Audited Financial Statements. Town of Mammoth Lakes, California. June 30, "ICHOlMJN V^OLSON. Roseville, Caiil'on'na 95661'

Transcription

1 Audited Financial Statements Town of Mammoth Lakes, California June 30, 2006 "ICHOlMJN V^OLSON Roseville, Caiil'on'na 95661'

2 TOWN OF MAMMOTH LAKES California Annual Financial Report June 30, 2006

3 Table of Contents INTRODUCTION SECTION Letter of Transmittal...,., ,,a-e FINANCIAL SECTION Independent Auditors Report Management s Discussion and Analysis, as Frepared by Management B asic Financial Statem ents: Government-Wide Financial Statements Statement of Net Assets Statement of Activities Fund Financial Statem ents: Balance Sheet - Governmental Funds Reconciliation of the Balance of Governmental Funds to the Statement of Net Assets Statement of Revenues, Expenses, and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities...16 Statement of Net Assets-Proprietary Funds., Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Assets - Fiduciary Funds - Agency Notes to the Financial Statements 21-45

4 Table of Contents - Continued REQUIRED SUPPLEMENTARY INFORMATION PERS Schedule of Funding Progress,, ,46 Note to Required Supplementary Information Budgetary Comparison Schedules ,48-51 OTHER SUPPLEMENTARY INFORMATION Independent Auditor s Report on Compliance and on Internal Control over Financial Reporting based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...,,...52 Combining Balance Sheet - Other Governmental Funds......,...,..., Combining Statement of Revenues, Expenditures, and Changes In Fund Balances - Other Governmental Funds Budgetary Comparison Schedules - Nonmajor Funds: DIF General Facilities Capital Projects Fund - Budgetary Comparison Schedule...,,..., ,...,,...57 DIF Law Enforcement Capita! Projects Fund - Budgetary Comparison Schedule.,, DIF Storm Drains Capital Projects Fund - Budgetary Comparison Schedule DIF Parks and Recreation Capital Projects Fund - Budgetary Comparison Schedule, DIF Public Meeting Facilities Capital Projects Fund - Budgetary Comparison Schedule.,, D ip pjre Facilities Capital Projects Fund - Budgetary Comparison Schedule DIF Airport Improvement Capital Projects Fund - Budgetary Comparison Schedule ,.,...,...63 DIF Library Capital Projects Fund - Budgetary Comparison Schedule...,,..,,...64

5 Table of Contents - Continued OTHER SUPPLEMENTARY fnformation (continued) DIF Circulation Capital Projects Fund - Budgetary Comparison Schedule...65 Drug Enforcement Special Revenue Fund - Budgetary Comparison Schedule DIF Administrative Overhead Special Revenue Fund - Budgetary Comparison Schedule Transportation Administration Overhead Special Revenue Fund - Budgetary Comparison Schedule Debt Service Fund - Budgetary Comparison Schedule Internal Service Funds: Combining Statement of Net Assets Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows

6 INTRODUCTION SECTION

7 Finance Department (760) P.O. Box 1609, Mammoth Lakes, CA October 13, 2006 To the Citizens, Honorable Mayor and Members of the Town Council of the Town of Mammoth Lakes: It is with pleasure that we to submit to you the annual financial report of the Town of Mammoth Lakes (Town) for the fiscal year ended June 30, This report has been prepared in accordance with accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board (GASB) and other accounting rule making bodies. To the best of our knowledge and belief, the enclosed information is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the Town. All disclosures necessary to enable the reader to gain an understanding of the Town s financial activities have been included. This letter of transmittal is designed to complement the Management s Discussion and Analysis (MD&A) and should be read in conjunction with it. The annual financial report is presented in two sections: Introductory and Financial. The Introductory Section includes this Letter of Transmittal. The Financial Section includes the independent auditors report, Management s Discussion and Analysis, audited Basic Financial Statements, Notes, Required Supplementary Information, supporting statements and schedules necessary to fairly present the financial position and the changes in financial position of the Town in conformity with accounting principles generally accepted in the United States. The audited basic financial statements include the government wide financial statements that present an overview of the Town s entire financial operation and the fund financial statements that present the financial information of each of the Town s major funds, as well as non-major governmental, fiduciary and other funds. General Information about the Town of Mammoth Lakes The Town of Mammoth Lakes (which was incorporated in 1984) is located in the heart of California s eastern Sierra Nevada Mountain range. The Town is approximately 300 miles north of Los Angeles, and 160 miles south of Reno, Nevada, both reached via U.S. Highway 395, and approximately 250 miles east of San Francisco. Mammoth Lakes is the premier ski and outdoor recreation area in the eastern Sierra. It has a year round population of approximately 7,400 people. During peak winter weekends the population swells to in excess of 35,000. The eastern Sierra provides extensive all-year recreation and resort facilities and caters to a large number of tourists who reach the area either a

