HomeMy WebLinkAboutFIN Year-End Financial Statements and Related Audit ReportsAgenda Item No: 6.b
Meeting Date: November 5, 2018
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: FINANCE
Prepared by: Nadine Hade
Finance Director
City Manager Approval: __________
TOPIC: YEAR-END FINANCIAL STATEMENTS AND RELATED AUDIT
REPORTS
SUBJECT: FISCAL YEAR 2017-2018 ANNUAL FINANCIAL REPORT; GANN
APPROPRIATIONS LIMIT; MEMORANDUM ON INTERNAL
CONTROL; CHILD DEVELOPMENT PROGRAM; AND SINGLE AUDIT
FOR FEDERAL GRANTS
RECOMMENDATIONS: ACCEPT THE FISCAL YEAR 2017-2018 ANNUAL
FINANCIAL REPORT, THE GANN APPROPRIATIONS
LIMIT REPORT, THE MEMORANDUM ON INTERNAL
CONTROL, CHILD DEVELOPMENT PROGRAM
REPORT, AND THE SINGLE AUDIT REPORT
BACKGROUND: As required by local code, State law, bond covenants, and best practices, the
City of San Rafael completes an annual audit of its financial activities. The auditing firm of Maze
and Associates, Accountancy Corporation conducted the audit for fiscal year 2017-2018. Their
work was completed in accordance with generally accepted auditing standards; Government
Auditing Standards, issued by the Comptroller General of the United States; and the provisions
of Office of Management and Budget Circular A-133, Audits of State and Local Government and
Non-Profit Organizations.
The requirements of Section 1.5 of Article XIIIB of the California Constitution are met with an
agreed-upon procedure report applied to the Gann Appropriation Limit calculated for the year
ending June 30, 2019. A Memorandum on Internal Control is also prepared by the auditors to
address the City’s controls over its financial activities. These reports are also attached to this staff
report.
Also, as part of the fiscal year-end closing activities, the Finance and Community Services
departments worked with Maze and Associates to complete the annual audit of the City’s
childcare program, as required by the State of California.
____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: 11/05/2018
Disposition: Accepted Reports
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
Finally, the federal Single Audit Act requires that any local agency expending $750,000 or more
in combined federal grant funds, either directly or indirectly in a fiscal year, is subject to a
separate audit on those programs and a separate Single Audit Report is issued. This threshold
was triggered in fiscal year 2017-2018.
Progress on the year-end audit was discussed at the City Council Finance Committee meeting of
October 2, 2018, and these final reports were presented to the City Council Finance Committee
on October 30, 2018 at which time it was agreed that staff would bring the reports forward to the
full City Council.
ANALYSIS:
Overview
The Fiscal Year 2017-2018 saw a moderate improvement in fiscal performance, following the
sales tax revenue stall that weighed down the revenues of the previous fiscal year. Property tax
revenues remained reasonably strong; however, the recovery of assessed value from properties
that were reassessed during the recession has peaked. The City’s General Fund Emergency
Reserves continue to meet the target level of ten percent of operating expenses established by
City Council Policy. Although the City’s year ending fund balances are strong, critical unmet
needs have accumulated as a result of the past, multi-year deferral of various capital
improvements, maintenance and technology support projects and initiatives.
Fiscal year 2017-2018 marks the fourth year of implementation of the pension accounting
standard issued by the Governmental Accounting Standards Board (GASB) known as GASB 68,
and the second year of implementation of the new Other Postemployment Benefits (OPEB)
accounting standard issued by the Governmental Accounting Standards Board (GASB) known as
GASB 75. These requirements, which affect all public agencies with defined benefit retiree
plans, are designed to enhance the comparability of financial statements by requiring the
measurement of pension-related assets and liabilities at fair value, using a consistent and detailed
definition of fair value and accepted valuation techniques. The net impact of reporting under
GASB 68 lowers the City’s net position as of June 30, 2018 by $113.7 million from a reporting
perspective. The net pension liability as of this date was measured to be $120.6 million. The net
impact of reporting under GASB 75 lowers the City’s net position as of June 30, 2018 by $29.4
million. The net OPEB liability as of this date was measured to be $33.7 million.
The full annual funding of the City’s Retiree and OPEB costs have been incorporated into the
adopted fiscal year 2018-2019 budget; therefore, there is no negative impact on City operations
or services resulting from the reporting of financial information under these reporting standards.
Consistent with the policy adopted by the City Council upon the implementation of Measure E
transactions and use tax (TUT) in April 2014, the City has set-aside the portion of the Measure E
that exceeds the former Measure S TUT (i.e., one-quarter of one percent from the three-quarter of
one percent tax) for public safety facilities construction and improvements. The accumulated
balance of $4.8 million as of July 1, 2017 was combined with $4.0 million of revenues during the
fiscal year, as well as $2.2 million in County Reimbursements for Fire Station No. 57 and $5.6
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
million in bond proceeds to support $16.6 million in project expenditures. Approximately thirty
percent of the expenditures during the fiscal year went to Fire Station 57, with the remaining
70% split evenly between the Public Safety Center and Fire Station 52. Total project-to-date
spending is approximately $18.8 million.
Fiscal Year 2017-18 Annual Financial Report – Citywide Financial Results
The actual results of the City’s financial activities are presented in the attached Comprehensive
Annual Financial Report. The report includes Government-wide financial statements with
governmental activities and business-type activities presented separately. Net position is one
indicator of the City’s financial position. At the end of the fiscal year, net position of the City
governmental activities was $115.5 million, a decrease of $4.1 million from the prior year
adjusted balance. This decrease is largely attributable to the spending down of accumulated funds
that had been set aside for the public safety facilities construction and improvements. The
Parking Fund, reported as a business-type activity, ended the fiscal year with a net position of
$10.1 million, or $0.6 million more than that of the previous fiscal year. Cash contributes
approximately 32% of this net position, with the remainder contributed by parking infrastructure.
Additional explanatory information is provided in the Management’s Discussion and Analysis
(MD&A) section beginning on page five of the attached CAFR. The MD&A provides key
highlights and a summary view of financial activities for the year.
Financial Results: General Fund
General fund operating revenues exceeded expenditures by $4.6 million. Measure E revenues of
$4.0 million dedicated to public safety facilities construction and infrastructure and $4.8 million
of previously accumulated Measure E funds were transferred out of the General Fund in support
of the projects. Other operating net transfers out of $0.3 million resulted in a $4.5 million
reduction in fund balance for the year. There were sufficient funds available at the end of the
fiscal year to maintain the required balance in the Emergency and Cash Flow Reserve. As of
June 30, 2018, the entire spendable portion of the General Fund balance has been assigned.
Gann Appropriations Limit
The Agreed-Upon Procedures report for the Gann Appropriations Limit required three
procedures to be performed including testing the accuracy of the calculations and comparison of
information presented. No exceptions were noted in these procedures for compliance with the
Proposition 111 fiscal year 2018-2019 Appropriations Limit calculation.
Memorandum on Internal Control
The auditors are required to communicate to the City Council matters that come to their attention
relating to the audit in a report entitled Memorandum on Internal Control and Required
Communications. No additional issues were raised during this audit.
Child Development Program (Childcare) Audit
The Childcare Program had positive operating results, with $3.9 million in total revenues and
$3.7 million in expenditures for the fiscal year. The fund balance increased from $1.4 million to
$1.6 million. Approximately half of the residual funds have been accumulated for capital
improvements. The audit resulted in no adverse findings.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
Single Audit
The City incurred a total of $1,336,897 in federal expenditures during fiscal year 2017-2018 that
fell under the parameters of this audit. The auditor identified the following major program to be
audited:
U.S Department of Transportation-Highway Planning and Construction – $754,400.
Approximately two-thirds of this funding supported modifications to the intersection at 2nd Street
at Grand, and approximately one-third was allocated to the Southern Heights bridge replacement.
As required under the Single Audit Act, several separate reports are contained within the
document. Most of these reports comment on either compliance with Federal assistance
regulations or recommendations regarding the City's accounting practices. The auditors identified
three deficiencies in the City’s procedures that needed attention. One of the items pertained to
adequate review of reimbursements prior to submission, another addressed the procedures to
ensure subcontractor compliance with payroll-related regulations, and the final item involved the
refinement of the City’s tracking of federal grants. The City has addressed each of these three
items in a corrective action plan and anticipates that the implementation of the proposed
corrections currently underway will be determined to be satisfactory in subsequent audits.
FISCAL IMPACT: No fiscal impact occurs by the City Council’s acceptance of these reports.
The fiscal year 2017-2018 Comprehensive Annual Financial Report and related reports are
presented as the actual results of the City and related entities’ financial activities for the year.
RECOMMENDATION: Staff recommends that City Council accept the reports as presented.
The reports will remain as “draft” until City Council has accepted the reports.
