Y

Hua

COMMITTEE OF THE WHOLE MEETING

Thursday June 7 2001 530 p m

AGENDA

COMMITTEE OF THE WHOLE ITEMS

Presentation by Curtis Gray Homestead Miami Speedway

2 Update from Merrett Stierheim and the Financial Team

This meeting is open to the public In accordance with the Americans with Disabilities Act of1990 all persons who are disabled and who need special accommodations to participate inthis meeting because of that disability should contact the Office of the City Clerk 2471801ext 160 no later than two days prior to such proceeding

Anyone wishing to appeal any decision made by the City of Homestead City Council withrespect to any matter considered at such meeting or hearing will need a record of theproceedings and for such purpose may need to ensure that a verbatim record of theproceedings is made which record includes the testimony and evidence upon which theappeal is to be based

Agenda items may be viewed at the Office of the City Clerk City of Homestead 790 NHomestead Blvd Homestead FL 33030 Anyone wishing to obtain a copy of any agendaitem should contact the City Clerk at 2471801 ext 160

In accordance with Code Section 2591 any Lobbyists must register with the City Clerksoffice before addressing the Council on any of the above items

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CITY of HOMESTEAD

Outline of

Financial Concerns

EXHIBITS

Presented byMR Stierheim Review Team

June 7 2001

HOMESTEAD RECOVERY TEAM

TEAM MEMBERS

Mayor Roscoe Warren City of HomesteadManager Curt Ivy City of Homestead

Manager Merrett Stierheim Town of Miami Lakes

Judith Cannon Project Coordinator

Assurant Group

Ed Harper Ex VPArt Heggen Ex VPManny Gutierrez Sr VP

Larry Adams retired VP FPLEd Marquez Sr VP First Southwest CompanyGary Dellapa Budget Specialist ConsultantMichael Levinson City Manager Coral SpringsDanny Lipe Ex VP Community BankBill Losner PresCEO Ist Natl Bank of Homestead

City of HomesteadDottie Zaharaho City Finance ConsultantMarleen Volkert Assistant ManagerAnnette Lewis Finance DirectorLaurie Houghton Accountant Finance DepartmentJim Swartz Utilities DirectorJerry Chiocca External City Auditor Rachlin Cohen Holtz

Dick Montalbano Sr VP William R Hough Co financial advisor to City

MiamiDade County

Bill Johnson Senior Advisor to County ManagerKevin Lynskey Asst Dir Office of Performance ImprovementDiane Camacho Asst Dir Finance and Admin Seaport DeptMiriam Abreu Chief Accountant Finance Aviation DeptParticia Prochnicki Audit Supervisor Audit and Management DeptWillis Patterson Asst Controller Finance Dept

Ryder Group and Baptist Health Systems have offered to help in the appropriate way at theappropriate time when needed

Fiscal Year 9697 Audit Report

Pages 24

73

j444f1144dsstir

It

qb 7 FNtaCity of Homestead Florida

NOTES TO FINANCIAL STATEMENTS CON17DSeptember 30 1997 n A 000 0 OFF

NOTE 4 DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS Continued

D Interjund Receivables and Payables

Individual interfund receivable and payable balances including restricted at September 301997 are as follows in thousands

Advances

S 10936 S 1093

Due from Due to

Other Funds Other Funds

General Fund S 3571 S 4711

Special Revenue FundsHomestead Economic andRebuilding Organization 34 890

Community Development1072Block Grano

Economic Development Grants 783 782

Home Program Grant 108

262

6

651Other State and Local GrantsSecond Dollar Law EnforcementConfiscated Property Law

Enforcement

Motorsports Complex

15215 1600

Stadium 707

Debt Service Funds44

Downtown

utility tax71

IHeroTax Increment Financing

Capital Projects Funds 82Downtown

101utility taxParks and Recreation

857 747Capital Improvement I47

Dade County Gas Tax

Enterprise Funds3279 26

water and Sewer4342 3048

Electric244

Stormwater

Intemal Service Funds 388Health SelfInsurance

379Other Self Insurance

Trust and Agency FundsGeneral Employees Pension 124

IO2City Payroll

175

Total S 14888 S 14 88 S 10936 S 1093

4Ir

I

ff11SSSty4y

The Rules of the Auditor General Section 05541f6 789 require disclosure in themanagement letter ot t e tollowing matters

if not already addressed m the a reports on

the internal control structure or compliance There were recommendations to im rove financialtro tre were nore wer olations of laws

manaement acco ntinfl procedure and intern nomaterially affect the financal statements

rules and regulations which may or may or maytarP were illeal or i rover expenditurewhtch may materially affect the financialsstatementsF I r Mn inn nr rantrtrea

were tmpruper w varn failures t

or oeratcauvna

transactions or other inacities shortages

auditor See the accompanying Schedule of Findingsan ue one osts an e

accmpanying Other Comments and Observations

The Rules of the Auditor General Section 105541f10also require that the name or officialtitle and legal authority for the primary government and each component unit of the reportingcial

entity be disclosed in the management letter t discised

inntto Chapter 5312nLawsstatements The City of Homestead Floridaof Florida The City of Homestead Florida included the following component unitCommunity Redevelopment Agency of Homestead Homestead Economic and RebuildingOrganization which was created pursuant to Ordinance 940651 of the City of HomesteadFlorida

This management letter is intended solely for the information of the City of Homestead Floridaand management and the State of Florida Office of the Auditor General However this report isa matter of public record and its distribution is not limited

