Financial Advisory Board - Regular Meeting

All right, so I think we'll need to give it a few comments.

I'm going to start calling the others to see who's joining us.

Thank you.

What's your name and reason for calling?

Name is Richard Schervone, regarding the Finance Advisory Board.

Okay, please stay on the line.

Hey, Sid, you joining us for the meeting?

Yes, apologies. I just landed. It's all good.

No problem. Thank you. Sid's coming on board.

All right. Thank you. Yeah, Marco as well on.

There's Sid.

Hey, good evening.

Thank you, sir. Joining. And I don't have Liz's phone number with me, but I'll text her.

Morning, everyone. Morning, no, evening. Hello. Hey, Marco. How's everyone doing? No, he came today. No, he came today. Well, there is a playing game. So let's see if we make it. And you're not at the game? Well, no, it's not here. It's an away game.

Oh, it's an away game. That's why you're making the meeting.

Okay. So the next two games are away games and they determine the fate of the playoffs. If we lose those two games, then we are off the season. If we win the two, then we make it to the playoffs.

Okay.

I'm going to go grab my other phone, see if I have Liz's information.

Mr. Arisa, are you joining for Brandon?

Yes. Hi, Mady. Yes, I am. You had a conflict.

Hi, I'm Mady. Good evening.

Good evening.

I'll introduce you as soon as we begin.

Thank you. Okay.

Actually, Lars, while I'm trying to get Liz, you already have a quorum. You can start the meeting. And if you don't mind, let's move Brandon up first so he can get out of here.

Alrighty, will do. Thank you. Okay, good evening, everyone. So I'm calling North Bay Village Financial Advisory Board meeting to order. It's Tuesday, April 14th, 6.35. Do a roll call of our advisory team members. Marco, Soniga. Present, here. Thank you. Siddharth, Mehta. I am present. Thank you, William. William Prendergast. I am here. Thank you. And Liz, we don't have yet. Okay. And then I see we have also joining us Frank Rollison, our city manager. We have liaison commissioner Richard Chevroni and city CFO Mike Depp. Camille Thea. So I'll let Maite introduce our guest from the external auditor, and then I'll just go to approval of the meeting minutes, and then we'll have the presentation done.

And Liz is joining us as we're talking.

Okay, good evening, everybody. We have... You want me to wait for her to join?

No, she's in.

Okay.

Thank you. I'm fine.

Brandon couldn't make it from CBIS, but he sent Mr. Arisa, his partner, and he will be going over the annual report for 2024.

Thank you, Mady. And good evening, board members. My name is Moises Arisa. I'm with the firm of CBIS CPAs. And Brandon apologizes. He did have an emergency that he had to run to. But I'm going to step in and present the annual financial comprehensive report for fiscal year ended September 30th, 2024, which was released earlier this month. So I'm going to go ahead and share my screen, and I'll turn over to some pages as part of the presentation. If you would like to follow along, if you could please confirm that you see the annual comprehensive report?

No, we can't see it.

Not yet. Let me try that again. What about now?

It's, now we can see it.

