$7,200,000 CITY OF CLAREMONT General Obligation Refunding Bonds, Series 2016 (Johnson s Pasture)

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1 NEW ISSUE FULL BOOK-ENTRY RATING: Standard & Poor s: AAA (See RATING herein) In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, subject, however to certain qualifications described herein, under existing statues, regulations, rules and court decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest on the Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See TAX MATTERS herein. Dated: Date of Delivery $7,200,000 General Obligation Refunding Bonds, Series 2016 (Johnson s Pasture) Due: August 1, as shown below The $7,200,000 City of Claremont General Obligation Refunding Bonds, Series 2016 (Johnson s Pasture) (the Bonds ) are being issued by the City of Claremont (the City ) to (i) advance refund the City s outstanding General Obligation Bonds, as more particularly described herein, and (ii) pay the costs of issuing the Bonds. See INTRODUCTION - Purpose of Issue and THE BONDS - Application and Investment of Bond Proceeds and Tax Revenues herein. The Bonds are general obligation bonds of the City payable solely from ad valorem property taxes levied on taxable property within the City. The City Council is empowered and is obligated to levy ad valorem taxes, without limitation as to rate or amount, upon all property within the City subject to taxation by the City (except certain personal property which is taxable at limited rates), for the payment of interest on and principal of the Bonds when due. The City will direct the County of Los Angeles (the County ) to collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service on the Bonds. See THE BONDS - Security herein. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee for The Depository Trust Company, New York, New York (collectively referred to herein as DTC ). Purchasers of the Bonds (the Beneficial Owners ) will not receive physical certificate representing their interest in the Bonds. The Bonds are issued as fully registered securities in denominations of $5,000 or any integral multiple thereof. Payments of principal of and interest on the Bonds will be paid by Wells Fargo Bank, National Association, as the paying agent, authenticating agent and transfer agent (the Paying Agent ), to DTC for subsequent disbursement to DTC Participants (defined herein) who will remit such payments to the beneficial owners of the Bonds. See THE BONDS - Book-Entry Only System herein. The Bonds will be dated their date of delivery. Interest on the Bonds accrues from their dated date and is payable semiannually on February 1 and August 1 of each year, commencing August 1, The Bonds are subject to optional and mandatory sinking redemption prior to maturity as described herein. See THE BONDS - Redemption of Bonds herein. This cover page contains certain information for general reference only. It is not a intended to be a summary of the security or terms of this issue. Prospective investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page and not otherwise defined shall have the meaning set forth herein. THE BONDS ARE GENERAL OBLIGATION BONDS OF THE CITY AND DO NOT CONSTITUTE A DEBT, LIABILITY OR OBLIGATION OF THE COUNTY. NO PART OF ANY FUND OF THE COUNTY IS PLEDGED OR OBLIGATED TO THE PAYMENT OF THE BONDS. MATURITY SCHEDULE (See Inside Cover Page) The Bonds are delivered when, as and if issued and received by the Underwriter, subject to the approval as to their legality by Best Best & Krieger LLP, Riverside, California, Bond Counsel to the City. Best Best & Krieger LLP, is also acting as Disclosure Counsel to the City. Certain other legal matters are being passed upon for the City by Best, Best & Krieger LLP, Irvine, California. Certain legal matters will be passed upon for the Underwriter by Nossaman LLP, Irvine, California. It is anticipated that the Bonds will be available for delivery through the facilities of DTC on or about March 16, Dated: March 2, 2016.

2 Maturity (August 1) MATURITY SCHEDULE BASE CUSIP $7,200,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2016 (JOHNSON S PASTURE) Principal Amount Interest Rate Yield Price CUSIP 2016 $235, % 0.300% DE , DF , DG , DH , DJ , DK , DL , DM , DN , DP , C DQ , C DR , C DS , C DT , C DU , C DV , C DW , C DX , C DY5 $1,425, % Term Bond due August 1, 2037 Yield 3.130%, Price , CUSIP DZ2 CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright 2016 CUSIP Global Services. All rights reserved. CUSIP data herein is provided by Standard & Poor s CUSIP Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service Bureau. CUSIP numbers are provided for convenience of reference only. Neither the City nor the Underwriter take any responsibility for the accuracy of such numbers. C Priced to call on August 1, 2025 at par.

3 City Council Corey Calaycay, Mayor Sam Pedroza, Mayor Pro Tem Joe Lyons, Council Member Larry Schroeder, Council Member Opanyi Nasiali, Council Member City Staff Tony Ramos, City Manager Colin Tudor, Assistant City Manager Adam Pirrie, Finance Director Shelley Desautels, City Clerk PROFESSIONAL SERVICES Bond Counsel/Disclosure Counsel Best Best & Krieger LLP Riverside, California Paying Agent/Escrow Agent Wells Fargo Bank, National Association Minneapolis, Minnesota Verification Agent Grant Thornton LLP Minneapolis, Minnesota

4 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representations other than as contained in this Official Statement, and, if given or made, such other information or representation must not be relied upon as having been given or authorized by the City or the Underwriter. Use of this Official Statement. This Official Statement is submitted in connection with the sale of the Bonds described herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement does not constitute a contract between any Bond Owner and the City or the Underwriter. Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. Copies of documents referred to herein concerning the Bonds are available from the City of Claremont, Finance Department, 207 Harvard Avenue, Claremont, California 91711, Phone: (909) The City may impose a charge for copying, mailing and handling. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure made by the City, the words or phrases will likely result, are expected to, will continue, is anticipated, estimate, project, forecast, expect, intend and similar expressions identify forward looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City or any other party described in this Official Statement, since the date of this Official Statement. Document Summaries. All summaries of documents contained in this Official Statement are made subject to the provisions of such documents and do not purport to be complete statements of any or all such provisions. Each reference in this Official Statement to a document is qualified in its entirety by reference to such document, which is on file with the City. No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. No Registration with the SEC. The issuance and sale of the Bonds have not been registered under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, and the Paying Agent Agreement has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions provided thereunder. Public Offering Prices. The Underwriter may offer and sell the Bonds to certain dealers and dealer banks and banks acting as agent at prices lower than the public offering prices stated on the cover page of this Official Statement, and the Underwriter may change public offering prices from time to time. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market prices of the Bonds at levels above those that might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the Bonds to certain securities dealers and dealer banks and banks acting as agent at prices lower than the public offering prices stated on the cover page hereof and said public offering prices may be changed from time to time by the Underwriter. The City maintains a website. However, the information presented there is not part of this Official Statement, is not incorporated herein, and should not be relied upon in making an investment decision with respect to the Bonds.

5 TABLE OF CONTENTS INTRODUCTION... 1 The City... 1 Sources of Payment for Bonds... 1 Authority for Issuance of the Bonds... 1 Purpose of Issue... 1 Offering and Delivery of the Bonds... 2 Description of the Bonds... 2 Tax Matters... 2 Continuing Disclosure... 2 Forward Looking Statements... 3 Other Information... 3 THE BONDS... 4 Authority for Issuance... 4 Purpose of Issue... 4 Security... 4 Payment of the Bonds... 4 Book-Entry-Only System... 5 Paying Agent... 5 Application of Bond Proceeds... 5 Redemption of Bonds... 6 Redemption Procedure... 6 Partial Redemption of Bonds... 7 Effect of Redemption of Bonds... 7 Defeasance... 7 Registration, Transfer and Exchange of Bonds... 8 Events of Defaults and Remedies... 8 Amendments to Paying Agent Agreement... 9 SOURCES AND USES OF FUNDS DEBT SERVICE SCHEDULE CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY TAXES AND APPROPRIATIONS Article XIIIA of the State Constitution Legislation Implementing Article XIIIA Article XIIIB of the State Constitution Articles XIIIC and XIIID of the State Constitution Proposition Proposition 1A; Proposition SB Possible Future Initiatives Possible Future Actions CITY FINANCES Accounting Practices Financial Statements Budget Procedures Impact of State Budget on City Revenues Tax Receipts Property Taxes Tax Levies and Delinquencies Sales and Use Taxes Sales Tax Rates Outstanding General Fund Debt Direct and Overlapping Debt Employee Retirement System Other Post-Employment Benefits Investment of City Funds TAX MATTERS APPROVAL OF LEGAL PROCEEDINGS FINANCIAL STATEMENTS CONTINUING DISCLOSURE LITIGATION AND SIGNIFICANT CLAIMS RATING UNDERWRITER ADDITIONAL INFORMATION APPENDIX A - GENERAL INFORMATION CONCERNING THE CITY AND COUNTY... A-1 APPENDIX B - BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, B-1 APPENDIX C - FORM OF OPINION OF BOND COUNSEL... C-1 APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE... D-1 APPENDIX E - INFORMATION CONCERNING DTC... E-1 -i-

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7 $7,200,000 General Obligation Refunding Bonds, Series 2016 (Johnson s Pasture) INTRODUCTION This Official Statement (which includes the cover page, the table of contents and appendices hereto) is furnished by the City of Claremont (the City ), located in Los Angeles County (the County ), California, to provide information concerning the $7,200,000 City of Claremont, California, General Obligation Refunding Bonds, Series 2016 (Johnson s Pasture) (the Bonds ). This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of Bonds to potential investors is made only by means of the entire Official Statement. The City The City is located within the County, approximately 30 miles east of downtown Los Angeles and encompasses approximately square miles. The City has a population as of January 1, 2015 of approximately 36,282. Sources of Payment for Bonds The Bonds are general obligations of the City payable from ad valorem taxes levied by the City and collected by the County. The City Council is empowered and is obligated to annually levy ad valorem taxes for the payment of the Bonds and the interest thereon upon all property within the City subject to taxation by the City, without limitation of rate or amount (except with respect to certain personal property which is taxable at limited rates). See THE BONDS - Security herein. THE BONDS ARE GENERAL OBLIGATION BONDS OF THE CITY AND DO NOT CONSTITUTE A DEBT, LIABILITY OR OBLIGATION OF THE COUNTY. NO PART OF ANY FUND OF THE COUNTY IS PLEDGED OR OBLIGATED TO THE PAYMENT OF THE BONDS. Authority for Issuance of the Bonds The Bonds are being issued pursuant to the provisions of Articles 9 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (collectively, the Refunding Law ), a resolution adopted by the City Council on February 23, 2016 (the Bond Resolution ) and a Paying Agent Agreement dated as of March 1, 2016 (the Paying Agent Agreement ) between the City and Wells Fargo Bank, National Association, as paying agent (the Paying Agent ). See THE BONDS - Authority for Issuance herein. Purpose of Issue The Bonds are being issued to: (i) advance refund the City s outstanding General Obligation Bonds, Series 2007 (Johnson s Pasture Acquisition) (the Refunded Bonds ), and (ii) pay the costs of issuing the Bonds. See THE BONDS - Application of Bond Proceeds and ESTIMATED SOURCES AND USES OF FUNDS herein. 1

8 Offering and Delivery of the Bonds The Bonds are offered when, as and if issued, subject to approval of legality by Bond Counsel. It is anticipated that the Bonds will be available for delivery through the facilities of DTC on or about March 16, Description of the Bonds Maturity Dates. The Bonds will mature on August 1 in the years and in the principal amounts set forth on the inside cover page hereof. Payment Dates. The Bonds will be dated their date of delivery. Interest on the Bonds accrues from their dated date at the rates set forth on the inside cover page of this Official Statement, and is payable semiannually on each February 1 and August 1, commencing August 1, The principal amount of the Bonds is payable at maturity or at earlier redemption upon surrender of the applicable Bond for payment. Registration. The Bonds will be issued in fully registered form only, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ), and will be available to actual purchasers of the Bonds (the Beneficial Owners ) in authorized denominations, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. See THE BONDS - Book-Entry-Only System. In the event that the book-entry-only system described below is no longer used with respect to the Bonds, the Bonds will be registered in accordance with the Paying Agent Agreement described herein. See THE BONDS - Registration, Transfer and Exchange of Bonds. Denominations. The Bonds will be issued and beneficial ownership interests may be purchased by Beneficial Owners in denomination of $5,000 or any integral multiple thereof. Redemption. The Bonds are subject to redemption prior to maturity. See THE BONDS Redemption of Bonds herein. Tax Matters In the opinion of Best Best & Krieger LLP, Riverside, California ( Bond Counsel ), based on existing statutes, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and compliance with certain covenants described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California (the State ) personal income tax. See TAX MATTERS herein. Continuing Disclosure In order to assist the Underwriter of the Bonds in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission, the City will covenant in the Paying Agent Agreement for the benefit of bondholders and Beneficial Owners to make available certain financial information and operating data relating to the City and to provide notices of the occurrence of certain enumerated events pursuant to a Continuing Disclosure Certificate. The specific nature of the information to be made available and the enumerated events are summarized under the caption CONTINUING DISCLOSURE and set forth in APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE herein. 2

9 Forward Looking Statements Certain statements included or incorporated by reference in this Official Statement constitute forwardlooking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as plan, expect, estimate, project, budget or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information regarding the City herein. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. Other Information This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of documents referred to herein and information concerning the Bonds are available from the City of Claremont, 207 Harvard Avenue, Claremont, California A charge will be made to cover the City s reasonable costs of duplication and delivery. In addition, documents are available for inspection during business hours at the address above, or at the principal corporate trust office of the Paying Agent in Minneapolis, Minnesota. No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representations other than as contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The summaries and references to documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive, and are qualified in their entireties by reference to each of such documents, statutes and constitutional provisions. The information set forth herein, other than that provided by the City, has been obtained from official sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness by the City. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. All terms used herein and not otherwise defined shall have the meanings given such terms in the Paying Agent Agreement. 3

10 THE BONDS Authority for Issuance The Bonds are being issued pursuant to the Refunding Law, the Bond Resolution and the Paying Agent Agreement. Purpose of Issue The Bonds are being issued to: (i) advance refund the Refunded Bonds, and (ii) pay the costs of issuing the Bonds. See THE BONDS - Application of Bond Proceeds and ESTIMATED SOURCES AND USES OF FUNDS herein. Security The Bonds are general obligations of the City and the City Council is empowered and is obligated to levy ad valorem taxes upon all property within the City subject to taxation by the City, without limitation of rate or amount (except with respect to certain personal property which is taxed at limited rates), for the payment of the Bonds and the interest thereon, in accordance with all relevant provisions of law. The City will direct the County of Los Angeles to collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service. Such taxes, when collected, will be deposited into the debt service account for the Bonds (the Series 2016 Debt Service Account ), which is maintained by the City and which is irrevocably pledged for the payment of principal of and interest on the Bonds when due. For further information regarding the City s assessed valuation, tax rates, overlapping debt, and other matters concerning taxation, see CITY FINANCES. The County does not operate on the Teeter Plan, and therefore the City receives only those secured property taxes actually collected. The amount of the annual ad valorem tax levied by the City and collected by the County to repay the Bonds will be determined by the relationship between the assessed valuation of taxable property in the City and the amount of debt service due on the Bonds. A reduction in the assessed valuation of taxable property in the City caused by economic factors beyond the City s control, such as economic recession, slower growth, or deflation of land values, a relocation out of the City by one or more major property owners, or the complete or partial destruction of such property caused by, among other eventualities, an earthquake, flood or other natural disaster, could cause a reduction in the assessed value of the City and necessitate an unanticipated increase in the annual tax levy. For further information regarding the City s tax base, overlapping debt and other matters concerning taxation, see APPENDIX A GENERAL INFORMATION CONCERNING THE CITY AND COUNTY. Payment of the Bonds The Bonds will be issued in book-entry form only and will be initially issued and registered in the name of Cede & Co. Purchasers will not receive certificates representing their interest in the Bonds. The Bonds shall be issued in the denomination of $5,000 each or any integral multiple thereof. The Bonds mature on August 1, in the years and amounts set forth on the cover page hereof. See the maturity schedule on the inside cover page hereof and DEBT SERVICE SCHEDULE. Interest on the Bonds accrues from the date of delivery, and is payable on August 1, 2016, and semiannually thereafter on February 1 and August 1 of each year (the Interest Payment Dates ). Interest on the Bonds shall be calculated on the basis of a 360-day year comprised of twelve 30-day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (i) it is registered and authenticated as of an Interest Payment Date, in which event it shall bear interest from such date, or (ii) it is registered and authenticated prior to an Interest Payment Date and after the close of 4

11 business on the fifteenth day of the month preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is registered and authenticated prior to July 15, 2016, in which event it shall bear interest from the date of delivery; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Interest on the Bonds (including the final interest payment upon maturity or early redemption) is payable by check of the Paying Agent mailed on the Interest Payment Date to the owner thereof at such owner s address as it appears on the registration books maintained by the Paying Agent at the close of business on the fifteenth day of the month preceding the Interest Payment Date, or at such other address as the owner may have filed with the Paying Agent for that purpose; provided that an owner of $1,000,000 or more aggregate principal amount of Bonds, or the owner of all of the Bonds at the time outstanding, shall, at his or her option, receive payment of interest by wire transfer to an account in the United States of America designated by such owner to the Paying Agent no later than the fifteenth (15) day of the month immediately preceding the applicable Interest Payment Date. Principal of the Bonds is payable in lawful money of the United States of America at the principal office of the Paying Agent. Book-Entry-Only System The Bonds will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ) which has been appointed securities depository for the Bonds, and registered ownership may not thereafter be transferred except as provided in the Paying Agent Agreement. The Bonds are being issued in book-entry form only. Purchasers will not receive certificates representing their interests in the Bonds. Principal of and interest on the Bonds will be paid by the Paying Agent to DTC or its nominee, Cede & Co., which in turn is obligated to remit such principal and interest to its participants for subsequent disbursement to Beneficial Owners of the Bonds as described herein. See APPENDIX E INFORMATION CONCERNING DTC herein. Paying Agent Wells Fargo Bank, National Association in Minneapolis, Minnesota will act as the registrar, transfer agent, and paying agent for the Bonds. As long as DTC s book-entry method is used for the Bonds, the Paying Agent will send any notice of redemption or other notices to owners only to DTC. Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the redemption of the Bonds called for redemption or of any other action premised on such notice. The Paying Agent, the City, and the Underwriter of the Bonds have no responsibility or liability for any aspects of the records relating to or payments made on account of beneficial ownership, or for maintaining, supervising or reviewing any records relating to beneficial ownership, of interests in the Bonds. In the event that either (i) DTC determines not to continue to act as securities depository for the Bonds, or (ii) the City determines to terminate DTC as a securities depository for the Bonds, then the City will discontinue the book-entry system with DTC. If the City fails to identify another securities depository to replace DTC, then the Bonds shall no longer be required to be registered in the name of DTC, but shall be registered in whatever name or names the owners transferring or exchanging Bonds shall designate, in accordance with the provisions of the Paying Agent Agreement. Application of Bond Proceeds A portion of the proceeds from the sale of the Bonds will be deposited into an escrow fund (the Escrow Fund ) to refund the Refunded Bonds. The Escrow Fund is to be created and maintained by Wells Fargo Bank National Association, as escrow agent (the Escrow Agent ), under a certain Escrow Agreement, by and 5

12 between the City and the Escrow Agent, for the purpose of refunding the Refunded Bonds. See SOURCES AND USES OF FUNDS. Moneys in the Escrow Fund will be invested in cash and/or non-callable direct obligations of the United States Treasury or other non-callable obligations, the payment of the principal of and interest on which is guaranteed by a pledge of the full faith and credit of the United States of America. Grant Thornton LLP, acting as verification agent (the Verification Agent ) with respect to the Escrow Fund, will certify that the proceeds of the Bonds, along with the interest earnings thereon, if any, will be sufficient: (i) to pay the interest due on the Refunded Bonds to and including August 1, 2017 and (ii) to redeem the Refunded Bonds on August 1, 2017 at a redemption price equal to the principal amount thereof, plus accrued interest, without premium. Amounts on deposit in the Escrow Fund are not available to pay debt service on the Bonds. Redemption of Bonds Optional Redemption. The Bonds maturing on or before August 1, 2025, are not subject to redemption prior to their respective maturity dates. Bonds maturing on or after August 1, 2026, shall be subject to redemption prior to their respective maturity dates as a whole, or in part, on any date, from any moneys provided at the option of the City, in each case on and after August 1, 2025, at a redemption price equal to the principal amount of Bonds called for redemption, plus accrued interest to the date fixed for redemption, without premium. The City shall provide notice to the Paying Agent of any such optional redemption at least forty-five (45) days prior to the date set for redemption. In the case of a redemption in part, a City representative shall designate to the Paying Agent, in a written request of the City, those maturities to be redeemed in whole or in part (including as a maturity, for such purposes, principal due on the Bonds on a particular August 1 as a result of a scheduled mandatory sinking fund redemption). In the event a City representative does not designate the maturities of the Bonds to be redeemed, the Paying Agent shall select Bonds for redemption on a proportionate basis among maturities. In the event a particular maturity of Bonds is to be redeemed in part only, the Paying Agent shall select the Bonds of such maturity to be redeemed by lot. Mandatory Sinking Fund Redemption. The Bonds maturing August 1, 2037 are subject to mandatory sinking fund redemption in part, by lot, prior to their stated maturity dates, on each August 1 on and after August 1, 2035, at a redemption price equal to 100% of the principal amount thereof called for redemption, plus accrued interest to the redemption date, without premium, as follows: Redemption Procedure $1,425,000 Term Bond Maturing August 1, 2037 Redemption Date (August 1) Principal Amount of Bonds to be Redeemed 2035 $460, $475, $490,000 Regardless of whether the City has deposited funds sufficient for any redemption with the Paying Agent, the Paying Agent shall cause notice of any redemption to be mailed, first class mail, postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the respective owners of any Bonds designated for redemption, at their addresses appearing on the registration books maintained by the Paying Agent and to the Securities Depositories and the Information Services (both as defined in the Paying Agent Agreement); but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice shall not affect the validity of the proceedings for the redemption of 6

13 such Bonds. The City shall have the right to cancel the notice of any optional redemption by providing written notice of such cancellation to the Paying Agent not less than five (5) days prior to the date set for redemption. Such notice shall state the redemption date and the redemption price and the CUSIP numbers of the Bonds to be redeemed, and, if less than all of the then outstanding Bonds are to be called for redemption, shall designate the serial numbers of the Bonds to be redeemed by giving the individual number of each Bond or by stating that all Bonds between two stated numbers, both inclusive, or by stating that all of the Bonds of one or more maturities have been called for redemption, and shall require that such Bonds be then surrendered at the principal office of the Paying Agent for redemption at the said redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Any notice of optional redemption shall also state that it is subject to cancellation not less than five (5) days prior to the date set for redemption. In the event term bonds are redeemed in part, the City shall deliver a revised sinking fund schedule to the Paying Agent. Partial Redemption of Bonds Upon surrender of Bonds redeemed in part only, the City shall execute and the Paying Agent shall authenticate and deliver to the owner, at the expense of the City, a new Bond or Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. Effect of Redemption of Bonds From and after the date fixed for redemption, if notice of such redemption shall have been duly given as provided in the Paying Agent Agreement and funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under the Paying Agent Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice. Defeasance The City shall have the option to pay and discharge the entire indebtedness on all or any portion of the Bonds (including the principal due on the Bonds on any date as a result of a scheduled mandatory sinking fund redemption) in any one or more of the following ways: (a) (b) (c) by paying or causing to be paid the principal of, and interest and any premium on, such outstanding Bonds, as and when the same become due and payable; by depositing with an escrow agent, in trust, at or before maturity, money which, together with, in the event of a discharge of all of the Bonds, the amounts then on deposit in the funds and accounts provided for in the Paying Agent Agreement is fully sufficient to pay such outstanding Bonds, including all principal, interest and redemption premiums; or by irrevocably depositing with an escrow agent, in trust, cash and Federal Securities in such amount as the City shall determine as confirmed by an independent certified public accountant will, together with the interest to accrue thereon and, in the event of a discharge of all of the Bonds, moneys then on deposit in the fund and accounts provided for in the Paying Agent Agreement, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates. If the City shall have taken any of the actions specified in (a), (b) or (c) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in the Paying Agent Agreement provided or provision satisfactory to the Paying Agent shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds shall not have been 7

14 surrendered for payment, the pledge of the funds and moneys provided for in the Paying Agent Agreement and all other obligations of the City under the Paying Agent Agreement with respect to such outstanding Bonds shall cease and terminate. Notwithstanding the foregoing, the obligation of the City to pay or cause to be paid to the owners of the Bonds not so surrendered and paid all sums due thereon and all amounts owing to the Paying Agent pursuant to the Paying Agent Agreement shall continue in any event. Registration, Transfer and Exchange of Bonds The Paying Agent shall keep or cause to be kept sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the City upon reasonable notice; and, upon presentation for such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the Bonds. Events of Defaults and Remedies The following constitute Events of Default under the Paying Agent Agreement: (a) if default shall be made by the City in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed or by declaration or otherwise; or (b) if default shall be made by the City in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable. Upon the occurrence of an Event of Default, any bondowner shall have the right, for the equal benefit and protection of all bondowners similarly situated: (a) by mandamus, suit, action or proceeding, to compel the City and its members, officers, agents or employees to perform each and every term, provision and covenant contained in the Paying Agent Agreement and in the Bonds, and to require the carrying out of any or all such covenants and agreements of the City and the fulfillment of all duties imposed upon it; or (b) by suit, action or proceeding in equity, to enjoin any acts or things which are unlawful, or the violation of any of the bondowners rights. Nothing in the Paying Agent Agreement, or in the Bonds, shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective owners of the Bonds at the respective dates of maturity, or affect or impair the right of action, which is also absolute and unconditional, of such bondowners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds. A waiver of any default by any bondowner shall not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of any owner of any of the Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the bondowners by the Paying Agent Agreement may be enforced and exercised from time to time and as often as shall be deemed expedient by the owners of the Bonds. If a suit, action or proceeding to enforce any right or exercise any remedy be abandoned or determined adversely to the bondowners, the City and the bondowners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. No remedy conferred upon the owners of Bonds under the Paying Agent Agreement shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the bondowners. 8

15 Amendments to Paying Agent Agreement The Paying Agent Agreement and the rights and obligations of the City and of the owners of the Bonds may be modified or amended at any time by a Supplemental Paying Agent Agreement pursuant to the affirmative vote at a meeting of owners, or with the written consent without a meeting, of the owners of at least a majority in aggregate principal amount of the Bonds then outstanding, exclusive of Bonds disqualified as provided in the Paying Agent Agreement. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the ad valorem taxes of the taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or the Paying Agent Agreement), or reduce the percentage of Bonds required for the amendment of the Paying Agent Agreement. Any such amendment may not modify any of the rights or obligations of the Paying Agent without its written consent. The Paying Agent Agreement and the rights and obligations of the City and of the bondowners may also be modified or amended at any time by a Supplemental Paying Agent Agreement, without the consent of any owners, only to the extent permitted by law and only for any one or more of the following purposes: (a) to add to the covenants and agreements of the City in the Paying Agent Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power reserved to or conferred upon the City; (b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Paying Agent Agreement, or in regard to questions arising under the Paying Agent Agreement, as the City and the Paying Agent may deem necessary or desirable and not inconsistent with the Agreement, and which shall not adversely affect the rights of the owners of the Bonds; and (c) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations. 9

16 SOURCES AND USES OF FUNDS Proceeds of the Bonds plus funds on-hand at the City will be applied as follows: Sources of Funds Principal Amount $7,200, Plus Net Original Issue Premium 988, Funds On-Hand 503, Total Sources $8,692, Uses of Funds Escrow Fund (1) $8,550, Cost of Issuance (2) 142, Total Uses $8,692, (1) Amounts on deposit will be used to redeem the Refunded Bonds. (2) Includes Underwriter s Discount, legal fees, rating agency fees, fees of the City, paying agent/escrow agent fees, printing expenses and other costs of issuance with respect to the Bonds. DEBT SERVICE SCHEDULE The following table shows the debt service schedule with respect to the Bonds (assuming no early redemption). Period Ending (August 1) Annual Principal Payment Annual Interest Payment Total Annual Debt Service 2016 $ 235,000 $ 111, $ 346, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 85, , ,000 64, , ,000 42, , ,000 28, , ,000 14, , TOTAL $7,200,000 $3,703, $10,903,

17 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY TAXES AND APPROPRIATIONS Principal of and interest on the Bonds are payable from the proceeds of an ad valorem tax levied by the City for the payment thereof (See THE BONDS Security herein.) Articles XIIIA, XIIIB, XIIIC and XIIID of the Constitution, Propositions 62, 111, and 218 and 1A, and certain other provisions of law discussed below, are included in this section to describe the potential effect of these Constitutional and statutory measures on the ability of the City to levy taxes and spend tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laws impose any limitation on the ability of the City to levy taxes for payment of the Bonds. The tax levied by the City for payment of the Bonds was approved by the City s voters in compliance with Article XIIIA and all applicable laws. Article XIIIA of the State Constitution On June 6, 1978, California voters approved Proposition 13 ( Proposition 13 ), which added Article XIIIA to the State Constitution ( Article XIIIA ). Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service (i) on indebtedness approved by the voters prior to July 1, 1978, (ii) on bonded indebtedness approved by a two-thirds vote on or after July 1, 1978, for the acquisition or improvement of real property or (iii) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55 percent of the voters voting on the proposition. Article XIIIA defines full cash value to mean the county assessor s valuation of real property as shown on the tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. This full cash value may be increased at a rate not to exceed two percent per year to account for inflation. Article XIIIA has subsequently been amended to permit reduction of the full cash value base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the full cash value base in the event of reconstruction of property damaged or destroyed in a disaster, and in other minor or technical ways. Legislation Implementing Article XIIIA Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voterapproved indebtedness). The one percent property tax is automatically levied by the County and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the two percent annual adjustment are allocated among the various jurisdictions in the taxing area based upon their respective situs. Any such allocation made to a local agency continues as part of its allocation in future years. All taxable property is shown at full market value on the tax rolls. Consequently, the tax rate is expressed as $1 per $100 of taxable value. All taxable property value included in this Official Statement is shown at 100 percent of market value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value. 11

18 Article XIIIB of the State Constitution In addition to the limits Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual appropriations limit imposed by Article XIIIB which effectively limits the amount of such revenues those entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in The appropriations limit of each government entity applies to proceeds of taxes, which consist of tax revenues, State subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed the cost reasonably borne by such entity in providing the regulation, product or service. Proceeds of taxes excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not proceeds of taxes, such as reasonable user charges or fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on Bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government. The State and each local government entity has its own appropriations limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Proposition 111 requires that each agency s actual appropriations be tested against its limit every two years. If the aggregate proceeds of taxes for the preceding two-year period exceeds the aggregate limit, the excess must be returned to the agency s taxpayers through tax rate or fee reductions over the following two years. The City has never exceeded its appropriations limit. Articles XIIIC and XIIID of the State Constitution General. On November 5, 1996, the voters of the State approved Proposition 218, known as the Right to Vote on Taxes Act. Proposition 218 adds Articles XIIIC and XIIID to the State Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges. On November 2, 2010, California voters approved Proposition 26, entitled the Supermajority Vote to Pass New Taxes and Fees Act. Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as fees. Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article XIIIC define taxes that are subject to voter approval as any levy, charge, or exaction of any kind imposed by a local government, with certain exceptions. Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City ( general taxes ) require a majority vote; taxes for specific purposes ( special taxes ), even if deposited in the City s General Fund, require a two-thirds vote. Property-Related Fees and Charges. Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property-related fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i) a prohibition against 12

19 assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must confer a special benefit, as defined in Article XIIID, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Reduction or Repeal of Taxes, Assessments, Fees and Charges. Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City s General Fund. If such repeal or reduction occurs, the City s ability to pay debt service on the Bonds could be adversely affected. Burden of Proof. Article XIIIC provides that local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor s burdens on, or benefits received from, the governmental activity. Similarly, Article XIIID provides that in any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance with Article XIIID. Judicial Interpretation of Proposition 218. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts, and it is not possible at this time to predict with certainty the outcome of such determination. Impact on City s General Fund. The City does not believe that any material source of General Fund revenue is subject to challenge under Proposition 218 or Proposition 26. The approval requirements of Articles XIIIC and XIIID reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase the taxes, fees, charges or taxes in the future that it may need to meet increased expenditure needs. Proposition 62 Proposition 62 was a statutory initiative adding Sections to 53730, inclusive, to the California Government Code. It confirmed the distinction between a general tax and special tax, established by the State Supreme Court in 1982 in City and County of San Francisco v. Farrell, by defining a general tax as one imposed for general governmental purposes and a special tax as one imposed for specific purposes. Proposition 62 further provided that no local government or district may impose (i) a general tax without prior approval of the electorate by majority vote or (ii) a special tax without such prior approval by two-thirds vote. It further provided that if any such tax is imposed without such prior approval, the amount thereof must be withheld from the levying entity s allocation of annual property taxes for each year that the tax is collected. By its terms, Proposition 62 applies only to general and special taxes imposed on or after August 1, Proposition 62 was generally upheld in Santa Clara County Local Transportation Authority v. Guardino, a California Supreme Court decision filed October 28, The voters approved the issuance and sale of the bonds at the general election on November 7, Proposition 1A; Proposition 22 Proposition 1A. Proposition 1A, proposed by the Legislature in connection with the State s Fiscal Year Budget, approved by the voters in November 2004 and generally effective in Fiscal Year , provided that the State may not reduce any local sales tax rate, limit existing local government authority to levy 13

20 a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibited the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any Fiscal Year, as set forth under the laws in effect as of November 3, Any change in the allocation of property tax revenues among local governments within a county has to be approved by two-thirds of both houses of the Legislature. Proposition 22. Proposition 22, entitled The Local Taxpayer, Public Safety and Transportation Protection Act, was approved by the voters of the State in November Proposition 22 eliminates or reduces the State s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues. SB 222 On July 13, 2015, the Governor signed Senate Bill 222 ( SB 222 ) into law, effective January 1, SB 222 amends Section of the California Education Code and Section of the California Government Code to clarify the process of lien perfection for general obligation bonds issued by or on behalf of cities, counties, cities and counties, school districts, community college districts, authorities and special districts, including the City. SB 222, applicable to general obligation bonds issued after its effective date, will remove the extra step between (a) the issuance of general obligation bonds by cities, counties, cities and counties, school districts, community college districts and special districts; and (b) the imposition of a statutory lien on the future ad valorem property taxes that are the source of repayment of the general obligations bonds. The statutory lien will be valid and binding from the time the Bonds are issued. By clarifying that the lien created with each general obligation bond issuance is a statutory lien (consonant with bankruptcy statutory law and case precedent), SB 222, while it does not prevent default, should reduce the ultimate bankruptcy risk of non-recovery on local general obligations bonds, and thus potential improve ratings, interest rates and bond costs. Possible Future Initiatives Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 62, 111, 218 and 1A were each adopted as measures that qualified for the ballot pursuant to the State s initiative process. From time to time other initiative measures could be adopted, further affecting revenues of the City or the City s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the City. Possible Future Actions In recent years several initiative measures have been adopted which affect property and other local taxes. There is no assurance that the California electorate or Legislature will not at some future time approve additional limitations. 14

