On the Cover: Spring Eggstravaganza Almansor Park The City celebrated its annual Spring Eggstravaganza on Saturday, April 19, 2014, with a helicopter drop of thousands of candy-filled eggs to a delighted crowd of young children over Almansor Park. Mosaic Parking Structure 26 North Main Street Construction of the Mosaic Parking Structure was completed in December, 2014. The $6.2 million parking project is a 5.5 story structure and provides over 300 spaces to the public for convenient parking for access to shops and restaurants located around the Main Street area. Alhambra Night Out The City of Alhambra and the Alhambra Police Department participated in the 19 th Annual Alhambra Night Out Against Crime on August 5, 2014. The event aims to promote crime and drug prevention awareness, local anti-crime programs, neighborhood spirit and police-community partnerships. It was participated by a crowd of approximately 3,500 citizens.
, CALIFORNIA Comprehensive Annual Financial Report Year ended June 30, 2014 (With Independent Auditors Report Thereon) Prepared by: Paul Espinoza, Director of Finance and Staff
Comprehensive Annual Financial Report Table of Contents Page Introductory Section: Letter of Transmittal Officials of the City of Alhambra Organizational Chart GFOA Certificate of Achievement for Excellence in Financial Reporting iv ix x xi Financial Section: Independent Auditors Report 1 Management s Discussion and Analysis 4 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position 16 Statement of Activities 17 Fund Financial Statements: Balance Sheet Governmental Funds 18 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds 20 Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General Fund 22 Statement of Net Position Proprietary Funds 25 Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds 26 Statement of Cash Flows Proprietary Funds 27 Statement of Fiduciary Net Position 29 Statement of Changes in Fiduciary Net Position 30 Notes to the Basic Financial Statements 31 Required Supplementary Information (Unaudited): Schedule of Funding Progress of the City s Defined Benefit Pension Plan 77 Schedule of Funding Progress of the City s Health Subsidy Pension Plan 78 Schedule of Funding Progress of the City s Other Post-Employment Benefit Plans 78 i
Table of Contents, Continued Page Combining and Individual Fund Statements and Schedules: Other Governmental Funds: Combining Balance Sheet Other Governmental Funds 79 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Other Governmental Funds 80 Combining Balance Sheet Other Special Revenue Funds 81 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficits) Other Special Revenue Funds 83 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Other Special Revenue Funds: Law Enforcement Fund 85 State Gas Tax Fund 86 Proposition A Transportation Fund 87 Proposition C Transportation Fund 88 Measure R Fund 89 Air Quality Fund 90 Lighting and Landscape Maintenance Fund 91 Police Facility Assessment Fund 92 Asset Forfeiture Fund 93 Disability Access Compliance Fund 94 Community Development Block Grant Fund 95 Home and Rental Rehabilitation Fund 96 Housing Asset Fund 97 Transportation Capital Improvements Fund 98 Combining Balance Sheet Other Debt Service Funds 99 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Other Debt Service Funds 100 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Other Debt Service Funds: Community Improvement Fund 101 Lighting and Sidewalk Construction Fund 102 Police Facility Fund 103 Parking Authority Debt Service Fund 104 ii
Table of Contents, Continued Page Combining Balance Sheet Other Capital Projects Funds 105 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Other Capital Projects Funds 106 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Other Capital Projects Funds: Capital Outlay Fund 107 Parking Authority Projects Fund 108 Internal Service Funds: Combining Statement of Net Position (Deficits) Internal Service Funds 109 Combining Statement of Revenues, Expenses, and Changes in Net Position (Deficits) Internal Service Funds 110 Combining Statement of Cash Flows Internal Service Funds 111 Statistical Section (Not Covered by Independent Auditors Report) Net Position by Component - Last Ten Fiscal Years 113 Changes in Net Position - Last Ten Fiscal Years 114 Fund Balances of Governmental Funds - Last Ten Fiscal Years 116 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 117 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 118 Direct and Overlapping Property Tax Rates - Current Year and Nine Years Ago 119 Principal Property Tax Payers - Current Year and Nine Years Ago 120 Property Tax Levies and Collections - Last Ten Fiscal Years 121 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 122 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years 123 Direct and Overlapping Debt 124 Legal Debt Margin Information - Last Ten Fiscal Years 126 Pledged Revenue Coverage - Last Ten Fiscal Years 127 Demographic and Economic Statistics 128 Principal Employers - Current Year and Nine Years Ago 129 Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 130 Operating Indicators by Function - Last Ten Fiscal Years 131 Capital Asset Statistics by Function - Last Ten Fiscal Years 132 iii
