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1989-1990 Annual Audit ReportCITY~a~ OF ~ AGENDA ITEM NO.: ..................... ~ ............................................ . SAN RAFAEL T G Dec. 17, 1990 MEE IN DATE! ..................................... " .............. . P a BOX 60. SAN RAFAEL. CALIF 94915 /PHoNE 14151 456 ·111 2 REPORT TO MAYOR AND CITY COUNCIL SUBJECT: 1989/90 ANNUAL AUDIT REPORT SUBMITTED Bv:_~dL~ ......... APPROVED BV: ............................. ~ ...... _ ........... . Ransom E. Coleman, Finance Director City Manager DATE: Dec. 13, 1990 RECOMMENDATION: Accept the report. SUMMARY/BACKGROUND: Deloitte & Touche has completed the audit for the City. We have an opinion from the auditors that these financial statements present fairly the financial position of the City and the Agency as of 6/30/90 in conformity with generally accepted accounting principles. The enclosed report is a combined financial statement that includes the Redevelopment Agency and the City. If you have any questions concerning the audit, a representative from Deloitte & Touche will be present at the meeting. File No ......... _ ............ g.7._ ...... __ . __ Co ::;;::! il J;r '·. . 1""/I.1/fO .............. _ i);;"n ~:i·io ·l ..... a.~ .... ~ Deloitte& Touche CITY OF SAN RAFAEL General Purpose Financial Statements for the Year Ended June 30, 1990 and Independent Auditors' Report CITY OF SAN RAFAEL TABLE OF CONTENTS Independent Auditors' Report General Purpose Financial Statements as of and for the Year Ended June 30, 1990: Combined Balance Sheet -All Fund Types and Account Groups Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types and Expendable Trust Funds Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Budget Basis) -General, Budgeted Special Revenue and Budgeted Debt Service Funds Notes to General Purpose Financial Statements 1 2 3 4 5-17 Deloitte& Touche L INDEPENDENT AUDITORS' REPORT Honorable Mayor and Members of the City Council of the City of San Rafael, California: 50 Fremont Street San Francisco, California 94105-2230 Telephone : (415) 393-4300 Facsimile: (415) 982-7805 We have audited the accompanying general purpose financial statements of the City of San Rafael, California as of June 30, 1990 and for the year then ended, listed in the foregoing table of contents. These general purpose financial statements are the responsibility of the management of the City of San Rafael, California. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such general purpose financial statements present fairly, in all material respects, the financial position of the City of San Rafael, California at June 30, 1990 and the results of its operations for the year then ended in conformity with generally accepted accounting principles. September 20, 1990 CITY OF SAN RAFAEL COMBINED BALANCE SHEET -ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30, 1990 •••.......• GOVERNMENTAL FUND TyPES •.••••••.•• ASSETS CASH AND INVESTMENTS (Note 2) RESTRICTED CASH AND INVESTMENTS (Note 2) ACCOUNTS RECEIVABLE FIXED ASSETS (Note 3) OlliER ASSETS LAND HELD FOR SALE (Note 4) AMOUNT AVAILABLE IN DEBT SERVICE FUND AMOUNT AVAILABLE FOR OUTSTANDING CLAIMS AMOUNT TO BE PROVIDED FOR RETIREMENT OF: General long-term debt Vacation ana sick leave obligations TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES: Vouchers and accounts payable Accrued payroll and benefits (Note 5) Deposits and advances Deferred compensation liability (Note 8) Outstanding claims (Note 5) Long-term aebt (Note 5) Total liabilities EQUITY: Investment in general fIXed assets Fund balances (Note 6): ReseIVed UnreseIVed: Designated Undesignated Total equity TOTAL LIABILITIES AND EQUITY See notes to general purpose financial statements. GENERAL $6,227,121 86,057 11,106 ~6.324,284 $ 249,691 472,504 722,195 771,314 4,830,775 5.602,O!l9 i6.324,284 SPECIAL CAPITAL DEBT REVENUE PROJECTS SERVICE $11,100,626 $6,651,240 $3,639,997 3,814,678 711,246 585,527 56,052 2,435,000 ~11.81l,872 ~9.671,767 P .510,727 $ 51,951 $ 38,115 $ 4,968 50,139 95,000 102,090 133,115 4,968 612,605 2,750,687 3,814,678 8,562,488 6,787,965 3,691,081 2.534.689 II ,'09.7!l2 9,53!l.652 ',505,759 ~11,811,872 i9,671.767 P ,510,727 FIDUCIARY .•••• ACCOUNT GROUPS ...