21 CITY FINANCES The information in this section concerning the operations of the City and the City s general fund finances is provided as supplementary information only, and it should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest on the Bonds is payable from the general fund of the City. The Bonds are payable solely from the proceeds of an ad valorem tax levied by the City in an amount sufficient for the payment thereof. See THE BONDS - Security herein. Accounting Practices The accounting practices of the City conform to generally accepted accounting principles. The City s accounting is organized on the basis of fund groups, with each group consisting of a separate set of selfbalancing accounts containing assets, liabilities, fund balances, revenues and expenditures. The major fund classification is the general fund which accounts for all financial resources not identified as requiring special fund placement. The City s fiscal year begins on July 1 and ends on June 30. Governmental fund financial statements include a balance sheet and a statement of revenues, expenditures and changes in fund balance for all major governmental funds and non-major funds aggregated. Financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. See APPENDIX B Audited Financial Statements of the City Note 1 Summary of Significant Accounting Policies herein for further description of the City s accounting methods. Financial Statements The City s general fund finances the legally authorized activities of the City for which restricted funds are not provided. General fund revenues are derived from such sources as taxes, fees, use of money and property, and aid from other governmental agencies. Audited financial statements for the City for the fiscal year ended June 30, 2015, and prior fiscal years are on file with the City and available for public inspection at the office of the City Clerk, 207 Harvard Avenue, Claremont, California , telephone number (909) The following tables show the audited balance sheets and income and expense statements for the City for the through fiscal years and budgeted numbers for fiscal year The audited financial statements for the year ended June 30, 2015 are included in APPENDIX B hereto. 15

22 TABLE 1 General Fund Budgets General Fund - Audited Revenues, Expenditures and Fund Balances For Fiscal Years through (Audited) and Fiscal Year (Budgeted) Audited Audited Audited Budgeted Revenues Taxes $18,712,855 $18,809,892 $19,577,396 $19,203,800 Assessments Licenses and permits 843,317 1,099,904 1,169,564 1,475,000 Intergovernmental 1,321,404 1,982,032 1,003, ,128 Charges for services 1,501,086 1,850,192 1,262,514 1,340,270 Use of money and property 347, , ,657 - Fines and forfeitures 771, , , ,000 Contributions Miscellaneous 329, , ,173 1,042,216 Total Revenues 23,828,246 25,356,712 24,596,886 24,105,414 Expenditures Current: General government 4,369,958 5,263,396 5,593,292 4,209,792 Police 9,462,566 9,504,209 9,876,365 10,328,967 Community development 2,388,357 2,388,049 2,856,722 3,830,789 Human services 2,228,784 2,337,352 2,470,200 2,644,957 Community services 1,505,316 1,647,843 1,432,857 1,592,494 Economic development Capital Outlay 1,237, , ,331 83,879 Debt service: Principal retirement Interest and fiscal charges Total Expenditures 21,192,406 22,008,012 22,537,767 22,640,878 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,635,840 3,348,700 2,059,119 1,464,536 Other Financing Sources (Uses): Transfers in 704, , ,638 - Transfers out (2,099,249) (2,375,243) (1,351,636) (1,364,464) Contributions to other agencies (3,416,375) - - Contributions from other agencies Total Other Financing Sources (Uses) (4,810,722) (2,024,180) (755,998) (1,364,464) Net Change in Fund Balances (2,174,882) 1,324,520 1,303, ,072 Fund Balances, Beginning of Year 13,191,567 11,016,685 12,341,205 11,600,036 Fund Balances, End of Year $11,016,685 12,341,205 13,644,326 11,700,108 Source: City of Claremont Comprehensive Annual Financial Reports ( through ), City of Claremont Operating & Capital Improvement Program Budget. 16

23 TABLE 2 General Fund Balance Sheet As of June 30 for Fiscal Years through Audited Audited Audited Assets Cash and investments $ 9,621,760 $11,857,753 $12,592,613 Receivables: Accounts 44, , ,101 Taxes 211, , ,069 Notes 275, , ,839 Accrued interest 5,929 3,870 11,474 Prepaid costs 8,813 14,899 19,717 Due from other governments 1,614,374 1,516,579 1,583,612 Due from other funds 1,910, ,395 1,164,749 Land held for resale Restricted assets: Cash and investments with fiscal agents Total Assets $14,088,762 $15,513,977 $16,528,174 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ 749,447 $ 785,444 $ 1,116,433 Accrued liabilities 142, , ,983 Unearned revenues 90,000 Deposits payable 1,115,555 1,256, ,142 Due to other funds Total Liabilities 2,097,136 2,218,338 1,939,558 Deferred Inflows of Resources: Unavailable revenues 974, , ,290 Total Deferred Inflows of Resources 974, , ,290 Fund Balances Nonspendable 296, ,983 30,971 Restricted Committed 7,726,461 8,149,006 9,907,921 Assigned Unassigned 2,993,981 3,606,216 3,705,434 Total Fund Balances 11,016,685 12,341,205 13,644,326 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $14,088,762 $15,513,977 $16,528,174 Source: City of Claremont Comprehensive Annual Financial Reports ( through ). The City Council employs, at the beginning of each fiscal year, an independent certified public accountant who, at such time or times as specified by the City Council, at least annually, and at such other times as he or she determines, examines the combined financial statements of the City in accordance with generally accepted auditing standards, including such tests of the accounting records and such other auditing procedures as such accountant considers necessary. As soon as practicable after the end of the fiscal year, a final audit and report is submitted by such accountant to the City Council and a copy of the financial statements as of the close of the fiscal year is published. The City s Independent Auditor s Report for fiscal year was prepared by Lance Soll & Lunghard LLP, Brea, California. Budget Procedures The City typically adopts a two-year budget that provides for the general operations of the City. The City develops budgets, which are legally adopted for all funds other than trust and agency funds. The budget includes proposed expenditures and means of financing them. The City Council typically approves total budgeted appropriations and amendments affecting fund balance throughout the year. This appropriated

24 budget covers substantially all City expenditures. Actual expenditures may not exceed budgeted appropriations at the fund level. However, the City Manager is authorized to transfer budgeted amounts between funds and between financial categories without approval of the City Council. Impact of State Budget on City Revenues General. In recent years, the State of California has faced significant financial and budgetary stress. On January 7, 2016, Governor Brown introduced to the State Legislature the fiscal year State Budget (the State Budget ). The State Budget includes approximately $120.6 billion in State General Fund resources (including revenues, transfers and the prior year ending balance) and approximately $122.6 billion in planned State General Fund expenditures. By the end of fiscal year , the Budget Stabilization Account will have a total balance of approximately $8 billion. The State Budget includes an approximately 5.6% State General Fund spending increase from the fiscal year State Budget Act. Information about the State Budget and other State budgets is regularly available at various State-maintained websites. An impartial analysis of the budget is posted by the Legislative Analyst Office at In addition, various State official statements, many of which contain a summary of the current and past State budgets, may be found at the website of the State Treasurer, The information referred to in this paragraph is prepared by the respective State agency maintaining each website and not by the City, or the Underwriter, and the City and the Underwriter take no responsibility for the continued accuracy of the Internet addresses or for the accuracy or timeliness of information posted there, and such information is not incorporated herein by these references. Dissolution of Redevelopment Agency. In an effort to balance its budget, the State of California adopted ABx1 26 on June 28, 2011, amended by AB 1484 on June 27, 2012 (the Dissolution Act ), which suspended all new redevelopment activities except for limited specified activities as of June 28, 2011 and dissolved redevelopment agencies on January 31, See Note 15 to the City s audited financial statements attached as APPENDIX B for information about the impact on the City of the dissolution of its redevelopment agency, the Claremont Redevelopment Agency (the Former Redevelopment Agency ). Future State Budgets. The City cannot predict what actions will be taken in future years by the State Legislature and the Governor to address the State s current or future budget deficits. Future State budgets will be affected by national and state economic conditions and other factors over which the City has no control. To the extent that the State budget process results in reduced revenues to the City, the City will be required to make adjustments to its budget. Decreases in such revenues may have an adverse impact on the City s ability to pay scheduled debt service on the Bonds. Tax Receipts Taxes received by the City include property taxes, sales taxes, utility users taxes and others. Of such taxes, property taxes (approximately 33% of the General Fund revenues) sales taxes (approximately 16% of General Fund revenues) and utility user s taxes (approximately 18% of General Fund revenues) constitute major sources of General Fund revenues. The City believes that none of the general taxes currently imposed by or for the benefit of the City are affected by Proposition 62 or Proposition 218. See CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS Articles XIIIC and XIIID of the State Constitution. Property Taxes General. Property taxes represent the largest source of tax revenue to the City. This section describes property tax levy and collection procedures and certain information regarding historical assessed values and major property tax payers in the City. See CONSTITUTIONAL AND STATUTORY LIMITATIONS ON 18

25 TAXES AND APPROPRIATIONS and BOND OWNERS RISKS Property Taxes for a description of risks associated with the levy and collection of property tax revenues. Property taxes have historically been the primary revenue source affected by voter initiatives and legislative actions. With approval of Proposition 13 ( Proposition 13 ), property tax revenues were reduced by two-thirds and thereafter limited to 2% annual increases or the consumer price index, whichever is less. See CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS Article XIIIA of the State Constitution for further description of Proposition 13. Levy and Collection. Property taxes are levied for each Fiscal Year on taxable real and personal property as of the preceding January 1. For assessment and collection purposes, property is classified either as secured or unsecured and is listed accordingly on separate parts of the assessment roll. The secured roll is that part of the assessment roll containing State-assessed public utilities property and real property the taxes on which are a lien sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the unsecured roll. Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each Fiscal Year, and become delinquent on December 10 and April 10, respectively. A penalty of 10% attaches immediately to all delinquent payments. Property on the secured roll with respect to which taxes are delinquent become tax defaulted on or about June 30 of the Fiscal Year. Such property may thereafter be redeemed by payment of a penalty of 1% per month to the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property is deeded to the State and may be sold at public auction. Property taxes on the unsecured roll are due as of the January 1 lien dates and become delinquent on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1% attaches to them on the first day of each month until paid. The County has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a judgment in the office of the County Clerk specifying certain facts in order to obtain a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder s office in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. Beginning in , Proposition 13 and its implementing legislation shifted the function of property tax allocation to the counties, except for levies to support prior voted debt, and prescribed how levies on countywide property values are to be shared with local taxing entities within each county. See CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS Article XIIIA of the State Constitution for further description of Proposition 13. Assessed Valuation. All property is assessed using full cash value as defined by Article XIIIA of the State Constitution. State law provides exemptions from ad valorem property taxation for certain classes of property such as churches, colleges, non-profit hospitals, and charitable institutions. See CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS, above. Future assessed valuation growth allowed under Article XIIIA (new construction, certain changes of ownership, 2% inflation) will be allocated on the basis of situs among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools will share the growth of base revenues from the tax rate area. Each year s growth allocation becomes part of each agency s allocation in the following year. For assessment and collection purposes, property is classified as either secured or unsecured and is listed accordingly on separate parts of the assessment roll. The secured roll is that part of the assessment roll containing State-assessed property and real property having a tax lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Unsecured property comprises all property not attached to land such as 19

26 personal property or business property. Boats and airplanes are examples of unsecured property. Unsecured property is assessed on the unsecured roll. The following table shows assessed valuations and tax levies for fiscal years through TABLE 3 Assessed Value of Taxable Property and Total Current Tax Levy Fiscal Years through Local Secured Non-Unitary Utility Unsecured Total $3,639,871,884 $1,097,712 $58,646,311 $3,699,615, ,714,003,884 1,097,712 64,822,567 3,779,924, ,829,922, ,834,463 3,894,756, ,157,219, ,387,420 4,218,606, ,345,913, ,384,221 4,408,297,317 Source: California Municipal Statistics, Inc. The following table shows typical tax rates in the tax rate area for fiscal years through TABLE 4 Typical Tax Rates per $100 of Assessed Valuation (TRA 02730) (1) General City of Claremont Claremont Unified School District Citrus Community College District Metropolitan Water District Total (1) assessed valuation of TRA 2730 is $2,278,178,896. Source: California Municipal Statistics, Inc. Tax Levies and Delinquencies The City is located in Los Angeles County, which is not subject to the Teeter Plan. Therefore, the City receives secured property taxes actually collected. Secured tax charges and delinquencies for the past five years are shown in the following table. 20

27 TABLE 5 Secured Tax Charges and Delinquencies Secured Tax Charge (1) Amt. Del. June 30 % Del. June $4,182, $100, % ,298, , ,421, , ,561, , ,953, , (1) Taxing District No. 1. City s general obligation bond debt service levy. Source: California Municipal Statistics, Inc. The following table lists the top local secured taxpayers in the City for TABLE 6 Top Ten Local Secured Taxpayers Assessed Valuation % of Total (1) Property Owner Primary Land Use 1. Claremont Star LP Hotel $ 48,722, % 2. KMF Claremont LLC Apartment 20,189, CHP Claremont CA Owner LLC Professional Building 19,723, HFP Ltd. Auto Dealership 18,565, Claremont Village Expansion Borrower LLC Shopping Center 16,775, ROIC California LLC Shopping Center 16,750, CWI Eagles LLC Apartment 14,753, KDF Claremont LP Apartments 12,990, Raintree Springhill Apartments LLC Apartments 11,948, Claremont Investors Ltd. Apartments 11,856, $192,275, % (1) Local Secured Assessed Valuation: $4,345,913,096. Source: California Municipal Statistics, Inc. Sales and Use Taxes Sales and use taxes represent the third largest source of tax revenue to the City. The sales tax is an excise tax imposed on retailers for the privilege of selling or leasing tangible personal property. The use tax is an excise tax imposed for the storage, use, or other consumption of tangible personal property purchased from any retailer. The total sales tax rate within the City is 9.0%, as of July 1, Collection of the sales and use tax is administered by the California State Board of Equalization. Under its procedures, the State Board of Equalization projects receipts of the sales and use tax on a quarterly basis and remits an advance of the receipts of the sales and use tax to the City on a monthly basis. The amount of each monthly advance is based upon the State Board of Equalization s quarterly projection. During the last month of each quarter, the State Board of Equalization adjusts the amount remitted to reflect the actual receipts of the sales and use tax for the previous quarter. The State Board of Equalization receives an administrative fee based on the cost of services provided by the State Board of Equalization to the City in administering the City s sales tax, which is deducted from revenue generated by the sales and use tax before it is distributed to the City. 21

28 Sales Tax Rates A sales tax is imposed on retail sales or consumption of personal property. The tax rate is established by the State Legislature. Effective July 1, 2015, the aggregate tax rate in the State is 7.50%. An additional 1.5% is collected in Los Angeles County for transportation purposes. The State collects and administers the tax, and makes distributions on taxes collected within the City as follows: TABLE 7 Sales Tax Rates (Effective July 1, 2015) State General Fund % State Education Protection Account 0.25 Local Public Safety Fund 0.50 Los Angeles County Transportation Commission 1.00 Los Angeles County Transportation Authority 0.50 Los Angeles County Transportation Fund 0.25 City 1.00 Local Revenue Fund Total 9.00% Application of Sales Tax. Sales and use taxes are complementary taxes; when one applies, the other does not. In general, the statewide sales tax applies to gross receipts of retailers from the sale of tangible personal property in the State. The use tax is imposed on the purchase, for storage, use or other consumption in the State of tangible personal property from any retailer. The use tax generally applies to purchases of personal property from a retailer outside the State where the use will occur within the State. The sales tax is imposed upon the same transactions and items as the statewide sales tax and the statewide use tax. Certain transactions are exempt from the State sales tax, including sales of the following products: food products for home consumption; prescription medicine; newspapers and periodicals; edible livestock and their feed; seed and fertilizer used in raising food for human consumption; and gas, electricity and water when delivered to consumers through mains, lines and pipes. This is not an exhaustive list of exempt transactions. A comprehensive list can be found in the State Board of Equalization s July 2014 Publication No. 61 entitled Sales and Use Taxes: Exemptions and Exclusions, which can be found on the State Board of Equalization s website at Sales Tax Collection Procedures. Collection of the sales and use tax is administered by the State Board of Equalization. According to the State Board of Equalization, it distributes quarterly tax revenues to cities, counties and special districts using the following method: Using the prior year s like quarterly tax allocation as a starting point, the State Board of Equalization first eliminates nonrecurring transactions such as fund transfers, audit payments and refunds, and then adjusts for growth, in order to establish the estimated base amount. The State Board of Equalization disburses 90% to each local jurisdiction in three monthly installments (advances) prior to the final computation of the quarter s actual receipts. Ten percent is withheld as a reserve against unexpected occurrences that can affect tax collections (such as earthquakes, fire or other natural disaster) or distributions of revenue such as unusually 22

29 large refunds or negative fund transfers. The first and second advances each represent 30% of the 90% distribution, while the third advance represents 40%. One advance payment is made each month, and the quarterly reconciliation payment (clean-up) is distributed in conjunction with the first advance for the subsequent quarter. Statements showing total collections, administrative costs, prior advances and the current advance are provided with each quarterly clean-up payment. Under the Sales and Use Tax Law, all sales and use taxes collected by the State Board of Equalization under a contract with any city, city and county, redevelopment agency, or county are required to be transmitted by the State Board of Equalization to such city, city and county, redevelopment agency, or county periodically as promptly as feasible. These transmittals are required to be made at least twice in each calendar quarter. Under its procedures, the State Board of Equalization projects receipts of the sales and use tax on a quarterly basis and remits an advance of the receipts of the sales and use tax to the City on a monthly basis. The amount of each monthly advance is based upon the State Board of Equalization s quarterly projection. During the last month of each quarter, the State Board of Equalization adjusts the amount remitted to reflect the actual receipts of the sales and use tax for the previous quarter. The State Board of Equalization receives an administrative fee based on the cost of services provided by the Board to the City in administering the City s sales tax, which is deducted from revenue generated by the sales and use tax before it is distributed to the City. Sales taxes received by the City in fiscal year equaled approximately $3,957,760 and represented approximately 16% of tax revenues to the General Fund. Outstanding General Fund Debt As of the date hereof, the City has outstanding the following debt payable from the City s General Fund: Loans Payable. LaSalle National Bank loaned the City approximately $12 million in December 2002 for the refunding and refinancing of City Hall and Community Center project debt and the financing of the City Yard project. In fiscal year , Compass Bank loaned the City approximately $6 million to refinance the LaSalle National Bank loan. The term of the remaining $3,895,000 is 5 years with a final payment due in January Pension Obligation Bonds. To pay off the CalPERS side account, the City issued pension obligation bonds in the amount of approximately $6 million in January Full bond maturity is scheduled during fiscal year Direct and Overlapping Debt Contained within the City are overlapping local agencies providing public services which have issued general obligation bonds and other types of indebtedness. Direct and overlapping bonded indebtedness is shown in the following table. 23

30 Assessed Valuation: $4,408,297,317 TABLE 8 Statement of Direct and Overlapping Debt DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 2/1/16 Los Angeles County Flood Control District 0.353% $ 53,321 Metropolitan Water District ,598 Citrus Community College District ,549,338 Claremont Unified School District ,483,343 City of Claremont General Obligation Bonds ,100,000 (1) Los Angeles County Regional Park and Open Space Assessment District ,111 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $51,559,711 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Los Angeles County General Fund Obligations 0.346% $ 6,175,905 Los Angeles County Superintendent of Schools Certificates of Participation ,487 Claremont Unified School District General Fund Obligations ,036,182 City of Claremont Pension Obligation Bonds ,875,000 Los Angeles County Sanitation District No. 21 Authority ,119 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $17,058,693 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $10,935,000 COMBINED TOTAL DEBT $79,553,404 (2) Ratios to Assessed Valuation: Direct Debt ($8,100,000) % Total Direct and Overlapping Tax and Assessment Debt % Combined Direct Debt ($12,975,000) % Combined Total Debt % Ratio to Redevelopment Incremental Valuation ($495,341,357): Total Overlapping Tax and Assessment Debt % (1) Excludes general obligation bonds to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. Employee Retirement System This caption contains certain information relating to PERS. The information is primarily derived from information produced by PERS, its independent accountants and actuaries. The City has not independently verified the information provided by PERS and makes no representations and expresses no opinion as to the accuracy of the information provided by PERS. The comprehensive annual financial reports of PERS are available on its Internet website at The PERS website also contains PERS most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are forward-looking statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or may be changed in the future. Actuarial assessments will change with the future experience of the pension plans. Plan Description. The City contributes to the California Public Employees' Retirement System ( PERS ), an agent multiple-employer defined benefit retirement plan that acts as a common investment and 24

31 administrative agent for various local and state governmental agencies within the State of California. PERS provides retirement, disability, and death benefits based on the employee's years of service, age and final compensation. Employees vest after five years of service and may receive retirement benefits at age 50. These benefit provisions and all other requirements are established by State statute and City ordinance. Copies of the Fund's annual financial report may be obtained from their executive office: 400 P Street, Sacramento, California PERS Contributions and Funding Policy. The City now has one tier of retirement for Miscellaneous employees and two tiers of retirement for Safety-employees. The retirement received by employees is dependent on their date of hire and previous employment with PERS reciprocal agencies, as shown in the tables below. Miscellaneous Hire Date Prior to 1/1/2013 * Benefit formula 55 Benefit vesting schedule 5 years of service Benefit payments Monthly for life Retirement age Monthly benefits, as a % of eligible compensation 1.426% % Required employee contribution rates 7.952% Required employer contribution rates % * Closed to new entrants Source: City of Claremont Comprehensive Annual Financial Report ( ). Safety Tier 1 Tier 2 Hire Date Benefit formula Benefit vesting schedule 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Retirement age Monthly benefits, as a % of eligible compensation 1.426% % 1.426% % Required employee contribution rates 8.986% 8.980% Required employer contribution rates % % * Closed to new entrants Source: City of Claremont Comprehensive Annual Financial Report ( ). The City's contributions to the Safety and Miscellaneous plans in the fiscal year ended June 30, 2015 totaled $2,973,280. Funded Status. The following table sets forth the schedule of funding for the City s pension plans as of June 30,

32 Valuation Date (June 30) Miscellaneous Annual Covered Payroll Actuarial Accrued Liability Actuarial Value of Assets UAAL (1) Market Value of Assets Funded Ratio (1) 2009 $63,997,557 $50,820,862 $27,070,933 $36,926, % $10,053, ,194,773 53,180,421 24,710,044 41,484, ,217, ,752,116 55,803,024 22,230,121 49,521, ,946, ,220,423 57,241,662 26,504,251 47,716, ,470, ,977,663 N/A (2) 24,716,942 53,260, ,899, ,697,077 N/A (2) 23,599,332 61,097, ,953,447 (1) Based on the market value of assets. (2) This information is not available for such Fiscal Year. Source: PERS Actuarial Reports dated October 2013, October 2014 and October Valuation Date (June 30) Tier I Safety Share of Pool s Market Value of Assets Plan s Share of Pool s UAAL (1) Annual Covered Payroll Actuarial Accrued Liability Funded Ratio (1) 2011 (2) $51,372,073 $40,541,676 $10,830, % $3,612, ,003,105 39,086,210 13,916, ,549, ,224,589 42,812,157 12,412, ,326, ,658,731 47,931,736 11,726, ,240,131 (1) Based on the market value of assets. (2) Initial year of plan. Source: PERS Actuarial Report dated November Valuation Date (June 30) Tier II Safety Share of Pool s Market Value of Assets Plan s Share of Pool s UAAL (1) Annual Covered Payroll Actuarial Accrued Liability Funded Ratio (1) 2012 (2) $ 9,740 $ 7,383 $ 2, % $120, ,918 46,675 11, , , ,199 (3,696) ,277 (1) Based on the market value of assets. (2) Initial year of plan. Source: PERS Actuarial Report dated November Recent Actions Taken by PERS. On March 14, 2012, the PERS Board voted to reduce its discount rate, which rate is attributable to its expected price inflation and investment rate of return (net of administrative expenses), from 7.75% to 7.5%. As a result of such discount rate decrease, among other things, (i) the amounts of PERS member state and schools employer contributions will increase by 1.2 to 1.6% for Miscellaneous plans and 2.2 to 2.4% for Safety plans beginning in fiscal year and (ii) the amounts of PERS member public agency contributions will increase by 1 to 2% for Miscellaneous plans and 2 to 3% for Safety plans beginning in fiscal year More information about the PERS discount rate adjustment can be accessed through PERS s web site at The reference to this internet website is shown for reference and convenience only, the information contained within the website may not be current and has not been reviewed by the City and is not incorporated herein by reference. The PERS Board adjustment has been undertaken in order to address underfunding of the PERS funds, which arose from significant losses incurred as a result of the economic crisis arising in 2008 and persists due to a slower than anticipated, subsequent economic recovery. The City is unable to predict what the amount of 26

33 PERS liabilities will be in the future, or the amount of the PERS contributions which the City may be required to make. At its April 17, 2013 meeting, the PERS Board of Administration approved a recommendation to change the PERS amortization and smoothing policies. Prior to this change, PERS employed an amortization and smoothing policy that spread investment returns over a 15-year period with experience gains and losses paid for over a rolling 30-year period. After this change, PERS will employ an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate spread directly over a 5-year period. The new amortization and smoothing policy was used for the first time in the June 30, 2013 actuarial valuations. These valuations were performed in the fall of 2014 and set employer contribution rates for fiscal year The City cannot predict how this change in amortization and smoothing policies will affect its contribution levels. According to PERS, the prior amortization and smoothing policy was designed to reduce volatility in employer contribution rates, and, although the policy accomplished this goal fairly well since its adoption, a number of concerns have developed: The use of an actuarial value of assets corridor can lead to significant single year increases to rates in years when there are large investment losses. The use of long asset smoothing periods and long rolling amortization periods result in slow progress toward full funding. The use of an actuarial value of assets requires the disclosure of two different funded statuses and unfunded liability numbers in actuarial valuation reports. This adds confusion and inhibits transparency. The use of rolling amortization and long asset smoothing periods makes it difficult for employers to predict when contribution rates will peak and how high that peak will be. The use of rolling amortization and asset smoothing periods may result in additional calculations for the new accounting standards. These calculations would be avoided with a quicker funded status recovery. According to PERS, the adoption of the new smoothing and amortization policies will change future employer contribution rates, as follows: Funding levels will improve, which will reduce the funding level risk. Local agencies plans will experience more rate volatility in normal years, but a much-reduced chance of very large rate increases in years when there are large investment losses. Contribution rates in the near term will increase. Long-term contribution rates will be lower. There will be greater transparency about the timing and impact of future employer contribution rate changes. The new policy eliminates the need for an actuarial value of assets. As a result, there will be only one funded status and unfunded liability in actuarial reports. There will be less confusion when the new accounting standards are implemented since there will be no need for extra liability calculations. At its November 18, 2015 meeting, PERS adopted a funding risk mitigation policy with a goal to incrementally lower the discount rate in years of good investment returns, help pay down the pension fund s unfunded liability, and provide greater predictability and less volatility in contribution rates for employers. Under the policy adopted by the PERS Board of Administration, a mechanism will be established to reduce the discount rate or assumed rate of return by a minimum of 0.05 percentage points to a maximum of 0.25 percentage points in years when investment returns outperform the existing discount rate, currently 7.5 percent, 27

34 by at least four percentage points. The four percentage point threshold would work to offset increases to employer contribution rates that would otherwise increase when the discount rate is lowered, and help pay down PERS unfunded liability. PERS staff modeling anticipates the policy will result in a lowering of the expected portfolio volatility to 8 percent in about 21 years, improve funding levels gradually over time, and cut risk in the system by lowering the volatility of investment returns. While rates are expected to increase for PERS employers in the future, the policy is designed to minimize any increases above projected rates. PERS investment returns are reported as of June 30 at the end of each fiscal year. In years when the returns exceed the discount rate by 4 percent, the policy will trigger a discount rate adjustment. PERS asset allocation will be adjusted to account for the new discount rate and will take effect on October 1 of the fiscal year immediately following. Member contribution calculations will also reflect the new discount rate effective October 1 of the fiscal year immediately following the good returns, and the changes will be included in employer contribution rates outlined in actuarial valuations as of June 30 for that fiscal year. Resulting contribution rate changes for employers would go into effect one year after the following fiscal year for state and schools, and two years after for California public agencies. Pension Reform Act of 2013 (Assembly Bill 340). On September 12, 2012, Governor Brown signed AB 340, a bill that enacted the California Public Employees Pension Reform Act of 2013 ( PEPRA ) and that also amended various sections of the State Education and Government Codes. AB 340 (i) increases the retirement age for new State, school, and city and local agency employees depending on job function, (ii) caps the annual PERS pension benefit payouts, (iii) addresses numerous abuses of the system, and (iv) requires State, school, and certain city and local agency employees to pay at least half of the costs of their PERS pension benefits. PEPRA applies to all public employers except the University of California, charter cities and charter counties (except to the extent they contract with PERS). The provisions of AB 340 went into effect on January 1, 2013 with respect to new State, school, and city and local agency employees hired on that date and after; existing employees who are members of employee associations, including employee associations of the City, will have a five-year window to negotiate compliance with AB 340 through collective bargaining. If no deal is reached by January 1, 2018, a city, public agency or school district could force employees to pay their half of the costs of PERS pension benefits, up to 8% of pay for civil workers and 11% or 12% for public safety workers. PERS has predicted that the impact of AB 340 on employers, including the City and other employers in the PERS system, and employees will vary, based on each employer s current level of benefits. To the extent that the new formulas lower retirement benefits, employer contribution rates could decrease over time as current employees retire and employees subject to the new formulas make up a larger percentage of the workforce. This change would, in some circumstances, result in a lower retirement benefit for employees than they currently earn. Additionally, PERS has noted that changes arising from AB 340 could ultimately have an adverse impact on public sector recruitment in areas that have historically experienced recruitment challenges due to higher pay for similar jobs in the private sector. More information about AB 340 can be accessed through the PERS s web site at pca=st. This internet address is provided for reference and convenience only; the information contained within this website may not be current and has not been reviewed by the City and is not incorporated herein by reference. Also, on February 18, 2014, the PERS Board approved new demographic assumptions reflecting (i) expected longer life spans of public agency employees and (ii) trends of higher rates of retirement for certain public agency member groups, including police officers and firefighters, PERS expects that the new assumptions will raise employer pension costs in the future. The PERS Board approved the implementation of the costs for local public agencies like the City beginning in fiscal year , with the cost spread over 20 years and the increases phased in over five years. In 2015, the PERS Board also adopted a policy to gradually lower the system s 7.5 percent long-term annual earning assumption (the Discount Rate ) and investment risk 28

35 profile. As a result, the Discount Rate will gradually move down to approximately 6.5 percent in the next two decades. The City is unable to predict the amount of PERS liabilities in the future or the amount of the PERS contributions which the District may be required to make, all as a result of the implementation of AB 340, and as a result of negotiations with its employee associations. Other Post-Employment Benefits Plan Description The City has established the City of Claremont Retiree Medical Benefit Plan, a single-employer defined benefit retiree healthcare plan. The plan, which is administered by the City, provides medical insurance benefits for employees who retire with PERS pension benefits immediately upon termination of employment from the City. Eligible retirees must elect coverage through the city s medical plan. The City allows eligible retirees and family members to purchase medical insurance if the retirees pay the premiums. Since the premium rates for coverage prior to Medicare eligibility are based on active and retiree blended costs rather than otherwise higher retiree only rates, the reduced cost to the retiree results in an implicit subsidy and a liability for the City. In addition, the City pays $32.20 per month on behalf of each retiree who retired prior to August 1, The plan and its contribution requirements are established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by agreement between the City and the bargaining units. The plan does not issue a separate report. All transactions are included within the financial statements of the City. Funding Policy The required contribution is based on projected pay-as-you-go financing requirements. For fiscal year , the City contributed $10,465 to the plan in the form of current premiums. Contributions were made from the General Fund. Plan members receiving benefits contribute the difference between the City contribution of $32.20 per month and the plan members chosen PERS medical plan. The funding policy is determined by the City Council. Annual OPEB Cost and Net OPEB Obligation The City s annual other post-employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the City s annual OPEB cost for the year, the amount actually contributed to the plan from the City s General Fund, and changes in the City s net OPEB obligation: Fiscal Year Annual required contribution $136,522 Interest on OPEB obligation 16,640 Adjustment to annual required contribution (47,282) Annual OPEB cost 105,880 Contributions made 8,984 Increase in net OPEB obligation 96,896 Net OPEB obligation beginning of year 950,792 Net OPEB obligation end of year $1,047,688 29

36 The City s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for and the two preceding years were as follows: Fiscal Year Ended Annual OPEB cost OPEB Cost Contributed Of Annual OPEB Cost Contributed Net OPEB Obligation 6/30/2013 $184,672 $11, % $850,858 6/30/ ,399 10, % 950,792 6/30/ ,880 8, % 1,047,688 Funded Status and Funding Progress Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress below presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. This is the third year of the plan. The actuarial valuation is prepared biennially. The table below presents the latest information available. Actuarial Valuation Date Actuarial Value of Assets Unfunded Actuarial Accrued Liability UAAL as a Percent of Covered Payroll Funded Ratio Covered Payroll Interest Rate Salary Scale 6/30/2013 $ - $1,904, % $12,662, % 5.00% 3.25% 6/30/2014-2,137, % 9,931, % 5.00% 3.25% 6/30/2015-1,636, % 11,248, % 4.50% 3.00% Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. These amounts are subject to continual revision as results are compared to past expectations and new estimates are made about the future. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the June 30, 2013, actuarial valuation, the Entry Age Normal actuarial cost method was used. The actuarial assumptions included a 4.5% investment rate of return (net of administrative expenses), which is a blended rate of the expected long-term investment returns on plan assets and on the employer s own investments calculated based on the funded level of the plan at the valuation date, an inflation rate of 3%, an annual healthcare cost trend rate of 10% initially, reduced by decrements to an ultimate rate of 5% after seven years, and a payroll increase rate of 3.00% per annum. The amount of post-retirement benefit increases used in developing the actuarial report is not available. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2013, was twenty-six years. The number of active plan participants is

37 Investment of City Funds The City invests its funds in accordance with the City s Investment Policy. The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section under the oversight of the Treasurer of the State of California. The City s investment policy limits investments in money market funds that carry the highest available fund credit rating issued by either Standard & Poor s or Moody s. The City s investment policy does not further limit its investment choices. The City s investment policy does not place a limit on the amount that may be invested by any one issuer. As of June 30, 2015, the City has not invested more than 5% of its total investments in any one issuer (investments guaranteed by the U.S. government and investments in mutual funds and external investment pools are excluded from this requirement). The City does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising for interest rates. The city has elected to use the segmented time distribution method of disclosure for its interest rate risk. As of June 30, 2015, the City had the following investments and remaining maturities: Remaining Investment Maturities Investment Type 6 months or less 6 months to 1 year 1 to 3 years Total Local Agency Investment Fund $25,331,705 $ - $ - $25,331,705 Fiscal Agent: Money Market Mutual Funds $ 859,153 $ - $ - $ 859,153 Total $26,190,858 $ - $ - $26,190,858 TAX MATTERS In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that interest on the Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. Bond Counsel further notes, however, that, with respect to corporations, such interest may be included as an adjustment in the calculation of alternative minimum taxable income, which may affect the alternative minimum tax liability of corporations. Bond Counsel s opinion as to the exclusion from gross income for federal income tax purposes of interest on the Bonds is based upon certain representations of fact and certifications made by the City, the Underwriter and others and is subject to the condition that the City complies with all requirements of the Internal Revenue Code of 1986, as amended (the Code ) that must be satisfied subsequent to the issuance of the Bonds to assure that interest on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements. Should the interest on the Bonds become includable in gross income for federal income tax purposes, the Bonds are not subject to early redemption as a result of such occurrence and will remain outstanding until maturity or until otherwise redeemed in accordance with the Indenture. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent bondowners from realizing the full current benefit of the tax status of such interest. For example, legislative proposals are announced from time to time which generally would limit the exclusion from gross income of interest on obligations like the Bonds to some 31