Introductory Section
Officials of the City of Alhambra Mayor Gary S. Yamauchi Third District City Council Members Stephen K. Sham First District Steven T. Placido Fourth District Barbara A. Messina Second District Luis Ayala Fifth District City Administration and Department Heads City Manager... Mary Swink City Attorney... Joseph Montes Director of Administrative Services... Chris Paulson Director of Public Works... Mary Chavez Director of Community Services... Martin Ray Director of Finance... Paul Espinoza Assistant City Manager/Director of Development Services... Tara Schultz Director of Library Services...Carmen Hernandez Police Chief... Mark Yokoyama Fire Chief... Bill Walker Assistant City Manager/Director of Personnel... Richard Bacio ix
ORGANIZATIONAL CHART City Council Stephen K. Sham First District Barbara A. Messina Second District Gary S. Yamauchi Third District Steven T. Placido Fourth District Luis Ayala Fifth District Civil Service/ Board of Appeals Parks & Recreation Commission Planning Commission Design Review Commission Board of Library Trustees Transportation Commission Youth Commission HCDA Citizens Advisory Committee Arts & Cultural Events Committee Environmental Committee City Manager City Attorney Management Services Community Services Finance Administrative Services Development Services Fire Library Personnel Police Public Works x
xi
Financial Section
INDEPENDENT AUDITORS REPORT The Honorable Mayor and Members of the City Council City of Alhambra Alhambra, California Report on the 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 the City of Alhambra (the City), as of and for the year ended June 30, 2014, 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. Auditors 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 basic financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the basic financial statements. The procedures selected depend on the auditors 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 auditors consider internal control relevant to the City 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 City 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. - 1-2875 Michelle Drive, Suite 300, Irvine, CA 92606 Tel: 714.978.1300 Fax: 714.978.7893 Offices located in Orange and San Diego Counties
Opinions In our opinion, the basic 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, as of June 30, 2014, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note V(J) to the financial statements, the net position of the governmental activities and fund balances of the other governmental funds were restated as of July 1, 2013. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and the schedules of funding progress, listed in the table of contents as required supplementary information, 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 management s discussion and analysis and the schedules of funding progress 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 the audit of the basic financial statements. We do not express an opinion or provide any assurance on the management s discussion and analysis and the schedules of funding progress 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 fund 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 fund 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 fund statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. - 2 -
Other Matters (Continued) Other Information (Continued) The introductory section and statistical section 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 December 26, 2014, 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. Irvine, California December 26, 2014-3 -
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Management s Discussion and Analysis June 30, 2014 This section of the City s Comprehensive Annual Financial Report provides a narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2014. We encourage readers to consider the information presented here in conjunction with additional information we have furnished in our letter of transmittal, which can be found beginning on page iv and the City s financial statements beginning on page 17. Financial Highlights The following are some key financial highlights for the fiscal year June 30, 2014: The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $206,469,967 (net position), which was comprised of capital assets, net investment in capital assets of $156,874,335, restricted for debt service of $2,320,941, restricted for projects and programs of $23,117,892, and unrestricted net position of $24,156,799. The City s total net position increased by $7,374,048 during the current fiscal year, comprised of an increase in governmental activities of $1,629,277, and an increase in business-type activities of $5,744,771. As of June 30, 2014, the City s governmental funds reported combined fund balances of $41,914,787, an increase of $5,563,739 in comparison with the prior year. Of this amount, $18,008,694 or approximately 43% of total fund balances, are available for spending at the City s discretion (committed, assigned, and unassigned fund balance). At the end of the current fiscal year, committed, assigned, and unassigned fund balance for the General Fund was $18,236,116, or 33% of total general fund expenditures. However, the City has committed or assigned $17,814,106 for various projects and programs leaving $422,010 as unassigned. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City s basic financial statements. The City s basic financial statements comprise of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains supplementary information in addition to the basic financial statements. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City s finances in a manner similar to a private-sector business. The statement of net 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 changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities). The governmental activities of the City include general government, public safety, public works, housing, health and community development, culture See independent auditors' report 4 (Continued)
Management s Discussion and Analysis June 30, 2014 and recreation, and interest on long-term debt. The business-type activities of the City include its water, sewer and storm drain, sanitation, and golf course/clubhouse operations. The government-wide financial statements include not only the City itself (known as the primary government), but also five legally separate entities, the Alhambra Capital Improvements Corporation, Alhambra Golfcourse/Clubhouse Corporation, Alhambra Public Financing Authority, Alhambra Parking Authority, and the Economic Development Corporation. The City is financially accountable for these entities and financial information for these blended component units is reported within the financial information presented for the primary government itself. The government-wide financial statements can be found on page 16 and page 17 of this report. Fund Financial Statements. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the governmental-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of this fiscal year. Such information may be useful in evaluating the City s near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City s near-term financial decision. Both the governmental fund balance sheet and the governmental fund statement of revenue, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 20 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund which is considered to be a major fund. Data from the other 19 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these other governmental funds is provided in the form of combining statements in the other governmental funds section of this report. The City adopts an annual appropriated budget for all of its funds. A budgetary comparison statement is provided for all funds with an annually adopted budget. The budgetary comparison statement for the General Fund is located in the basic financial statements. The basic governmental fund financial statements can be found on page 18 and page 20 of this report. Proprietary Funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water, sewer and storm drain, sanitation, and golf course/clubhouse operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City s various functions. The City uses internal service funds to account for self-insurance activities, See independent auditors' report 5 (Continued)
Management s Discussion and Analysis June 30, 2014 including: general claims liability, workers compensation insurance, vehicle operation and maintenance, and compensated absences. Because these services benefit both governmental and business-type functions, the services have been allocated to governmental and business type activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water, sewer and storm drain, sanitation, and golfcourse/clubhouse operations, all of which are considered major funds of the City. Conversely, the internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements in the Supplementary Information section of this report. The basic proprietary fund financial statements can be found on page 25 through page 28 of this report. Fiduciary Funds. The City maintains one fiduciary fund, a Private Purpose Trust for the Alhambra Redevelopment Agency Successor Agency. Fiduciary Funds are used to account for financial resources held for the benefit of parties outside the City government. Fiduciary Funds are not reflected in the government-wide statements because the resources are not available to support governmental activities of the City. The basic fiduciary fund financial statements can be found on page 29 through page 30 of this report. Notes to the Basic Financial Statements. The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 31 through 76 of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City s progress in funding its obligation to provide pension benefits and other post-employment benefits to its employees. Required supplementary information can be found on pages 77 through 78 of this report. The combining statements referred to earlier in connection with other governmental funds and internal service funds, together with information on capital assets used in the operation of governmental funds (those not included in internal service funds), are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found on pages 79 through 112 of this report. See independent auditors' report 6 (Continued)