Miami FloridaApril 15 1998 S

ino 1 Q

73

Fiscal Year 9798 Audit

Pages 72 and 73

2

82 and 83

City of Homestead Florida

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

Year Ended September 30 1998

Section I Summary of AnditoraResults

Financial Statem

Type of report issued on the basic financial statements

Internal control over financial reporting

Material weakness identified

jiportable con coons identified that are not consideredbe material weaknesses

Noncompliance material to financial statements noted

Federal Awards

Internal control over major programs

Material weakness identified

eportable conditions identified that are not consideredto be material weaknesses

Type of auditorsreport issued on compliance for major programs

Any auditfndmadisclosed that are u to be reported in

accordance with section 510aof Cucular

ffud cTo Rs urre i

Qualified

Yes

4

Qualified

Yes

72

City of Homestead Florida

SCHEDULE OF FINDINGS AND QUESTIONED COSTS CONTINUED

Year Ended September 301998

Section I Summary of AuditorsResults Continued

Federal Awards Continued

Identification of major programs

CFDA Numbers Name of Federal Program

11307 US Department of Commerce 8r Economic DevelopmentAdministration Economic Development Revolving LoanGrant

14219 US Department of Housing and Urban DevelopmentCommunity Development Block Grant

14239 US Department of Housing and Urban DevelopmentHome Improvement Partnership

16000 US Department of Justice Fines and Forfeitures

Dollar threshold used to distinguish betweenType A and Type B programs 300000

itee qualiasrisk auditee7 C hxA s1r No

Section Il Financial Statement Findings

971 Grants

Significant Federal State and Local Grants were received by the City in the current yearInternal controls were inadequate to ensure the proper recording and reporting of theexpen rtures an receipts of ese grants Cash mana ement and reportin internal control andcoin Rance reqremuien not Adequately monitor ersonne assigned to perform thisfunction dr not have familiarity with grant documents and re uirements and were not properlysupervised Thewas not appropnate mana a nt overs monitor these personneorreerests tin re rtin hissituation was a avat the extensive tunwv onnel

experienced by time City Reporting was inaccurate not performed timely an m som cases notperformed at all Si ifi ant an activity was either unrecorded or recorded incorrectly Grantactivity rennrtelt to the federal government did not agree to the general ledger a rvity orsupporting documentation See related grant findings below items 972 976 977 981through 985

73

We were unable to agree federal and state grant activity reported to granting agencies to thespecial revenue fund general ledger accounts and the federal and state financial assistanceschedules as outlined in the accompanying schedule of findings and questioned costs for the yearended September 30 1998 Sufficient documentation was not available and we were unable tosatisfy ourselves through the application of alternative procedures that the grant activity andrelated receivables were properly accounted for and reported in the four special revenue grantfunds the Community Development Block Grant Special Revenue Fund the EconomicDevelopment Grants Special Revenue Fund the Home Program Special Revenue Fund and theOther State and Local Grants Special Revenue Fund

The Stadium Special Revenue Fund an the Motorsports Special Revenue Fund haddeficit fundances of16and926232respectively at September 30 1998 T General Fund

and the Electr Enterprise Fund reflect receivables from these funds of 265304Jand9493932 respe Because of the deficit fund balances and continued insufficiency ofrevenues fund appropriations or other definitive funding plans m our opinion these interfundreceivables should be reflected as equity transfers to those fiords i order to confo witrwaan Fky u al llr ililtLFLCb

In our opinion based on our audit and the report of other auditors excep for the effects of sucliadjustments if any as might have been determined to be necessary we be able to examineevidence regarding the matt bmatters descried in the third and fourth paragrafis above an

e e acts o not recording a to rum and Motorsports Special Revenue Fund irate unxcep for

loans

as equity transfers described in the fifth paragraph above the general purpose financialstatements referred to above present fairly in all material respects the financial position of theCity of Homestead Florida as of September 30 1998 and the results of its operations and thecash flows of its proprietary fund types for the year then ended in conformity with generallyaccepted accounting principles

In accordance with Government Auditing Standards we have also issued a report datedDecember 23 1999 on our consideration of the City of Homestead Floridas internal controlover financial reporting and our tests of its compliance with certain provisions of lawsregulations contracts and grants Instances of reportable conditions in internal control as well asinstances of noncompliance were reported

Our audit was performed for the purpose of forming an opinion on the generalpurpose financialstatements of the City of Homestead Florida taken as a whole The combining and individualfined financial statements are presented for purposes of additional analysis and are not a requiredpart of the general purpose financial statements of the City of Homestead Florida Suchinformation except for the information in the third and fourth paragraphs above has beensubjected to the auditing procedures applied in the audit of the generalpurpose financialstatements and in our opinion based on our audit and the report of other auditors except for theeffects on the general fund special revenue funds and enterprise funds of the matters describedin the third through fifth paragraphs is fairly presented in all material respects in relation to thegeneralpurpose financial statements as a whole

I

t

Zr

6111 I41

2

ManorAccountants

231

Grant Thornton TThe US Member Finn of MW THORWON ur

Grant Thornton International bsS AjcYet 6voks Closed

20177YV

J h

MANAGEMENT LETTER REQUIRED BYSECTION 10554eOF THE RULES OF THE

AUDITOR GENERAL OF THE STATE OF FLORIDA

Honorable Mayor and Members of Commission t pCity ofHomestead Florida 3 WvrWe have audited the financial statements of the City of Homestead Florida as of and for thefiscal year ended September 30 1998 and have issued our report thereon dated December 231999

We have issued our Independent Auditors Report on Compliance and Internal Control OverFinancial Reporting dated December 23 1999 Disclosures in those reports if any should beconsidered in conjunction with this management letter

We conducted our audit in accordance with generally accepted auditing standards andGovernment Auditing Standards issued by the Comptroller General of the United StatesAdditionally our audit was conducted in accordance with the provisions of Chapter 10550 Rulesof the Auditor General which govern the conduct of local governmental entity audits performedin the State of Florida and require that certain items be addressed in this letter

The Rules of the Auditor General Section 105541elrequire that we comment as towhether or not irregularities reported in the preceding annual financial audit report have beencorrected There were no irregularities disclosed in the preceding annual financial audit report