ATTACHMENTS:
1. FY 2017-18 Draft Comprehensive Annual Financial Report
2. FY 2017-18 Draft Gann Appropriations Limit
3. FY 2017-18 Draft Memorandum of Internal Controls and Required Communications
4. FY 2017-18 Draft Child Development Program Financial Statements
5. FY 2017-18 Draft Single Audit Report
DRAFTSAN RAFAEL THE CITY WITH A MISSION COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDING JUNE 30, 2018 7 -rw~"'•••t. Pourtfi Street1 San <]¼jaeC Ca{ifomia
DRAFTCOMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2018 City of San Rafael, California 1400 Fifth Avenue San Rafael, California 94901 Prepared by the Finance Department of the City of San Rafael
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DRAFTCourtyard in Pront of <Bank,of _Jlmerica <BuiUing INTRODUCTORY SECTION
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DRAFTCITY OF SAN RAFAEL, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2018 I INTRODUCTORY SECTION I TABLE OF CONTENTS Table of Contents Letter of Transmittal .................................................................................................................................... v Mission Statement and Vision Statement ................................................................................................... xi City Council and Staff ............................................................................................................................... xii Location Map ................................... : ........................................................................................................ xiii Organizational Chart ................................................................................................................................. xiv Certificate of Achievement for Excellence in Financial Reporting ........................................................... xv I FINANCIAL SECTION I Independent Auditor's Report .................................................................................................................. I Management's Discussion and Analysis .................................................................................................. 5 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position ............................................................................................................. 25 Statement of Activities .................................................................................................................. 26 Fund Financial Statements: Major Governmental Funds: Balance Sheet ............................................................................................................................ 30 Balance Sheet -Reconciliation of Governmental Fund Balances to Net Position of Governmental Activities .............................................................................. 32 Statement of Revenues, Expenditures, and Changes in Fund Balances .................................... 33 Reconciliation of the Net Change in Fund Balances -Total Governmental Funds with the Statement of Activities ................................................................................. 34 Proprietary Funds: Statement of Net Position .......................................................................................................... 36 Statement of Revenues, Expenses, and Changes in Fund Net Position .................................... 37 Statement of Cash Flows ........................................................................................................... 38
DRAFTCITY OF SAN RAFAEL, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2018 Table of Contents I FINANCIAL SECTION (Continued) j Fiduciary Funds: Statement of Fiduciary Net Position ......................................................................................... 40 Statement of Changes in Fiduciary Net Position ....................................................................... 41 Notes to Basic Financial Statements .................................................................................................. 43 Required Supplementary Information: Schedule of the City's Propotiionate Share of the Net Pension Liability ..................................... 96 Schedule of Contributions -Pension ............................................................................................ 97 Schedule of Changes in Net OPEB Liability and Related Ratios ............................................... IOI Schedule of Contributions -OPEB ............................................................................................ 102 Schedules of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual -Budgetary Basis General Fund ........................................................................................................................... I 06 Traffic and Housing Mitigation Special Revenue Fund .......................................................... I 07 Gas Tax Special Revenue Fund ............................................................................................... I 08 Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Budgetary Basis Essential Facilities Capital Projects Fund ................................................................................ I IO Non-major Governmental Funds: Co1nbining Balance Sheets ......................................................................................................... 114 Combining Statements of Revenues, Expenditures, and Changes in Fund Balance ................................................................................................................... 120 Budgeted Non-major Governmental Funds: Combining Schedules of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual ...................................................................... 126 ii
DRAFTCITY OF SAN RAFAEL, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2018 Table of Contents I FINANCIAL SECTION (Continued) Internal Service Funds: Combining Statements of Net Position ....................................................................................... 136 Combining Statements of Revenues, Expenses and Changes in Fund Net Position ................... 138 Combining Statements of Cash Flows ........................................................................................ 140 Agency Funds: Combining Statements of Changes in Assets and Liabilities ...................................................... 144 I STATISTICAL SECTION Financial Trends: Net Position by Component -Last Ten Fiscal Years ....................................................................... 146 Changes in Net Position -Last Ten Fiscal Years ............................................................................. 148 Fund Balances of Governmental Funds -Last Ten Fiscal Years ..................................................... 152 Changes in Fund Balance of Governmental Funds -Last Ten Fiscal Years .................................... 154 Revenue Capacity: Assessed and Estimated Actual Value of Taxable Property-Last Ten Fiscal Years ...................... 158 Property Tax Rates -All Overlapping Governments-Last Ten Fiscal Years .................................. 159 Principal Prope1ty Tax Payers -Current Year and Nine Years Ago ................................................ 160 Property Tax Levies and Collections -Last Ten Fiscal Years ......................................................... 161 Debt Capacity: Ratio of Outstanding Debt by Type -Last Ten Fiscal Years ........................................................... 162 Computation of Direct and Overlapping Debt.. ................................................................................ 163 Computation of Legal Bonded Debt Margin .................................................................................... 164 Revenue Bond Coverage Parking Facility-Last Ten Fiscal Years ................................................. 165 Ill
DRAFTCITY OF SAN RAFAEL, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2018 Table of Contents I ST A TISTICAL SECTION (Continued) Demographic and Economic Information: Demographic and Economic Statistics -Last Ten Fiscal Years ...................................................... I 66 Principal Employers -Last Nine Calendar Years ............................................................................ 167 Operating Information: Full-Time Equivalent City Government Employees by Function -Last Ten Fiscal Years ................................................................................................................. 168 Operating Indicators by Function/Program -Last Ten Fiscal Years ................................................ 170 Capital Asset Statistics by Function/Program -Last Ten Fiscal Years ............................................ 172 IV
DRAFTOctober 5, 2018 Honorable Mayor, Members of the City Council and Residents of San Rafael: The Comprehensive Annual Financial Report ("CAFR") of the City of San Rafael ("City") for the year ended June 30, 2018, is hereby submitted as required by local ordinances, state statutes and bond covenants. This financial report has been prepared in conformance with Generally Accepted Accounting Principles (GAAP) as promulgated by the Governmental Accounting Standards Board (GASB) and includes the rep01i of the independent ce1iified public accounting firm, Maze and Associates Accountancy Corporation, which has issued an unqualified, or "clean" opinion on the City's financial statements for the fiscal year ended June 30, 2018. The independent audit of the financial statements is part of a broader, federally mandated examination known as a "Single Audit", which is designed to meet the needs of federal grantor agencies. The standards governing Single Audits require the independent auditor to report on the audited agency's internal controls and compliance with legal requirements, with special emphasis on such controls and requirements involving the administration of federal funding. These rep01is will be available in the City's separately issued Single Audit Report. City Management is responsible for both the data accuracy, and the completeness and fairness of the presentation ofthis rep01i. To the best of our knowledge and belief, the data presented is accurate in all material respects and is rep01ied in a manner that presents fairly the financial position and results of operations of the various funds and component units of the City. Fmiher, the CAFR is prepared in accordance with procedures and policies set by the Government Finance Officers Association. The analysis of the financial condition and the result of operations can be found in the financial section of the Management's Discussion and Analysis document. The CAFR is organized into three sections: 1. Introducto1y section, which is unaudited, includes this letter of transmittal, an organizational chati and a list of the City's elected and appointed officials. 2. Financial section, includes the general-purpose financial statements, related footnote disclosures, and the combining and individual fund and account group financial statements and schedules, as well as the independent auditors' rep01i. 3. Statistical section, which is unaudited, includes selected financial and demographic information, presented on a multi-year basis. Generally, ten-year data is presented for expenditures, revenues, assessed valuation for local propetiies and construction activity. CITY OF SAN RAFAEL j 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Gary 0. Phillips, Mayor• John Gamblin, Vice Mayor• Maribeth Bushey, Council member• Kate Colin, Councilmember • Andrew Cuyugan McCullough, Councilmember V
DRAFTREPORTING ENTITY -PROFILE OF THE GOVERNMENT The City of San Rafael is located 17 miles north of San Francisco in Marin County. Protected by its Mediterranean like setting along the shores of the San Francisco Bay, the City enjoys a mild climate year-round. As the County seat, San Rafael is considered the commercial, financial, cultural and civic hub of Marin County. Abundant recreational facilities are available in and around the City. The City's park and recreational resources include 19 city parks, 393 acres of developed parkland, city and county open space, and China Camp State Park. San Rafael is close to other attractions, including the Golden Gate Bridge, Muir Woods, Point Reyes National Seashore, Mount Tamalpais, multiple state parks, San Francisco, Oakland and the Sonoma and Napa wine country. In 1874, the City of San Rafael became the first incorporated city in the county, later becoming a charter city in 1913 by vote of City residents. The City Council comprises five members; four are elected at-large to four-year terms while the mayor is elected separately to a four-year term. The City's land area is 22 square miles, including seventeen square miles ofland and 5 of water and tidelands. San Rafael's population on January 1, 2018 was 60,842 and is projected to grow at an average rate of 0.4% per year. Downtown San Rafael is the location of many community events, including the Thursday night Farmers Market Festivals six months out of the year, Second Friday Art Walks, the Twilight Criterium Bike Race, Mill Valley Film Festival, Winter Wonderland/Parade of Lights, and is one of only 14 Cultural Arts Districts in the State of California. San Rafael is also the heart of the County's cultural activities with venues such as the Marin Center, which presents numerous ballets, conceits, speaking engagements as well as the award-winning Marin County Fair; the Falkirk Cultural Center, providing ai1 exhibits and children's programming; the Christopher B. Smith Film Center, and a host of other diverse dining and ente11ainment venues. The City is also home to the distinguished Dominican University of California. The City of San Rafael provides a full range of municipal services required by statute or charter, namely: police and fire protection, construction and maintenance of streets, parks, storm drains and other infrastructure, recreation, childcare, permits, planning, code enforcement, and a library system serving two locations. The City perfmmed ce11ain infrastructure construction and economic development activities through a separate Redevelopment Agency until its dissolution on February 1, 2012. The City of San Rafael accepted the role of Successor Agency to the Redevelopment Agency per Council action on January 3, 2012, and now conducts its economic development activities with funding from its General Fund. The City and California Municipal Finance Authority compose the San Rafael Joint Powers Financing Authority, originally established by the City and former Redevelopment Agency for the purpose of financing redevelopment and other projects. The San Rafael CITY OF SAN RAFAEL I 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Gary 0. Phillips, Mayor• John Gamblin, Vice Mayor· Maribeth Bushey, Council member• Kale Colin, Councilmember • Andrew Cuyugan McCullough, Councilmember vi