38 extent for taxpayers who are individuals and whose income is subject to higher marginal income tax rates. Other proposals have been made that could significantly reduce the benefit of, or otherwise affect, the exclusion from gross income of interest on obligations like the Bonds. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, and regarding the impact of future legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. Bond Counsel s opinion may be affected by action taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such action or events are taken or do occur, or whether such actions or events may adversely affect the value or tax treatment of a Bond, and Bond Counsel expresses no opinion with respect thereto. The Internal Revenue Service (the IRS ) has initiated an expanded program for auditing tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit (or by an audit of similar bonds). Although Bond Counsel has rendered an opinion that interest on the Bonds is excluded from gross income for federal income tax purposes provided the City continues to comply with certain requirements of the Code, the accrual or receipt of interest on the Bonds may otherwise affect the tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient s particular tax status and other items of income or deductions. Bond Counsel expresses no opinion regarding any such consequences. Accordingly, all potential purchasers should consult their tax advisors before purchasing any of the Bonds. A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix C. APPROVAL OF LEGAL PROCEEDINGS Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approval of Best Best & Krieger LLP, Riverside, California, Bond Counsel. Best Best & Krieger LLP, Riverside, California, is also serving as Disclosure Counsel in connection with the sale, issuance and delivery of the Bonds. Certain other legal matters will be passed upon for the City by Best Best & Krieger LLP, Irvine, California. Certain legal matters will be passed upon for the Underwriter by its counsel Nossaman LLP, Irvine, California. Copies of the approving opinion of Bond Counsel will be available at the time of delivery of the Bonds. The form of the opinion is set forth in APPENDIX C FORM OF OPINION OF BOND COUNSEL. Except as expressly described in certain opinions delivered to the City and the Underwriter, Bond Counsel is not passing upon and undertakes no responsibility for the accuracy, completeness or fairness of the information contained in the Official Statement. Bond Counsel, Disclosure Counsel and Underwriter s Counsel will receive compensation that is contingent upon the sale, issuance and delivery of the Bonds. FINANCIAL STATEMENTS The City s Basic Financial Statements for Fiscal Year included in this Official Statement have been audited by Lance Soll & Lunghard LLP, Brea, California, as stated in their report included in the Financial Statements. See APPENDIX B BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, Lance Soll & Lunghard LLP has not been requested to consent to the use or to the inclusion of its report in this Official Statement and has not reviewed this Official Statement. 32

39 CONTINUING DISCLOSURE The City has covenanted in the Paying Agent Agreement that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate executed by the City and dated the date of issuance and delivery of the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof (the Continuing Disclosure Certificate ). See APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE. Any Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under the Continuing Disclosure Certificate. These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the Rule ). The City and certain entities related to the City for which the City coordinates have entered into previous undertakings pursuant to the Rule. A review of compliance with disclosure undertakings for filings required by the City within the last five years indicates that the City may not have fully complied with its prior continuing disclosure undertakings under the Rule. Identification of the below described events does not constitute a representation by the City that the late filings were material. For example, the City filed the 2015 budget, 2014 operating data, the 2014 Comprehensive Annual Financial Report ( CAFR ), the 2010 CAFR, and the 2011 and 2010 audited financial statements of the redevelopment agency after the filing due date and did not provide notices of the failure to provide annual financial information by the filing date. LITIGATION AND SIGNIFICANT CLAIMS No litigation is pending against the City with service of process accomplished or threatened in writing concerning the validity of the Bonds, or questioning the political existence of the City or seeking to restrain or enjoin the issuance or execution of the Bonds. The City will furnish to the purchaser of the Bonds a certificate as to the foregoing as of the time of the original delivery of the Bonds. There are a variety of civil cases in which the City is a named defendant pending at any given time. Additionally, there are numerous claims filed with the City or with other agencies in which the claimants allege that they have been damaged by the City. If these cases or these claims which develop into civil actions were determined adversely to the City, it is possible there could be an adverse effect on the City s revenues and cash flow. RATING The City has obtained a rating on the Bonds from Standard & Poor s of AAA. Such rating reflects only the views of such organization and any desired explanation of the significance of the rating should be obtained from: Standard & Poor s Ratings Services, 55 Water Street, New York, New York Generally, rating agencies base their ratings on the information and materials furnished to them and on investigations, studies and assumptions of their own. There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of the rating agency, circumstances so warrant. Any such downward revision or withdrawal of the rating may have an adverse effect on the market price of the Bonds. UNDERWRITER The Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the Underwriter ). The Underwriter has agreed to purchase the Bonds at an aggregate purchase price of $8,127, (consisting of the principal amount of the Bonds of $7,200,000.00, plus original issue premium in the amount of $988,884.95, less Underwriter s discount in the amount of $61,200.00). The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside cover page hereof. The offering prices may be changed from time to time by the Underwriter. 33

40 ADDITIONAL INFORMATION The purpose of this Official Statement is to supply information to the purchasers of the Bonds. Quotations from and summaries and explanations of the Bonds, the Paying Agent Agreement providing for issuance of the Bonds, and the constitutional provisions, statutes and other documents referenced herein, do not purport to be complete, and reference is made to said documents, constitutional provisions and statutes for full and complete statements of their provisions. Some of the data contained herein has been taken or constructed from City records. Appropriate City officials, acting in their official capacities, have reviewed this Official Statement and have determined that, as of the date hereof, the information contained herein is, to the best of their knowledge and belief, true and correct in all material respects and does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made, not misleading. This Official Statement has been approved by the City Council. By: Title: /s/ Tony Ramos City Manager 34

41 APPENDIX A GENERAL INFORMATION CONCERNING THE CITY AND LOS ANGELES COUNTY The following material is descriptive of the City of Claremont and Los Angeles County. The following information concerning the City of Claremont and Los Angeles County is included only for the purpose of supplying general information regarding the community. The Bonds are not a debt of Los Angeles County. This material has been prepared by or excerpted from the sources as noted herein and has not been reviewed for accuracy by the City or Bond Counsel. General The City of Claremont. The City of Claremont (the City ) is located approximately 30 miles east of downtown Los Angeles. The City was incorporated in The City has operated under a Council-Manager form of government since Policy-making and legislative authority are vested in a governing council (the City Council ) consisting of five members, who are elected at large on a nonparticular basis to four-year terms, with elections held every two years. The City Council appoints a member to serve as the Mayor for a one-year term. The City Council appoints the City Manager, who in turn appoints the heads of various departments. Los Angeles County. With 4,061 square miles, Los Angeles County (the County ) borders 70 miles of coast on the Pacific Ocean. The County is bordered on the east and the south by Orange and San Bernardino Counties, on the north by Kern County and on the west by Ventura County and the Pacific Ocean. The topography of the County encompasses mountain ranges, deep valleys, forests, islands, lakes, rivers and desert. In between the large desert portions of the County, which make up around 40% of its land area, and the heavily urbanized central and southern portions sit the San Gabriel Mountains containing Angeles National Forest. The County is home to 88 incorporated cities and many unincorporated areas, along with two offshore islands. It is the most populous county in the United States. The County was incorporated on February 18, 1850 and is one of the original counties of the State of California (the State ). The County seat is Los Angeles, which is the largest city in the State. The County is governed by a five-member Board of Supervisors that are elected by the voters, along with an Assessor, District Attorney and Sheriff. Each Supervisor represents over two million people. A-1

42 Population The following table below shows historical population figures for the City of Claremont, Los Angeles County and the State of California from 2004 through POPULATION ESTIMATES City of Claremont, Los Angeles County and State of California 2004 through 2015 City of Claremont Los Angeles County State of California Year (1) Population % Change Population % Change Population % Change , ,806, ,570, ,981 (0.4) 9,816, ,869, ,856 (0.4) 9,798,609 (0.2) 36,116, , ,780,808 (0.2) 36,399, ,850 (0.1) 9,785, ,704, , ,801, ,966, (2) 34,926 (0.1) 9,818, ,253, , ,847, ,427, , ,908, ,680, , ,980, ,030, , ,054, ,357, , ,136, ,714, (1) January 1 data. (2) April 1 data. Source: California Department of Finance. A-2

43 Personal Income The following table shows of per capita personal income for the County, State of California and the United States from 2003 through PER CAPITAL PERSONAL INCOME (1) Los Angeles County, State of California, and United States 2003 through 2013 Year County of Los Angeles % Change California % Change United States % Change 2003 $33, $35, $32, , % 37, % 34, % , , , , , , , , , , , , ,396 (4.2) 41,587 (4.6) 39,379 (3.7) , , , , , , , , , , , , (1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S. Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation). Source: U.S. Department of Commerce, Bureau of Economic Analysis. A-3

44 Employment The following table summarizes the labor force, employment and unemployment figures for the City of Claremont, Los Angeles County and the State of California from 2010 through CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT RATE City of Claremont, Los Angeles County and State of California 2008 through 2014 (1) Year Area Labor Force Employment Unemployment Unemployment Rate (%) 2010 City of Claremont 16,400 14,400 1, % Los Angeles County 4,917,400 4,302, , State of California 18,336,300 16,091,900 2,244, City of Claremont 16,400 14,500 1, % Los Angeles County 4,929,500 4,326, , State of California 18,419,500 16,260,100 2,159, City of Claremont 16,400 14,700 1, % Los Angeles County 4,914,500 4,378, , State of California 18,554,800 16,630,100 1,924, City of Claremont 16,600 15,100 1, % Los Angeles County 4,982,300 4,495, , State of California 18,671,600 17,002,900 1,668, City of Claremont 16,800 15,400 2, % Los Angeles County 5,025,900 4,610, , State of California 18,811,400 17,397,100 1,414, (1) Data is based on annual averages, unless otherwise specified, and is not seasonally adjusted. Source: U.S. Department of Labor Bureau of Labor Statistics, California Employment Development Department. March 2014 Benchmark. A-4

45 Industry The City is included in the Los Angeles-Long Beach-Glendale Metropolitan Statistical Area. The distribution of employment in the Los Angeles/Long Beach/Glendale area is presented in the following table for the calendar years 2010 through These figures are countywide statistics and may not necessarily accurately reflect employment trends in the City. INDUSTRY EMPLOYMENT & LABOR FORCE ANNUAL AVERAGES Los Angeles-Long Beach-Glendale Metropolitan Division Calendar Year 2010 through Farm 6,200 5,600 5,400 5,500 5,300 Mining and Logging 4,100 4,100 4,300 4,600 4,700 Construction 104, , , , ,200 Manufacturing 373, , , , ,900 Wholesale Trade 203, , , , ,500 Retail Trade 386, , , , ,500 Transportation, Warehousing and Utilities 150, , , , ,700 Information 191, , , , ,900 Financial Activities 209, , , , ,700 Professional and Business Services 528, , , , ,400 Education and Health Services 637, , , , ,000 Leisure and Hospitality 384, , , , ,600 Other Services 136, , , , ,700 Government 579, , , , ,700 Total All Industries 3,896,300 3,917,200 4,015,900 4,135,200 4,231,700 Source: California Employment Development Department, Labor Market Information Division. March 2014 Benchmark. Largest Employers The following table shows the largest employers located in Claremont. LARGEST EMPLOYERS City of Claremont 2015 Rank Company Employees % of Employment 1. Claremont Colleges 3, % 2. Claremont Unified School District % 3. VNA Hospice & Palliative Care of Sothern California % 4. Hi-Rel Connectors % 5. Claremont Auto Center % 6. Technip % 7. Claremont Manor % 8. City of Claremont % 9. Pilgrim Place % 10. Webb Schools of California % Source: City of Claremont. A-5

46 Commercial Activity Summaries of annual taxable sale date for the County and the City for years 2004 through 2013 are shown in the following tables. TAXABLE SALES Los Angeles County 2004 through 2013 (Dollars in Thousands) Retail Stores Taxable Transactions Total Outlets Taxable Transactions Year Retail Permits Total Permits ,717 $86,496, ,398 $122,533, ,641 92,271, , ,722, ,512 95,554, , ,162, ,380 96,095, , ,820, ,999 89,810, , ,881, ,461 78,444, , ,744, ,491 82,175, , ,942, ,872 89,251, , ,440, ,359 95,318, , ,295, ,370 99,641, , ,079,708 Note: In 2009, retail permits expanded to include permits for food services. Source: Taxable Sales in California (Sales & Use Tax), California Board of Equalization. TAXABLE SALES City of Claremont 2004 through 2013 (Dollars in Thousands) Retail Stores Taxable Transactions Total Outlets Taxable Transactions Year Retail Permits Total Permits $391, $431, , , , , , , , , , , , , , , , , , ,489 Note: In 2009, retail permits expanded to include permits for food services. Source: Taxable Sales in California (Sales & Use Tax), California Board of Equalization. A-6

47 Building Activity In addition to annual building permit valuations, the numbers of permits for new dwelling units issued each year from 2010 through 2014 in the County and the City are shown in the following tables. BUILDING PERMITS AND VALUATIONS Los Angeles County (Dollars in Thousands) 2010 through Valuation ($000 s) Residential $2,824,463 $3,415,434 $3,089,228 $4,743,955 $5,509,418 Non-Residential 2,699,913 3,126,956 1,836,109 4,326,366 6,657,571 Total $5,494,375 $6,542,390 $4,925,337 $9,070,321 $12,166,989 Units Single Family 2,417 2,370 2,508 3,607 4,358 Multiple Family 5,056 8,098 7,244 13,243 14,349 Total 7,473 10,468 9,752 16,850 18,707 Note: Totals may not add to sum because of rounding. Source: Construction Industry Research Board. BUILDING PERMITS AND VALUATIONS City of Claremont 2010 through Valuation Residential $18,241,348 $ 9,111,684 $ 8,088,362 $13,109,839 $32,951,051 Non-Residential 37,156,770 31,855,255 7,776,759 50,163,393 56,025,666 Total $55,398,118 $40,966,939 $15,865,121 $63,273,232 $88,976,717 Units Single Family Multiple Family Total Note: Totals may not add to sum because of rounding. Source: City of Claremont. A-7

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49 APPENDIX B BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 B-1

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53 City of Claremont California Comprehensive Annual Financial Report Year Ended June 30, 2015 City Council Corey Calaycay, Mayor Sam Pedroza, Mayor Pro Tem Joe Lyons, Council Member Larry Schroeder, Council Member Opanyi Nasiali, Council Member City Manager Tony Ramos Prepared by Financial Services Department

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55 , CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS INTRODUCTORY SECTION Page Number Letter of Transmittal... 1 GFOA Award of Financial Reporting Achievement Organizational Chart Principal Officials General Fund Revenue and Expenditure Graph FINANCIAL SECTION Independent Auditors Report Management s Discussion and Analysis Basic Financial Statements: Government Wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet Governmental Funds Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Net Position Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds Statement of Cash Flows Proprietary Funds Statement of Fiduciary Net Position Fiduciary Funds Statement of Changes in Fiduciary Net Position Fiduciary Funds Notes to the Basic Financial Statements... 61

56 , CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS FINANCIAL SECTION, Continued Page Number Required Supplementary Information Notes to Required Supplementary Information Budgetary Comparison Schedules Major Funds: General Fund Community Development Block Grant Foothill Relinquishment Successor Housing Schedule of Changes in the Net Pension Liability and Related Ratios Agent Multiple Schedule of Contributions Agent Multiple Schedule of Proportionate Share of the Net Pension Liability Cost Sharing Schedule of Contributions Cost Sharing COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Combining Balance Sheet Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Budgetary Comparison Schedules Special Revenue Funds: Supplemental Law Enforcement Traffic Offender State Gas Tax Drainage Proposition A Proposition C Landscape / Lighting Assessment Air Quality Improvement TDA Article Nutrition Grant Federal Gas Tax Park Dedication Measure R Wilderness Park Parking Lot Budgetary Comparison Schedules Capital Projects Funds: Capital Projects Capital Projects Grant Hillside Fund

57 , CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS FINANCIAL SECTION, Continued Page Number COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES, Continued Budgetary Comparison Schedules Debt Service Funds: City Debt Service Budgetary Comparison Schedule Permanent Fund Perpetual Care Reserve Combining Statement of Net Position Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds Combining Statement of Cash Flows Internal Service Funds Combining Statement of Net Position All Agency Funds Combining Statement of Changes in Assets and Liabilities All Agency Funds STATISTICAL SECTION Financial Trends: Net Position by Component Change in Net Position Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Revenue Capacity: Assessed Value of Taxable Property Direct and Overlapping Property Tax Rates Principal Property Tax Payers Property Tax Levies and Collections Debt Capacity: Ratios of Outstanding Debt by Type Ratio of General Bonded Debt Outstanding Direct and Overlapping Debt Legal Debt Margin Information Pledged-Revenue Coverage Demographic and Economic Information Demographic and Economic Statistics

58 , CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS STATISTICAL SECTION, Continued Page Number Operating Information Full-time City Employees by Function Operating Indicators by Function Capital Asset Statistics by Function

59 January 23, 2016 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Claremont: It is our pleasure to present the Comprehensive Annual Financial Report (CAFR) of the City of Claremont for the fiscal year ended June 30, Management assumes full responsibility for the accuracy and reliability of all information provided in this report. To provide a reasonable basis for making such representations, management has established a comprehensive internal control framework that is designed to both protect the City s assets from loss, theft or misuse, and to compile sufficient reliable information for the preparation of the City s financial statements in accordance with GAAP. Because the cost of internal controls should not outweigh their benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free from material misstatement. The City s financial statements have been audited by Lance, Soll & Lunghard, LLP, Certified Public Accountants, a public accounting firm fully licensed and qualified to perform audits of local governments within the State of California. Lance, Soll & Lunghard have issued an unmodified ( clean ) opinion of the City s financial statements for the year ended June 30, The independent auditors report is presented at the beginning of the financial section of this report. The CAFR is presented in three sections. The Introductory section, which is unaudited, includes this letter of transmittal, the City s organizational chart, and a listing of the City s principal elected and appointed officials. The Financial section, which is audited, includes the independent auditors report, management s discussion and analysis (MD&A), basic financial statements, notes to the financial statements, and the combined and individual fund financial statements and schedules. The MD&A immediately follows the independent auditors report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with this letter. 1

60 The Statistical section, which is unaudited, includes selected financial and demographic information generally presented on a multi-year basis. The City is required to undergo an annual single audit in accordance with the provisions of the Single Audit Act Amendments of 1996 and the U.S. Office of Management and Budget s Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations. The standards governing single audit engagements require the auditor to report on the fair presentation of financial statements and the internal controls and compliance with legal requirements as they relate to the administration of Federal awards. These reports are available in the City s separately issued Single Audit Report. City of Claremont Profile The City of Claremont, incorporated in 1907, is located approximately 30 miles east of downtown Los Angeles. Claremont is best known for its tree-lined streets, historic buildings, and college campuses. Claremont is a vital, balanced community that provides a wide range of programs and services for all age groups, preserves a full range of housing opportunities, and supports a variety of thriving commercial and industrial centers. The City values protecting the environment while encouraging appropriate development, and respects traditional values while embracing new ideas. The City has operated under the council-manager form of government since Policy-making and legislative authority are vested in a governing council (Council) consisting of five members, who are elected at large on a non-partisan basis to serve four-year terms, with elections held every two years. The Council appoints a member to serve as the Mayor for a one-year term. The Council appoints the City Manager, who in turn appoints the heads of various departments. The City provides a broad range of services including: police protection, solid waste collection, maintenance of streets and infrastructure, planning and zoning activities, recreational activities, and general administrative services. The City s biennial budget and fiscal policies (attached) serve as the foundation for the City s financial planning and control. The Council formally adopts the budget and appropriates available monies for the City s various funds. The budget is prepared by fund, department (e.g., Human Services), and program (e.g., Senior Services). Department heads may transfer resources within a department as they see fit; however, transfers between departments require the approval of the City Manager. Local Economy The State of California and the Los Angeles region has been severely affected by the worst recession in the United States since the Great Depression. High unemployment, restricted credit and declines in the housing market had caused consumer spending to slow considerably. 2

61 In Claremont, the effects of the economic contraction began to be felt during , when City staff identified a $1.5 million General Fund budget shortfall resulting from severely diminished sales tax revenues. This shortfall was addressed with one-time revenues, operational reductions, and the elimination of vacant positions. At that time, staff identified an additional shortfall for the of $2 million. This shortfall was eliminated through further operational reductions, negotiated salary and benefit concessions, and the elimination of positions. This proactive approach to managing the City s budget eliminated the need for further reductions in staffing, and allowed residents to enjoy the same levels of service. The early action taken by the City Council to address the economic downturn established a sound foundation for continuing to develop balanced budgets while still meeting the needs of the community. Over the past five years, Claremont has seen a rebound in taxable sales resulting in an increase in sales tax revenue, while assessed values have seen significant growth, contributing to higher property tax revenues. Additionally, an increase in commercial and residential development activity has generated significant development fee revenue, as well as contributing to increases in the City s tax base. Major commercial enterprises located within the City of Claremont s boundaries include automobile retailers, hotels, restaurants, general retail, and service establishments, as well as several educational institutions. A number of major economic development and commercial revitalization projects are currently in progress, with the goal of providing additional venues for entertainment, dining and shopping. These projects are crucial in helping to diversify and strengthen the City s tax base. Long-term Financial Planning As of June 30, 2015, the General Fund Reserve balance and General Fund Operations balance were $9.9 million and $3.7 million, respectively. These two balances combined make up the City s reported General Fund balance of $13.6 million. The General Fund Reserve balance of $9.9 million exceeds the required 25 percent of General Fund operating expenditures, as established by the City s reserve policy. In comparison with the previous fiscal year, the General Fund balance increased by $1.3 million, primarily as a result of the receipt of higher than expected revenues from building permit and plan check fees, property taxes and sales taxes. Changes in the economy have had a significant impact in Claremont, highlighting the need for the City to be proactive in seeking out economic development opportunities. City staff continues to work closely with our business community to revitalize and assist existing businesses, as well as to attract new business that will bring synergy to the Claremont economy and community. In these times of financial insecurity, these efforts to strengthen the local economy are of paramount importance. 3

62 Through their efforts to manage costs and increase revenues, the City Council and staff have placed the City of Claremont in an ideal financial position. Many local cities continue to struggle to come to terms with the new fiscal reality facing local governments, and through its proactive and decisive actions over the last few years, the City of Claremont is beginning to experience the benefits of the slow economic recovery. As a result of responsible financial management, the General Fund Reserve and General Fund Operations balances are sound, as are the balances of other funds, which have shown stable or increased fund balances. Major Initiatives The City s commitment for and beyond is to continue exploring innovative means that effectively meet the needs of the community. Included among the major initiatives for this year are: Economic Development. The City Council has identified Economic Development as a means of ensuring the long term financial stability of Claremont. Staff efforts will continue to assist developers through the development process to create additional jobs, sales tax revenue, and provide a wide range of services to our residents. Financial Stability. The City Council will be financially judicious to increase reserves, while continuing to provide the environment, services, and programs the residents expect. Local Water Issues. The City Council will be active in addressing water issues ranging from system acquisition to protesting rate increases. Actions will continue to ensure Claremont residents have control over current and future water rates. The City Council will continue to monitor the implementation of the MS4 storm water permit. Public Safety. The City Council is dedicated to programs that strengthen public safety. In addition to staffing considerations, the Council supports the utilization of technology to increase the effectiveness of the Police Department. Quality of Life Issues. The City Council places a high priority on maintaining the quality of life for all Claremont residents. The City Council is committed to supporting programs and services that positively impact Claremont residents. Sustainability. The City Council adopted the Claremont Sustainable City Plan on October 28, Staff has completed a large portion of the one-time activities listed in the plan, and continues to implement many ongoing activities and significant action items to encourage and ensure sustainability. 4

63 Urban Forest Management. The City of Claremont boasts over 24,000 City-owned trees, and thousands of privately-owned trees. The care and maintenance of trees is a high priority for the City Council, and it is committed to policies and practices that promote the health and safety of the City s urban forest. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Claremont for its Comprehensive Annual Financial Report (CAFR) for the year ended June 30, This was the twenty-fourth consecutive year that the City has received this prestigious award. In order to be eligible for the Certificate of Achievement, the City must publish an easily readable and efficiently organized CAFR, one which satisfies both generally accepted accounting principles and applicable legal requirements. We believe our current CAFR continues to meet the award requirements; therefore, we are submitting it to the GFOA to determine its eligibility for a certificate for the year ended June 30, The City received the Distinguished Budget Presentation Award for its Operating and Capital Improvement Program Budget. In order to qualify for this award, the City s budget document must be judged to be proficient in several categories, including: as a policy document, a financial plan, an operations guide, and a communications device. The preparation of this report would not have been possible without the dedicated service of the entire Financial Services Department staff. We appreciate the high level of professionalism and commitment these staff members bring to the City. We would also like to thank the City Council for their continuing leadership and support in planning and conducting the financial affairs of the City in a responsible manner. Concluding Comments The community we enjoy today is a result of the decisions and efforts of past and present Council members, commissioners and staff. The accomplishments listed previously in this transmittal letter are our contributions to ensuring that Claremont continues to be a community that is safe and well-maintained, and one that offers a balance of programs designed to meet the needs and desires of residents of all ages. 5

64 There is no doubt that the City of Claremont enjoys a quality of life that sets it apart from other communities. A number of exciting projects designed to build on the community s quality of life are currently underway, and we are confident that our efforts will have a profound and positive impact on Claremont for many years to come. Respectfully submitted: Prepared by: Tony Ramos City Manager Adam Pirrie Finance Director Attachment: Fiscal Policies 6

65 FISCAL POLICIES The budget document allocates City resources such as personnel, materials, and, equipment in tangible ways to achieve the general goals of the community. It is prudent, therefore, for the City to have in place adopted fiscal policies to guide the City Manager and City Council through the budget decision-making process. These policies are: Operational Efficiencies To implement internal operating efficiencies wherever possible. To utilize private contractors when the same or higher level of service can be obtained at lower total cost. To staff each department according to adopted service levels, and to utilize consultants and temporary help instead of hiring staff for special projects or peak workload periods. To develop agreements with the Claremont Unified School District to combine certain operations and provide program assistance where appropriate. To enter into joint operating arrangements with other agencies so as to provide services more cost effectively. To increase the use of volunteers. Voter Approved Revenues To utilize revenues derived from the Utility Users Tax (UUT) and Landscape and Lighting District (LLD), both of which were ratified in the March 1997 municipal election, to fund programs and services that are important to the community. To use the LLD assessments to sustain the current level of maintenance and street lighting Citywide and not to add new services or projects. To use the Consumer Price Index as a guide for determining increases in LLD assessments. In no case will the annual increase exceed ten percent. 7

66 Reserves To develop a balanced budget that preserves existing reserves, and provides the opportunity to commit additional funds to reserves when budget surpluses are identified. A balanced budget is defined as one where the outflow of funds from expenditures is met or exceeded by the inflow of funds from revenues. To maintain an amount equal to 25 percent of the General Fund operating expenditures in an Operating and Environmental Emergency Reserve account by annually committing the funds necessary to achieve this objective. To maintain a Maintenance of Operations Reserve account to address City Council-directed projects, capital projects, liability costs not covered by City insurance, unanticipated increases in PERS or other benefit costs, cyclical revenue downturns or temporary operating cost increases, and other municipal purposes deemed necessary by the City Council. To maintain an Equipment and Facility Revolving Reserve account to fund renovation projects pertaining to City buildings, replacement and refurbishment of furniture and other equipment, safety equipment, emergency response equipment, and recreation facilities equipment. To have sufficient revenues in the Enterprise Funds for current operation and equipment replacement. Infrastructure To provide sufficient routine maintenance each year to avoid a deferred maintenance backlog. Employee Development To attract and retain competent employees by providing a professional work environment, safe working conditions, adequate training opportunities, and competitive salaries. Economic Development To aggressively pursue new developments and businesses that add to the City s economic base, particularly those that generate sales tax. 8

67 New Services To promote a mix of businesses that contributes to a balanced community. To develop programs that enhance and retain existing businesses. To add new services only when a need has been identified and a permanent funding source developed. To provide money to community-based organizations offering to provide needed services to the community, and not to become the primary funding source. To require agreements for specific services and monitor effectiveness on an ongoing basis. Fiscal Management To generate additional revenue by marketing City services to other agencies on a contract basis. To maximize revenues by utilizing grants from other agencies to the fullest extent possible. To charge fees for services that reflect the true cost of providing such services and to review fee schedules on a regular basis. To fully account for the cost of enterprise operations to avoid any subsidy by the General Fund, and to charge Enterprise Funds their fair share of the cost of City support services. To maintain accurate accounting records to keep the City Manager and City Council informed of the financial condition of the City at all times. To file a quarterly report of investments that adheres to both State law and City policy, and which follows reasonable and prudent guidelines for investment of the City s investable cash. To provide service level performance indicators for prior years. 9

68 Investments To manage all public funds and securities belonging to or under the control of the City and for the deposit and investment of those funds in accordance with principles of sound treasury management and with applicable laws and ordinances. To accurately monitor and forecast expenditures and revenues, thus enabling the City to invest funds to the fullest extent possible. To maintain the level of investment of all funds as near to 100 percent as possible through current and projected cash flow management. To submit within 30 days of the close of each quarter, a written Investment Report to the City Council at a regularly scheduled Council meeting. To seek safety and liquidity in all investments; yield is a secondary criterion for selecting investments. Capital Improvement Management To establish a five-year plan that systematically plans, schedules, and finances capital projects to ensure cost-effectiveness as well as conformance with established policies. To designate a project manager who will prepare the project proposal, ensure that required phases are completed on schedule, authorize all project expenditures, ensure that all regulations and laws are observed, and periodically report project status. To maintain a committee that will review project proposals, determine project phasing, recommend project managers, review and evaluate the draft CIP budget document, and report CIP projects progress on an ongoing basis. To plan for new facilities only if construction and maintenance costs will not adversely impact the operating budget. Debt Management To consider the use of debt financing only for one-time capital improvement projects and only under the following circumstances: 10

69 1. When the project s useful life will exceed the term of the financing. 2. When project revenues or specific resources will be sufficient to service the long-term debt. To carefully monitor the City s level of general-purpose debt. To obligate the General Fund to secure long-term financings only when marketability can be significantly enhanced. To prepare an internal feasibility analysis for each long-term financing which analyzes the impact on current and future budgets for debt service and operations. This analysis will also address the reliability of revenues to support debt service. To generally conduct financing on a competitive basis. However, negotiated financings may be used due to market volatility or the use of an unusual or complex financing or security structure. To monitor all forms of debt annually in conjunction with the City s Financial Plan preparation and review process and report concerns and remedies, if needed, to the Council. To diligently monitor compliance with bond covenants and ensure the City adherence to Federal arbitrage regulations. To maintain good, ongoing communications with bond rating agencies about the City condition. 11

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72 ORGANIZATIONAL CHART CITIZENS OF CLAREMONT Advisory Commissions City Council City Attorney City Manager Legislative Support Intergovernmental Relations Budget Economic Development Business Assistance & Development General Administration Priority Project Management General Government Legal Services Risk Management General Services Elections Public Safety Police Fire Services Liaison Animal Control Liaison Administrative Services City Clerk Personnel Community Information Technology Treasury Accounting Budget Refuse Billing Business License Financial Services Community Development Planning Engineering Building Code Enforcement CDBG Affordable Housing Community Services Solid Waste Motor Fleet Utilities Sewer Maintenance Public Transport Streets Parks Cemetery Human Services Youth Programs/Sports Recreation Classes & Facilities Community Special Events Senior Citizen & Social Services Teen Programs and Services 14

73 CITY COUNCIL Sam Pedroza Mayor Pro Tem Larry Schroeder Council Member Corey Calaycay Mayor Joe Lyons Council Member Opanyi Nasiali Council Member ADMINISTRATION & DEPARTMENT DIRECTORS Tony Ramos City Manager Colin Tudor Assistant City Manager Brian Desatnik Director of Community Development Paul Cooper Police Chief Adam Pirrie Finance Director Pat Malloy Interim Director of Community Services Anne Turner Director of Human Services Independent Auditors Lance, Soll and Lunghard Certified Public Accountants Brea, California 15

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75 GENERAL FUND Year Ended June 30, 2015 Revenues* (percentage of General Fund income by source) Use of Money 2% Charges for Services 7% Intergovernmental 4% Licenses & Permits 5% Fines & Forfeiture 3% Other 2% Property Taxes 33% Utility User Tax 18% Other Taxes 12% Sales Tax 16% Expenditures* (percentage of General Fund expenditures by department/category) Community Services 6% Human Services 11% Capital Outlay 1% General Government 25% Community Development 13% *Figures based on revenues and expenditures related to the General Fund. Police 44% 17

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77 INDEPENDENT AUDITORS REPORT To the Honorable Mayor and Members of the City Council City of Claremont, California Report on Financial Statements 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 City of Claremont, California, (the City) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

78 To the Honorable Mayor and Members of the City Council City of Claremont, California Opinions 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 Claremont, California, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in Note 1 to the financial statements, in 2015 the City adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions An Amendment of GASB Statement No. 27. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, the budgetary comparison schedules for the General Fund, Community Development Block Grant Fund, Foothill Relinquishment Fund, Successor Housing Fund, the schedule of changes in net pension liability and related ratios (agent multiple), the schedule of contributions (agent multiple), the schedule of proportionate share of the net pension liability (cost-sharing), and the schedule of contributions (cost-sharing) 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 20

79 To the Honorable Mayor and Members of the City Council City of Claremont, California 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 22, 2016, on our consideration of the City s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City s internal control over financial reporting and compliance. Brea, California January 22,