The Rules of the Auditor General Section 10554 1e2 re uire that we comment as towhether or not recommendations made in the preceding annual financial audit report have beenfollowed Most of the recommendations made in the nrecediniz annual

not been in the

Part I comments adequately addressed during 1998

svrte 1200777 idea AvnueWwri FL 331312867Tel 305 3779900Fm 305 3779130

82

As required by the Rules of the Auditor General Section105541e3the scope of our auditincluded a review of the provisions of Section 2185031Florida Statutes Determination ofFinancial Emergency The Citys Stadium and Motorsports Special Revenue Funds havereported an unreserv and total fund deficit for two consecutive years and as sucwere tecTimcal1Ina 3111TE anci emergen as defined m on a tatute 218503 1dThe Stadium and Motorsports Speci RevenueTunds had an unreservedmound deficit atSeptember 3 1 of1699034 and 9262328 an a eptember 30 1997 offand9308 respectively In addition The Citys Health and Other SelfInsuraMr tft l ceFuns nave reported a unreserved and total retained earnings deficitfor two consecutive yearsandAs such these funds were technically in a state of financialemergency as defined in Florida Statute 218503 1d TheHeal Other Self InsuranceInternal Service Funds had an unreserved retained earnings deficit at Sept 30

Fund the Health Self Insurance Internal Service Fund and the Other Self Insurance InternalService Fund was technically in a state of financial emergenc the deficits did not result in a Vfailure for the City to meetcurrent o0liZations including scheduled ongterm ebt principal and

The Rules of the Auditor General Section 105541e4require that we determined that theannualfnama rennR tor t e efl Florida fo VSCaIeat ended

Septem 1998 wn a Department of Banking and Finance pursuant toSecUonFlorida lutes and is in agreement with the annual financial audit report Howev

annual financial r rt was not coin leted or available for our review and we therefore were notable to seise it to the audit report or the fiscal Year en Septe 1998

The Rules of the Auditor General Section 105541e6789require disclosure in themanagement letter of the following matters if not already addressed in the auditorsreports onthe internal control structure or compliance There were recommendations to improve financialmanagement accounting procedures and internal controls there were no violations of lawsrules and regulations which may or may not materially affect the financial statements there wereillegal or im ditures which may materially affect the financial statements there 7ereimproper or jnMequate accounting procedures eg the omission of requtred isc osures from

e financial statements there were failures to properly record financi or otner

macquractess ssirtages Sid iscoverea by the auditor See the

accompanying Schedule ofFindings an Questioned osts and the accompanying OtherComments and Observations

The Rules ofthe Auditor General Section105541e10also require that the name or officialtitle and legal authority for the primary government and each component unit of the reportingentity be disclosed in the management letter unless disclosed in the notes to the financialstatements The City of Homestead Florida was established pursuant to Chapter 25312 Lawsof Florida The City of Homestead Florida included the following component unitCommunity Redevelopment Agency of Homestead Homestead Economic and RebuildingOrganization which was created pursuant to Ordinance 940651 of the City of HomesteadFlorida

Fiscal Year 9899 Audit

Pages 68 and 69

70 and 71

77 and 78

19 and 20

Rachlin Cohen Holtz I1P Ao IndCertified Public Accountants Consultants fS

Report of Independent Certified Public Accountants on Compliance and onInternal Control over Financial Reporting Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing Standards

Honorable Mayor City Council and City ManagerCity of Homestead Florida

IWe have audited the general purpose financial statements of the City of Homestead Florida the City asof September 30 1999 and for the year then ended and have issued our report dated September 27 2000We conducted our audit in accordance with generally accepted auditing standards and the standardsapplicable to financial audits contained in Government Auditing Standards issued by the ComptrollerGeneral of the United States

Compliance

As part of obtaining reasonable assurance about whether the Citys financial statements are free ofmaterial misstatement we performed tests of its compliance with certain provisions of laws regulationscontracts and grants non compliance with which could have a direct and material effect on thedetermination of financial statement amounts However providing an opinion on compliance with thoseprovisions was not an objective of our audit and accordingly we do not express such an opinion e

4Ai cAinetare of nnnemmnliance that are required to be repo under

internal Control over Financial Reporting

In planning and performing our audit we considered the Citys internal control over financial reporting inorder to determine our auditing procedures for the purpose of expressing our opinion on the financialstatements and not to provide assurance on the internal control over financial reporting However wenoted certain matters involving the internal control over financial re rtin and i o s thaw

consi er to Be reportable con iti Ricporta a conditions involve matters coming to our attentionrelating roMigniticant a iciencies in the desi operation of the internal control over financial

t that our m omen r n aversely affect the Ci s itv to record process summarize and

erportiinancMTata consistent wit a arse tons or management in the fina statements ReportaT econ itions are clescriDea in a accompanying schedule of findings and questioned costs as items9972 998 999991099119912991399149915and 9916

In conjunction with the reportable condition discussed above the City has several grants that have adiscrenancv between the revenue anderenditnres ramrrAPA i thtp vino nernuntm recor s and the

Assistance There is an absence of controls in place to

68

One Southeast Third Avenue Tenth Floor Miami Florida 33131 Tel 3033742 Fax3617S11Offices in Miami 0 Ft Lauderdale Boca Raton Kest Palm Beach Stuart

wwwrchcpacomMember of Summit Intematitmal A iIMs Inc xi1h otlir in rnec rml amshreuthout Iharo

Iem4t eanaerican Intilute of Celled Public AccoumWbmdmemherniheFianiz tars

Ix

Honorable Mayor City Council and City ManagerCity of Homestead FloridaPage Two

MA material weakness is a condition in which the design or operation of one or more of the internal controlcomponents does not reduce to a relatively low level the risk that misstatements in amounts that would be

Nmaterial in relation to the financial statements being audited may occur and not be detected within atimely period by employees in the normal course of performing their assigned functions Ourconsideration of the internal control over financial reporting would not necessarily disclose all matters in

