Herald
"That policy was founded long ago and has been followed consistently to date," Blanco wrote in
her May 30 response to the audit, which she forwarded to each commissioner this week. "All city
commissioners and board members of [the authority] have been aware of this historically and no
eyebrows or questions have ever been raised. "
The auditor recommended the city review Blanco's salary and benefits package "for
appropriateness in light of the issues outlined in the findings" and write a policy for how Blanco
should be paid.
Kurland said he questioned aspects of the authority's management even before Blanco became
director. He said that for about a year during his tenure under a previous director, no one kept
legally required minutes of the authority's board meetings, leaving a hole in the record of the
board's actions. Kurland said because of this, there's no record of board members questioning the
lack of basic documentation of their work.
"There's no minutes to reflect why we're wondering why there were no minutes being taken," he
said.
Kurland said Blanco began keeping a record of meetings when she took over.
Even though now there are records of the board's actions, the agency's days may be numbered.
Suarez, who as mayor is the de -facto chairman of the authority's board, said he plans to
recommend the city abolish the agency when the commission meets again in September.
"I don't see the need anymore for MSEA. It's outlived its usefulness," he said. "I think the
findings of the audit just support that in a multitude of different ways."
Meanwhile, Blanco said she's suffering because of the mistakes of other government bureaucrats
and lack of guidance from her board. No one questioned her appointment, she said, and any
discrepancies should have been handled by the city attorney's office to make sure the commission
voted on her appointment.
Similarly, she said the city administration should have cleared up any questions about her
compensation.
In her letter, she blasted Guba's conclusions and challenged him to incorporate her responses in
his audit.
Submitted into the public
record for items) Sit.5
on 1D 25 18, City clerk
htips:llwww,miamiherald.com/newsliocallcommunitylmiami-dadelarticle2l 5641790,html 4R
14/23/2018 Audit of Miami government agency reveals issues i Miami Herald
Submitted into the public
Read the full audit below.
record for item(s) 5R.5
on 10 25 18 City Clerk
To print the document, click the "Original Document" link to open the original PDF. At this time it
is not possible to print the document with annotations.
This article has been clarified to reflect the correct time period when minutes of the authority's meetings were not
recorded, according to a former board member p previous version of this article mischaracterized that time
htips:llwww.miamiheraid.com/newsliocallcommunity/miami-dade/article2l5641790.html 5/7
101231WO18 Audit, of Miami government agency reveals issues I Miami Herald
period Submitted into the public
record for items) SR.5
on 1O 2518, City Clerk
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10123/2018
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Audit of Miami government agency reveals issues l Miami Herald
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COMMENTING POLICY
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TERMS OF SERVICE
Submitted into the public
record for item(s) SR.5
can 1Q 25 18 City Clerk
https:llwww.miamiheraid.com/newMocal/community/miami-dade/article2l5641790,html 717
Submitted into the public
record for item(s) 5R.5
on 10/25/19 City Clerk
ATLAbn SPORTS AND EXBIBMON AUTHORITY
311. ilew
i I'
_ds 4
FISCAL VEA 11-2012
DESCRIPTION
2012
Budget 1
REVENUES
MSEA Reswve Funds
Interest income
TOTAL REVENUE
$ 53,500
1, PayroU, Taxes and Benefits
COMPENSATION AND BENEFITS
'i Examtve Director
Marketing Manager,
Exacwtive Assistant
3 Bookkeeper
4 Group Insurance
cin
0 Retlramenl Plan
Total Pe otl, Taxcs and Beziefits
]1 Operatiap Expenses
7 Business Meeting -Expenses
..T
j7
4
WE'D!