8 General Information about the Town of Mammoth Lakes (continued) through Yosemite National Park (access limited to summer season) or from the north or south via U.S. Highway 395. Winter recreation is centered primarily on skiing activities at Mammoth Mountain. Ail year recreational sports include hiking, fishing, bicycling, horseback riding, water sports, etc, throughout the area. The elevation of the Town is approximately 7,000 feet above sea level with that of the main ski facility at approximately 9,000 feet. The Town of Mammoth Lakes provides full tourist and commercial services including rentals (both motels and condos), restaurants, shopping, gas stations, sporting goods dealers, and other commercial, recreation related enterprises. A five member Town Council, the members of which are elected by the voters of the Town to serve staggered four year terms, govern the Town. The Mayor is a member of the Town Council. The Council appoints a Town Manager who is responsible for administration of the Town under the policy direction of the Council Town services include police protection and animal control; planning and zoning; parks and recreation activities; tourism development and marketing; transit services; airport operations; general administrative support; and public works, including snow removal and storm drainage services, affordable and employee housing, construction and maintenance of streets, parks, and other infrastructure. The Mono County Local Transportation Commission, the Mammoth Unified School District, the Mammoth Community Water District, the Mammoth Lakes Fire Protection District, Cerro Coso Community College, and the Southern Mono Hospital District have not met the established criteria for inclusion in the reporting entity, and accordingly are excluded from this report. Internal Control Management of the Town is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the Town are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1 ) the cost of a control should not exceed the benefit likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by management. Managements continuing commitment to a sound and viable internal control structure is emphasized through written policies and procedures, an effective internal audit function, and a well qualified accounting staff. Budgeting Controls The Town maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual budget approved by the Town Council. Budgetary control for operations is maintained at the department level by fund. Budgetary control for capital improvement projects (i.e., project-length financial plans) is maintained at the individual project level by fund. The Town s budgeted expenditure authority lapses at the end of each fiscal year. However, outstanding purchase order commitments may be reappropriated for the subsequent fiscal year upon Council approval This approval is generally limited to capital improvement projects. As demonstrated by the statements and schedules included in the financial section of this report, the Town continues to fulfil! its responsibility for sound fiscal management. b

9 Development Impact Fees New development increases the demand for public facilities and services, The DIFs were established to mitigate the increased demand on the public facilities and services that new development in the Town would create. A Capital Project Fund has been established for each fee type to account for the collection of the fees and the cost of the capital projects that the DIFs are established to mitigate. Town future capital projects are extremely dependent on an adequate DIF that is supported by a Justification Study Report. The Town prepared extensive background and data that supported a DIF level that was adopted by Council on June 1, These new fee levels were effective October 1, 2005 and will go a long ways to funding essential Town projects. Expenditures out of the DIF funds during the last fiscal year include administrative costs and costs associated with updating the DIF projects and fee schedules. Expenditures were also expended on storm drain master plan update, drainage projects on Old Mammoth Road and along the Safe Route to School project, Welcome Center, Visitor Center Administration Building, loader equipment payment, trails and site planning for recreation facilities. All of the DIF funds are reported and their financial activity is included with Capital Projects section with the one exception of the Administrative Overhead Fund that is reported in the Special Revenue section. Both the Capital Projects and Special Revenue sections can be found in the Supplemental Information Section in the report. Cash Management The Town Treasurer manages the Cash Management and Investment Program of the Town. The Town s policy is to pool all cash for purposes of investment. This cash investment pool contains resources from all of the Town s funds, in accordance with the Town Council-approved investment policy, cash temporarily idle may be invested in U.S. government securities, certificates of deposit, A1 and P1 commercial paper, the Local Agency Investment Fund, passbook deposits, and County pooled funds without the specific approval of the Town Council. The Town s total investment pool is small enough to permit all funds to be invested in the Local Agency Investment Fund (L.A.I.F.). The following table presents an overview of the Town s month-end investment balances in L.A.I.F., and the average annualized yield for each respective month. Annualized Month Ended Closing Balance Effective Yield July 31, 2005 $ 15,063, % August 31, ,663,588 3,179% September 30, ,163, % October 31, ,684, % November 30, ,009, % December 31, ,509, % January 31, ,107, % February 28, ,772, % March 31, ,520, % April 30, ,920, % May 31, ,400, % June 30, ,175, % c