DRAFTSanitation District is a discretely presented component unit of the City of San Rafael and is presented independent of City financial information. For a fmther explanation of these entities, refer to Note 1 -Summary of Significant Accounting Policies in the Financial Section of the CAFR. The City participates in various organizations through formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these agencies exercise full powers and authorities within the scope of the related Joint Powers Agreement including the preparation of annual budgets, accountability for all funds, and the power to make and execute contracts. Obligations and liabilities of the separate entities are not those of the City. For a fmther explanation of these separate entities, refer to Note 12 -Jointly Governed Organizations in the CAFR. The City's net pension liability under GASB 68 rep01ted as of June 30, 2018 is based on the latest available GASB 67 /68 rep01t prepared by the Marin County Employees Retirement Association (MCERA), which was prepared as of June 30, 2017. The next annual repo1t is anticipated to be completed within the upcoming 30 days. The City is aware of factors that may have an impact on the future measurement of the net pension liability. For example, the MCERA Board reduced the discount rate :from 7.25% to 7.00%, increasing the likelihood of attaining targets and regulating risk. The City does not expect these factors to result in a net material difference in the measurement of its net pension obligation of $120.6 million reported in this year's financial repo1ts. During fiscal year 2017-2018, the City made significant progress towards improving our essential facilities. Building from over a decade of community efforts to address San Rafael's aging essential public safety facilities, the Essential Facilities project includes a total of seven projects recommended for either replacement or renovation, including a new public safety center across the street from City Hall. These new buildings will be seismically-safe and provide modern facilities for our firefighters, police officers, paramedics and dispatchers. They will include an upgraded dispatch and communications center, and a new classroom and training tower for emergency preparedness. Construction of both Fire Station 57, located at 3530 Civic Center Drive, and Fire Station 52, located at 210 3rd Street, began in June 2017 and is expected to be completed by the beginning of 2019. ECONOMIC FACTORS The City has a diversified economic base, which includes an assortment of high-tech, financial, service-based, entertainment and industrial businesses. Downtown San Rafael provides a mix ofrestaurants, retail shops and financial institutions. The City's varied economic base is reflected in its prope1ty tax base, which is 71 % residential, 19% CITY OF SAN RAFAEL I 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Gary 0. Phillips, Mayor• John Gamblin, Vice Mayor• Maribeth Bushey, Councilmem~,er • Kate Colin, Councilmember • Andrew Cuyugan McCullough, Councilmember VII
DRAFTcommercial, 4% institutional, 6% unsecured and others. The top 25 sales tax producers provide 50% of overall sales tax revenues. The California economy has recovered from the Great Recession and is experiencing one of the most prolonged periods of expansion in state history. Unemployment is currently at an all-time low of 4.2% and has held steadily below 5% for over a year. In November of 2017, the Federal Government passed the Tax Cuts and Jobs Act providing a temporary boost to the nation's economy and, as a result, California is projected to record unprecedented capital gains for the fiscal year ahead. Locally, Marin County's unemployment rate is among the lowest in the State at 2.7% and total employment figures are forecasted to grow at an average rate of 0.9% through 2022. Per capita income has seen an average annual increase of over 4% over the last two years and is projected to continue to grow 2.1 % per year through 2022. Overall, economic indicators show Marin County to be in a steady growth pattern for the foreseeable future with taxable sales, industrial production as well as per capita income all projected for growth in the years ahead. Demographic Data The following is a sample of demographic and economic attributes that make San Rafael an exceptional place to live and work. ~ Economic development organizations in San Rafael include the San Rafael Chamber of Commerce, Downtown Business Improvement Dish·ict, and the Marin Economic Forum. ~ Marin County's top 10 employers include Kaiser Permanente, Marin General Hospital, BioMarin Pharmaceutical, Glassdoor, Dominican University of California, Bradley Real Estate, Novato Community Hospital, Wells Fargo, FICO, and W Bradley Electric. ~ Major shopping areas, as measured in available retail square footage, include the Downtown corridor (938,000 aggregate), Northgate Mall (725,000), Montecito Center (130,000) and Northgate One (113,900). ~ The top three sales tax categories in 2017 for San Rafael were: 1. Autos and Transp011ation (29.3%), 2. General Consumer Goods (17.3%), and 3. Building and Consh·uction (16.8%) ~ Several hotels and motels support tourism activity, led by a combined 471 rooms in the Embassy Suites and Four Points Sheraton. Citywide, the total number of hotel rooms is 787. ~ Establishing and maintaining affordable residential housing for sale and lease continues to be a challenge both in San Rafael and throughout Marin County. The median rent price in San Rafael is $4,000 (3 bdr home). The median home value in San Rafael is $1,027,700. CITY OF SAN RAFAEL I 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Gary 0. Phillips, Mayor• John Gamblin, Vice Mayor• Maribeth Bushey, Councilmem~~r • Kate Colin, Council member· Andrew Cuyugan McCullough, Councilmember Vlll
DRAFTRecent growth and economic vibrancy: • San Rafael ranked No. 4 on Milken Institute Best-Performing Cities Index. This index provides an objective benchmark for examining the underlying factors and identifying unique characteristics of economic growth in metropolitan areas. The index uses metrics such as job creation, wage gains, and technology developments to evaluate the relative growth of metropolitan areas. • San Rafael ranked No. 3 on the SMU National Center for Arts Research Vibrancy Index. This overall index is composed of three dimensions: supply, demand, and government support. Supply is assessed by the total number of arts providers in the community, including the number of aits and culture organizations and employees, independent aitists, and ente1tainment firms. Demand is gauged by the total nonprofit aits dollars in the community, including program revenue, contributed revenue, total expenses, and total compensation. Lastly, the level of government supp011 is based on state and federal arts dollars and grants. • San Rafael ranked 26th of 100 cities nationwide in online community research publication Livibility.com's annual listing of Best Places to Live in America. • San Rafael issued $48.5 million in bonds and began construction on a new Public Safety Center as well as two fire stations and the City's bond rating improved from AA-to AA. • San Rafael integrated SMART train service into San Rafael's transportation network, including new signal systems, a Quiet Zone, parking, and other improvements. • San Rafael developed a pilot program to regulate cannabis business activity, including zoning changes and licensing in an effo11 to enhance revenues for regulatory effo1ts and other city services. FINANCIAL INFORMATION The City's management is responsible for establishing and maintaining internal controls to ensure that the City's assets are adequately protected from loss, theft or misuse. In addition, management controls ensure that proper accounting data is collected so as to prepare rep011s in conformance with generally accepted accounting principles. CITY OF SAN RAFAEL I 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Gary 0. Phillips, Mayor· John Gamblin, Vice Mayor• Maribeth Bushey, Councilmef!lber • Kate Colin, Councilmember • Andrew Cuyugan McCullough, Councilmember IX
DRAFTInternal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (I) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived. All internal control evaluations occur within the above :framework. It is management's belief that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance that financial transactions are properly recorded. The City develops a budget based upon City Council priorities and department objectives. The Finance Depaitment maintains a traditional line item budget by major function. Budget control is accomplished at the functional or division level within each fund. This budget creates a comprehensive management and fiscal system aimed at achieving the objectives of each operating level consistent with those that have been set for the community by the City Council. Each depaitment director is responsible for accomplishing goals within his or her functional area and monitoring the use of her or his budget allocations consistent with policies set by the City Council and monitored by the City Manager. ACKNOWLEDGMENTS The preparation of this City-wide document would not have been possible without the assistance of each of the City's depaitments. In addition, Finance support staff Sara Smith, Shawn Plate and Whitney Fry, led by Accounting Manager Van Bach and ROS Consultant Mark Moses were key to the timely issuance of this repmt. We believe this document meets the Government Finance Officers Association's (GFOA) Certificate of Achievement for Excellence in Financial Repmting requirements and will be submitting it to the GFOA to determine its eligibility. If accepted, this will mark the seventh consecutive year for which the City received the award. Lastly, we appreciate the ongoing leadership and suppmt from the Mayor, City Councilmembers and the City Council Finance Committee made up of Mayor Phillips and Vice-Mayor Gamblin. Their strong commitment to financial accountability and stewardship provide inspiration to the organization and motivate a high level of achievement. Respectfully submitted, Jim Schutz City Manager Nadine Atieh Hade Interim Finance Director CITY OF SAN RAFAEL I 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Gary 0. Phillips, Mayor• John Gamblin, Vice Mayor· Maribeth Bushey, Council member• l<ate Colin, Councilmember • Andrew Cuyugan McCullough, Councilmember X
DRAFTSAN RAFAEL THE CITY WITH A MISSION MISSION STATEMENT The Mission of the City of San Rafael is to enhance the quality of life and to provide for a safe, healthy, prosperous and livable environment in partnership with the community. VISION STATEMENT Our vision for San Rafael is to be a vibrant economic and cultural center reflective of our diversity, with unique and distinct neighborhoods in a beautiful natural environment, sustained by active and informed residents and a responsible innovative local government. January 1996 xi
DRAFTSAN RAFAEL THE CITY WITH A MISSION City Council and Staff As of October 5, 2018 City Council Gary O. Phillips, Mayor John Gamblin, Vice Mayor Maribeth Bushey, Councilmember Kate Colin, Councilmember Andrew McCullough, Councilmember Elected Officials Rob Epstein, City Attorney Lindsay Lara, City Clerk Executive Team Jim Schutz, City Manager Cristine Alilovich, Assistant City Manager and Interim Human Resources Director Diana Bishop, Chief of Police Chris Gray, Fire Chief Henry Bankhead, Interim Library Director Paul Jensen, Community Development Director Bill Guerin, Public Works Director Susan Andrade-Wax, Community Services Director Nadine Hade, Interim Finance Director Doris Toy, District Manager/ Engineer-SRSD XII
DRAFTGreater San Francisco Bay Area ) LOCATION xiii MAP
DRAFTI-C:: <( :c u ..J <( ' z 0 -~ N -z <( C, c:: 0 XIV
DRAFTGovernment Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of San Rafael California For its Comprehensiv_e Annual Financial Report for the Fiscal Year Ended June 30, 2017 Executive Director/CEO xv
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DRAFT'View of San 1?.g,fae{ from :},1ount <Tama{pais, P,ast <Peaft FINANCIAL SECTION
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DRAFTINDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of San Rafael, 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 the City of San Rafael (City), California, as of and for the year ended June 30, 2018, 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 the 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 did not audit the component unit financial statements of the San Rafael Sanitation District, which represents 22%, 36%, and 14%, respective, of the assets, net position, and revenues of the entity-wide reporting entity. These component unit financial statements were audited by other auditors, whose report thereon has been furnished to us and our opinion, insofar as it relates to the amounts included for the San Rafael Sanitation District, is based solely on the report of these auditors. 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 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.
DRAFTOpinions In our opinions, based on our audit and the report of other auditors, 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, the aggregate remaining fund information and the discretely presented component unit of the City as of June 30, 2018, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management's Discussion and Analysis and required supplementary information, as listed in the Table of Contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 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, Supplementary Information, and Statistical Section as listed in the Table of Contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. The Supplementary Information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The Introductory and Statistical Sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. 2
DRAFTOther Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 5, 2018 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. Pleasant Hill, California October 5, 2018 3