Nthe internal control that might be reportable conditions and accordingly would not necessarily discloseall reportable conditions that are also considered to be material weaknesses However of the reportableconditions described above we consider items 971 972 996 999 9913 and 9914 to be matera

Mweaknesses1

This report is intended solely for the information and use of the Mayor City Council management and thet Auditor General of the State of Florida and is not intended to be and should not be used by anyone other

than these specified parties However this report is a matter of public record and its distribution is notlimited

1Qc1Ye Co fcec

Miami Florida

September 27 2000

69

I

I

I

I

I

Rachlin Cohen Holtz LLPCertified Public Accountants Consultants

Honorable Mayor City Council and City ManagerCity of Homestead Florida

We have audited the accompanying general purpose financial statements of the City of HomesteadFlorida the City as of September 30 1999 and for the year then ended and have issue4ur report datedSeptember 27 2000 We conducted our audit in accordance with generally accepted auditing standardsand the standards applicable to financial audits contained in Government Auditing Standards issued bythe Comptroller General of the United States

In connection with our audit of the general purpose financial statements of the City for the year endedSeptember 30 1999 we report the following in accordance with Chapter 10550 Rules of the AuditorGeneral Local Government Entity Audits which requires that this report specifically address but not belimited to the matters outlined in Rule 1O554Ixe

1 No inaccuracies irregularities shortages defalcations or violations of laws rules regulations andcontractual provisions were reported in the preceding annual financial audit

2 The City during fiscal year 1999 was not in a state of financial emergency as defined by FloridaStatute Section 2185031 The City hadthree funds with deficit balances for two consecutive

and the

3 Recommendations to improve the Citys present financial management and accounting proceduresare accompanying this report in the schedule of findings and questioned costs

4 Most of the

summary

5 During the course of our audit we noted instances when the City

a Made illegal or improper expenditures

b Had improper or inadequate accounting procedures

c Failed to record financial transactions which did have a material effect on the Cityspurpose financial statements

70

as

1111

One Southeast Third Avenue Tenth Floor Miami Florida 33131 Tel 30537429a FaxOffices in Miami Ft Lauderdale a Boca Raton West Palm Beach ruart

wwwrchcpacomIenMr n Sunrnit InternationalAth atiico in principal aho thmuhoutte dIemheene lmenun ln ri CmaidNbk ASavatmti and wrnba ar the Florida 9tln tue m Cdiii b

I

Honorable Mayor City Council and City ManagerCity of Homestead FloridaPage Two

d Had other inaccuracies irregul shortages or defalcati

The above findings are disclosed in the Schedule of Findings and Questioned Costs

6 The annual nancial report for the year ended September 30 1999 was not filed timely with theDepartment ofBaffintangand Finance pursuant to Section 21832Ixa Florida Statutes seecondition 991 in the Schedule of Findings and Questioned Costs and therefore we were able

to agree the report with the audited financial statements of the same period

7 The City was incorporated by Chapter 165 Florida Statutes The City included the followingcomponent unit Community Redevelopment Agency of Homestead Homestead Economic andRebuilding Organization which was created pursuant to Ordinance 940651 of the City ofHomestead Florida

This report is intended solely for the information and use of the Mayor City Council management andthe Auditor General of the State of Florida and is not intended to be and should not be used by anyoneother than these specified parties However this report is a matter of public record and its distribution isnot limited

Miami Florida

September 27 2000

r

71

CITY OF HOMESTEAD FLORIDA

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS

FISCAL YEAR ENDED SEPTEMBER 30 1999

t l 4 11 LAP3 No

II PRIOR YEAR FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS STATUSContinued

983 CFDA No 14219 Community Development Block GrantsSmall CitiesUS Department ojHousing and Urban DevelopmentPassed through the State ofFlorida Department of Community AffairsContract No 94DBS7111302A03

This comment is no longer applicable as there were no loans made from this grant during September 301999

984 CFDA No 14239 Home Investment Partnership GrantUS Department ofHousing and Urban DevelopmentContract No b193DA0120252

This comment was repeated as of September 30 1999 See Schedule of Findings and Questioned Costs984

985 CFDA No 16000 Federal Equitable SharingUS Department ofJustice

This comment was repeated as of September 30 1999 See Schedule of Findings and Questioned Costs985

Finance Deficiencies

This omment was as of September 30 1999 See Schedule of Findings and Questioned CostsR972

Internal Service Funds

ThiscoLnment was repeated as of SeerPe 30 1999 See Schedule of Findings and Questioned Costs9923

Bank Reconciliations

Thiscom was repeated as of September 30 1999 See Schedule of Findings and Questioned Costs0910

Hurricane Andrew State Trust Fund

This comment no longer applies as of September 30 1999

Florida Forfeiture Reporting

This comment was repeated as o 19 See Schedule ofFindings and Questioned Costs99

77

CITY OF HObIESTEAD FLORIDA

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS

FISCAL YEAR ENDED SEPTEMBER 30 1999

1II PRIOR YEAR FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS STATUS

Continued

Fixed Assets

This comment no longer applies to the enterprise funds fixed assets However see comment 49914 inthe Schedule of Findings and Questioned Costs relating to the general fixed assets

Accounts Payable

This comment was repeated as of SeDtemhuQ 1999 See Schedule of Findings and Questioned Costs

Payroll

This comment was repeated as of September 30 1999 See Schedule of Findings and Questioned Costs

Pooled Cash

is comment was repeated as of September 30 1999 See Schedule of Findings and Questioned CostsP9927

General Employees Pension Plan Investment Guidelines

NThis comment was repeated as of e 30 1999 See Schedule ofFindings and Questioned Costs99

Debt Covenants

This comment was repeated as of September 30 1999 See Schedule of Findings and Questioned Costs

Band Arbitrage

This comment was repeated as of September 30 1929 See Schedule of Findings and Questioned Costs21

