City of Alhambra California

Transcription

1 City of Alhambra California Comprehensive Annual Financial Report For the year ended June 30, 2009

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3 , CALIFORNIA Comprehensive Annual Financial Report Year ended June 30, 2009 (With Independent Auditors Report Thereon) Prepared by: Howard Longballa, Director of Finance and Staff

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5 Comprehensive Annual Financial Report Table of Contents Page Introductory Section: Letter of Transmittal Officials of the City of Alhambra Organizational Chart GFOA Certificate of Achievement for Excellence in Financial Reporting iv viii ix x Financial Section: Independent Auditors Report 1 Management s Discussion and Analysis 3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets 15 Statement of Activities 16 Fund Financial Statements: Balance Sheet Governmental Funds 17 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds 19 Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual: General Fund 21 Community Development Block Grant Special Revenue Fund 24 Home and Rental Rehabilitation Grant Special Revenue Fund 25 Alhambra Redevelopment Agency Low- and Moderate-Income Housing Special Revenue Fund 26 Statement of Net Assets Proprietary Funds 27 Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds 28 Statement of Cash Flows Proprietary Funds 29 Notes to the Basic Financial Statements 31 Required Supplementary Information (Unaudited): Schedule of Funding Progress of the City s Defined Benefit Pension Plan 71 Schedule of Funding Progress of the City s Health Subsidy Pension Plan 72 Schedule of Funding Progress of the City s Other Post-Employment Benefit Plans 72 i

6 Table of Contents, Continued Page Combining and Individual Fund Statements and Schedules: Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Major Debt Service Fund: Alhambra Redevelopment Agency Tax Allocation Bond Fund 73 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Major Capital Projects Fund: Alhambra Redevelopment Agency Industrial Project Fund 74 Other Governmental Funds: Combining Balance Sheet Other Governmental Funds 75 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Other Governmental Funds 76 Combining Balance Sheet Other Special Revenue Funds 77 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficits) Other Special Revenue Funds 79 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Other Special Revenue Funds: Law Enforcement Fund 81 TDA Bikeway Fund 82 State Gas Tax Fund 83 Proposition A Transportation Fund 84 Proposition C Transportation Fund 85 Air Quality Fund 86 Lighting and Landscape Maintenance Fund 87 Police Facility Assessment Fund 88 Asset Forfeiture Fund 89 Transportation Capital Improvements Fund 90 Combining Balance Sheet Other Debt Service Funds 91 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Other Debt Service Funds 92 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Other Debt Service Funds: Community Improvement Fund 93 Lighting and Sidewalk Construction Fund 94 Police Facility Fund 95 ii

7 Table of Contents, Continued Page Combining Balance Sheet Other Capital Projects Funds 96 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Other Capital Projects Funds 97 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Other Capital Projects Funds: Capital Outlay Fund 98 Alhambra Redevelopment Agency Central Projects Fund 99 Internal Service Funds: Combining Statement of Net Assets (Deficits) Internal Service Funds 100 Combining Statement of Revenues, Expenses, and Changes in Net Assets (Deficits) Internal Service Funds 101 Combining Statement of Cash Flows Internal Service Funds 102 Statistical Section (Not Covered by Independent Auditors Report) Net Assets by Component - Last Seven Fiscal Years 104 Changes in Net Assets - Last Seven Fiscal Years 105 Fund Balances of Governmental Funds - Last Seven Fiscal Years 106 Changes in Fund Balances of Governmental Funds - Last Seven Fiscal Years 107 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 108 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 109 Principal Property Tax Payers - Current Year and Nine Years Ago 110 Property Tax Levies and Collections - Last Ten Fiscal Years 111 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 112 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years 113 Direct and Overlapping Debt 114 Legal Debt Margin Information - Last Ten Fiscal Years 115 Pledged Revenue Coverage - Last Ten Fiscal Years 116 Demographic and Economic Statistics 117 Principal Employers - Current Year and Nine Years Ago 118 Full-time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years 119 Operating Indicators by Function - Last Ten Fiscal Years 120 Capital Asset Statistics by Function - Last Ten Fiscal Years 121 iii