Okay, perfect. So, just to confirm, you see the cover page with the image? Correct. Yes. Okay, beautiful. So this is the North Bay Village Annual Comprehensive Financial Report for the fiscal year ended September 30th, 2024. This report is submitted to the Florida Auditor General and released to the elected body. And it becomes a public document, not only within the North Bay Village website, but also at the Florida Auditor General's website. The Florida Auditor General's website, it maintains five years, five years of financial statement history. So any municipality, special district, county, or school board, if you ever want to research audited financial statement, if you visit the Florida Auditor General's website, you will be able to identify and locate the past five fiscal years. I'm going to go over certain sections of the report, the first one being the independent auditor's report. This section, this report is in our letterhead because it's the audit report that we as an external CPA firm issue. And it goes into detail of what we audited. And as mentioned here, we audited the financial statements of the North Bay Village for the fiscal year ended September 30th, 2024. And in terms of a financial external audit, the way we conclude is by providing an opinion, providing an opinion on the financial statements. And as mentioned, As noted here in our opinion, the financial statements noted above of North Bay Village present fairly in all material respects the financial position of governmental activities, business type activities in each major front of the village as of September 30th, 2024. So it is a clean opinion and it's the only opinion that the village wants to receive. Throughout the process with Mady's help and help of personnel at the village, we did, as a friendly reminder, this was the first fiscal year audit that we as a firm CBAs performed. The village did issue an RFP subsequent to this, and there was a rotation auditors, and that's why it's the first year of our audit contract. With Mady's help, we did complete the financial statement audit. But I am going to go into certain recommendations for areas of improvement as part of today's presentation that Mehdi is aware and were documented as part of this document. But I'll go into that and I'll highlight that when I get to that part of the presentation. The document in itself is nearly 150 pages. And if I was to recommend one section of the document to read it in its entirety, it would be the management discussion analysis. It starts off on PDF page 20 or printed page four. And management discussion analysis is a representation by management of them comparing fiscal year 2024 as compared to the previous fiscal year. And so what this section of the document does is it provides a good summary of current year activity versus prior year activity, showing you quantitative changes. But the nice thing about the MD&A is that within every chart or every fluctuation analysis where you're comparing current year versus prior year, Management has provided underlying reasons and explanations of what is causing the activity for fiscal year that is audited as compared to the previous fiscal year. So you'll have your government-wide comparison of fiscal year 24 versus 23. And then there's some highlights related to capital assets, long-term debt. as well as how a financial statement reader could obtain additional information. And they do so by contacting the village manager's office. Following the MD&A, you reach the financial statements, the first one being the statement of net position. And the village follows government accounting, which is different than a for-profit commercial entity. This statement of net position is similar to a balance sheet. But it's not a balance sheet. But it starts off with assets. In government accounting, we have deferred outflows. We have our liabilities. And then we also have deferred inflows. And then we call equity net position. Net position is the term that we use for equity. Positive ending equity of $44.4 million. Village-wide, the largest assets of the village are... the cash on hand as well as the capital assets. Capital assets is the term that we use in government accounting for PP&E, property planning equipment. The largest liabilities of the village are its notes payable, that there's notes payable for infrastructure of the village, as well as its pension liability. the village provides pension benefits to its employees. And there is a funding requirement. And that liability is one of the largest liabilities of the village as of year end. But as a friendly reminder, that is not a true liability that gets paid at a certain point in time or because it's in perpetuity. You're to fund it in perpetuity as individuals retire once they reach retirement age. Following the statement of net position, you reach the statement of activities. And although it doesn't look like it, this is a profit and loss statement. This is how we present our profit and loss statement. We start off with expenses. And we present expenses by a function or activity. General government, public safety, public works, building, recreation. To the right of that, we represent program revenues. charges for services, fees that the village collects for providing a service, operating grants on the third column, and capital grants on the fourth column. These are all revenues. After we net program revenues versus expenses, the net effect is noted on the second to last and the third to last column. And at the bottom, we have general revenues, which are what we call non-exchange transactions. where one would argue that it's not subject to providing equivalent value, which are taxes, sales tax, intergovernmental state revenue sharings. This is the way it's categorized under government accounting. Change in net position is, you could think of it as net income, positive of 21.3 million as of year end. Noting that your beginning equity net position was 23.1 million. Taking into account the change in net position could be translated as net income, our ending equity is 44.4 million. Following these two statements, government accounting provides additional financial statements at the fund level. So the first two pages is entity wide, the following pages breaks it down between opinion unit, the general fund, the GOB fund, capital projects fund. So there's more granular information following the first two pages. After the financial statements, we reach the footnotes. The footnotes start off by stating what are the villages accounting policies. And after that, it provides further granular detail regarding some components in this financial statements. For example, capital assets. This footnote, the purpose of this footnote is to show the beginning balance of your capital assets. That is what we earlier mentioned was your property planning equipment. The increases represent additions or equipment purchase or a construction in progress that has been acquired or obtained during the fiscal year. Decreases could relate to disposals of property, and then your ending balance will tie to the face of the financial statements. So this is a capital asset roll for schedule. Similar to that, we also provide one for debt. So your long term debt. What was my long term debt at the first day of the fiscal year? Additions represent new debt that the village took took on. Reductions are your principal payments towards that debt. And then your ending balance will tie to the face of your financial statements to the right. Of the ending balance column, we show there's a requirement to distinguish between current liabilities and long-term liabilities. So we show the financial statement readers of this long-term liability, how much of it is due within the next 12 months. And that's considered a current liability. And that's the last column here. So of the long-term liabilities in governmental and business type activities, we have a total of $20 million. $3.6 is due next year in the business type activities, $9.3. And a majority of it is due next year because of the state revolving loans, which we'll talk about when we talk about the recommendations as of year end. Following the footnotes, we reach our government auditing standards report. Within this report, we identify recommendations for improvement. We did have a total of five recommendations to share with the village, which we'll go into that. But within this document available on PDF page 126 or printed page 102, we mention or identify the five recommendations that we have for the village. Before we get into the recommendations, the last schedule I do want to share with you is the federal award schedule. So this schedule is not required for every municipality. It's only required for municipalities that receive X amount of federal assistance or grants. It's an additional audit requirement. So for this fiscal year, the village obtained a financial statement audit as required by Florida law, Florida statutes. But because of the robust federal grant activity, which pushed the village in excess of the reporting threshold, the village was subject to an additional audit, which it's called a federal single audit, also known as a uniform guidance. So this represents all the federal grants that were expended during the fiscal year, which was $2.6 million. Because you exceeded this reporting threshold, we also had to perform this audit, and we performed an audit specifically looking at the coronavirus or the COVID funding. The village expended $2.2 million, and when you receive COVID funding, the village is not at its discretion to use it for whatever activity it would like. There are certain criteria to what is an acceptable activity or an acceptable expenditure. So we test to ensure that the village did consume those federal grants for allowable activity and expenditures. And we had no items of concern in terms of the federal single audit. That highlights the financial statements and the federal awards. I'm not going to go into the five recommendations for improvement that we reported within our document. The first one being that we are aware that there was change in management and change in personnel. And because of that, there was a lack of providing us the financial general ledger on a timely basis, which we're all aware. And therefore, the reporting deadline was missed. There is a reporting deadline stipulated by state law. And As of today, the village is in compliance because this was submitted to Tallahassee, the Florida Auditor General, and the Joint Legislative Committee. But at the point of the fiscal year end, the village was not in compliance because it took a bit longer to reconcile its books and records and contract an auditor and produce a final audited financial statement. So that's the first item. The second item was related to payroll. One of the tests that we do for payroll is that we look at the employee database and we select on a random basis certain employees to test and look at their HR file. So if John Doe is, we look at their HR file, we compare it to their payroll check. And if John Doe is receiving an hourly rate of, let's say, $20 per hour, we go back to the HR file to make sure that that's the approved pay rate. And while we did not believe that there was an issue in the rates, when we opened the HR files, some of the record keeping of the approval forms were not located. So we mentioned that we recommend that there be better safeguards. in record keeping HR files in terms of payroll, just because if anybody wants to audit somebody's pay stub, and they're gonna look at the hourly rate that they're being paid, you wanna track it back to some type of HR file that there was either a pay increase as compared to the previous fiscal year, or that if there was a pay rate change during the fiscal year, that it did go through the proper approval levels. Maybe it's subject to approval by a certain department head or subject to approval by the village manager to have somebody's pay rate change. All of that should have a record keeping in some individual's HR file. So that was the second recommendation. The third one was regarding the nine months for the Florida statute. This audit was due in 2025 and it was produced in 2026. Once again, as of today, April 14th, the village is in compliance with Florida law. The other item that we mentioned was it's all related to the delay in producing and completing the audit. So the previous recommendation was related to the Florida law. The law says that this was supposed to be completed in 2025. Well, there's a federal law that says the same thing. They have a different timeline in terms of a data collection form. So even though it's all related to the same delay in the completion of the audit, we do separate it between two different types of recommendation because one is governed by Florida law and the other one is governed by federal law. So it is related to the fact that there was a federal law that was not adhered to. Within the document, as required by auditing standards, The auditor produces these recommendations and there is a response from management regarding each recommendation, which I'll share with you momentarily. The last item or last recommendation is regarding the state revolving loan. So without going into much detail, many years ago, the village obtained loans that are issued by the Florida Department of Environmental Protection. And within that loan agreement there is something called debt covenants and debt covenants are when a lender lends an individual and an entity a municipality um alone they require certain metrics that could be financial or qualitative metrics to be met throughout the loan a period within that document they included a covenant that stipulated that you that the end that the village was to produce a certain amount of revenue from the water and sewer fund operations. So the document, the agreement many moons ago, the village agreed to adhering to a minimum formula to equate what was the minimum revenue that the water and sewer fund was to produce. And when we compared the formula inside the debt agreement or loan document as compared to the revenue that the village produced in the water and sewer fund, it was not sufficient. So because of that, we reported that the village, we recommend that the village monitor the actual results of the water and sewer fund before year end to ensure that there's enough a revenue being produced by the funds in order to adhere to that funding requirement in the loan. And that could be revisiting the rates, the water and sewer rates that are being currently charged to residents of the village. That could be done by a rate study where an independent party compares and produces a rate study saying, based on how much it costs to operate the water and sewer activity of the village, these are the rates that you should be applying to your services in order to adhere to the loan document. So that was one of the items that we mentioned. Why is this so important? The reason that this, out of all the recommendations, I think they are important, but this one in particular is because although we know that the state of Florida Department of Environmental Protection did not take action they could take action for the mis-covenant. What action could they do? They could do a debt call. A debt call is when the lender calls that debt to be due immediately. They did not do that. We know that as of today, they did not call the debt. But for financial statement purposes, we disclose that the village was not in compliance with the loan document and therefore this debt could be called at any moment. So it puts a little bit of strain on the village because if the state, which again, they did not call the debt. If the state was to call the debt, the loan will have to be paid in full immediately as opposed in many years to come. So that's why it's important to make sure that the village do its best to stay in compliance with the debt covenant or clauses within the loan agreement. After, as an auditor, when you provide recommendations to a client, the client has the ability to respond and stipulate if they agree or disagree with the auditor. And our recommendations weren't, they were pretty factual because our recommendations are based on thorough law, saying the law says that you have to finish the audit by this date. The federal law says you have to issue the audit by this day. And the loan said that you have to charge X amount as a minimum and it wasn't being charged. So it was really factual based. So as noted within the villages or management's response, management said that they do agree with the auditor's recommendations. And as part of their response, they stipulate when do they expect that they would address the recommendation. So I would ask you if there's, this is another section. It's, it's, I believe it's three pages where the village says, okay, I understand. I, and I acknowledge these recommendations. What we like to call at the firm, the items in pursuit of perfection. And we understand your recommendations. This is what we're going to do about it. And this is when we believe these items will be accomplished. So, um, um, it says that, um, by September, um, 30, 20, 26, the majority of these recommendations will be addressed and management believes that these will not be repeated recommendations in years to come. So just to give it full circle. I'm here today presenting the financial statements, but we had a total of five individuals working on the audit. We started the audit. We have different phases. And I want to thank Mady and her team and the village manager's office as well, because not only were you subject to two audits, you had the financial statement audit, but because of your robust federal grants, you had another federal audit performed. And then in addition to that, you change auditors. And we audited. over 60 municipalities just in South Florida. And this is what we specialize in. But always when there's a change in auditors, there is a lot of requests that we require from our clients because we populate what we call is a permanent file, historical lease agreements, historical debt agreements, historical, there's a lot of pension information that we requested. And I know that took a lot of time and effort from Mady and her team to produce all the information. The good thing is that many of the information that we requested on year one will not be requesting again next year. We'll be only requesting changes to documents, changes to lease agreements, debt agreements, changes to pension ordinance. So at least we have the foundation and we will not be requesting the amount of information that we requested from Mady and her team this year. So I wanna thank Mady for her patience and for helping us throughout the process. We ask a lot of questions and it's part of the process and we don't try to make things complicated, but we've been tasked to perform an audit to ensure that we're able to conclude and identify any areas for improvement. And that's what we did here today. So I'll open up to any questions you may have. Once again, the audit is finalized and it has been submitted to the state. It was submitted to the state the same day that it was produced, just in order to make the village compliant with Florida law.