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DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 This analysis of the City of San Rafael's (City) financial performance provides an overview of the City's financial activities for the fiscal year ended June 30, 2018. Please read it in conjunction with the basic financial statements and the accompanying notes to those basic financial statements. FINANCIAL HIGHLIGHTS Government-wide: • Net Position -The assets of the City exceeded its liabilities as of June 30, 2018 by $130.2 million. • Activities -During the fiscal year the City's total revenues of $112.6 were greater than expenses of $108.0 million for governmental and business-type activities. • Changes in Net Position -The City's total net position increased by $4.6 million in fiscal year 2017-2018 as compared to the net position of the previous year. Net position of governmental activities increased by $4.6 million, while net position of the business-type activities decreased by $32 thousand. Fund Level: • Governmental Funds -As of the close of fiscal year 2017-2018, the City's governmental funds reported combined ending fund balances of $87.9 million, an increase of $41.8 million primarily due to bond proceeds from fund balance of the prior year. Of this total amount, $1.3 million is nonspendable, $73.5 million is restricted, $1.8 million is committed, and $11.3 million is assigned. • Governmental fund revenues totaled $107.4 million, an increase of $9.6 million from the those of the previous fiscal year. Approximately one-half of this increase was in the General Fund and is attributable to positive trends in property tax and sales tax performance. The remainder was due to an increase in traffic mitigation fees, reimbursements from the County of Marin for major improvements to Fire Station 57, large donations to the library facility fund, and first-time revenues for a new community facilities district. Aside from these items, the City experienced modest to moderate growth in revenues. • Governmental fund expenditures increased by $17.7 million to $120.4 million, from $102.7 million in the prior year, due primarily to public safety infrastructure and other capital improvement program expenditures. • Enterprise fund operating revenue dropped slightly by $65 thousand to $5.2 million. Enterprise operating expenditures totaled $4.6 million, an increase of $0.8 million over the previous year. The expenditure increase was attributable primarily to the pension-related accounting adjustments in the parking fund. OVERVIEW OF FINANCIAL STATEMENTS The Comprehensive Annual Financial Rep01t is composed of the following: 1. Introductory section, which includes the Transmittal Letter and general information 2. Management's Discussion and Analysis (this part) 3. Basic Financial Statements, which include the Government-wide and the Fund financial statements along with the Notes to these financial statements 4. Combining statements for Non-Major Governmental Funds, Internal Services Funds, and Fiduciary Funds 5. Statistical Information 5
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 This discussion and analysis is intended to serve as an introduction to the City's basic financial statements, which have three components: I) Government-wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the Basic Financial Statements. The basic financial statements include the City (primary government) and all legally separate entities (component units) for which the government is financially accountable. This repo1t also contains other supplementary information in addition to the basic financial statements for further information and analysis. Government-wide Financial Statements The government-wide financial statements present the financial picture of the City and provide readers with a broad view of the City's finances. These statements present governmental activities and business-type activities separately and include all assets of the City (including infrastructure) as well as all liabilities (including long-term debt). Additionally, ce1tain interfund receivables, payables, and other interfund activity have been eliminated as prescribed by Governmental Accounting Standards Board (GASB) Statement No. 34. The Statement of Net Position and the Statement of Activities and Changes in Net Position rep01t information about the City as a whole. These statements include all assets and liabilities of the City using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account, regardless of when cash is received or paid. The Statement of Net Position presents information on all of the City's assets and liabilities, with the difference between the two rep01ted as net position. Over time, increases 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 and Changes in Net Position presents information showing how the City's net position changed during the year. All changes in net position are repo1ted as soon as the underlying event giving rise to the change occurs, regardless of timing of related cash flows. In the Statement of Net Position and the Statement of Activities and Changes in Net Position, City activities are separated as follows: Governmental Activities -Most of the City's basic services are rep01ted in this category, including Public Safety, Public Works and Parks, Community Development, Cultural and Recreation, and Government Administration (finance, human resources, legal, City Clerk and City Manager operations). Prope1ty tax, sales and use taxes, user fees, interest income, franchise fees, hotel taxes, business licenses, and property transfer taxes, plus state and federal grants finance these activities. '· Business-type Activities -The City charges fees to customers to cover the full costs of certain services it provides. The City's Parking Services program is the City's sole business-type activity. Discretely Presented Component Units -The government-wide financial statements include not only the City itself (the primary government), but also the San Rafael Sanitation District, a legally separate entity for which the City is financially accountable. Financial information for the San Rafael Sanitation District is reported separately from the financial information presented for the primary government. The government-wide financial statements can be found on pages 25 through 27 of this report. 6
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 Fund Financial Statements and Major Component Unit 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 are divided into three categories: governmental funds, proprietary funds, and fiduciary funds. The fund financial statements provide detailed information about each of the City's most significant funds called major funds. The concept of major funds and the dete1mination of the major funds were established in the Governmental Accounting Standards Board Statement No. 34. Each major fund is presented individually with all non-major funds summarized and presented in a single column. Further detail on the non-major funds is presented on pages 114 through 144 of this report. 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 government-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 the fiscal year. Such infmmation may be useful in evaluating a government's near-term financial capacity. Because the focus of governmental funds is nanower than that of the government-wide financial statements, it is useful to compare the inf 01mation presented for government funds with similar inf mmation 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. Both 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. These reconciliations are presented on the page immediately following each governmental fund financial statement. The City has twenty-nine governmental funds, of which four are considered major funds for presentation purposes. Each major fund is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances. The City's four major funds are: the General Fund, Traffic and Housing Mitigation, Gas Tax and Essential Facilities Capital Projects. Data from the other twenty-five governmental funds are combined into a single, aggregated presentation. The basic governmental fund financial statements can be found on pages 30 through 34 of this report. Individual fund data for each of these non-major governmental funds is provided in the fo1m of combining statements on pages 114 through 133 of this report. Proprietary Funds -The City maintains two different types of proprietary funds -enterprise funds and internal service funds. Enterprise funds are used to repmt the same functions presented as business-type activities in the government-wide financial statements. The City uses an enterprise fund to account for its Parking Services program and repmts it as a major fund. Internal service funds are used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its building maintenance; vehicle, equipment and computer replacement; workers' compensation; general liability; self-insured dental program; other employee and retiree benefits programs. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. 7
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 Proprietaiy funds provide the same type of information as the government-wide financial statements, only in more detail. Like the government-wide financial statements, proprietary fund financial statements use the accrual basis of accounting. There is no reconciliation needed between the government-wide financial statements for business-type activities and the proprietary fund financial statements. The basic proprietary fund financial statements can be found on pages 36 through 38 of this repo1t. Fiducimy Funds -Fiduciaty funds ai·e used to account for resources held for the benefit of paities 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 City acts as an agent on behalf of others, holding amounts collected, and disbursing them as directed or required. The City's fiduciary activities are rep01ted in the separate Statements of Fiduciary Net Position and the Agency Funds Statement of Changes in Assets and Liabilities. The City's fiduciai·y funds include a private purpose trust fund to account for activities of the City of San Rafael Successor Agency and an agency fund that accounts for resources held by the City in a custodial capacity for the Pt. San Pedro Road Assessment District. Information for the fiduciary funds can be found on pages 41 through 42 of this rep01t. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 43 through 94 of this report. Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report also presents ce1tain required supplementaiy information. One section includes budgetary comparison statements for the major funds (general, gas tax, traffic and housing mitigation, and essential facilities capital projects). The other section is a schedule of funding progress for the Marin County Employees' Retirement System. All budgeted positions that are filled by either full-time or permanent patt-time employees (working seventy-five percent of full-time equivalent) are eligible to participate in this system. Required supplementary information can be found on pages 96 through 108 of this repo1t. GOVERNMENT-WIDE FINANCIAL ANALYSIS Statement of Net Position Net position is one measmement of the City's financial position. During this fiscal year, the net position of the City was $ 120.1 million from Governmental Activities and $10.1 million from Business-type Activities, for a total of$ 130.2 million. This represents an increase of $4.6 million from the prior year net position. 8
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 The following is the condensed Statement of Net Position for the fiscal years ended June 30, 2018 and 2017: Governmental Activities Increase Business-Type Activities Increase 2018 2017 (Decrease) 2018 2017 (Decrease) Cu!1'ent and other assets $126,251 $83,145 $43,106 $3,199 $3,267 ($68) Capital assets 221,978 199,506 22,472 16,151 16,444 (293) Total assets 348,229 282,651 65,578 19,350 19,711 (361) Deferred outflows (Notes 9 and 11) 44,932 76,869 (31,937) 1,364 2,394 (1,030) Cun·ent and other liabilities 19,363 12,923 6,440 439 432 7 N oncmTent liabilities 219,709 209,678 10,031 9,151 10,882 (1,731) Total liabilities 239,072 222,601 16,471 9,590 11,314 (1,724) Deferred inflows (Notes 9 and 11) 33,947 21,403 12,544 1,060 693 367 Net Position: Net investment in capital assets 217,170 199,203 17,967 10,952 10,969 (17) Restricted 25,550 29,225 (3,675) 0 0 0 Unrestricted (122,577) (112,913) (9,664) (887) (872) (15) Total net position $120,143 $115,515 $4,628 $10,065 $10,097 ($32) Current Governmental assets increased by $43.1 million, primarily due to bond proceeds being held for the public safety facility construction and improvements. The $22.4 million increase in Capital assets reflects project-to-date activity for this activity in combination with major traffic infrastructure improvements. Current and other liabilities increased by approximately $6.4 million, primarily due to an increase in accounts payable due to a higher level of construction activity. Noncurrent governmental liabilities increased by $10.0 million, a result of the new bond and loan obligations of $54.8 million and offset by a $45.0 decrease in net pension and OPEB liabilities (Notes 9 and 11 ). The net position in business-type activities reflects the fiscal act1v1ty of the Parking Services program and decreased by $32 thousand from the previous year. The $1,731 thousand decrease in noncurrent liabilities is driven by the decrease in net pension and OPEB liabilities. Decreases to deferred outflows and increases to deferred inflows under the repmiing requirements of GASB 68 and GASB 75 offset the liability increase, thus reducing the impact on net position. At June 30, 2018, the largest po1iion of net position in the amount of $228.1 million consisted of the City's investment in capital assets net of related debt. This component represents the total amount of funds required to acquire capital assets less any related debt used for such acquisition that is still outstanding. The City uses these assets to provide services to residents. The capital assets of the City are not sources of income for repayment of debt as most assets are not revenue generating and generally are not liquidated to repay debt. Therefore, debt service payments are funded from other sources available to the City. 9
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 A p01tion of the City's net position, $25.6 million, is subject to external restrictions, and their use is determined by those restrictions whether legal or by covenant. The remaining p01tion, unrestricted negative $123 .5 million, represents the extent to which the net investment in capital assets and restricted net position exceed total assets. Net Position as of 6/30/2018 Total=$ 130,208 (in thousands) Invested in Capital Assets (net) Restricted Um-estricted Total Net Position 10 $228,122 25,550 (123,464) $130,208