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9 Introductory Section

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12 The independent audit of the financial statements of the City was part of a broader, federally mandated Single Audit designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City s separately issued Single Audit Report. Management s discussion and analysis (MD&A) immediately follows the independent auditor s report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complement this letter of transmittal and should be read in conjunction with it. Profile of the City of Alhambra The City of Alhambra was incorporated on July 11, 1903 and became the third city in the state to adopt by charter the Council-Manager form of government. Council members are nominated by district and elected at large for four-year terms at elections held in even numbered years. The City is located eight miles east of downtown Los Angeles and shares common boundaries with the cities of South Pasadena and San Marino to the north, San Gabriel to the east, Monterey Park to the south, and Los Angeles to the west. Alhambra occupies 7.69 square miles and generally has been fully developed since the 1960 s. Private development and higher densities have increased the population from 54,800 in 1960 to 89,171 in The City is diversified with single family and multiple family housing development, commercial development, and significant industrial development. The City provides a full range of municipal services. Services provided include police, fire, street maintenance and improvements, trash collection, water and storm drains, recreation, library, public improvements, planning zoning, and general administrative and support services. The City of Alhambra adopts a comprehensive budget detailed by department prior to the start of the fiscal year on July 1. The budget is further broken down by character of expenditure, defined as personnel services, service and supplies, and capital outlay. The ledgers of the City and its component units are maintained by the line item detail or object of expenditure. However, all budgetary controls are exercised at the department and fund level. Revenues are estimated annually and measured against actual revenues earned. Adoption of GASB Statements No. 34 The City has adopted Governmental Accounting Standard Board (GASB) Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments (GASB 34), effective July 1, GASB 34 establishes new financial reporting requirements for state and local governments. Some key changes with GASB 34 include: Government-wide, full accrual basis financial statements in place of the combined financial statements Capitalization and depreciation of all capital assets, including infrastructure assets Inclusion of management s discussion and analysis (MD&A) as required supplementary information Significant format and presentation changes to information in the statements. v

13 Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Alhambra operates. Local Economy. The City of Alhambra s economic base is a combination of commercial and light industrial business with nearly 2,055 businesses located in the City generating $1.1 billion in taxable sales in Approximately 40% of that amount is from Auto Row which currently has 14 dealers and over 21 different makes of automobiles. Other major businesses include Costco, Kohl s, Home Depot, Office Depot, Ross Dress For Less, Staples, Target, and Toys R Us. The renaissance of downtown Alhambra includes the 14 screen Alhambra Renaissance Cineplex with adjacent parking structure. The Cineplex includes stadium seating, a 20,000 square foot public plaza, and 15,000 square feet of retail/restaurant space located at the northeast corner of Main Street and Garfield Avenue. Cineplex eating establishments include Applebees Grill, Panda Express and Johnny Rockets. The Cineplex Parking Structure is a five-level 252,000 square foot structure with 811 parking spaces. Prior to the current recession, these and other private developments throughout the community, contributed to the City experiencing a continued growth in its revenue base over the prior five years. However since Alhambra s economic condition generally reflects the overall economic condition of the Los Angeles County region, the recession which started in December 2007, (while only slightly felt during by the City during the fiscal year), impacted more negatively the budget-to-actual revenue numbers for fiscal year While gross General Fund revenues were ($1,804,743) or (3.8%) under the final budgeted numbers, net revenues (adjusted for deferred Homeland security grants not yet received) were under budget only ($736,291) or (1.5%). Revenues under budget were sales taxes, building permit fees, and investment income offset by positive to budget parking permits, jail lease revenue, user fee charges, private library donations, and one-time reimbursements. It is worth noting that actual June 30, 2008 to June 30, 2009 General Fund revenues only decreased ($116,315) or (0.3%). Since the budget for was prepared with very conservative assumptions, the City expects to end June 30, 2010 on target. During fiscal year Construction in progress decreased substantially due to the completion of the new Civic Center Library facility as well as various improvements to streets and sidewalks. Capital assests for utility systems increased due to improvements in water and sewer lines, water reservoirs, and water wells. During fiscal year the City will complete the construction of the new Utility Groundwater Treatment Plant. Long-term Financial Planning. The City has developed a Strategic Plan with established goals from which budgetary decisions are made. The Plan is periodically updated and the City is consistently working to achieve these goals. City goals for fiscal years are as follows: Improve and expand infrastructure and facilities, including recreation and leisure Provide premier customer service Enhance commercial development, housing and jobs creation Achieve long-term financial viability Improve the pride, character and quality of our neighborhoods Substantial progress has been made towards the accomplishment of these goals. The City has also developed a Five-Year Capital Improvement Plan detailing specific capital projects planned for each City department. Each project is consistent with the overall goals and objectives of the City as outlined in the Strategic and General Plans. The current Five-Year Capital Improvement Plan proposed nearly $64 million of capital projects which includes $13 million for major street projects, $34 million for water and sewer system improvements, and $3 million for economic development. The City also closely monitors current revenues and expenditures to determine if any long-term trends are developing which may require adjustment of anticipated revenues or expenses. vi

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15 Officials of the City of Alhambra Mayor Steven T. Placido Fourth District City Council Members Barbara A. Messina Second District Luis Ayala Fifth District Gary S. Yamauchi Third District Stephen K. Sham First District City Administration and Department Heads City Manager and Executive Director/Alhambra Redevelopment Agency...Julio J. Fuentes City and Redevelopment Agency Attorney...Joseph Montes Director of Administrative Services... Tara Schultz Director of Public Works...Mary Chavez Director of Community Services... Cynthia Jarvis Director of Finance... Howard Longballa Director of Development Services... Vanessa Reynoso Director of Library Services... Carmen Hernandez Police Chief... James Hudson Fire Chief...Bruce Stedman Director of Personnel... Richard Bacio Director of Utilities...Mary Swink viii