•• FUND TYPE -GENERAL GENERAL TOTAL TRUST AND FIXED LONG-TERM (MEMORANDUM AGENCY ASSETS OBLIGATIONS ONLY) $3,603,566 $ 31,222,550 3,814,678 12,104 1,450,986 $29,649,785 29,649,785 11,106 $ 7,505,759 2,435,000 7,505,759 620,185 620,185 23,556,241 23,556,241 1,255,447 1,255,447 P.615,670 ~29.649,785 P2,937,632 ~101,521.737 $ 344,725 $ 1,255,447 1,727,951 145,139 $2,705,907 2,705,907 620,185 620,185 2,705,907 31,062,000 32,937,632 31,062,000 36,605,907 $29,649,785 29,649,785 909,763 8,859,047 23,872,309 909,763 29,649,7!l5 2,534,689 64,915,!l30 p,615,670 ~29,649,785 P2,937,632 ~101,521,737 -2- v CITY OF SAN RAFAEL COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 1990 FIDUCIARY •••••••••••• GOVERNMENTAL FUND TyPES •••••••••••••• FUND TYPE - SPECIAL CAPITAL DEBT EXPENDABLE GENERAL REVENUE PROJECTS SERVICE TRUST REVENUES: Taxes and s~ecial assessments $18.385,163 $ $5,407,148 Licenses ana permits 365,410 352,758 $ Intergovernmental 2,764.075 923,431 339,488 74 Charges for services 1,092,793 3,041,326 Fines and forfeitures 650,890 Interest and rentals 536,273 976.078 922,977 523,621 $ 83.727 Sale of property 334,577 7.211 Other 125.430 428.721 3.502 888 Total revenues 2~.25~.iln 5.72~.525 I.2il5.gil7 5.g:n.7~I B~.727 EXPENDITURES: Current: General "overnment 3,834,532 231,681 Public sa e~ 12,583,163 2,765 Public worlCs and parks 5,210,248 Recreation 461,926 1,849,041 Claims 144,912 Other 922,532 522,454 546,248 117,859 56,607 Cagital outlay 429,731 1,486,710 4,703,514 De t service: Principal retirement 3,486,320 Interest 2.826.510 Total expenditures 2~.5B7.0~~ ~.Og2.il51 5.Ng.7il2 il.~~O.ilBg 5il.il07 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 667.567 1.636.874 (3.983.795) (498.958) 27.120 OTHER FINANCING SOURCES (USES): Proceeds from note payable 169,000 Operating transfers 10 298,488 52,389 315,277 143,752 Operating transfers out (54.877) 451 618~ (111.541) {191:870~ Total other financing sources (uses) 243.611 399 229 372.736 (48 118 EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDE~ EXPENDITURES AND 0 ER USES 911,178 1,237,645 (3,611,059) (547,076) 27,120 FUND BALANCES, JULY 1, 1989 4.690.911 10.472.137 13.149.711 8.052.835 882.643 FUND BALANCES, JUNE 30, 1990 $ 5.602.089 $11.709.782 $ 9.538.652 $7.505.759 $909.763 See notes to general purpose financial statements. TOTAL (MEMORANDUM ONLY) $23.792,311 718,168 4,027.068 4,134,119 650,890 3,042,676 341,788 558.541 ~7.2il5.5ilI 4,066,213 12,585,928 5,210,248 2,310,967 144,912 2,165,700 6,619,955 3,486,320 2.826.510 ~g.~Iil.75~ (2.151.192) 169,000 809,906 (809.906) 169.000 (1,982,192) 37.248.237 $35.266.045 -3- CITY OF SAN RAFAEL COMBINED STAlEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACfUAL (BUDGET BASIS) -GENERAL, BUDGElED SPECIAL REVENUE AND BUDGElED DEBT SERVICE FUNDS FOR mE YEAR ENDED JUNE 30,1990 ••••••••••••• • GENERAL. •••••••••••••• ••••• BUDGETED SPECIAL REVENUE ••••• ••••••• BUDGETED DEBT SERVICE ••••••••• ACTUAL VARIANCE -ACTUAL VARIANCE -ACTUAL VARIANCE - (BUDGET FAVORABLE (BUDGET FAVORABLE (BUDGET FAVORABLE BUDGET BASIS) (UNFAVORABLE) BUDGET BASIS) (UNFAVORABLE) BUDGET BASIS) (UNFAVORABLE) REVENUES: Taxes and sIJecial assessments $17,295,000 $18,385,163 $1,090,163 $1,929,120 $1,888,972 $ (40,148) Licenses ani! pennits 330,000 365,410 35,410 $ 380,000 $ 350,956 $(29,044) Intergovernmental 2,837,000 2,764,075 (72,925) 743,700 751,343 7,643 74 74 Charges for seIVices 1,012,000 1,093,910 81,910 1,700,751 1,644,146 (56,605) Fines and forfeitures 650,000 678,406 28,406 Interest and rentals 247,000 329,453 82,453 42,000 26,955 (15,045I 188,430 188,430 Other 20,000 105,443 85,443 3,000 485 ~2 515 Total revenues 22,3!H,/l/l/l 23,72I,!!/')/l I,33/l,!!/')/l 2,!!/')9,'l!)! 2,773,!!!!S n:S/')/') 1,929,12/l 2,/l77,'l7/') I'lB,3Sli EXPENDITURES: Current: General fovernment 4,100,052 3,834,532 265,520 232,244 230,456 1,788 Public sa ety 12,725,166 12,583,163 142,003 Public works and parks 5,186,706 5,210,248 (23'542~ (382) Recreation 459,064 461,926 f2,862 1,766,296 1,766,678 Other 918,305 922,532 4,227 6,365 410 5,955 Ca~ital outlay 1,112,930 429,731 683,199 969,853 756,747 213,106 De t seIVice: Principal retirement 765,000 769,320 (4,320) Interest 1,164,175 1,160,674 3,501 Total apenditures 2~,S02,22~ 2~,~~2,1:32 I,OliO,091 2,9IiS,:39:3 2,7S3,S!!1 2U,SI2 1,9:3S,S~0 1,9:30,~0~ S,I~1i EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (2,111,223) 279,728 2,390,951 (98,942) 20,004 118,946 (6,420) 147,072 153,492 OrnER FINANCING SOURCES (USES): 298,488 52,389 52,389 Operating transfers in 298,488 Operating transfers out ~2,488) ~52,389) f49:901~ f296:000~ f296:000~ fl88:430~ fl88:430~ Total other financing sources (uses) 2·Ii,OOO ~Ii,099 ~9 901 291i 000 2~:3 !'ill S2,:3S9 IS!! ~:30 IS!! ~30 