Risk bfanagennent Public Liability and Proper0 Cases

The City has implemented this recommendation as of September 30 1999

Risk bfanager

The City has implemented this recommendation as of September 30 1999

78

CITY OF HOMESTEAD FLORIDA

NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTSContinued

NOTE 2 DEPOSITS AND INVESTMENTS Continued

Fnvestntents ContinuedCarrying

ValuePer combined balance sheet

Cash and investments unrestricted 67273987Cash and investments restricted 3404843

70678830

NOTE 3 RESTRICTED CASH AND CASH EQUIVALENTS

Restricted and limited use assets of the Enterprise Funds at September 30 1999 represent moniesrequired or designated to be used for debt service renewal and replacement and customer depositsunder the terms of bond covenants or City ordinances The City had restricted the followingassets for the following purposes at September 30 1999

Debt service S 955855Renewal replacement and improvement 589747Customer deposits 1859241

Total 340484

NOTE 4 BUDGETGAAP RECOi1CILIATION

The following schedule reconciles the amounts on the Combined Statement of RevenuesExpenditures and Changes in Fund Balances Budget to Actual to the amounts on the CombinedStatement of Revenues Expenditures and Changes in Fund Balances

NOTE S DEFICIT FUND EQUITY

The Community Development Block Grants Special Revenue Fund had a deficit fund balance of8700t September 30 1999 This deficit will be eliminated through anticipated programin from various City projects

19

SpecialGeneral Revenue

Fund Funds

Excess deficiency of revenues over expenditures and otherfinancing sources uses GAAP basis S 839599 605260

Encumbrances recorded as expenditures 604692 214863Funds not budgeted 1084043Excess efficiency ofrevenues over expenditures and other

financing sourc s uses budgetary basis S444291 47444

NOTE S DEFICIT FUND EQUITY

The Community Development Block Grants Special Revenue Fund had a deficit fund balance of8700t September 30 1999 This deficit will be eliminated through anticipated programin from various City projects

19

CITY OF HOAIESTEAD FLORIDA

NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS

Continued

NOTE 5 DEFICIT FUND EQUITY Continued

The Home Program Grant Special Revenue Fund had a deficit fund balance o 1129Z4t1 September 30 1999 This deficit will be eliminated through anticipated program 1 fromvarious City projects

1The Other State and Local Grant Fund had a deficit fund balance o 127952t September 30 d

1999 This deficit will be eliminated through anticipated grant me or general fund Z400contributions if necessary

1 The Motor Sports Complex Special Revenue Fund had a deficit fund balance of 226905 atSeptember 30 1999 During 1999 the City transferred8913695 ofthe electric fund equity intothe fund decreasing the deficit The remainingalance will be eliminated through anticipated V

increases in the fundsrevenuestream

The Health SelfInsurance Internal Service Fund had a deficit fund equity of 103594 asSeptember 30 1999 The City will eliminate this deficit through increasing departmes Ilfor employees health insurance during the next five fiscal years

ysb aThe Other SelfInsurance Internal Service Fund had a deficit fund equity o 347879

tat 4

September 30 1999 This deficit was reduced by approximately 303000 during the 1999

fl

year The City will continue over allocating insurance costs to eliminate this deficit A

1NOTE 6 INTERFUND PAYABLES AND RECEIVABLES r

Individual interfund receivable and payable balances at September 30 1999 are as follows

Due from Due to

Other Funds Other Funds

General Fund

Special Revenue FundsHomestead Economic and Rebuilding Organization HEROCommunity Development Block GrantEconomic Development Grant FundHome Program Grant FundOther State and Local Grants

Second Dollar Law Enforcement

Confiscated Property Law EnforcementMotor Sports Complex FundStadium Complex Fund

Total Special Revenue

Debt Service Funds

Downtown Debt Service

Utility Tax Debt ServiceTotal Debt Service

10180857 10405120

78329 223669124048 158371370795 14395907 1016475

430071 217155323186

3140065 17258645092 272672712757 26773

4807064 6079746

59034 22596371640 37960130674 263923

70

CITY OF HOMESTEAD FLORIDA

SCHEDULE OF FINDINGS AND QUESTIONED COSTSContinued

OTHER MATTERS Continued

Recommendation

We recommend that the City review their need to continue to have procurement credit cards These cardsenable the user to bypass the internal controls system established for City purchases as approval does notoccur prior to the purchase This increases the risk for unauthorized or unallowable purchases If the Citydetermines it to be necessary to continue with the procurement card program the policy should be strictlyadhered to In addition someone in the finance department should review the credit card bills foradherence to the City policy including proper department authorizations

Afanagentent Response

The Purchasing Department is reviewing its policy and has already taken steps to place additional limitson the use of procurement cards

9936 General Fund Revenues

During our audit of the general fund we noted that it has become increasingly dependent on transfers fromthe enterprise funds and revenues from payments in lieu of taxes These transfers and revenues totaled

kJ approximately 54900000 or 33 of the total revenues and transfers in for the yearcontinue to depend on the enterprise funds to fund its governmen funds

We recommend that the City research other sources of revenues and consider increasing its millage rate tofund the general fund operations

Afanagement Response

The S49 million operating transfers represent the Enterprise Funds portion of citywide administrativeexpenses for the Finance Human Resources Purchasing and City Managersoffice function There is aPILOT portion which is tied to the millage rate times the fixed asset balance for the enterprise funds TheCity is currently reviewing ways to increase the Citys tax base and promote economic development9937 Payroll

The Citysfinance department processes ayrol weekly These services are using a substantial amount ofthe departmentstime which could be used other services within the Finance DepartmentRecommendation

We recommend that the City review the effectiveness of changing the pa oil to biweekly and consideroutsourcing its payroll function exclusively to one of the larger payrol services This may prove to bemore efficient and cost effective

Afanagement Response

The City in the past has explored a biweekly payroll but has concluded to maintain its current practice99