Management s Discussion and Analysis June 30, 2014 Government-wide Financial Analysis Summary of Net Position June 30, 2014 and 2013 Governmental Business-type activities activities Total 2014 2013 2014 2013 2014 2013 Assets: Current and other assets $ 60,794,226 53,518,099 38,157,395 32,686,060 98,951,621 86,204,159 Capital assets 138,307,472 138,007,160 46,202,984 46,536,273 184,510,456 184,543,433 Total assets 199,101,698 191,525,259 84,360,379 79,222,333 283,462,077 270,747,592 Liabilities: Current and other liabilities 7,668,635 5,886,206 2,219,323 2,125,657 9,887,958 8,011,863 Long-term liabilities 53,976,275 49,811,542 13,127,877 13,828,268 67,104,152 63,639,810 Total liabilities 61,644,910 55,697,748 15,347,200 15,953,925 76,992,110 71,651,673 Net position: Net investment in capital assets 119,910,993 119,554,523 36,963,342 36,630,591 156,874,335 156,185,114 Restricted 24,277,963 16,618,337 1,160,870 1,160,340 25,438,833 17,778,677 Unrestricted (6,732,168) (345,349) 30,888,967 25,477,477 24,156,799 25,132,128 Total net position $ 137,456,788 135,827,511 69,013,179 63,268,408 206,469,967 199,095,919 As noted earlier, net position may serve over time as a useful indicator of the City s financial position. In the case of the City, assets exceeded liabilities by $206,469,967 at June 30, 2014. The largest portion of the City s net position of $156,874,335 reflects its investment in capital assets (e.g., land, buildings, infrastructure, machinery and equipment, etc.), less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City s investment in its capital assets is reported net investment in capital assets, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The second largest portion of the City s net position of $25,438,833 represent resources that are subject to external restrictions on how they may be used. The remaining portion of the City s net position is unrestricted and may be used to meet the City s ongoing obligations to citizens and creditors. At June 30, 2014, unrestricted net position were $24,156,799. See independent auditors' report 7 (Continued)
Management s Discussion and Analysis June 30, 2014 Summary of Activities Year ended June 30, 2014 and 2013 Governmental Business-type activities activities Total 2014 2013 2014 2013 2014 2013 Revenues: Program revenues: Charges for services $ 12,031,080 10,964,302 35,809,731 33,553,398 47,840,811 44,517,700 Operating grants and contributions 8,035,043 9,371,187 22,240 22,626 8,057,283 9,393,813 Capital grants and contributions 890,309 1,992,813 890,309 1,992,813 General revenues 52,702,403 53,417,517 374,230 378,644 53,076,633 53,796,161 Total revenues 73,658,835 75,745,819 36,206,201 33,954,668 109,865,036 109,700,487 Expenses: General government 1,309,345 1,206,489 1,309,345 1,206,489 Public safety 43,976,801 43,666,780 43,976,801 43,666,780 Public works 8,415,715 9,946,710 8,415,715 9,946,710 Housing, health, and community development 8,139,588 8,683,130 8,139,588 8,683,130 Culture and recreation 9,519,514 8,913,765 9,519,514 8,913,765 Interest on long-term debt 1,398,665 1,355,529 1,398,665 1,355,529 Water 16,863,678 18,530,841 16,863,678 18,530,841 Sewer and storm drain 1,851,342 1,788,731 1,851,342 1,788,731 Sanitation 8,694,414 8,606,408 8,694,414 8,606,408 Golf course/clubhouse 2,321,926 1,621,155 2,321,926 1,621,155 Total expenses 72,759,628 73,772,403 29,731,360 30,547,135 102,490,988 104,319,538 Increase in net position before transfers 899,207 1,973,416 6,474,841 3,407,533 7,374,048 5,380,949 Transfers in (out) 730,070 425,084 (730,070) (425,084) Increase in net position 1,629,277 2,398,500 5,744,771 2,982,449 7,374,048 5,380,949 Net position, July 1, as restated 135,827,511 133,429,011 63,268,408 60,285,959 199,095,919 193,714,970 Net position, June 30 $ 137,456,788 135,827,511 69,013,179 63,268,408 206,469,967 199,095,919 Governmental Activities. Governmental activities increased the City s net position by $1,629,277. Governmental Revenues. Governmental revenues decreased by $2,086,984 or 2.8%. There are several reasons which account for this decrease, however the main factors are a decrease in operating grants and contributions of $873,519 partially due to decrease in CDBG allocation revenues as program income available in current year. Capital grants and contributions decreased $1,102,504 due to decrease in street construction grant revenues. These decreases