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FY2010 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY (A Component Unit of Monroe County, Florida) Financial Statements For the Year Ended September 30, 2010 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY (A Component Unit of Monroe County, Florida) Table of Contents Page Independent Auditors' Report------------------------------------------------------------------------------------------------ 2 - 3 Management's Discussion and Analysis------------------------------------------------------------------------------- 4 - 8 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Assets 9 Statement of Activities 10 Fund Financial Statements Balance Sheet - General Fund 11 ---------------------------------------------------------------------------------------- Statement of Revenues, Expenditures and Changes in Fund Balance - General Fund 12 Notes to Financial Statements 13 - 20 ----------------------------------------------------------------------------------------- REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund (Budgetary Basis),----------------------------- 21 SUPPLEMENTARY INDEPENDENT AUDITORS' REPORTS 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................................................................................22 - 23 Independent Auditors' Management Letter.....................................................................24 - 25 URTIFTED PUBLIC INDEPENDENT AUDITORS' REPORT To the Governing Board Monroe County Comprehensive Plan Land Authority Monroe County, Florida: We have audited the accompanying financial statements of the governmental activities and the major fund of Monroe County Comprehensive Plan Land Authority (the "Authority"), a component unit of Monroe County, Florida, as of and for the year ended September 30, 2010, which collectively comprise the Authority's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Authority's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of the Authority as of September 30, 2010, and the respective changes in financial position for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 3, 2011 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 and should be considered in assessing the results of our audit. 2 The management's discussion and analysis and required supplementary information listed in the foregoing table of contents are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. CHERRY, BEKAERT& HOLLAND, L.L.P. "\► JuA Orlando, Florida February 3, 2011 3 MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the Monroe County Comprehensive Plan Land Authority (the "Authority"), we offer readers of the Authority's financial statements this narrative overview and analysis of the Authority's financial activities for the fiscal year ended September 30, 2010. Overview of the Financial Statements This discussion and analysis serves as an introduction and guide to the Authority's basic financial statements. The Authority's basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. In addition to basic financial statements, this report also contains supplementary information addressing budget, internal control, and compliance issues. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the Authority's finances, in a manner similar to a private-sector business. The Statement of Net Assets presents information on all of the Authority's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Authority is improving or deteriorating. The Statement of Activities presents information showing how the Authority's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. In this format capital assets are capitalized and depreciated, whereas in the fund-level format described below the related purchases are treated as expenses. Fund Financial Statements. The General Fund is used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, the General Fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. This information is useful in evaluating the Authority's ability to fund new acquisitions in the near-term. Since the focus of the General Fund is narrower than that of the government-wide financial statements, it is useful to compare the information presented for the General Fund with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the General Fund Balance Sheet and the General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between fund level and government-wide activities. The Authority adopts an annual appropriated budget. A budgetary comparison statement has been provided to demonstrate compliance with this budget. Notes to the Financial Statements. The notes contained in this report provide additional information that is essential to a full understanding of the data provided. The notes are an integral part of the basic financial statements. 