Before anybody else puts in Mr. Arisa. Yeah. I have only been present for about 18 to 20 then CAFRs of the village. And I have never had a comprehensive report given. like you have just given tonight. So congratulations on that.

Thank you. Thank you.

Hey, this is Sid Hart. Just a question for you.

Yes.

So for the debt covenants, what kind of bonds are those? Are those general obligation bonds or?

No, they're state revolving loan agreements. Oh, state revolving. Yeah. So the Florida Department of Environmental Protection, they have two programs. It's called the Clean Water Program and the Drinking Water Program. And what they do to help and improve infrastructure at municipalities is that they provide these loan opportunities at reduced interest rates. So they're typically under prime, typically less than when you receive it, you go out to market because it is given through the state level that receives federal funding. But within that document, as mentioned, there's different covenants. The one that was missed was the minimum revenue covenants. They call it pledge revenue. And they require that the village produce a certain amount of revenue out of its water and sewer activity. And the minimum that they want the village to produce is not being produced.

And so what is the implication then, or I guess the adjustment that needs to be made? Because I'm assuming that the state won't call the debt.

So the first thing that we did was we reached out to the state and asked for a waiver. And we told them, hey, we know that you didn't call this debt. So can we get a waiver on this debt covenants? And they would not give it to us. They said, no, we want the village to adhere to it. And we want to see if they make an improvement on it. because it's part of the program. We give out these loans to many municipalities across the state of Florida, and we keep them accountable to the program requirements, and we're going to keep North Bay Village accountable to it. I don't want to speak on their behalf, but they will provide more information. But I did want to mention that I did, we did reach out for a waiver, and Mady could confirm, and they did not produce the waiver. Because when you have a debt or a loan or line of credit, And if there's requirements and they're not met, you could go back to the lender and say, look, I did not meet it. Can you please provide me a waiver so that my auditor will not report it and will not report it in terms of the consequences of not meeting the waiver? And they came back and they said, no, we expect for the auditor to report it. Thank you for the auditor for pointing it out. And we want them to comply with it.