80 MANAGEMENT S DISCUSSION AND ANALYSIS As management of the City of Claremont ( City ), we offer readers of the City s financial statements this 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 that we have furnished in our letter of transmittal and the City s financial statements. Financial Highlights At June 30, 2015, the City s assets exceeded its liabilities by $87.1 million (net position). Of this net position, the negative amount of $27.7 million represents the City s unrestricted net position. This negative unrestricted negative net position is the result of the implementation of Government Accounting Standards Board (GASB) Statement No. 68, which requires the City to record the longterm net pension obligation of its CalPERS retirement plans as a liability. The City s total net position decreased by $44.3 million during the current fiscal year, primarily due to the implementation of GASB Statement No. 68 and the depreciation of infrastructure and capital assets. As of June 30, 2015, the City s governmental funds reported combined fund balances of $36.1 million, an increase of $2.3 million from the prior fiscal year. Approximately 41 percent of this amount, or $14.8 million, is available for spending at the City Council s discretion. As of June 30, 2015, the City s proprietary funds reported a net position of $10.7 million, a decrease of $3.7 million from the prior fiscal year. This decrease in net position was the result of the implementation of GASB Statement No. 68. Approximately 25 percent of this amount, or $2.5 million, represents the unrestricted portion of net position. Operationally, General Fund revenues and transfers in exceeded expenditures and transfers out by $1.3 million. Fund balance in the General Fund amounted to $13.6 million, an increase of $1.3 million over the prior year. The General Fund s Operating and Environmental Emergency committed fund balance stands at $7.4 million at June 30, 2015, exceeding the 25 percent of budgeted General Fund operating expenditures outlined in the City s Reserve Policy. The Maintenance of Operations and Equipment and Facility Revolving Committed balances amounted to $669,272 and $853,858, at June , respectively. The City s total long-term debt decreased by $945,214 during the current fiscal year, due primarily to regularly scheduled debt service payments. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City s Basic Financial statements. The City s Basic Financial Statements are 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 to the Basic Financial Statements. Government-wide Financial Statements The Government-wide Financial Statements present the financial picture of the City from the economic resources measurement focus using the accrual basis of accounting. They present Governmental Activities and Business-type Activities separately. These statements include all assets 22

81 of the City, including infrastructure, as well as all liabilities, including long-term debt. Additionally, certain eliminations have occurred with regard to interfund activity, payables and receivables, as prescribed by GASB Statement No. 34. The Statement of Net Position presents information on all of the City s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position 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 position has changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the changes 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). Both of the Government-wide Financial Statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (Governmental Activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (Businesstype Activities). The Governmental Activities of the City include general government, community development, police, economic development, community services, and human services. The Businesstype Activities of the City include transportation, sewer, sanitation, and cemetery. The Government-wide Financial Statements can be found on pages of this report. 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, 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 three categories: 1) governmental funds, 2) proprietary funds and 3) fiduciary funds. Governmental funds. 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. The governmental fund statements provide a detailed short-term view of the City s general governmental 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. 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 government s near-term financing decisions. The Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and Governmental Activities. The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with the budget. The basic Governmental Fund Financial Statements can be found on pages of this report. 23

82 Proprietary funds. The City maintains two different types of proprietary funds, Enterprise and Internal Service 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 Dial-a-Ride and Get About transportation services, sewer, sanitation, and cemetery services. 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 fleet of vehicles and for its management of information systems (technology). Because both of these services predominantly benefit governmental rather than business-type functions, they have been included within Governmental Activities in the Government-wide Financial Statements. The basic Proprietary Fund Financial Statements can be found on pages of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the Government-wide Financial Statements because the resources of those funds are not available to support the City s own programs. The basic fiduciary Fund Financial Statements can be found on page of this report. Notes to the 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 of this report. Government-wide Financial Analysis As noted earlier, net position over time may serve as a useful indicator of the City s financial position. In the case of the City, assets exceeded liabilities by $87.1 million at the close of the most recent fiscal year. The largest portion of the City s net position reflects its investment in capital assets (e.g., land, buildings, utility and general government infrastructure, machinery, and equipment, etc.), less any related debt used to acquire those assets that is 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 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. Governmental Activities Business-Type Activities Total Current & Other Assets $ 41,669,036 $ 40,490,595 $ 7,632,849 $ 7,213,236 $ 49,301,885 $ 47,703,831 Capital Assets 94,405, ,501,354 8,259,465 8,666, ,665, ,167,835 Total Assets 136,074, ,991,949 15,892,314 15,879, ,967, ,871,666 Deferred Outflows 2,788, ,686-3,108,581 - Long-term Liabilities Outstanding 52,608,762 22,873,553 3,988, ,865 56,597,016 23,012,418 Other Liabilities 2,950,376 3,651, , ,023 3,362,436 4,471,079 Total Liabilities 55,559,138 26,524,609 4,400, ,888 59,959,452 27,483,497 Deferred Inflows 7,315, ,616-7,998,552 - Net Position: Invested in Capital Assets Net of Related Debt 86,156,725 94,051,689 8,259,465 8,666,481 94,416, ,718,170 Restricted 21,259,371 19,452, ,259,371 19,452,008 Unrestricted (31,427,533) 2,963,643 2,869,605 6,254,348 (28,557,928) 9,217,991 Total Net Position $ 75,988,563 $ 116,467,340 $ 11,129,070 $ 14,920,829 $ 87,117,633 $ 131,388,169 At June 30, 2015, the City reported positive balances in all categories of net position, except for unrestricted net position. The deficit balance in unrestricted net position and the decrease of 24

83 $44.3 million in net position were primarily the result of the implementation of GASB Statement No. 68, as well as the depreciation of capital assets. Governmental Activities Total expenses for the fiscal year for Governmental Activities were $38.3 million. The City s overall governmental program revenues totaled $12.5 million. Total general revenues and transfers totaled $21.2 million. The City s programs include general government, police, community development, human services, community services and economic development. Each program s net costs, total cost less revenue generated by the activities, are presented in the table and charts that follow. Total governmental revenues, excluding transfers, of $33.3 million for the current fiscal year were approximately the same as in the prior year. Changes in Net Position Governmental Activities Business-type Activities Total Revenues: Program Revenues: Charges for Services $ 4,585,945 $ 5,611,028 $ 7,423,096 $ 7,233,905 $ 12,009,041 $ 12,844,933 Operating Grants & Contributions 4,952,256 3,640, , ,214 5,397,938 3,854,585 Capital Grants & Contributions 3,041,180 4,075, ,041,180 4,075,996 General Revenues: Property Taxes 8,171,972 7,459, ,171,972 7,459,855 Other Taxes 11,405,424 11,469, ,405,424 11,469,556 Other 1,132, ,237 23,293 17,547 1,155, ,784 Total Revenues 33,289,023 33,237,043 7,892,071 7,465,666 41,181,094 40,702,709 Expenses: General Government 6,426,753 7,366, ,426,753 7,366,243 Police 10,482,700 10,399, ,482,700 10,399,151 Community Development 3,777,811 3,395, ,777,811 3,395,246 Human Services 3,215,555 3,174, ,215,555 3,174,434 Community Services 13,432,419 12,603, ,432,419 12,603,479 Economic Development 197, , , ,372 Interest on Long-term Debt 741, , , ,672 Transportation , , , ,976 Sewer , , , ,519 Sanitation - - 5,278,995 5,601,198 5,278,995 5,601,198 Cemetery , , , ,705 Total Expenses 38,274,303 37,921,597 7,068,782 7,463,398 45,343,085 45,384,995 Change in Net position Before Transfers (4,985,280) (4,684,554) 823,289 2,268 (4,161,991) (4,682,286) Transfers 443,367 50,000 (443,367) (50,000) - - Change in Net Position (4,541,913) (4,634,554) 379,922 (47,732) (4,161,991) (4,682,286) Net Position-Beg. of Year, as restated 80,530, ,101,894 10,749,148 14,968,561 91,279, ,070,455 Net Position - End of Year $ 75,988,563 $ 116,467,340 $ 11,129,070 $ 14,920,829 $ 87,117,633 $ 131,388,169 25

84 Expenses and Program Revenues Governmental Activities 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 General Government Police Community Development Human Services Community Services Economic Development Revenues by Source Governmental Activities Other Taxes 22% Other 3% Charges for Services 14% Operating Contributions & Grants 15% Sales Tax 12% Capital Contributions & Grants 9% Property Taxes 25% 26

85 Business-type Activities The City s Business-type Activities include transportation, sewer, sanitation, and cemetery operations. The cost of all Business-type Activities this year was approximately $7.1 million. As detailed in the Statement of Revenues, Expenses and Changes in Fund Net Position, the amount paid by users of the services and activities was $7.4 million. Significant changes in revenue from the prior year were seen in sanitation and cemetery operations, primarily related to City Council approved fee increases and increases in special bin rentals. Expenses related to Business-type Activities saw an increase in the cemetery operation, primarily due to the completion of the cemetery expansion. Decreases were seen in the City s transportation, sewer and sanitation operations, due to lower ridership, the deferral of the sewer lining project, and reduced expenditures on vehicle replacements, respectively. Expenses and Program Revenues Business-type Activities 6,500,000 5,500,000 4,500,000 Expenses Program Revenues 3,500,000 2,500,000 1,500, , ,000 Transportation Sewer Sanitation Cemetery Revenues by Source Business-type Activities Operating Grants & Contributions 7% Charges for Services 92% Use of Money and Property 1% 27

86 Financial Analysis of the Government 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, unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. As of June 30, 2015, the City s governmental funds reported combined ending fund balances of $36.1million, an increase of $2.3 million in comparison with the prior fiscal year. Approximately 41 percent of this amount, or $14.8 million, constitutes the amount that is available for spending at the City Council s discretion. Approximately 65 percent of this amount, or $9.9 million, is committed to reserves. The portion of fund balance that is restricted amounts to $20.3 million and results from external limitations imposed by outside parties or by law through constitutional provisions or enabling legislation. The portions of fund balance that are nonspendable are either not in a spendable form or they are legally or contractually required to be maintained intact. Nonspendable fund balance amounted to $0.9 million at June 30, The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the General Fund was $3.7 million, while total fund balance amounted to $13.6 million. As a measure of the General Fund s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents approximately 16 percent of total General Fund expenditures, while total fund balance represents approximately 61 percent of that same amount. The City s General Fund balance increased during the current fiscal year, with revenues and transfers in exceeding expenditures and transfers out by $1.3 million. The increase in fund balance is primarily due to increases in building permit and plan check, property tax and sales tax revenues along with expenditures that fell below budgetary estimates. The Foothill Relinquishment Fund has a total fund balance of $5.3 million, all of which is restricted in its use for street maintenance and capital projects. The Successor Housing Fund has a total fund balance of $6.1 million, of which all is restricted for community development projects. The Successor Agency Housing Fund was created when the City elected to assume the responsibilities for the former Claremont Redevelopment Agency s low and moderate income housing activities in the wake of the elimination of redevelopment agencies in California. Housing assets were transferred from the former Redevelopment Agency to the City. Proprietary funds. The City s Proprietary Fund Statements provide the same type of information found in the Government-wide Financial Statements, but in greater detail. The Sewer Fund has a total net position of $10.2 million, of which $7.0 million is invested in capital assets, and $3.1 million is unrestricted. The Sanitation fund has a total negative net position of $434,567, of which $482,291 is invested in capital assets, and the negative amount of $916,858 is unrestricted. The negative net position is the result of the implementation of GASB Statement No. 68. The remaining proprietary funds have a net position totaling $0.9 million, of which $809,486 is invested in capital assets, and $130,128 is unrestricted. 28

87 General Fund Budgetary Highlights The City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions contained in the City's budget for fiscal year The level of budgetary control is established at the fund level. In preparing its budget, the City attempts to estimate its revenues using realistic, yet conservative methods, so as to budget its expenditure appropriations and activities in a prudent manner. As a result, the City routinely adopts amendments to both revenue and expenditure budgets throughout the course of the year to reflect changes in priorities and the availability of financial resources. During the current fiscal year, General Fund revenues were greater than budgetary expectations by $886,075. This amount above appropriation was primarily a result of an increase in building permit and plan check fee resulting from higher levels of commercial and residential development during the fiscal year, an increase property tax revenue, and higher sales tax revenue resulting from improvements in the local economy and increased economic development efforts. Expenditures in the General Fund were below the budget by $2,576,942. This was primarily due to savings seen across all departments. Debt Administration Debt, considered a liability of Governmental Activities, was $21.9 million at June 30, Loans payable include the refunding and refinancing of the City Hall and Alexander Hughes Community Center renovations, and financing for construction of the City Yard and the expansion of the Joslyn Senior Center. Debt of the Business-type Activities was $146,069 at the end of fiscal year Debt activity for both Governmental and Business-type Activities is represented in the table below: Long Term Debt Governmental Activities Business-type Activities Total Description Compensated Absences $ 2,268,785 $ 2,187,597 $ 146,069 $ 138,865 $ 2,414,854 $ 2,326,462 OPEB Obligation 1,047, , ,047, ,792 General Obligation Bonds 8,315,000 8,525, ,315,000 8,525,000 Pension Obligation Bonds 4,875,000 5,090, ,875,000 5,090,000 Loans Payable 3,895,000 4,625, ,895,000 4,625,000 Workers Comp Cumulative 230, , , ,712 General Liability Cumulative 1,355,489 1,359, ,355,489 1,359,787 Total $ 21,987,154 $ 22,948,888 $ - $ - $ 22,133,223 $ 23,087,753 Unamortized Bond Discount (66,019) (75,335) - - (66,019) (75,335) $ 21,921,135 $ 22,873,553 $ 146,069 $ 138,865 $ 22,067,204 $ 23,012,418 Additional information on the City s long-term debt can be found on pages of this report. 29

88 Capital Assets The capital assets of the City are those assets that are used in the performance of the City s functions, including infrastructure assets. At June 30, 2015, net capital assets of the Governmental Activities totaled $94.4 million, and the net capital assets of the Business-type Activities totaled $8.3 million. Depreciation on capital assets is recognized in the Government-wide Financial Statements. Capital Assets Governmental Activities Business-type Activities Total Description Land $ 29,327,583 $ 29,327,583 $ - $ - $ 29,327,583 $ 29,327,583 Construction in Progress 1,131,973 1,410, ,544 1,131,973 2,005,261 Structures and Improvements 33,919,573 33,843, , ,900 34,234,473 34,158,479 Machinery and Equipment 3,692,027 3,337, , ,538 3,835,563 3,481,061 Vehicles 4,547,098 3,954,763 3,443,037 3,443,038 7,990,135 7,397,801 Furniture and Fixtures 322, , , ,302 Land Improvements 9,612,482 9,128,770 1,184, ,112 10,796,620 9,576,882 Infrastructure 253,882, ,882,392 10,640,529 10,640, ,522, ,522,921 Capital Assets $ 336,435,430 $ 335,207,629 $ 15,726,140 $ 15,584,661 $ 352,161,570 $ 350,792,290 Accumulated Depreciation (242,029,724) (232,706,275) (7,466,675) (6,918,180) (249,496,399) (239,624,455) Total Capital Assets $ 94,405,706 $ 102,501,354 $ 8,259,465 $ 8,666,481 $ 102,665,171 $ 111,167,835 Additional information on the City s capital assets can be found on pages of this report. Significant Accomplishments of Fiscal Year Continued fiscally responsible management of City resources by maintaining General Fund reserves at levels exceeding the 25 percent of operating expenses outlined in the City s reserve policy. Continued to maintain a balanced budget for in the face of a slowly recovering local economy. Maintained service levels to the community in spite of significant reductions in staffing. The City Council authorized additional payments in the amount of $600,000 to pay down the unfunded liability on the City s miscellaneous CalPERS pension plan. Economic Factors and Next Year s Budget and Rates The City s budget assures efficient, effective, and economic use of the City s resources while ensuring that the highest priority objectives are accomplished. Through the budget, the City Council sets the City s direction, establishes its priorities, and allocates its resources. In considering the City budget for fiscal year , the City Council and management used the following criteria for the key assumptions in our forecast: Sales tax revenues are expected to be lower than in previous years, however, some growth is expected as increases in new auto sales continues and economic development efforts that have seen the addition of several new retail and dining establishments in the City provide additional sources of sales tax. 30

89 Property tax revenues will begin to increase, as the assessed value of property in the City begins to rise. Anticipated growth will be slow and the budget is conservative in its revenue projections for property tax. Utility tax revenues are expected to increase by two percent based on increases in rates for water, electricity, natural gas, telephone and cable television. Operational levels and current services will be maintained. The labor contracts for all six employee bargaining units are in place, and have been included in the budget for Salary and benefit costs are anticipated to increase an average of two percent as a result of: 1) negotiated cost of living increases and employee eligibility for annual merit increases, and 2) the agreement of employees to begin contributing toward the employee portion of CalPERS retirement costs. Contacting the City s Financial Management This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City s finances and to show the City s accountability for the money it receives. Questions about this report and the separate reports of the City s component units, or requests for any additional financial information, may be directed to our Financial Services Department at 207 Harvard Avenue, Claremont, California 91711, (909)

90 32

91 GOVERNMENT-WIDE FINANCIAL STATEMENTS 33

92 34

93 STATEMENT OF NET POSITION JUNE 30, 2015 Primary Government Governmental Business-Type Activities Activities Total Assets: Cash and investments $ 33,511,125 $ 6,475,674 $ 39,986,799 Receivables: Accounts 543, ,104 1,191,671 Taxes 251,666 1, ,073 Notes and loans 5,397,180-5,397,180 Accrued interest 22,026 5,900 27,926 Internal balances (393,877) 393,877 - Prepaid costs 22,155 1,088 23,243 Due from other governments 2,294, ,987 2,400,104 Inventories Restricted assets: Cash with fiscal agent 21,077-21,077 Capital assets not being depreciated 30,459,556-30,459,556 Capital assets, net of depreciation 63,946,150 8,259,465 72,205,615 Total Assets 136,074,742 15,892, ,967,056 Deferred Outflows of Resources: Deferred outflows - pension plans 2,788, ,686 3,108,581 Total Deferred Outflows of Resources 2,788, ,686 3,108,581 Liabilities: Accounts payable 1,895, ,515 2,147,450 Accrued liabilities 131,308 14, ,003 Accrued interest 218, ,991 Unearned revenue - 145, ,850 Deposits payable 704, ,142 Noncurrent liabilities: Due within one year 2,127,431 89,593 2,217,024 Due in more than one year 18,746,016 56,476 18,802,492 OPEB Liability 1,047,688-1,047,688 Net Pension Liability 30,687,627 3,842,185 34,529,812 Total Liabilities 55,559,138 4,400,314 59,959,452 Deferred Inflows of Resources: Deferred inflows - pension plans 7,315, ,616 7,998,552 Total Deferred Inflows of Resources 7,315, ,616 7,998,552 Net Position: Net investment in capital assets 86,156,725 8,259,465 94,416,190 Restricted for: Community development projects 6,113,603-6,113,603 Public safety 641, ,507 Public works 2,942,337-2,942,337 Capital projects 5,286,654-5,286,654 Debt service 1,160,231-1,160,231 Community services 4,213,491-4,213,491 Perpectual Care Reserve Expendable 901, ,548 Unrestricted (31,427,533) 2,869,605 (28,557,928) Total Net Position $ 75,988,563 $ 11,129,070 $ 87,117,633 See Notes to Financial Statements 35

94 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2015 Program Revenues Operating Capital Charges for Contributions Contributions Expenses Services and Grants and Grants Functions/Programs Primary Government: Governmental Activities: General government $ 6,426,753 $ 33,422 $ 29,296 $ - Police 10,482,700 1,436,843 1,196, ,808 Community development 3,777,811 1,771,774 44, ,424 Human services 3,215, , ,649 - Community services 13,432, ,049 2,942,801 2,294,948 Economic development 197, ,200 - Interest on long-term debt 741, Total Governmental Activities 38,274,303 4,585,945 4,952,256 3,041,180 Business-Type Activities: Transportation 656,591 78, ,541 - Sewer 752, , Sanitation 5,278,995 6,031,502 11,141 - Cemetery 381, , Total Business-Type Activities 7,068,782 7,423, ,682 - Total Primary Government $ 45,343,085 $ 12,009,041 $ 5,397,938 $ 3,041,180 General Revenues: Taxes: Property taxes, levied for general purpose Transient occupancy taxes Sales taxes Franchise taxes Business licenses taxes Utility users tax Other taxes Motor vehicle in lieu - unrestricted Use of money and property Other Gain on sale of capital asset Transfers Total General Revenues and Transfers Change in Net Position Net Position at Beginning of Year Restatement of Net Position Net Position at End of Year See Notes to Financial Statements 36

95 Net (Expenses) Revenues and Changes in Net Primary Government Governmental Business-Type Activities Activities Total $ (6,364,035) $ - $ (6,364,035) (7,715,305) - (7,715,305) (1,349,047) - (1,349,047) (2,275,049) - (2,275,049) (7,526,621) - (7,526,621) 276, ,813 (741,678) - (741,678) (25,694,922) - (25,694,922) - (143,723) (143,723) - 102, , , ,648-77,801 77, , ,996 (25,694,922) 799,996 (24,894,926) 8,171,972-8,171,972 1,283,893-1,283,893 3,957,760-3,957, , , , ,944 4,548,155-4,548, , ,880 15,483-15, ,435 22, , , ,228 15,600-15, ,367 (443,367) - 21,153,009 (420,074) 20,732,935 (4,541,913) 379,922 (4,161,991) 116,467,340 14,920, ,388,169 (35,936,864) (4,171,681) (40,108,545) $ 75,988,563 $ 11,129,070 $ 87,117,633 See Notes to Financial Statements 37

96 38

97 FUND FINANCIAL STATEMENTS Governmental Fund Financial Statements Proprietary Fund Financial Statements Fiduciary Fund Financial Statements 39

98 40

99 GOVERNMENTAL FUND FINANCIAL STATEMENTS General Fund The General Fund accounts for all revenues and expenditures used to finance the traditional services associated with a municipal government which are not accounted for in another fund. Community Development Block Grant This fund is used to account for financial activity related to the Community Development Block Grant (CDBG) which is used for community development projects. Foothill Relinquishment Fund This fund is used to account for the contribution from the California Department of Transportation (Caltrans) for the relinquishment of Foothill Boulevard to the City, and the capital projects completed on Foothill Boulevard. Successor Housing This fund is used to account for the development of low and moderate income housing due to the dissolution of the Claremont Redevelopment Agency. Other Governmental Funds Other Governmental Funds is the aggregate of all the non-major governmental funds. 41

100 BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2015 Special Revenue Funds Community Development Block Grant Foothill Relinquishment General Assets: Cash and investments $ 12,592,613 $ 869 $ 5,334,714 Receivables: Accounts 464, Taxes 207, Notes 484, ,712 - Accrued interest 11, Prepaid costs 19, Due from other governments 1,583, ,965 - Due from other funds 1,164, Restricted assets: Cash and investments with fiscal agents Total Assets $ 16,528,174 $ 1,039,546 $ 5,334,714 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ 1,116,433 $ 112,834 $ 48,060 Accrued liabilities 118, Deposits payable 704, Due to other funds Total Liabilities 1,939, ,834 48,060 Deferred Inflows of Resources: Unavailable revenues 944, ,712 - Total Deferred Inflows of Resources 944, ,712 - Fund Balances: Nonspendable 30, Restricted - - 5,286,654 Committed 9,907, Assigned Unassigned 3,705, Total Fund Balances 13,644,326-5,286,654 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 16,528,174 $ 1,039,546 $ 5,334,714 See Notes to Financial Statements 42

101 BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2015 Assets: Cash and investments Receivables: Accounts Taxes Notes Accrued interest Prepaid costs Due from other governments Due from other funds Restricted assets: Cash and investments with fiscal agents Total Assets Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable Accrued liabilities Deposits payable Due to other funds Total Liabilities Deferred Inflows of Resources: Unavailable revenues Total Deferred Inflows of Resources Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances Special Revenue Funds Successor Housing Other Governmental Funds Total Governmental Funds $ 2,927,045 $ 11,311,161 $ 32,166,402-29, ,538-44, ,666 3,985,629-5,397,180-9,664 21, , ,540 2,294, ,164,749-21,077 21,077 $ 6,912,674 $ 12,014,476 $ 41,829,584 $ 1,050 $ 539,517 $ 1,817,894-7, , , , ,728 1,164, , ,494 3,813,017-42,164 1,913,166-42,164 1,913, , ,519 6,113,603 8,957,566 20,357, ,907,921-1,212,466 1,212,466 - (12,762) 3,692,672 6,113,603 11,058,818 36,103,401 $ 6,912,674 $ 12,014,476 $ 41,829,584 See Notes to Financial Statements 43

102 44

103 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2015 Fund balances of governmental funds $ 36,103,401 Amounts reported for governmental activities in the statement of net position are different because: Capital assets net of depreciation have not been included as financial resources in governmental fund activity. 93,183,832 Deferred outflows related to contributions made after the actuarial measurement date and actuarial adjustments due to proportionate share made to the accrued net pensions liability. 2,662,907 Long-term debt and compensated absences that have not been included in the governmental fund activity: Bonds payable $ (13,190,000) Original issue discount 66,019 Loans payable (3,895,000) CJPIA cumulative deposit payable (1,585,681) Compensated absences (2,142,380) (20,747,042) Governmental funds report all OPEB contributions as expenditures, however in the statement of net position any excesses or deficiencies in contributions in relation to the Annual Required Contribution (ARC) are recorded as an asset or liability. (1,047,688) Accrued interest payable for the current portion of interest due on bonds has not been reported in the governmental funds. (218,991) Revenues reported as unavailable revenue in the governmental funds and recognized in the statement of activities. These are included in the intergovernmental revenues in the governmental fund activity. 1,913,166 Governmental funds report all pension contributions as expenditures, however in the statement of net position, the excess of the plan proportionate share of the total pension liability over the proportionate share of the plan fiduciary net position is reported as a net pension liability. (29,158,218) Deferred inflows related to the net difference between projected and actual earnings on pension plan investments and difference between actual contributions and proportionate share of contributions. (7,044,215) 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 position. 341,411 Net Position of governmental activities $ 75,988,563 See Notes to Financial Statements 45

104 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Special Revenue Funds Community Development Block Grant Foothill Relinquishment General Revenues: Taxes $ 19,577,396 $ - $ - Assessments Licenses and permits 1,169, Intergovernmental 1,003, ,515 7,201 Charges for services 1,262, Use of money and property 456, Fines and forfeitures 736, Contributions Miscellaneous 390, Total Revenues 24,596, ,515 7,201 Expenditures: Current: General government 5,593, Police 9,876, Community development 2,856, Human services 2,470,200 19,786 - Community services 1,432,857-28,510 Economic development - 194,729 - Capital outlay 308, ,640 Debt service: Principal retirement Interest and fiscal charges Total Expenditures 22,537, , ,150 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,059,119 - (171,949) Other Financing Sources (Uses): Transfers in 595, Transfers out (1,351,636) - - Total Other Financing Sources (Uses) (755,998) - - Net Change in Fund Balances 1,303,121 - (171,949) Fund Balances, Beginning of Year 12,341,205-5,458,603 Fund Balances, End of Year $ 13,644,326 $ - $ 5,286,654 See Notes to Financial Statements 46

105 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Revenues: Taxes Assessments Licenses and permits Intergovernmental Charges for services Use of money and property Fines and forfeitures Contributions Miscellaneous Total Revenues Expenditures: Current: General government Police Community development Human services Community services Economic development 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) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year Special Revenue Funds Successor Housing Other Governmental Funds Total Governmental Funds $ - $ - $ 19,577,396-2,955,348 2,955, ,169,564-3,821,850 5,047,501-1,167,882 2,430, ,062 36, , ,647-18,940 18,940-71, , ,062 8,071,726 33,045,390 7,161-5,600, ,207 10,257,572-16,423 2,873, ,424 2,664,410-3,864,220 5,325, ,729-1,786,267 2,245,238-1,155,000 1,155, , ,646 7,161 8,123,187 31,061, ,901 (51,461) 1,983,610-2,475,911 3,071,549 - (1,365,026) (2,716,662) - 1,110, , ,901 1,059,424 2,338,497 5,965,702 9,999,394 33,764,904 $ 6,113,603 $ 11,058,818 $ 36,103,401 See Notes to Financial Statements 47

106 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2015 Net change in fund balances - total governmental funds $ 2,338,497 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 capital outlays exceeded depreciation in the current period. Capital outlay $ 1,060,200 Depreciation (9,272,235) (8,212,035) Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Principal repayments 425,000 Loan repayments 730,000 Amortization of bond premiums/discounts (9,316) 1,145,684 Issuance of long-term liabilities (e.g. CJPIA cumulative deposit payable) provides current financial resources to governmental funds, the issuance of debt increase long-term liabilities in the Statement of Net Position. CJPIA cumulative deposit payable - Worker's Compensation (19,480) CJPIA cumulative deposit payable - General Liability 4,298 Accrued interest for long-term liabilities. This is the net change in accrued interest for the current period. 13,284 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. (64,932) 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. (96,896) Pension obligation 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. 250,882 Revenues reported as unavailable revenue in the governmental funds and recognized in the statement of activities. These are included in the intergovernmental revenues in the governmental fund activity. 223,470 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. (124,685) Change in net position of governmental activities $ (4,541,913) See Notes to Financial Statements 48

107 PROPRIETARY FUND FINANCIAL STATEMENTS Transportation This fund is used to account for grant and other revenues received by the City for its Dial-a-Ride service. Sewer This fund is used to account for financial activity related to replacement, upgrade, maintenance and repair of the sanitary sewer system. Sanitation This fund is used to account for activities related to refuse collection, recycling and street sweeping services. Cemetery This fund is used to account for sales, marketing, maintenance and interment operations of Oak Park Cemetery. The City took over the privately run cemetery in March Internal Service Funds These funds are established to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government units, on a cost reimbursement basis. 49

108 STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2015 Business-Type Activities - Enterprise Funds Transportation Sewer Sanitation Assets: Current: Cash and investments $ 187,731 $ 3,684,514 $ 2,284,817 Receivables: Accounts 30 13, ,421 Taxes - - 1,407 Accrued interest - 3,225 2,406 Prepaid costs Due from other governments 105, Inventories Total Current Assets 293,748 3,701,581 2,919,051 Noncurrent: Capital assets - net of accumulated depreciation 85,866 6,967, ,291 Total Noncurrent Assets 85,866 6,967, ,291 Total Assets 379,614 10,669,289 3,401,342 Deferred Outflows of Resources: Deferred outflows - pension plans 13,803 35, ,507 Total Deferred Outflows of Resources 13,803 35, ,507 Liabilities: Current: Accounts payable $ 4,021 $ 25,766 $ 207,500 Accrued liabilities 583 1,398 11,852 Unearned revenues 145, Compensated absences - 11,574 75,424 Total Current Liabilities 150,454 38, ,776 Noncurrent: Compensated absences - 27,068 29,184 Net pension liability 94, ,382 3,195,697 Total Noncurrent Liabilities 94, ,450 3,224,881 Total Liabilities 245, ,188 3,519,657 Deferred Inflows of Resources: Deferred Inflows - pension plans 16,807 61, ,759 Total Deferred Inflows of Resources 16,807 61, ,759 Net Position: Investment in capital assets 85,866 6,967, ,291 Unrestricted 45,690 3,262,458 (916,858) Total Net Position $ 131,556 $ 10,230,166 $ (434,567) Reconciliation of Net Position to the Statement of Net Position Net Position per Statement of Net Position - Proprietary Funds Prior years' accumulated adjustment to reflect the consolidation of internal service funds activities related to the enterprise funds Current years' adjustments to reflect the consolidation of internal service activities related to enterprise funds Net Position per Statement of Net Position See Notes to Financial Statements 50

109 STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2015 Assets: Current: Cash and investments Receivables: Accounts Taxes Accrued interest Prepaid costs Due from other governments Inventories Total Current Assets Noncurrent: Capital assets - net of accumulated depreciation Total Noncurrent Assets Total Assets Deferred Outflows of Resources: Deferred outflows - pension plans Total Deferred Outflows of Resources Liabilities: Current: Accounts payable Accrued liabilities Unearned revenues Compensated absences Total Current Liabilities Noncurrent: Compensated absences Net pension liability Total Noncurrent Liabilities Total Liabilities Deferred Inflows of Resources: Deferred Inflows - pension plans Total Deferred Inflows of Resources Net Position: Investment in capital assets Unrestricted Total Net Position Business-Type Activities - Enterprise Funds Cemetery Totals Governmental Activities- Internal Service Funds $ 318,612 $ 6,475,674 $ 1,344,723 3, ,104 50,029-1, , ,088 1,088 2, , ,592 7,238,972 1,398, ,600 8,259,465 1,221, ,600 8,259,465 1,221,874 1,048,192 15,498,437 2,619,952 18, , ,988 18, , ,988 $ 14,228 $ 251,515 $ 78, ,695 5, ,850-2,595 89,593 50,143 17, , , ,476 76, ,506 3,842,185 1,529, ,730 3,898,661 1,605, ,415 4,400,314 1,738,931 36, , ,721 36, , , ,600 8,259,465 1,221,874 84,438 2,475,728 (486,586) $ 808,038 $ 10,735,193 $ 735,288 $ 10,735, ,770 (64,893) $ 11,129,070 See Notes to Financial Statements 51

110 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015 Business-Type Activities - Enterprise Funds Transportation Sewer Sanitation Operating Revenues: Sales and service charges $ - $ 854,440 $ 6,031,502 Interdepartmental charges Miscellaneous Passenger fares 78, Total Operating Revenues 78, ,440 6,031,502 Operating Expenses: Administration and general 75, ,004 1,667,598 Services and supplies - 280,056 3,350,184 Transportation services 511, Depreciation expense 69, , ,330 Total Operating Expenses 655, ,020 5,221,112 Operating Income (Loss) (577,433) 105, ,390 Nonoperating Revenues (Expenses): Intergovernmental 434,541-11,141 Interest revenue - 13,381 8,432 Gain (loss) on disposal of capital assets Total Nonoperating Revenues (Expenses) 434,541 13,381 19,573 Income (Loss) Before Transfers (142,892) 118, ,963 Transfers in 146, Transfers out - (90,000) (500,000) Changes in Net Position 3,741 28, ,963 Net Position: Beginning of Year, as previously reported 232,659 10,586,365 2,777,229 Restatements (104,844) (385,000) (3,541,759) Beginning of Fiscal Year, as restated 127,815 10,201,365 (764,530) End of Fiscal Year $ 131,556 $ 10,230,166 $ (434,567) Reconciliation of Changes in Net Position to the Statement of Activities: Changes in Net Position, per the Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds Adjustment to reflect the consolidation of current fiscal year internal service funds activities related to enterprise funds Changes in Net Position of Business-Type Activities per Statement of Activities See Notes to Financial Statements 52

111 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015 Operating Revenues: Sales and service charges Interdepartmental charges Miscellaneous Passenger fares Total Operating Revenues Operating Expenses: Administration and general Services and supplies Transportation services Depreciation expense Total Operating Expenses Operating Income (Loss) Nonoperating Revenues (Expenses): Intergovernmental Interest revenue Gain (loss) on disposal of capital assets Transfers in Transfers out Total Nonoperating Revenues (Expenses) Income (Loss) Before Transfers Changes in Net Position Business-Type Activities - Enterprise Funds Cemetery Totals Governmental Activities- Internal Service Funds $ 458,827 $ 7,344,769 $ ,017, , ,327 7,423,596 2,017, ,108 2,105, , ,479 3,842,719 1,203, ,216-33, , , ,997 7,003,889 2,316,139 81, ,707 (298,221) - 445, ,793 4, , ,475 20,163 82, ,182 (278,058) - 146,633 88,480 - (590,000) - 82, ,815 (189,578) Net Position: Beginning of Year, as previously reported Restatements Beginning of Fiscal Year, as restated End of Fiscal Year 865,806 14,462,059 2,619,895 (140,078) (4,171,681) (1,695,029) 725,728 10,290, ,866 $ 808,038 $ 10,735,193 $ 735,288 $ 444,815 $ (64,893) 379,922 See Notes to Financial Statements 53

