CITY OF SOUTH GATE, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2012

Transcription

1 , CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2012

2 , CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2012 PREPARED BY: DEPARTMENT OF FINANCE

3 COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2012 TABLE OF CONTENTS INTRODUCTORY SECTION Page Number Letter of Transmittal... i Directory of Officials... iii Organizational Chart... iv FINANCIAL SECTION INDEPENDENT AUDITORS REPORT... 1 MANAGEMENT'S DISCUSSIONS AND ANALYSIS... 3 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Assets...13 Statement of Activities...14 Fund Financial Statements: Balance Sheet Governmental Funds...16 Reconciliation of the Balance Sheet to the Statement of Net Assets...19 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds...20 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities...22 Budget Comparison Statement General Fund...23 Budget Comparison Statement Community Development Block Grant Fund...24 Budget Comparison Statement Home Program Fund...25 Statement of Net Assets-Proprietary Funds...26 Statement of Revenues, Expenses, and Changes in Fund Net Assets-Proprietary Funds...28 Statement of Cash Flows-Proprietary Funds...30 Statement of Fiduciary Net Assets Fiduciary Funds...32

4 COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2012 FINANCIAL SECTION (CONTINUED) TABLE OF CONTENTS Page Number Statement of Changes in Fiduciary Net Assets Fiduciary Funds Notes to Financial Statements...35 COMBINNING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Combining Balance Sheet - Nonmajor Governmental Funds...84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds...90 Budgetary Comparison Schedules Special Revenue Funds Law Enforcement Grants...96 Housing Authority...97 Asset Seizure...98 Air Quality Improvement...99 Traffic Safety Gas Tax Grants Street Sweeping Prop A Transit UDAG Prop C Transit Public Access Corporation Street Light & Landscaping American Recovery and Reinvestment Act Measure R Transit Budgetary Comparison Schedules Capital Projects Funds Bike Way Fund Capital Improvement Fund Low-Income Housing Community Development Commission Budgetary Comparison Schedules Debt Service Funds Ardine Assessment District Community Development Commission Combining Statement of Net Assets Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds Combining Statement of Cash Flows Internal Service Funds...120

5 COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2012 TABLE OF CONTENTS COMBINNING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES (CONTINUED) Page Number Combining Statement of Changes in Assets and Liabilities All Agency Funds STATISTICAL SECTION Net Assets by Component Changes in Net Assets Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Governmental Activities Tax Revenue by Source Direct and Overlapping Property Tax Rates Assessed Value of Taxable Property Principal Property Tax Payers Property Tax Levies and Collections Ratios of Outstanding Debt by Type Direct and Overlapping Debt Legal Debt Margin Information Pledged Revenue Coverage Demographic and Economic Statistics Full-Time Equivalent City Government Employees by Function Operating Indicators by Function Capital Assets Statistics by Function

6 THIS PAGE INTENTIONALLY LEFT BLANK

7 i

8 ii

9 ELECTED AND ADMINISTRATIVE OFFICIALS Mayor Vice Mayor Councilmember Councilmember Councilmember City Clerk City Treasurer City Manager City Attorney Asst. City Manager/Director of Finance Director of Public Works Director of Community Development Director of Personnel Director of Parks and Recreation Chief of Police W. H. (Bill) DeWitt Gil Hurtado Maria Davila Henry C. Gonzalez Jorge Morales Carmen Avalos Maria Belen Bernal Michael Flad Raul Salinas Bryan Cook Mohammad Mostahkami Steve Lefever Lolita Brown Fletcher Paul Adams Randy Davis iii

10 iv

11 The Honorable City Council of the City of South Gate South Gate, California INDEPENDENT AUDITORS REPORT 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 City of South Gate, California (the City), as of and for the year ended June 30, 2012, which collectively comprise the City's basic financial statements as listed in the accompanying table of contents. These financial statements are the responsibility of the City of South Gate's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of South Gate as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, and the respective budgetary comparison for the General Fund, the Community Development Block Grant Fund, and the Home Program Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. We would like to draw the reader s attention to Note 20 Successor Agency Trust for Assets of Former Redevelopment Agency. The note provides information on the dissolution of the Redevelopment Agency and the new formed Successor Agency. In accordance with Government Auditing Standards, we have also issued our report dated January 29, 2013, on our consideration of the City of South Gate s internal control over financial reporting and our tests of its compliance with certain laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

12 The Honorable City Council of The City of South Gate South Gate, California Accounting principles generally accepted in the United States of America require that the management's discussion and analysis as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City s financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, budgetary schedules and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Brea, California January 29,