were partially offset by an increase in charges for services of $1,066,778. The increase in charges for services was primarily due to an increase in building permit revenues of $1,440,707. Governmental Expenses. Governmental expenses decreased by $1,012,775 or 1.4%. There are several reasons which account for this decrease, however main factors are a decrease of $1,530,995 in public works from loss on infrastructure replacement of $1,844,381 recorded in prior year offset by expenditures for new parking structure. Housing, health, and community development expenses decreased $543,542 due to write down of loan of $897,109 in prior year offset by increase in HOME rehabilitation expenditures. These decreases were partially offset by an increase of $605,749 in culture and recreation primarily due to increases in library, recreation and park operations services costs. See independent auditors' report 8 (Continued)
Management s Discussion and Analysis June 30, 2014 $50,000,000 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Expenses and Program Revenues Governmental Activities For the year ending June 30, 2014 General government Public safety Public works Housing, health, and community development Culture and recreation Expenses Program revenues Interest on longterm debt Revenues by Source Governmental Activities Utility users tax 5% Investment earniugs Other 0% taxes 5% Other 13% Charges for services 15% Operating grants and contributions 11% Capital grants and contributions 1% Motor vehicle in lieu 10% Sales taxes 19% Property taxes 21% See independent auditors' report 9 (Continued)
Management s Discussion and Analysis June 30, 2014 Business-type Activities. Business-type activities increased the City s net position by $5,744,771 indicating that business-type activities had revenues sufficient to cover operations. A key element of this increase is as follows: Water Fund net position increased $3,103,220 primarily due to increase in revenues from water rate increase and additional fees related to significant development projects in current year.. Sewer and Storm Drain Fund net position increased $3,134,198 due to revenues exceeding expenses providing for the accumulation of resources for future capital projects and expenses. Expenses and Program Revenues Business-type Activities for the year ended June 30, 2014 $25,000,000 $20,000,000 $15,000,000 Expenses Program revenues $10,000,000 $5,000,000 $0 Water Sewer and storm drain Sanitation G olf course/clubhouse Revenues by Source Business-type Activities $40,000,000 $35,000,000 $35,809,731 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Charges for services $22,240 $142,339 $231,891 Operating grants and contributions Capital grants and contributions Investment earnings Other See independent auditors' report 10 (Continued)
Management s Discussion and Analysis June 30, 2014 Financial Analysis of the City s Major Funds 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. Below is an analysis of the City s major governmental fund for the year ended June 30, 2014. Amount Percentage June 30, June 30, Increase Increase 2014 2013 (Decrease) (Decrease) General Fund Balance: $ 18,475,333 14,772,079 3,703,254 25% The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the fund balance was $18,475,333 which increased by $3,703,254 during the current fiscal year. There are multiple reasons for the increase, however revenues exceeded budget by $3,870,354 due primarily to building permit revenues exceeding budget by $1,440,707, unexpected revenue from settlement of $1,275,000, and sales tax exceeded budget by $712,306 primarily due to increases auto sales. Proprietary Funds. The City s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Amount Percentage June 30, June 30, Increase Increase 2014 2013 (Decrease) (Decrease) Net Position: Water Fund $ 42,935,930 39,832,710 3,103,220 7.8% Sewer Fund 23,340,996 20,206,798 3,134,198 15.5% Sanitation Fund 194,061 341,272 (147,211) 43.1% Golf course/clubhouse Fund 4,580,278 5,084,502 (504,224) -9.9% Total Net Position $ 71,051,265 65,465,282 5,585,983 56.5% Unrestricted Net Position: Water Fund $ 17,342,138 14,583,352 2,758,786 18.9% Sewer Fund 17,221,913 14,178,765 3,043,148 21.5% Sanitation Fund 90,680 202,338 (111,658) 55.2% Golf course/clubhouse Fund (1,727,678) (1,290,104) (437,574) -33.9% Total Unrestricted Net Position $ 32,927,053 27,674,351 5,252,702 61.6% Enterprise Funds. Unrestricted net position of the enterprise funds totaled $32,927,053 and total growth in net position for these funds was $5,252,702. Other factors concerning the finances of these funds have already been addressed in the discussion of the City s business-type activities. The Water Fund s unrestricted net position was $17,342,138, while total net position was $42,935,930 at the end of the current year. The net position of the Water Fund increased $3,103,220 during the current fiscal year. This increase was attributable primarily due to water rate increases and a decrease in interfund allocation expense to the General Fund of $907,763. See independent auditors' report 11 (Continued)