112 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015 Business-Type Activities - Enterprise Funds Transportation Sewer Sanitation Cash Flows from Operating Activities: Cash received from customers and users $ 64,250 $ 855,143 $ 5,958,348 Cash received from/(paid to) interfund service provided Cash paid to suppliers for goods and services (837,269) (308,961) (3,383,031) Cash paid to employees for services (82,528) (238,197) (1,703,807) Cash received from (payments to) others Net Cash Provided (Used) by Operating Activities (855,547) 307, ,334 Cash Flows from Non-Capital Financing Activities: Cash transfers out - (90,000) (500,000) Cash transfers in 146, Subsidy from federal, state and other governments 434,541-11,141 Net Cash Provided (Used) by Non-Capital Financing Activities 581,174 (90,000) (488,859) Cash Flows from Capital and Related Financing Activities: Acquisition and construction of capital assets Proceeds from sales of capital assets - - 3,718 Net Cash Provided (Used) by Capital and Related Financing Activities - - 3,718 Cash Flows from Investing Activities: Interest received - 11,190 6,754 Net Cash Provided (Used) by Investing Activities - 11,190 6,754 Net Increase (Decrease) in Cash and Cash Equivalents (274,373) 229, ,947 Cash and Cash Equivalents at Beginning of Year 462,104 3,455,339 1,890,870 Cash and Cash Equivalents at End of Year $ 187,731 $ 3,684,514 $ 2,284,817 Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ (577,433) $ 105,420 $ 810,390 Adjustments to reconcile operating income (loss) net cash provided (used) by operating activities: Depreciation 69, , ,330 (Increase) decrease in prepaid expense (Increase) decrease in accounts receivable (15) 703 (73,154) (Increase) decrease in taxes receivable (Increase) decrease in due from other governments (14,062) - - (Increase) decrease in inventories (Increase) decrease in deferred outflows - pension plan (13,803) (35,782) (251,507) Increase (decrease) in accounts payable 2,501 (28,905) (32,847) Increase (decrease) in accrued liabilities 177 (1,340) (7,097) Increase (decrease) in unearned revenue (328,554) - - Increase (decrease) in compensated absences - 4, Increase (decrease) in net pension liability (10,244) (37,618) (346,062) Increase (decrease) deferred inlflows -pension plan 16,807 61, ,759 Total Adjustments (278,114) 202,565 61,944 Net Cash Provided (Used) by Operating Activities $ (855,547) $ 307,985 $ 872,334 See Notes to Financial Statements 54

113 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015 Cash Flows from Operating Activities: Cash received from customers and users Cash received from/(paid to) interfund service provided Cash paid to suppliers for goods and services Cash paid to employees for services Cash received from (payments to) others Net Cash Provided (Used) by Operating Activities Cash Flows from Non-Capital Financing Activities: Cash transfers out Cash transfers in Subsidy from federal, state and other governments Net Cash Provided (Used) by Non-Capital Financing Activities Cash Flows from Capital and Related Financing Activities: Acquisition and construction of capital assets Proceeds from sales of capital assets Net Cash Provided (Used) by Capital and Related Financing Activities Cash Flows from Investing Activities: Interest received Net Cash Provided (Used) by Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating income (loss) Adjustments to reconcile operating income (loss) net cash provided (used) by operating activities: Depreciation (Increase) decrease in prepaid expense (Increase) decrease in accounts receivable (Increase) decrease in taxes receivable (Increase) decrease in due from other governments (Increase) decrease in inventories (Increase) decrease in deferred outflows - pension plan Increase (decrease) in accounts payable Increase (decrease) in accrued liabilities Increase (decrease) in unearned revenue Increase (decrease) in compensated absences Increase (decrease) in net pension liability Increase (decrease) deferred inlflows -pension plan Total Adjustments Net Cash Provided (Used) by Operating Activities Business-Type Activities - Enterprise Funds Cemetery Totals Governmental Activities- Internal Service Funds $ 461,096 $ 7,338,837 $ 2,004, ,026 (222,377) (4,751,638) (1,236,125) (49,020) (2,073,552) (793,725) , ,471 (1,545) - (590,000) ,633 88, , ,315 88,480 (141,481) (141,481) (245,066) - 3,718 (181,658) (141,481) (137,763) (426,724) ,746 4, ,746 4,260 49, ,769 (335,529) 269,592 6,077,905 1,680,252 $ 318,612 $ 6,475,674 $ 1,344,723 $ 81,330 $ 419,707 $ (298,221) 33, , , ,769 (70,697) (13,639) (14,062) 24,026 1,245 1,245 - (18,594) (319,686) (125,988) (11,143) (70,394) (33,121) (755) (9,015) (2,993) - (328,554) - 1,676 7,204 16,256 64,428 (329,496) (165,620) 36, , , ,369 94, ,676 $ 189,699 $ 514,471 $ (1,545) See Notes to Financial Statements 55

114 56

115 FIDUCIARY FUND FINANCIAL STATEMENTS Agency Funds These funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments and/or other funds. Successor Agency of the Former Claremont Redevelopment Agency This fund is used to account for the activities related to the dissolution of the former Claremont Redevelopment Agency. 57

116 STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2015 Private- Purpose Trust Fund Successor Agency Funds Agency to the Former RDA Assets: Cash and investments $ 852,314 $ 465,896 Receivables: Accounts - 1,510 Notes and loans - 1,788,309 Accrued interest - 2,000 Prepaid costs - 42,521 Land held for resale - 400,000 Restricted assets: Cash and investments with fiscal agents - 838,076 Total Assets $ 852,314 3,538,312 Deferred Outflows of Resources: Deferred loss on refunding 228,434 Deferred outflow - Pension Plan 34,227 Total Deferred Outflows of Resources 262,661 Liabilities: Accounts payable $ 535,628 1,890 Accrued liabilities 280,688 1,485 Accrued interest - 171,910 Deposits payable 25,998 - Due to external parties/other agencies 10,000 - Long-term liabilities: Due in one year - 645,000 Due in more than one year - 8,476,472 Net Pension Liability - 416,765 Total Liabilities $ 852,314 9,713,522 Deferred Inflows of Resources: Deferred Inflows - Pension Plan 74,045 Total Deferred Inflows or Resources 74,045 Net Position: Held in trust for other purposes (5,986,594) Total Net Position $ (5,986,594) See Notes to Financial Statements 58

117 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2015 Private- Purpose Trust Fund Successor Agency to the Former RDA Additions: Taxes $ 1,098,853 Interest and change in fair value of investments 306,054 Total Additions 1,404,907 Deductions: Administrative expenses 239,949 Contractual services 133,691 Interest expense 338,225 Debt issuance cost 153,739 Total Deductions 865,604 Changes in Net Position 539,303 Net Position - Beginning of the Year (6,064,000) Restatement of Net Position (461,897) Net Position - End of the Year $ (5,986,594) See Notes to Financial Statements 59

118 60

119 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 I. SIGNIFICANT ACCOUNTING POLICIES Note 1: Summary of Significant Accounting Policies The basic financial statements of the City of Claremont, California, (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Boards (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City s accounting policies are described below. a. Financial Reporting Entity The City was incorporated October 3, 1907, under the General Laws of the State of California and enjoys all the rights and privileges pertaining to such General Law cities. The City uses the City Council/Manager form of government. The financial reporting entity consists of (1) the primary government (2) organizations for which the primary government is financially accountable, and (3) other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity s financial statements to be misleading or incomplete. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government s exclusion would cause the reporting entity s financial statements to be misleading or incomplete. The following is a brief review of the component units included in the accompanying basic financial statements of the City. Claremont Public Improvement Corporation The Claremont Public Improvement Corporation (Corporation) was organized as a nonprofit benefit corporation under the Nonprofit Benefit Corporation Law on October 1, Its purpose is to finance the acquisition, construction or improvement of additions to the City s real or personal property for the benefit of the City s residents. The criteria used in determining the scope of the reporting entity are based on the provisions of GASB Statements No. 14 and No. 61. The City is the primary government unit. Component units are those entities which are financially accountable to the primary government, either because the City appoints a voting majority of the component unit s board, or because the component unit will provide a financial benefit or impose a financial burden on the City. The Corporation has been accounted for as blended component unit of the City. Despite being legally separate, the Corporation is so intertwined with the City that it is, in substance, part of the City s operations. Accordingly, the balances and transactions of the component unit are reported within the funds of the City. The Corporation s transactions are set forth as separate funds in the debt service and capital projects funds. The following specific criteria were used in determining that the Corporation was a blended component unit: 61

120 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) The members of the City Council also act as the governing bodies of the Corporation. The Corporation is managed by employees of the City. However, no salary allocation is made to the Corporation. The City and the Corporation are financially interdependent. The Corporation arranges financing issues for the City. The City pays the debt service on the Corporation s financing issues. Detailed financial statements are available for the above component unit from the City s Finance Department. The Claremont Public Improvement Corporation has had no activity during the year. b. Measurement focus, Basis of Accounting and Financial Statement Presentation The accounts of the City are organized and operated on the basis of funds, each of which is defined as a separate fiscal and accounting entity with a self-balancing set of accounts. These funds are established for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. Government-Wide Financial Statements The City government-wide financial statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present summaries of governmental and business-type activities for the City, the primary government, accompanied by a total column. Fiduciary activities are reported only in the fund financial statements. These basic financial statements are presented on an economic resources measurement focus and the accrual basis of accounting. Accordingly, all of the City s assets and liabilities, including capital assets and related infrastructure assets and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Sometimes the government will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government s policy to consider restricted net position to have been depleted before unrestricted net position is applied. 62

121 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) Certain types of transactions are reported as program revenues for the City in three categories: Charges for services Operating grants and contributions Capital grants and contributions Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column (in the Statement of Activities, internal service fund transactions have been eliminated). However, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated: Due to / from other funds Advances to / from other funds Transfers in / out Government Fund Financial Statements Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in Net Position as presented in these statements to the Net Position presented in the government-wide financial statements. The City has presented all major funds that met the applicable criteria. All governmental funds are accounted for on a spending or current financial resources measurement focus. Accordingly, only current assets and current liabilities generally are included on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financial sources) and decreases (expenditures and other financial uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Sometimes the government will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the government s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, 63

122 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. Revenues are recorded when received in cash, except those revenues subject to accrual (generally 60 days after year-end), which are recognized when due. The primary revenue sources which have been treated as susceptible to accrual by the City, are property taxes, charges for services, federal and state grants, sales tax, and interest. Expenditures are recognized in the accounting period in which the related fund liability is incurred. Unavailable revenues arise when potential revenues do not meet both the measurable and available criteria for recognition in the current period. In subsequent periods when the revenue recognition criteria have been met the unavailable revenue is removed from the balance sheet and revenue is recognized. Unearned revenues arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when the government has a legal claim to the resources, the unearned revenue is removed from the balance sheet and revenue is recognized. The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. The City reports the following major governmental funds: The General Fund is the City s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Community Development Block Grant (CDBG) fund is used to account for financial activity related to the Community Development Block Grant which is used for community development projects. The Foothill Relinquishment Fund is used to account for the contribution from the California Department of Transportation for the relinquishment of the Foothill Boulevard to the City, and the capital projects completed on Foothill Boulevard. The Successor Housing fund is used to account for the development of low and moderate income housing due to the dissolution of the Claremont Redevelopment Agency. Proprietary Fund Financial Statements Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Net Position, and a Statement of Cash Flows for all proprietary funds. 64

123 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the government-wide financial statements. Proprietary funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position presents increases (revenues) and decreases (expenses) in total Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. The City reports the following major proprietary funds: The Sewer fund is used to account for financial activity relative to replacement, upgrades, maintenance and repairs of the sanitary sewer system. The Sanitation Fund is used to account for activities related to refuse collection, recycling and street sweeping services. The Transportation Fund is used to account for grant and other revenues received by the City for its Dial-a-Ride service. The Cemetery Fund is used to account for sales, marketing, maintenance and interment operations of Oak Park Cemetery. The City took over the privately run cemetery in March Fiduciary Fund Financial Statements Fiduciary fund financial statements include a Statement of Net Position and a Statement of Changes in Fiduciary Net Position. The City s fiduciary funds representing agency funds which are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The private-purpose trust funds are reported using the economic resources measurement focus and the accrual basis of accounting. 65

124 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) Additionally, the City reports the following fund types: Capital project funds are used to account for major capital improvement projects. Debt service funds are used to account for the debt service payments of long-term liabilities. Internal service funds are established to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government units, on a cost reimbursement basis. The City s internal service funds include the Motor Fleet Fund and the Technology Fund. The Perpetual Care Fund, a Permanent Fund, establishes an endowment fund for future maintenance of the cemetery. The Agency Funds are used to account for assets held by the government as an agent for individuals, private organizations, and other governments and/or other funds. The City s agency funds include the Payroll Fund and the 1911 Act Bond Fund. The private purpose trust fund accounts for the assets and liabilities of the former redevelopment agency and its allocated revenue to pay estimated installment payments of enforceable obligations until obligations of the former redevelopment agency are paid in full and assets have been liquidated. c. Cash, Cash Equivalents and Investments Cash and Cash Equivalents - The City s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. The short-term investments include the California Local Agency Investment Fund (LAIF). Investment Valuation - In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value, except for money market investments which have a remaining maturity of less than one year when purchased, which are stated at amortized cost. Money market investments are short-term, highly liquid debt instruments including commercial paper, bankers acceptances, and U.S. Treasury and Agency obligations. Cost is used as fair value for those securities for which market quotations are not readily available. State Investment Pool - The City participates in the LAIF, an investment pool managed by the State of California. LAIF has invested a portion of the pooled funds in Structured Notes and Asset-Backed Securities. LAIF s investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as a result of changes in interest rates. Restricted Cash and Investments - Amounts shown as restricted assets have been restricted by either bond indentures, law, or contractual obligations to be used for specific purposes, such as servicing bonded debt and construction of capital assets. 66

125 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) Deposit and Investment Risk Disclosures - In accordance with GASB Statement No. 40, Deposit and Investment Disclosures Amendment of GASB No. 3, certain disclosure requirements, if applicable, are made for Deposits and Investment Risks in the following areas: Interest Rate Risk Credit Risk - Overall - Custodial Credit Risk - Concentrations of Credit Risk In addition, other disclosures are specified, including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end, and other disclosures. d. Inventories and Prepaid Items Cement vaults held by the Cemetery Fund, are used in the interment process and are also stated at cost using the first-in, first-out (FIFO) method. The City uses the purchases method to account for fuel held by the Motor Fleet internal service fund. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. e. Land and Buildings Held for Resale Land and buildings held for resale are recorded at the lower of acquisition cost or net realizable value. f. Capital Assets Capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are valued at their estimated fair market value on the date donated. City policy has set the capitalization threshold for reporting infrastructure at $25,000, all other capital assets at $5,000. Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as follows: Structures and Improvements Machinery and equipment Vehicles Furniture & Fixtures Land Improvements Infrastructure Years 3-20 Years 2-20 Years 20 Years Years Years The Governmental Accounting Standards Board (GASB) issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local governments basic financial statements. In accordance with Statement No. 34, the City has included the value of all infrastructure into its Basic Financial Statements. 67

126 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) The City defines infrastructure as the basic physical assets that allow the City to function. The assets include streets, sewers, park lands, and buildings. Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, landscaping and land. These subsystems were not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems. Interest accrued during capital assets construction, if any, is capitalized for the business-type and proprietary funds as part of the asset cost. For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34 for infrastructure reporting. The City commissioned an appraisal of City owned infrastructure and property as of June 30, This appraisal determined the original cost, which is defined as the actual cost to acquire new property in accordance with market prices at the time of first construction/acquisition. Original costs were developed in one of three ways (1) historical records; (2) standard unit costs appropriate for the construction/acquisition date; or (3) present cost indexed by a reciprocal factor of the price increase from the construction/acquisition date to the current date. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date on a straight line, unrecovered cost method was computed using industry accepted life expectancies for each infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation from the original cost. g. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position and governmental funds balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position or fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The City has two items that qualify for reporting in this category. It is the deferred loss on refunding reported in the statement of fiduciary net position. A deferred loss on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The other item, deferred pension related items, is reported in the government-wide statement of net position. In addition to liabilities, the statement of net position and governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has two types of items, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from three sources: grant reimbursement, development fees and housing loans. These amounts are recognized as an inflow of resources in the period that the amounts become available. The other item is deferred pension related items reported in the government-side statement of net position. 68

127 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) h. Long-Term Debt Government-Wide Financial Statements Long-term debt and other financed obligations are reported as liabilities in the appropriate funds. Bond premiums and discounts, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable premium or discount. Fund Financial Statements The fund financial statements do not present long-term debt but are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. i. Net Position Government-Wide Financial Statements Net Investment in Capital Assets - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. Restricted Net Position - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments. Unrestricted Net Position - This amount is all Net Position that do not meet the definition of invested in capital assets, net of related debt or restricted Net Position. Fund Financial Statements Fund Equity - The City Council adopts and amends committed fund balance amounts through a resolution. The City Manager authorizes assigned amounts for specific purposes pursuant to the policy-making powers granted to him through a resolution. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted amounts to be used first, then unrestricted. When an expenditure is incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used, they are considered to be spent in the order as follows: committed, assigned and then unassigned. Nonspendable Fund Balance Petty cash The portion of fund balance that represents the asset amount of petty cash, held by a given fund. Postage The portion of fund balance that represents the asset amount of prepaid postage, held by a given fund. Notes and loans receivable The portion of fund balance that represents the asset amount of notes receivable, held by a given fund. This includes the portion of fund balance that represents the asset amount of employee computer loans outstanding 69

128 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) that were issued under the City s Employee Personal Computer Purchase Program and the amount of loans receivable made to the former Redevelopment Agency. Prepaid costs The portion of fund balance that represents the asset amount of prepaid expenditures, held by a given fund. Permanent fund principal The portion of fund balance that represents an endowment for future maintenance of the Oak Park Cemetery. Restricted Fund Balance Community development projects The portion of fund balance restricted for community development projects. Public safety The portion of fund balance that is restricted for use in public safety programs. Public works The portion of fund balance that is restricted for use in public works projects. Capital projects The portion of fund balance restricted for capital projects. Debt service The portion of fund balance restricted for repayment of debt. Community services The portion of fund balance restricted for community services. Committed Fund Balance Environmental and fiscal emergency reserve - The portion of fund balance that has been set aside as the City s emergency funds. As of June 30, 2015, the balance of the environmental and fiscal emergency reserve is $7,379,099. Maintenance of operations reserve - The portion of fund balance that has been set aside to address unforeseen increases in operating costs. As of June 30, 2015, the balance of the reserve is $669,272. Equipment and facility reserve - The portion of fund balance set aside for replacement of equipment and facilities. As of June 30, 2015, the balance of the reserve is $853,858. Water system acquisition reserve - The portion of fund balance set aside for acquisition of water systems. As of June 30, 2015, the balance of the reserve is $1,000,000. Assigned Fund Balance Community development projects The portion of fund balance in the Capital Projects Fund which has been set aside for community development projects. 70

129 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) Unassigned Fund Balance (General Fund Only) Fund Balance - Any portion of the General Fund balance that does not fall under any of the fund balance definitions j. Compensated Absences Government-Wide Financial Statements For governmental and business-type activities, compensated absences are recorded as incurred and the related expenses and liabilities are reported. Fund Financial Statements In governmental funds, City employees have vested interests in varying levels of vacation and compensatory time. All compensated absence amounts are deemed to be long term. In proprietary funds, compensated absences are expensed to the various funds in the period they are earned, and such fund s share of the unpaid liability is recorded as a long-term liability of the fund. k. Property Taxes Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City accrues only those taxes which are received from the county within sixty days after year-end. l. Use of Estimates Lien Date January 1 Levy Date June 30 Due Date November 1 and February 1 Collection Date December 10 and April 10 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions. 71

130 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 2: Budgetary Accounting a. Deficit Fund Balances The following funds have a deficit at June 30, 2015: Fund Amount Special Revenue Funds: TDA Article 3 $ (1,242) Wilderness Park Parking Lot (11,520) Fiduciary Fund: Successor Agency to the Former RDA (6,045,521) These deficits will be eliminated with future revenue. Note 3: Cash and Investments As of June 30, 2015, cash and investments were reported in the accompanying financial statements as follows: Cash and Investments: Governmental Activities $ 33,511,125 Business-type Activities 6,475,674 Fiduciary Funds: Agency 852,314 Private Purpose Trust 465,896 Total Cash and Investments 41,305,009 Cash and Investments with Fiscal Agents: Governmental Activities 21,077 Fiduciary Funds: Private Purpose Trust 838,076 Total Cash and Investments with Fiscal Agents 859,153 Total $ 42,164,162 The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under provisions of bond indentures. Interest income earned on pooled cash and investments is allocated monthly to the various funds based on monthly cash and investment balances. Interest Income from cash and investments with fiscal agents is credited directly to the related fund. a. Deposits At June 30, 2015, the carrying amount of the City s deposits was $15,973,304, including petty cash, and the bank balance was $15,553,442. The $419,862 difference represents outstanding checks and other reconciling items. The California Government Code requires California banks and savings and loan associations to secure a City's deposits by pledging government securities with a value of 110% of a City's deposits. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of a City's total deposits. The City Treasurer may waive the collateral requirement for deposits which are fully insured up to $250,000 by the FDIC. The collateral for deposits in federal and state chartered banks is held in safekeeping by an authorized Agent of Depository recognized by the State of California Department of Banking. The collateral for deposits 72

131 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 3: Cash and Investments (Continued) with savings and loan associations is generally held in safekeeping by the Federal Home Loan Bank in San Francisco, California as an Agent of Depository. These securities are physically held in an undivided pool for all California public agency depositors. Under Government Code Section 53655, the placement of securities by a bank or savings and loan association with an "Agent of Depository" has the effect of perfecting the security interest in the name of the local governmental agency. Accordingly, all collateral held by California Agents of Depository are considered to be held for, and in the name of, the local governmental agency. b. Investments Under the provisions of the City s investment policy, and in accordance with California Government Code, the following investments are authorized: Maximum Maximum Maximum Percentage of Investment in Authorized Investment Type Maturity Portfolio One Issuer Securities issued by the U.S. Treasury 5 years No Limit No Limit Non-negotiable certificates of deposit 5 years 30% No Limit Local Agency Investment Fund N/A No Limit No Limit Money Market/Mutual Funds N/A 15% No Limit c. Investments Authorized by Debt Agreements The above investments do not address investment of debt proceeds held by a bond trustee. Investments of debt proceeds held by a bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City s investment policy. d. Investments in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section under the oversight of the Treasurer of the State of California. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. The State Treasurer's Office audits the fund annually. The fair value of the position in the investment pool is the same as the value of the pool shares. e. GASB Statement No. 31 The City adopted GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, as of July 1, GASB Statement No. 31 establishes fair value standards for investments in participating interest earning investment contracts, external investment pools, equity securities, option contracts, stock warrants and stock rights that have readily determinable fair values. Accordingly, the City reports its investments at fair value in the balance sheet. All investment income, including changes in the fair value of investments, is recognized as revenue in the operating statement. 73

132 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 3: Cash and Investments (Continued) f. Credit Risk The City s investment policy limits investments in money market funds that carries the highest available fund credit rating issued by either Standard and Poor s or Moody s Investor Services. The City s investment policy does not further limit its investment choices. Investments in U.S. government securities are not considered to have credit risk and, therefore, their credit quality is not disclosed. As of June 30, 2015, the City s investments in external investment pools and money market mutual funds are unrated. g. Custodial Credit Risk The custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. As of June 30, 2015, none of the City s deposits or investments were exposed to custodial credit risk. h. Concentration of Credit Risk The City s investment policy does not place a limit on the amount that may be invested with any one issuer. With respect to concentration risk, as of June 30, 2015, the City has not invested more than 5% of its total investments in any one issuer. Investments guaranteed by the U.S. government and investments in mutual funds and external investment pools are excluded from this requirement. i. Interest Rate Risk The City does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising for interest rates. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk. As of June 30, 2015, the City had the following investments and remaining maturities: Remaining Investment Maturities 6 months to 1 Investment Type 6 months or less year TOTAL Local Agency Investment Fund $ 25,331,705 $ - $ 25,331,705 Fiscal Agent: Money Market Mutual Funds 859, ,153 $ 26,190,858 $ - $ 26,190,858 74

133 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 4: Receivables Notes Receivable As of June 30, 2015, notes receivable and unavailable revenue consisted of the following: Notes Receivable General Fund: Padua Hills Theatre Loan $ 251,394 City of Pomona Loan 227,250 Employee Computer Loans 6,195 Special Revenue Funds: Community Development Block Grant Loans 926,712 Housing Successor Owner Participation Agreement 553,221 Jamboree Housing Corporation Loan 3,432,408 $ 5,397, On November 10, 2008, the City entered into a Ground Lease with Padua Hills Theatre, LLC to lease the premises, purchase the historical improvements and accept a non-exclusive right to use the parking areas of the Historic Padua Hills Theatre. On February 9, 2009, the participant entered into an agreement to purchase the historical improvements for $305,000. A payment of $30,500 representing ten percent of the sales price was made and a note in the amount of $274,500 was signed by the participant. The terms of the thirty-year non-recourse promissory note call for interest at 6% per annum, accruing quarterly. Payments of principal and interest in the amount of $5, are payable quarterly. The loan is evidenced by a note from the participant that is secured by a deed of trust. All accrued interest and outstanding principal is due February 9, The outstanding balance of the loan with interest at June 30, 2015, is $251, On July 2, 2012, the City entered into an agreement with the City of Pomona to partially fund a storm drain improvement project on Indian Hill Boulevard using federal grant monies. Repayments will be made in four installments in starting in November The terms of the note call for interest at 2% per annum. Payments of principal and interest of $78,750 will be made annually. The outstanding balance of the loan with interest at June 30, 2015, is $227, The City offers no interest loans up to a maximum amount of $2,500 for the purchase of approved computer systems. Full-time and permanent part-time employees are eligible to participate in the Employee Personal Computer Purchase Program. Loans are repaid by employees over two years through regular payroll deductions. Outstanding loans at June 30, 2015, were $6, The City uses Community Development Block Grant funds to provide housing rehabilitation loans to eligible applicants. The City makes deferred loans to resident homeowners who qualify as low income, which are not repaid until the title to the property changes. Outstanding loans at June 30, 2015, were $701,712. The City makes forgivable Job Creation Loans to businesses for the purpose of creating permanent jobs to low and moderate income individuals. Outstanding loans at June 30, 2015 were $225,000. These loans are reflected in the Community Development Block Grant Fund. Since the funds have not legally vested with the City as of June 30, 2015, these funds are reported as unavailable revenue. 75

134 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 4: Receivables (Continued) 5. At June 30, 2015, the Successor Housing Fund was owed $553,221 under the provisions of an owner participation agreement dated April 27, The terms of the thirty-year non-recourse promissory note call for interest at 3% per annum, accruing monthly. Annual payments on the note are required only if the owner has surplus cash, defined as net operating income after debt service and replacement reserves. Annual payments will be applied to accrued interest before being applied to outstanding principal. All accrued interest and outstanding principal is due March 28, The note is secured by a trust deed. 6. In January 2009 the former Redevelopment Agency entered into a Disposition and Development Agreements (DDA) with Jamboree Housing Corporation. The agreement conveyed real property to the Developers and the Developers agreed to construct develop, operate and manage high quality housing which is affordable to persons and families of very low and low income. The Agency provided a loan to the Developer in the amount $3,410,000 to assist with the Developer s acquisition of the Agency Parcel and the Developer Parcel and a second loan in the amount of $1,500,000 to assist the Developer in project related fees, which is now accounted for by the City in the Successor Housing Fund. At June 30, 2015, the outstanding balance for the Jamboree Housing Corporation note was $3,432,408. Note 5: Interfund Receivable, Payable and Transfers a. Due To/From Other Funds At June 30, 2015, the City had the following internal balances: Due To Other Funds Governmental Funds Other Successor Governmental Housing Fund Funds Totals Due From Other Funds: Governmental Funds: General Fund $ 798,021 $ 366,728 $ 1,164,749 b. Due To/From Other Funds The General Fund is owed $798,021 from the Successor Housing Fund for a permanent loan on City fees to the Claremont Village Housing Partners, LP. The General Fund is owed $366,728 from the Other Non-Major Governmental Funds for temporary negative cash and investments. 76

135 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 5: Interfund Receivable, Payable and Transfers (Continued) c. Transfers For the year ended June 30, 2015, the City had the following interfund transfers: Funds Transfers Out: Governmental Funds: Major Funds: General - Transfers In Major Funds Nonmajor Major Funds Nonmajor Other Internal General Governmental Transportation Service Fund Funds Fund Funds Totals $ $ 1,351,636 $ - $ - $ 1,351,636 Nonmajor Other Governmental Funds 595, , ,633 88,480 1,365,026 Proprietary Funds: Major Funds: Sewer - 90, ,000 Sanitation - 500, ,000 Totals $ 595,638 $ 2,475,911 $ 146,633 $ 88,480 $ 3,306,662 The General Fund transferred $1,351,636 to Other Governmental Funds for capital projects, debt service and various operating expenses. The Nonmajor Other Governmental Funds transferred $595,638 to the General Fund to reimburse the General Fund for the cost of constructing the Wilderness Park Parking Lot. The Sanitation Fund transferred $500,000 to Other Governmental Funds for debt service related to the Corporate Yard. The Sewer Fund transferred $90,000 to Other Governmental Funds to pay for debt service related to the Corporate Yard. $146,663 was transferred from Other Governmental Funds into the Transportation Fund for the Dial-a-Ride program. $35,000 was transferred from the Proposition C fund to the Debt Service fund to pay for debt service related to the Corporate Yard. $587,755 was transferred from the Hillside fund to the Debt Service fund to pay for debt service on the 2007 General Obligation fund. 77

136 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Capital Assets a. Government-Wide Financial Statements The following is a summary of capital assets for governmental activities: Beginning Transfers of Ending Balance CIP Increases Decreases Balance Governmental Activities: Capital assets, not being depreciated: Land $ 29,327,583 $ - $ - $ - $ 29,327,583 Construction-in-progress 1,410,717 (1,203,526) 924,782-1,131,973 Total capital assets not being depreciated 30,738,300 (1,203,526) 924,782-30,459,556 Capital assets, being depreciated: Structures and Improvements 33,843,579-75,994-33,919,573 Machinery and Equipment 3,337,523 73, ,915-3,692,027 Vehicles 3,954, , , ,961 4,547,098 Furniture and Fixtures 322, ,302 Land Improvements 9,128, , ,612,482 Infrastructure 253,882, ,882,392 Total capital assets being depreciated 304,469,329 1,203, , , ,975,874 Less accumulated depreciation Structures and Improvements 11,947,739-1,260,630-13,208,369 Machinery and Equipment 2,508, ,321-2,774,384 Vehicles 1,859, , ,723 2,009,840 Furniture and Fixtures 130,404-16, ,521 Land Improvements 2,824, ,725-3,383,917 Infrastructure 213,436,526-7,070, ,506,693 Total accumulated depreciation 232,706,275-9,598, , ,029,724 Total capital assets being depreciated, net 71,763,054 1,203,526 (8,982,192) 38,238 63,946,150 Governmental activities capital assets, net $ 102,501,354 $ - $ (8,057,410) $ 38,238 $ 94,405,706 Governmental activities depreciation for capital assets for the year ended June 30, 2015, was as follows: Governmental Activities: General Government $ 434,602 Community Development 902,029 Police 326,947 Community Services 7,014,098 Human Services 594,559 Internal Service Funds 325,937 Total Depreciation Expense - Governmental Activities $ 9,598,172 78

137 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Capital Assets (Continued) The following is a summary of capital assets for business-type activities: Beginning Ending Balance Increases Decreases Transfers Balance Business-Type Activities: Capital assets, not being depreciated: Construction-in-progress $ 594,544 $ 141,482 $ - $ (736,026) $ - Total Capital Assets, Not Being Depreciated 594, ,482 - (736,026) - Capital assets, being depreciated: Structures and Improvements 314, ,900 Machinery and equipment 143, ,536 Vehicles 3,443, ,443,037 Land Improvements 448, ,026 1,184,138 Infrastructure 10,640, ,640,529 Total Capital Assets, Being Depreciated 14,990, ,026 15,726,140 Less accumulated depreciation: Structures and Improvements 246,309 6, ,608 Machinery and equipment 91,677 6, ,471 Vehicles 2,698, , ,962,805 Land Improvements 59,469 59, ,922 Infrastructure 3,822, , ,033,869 Total Accumulated Depreciation 6,918, , ,466,675 Total Capital Assets being depreciated, net 8,071,934 (548,495) - 736,026 8,259,465 Business- Type Activities Capital Assets, net $ 8,666,478 $ (407,013) $ - $ - $ 8,259,465 Business-type activities depreciation expense for capital assets for the year ended June 30, 2015, was as follows: Transportation $ 69,080 Sewer 238,960 Sanitation 207,045 Cemetery 33,410 Total depreciation expense $ 548,495 79

138 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Capital Assets (Continued) b. Fund Financial Statements The fund financial statements do not present general government capital assets, therefore, capital assets are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. Note 7: Long-Term Debt Governmental activities long-term debt Summary of changes in governmental activities long-term debt for the year ended June 30, 2015, was as follows: Balance Balance Due Within July 1, 2014 Addition Deletion June 30, 2015 One Year Compensated Absences $ 2,187,597 $ 2,238,947 $ 2,157,759 $ 2,268,785 $ 927,431 OPEB Obligation 950, ,880 8,984 1,047,688 - Workers' Comp Cumulative Deposit Payable - Note 8 210,712 19, ,192 - General Liability Cumulative - Deposit Payable - Note 8 1,359,787-4,298 1,355,489 - General Obligation Bonds 8,525, ,000 8,315, ,000 Pension Obligation Bonds 5,090, ,000 4,875, ,000 Loans Payable 4,625, ,000 3,895, ,000 Total $ 22,948,888 $ 2,364,307 $ 3,326,041 21,987,154 $ 2,127,431 Unamortized Bond discount (66,019) $ 21,921,135 a. Claims Payable The City joined the California Joint Powers Insurance Authority in prior years as described in Note 8 and therefore eliminated its risk of loss relating to claims and judgment. b. Compensated Absences The City s liability for vested and unpaid compensated absences (accrued vacation and compensatory time) in the governmental activities has been accrued and amounts to $2,268,785 at June 30, There is no fixed payment schedule for compensated absences. Compensated absences are paid, if matured, out of the General Fund and other various Special Revenue Funds. c. Other Post-Employment Benefits Obligation Additional information is presented in Note