Conference Registration
9 ContIngaricias
"d RAM
11 General Insurance & Directors Liability Insurance
20,000
Mernberships/Subscriptions
a
ap
4- 'A
13 Office SuppBes
100
Pasta 9i
I,
%',
100
15 Telephone
— Ma or ClWido'Eveni
TOTAL OPERATING EXPENSES
30,500
M. PROFESSIONAL SERVICES
16 Audit
gftl� Ml OEM
�;A,
aj
10 Professional Servfcestprojecis
a.000
TOTAL PROFESSIONAL SERVICES
23,p00
TOTAL OPERATING EXPENSES
63,60D
IV. CAPIl AL EXPENI)rfURM
20 OFFICE EQUIPMENT PURCHASES
21 Malmase Golf Clubhouse
TOTAL CAPITAL EXPENDITURES
Excez3(shortage) of Revenue over Fxpen8as
Submitted into the public
record for item(s) SR.5
on 10/25/18 City Clerk
AV-4AII SPORTS AND EXHIBITION AUTHORITS
-Propose! Operating Budget
FISCAL YEAR 2012-2013
DESCRIPTION� 2012
Budget
MSEA Reserve Fund 11 65.03
TOTAL REVENUE 5 66.000
L Pa3To11, TFXCS and BenerltS
COMPENSATION AND BENEFITS
1 Executive Director
2 Pmiect lUEanagr
e.
3 Execufrve Assistant
4 Bookkeeper
5
vr0up Insurance
TOTAL OPERATING EXPENSES
.6
SSfi�Ae[fipareCaritributicin -
'
r
Retirement Plan
. -
18 . -Le ai5v ort lv1SEA WAST{7N tSLAfdD lrltytromzE
9 PP
_ To ca: Pstyrall. Taxes and Eenefira
9 .PrafessiQnal- Sewfcesl
rl. Oper2ti9g Expenses
20 Prcfessianal5erviceslDr:qects
I
Administrative Services Expenses
5,
4
Business Meeting Expenses
1,300
1D
Car AlkawarnICelipho�e Mrlea�e
�,�"r�� 3 gpp;
1�
';GounerLQelruery
TOTAL CAPITAL EXPENDITURES
12
General Insurance $ Directors UabI ity Insurance
25,000
Excess (s)ortage] of Revenue ove- Eq mrses
Ce Equr .744lJlarntetaaIs>re t
2pp
14
Office Supplies
600
15
Passage
100
16
Telephone
TOTAL OPERATING EXPENSES
3s.000
itL PROFESSIONAL SERVICES
17 Auditi
s 000T,
. -
18 . -Le ai5v ort lv1SEA WAST{7N tSLAfdD lrltytromzE
9 PP
9 .PrafessiQnal- Sewfcesl
20 Prcfessianal5erviceslDr:qects
1=,u0fl
TOTAL PROFESSIONAL SERVICES
30.000
TOTAL OPERATING E_%PENSES
66,000
IV, CAPITA.. ERPENDI' IBES
21 Office Fdmiture Expenditures
TOTAL CAPITAL EXPENDITURES
TOTAL OPE LkTING BUDGZIM'hCA.P.TALMFENDITURES
5- 6fi,pD0
Excess (s)ortage] of Revenue ove- Eq mrses
MIAMI SPORTS AND EXHIBITION AUTHORITY
Proposed Operating Budget
FISCAL YEAR 2013-2014
DESCRIPTION
2013
Budget
REVENUES
MSEA Reserve Funds
$66,000
TOTAL REVENUE
$ 66,000
i. Payroll, Taxe9 and Benefits
COMPENSATION
I Executive Director
s0
2 Project Manager
5o
3 Bookkeeper
se
4 Retirement Plan
SC
TOTAL PAYROLL, TAXES AND BFNEFITS
$0.00
II. Operating zxpawcs
5 Administrative Services
$20,000
8 Business Meeting Expenses
51,600
7 Business Travel
SC
8 Car Allowance/Cellphone, Mileage
$6,000
9 Conference Registration
$0
10 Contingencies
$2,000
11 CourieriDeiivery
Si0o
12 General Insurance & Dfrectofs Liability Insurance
$17,000
13 memberships/Subscriptions - Stale of Florida fees
$200
14 Warehouse Storage
54.500
15 Office Supplies
$300
16 Postage
$50
17 Printing
$100
16 Prornotions/Marketing
$0
19 Tele hone
$a
TOTAL OPERATING EXPENSES
551,s5o
U1. Professional Scrvires
2a Audit
S10.300
21 Legal Support MSEA - City Attorney
$0
22 Professional Service fees- bank fees
$650
23 Accounting Services
$3,000
TOTAL PROFESSIONAL SERVICES
$13,650
TOTAL OPERATING EXPENSES
$65,500
IV. Capital Expenditures
24 Office Equipment
$500
25 Furniture & Fixtures
50
TOTAL CAPITAL EXPENDITURES
$500
TOTAL OPERATING i3T WI CAFlTAL EXI lTURES :.