And so does it impact any future ability to continue to get loans or anything like that?

I don't want to speak on their behalf, but I would expect that it may be an item of discussion for future loans, but that would be directly with them. I don't want to speak on their behalf. Our responsibility is to test the agreement versus your general ledger. And if we have a finding, identify because the Florida Auditor General says, CBIS, I want you to look at the numbers and tell me if the numbers are right, the assets, the liabilities, the equity, the revenue. But if you're aware of missing debt compliance or missing adherence to Florida law, you have to make us aware. And that's why we had to, it wasn't up to us. It's a requirement by Florida law to report that covenant compliance.

Now, speaking on behalf of the village, Sid, I will answer you this way. For the three years prior to this audit being done, the village did not raise the water or the sewer rates on the village residents, only did the pass-through of what the county increased. That's the fault we suffered then, and because of that, we were... We're calling it short, not short on payments. We paid the amount that we had to pay. We were short on collection from the residents to cover what we were short. So now we're in the process of doing the study. And unfortunately, all residents are going to be hit with an increase in the water and shore.

Gotcha. Okay. Well, that's super helpful. Thank you.

The last thing I want to mention, the document is over 150 pages. If you read it and digest it and something comes up, Mady has our contact information. We make ourselves available. Our approach is not just to be here for the audit and say hi and bye. We've mentioned to Mady that if there's an agreement that the village is going to enter into or sign and they would like to maybe run it by us, not for approval because we're independent. We're not here to make management decisions. But to give you some insight on the accounting of how it's going to affect your equity, how is it going to affect your future fund balance? Fund balance is a term that they use for the general fund of how much money you have designated, unrestricted, restricted, committed. We make ourselves available. Auditing standards allow us to provide advice and how to interpret accounting standards. It doesn't allow us to make decisions for management, but we feel comfortable. If you have an agreement, you say, hey, CBiz, can you tell me how this is going to affect my financial statements before I sign it? There's no cost for that. We do that all the time. And it's a good thing for you, but it's also a good thing for us so that when we perform the audit, it's not a surprise and it takes us longer to digest it for the first time. So very typical for our clients to send us potential public-private partnership agreements. If an entity is going to get into one of those, those do have significant accounting implications. So we're experts in it, and we make ourselves available for that and other things that might come around.

And in reply for the village, I will also say that the next audit is due, if I'm not mistaken, by the end of June. which is the 24-25 audit. And once we get those, you're going to see the differences in the funds that we collected that we have spent, mainly in the TISE project. And we do, by the way, Mario, I'm letting you know, I mean, Moises, I'm letting you know, we do have a PPP. Okay. Yeah. Which I'm sure you know by now, 24-25, which is the TISE project. You know, and everything is above board. The issue we had, the big issue we had, and we said, hey, there's nothing we can do to correct it. We lost, and I'm being polite by saying we lost, we lost our village manager and we lost our CFO. So we were left on budget night without a budget. Might be how to kick her heels in. And she has been a super champion. She created a budget, not only for this year, but last year and another one for this year. And she's sure to control it. So she has her hands full. All the findings, the HR findings were true. I can also attest that none of those employees are currently working for the village either. They have all gone to other cities, other headaches for CBiz if they're doing those. And we have a system in place that requires three signatures for any employee, which is the manager's. the HR director, and the department manager. So we're covered as far as that one, as covered as we can be, as far as that paperwork goes. And the whole accounting system has, not accounting system, payroll system has changed from, I forgot the name, it starts with a K, the other company, back we went to ADP, which is an easier term, company to deal with. So every employee has clean records now of payroll signed by three individuals. So that finding I know will disappear. The findings about timeliness will disappear. And the only one that we're working on right now is the revolving loan program.

I had just a quick question if you guys don't mind. So CBiz is doing the new audit that's supposed to come out in June, correct? Yes. Okay, great. That'll obviously be really helpful since you guys had just done it in the past. Being that this report has only been out for a few months and you guys are just now getting a chance to really go back and look at some of the issues that we had in 2020, the year prior, Is there a dialogue with, I guess it would be the commissioners, as far as things like the sewer? You could look at that when this report first came out and immediately say, okay, this is a problem, we need to change it. But is there a dialogue with the next year or the most current situation to make sure that you're not having a knee-jerk reaction to something from last year when it may have already corrected itself? I'm just using the sewer as an example, but in general, if we're first showing an alarm going off for that year, but then your first instinct, you want to correct it, but you might go, wait a minute, wait, we don't have to do anything. It's actually something that already taken care of.

It just hasn't come out yet. Correct. The revenue in the pledge revenue, we do have preliminary fiscal year 25 numbers. There was some months I didn't want to project out. I don't want to say that it's not going to be in compliance, but typically, unless there was a significant, which we know that there was no rate change, unless there was a significant decrease in expenses, we do not expect for the ratio to be met. When the village changes its utility rates, it cannot be done just from one day to another. There's a process, and it has to go to the village council to approve. the rates for the rate change. I'll let the commissioner speak, too. It does take some time to change rates.

It doesn't take that much of a time, but it takes a little bit of paperwork. Basically, what also happened here was the administration that we had at that time felt this was never a finding by the prior auditors, by the way. that we were not in compliance for those three years when we're just passing on the pass-through from the county. So we were not made aware. My philosophy, and I cannot speak for my four fellow commissioners, immediately I go for findings and immediately I start digging into the findings. Once I got my copy of my report, which I believe I got it a little bit earlier than you guys did, I got it before it went to state, I wrote Maite and Frank, my village manager and my CFO, questions regarding these findings. And I have received answers on them already. That's why I'm able to give you the answers that for 24-25, these should all disappear. Except the revolving lone one, because we need to do the study of what we're under. We're calling it such. We're under... as far as collecting the funds. We're not under as far as paying the funds. You know, they have received the proper payment. That's one of the reasons why they didn't call the debt in, by the way. You know, we haven't cheated them of their funds. So as long as we make the proper payments, we're good, but we need to correct the amount of monies that are coming in because we're borrowing from Pete to pay Paul.

Sure. Okay. Thank you.