4 Other Information. In addition to financial statements and accompanying notes, this report also presents supplementary information in the form of independent opinions on internal control and compliance issues. Government-wide Financial Analysis Statement of Net Assets. In the Statement of Net Assets presented on page 9, the Authority's assets total $35,446,710 and include cash and cash equivalents, amounts due from other governments for tourist impact tax and park surcharge fees, mortgages receivable, office equipment, and capital assets in the form of acquired land. The cash and cash equivalents include funds invested in the Local Government Surplus Trust Funds Investment Pool Fund B, which are subject to withdrawal restrictions and an unrealized loss described in Note 2. The mortgage receivables consist of eight long-term balloon loans issued for the acquisition of affordable housing sites as described in Note 3. Cash and cash equivalents are the assets typically of most importance to the Authority's Board of Directors and to the public, as these assets are the resources most readily available to meet current and future needs for property acquisition. The Authority's cash and cash equivalents total $9,951,757. This amount compares with $9,200,793 at the end of the previous fiscal year, an increase of $750,964. Approximately 47% of the Authority's assets consist of land acquired for specific public purposes, approximately 25% consist of mortgages, and approximately 28% are categorized as cash and cash equivalents. The Authority's current liabilities consist of accounts payable, accrued wages, and compensated absences (annual leave and sick leave) forecasted to be used during the upcoming year. The Authority's non-current liabilities consist of compensated absences that are forecasted not to be used during the upcoming year. Total liabilities are $93,844. The Authority's resulting net assets are categorized as those invested in capital assets, those restricted specifically for the acquisition of land (listed as "restricted"), and those which may be used for all purposes authorized by the Authority's enabling legislation (listed as "unrestricted"). The Authority's total net assets are $35,352,866, an increase of$1,793,452 over the prior year. Of this total, $16,814,656 is invested in capital assets, $2,859,459 is restricted for the acquisition of property, and $15,678,751 is unrestricted. The following table provides a condensed comparison of the Authority's Statement of Net Assets at year end for 2010 and 2009: 2010 2009 Cash and cash equivalents $ 9,951,757 $ 9,200,793 Capital and other assets 25,494,953 24,441,394 Total assets 35,446,710 33,642,187 Total liabilities 93,844 82,773 Net assets Invested in capital assets, net of related debt 16,814,656 17,418,412 Restricted 2,859,459 2,522,915 Unrestricted 15,678,751 13,618,087 Total net assets $ 35,352,866 $ 33,559,414 5 Statement of Activities. In the Statement of Activities presented on page 10, the Authority's revenues total $3,424,098 and include intergovernmental revenue consisting of tourist impact tax and park surcharge fees, investment income consisting of interest on cash and investment accounts, and miscellaneous income from the sale of land to the federal government. The investment income shown is the total of interest on cash and investment accounts plus the current year portion of the unrealized gain on funds invested in Local Government Surplus Trust Funds Investment Pool Fund B described in Note 2. The Authority's overall revenues increased by $691,864 compared to the prior year. The major components of this increased revenue were proceeds from the sale of land, a reduction in the Fund B unrealized loss described in Note 2, and an increase in tourist impact tax revenue. The program expenses listed in the Statement of Activities total $1,630,646 and consist of a land contribution conveyance, the cost of a land sale, and general government. The referenced land contribution conveyance reflects the $339,767 reduction to the Authority's land inventory to account for the donation of the Conley property to the Monroe County Board of County Commissioners for use as a wetland restoration site. The referenced cost of a land sale reflects the $987,202 reduction to the Authority's land inventory to account for the sale of conservation land on Summerland Key to the federal government. The $303,677 in general government expenses listed includes the Authority's personnel and operating expenses plus the amount by which compensated absences increased during the current year. Total program expenses for fiscal year 2010 decreased by $86,348 compared to the prior year. The following table provides a condensed comparison of the Authority's governmental activities at year end for 2010 and 2009: 2010 2009 General revenues: Intergovernmental $ 2,874,078 $ 2,748,750 Investment income 99,420 (28,068) Miscellaneous income 450,600 994 Land contributions - 10,558 Total general revenues 3,424,098 2,732,234 Program expenses: Land contribution conveyances 339,767 1,414,831 Cost of land sale 987,202 - General government 303,677 302,163 Total program expenses 1,630,646 1,716,994 Increase in net assets $ 1,793,452 $ 1,015,240 Financial Analysis of the General Fund As noted above, the Authority uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The Authority's General Fund financial statements provide information on near-term inflows, outflows, and balances of spendable resources. This information can be useful in assessing the Authority's ability to fund new acquisitions in the near-term. 6 Balance Sheet. The General Fund Balance Sheet presented on page 11 lists the Authority's assets and liabilities in a manner similar to the government-wide Statement of Net Assets. However, since the General Fund Balance Sheet is a fund-level presentation providing a near- term perspective, the assets section excludes the Authority's capital assets (land) and the liability section excludes noncurrent liabilities (compensated absences) that the Authority will pay in the future. Presented in this manner, the Authority's assets are $18,630,146 and its liabilities are $14,734. This statement identifies $18,615,412 of total fund equity. Of this total, $8,376,579 is attributable to funds the Authority will receive in the future from the repayment of mortgage loans, $2,859,459 is attributable to funds restricted for land acquisition, and $7,379,374 is attributable to funds which may be used for all purposes authorized by the Authority's