13 MANAGEMENT S DISCUSSION AND ANALYSIS The following discussion and analysis of the financial performance of the City of South Gate provides an overview of the City s financial activities for the fiscal year ended June 30, It should be read in conjunction with the financial statements identified in the accompanying table of contents. Financial Highlights The total assets of the City of South Gate exceeded total liabilities at the close of this fiscal year ended June 30, 2012 by $252,694,750. This amount represents an increase over the previous fiscal year of $16,943,611. As of June 30, 2012, the City s governmental activities reported combined ending net assets of $249,133,938, an increase of $15,642,496 over the prior fiscal year. This increase is due to a one-time extraordinary gain resulting from the dissolution of the redevelopment agency of $26,432,350 and a beginning net asset restatement due to a change in the accounting treatment of the City s Pension Safety Plan Side Pool of $15,301,989. Excluding these onetime adjustments the governmental activities combined ending net assets increased by $4,512,135. The City s business activities reported a combined ending net assets of $3,560,812, an improvement of $1,301,115 from the previous fiscal year. As of June 30, 2012, the unassigned balance in the General Fund was $7,216,043. The General Fund reported revenues in excess of expenditures of $453,626 before other financing sources. The Capital Improvements Capital Project Fund reports a fund balance of $1,092,809, a decrease of $205,401 due to the use of previously received funding sources to pay for various projects completed during the fiscal year. Using the Accompanying Financial Statements This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities provide information about the activities of the City of South Gate as a whole and present a longer-term view of the City s finances. Also included in the accompanying report are fund financial statements. For governmental activities, the fund financial statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the City s operations in more detail than the government-wide statements by providing information about the City s most significant funds. The remaining statements provide financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City s basic financial statements, which is comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements: The government-wide financial statements are designed to provide readers with a broad overview of the City of South Gate s finances, in a manner similar to a private-sector business. 3

14 The statement of net assets presents information on all of the City of South Gate s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of South Gate is improving or deteriorating. The statement of activities presents information on how the City s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing or related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both statements include not only the City of South Gate itself (known as the primary government) but also the South Gate Community Redevelopment Agency, the South Gate Utility Authority, the Housing Authority of the City of South Gate and the South Gate Public Financing Authority, for which the City of South Gate is financially accountable. Financial information on these component units is reported separately from the financial information presented for the primary government itself. During the year, per AB 1X 26, the Community Development Commission, a component unit of the City, was dissolved effective February 1, Prior to that date, the final seven months of the activity of the redevelopment agency continued to be reported in the governmental funds of the City. After the dissolution, the City of South Gate elected to become the Successor Agency for the former Community Development Commission and the remaining assets and activities of the dissolved redevelopment agency were reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City. Fund financial statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of South Gate, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of South Gate can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds. Most of the City s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year end that are available for spending. These funds are reported using the modified accrual method of accounting, which measures cash and all other current financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City 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 City s programs. The relationship or differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are described in a reconciliation at the bottom of the fund financial statements. Proprietary funds. When the City charges customers for the services it provides whether to outside customers or to other units of the City 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 City s enterprise funds (a component of proprietary funds) are the same as the business-type activities reported in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. Internal service funds (the other component of proprietary funds) are used to report activities that provide supplies and services for the City s other programs and activities. 4

15 Fiduciary funds. The City of South Gate is an agent for certain assets held for, and under the control of, other organizations and individuals. All of the City s fiduciary activities are reported in a separate Statement of Fiduciary Assets. These activities are excluded from the other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on the pages immediately following the government-wide financial statements. Other information. In addition to the basic financial statements and accompanying notes, the combining statements referred to earlier in connection with the non-major governmental funds and internal service funds are presented immediately following the notes.to the basic financial statements. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government s financial position. In the case of South Gate, assets exceeded liabilities by $252,694,750 at June 30, City of South Gate Net Assets (in millions) Governmental Business-type Activities Activities Total Total Current and other assets Capital assets Total assets Long-term debt outstanding Other liabilities Total liabilities Net assets: Invested in net capital assets Restricted Unrestricted Total net assets By far the largest portion of the City s net assets reflects its investment in capital assets (e.g. land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. The City of South Gate uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City s investment in its capital assets is reported net of related debt, it should be noted that the resources 5