16 ORGANIZATIONAL CHART PEOPLE OF ALHAMBRA City Council/ Alhambra Redevelopment Agency Board Stephen K. Sham First District Barbara A. Messina Second District Gary S. S. Yamauchi Third District Steven T. T. Placido Fourth District Luis Ayala Fifth District Civil Service/ Board of of Appeals Parks & Recreation Commission Planning Commission HCDA Citizens Advisory Committee Design & Review Board Board of of Library Trustees Transportation Commission City Manager & ARA Executive Director City Attorney (Contract) Management Services Development Services Fire Community Services Police Administrative Services Finance Library Personnel Public Works Utilities ix

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19 Financial Section

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23 Management s Discussion and Analysis June 30, 2009 This section of the City s Comprehensive Annual Financial Report provides a narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with additional information we have furnished in our letter of transmittal, which can be found beginning on page iv and the City s financial statements beginning on page 15. Financial Highlights The following are some key financial highlights for the fiscal year June 30, 2009: The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $155,275,274 (net assets), which was comprised of capital assets, net of related debt of $145,319,219, and unrestricted net deficit of $374,100. The City s total net assets increased by $1,881,409 during the current fiscal year, comprised of a decrease in governmental activities of $547,293 and an increase in business-type activities of $2,428,702. As of June 30, 2009, the City s governmental funds reported combined fund balances of $33,429,571, a decrease of $4,659,338 in comparison with the prior year. Of this amount, $10,636,175 or approximately 32% of total fund balances, are available for spending at the City s discretion (unreserved fund balance). At the end of the current fiscal year, unreserved fund balance for the General Fund was $8,746,072, or 17% of total general fund expenditures. However, the City Council has designated $8,745,768 for various projects and programs leaving $304 as undesignated. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City s basic financial statements. The City s basic financial statements comprise of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains supplementary information in addition to the basic financial statements. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City s finances in a manner similar to a private-sector business. The statement of net assets presents information on all of the City 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 is improving or deteriorating. The statement of activities presents information showing 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 of 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). See accompanying independent auditors' report 3 (Continued)

24 Management s Discussion and Analysis June 30, 2009 Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities). The governmental activities of the City include general government, public safety, public works, housing, health and community development, culture and recreation, and interest on long-term debt. The business-type activities of the City include its water, sewer and storm drain, sanitation, and golf course/clubhouse operations. The government-wide financial statements include not only the City itself (known as the primary government), but also five legally separate entities, the Alhambra Capital Improvements Corporation, Alhambra Golfcourse/Clubhouse Corporation, Alhambra Public Financing Authority, and the Alhambra Parking Authority. The City is financially accountable for these entities and financial information for these blended component units is reported within the financial information presented for the primary government itself. Financial information for another blended component unit, the Alhambra Redevelopment Agency, is also included with the activities of the primary government. The government-wide financial statements can be found on page 15 and page 16 of this report. Fund Financial Statements. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City, 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 can be divided into two categories: governmental funds and proprietary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the governmental-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of this fiscal year. Such information may be useful in evaluating the City s near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City s near-term financial decision. Both the governmental fund balance sheet and the governmental fund statement of revenue, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 21 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, Community Development Block Grant Fund, Home Rental and Rehabilitation Fund, Low- and Moderate Income Housing Fund, Tax Allocation Bond Fund and the Industrial Project Fund, each of which is considered to be major funds. Data from the other 15 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these other governmental funds is provided in the form of combining statements in the other governmental funds section of this report. The City adopts an annual appropriated budget for all of its funds. A budgetary comparison statement is provided for all funds with an annually adopted budget. The budgetary comparison statement for the General Fund, Community Development Block Grant Fund, Home Rental and Rehabilitation Fund and Low- and Moderate- Income Housing Fund are located in the basic financial statements. The Tax Allocation Bond Fund, Industrial Project Fund and the other governmental fund budgetary comparisons are located in the Combining and Individual Fund Statements and Schedules section of the report. See accompanying independent auditors' report 4 (Continued)

25 Management s Discussion and Analysis June 30, 2009 The basic governmental fund financial statements can be found on page 17 and page 19 of this report. Proprietary Funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water, sewer and storm drain, sanitation, and golf course/clubhouse operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City s various functions. The City uses internal service funds to account for self-insurance activities, including: general claims liability, workers compensation insurance, vehicle operation and maintenance, and compensated absences. Because these services benefit both governmental and business-type functions, the services have been allocated to governmental and business type activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water, sewer and storm drain, sanitation, and golfcourse/clubhouse operations, all of which are considered major funds of the City. Conversely, the internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements in the Supplementary Information section of this report. The basic proprietary fund financial statements can be found on page 27 through page 30 of this report. Notes to the Basic Financial Statements. The notes to the basic financial statements 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 basic financial statements can be found on pages 31 through 70 of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City s progress in funding its obligation to provide pension benefits and other post-employment benefits to its employees. Required supplementary information can be found on pages 71 through 72 of this report. The combining statements referred to earlier in connection with other governmental funds and internal service funds, together with information on capital assets used in the operation of governmental funds (those not included in internal service funds), are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found on pages 75 through 103 of this report. See accompanying independent auditors' report 5 (Continued)