EXCESS OF REVENUES AND ornERSOURCESOVER~UNDERJs EXPENDITURES AND 0 ER US $(l,815,223) $ 525,827 $2,341,050 $ (394,942) $ (223,607) $171,335 $ [6,420) $ [41,358) $ (34,938) See notes to general purpose financial statements. -4- CITY OF SAN RAFAEL NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES Description of the Reporting Entity -The general purpose financial statements of the City of San Rafael (the City) include the financial activities of the City and the City of San Rafael Redevelopment Agency (the Agency). The financial operations of the Agency are closely related to the City, and the City Council has a continuing oversight responsibility for the Agency. The oversight responsibility is determined on the basis of budget adoption, taxing authority, funding and appointment of the governing board. Financial statements for the San Rafael Sanitation District are not included as it is administered by a board separate from the City Council. This entity determines its own budget, enters into contracts, has the legal right to acquire and dispose of property and produce its own financial statements. Description of Joint Venture Participation -The City participates in two joint venture activities through formally organized and separate entities. The financial activities of the California Joint Powers Insurance Authority and the Marin County Major Crimes Task Force are not included in the accompanying general purpose financial statements as they are administered by boards separate from and independent of the City (see Note 10). Description of Funds and Account Groups -The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped in the financial statements in this report into categories as follows: • Governmental Funds: •• General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. • • Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes. • • Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. • • Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long- term debt principal, interest, and related costs. -5- • Fiduciary Funds: • • Trust and Agency Funds are used to account for assets held by the City as a trustee or agent for individuals, private organizations, other governments, and/or other funds. All trust funds are expendable. Expendable trust funds are accounted for in the same manner as governmental funds. Agency funds are custodial in nature and do not involve measurement of the results of operations. • Account Groups: • • General Fixed Assets Account Group -Fixed assets are accounted for in the general fIxed assets account group, rather than in governmental funds. No depreciation has been provided on general fixed assets. Public domam (infrastructure) assets such as roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems are not capitalized. • • General Long-Term Obligations Account Group -Long-term liabilities expected to be fInanced from governmental funds are accounted for in the general long-term obligations account group, not in the governmental funds. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current fInancial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (Le., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. All governmental funds, expendable trust funds and agency funds are accounted for using the modified accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. The City's primary revenue sources, taxes and special assessments, intergovernmental revenues, and interest and rentals have been treated as "susceptible to accrual" under the modified accrual basis. Licenses and permits, fines and forfeitures, charges for current services, and donations and other revenues are not considered "susceptible to accrual" under the modified accrual basis. Expenditures under the modified accrual basis of accounting are recognized when the related fund liability is incurred, except for principal and interest on general long-term obligations which is recognized when paid. Budgets and Budgetary Accounting -The City annually adopts a budget for its general fund (excluding certain workers' compensation and liability claims) and certain special revenue and debt service funds to be effective July 1 for the ensuing fiscal year. From the effective date of the budget, which is adopted at the department level, the amounts stated therein as proposed expenditures become appropriations to the various City departments. The City Council may amend the budget by resolution during the fiscal year. The City Manager is