Mr. Arisa, I have a question. The utility rate study, that's by Florida law. We have to do that before we can increase our rates?

I believe that I'm not aware of a Florida law. I believe the rate study that's going to be produced is going to produce not only for one fiscal year, but it's going to show you a projection for years to come. In order to avoid having to bring this up to council year after year or having significant changes without and having to go to citizens every year with a change in rates, it is typical for us to see our clients do a multi-year rate study so that they could project not only for the current year, but for future years. Because there may be expenses that the village is aware of that are going to commence or take up upon in terms of water and sewer infrastructure that you're not paying or capturing in this fiscal year. So when they do the rate study, not only are they going to ask you about historical information, but they're going to ask you, Mady, what other expenses do you have a CIP plan for the next five years that you know that it's going to cost X amount? so that we could consider those future expenses that are being projected as part of the rate study, because they don't want to do the rate study just to correct it for one fiscal year, and then second fiscal year, you go back to not being in compliance.

All right. I know. I understand. As a matter of fact, the clerk and myself and Janice went ahead and tried to reach out to other cities to see if they have...

I could help you. I could help you with. Yes, I could help because it's very common. I could help you put you in contact with some of our clients that have done a rate study recently and give you a couple of names of municipalities that have hired or have someone that they recently used for a rate study. And I'll give you a couple of names so that you could have a couple of different vendors to have a dialogue with. In the state of Florida, there is a law that if one municipality went out to bid and hire somebody to do a race study, the village could piggyback off that because it went through the process.

Correct.

We found one. I'm sorry.

The other thing we have to keep in mind, and I'm sure you are keeping in mind, is that we have all these buildings hopefully coming up. Right. Two of them have started. And it's going to take a good two years before they really are up and running. But we have to start counting units that are going in there and the increase in water and sewer of these buildings because we have to collect those funds. I'm not sure if it's going to lower our general village population rate. I'm hoping it doesn't once everything is done. But there's also an increase in use by all these departments.

Yeah. No, no, I understand. As a matter of fact, the one that we found was just finished in January 15th of 26 in another city, Delon. I mean, I haven't talked to the manager yet. He was in a meeting this afternoon when we got the information, but I'll work with him tomorrow morning on it.

So this is the manager. This is Frank. And I'm in the mode of almost all of these things that we have found. is to stop the bleed that's going on. And it appears to me we should, being that looking over the last few years, and like the commissioner is saying, these other buildings have not come online yet, that I am anticipating I'm going to have the similar finding coming for the 2425 audit as we did with the 2324. The fact that we made the payments is a plus item, but it's also been a bleed on the general fund because obviously we've not been bringing in the revenue that should be covering the costs of the revolving loan fund. And that's what they're concerned about is that even though we made the payments, and that's a plus when I talk to the lady that runs the operation up there, They are concerned that if something were to happen in the general fund area, that we would have to default on the payments coming in for those loan amounts. So what I'm looking for is a short-term fix coming up right now for the upcoming budget. We have to address the millage. We have to address the debt service. And I don't want to leave it where it is at the present time because I know it's not adequate. to cover the costs that we're going to have to cover. So what I've told Mady and what I'm looking for CBIS to help us on is what's a good shot when you look at what our debt services on those loans and what our revenues are that I would need to make an increase on for the immediate while we do an in-depth, because I don't want to do a, a half-assed job to hurry up and get a report. I'd rather get a figure and say, okay, here's a healthy amount that we should increase the debt service on those water and sewer. And then if I have to back off of it, I don't want to do an overkill, but at least to show the state that we've made an effort right away in the 20, when we do the 26 audit, that we've done something in the short term to start to shore this up. So I'd like to see this, to look at that and see what they can come up with too.

So for what I could do in order to remain independent because we're the auditors and I don't want it to appear that I set the rates for the village, I could provide you the calculation that shows the shortfall and the projection of what revenue threshold would have kept you in compliance. So, and then base, I give you that information and then you as management decide and set the rates. I'm not going to say.

But that will give us something concrete to get to the commission. as we're now preparing the budget for next year. And we've got to set the millage not only on this debt, but we have other debt service with the stormwater alone that we're going to have to address too. So those will all be combined. So that would be great information and that would help us At least, you know, get a stab at it and then not do something just foolish or haphazard. And it would show the state that we've made a concerted effort to improve on the ratio of the debt to the loan.

You know, hopefully then for the 26 audit, not 25, the 26 audit, we can remove it as a finding.

Right. Right, because I think we'll have that find. We have to have it. We're going to have it again.

25 closed already.

Yeah, yeah. So it's going to, you know, we're going to have it again. But we're fixing the other ones that we have real control over. And, of course, with Janice being here, there's no –

doubt that the payroll and the hr stuff is you know up to snuff because that's just what she does so we're getting there and the 24 25 audit has begun already we've already started submitting to cbiz uh from their want list still working a couple of items in the trial balance but that should be corrected shortly okay yeah and we're and we're local

We were in downtown Miami. We just moved to Coral Gables. So we're local. We perform the audit onsite. We're not from out of town. We don't do this virtual stuff. So we're there helping Mady and to the best of our ability. So if anything ever comes up, we're just, again, we're locally based in Coral Gables.

Members of the board, any questions? This is your chance.

No further questions, but I do also want to thank you, Mr. Arisa, for a very clear and educational presentation of this audit material. And also... Echo your kudos to my team for their work. Seeing a clean audit opinion under those circumstances is to me a big achievement. Big achievement. Thank you.

Yeah, I agree.

While thinking of it, though, I know that we've talked about this compliance issue with the water and sewage debt, and I haven't read the management response in detail, but I heard in the beginning that your recommendation was monitoring issues. Would that be monitoring in terms of just fixing it the way we just discussed? Or is it to, in addition, also implement like an annual control, an annual monitoring control to respond to the risk of this manifestation?