26 Management s Discussion and Analysis June 30, 2009 Government-wide Financial Analysis Summary of Net Assets June 30, 2009 and 2008 Governmental Business-type activities activities Total Assets: Current and other assets $ 64,532,274 69,396,501 24,551,610 24,885,872 89,083,884 94,282,373 Capital assets 153,224, ,358,141 45,657,385 43,142, ,882, ,500,603 Total assets 217,756, ,754,642 70,208,995 68,028, ,965, ,782,976 Liabilities: Current and other liabilities 12,199,679 12,487,669 4,286,048 3,618,964 16,485,727 16,106,633 Long-term liabilities 99,757, ,920,309 16,447,043 17,362, ,204, ,282,477 Total liabilities 111,957, ,407,978 20,733,091 20,981, ,690, ,389,110 Net assets (deficit): Invested in capital assets, net of related debt 111,857, ,472,851 33,462,124 35,115, ,319, ,588,695 Restricted 8,499,470 1,832,264 1,830,685 9,434,618 10,330,155 11,266,882 Unrestricted (deficit) (14,557,195) (5,958,452) 14,183,095 2,496,740 (374,100) (3,461,712) Total net assets $ 105,799, ,346,663 49,475,904 47,047, ,275, ,393,865 As noted earlier, net assets may serve over time as a useful indicator of the City s financial position. In the case of the City, assets exceeded liabilities by $155,275,274 at June 30, The largest portion of the City s net assets of $145,319,219 reflects its investment in capital assets (e.g., land, buildings, infrastructure, machinery and equipment, etc.), less any related debt used to acquire those assets that are still outstanding. The City 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 needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The second largest portion of the City s net assets of $10,330,155 represent resources that are subject to external restrictions on how they may be used. The remaining portion of the City s net assets is unrestricted and may be used to meet the City s ongoing obligations to citizens and creditors. At June 30, 2009, unrestricted net deficits were $374,100. See accompanying independent auditors' report 6 (Continued)

27 Management s Discussion and Analysis June 30, 2009 Summary of Activities Year ended June 30, 2009 and 2008 Governmental Business-type activities activities Total Revenues: Program revenues: Charges for services $ 8,508,327 8,782,736 26,819,083 27,006,068 35,327,410 35,788,804 Operating grants and contributions 8,160,683 8,370,273 36,714 26,892 8,197,397 8,397,165 Capital grants and contributions 3,280, ,900 3,280, ,900 General revenues 58,473,235 56,670, ,858 1,295,440 59,116,093 57,965,751 Total revenues 78,422,257 74,417,220 27,498,655 28,328, ,920, ,745,620 Expenses: General government 2,599,399 2,101,814 2,599,399 2,101,814 Public safety 39,274,021 40,247,664 39,274,021 40,247,664 Public works 7,458,819 7,802,271 7,458,819 7,802,271 Housing, health, and community development 16,288,258 11,397,493 16,288,258 11,397,493 Culture and recreation 9,762,657 9,015,048 9,762,657 9,015,048 Interest on long-term debt 4,204,612 4,393,572 4,204,612 4,393,572 Water 12,646,555 10,680,298 12,646,555 10,680,298 Sewer and storm drain 1,325,972 3,512,671 1,325,972 3,512,671 Sanitation 8,412,422 8,516,066 8,412,422 8,516,066 Golf course/clubhouse 2,066,788 1,620,486 2,066,788 1,620,486 Total expenses 79,587,766 74,957,862 24,451,737 24,329, ,039,503 99,287,383 Increase (decrease) in net assets before transfers (1,165,509) (540,642) 3,046,918 3,998,879 1,881,409 3,458,237 Transfers in (out) 618,216 1,441,392 (618,216) (1,441,392) Increase (decrease) in net assets (547,293) 900,750 2,428,702 2,557,487 1,881,409 3,458,237 Net assets, July 1 106,346, ,445,913 47,047,202 44,489, ,393, ,935,628 Net assets, June 30 $ 105,799, ,346,663 49,475,904 47,047, ,275, ,393,865 Governmental Activities. Governmental activities decreased the City s net assets by $547,293. Revenue increased $4,005,037 primarily due to additional transportation improvement revenues received from the State of $2,194,417, an increase in property tax increment revenue received of $2,632,247, along with various decreases and increases in other revenues. Expenses increased $4,629,904 which included a write-down of land value of $1,974,317, an increase in property tax increment pass thru payments of $1,440,450, and additional postemployment benefits of $1,197,873. See accompanying independent auditors' report 7 (Continued)

28 Management s Discussion and Analysis June 30, 2009 Expenses and Prog ram Revenues Governmental Activities For the year ending June 30, 2009 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 General government P ublic safety P ublic w o rks H o using, health, and community development Expenses Program revenues Culture and recreation Interest on lo ng-term debt Revenues by Source Governmental Activities Other taxes 0% Motor vehicle in lieu 10% Investment earnings 1% Other 2% Charges for services 12% Operating grants and contributions 12% Sales taxes 19% Capital grants and contributions 5% Property taxes 39% See accompanying independent auditors' report 8 (Continued)