authorized to transfer budgeted amounts between accounts, departments or funds; the Council must approve any increase in the City's total budget. Several supplemental appropriations were approved during the course of the year. All unencumbered appropriations lapse at year-end. -6- Annual budgets are adopted on a cash basis (budget basis). The City also adopts bud~ets annually for its Capital Projects Funds. Such budgets are based on a project time frame, rather than a fiscal year' operating" time frame, reappropriating unused appropriations from year to year until project completion. The City does not adopt budgets for trust and agency funds, certain special revenue grant funds, the special revenue equipment replacement fund and special assessment debt service funds. The City's budgetary process is based on the cash basis of accounting for certain transactions. The results of operations are presented in the budget and actual comparison statement in accordance with the budgetary process (budget basis) to provide a meaningful comparison to budget. The results of actual operations on a budgetary basis are reconciled to the results of operations on a generally accepted accounting principles (GAAP) basis by fund type as follows: Excess of revenues and other sources over (under) expenditures and other uses (budget basis) Adjustments arising from differences between cash basis and modified accrual basis Adjustments to record excess of revenues and other sources over (under) expenditures and other uses for unbudgeted funds Excess of revenues and other sources over ( under) expenditures and other uses (GAAP basis) General $525,827 (22,349) 407.700 ~911.178 Special Debt Revenue Service $ (223,607) $ (41,358) 11 ,369 1.449.883 (505.7l8) ~1.237.645 U547.076) Encumbrance accounting, under which purchase orders, contracts, and other commitments for expenditures are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of the budgetary process. Investments are stated at cost, which approximates current (market) value, except for investments of the Deferred Compensation Plan Agency Fund, which are stated at current (market) value. Restricted Cash and Investments -Certain proceeds of various special assessment bonds, as well as certain resources set aside for their repayment, are classified as restricted cash and investments on the balance sheet because their use is limited to debt service by applicable bond covenants. Fixed assets are stated at historical cost or estimated historical cost when actual cost is not available. Land held for sale is stated at cost which approximates net realizable value. -7- v Accumulated Unpaid Vacation and Sick Leave -The City accounts for compensated absences (unpaid vacation and sick leave) expected to be currently payable as accrued payroll and benefits liability in the governmental funds to which they relate. The balance of the earned and vested, but unused, compensated absences expected to be paid subsequent to June 30, 1990 is recorded in the general long-term obligations account group. Sick pay vesting was discontinued in 1978. Property Tax Levy, Collection and Maximum Rates -The State of California (State) Constitution Article XIII A provides that the combined maximum property tax rate on any given property may not exceed one percent of its assessed value unless an additional amount for general obligation debt has been approved by voters. Assessed value is calculated at 100 percent of market value as defined by Article XIII A and may be adjusted by no more than two percent per year unless the property is sold, transferred or improved. The State Legislature has determined the method of distribution of receipts from a one percent tax levy among the counties, cities, school districts and other districts. Marin County assesses properties, bills for, and collects property taxes as follows: Lien dates Levy dates Due dates Delinquent as of Secured March 1 July 1 50% on November 1 50% on February 1 December 10 (for November) April 10 (for February) Unsecured March 1 July 1 July 1 August 31 The term "unsecured" refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the property being taxed. Property taxes levied are recorded as revenue and receivables, net of estimated uncollectibles, in the fiscal year of levy. "Total Memorandum Onl "Information -Columns on the accompanying combined financial statements captioned "Total Memorandum Only " do not present consolidated financial information. They are not necessary