S 613,000
Subrnitted into the public
record for item(s) sR.S
onlt7 25 18, City Clerk
Submitted into the public
record for item(s) 5R.s
on 1{} Z5 18 City Clerk
NHANH SPORTS AND EXHIBITION AUTHORITY
Proposed Operating Budget
FISCAL YEAR 2014-2015
DESCRIPTION
2014-2015
Budget
REVENUES
MSEA Reserve Funds
$89,000
TOTAL REVENUE
$ 89,600
I. Payroll, Taxes and Benefits
COMPENSATION
1 Executive Director
so
2 Project Manager
$0
3 Bookkeeper
$0
4 Retirement Plan
$0
TOTAL PAYROLL, TAXES AND BENEFITS
$0.00
11. Operating Expenses
5 Administrative Services
$30,000
6 Business Meeting Expenses
$1,500
7 Courier/Deliveries
$100
8 General Insurance & Directors Liabilify Insurance
$16,000
9 Car Allowance
$5,400
10 Travel Expenses
$2,700
11 Insurance - health, life, disability
$5,000
12 Phone / tablet PC Allowance
$3,400
13 Memberships/Subscriptions - State of Florida fees
$500
14 Promotions/Marketing
3o
15 Office Supplies
$206
16 Postage
$50
17 Printing
$100
18 Contingencies
$5,000
TOTAL OPERATING EXPENSES
$69,950
III. Professional Services
19 Warehouse Storage Services
$4,500
20 Audit Services
$10,000
21 Bank Services
$550
22 Accounting Services
$4,000
TOTAL PROFESSIONAL SERVICES
$19,050
TOTAL OPERATING EXPENSES
$89,000
IV. Capital Expenditures
23 Office Equipment
$0
24 Furniture & Fixtures
$0
TOTAL CAPITAL EXPENDITURES
so
TOTAL OPERATING BUDGET WI CAPITAL EXPENDITURES
$ 89,040
Submitted into the public
record for item(s) 5R.5
on 10 25 1B City Clerk
Blanca, Lourdes
From: Flechas, Joey <jflechas@miamiherald.com>
Sent: Friday, July 27, 2018 4:49 PM
To: Blanco, Lourdes
Subject: Re: MSEA Audit/Lourdes Blanco Executive Director
Thank you.
On Fri, Jul 27, 2018 at 4:14 PM, Blanco. Lourdes <lourdesblanco La miamigov.corn> wrote:
As per your request.
From: Blanco, Lourdes
Sent: Wednesday, May 30, 2018 1:29 AM
To: Guba, Theodore <tguba.dadiami�ov.com>
Cc: Blanco, Lourdes <Iourdesblanconrniarni ►o�, v.corn>
Subject: MSEA Audit/Lourdes Blanco Executive Director
Good Evening,
Mr. Guba,
I met with you and my attorney last Friday and voluntarily turned over your
proposed report which you kept stating was not a public record. What you failed to
see is that when you turned it over to me, it nonetheless became a document provided
to me and that I was at liberty to obtain and keep. Nonetheless, you insisted that the
copies you supplied could not be removed.
I thought that in your pursuit it would be appropriate to obtain sufficient, appropriate
evidence to provide a reasonable basis to address the objectives of the audit and to
support your findings and conclusions. In so doing I believe you should consider
all evidence and laws that are significant within the context of the objectives. In this
regard while it may appear that the letter of written ordinances or resolutions were not
fully complied with, factually the requirements were legally waived by the City
through its actions. Your report is not faithful to this requirement and the audit is a �4 a
r
misleading leading me to believe that it was done to retaliate for my openness and E U
desire that the public be informed of the truth regarding the conditions now befalling v
41
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us regarding the heliport site. o
You came to the conclusion that my appointment was not approved by the City
Commission as required by the City Code of Ordinances. Yet, I was appointed by
MSEA's board of directors as Executive Director on July 21, 2015 and since then the
Board and the City Commission acquiesced to my appointment and have never
questioned it. In fact, Assistant City Attorney Rafael Suarez -Rivas, MSEA's assigned
City Attorney, whose function and duty it was to provide proper guidance never once
questioned my appointment or my ability to act as the Executive Director. So you see
that even if your report were correct, the City waived any challenge to my credentials.