enabling legislation. Compared to the prior year, the amount of equity reserved for mortgage loans increased by $1,636,000, the amount reserved for land acquisition increased by $336,544, the unreserved fund balance increased by $429,224, and total fund equity increased by $2,401,768. Statement of Revenues, Expenditures and Changes in Fund Balance. The General Fund Statement of Revenues, Expenditures and Changes in Fund Balance presented on page 12 lists the Authority's revenues and expenditures in a manner similar to the government-wide Statement of Activities. However, in this format the revenues exclude land contributions, while the expenditures include land purchases (as capital outlay) and exclude land donations to other entities (land contribution conveyances). Presented in this manner, the Authority's revenues are $3,424,098 and its expenditures are $1,022,330. General Fund Budgetary Highlights. The Authority budgets its revenues and expenditures on the same basis of accounting as presented in the basic financial statements of the General Fund, except that mortgage assistance cash outlays and receipts are budgeted as operating activities and compensated absences are not budgeted in personnel expenditures. There were no supplemental appropriations to amounts originally budgeted for fiscal year 2010. As shown in the Budget and Actual schedule on page 21, the Authority operated well within the limits established by its adopted budget. Actual revenues exceed the budgeted amount by $1,094,098, while actual expenditures are $5,960,851 less than budget. Most of the revenue surplus consists of proceeds from the sale of land and tourist impact tax revenue, the latter being budgeted conservatively in light of the downturn in the national economy. With respect to investment income, the Authority received $24,804 in interest during this period of extraordinarily low interest rates. However, investment income is reported in this schedule as a $99,420 due to the $74,616 current year portion of the unrealized gain on funds invested in Local Government Surplus Trust Funds Investment Pool Fund B described in Note 2. The schedule's positive expenditure variance includes budgeted reserves held for specific acquisition projects. Capital Asset Administration As shown in Note 4 on page 17, the Authority's investment in capital assets amounts to $16,816,564, a decrease of $601,848 compared to the prior year. The decrease was the net result of$723,213 of land and $1,908 of office equipment acquired via purchase less $987,202 of land sold for conservation and less $339,767 of land donated for wetland restoration. 7 Requests for Information This financial report is designed to provide a general overview of the Authority's finances for all those with an interest in the government's finances. Questions concerning any of the information should be addressed to Mark Rosch, Executive Director, at 1200 Truman Avenue, Suite 207, Key West, FL 33040. 8 BASIC FINANCIAL STATEMENTS MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY Statement of Net Assets September 30, 2010 Assets Cash and cash equivalents $ 9,951,757 Due from BOCC 282,731 Due from State of Florida 19,079 Mortgages receivable 8,376,579 Equipment, net of accumulated depreciation 1,908 Capital assets-land 16,814,656 Total assets 35,446,710 Liabilities and Net Assets Current liabilities: Accounts payable 5,193 Accrued wages 9,541 Compensated absences 15,542 Total current liabilities 30,276 Noncurrent liabilities: Compensated absences 63,568 Total noncurrent liabilities 63,568 Total liabilities 93,844 Net assets Invested in capital assets 16,814,656 Restricted 2,859,459 Unrestricted 15,678,751 Total net assets $ 35,352,866 The notes to the financial statements are an integral part of this statement. 9 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY Statement of Activities Year Ended September 30, 2010 General revenues Intergovernmental $ 2,874,078 Investment income 99,420 Miscellaneous income 450,600 Total general revenues 3,424,098 Program expenses Land contribution conveyances 339,767 Cost of land sold 987,202 General government 303,677 Total program expenses 1,630,646 Increase in net assets 1,793,452 Net assets - beginning of year 33,559,414 Net assets - end of year $ 35,352,866 The notes to the financial statements are an integral part of this statement. 10 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY Balance Sheet General Fund September 30, 2010 Assets Cash and cash equivalents $ 9,951,757 Due from BOCC 282,731 Due from State of Florida 19,079 Mortgages receivable 8,376,579 $ 18,630,146 Liabilities and Fund Equity Liabilities Accounts payable $ 5,193 Accrued wages 9,541 Total liabilities 14,734 Fund equity Reserved for mortgage loans 8,376,579 Reserved for land acquisition 2,859,459 Fund balance - unreserved 7,379,374 Total fund equity 18,615,412 Total liabilities and fund equity $ 18,630,146 Amounts reported in the statement of net assets differ from amounts reported above as follows: Fund balance - total governmental funds $ 18,615,412 Capital assets used in governmental activities are not financial resources and therefore are not reported above. 16,816,564 Compensated absences are not due and payable in the current period and, therefore, are not reported in the governmental funds. (79,110) Net assets of governmental activities $ 35,352,866 The notes to the financial statements are an integral part of this statement. 