for a fair presentation of the financial statements, but are presented as additional analytical data. Interfund eliminations have not been made in the aggregation of this data. 2. CASH AND INVESTMENTS The City maintains a cash and investment pool consisting of cash in banks, certificates of deposit, bankers' acceptances, obligations of the U.S. Treasury and deposits in the State of California Local Agency Investment Fund. This pool is available for use by all funds, except the Redevelopment Agency, Capital Projects and Debt Service Funds, the Deferred Compensation Plan (Agen~) Fund and certain debt service funds. Each fund type's portion of the pool is shown on the combined balance sheet as 'Cash and Investments." In addition, investments are separately held by several of the City's funds. -8- Cash Deposits -At year-end the carrying amount of the City's cash deposits, including certificates of deposit, was $5,602,258, and the bank balance was $6,342,938. Of the bank balances, $3,192,990 was covered by federal depository insurance, and $3,149,948 was secured with government securities held by the pledging financial institution, or by its trust department or agent. Under the California Government Code, a financial institution is required to secure deposits made by state or local governmental units by pledging securities held in the form of an undivided collateral pool. The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. Such collateral is considered to be held in the name of the City. Investments -Statutes authorize the City to invest in obligations of the U.S. Treasury, its agencies, and instrumentalities, certificates of deposit, commercial paper, bankers' acceptances, medium term notes, repurchase agreements, and the State of California Local Agency Investment Fund. The City's investments are categorized below to give an indication of the credit risk assumed by the City at June 30, 1990. Category 1 includes investments that are insured or registered or for which the securities are held by the City or its agent in the City'S name. Category 2 includes uninsured and unregistered investments for which the securities are held by the broker's or dealer's trust department or agent in the City's name. Category 3, of which there are none, includes uninsured and unregistered investments for which the securities are held by the counterparty, or by its trust department or agent but not in the City'S name. U.S. government securities Bankers' acceptances Medium term notes Total Investment in the State of California Local Agency Investment Fund Mutual funds Total investments Total cash deposits (discussed above) Total cash and investments (including restricted cash and investments) ....... Category .•..•.. 1 Z $3,603,997 $3,049,613 1 1 491 1 532 $4 1 541 1 145 $3 1 603 1 997 $ Carryi ng Amount 3,603,997 3,049,613 1 1 491 1 532 8,145,142 19,798,000 L49L828 29,434,970 5 1 602 1 258 $35 1 037 1 228 Current (Market) Value $ 3,621,884 3,101,225 1 1 500 1 602 8,223,711 19,798,000 L49L828 $29 1 513 1 539 -9- 3. 4. FIXED ASSETS A summary of changes in general fixed assets follows: Balance Balance July 1. 1989 Additions Disposals June 30. 1990 Land and buildings $18,595,553 $2,073,870 $350,000 $20,319,423 Rolling equipment 2,961,681 284,601 24,776 3,221,506 Furniture and equipment 2,702,534 333,168 121,745 2,913,957 Improvements other than buildings 3.194.899 3.194.899 Investment in general fixed assets $27.454.667 $2.691.639 $496.521 $29.649.785 LAND HELD FOR SALE In March 1990, the Redevelopment Agency purchased land for $2,435,000. This property will be sold to a third party for the same price within three years. During the intervening period, the Redevelopment Agency is collecting monthly lease payments from the third party ($54,780 in 1989-90). The lease payments approximate the interest that would have been earned on the money used to purchase the land had it been invested in the State of California Local Agency Investment Fund. -10 - 5. LONG-TERM OBLIGATIONS Long-term debt at June 30, 1990 follows: General Obligation Bonds (a) Terra Linda recreation Open space bonds Total general obligation bonds Tax Allocation Bonds (b) 1977 Series 1985 Series Total tax allocation bonds Special Assessment Bonds (with governmental commitment) (c) East San Rafael Drainage No.1 East San Rafael Drainage No.1 Supplement East San Rafael Drainage No.1 Phase 2 East San Rafael Drainage No.2 East Francisco Boulevard Lucas Valley Sun Valley Northgate/Civic Center