CITY OF NORTH MIAMI, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 PREPARED BY: FINANCE DEPARTMENT CARLOS M. PEREZ, CPA FINANCE DIRECTOR ELAINE HARMON-CONNORS, CGFO ASSISTANT FINANCE DIRECTOR RAYMOND BACHIK, CPA CHIEF ACCOUNTANT MIGUEL CODORNIU PENSION ADMINISTRATOR SPECIAL ACKNOWLEDGEMENT PAM SOLOMON PUBLIC INFORMATION OFFICER GABRIEL COLON GRAPHICS DESIGNER CITY OF NORTH MIAMI, FLORIDA TABLE OF CONTENTS PAGE PART I – INTRODUCTORY SECTION Letter of Transmittal i-vi List of Principal Officials vii Organizational Chart viii Certificate of Achievement for Excellence in Financial Reporting ix PART II – FINANCIAL SECTION Independent Auditors’ Report 1-2 Management's Discussion and Analysis 3-22 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 23 Statement of Activities 24 Fund Financial Statements: Balance Sheet – Governmental Funds 25 Reconciliation of the Balance Sheet to the Statement of Net Assets Governmental Funds 26 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 27 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 28 Statement of Net Assets – Proprietary Funds 29-30 Statement of Revenues, Expenses and Changes in Net Assets – Proprietary Funds 31 Statement of Cash Flows – Proprietary Funds 32-33 Statement of Fiduciary Net Assets – Pension Trust Funds 34 Statement of Changes in Fiduciary Net Assets – Pension Trust Funds 35 Notes to Basic Financial Statements 36-77 Required Supplementary Information: Budgetary Comparison Schedule – General Fund 78-79 Budgetary Comparison Schedule – Landfill Closure 80 Budgetary Comparison Schedule – CRA Funded Projects Special Revenue Fund 81 Notes to Budgetary Comparison Schedules 82 Schedule of Funding Progress – Clair T. Singerman Employees Retirement System 83 Schedule of Funding Progress – North Miami Police Pension Plan 84 Schedule of Funding Progress – Other Post Employment Benefits 85 Combining Fund Statements and Schedules: Combining Balance Sheet-Nonmajor Governmental Funds 86-87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds 88-89 CITY OF NORTH MIAMI, FLORIDA TABLE OF CONTENTS (Continued) PAGE PART II – FINANCIAL SECTION (Continued) Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Budgetary Basis – Nonmajor Governmental Funds 90-96 Internal Service Funds: Combining Statement of Net Assets 97 Combining Statement of Revenues, Expenses and Changes in Net Assets 98 Combining Statement of Cash Flows 99-100 Pension Trust Funds: Combining Statement of Fiduciary Net Assets 101 Combining Statement of Changes in Fiduciary Net Assets 102 PART III – STATISTICAL SECTION TABLE Net Assets by Component 1 103 Changes in Net Assets 2 104-106 Fund Balances of Governmental Funds 3 107 Changes in Fund Balances of Governmental Funds 4 108 Tax Revenues by Source, Governmental Funds 5 109 Assessed Value of All Taxable Property 6 110 Property Tax Rates – Direct and Overlapping Governments 7 111 Principal Property Taxpayers 8 112 Property Tax Levies and Collections 9 113 Enterprise Funds and Utility Rates 10 114 Ratios of Outstanding Debt by Type 11 115 Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt per Capita 12 116 Schedule of Direct and Overlapping bonded Debt General Obligation Bonds 13 117 Ratio of Annual Debt Service Expenditures for Bonded Debt to Total General Governmental Expenditures 14 118 Schedule of Revenue Bond Coverage Water & Sewer Enterprise Fund 15 119 Fiscal Year Budgeted and Historic Non-Ad Valorem Funds 16 120 Debt Service Requirements and Coverage Outstanding and Proposed Payable from Non-Ad Valorem Funds 17 121 Debt Service Payable from Portions of the Non-Ad Valorem Funds 18 122 Demographic and Economic Statistics 19 123 Principal Employers Current and Nine Years Ago 20 124 Full-Time Equivalent City Government Employees by Function 21 125 Operating Indicators by Function 22 126 Capital Asset Statistics by Function 23 127 CITY OF NORTH MIAMI, FLORIDA TABLE OF CONTENTS (Continued) PAGE PART IV – 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 128-129 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida 130-132 Independent Auditors’ Report on Compliance and Internal Control over Compliance Applicable to Each Major Federal Awards Program and State Financial Assistance Project 133-134 Schedule of Expenditures of Federal Awards and State Financial Assistance 135-136 Notes to the Schedule of Expenditures of Federal Awards and State Financial Assistance 137 Summary Schedule of Prior Audit Findings 138 Schedule of Findings and Questioned Costs 139-141 July 8, 2010 To the Citizens, Honorable Mayor and Members of the City Council of the City of North Miami, Florida The Comprehensive Annual Financial Report of the City of North Miami, Florida, for the fiscal year ended September 30, 2009 as required by Chapter 11.45 of the Florida Statutes, Chapter 10.550 of the Rules of the Auditor General of the State of Florida, and Section 23 of the Charter of the City of North Miami is submitted for your review. The financial statements included in this report conform with accounting principles generally accepted in the United States (GAAP) established by the Governmental Accounting Standards Board. This report consists of management’s representations concerning the finances of the City of North Miami and is presented in a format designed to fairly set forth the financial position and the results of operations of the City on a government-wide and fund basis. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented. We believe the data in this report to be accurate in all material respects, and include all statements and disclosures necessary for the reader to obtain a thorough understanding of the City’s financial activities. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed to both protect the City’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of North Miami’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City’s financial statements have been audited by MarcumRachlin, a division of Marcum LLP, a licensed certified public accounting firm. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City’s financial statements for the fiscal year ended September 30, 2009 are fairly presented in accordance with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. i City of North Miami I 776 NE 125 Street I North Miami I Florida I 33161 305.893.6511 Fax: 305.891.1015 The independent audit of the financial statements of the City was part of a broader, federal and state mandated “Single Audit” designed to meet the special needs of federal and state grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the City’s internal controls and compliance with legal requirements, with special emphasis on the administration of federal and state awards. In accordance with Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments, as amended, GAAP requires that management provide a narrative, introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of North Miami’s MD&A can be found immediately following the report of the independent Certified Public Accountants. PROFILE OF THE GOVERNMENT The City of North Miami was incorporated on February 5, 1926 and is a political subdivision of the State of Florida. The City operates under a council-manager form of government and provides general government, public safety, public works, economic and community development, library, recreation and cultural services to approximately 60,000 residents. In addition, the City operates the Water and Sewer Utility, Stormwater Utility and Solid Waste Services as enterprise activities. The Council is responsible for enacting ordinances, resolutions and regulations governing the City, as well as appointing the members of various advisory boards, the City Manager and City Attorney. The City Manager is the City’s Chief Executive Officer and