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 Statement of Activities -Governmental The following is the condensed Statement of Activities and Changes in Net Position for the fiscal years ended June 30, 2018 and 2017: Summary of Changes in Net Position (in thousands) Governmental Activities Increase 2018 2017 (Decrease) REVENUFS Program revenues: Charges for services $19,142 $17,282 $1,860 Operating grants and contributions 5,143 3,965 1,178 Capital grants and contributions 975 1,703 (728) Total progran1 revenues 25,260 22,950 2,310 General revenues: Property taxes 24,627 23,343 1,284 Sales taxes 34,120 31,819 2,301 Paramedic tax 4,923 5,486 (563) Transient occupancy tax 3,115 2,985 130 Franchise tax 3,727 3,611 116 Business license tax 2,790 2,775 15 Other taxes 2,246 1,825 421 Investment earnings 557 211 346 Miscellaneous 5,992 2,449 3,543 Total general revenues 82,097 74,504 7,593 TOT AL REVENUES 107,357 97,454 9,903 EXPENSFS General government 9,836 10,996 (1,160) Public safety 53,231 44,367 8,864 Public \\orks and parks 22,085 19,846 2,239 Community/economic development 4,040 4,243 (203) Culture and recreation 13,286 14,131 (845) Interest on long-tem1 debt 884 271 613 TOT AL EXPENSES 103,362 93,854 9,508 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENSES 3,995 3,600 395 Transfers in 633 536 97 Total Other Financing Sources (Uses) 633 536 97 Net Change in Net Position 4,628 4,136 492 Beginning Net Position 115,516 111,380 4,136 Change due to inlplementation of GASB 75 (See Note IQ) 0 Ending Net Position, June 30 $120,144 $115,516 $4,628 11
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 The City's governmental activities net position increased by $4.6 million during fiscal year 2017-2018. Year-over-year increases revenues of $9.9 million outpaced the increase in expenses of $9.5 million by $0.4 million. Revenue increases were concentrated in the areas of charges for services, prope1iy taxes and sales taxes, while increases in program expenses were concentrated in public safety. Growth in prope1ty taxes was aided by Measure D, a library parcel tax which generated revenues of a little over $1.0 million, up from the $868 thousand generated by the preceding library tax, Measure C. The year-over-year $2.8 million increase in sales taxes was buoyed by a surge in auto sales coupled with adjustments corresponding to activity in prior years. The $563K decline in paramedic tax revenues was due to the large collection of prior year taxes in the previous fiscal year. The increase in fiscal year 2017-2018 governmental expenses was due, in part to pension expense adjustments recorded under GASB 68 and increased internal service fund expenditure allocations resulting primarily from increased Liability lnsmance and Workers' Compensation premiums and claims during the year. The remaining year-over-year increase is attributable to other operating costs, which increased by approximately $5 million as a result of ove1time necessary for public safety emergencies during the year as well as a general increase in overall expenditures. The following graph shows governmental revenues by source: Revenues by Source Governmental Activities Total -$107,357 (in thousands) 12 ■ Charges for services ■ Operating grants and contributions Capital grants and contributions ■Taxes Investment earnings ■ Miscellaneous
DRAFTV> $60 "t] C I)! _g $50 I-$40 $30 $20 $10 $0 CITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 Expenses and Program Revenues Governmental Activities Total expenses for governmental activities were $102.5 million (excluding interest on long-term debt of $884 thousand). Program revenues offset total expenditures as follows: • Those who directly benefited from programs contributed $19.2 million in charges for services. • A total of $6.1 million in operating and capital projects were funded by outside agencies through operating, capital grants, and contributions. As a result, total expenses that were funded by tax revenues, investment income, other general revenues and fund balance were $77 .2 million. Functional expenses for the year ended June 30, 2018 were as follows: Function General government Public safety Public works and parks Expenses by Function (in thousands) Amount $9,836 53,231 22,085 Community development 4,040 Culture and recreation 13,286 Interest on debt 884 Total expenses $103,362 13 Percent of Total 9.4% 51.5% 21.4% 3.9% 12.9% 0.9% 100%
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 Statement of Activities -Business-type Summary of Changes in Net Position For the periods ended June 30, (in thousands) 2018 2017 Revenues Program re\·ettues: Charges for s.,•rvices S5,204 S5,26S Total program revenues 5,204 5,26S General revenues: ~faeellaneous 24 11 Total general re\"enues 24 11 TOTAL REVENUES 5,228 5,279 Expemes General government 4,628 4,lSS TOTAL EXPENSES 4,628 4,188 EXCESS (DEFICID.~CY) OF RE\IEN"1JES OVER (UNDER) EXPENSES, 600 1,091 OIBER FINA ... i\1CING SOURCES (USES) Transfers out (633) (536) Total Other Financing sources (uses) Net Change in Net Position (33) 555 Net Position, Beginning as of 711117 10,097 9,542 Net Position, Ending as of6/30/1S 510,064 S10,097 Increase (Decrease) ($64) (64) 13 13 (51) 440 440 (491) (97) (5SS) 555 (S33) The net position for business-type activities decreased from the prior year by $33 thousand. • Parking services is the City's only business-type activity with income derived from program revenues of $5.2 million. Program revenues include parking meter coin income of $1.9 million and parking garage hourly and monthly parking income of $1.3 million. Revenues also include parking and non-vehicle code fines totaling $2.0 million. Total expenses for parking services were $4.6 million and transfers out to general fund and non-major governmental fund for support totaled $633 thousand during the fiscal year 2017-2018. The year-over-year increase in expenses was driven by routine pension-related accounting adjustments in the parking fund. 14
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 FINANCIAL ANALYSIS OF INDIVIDUAL FUNDS Governmental Funds Fund Balance Classifications In February 2009, the Governmental Accounting Standards Board issued Statement No. 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions. The objective of GASB 54 was to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be applied. Under GASB 54, fund balances are classified in five categories: nonspendable, restricted, committed, assigned, and unassigned based on hierarchy of constraint. Further details on fund balance classifications can be found in Note 8B. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financial capacity. In paiticular, 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, 2018, the City repmted a combined ending fund balance of $87.9 million of all its governmental funds (an increase of $4 l.8 million from the prior year): $1.3 million is non-spendable, $73 .5 million is restricted, $1.8 million is committed, and $11.3 million is assigned. General Fund -The General Fund is the primary operating fund of the City. General Fund -The fund balance of the General Fund as of June 30, 2018 was $12.2 million (a decrease of $4.5 million from the prior year balance): $1.0 million is non-spendable and $1 l.2 million is assigned. The assigned pmtion of the balance includes $7.5 million for emergency and cash flow needs. General Fund Budgetary Highlights: The original adopted General Fund budget projected total revenue of $77.2 million and transfers-in of $1.3 million for total resources of $78.5 million. This budget appropriated expenditures of $73.0 million and transfers-out of $6.4 million for total appropriations of $79.4 million. Expenditures were later increased to $74.4 million to accommodate bond issuance costs and reimbursable fire strike team expenses. Transfers-out were later increased to $65.2 million in order to accommodate the funding of the San Rafael Essential Facilities project from Measure E Transactions and Use Tax (TUT), based on actual project expenditures; the transfer of a PG&E loan to a capital project fund; and the transfer of bond proceeds to the Essential Facilities Capital Project Fund. Actual revenues, at $78.5 million, were higher than the original budgeted revenues by $1.3 million. This positive performance was primarily due to stronger-than-anticipated prope1ty tax and sales tax revenues. Actual expenditures of $73 .9 million were greater than the original budgeted expenditures by $1.0 million, primarily due to the cost of bond issuance coupled with higher than anticipated overtime costs. Fiscal year 2017-2018 General Fund revenues, transfers, and financing sources of 134.6 million were exceeded by expenditures, operating and capital transfers out of $139.l million by $4.5 million. Consistent with the City's Essential Facilities Project funding policy, previously accumulated funds of $4.8 million assigned to Public Safety Facilities from Measure E funds were used to cover this difference. Net operating results were sufficient to ensure that the General Fund Emergency and Cash Flow Reserve maintained its tai·get level of l 0 percent of actual expenditures. 15
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 Summary of General Fund Budget and Actual For the fiscal year ended June 30, 2018 (in thousands) Adopted Budget Revised Budget Revenues $77,133 $78,454 Transfers in 1,356 1,.356 Financing sources 54,814 Total resources 78,489 134,624 Expenditures 72,885 $74,281 Operating transfers out 2,350 2,350 Capital Transfers out 4,025 62,857 Total uses 79,260 139,488 Net Results ($771) (4,864) Actual $78,469 1,356 54,814 134,639 73,913 2,350 62,.857 139,120 ($4,481) Traffic and Housing Mitigation Fund -The City uses this fund to collect developer contributions to be used for major street improvement and housing infrastructure projects. During the year, the fund balance decreased from $9.1 million to $6.3 million. Revenues totaled $0.8 million, while $3.0 million was charged against this fund to support the maintenance of the City-wide traffic model. Intersection improvements at Freitas and Las Gallinas accounted for charges of $2.9 million and a traffic study at Third and Hethe1ton added $32.8 thousand in charges. The balance in the fund is being held in anticipation of major street projects identified in the General Plan 2020 and other qualifying expenditures. Gas Tax Fund -The City uses this fund to manage its allocation of State gasoline taxes and local funding for street maintenance projects. Gas tax revenues were exceeded by expenditures and net transfers by $731 thousand in fiscal year 2017-2018 resulting in a drop in fund balance from $6.7 million to $6.0 million. Expenditures during fiscal year 2017-2018 totaled $4.6 million. In addition to routine street-related maintenance which included $1.0 million in street resurfacing, major expenditures included $1.1 million for modifications to 2nd Street at Grand Avenue, $537 thousand for improvements on G Street, $522 thousand for the Francisco Blvd. multi-use path, $266K for modifications to the corner of 3rd and Cijos, $245 thousand for the Grand Avenue pedestrian bicycle trail, and $218 for the Third Street rehabilitation project study. The largest sources of revenues were $1.1 million in development impact fees, $1.3 million from State gasoline taxes, $678 thousand in local Measure A, and $280 thousand in State RMRA (Road Maintenance and Rehabilitation Account) funding. Essential Facilities Capital Projects Fund -The City uses this fund to account for major capital improvements to public safety facilities. The currently active construction projects are Fire Station 57, Fire Station 52 and the Public Safety Center. Expenditures during fiscal year 2017-2018 totaled $16.6 million, of which $8.8 million was transferred from the General Fund from an allocation of Measure E Transaction and Use Tax, $2.3 million from reimbursements from the County of Marin for its share of Fire Station 57 costs, and the remainder provided from bond proceeds associated with the 2018 Lease Revenue Bonds. 16
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 Non-major Govemmental Funds -The City's non-major funds are presented in the basic financial statements in the aggregate. At June 30, 2018, non-major funds had a total fund balance of $14.2 million, a $0.6 million increase over that of the previous year. The largest fund balance increase, $1.7 million, was recorded in the Library Fund which recorded two large bequeathments. The Stormwater fund increased by $400 thousand, in anticipation of large maintenance needs. The largest decline in fund balance, $475 thousand, was in the Emergency Medical Services Fund, a direct result of planned capital transfers to support the delivery of medical transpott services. Of the ending total non-major fund balances of $14.2 million: $12.0 million (84%) is legally restricted for specific purposes by external funding source providers, $1.8 million ( 13%) is committed for special purposes by the City Council, $0.3 (2%) million is nonspendable, and $0.1 million (I%) is assigned. Additional information about these aggregated non-major funds is presented in the combining statements which immediately follow the required supplementary information. Proprietary Funds The City's proprietary funds are presented in the basic financial statements in a manner similar to that found in the government-wide financial statements, but in more detail. As noted in the Proprietary Funds -Statement of Revenues, Expenses and Changes in Net Position at page 3 7, the City's Enterprise fund net position decreased by $152 thousand during the fiscal year. The Parking Services Fund is the City's sole business-type (Enterprise) activity. The proprietary fund operating revenue decreased by $65 thousand in fiscal year 2017-2018 to $5.2 million. The Enterprise fund operating expenses were $4.6 million in fiscal year 2017-2018, an increase of $0.8 million over the prior fiscal year. The change in operating expenses was primarily driven by the recognition of pension and OPEB expenses under Governmental Accounting Standards Board Statement Nos. 68 and 75. The City's Internal Service Funds are also repo1ted in this Proprietary Fund classification. In fiscal year 2017-2018, the Internal Services Funds were comprised of: Building Maintenance, Vehicle Replacement, Equipment Replacement, Employee Benefits, Liability Insurance, Workers' Compensation, Dental Insurance, Employee Retirement, OPEB/Retiree Medical, Radio Replacement, Telephone Replacement and Sewer Maintenance. The net position of the Internal Service Funds decreased by $391 thousand. Net investment in capital assets increased by $4.9 million, while unrestricted fund balance decreased by $5.3 million. The increase in capital assets resulted primarily from facility projects and vehicle replacements. The decrease in unrestricted fund balance reflected the use of accumulated funds in support of these projects. 111 addition, unrestricted funds were applied to the $1.0 million increase in general liabilities in the Liability Insurance fund. The other Internal Service Funds reported small-to-moderate changes to their respective net positions. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The City's investment in capital assets for its governmental and business-type act1v1t1es as of June 30, 2018 amounts to $238.1 million, net of accumulated depreciation of $174.8 million. This investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure and construction in progress. Infrastructure assets are items that are normally immovable and of value only to the City such as roads, bridges, streets and sidewalks, drainage systems, lighting systems, and similar items. The net addition to the City's investment in capital assets for the current fiscal year was $29.0 million, offset by accumulated depreciation of $6.9 million. 17