Fiscal Year 9899 Budget

Page 12

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Citywide Revenuey Fund

FY97 FY98 FY98 FY99

Actual Budget Projected Projected

GENERAL FUND

Total Taxes 5589122 6107000 5794948 7978210Total Licenses Permits 622986 520000 659000 718 000Total Intergovernmental Revenue 1926460 2479000 2015165 2408Total Charges for Services 3531492 4003800 3586670 109880Total Fines Forfeits 77960 93100 105300 124Total Miscellaneous Revenues 1053980 1078900 1059950 015 26Total Contributions 3424268 1516253 2516253 900

TotalGeneral Fund 16226267 15798053 15737286 15253979

SPECIAL REVENUES

Baseball Stadium Operating 366460 241582 241582 369848Forfeiture Funds 1658022 1000000 1438978 1800523Motorsports Complex 1806000 2073750 2091750 2165000Community Redevelopment Agency 992448 882414 941000 970524

Total Special Revenue Fund 4822930 4197746 4713310 5305895

ENTERPRISE FUNDS

Solid Waste 3405185 3832000 3468620 3673570Stonnwater Utility 380925 412000 367973

415 A

Electric Utility 24503648 25633313 3 SWater Utility 2037565 2015500 2135 4490742Wastewater Utility 3906191 3279000 4108348 3609558Total Enterprise Funds 34233514 35159400 35713629 47006835

INTERNAL SERVICE FUNDS

Fleet Maintenance 0 0 1749 281 rrSelf Insurance Charges for Service 3943600 4033459 4128486 4225505

Total Internal Service Funds 3943600 4033459 4128486 5974786 v

2TOTAL ALL FUNDS 59226311 59188658 60292711 73541494

Rewrote Projection01

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12

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Fiscal Year 9900 Budget

Page 103

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ELECTRIC UTILITY

Departmental Expenditure Summary

Expenditures Expenditures Adopted Amended Estimated199697 199798 199899 199899 199900

Personnel Services 2810488 3005443 2929515 2929515 5655Operating Expenses 24485450 26672849 24701532 24953598 23026Non Operating 0 0 0 0 2675Capital OutlayTotal 27295938 29678292

5555 604

331866515754054 6

33637167 38962

PROGRAM DESCRIPTION

The Electric Utility is divided into six major program areas

AdministrationThe Administration Division provides clerical support financial servicesleadership and implements policy

Power PlantThe Power Plant Division services 14000 customers

EngineeringThe Engineering Division designed 12 miles of distribution lines during the priorfiscal year in order to keep up with the load growth and to provide reliability to the new andexisting customers

System OperationsThe System Operations Division is responsible for coordinating theoperation of 56 MW power plant 9 distribution circuits and 3 substations in addition to buyingand selling power

System Protection ControlThe System Protection Control Division is responsible formaintenance of 3 substations 14000 electric meters and electric power plant electricinstruments and controls

GOALS OBJECTIVES

Position the Electric Utility to become more competitive as our industry proceeds with deregulation

Review rate structure as it compares with our primary competitors

Review service delivery trends to identify competitive strengths and weaknesses to beaddressed

1 Become FERC compliant in our financial reporting

103

Fiscal Year 0001 Budget

Pages 138

11

Position Summary

FundingSource

AdoptedFY 199899

Adopted AdjustedFY 199900

Adopted IncreaseFY 199900 FY 200001 Decrease

General Fund 0 0 0Trust Fund 0 0 0

0 0

Utilities 60 71 74

0 0

72Total 60 71 74 72 2

Revised by 3 FY 199900 1 Position Program Development Coord Position

2 Positions Per Council approval in FY 9900 3 Journeyman Apprenticepositions were created in exchange for I Journeyman Lineman position

Difference of2 for FY 2000012 Positions Mgr Of Enterprise Accounting Q Accountant I moved to FinanceDepartment

Departmental Expenditure Summary

FY 199798 FY 199899 FY 199900tel Services 3005443 2929515 5655270ng Expenditures 26672849 24953598 25701160Outlay 0 5754054 5555604

Total

t

138C

199900 FY 2000015655270 486704725701160 228124455555604 2490833

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0000 wkt1Citywid Revenues by Fund

FY 98 FY99 FY00 FY 2001Actual Unaudited Projected Projected

GENERAL FUND

Property Taxes 4924914 5155814 5123468 5344149Other Taxes 1057709 1501829 2922129 4343733Total License Permits 762226 1578904 795000 827339

Total Intergovernmental Revenue 2518225 2396600 4192902 2993407

Total Charges for Service 3477977 138748 116080 158602Total Fines Forfeits 114253 85168 88500 85290Total Miscellaneous Revenue 3437450 4887375 584950 271673Total Contributions 1000000 0 3932200 4372454

Total General Fund 17292754 15744438 17755229 18428168

SPECIAL REVENUES

Baseball Stadium Operating 68737 89972 90700 304836

Motorsports Complex 11605756 2165000 2165000 2165000

Community Redevelopment Agency 1011003 979114 9800 1078911

Total Special Revenue Fund 12685496 3234086 3235700 3548747

ENTERPRISE FUNDS

Solid Waste 0 4234373 4372189 4715851

Stormwater Utility 413564 426725 600 779717

Electric Utility 2525508525599

268 38 962 8 2560 3

Water Utility 1928768 I 199 4385900 2756539

Wastewater Utility 3761915 3484199 3827767 4158076

Total Enterprise Funds 31359332 35734764 51971330 44970716

INTERNAL SERVICE FUNDS

Fleet Maintenance 0 1207024 0 3141922

Self Insurance Charge for Service 3033362 2451720 4332155 5289659

Total Internal Service Funds 3033362 3658744 4332155 8431581

TOTAL ALL FUNDS 64370944 58372032 77294414 75379212

11

William R Hough Dick Montalbano

unsigned letter dated3701

William iHough U100 SECOND AVENUE SOUTH

SUITE 900

ST PETERSBURG FLORIDA 337014396

727 8958880 8008000061FAX 727 895 8895

March 7 2001

1 11

Mr Curtis K Ivy JrCity ManagerCity ofHomestead7090 North Homestead Boulevard

Homestead FL 33030

Dear Curt

At your request we have reviewed the City of HomesteadsAnnual Audited Financial State newfor the period ended September 30 1999 and the adopted budget for the current fiscal year girdingSeptember 30 2001 We have not had an opportunity to review any financial information for the 1 iscalyear ended September 30 2000 We make the following observations and raise the following coy emsbased on these two documents and acknowledge that the extent of our evaluation must be refined one theaudited financial statements for the year 2000 are available Our primary concern was to assure yot thatthe City of Homestead had complied with its various financial covenants regarding the outstanding debtof the City of Homestead

