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2018.04.13_FAB_Minutes_Regular• - = TOWN OF HIGHLAND BEACH FINANCIAL ADVISORY BOARD REGULAR MEETING MINUTES Town Hall / Commission Chambers Date: April 13, 2018 3614 South Ocean Boulevard Time: 2:00 PM Highland Beach, Florida 1. CALL TO ORDER: Chair Babii called the Financial Advisory Board Regular Meeting of Friday, April 13, 2018 to order at 2:00 P.M. in Commission Chambers. Roll call was taken followed by the Pledge of Allegiance. MEMBERS PRESENT UPON ROLL CALL: Member Edward Kornfeld Member Jeff Hollander Vice Chair David Stern Chair Greg Babij Finance Director Cale Curtis 2. ADDITIONS, DELETIONS OR ACCEPTANCE OF AGENDA: Chair Babii called for any additions, deletions or modifications to the agenda. MOTION: Member Hollander moved to accept the agenda as presented. The motion was seconded by Vice Chair Stern, which passed unanimously. 3. PUBLIC COMMENTS AND REQUESTS: There were no public comments. 4. PRESENTATIONS: A) Introduction of New Member Jeff Hollander Member Hollander introduced himself. The Board welcomed Member Hollander. Financial Advisory Board Regular Minutes Tuesday, December 18, 2017 Paue 2 of 6 B) Comprehensive Annual Financial Report for Fiscal Year ending September 30, 2017 By: Racquel McIntosh of Gran & Associates Vice Chair Stern questioned the chart on Page III — 2007 to 2017 Taxable Assessed Valuation that shows a decrease in the value from 2007 to 2017 as well as the population. He asked where the data comes from and what it is based on. Finance Director Curtis explained the assessed valuation comes from the Palm Beach County Property Appraiser. For the fiscal year 2018, the Town has significantly surpassed the 2007 high of $2.3 billion. The population is based on the U.S. Census Bureau. Finance Director Curtis will pursue an effort to have the population changed. Racquel McIntosh reviewed the following points in the report: o Independent Auditor's Report — They have an unmodified or clean opinion for the Town and the financial statements present fairly, in all material respects, the respective financial position of the governmental activities for the fiscal year. o Page 9 — Statement of Net Position o Page 11 — Balance Sheet — Governmental Funds o Page 13 — Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds o Page 15 — Statement of Net Position — Proprietary Funds o Page 16 — Statement of Revenues, Expenses and Changes in Fund Net Position — Proprietary Funds o Page 36 — Long Term Liabilities o Page 47 — Florida Retirement System — Sensitivity analysis for the liability o Pages 50 & 51 — Florida Retirement System continuation o Pages 58 & 59 — Budget to Actual Report o Page 88 — Internal Control over Financial Reporting and Compliance Report Member Kornfeld asked for a quick summary regarding how they address their internal control review. Ms. McIntosh explained that they do interviews with the Finance Director and Town Manager and testing and pull samples from the financial system such as requisitions and invoices. o Page 90 — Financial Statement and Compliance Audit. As a result of the project for the water plant and the drawdown of the state funds, the Town met the threshold for a single audit. The threshold is $750.000 in any fiscal year. o Page 92 — Schedule of Expenditures of State Financial Assistance — Project tested for single audit. o Page 95 — Independent Auditor's Report on Compliance with Florida Statutes Section 218-415. The Town complied with the statute in all material respects. o Page 97 — Report to Management. Financial Advisory Board Regular Minutes Tuesday, December 18, 2017 Pame 3 of 6 Board Discussion: Member Hollander referred to the 2007 Promissory Note and whether the Town has the ability to prepay it. Ms. McIntosh does not believe any of the loans have prepayment penalties. Finance Director Curtis explained that this is true with the exception of the 2007 note. He will share the terms of the notes with the Financial Advisory Board for their review. Member Hollander referred to the fiscal year ending September 30th with the revenues in by the end of December and questioned the time lag from the end of September until now. Ms. McIntosh explained that the biggest issue is FRS and they do not issue their reports until mid-January. Chair Babii asked when they do the testing and initial interviews. Ms. McIntosh stated that it was done in December. Chair Babii asked if most of the work could be done sooner without the FRS and have a draft report done quickly. Ms. McIntosh did not think it would be possible to come earlier than December. They could do a draft without the FRS but it would take more time. Chair Babii referred to Page 3 — Management Analysis and Page 5 — Net Position and asked that the nomenclature be corrected. There needs to be more time for the Financial Advisory Board to review these audits before they are finalized. Finance Director Curtis stated that if he were to get draft statements by the first week in February, the FRS information would be available. This would be enough time to give the draft statements to the Financial Advisory Board for review before it is finalized. Ms. McIntosh explained that the draft report could be done in February but Finance Director Curtis would still have to do the MDA and the stat section. Technically it would not be until the first week of March. Finance Director Curtis does not see an issue with it and will still give this board enough time to review