10 Cash Management (continued) The investment policy of the Town of Mammoth Lakes is to maximize investment income consistent with safe and prudent investment practices. The policy states: "It is the primary duty of the Treasurer to protect, preserve and maintain cash and investments placed in his/her trust on behalf of the citizens of the community. The investment policy specifies the standards and requirements set forth by the Town Council, and the responsibility for administering the funds is under the control of the Town Treasurer. Risk Management The Town, along with seventy-plus other California cities, is a member of the California Joint Powers Insurance Authority (CJPIA). The CJPIA provides self-insured and pooled liability coverage up to the program limits of $50 million combined single limit per occurrence. This coverage protects the Town, its officers and employees, as well as elected and appointed officials, from liability for monetary damages resulting from an occurrence because of Bodily injury, Property Damage, Errors and Omissions including Misfeasance, Malfeasance and Nonfeasance, and Personal injury, including False Arrest, Libel, Wrongful Entry, Discrimination and Assault. Participation in the pooled liability program is mandatory for ail member cities. The Town and other member cities bear the first $20,000 of each liability loss. Higher losses are pooled in layers and shared by all cities participating in those layers. The cost for each policy year is equal to the sum of each of the following: 1) The Town's losses up to $20,000 for each occurrence. 2) The Town s share of pooled losses above $20,000 but less than $500,000 for each occurrence, which is prorated on the basis of total losses under $20,000 excluding occurrences for "property damage only with a total value of $2,000 or less occurring on or after July 1, ) The Town s share of pooled losses above $500,000 but less than $5,000,000 for each occurrence, which is prorated on the basis of total members payroll with a minimum imputed payroll of $300,000. 4) The Town s share of all other expenses of CJPIA, which is prorated on the basis of total members payroll, with a minimum imputed payroll of $815,000 for the periods ended June 30, 1990 and thereafter and $500,000 for the periods ended June 30, 1989, 1988, and In addition to the general liability the Town aiso purchases All Risk Property Insurance through CJPIA. The Town also receives workers compensation coverage from the CJPIA, the same organization that provides liability and property coverage for the Town. Pension Plan In September 1985, the Town entered into a contract with the State of California Public Employees Retirement System (CalPERS) for the provision of a pension plan for all full-time permanent and part-time qualified miscellaneous employees. Subsequently, safety employees were added to CalPERS effective August As more fully disclosed in Note 7 of the notes to d

11 Pension Plan (continued) financial statements, the Town is funding the plan in accordance with the actuarial assumptions determined by CalPERS. The Town has also entered into a contract with the Public Agency Retirement Services (PARS) effective July 2003 for the provision of an additional pension plan for full-time vested safety employees. A third plan actuary has provided the Town with funding recommendations based on actuarial assumptions; the Town is funding more than this minimum recommendation. The Town requires all part-time, seasonal, and temporary non-catpers qualified employees to participate in the Federal Insurance Compensation Act (FICA), commonly called Social Security. Independent Audit The Town Council requires an annual audit of the financial statements of the Town. This requirement has been fulfilled and the auditor s unqualified opinion has been included in this report. Respectfully submitted, Brad Koehn Finance Director e

12 FINANCIAL SECTION

13 INDEPENDENT AUDITOR S REPORT Honorable Mayor Members of the Town Council Town of Mammoth Lakes, California We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Mammoth Lakes, California as of and for the year ended June 30, 2006, which collectively comprise the Tow n s basic financial statements as listed in the table of contents, These financials are the responsibility of the Town's management. Our responsibility is to express an opinion 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 opinion. in our opinion, the respective financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Mammoth Lakes, California, as of June 30, 2006, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

14 Town of Mammoth Lakes Mammoth Lakes, California The management s discussion and analysis, schedule of funding progress, and budgetary comparison information on pages 3 through 10 and 48 through 51 are not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America, W e 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. In accordance with Government Auditing Standards, we have also issued our report dated October 14, 2006, on our consideration of the Town of Mammoth Lake s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of Mammoth Lake s basic financial statements. The introductory section, and supplementary information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The other supplementary information, such as combining and individual nonmajor fund financial statements have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it. & O t& M Certified Public Accountants Roseville, California October 14,

15 Finance Department (760) B9 F.O. Box 1609, Mammoth Lakes, CA MANAGEMENT S DISCUSSION AND ANALYSIS The discussion and analysis of the Town of Mammoth Lakes financial performance for the fiscal year ended June 30, 2006 provides an analysis on the Town s overall financial position and results of operations to assist users in evaluating the Town's financial position, and provides discussion of significant changes that occurred in funds and significant budget variances. In addition, it describes the activities during the year for capital assets and long-term debt. We end our discussion and analysis with a description of currently known facts, decisions, and conditions that are expected to have a significant effect on the financial position or results of operations. Please read it in conjunction with the transmittal letter and the Town's financial statements. The Statement of Net Assets and the Statement of Activities: A frequent question asked about the Town s finances is, Is the Town as a whole better off or worse off as a result of the year s activities? The Statement of Net Assets and the Statement of Activities report information about the Town as a whole and about its activities in a way that answers this question. These statements include all assets and liabilities of the Town using the accrual basis of accounting; this is similar to the accounting used by most private-sector companies. These two statements report the Town's net assets and changes in them. Net assets are the difference between assets and liabilities, which is one way to measure the Town's financial health, or financial position. Over time, increases or decreases in the Town's net assets are an indication of whether its financial health is improving or deteriorating. It is important to remember that this measure of financial health is reviewing all of the Town's assets, including street infrastructure, storm drainage, and street lights; these assets are valuable to the Town, but their asset value would not be available to be sold and fund other Town priorities. Furthermore the depreciation of these assets is recorded as an expense in the Statement of Activities and can be confusing if the goal of the reader is to follow the flow of cash and expenditures. That is why the Fund Financial Statements continue to be an important part of the Town financial story and follow the Statement of Activities statement. - 3-