11 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY Statement of Revenues, Expenditures and Changes in Fund Balance General Fund Year Ended September 30, 2010 Revenues Intergovernmental $ 2,874,078 Miscellaneous income 450,600 Investment income 99,420 Total revenues 3,424,098 Expenditures Current Personnel 216,257 Operating 80,570 Capital outlay 725,503 Total expenditures 1,022,330 Excess of revenues over expenditures 2,401,768 Fund balance, beginning of year 16,213,644 Fund balance, end of year $ 18,615,412 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances-total governmental fund $ 2,401,768 Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is capitalized net of accumulated depreciation of$382. 725,121 Land contribution conveyances are not reported on government funds; this is the amount of land conveyances and land contributions during fiscal year 2010. (1,326,969) Compensated absences do not use current financial resources and are not reported on the Governmental Funds but are included in the Statement of Activities. (6,468) Change in net assets of governmental activities $ 1,793,452 The notes to the financial statements are an integral part of this statement. 12 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY (A Component Unit of Monroe County, Florida) Notes to Financial Statements Year Ended September 30, 2010 Note 1 - Summary of significant accounting policies Reporting Entity — The Monroe County, Florida Comprehensive Plan Land Authority (the "Authority") is a legally separate entity from Monroe County, Florida. However, the Monroe County Board of County Commissioners serves as the governing board of the Authority and is able to impose its will. Therefore, the Authority, for financial reporting purposes, is considered a blended component unit of Monroe County, Florida. The financial statements of the Authority are included as a special revenue fund in the Monroe County, Florida Comprehensive Annual Financial Report. The Authority was established under Monroe County, Florida Ordinance 031-1986 pursuant to Florida Statute 380. Its purpose is to operate a land acquisition program in Monroe County, to implement the Monroe County Comprehensive Plan and address issues created by it. Basis of Accounting — Government fund financial statements are organized for reporting purposes on the basis of a General Fund, the Authority's major fund, which accounts for all activities of the Authority and is accounted for using the modified accrual basis of accounting. Revenues are recognized when they become measurable and available as net current assets. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The Authority considers all revenues available if collected within 60 days after year-end. Expenditures are recognized when the related fund liability is incurred. 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. Capital Assets— Capital assets are defined by the Authority as assets with an initial, individual cost of$1,000 or more and an estimated useful life in excess of two years. Such assets consist of land and equipment and, when purchased, are recorded at the Authority's cost. Where land is acquired by donation, the asset is recorded at the Authority's transaction cost plus the higher of the tax assessed value at the time of donation or 115% of the 1986 tax assessed value. Equipment is depreciated using the straight line method over a five year useful life of the equipment. Cash and Cash Equivalents and Investments — The Authority's cash and cash equivalents consist of demand deposits and highly liquid investments with maturities of 90 days or less when purchased. All investments are reported at fair value. 13 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY (A Component Unit of Monroe County, Florida) Notes to Financial Statements Year Ended September 30, 2010 Note 1 — Summary of significant accounting policies (continued) Budget — Prior to, or on September 30, the Authority's budget is legally enacted through passage of a resolution. There were no supplemental appropriations during the year. Budgeted to Actual Expenditure reports are employed as a management control device during the year for the fund. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America, except that mortgage assistance cash outlays and receipts are budgeted as operating activities and compensation accruals are not budgeted. For the fiscal year Error! Unknown switch argument., the following adjustments were necessary to present the actual data on a budgetary basis for the General Fund: GAAP basis $ 2,401,768 Compensation accrual difference 660 Non-GAAP budgetary basis $ 2,402,428 All appropriations lapse at year-end. Compensated Absences — The Authority's policy grants employees annual leave and sick leave in varying amounts. Upon termination of employment, employees with six months or more of credited service can receive payment for accumulated annual leave. In general, sick leave payments are granted upon termination of employment to employees with five years or more of credited service. The maximum payment is subject to percentage and maximum hour limitations. Use of Estimates - The preparation of the financial statements requires management to make use of estimates that affect reported amounts. Actual results could differ from those estimates. Note 2— Deposits and investments As of Error! Unknown switch argument., the Authority has the following deposits and investments: Demand deposits $ 9,728,481 Local Government Surplus Trust Florida PRIME 41,292 Local Government Surplus Trust Fund B 257,382 Unrealized Loss in Fund B (75,398) Total cash and cash equivalents $ 9,951,757 14 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY (A Component Unit of Monroe County, Florida) Notes to Financial Statements Year Ended September 30, 2010 Note 2— Deposits and investments (continued) The Authority places its cash and cash equivalents