16 needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of South Gate Changes in Net Assets (in millions) Governmental Business-type Activities Activities Total Total Revenues Program revenues: Charges for services Operating grants/contributions Capital contributions/grants General revenues: Property taxes Sales taxes Other taxes Investment income Motor vehicle in-lieu Other revenue Total revenues Program expenses General government Public works Parks and recreation Police Community development Interest expense Sewer Water Refuse Total expenses Increase in net assets before transfers Transfers Extraordinary gain/loss Increase in net assets Beginning net assets Restatement of net assets Ending net assets Governmental Activities. Net Assets increased by $15,642,496. This is primarily the result of a onetime extraordinary gain due to the dissolution of the Community Development Commission. Revenues and expenses decreased. Revenues decreased by approximately 10.7%, primarily due to the dissolution of the Community Development Commission and declines in Operating Contributions and Grants. Program expenses decreased by 1.3% as result of continued retirements during the year which were not filled. Additional expense savings were 6

17 due to a reduction of Maintenance and Operations cost through improved efficiencies in operations and obtaining more favorable discounts on supplies. The City of South Gate relies heavily on federal, state and local grant funds as a major funding source for capital projects. Property tax, state funds and sales tax remain the most significant portion of the Governmental Activities revenue stream. Revenues by Source Governmental Activities The cost of all Governmental activities this year was $64,160,252. Of this amount, $11,907,168 was paid for by those who directly benefited from programs provided, $18,841,474 was subsidized by grants received from other governmental organizations for both capital and operating activities, and $37,473,451 was financed through general taxes and other revenues. Expenses and Program Revenues Governmental Activities 7

18 The City s largest expense is the Police Department, whose operations totaled $20.7 million in Community Development followed with $13.8 million which includes the HUD Grants and seven months of the Redevelopment Agency. Public Works expenses of $15.3 million are due to several large capital improvement projects. Business-Type Activities. During the year ended June 30, 2012, the financial condition of the City s business-type activities improved as indicated by the increase in business-type net assets in the amount of $1,301,115. These business-type activities consisted of the water, sewer and refuse utilities. The cost of providing all business-type activities this year was $16,894,577. The revenue paid by users of these utilities was $17,642,584. When capital improvements are made, the assets are capitalized, and no expense is incurred even though current assets have been converted to long-term capital assets. The water activity generates an excess of revenue over expenses in an effort to maintain a reasonable reserve for capital improvements and debt service requirements. Revenues by Source Business-Type Activities 8

19 Expenses and Program Revenues Business-Type Activities Financial Analysis of the City s Funds As noted earlier, the City of South Gate uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds: The focus of the City s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of South Gate s financing requirements. In particular, spendable fund balance may serve as a useful measure of a government s net resources at the end of the fiscal year. As of June 30, 2012, the City s governmental funds reported combined ending fund balances of $63,837,651, an increase of $3,868,514 in comparison with the prior year. Of that amount, $21,022,544 constitutes spendable fund balance, the remainder of fund balance totaling $42,815,107 is non spendable because it has already been committed. Of the non spendable amount, $37,884,724 represents advances from the General Fund to the Water Utility and the Successor Agency to Redevelopment Agency. The remainder is reserved for land held for resale ($2,395,000), an advance from the CDBG Fund to the Redevelopment Agency ($2,020,000), and a variety of other restricted purposes. The Redevelopment Agency has been dissolved as of February 1, 2012 and is no longer reflected as a component unit in the City s financial statements. The General Fund is the chief operating fund of the City of South Gate. As of the end of the fiscal year, the total combined fund balance was $45,305,175, an increase of $874,885 in comparison with the prior year. The unassigned, spendable fund balance totaled $7,216,043. This increase of $2,499,519 was a result of revenues and other financing sources exceeding operating expenditures and other financing uses. 9