Kerner Boulevard Refunding Maturit~ 1991 1993 1995 2010 Interest Authorized Rates and Issued 4.00% $ 233.000 4.00 -5.00 2.250.000 5.25 -6.00 4.660,000 6.70 -9.20 12,000.000 6.00 7.00 7.00 5.00 8.00 -11.00 5.50 -5.75 5.50 -8.50 7.00 -9.70 5.75 -8.00 2.067,280 232.888 107.410 457.527 Peacock Gap Improvement 1992 1990 1990 1990 1997 1998 2006 2011 2005 2005 10.00 -10.85 75.965 217.393 357.326 4.435.920 6,445,000 9.171,065 Total special assessment bonds (with governmental commitment) Other Long-term Debt 2025 Total Long-term Debt Debt service payments are generally made from the following sources: (a) Property taxes recorded in the General Fund (b) Incremental property taxes recorded in the Redevelopment Agency (Capital Projects) Fund (c) Special assessment revenues recorded in the various Special Assessment (Debt Service) Funds 8.00 Outstanding June 30. 1990 $ 18.000 675.000 693.000 3,120,000 11.320.000 14.440.000 290.000 7.000 7.000 15.000 30,000 108.000 298.000 3.630,000 5,990,000 5.385.000 15.760.000 169.000 $31.062,000 The City is "obligated in some manner" (as defined by GASB No.6) for special assessment debt because it must cover delinquencies of special assessments bonds with other resources until foreclosure proceeds are received or because it has been indicated that it may do so. -11- Long-term debt does not include special assessment debt issued under the 1911 Bond Act as the City is not liable in any manner for repayment. The County of Marin acts as the City's agent for property owners in collecting the assessments and forwarding the collections to bondholders. The outstanding balance of the 1911 Bond Act as of June 30, 1990 is $374,933. At June 30, 1990, the other long-term debt consists of a $169,000 promissory note bearing interest at 8% with principal and accrued interest due and payable in November 2024. The note was assumed to finance the purchase of certain property by the Redevelopment Agency. A summary of long-term obligations transactions for the year ended June 30, 1990 follows: General Tax Speci a 1 Certificates Other Vacation and Obligation Allocation Assessment of Partici-Long-Term Sick Leave Outstanding Bonds Bonds Bonds pation Debt Total Debt Obligations Claims Balance, July 1, 1989 (as restated) (A) $853.000 $15.045.000 $18.412.000 $65.000 $ 4.230 $34.379.230 $1.137.275 $464.238 Additions: Vacations and sick leave obligations (net) 118.172 Outstanding claims (net) 155.947 Other long-term debt 169.000 169.000 Retirements -principal repayments (160 1000) (605.000) (2.652.000) (65.000) (41230) (314861230) Balance, June 30,1990 ~6931000 ~14.4401000 ~151760.000 ~1691000 ~3110621000 ~11255.447 ~6201185 (A) During the year ended June 30, 1990, the City determined that the June 30, 1989 balance for outstanding claims was overstated by $1,195,260. The July 1,1990 balance has been restated to reflect the proper amount of the liability. Debt service requirements, including interest, follow: Year ending June 30: 1991 1992 1993 1994 1995 Thereafter Total General Obligation Bonds $197,465 197,470 185,900 192,400 $773.235 Tax All ocati on Bonds $ 1,750,323 1,754,673 1,752,711 1,763,236 1,766,040 19 1 457 .311 $28.244.294 Special Assessment Bonds $ 2,050,395 1,957,770 1,941,455 1,844,485 1,841,933 22.561. 776 $32.197,814 Other Long-Term Debt $642.200 $642.200 $ 3,998,183 3,909,913 3,880,066 3,800,121 3,607,973 42.661.287 $61.857 ,543 -12 - 6. FUND EQUITY Fund balances consist of reseIVed and unreseIVed amounts. Reserved fund balances represent that portion of a fund balance which is not appropriable for expenditure or is legaJIy segregated for a specific future use. The remaining portion is unreserved fund balance. Portions of unreserved fund balance may be designated to indicate tentative plans for financial resource utilization in a future period, such as for general contingencies or capital projects. Such plans or intent are subject to change, have not been legally authorized and may not result in expenditures. At June 30, 1990 fund balances consisted of: Fiduciary ....•....... Governmental Fund Types ......