First we reviewed the results of operations for the water and sewer system for the year a idedSeptember 30 1999 Your debt service coverage for the fiscal year ended September 30 1999 is w Il inexcess of the requirement under the bond documents We then reviewed the electric system to deter ninecompliance with the outstanding debt relating to the Motorsports Complex given that the pri wrysecurity under the loan agreements is the net revenues of the electric system The review of suchfinancial statements has raised significant nificant conces en that the electric has operated at a loss 011 7a cash flow basis o apprmrimatety s39000000 for fiscal ended S

covenW90fftRloa agreement or t Gulf Breeze loans which funded the Motorsportsrequire an annual rateco115

In reviewing the financial information it appears that the electric system budget for 1 was

adopted with a deficitanticipated The budgeted revenues or the electric system 9999 wereapproxrmate y ton yet the operating expenses were a climately s32 million This sl ould

ve rat some conce

mt

rn at tltrle a gd was ado revrewmg summary of citywide revenues and expenditures contained in the adopted budget for 20002001 it appears thrt theproiected revenues for 2000 reflected a 50 increase in revenues ova 1992 This was not a to listic

assumptiongiventt1faekofrate n ases ac of significant growth within the utility syster L

Compounding the problem of overestimating electric system revenues was the fact that the Cityof Homestead adopted a utility tax which should have had a neutral impact on customers etvenpan was r e ectnc system rates too newr ted utility tax The problem J thattri City aid in fact reduce me electric system rates but did not adjust its transfer out ofthe electric r stem 1to the General Fund The2Wbudgn reflected significant increase in electric system revenues ar d for

e fiscal year en rag September 30 2001 continues to to ec slgm cant revenues over the anti fated

GWFwaIvy374114ac 71411

S27 million range resultin m anotlreduce its estimates tt I not rureduced electric rates We are told2 ll not be any better than the

c Item a am opera99 the electric system hadlessi

Senior administration believes that it will be in the 25 millk n to

ar otrnC shallo So while the City of HomesWc didce t em sufficiently to take into consideration the irnpact o1 the

its cash reserves Asind sate

that it

not have sufficient liquidassets to susta lions longtern given the excess of expenditur verrevenues an

The additional concern that the problems within the electric system raises as I reviewer theadopted budget for the General Fund is that the General Fund reflects a balanced budget which runsfor 2001 both the full im4a of coil tint the utility tax and collection of a transfer out of the ale tric

Tote extent that the electric system is notable to fund such trans ens and Genera un m

I abilities a manna statement as of SeptemGeneral und of approximately32 trillion For thFund operated at a defter a trap

invesmpants in light of 0W thatbudgeted transfer to the General Fund

it will n it

year ended September 30 1999 the Generalistely 1 million Ifft r 2000 rea1Txtt su if not all of its cash and

may not have sulticient revenues W tun I its

Given the concerns which the review of sale fmancial information raises it is imperatM theCity of Homestead do all in its power to accelerate the completion of the audit for fiscal year a idedSeptember 30 2000 An organization the size of the City of Homestead should provide is mangerelected officials and the general public monthly financial statements to review its performance at d toallow it to control its limited resources and to insure that it meets its budgeted targets While the C ty isnot in technical default under the terms of the loan agreements and reimbursement agreements suppo ringthe Motorsports financing it is imperative that the City move forward to engage an independent ElectricRate Study to evaluate the electric systems rate structure and customer base to determine the approf dateutility rates We w d slat ityyttlsd Lti ack of iLe outci to sudior9 CU Tent

of timely fma teal

This letter provides you with a summary of the findings we have discussed in our meetings do pingthe past several weeks We will continue to identify additional information as we meet with S marManagement from Finance and the Electric System I would be available to meet with you and the CityCouncil Members to discuss these issues in greater detail and to assist the City in developing an A SionPlan to address these financial issues We have attached to this summary the Financial Analysis i latedFebruary 12 2001 which we have previously presented to you

Sincerely

WILLIAM R HOUGH fit CO

Richard Monalbano

Senior Vice President

Manager of Public Finance

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City of MiamisRecovery Plan 111596list of potential options

STRATEGIC FINANCIAL

RECOVERY PLAN

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Presented to

THE MAYOR AND CITY COMMISSION

Submitted 41

MERRETT R STIERHEIM

City Manager

NOVEMBER 1 1996

Potential Funding Solution Alternatives For Fiscal Year 199697

A Shortterm Loans Cash Flow Enhancements1 Internal pooled cash2 Tax Anticipation Notes3 Loans from other governments and quasiCity organizations4 Loan from pension fiords5 Seek advance payments from utilities for fran and utility taxes

B NewEnhanced Revenues from City residents6 Increase EMS fees and billings and pursue payment7 Reestablish parking ticket issuance to previous levels pattiatlarly downtownS Reform code eaforeement process and instmm hearing examiners9 Utilize 199697 Law Enforcement Trust Fund moneys for Police overtime10 Increase user fees where feasible11 Inereese solid waste fee to a level comparable with other jurisdictions12 Increase marina live aboard and other public facility fees13 Increase alarm towing and certificate ofuse renewal fees14 Pursue leveraged leases sale leaseback transactions for appropriate City faeiities15 Sell parking garages to Off Street Parking Auith16 Sell City assns such as land buildings and assns17 Pension Oust m absorbevecosts18 Aggressive pmaue jaecelerated groat drawdowns from state and federal governments19 Aggressively pursue recovery of state and federal grant reimbursements20 Identify nonft or licensed businesses on City Property