Management s Discussion and Analysis June 30, 2014 The Sewer and Storm Drain Fund s unrestricted net position was $17,221,913, while total net position was $23,340,996 at the end of the fiscal year. The net position of the Sewer and Storm Drain Fund increased by $3,134,198 during the current fiscal year primarily due to sewer rate increases to accumulate funds for future capital projects. The Sanitation Fund s unrestricted net position was $90,680 at the end of the current fiscal year, while total net position was $194,061. The net position of the Sanitation Fund decreased by $147,211 during the current fiscal year. This decrease was due primarily to use of available resources as anticipated. The Golf course/clubhouse fund s unrestricted net deficit was $1,727,678, while total net position was $4,580,278 at the end of the current fiscal year. The net position of the Golf course/clubhouse fund decreased $504,224 during the current fiscal year. This decrease was due primarily to increased golf course maintenance costs and clubhouse roof improvements. General Fund Budgetary Highlights In the General Fund, differences between the original budget and the final amended budget resulted in a net increase in appropriation of $804,892 (net of prior year carryover of available and encumbered balances) and can be briefly summarized as follows: $522,092 in increases allocated to various general government departments $61,316 in increases allocated to the library department $393,363 in increases allocated to the community services department $150,000 in increases allocated to the development services department $339,295 in increases allocated to public safety The increase in various general government departments included $110,092 for debt service on new bond issue, $400,000 for additional legal costs, along with other miscellaneous adjustments. The increase in library department of $61,316 was funded from donations made to the library. The increase in community services included $203,880 for picnic shelters and $170,000 for clubhouse roof replacement., and other various improvements funded by available fund balance. The increase of $150,000 in development services for additional costs for larger development projects funded by additional revenues collected. The increase of $339,295 in public safety included $291,567 for training, equipment, and other items funded from homeland security and urban area grants, $34,320 for information technology services and other various purchases budgeted from available fund balance. See independent auditors' report 12 (Continued)
Management s Discussion and Analysis June 30, 2014 Also in the General Fund, differences between the final amended budget and the actual amounts for revenues, expenditures, and other financing sources and uses resulted in a net positive variance of $5,267,076. General fund revenues accounted for a positive variance of $3,870,354 resulting primarily from increased building permit revenue which has a positive variance of $1,440,707, increased sales tax having a positive variance of $712,306, and other revenues with a positive variance of $1,270,372 from one-time revenue of $1,275,000. The General Fund expenditures were under budget by $1,372,712 due to expenditures capital outlay expenditures under budget by $585,844 primarily due to unexpended grant awards. There are various departments under budget and over budget which have a occurred for a multitude of reasons but have resulted in a positive variance for the General Fund. Capital Asset and Debt Administration Capital Assets. The City s investment in capital assets for its governmental and business-type activities amounts to $184,510,456 (net of accumulated depreciation of $101,035,383) as of June 30, 2014. This investment in capital assets includes land, buildings, improvements other than building, infrastructure (roads, sidewalks, land held under easement, streetlights, etc.), and machinery and equipment. Capital Assets (Net of Accumulated Depreciation) June 30, 2014 and 2013 Governmental Business-type activities activities Total 2014 2013 2014 2013 2014 2013 Land $ 22,035,738 22,035,738 5,769,073 5,769,073 27,804,811 27,804,811 Buildings, structures, and improvements 58,262,478 59,618,412 12,159,000 12,497,913 70,421,478 72,116,325 Machinery and equipment 3,330,375 3,720,721 1,118,606 1,215,491 4,448,981 4,936,212 Utility systems 27,069,955 27,053,796 27,069,955 27,053,796 Infrastructure 51,326,718 52,471,636 51,326,718 52,471,636 Construction in progress 3,352,163 160,653 86,350 3,438,513 160,653 Total $ 138,307,472 138,007,160 46,202,984 46,536,273 184,510,456 184,543,433 Additional information on the City s capital assets can be found in notes to the basic financial statements on pages 48 through 52 of this report. Major capital asset events during the current fiscal year included the following: Governmental activities Machinery and equipment additions include a street sweeper, two police vehicles, four defibrillators; various rescue equipment, and other miscellaneous equipment. Deletions included a four defibrillators, workstation, copier and other miscellaneous equipment. Construction in progress increased due to construction of a parking structure to be completed next fiscal year offset by the completion of a playground renovation project. Infrastructure additions and deletions included improvement and replacement of streets and sidewalks. See independent auditors' report 13 (Continued)