16 The Statement of Net Assets and the Statement of Activities: (continued) in the Statement of Net Assets and the Statement of Activities, the Towns Activities are separated as follows: Governmental activities - Almost all of the Town s services are reported in this category, including the general administration (Town Manager, Town Clerk, Personnel, Finance etc,), police protection, public works, and tourism and recreation and community development. Transient occupancy tax, sales tax, property taxes, other taxes, interest, grants, intergovernmental revenue and service charges finance these activities. The Statement of Net Assets also includes the value of capital assets (net of depreciation, future debt payments and the assets and liabilities of the internal service funds): while the Statement of Activities includes depreciation expense and some of the activity in the internal service funds on the accrual basis. These are significant differences from the Fund Financial Statements. Business-type activities - The Town s Airport charges fees to customers to cover all or most of the cost of certain services that the Airport provides. The Town also operates the Long Valley Mineral Pit that is a business-type activity charging customers for the cost of services (dumping of clean materials). Fund Financial Statements: The fund financial statements provide detailed information about the most significant funds and other funds - not the Town as a whole. Some funds are required to be established by State law and by bond covenants. However, management established many other funds to help it control and manage money for particular purposes or to show that it is meeting iegal responsibilities for using certain taxes, grants, and other resources. The Town s two types of funds are governmental and proprietary. Government funds - Most of the Town s basic services are reported in governmental funds, which focus on how money flows in and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Town s general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the Town s programs. There is a reconciliation of the significant differences between the Government Fund Balance Sheet and the Net Assets of Governmental Activities. These differences are unavoidable, because by definition the report are looking at different financial activity. Both reports provide a different perspective on the Town s finances that are beneficial. -4-

17 Fund Financial Statements: (continued) Proprietary funds - When the Town charges customers for the services it provides, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the Town s enterprise funds (Airport & Long Valley Mineral Pit) are the same as the business-type activities that are reported in the government-wide statements but provide more detail and additional information such as a Statement of Cash Flows. Reporting the Town s Fiduciary Responsibilities: The Town is the trustee, or fiduciary, for certain funds held on behalf of developers or Assessment Districts. The Town s fiduciary activities are reported in separate Statements of Fiduciary Net Assets. The fiduciary activities have been excluded from the Town s other financial statements because the Town cannot use these assets to finance its operations. The Town is responsible for ensuring that the assets reported in these funds are used for their intended purposes. Financial Analysis of the Town as a whole: Net Assets: A condensed presentation of the Town s net assets shown in the following table totals $128,074,356 as of June 30, The Town had a decrease in Net Assets compared to the prior year of $3,729,299. This decrease can be attributed to the impact of depreciation being greater than the growth of capital assets. Town of Mammoth Lakes Net Assets Governmental Activities Business-type Activities Total Current and other assets $ 35,456,963 $ 26,236,594 ${2,155,520} $(1,611,581) $ 33,301,443 $ 24,625,013 Capital assets, net of depreciation 111,498, ,131,024 2,095,953 6,128, ,594, ,259,305 Total assets $ 146,955,799 $ 145,367,618 $ (59,567) $ 4,516,700 $ 146,896,232 $ 149,884,318 Long-term debt outstanding $ 10,039,070 $ 10,813,261 $ 132,956 $ 195,507 $ 10,172,026 $ 11,008,768 Other liabilities 10,251,384 6,631, , ,830 8,649,850 7, Total liabilities S 20,290,454 $ 17,444,326 $ 531,422 $ 636,337 $ 18,821,876 $ 18,080,663 Net assets: Invested in capital assets, $ 97,637,283 $ 108,317,763 $ 1,711,195 $ 5,708,377 $ 99,348,478 $ 114,026,140 Restricted 791,124 1,296, ,124 1,296,341 Unrestricted 28,236,938 18,309,188 (2,302,184) (1,828,014} 27,934,754 16, Total net assets $ 126,665,345 $ 127,923,292 $ (590,989) $ 3,880,363 $ 128,074,356 $ 131,803,655-5-

18 Financial Analysis of the Town as a whole: (continued) By far the largest portion of the net assets reflects the Town s investment in capital assets (e.g., land, buildings, streets, machinery, and equipment), less any related debt used to acquire those assets that is still outstanding. These capital assets are used to provide services to citizens; and are therefore not available for future spending. Even the unrestricted net asset total includes funding that has been set aside or reserved for various purposes. The breakdown for the portion of the unrestricted net assets that has been set aside or reserved for various purposes for the governmental activities is as follows: Long term receivables Self Insurance Debt service Economic uncertainties Subsequent years expenditures Vehicle and equipment replacement $ 2,670, , ,094 3,987,779 5,105,912 4,262, $ 1,882, , ,390 3,476,938 5,169,658 4,308,200 General Fund Budgetary Highlights: General fund revenues (Taxes and assessments) ended the year very strong and exceeded final budget expectations by $3,130,942. Transient occupancy taxes continued to be the revenue leader with total revenues of $10,665,162 that was $1,573,661 over budget. Both property and sales taxes also exceeded expectations and were $834,050 and $396,410 over budget respectively. These revenue surpluses can be accounted for by the strong growth in visitor dollars spent in Town and the dramatic increase in assessed property valuations. Other revenue overages include Utility User Tax, Business Tax, Franchisee Fees and Interest earnings. The positive report on the above revenues are somewhat offset by revenue shortfalls in licenses and permits and charges for services. -6-