21 Evaluate all City leases for oppor to increase revenues22 Chmge for all special even costs incurred by the City23 Evaluate all avaullable prior year CDBG HOME and other federal fonds for potential

24 an jai charges to grant funds by controlling program costs under admioistrariveCap

award25 Establish a suggestion Program for all employees26 Establish firm and challenging guidelines for the waiver ofCity fees27 Expand revenue collection program for delinquent accounts28 Explore all new City hires joking State pendonplan in lien of existing City Plans

C Expenditure Reductions

1 Institute a 4be board reductions in operations depending on service implications2 Reduce managerial and administrative positions3 Review all executive benefm4 Evaluate benefit packages for all employees nniouiaed andnonunionized5 Reopen and re aegotmoe all anion contracts6 Considernego0ate deferral of the 4 percent January costofLiving adjusrmeM for all employees7 Freeze or cancel 199697 merit increasesS Reduce number ofand charge monthly use fee for take home vehicles9 Define City Managersdiscretionary authority to provide for disclosure and appropriate checks

and balances including periodic auditing10 Reduce cellular Phone11 Evaluate the growth in temporary and parttime positions12 Immediately freeae all funded vacancies13 Freeze all travel memberships and non essential Purchase14 Stop portaltopatal coverage for protective service employees

c

15 City Commission City Clerk City Attorney City Manager to evaluate their office expensesand establish fume guidelines which are approved public and part of formal City procedures

16 Increase use of volunteers and community groups at park facilities17 Close costly obsolete public facilities that are a drain on the treasury18 Modify ctarent level of solid waste service including reducing trash service19 Review recycling program20 Reevaluate and restructure NET program to reduce costs21 Reduce general fund supported community based organizations consistent with reductions to City

operations22 Reduce funding in special programs and accounts areanondepartmental allocations23 Review all utility expenses

Potential Funding Solution Alternatives For Fiscal Year199798 and Beyond

1 Raise property taxes to 10 mill level2 Present extraordinary two year mtllage for voter consideration3 Transfer fire service to County or establish a City nonad valorem based special assessm district for

fire service

4 Transfer E911 service to County5 Evaluate feasibility of transferring other services to Dade County6 pursue legislative proposals to enhance revenue partial year assessments paymentsIlea taxes

for exempt land is City etc7 Evaluate allotnding loam due the City from various loan programs and aggressively pursue

tepaymentall delinquent amounts8 Establish non ad vatotem based special assessment districts for sand lighting and other services9 Restructure pension program and City contribution level sbaring programs audit current programs for

savings opportunitieslevels for City executives10 Tie cost containment and performance goals to compensation

11 Develop replacement program for City vehicles and equipment12 Properly fund all sell insurance trust fimds and begin to build adequate reserves to help cover

tmfimded liabilities

13 Thoroughly analyze workerscompensation and general liability and other self instate liabilityypmgrgams to develop procedures and systems to contain andor reduce costs

14 Eliminate dependence on debt fmaneing for operatingPurposes15 Fund essential renewal and repiaamew on a payasyuugobasis16 pursue privatization oppornmides as appropriate17 Develop twotier Compensation program for new hires in all areas of City service18 Assess feasibility of restructuring City debt19 Reduce dependence on TANS fundm for debt and operations of20 paste renegotiating agreements with MSEA and County regarding 8

public facilities eligible for convention development tax support21 Aggressively seek all Outstanding FEMA receivables22 Restructure health insurance program to contain andorrethm costs23 b stidne plan to make all City conference convention and pub facilities selfsufficient with no

general fund or utility tax support required24 work with FPLto instiarte energy savings programs in all City facilities25 Evaluate privatization of garbage and trash collection

Schedule 2

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PARKINGREQUIREMENTS

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JUNE 7 2001

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May 30 2001

Mr Curt IvyCity ManagerCity of Homestead790 N Homestead Boulevard

Homestead Florida 33030

Dear Curt

On behalf of Homestead MiamiSpeedway HMS please accept this letter as ouroffer of13 million cash to purchase the entire 8726 acre property south of Palm Drive whichthe City of Homestead currently owns

If this offer is accepted we would accept the amount of fill to be verified by anindependent surveyor which is currently on the 8726 acres as a partial payment toward the totalamount of fill owed by the City to HMS The total amount of fill owed by the City to HMS is230000 cubic yards

HMS makes no expressed or implied representation that HMS will purchase anyadditional fill over and above the actual fill existing on the property at the time this 8726 acres ispurchased

In the event that HMS in its sole discretion should elect at any time or times to purchaseadditional fill to be placed on this 8726 acres then any royalty paid by HMS to the City ofHomestead for such additional fill shall not exceed 40 cents per ton

Any such royalty paid by HMS to the City of Homestead shall be confined to future fillplaced on this 8726 acres and HMS makes no expressed nor implied representation that it willpay any royalties on any other fill placed on any HMS property other than this 8726 acres

No royalty shall be paid on the 230k cubic yards of fill existing and situated on this 8726acres at the time of purchase

SincerelyZCurtis Gray

HOM ESTEA D MIA NI I SPEEDWAYONE SPEEDWAY BOULEVARD HomESTEAD FLORIDA 33035 1500 PHONE 305 230 5000 FAX 305 230 5223

wwwhomesteadmiamispeedwaycom

1A

ECONOMIC IMPACT RESULTS

EVENT ECONOMIC IMPACT

1997 World Series 62 million

The Ericsson Tournament 68 million

2000 Orange Bowl 103 million

1999 NASCAR Winston 118 million

Cup Series

1999 Super Bowl 396 million

Source Sport Management Research Institute

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