on deposit with financial institutions in the United States. The Federal Deposit Insurance Corporation (FDIC) covers $250,000 for substantially all depository accounts. The Authority from time to time may have amounts on deposit in excess of the insured limits and the remaining balances are insured 100% by the State of Florida collateral pool, a multiple financial institution pool with the ability to assess its members for collateral shortfalls if a member institution fails. As of Error! Unknown switch argument., the cash and cash equivalents have a bank balance of$10,095,936. The Authority's investment policy is in accordance with Florida Statute 218.415. This policy authorizes investments in demand deposits, the Local Government Surplus Trust Fund, money market funds with the highest credit quality rating from a nationally recognized agency, or direct obligations of the United States Treasury. As of Error! Unknown switch argument., the Authority had $223,276 invested in the Local Government Surplus Trust Fund, which was 2% of the Authority's total cash and cash equivalents. Of the $223,276 invested, the Authority had $181,984 or 82% invested in Fund B and $41,292 or 18% invested in Florida PRIME. The Local Government Surplus Trust Fund has been in existence for over 25 years and is administered by the Governor, Chief Financial Officer, and Attorney General of the State of Florida sitting as the State Board of Administration. On November 29, 2007, the SBA suspended withdrawals from the Fund due to concerns of insufficient liquidity. On December 4, 2007 the SBA divided the Fund into two pools, Fund A and Fund B, based on security quality. Fund A re-opened for limited withdrawals on December 5, 2007 and has since resumed normal operations under the name Florida PRIME. Fund B remains closed to withdrawals and new investors. Participants receive periodic distributions of their Fund B principal in the form of transfers to their Fund A accounts. As of Error! Unknown switch argument., the SBA had returned 80% of Fund B's original balance to investors in this manner. When the SBA created Fund B on December 4, 2007, the Authority had an account balance of $1,287,034. As of Error! Unknown switch argument., the SBA had returned $1,029,652 of this amount to the Authority, leaving a balance of $257,382. Due to the poor quality of Fund B's underlying assets, the net asset value of the Authority's account balance on Error! Unknown switch argument. was $181,984, yielding an unrealized loss of$75,398. Since $150,014 of the unrealized loss was already included in the Authority's financial statements through 2009, the current year portion was an unrealized gain of$74,616. The Florida PRIME is rated by Standard and Poors. The current rating is AAAm. The Fund B is not rated by any nationally recognized rating agency. The weighted average days to maturity (WAM) of the Florida PRIME at Error! Unknown switch argument. is 52 days. Next interest rate reset days for floating rate securities are used in the calculation of the WAM. 15 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY (A Component Unit of Monroe County, Florida) Notes to Financial Statements Year Ended September 30, 2010 Note 2— Deposits and investments (continued) The weighted average life (WAL) (based on expected future cash flows) of Fund B at Error! Unknown switch argument. is estimated at 7.49 years. However, because Fund B consists of restructured or defaulted securities there is a considerable uncertainty regarding the weighted average life. Note 3— Mortgage receivables Mortgage receivables as of September 30, 2010 are as follows: First mortgage due from governmental agency, collateralized by land, payable in full April 2028, interest free (OR 1514-594) $ 382,554 Second mortgage due from governmental agency, collateralized by land, payable in full November 2034, interest free (OR 1697-2076) and (as amended at OR 2442-1497) 1,500,000 Second mortgage due from governmental agency, collateralized by land, payable in full January 2034, interest free (OR 1965-1039) 2,210,000 First mortgage due from governmental agency, collateralized by land, payable in full September, 2045 interest free (OR 1395-1409) 59,025 Third mortgage due from private company, collateralized by land, payable in full May 2050, interest free (OR 1749-2340) 1,089,000 Third mortgage due from private company, collateralized by land, payable in full September 2053, interest free (OR 1939-405) 1,500,000 Second mortgage due from governmental agency, collateralized by land, payable in full July 2040, interest free (OR 2475-1762) 836,000 Third mortgage due from governmental agency, collateralized by land, forgivable July 2040, interest free (OR 2475-1767) 800,000 Total mortgages receivable $ 8,376,579 The mortgages receivable are equally offset by a fund balance reserve which indicates that they do not constitute "available spendable resources," even though they are a component of total assets. 