So we left it very general to monitor and compare actual results of the fund. to ensure that future water and sewer rates of revenue are sufficient to cover the annual operating of the fund as well as to meet the coverage ratios in the debt agreement. Using the term monitor could be different. It could be because not everybody goes and hires a third party to do a rate study. Sometimes the expertise is in-house and the municipality will do their own rate study themselves. So we did leave it very generalized, but that does encompass either looking inside for the expertise or having a rate study performed from an external party. I personally, from our experience, see that municipalities do have a big appetite to do a rate study with an external party because it goes over rather well with the residents of the municipality that it was just not left to us two individuals that work at the village or just the elected body to determine what is a sufficient rate. Sometimes increasing rates is not the best news to hear. So when you have an external independent company doing a rate study that this is all they do and that's what they specialize in to support, this would be the rate that you should be charging. And if you've ever seen a rate study, Not only does it tell you what you should be charging in order to provide the level of quality of service that you as a village want to provide, but it also provides you comparison of your peers. Other municipalities surrounding the village of North Bay Village, their information will also be in there to give you an eyeball of what they charge and how much are their rates to operate their water and sewer fund. So I think that the external rate studies are welcome because it gives that extra ammunition to go to the public of why we have to increase the rates. Oh, not us, the village has to increase the rate.

So would you see this to be an annual thing?

No, so when you see the rate studies, the expert, they call them specialists, they call them management specialists, they produce a report saying this is what you should increase it today. And they give you different options of if you were to increase it at a different level, now you may not have to reanalyze this or increase for the next five years. You don't have to think about this for the next five years. But if you only increase it X amount, this might be another dialogue that we're going to have to talk about in 36 months again. So it's a very comprehensive report. And it's not produced like this because you have to provide them not only historical information, but in order to get a well-produced product, Mady is going to have to look at what the capital improvement plans are for the village for the next five years and provide all that information to them. So there's a forecasting aspect to it in order to produce that product.

And listen, this is Frank again. So that's why I'm saying it's going to take some time because we just entered into an agreement with Ardura who is doing a study of the water and sewer infrastructure that we have throughout the village. And most of this infrastructure has been in since the mid forties and it is deteriorating and we're having continual issues with major leaks and repairs that have to take place. Not little leaks, but we've had several on the causeway. One of them recently that was just a two inch water line going to a building ended up costing us over $200,000 to repair. Because when you got into the guts of what was in the ground, it wasn't salvageable and some larger blinds had to be replaced and other valves had to be put in just to be able to shut the water off to make that repair for that two inch line. So all of those calculations, all of that information, when we do the rate study, the real rate study, will be supplied to whoever's doing the study and they will get the picture of exactly what our infrastructure is like. And that's why back when I was here back in 20, I guess, 16, 17 commissioner, when we went to the state and we made these loans, that's how long these loans have been in place to start doing the repair work to the infrastructure. For some reason, some of that operational stuff halted And we're now playing catch up on that. So, you know, we need to make an effort. We know we got to increase it. We don't want to do an overkill, but we need to do a good rate study. And some of the basic information that the people doing the rate study are going to require, I don't have to give them at the present time. We can give numbers on costs, but I can tell you now, I pay for more water from the county than Then I collect off our meters. So it's going in the ground.

And I don't want to point fingers, but besides manager and CFO, we all, we have also changed our public works and we have created a CIP director. So we have all that information that we, not we, that they have to furnish us with so we can do the proper reporting from this point forward.

Yeah. We've got our work ahead of us, but we're not shirking it and we're not denying that the problems are there. We're attacking it.

But basically, the board, you're going to hear that there's a finding in the 25 audit on the revolving loan because 25 closed October 1st or September 30th. Yeah. So we cannot go back and correct what took place till September 30th. We can correct what's taking place this year and try to correct it before September 30th. So in 26, there is a correction to the problem.

Correct. No further questions from me.

And the only other thing I will say regarding this report is you gentlemen and one lady, which is Liz, I'm excluding you in my thing because you're staffing. I know you'll be there. You have one more chance if your question pops up next Tuesday night. I don't know if it's going to be Moises or it's going to be Brandon, but one of them is going to go in front of the commission with the same report. And I am sure a lot of these questions will be asked of him again. Okay. And hopefully answers will be at least the commission will be advised of this major finding and that we have to correct it, which once you hear the residents complaining about, hey, our water rates are going up. Yes, our water rates are going to go up.

They have to go up.

All right.

Any other questions for Mr. Arisa before we let him go?

I was just going to say thank you, sir.

Thank you for having me. Thank you.

I appreciate it.

I appreciate it. Allowing us to be of service. If anything comes up, you have my contact information. Have a good evening. Thank you.

Good evening, Moise.

Bye. Good evening.

All right. Let's go back then in the agenda. We have approval of our meeting minutes. I'll make a motion to approve the meeting minutes from 0310. Everyone in favor say aye. Second. Aye. Okay, I had a second. I heard aye. Meeting minutes approved.

Before we go past this item, up till now, I have been doing the minutes. The minutes do not require that much work. Obviously, you see what the minutes state. If there's anybody that wants to volunteer to be secretary and take on the job of doing minutes, I will do this tonight's minutes. But hopefully, if we have a secretary, they can do it from this point forward.

Do we have any immediate volunteers, or do you want to think about it until next time and be ready with your pen?

I don't mind trying taking that on, actually. The only reason I'm a little hesitant is because this is meeting number two for me, so I want to make sure I'm not quite familiar with the way it rolls so far.

I'll do minutes again for this meeting. I don't mind. You're reading the minutes that I'm submitting, basically. You see that there is comment very few comments that's why this is taped so if anybody wants a copy of the actual verbatim of the meet of the meeting this is taped okay so it's just a summary of what took place okay i will do this tonight's meeting and hopefully you'll say yes for the next meeting yeah that that's that should be fine then sure okay thank you great thank you so much bill

Sure. Moving on then to 3A, update on the Village Community Center and the Treasure Island Elementary School project.

I'll leave that to my boss.

Go ahead, Mr. Boss.