••.... Fund Type -Totals Special Capital Debt Trust and (Memorandum General Revenue Projects Service Agency Only) Fund balances: Reserved: Encumbrances $ 256,943 $ 612,605 $ 632 $ 870,180 Debt service $3,814,678 3,814,678 Refunds and projects $909,763 909,763 Insurance claims 500,000 500,000 Housing 103,637 103,637 Inventory 14,371 14,371 Accounts receivable 211,418 211,418 Land held for resale 2.435.000 2.435.000 Total 771.314 612.605 2.750.687 3.814.678 909.763 8.859.047 Unreserved and designated for: Construction 6,787,965 6,787,965 Debt service 3,691,081 3,691,081 Traffic mitigation 8,562,488 8,562,488 Claims payments 1,025,816 1,025,816 Contingent liabilities 710,880 710,880 Working capital 3.094.079 3.094.079 Total 4.830.775 8.562.488 6.787.965 3.691.081 23.872.309 Unreserved and undesignated 2.534.689 2.534.689 Total fund balances ~5.602.089 ~11.709.782 ~9.538.652 ~7.505.759 ~909.763 ~35.266.045 -13- 7. EMPLOYEES' RETIREMENT PLAN Plan Description -All permanent employees are eligible to participate in the Marin County Employees' Retirement Fund (the Fund). The Fund is an agent multiple-employer defined benefit retirement plan that acts as a common investment and administrative agent for various local governmental agencies within the County of Marin. The Fund 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 are eligible to receive retirement benefits after 20 years of service for safety employees and at the age of 50 for other covered employees. These benefit provisions and all other requirements are established by County ordinance. The City contributed to the Fund 22.49% of payroll for public safety personnel and 10.95% for other covered employees for the year ended June 30, 1990. The City's covered payroll for employees participating in the Fund for the year ended June 30, 1990 was $12,229,560. The City's 1990 payroll for all employees was $15,364,008. The City, due to a collective bargaining agreement, also has a legal obligation to contribute half of the employee's contribution up to a maximum of 7% of payroll for safety employees and 5% of payroll for all other employees. Employees have an obligation to contribute the remaining portion. Funding Status and Progress -The "pension benefit obligation" is determined for each participating employer by the Fund's actuary and is a standardized disclosure measure that results from applying actuarial assumptions to estimate the present value of pension benefits, adjusted for the effects of projected salary increases and step rate benefits, to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of the City's portion of the Fund to which contributions are made on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among employers. The measure is the actuarial present value of credited projected benefits and is independent of the funding method used. The pension benefit obligation was computed as part of an actuarial valuation performed as of July 1, 1987 and updated as of July 1, 1989. The significant actuarial assumptions used in the 1989 update to compute the pension benefit obligation were an assumed rate of return on investment assets of 8%, and annual payroll increases of 10% per year before four years of service, and 6% per year thereafter. -14- Total unfunded pension benefit obligation applicable to the City's employee groups at July 1, 1989 follows: Pension Benefit Obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits Current employees: Accumulated employee contributions and allocated investment earnings Employer-financed, vested Employer-financed, nonvested Total pension benefit obligation Net assets available for benefits, at cost (current (market) value, $50,304,888) Unfunded pension benefit obligation Public Safety $16,300,000 4,100,000 13,700,000 800.000 $34,900.000 $10,100,000 1,800,000 4,600,000 500.000 $17.000,000 $26,400,000 5,900,000 18,300,000 1.300.000 51,900,000 42.787.972 S 9.112.028 Actuarially Determined Contributions Required and Contributions Made -The funding policy of the Fund provides for actuarially determined periodic contributions by the City at rates such that sufficient assets will be available to pay Fund benefits when due. The contribution to the Fund for the year ended June 30, 1990 of $3,165,631 was made in accordance with the actuarially determined requirements computed as of July 1, 1989. The contribution consisted of (a) $2,215,216 normal cost (18.11 % of current covered payroll) and (b) $950,415 amortization of the unfunded actuarial liability (7.77% of current covered payroll). The City contributed $2,097,377 (17.15% of current covered payroll). The employees' contribution was $1,068,255 (8.74% of current covered payroll) of which the City paid $537,696. The contribution rate for normal cost is determined using the Entry Age Normal Actuarial Cost Method, a projected benefit cost method. It takes into account those benefits that