29 Management s Discussion and Analysis June 30, 2009 Business-type Activities. Business-type activities increased the City s net assets by $2,428,702, accounting for 129% of the increase in the City s net assets, indicating that business-type activities had revenues sufficient to cover operations. A key element of this increase is as follows: Water Fund net assets increased $1,818,314 due to revenues exceeding expenses providing for the accumulation of resources for future capital projects and expenses. Sewer and Storm Drain Fund net assets increased $1,328,816 due to revenues exceeding expenses providing for the accumulation of resources for future capital projects and expenses. Expenses and Program Revenues Business-type Activities for the year ended June 30, 2009 $16,000,000 $14,000,000 $12,000,000 Expenses Program revenues $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 W ater Sewer and storm drain Sanitation Golf course/clubhouse R evenues by Source Business-type A ctivities $30,000,000 26,819,083 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Charges for services 36, ,663 Operating grants and contributions Capital grants and contributions In vestm en t earnings 202,195 Other See accompanying independent auditors' report 9 (Continued)

30 Management s Discussion and Analysis June 30, 2009 Financial Analysis of the City s Funds As noted earlier, the City 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 may be useful in assessing the City s financing requirements. In particular, unreserved fund balance may serve as a useful measure of the City s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City s governmental funds reported combined ending fund balances of $33,429,571. Approximately 32% of fund balances, $10,636,175, constitute unreserved fund balance, which is available for spending at the City s discretion. The remainder of the fund balance is reserved to indicate that it is not available for new spending because it has already been committed 1) to liquidate contracts and purchases orders of the prior period ($2,700,326), 2) to pay debt service ($8,499,470), 3) reflect amounts due from other funds that are long-term in nature and thus do not represent available spendable resources ($3,027,100), 4) restricted for expenditures related to police facility ($2,281,178), 5) for assets held for future resale ($6,087,108), and 6) for a variety of other restricted purposes ($198,214). The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the total fund balance was $9,111,184 and the unreserved fund balance of the General Fund was $8,746,072; however, of this amount, the City Council has designated $8,745,768 for various projects and programs. As a measure of General Fund liquidity, it may be useful to compare both the unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 17% of total General Fund expenditures of $51,145,562 while total fund balance represents 18% of that same amount. The fund balance of the City s General Fund decreased by $1,113,113 during the current fiscal year. The primary reason for the decrease is that revenues were not sufficient to fund expenditures as expenditures exceeded revenues by $5,172,212. However this deficiency was partially offset by a sale of property for $1,122,927 and net positive increase in transfers from other funds. The Community Development Block Grant (CDBG) Fund utilizes federal grant monies received from the U.S. Department of Housing and Urban Development along with miscellaneous program income to fund expenditures in target areas as indicated by Federal regulations. The CDBG Fund has a total fund balance of $19,653. The net decrease in fund balance during the current year in the CDBG Fund was $40,676. The net decrease in fund balance is primarily due to timing differences in the recording of grant revenues. The Home and Rental Rehabilitation Grant (HOME) Fund utilizes federal grant monies received from the U.S. Department of Housing and Urban Development along with miscellaneous program income to fund affordable housing projects. The HOME Fund has a total fund deficit of $15,048. The net increase in fund balance during the current year in the HOME Fund was $6,620. The net increase in fund balance is primarily due to timing differences in the recording of grant revenues. The Low- and Moderate-Income Housing Fund utilizes funds required to be set aside by the State of California for low- and moderate-income housing projects. The Low- and Moderate-Income Housing Fund has a total fund balance of $5,890,532. The net increase in fund balance during the current year in the Low- and Moderate- Income Housing Fund was $2,491,681. The net increase in fund balance is primarily due to an increase in property tax set-aside revenues and decrease in project expenditures. See accompanying independent auditors' report 10 (Continued)