16 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY (A Component Unit of Monroe County, Florida) Notes to Financial Statements Year Ended September 30, 2010 Note 4—Capital assets A summary of changes in capital assets is as follows: Balance Balance 10/01/2009 Additions Deductions 09/30/2010 Capital assets, not depreciated: Land $ 17,41 8,412 $ 723,213 $ (1 ,326,969) $ 16,814,656 Total capital assets, not depreciated 17,418,412 723,213 (1 ,326,969) 16,814,656 Capital assets, depreciated: Equipment - 2,290 - 2,290 Total capital assets, depreciated - 2,290 - 2,290 Less accumulated depreciation - (382) - (382) Total capital assets, depreciated, net - 1,908 - 1,908 Total capital assets, net $ 17,418,412 $ 725,121 $ (1 ,326,969) $ 16,816,564 The City of Key West leases one property with a cost of $101,606 from the Authority. This property, which is included in capital assets, is used to provide city recreational facilities. The term of the lease provides for rental of $1 per year for 30 years, expiring in the year 2022. Monroe County provides the Authority's office space at no cost. Note 5—Accumulated compensated absences The amount of vested accumulated compensated absences payable based on the Authority's annual and sick leave policies, is reported as a liability in the government-wide financial statements. That liability includes earned but unused vacation and sick leave. Vacation leave is accrued based on length of employment. Sick time is paid out based on length of employment up to a maximum of one half of 120 days with 15 or more years of service. The change in accumulated compensated absences during the year is as follows: Balance Balance Current 10/1/2009 Additions Deletions 9/30/2010 Portion Compensated absences $ 72,642 $ 22,010 $ 15,542 $ 79,110 $ 15,542 17 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY (A Component Unit of Monroe County, Florida) Notes to Financial Statements Year Ended September 30, 2010 Note 6— Retirement system Plan description — The Authority's employees participate in the Florida Retirement System ("FRS"), administered by the Florida Department of Administration. Employees elect participation in either the defined benefit plan ("Pension Plan"), a multiple-employer cost-sharing defined benefit retirement plan, or the defined contribution plan ("Investment Plan") under the FRS. As a general rule, membership in the FRS is compulsory for all employees working in a regularly established position for a state agency, county government, district school board, state university, community college, or a participating city or special district within the State of Florida. The FRS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefits are established by Chapter 121, Florida Statutes, and Chapter 60S, Florida Administrative Code. Amendments to the law can be made only by an act of the Florida Legislature. Benefits are computed on the basis of age, average final compensation, and service credit. Regular class employees who retire at or after age 62 with 6 years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation for each year of credited service. Vested employees with less than 30 years of service may retire before age 62 and receive reduced retirement benefits. Special risk class employees (sworn law enforcement officers, firefighters, and correctional officers) who retire at or after age 55 with 6 years of credited service, or with 25 years of service regardless of age, are entitled to a retirement benefit payable monthly for life, equal to 3.0% of their final average compensation for each year of credited service. Senior Management Service class employees who retire at or after age 62 with at least 6 years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 2.0% of their final average compensation for each year of credited service. Elected Officers' class employees who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 3.0% (3.33% for judges and justices) of their final average compensation for each year of credited service. A post-employment health insurance subsidy is also provided to eligible retired employees through the FRS in accordance with Florida Statutes. In addition to the above benefits, the FRS administers a Deferred Retirement Option Program ("DROP"). This program allows eligible employees to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed 60 months after electing to participate. Deferred monthly benefits are held in the FRS Trust Fund and accrue interest. For those employees who elect participation in the Investment Plan rather than the Pension Plan, vesting occurs at one year of service. These participants receive a contribution for self- direction in an investment product with a third party administrator selected by the State Board of Administration. 18 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY (A Component Unit of Monroe County, Florida) Notes to Financial Statements Year Ended September 30, 2010 Note 6— Retirement system (continued) The State of Florida annually issues a publicly available financial report that includes financial statements and required supplementary information for the FRS. The latest available report may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P. O. Box 9000, Tallahassee, FL 32315-9000, or accessing their internet site at www.frs.state.fl.us. Funding policy — The FRS is noncontributory for members. Governmental employers are required to make contributions to the FRS based on statewide contribution rates. The contribution rates by job class through June 30, 2010 were as follows: regular 9.85%; special risk 20.92%; special risk administrative support 12.55%; county elected officers 16.53%; senior management 13.12% and DROP participants 10.91%. Effective July 1, 2010 the contribution rates by job class were as follows: regular, 10.77%; special risk, 23.25%; special risk administrative support, 13.24%; county elected officers, 18.64%; senior management, 14.57%; and DROP participants, 12.25%. During the fiscal year ended September 30, 2010, the Authority contributed to the plan an amount equal to 9.85% of covered payroll through June 30, 2010 and 10.77% of covered payroll from July 1, 2010 through September 30, 2010. The Authority's contributions to the FRS for the fiscal years ending September 30, 2008 through 2010 were $16,268, $16,268, and $16,677, respectively, which were equal to the required contributions