20 The Capital Improvements Capital Projects Fund accounts for most of the capital improvement activity in the City such as buildings and street infrastructure. Expenditures are charged directly to this fund and reimbursed with transfers from other funds, primarily the Grants Fund as the funding sources are received. The fund balance of $1,092,809 is designated for specific future projects and for the condemnation deposits with the State of California. The other non-major governmental funds include several special revenue funds used exclusively to account for intergovernmental and assessment proceeds which are restricted as to use by law. This group of funds includes the Gas Tax Fund, Street Sweeping Fund, Street Lighting and Landscaping Fund, transit funds and various grant funds. Proprietary Funds: The City s proprietary funds consist of the Water, Sewer and Refuse Funds, which are the business-type activities that account for the operation of those utilities. Also included are the internal service funds which provide for supporting governmental activities including vehicle and computer maintenance as well as insurance activities. In the business-type activities, the Water and Sewer Funds are considered major funds. The Refuse Fund is considered non-major. At year end the combined net assets of these funds totaled $3,560,812, an increase of $1,301,115 from the prior year. This is because the Water Fund has more revenues than expenses. The construction of capital facilities does not result in an expense because the assets are capitalized. The internal service funds are considered non-major. Net assets at fiscal year end totaled $833,626, a decrease of $282,478 from the prior fiscal year due to increased insurance premiums and legal settlements. General Fund Budgetary Highlights For many years the City s General Fund revenues have not kept pace with increases in expenditures. This continued through fiscal year In June 2008, the voters approved a one cent local sales tax which was implemented in October, The additional revenue generated from this action was expected to eliminate future budget deficits. Due to the economic recession and slow recovery, this measure only reduced the structural deficit. To close this ongoing structural gap, the City implemented a ten percent (10%) compensation reduction for all employees in fiscal year , staff reductions and an early retirement incentive program for fiscal year Capital Asset and Debt Administration Capital Assets: The capital assets of the City are those that are used in the performance of City functions including infrastructure assets. Capital Assets include equipment, buildings, land, park facilities and roads. As of June 30, 2012, the City s net capital assets in governmental activities totaled $224,776,323 and net capital assets in business-type activities totaled $40,348,442. Governmental capital assets decreased by $3,162,609 and business-type capital assets decreased by $246,

21 City of South Gate Capital Assets (Net of depreciation) Business- Governmental Type Activities Activities Total Total Structures & improvements $17,045,651 $3,114,639 $20,160,290 $20,473,415 Machinery and equipment 2,150,479 2,395,103 4,545,582 3,729,072 Infrastructure 191,562, ,562, ,996,964 Utility distribution system 0 30,891,404 30,891,404 31,711,252 Land 3,738,993 1,290,602 5,029,595 6,715,595 Construction in progress 10,278, ,550 11,002,107 9,974,904 Water rights 0 1,933,144 1,933,144 1,933,144 Total $224,776,323 $40,348,442 $265,124,765 $268,534,346 Long Term Debt. At the end of the fiscal year, the City of South Gate had total long-term debt outstanding of $89,965,225. This amount represents a decrease over the prior year of $39,356,843 due to the transfer of $34,845,000 fiscal year 2002 and 2003 Tax allocation bonds to the Successor Agency and the retirement of $4,511,843 debt. City of South Gate Outstanding Debt Business- Governmental Type Activities Activities Total Total Revenue bonds $0 $34,463,112 $34,463,112 $72,161,518 Certificates of participation 16,185, ,185,000 $17,010,000 Pension obligation bonds 21,220, ,220,000 $22,055,000 Limited obligation bonds 85, ,000 $110,000 Capital lease obligations 1,516, ,516,047 $2,084,877 Notes/Loans payable 3,630, ,630,000 $4,045,000 Claims and judgments 6,002, ,002,559 $6,364,012 Other post employment benefits 2,659, ,659,391 $1,861,551 Compensated absences 4,014, ,122 4,204,116 3,630,110 Total $55,312,991 $34,652,234 $89,965,225 $129,322,068 Economic Factors and Next Year s Budget During the fiscal year, the City s spendable, unassigned fund balance in the General Fund increased to $7,216,043. The budget was balanced by continuing the 10 % pay reduction to all City employees and continuing to fill only essential positions and controlling Maintenance and Operations cost. Contract negotiations concluded with labor groups in December 2012, resulting in a swap of benefits including pay increases for increases in employee contributions to retirement costs. 11

22 When preparing the City s budget for fiscal year , the following assumptions were made: The economy has stabilized at this economic level, with moderate growth through Services will be reduced in certain areas to minimize impacts to the community. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general overview of the City s finances and to show the City s accountability for the money it receives. If you have questions about this report or need additional financial information, contact Bryan Cook ACM/Finance Director at (323) or the Finance Department, 8650 California Avenue, South Gate, California