19 General Government Functions The revenue and expenditure activity for the governmental activities and the businesstype activities are summarized in the following table. Governmental Activities Business-type Activities Total Revenues: Program revenues: Charges for services $ 4,507,508 $ 5,110,089 S 734,361 $ 515,965 $ 5,241,869 $ 5,626,054 Operating grants and contributions 11,689,803 2,696, ,157 12,000,960 2,696,702 Capital grants and contributions 1,798,546 * 1,645,318 * 3,443,864 General revenues: Transient occupancy tax 10,669,247 9,614, ,669,247 9,614,445 Sales tax 2,326,410 2,105, ,326,410 2,105,148 Property tax 2,237,167 1,857,088» - 2,237,167 1,857,088 Other taxes 2,214,212 1,841,289 - (5,304) 2,214,212 1,835,985 Other 1,524,509 1,500,404-86,951 1,524,509 1,587,355 Transfers in (out) 40,000 (40,000) - 40,000 40,000 - Total revenues $ 35,208,856 $ 26,483,711 $ 1,045,518 $ 2,282,930 $ 36,254,374 $ 28,766,641 Expenses: General government $ 4,029,955 $ 2,053,796 $ $ $ 4,029,955 $ 2,053,796 Public safety 5,717,718 3,557, ,717,718 3,557,067 Tourism & recreation 3,063,701 2,236, ,063,701 2,236,203 Community development 8,639,883 6,090, ,639,883 6,090,748 Public works 15,103,564 12,951, ,103,564 12,951,928 Airport , , ,073 1,800,221 Waste (Mineral Pit) ,200 29, , ,989 Debt service (Interest) 811, , , ,297 Total expenses $ 37,366,803 $ 27,295,039 $ 1,021,273 $ 976,937 $ 38,388,076 $ 29,293,249 Change in net assets $ (2,157,947) $ (809,328) $(4,471,352) $ 1,305,993 $ (6,629,299) $ 496,665 Net assets - restated beginning 128,823, ,734,620 3,880,363 2,574, ,703, ,308,990 Net assets - en din g $ 126,665,345 $127,925,292 $ (590,98 9 ) $ 3,860,363 $126,074,356 $131,805,655

20 Fund Balance: The Town's Fund Balance sometimes referred to as the Town s savings account includes amounts that are set aside for specific purposes, or offset long term receivables or are restricted by other entities or even by local commitments such as through Council s commitment to the Measure A formula. However, portions of the fund balance designations are set by Council resolutions or could be redirected to other uses or are available to be appropriated. Below is a summary of those General Fund balances (this is different than the Governmental Funds discussed above that broadly incorporates more funds) over the last 4 years: Year Year Year Year Year Year Ended Ended Ended Ended Ended Ended 6/30/2006 6/30/2005 6/30/2004 6/30/2003 6/30/2002 6/30/2001 Self insurance $ 345,000 $ 345,000 $ 345,000 $ 325,000 $ 250,000 $ 0 Economic Uncertainties 3.824,605 3,476,938 2,950,900 2,808,000 2,390,000 2,135,000 Subsequent Years Expenditures 4,788,219 1,832,563 3,349,534 2,651,189 1,346, ,665 Undesignated 874, , ,719 61,928 66, ,811 General fund reserves are detailed in Note 8 of the notes to the general-purpose financial statements. Internal Service Fund: internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments dr agencies of the Town and to other government units on a cost reimbursement basis. The Town garage is operated as an interna! service fund. Services provided by the garage are charged to the governmental agencies that have contracted with the Town to receive the garage services. Also, services that the garage provides to other Town departments are charged to the department that benefits from the service. The fund also is used to account for purchases of vehicles and equipment when adequate funds have been accumulated and replacement is necessary. The Town also uses an internal service fund to account for certain insurance and benefit programs offered to employees. Premiums are collected from the employee or the department, depending on the benefit and paid to the internal service fund. The internal service fund, in turn, processes certain medical expense reimbursements and premiums. -8-