No, I'm not the boss. Once you're in these positions for a while, you realize how little you are the boss. So let me bring you up to speed. Let's talk about the community center first. It is moving quite rapidly now. I was over there yesterday and walked through it. The drywall is just about finished on the interior. So that means that all the infrastructure, the electric and the plumbing has all been completed. The windows are all in except two on the east side where they are still using that opening to put supplies in and out. But that's rapidly going to be closed up too, and they're going to be under AC. The air conditioning units have been installed. They are now, when I was there yesterday, putting in the stringers to drop the ceiling. So then they'll be able very quickly to get the AC going inside the buildings. They're ready to do the flooring. They've already painted on the second floor, the first coat. And so it's going very fast on the buildings. When we get to the outside, the rain slowed them down a little bit. They're about ready to put in the artificial turf on the 11 by 11 field. It looks magnificent. It's huge. And so I would not be surprised at any day if they don't start this week, since we're getting dry weather to start to put in the turf. The sidewalk group running jogging path all around the school, has been completed except for a couple of key areas where they're still running equipment in and out and across and they don't want to mess the sidewalks up. So they'll do that as they back out. They are now prepping the grounds for the pickleball paddleball courts. That's going to be the last installation they do because they want to back out the gates as they close that up and be able to get the equipment out. So that is moving rapidly. When you look at time, they are anticipating just word of mouth. By the end of May, they will be finished with that project. Let's talk about the city hall. We're still on target to break ground before August 30th with the agreement they have with the county. We... So we've had another couple of snags with FDOT, and I'm not going to allow that to hold us up any longer on putting this out to bid. So the last comments that we received from the plans reviewers from CAP Engineering were some electrical issues that had to be addressed. That is being handled by the architect at the present time. And once those are in and approved, regardless of where we're at with FDOT, we're going to put it out to bid with those existing plans, recognizing that the FDOT stuff is really minor in nature and is not really going to have an impact on the building itself. So we have five contractors that were already vetted several months ago that will be able to bid on the project. They have had 90% plans for several months. So they've been able to work on their takeoffs and whatever they want on their pricing that they're working on. And this will be the final set of plans that go out to them. So we'll put it out to bid probably for minimum of 45 days or 60 days. And then a committee will review the bid packages that come in. The county will be a part of that. They have a member on there since there's a county fire station in the project. And then it'll go before the commission for their award. Typically, the commission takes August off as a break during the summer. So I am... contemplating in my own brain that this September commission meeting is a deadline for me to have a recommendation before the commission to award the bid. And if we're able to do that Tuesday in September, we should be able to get to the stage where they're setting up and ready to break ground by the end of August. So that's my timeline on that.

Frank, if you hand out the contract in September by commission, you cannot break ground in August. Because? Because August is before September. We haven't given the contract out.

Well, you're absolutely correct there, sir. I'm going to have to look at our plan. I mean, we can do it.

You have to shorten the number. We may have to shorten the date. July. Should we do it in July or August? We have to call a special meeting in August.

Well, we can call a special meeting in August if we had to, but that's going to be late. We're going to have to try to do it in July, Commissioner. Yep. Yeah, that's not good. But anyway, we're pressing on that. We have an agreement with the county to break ground before the end of August. I'm sure if it's delayed for a couple of weeks, it's not going to be a big deal. They are very excited to get this thing going too. So they understand the process and what we've been up against. But that's where we are on the village home.

I mean, that's two major projects for the village in one year. That's a hell of a lot of work. Yeah.

It is a lot of work. And then when you, listen, when you throw the audit into what we've all been, had to be tied up with, with supplying this information, all the departments with a METE. Plus, we're breaking ground on the third major project is the North Bay Island Stormwater Project, which will break ground in the summer also. For that, it's a huge stormwater project on North Bay Island. So it's another capital project that's breaking ground.

And all departments have already been asked to start preparing and submit, I don't know what date because I'm not at the department, the budget for next year to the administration so they can start working on next year's budget.

Yeah, we have our first meeting with all the directors tomorrow.

Now, this is a constant moving machine that we're working with here, trying to fine-tune it.

Yeah. Well, the work's much appreciated.

As they say, it takes a village. Yes, it does.

Any questions? All right. Thank you.

Yeah, no, I was just thinking if the budget work for next fiscal year starts already, then that study for the Warren Sue, which is even more pressing.

No, I don't think it'll be ready for the next meeting.

No, I don't think it's going to be ready, but I'm just thinking that it's more pressing since the budget work also starts.

The good thing is we have, and I'm talking off the top of my head, we have like eight different departments. And each department is basically tasked with another one of these projects. This is going to be the one that's doing the... legwork for calling it such or all the work that's needed to start moving the study on the rate approval, CBiz now has to submit to us a calculation of what the shortage was for us to have it included in next year's budget, basically. uh the full true budget study will not be till the following year following budget year i don't think unless we do a change in the middle of the year which is a different uh accounting system we may be able to do it well the issue is is you've got to get that uh uh

Your debt millage in, that's how, you know, that's the whole issue. Even if we discover what it is, we're not going to be able to make a change with a horse in the middle of the stream. So that's why I'm saying we can get a thumbnail increase now to start showing the state that we're addressing it and not do an overkill with it. And then see what the rate study comes back with. And it'll probably be a rate increase above that. But at least we'll have started to stop the bleeding. And it'll show the state that we're earnestly trying to fix it. That's the best I think we can get done by this time around. Because, you know, we're going to be upset in the millage. I mean, you know, it's going to be, we're there. Yep.

But that's what I understood from the auditor, that he was going to help us to calculate that.

He'll give us some figures, the highs and the lows, and then we'll have to take the stab at it as to what we can convince. So, you know, present to the commission and what they're willing to go with, and then we go from there.

Correct.

I mean, thank God it's not one of my headaches this year. But we also have to consider that we need to increase our budget. Let's be realistic. There's going to be an increase in millage. But we have to do the least increase possible because it's an election year.

Yeah.

And I'm not up for re-election, so I have no place on the matter. It's not affecting me.

Yeah, but the reality is what the reality is, Commissioner. Oh, true.

That's what I'm saying. There's going to be an increase. There has to be.

Yeah. I mean, here we're opening up the beautiful community center, and it's not budgeted to be staffed in this year's budget. So how do we run the programs? How do we provide the services for the community, for the children, for the seniors, those types of things? We've got a beautiful community building. We need to have programs in.

And so it's going to have to be addressed. It will be addressed. There's some ideas. All right, jump to one.