Management s Discussion and Analysis June 30, 2014 Business-type activities Utility systems additions included improvements in water and sewer lines, water reservoirs, and water wells. Construction in progress increased due sewer plant renovation project to be completed next fiscal year. Debt Administration. At the end of the current fiscal year, the City had total bonded debt outstanding of $35,710,000. Of this amount, $26,440,000 represents certificates of participation issued for various capital improvements including police facility, golf course/clubhouse, and water treatment facility, $6,565,000 represents lease revenue bonds for the construction of a parking structure, and $2,705,000 represents special assessment bonds to finance public works maintenance and improvement projects. Additions to the City s longterm debt included lease revenue bonds of $6,565,000, pension liability of $657,935, and OPEB liability of $1,387,608. Deductions include net decrease in outstanding claims of $685,627 and in benefits payable of $17,702, and the repayment of outstanding principal totaling $4,225,202. Outstanding Debt June 30, 2014 and 2013 Governmental Business-type activities activities Total 2014 2013 2014 2013 2014 2013 Bonded indebtedness: Certificates of participation $ 16,045,060 17,852,940 10,394,940 11,072,060 26,440,000 28,925,000 Lease revenue bonds 6,565,000 6,565,000 Assessment district bonds 2,705,000 3,155,000 2,705,000 3,155,000 Other long-term debt: Capital lease obligations 506,338 599,697 506,338 599,697 Benefits payable 3,265,964 3,218,299 335,113 399,850 3,601,077 3,618,149 Pension liability 3,851,040 3,265,479 613,082 540,708 4,464,122 3,806,187 OPEB liability 5,676,053 4,453,784 800,263 634,924 6,476,316 5,088,708 Self insurance claims payable 11,477,951 12,163,578 11,477,951 12,163,578 Notes and loans payable 1,827,334 2,828,396 978,907 1,174,688 2,806,241 4,003,084 $ 51,919,740 47,537,173 13,122,305 13,822,230 65,042,045 61,359,403 Additional information on the City s debt can be found in notes to the basic financial statements on pages 54 through 59 of this report. As of June 30, 2014 Standard & Poors credit market services has assigned a rating of A+ to the City. This rating has been raised to AA- on August 29, 2014. State statutes limit the amount of general obligations debt a governmental entity may issue to 15% of its total assessed valuation. The current debt limitation for the City is $285,151,189. The City currently has no general obligation debt. See independent auditors' report 14 (Continued)
Management s Discussion and Analysis June 30, 2014 Next Year s Budget The fiscal year 2014-2015 budget is basically a hold the line budget due to a nationwide slow economic recovery. However, as in past budgets, the City s emphasis is on future economic development efforts to continue to strengthen the City s revenue base despite the loss of redevelopment. The major thrust of the 2014-15 City of Alhambra Annual Budget is infrastructure improvements including water and sewer system improvements and enhancements, various street and traffic projects, public safety and golf course improvements. While the local economy is sluggish in its recovery, the City is cautiously optimistic and the budget projections for the fiscal year 2014-15 remain conservatively optimistic. Lastly the budget includes an increase to General Fund Reserves, no tax increases, no layoffs, no mandatory furloughs and no restrictions to on-going vital services. Request for Information This financial report is designed to provide a general overview of the City s finances for readers of the financial statements. Questions concerning any of the information in this report or request for additional financial information should be addressed to the Director of Finance, 111 South First Street, Alhambra, CA 91801. See independent auditors' report 15
Basic Financial Statements