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 Additions to capital assets during fiscal year 2017-2018 included: ► Building and structure projects: $0.7 million • City Hall & Terra Linda Center Re-Roof -$66 lk ► Infrastructure: $2.5 million • G Street Improvement Phase 1-$538k • Del Presidio Blvd-Pt. San Pedro Resurfacing -$84lk • 2nd Street at Grand Ave. Intersection Modification -$1.2 million The City's Capital Assets for the fiscal years ending June 30, 2018 and 2017 were as follows: Governmental Acth•ities Land Construction in progress Land improvements Buildings and structures Machinery and equipment Infrastructure Less accumulated depreciation Subtotal Governmental Activities Business-type Activities Land Buildings and strucrures Machinery and eqmpment Less accumulated depreciation Subtotal Business-type Activities Total Capital Assets Summary of Capital Assets (in thousands) 2018 $83,662 35,720 9,020 43,559 20,9'71 199,560 (170,514) 221,978 8,621 10,714 1,128 (4,313) 16,150 $238,128 2017 $83,662 11,847 9,020 42,896 18,841 197,025 (163,785) 199,506 8,621 10,714 1,212 (4,103) 16,444 $215,950 Additional information on the City's capital assets can be found in Note 5 on pages 63 through 64 of this repo1t. 18
DRAFTDebt Administration CITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 The City's debt obligations were stable year-over year and reflect payments of principal made during the year. The debt of the former Redevelopment Agency is repo1ied under the Successor Agency, which is presented as Private-Purpose Trust Fund on the Statement of Fiduciary Net Position. (See Note 6 of the financial statements for additional information on the debt obligations of the City and Note 15 for additional information on the Successor Agency.) The City's long-term obligations for the fiscal years ending June 30, 2018 and 2017 were as follows: Governmental Activity Debt: Summary of Long-Term Debt (in thousands) 2018 Authority Lease Revenue Bond 2010 Taxable Pension Obligation Bonds PG & E City Hall HVAC Retrofit Kate Payable PG & E Street Light Retrofit Note Payable PG & E Efficiency 1\~ote Payable Subtotal Governmental Actidty Debt Business-type Debt: PG & E Parking Lot Lighting Retrofit Kote Payable 2012 Authority Lease Revenue refunding Bonds, as adjusted Subtotal Business-type Debt Total Long-Term Obligations ECONOMIC CLIMATE AND NEXT YEAR'S BUDGET 2018 $53,612 4,185 179 49 1,081 59,106 35 5,164 5,199 $64,305 2017 $4,390 213 91 4,694 41 5,434 5,475 $10,169 This fiscal year begins on a high note. From a national perspective unemployment is at a 17-year low of 3 .9% and the current bull market has become the longest in U.S. history with the S&P 500 setting a record high in August. Tax cuts enacted at the end of 2017 have provided a boost to the national economy and as a result economic growth has hit an almost four-year high and job creation as well as wage growth remain strong. However, significant challenges still exist with rising income inequality, increasing medical and pension costs, deteriorating infrastructure, and government deficits. Not to mention the looming trade war with China, where newly announced tariffs $200 billion of Chinese goods threatens consumer spending and business investment. California is also on strong economic footing to begin the fiscal year with unemployment at 4.2% with almost 350,000 nonfarm payroll jobs created in the last year, an increase of over 2%. The state's fiscal 2019 budget assumes continued expansion and forecasts capital gains at unprecedented high levels allowing for the state's rainy day fund to project full funding by year-end. Concerns of the next recession remain and the identified "Wall of Debt" still looms over the state's long-term outlook. 19
DRAFTCITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 Locally, Marin County's unemployment rate is among the lowest in the State at 2.7% and total employment figures are forecasted to grow at an average rate of 0.9% through 2022. Per capita income has seen an average annual increase of over 4% over the last two years and is projected to continue to grow 2.1 % per year through 2022. Overall, economic indicators show Marin County to be in a steady growth pattern for the foreseeable fuhire with taxable sales, industrial production as well as per capita income all projected for growth in the years ahead. In San Rafael, property taxes have sustained moderate growth while sales taxes have begun to level out after years of steady growth. The trend of consumer spending continues to shift to online retailers and away from brick-and-mortar locations. The Wayfair ruling in June of this year could lead to a positive impact in this regard should California capitalize on the ruling which ove1iurned the Supreme Court's 1992 physical presence tlu·eshold for when states could ta,"X remote sales. The City's general fund has been fueled by the momentum of six consecutive years of solid operating results. Se1vice levels have increased moderately over the past few years, with resources being allocated to homeless issues, massage ordinance enforcement, open space management and deferred maintenance. At the same time, the City is fully funding its actuarially-determined, required contributions for both pension and retiree medical (OPEB) obligations. Reductions in staffing and se1vice levels, coupled with defen-ed maintenance of City facilities as method of coping with past economic downturns means that, although the City is able to maintain and, in some cases, improve on its level of se1vices and make come strategic investments for the City's future, there will still be critical, unfunded capital and maintenance needs. Sales tax and transactions and use tax (Measure E) combined, represent the City's largest tax revenue generators. The City's forecast shows continued, but moderate, growth intenupted by a flat year in fiscal year 2018-2019. A handful of retail store closures account for this slow down. The City's second largest ta,-x generator is property tax. The City is expecting the fiscal year 2018-2019 ta,"X roll to increase by approximately four percent over the previous year. Other tax and non-tax revenues are expected to grow moderately, in the range of two to four percent. The City's largest expenditure relates to personnel costs. Salaries and benefits are tied to the labor agreements with each bargaining group. With the exception of SEIU-Childcare, which has a tlu·ee-year contract terminating on October 31, 2019, the City's labor units are all operating under two-year contracts that expire on June 30, 2020. In the bond markets, the San Rafael name is recognized as a high credit municipal entity given both the City's financial strength and solid financial management. Because the City's bonds are highly sought by investors and are competitive in the marketplace, the City can borrow funds at reasonably attractive rates. The City maintains an AA issuer credit rating with Standard & Poor's Ratings Se1vices. Following tlu·ee years of funding the San Rafael Essential Facilities capital improvements project exclusively from CU1Tent General Fund Measure E revenues, the City has begun to use proceeds from the 2018 Lease Revenue Bonds. The project, which includes a new public safety administrative building and major safety and operational improvements to fire stations, is being funded from a dedicated potiion of the MeasUl'e E TUT which will be used to pay debt se1vice on the bonds after construction. General Fund balances are expected to remain stable for the year and the Emergency and Cashflow Rese1ve will continue to meet or exceed the ten percent target funding level. 20
DRAFTREQUEST FOR INFORMATION CITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2018 This financial report is designed to provide our residents, businesses, customers, and investors and creditors with a general overview of the City's finances and to demonstrate the City's accountability for providing high quality services within the limits of our fiscal resources. If you have questions about this report or need additional financial information, contact the City of San Rafael -Finance Depaitment at 1400 Fifth A venue, Room 204, San Rafael, California 94901. 21
DRAFT
DRAFTCITY OF SAN RAFAEL STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITIES The Statement of Net Position and the Statement of Activities summarize the entire City's financial activities and financial position. They are also referred to as Government-wide financial statements. The Statement of Net Position reports the difference between the City's total assets and the City's total liabilities, including all the City's capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the City's net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of all of the City's Governmental Activities in a single column, and the financial position of all the City's Business-type Activities in a single column; these columns are followed by a total column which presents the financial position of the entire City. The City's Governmental Activities include the activities of its General Fund, along with all its Special Revenue, Capital Projects and Debt Service Funds. Since the City's Internal Service Funds service these Funds, their activities are consolidated with Governmental Activities, after eliminating inter-fund transactions and balances. The City's Business-type Activities include all its Enterprise Fund activities. The Statement of Activities reports increases and decreases in the City's net position. It is also prepared on the full accrual basis, which means it includes all the City's revenues and all its expenses, regardless of when cash changes hands. This differs from the "modified accrual" basis used in the Fund financial statements, which reflect only current assets, current liabilities, available revenues and measurable expenditures. The Statement of Activities presents the City's expenses first, listed by program, and follows these with the expenses of its business-type activities. Program revenues -that is, revenues which are generated directly by these programs -are then deducted from program expenses to arrive at the net expense of each governmental and Business-type program. The City's general revenues are then listed in the Governmental Activities or Business-type Activities column, as appropriate, and the Change in Net Position is computed and reconciled with the Statement of Net Position. Both these Statements include the financial activities of the City and the San Rafael Joint Powers Financing Authority which are legally separate but are considered to be component units of the City because they are controlled by the City, which is financially accountable for their activities. The balances and the activities of the San Rafael Sanitation District, a discretely presented component unit, are included in these statements in a separate column. 23
DRAFT
DRAFTCITY OF SAN RAFAEL STATEMENT OF NET POSITION JUNE 30, 2018 Primary Government ASSETS Cash and investments available for operations (Note 2) Restricted cash and investments (Note 2) Receivables: Accounts Taxes Grants Interest Loans (Note 4) Long-term receivable from the Successor Agency (Note 15D) Long-term receivable from San Rafael Sanitation District (Note 4F) Internal balances (Note 3B) Prepaid expenses and others Capital assets (Note 5): Nondepreciable Depreciable, net Total Assets DEFERRED OUTFLOWS Deferred outflows related to pension (Note 9) Deferred outflows related to OPEB (Note 11) Total Deferred Outflows LIABILITIES Accounts payable Deposits payable Interest payable Developer deposits payable Unearned revenue Claims payable (Note 13): Due in one year Due in more than one year Compensated absences (Note lK): Due in one year Due in more than one year Long-term debt (Note 6): Due in one year Due in more than one year Long-term payable to the City of San Rafael (Note 4F) Net OPEB liability (Note 11) Net pension liability (Note 9) Total Liabilities DEFERRED INFLOWS Deferred inflows related to pension (Note 9) Deferred inflows related to OPEB (Note 11) Total Deferred Inflows NET POSITION (Note 8): Net investment in capital assets Restricted for: Special revenue projects: Housing and street improvements Storm water Emergency medical services Other Capital projects Debt service Total Restricted Net Position Unrestricted Total Net Position Governmental Activities $55,696,735 50,816,452 4,108,284 8,035,409 473,510 279,785 460,026 571,330 4,621,437 42,069 1,146,459 I 19,382,477 102,595,551 348,229,524 37,363,857 7 567 802 44,931 659 14,521,173 243,783 599,675 231,594 2,696,736 6,846,939 574,457 4,021,198 495,172 58,610,876 33,332,951 116 897,481 239,072,035 30,624,579 3,321,843 33,946 422 217,170,376 13,205,588 589,023 1,269,432 8,962,590 1,354,628 168,322 25,549,583 (122,577,233) $120,142,726 See accompanying notes to financial statements 25 Business-type Activities $3,200,268 41,347 (42,069) 8,620,853 7,529 538 19,349,937 1,199,315 165,198 1,364,513 95,513 44,522 16,933 118,531 281,816 4,917,057 363,049 3,752,206 9,589,627 982,996 77,157 1,060,153 JO 951,518 (886,848) $10,064,670 Total $58,897,003 50,816,452 4,149,631 8,035,409 473,510 279,785 460,026 571,330 4,621,437 1,146,459 128,003,330 110,125,089 367,579 461 38,563,172 7,733,000 46,296,172 14,616,686 243,783 44,522 599,675 231,594 2,696,736 6,846,939 591,390 4,139,729 776,988 63,527,933 33,696,000 120,649,687 248,661,662 31,607,575 3,399,000 35,006,575 228,121,894 13,205,588 589,023 1,269,432 8,962,590 1,354,628 168,322 25,549,583 (123,464,081) $130,207,396 Component Unit San Rafael Sanitation District $30,502,613 324,537 55,289 891,133 47,741,924 79,515,496 386,592 4,621,437 5 008 029 48,633,057 25,874,410 $74,507,467