it. Discussion ensued regarding the timeliness of the FRS numbers given to the municipalities. The Board discussed finding ways to shorten the time. Chair Babii asked that the correction be made on Page 5: "Tax revenues were down $108" should read "Tax revenues were down $108,000". He asked where the discount factors come from on page 47. Ms. McIntosh explained they come from the FRS. Chair Babii also asked that the Town Official sheet be corrected to include the new Commissioner's names. Member Komfeld referred to the discount rates for the FRS. The (one) I% change can cause the Town's liability to go up significantly year to year. Ms. McIntosh explained that the Actuary for FRS put an exception in their report because they thought the discount rate was too high. Finance Director Curtis will summarize the Board's comments and report back to the Commission at the next workshop meeting. Financial Advisory Board Regular Minutes Tuesday, December 18, 2017 Pame 4 of 6 5. APPROVAL OF MINUTES: • December 18, 2017 — Regular Meeting Vice Chair Stern noted on Page 3, Line 1 $100,00 should read $100,000. MOTION: Vice Chair Stern moved to approve the minutes of December 18, 2017, Regular Meeting as amended. Member Komfeld seconded the motion, which passed unanimously. 6. OLD BUSINESS: None. 7. NEW BUSINESS: A. Review of Monthly Financial Report — Period Ending March 31, 2018 Finance Director Curtis presented this item. He explained that based on the way the Town is operated, they are primarily funded by ad valorem taxes. These taxes come in a very systematic and predictable manner. Most of these funds come in the months of December and January. These funds are what are used to finance the general operations of the Town including the administrative offices, the Police Department and the Fire Rescue Department. On Page 3, he explained any type of variances where the monthly expenditures or the year-to-date expenditures go outside of the expected amount for the fiscal year spent. Vice Chair Stern asked Finance Director Curtis to comment on Fines and Forfeitures on Page 2 of the report comparing last year to this year which shows a significant difference? Finance Director Curtis will look into this. Finance Director Curtis addressed Page 4: Special Revenue Fund which has to do with the Infrastructure Sales Tax and the Enterprise Funds (Water and Sewer) — These funds are very predictable in nature. The majority of the revenues are funded by water flat charges or sewer flat charges. Finance Director Curtis commented that overall for the month of February, we are in line with where we should be in comparison with prior years and where he expects to be as far as reporting is concerned. Vice Chair Stern addressed the chart on Page 5 and asked if Finance Director Curtis was comfortable that everything was in the right place to maximize our interest. Finance Director Curtis answered yes. Financial Advisory Board Regular Minutes Tuesday, December 18, 2017 Page 5 of 6 Member Komfeld referred to the water main project and the amount budgeted of $5 million and asked what the final number would be. Finance Director Curtis explained that we are at $3.5 million and will be well under the $5 million. Member Komfeld commented on the Monthly Financial Report and the fact that it is well prepared by Finance Director Curtis. B. Review of Investment Portfolio — Period Ending March 31, 2018 Finance Director Curtis presented this item. MOTION: Chair Babii moved to approve the Investment Portfolio of March 31, 2018, quarter end. The motion was seconded by Vice Chair Stern, which passed unanimously. Chair Babii complimented Finance Director Curtis on a job well done. He suggested the Commission give them direction as to how much of the money they have is needed near term and how much of the money is needed further term. They should also be looking into moving some of it out into a slightly longer duration. 8. REPORTS (PERMANENTLYADDED AGENDA ITEM A) Member Hollander is looking forward to reviewing the duration of the Town's investments. B) Member Kornfeld felt it was a good, productive meeting. The publishing of a monthly report is key. C) Vice Chair Stern also thought it was a good meeting and the board should make themselves open to anything the Commission feels they would like them to review. D) Chair Babij thanked the Commissioners for embracing the Financial Advisory Board. He interviewed three candidates for the three vacancies on the Board and has recommended them to the Commission. He suggested the board start thinking about larger infrastructure projects such as the streetscape, underground wiring and how much we want to spend on these projects and how much we want to borrow as we get more details from the Commissioners. 9. ANNOUNCEMENTS Administrative Support Specialist Rosalie DeMartino made the following announcements: • Planning Board Meeting — Friday, April 19, 2018 — 9:30 AM in Town Hall Conference Room • Town Commission Workshop Meeting —Tuesday, April 24, 2018 — 1:30 PM • Town Commission Regular Meeting — Tuesday, May 1, 2018 — 1:30 PM Financial Advisory Board Regular Minutes Tuesday, December 18, 2017 Page 6 of 6 10. ADJOURNMENT There being no further business to come before the Board, Chair Babii called for a motion to adjourn. MOTION: Vice Chair Stern moved to adjourn the meeting at 2:30 PM. Member Hollander seconded the motion, which passed unanimously. APPROVAL: ATTEST: X Rosalie DeMartino Administrative Support Specialist Date: i