Statement of Net Position June 30, 2014 Governmental Business-type Assets Activities Activities Total Cash and investments $ 38,121,288 35,350,320 73,471,608 Restricted cash and investments 4,770,569 1,160,870 5,931,439 Accounts receivable 7,237,202 4,965,816 12,203,018 Loans receivable 265,239 265,239 Due from Successor Agency 5,962,446 5,962,446 Internal balances 3,896,961 (3,896,961) Inventories 40,735 556,127 596,862 Prepaid items 27,368 21,223 48,591 Property held for resale 472,418 472,418 Capital assets not being depreciated 25,387,901 5,855,423 31,243,324 Capital assets, net of accumulated depreciation 112,919,571 40,347,561 153,267,132 Total assets 199,101,698 84,360,379 283,462,077 Liabilities Liabilities: Accounts payable 3,388,650 1,605,397 4,994,047 Accrued liabilities 1,709,129 1,709,129 Bond interest payable 544,612 147,210 691,822 Due to Successor Agency 815,066 815,066 Deposits 1,013,381 409,808 1,423,189 Retentions payable 197,797 56,908 254,705 Long-term liabilities: Due within one year 4,812,929 930,818 5,743,747 Due in more than one year 49,163,346 12,197,059 61,360,405 Total liabilities 61,644,910 15,347,200 76,992,110 Net Position Net position: Net investment in capital assets 119,910,993 36,963,342 156,874,335 Restricted for: Debt service 1,160,071 1,160,870 2,320,941 Special revenue programs 20,535,807 20,535,807 Parking structure project 2,572,747 2,572,747 Law Enforcement 9,338 9,338 Unrestricted (6,732,168) 30,888,967 24,156,799 Total net position $ 137,456,788 69,013,179 206,469,967 See accompanying auditors' report and notes to financial statements 16
Statement of Activities Year ended June 30, 2014 Net (expenses) revenues and Program revenues changes in net assets Operating Capital Charges for grants and grants and Governmental Business-type Expenses services contributions contributions activities activities Total Functions/programs primary government: Governmental activities: General government $ 1,309,345 1,771,545 462,200 462,200 Public safety 43,976,801 4,768,708 555,576 (38,652,517) (38,652,517) Public works 8,415,715 730,946 2,916,126 882,950 (3,885,693) (3,885,693) Housing, health, and community development 8,139,588 4,107,468 4,324,437 292,317 292,317 Culture and recreation 9,519,514 652,413 238,904 7,359 (8,620,838) (8,620,838) Interest on long-term debt 1,398,665 (1,398,665) (1,398,665) Total governmental activities 72,759,628 12,031,080 8,035,043 890,309 (51,803,196) (51,803,196) Business-type activities: Water 16,863,678 20,138,797 3,275,119 3,275,119 Sewer and storm drain 1,851,342 5,316,389 3,465,047 3,465,047 Sanitation 8,694,414 8,586,339 22,240 (85,835) (85,835) Golf course/clubhouse 2,321,926 1,768,206 (553,720) (553,720) Total business-type activities 29,731,360 35,809,731 22,240 6,100,611 6,100,611 Total $ 102,490,988 47,840,811 8,057,283 890,309 (51,803,196) 6,100,611 (45,702,585) General revenues: Property taxes and assessments 15,983,618 15,983,618 Sales tax 15,103,394 15,103,394 Utility users tax 4,176,807 4,176,807 Franchise tax 1,625,107 1,625,107 Business license tax 1,544,170 1,544,170 Other taxes 654,609 654,609 Unrestricted intergovernmental 7,695,977 7,695,977 Unrestricted investment earnings 140,478 142,339 282,817 Miscellaneous 5,778,243 231,891 6,010,134 Transfers 730,070 (730,070) Total general revenues and transfers 53,432,473 (355,840) 53,076,633 Change in net position 1,629,277 5,744,771 7,374,048 Net position beginning of year, as restated 135,827,511 63,268,408 199,095,919 Net position end of year $ 137,456,788 69,013,179 206,469,967 See accompanying auditors' report and notes to financial statements 17
Balance Sheet Governmental Funds June 30, 2014 Nonmajor Totals General Governmental Funds Governmental Funds Assets Cash and investments $ 16,276,761 13,958,981 30,235,742 Restricted cash and investments 4,757,039 4,757,039 Receivables: Accounts 5,793,530 766,497 6,560,027 Loans 265,239 265,239 Due from other funds 2,401,732 85,272 2,487,004 Due from Successor Agency 163,406 5,799,040 5,962,446 Inventories 40,735 40,735 Prepaid items 25,738 45 25,783 Property held for resale 472,418 472,418 Total assets $ 24,701,902 26,104,531 50,806,433 Liabilities and Fund Balances (Deficits) Liabilities: Accounts payable $ 1,270,794 1,444,822 2,715,616 Accrued liabilities 1,709,129 1,709,129 Due to other funds 24,880 421,099 445,979 Due to Successor Agency 815,066 815,066 Deposits 1,002,273 1,002,273 Retentions payable 390 197,407 197,797 Total liabilities 4,822,532 2,063,328 6,885,860 Deferred inflow of resources: Unavailable revenues 1,404,037 601,749 2,005,786 Fund balances: Nonspendable: Prepaid items 25,738 25,738 Due from Successor Agency 163,406 163,406 Inventories 40,735 40,735 Restricted for: Law enforcement 9,338 377,440 386,778 Streets and transportation 10,990,711 10,990,711 Air quality 317,831 317,831 Parking Structure Community development 2,572,747 768,655 2,572,747 768,655 Police facility 1,663,078 1,663,078 Debt service 1,160,071 1,160,071 Low income housing 5,816,343 5,816,343 Committed for: Emergency reserve 8,727,546 8,727,546 Art in public places Assigned to: 471,560 471,560 Continuing appropriations 540,000 540,000 Self-insurance fund 3,400,000 3,400,000 Catch basin improvements 800,000 800,000 Various capital improvements Streets and transportation 700,000 900,000 700,000 900,000 Library building repairs 1,275,000 1,275,000 General plan amendment Unassigned 1,000,000 422,010 (227,422) 1,000,000 194,588 Total fund balances 18,475,333 23,439,454 41,914,787 Total liabilities and fund balances $ 24,701,902 26,104,531 50,806,433 See accompanying auditors' report and notes to financial statements 18