are expected to be earned in the future as well as those already accrued. The Fund also uses the level percentage of payroll method to amortize the unfunded actuarial liability over a thirty-year period. Significant actuarial assumptions used in the 1989 valuation to compute the actuarially determined contribution requirement are the same as those used to compute the pension benefit obligation as described above. Three-Year Historical Trend Information -Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. Ten-year trend information for the Fund may be found in the Marin County Employees' Retirement Association Annual Report. -15 - For the City's share of the Fund, trend information for the years ended June 30, 1989, 1988 and 1987 follows: Net assets available for benefits, at cost Pension benefit obligation Net assets available for benefits as a percentage of pension benefit obligation Unfunded pension benefit obligation Annual covered payroll Unfunded pension benefit obligation as a percentage of annual covered payroll 1989 $42,787,972 $51,900,000 82% $9,112,028 $12,229,560 75% 1988 $38,223,191 $47,800,000 80% $9,576,809 $11,180,372 86% 1987 $34,270,472 $44,443,000 77% $10,172,528 $10,680,121 95% Employer's contributions, made in accordance with actuarially determined requirements, as a percentage of annual covered payroll was 17%, 17% and 18% for 1990, 1989, and 1988, respectively. Other trend information for 1990 is not yet available. Post-employment Health Care Benefits -In addition to providing pension benefits, the government provides certain health care benefits for retired employees and their spouses. Substantially all of the City's emplolees may become eligible for these benefits if they are receiving a retirement benefit from the Marin County Employees Retirement Fund within 120 days of retirement from City employment. The cost of retiree health care benefits is recognized as an expenditure as claims are paid. For 1990, those costs total $99,471. 8. DEFERRED COMPENSATION PLAN The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the City (without being restricted to the provisions of benefits under the plan), subject only to the claims of the City's general creditors. Participants' rights under the plan are equal to those of general creditors of the City in an amount equal to the fair market value of the deferred account for each participant. 9. CONTINGENCIES The City is self-insured for general liability purposes for the first $250,000 per occurrence. There are pending claims and litigation against the City which are considered normal to the City's operation. City management is of the opinion that -16- potential claims against the City not covered by insurance resulting from such litigation would not materially affect the general purpose financial statements of the City. Management believes that they are in compliance with all finance-related legal and contractual provisions. 10. INVESTMENT IN JOINT VENTURES The City participates in two joint venture activities through formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these entities exercise full powers and authorities within the scope of the related Joint Powers Agreement including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Obligations and liabilities of the separate entities are not those of the City. • The Marin County Major Crimes Task Force (Task Force) was established by twelve local law enforcement agencies to conduct narcotics investigations in Marin County. The Task Force has an oversight committee consisting of three city managers, one councilman, and one member of the board of supervisors. • The California Joint Powers Insurance Authority (Insurance Authority) which began operations in February 1986, is a governmental self-insurance cooperative organized under a joint power agreement. The Insurance Authority pools self-insurance losses of charter and associate members, develops risk management programs, and provides for administration of pooled coverage claims. The summary of annual financial information as of and for the year ended June 30, 1989 (date of most recent available audited financial statements) for the Task Force and the Insurance Authority is as follows: Total assets Total liabilities Total fund balance/retained earnings Total revenues Total expenditures/expenses Net increase Task Force $543,973 24,202 519,771 801,678 573,362 228,316 Insurance Authoritv $36,584,527 33,431,521 3,153,006 1,956,441 452,264 1,504,177 -17 -