23 STATEMENT OF NET ASSETS JUNE 30, 2012 Primary Government Governmental Business-Type Activities Activities Total Assets: Cash and investments $ 24,844,906 $ 12,378,729 $ 37,223,635 Receivables: Accounts 1,208,256 3,354,568 4,562,824 Notes and loans 7,985,879-7,985,879 Accrued interest 19,783 12,003 31,786 Settlement 236, ,712 Internal balances 20,015,536 (20,015,536) - Advances to Successor Agency 20,613,962-20,613,962 Prepaid costs 68,564-68,564 Deposits 197, ,000 Due from other governments 6,399, ,948 6,701,836 Inventories 148, ,524 Deferred charges 833, ,085 1,687,622 Land held for resale 2,395,000-2,395,000 Restricted assets: Cash with fiscal agent 411,341 4,194,269 4,605,610 Capital assets not being depreciated 14,017,550 3,947,296 17,964,846 Capital assets, net of depreciation 210,758,773 36,401, ,159,919 Total Assets 310,155,211 41,428, ,583,719 Liabilities: Accounts payable 3,108, ,293 3,921,830 Accrued liabilities 931,599 79,295 1,010,894 Accrued interest 416, , ,924 Unearned revenue 632, , ,083 Deposits payable 622,644 1,493,006 2,115,650 Due to other governments 50,000-50,000 Retentions payable 343,488 94, ,564 Noncurrent liabilities: Due within one year 6,698,697 1,465,741 8,164,438 Due in more than one year 48,217,291 33,472,295 81,689,586 Total Liabilities 61,021,273 37,867,696 98,888,969 Net Assets: Invested in capital assets, net of related debt 223,175,276 39,090, ,265,330 Restricted for: Community development projects 5,754,282-5,754,282 Public safety 3,503,895-3,503,895 Public works 6,528,710-6,528,710 Capital projects 806, ,930 Debt service 9,758 4,194,269 4,204,027 Unrestricted 9,355,087 (39,723,511) (30,368,424) Total Net Assets $ 249,133,938 $ 3,560,812 $ 252,694,750 See Notes to Financial Statements 13

24 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2012 Functions/Programs Primary Government: Governmental Activities: Program Revenues Operating Capital Charges for Contributions Contributions Expenses Services and Grants and Grants General government $ 5,917,033 $ 3,156,206 $ 46,284 $ - Public safety 20,662,535 3,230,594 1,119,768 - Community development 13,806,568 3,777,223 12,474,397 31,762 Parks and recreation 4,963, , Public works 15,254,680 1,185,214-5,169,263 Interest on long-term debt 3,555, Total Governmental Activities 64,160,252 11,907,168 13,640,449 5,201,025 Business-Type Activities: Water 11,526,201 12,786, Sewer 1,507,766 1,496, Refuse 3,860,610 3,359, ,813 - Total Business-Type Activities 16,894,577 17,642, ,813 - Total Primary Government $ 81,054,829 $ 29,549,752 $ 14,189,262 $ 5,201,025 General Revenues: Taxes: Property taxes, levied for general purpose Transient occupancy taxes Sales taxes Franchise taxes Business licenses taxes Other taxes Motor vehicle in lieu - unrestricted Use of money and property Other Transfers Extraordinary gain/(loss) on dissolution of community development commission (Note 20) Total General Revenues, Extraordinary items and Transfers Change in Net Assets Net Assets at Beginning of Year Restatement of Net Assets Net Assets at End of Year See Notes to Financial Statements 14

25 Net (Expenses) Revenues and Changes in Net Assets Primary Government Governmental Business-Type Activities Activities Total $ (2,714,543) $ - $ (2,714,543) (16,312,173) - (16,312,173) 2,476,814-2,476,814 (4,405,697) - (4,405,697) (8,900,203) - (8,900,203) (3,555,808) - (3,555,808) (33,411,610) - (33,411,610) - 1,260,422 1,260,422 - (11,129) (11,129) - 47,527 47,527-1,296,820 1,296,820 (33,411,610) 1,296,820 (32,114,790) 17,371,261-17,371, , ,795 12,877,482-12,877,482 1,979,929-1,979,929 1,347,704-1,347, , ,106 52,705-52,705 2,704, ,395 2,946, , , , ,294 (450,294) - 26,432,350-26,432,350 64,356,095 4,295 64,360,390 30,944,485 1,301,115 32,245, ,491,442 2,259, ,751,139 (15,301,989) - (15,301,989) $ 249,133,938 $ 3,560,812 $ 252,694,750 See Notes to Financial Statements 15