Why you chose not to review this matter with former Mayor Regalado remains a question.
You have questioned whether I met the minimum requirements for the job. This
again, ignores history. I have explored this with Ricardo Martinez from the Human
Resources Department. Personnel records such as the City of Miami Chart of
Accounts confirm my position. In 2017 Mr. Martinez requested me to write a new
job application. Occupational Code 98059 was created for my promotion to Executive
Director. Yet, without my knowledge I am still classified under Job Code
Administrative Assistant 1,150005, International Intergovernmental Affairs Office.
This incorrect and inconsistent classification is now brought up to attack me and give the
impression of error. Again, the history of the situation is the best proof that assuming that
I did not meet the requirements for the job, this assertion or position was waived a long
time ago as it was not thought to be of importance. Yet, you have chosen to bring the
matter up to create turmoil and excuse.
You also criticize payments made to me as appearing on separate budgets. Budgets
are approved by the Board of MSEA and by resolution of the City Commission.
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Previous Executive Director, Kirk Menendez, was a city employee on the City Budget
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and also appeared as Executive Director on the MSEA budget. That policy was
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founded long ago and has been followed consistently to date. All City Commissioners
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and Board Members of MSEA have been aware of this historically and no eyebrows
or questions have ever been raised. At the July 18, 2417 meeting of the MSEA Board this
subject was discussed without question. Commissioner Willie Gort and Chairman of
the Commission Keon Hardemon are MSEA board members and they are fully aware
of the nature of the payments.
Additionally, De La Vega and Jewett, MSEA's CPA handled payroll and Jewett
engaged Paychex, not me, to carry out the matter of payment to me; I had no contact
or play in the methodology used to pay me.
Regarding a failure to provide required reports you overlooked that monthly reports
from {October 2417 to February 2418 were kept in a drawer in the Mayor's office. On
May 23, 2417 I met Joe Ruiz, Chief of Staff of Mayor Suarez to pick up a folder from
this drawer to make additional files for the upcoming MSEA meeting of May 31,
2418.1 noticed the reports were missing along with three financial statements from
the files.
Reports are given to the Board members inside their folders (I can supply a copy of
one that I found) and the reports were not discussed by the Board. They seem to have
been discarded by the Board Members.
In your fourth finding you indicate that MSEA lacked policies and procedures
regarding financial and operational controls. Cinder Section 2-14 of the City code the
members of the authority are to make and adopt bylaws and regulations for the
authority's governance and for the operation governance of its facilities. The
emphasis is on the authority, not me. that is to adopt them. Your report provides an
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erroneous impression that their absence is somehow a fault of mine. Lnl
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Board Member, Commissioner Willie Gort instructed the Executive Director to establish
C N Cp
Grant procedures. Mayor Regalado tried several times to present to the Board the v
completed documentation as worked on by the Executive Director, Assistant City Attorney
C/n L Q
Robin Jones, and Assistant City Attorney Rafael Suarez -Rivas, MSEA's assigned city attorney,
but the Board Members simply did not discuss them.
In your final finding, you state that MSEA no longer receives convention development
taxes and its functions may be carried out by other city agencies. Truth is MSEA has
functioned just fine and has carried out its duties and obligations without the
development taxes since 2004. When construction of the Chalk Seaplane base is
finished MSEA will receive $200,000.00 a year for 30 years and over $1,000,000.00 a
year based on the lease agreement. MSEA never had any general fund money from the
City, that only income was derived from Chalk's Airlines.
There were other matters that I noticed while going over your report.