for each fiscal year. The Authority has historically contributed amounts equal to required contributions and, therefore, does not have a pension asset or liability as determined in accordance with GASB Statement No. 27. Note 7—Other postemployment benefits (OPEB) The Monroe County Board of County Commissioners (BOCC) administers a single-employer defined benefits healthcare plan (the "Plan"). Florida Statutes 112.0801 requires the County to provide retirees and their eligible dependents with the option to participate in the Plan if the County provides health insurance to its active employees and their eligible dependents. The Plan provides medical coverage and prescription drug benefits to both active and eligible retired employees. The Plan does not issue a publicly available financial report. The BOCC may amend the plan design, with changes to the benefits, premiums and/or levels of participant contribution at any time. In an open session, on at least an annual basis and prior to the annual enrollment process, the BOCC approves the rates for the coming calendar year for the retiree and County contributions. 19 MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY (A Component Unit of Monroe County, Florida) Notes to Financial Statements Year Ended September 30, 2010 Note 7—Other postemployment benefits (OPEB) (continued) Eligibility for post employment participation in the Plan is limited to full time employees of the County, and the Constitutional Officers. Employees who retire as an active participant in the Plan and were hired on or after October 1, 2001 may continue to participate in the Plan by paying the monthly premium established annually by the BOCC. Employees who retire as an active participant in the plan, were hired before October 1, 2001, have at least ten years of full time service with the County, and meet the retirement criteria of the Florida Retirement System (FRS) may continue to participate in the Plan at a cost equal to the FRS Health Insurance Subsidy for ten years of service (currently $5 per month for each year of service credit at retirement or $50 per month). Retirees who have met the requirements for early retirement, have not achieved age 60 and whose age and years of service do not equal 70 (rule of 70) must pay the standard monthly premium until the age criteria or the rule of 70 is met. At that time, the retiree's cost of participation will be equal to the FRS Health Insurance Subsidy. Surviving spouses and dependents of participating retirees may continue in the plan if eligibility criteria specific to those classes are met. The BOCC engages an actuarial firm on a biannual basis to determine the County's actuarially determined annual required contribution and unfunded obligation. The Authority has no responsibility to the Plan other than to make the periodic payments determined by the BOCC. Further information about the Plan is available in the County's Comprehensive Annual Financial Report which is published on the Clerk's website at www. clerk-of-the-court.com. Note 8— Risk management The Authority is exposed to various risks of loss related to tort; theft of, damage to, and destruction of assets; errors and omissions: injuries to employee; and natural disasters. The Authority participates in the coverage provided by the Board of County Commissioners of Monroe County Worker's Compensation, Group Insurance and Risk Management Fund internal service funds. Under these programs, the Worker's Compensation Fund provides $1,000,000 coverage per claim for regular employees. Risk Management has a $5,000,000 excess insurance policy for general liability claims with a $100,000 self-insured retention, and building property damage is covered for the actual value of the building with a deductible between $100,000 and $250,000. Deductibles for windstorm and flood vary by location. Monroe County purchases commercial insurance for claims in excess of coverage provided by the funds and for all other risks of loss. Settled claims have not exceeded this commercial coverage in any of the past three years. The Authority makes payments to the Worker's Compensation, Group Insurance and Risk Management Funds based on estimates of the amounts needed to pay prior and current year claims. Note 9—Commitments The Authority had approximately $259,717 of commitments to acquire various properties and $1,180,000 of commitments to issue mortgage loans as of Error! Unknown switch argument.. 20 REQUIRED SUPPLEMENTARY INFORMATION MONROE COUNTY, FLORIDA COMPREHENSIVE PLAN LAND AUTHORITY Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund (Budgetary Basis) Year Ended September 30, 2010 Variance with Final Budget Budget Positive Original Final Actual (Negative) Revenues Intergovernmental $ 2,290,000 $ 2,290,000 $ 2,874,078 $ 584,078 Miscellaneous income - - 450,600 450,600 Investment income 40,000 40,000 99,420 59,420 Total revenues 2,330,000 2,330,000 3,424,098 1,094,098 Expenditures Current Personnel 236,000 236,000 215,597 20,403 Operating 121,500 121,500 80,570 40,930 Capital outlay 9,441,021 6,625,021 725,503 5,899,518 Total expenditures 9,798,521 6,982,521 1,021,670 5,960,851 Excess (deficiency)of revenues over(under)expenditures (7,468,521) (4,652,521) 2,402,428 7,054,949 Fund balance, beginning of year 9,481,946 9,481,946 9,481,946 - Fund balance, end of year $ 2,013,425 $ 4,829,425 11,884,374 $ 7,054,949 Reconciliation of budgetary to full accrual basis Reconciling items Mortgage receivable 8,376,579 Transfer from reserve for land acquisition (1,636,000) Compensation accrual (9,541) Fund balance, end of year(full accrual) $ 18,615,412 21 SUPPLEMENTARY INDEPENDENT AUDITORS' REPORTS 4 . 