26 BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2012 Special Revenue Funds Community Development Block Grant Home Program General Assets: Cash and investments $ 2,490,817 $ 179,001 $ - Receivables: Accounts 1,092, Notes and loans 17,433 3,783,699 3,539,490 Accrued interest 2,328 1,818 - Settlement 236, Prepaid costs 18, Deposits 20, Due from other governments 2,908, , ,640 Due from other funds 3,232, Advances to other funds 19,290, Advances to Successor Agency 18,593,962 2,020,000 - Inventories 148, Land held for resale Restricted assets: Cash and investments with fiscal agents 279, Total Assets $ 48,331,785 $ 6,372,670 $ 3,952,130 Liabilities and Fund Balances: Liabilities: Accounts payable $ 619,361 $ 365,912 $ 124,811 Accrued liabilities 793,922 7,235 3,160 Deferred revenues 954,023 3,714,115 3,539,490 Unearned revenues 245, ,408 32,459 Deposits payable 363, Due to other governments 50, Due to other funds ,210 Retentions payable Total Liabilities 3,026,610 4,352,670 3,952,130 Fund Balances: Nonspendable: Inventory 148, Prepaid costs 18, Deposits 20, Notes and loans 17,433 69,584 - Land held for resale Advances to other funds 19,290, Advances to Successor Agency 18,593,962 2,020,000 - Restricted for: Community development projects Public safety Public works Capital Projects Debt service Low and moderate housing activities Unassigned 7,216,043 (69,584) - Total Fund Balances 45,305,175 2,020,000 - Total Liabilities and Fund Balances $ 48,331,785 $ 6,372,670 $ 3,952,130 See Notes to Financial Statements 16

27 BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2012 Assets: Cash and investments Receivables: Accounts Notes and loans Accrued interest Settlement Prepaid costs Deposits Due from other governments Due from other funds Advances to other funds Advances to Successor Agency Inventories Land held for resale Restricted assets: Cash and investments with fiscal agents Total Assets Liabilities and Fund Balances: Liabilities: Accounts payable Accrued liabilities Deferred revenues Unearned revenues Deposits payable Due to other governments Due to other funds Retentions payable Total Liabilities Fund Balances: Nonspendable: Inventory Prepaid costs Deposits Notes and loans Land held for resale Advances to other funds Advances to Successor Agency Restricted for: Community development projects Public safety Public works Capital Projects Debt service Low and moderate housing activities Unassigned Total Fund Balances Total Liabilities and Fund Balances See Notes to Financial Statements 17 Capital Projects Fund Capital Improvement Fund Other Governmental Funds Total Governmental Funds $ 2,693,528 $ 13,124,822 $ 18,488, ,427 1,208, ,257 7,985,879-11,027 15, ,712-22,584 41, , ,000-2,690,961 6,399, ,232, ,290, ,613, ,524-2,395,000 2,395, , ,341 $ 3,002,155 $ 19,005,078 $ 80,663,818 $ 1,308,764 $ 535,663 $ 2,954,511-99, , ,450 8,811,078-89, , ,094 2, , ,000-2,255,134 2,507, , ,488 1,909,346 3,585,411 16,826, ,524-22,584 41, , ,000-41, ,824-2,395,000 2,395, ,290, ,613,962-3,052,812 3,052,812-3,503,895 3,503,895-6,528,710 6,528, , ,809-9,758 9,758-52,082 52,082 - (186,981) 6,959,478 1,092,809 15,419,667 63,837,651 $ 3,002,155 $ 19,005,078 $ 80,663,818

28 THIS PAGE INTENTIONALLY LEFT BLANK 18

29 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2012 Fund balances of governmental funds $ 63,837,651 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets net of depreciation have not been included as financial resources in governmental fund activity 224,147,641 Bond issuance cost is an expenditure in the governmental funds, but it is a deferred charge in the statement of net assets 833,537 Long-term debt and compensated absences that have not been included in the governmental fund activity: Bonds payable (21,305,000) Certificates of participation (15,787,997) Notes and loans payable (3,630,000) Capital lease obligations (1,516,047) Compensated Absences (4,014,994) Governmental funds report all OPEB contributions as expenditures, however in the Statement of Net Assets any excesses or deficiencies in contributions in relation to the Annual Required Contribution (ARC) are recorded as an asset or liability (2,659,391) Accrued interest payable for the current portion of interest due on Bonds has not been reported in the governmental funds (416,166) Revenues reported as deferred revenue in the governmental funds and recognized in the Statement of Activities. These are included in the intergovernmental revenues in the governmental fund activity. 8,811,078 Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net assets 833,626 Net assets of governmental activities $ 249,133,938 See Notes to Financial Statements 19