They are:
Mr. Zhang conducted expense, and revenue analysis in the Audit report which
are totally false. On March 16, 2018 at 9:53pm, I sent an email with graphs calling
attention to his failure to distinguish between operational expenses and capital
expenditures. The expense analysis in the report ignored my graphs and comments.
The audit indicates that I approved variations on expenses. This is factually incorrect.
The variations were fully and properly analyzed, studied, discussed, supported and
approved by MSEA Board and the City Commission to their full satisfaction. MSEA's
purpose is to grant funds for Sports and Exhibitions within the City of Miami.
You also indicate that MSEA has been running a deficit in the financial operations.
4
This is false. Again, you have failed to distinguish between operating and capital
expenditures
as per certain Administrative Policy (AMP). Mr. Zhang purposely omits the AMP
number, because there was no Administrative Policy in effect about cellular,
telephone, and auto allowance_ Coverage for cellular telephone and auto allowance
was created by the City Manager on 3122118, and it is number 3-01. The purpose of
this AMP, is to ESTABLISH a policy regarding the use of City issues cellular
telephone, and the assignment of cellular telephone and automobile allowances. The
Audit Report says that I have violated an Administrative Policy (AMP) that did not
existed.
Car Allowance, Phone, Tablet, PC allowance, Insurance Reimbursement: This is the
cost of what I pay toward the health, dental and life insurance, exactly as what was
paid to my predecessor,( Dirk Menendez), who was a City of Miami employee, in both
budgets paid by the City of Miami and by MSEA .
2014-2415 MSEA Budget prepared by Kirk Menendez, approved by MSEA and City
Commission:
Car allowance: $5,404.40
Phone, tablet
PC,: $3,400.00
Insurance: $5,000.00
These are the same allowances that the Chairman and Board of Directors and City
u
As stated to Mr. Zhang by email dated March 16, 2018 at 10:42am all variations of
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expenditures have been approved by MSEA Board and subsequently by the City
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Commission. The calculations made on the Audit Report in reference to the budget
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are false.
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The Audit Report states I was reimbursed more allowance than what the City allows,
as per certain Administrative Policy (AMP). Mr. Zhang purposely omits the AMP
number, because there was no Administrative Policy in effect about cellular,
telephone, and auto allowance_ Coverage for cellular telephone and auto allowance
was created by the City Manager on 3122118, and it is number 3-01. The purpose of
this AMP, is to ESTABLISH a policy regarding the use of City issues cellular
telephone, and the assignment of cellular telephone and automobile allowances. The
Audit Report says that I have violated an Administrative Policy (AMP) that did not
existed.
Car Allowance, Phone, Tablet, PC allowance, Insurance Reimbursement: This is the
cost of what I pay toward the health, dental and life insurance, exactly as what was
paid to my predecessor,( Dirk Menendez), who was a City of Miami employee, in both
budgets paid by the City of Miami and by MSEA .
2014-2415 MSEA Budget prepared by Kirk Menendez, approved by MSEA and City
Commission:
Car allowance: $5,404.40
Phone, tablet
PC,: $3,400.00
Insurance: $5,000.00
These are the same allowances that the Chairman and Board of Directors and City
Commission authorized and approved for me.
Interlocal Agreement, Development Agreement, Lease Agreement of Watson Island
Y
Heliport continue to be inaccurate. As per email of March 7, 2018, (sent to Mr. Guba),
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on July 24, 2017, I sent an email to Mr. George Wysong saying I was not going to -=
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present expired and inaccurate documents to the external Auditor of MSEA. .p
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City Attorney, Victoria Mendez, and Assistant City Attorney George Wysong ignored my $ v
many pleadings and requests and did not go over the documents and made me present
inaccurate and expired documents to the external auditor, resulting in a significant
deficiency in the September 30, 2018 MSEA certified financial statements.
You may wish to proceed with your report in its present format, or you could be in
compliance with Government Auditing Standards and provide a truthful picture.
That choice will be yours.
Respectfully submitted,
Lourdes Blanco
Executive Director
Miami Sports and Exhibition Authority
Joey Fleehas, Staff Writer
Miami Herald
3511 NW gist Ave., Miami, FL 33172
desk: 305-376-3602
cell. 813-625-0049
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