21 Enterprise Fund: Enterprise funds are used to finance and account for the acquisition, operation, and maintenance of Town facilities and services that are entirely or predominantly selfsupporting from user charges. Enterprise operations are accounted for in such a manner as to show a profit or loss as in comparable private enterprises. At June 30, 2006, the Town operated two enterprise funds: the Mammoth Yosemiie Airport, and the Long Valley Mineral Pit. The airport Fiscal Year operating income (loss) was 143,852. The Long Valley Mineral Pit operating income (loss) was $1,831. The Airport Enterprise Fund paid down principal of $35,145 in aviation loans from the California Department of Transportation Aviation Division during the fiscal year. The total aviation loan debt as of June 30, 2006 was $384,758. In addition the Town s General Fund has loaned to the Airport Enterprise Fund a total of $2,628,000 to fund costs associated with capital improvements and debt service. Debt Administration: The Town paid down principal of $973,967 in existing Certificates of Participation debt during the fiscal year. Total Certificates of Participation debt as of June 30, 2006 was $7,645,766. The Town has never issued general obligation bonds or revenue bonds. The Town also has received a California State Water Resources Control Board loan; the outstanding balance at June 30, 2006 is $857,533 and has an interest rate of 2.5%. Outlook for the future: The Town continues to benefit from the increased property valuations that many California communities have experienced recently and construction of new transient facilities, especially completion of additional units in the new Village. Growth of Town revenues is expected to continue as these new units offer easy Gondola access and a desirable Village experience. Both Intrawest, the developer that built the Village and other developers are discussing with the Town other development projects both surrounding the Village and throughout Town that are anticipated to begin construction over the next few years. The Town is also in the process of updating public project construction costs estimates and revising the developer impact fees that help fund the construction of those public projects, in response to developer s requests to build fractional (timeshare) products that were previously not permitted; a taxing district (Mello Roos) was formed that encompasses fractional ownership developments. This new revenue source will assist the Town in funding increased service levels and possibly certain future capital projects. - 9-

22 Outlook fo r the future: (continued) The Town has experienced strong growth in revenue that has not been universally experienced in other California cities. This is very evident in the continued strong growth of Transient Occupancy Taxes and Sales tax. Expenditure increases from employee benefits such as health insurance and retirement costs that have been experienced by California cities has also affected Mammoth Lakes. Fortunately, revenue growth has allowed the Town to better absorb the increased costs while still allowing the Town to increase service levels and programs, such as increased road rehabilitation. The adopted budget for fiscal year programs a fund balance contribution of 99,780 for operations. The budget includes funding for the 4th year of a multiple year increase in the pavement management system (road rehabilitation) and the second year of five year parks maintenance (including minor capital projects) and increased service levels in Parks Maintenance, Community Development, and Public Works. At the June 2006 election, Mammoth Lakes voters approved and increase in the Transient Occupancy Tax rate from 12% to 13% effective on October 1, Council has since directed that this new revenue would be used to increase transit services in the community. in conclusion, growth in existing revenues, updating of development impact fees, establishment of a Mello Roos taxing district, along with an increase in the fund balance or savings account set aside for economic uncertainties all contribute to a continued healthy financial position for the Town. The Town has experienced and is expected to experience continued revenue growth. This growth will allow the Town to continue to fund current service levels, and also provide some funding opportunities to move the Town closer to its vision of a high quality, full-service recreational resort that is a desirable place to live and work. Respectfully submitted, Brad Koehn Finance Director -10-

23 BASIC FINANCIAL STATEMENTS

24 TOWN OF MAMMOTH LAKES Government-Wide Financial Statements Statement of Net Assets June 30, 2008 Primary Government Governmental Business-type Activities Activities Total Assets Cash and investments $ 19,971,456 $ 63,298 $ 20,034,754 Accounts receivable 3,037, ,156 3,446,128 Loans receivable 8,705,716-8,705,716 inventory 322,695 1, ,721 internal balances 2,628,000 (2,628,000) - Restricted assets: Cash and investments with fiscal agent 791, ,124 Capital assets not being depreciated 13,887, ,316 14,431,658 Capital assets, net of depreciation 97,611,494 1,551,637 99,163,131 Total Assets 146,955,799 (59,567) 146,896,232 Liabilities Accounts payable 1,902, ,372 2,025,749 Accrued liabilities 354,116 9, ,700 Deferred revenue 7,994,891-7,994,891 Noncurrent liabilities: Due within one year 1,255,882 36,876 1,292,758 Due in more than one year 8,783, ,590 9,144,778 Total Liabilities 20,290, ,422 20,821,876 Net Assets Invested in capital assets, net of related debt 97,637,283 1,711,195 99,348,478 Restricted 791, ,124 Unrestricted 28,236,938 (2,302,184) 25,934,754 Total Net Assets $ 126,665,345 $ (590,989) $ 126,074,356 See accompanying notes to financial statements

25 Functions/Prograros TOWN OF MAMMOTH LAKES Government-Wide Financial Statements Statement of Activities Year Ended June 30, 2006 Expenses Program Revenues Charges for Services Operating Grants and Contributions Govern mentai Activities General government $ 4,029,955 $ 3,085,985 $ 2,881,024 Public safety 5,717, , ,605 Public ways and facilities 15,103, ,431 3,403,904 Community development 8,639,883-5,253,270 Tourism and recreation 3,063, ,639 - interest on long-term debt 811, Total Governmental Activities 37,366,803 4,507,508 11,689,803 Business-type Activities Airport 853, , ,157 Waste 168, ,066 - Total Business-type Activities 1,021, , ,157 Totals $ 38,388,076 $ 5,241,869 $ 12,000,960 See accompanying notes to financia! statements -12