31 Management s Discussion and Analysis June 30, 2009 The Tax Allocation Bonds Fund accumulates property tax increment monies for the Redevelopment Agency for the payment of various bond issues. The Tax Allocation Bonds Fund has a total fund balance of $7,838,712. The increase in fund balance during the current year in the Tax Allocation Bonds Fund was $741,478. The net increase in fund balance is primarily due to an increase in property tax increment and interest earned on debt service reserve accounts. The Industrial Project Fund accounts for all Agency capital project activity in the Industrial project area. The Industrial Project Fund has a total fund deficit of $2,117,493. The net decrease in fund balance during the current year in the Industrial Project Fund was $5,658,310. The net decrease in fund balance is primarily due the expenditures made for the library facility project. Proprietary Funds. The City s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Enterprise Funds. Unrestricted net assets of the enterprise funds totaled $14,760,890 and total growth in net assets for these funds was $2,234,522. Other factors concerning the finances of these funds have already been addressed in the discussion of the City s business-type activities. The Water Fund s unrestricted net assets were $14,080,476, while total net assets were $35,801,348 at the end of the current year. The unrestricted net assets represents 120% of total Water Fund operating expenses of $11,727,078 while total net assets represents 305% of that same amount. The net assets of the Water Fund increased by $1,818,314 during the current fiscal year attributable primarily due to water rate increases to accumulate funds for future capital projects. The Sewer and Storm Drain Fund s unrestricted net assets were $3,853,906, while total net assets were $9,496,328 at the end of the fiscal year. The unrestricted net assets represent 282% of total Sewer and Storm Drain Fund expenses of $1,363,278 while total net assets represent 697% of that same amount. The net assets of the Sewer and Storm Drain Fund increased by $1,328,816 during the current fiscal year primarily due to sewer rate increases to accumulate funds for future capital projects. The Sanitation Fund s unrestricted net deficit was $1,064 at the end of the current fiscal year, while total net assets were $281,569. The unrestricted net deficit represents 0.01% of total Sanitation Fund expenses of $8,470,888, while total net assets represent 3% of the same amount. The net assets of the Sanitation Fund decreased by $549,942 during the current fiscal year. This decrease was due to the planned use of available net assets during the current fiscal year. The Golfcourse/Clubhouse fund s unrestricted net deficit was ($3,172,428), while total net assets were $4,474,454 at the end of the current fiscal year. The unrestricted net assets represent (160%) of total Golfcourse/Clubhouse fund expenses of $1,977,751, while total net assets represents 226% of that same amount. The net assets of the Golfcourse/Clubhouse fund decreased $362,666 during the current fiscal year. This decrease is primarily attributed to declining revenues and increasing operating costs. Internal Service Funds. The City s internal service funds are an accounting device used to accumulate and allocate costs internally among the City s various functions. The City uses internal service funds to account for its self-insurance activities, including liability insurance and workers compensation insurance, vehicle operations and maintenance, and compensated absences. As of June 30, 2009, unrestricted net deficit of the internal service funds was ($2,410,563) and total increase in net assets for these funds was $814,165. The See accompanying independent auditors' report 11 (Continued)

32 Management s Discussion and Analysis June 30, 2009 services provided by the internal service funds have been allocated to governmental and business-type functions, based on user percentages, in the government-wide financial statements. General Fund Budgetary Highlights In the General Fund, differences between the original budget and the final amended budget resulted in a net increase in appropriation of $1,146,439 and can be briefly summarized as follows: $22,788 in decreases allocated to various general government departments $170,188 in increases allocated to the library department $50,300 in increases allocated to the community services department $40,000 in increases allocated to the public works department $948,739 in increases allocated to public safety Of this increase, $170,188 was funded from donations made to the library. The increase of $948,739 in public safety included $953,739 for homeland security grants offset $5,000 of appropriation decreases. The remaining $67,512 was budgeted from available fund balance and included various items. Also in the General Fund, differences between the final amended budget and the actual amounts for revenues and expenditures resulted in a net positive variance of $1,044,470. General fund revenues accounted for a negative variance of $1,804,743 of this variance resulting from many sources including sales tax revenues under budget by $1,772,205, homeland security grants under budget by $1,068,452, and a net positive variance of $1,035,914 from various other revenues. The General Fund expenditures were under budget by $2,517,915 primarily due to personnel and capital expenditures for public safety. See accompanying independent auditors' report 12 (Continued)

33 Management s Discussion and Analysis June 30, 2009 Capital Asset and Debt Administration Capital Assets. The City s investment in capital assets for its governmental and business-type activities amounts to $198,882,009 (net of accumulated depreciation of $83,907,269) as of June 30, This investment in capital assets includes land, buildings, improvements other than building, infrastructure (roads, sidewalks, land held under easement, streetlights, etc.), and machinery and equipment. Capital Assets (Net of Accumulated Depreciation) June 30, 2009 and 2008 Governmental Business-type activities activities Total Land $ 26,514,147 26,545,147 5,764,209 5,764,209 32,278,356 32,309,356 Buildings, structures, and improvements 70,080,270 40,377,655 4,823,161 5,029,706 74,903,431 45,407,361 Machinery and equipment 4,406,014 4,969,804 1,424,225 1,119,679 5,830,239 6,089,483 Utility systems 22,621,505 22,188,940 22,621,505 22,188,940 Infrastructure 51,555,151 53,138,374 51,555,151 53,138,374 Construction in progress 669,042 29,327,161 11,024,285 9,039,928 11,693,327 38,367,089 Total $ 153,224, ,358,141 45,657,385 43,142, ,882, ,500,603 Additional information on the City s capital assets can be found in notes to the basic financial statements on pages 46 through 50 of this report. Major capital asset events during the current fiscal year included the following: Governmental activities Buildings, structures and improvements additions includes a new library facility completed in September of Construction in progress decreased due to the completion of the new library facility included in buildings, structures and improvements. Infrastructure additions included improvements to streets and sidewalks. Business-type activities Utility systems increased due to improvements in water and sewer lines, water reservoirs, and water wells. Construction in progress increase is for a nitrate remediation facility. See accompanying independent auditors' report 13 (Continued)