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 To the Governing Board Monroe County Comprehensive Plan Land Authority Monroe County, Florida: We have audited the financial statements of the governmental activities and the major fund of Monroe County Comprehensive Plan Land Authority (the "Authority"), a component unit of Monroe County, Florida, as of and for the year ended September 30, 2010, which collectively comprise the Authority's basic financial statements, and have issued our report thereon dated February 3, 2011 for the purpose of compliance with Section 218.29(2), Florida Statutes, and Chapter 10.550, Rules of the Auditor General-Local Governmental Entity Audits. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control over Financial Reporting In planning and performing our audit, we considered the Authority's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Authority's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Authority's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 22 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Authority's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information of the Authority and management, and the Florida Auditor General, and is not intended to be and should not be used by anyone other than these specified parties. CHERRY, BEKAERT& HOLLAND, L.L.P. • " `\A Orlando, Florida February 3, 2011 23 INDEPENDENT AUDITORS' MANAGEMENT LETTER To the Governing Board Monroe County Comprehensive Plan Land Authority Monroe County, Florida: We have audited the financial statements of the governmental activities and the major fund of the Monroe County Comprehensive Plan Land Authority (the "Authority"), a component unit of Monroe County, Florida, as of and for the year ended September 30, 2010, which collectively comprise the Authority's basic financial statements, and have issued our report thereon dated February 3, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, dated February 3, 2011 should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General-Local Government Entity Audits, which governs the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditors' report. Section 10.554(1)(i)1, Rules of the Auditor General, require that we determine whether or not corrective actions have been taken to address significant findings and recommendations made in the preceding annual financial report. There were no recommendations made in the preceding year's annual financial report. Section 10.554(1)(i)2, Rules of the Auditor General, require our audit to include a review of the provisions of Section 218.145, Florida Statutes, regarding the investment of public funds. In connection with our audit of the financial statements of the Authority, nothing came to our attention that could cause us to believe that the Authority was in noncompliance with Section 218.415 regarding the investment of public funds. Section 10.554(1)(i)3, Rules of the Auditor General, require that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.554(1)(i)4, Rules of the Auditor General, require that we address violations of provisions of contracts and grant agreements, or abuse, that have an effect on the financial statements that is less than material but more than inconsequential. In connection with our audit, we did not have any such findings. 24 Section 10.554(1)(i)5, Rules of the Auditor General, provide that the auditor may, based on professional judgment, report the following matters that have an inconsequential effect on the financial statements, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, fraud, illegal acts, or abuse, and (2) control deficiencies that are not significant deficiencies. In connection with our audit, we did not have any such findings. Section 10.554(1)(i)6, Rules of the Auditor General, require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The Authority was established under Monroe County, Florida Ordinance 031-1986 pursuant to Florida Statute 380. There are no component units related to the Authority. Section 10.554(1)(i)7.a, Rules of the Auditor General, require that a statement be included as to whether or not the local governmental entity has met one or more conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our 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)7.b, Rules of the Auditor General, require that we determine whether the annual financial report for the Authority for the fiscal year ended September 30, 2010, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2010. The Authority, as a blended component unit of Monroe County, Florida, includes its financial information in the annual report filed on a consolidated basis by the County. In connection with our audit, we determined that these two reports were in agreement. Section 10.554(1)(i)7.c and 10.556(7), Rules of the Auditor General, require that we apply financial condition assessment procedures. It is management's responsibility to monitor the Authority's financial condition, and our financial condition assessment was based in part on representations made by management and the review of the financial information provided by same. The results of our financial condition assessment procedures disclosed no deteriorating financial conditions. Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is not limited. Auditing standards generally accepted in the United States of America require us to indicate that this letter is intended solely for the information and use of management and the Florida Auditor General, and is not intended to be and should not be used by anyone other than these specified parties. CHERRY, BEKAERT& HOLLAND, L.L.P. • " "\A Orlando, Florida February 3, 2011 25