26 Program Revenues Capital Grants and C ontributions Net (Expense) Revenue and Change in Net Assets Primary Government Governmental A ctivities Business-type A ctivities Total $ $ 1,937,054 (5,393,660) (10,885,229) (3,386,613) (2,629,062) (811,982) $ $ 1,937,054 (5,393,660) (10,885,229) (3,386,613) (2,629,062) (811,982) - (21,169,492) - (21,169,492) ,379 21, ,866 2,866-24,245 24,245 $ - (21,169,492) 24,245 (21,145,247) General Revenues Property Taxes 2,237,167-2,237,167 Saies Taxes 2,326,410-2,326,410 Transient Occupancy 10,669,247 ~ 10,669,247 Utility Users Taxes 797, ,774 Business Taxes 404, ,287 Other taxes 327, ,563 Motor Vehicle In Lieu 52,704-52,704 Investment Earnings 631, ,693 Other income (loss) 1,524,509 (4,456,406) (2,931,897) Transfers in (out) 40,000 (40,000) - Totals 19,011,545 (4,495,597) 14,515,948 Change in Net Assets (2,157,947) (4,471,352) (6,629,299) Net Assets Beginning of Year 127,923,292 3,880, ,803,655 Prior year adjustment 900, ,000 Beginning, As Restated 128,823,292 3,880, ,703,655 End of Year $ 126,665,345 $ (590,989) $ 126,074,356»12-

27

28 FUND FINANCIAL STATEMENTS

29 TOWN OF MAMMOTH LAKES Balance Sheet Governmental Funds June 30, 2006 Housing & Community General Gas Tax Development Fund Fund Fund Assets Cash and investments $ 10,902,187 $ $ 29,883 Account receivables 2,390,709 82,227 - Loans receivable 900,000-7,210,716 Due from other funds 8, Advances to other funds 2,705, Restricted assets: Cash and investments with fiscal agent Total Assets $ 16,906,687 $ 82,227 $ 7,240,599 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 1,419,485. $ 33,660 $ 19,883 Accrued liabilities 296,330 32,782 - Deferred revenue 189,175-7,210,716 Due to other funds 8, Advances from other funds ~ - - Total Liabilities 1,912,999 66,442 7,230,599 Fund Balances Reserved: Reserved for long term receivables 3,290,709 15,785 - Reserved for advances 2,713, Unreserved, reported in: General fund 8,989, Special revenue funds ,000 Capital projects funds Debt service funds Total Fund Balances 14,993,688 15,785 10,000 Total Liabilities and Fund Balances $ 16,906,687 $ 82,227 $ 7,240,599 See accompanying notes to financial statements -13-

30 Capital Projects Fund O ther Governmental Funds Total Governmental Funds $ 403,898 $ 3,770,232 $ 15,106, , ,525 2,924, ,000 8,705, , , ,705, , ,124 $ 720,113 $ 5,493,497 $ 30,443,123 $ 296,229 $ 20,635 $ 1,789,892 3,884 3, , ,000 7,994, , ,625-77,782 77, , ,225 10,408, ,306, ,713,791 _ 8,989,188 - {140,783} (130,783) 420,000 3,823,961 4,243, , , ,000 4,595,272 20,034,745 $ 720,113 $ 5,493,497 $ 30,443,

31

32 TOWN OF MAMMOTH LAKHS Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2006 Total Fund Balances Governmental Funds (page 12) $ 20,034,745 Amounts reported in the Governmental Activities column in the Statement of Net Assets are different because: Capital Assets Capital assets used in governmental activities are not current financial resources and therefore are not reported in the Governmental Funds Balance Sheet: Governmental capital assets, net of depreciation and adjustments 109,282,957 Long-term Obligations Long-term liabilities are not due and payable in the current period and therefore not reported in the Governmental Funds Balance Sheet: Certificates of participation Loans payable Capital leases Compensated absences (7,645,766) (1,274,361) (528,180) (590,763) Internal Services Internal service funds (Garage services and Employee benefits) are used by the Town to charge the costs of activities involved in rendering services to departments within the Town. The assets and liabilities of the internal services funds are included in the statement of net assets. 7,386,713 Net Assets - Governmental Activities (page 10) $ 126,665,345 See accompanying noies io financial statements - 14-

33 TOWN OF MAMMOTH LAKES Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds Year Ended June 30, 2006 General Fund Gas Tax Fund Housing & Community Development Fund Capital Projects Fund Revenues Taxes and assessments $ 16,762,448 $' $ $ Licenses and permits 3,085, » Fines, forfeitures and penalties 172, Use of money and property 263,845 - ' - - Intergovernmental 1,989,606 1,486,253 3,467,973 1,455,433 Charges for services 1,249, Other 68, Total Revenues 23,591,814 1,486,253 3,467,973 1,455,433 Expenditures Current: General government 3,084,026 45,473 Public safety 4,398,404 - ~ - Public ways and facilities 523,429 3,397, Community development and services 8,291,084-3,412,500 - Capital outlay ,234,961 Debt Service - ~ - - Total Expenditures 16,296,943 3,397,598 3,457,973 4,234,961 Excess (Deficiency) of Revenues Over Expenditures 7,294,871 (1,911,345) 10,000 (2,779,528) Other Financing Sources (Uses) Transfers in 9,907,768 2,089,816-3,320,237 Transfers (out) (14,102,693) (162,686) - (136,284) Proceeds from sale of assets 1,354, Total Other Financing Sources (Uses) (2,840,286) 1,927,130-3,183,953 Net Change in Fund Balances 4,454,585 15,785 10, ,425 Fund Balances, Beginning of Year 9,639,103 «15,575 Prior year adjustment 900, Fund Balances, Beginning of Year, restated 10,539, ,575 Fund Balances, End of Year $ 14,993,688 $ 15,785 $ 10,000 $ 420,000 See accompanying notes to financial statements - 15