DRAFTFunctions/Programs Primary Government Governmental Activities: General government Public safety Public works and parks Community development Culture and recreation Interest on long-term debt and fiscal charges Total Governmental Activities Business-type Activities Parking services Total Business-type Activities Total Primary Government Component Unit San Rafael Sanitation District CITY OF SAN RAFAEL ST A TEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2018 Expenses $9,835,941 53,231,[97 22,084,433 4,040,195 13,285,563 884,336 I 03,36 l,665 4,627,716 4,627,716 $107,989,381 $12,235,868 General revenues: Taxes: Property Sales: Sales and Use Charges for Services $517,542 5,628,478 2,362,375 3,814,892 6,819,303 19,142,590 5,203,585 5,203,585 $24,346,175 $16,829,908 Measure E half-cent sales Measure E quarter-cent sales Measure S Paramedic Transient occupancy Franchise Business license Other Investment earnings Miscellaneous Transfers (Note 3A) Total general revenues and transfers Change in Net Position Net Position, beginning of year Net Position, end of year See accompanying notes to financial statements 26 $ Program Revenues Operating Grants and Contributions $252,490 1,842,521 2,919,868 127,791 5,142,670 $5,142,670 58,440 $ Capital Grants and Contributions $974,603 974,603 $974,603 105,734
DRAFTNet (Expenses) Revenues and Changes in Net Position Component Primary Government Unit San Rafael Governmental Business-type Sanitation Activities Activities Total District ($9,065,909) ($9,065,909) (45,760, l 98) (45,760,198) (15,827,587) (15,827,587) (225,303) (225,303) (6,338,469) (6,338,469) (884,336) (884,336) (78, l O 1,802) (78, IO l,802) $575,869 575,869 575,869 575,869 (78,101,802) 575,869 (77,525,933) $4,758,214 24,627,373 24,627,373 l,620,584 22,024,974 22,024,974 8,050,000 8,050,000 4,025,000 4,025,000 19,528 19,528 4,923,[48 4,923,[48 3,l 15,l5l 3,l l5,l5l 3,726,84[ 3,726,84[ 2,790,212 2,790,2[2 2,245,882 2,245,882 556,745 24,436 581,18[ 234,379 5,991,713 5,991,713 10,690 632,657 (632,657) 82,729,224 (608,221) 82,121,003 1,865,653 4,627,422 (32,352) 4,595,070 6,623,867 I I 5,5 I 5,304 l0,097,022 125,612,326 67,883,600 $120,142,726 $10,064,670 $130,207,396 $74,507,467 27
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DRAFTFUND FINANCIAL STATEMENTS Major funds are defined generally as having significant activities or balances in the current year. Only individual major funds are presented in the Fund Financial Statements, while non-major funds are combined in a single column. Individual non-major funds may be found in the Supplemental Section. The funds described below were determined to be major funds by the City in fiscal year 2017-2018: GENERAL FUND Established to account for all financial resources necessary to carry out basic governmental activities of the City which are not accounted for in another fund. The General Fund supports essential City services such as police and fire protection, building and street maintenance, libraries, recreation, parks and open space maintenance. TRAFFIC AND HOUSING MITIGATION SPECIAL REVENUE FUND Established to maintain long-term developer contributions for major housing and street improvement projects. GASTAXSPECIALREVENUEFUND Established to receive and expend the City's allocation of the State gasoline taxes. ESSENTIAL FACILITIES CAPITAL PROJECTS FUND Established to account for major capital improvements to public safety facilities. 29
DRAFTCITY OF SAN RAFAEL GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2018 ASSETS Cash and investments available for operations (Note 2) Restricted cash and investments (Note 2) Receivables: Accounts Taxes Grants Interest Loans (Note 4) Long-term receivable from the Successor Agency (Note 15D) Prepaids Total Assets LIABILITIES Accounts payable Deposits payable Developer deposits payable Unearned revenue Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenue -SB90 reimbursement receivable Unavailable revenue -long-term receivable from Successor Agency Total Deferred Inflows of Resources Fund Balances (Note 8): Nonspendable Restricted Committed Assigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances General $7,628,610 1,435,919 7,612,489 134,479 204,510 164,141 571,330 844,093 $18,595,571 $4,029,694 220,730 454,797 4,705,221 1,096,066 571,330 1,667,396 1,008,234 11,214,720 12,222,954 $18,595,571 See accompanying notes to basic financial statements 30 Special Revenue Funds Traffic and Housing Mitigation Gas Tax $6,661,776 $6,318,344 703,254 153,689 45,716 $6,707,492 $7,175,287 $401,119 $1,183,006 401,119 1,183,006 6,306,373 5,992,281 6,306,373 5,992,281 $6,707,492 $7,175,287
DRAFTEssential Other Total Facilities Capital Governmental Governmental Projects Fund Funds Funds $3,155,347 $14,494,490 $38,258,567 50,113,396 703,056 50,816,452 1,055,056 895,086 4,089,315 269,231 8,035,409 339,031 473,510 71,123 4,152 279,785 250,169 460,026 571,330 302,366 1,146,459 $54,394,922 $17,257,581 $104,130,853 $5,185,870 $2,702,783 $13,502,472 23,053 243,783 144,878 599,675 231,594 231,594 5,185,870 3,102,308 14,577,524 1,096,066 571,330 1,667,396 302,366 1,310,600 49,209,052 11,981,982 73,489,688 1,754,983 1,754,983 115,942 11,330,662 49,209,052 14,155,273 87,885,933 $54,394,922 $17,257,581 $104,130,853 31
DRAFTCITY OF SAN RAFAEL GOVERNMENTAL FUNDS BALANCE SHEET -RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO NET POSITION OF GOVERNMENTAL ACTIVITIES JUNE 30, 2018 Total fund balances reported on the governmental funds balance sheet Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds because of the following: Capital assets used in Governmental Activities are not financial resources and, therefore, are not reported in the Governmental Funds. Internal service funds are used by management to charge the cost of management of building, workers' compensation, employee benefits, insurance, and post-retirement healthcare benefits to individual funds. The assets and liabilities are included in Governmental Activities in the Statement of Net Position. Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the Governmental Funds. Compensated absences Unavailable revenue Long-term receivables from San Rafael Sanitation District Deferred outflow related to pension Net pension liability Deferred inflow related to pension Deferred outflow related to OPEB Deferred inflow related to OPEB Net OPEB liability : Net position of governmental activities See accompanying notes to financial statements 32 $87,885,933 208,207,110 20,707,748 (59,106,048) (4,595,655) 1,667,396 4,621,437 37,363,857 (116,897,481) (30,624,579) 7,567,802 (3,321,843) (33,332,951) $120,142,726
DRAFTCITY OF SAN RAFAEL GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2018 Seecial Revenue Funds Traffic and Essential Other Housing Facilities Capital Governmental General Mitif;ation Gas Tax Projects Fund Funds REVENUES Taxes and special assessments $68,079,065 $39,619 $44,478 $6,730,627 Licenses and permits 2,718,166 Fines and forfeitures 384,268 Use of money and properties 175,230 56,994 45,748 $196,846 179,713 Intergovernmental 4,103,766 2,949,961 1,825,247 Charges for services 2,379,046 662,332 1,097,941 10,520,775 Other revenue 629,348 2,158,166 2,431,900 Total Revenues 78,468,889 758,945 4,138,128 2,355,012 21,688,262 EXPENDITURES Current: General government 9,686,131 50,900 273,069 Public safety 43,481,474 8,324,234 Public works and parks 11,953,335 2,974,669 1,580,271 1,139,037 Community development 4,051,224 Culture and recreation 3,229,533 9,594,238 Capital outlay 225,996 2,986,597 16,622,567 2,980,807 Debt service: Principal 280,172 Interest and fiscal charges 1,005,636 Total Expenditures 73,913,501 3,025,569 4,566,868 16,622,567 22,311,385 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 4,555,388 {2,266,624} (428,740} {14,267,555} (623,123} OTHER FINANCING SOURCES (USES) Bonds Issued (Note 6A) 45,485,000 Bond premium (Note 6) 8,248,397 Note Issued (Note 6A) 1,080,800 Transfers in (Note 3A) 1,356,344 148,788 246,113 63,476,607 3,124,112 Transfers out (Note 3A) (65,207,407) (711,221) {548,788} {1,905,806} Total Other Financing Sources (Uses) (9,036,866} {562,433) (302,675} 63,476,607 1,218,306 Net Change in Fund Balances (4,481,478) (2,829,057) (731,415) 49,209,052 595,183 FUND BALANCES, BEGINNING OF YEAR 16,704,432 9,135,430 6,723,696 13,560,090 FUND BALANCES, END OF YEAR $12,222,954 $6,306,373 $5,992,281 $49,209,052 $14,155,273 See accompanying notes to financial statements 33 Total Governmental Funds $74,893,789 2,718,166 384,268 654,531 8,878,974 14,660,094 5,219,414 107,409,236 10,010,100 51,805,708 17,647,312 4,051,224 12,823,771 22,815,967 280,172 1,005,636 120,439,890 {13,030,654} 45,485,000 8,248,397 1,080,800 68,351,964 (68,373,222} 54,792,939 41,762,285 46,123,648 $87,885,933
DRAFTCITY OF SAN RAFAEL Reconciliation of the NET CHANGE IN FUND BALANCES -TOT AL GOVERNMENT AL FUNDS with the ST A TEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2018 NET CHANGE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS Amounts reported for Governmental Activities in the Statement of Activities are different because of the following: Capital Assets Transactions Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. Capital outlay and improvement expenditures are added back to fund balance Other capitalized expenditures are added back to fund balance Loss on disposal of capital assets is deducted from fund balance Depreciation expense is deducted from fund balance Long-Term Debt Proceeds and Payments Governmental funds record proceeds and payments as other financing sources and expenditures. $41,762,285 22,815,967 1,440,629 (237,868) (6,489,952) However, in the Statement of Net Position, those costs are reversed as increases and decreases in long-term liabilities. Long-term debt issuance (54,8 I 4, I 97) Repayments on long-term debt principal 280, I 72 Amortized bond premium expense is added back to fund balance 121,300 Accrual of Non-Current Items The amount below included in the Statement of Activities does not require the use of current financial resources and therefore is not reported as revenue or expenditures in governmental funds (net change): Compensated absences Unavailable revenue Long-term receivable from San Rafael Sanitary District Net Pension Liability Transactions Governmental funds record pension expense as it is paid. However, in the Statement of Activities those costs are reversed as deferred outflows/(inflows) and an increase/(decrease) in net pension liability. Net OPEB Liability Transactions Governmental funds record OPEB expense as it is paid. However, in the Statement of Activities those costs are reversed as deferred outflows/(inflows) and an increase/(decrease) in net OPEB liability. Allocation of Internal Service Fund Activities Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of the internal service fund is reported with governmental activities. Change in Net Position of Governmental Activities See accompanying notes to financial statements 34 (210,912) (190,617) 93,601 403,481 164,186 (510,653) $4,627,422
DRAFTPROPRIETARY FUND FINANCIAL STATEMENTS Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges, whether external or internal. The City reports its only enterprise fund, as a major fund. PARKING SERVICES FUND Established to maintain parking garages, lots and spaces in the Downtown Parking District, and to pay for parking enforcement and meter collection. INTERNAL SERVICE FUNDS Established to account for department services and financing performed for other departments within the same governmental jurisdiction. Funding comes from charges assessed to the departments benefiting from the service. 35
DRAFTCITY OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2018 ASSETS Current Assets: Cash and investments available for operations (Note 2) Receivable: Accounts Total Current Assets Noncurrent Assets: Capital assets (Note 5): Nondepreciable Depreciable, net Total Noncurrent Assets Total Assets DEFERRED OUTFLOWS Deferred outflows related to pension (Note 9) Deferred outflows related to OPEB (Note 11) Total Deferred Outflows LIABILITIES Current Liabilities: Accounts payable Interest payable Compensated absences, due in one year (Note IK) Claims payable, due in one year (Note 13) Long-term debt, due in one year (Note 6) Total Current Liabilities Noncurrent Liabilities: Compensated absences (Note IK) Claims payable (Note 13) Long-term debt (Note 6) Net OPEB liability (Note 11) Net pension liability (Note 9) Total Noncurrent Liabilities Total Liabilities DEFERRED INFLOWS Deferred inflows related to pension (Note 9) Deferred inflows related to OPEB (Note I I) Total Deferred Inflows NET POSITION (Note 8): Net investment in capital assets Unrestricted Total Net Position Some amounts reported for business-type activities in the Statement of Net Position are different because certain internal service fund assets and liabilities are included with business-type activities. Net position business-type activities See accompanying notes to financial statements 36 Business-type Activities -Enterprise Funds Parking Services $3,200,268 41,347 3,241,615 8,620,853 7,529,538 16,150,391 19,392,006 1,199,315 165,198 1,364,513 95,513 44,522 16,933 281,816 438,784 118,531 4,917,057 363,049 3,752,206 9,150,843 9,589,627 982,996 77,157 1,060,153 10,951,518 (844,779) 10,106,739 (42,069) $10,064,670 Governmental Activities Internal Service Funds $17,438,168 18,969 17,457,137 3,153,481 10,617,437 13,770,918 31,228,055 1,018,701 2,696,736 3,715,437 6,846,939 6,846,939 10,562,376 13,770,918 6,894,761 $20,665,679
DRAFTCITY OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2018 OPERATING REVENUES Charges for current services Other operating revenues Total Operating Revenues OPERATING EXPENSES Personnel Insurance premiums and claims Maintenance and repairs Depreciation (Note 5) General and administrative Total Operating Expenses Operating Income NONOPERATING REVENUES (EXPENSES) Investment income Interest expense Miscellaneous income Loss on sale of capital assets Total Nonoperating Revenues (Expenses) Income Before Transfers TRANSFERS IN (Note 3A) TRANSFERS OUT (Note 3A) Change in Net Position NET POSITION, BEGINNING OF YEAR NET POSffiON, END OF YEAR * Reconciliation of the Change in Net Position with the Statement of Activities Change in Net Position Some amounts reported for business-type activities in the Statement of Activities are different because the portion of the net income of certain internal service funds is reported with the business-type activities which those funds serviced. Change in Net Position of Business-type Activities See accompanying notes to financial statements 37 Business-type Activities -Enterprise Funds Parking Services $3,166,681 2,036,904 5,203,585 2,366,761 203,002 241,389 1,752,383 4,563,535 640,050 24,436 (184,163) (159,727) 480,323 {632,657) (152,334) 10,259,073 $10,106,739 ($152,334) 119,982 ($32,352) Governmental Activities Internal Service Funds $14,840,684 965,033 15,805,717 3,670,463 7,533,460 (146,671) 1,203,311 4,739,382 16,999,945 p,194,228) 128,744 44,124 (23,226) 149,642 {1,044,586) 1,265,351 (611,436) (390,671) 21,056,350 $20,665,679