139 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7: Long-Term Debt (Continued) d. Taxable Pension Obligation Bonds, 2006 Series A On January 1, 2006, the City issued $6,060,000 in Taxable Pension Obligation Bonds, 2006 Series A, for the purpose of funding the unfunded accrued actuarial liability of the City s safety plan of the California Public Employees Retirement System. The bonds mature annually each June 1, 2006 to 2027, in amounts ranging from $40,000 to $275,000. The bonds bear interest at 5.180% and are payable monthly, commencing March 1, The bonds are subject to optional redemption prior to their maturity at the option of the City, in whole or in part on any date, at a redemption price equal to the principal amount, plus accrued interest to the redemption date. The annual requirements to amortize the 2006 Taxable Pension Obligation Bonds outstanding at June 30, 2015, were as follows: Year Ending June 30, Principal Interest Total 2016 $ 240,000 $ 255,698 $ 495, , , , , , , , , , , , , ,460, ,864 3,099, ,000 58, ,307 Totals $ 4,875,000 $ 1,831,272 $ 6,706,272 e. General Obligation Bonds, Series 2007 On August 21, 2007, the City issued $9,655,000 in General Obligation Bonds, Series 2007, for the purpose of funding a portion of the costs of acquiring an approximately 180-acre undeveloped area within the City known as Johnson s Pasture. The bonds mature annually each August 1, 2008 to 2037, in amounts ranging from $175,000 to $565,000. The bonds bear variable interest rate ranging from 3.75% to 4.625% and are payable semi-annually each February 1 and August 1, commencing February 1, The bonds are subject to optional redemption prior to their maturity at the option of the City, in whole or in part on any date, at a redemption price equal to the principal amount, plus accrued interest to the redemption date. 81

140 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7: Long-term Debt (Continued) The annual requirements to amortize the General Obligation Bonds, Series 2007 outstanding at June 30, 2015, were as follows: f. Loans Payable Year Ending June 30, Principal Interest Total 2016 $ 215,000 $ 368,180 $ 583, , , , , , , , , , , , , ,460,000 1,465,886 2,925, ,805,000 1,106,356 2,911, ,255, ,072 2,900, ,620, ,700 1,734,700 Totals $ 8,315,000 $ 5,075,165 $ 13,390,165 Loans payable amounting to $3,895,000 at June 30, 2015, was comprised of the following: 1. On December 27, 2002, the LaSalle National Bank loaned the City $12,000,000 for costs related to the acquisition and construction of the City Corporate Yard and for refinancing the City s loan obligation with respect to the City Hall and City Community Center. The City refinanced the loan in July In fiscal year 2012, Compass Bank loaned the City $6,080,000 to refinance the City s outstanding 2002 lease. The refinancing took place July 1, Loan payments are made annually. Final payment is due January Based on current available information, the annual debt requirements due under the terms of the loan are as follows: Year Ending June 30, Principal Interest Total 2016 $ 745,000 $ 82,677 $ 827, ,000 66, , ,000 48, , ,000 31, , ,000 13, ,603 Totals $ 3,895,000 $ 242,737 $ 4,137,737 82

141 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7: Long-term Debt (Continued) Long-Term Debt of Business-Type Activities A summary of changes in long-term debt of business type activities for the year ended June 30, 2015, was as follows: Balance Balance Due Within July 1, 2014 Additions Deletions June 30, 2015 One Year Compensated absences $ 138,865 $ 122,186 $ 114,982 $ 146,069 $ 89,593 g. Compensated Absences In proprietary funds, the liability for vested and unpaid compensated absences (accrued vacation and compensatory time) is reported in the fund as the benefits vest and are earned. At June 30, 2015, compensated absences in the business-type and proprietary funds amounted to $146,069. There is no fixed payment schedule to pay these liabilities. Note 8: Liability, Workers Compensation, and Purchased Insurance a. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City of Claremont is a member of the CALIFORNIA JOINT POWERS INSURANCE AUTHORITY (Authority). The Authority is composed of 118 California public entities and is organized under a joint powers agreement pursuant to California Government Code 6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee. b. Self-Insurance Programs of the Authority Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted annually thereafter, for coverage years and prior. Retrospective adjustments are scheduled to continue indefinitely on coverage years and prior, until all claims incurred during those coverage years are closed, on a pool-wide basis. This subsequent cost re-allocation among members, based on actual claim development, can result in adjustments of either refunds or additional deposits required. Coverage years and forward are not subject to routine annual retrospective adjustment. The total funding requirement for self-insurance programs is estimated using actuarial models and pre-funded through the annual contribution. Costs are allocated to individual agencies based on exposure (payroll) and experience (claims) relative to other members of the risk-sharing pool. Additional information regarding the cost allocation methodology is provided below. 83

142 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8: Liability, Workers Compensation, and Purchased Insurance (Continued) Liability In the liability program claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool s total incurred costs within the second layer. (4) Incurred costs from $750,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers. For the Authority s pooled retention is $2 million per occurrence, with reinsurance to $20 million, and excess insurance to $50 million. The Authority s reinsurance contracts are subject to the following additional pooled retentions: (a) 50% of the $2.5 million annual aggregate deductible in the $3 million x/s $2 million layer, (b) 50% quota share of the $3 million x/s $2 million layer, and (c) $3 million annual aggregate deductible in the $5 million x/s $10 million layer. The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Costs of covered claims for subsidence losses have a sub-limit of $30 million per occurrence. Workers Compensation In the workers compensation program claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool s total incurred costs within the second layer. (4) Incurred costs from $100,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers. For the Authority s pooled retention is $2 million per occurrence, with reinsurance to statutory limits under California Workers Compensation Law. Employer s Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer s Liability losses from $5 million to $10 million are pooled among members. 84

143 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8: Liability, Workers Compensation, and Purchased Insurance (Continued) c. Purchased Insurance Pollution Legal Liability Insurance The City of Claremont participates in the pollution legal liability insurance program which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of Claremont. Coverage is on a claims-made basis. There is a $50,000 deductible. The Authority has a limit of $50 million for the 3-year period from July 1, 2014 through July 1, Each member of the Authority has a $10 million sub-limit during the 3-year term of the policy. Property Insurance The City of Claremont participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City of Claremont property is currently insured according to a schedule of covered property submitted by the City of Claremont to the Authority. City of Claremont property currently has all-risk property insurance protection in the amount of $82,018,375. There is a $5,000 deductible per occurrence except for non-emergency vehicle insurance which has a $1,000 deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Earthquake and Flood Insurance The City of Claremont purchases earthquake and flood insurance on a portion of its property. The earthquake insurance is part of the property protection insurance program of the Authority. City of Claremont property currently has earthquake protection in the amount of $30,987,279. There is a deductible of 5% per unit of value with a minimum deductible of $100,000. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Crime Insurance The City of Claremont purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority. Premiums are paid annually and are not subject to retrospective adjustments. d. Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in

144 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8: Liability, Workers Compensation, and Purchased Insurance (Continued) e. CJPIA Retrospective Deposit Liability Retrospective deposits and refunds are cost allocation adjustments to prior coverage periods. Some claims take many years to resolve and over time their estimated value changes. The retrospective adjustments are calculated annually and take into consideration all the changes in claim values that occurred during the most recent year. The formula is designed to adequately cover the cost of claims brought against members and to ensure the overall financial strength and security of the Authority. The formula was developed to be as equitable as possible by taking into consideration both risk exposure and claims experience of individual members. CJPIA has temporarily deferred the payment on retrospective deposits owed to the Authority by members. The payment deferral period extends until July 1, 2014 for the liability program and July 1, 2015, for the workers compensation program. Retrospective deposit payments are scheduled to resume on these dates. The October 2012 annual retrospective adjustment is included in these balances. The City at June 30, 2015, had a retrospective deposit due of $1,355,489 for the liability program and $230,192 for the workers compensation program. Optional Payment Plans When retrospective deposit payments resume as indicated above, members will have the opportunity to select from a variety of optional payment plans. Discounts under the incentive plan are available to members choosing to voluntarily accelerate payment during the deferral period. The City has chosen not to voluntarily accelerate payment at this time. After the deferral period, members choosing from among the optional payment plans will be subject to a moderate annual fee. The fee is intended to provide a means for the Authority to recover otherwise foregone investment earnings and to serve as a minor disincentive for the selection of longer financing terms. Retrospective balances will change with each annual computation during the payment deferral period. Member balances may increase or decrease as a result of the most recent year s claim development. Accordingly, some members who chose to pay off their balance in full may be required to pay additional retrospective deposits in the future based on the outcome of actual claim development reflected in subsequent retrospective deposit computations. Conversely, if claim development is favorable then subsequent retrospective adjustments could potentially result in refunds to the member. More information on the CJPIA retrospective balances can be found on the CJPIA website at CJPIA.org. 86

145 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9: Public Employees Retirement System a. Miscellaneous Plan Plan Description The City of Claremont contributes to the California Public Employees Retirement System (PERS), an agent multiple-employer public employee defined benefit plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and City ordinance. Copies of PERS annual financial report may be obtained from their Executive Office located at 400 P Street, Sacramento, California Benefits Provided Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: The Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees Retirement Law. The Plan provisions and benefits in effect at June 30, 2015, are summarized as follows: Hire date Prior to 1/1/2013* Benefit formula 55 Benefit vesting schedule 5 years of service Benefit payments monthly for life Retirement age Monthly benefits, as a % of eligible compensation 1.426% % Required employee contribution rates 7.952% Required employer contribution rates % * Closed to new entrants Contribution Description Section 20814(c) of the California Public Employees Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. b. Safety Plans Plan Description The City of Claremont contributes to the California Public Employees Retirement System (PERS), a cost sharing multiple-employer public employee defined benefit plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and City ordinance. 87

146 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9: Public Employees Retirement System (Continued) Copies of PERS annual financial report may be obtained from their Executive Office located at 400 P Street, Sacramento, California Benefits Provided Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: The Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees Retirement Law. The Plan provisions and benefits in effect at June 30, 2015, are summarized as follows: Tier 1 Tier 2 Hire date Benefit formula Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life Retirement age Monthly benefits, as a % of eligible compensation 1.426% % 1.426% % Required employee contribution rates 8.986% 8.980% Required employer contribution rates % % * Closed to new entrants Contribution Description Section 20814(c) of the California Public Employees Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS annual actuarial valuation process. For public agency cost-sharing plans covered by either the Miscellaneous or Safety risk pools, the Plan s actuarially determined rate is based on the estimated amount necessary to pay the Plan s allocated share of the risk pool s costs of benefits earned by employees during the year, and any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2015, the City reported net pension liabilities for each plan as follows: Net Pension Liability Miscellaneous $ 23,572,693 Safety - Tier 1 11,361,265 Safety - Tier 2 12,619 Total Net Pension Liability $ 34,946,577 88

147 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9: Public Employees Retirement System (Continued) The net pension liability of each of the Plans is measured as of June 30, 2014, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2013 rolled forward to June 30, 2014 using standard update procedures. The City s net pension liability for each Safety Plan is measured as the proportionate share of the net pension liability of its risk pool with CalPERS. The City s proportion of the net pension liability was based on CalPERS Public Agency Cost-Sharing Allocation Methodology Report, which can be obtained on the CalPERS website. The City s proportionate share of the cost-sharing net pension liability for each Plan as of June 30, 2013 and 2014 was as follows: Proportions as a percentage of the CalPERS Safety risk pool: Tier 1 Tier 2 Proportion - June 30, % % Change - Increase (Decrease) % % For the year ended June 30, 2015, the pension contributions and pension expense for each plan were as follows: Miscellaneous Safety Tier 1 Safety Tier 2 Contributions - employer $ 1,985,243 $ 804,278 $ 183,759 Pension Expense 1,635, ,272 21,462 Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability/(asset) of the Plan as of the measurement date, calculated using the discount rate of 7.50 percent, as well as what the net pension liability/(asset) would be if it were calculated using a discount rate that is 1 percentage-point lower (6.50 percent) or 1 percentage-point higher (8.50 percent) than the current rate: Discount Rate - 1% (6.50%) Current Discount Rate (7.5%) Discount Rate +1% (8.5%) Miscellaneous Plan Net Pension Liability $ 34,845,701 $ 23,572,693 $ 14,304,039 Safety Plan Tier 1 Net Pension Liability 19,551,266 11,361,265 4,613,058 Safety Plan Tier 2 Net Pension Liability 21,714 12,619 5,123 89

148 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9: Public Employees Retirement System (Continued) At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Miscellaneous Plan Pension contributions subsequent to measurement date $ 1,985,243 $ - Net Difference between Projected and Actual Earnings on Pension Plan Investments - (4,188,010) Total 1,985,243 (4,188,010) Safety Plan Tier 1 Pension contributions subsequent to measurement date 804,278 - Differences between actual contributions and the proportionate share of contributions - (561,692) Net Difference between Projected and Actual Earnings on Pension Plan Investments - (3,430,342) Adjustment due to Difference in Proportions 169,528 - Total 973,806 (3,992,034) Safety Plan Tier 2 Pension contributions subsequent to measurement date 183,759 - Differences between actual contributions and the proportionate share of contributions 131,436 - Net Difference between Projected and Actual Earnings on Pension Plan Investments - (3,811) Adjustment due to Difference in Proportions - (20,178) Total 315,195 (23,989) Total $ 3,274,244 $ (8,204,033) $2,973,280 were contributions made subsequent to measurement date and will be recognized in June 30, The remaining amounts reported as deferred outflows or resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Measurement Period ended June 30: Deferred Outflows/(Inflows) of Resources Miscellaneous Safety Tier 1 Safety Tier 2 Total 2015 $ (837,602) $ (789,269) $ 28,516 $ (1,598,355) 2016 (837,602) (789,269) 28,516 (1,598,355) 2017 (837,602) (789,269) 28,516 (1,598,355) 2018 (837,602) (768,629) 22,661 (1,583,570) 2019 (837,602) (686,068) (762) (1,524,432) $ (4,188,010) $ (3,822,504) $ 107,447 $ (7,903,067) 90

149 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9: Public Employees Retirement System (Continued) Actuarial Methods and Assumptions Used to Determine Total Pension Liability For the measurement period ended June 30, 2014, (the measurement date), the total pension liability was determined by rolling forward the June 30, 2013, total pension liability. The June 30, 2013 and the June 30, 2014, total pension liabilities were based on the following actuarial methods and assumptions: Actuarial Cost Method Entry Age Normal in accordance with the requirements of GASB Statement No. 68 Actuarial Assumptions Discount Rate 7.50% Inflation 2.75% Salary Increases 3.30% to 14.20% depending on Entry Age and Service Investment Rate of Return 7.50% Net of Pension Plan Investment and Administrative Expenses; includes Inflation Mortality Rate Table (1) Derived using CalPERS Membership Data for all Funds Post Retirement Benefit Increase Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter (1) The mortality table used was developed based on CalPERS specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the 2014 experience study report. All other actuarial assumptions used in the June 30, 2013, valuation were based on the results of an actuarial experience study for the period from 1997 to 2011, including updates to salary increase, mortality and retirement rates. The Experience Study report can be obtained at CalPERS website under Forms and Publications. Discount Rate The discount rate used to measure the total pension liability was 7.50% for each Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.50 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.50 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called GASB Crossover Testing Report that can be obtained at CalPERS website under the GASB 68 section. 91

150 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9: Public Employees Retirement System (Continued) According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. The 7.50 percent investment return assumption used in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An investment return excluding administrative expenses would have been 7.65 percent. Using this lower discount rate has resulted in a slightly higher total pension liability and net pension liability. This difference was deemed immaterial to the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan. However, employers may determine the impact at the plan level for their own financial reporting purposes. CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management review cycle that is scheduled to be completed in February Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB 67 and 68 calculations through at least the , fiscal year. CalPERS will continue to check the materiality of the difference in calculation until such time as we have changed our methodology. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. 92

151 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9: Public Employees Retirement System (Continued) The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses. Asset Class New Strategic Allocation Real Return Years 1-10 (1) Real Return Years 11+ (2) Global Equity 47.0% 5.25% 5.71% Global Fixed Income Inflation Sensitive Private Equity Real Estate Infrastructure and Forestland Liquidity 2.0 (0.55) (1.05) (1) An expected inflation of 2.5% used for this period (2) An expected inflation of 3.0% used for this period Pension Plan Fiduciary Net Position Detailed information about each pension plan s fiduciary net position is available in the separately issued CalPERS financial reports. Note 10: Net Position Restatement Beginning Net Position has been restated by $(40,205,588) as a result of a change in accounting principle to recognize the net pension liability related to the defined benefit pension plan the District has. This restatement is a result of the new Governmental Accounting Standards Board Statement No. 68. A correction of CIP in the Cemetery Fund was restated for $86,576. $(451,427) was a corrected restatement of the OPEB liability. Note 11: Other Post-Employment Benefits a. Plan Description The City has established the City of Claremont Retiree Medical Benefit Plan, a single-employer defined benefit retiree healthcare plan. The plan, which is administered by the City, provides medical insurance benefits for employees who retire with CalPERS pension benefits immediately upon termination of employment from the City. Eligible retirees must elect coverage through the City s medical plan. The City allows eligible retirees and family members to purchase medical insurance if the retirees pay the premiums. Since the premium rates for coverage prior to Medicare eligibility are based on active and retiree blended costs rather than otherwise higher retiree only rates, the reduced cost to the retiree results in an implicit subsidy and a liability for the City. In addition, the City pays $32.20 per month on behalf of each retiree who retired prior to August 1, The plan and its contribution requirements are established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by agreement between the City and the bargaining units. The plan does not issue a separate report. All transactions are included within the financial statements of the City of Claremont. 93

152 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 11: Other Post-Employment Benefits (Continued) b. Funding Policy The required contribution is based on projected pay-as-you-go financing requirements. For fiscal year , the City contributed $10,465 to the plan in the form of current premiums. Contributions were made from the General Fund. Plan members receiving benefits contribute the difference between the City contribution of $32.20 per month and the plan members chosen PERS medical plan. The funding policy is determined by the City Council. c. Annual OPEB Cost and Net OPEB Obligation The City s annual other post-employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the City s annual OPEB cost for the year, the amount actually contributed to the plan from the City s General Fund, and changes in the City s net OPEB obligation: Fiscal Year 2014/2015 Annual required contribution $ 136,522 Interest on OPEB obligation 16,640 Adjustment to annual required contribution (47,282) Annual OPEB cost 105,880 Contributions made 8,984 Increase in net OPEB obligation 96,896 Net OPEB obligation - beginning of year 950,792 Net OPEB obligation - end of year $ 1,047,688 The City s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for and the two preceding years were as follows: Fiscal Year Annual OPEB of Annual OPEB Net OPEB Ended OPEB cost Cost Contributed Cost Contributed Obligation 6/30/2013 $ 184,672 $ 11, % $ 850,858 6/30/ ,399 10, % 950,792 6/30/ ,880 8, % 1,047,688 94

153 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 11: Other Post-Employment Benefits (Continued) d. Funded Status and Funding Progress Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress below presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. This is the third year of the plan. The actuarial valuation is prepared biennially. The table below presents the latest information available. Unfunded UAAL as a Actuarial Actuarial Actuarial Percent of Valuation Value of Accrued Funded Covered Covered Interest Salary Date Assets Liability Ratio Payroll Payroll Rate Scale 6/30/2009 $ - $ 1,904, % $ 12,662, % 5.00% 3.25% 6/30/2011-2,137, % 9,931, % 5.00% 3.25% 6/30/2013-1,636, % 11,248, % 4.50% 3.00% e. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. These amounts are subject to continual revision as results are compared to past expectations and new estimates are made about the future. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the June 30, 2013, actuarial valuation, the Entry Age Normal actuarial cost method was used. The actuarial assumptions included a 4.5% investment rate of return (net of administrative expenses), which is a blended rate of the expected long-term investment returns on plan assets and on the employer s own investments calculated based on the funded level of the plan at the valuation date, an inflation rate of 3%, an annual healthcare cost trend rate of 10% initially, reduced by decrements to an ultimate rate of 5% after seven years, and a payroll increase rate of 3.00% per annum. The amount of post-retirement benefit increases used in developing the actuarial report is not available. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2013, was twenty-six years. The number of active plan participants is

154 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 12: Joint Venture Organizations a. Pomona Valley Transportation Authority The City is a member of the Pomona Valley Transportation Authority (Pomona Authority). The Pomona Authority is comprised of four cities and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the Pomona Authority is to study, implement and provide for public transportation that will best serve transit-dependent persons, including handicapped and senior adults, residing in the Pomona Valley. Each member city has two representatives on the Board of Directors. Officers of the Pomona Authority are elected annually by the Board of Directors. The City does not have an equity interest in the Pomona Authority. However, the City does have an ongoing financial interest because the City is able to influence the operations of the Pomona Authority so that the Pomona Authority uses its resources on behalf of the City. Also, an ongoing financial responsibility exists because the Pomona Authority is dependent on continued funding from the City. Below are the most currently available condensed audited financial statements of the Pomona Authority as of June 30, Separate financial statements of the Pomona Authority are available from its offices located in La Verne, California. Total Assets $ 3,168,365 Liabilities $ 1,689,898 Contributed Capital 411,448 Equity 1,067,019 Total liabilities and fund equity $ 3,168,365 Revenues $ 4,376,023 Expenses 4,428,926 Net Income (52,903) Retained earnings - July 1, ,119,922 Retained earnings - June 30, 2015 $ 1,067,019 b. Tri City Mental Health Center The City is a member of the Tri City Mental Health Center (Center). The Center is a jointly governed organization comprised of three cities and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the Center is to develop mental health services and facilities to serve persons residing in the three member cities. The Board of Directors has five members, one from the City of Claremont, three from the City of Pomona, and one from the City of La Verne. 96

155 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 12: Joint Venture Organizations (Continued) The financial statements noted that Tri-City filed a petition under Chapter 9 of the Bankruptcy Code in February 2004 and that Tri-City had emerged from that bankruptcy filing and noted the approved plan for the adjustment of debts in fiscal year Below are the most currently available condensed audited financial statements of the Tri City Mental Health Center as of June 30, Separate financial statements of the Center are available from its offices located in Claremont, California. For more information, contact the City s Finance Department. Total Assets $ 34,430,939 Liabilities $ 16,126,863 Deferred inflow of resources 9,719,890 Net investment in capital assets 4,611,912 Restricted net position 9,691,515 Unrestricted net position (4,742,851) Net position 9,560,576 Total liabilities and net position $ 35,407,329 Operating Revenues $ 5,988,257 Operating Expenses 15,491,200 Operating (income) (9,502,943) Non-operating revenue (expenses) 13,442,888 Income before special items 3,939,945 Settlement of bankruptcy debt 683,816 Change in net position 4,623,761 Net position - July 1, ,936,815 Net position - June 30, 2015 $ 9,560,576 Note 13: Commitments and Contingencies a. Lawsuits The City is a defendant in a number of lawsuits which have arisen in the normal course of business. While substantial damages are alleged in some of these actions, their outcome cannot be predicted with certainty. In the opinion of the City s legal counsel, these actions when finally adjudicated will not have material adverse effect on the financial position of the City. b. Federal and State Grant Programs The City participated in Federal and State grant programs. These programs are audited by the City s independent accountants in accordance with the provisions of the Federal Single Audit Act Amendments of 1996 and applicable State requirements. No cost disallowance is expected as a result of these audits; however, these programs are subject to further examination by the grantors. Expenditures which may be disallowed, if any, by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial. 97

156 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 13: Commitments and Contingencies (Continued) As of June 30, 2015, in the opinion of City management there were no additional outstanding matters that would have a significant effect on the financial position of the funds of the City. Note 14: Fund Balance and Net Position At June 30, 2015, the City report the following fund balance classifications: Major Special Revenue Funds Other Total Foothill Successor Governmental Governmental General Relinquishment Housing Funds Funds Fund Balances: Nonspendable: Prepaid costs $ 19,717 $ - $ - $ - $ 19,717 Permanent fund principal , ,548 Petty cash 4, ,322 Postage 6, ,932 Restricted for: Community development projects - - 6,113,603-6,113,603 Public safety , ,507 Public works ,942,337 2,942,337 Capital Projects - 5,286, ,286,654 Debt service ,160,231 1,160,231 Community services ,213,491 4,213,491 Committed to: Natural and fiscal emergency 7,379, ,379,099 Maintenance of operations 674, ,964 Equipment and facility 853, ,858 Water system acquisition 1,000, ,000,000 Assigned to: Community development projects ,212,466 1,212,466 Unassigned 3,705, (12,762) 3,692,672 Total Fund Balances $ 13,644,326 $ 5,286,654 $ 6,113,603 $ 11,058,818 $ 36,103,401 Note 15: Successor Agency Trust for Assets of Former Redevelopment Agency On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 ( the Bill ) that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Claremont that previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit. The Bill provides that upon dissolution of a redevelopment agency, either the city or another unit of local government will agree to serve as the successor agency to hold the assets until they are distributed to other units of state and local government. On January 10, 2012, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill as part of City resolution number

157 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 15: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments). In future fiscal years, successor agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated. The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by the Bill. Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City are valid enforceable obligations payable by the successor agency trust under the requirements of the Bill. The City s position on this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue unfavorably to the City. In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, After the date of dissolution, the assets and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City. This fund uses the economic resources measurement focus. a. Cash and Investments Cash and investments reported in the accompanying financial statements consisted of the following: Cash and investments pooled with the City $ 465,896 Cash and investments with fiscal agent 838,076 $ 1,303,972 99

158 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 15: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) b. Notes Receivable As of June 30, 2015, notes receivable consisted of the following: Notes Receivable Claremont Village Expansion $ 1,775,000 Rehabilitation of Commercial Buildings 13,309 $ 1,788,309 In February 2006, the Agency entered into two Disposition and Development Agreements (DDA) with Claremont Village Expansion, LLC and Claremont Village Inn, LLC. The Agency agreed to convey real property to the Developers and the Developers agreed to construct specialty retail spaces and an inn within the Claremont Village area. In lieu of fixed payments of principal and interest, the Developers shall pay the Agency the distributable cash from operations for each fiscal year and in the event of a sale of distribution of the project, the distributions of net proceeds. At June 30, 2015, the outstanding balance for the Claremont Village Expansion, LLC and the Claremont Village Inn, LLC notes were $1,243,000 and $532,000, respectively. The Agency has developed a small business assistance program, which provides for the rehabilitation of eligible commercial buildings located in the Village and Foothill Project Areas through loans and other forms of assistance. The Agency s assistance is used to correct code violations, meet seismic safety requirements, improve the appearance, general condition and function of buildings and promote economic activity in the two project areas. At June 30, 2015, the Agency was owed $13,309 for a loan made under the small business assistance program. The loan is evidenced by a note from the participant that is secured by a deed of trust, assignment of rents and/ or a personal or business guaranty. The term of the note is five years. Principal and interest, accruing at a rate of 5% per annum, are payable monthly. c. Land and Buildings Held for Resale Land and buildings held for resale are recorded in the Successor Agency at the lower of cost or market, but not greater than net realizable value. The amount recorded as assets held for resale as of June 30, 2015, was $400,

159 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 15: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) d. Long-Term Debt A description of long-term debt outstanding (excluding defeased debt) of the Successor Agency as of June 30, 2015, is as follows: Balance Balance Due Within July 1, 2014 Additions Deletions June 30, 2015 One Year Tax Allocation Bonds $ 9,185,000 $ 3,380,000 $ 4,440,000 $ 8,125,000 $ 645,000 Total $ 9,185,000 $ 3,380,000 $ 4,440,000 8,125,000 $ 645,000 Unamortized Bond Premium 996,472 $ 9,121,472 Tax Allocation Refunding Bonds The Tax Allocation Refunding Bonds amount of $8,125,000 at June 30, 2015, was comprised of the following: 2004 Tax Allocation Revenue Bonds To finance the Claremont Redevelopment Agency, Redevelopment Agency of the City of Lakeport, and Redevelopment Agency of the City of West Sacramento for a total principal amount of $25,205,000. The Claremont Redevelopment Agency portion of the Tax Allocation Revenue Bonds issued in the principal amount of $6,000,000 on December 1, The bonds mature annually each September 1, 2005 to 2020, in amounts ranging from $205,000 to $1,090,000. In addition, term bonds in amounts of $6,000,000 mature from September 1, 2022 to September 1, The term bonds bear interest ranging from 4.6% to 5.25% and are payable semi-annually each March 1 and September 1. The term bonds are subject to mandatory redemption on September 1, 2022, and on each August 1 in the years 2025, 2029, and 2035 at a price equal to the principal amount plus accrued interest to the redemption date. The bonds maturing on or after September 1, 2014, are subject to optional redemption on September 1, 2015, and on each interest payment date thereafter, at a price equal to the principal amount, plus accrued interest to the redemption. The bonds are payable from RPTTF money received from the State of California. The Agency has obtained a Debt Service Reserve Insurance policy from the trustee for a premium of 3% of the debt service reserve insurance policy amount to eliminate the need for a cash balance as required by the bond. This Bond was fully defeased with the issuance of the 2014 Tax Allocation Revenue Refunding Bonds. 101

160 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 15: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) 2013 Tax Allocation Revenue Refunding Bonds To refund the 2001 Tax Allocation Bonds, the Agency issued Tax Allocation Refunding Bonds in the principal amount of $5,200,000 on December 24, The bonds mature from September 1, 2014 to September 1, The term bonds bear interest ranging from 3.0% to 5.0% and are payable semi-annually each March 1 and September 1. The bonds are payable from Redevelopment Property Tax Trust Fund (RPTTF) money received from the State of California. The Agency has obtained a Debt Service Reserve Insurance policy from the trustee for a premium of 2.25% of the debt service reserve insurance policy amount to eliminate the use for a cash balance as required with this bond. The annual requirements to amortize the 2013 Tax Allocation Revenue Refunding Bonds outstanding at June 30, 2015, were as follows: Year Ending June 30, Principal Interest Total 2016 $ 405,000 $ 225,100 $ 630, , , , , , , , , , , , , ,440, ,250 2,693,250 Totals $ 4,745,000 $ 1,163,850 $ 5,908, Tax Allocation Refunding Bonds To refund the 2004 Tax Allocation Bonds the Agency issued Tax Allocation Refunding Bonds in the principal amount of $3,380,000 on July 17, The bonds mature from September 1, 2015 to September 1, The term bonds bear interest ranging from 2.0% to 5.0% and are payable semi-annually each March 1 and September 1. The bonds are payable from Redevelopment Property Tax Trust Fund (RPTTF) money received from the State of California. The Agency has obtained a Debt Service Reserve Insurance policy from the trustee not to exceed $338,000 to eliminate the use for a cash balance as required with this bond. 102

161 NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 15: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) The annual requirements to amortize the 2014 Tax Allocation Revenue Refunding Bonds outstanding at June 30, 2015, were as follows: Year Ending June 30, Principal Interest Total 2016 $ 240,000 $ 164,220 $ 404, , , , , , , , , , , , , ,670, ,000 2,023, ,000 19, ,000 Totals $ 3,380,000 $ 1,066,220 $ 4,446,220 Pledged Revenue e. Insurance Assembly Bill 1X 26 provided that upon dissolution of the Redevelopment Agency, property taxes allocated to redevelopment agencies no longer are deemed tax increment but rather property tax revenues and will be allocated first to successor agencies to make payments on the indebtedness incurred by the dissolved redevelopment agency. Total principal and interest remaining on the debt is $10,355,070 with annual debt service requirements as indicated above. For the current year, the total property tax revenue recognized by the Successor Agency for the payment of indebtedness incurred by the dissolved redevelopment agency was $1,098,853 and the debt service obligation on the bonds was $1,132,821. The Successor Agency is covered under the City s insurance policies. Therefore, the limitation and self-insured retentions applicable to the City also apply to the Successor Agency. Additional information as to coverage and self-insured retentions can be found in Note 8. f. Commitments and Contingencies At June 30, 2015, the Successor Agency was involved as a defendant in several lawsuits arising out of the ordinary conduct of its affairs. It is the opinion of management that settlements of these lawsuits, including losses for claims that are incurred but not reported, if any, will not have a material effect on the financial position of the Successor Agency. 103

162 104

163 REQUIRED SUPPLEMENTARY INFORMATION 105

164 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2015 Note 1: Budget Procedures The City adheres to the following procedures in establishing the budgetary data reflected in its financial statements: 1. The City Council typically adopts a two-year budget that provides for the general operations of the City. The City develops budgets, which are legally adopted for all funds other than trust and agency funds. The budget includes proposed expenditures and means of financing them. 2. The City Council typically approves total budgeted appropriations and amendments affecting fund balance throughout the year. This appropriated budget covers substantially all City expenditures. There were no significant non-budgeted financial activities. Actual expenditures may not exceed budgeted appropriations at the fund level. However, the City Manager is authorized to transfer budgeted amounts between funds and between financial categories without approval of the City Council. Budget figures used in the financial statements are the final amounts, including any adjustments to the budget during the year. 3. Formal budgetary integration is employed as a management control device. Commitments for material services, such as purchase orders and contracts, are recorded during the year as encumbrances to assist in controlling expenditures. Appropriations which are encumbered at year-end lapse, and then are added to the following year s budgeted appropriations. 4. Budgets for the governmental fund types and proprietary fund types are adopted on a basis substantially consistent with generally accepted accounting principles (GAAP). Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. Budgetary comparison schedules are not presented for the Successor Housing Fund. 5. Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), the City is restricted as to the amount of annual appropriations from the proceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller, returned to the taxpayers through revised tax rates or revised fee schedules, or an excess in one-year may be offset against a deficit in the following year. For the fiscal year ended June 30, 2015, based on the calculations by the City Management, proceeds of taxes did not exceed the appropriations limit. 106

165 BUDGETARY COMPARISON SCHEDULE GENERAL FUND YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 12,341,205 $ 12,341,205 $ 12,341,205 $ - Resources (Inflows): Property and other taxes 18,975,000 18,975,000 19,577, ,396 Licenses and permits 981, ,000 1,169, ,564 Intergovernmental 549, ,886 1,003, ,049 Charges for services 1,519,295 1,529,295 1,262,514 (266,781) Use of money and property 394, , ,657 62,527 Fines and forfeitures 767, , ,647 (30,353) Miscellaneous 384, , ,173 5,673 Transfers in - 595, ,638 - Amounts Available for Appropriations 35,912,016 36,647,654 37,533, ,075 Charges to Appropriations (Outflow): General government 4,356,348 6,243,434 5,593, ,142 Police 9,977,808 10,069,525 9,876, ,160 Community development 3,603,272 3,668,272 2,856, ,550 Human services 2,565,986 2,575,986 2,470, ,786 Community services 1,567,964 1,708,019 1,432, ,162 Capital outlay 36, , ,331 91,267 Transfers out 1,363,188 1,801,511 1,351, ,875 Total Charges to Appropriations 23,470,775 26,466,345 23,889,403 2,576,942 Budgetary Fund Balance, June 30 $ 12,441,241 $ 10,181,309 $ 13,644,326 $ 3,463,

166 BUDGETARY COMPARISON SCHEDULE COMMUNITY DEVELOPMENT BLOCK GRANT YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ - $ - $ - $ - Resources (Inflows): Intergovernmental 132, , ,515 81,659 Amounts Available for Appropriations 132, , ,515 81,659 Charges to Appropriation (Outflow): Human services 18,228 18,228 19,786 (1,558) Economic development 114, , ,729 (80,101) Total Charges to Appropriations 132, , ,515 (81,659) Budgetary Fund Balance, June 30 $ - $ - $ - $ - 108