34 Management s Discussion and Analysis June 30, 2009 Debt Administration. At the end of the current fiscal year, the City had total bonded debt outstanding of $93,477,606. Of this amount, $41,588,098 represents certificates of participation issued for various capital improvements including police facility, golf course clubhouse, and water treatment facility, $4,710,000 represents special assessment bonds to finance public works maintenance and improvement projects and $47,179,508 represents tax allocation bonds issued for redevelopment projects. Additions to the City s long-term debt included a net increase in compensated absences payable of $137,778, pension liability of $672,512, and OPEB liability of $721,261. Deductions include repayment of outstanding principal totaling $7,144,379 and a net decrease in outstanding claims of $464,757. Outstanding Debt June 30, 2009 and 2008 Governmental Business-type activities activities Total Bonded indebtedness: Certificates of participation $ 27,582,358 29,272,696 14,005,740 15,121,077 41,588,098 44,393,773 Assessment district bonds 4,710,000 5,045,000 4,710,000 5,045,000 Tax allocation refunding bonds 47,179,508 50,181,736 47,179,508 50,181,736 Other long-term debt: Capital lease obligations 73, ,071 73, ,071 Benefits payable 3,099,239 2,982, , ,279 3,403,787 3,266,009 Pension liability 579,830 92, ,512 OPEB liability 635,000 86, ,261 Self insurance claims payable 6,499,739 6,964,496 6,499,739 6,964,496 Contractual obligations 3,855,831 4,342,204 3,855,831 4,342,204 Notes and loans payable 5,542,493 5,977,376 1,957,812 1,957,812 7,500,305 7,935,188 $ 99,757, ,920,309 16,447,043 17,362, ,204, ,282,477 Additional information on the City s debt can be found in notes to the basic financial statements on pages 54 through 62 of this report. The City received bond ratings of Aaa and AAA on its 2005 certificates issue due to the issuance of a municipal bond insurance policy. Standard & Poors credit market services has assigned a rating of A to the City. State statutes limit the amount of general obligations debt a governmental entity may issue to 15% of its total assessed valuation. The current debt limitation for the City is $254,338,467. The City currently has no general obligation debt. Next Year s Budget The major emphasis in the fiscal year budget includes expenditures for public safety, infrastructure improvements and continued emphasis on downtown mixed-use development and job creation. Request for Information This financial report is designed to provide a general overview of the City s finances for readers of the financial statements. Questions concerning any of the information in this report or request for additional financial information should be addressed to the Director of Finance, 111 South First Street, Alhambra, CA See accompanying independent auditors' report 14

35 Basic Financial Statements

36

37 Statement of Net Assets June 30, 2009 Governmental Business-type Assets Activities Activities Total Cash and investments $ 28,922,337 18,538,242 47,460,579 Restricted cash and investments 10,303,278 2,853,147 13,156,425 Accounts receivable 5,308,889 5,698,859 11,007,748 Notes receivable 4,870,171 4,870,171 Loans receivable 3,436,126 3,436,126 Internal balances 3,218,489 (3,218,489) Inventories 41, , ,636 Deferred charges 2,289, ,011 2,630,764 Prepaid items 54, ,327 6,087,108 6,087,108 Land held for resale Capital assets not being depreciated 27,183,189 16,788,494 43,971,683 Capital assets, net of accumulated depreciation 126,041,435 28,868, ,910,326 Total assets 217,756,898 70,208, ,965,893 Liabilities Liabilities: Accounts payable 5,313,281 2,473,185 7,786,466 Accrued liabilities 2,395,278 2,395,278 Bond interest payable 948, ,965 1,140,345 Bank notes payable 2,281,203 2,281,203 Deposits 843, ,136 1,282,823 Retentions payable 417,850 1,181,762 1,599,612 Long-term liabilities: Due within one year 8,027,893 1,295,963 9,323,856 Due in more than one year 91,729,956 15,151, ,881,036 Total liabilities 111,957,528 20,733, ,690,619 Net Assets Net assets: Invested in capital assets, net of related debt 111,857,095 33,462, ,319,219 Restricted for: Debt service 8,499,470 1,830,685 10,330,155 Unrestricted (14,557,195) 14,183,095 (374,100) Total net assets $ 105,799,370 49,475, ,275,274 See accompanying auditors' report and notes to financial statements 15