30 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2012 Special Revenue Funds Community Development General Block Grant Home Program Revenues: Taxes $ 26,810,572 $ - $ - Licenses and permits 1,030, Intergovernmental 254,987 2,555,399 2,352,594 Charges for services 4,436, Use of money and property 2,639, ,851 - Fines and forfeitures 991, Miscellaneous 1,265, Total Revenues 37,427,784 2,731,250 2,352,594 Expenditures: Current: General government 5,426, Public safety 17,935, Community development 2,300, ,708 2,352,594 Parks and recreation 4,355, Public works 2,493, Capital outlay 112,660 1,594,378 - Debt service: Principal retirement 2,128, ,000 - Interest and fiscal charges 2,221, ,851 - Total Expenditures 36,974,158 2,588,937 2,352,594 Excess (Deficiency) of Revenues Over (Under) Expenditures 453, ,313 - Other Financing Sources (Uses): Transfers in 492, ,000 - Transfers out (71,051) (492,310) - Total Other Financing Sources (Uses) 421,259 (332,310) - Extraordinary gain/(loss) on dissolution of redevelopment agency (Note 20) Net Change in Fund Balances 874,885 (189,997) - Fund Balances, Beginning of Year 44,430,290 2,209,997 - Fund Balances, End of Year $ 45,305,175 $ 2,020,000 $ - See Notes to Financial Statements 20

31 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2012 Revenues: Taxes Licenses and permits Intergovernmental Charges for services Use of money and property Fines and forfeitures Miscellaneous Total Revenues Expenditures: Current: General government Public safety Community development Parks and recreation Public works Capital outlay Debt service: Principal retirement Interest and fiscal charges Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers in Transfers out Total Other Financing Sources (Uses) Extraordinary gain/(loss) on dissolution of redevelopment agency (Note 20) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year Capital Projects Fund Capital Improvement Fund Other Governmental Funds Total Governmental Funds $ - $ 7,144,961 $ 33,955, ,030,179 1,323,812 14,891,012 21,377, ,634 5,213, ,449 2,975,385-1,948,510 2,939,807-80,566 1,345,827 1,323,812 25,002,132 68,837,572-9,784 5,435,965-1,222,764 19,158,080-8,723,381 13,780, ,355,526-5,214,436 7,707,706 4,951, ,429 7,324,647-2,025,256 4,568,830-1,652,415 4,050,002 4,951,180 19,514,465 66,381,334 (3,627,368) 5,487,667 2,456,238 3,421,967 1,434,859 5,509,136 - (4,530,621) (5,093,982) 3,421,967 (3,095,762) 415, , ,122 (205,401) 3,389,027 3,868,514 1,298,210 12,030,640 59,969,137 $ 1,092,809 $ 15,419,667 $ 63,837,651 See Notes to Financial Statements 21

32 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2012 Net change in fund balances - total governmental funds $ 3,868,514 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which depreciation ($7,658,416) exceeded capital outlays ($6,516,679) in the current period (1,141,737) The issuance of long-term debt provides current financial resource to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets Repayment of long-term debt principal 4,568,830 Bond premium and refunding charges amortization 3,160 Debt issuance costs are expenditures in governmental funds, but these costs are capitalized on the statement of net assets (117,458) Accrued interest for long-term liabilities. This is the net change in accrued interest for the current period. 608,492 Compensated absences expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds (568,923) Governmental funds report all contributions in relation to the annual required contribution (ARC) for OPEB as expenditures, however in the Statement of Activities only the ARC is an expense (797,840) Revenues reported as deferred revenue in the governmental funds and recognized in the Statement of Activities. These are included in the intergovernmental revenues in the governmental fund activity. (631,303) Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. The net revenues (expenses) of the internal service funds is reported with governmental activities (282,478) Extraordinary gains and losses relating to capital assets and long term liabilities transferred to the Successor Agency are reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported in the governmental funds. Capital assets $ (1,961,205) Deferred revenue (7,159,072) Long-term liabilities, including bond premiums of $964,252 35,809,252 Unamortized bond issuance costs (1,253,747) 25,435,228 Change in net assets of governmental activities $ 30,944,485 See Notes to Financial Statements 22