167 BUDGETARY COMPARISON SCHEDULE FOOTHILL RELINQUISHMENT YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 5,458,603 $ 5,458,603 $ 5,458,603 $ - Resources (Inflows): Intergovernmental - - 7,201 7,201 Amounts Available for Appropriations 5,458,603 5,458,603 5,465,804 7,201 Charges to Appropriation (Outflow): Public works 64,600 83,983 28,510 55,473 Capital outlay 420, , , ,177 Total Charges to Appropriations 484, , , ,650 Budgetary Fund Balance, June 30 $ 4,974,003 $ 4,525,803 $ 5,286,654 $ 760,

168 BUDGETARY COMPARISON SCHEDULE SUCCESSOR HOUSING YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 5,965,702 $ 5,965,702 $ 5,965,702 $ - Resources (Inflows): Use of money and property , ,062 Amounts Available for Appropriations 5,965,702 5,965,702 6,120, ,062 Charges to Appropriation (Outflow): General government 54,000 54,000 7,161 46,839 Total Charges to Appropriations 54,000 54,000 7,161 46,839 Budgetary Fund Balance, June 30 $ 5,911,702 $ 5,911,702 $ 6,113,603 $ 201,

169 MISCELLANEOUS PLAN SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS (1) TOTAL PENSION LIABILITY Service Cost $ 1,279,513 Interest 6,012,481 Changes of Benefits Terms - Difference Between expected and Actual Experience - Changes in Assumptions - Benefit Payments, Including Refunds of employee Contributions (4,079,298) Net Change in Total Pension Liability $ 3,212,696 Total Pension Liability - Beginning 81,566,311 Total Pension Liability - Ending (a) $ 84,779,007 PLAN FIDUCIARY NET POSITION Contribution - Employer $ 2,170,108 Contribution - Employee 672,261 Net Investment Income 9,172,421 Benefit Payments, Including Refunds of Employee Contributions (4,079,298) Net Change in Fiduciary Net Position $ 7,935,492 Plan Fiduciary Net Position - Beginning 53,270,822 Plan Fiduciary Net Position - Ending (b) $ 61,206,314 Plan Net Pension Liability/(Assets) - Ending (a) - (b) $ 23,572,693 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability % Covered-Employee Payroll $ 8,136,809 Plan Net Pension Liability/(Asset) as a Percentage of Covered- Employee Payroll % (1) Historical information is required only for measurement for which GASB 68 is applicable. Fiscal Year 2015 was the first year of implementation, therefore only one year is shown. (2) Net of administrative expenses. Notes to Schedule: Benefit Changes: There were no changes in benefits. Changes of Assumptions: There were no changes in assumptions. 111

170 AGENT MULTIPLE EMPLOYER BENEFIT PLAN SCHEDULE OF PLAN CONTRIBUTIONS AS OF JUNE 30, Miscellaneous Plan Actuarially Determined Contribution $ 1,985,243 Contribution in Relation to the Actuarially Determined Contribution (1,985,243) Contribution Deficiency (Excess) $ - Covered-Employee Payroll $ 8,136,809 Contributions as a Percentage of Covered-Employee Payroll 24.40% (1) Historical information is required only for measurement for which GASB 68 is applicable. Fiscal Year 2015 was the first year of implementation, therefore only one year is shown. Note to Schedule: Valuation Date: June 30, 2012 Methods and assumptions used to determine contribution rates: Single and Agent Employers Entry age normal cost method Amortization method Level percentage of payroll Assets valuation method 15 year smoothed market Inflation 2.75% 3.30% to 14.20%, Varies by Salary Increases Entry Age and Service Payroll growth 3.00% Investment rate of return 7.5% net of administrative expenses Retirement age Mortality 55 years Based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board, first used in the June 30, 2009 valuation. For purposes of the post-retirement mortality rates, those revised rates include 5 years of projected on-going mortality improvement using Scale AA published by the Society of Actuaries until June 30, There is no margin for future mortality improvement beyond the valuation date. The mortality assumption will be reviewed with the next experience study expected to be completed for the June 30, 2013 valuation to determine an appropriate margin to be used. 112

171 COST SHARING MULTIPLE EMPLOYER BENEFIT PLAN SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY AS OF JUNE 30, Safety Plan Tier 1 Proportion of the Net Pension Liability % Proportionate Share of the Net Pension Liability $ 11,361,265 Covered-Employee Payroll $ 3,426,600 Proportionate Share of the Net Pension Liability as Percentage of Covered-Employee Payroll % Plan Fiduciary Net Position $ 49,782,091 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 81.42% Safety Plan Tier 2 Proportion of the Net Pension Liability % Proportionate Share of the Net Pension Liability $ 12,619 Covered-Employee Payroll $ 206,315 Proportionate Share of the Net Pension Liability as Percentage of Covered-Employee Payroll 6.12% Plan Fiduciary Net Position $ 7,233 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 81.42% Notes to Schedule: Benefit Changes: None Changes of Assumptions: None (1) Historical information is required only for measurement for which GASB 68 is applicable. Fiscal Year 2015 was the first year of implementation, therefore only one year is shown. 113

172 COST SHARING MULTIPLE EMPLOYER BENEFIT PLAN SCHEDULE OF PLAN CONTRIBUTIONS AS OF JUNE 30, Safety Plan Tier 1 Actuarially Determined Contribution $ 804,278 Contribution in Relation to the Actuarially Determined Contribution (804,278) Contribution Deficiency (Excess) $ - Covered-Employee Payroll $ 3,426,600 Contributions as a Percentage of Covered-Employee Payroll 25.38% Safety Plan Tier 2 Actuarially Determined Contribution $ 183,759 Contribution in Relation to the Actuarially Determined Contribution (183,759) Contribution Deficiency (Excess) $ - Covered-Employee Payroll $ 206,315 Contributions as a Percentage of Covered-Employee Payroll 26.72% (1) Historical information is required only for measurement for which GASB 68 is applicable. Fiscal Year 2015 was the first year of implementation, therefore only one year is shown. Note to Schedule: Safety Plan Tier 1 and Safety Plan Tier 2 Valuation Date: June 30, 2012 Methods and assumptions used to determine contribution rates: Single and Agent Employers Entry age normal cost method Amortization method Level percentage of payroll Assets valuation method Inflation 2.75% 3.30% to 14.20%, varies by Entry Age and Service Salary Increases Investment rate of return 7.5% net of administrative expenses Retirement age Mortality 55 years Based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board, first used in the June 30, 2009 valuation. For purposes of the post-retirement mortality rates, those revised rates include 5 years of projected on-going mortality improvement using Scale AA published by the Society of Actuaries until June 30, There is no margin for future mortality improvement beyond the valuation date. The mortality assumption will be reviewed with the next experience study expected to be completed for the June 30, 2013 valuation to determine an appropriate margin to be used. 114

173 SUPPLEMENTARY INFORMATION 115

174 116

175 NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Narcotics Asset Forfeiture This fund is used to account for the revenues from the seizure of property related to drug crimes. Narcotics Asset Forfeiture revenues are to be paid for programs related to the prevention of drug abuse and drug enforcement. Supplemental Law Enforcement This fund is used to account for the financial activity of the Citizen s Option for Public Safety (COPS) Program established by AB3229. Traffic Offender This fund is used to account for the revenue generated by the vehicle impound lot and expenditures relating to traffic safety and enforcement programs. State Gas Tax This fund is used for receipts and expenditures of monies apportioned to the City under the Streets and Highway Code Section 2103, 2105, 2106, 2107 and of the State of California. Drainage This fund is used to account for receipts from developers and expenditures for drainage projects. Proposition A This fund is used to account for the financial activity relative to the City s share of Proposition A monies. Proposition A increased the sales tax in Los Angeles County by one-half percent (0.5%) and is used for transportation related purposes. Proposition C This fund is used to account for the financial activity relative to the City s share of Proposition C monies. Proposition C increased the sales tax in Los Angeles County by one-half percent (0.5%) and is used for transportation related purposes. Landscape and Lighting Assessment This fund is used to account for financial activity relating to the City-wide 1972 Act Landscaping and Lighting District. Revenues include assessment to the property owners within the district and expenditures related to the maintenance and upkeep of the system. Air Quality Improvement This fund is used to account for clean air fees collected by the State and distributed by the Southern California Air Quality Management District for clean air projects. TDA Article 3 This fund is used to account for TDA Article 3 revenues and expenditures. Funding is provided by the state to the MTA for the construction and improvements of local and regional bikeways. 117

176 SPECIAL REVENUE FUNDS, Continued Nutrition Grant NON-MAJOR GOVERNMENTAL FUNDS, (Continued) This fund is used to account for financial activity relative to the senior citizen nutrition program. Revenues include the senior citizen nutrition grant, a USDA Federal grant and contributions. Federal Gas Tax The fund is used to account for Federal funds used for the upgrade and maintenance of roadways. Park Dedication This fund is used to account for revenues and expenditures relating to park improvement and construction. Revenues include park dedication fees resulting from new development. Measure R This fund is used to account for receipts and expenditures of monies apportioned to the City under Measure R, a voter approved retail transactions and use tax at the rate of one-half of one percent (.5%) for a period of thirty (30) years. This money is restricted to expenditures that maintain and improve City streets for transportation services, and to fund public transit operations. Wilderness Park Parking Lot This fund is used to account for receipts of monies received through permits issued for parking at the Wilderness Park located in the City and the expenditures related to the upkeep of the parking facilities and the Wilderness Park. CAPITAL PROJECTS FUNDS Capital Projects This fund is used to account for major capital improvement projects not financed by other special funds. Capital Projects Grant Fund This fund is used to account for revenues and expenditures associated with capital projects funded by grants. Hillside Fund This fund is used to account for revenues and expenditures associated with the acquisition and preservation of hillside open space. DEBT SERVICE FUNDS City Debt Service This fund is used to account for the City s debt service payments. PERMANENT FUND Perpetual Care Reserve This fund establishes an endowment for future maintenance of the cemetery. 118

177 119

178 COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Assets: Cash and investments $ 24,510 $ 89,358 $ 556,503 Receivables: Accounts - - 5,223 Taxes Accrued interest Due from other governments Restricted assets: Cash and investments with fiscal agents Total Assets $ 24,532 $ 89,457 $ 562,332 Liabilities, Deferred Inflows of Resources, and Fund Balances: Narcotics Asset Forfeiture Special Revenue Funds Supplemental Law Enforcement Traffic Offender Liabilities: Accounts payable $ - $ 19,296 $ 13,651 Accrued liabilities - - 1,867 Due to other funds Total Liabilities - 19,296 15,518 Deferred Inflows of resources: Unavailable revenues Total Deferred Inflows of Resources Fund Balances: Nonspendable Restricted 24,532 70, ,814 Assigned Unassigned Total Fund Balances 24,532 70, ,814 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 24,532 $ 89,457 $ 562,

179 COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 (CONTINUED) Special Revenue Funds Assets: Cash and investments Receivables: Accounts Taxes Accrued interest Due from other governments Restricted assets: Cash and investments with fiscal agents Total Assets State Gas Tax Drainage Proposition A $ 1,928,064 $ 264,447 $ 1,673, , ,600 96, $ 2,026,067 $ 264,668 $ 1,675,423 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable Accrued liabilities Due to other funds Total Liabilities Deferred Inflows of resources: Unavailable revenues Total Deferred Inflows of Resources Fund Balances: Nonspendable Restricted Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 34,391 $ - $ 11, ,391-11, ,991, ,668 1,663, ,991, ,668 1,663,872 $ 2,026,067 $ 264,668 $ 1,675,

180 COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Assets: Cash and investments Receivables: Accounts Taxes Accrued interest Due from other governments Restricted assets: Cash and investments with fiscal agents Total Assets Proposition C Special Revenue Funds Landscape/ Lighting Assessment Air Quality Improvement $ 1,040,183 $ 220,039 $ 175,805-24, , , $ 1,041,086 $ 272,206 $ 187,650 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable Accrued liabilities Due to other funds Total Liabilities Deferred Inflows of resources: Unavailable revenues Total Deferred Inflows of Resources Fund Balances: Nonspendable Restricted Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 10,677 $ 269,063 $ - 1,489 3, , , ,028, , ,028, ,650 $ 1,041,086 $ 272,206 $ 187,

181 COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 (CONTINUED) Special Revenue Funds Assets: Cash and investments Receivables: Accounts Taxes Accrued interest Due from other governments Restricted assets: Cash and investments with fiscal agents Total Assets TDA Article 3 Nutrition Grant Federal Gas Tax $ - $ - $ 498, , $ - $ 9,453 $ 498,343 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable Accrued liabilities Due to other funds Total Liabilities Deferred Inflows of resources: Unavailable revenues Total Deferred Inflows of Resources Fund Balances: Nonspendable Restricted Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ - $ 8,243 $ , ,242 9, , (1,242) - - (1,242) - 498,343 $ - $ 9,453 $ 498,

182 COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Assets: Cash and investments Receivables: Accounts Taxes Accrued interest Due from other governments Restricted assets: Cash and investments with fiscal agents Total Assets Park Dedication Special Revenue Funds Measure R Wilderness Park Parking Lot $ 761,152 $ 866,869 $ 45, , $ 761,803 $ 867,548 $ 88,216 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable Accrued liabilities Due to other funds Total Liabilities Deferred Inflows of resources: Unavailable revenues Total Deferred Inflows of Resources Fund Balances: Nonspendable Restricted Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 7,125 $ 101,527 $ 57, , ,527 57, , , , , (11,520) 754, ,021 (11,520) $ 761,803 $ 867,548 $ 88,

183 COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 (CONTINUED) Capital Projects Funds Assets: Cash and investments Receivables: Accounts Taxes Accrued interest Due from other governments Restricted assets: Cash and investments with fiscal agents Total Assets Capital Projects Capital Projects Grant Hillside Fund $ 1,143,913 $ - $ 658, , , , $ 1,144,616 $ 438,795 $ 676,209 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable Accrued liabilities Due to other funds Total Liabilities Deferred Inflows of resources: Unavailable revenues Total Deferred Inflows of Resources Fund Balances: Nonspendable Restricted Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 6,260 $ - $ ,685-6, , ,209 1,138,356 74, ,138,356 74, ,209 $ 1,144,616 $ 438,795 $ 676,

184 COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Assets: Cash and investments Receivables: Accounts Taxes Accrued interest Due from other governments Restricted assets: Cash and investments with fiscal agents Total Assets Debt Service Funds City Debt Service Permanent Funds Perpetual Care Reserve Other Governmental Funds $ 462,945 $ 901,284 $ 11,311, , , , ,540 21,077-21,077 $ 484,022 $ 902,050 $ 12,014,476 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable Accrued liabilities Due to other funds Total Liabilities Deferred Inflows of resources: Unavailable revenues Total Deferred Inflows of Resources Fund Balances: Nonspendable Restricted Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ - $ 502 $ 539, , , , , , , , ,022-8,957, ,212, (12,762) 484, ,548 11,058,818 $ 484,022 $ 902,050 $ 12,014,

185 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Narcotics Asset Forfeiture Special Revenue Funds Supplemental Law Enforcement Traffic Offender Revenues: Assessments $ - $ - $ - Intergovernmental - 106,230 - Charges for services ,131 Use of money and property ,564 Contributions Miscellaneous ,710 Total Revenues , ,405 Expenditures: Current: Police - 97, ,042 Community development Human services Community services Capital outlay - 43,492 54,039 Debt service: Principal retirement Interest and fiscal charges Total Expenditures - 140, ,081 Excess (Deficiency) of Revenues Over (Under) Expenditures 90 (34,013) (114,676) Other Financing Sources (Uses): Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances 90 (34,013) (114,676) Fund Balances, Beginning of Year 24, , ,490 Fund Balances, End of Year $ 24,532 $ 70,161 $ 546,

186 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 (CONTINUED) Special Revenue Funds Revenues: Assessments Intergovernmental Charges for services Use of money and property Contributions Miscellaneous Total Revenues Expenditures: Current: Police Community development Human services Community services 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) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year State Gas Tax Drainage Proposition A $ - $ - $ - 1,044, ,231-72,640-5,895 1,028 7, ,050,091 73, , , , ,441 11,488 9, ,441 11, , ,650 62, , (146,633) - - (146,633) 486,650 62, ,645 1,505, ,488 1,549,227 $ 1,991,676 $ 264,668 $ 1,663,

187 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Revenues: Assessments Intergovernmental Charges for services Use of money and property Contributions Miscellaneous Total Revenues Expenditures: Current: Police Community development Human services Community services 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) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year Special Revenue Funds Landscape/ Proposition C Lighting Assessment Air Quality Improvement $ - $ 2,342,924 $ - 524,857 49,054 44, , ,540 2,393,131 45, , ,695 2,924, , ,695 2,924,675 33, ,845 (531,544) 11, ,050 - (35,000) - - (35,000) 291, ,845 (240,494) 11, , , ,740 $ 1,028,920 $ - $ 187,

188 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 (CONTINUED) Special Revenue Funds Revenues: Assessments Intergovernmental Charges for services Use of money and property Contributions Miscellaneous Total Revenues Expenditures: Current: Police Community development Human services Community services 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) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year TDA Article 3 Nutrition Grant Federal Gas Tax $ - $ - $ , , , , , , ,536 - (1,242) (33,487) , ,487 - (1,242) ,343 $ (1,242) $ - $ 498,

189 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Revenues: Assessments Intergovernmental Charges for services Use of money and property Contributions Miscellaneous Total Revenues Expenditures: Current: Police Community development Human services Community services 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) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year Park Dedication Special Revenue Funds Measure R Wilderness Park Parking Lot $ - $ - $ , , ,750 2,773 2,764 2, , , , ,668 26, , , , , ,540 92, , (595,638) - - (595,638) 407,540 92,807 (478,403) 347, , ,883 $ 754,678 $ 766,021 $ (11,520) 131

190 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 (CONTINUED) Capital Projects Funds Revenues: Assessments Intergovernmental Charges for services Use of money and property Contributions Miscellaneous Total Revenues Expenditures: Current: Police Community development Human services Community services 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) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year Capital Projects Capital Projects Grant Hillside Fund $ - $ - $ 612, , , , , , , , ,127 23, , , ,523 8,127 67, , , , (587,755) 250,728 - (587,755) 318, ,680 19, ,300 (122,570) 656,294 $ 1,138,356 $ 74,110 $ 676,

191 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Revenues: Assessments Intergovernmental Charges for services Use of money and property Contributions Miscellaneous Total Revenues Expenditures: Current: Police Community development Human services Community services 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) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year Debt Service Funds City Debt Service Permanent Funds Perpetual Care Reserve Other Governmental Funds $ - $ - $ 2,955, ,821,850-40,657 1,167, ,244 36, , , ,901 8,071, , , , ,864, ,786,267 1,155,000-1,155, , ,646 1,900,646-8,123,187 (1,900,613) 43,901 (51,461) 1,900,646-2,475, (1,365,026) 1,900,646-1,110, ,901 1,059, , ,647 9,999,394 $ 484,022 $ 901,548 $ 11,058,

192 BUDGETARY COMPARISON SCHEDULE SUPPLEMENTAL LAW ENFORCEMENT YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 104,174 $ 104,174 $ 104,174 $ - Resources (Inflows): Intergovernmental 100, , ,230 6,230 Use of money and property Amounts Available for Appropriations 204, , ,818 6,644 Charges to Appropriation (Outflow): Police 100, ,192 97,165 24,027 Capital outlay - 67,000 43,492 23,508 Total Charges to Appropriations 100, , ,657 47,535 Budgetary Fund Balance, June 30 $ 104,174 $ 15,982 $ 70,161 $ 54,

193 BUDGETARY COMPARISON SCHEDULE TRAFFIC OFFENDER YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 661,490 $ 661,490 $ 661,490 $ - Resources (Inflows): Charges for services 212, , ,131 (62,369) Use of money and property 1,500 1,500 2,564 1,064 Miscellaneous 105, ,000 70,710 (34,290) Amounts Available for Appropriations 980, , ,895 (95,595) Charges to Appropriation (Outflow): Police 316, , ,042 32,210 Capital outlay - 65,593 54,039 11,554 Total Charges to Appropriations 316, , ,081 43,764 Budgetary Fund Balance, June 30 $ 664,238 $ 598,645 $ 546,814 $ (51,831) 135

194 BUDGETARY COMPARISON SCHEDULE STATE GAS TAX YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 1,505,026 $ 1,505,026 $ 1,505,026 $ - Resources (Inflows): Intergovernmental 961, ,505 1,044,196 82,691 Use of money and property 5,000 5,000 5, Amounts Available for Appropriations 2,471,531 2,471,531 2,555,117 83,586 Charges to Appropriation (Outflow): Capital outlay 1,032,500 1,384, , ,704 Total Charges to Appropriations 1,032,500 1,384, , ,704 Budgetary Fund Balance, June 30 $ 1,439,031 $ 1,087,386 $ 1,991,676 $ 904,

195 BUDGETARY COMPARISON SCHEDULE DRAINAGE YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 202,488 $ 202,488 $ 202,488 $ - Resources (Inflows): Charges for services 123, ,181 72,640 (50,541) Use of money and property , Amounts Available for Appropriations 326, , ,156 (50,013) Charges to Appropriation (Outflow): Capital outlay - 179,126 11, ,638 Total Charges to Appropriations - 179,126 11, ,638 Budgetary Fund Balance, June 30 $ 326,169 $ 147,043 $ 264,668 $ 117,

196 BUDGETARY COMPARISON SCHEDULE PROPOSITION A YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 1,549,227 $ 1,549,227 $ 1,549,227 $ - Resources (Inflows): Intergovernmental 625, , ,231 6,243 Use of money and property 3,000 3,000 7,200 4,200 Amounts Available for Appropriations 2,178,215 2,178,215 2,188,658 10,443 Charges to Appropriation (Outflow): Human services 10,000 10,000 10,888 (888) Community services 361, , ,055 3,728 Capital outlay - 80,000 9,210 70,790 Transfers out 256, , , ,493 Total Charges to Appropriations 627, , , ,123 Budgetary Fund Balance, June 30 $ 1,550,306 $ 1,470,306 $ 1,663,872 $ 193,

197 BUDGETARY COMPARISON SCHEDULE PROPOSITION C YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 855,075 $ 855,075 $ 855,075 $ - Resources (Inflows): Intergovernmental 519, , ,857 5,617 Use of money and property 1,500 1,500 3,683 2,183 Amounts Available for Appropriations 1,375,815 1,375,815 1,383,615 7,800 Charges to Appropriation (Outflow): Community services 363, , ,695 43,415 Transfers out 35,000 35,000 35,000 - Total Charges to Appropriations 398, , ,695 43,415 Budgetary Fund Balance, June 30 $ 977,705 $ 977,705 $ 1,028,920 $ 51,

198 BUDGETARY COMPARISON SCHEDULE LANDSCAPE / LIGHTING ASSESSMENT YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 240,494 $ 240,494 $ 240,494 $ - Resources (Inflows): Assessments 2,367,741 2,367,741 2,342,924 (24,817) Intergovernmental 15,750 15,750 49,054 33,304 Use of money and property (176) Miscellaneous Transfers in 540, , ,050 (448,080) Amounts Available for Appropriations 3,164,500 3,363,615 2,924,675 (438,940) Charges to Appropriation (Outflow): Community services 2,924,006 3,123,121 2,924, ,446 Total Charges to Appropriations 2,924,006 3,123,121 2,924, ,446 Budgetary Fund Balance, June 30 $ 240,494 $ 240,494 $ - $ (240,494) 140

199 BUDGETARY COMPARISON SCHEDULE AIR QUALITY IMPROVEMENT YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 175,740 $ 175,740 $ 175,740 $ - Resources (Inflows): Intergovernmental 42,000 42,000 44,566 2,566 Use of money and property Amounts Available for Appropriations 218, , ,921 2,781 Charges to Appropriation (Outflow): Community development 93,600 93,600 1,939 91,661 Capital outlay - 168,829 31, ,497 Total Charges to Appropriations 93, ,429 33, ,158 Budgetary Fund Balance, June 30 $ 124,540 $ (44,289) $ 187,650 $ 231,

200 BUDGETARY COMPARISON SCHEDULE TDA ARTICLE 3 YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ - $ - $ - $ - Resources (Inflows): Intergovernmental 20,000 20,000 - (20,000) Amounts Available for Appropriations 20,000 20,000 - (20,000) Charges to Appropriation (Outflow): Community development 2,300 2,300 1,242 1,058 Total Charges to Appropriations 2,300 2,300 1,242 1,058 Budgetary Fund Balance, June 30 $ 17,700 $ 17,700 $ (1,242) $ (18,942) 142

201 BUDGETARY COMPARISON SCHEDULE NUTRITION GRANT YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ - $ - $ - $ - Resources (Inflows): Intergovernmental 107, , ,109 3,481 Contributions 20,300 20,300 18,940 (1,360) Transfers in 37,709 37,709 33,487 (4,222) Amounts Available for Appropriations 165, , ,536 (2,101) Charges to Appropriation (Outflow): Human services 165, , ,536 2,101 Total Charges to Appropriations 165, , ,536 2,101 Budgetary Fund Balance, June 30 $ - $ - $ - $ - 143

202 BUDGETARY COMPARISON SCHEDULE FEDERAL GAS TAX YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 498,343 $ 498,343 $ 498,343 $ - Amounts Available for Appropriations 498, , ,343 - Budgetary Fund Balance, June 30 $ 498,343 $ 498,343 $ 498,343 $ - 144

203 BUDGETARY COMPARISON SCHEDULE PARK DEDICATION YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 347,138 $ 347,138 $ 347,138 $ - Resources (Inflows): Charges for services 936, , ,200 (505,400) Use of money and property 1,000 1,000 2,773 1,773 Amounts Available for Appropriations 1,284,738 1,284, ,111 (503,627) Charges to Appropriation (Outflow): Capital outlay 200, ,913 26, ,480 Total Charges to Appropriations 200, ,913 26, ,480 Budgetary Fund Balance, June 30 $ 1,084,738 $ 1,039,825 $ 754,678 $ (285,147) 145

204 BUDGETARY COMPARISON SCHEDULE MEASURE R YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 673,214 $ 673,214 $ 673,214 $ - Resources (Inflows): Intergovernmental 389, , ,404 3,969 Use of money and property 1,000 1,000 2,764 1,764 Amounts Available for Appropriations 1,063,649 1,063,649 1,069,382 5,733 Charges to Appropriation (Outflow): Capital outlay 400, , , ,804 Total Charges to Appropriations 400, , , ,804 Budgetary Fund Balance, June 30 $ 663,649 $ 230,484 $ 766,021 $ 535,

205 BUDGETARY COMPARISON SCHEDULE WILDERNESS PARK PARKING LOT YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 466,883 $ 466,883 $ 466,883 $ - Resources (Inflows): Charges for services 350, , ,750 18,750 Use of money and property ,153 1,653 Amounts Available for Appropriations 817, , ,786 20,403 Charges to Appropriation (Outflow): Public works 191, , ,668 59,207 Transfers out - 595, ,638 - Total Charges to Appropriations 191, , ,306 59,207 Budgetary Fund Balance, June 30 $ 625,693 $ (91,130) $ (11,520) $ 79,

206 BUDGETARY COMPARISON SCHEDULE CAPITAL PROJECTS YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 820,300 $ 820,300 $ 820,300 $ - Resources (Inflows): Intergovernmental - 63,000 - (63,000) Charges for services 178, , ,504 (73,850) Miscellaneous Transfers in 100, , ,728 - Amounts Available for Appropriations 1,098,654 1,312,382 1,175,546 (136,836) Charges to Appropriation (Outflow): Community development 10,450 13,950 13, Capital outlay 100, ,341 23, ,393 Total Charges to Appropriations 110, ,291 37, ,101 Budgetary Fund Balance, June 30 $ 988,204 $ 704,091 $ 1,138,356 $ 434,

207 BUDGETARY COMPARISON SCHEDULE CAPITAL PROJECTS GRANT YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ (122,570) $ (122,570) $ (122,570) $ - Resources (Inflows): Intergovernmental 260,000 1,971, ,203 (1,055,195) Amounts Available for Appropriations 137,430 1,848, ,633 (1,055,195) Charges to Appropriation (Outflow): Capital outlay 260,000 1,862, ,523 1,143,443 Total Charges to Appropriations 260,000 1,862, ,523 1,143,443 Budgetary Fund Balance, June 30 $ (122,570) $ (14,138) $ 74,110 $ 88,

208 BUDGETARY COMPARISON SCHEDULE HILLSIDE FUND YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 656,294 $ 656,294 $ 656,294 $ - Resources (Inflows): Assessments 594, , ,424 17,669 Intergovernmental - 5,964 - (5,964) Use of money and property 1,500 1,500 3,373 1,873 Amounts Available for Appropriations 1,252,549 1,258,513 1,272,091 13,578 Charges to Appropriation (Outflow): Community services 8,500 10,651 8,127 2,524 Transfers out 587, , ,755 - Total Charges to Appropriations 596, , ,882 2,524 Budgetary Fund Balance, June 30 $ 656,294 $ 660,107 $ 676,209 $ 16,

209 BUDGETARY COMPARISON SCHEDULE CITY DEBT SERVICE YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 483,989 $ 483,989 $ 483,989 $ - Resources (Inflows): Use of money and property Transfers in 1,898,219 1,898,219 1,900,646 2,427 Amounts Available for Appropriations 2,382,208 2,382,208 2,384,668 2,460 Charges to Appropriation (Outflow): Debt service: Principal retirement 1,155,000 1,155,000 1,155,000 - Interest and fiscal charges 743, , , Total Charges to Appropriations 1,898,219 1,900,916 1,900, Budgetary Fund Balance, June 30 $ 483,989 $ 481,292 $ 484,022 $ 2,

210 BUDGETARY COMPARISON SCHEDULE PERPETUAL CARE RESERVE YEAR ENDED JUNE 30, 2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 857,647 $ 857,647 $ 857,647 $ - Resources (Inflows): Charges for services 30,000 30,000 40,657 10,657 Use of money and property 1,500 1,500 3,244 1,744 Amounts Available for Appropriations 889, , ,548 12,401 Budgetary Fund Balance, June 30 $ 889,147 $ 889,147 $ 901,548 $ 12,

211 INTERNAL SERVICE FUNDS Motor Fleet This fund is used to account for activities involved in rendering motor services to departments within the City, the Claremont Unified School District, the Claremont University Center, and the Inland Valley Humane Society. Costs of materials and services used are accumulated in this fund and charged to the user as such goods are delivered or services rendered. Technology This fund is used to finance and account for activities involved in providing technological services to departments within the City. Costs of equipment and services used are accumulated in this fund and are charged to the user departments on a monthly basis. 153

212 COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2015 Governmental Activities - Internal Service Funds Motor Fleet Technology Totals Assets: Current: Cash and investments $ 1,251,029 $ 93,694 $ 1,344,723 Receivables: Accounts 46,341 3,688 50,029 Accrued interest Prepaid costs - 2,438 2,438 Total Current Assets 1,298,258 99,820 1,398,078 Noncurrent: Capital assets - net of accumulated depreciation 906, ,470 1,221,874 Total Noncurrent Assets 906, ,470 1,221,874 Total Assets 2,204, ,290 2,619,952 Deferred Outflows of Resources: Deferred outflow - Pension Plans 72,872 53, ,988 Total Deferred Outflows of Resources 72,872 53, ,988 Liabilities: Current: Accounts payable 63,829 14,212 78,041 Accrued liabilities 3,070 2,006 5,076 Compensated absences 26,032 24,111 50,143 Total Current Liabilities 92,931 40, ,260 Noncurrent: Compensated absences 13,680 62,582 76,262 Net pension liability 870, ,507 1,529,409 Total Noncurrent Liabilities 884, ,089 1,605,671 Total Liabilities 977, ,418 1,738,931 Deferred Inflows of Resources: Deferred Inflows - pension plans 154, , ,721 Total Deferred Inflows of Resources 154, , ,721 Net Position: Investment in capital assets 906, ,470 1,221,874 Unrestricted 238,889 (725,475) (486,586) Total Net Position $ 1,145,293 $ (410,005) $ 735,

213 COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30, 2015 Governmental Activities - Internal Service Funds Motor Fleet Technology Totals Operating Revenues: Interdepartmental charges $ 1,385,168 $ 632,750 $ 2,017,918 Total Operating Revenues 1,385, ,750 2,017,918 Operating Expenses: Administration and general 461, , ,101 Services and supplies 771, ,776 1,203,101 Depreciation expense 245,066 80, ,937 Total Operating Expenses 1,478, ,912 2,316,139 Operating Income (Loss) (93,059) (205,162) (298,221) Nonoperating Revenues (Expenses): Interest revenue 4, ,563 Gain (loss) on disposal of capital assets 15,600-15,600 Total Nonoperating Revenues (Expenses) 19, ,163 Income (Loss) Before Transfers (73,329) (204,729) (278,058) Transfers in - 88,480 88,480 Changes in Net Position (73,329) (116,249) (189,578) Net Position: Beginning of Year, as originally reported 2,183, ,061 2,619,895 Restatements (965,212) (729,817) (1,695,029) Beginning of Fiscal Year, as restated 1,218,622 (293,756) 924,866 End of Fiscal Year $ 1,145,293 $ (410,005) $ 735,

214 COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30, 2015 Governmental Activities - Internal Service Funds Motor Fleet Technology Totals Cash Flows from Operating Activities: Cash received from customers and users $ 1,375,217 $ 629,062 $ 2,004,279 Cash received from/(paid to) interfund service provided 24,026-24,026 Cash paid to suppliers for goods and services (793,554) (442,571) (1,236,125) Cash paid to employees for services (465,152) (328,573) (793,725) Net Cash Provided (Used) by Operating Activities 140,537 (142,082) (1,545) Cash Flows from Non-Capital Financing Activities: Cash transfers in - 88,480 88,480 Net Cash Provided (Used) by Non-Capital Financing Activities - 88,480 88,480 Cash Flows from Capital and Related Financing Activities: Acquisition and construction of capital assets (245,066) - (245,066) Proceeds from sales of capital assets 34,068 (215,726) (181,658) Net Cash Provided (Used) by Capital and Related Financing Activities (210,998) (215,726) (426,724) Cash Flows from Investing Activities: Interest received 3, ,260 Net Cash Provided (Used) by Investing Activities 3, ,260 Net Increase (Decrease) in Cash and Cash Equivalents (66,740) (268,789) (335,529) Cash and Cash Equivalents at Beginning of Year 1,317, ,483 1,680,252 Cash and Cash Equivalents at End of Year $ 1,251,029 $ 93,694 $ 1,344,723 Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ (93,059) $ (205,162) $ (298,221) Adjustments to reconcile operating income (loss) net cash provided (used) by operating activities: Depreciation 245,066 80, ,937 (Increase) decrease in accounts receivable (9,951) (3,688) (13,639) (Increase) decrease in due from other governments 24,026-24,026 (Increase) decrease in prepaid expense (Increase) decrease in deferred outflows - pension plan (72,872) (53,116) (125,988) Increase (decrease) in accounts payable (22,229) (10,892) (33,121) Increase (decrease) in accrued liabilities (2,172) (821) (2,993) Increase (decrease) in compensated absences 11,310 4,946 16,256 Increase (decrease) in net pension liability (94,310) (71,310) (165,620) Increase (decrease) deferred inlflows -pension plan 154, , ,721 Total Adjustments 233,596 63, ,676 Net Cash Provided (Used) by Operating Activities $ 140,537 $ (142,082) $ (1,545) 156