38 Statement of Activities Year ended June 30, 2009 Net (expenses) revenues and Program revenues changes in net assets Operating Capital Charges for grants and grants and Governmental Business-type Expenses services contributions contributions activities activities Total Functions/programs primary government: Governmental activities: General government $ 2,599, ,254 (2,229,145) (2,229,145) Public safety 39,274,021 4,116, , ,959 (34,485,146) (34,485,146) Public works 7,458, ,925 1,430,606 2,194,678 (3,601,610) (3,601,610) Housing, health, and community development 16,288,258 3,117,619 5,765, ,140 (6,669,965) (6,669,965) Culture and recreation 9,762, , ,998 40,235 (8,448,266) (8,448,266) Interest on long-term debt 4,204,612 (4,204,612) (4,204,612) Total governmental activities 79,587,766 8,508,327 8,160,683 3,280,012 (59,638,744) (59,638,744) Business-type activities: Water 12,646,555 14,093,897 1,447,342 1,447,342 Sewer and storm drain 1,325,972 2,870,951 1,544,979 1,544,979 Sanitation 8,412,422 8,045,969 36,714 (329,739) (329,739) Golf course/clubhouse 2,066,788 1,808,266 (258,522) (258,522) Total business-type activities 24,451,737 26,819,083 36,714 2,404,060 2,404,060 Total $ 104,039,503 35,327,410 8,197,397 3,280,012 (59,638,744) 2,404,060 (57,234,684) General revenues: Property taxes and assessments 27,777,842 27,777,842 Sales tax 13,131,359 13,131,359 Utility users tax 4,599,566 4,599,566 Franchise tax 1,620,966 1,620,966 Business license tax 1,560,820 1,560,820 Other taxes 342, ,860 Unrestricted intergovernmental 7,099,620 7,099,620 Unrestricted investment earnings 1,028, ,663 1,468,761 Miscellaneous 1,312, ,195 1,514,299 Transfers 618,216 (618,216) Total general revenues and transfers 59,091,451 24,642 59,116,093 Change in net assets (547,293) 2,428,702 1,881,409 Net assets beginning of year 106,346,663 47,047, ,393,865 Net assets end of year $ 105,799,370 49,475, ,275,274 See accompanying auditors' report and notes to financial statements 16

39 Assets CITY OF ALHAMBRA Balance Sheet Governmental Funds June 30, 2009 Special Revenue Funds Debt Service Capital Home and Low- and Fund Project Community Rental Moderate- Tax Fund Nonmajor Totals Development Rehabilitation Income Allocation Industrial Governmental Governmental General Block Grant Grants Housing Bonds Project Funds Funds Cash and investments $ 5,989,120 5,349,948 10,260,132 21,599,200 Restricted cash and investments 2,103,629 10,000 7,504, ,012 10,265,380 Receivables: Accounts 3,668,972 57,849 59, , ,973 78, ,340 5,305,885 Notes 2,870,171 2,000,000 4,870,171 Loans 483,480 2,952,646 3,436,126 Due from other funds 4,982, ,517 1,008 2,514, , ,138 8,807,334 Inventories 41,563 41,563 Deferred Charges 46, ,795 53,829 Advances to other funds 156,979 3,027,100 3,184,079 Land held for resale 5,779, ,522 6,087,108 Total assets $ 14,885,993 2,796,646 3,023,567 10,842,501 7,838,712 8,231,012 16,032,244 63,650,675 Liabilities and Fund Balances (Deficits) Liabilities: Accounts payable $ 1,517,684 22,627 18, ,335,002 2,088,685 4,982,685 Accrued liabilities 2,336,969 38,219 2,375,188 Bank notes payable 1,649, , ,629 2,281,203 Due to other funds 740,312 2,212,080 37,523 13,079 2,960, ,686 6,287,254 Deposits 331, , ,729 Advances from other funds 381,050 2,803,029 3,184,079 Deferred revenue 835, ,329 2,968,180 2,870,171 2,000, ,786 9,861,116 Retentions payable 12, ,322 38, , , ,850 Total liabilities 5,774,809 2,776,993 3,038,615 4,951,969 10,348,505 3,330,213 30,221,104 Fund balances: Fund balances (deficits): Reserved for debt service 7,838, ,758 8,499,470 Reserved for encumbrances 173,864 37,689 15,917 1,037,307 1,435,549 2,700,326 Reserved for inventories 41,563 41,563 Reserved for deferred charges 46, ,795 53,829 Reserved for advances 3,027,100 3,027,100 Reserved for land held for resale 5,779, ,522 6,087,108 Reserved for public safety augmentation 102, ,822 Reserved for police facility 2,281,178 2,281,178 Unreserved reported in: General Fund: Designated for: Contingencies 6,873,330 6,873,330 Budget stabilization 625, ,365 Subsequent year s operations 625, ,000 Disaster equipment 200, ,000 Art in public places 304, ,503 Park Projects 117, ,570 Undesignated Special revenue funds - undesignated (18,207) (30,965) 5,890,532 3,709,957 9,551,317 Capital projects funds - undesignated (8,941,181) 1,279,967 (7,661,214) Total fund balances (deficits) 9,111,184 19,653 (15,048) 5,890,532 7,838,712 (2,117,493) 12,702,031 33,429,571 Total liabilities and fund balance $ 14,885,993 2,796,646 3,023,567 10,842,501 7,838,712 8,231,012 16,032,244 63,650,675 See accompanying auditors' report and notes to financial statements 17