Sorry, jumping one step back there, Frank. So the way I understood you when we talked about the rate study is that it's not only a revenue aspect, it's also an investment aspect in terms of the water and sewer. How would that work? or how does that work so investments in the water and sewer infrastructure is that funded by the these rates or is that fund and funded by other means well it depends on

In other words, you know, I might say I have not delved into this, but I don't know what's left that we can draw down, how much we're eligible to get. But we would use those short term or the loans from the state. to fund this type of infrastructure work. The village passed a stormwater bond a couple of years ago that we are funding the stormwater work from. But the sewer, the sanitary sewer and the potable water, we have these two loans that we have with the state, state revolving loan fund, which Those roll over and increase as long as you're in good standing and you're able to make other draws down to do these projects. But what are the projects going to be? We need to get the study from Ardura and say, okay, here's your worst spot. Here's this, here's that. And how do we start attacking that? And then the new buildings that are going up, as they submit their permits, they have to get what's called a water allocation and a sewer allocation letter from the county that allows them to hook up to our system with what our capabilities are. And that study is probably going to show that some of these newer buildings that haven't gotten their certificates yet may fall short on us being able to supply them. Now, some of that has to be paid for by them and some of it has to be paid for by us. And so these studies and the hydraulic calculations that are done on our flows are what are provided to the engineers to say, okay, this building's got so many units, they're going to flush so many toilets, yada, yada, yada. You've got to have this flow. And they look back at our system and they say, you have the capacity or you don't. If you don't have the capacity, they don't get their letters. And without those letters, they can't get a building permit. So it has a snowball effect that our infrastructure has an impact on these projects that want to go forward for them to be able to pull their building permits. So it's just in the past few years, the Probably some things that should have been done or sped up a little bit didn't take place. And we're doing it now. And it's just, you know, it's just how it is.

Has anyone talked to some of the developers about this? I mean, this is right. I'm sure you've had lots of conversations, but this is my wheelhouse. I'm a developer, so I'm constantly working with cities on this kind of thing. And when cities don't know it, a lot of times we already do, and even sometimes before the cities do, and we already plan a contingency fund for it. And especially, I don't do developments anything the size. I do retail shopping centers with, you know, like your local neighbor community center and things like that. But they usually, I mean, most of the time, even on the developments that are my size, we're ready to write the check very quickly if we have to.

Going back numerous years, our prior stint, the gentleman who developed Alexei, which some of you may live there, he was willing to pay for an advance, the sewer line for all these buildings that he was planning on building and they were coming online. And the ones that he wasn't involved with, once they had to attach to his sewer line, they would have to pay a prorated portion to them. So yes, we have discussed this in the past. They are all aware of our situation and they're all aware that we have X capacity at this point. When a building goes up for approval, Hopefully, because I have no way of proving it, our planning department is deducting those amounts from the total figure.

Oh, yeah, the county does. The county, that's exactly what happens. When they put in for their allocation letter, the county is keeping a running tab on what we have available both in water and in sanitary sewer.

And if they don't have it, they don't get a permit. That's all.

Yeah. Which we don't want to be in that position. We, you know, we want this, we need this development going on in the community because this development is what's going to pay for all this infrastructure that has to be replaced. It's beyond being fixed. We have lined all the sewer lines we can line. We've fixed the water lines when they're significantly, we're aware where the leak is.

I mean... We are constantly stating, and that's why we're most of the commissioners pro-development, we need the development to lower our taxes. If all these buildings do get built, not my children, maybe my grandchildren, you know, it's not immediate. But you promised the taxes are going to go down. Buildings are not built. You have to sell the units. You have to close on the units. You got to wait a year. And then the tax kicks in. We haven't built. I mean, yeah, all these buildings are proposed, but there's only two right now being built, Continuum West and Shoma.

And now Tula, you know, the one on the Harbor Island is, in fact, in the next couple of days, they've already scheduled it. They scheduled it for Tuesday. They scheduled it for Wednesday. They've got an inspection problem or something. I'm not sure what the issue is holding them up. But they're now put the tower up and they're ready to pour the 16th floor slab on that 7918 project on West Drive. And they think within four, I think they're telling me within four months, they will be up, they'll have the 21st floor done and the roof on. So those slabs are being poured. That may be the first project that's really completed because it's got such a head start on, you know, the other two are just really coming out of the ground. So there's activity definitely happening, but it's going to be time. You know, by the time they CO, it's another year before we get a nickel.

Okay. Any more questions for Frank to his update? No, not for me. Thank you, Frank. All right. Thank you so much, Frank. Moving on, item four, new business. Don't think we have anything. Five staff commission liaison updates. Anything beyond what we have already discussed? No.

Basically, I throw it in at the appropriate time. Thank you.

okay uh opening for public comments there's no no all right any suggestions for agenda items for our may 12th meeting should we solicit that through the clerk's email uh basically at the maze meeting you're going to have the starting date

or the ribbon cutting date for the community center, because we're discussing it at the commission meeting on next Tuesday. So it'll be out already, the information, but we can confer, and I can give you an idea of what's gonna be taking place by then, because the committee is meeting and planning the ribbon cutting. An update of where we stand on the project, we'll leave there on the agenda. And any other ideas you want to discuss? Any ideas you want to hit back on if you have the opportunity to do a deep dive on the book? The book is the Annual Comprehensive Financial Report. It used to have a different name before, which I'm used to calling it. The ACFR, please bring them up. Mike will be at the meeting. Frank will be at the meeting. I will be at the meeting. We should be able to answer these questions for you. The only one side comment I want to make, Liz, I need you to send me either by email or text your phone number because I was trying to reach you today to make sure you were at the meeting and I don't have your number.

I will send that right now. I was actually looking for your number in my phone. I had about five Richards, but you weren't one of them. So why don't you give me your number right now and then I'll text you my number.

My number is 786- 457-6108. That's my city phone number. All righty. And my email for anybody that wants to send me anything ever by text, you know, any emails or whatever is rschervone at nbvillage.com. And if you forget about it, just go to the advisory boards and I'm listed there or on the commissioners. It's all the information listed there as well.

Okie dokie. Adjournment. Motion to adjourn the meeting. Second. Thank you, Bill. Meeting adjourned. Thank you, guys. Thanks, everybody. Thank you.

Have a great night.