33 BUDGETARY COMPARISON STATEMENT GENERAL FUND YEAR ENDED JUNE 30, 2012 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 44,430,290 $ 44,430,290 $ 44,430,290 $ - Resources (Inflows): Taxes 24,794,400 24,794,400 26,810,572 2,016,172 Licenses and permits 1,018,200 1,018,200 1,030,179 11,979 Intergovernmental 275, , ,987 (20,013) Charges for services 4,515,506 4,515,506 4,436,403 (79,103) Use of money and property 2,689,000 2,689,000 2,639,085 (49,915) Fines and forfeitures 1,250,000 1,250, ,297 (258,703) Miscellaneous 140, ,500 1,265,261 1,124,761 Transfers in 884, , ,310 (392,332) Amounts Available for Appropriations 79,997,538 79,997,538 82,350,384 2,352,846 Charges to Appropriations (Outflow): General government 5,132,587 5,132,587 5,426,181 (293,594) Public safety 17,731,269 17,731,269 17,935,316 (204,047) Community development 1,903,492 1,903,492 2,300,895 (397,403) Parks and recreation 4,387,913 4,514,571 4,355, ,045 Public works 2,720,413 2,734,351 2,493, ,081 Capital outlay 140, , ,660 38,128 Debt service: Principal retirement 2,105,901 2,163,574 2,128,574 35,000 Interest and fiscal charges 2,241,248 2,248,293 2,221,736 26,557 Transfers out 95,000 95,000 71,051 23,949 Total Charges to Appropriations 36,458,611 36,673,925 37,045,209 (371,284) Budgetary Fund Balance, June 30 $ 43,538,927 $ 43,323,613 $ 45,305,175 $ 1,981,562 See Notes to Financial Statements 23

34 BUDGETARY COMPARISON STATEMENT COMMUNITY DEVELOPMENT BLOCK GRANT YEAR ENDED JUNE 30, 2012 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 2,209,997 $ 2,209,997 $ 2,209,997 $ - Resources (Inflows): Intergovernmental 3,903,455 3,903,455 2,555,399 (1,348,056) Use of money and property 526, , ,851 (350,975) Transfers in , ,000 Amounts Available for Appropriations 6,640,278 6,640,278 5,101,247 (1,539,031) Charges to Appropriations (Outflow): Community development 740, , , ,678 Capital outlay 1,160,390 2,192,914 1,594, ,536 Debt service: Principal retirement 415, , ,000 - Interest and fiscal charges 136, , ,851 (39,025) Transfers out 784,642 1,034, , ,332 Total Charges to Appropriations 3,237,249 4,438,768 3,081,247 1,357,521 Budgetary Fund Balance, June 30 $ 3,403,029 $ 2,201,510 $ 2,020,000 $ (181,510) See Notes to Financial Statements 24

35 BUDGETARY COMPARISON STATEMENT HOME PROGRAM YEAR ENDED JUNE 30, 2012 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ - $ - $ - $ - Resources (Inflows): Intergovernmental 1,060,041 3,072,080 2,352,594 (719,486) Amounts Available for Appropriations 1,060,041 3,072,080 2,352,594 (719,486) Charges to Appropriations (Outflow): Community development 1,060,041 3,072,080 2,352, ,486 Total Charges to Appropriations 1,060,041 3,072,080 2,352, ,486 Budgetary Fund Balance, June 30 $ - $ - $ - $ - See Notes to Financial Statements 25

36 STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2012 Assets: Current: Business-Type Activities - Enterprise Funds Utility Authority Water Fund Utility Authority Sewer Fund Other Enterprise Funds Refuse Removal Fund Cash and investments $ 10,359,156 $ 2,019,573 $ - Receivables: Accounts 2,476, , ,713 Accrued interest 9,883 2,120 - Prepaid costs Due from other governments ,948 Restricted: Cash with fiscal agent 4,194, Total Current Assets 17,040,002 2,349, ,661 Noncurrent: Unamortized debt issuance costs 854, Capital assets - net of accumulated depreciation 20,716,305 19,632,137 - Total Noncurrent Assets 21,570,390 19,632,137 - Total Assets $ 38,610,392 $ 21,981,991 $ 851,661 Liabilities and Net Assets: Liabilities: Current: Accounts payable $ 736,683 $ 41,440 $ 35,170 Accrued liabilities 66,570 12,725 - Accrued interest 342, Unearned revenues ,232 Deposits payable 1,493, Due to other funds ,774 Retentions payable 94, Accrued compensated absences 15, Accrued claims and judgments Bonds, notes, and capital leases 1,450, Total Current Liabilities 4,198,834 54, ,176 Noncurrent: Advances from other funds 19,290, Accrued compensated absences 112,391 60,990 - Accrued claims and judgments Bonds, notes, and capital leases 33,298, Total Noncurrent Liabilities 52,702,067 60,990 - Total Liabilities 56,900, , ,176 Net Assets: Invested in capital assets, net of related debt 19,457,917 19,632,137 - Restricted for debt service 4,194, Unrestricted (41,942,695) 2,234,699 (15,515) Total Net Assets (18,290,509) 21,866,836 (15,515) Total Liabilities and Net Assets $ 38,610,392 $ 21,981,991 $ 851,661 See Notes to Financial Statements 26