215 FIDUCIARY FUND FINANCIAL STATEMENTS AGENCY FUNDS Payroll Revolving Fund This fund is used to account for payroll costs throughout the year. This fund segregates cash allocated for payroll Act Fund This fund is used to account for financial activity relative to special assessments for sewer construction. 157

216 COMBINING STATEMENT OF NET POSITION ALL AGENCY FUNDS JUNE 30, 2015 Payroll 1911 Act Bond Totals Assets: Cash and investments $ 826,316 $ 25,998 $ 852,314 Total Assets $ 826,316 $ 25,998 $ 852,314 Liabilities: Accounts payable $ 535,628 $ - $ 535,628 Accrued liabilities 280, ,688 Deposits payable - 25,998 25,998 Due to external parties/other agencies 10,000-10,000 Total Liabilities $ 826,316 $ 25,998 $ 852,

217 COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30, 2015 Payroll Balance Balance 7/1/2014 Additions Deductions 6/30/2015 Assets: Pooled cash and investments $ 361,020 $ 34,691,463 $ 34,226,167 $ 826,316 Total Assets $ 361,020 $ 34,691,463 $ 34,226,167 $ 826,316 Liabilities: Accounts payable $ - $ 16,242,597 $ 15,706,969 $ 535,628 Accrued liabilities 351,020 20,175,652 20,245, ,688 Due to external parties/other agencies 10, ,000 Total Liabilities $ 361,020 $ 36,418,249 $ 35,952,953 $ 826, Act Bond Assets: Pooled cash and investments $ 25,998 $ - $ - $ 25,998 Total Assets $ 25,998 $ - $ - $ 25,998 Liabilities: Deposits payable $ 25,998 $ - $ - $ 25,998 Total Liabilities $ 25,998 $ - $ - $ 25,998 Totals - All Agency Funds Assets: Pooled cash and investments $ 387,018 $ 34,691,463 $ 34,226,167 $ 852,314 Total Assets $ 387,018 $ 34,691,463 $ 34,226,167 $ 852,314 Liabilities: Accounts payable $ - $ 16,242,597 $ 15,706,969 $ 535,628 Accrued liabilities 351,020 20,175,652 20,245, ,688 Deposits payable 25, ,998 Due to external parties/other agencies 10, ,000 Total Liabilities $ 387,018 $ 36,418,249 $ 35,952,953 $ 852,

218 160

219 City of Claremont Comprehensive Annual Financial Report June 30, 2015 Statistical Section Following is a description of each of the five categories of the Statistical Section as identified in the Table of Contents. Financial Trends These schedules contain trend information to help the reader understand how the City s financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City s ability to generate property and sales taxes. Debt Capacity These schedules present information to help the reader assess the affordability of the City s current levels of outstanding debt and the City s ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City s financial activities take place and to help make comparisons over time and with other governments. Operating information These schedules contain information about the City s operations and resources to help the reader understand how the City s financial information relates to the services the City provides and the activities it performs. 161

220 NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year Governmental activities: Net investment in capital assets $ 116,668,382 $ 112,535,982 $ 109,325,917 $ 105,716,461 Restricted 11,675,611 11,338,149 17,220,255 16,053,086 Unrestricted 5,578,497 8,649,209 9,617,049 6,844,559 Total governmental activities net position $ 133,922,490 $ 132,523,340 $ 136,163,221 $ 128,614,106 Business-type activities: Invested in capital assets $ 9,872,488 $ 9,689,269 $ 9,991,878 $ 10,231,900 Unrestricted 5,971,920 6,590,909 5,783,966 5,726,320 Total business-type activities net position 15,844,408 16,280,178 15,775,844 15,958,220 Primary government: Net investment in capital assets $ 126,540,870 $ 122,225,251 $ 119,317,795 $ 115,948,361 Restricted 11,675,611 11,338,149 17,220,255 16,053,086 Unrestricted 11,550,417 15,240,118 15,401,015 12,570,879 Total primary government net position $ 149,766,898 $ 148,803,518 $ 151,939,065 $ 144,572,326 Source: Financial Services Department, City of Claremont 162

221 Fiscal Year $ 102,441,948 $ 97,143,366 $ 106,652,434 $ 101,176,343 $ 94,051,689 $ 86,156,725 8,312,169 10,234,372 13,569,569 12,821,239 19,452,008 21,259,371 15,358,032 17,504, ,946 7,104,312 2,963,643 (31,427,533) $ 126,112,149 $ 124,882,694 $ 120,644,949 $ 121,101,894 $ 116,467,340 $ 75,988,563 $ 9,699,291 $ 9,407,152 $ 8,819,204 $ 8,550,787 $ 8,666,481 $ 8,259,465 5,600,437 5,917,834 6,127,283 6,417,774 6,254,348 2,869,605 15,299,728 15,324,986 14,946,487 14,968,561 14,920,829 11,129,070 $ 112,141,239 $ 106,550,518 $ 115,471,638 $ 109,727,130 $ 102,718,170 $ 94,416,190 8,312,169 10,234,372 13,569,569 12,821,239 19,452,008 21,259,371 20,958,469 23,422,790 6,550,229 13,522,086 9,217,991 (28,557,928) $ 141,411,877 $ 140,207,680 $ 135,591,436 $ 136,070,455 $ 131,388,169 $ 87,117,

222 CHANGE IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year Expenses Governmental activities: General government $ 6,337,036 $ 6,771,998 $ 1,114,694 $ 4,455,741 Police 10,070,513 8,316,821 10,139,465 10,106,133 Community development 2,774,769 2,789,077 3,449,782 3,322,342 Human services 3,786,048 3,934,694 4,067,253 3,654,518 Community services 12,263,449 11,629,442 12,271,864 15,230,727 Economic development 3,012,374 1,017,714 1,698,428 2,413,954 Interest on long-term debt 1,063,338 1,597,007 1,466,899 1,760,764 Total governmental activities expenses 39,307,527 36,056,753 34,208,385 40,944,179 Business-type activities: Transportation 355, , , ,731 Sewer 832, ,141 1,071, ,897 Sanitation 4,563,987 4,431,820 4,732,460 4,855,993 Cemetery 261, , , ,999 Total business-type activities expenses 6,013,776 5,906,399 6,601,600 6,473,620 Total primary government expenses $ 45,321,303 $ 41,963,152 $ 40,809,985 $ 47,417,799 Program Revenues Governmental activities: Charges for services General government $ - $ - $ 53,315 $ 93,780 Police 1,045,132 1,130,480 1,405,237 1,264,011 Community development 1,772,252 2,128,787 1,598,555 1,505,197 Human services 1,028,300 1,056,179 1,006, ,033 Community services 332,500 1,251, , ,641 Operating grants and contributions 3,826,297 3,519,910 4,304,650 2,928,376 Capital grants and contributions 5,646,837 1,916,265 6,405,672 4,377,917 Total governmental activities program revenues 13,651,318 11,003,071 15,169,787 11,727,955 Business-type activities: Charges for services Transportation 44,961-45,880 43,734 Sewer 706, , , ,918 Sanitation 5,323,424 5,386,285 5,278,996 5,440,320 Cemetery 325, , , ,128 Operating grants and contributions 206, , , ,048 Total business-type activities program revenues 6,607,172 6,822,103 6,634,587 7,266,148 Total primary government program revenues $ 20,258,490 $ 17,825,174 $ 21,804,374 $ 18,994,103 Source: Financial Services Department, City of Claremont 164

223 (Continued) Fiscal Year $ 5,245,269 $ 5,574,041 $ 8,126,106 $ 5,999,860 $ 7,366,243 $ 6,426,753 9,716,082 9,616,661 9,718,317 10,491,078 10,399,151 10,482,700 3,765,565 2,804,170 2,261,222 5,209,061 3,395,246 3,777,811 3,397,208 2,927,918 2,914,812 2,975,792 3,174,434 3,215,555 12,501,094 13,426,145 12,630,451 13,219,630 12,603,479 13,432,419 1,462, , , , , ,387 1,781,861 1,729,793 1,130, , , ,678 37,869,642 36,504,848 37,703,581 39,787,714 37,921,597 38,274, , , , , , ,591 1,059, , , , , ,170 4,803,182 4,941,525 4,979,480 5,340,154 5,601,198 5,278, , , , , , ,026 6,892,642 6,760,733 7,065,967 7,323,880 7,463,398 7,068,782 $ 44,762,284 $ 43,265,581 $ 44,769,548 $ 47,111,594 $ 45,384,995 $ 45,343,085 $ 38,091 $ 77,974 $ 56,707 $ 440,198 $ 445,872 $ 33,422 1,172,432 1,398,243 1,096,240 1,319,177 1,692,242 1,436,843 1,723,708 1,361,333 1,253,997 1,864,211 2,124,973 1,771, , , , , , , , , , , , ,049 2,661,288 4,062,129 3,641,369 10,158,963 3,640,371 4,952,256 7,139,075 11,032,154 3,800,784 4,126,799 4,075,996 3,041,180 13,725,266 18,825,978 10,649,516 19,071,334 13,327,395 12,579,381 57,088 74,193 84, ,221 94,299 78, , , , , , ,440 5,597,526 5,758,182 5,674,383 5,662,889 5,922,914 6,031, , , , , , , , , , , , ,682 6,892,224 7,378,008 7,149,799 7,503,905 7,448,119 7,868,778 $ 20,617,490 $ 26,203,986 $ 17,799,315 $ 26,575,239 $ 20,775,514 $ 20,448,

224 CHANGE IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year Net (Expense)/Revenue Governmental activities $ (25,656,209) $ (25,053,682) $ (19,038,598) $ (29,216,224) Business-type activities 593, ,704 32, ,528 Total net revenues (expenses) $ (25,062,813) $ (24,137,978) $ (19,005,611) $ (28,423,696) General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes $ 9,176,054 $ 10,373,062 $ 11,016,489 $ 10,200,450 Transient occupancy taxes 445, ,381 1,018, ,864 Sales taxes 4,295,471 3,982,056 2,912,017 3,165,670 Franchise taxes 454, , , ,286 Business license taxes 682, , , ,463 Utility users tax 3,777,668 3,907,211 4,221,339 4,258,197 Other taxes 541, , ,177 91,726 Motor vehicle in lieu - unrestricted 283, , , ,964 Use of money and property 674,106 1,000,743 1,112, ,862 Other 1,043, , ,453 70,021 Gain/(loss) on sale of capital assets 5,368,699-5,728 (137,152) Extrordinary Gain/Loss Dissolution RDA Transfers 712, , , ,621 Total governmental activities 27,455,903 23,285,865 22,668,884 21,496,972 Business-type activities Use of money and property 131, , ,848 40,652 Other 111,874 45, Gain/(loss) on sale of capital assets - - 2,117 25,861 Transfers (712,285) (738,002) (740,719) (721,621) Total business-type activities (468,842) (479,934) (537,321) (654,926) Total primary government $ 26,987,061 $ 22,805,931 $ 22,131,563 $ 20,842,046 Changes in Net Position Governmental activities $ 1,799,694 $ (1,767,817) $ 3,630,286 $ (7,719,252) Business-type activities 124, ,770 (504,334) 137,602 Total primary government $ 1,924,248 $ (1,332,047) $ 3,125,952 $ (7,581,650) 166

225 Fiscal Year $ (24,144,376) $ (17,678,870) $ (27,054,065) $ (20,716,380) $ (24,594,202) $ (25,694,922) (418) 617,275 83, ,025 (15,279) 799,996 $ (24,144,794) $ (17,061,595) $ (26,970,233) $ (20,536,355) $ (24,609,481) $ (24,894,926) $ 10,332,384 $ 10,404,334 $ 8,669,321 $ 7,841,574 $ 7,459,855 $ 8,171, , ,377 1,000,739 1,076,884 1,147,537 1,283,893 2,875,326 2,904,937 3,492,307 3,724,579 3,927,625 3,957, , , , , , , , , , , , ,944 4,326,770 4,354,573 4,333,869 4,610,213 4,717,175 4,548, , , , , , , , ,362 18,691 19,367 16,028 15, , , , , , , , , , , , ,728-4, ,542 15, ,912, , , , ,438 50, ,367 21,594,341 21,911,315 27,107,069 19,806,768 19,959,648 21,153,009 45,856 19,774 20,596 15,730 17,047 22,793 2,259 57,410 15, ,000 (5,243) (5,243) - - (706,107) (672,374) (493,034) (168,438) (50,000) (443,367) (657,992) (584,190) (462,331) (157,951) (32,453) (420,074) $ 20,936,349 $ 21,327,125 $ 26,644,738 $ 19,648,817 $ 19,927,195 $ 20,732,935 $ (2,550,035) $ 4,232,445 $ 53,004 $ (909,612) $ (4,634,554) $ (4,541,913) (658,410) 33,085 (378,499) 22,074 (47,732) 379,922 $ (3,208,445) $ 4,265,530 $ (325,495) $ (887,538) $ (4,682,286) $ (4,161,991) 167

226 FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year General Fund: Reserved $ 1,160,391 $ 1,209,767 $ 921,749 $ 3,479,075 Unreserved 10,377,923 9,445,019 7,739,602 5,223,169 Nonspendable: Prepaid costs Notes and loans Advances to other funds Petty cash Postage Committed to: Adminsitrative services Community development projects Police Community Services Naural and fiscal emergency Donations Naural and fiscal emergency Maintenance of operations Equipment and facility Water system acquisition Unassigned Total General Fund $ 11,538,314 $ 10,654,786 $ 8,661,351 $ 8,702,244 All other governmental funds: Reserved $ 6,989,224 $ 7,132,800 $ 7,543,693 $ 10,435,807 Unreserved Undesignated, reported in: Special revenue funds 5,194,361 6,893,121 9,675,601 6,114,600 Capital projects funds 123,453 (149,056) 1,302, ,651 Debt service funds 1,675,242 1,339,542 2,149, ,349 Permanent funds - 391,341 78,933 - Nonspendable: Prepaid costs Land held for resale Notes and loans Permanent fund principal Petty cash Restricted for: Community development projects Public safety Parks and recreation Public works Capital projects Debt service Community services Assigned to: Community development projects Unassigned Total all other governmental funds $ 13,982,280 $ 15,607,748 $ 20,749,890 $ 17,379,407 Source: Financial Services Department, City of Claremont 168

227 Fiscal Year $ - $ - $ - $ - $ - $ ,015 12,202 4,233 8,813 14,899 19,717 11, , , , ,870-2,189, ,850 4,270 4,270 4,300 4,300 4,322 7,262 4,583 5,896 7,598 5,914 6,932-10, ,669 10, ,416 13, ,416 18, ,145, , ,437,441-5,677,312 6,277,652 6,814,834 7,379, , , , , , , , , ,000-1,000,000 3,975,585 6,149,503 6,227,688 2,993,981 3,606,216 3,705,434 $ 9,888,867 $ 11,688,535 $ 13,191,567 $ 11,016,685 $ 12,341,205 $ 13,644,326 $ - $ - $ - $ - $ - $ , , , , ,314-5,116,433 2,366,433 1,966,433 1,966, ,363,589 6,725,338 4,884,472 3,964, , , , , , , ,709, ,040 6,432,585 6,113, ,494 1,008, , , , ,507 41, ,014,652 3,490,537 3,633,116 2,500,077 2,381,597 2,942, , ,700,000 6,114,897 5,286, ,894 3,233, , ,899 67,675 1,160,231 1,963,052 2,502,112 2,473,662 2,876,931 3,665,148 4,213,491 1,141, , , , ,300 1,212,466 (2,321,716) (3,400,804) 4,457,240 (420,025) (122,570) (12,762) $ 15,589,128 $ 18,027,759 $ 20,932,305 $ 20,321,122 $ 21,423,699 $ 22,459,

228 CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year Revenues: Taxes $ 19,132,685 $ 20,886,551 $ 20,824,022 $ 19,856,656 $ 19,607,766 Assessments 1,826,665 1,916,265 2,584,458 2,707,689 2,725,544 Licenses and permits 940,867 1,196, , ,581 1,001,651 Intergovernmental 7,633,311 3,287,647 8,320,939 4,868,089 5,928,916 Charges for services 2,643,876 3,743,064 1,559,457 2,232,168 1,972,739 Use of money and property 632, ,733 1,128, , ,549 Fines and forfeitures 596, , , , ,515 Contributions ,484 95, ,853 Miscellaneous 7,467, , , , ,126 Total revenues 40,873,411 33,501,956 37,175,286 32,550,507 33,100,659 Expenditures Current: General government 4,337,310 5,626,202 3,911,294 3,952,812 4,547,658 Police 14,052,569 8,723,882 9,649,699 10,084,670 9,513,535 Community development 2,723,373 3,260,400 3,428,125 3,302,978 3,475,563 Human services 3,471,449 3,946,298 3,526,092 3,327,680 2,905,538 Community services 5,020,891 2,700,776 6,806,752 5,504,704 4,562,597 Economic development 3,013,052 3,053, ,927 1,548, ,975 Capital outlay 9,868,482 3,388,368 13,360,416 5,830,062 5,728,226 Debt service: Principal retirement 1,988,957 1,589,188 1,154,801 1,412,967 1,477,668 Interest and fiscal charges 1,216,649 1,438,263 1,797,820 1,751,526 1,771,156 Debt Issuance Cost Total expenditures 45,692,732 33,726,635 44,306,926 36,715,855 34,601,916 Excess (deficiency) of revenues over (under) expenditures (4,819,321) (224,679) (7,131,640) (4,165,348) (1,501,257) Other financing sources (uses): Transfers in 8,489,106 6,457,983 16,340,721 8,703,688 5,278,863 Transfers out (7,776,821) (5,819,981) (15,600,002) (8,038,067) (4,595,756) Contributions to other agencies Contributions from other agencies Proceeds from sale of capital asse ,000 Other debts issued 6,060,000-9,655, Bond Discount - - (139,728) - - Total other financing sources (uses) 6,772, ,002 10,255, , ,107 Extraordinary gain/loss on dissolution of RDA Net change in fund balances $ 1,952,964 $ 413,323 $ 3,124,351 $ (3,499,727) $ (743,150) Total current expenditures $ 45,692,732 $ 33,726,635 $ 44,306,926 $ 36,715,855 $ 34,601,916 Less: capital outlay (9,868,482) (3,388,368) (13,360,416) (3,536,754) (5,033,303) Total non-capital expenditures $ 35,824,250 $ 30,338,267 $ 30,946,510 $ 33,179,101 $ 29,568,613 Total debt service expenditures 3,205,606 3,027,451 2,952,621 3,164,493 3,248,824 Debt service as a percentage of noncapital expenditures 8.9% 10.0% 9.5% 9.5% 11.0% Source: Financial Services Department, City of Claremont 170

229 Fiscal Year $ 19,892,787 $ 18,869,859 $ 18,712,855 $ 18,809,892 $ 19,577,396 2,873,174 2,758,729 2,900,921 2,887,934 2,955, , , ,317 1,099,904 1,169,564 12,411,747 5,542,716 11,489,866 5,847,417 5,047,501 1,812,937 1,472,348 2,290,475 3,039,459 2,430, , , , , , , , , , ,647 45,808 46, ,234 23,859 18, , , , , ,726 39,818,642 31,059,827 38,151,700 33,497,156 33,045,390 4,934,806 4,679,408 5,068,437 5,295,410 5,600,453 9,321,309 9,254,407 9,742,621 9,912,694 10,257,572 2,167,706 2,131,407 2,454,824 2,458,789 2,873,145 2,468,405 2,376,736 2,416,385 2,534,451 2,664,410 5,623,979 5,182,842 5,765,965 5,142,832 5,325, , , , , ,729 8,232,671 2,862,241 4,913,912 3,618,336 2,245,238-1,554,016 1,534,920 6,882,676 1,100,000 1,155,000 1,719,700 1,296,032 1,013, , ,646-71, ,444,001 29,552,680 38,363,307 31,048,037 31,061,780 3,374,641 1,507,147 (211,607) 2,449,119 1,983,610 6,501,438 3,076,266 3,822,626 3,693,261 3,071,549 (5,829,064) (2,583,232) (3,654,188) (3,643,261) (2,716,662) - - (3,416,375) , ,000 - (72,022) - - 6,080, ,374 6,673,034 (2,574,458) (22,022) 354,887 - (3,730,838) $ 4,047,015 $ 4,449,343 $ (2,786,065) $ 2,427,097 $ 2,338,497 $ 36,444,001 $ 29,552,680 $ 38,363,307 $ 31,048,037 $ 31,061,780 (7,830,817) (2,505,532) (4,184,277) (3,618,336) (1,060,200) $ 28,613,184 $ 27,047,148 $ 34,179,030 $ 27,429,701 $ 30,001,580 3,273,716 2,902,281 7,895,722 1,879,944 1,900, % 10.5% 23.1% 6.9% 6.3% 171

230 ASSESSED VALUE OF TAXABLE PROPERTY to TAXABLE PROPERTY VALUES Category Residential $ 2,407,178,372 $ 2,690,103,323 $ 2,987,408,719 $ 3,158,452,549 Commercial 189,219, ,505, ,237, ,859,898 Industrial 53,540,598 54,987,746 58,420,983 58,117,480 Government 111, , , ,088 Institutional 25,490,482 36,874,434 47,284,891 31,536,575 Irrigated ,500 26,010 Miscellaneous 296,051 1,165,006 1,033,221 88,441 Recreational 9,672,414 9,796,496 9,923,535 15,462,367 Vacant Land 42,341,658 47,280,933 65,612,436 63,766,549 SBE Nonunitary 2,255,738 1,607, , ,997 Possessory Int. 4,139,317 4,266,139 4,241,035 4,322,107 Unsecured 58,272,878 67,483,122 58,932,142 61,635,310 Exempt [15,152,642] [12,858,457] [15,123,557] [16,812,928] Unknown 1,026,909 1,045, TOTALS $ 2,793,545,536 $ 3,135,229,207 $ 3,467,165,303 $ 3,636,315,371 Total Direct Rate % % % % Note: In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only re-assessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: The HdL Companies 172

231 $ 3,044,921,255 $ 3,106,552,543 $ 3,164,459,189 $ 3,225,927,065 $ 3,350,419,586 $ 3,573,792, ,009, ,373, ,498, ,365, ,193, ,938,485 59,357,181 57,572,834 62,030,035 61,017,329 62,179,515 62,431,606 73, ,508 74,360 75,846 77, ,427 46,936,678 53,339,258 37,136,730 51,449,160 37,388, ,659,424 26,530 26,467 26,666 27,199 50,000 4,570,657 90,207 89,990 90,664 92,475 94,322 94,746 15,523,516 15,198,478 14,575,328 11,585,458 11,748,163 12,335,832 62,423,079 14,446,350 47,996,453 46,746,211 48,909,559 50,696,774 1,097,712 1,097,712 1,097,712 1,097, ,103,314 5,734,759 5,984,059 5,718,036 6,862,452 7,441,249 65,512,785 58,379,960 58,646,311 64,822,567 64,834,463 61,387,420 [17,071,556] [17,892,218] [17,014,610] [21,961,610] [21,961,610] [21,761,900] $ 3,556,075,501 $ 3,620,010,120 $ 3,699,615,907 $ 3,779,924,163 $ 3,894,756,989 $ 4,218,606, % % % % % % 173

232 DIRECT AND OVERLAPPING PROPERTY TAX RATES (rate per $100 of assessed value) LAST TEN FISCAL YEARS City Direct Rates: City basic rate General Obligation Debt Redevelopment agency Total City Direct Rate Overlapping Rates: City of Claremont Tax District Children's Center Fund Citrus Community College Children's Institutional Tuition Fund Citrus Community College District Claremont Unified School District Consolidated Fire Protection District of LA Co County Sanitation District No. 21 Operating County School Services County School Services Fund Claremont Development Center Handicapped Minors Claremont Educational Augmentation Fund Impound Educational Revenue Augmentation Fund L A County Accumulative Cap Outlay L A County Fire - Ffw L A County Flood Control Drain Imp. Dist. Maint L A County Library L A County Flood Control Maintenance Los Angeles County General Three Valley Metro Water District Original Area Total Prop. 13 Rate Citrus CCD 2004 Series 2004A Citrus CCD 2004 Series 2007B Citrus CCD 2004 Series 2009C Citrus CCD Ref Bonds Series Citrus CCD 2004 Series 2014D Claremont USD 2000 Series A Claremont USD 2000 Series B Claremont USD 2000 Series C Claremont USD 2010 Refunding Bonds Detention Facilities 1987 Debt Service Flood Con. Ref. Bonds 1993 Debt Service Tax District 1 General Obligation Bond LA Co Fl Con Storm Dr DS # Three Vy Mwd Total Voter Approved Rate Total Direct & Overlapping Rate Note: In 1978, the voters of the State of California passed Proposition 13, which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only reassessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: Financial Services Department, City of Claremont 174

233

234 PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND TEN YEARS AGO Percent of Percent of Total City Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Value Taxpayer Value Value Front Porch Communities $ 58,202, % Claremont University Consortium $ 19,297, % Claremont Star LP 48,612, % PPC Claremont LLC 15,277, % Claremont University Consortium 23,869, % Penske Realty Inc 14,100, % KMF Claremont LLC 19,802, % DKVCMT LLC & DLVCMT LLC 12,212, % ROIC Claremont Center II LLC 19,387, % Claremont Star LP 10,836, % CHP Claremont California Owner LLC 19,337, % Claremont Investors LTD 10,211, % HFP Ltd 17,849, % Claremont Tennis Club 10,117, % Claremont Village Expansion Borrower 16,447, % HFP Ltd 9,565, % CWI Eagles LLC 14,472, % David R. Frack 7,049, % Southern CA School of Theology 12,708, % DOIT Indian Hill Villas Claremont LP 6,775, % $ 250,689, % $ 115,443, % Note: The amounts shown above include assessed value data for both the City and the former Redevelopment Agency. Source: The HDL Companies; Los Angeles County Assessor 176

235 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Fiscal Year Ended June 30 Taxes Levied for the Fiscal Year Collections in the Fiscal Year of Levy Amount Percent of Levy Collections in Subsequent Years Amount Percent of Levy Total Collections to Date Amount Percent of Levy 2006 $ 3,027,135 $ 2,684, % $ 235, % $ 2,920, % ,327,629 3,054, % 144, % 3,199, % ,633,771 3,335, % 217, % 3,552, % ,817,921 3,455, % 192, % 3,648, % ,683,957 3,568, % 107, % 3,675, % ,718,008 3,415, % 187, % 3,603, % ,806,516 3,551, % 241, % 3,792, % ,872,370 3,663, % 205, % 3,869, % ,013,465 3,895, % 101, % 3,997, % ,339,807 4,206, % ** ** 4,206, % Source: Los Angeles County Auditor-Controller; Financial Services Department, City of Claremont **Data is not yet available 177

236 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities Fiscal Year General Pension Tax Ended Obligation Obligation Allocation Loans Notes June 30 Bonds Bonds Bonds Payable Payable 2006 $ - $ 6,060,000 $ 13,535,000 $ 9,601,074 $ 698, ,965,000 13,095,000 8,615, , ,655,000 5,895,000 12,635,000 8,104, , ,465,000 5,810,000 12,155,000 7,567, , ,290,000 5,705,000 11,650,000 7,000, , ,110,000 5,585,000 11,125,000 6,404,296 96, ,920,000 5,445,000-11,857,676 49, ,725,000 5,280,000-5,335, ,525,000 5,090,000-4,625, ,315,000 4,875,000-3,895,000 - Note: Due to the dissolution of the Redevelopment Agency, Tax Allocation Bonds are no longer the liability of the City and there is no revenue of the City that is pledged for that debt. Source: Financial Services Department, City of Claremont 178

237 Governmental Activities Capitalized Total Percentage Debt Lease Governmental of Personal Per Obligation Activities Income Capita $ 100,377 $ 29,995, % $ 819 5,353 28,270, % ,765, % ,352, % ,875, % ,321, % ,272, % ,340, % ,240, % ,085, %

238 RATIO OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS Outstanding General Bonded Debt Fiscal Year General Pension Tax Percent of Ended Obligation Obligation Allocation Assessed Per June 30 Bonds Bonds Bonds Total Value 1 Capita 2006 $ - $ 6,060,000 $ 13,535,000 $ 19,595, % $ ,965,000 13,095,000 19,060, % ,655,000 5,895,000 12,635,000 28,185, % ,465,000 5,810,000 12,155,000 27,430, % ,290,000 5,705,000 11,650,000 26,645, % ,110,000 5,585,000 11,125,000 25,820, % ,920,000 5,445,000-14,365, % ,725,000 5,280,000-14,005, % ,315,000 5,090,000-13,405, % ,315,000 4,875,000-13,190, % Assessed value has been used because the actual value of taxable property is not readily available in the State of California. Note: Due to the dissolution of the Redevelopment Agency, Tax Allocation Bonds are no longer the liability of the City and there is no revenue of the City that is pledged for that debt. Source: Financial Services Department, City of Claremont 180

239 DIRECT AND OVERLAPPING DEBT JUNE 30, 2015 Estimated Share of Percentage Outstanding Overlapping Applicable Debt 6/30/15 Debt Direct Debt 2007 General Obligation Bond % $ 8,315,000 $ 8,315,000 Total Direct Debt 8,315,000 Overlapping Debt Metropolitan Water District Area 1112** 0.387% 53,296, ,015 Citrus CCD 2004 Series 2007B % 2,750, ,100 Citrus CCD 2004 Series 2009 Ser C % 7,105,302 1,274,045 Citrus CCD DS Ref Bond Series % 12,320,000 2,209,087 Citrus CCD 2004 Series 2014D % 77,687,251 13,930,024 Claremont Unified School District 2010 Refunding Bond % 30,700,000 26,959,599 Total Overlapping Debt 45,071,870 Total direct and overlapping tax and assessment debt $ 192,173,948 53,386,870 City direct debt 8,770,000 Total direct and overlapping debt $ 62,156,870 Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Claremont. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident and, therefore, responsible for the debt, for each overlapping government. Source: Financial Services Department, City of Claremont 181

240 LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Fiscal Year Assessed valuation $ 2,793,545,536 $ 3,135,229,207 $ 3,467,165,303 $ 3,636,315,371 Conversion Factor 25% 25% 25% 25% Adjusted Assessed Valuation 698,386, ,807, ,791, ,078,843 Legal debt limit percentage 15% 15% 15% 15% Debt limit 104,757, ,571, ,018, ,361,826 Total net debt applicable to limit: General obligation bonds - - 9,655,000 9,465,000 Legal debt margin $ 104,757,958 $ 117,571,095 $ 120,363,699 $ 126,896,826 Total debt applicable to the limit as a percentage of debt limit 0.00% 0.00% 7.43% 6.94% Note: The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with fiscal year , each parcel is now assessed at 100% of market value. Although the statutory debt limit has not been amended by the State since this change, the calculations presented above include a conversion factor of 25% to the assessed valuation to account for the change in the basis on which the legal debt limit is based. Source: Financial Services Department, City of Claremont 182

241 Fiscal Year $ 3,556,075,501 $ 3,620,010,120 $ 3,699,615,907 $ 3,779,924,163 $ 3,894,756,989 $ 4,218,606,460 25% 25% 25% 25% 25% 25% 889,018, ,002, ,903, ,981, ,689,247 1,054,651,615 15% 15% 15% 15% 15% 15% 133,352, ,750, ,735, ,747, ,053, ,197,742 9,290,000 9,110,000 8,920,000 8,725,000 8,525,000 8,315,000 $ 124,062,831 $ 126,640,380 $ 129,815,597 $ 133,022,156 $ 137,528,387 $ 149,882, % 6.71% 6.43% 6.16% 5.84% 5.26% 183

242 PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Tax Allocation Bonds Fiscal Year Ended Tax Debt Service June 30 Increment Principal Interest Coverage 2006 $ 2,393,154 $ 425,000 $ 637, ,797, , , ,178, , , ,356, , , ,754, , , ,799, , , ,508, Note: Due to the dissolution of the Claremont Redevelopment Agency, the Tax Allocation Bonds were transfered to the Successor Agency. There is no pledged revenue for any debt of the City as of 2/1/12. The Tax increment reported in 2012 is for the 7 months ending 1/31/12. Source: Financial Services Department, City of Claremont 184

243 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS Per Personal Capita Calendar Income Personal Unemployment Year Population (in thousands) Income Rate ,413 $ 1,227,822 $ 33, % ,572 1,332,287 36, % ,835 1,408,205 38, % ,007 1,430,186 38, % ,660 1,406,315 37, % ,608 1,294,843 34, % ,300 1,263,775 35, % ,749 1,307,269 36, % ,920 1,277,351 35, % ,932 1,298,044 36, % Sources: The HDL Companies; Los Angeles County Assessor 185

244 FULL-TIME CITY EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Full-Time Employees as of June 30 Function Administrative services City manager's office Community development Community services General government Human services Public safety Redevelopment agency Total Source: Financial Services Department, City of Claremont 186

245 Full-Time Employees as of June

246 OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year Police: Calls for service dispatched 22,679 22,682 22,893 22,500 Police reports, citations, field interviews 24,700 22,874 28,282 24,394 Public works: Street resurfacing (miles) Human services: Number of class participants 11,130 12,736 11,986 13,855 Number of facility rentals ,191 Community services: Sewer Miles of sewer main cleaned Catch basin cleaned Maintenance - Street and sidewalks Square footage of sidewalks, curbs and gutters replaced. 22,500 28,500 23,232 11,008 Sidewalk grinding or ramping locations completed 1,487 1,472 2,290 3,955 Sanitation - Commercial Dumpsters emptied annually 56,992 58,864 54,184 53,100 Tons of material recycled 1,403 1,558 1,697 1,727 Sanitation - Residential Automated containers emptied annually 426, , , ,036 Tons of material recycled 5,175 5,007 4,777 4,537 Source: Financial Services Department, City of Claremont 188

247 Fiscal Year ,622 22,996 24,754 26,388 26,769 28,305 22,360 20,270 18,067 20,893 20,213 17, ,440 14,112 13,707 34,044 45,057 36,037 2,294 1,024 1,239 1, ,935 44,000 7,222 6,689 6,742 6,227 3,647 4, ,900 55,020 55,020 55,640 53,456 53,456 3,149 2,632 2,059 1,901 1,465 1, , , , , , ,140 7,545 3,261 3,722 3,707 3,595 3,

248 CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year Police: Stations Fire**: Fire stations Public works: Streets (miles) Streetlights 2,531 2,531 2,728 2,728 City Street Trees 23,500 23,500 24,122 24,122 Parks and recreation: Parks/recreation sites Total Acres 1,420 1,420 1,767 1,767 Source: Financial Services Department, City of Claremont **The City of Claremont is part of the Los Angeles County, Consolidated Fire Protection District 190

249 Fiscal Year ,760 2,785 2,785 2,785 2,785 2,785 24,122 24,343 24,343 24,145 24,128 24, ,784 1,784 1,784 2,071 2,071 2,

250