34 Other Governmental Funds Total Governmental Funds $ $ 16,762,448-3,085, , , , ,218 8,861,483 2,881,024 4,130, ,362 3,549,134 33,550,607 4,865 3,134,364 4,398, ,030 4,549,057 11,703, ,090 4,484,051 1,476,384 1,476,384 2,358,369 29,745,844 1,190,765 3,804,763 1,833,193 17,151,014 (2,752,728) (17,154,391) 1,354,639 (919,535) 1,351, ,230 5,156,025 4,324,042 13,978, ,000 4,324,042 14,878,720 $ 4,595,272 $ 20,034,

35 I!

36 TOWN OF MAMMOTH LAKES Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statem ent of Activities Year Ended June 30, 2006 Net Change in Fund Balances - Governmental Funds (page 14) $ 5,156,025 Amounts reported for governmental activities in the Statement of Activities are different because of the following: Capital Assets Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of these assets is allocated over their estimated useful lives and reported as depreciation expense. The following amount is additionally adjusted for the effects of disposed assets. (8,657,326) Debt Payments i Proceeds from new Debt Long-term debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets, Costs associated with the issuance of long-term debt are reported as expenditures in the governmental funds, but in the Statement of Net Assets, the costs are deferred and amortized throughout the period during which the related debt is outstanding. Repayment of long-term debt principal is an expenditure in the governmental funds, but in the Statement of Net Assets the repayment reduces long-term liabilities. Principal payments Issuance of long-term debt Compensated absences 1,188,636 (375,223) (39,222) Internal Service Funds interna! service funds are used by management to charge the costs of certain activities, such as insurance and vehicle maintenance, to individual funds. The net revenue (expense) of the internal service funds is reported with the governmental activities. 569,163 Change in Net Assets - Governmental Activities (page 11) $ (2,157,947) See accompanying notes to financial statements -16-

37 I

38 TOWN OF MAMMOTH LAKES Statement of Net Assets Proprietary Funds June 30, 2006 Business-type Activities Governmental Total Activities - Enterprise Internal Airport Waste Funds Service Funds Assets Cash and investments $ 46,017 $ 17,281 $ 63,298 $ 4,865,259 Receivables 391,816 16, , ,293 Inventory 1,026-1, ,695 Capital assets not being depreciated 544, ,316 Capital assets, net of depreciation 1,551,637-1,551,637 2,780,211 Total Assets 2,534,812 33,621 2,568,433 8,081,458 Liabilities Accounts payable 96,796 26, , ,485 Accrued liabilities 8,045 1,539 9,584 17,928 Advance from other funds 2,628,000-2,628,000 - Noncurrent liabilities: Due within one year 36,876-36, ,713 Due in more than one year 361, , ,619 Total Liabilities 3,131,307 28,115 3,159, ,745 Net Assets Invested in capital assets, net of related debt 1,711,195-1,711,195 2,252,031 Unrestricted (2,307,690) 5,506 (2,302,184) 5,134,682 Total Net Assets,$ (596,495) $ 5,506 $ (590,989) $ 7,386,713 See accompanying notes to financial statements - 17-

39 I

40 TOWN OF MAMMOTH LAKES Statement of Revenues, Expenses, and Changes in Net Assets Proprietary Funds Year Ended June 30, 2006 Business-type Activities Governmental Total Activities - Enterprise Internal Service Airport Waste Funds Funds Operating Revenues Charges for services $ 563,295 $ 171,066 $ 734,361 $ 1,925,139 Rentals and commissions Grants 311, ,157 - Total Operating Revenues 874, ,066 1,045,518 1,925,139 Operating Expenses Personnel services 282,550 31, , ,062 Maintenance and operations 238, , , ,057 Depreciation 209, , ,892 Tota! Operating Expenses 730, , ,800 1,598,011 Operating Income (Loss) 143,852 2, , ,128 Nonoperating Revenues (Expenses) Interest income ,102 Transfers in 57,838-57,838 43,377 Transfers (out) (57,838) (40,000) (97,838) - Gain on sale of capital assets ,556 Loss on asset write off (4,456,406) - (4,456,406) ~ interest expense (122,473) - (122,473) - Total Nonoperating Revenues (Expenses) (4,578,879) (39,191) (4,618,070) 242,035 Change in Net Assets (4,435,027) (36,325) (4,471,352) 569,163 Net Assets - Beginning of Year 3,838,532 41,831 3,880,363 6,817,550 Net Assets ~End of Year s (596,495) $ 5,506 $ (590,989) $ 7,386,713 See accompanying notes to financial statements - 18-