DRAFTCITY OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2018 CASH FLOWS FROM OPERATING ACTMTIES Cash received from customers/other funds Cash payments to suppliers for goods and services Cash payments to employees for salaries and benefits Other operating revenues Cash Flows from Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTMTIES Interfund receipts Interfund payments Cash Flows from Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTMTIES Principal payments on revenue bonds and note payable Interest expenses and fiscal charges Acquisition of capital assets Proceeds from sale of property Cash Flows from Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTMTIES Interest received Cash Flows from Investing Activities NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR Reconciliation of operating income to net cash provided by operating activities: Operating income Adjustments to reconcile operating income to cash flows from operating activities: Depreciation Net change in assets and liabilities: Accounts receivable Prepaids and deposits Loans receivable (Decrease) in due to OPEB system Accounts payable Compensated absence obligations (Decrease) in due to retirement system Claims payable Net Cash Provided by Operating Activities NON-CASH TRANSACTIONS: Amortization of bond discount Business-type Activities -Enterprise Funds Parking Services $3,166,681 (1,795,085) (2,422,672) 2,052,607 1,001,531 (570,877) (570,877) (276,092) (186,188) (9,953) (472,233) 24,436 24,436 (17,143) 3,217,411 $3,200,268 $640,050 241,389 15,703 154,835 (3,814) 5,465 (6,161) (45,936) $1,001,531 $725 See accompanying notes to basic financial statements 38 Gove=ental Activities Internal Service Funds $15,902,273 (13,328,317) (1,099,561) 965,033 2,439,428 1,265,351 (611,436) 653,915 (6,338,654) 44,124 (6,294,530) 128,744 128,744 (3,072,443) 20,510,611 $17,438,168 ($1,194,228) 1,203,311 (18,969) 1,080,538 572,419 796,337 $2,439,428
DRAFTFIDUCIARY FUND FINANCIAL STATEMENTS Fiduciary funds are used to account for assets held by the City as an agent or custodian for other entities. The financial activities of such funds are excluded from the Government-wide financial statements and presented in fund statements that consist of a Statement of Net Position. SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY -PRIVATE PURPOSE TRUST FUND Established to account for the activities of the Successor Agency to the San Rafael Redevelopment Agency. PT. SAN PEDRO ROAD ASSESSMENT DISTRICT AGENCY FUND Established to accumulate funds for payment of principal and interest for Pt. San Pedro Road Median Landscaping Assessment District bonds. 39
DRAFTCITY OF SAN RAFAEL FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2018 ASSETS Cash and investments (Note 2) Restricted cash and investments (Note 2) Receivable: Taxes Total Assets LIABILITIES Accounts payable Interest payable Other long-term obligations (Note 15D) Due to bondholders Long-term debt (Note 15C): Due within.one year Due more than one year Total Liabilities NET POSITION (DEFICIT) Held in trust for private purpose Successor Agency to the Redevelopment Agency Private-Purpose Trust Fund $194,173 53 3,277,450 $3,471,676 $5,666 59,575 571,330 3,229,081 12,907,667 16,773,319 ($13,301,643) See accompanying notes to financial statements 40 Pt. San Pedro Road Assessment District Agency Fund $286,396 983 $287,379 $25,474 261,905 $287,379
DRAFTCITY OF SAN RAFAEL STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2018 ADDITIONS Property taxes Use of money and property Bond premium Total Additions DEDUCTIONS General government Interest expense Total Deductions Change in Net Position NET POSITION HELD IN TRUST FUND FOR OTHER PURPOSES Beginning of year End of year Successor Agency to the Redevelopment Agency Private-Purpose Trust Fund $3,930,522 $437 $79,861 4,010,820 156,641 860,792 1,017,433 2,993,387 (16,295,030) ($13,301,643) See accompanying notes to financial statements 41
DRAFT
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES I A. Description oftlte Financial Reporting Entity As required by generally accepted accounting principles, the financial statements present the City of San Rafael (the City) as the Primary Government, with its component units for which the City is considered financially accountable. The component units discussed below are included in the City's reporting entity because of the significance of their operational and financial relationships with the City. B. Description of Blended Component Units The accompanying basic financial statements include all funds and boards and commissions that are controlled by the City Council. The basic financial statements include the City's blended component units, entities for which the City is considered to be financially accountable. A blended component unit, although a legally separate entity, is in substance, part of the City's operations and so data from this entity is combined with the City. The City's blended component units are described below. San Rafael Joint Powers Financing Authority -The San Rafael Joint Powers Financing Authority (Authority) was formed by the City of San Rafael and the former San Rafael Redevelopment Agency (Agency) pursuant to Articles 1 and 2 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California for the purpose of assisting in the financing and refinancing of certain assessment district and redevelopment-related activities in the City. On March 18, 2013, the Agency was replaced by the California Municipal Finance Authority (CMF A) in order that the life of the Authority would extend beyond that of the Agency. The Authority is administered by a governing board whose members are the City Council of the City of San Rafael. Activities of the Authority related to the 2012 Authority Lease Revenue Refunding Bonds are reported in the Parking Services Enterprise Funds. Activities of the Authority related to the 2018 Authority Lease Revenue Bonds are reported in the City's General Fund and the Essential Facilities Capital Projects Fund. Separate financial statements are not prepared for the Authority. C Description of Discretely Presented Component Unit San Rafael Sanitation District -The San Rafael Sanitation District (District) was formed in 1947 under Section 4700 of the California Health and Safety Code to provide wastewater transmission over the southern two-thirds of the City and adjacent unincorporated areas. The District is governed by a three-member Board of Directors who are appointed to four-year terms. The City Council of the City appoints two out of the three board members and has the ability to remove the two board members at will. The City contracts with the District to maintain the collection systems in the City and surrounding unincorporated areas. These employees are paid through the City's payroll department and participate in the City's cost-sharing multiple-employer defined benefit pension plan administered by the Marin County Employees' Retirement Association. The employees also participate in the City's healthcare benefits plan which includes a provision for postemployment benefits. These costs are the obligation of the District and not the City. As discussed in Note 4F, a receivable from the District has been established. 43
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The District's activities are reported as a discretely presented component unit in a separate column in the basic financial statements which includes the District's assets, liabilities, revenues, expenses, results of operations and cash flows. The District's fiscal year ends on June 30 and its separately issued component unit financial statements can be obtained at the San Rafael Sanitation District, 111 Morphew Street, San Rafael, California 9490 l. D. Basis of Presentation Government-wide Statements -The Statement of Net Position and the Statement of Activities display information about the primary government (the City) and its component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Interfund transfers and amounts owed between funds within the primary government have been eliminated from the statements. Amounts representing interfund services and uses remain in the statements. These statements distinguish between the governmental and business-type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and ( c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements -The fund financial statements provide information about the City's funds, including fiduciary funds and blended component units. Separate statements for each fund category -governmental, proprietary, and fiduciary -are presented. The emphasis of fund financial statements is on major individual governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. E. Major Funds and Other Reported Funds Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds. 44
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The City reported the following major governmental funds in the accompanying financial statements: General Fund -Established to account for all financial resources necessary to carry out basic governmental activities of the City which are not accounted for in another fund. Traffic and Housing Mitigation Special Revenue Fund -Established to maintain long-term developer contributions for major housing and street improvement projects. Gas Tax Special Revenue Fund -Established to receive and expend the City's allocation of the State gasoline taxes. Essential Facilities Capital Projects Fund -Established to account for major capital improvements to public safety facilities. The City reported its only enterprise fund as a major fund m the accompanying fmancial statements. The enterprise fund is: Parking Services Fund -Established to maintain parking garages, lots and spaces in the Downtown Parking District, and to pay for parking enforcement, meter collection, and downtown enforcement services. The City also reports the following fund types: Internal Service Funds -These funds account for: building maintenance; vehicle, equipment computer, radio, and telephone replacement; employee benefits; liability insurance; workers' compensation; dental insurance; employee retirement; and retiree medical (OPEB); and sewer maintenance. Fiduciary Fund -These funds include: Successor Agency to the Redevelopment Agency Private-Purpose Trust Fund -which accounts for the accumulation of resources held by the Successor Agency to the Redevelopment Agency to be used for payments at appropriate amounts and times in the future; Pt. San Pedro Road Assessment District Agency Fund -which accumulates funds for the payment of principal and interest for Pt. San Pedro Road Median Landscaping District bonds. The fmancial activities of these funds are excluded from the government-wide fmancial statements, but are presented in the separate Fiduciary Fund fmancial statements. F. Basis of Accounting The government-wide, proprietary, fiduciary and discretely presented component unit financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. 45
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end with the exception of sales and use tax revenues which are reported as available if collected within ninety days of year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds from long-term debt and acquisitions under capital leases are reported as other financing sources. Those revenues susceptible to accrual are property and sales taxes, certain intergovernmental revenues, interest revenue, charges for services, fines and forfeitures. Other receipts and taxes are recognized as revenue when the cash is received. Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange include taxes, grants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenue. Thus, both restricted and unrestricted net position may be made available to finance program expenditures. The City's policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary. The City considers restricted shared state revenues such as gasoline taxes and public safety sales taxes, restricted locally imposed transportation sales taxes, fines, forfeitures, licenses, permits, charges for services, and program grants as program revenues. Certain indirect costs are included in program expenses reported for individual functions and activities. G. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. 46
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In addition to liabilities, the statement of financial position or 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. Unavailable revenue, a type of deferred inflow of resources, is reported in the governmental funds balance sheet. The governmental funds report unavailable revenues from three sources: taxes receivable, interest on interfund advances and loans receivable. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. H. Budgets, Budgetary Accounting, and Encumbrances The City adopts an annual budget which is effective July 1 for the ensuing fiscal year. The budget reflects estimated revenues and expenditures, except for the capital projects funds and the Peacock Gap Assessment District Debt Service Fund. Appropriations and spending authorizations for projects in the capital projects funds and some special revenue funds are approved by the City Council on a multi-year basis. 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 in order to respond to emerging needs, changes in resources, or shifting priorities. Expenditures may not exceed appropriations at the fund level, which is the legal level of control. The City Manager is authorized to transfer budgeted amounts between accounts, departments or funds; the Council must approve any increase in the City's operating expenditures, appropriations for capital projects, and transfers between major funds and reportable fund groups. Budgets are adopted on a basis consistent with Generally Accepted Accounting Principles for the General Fund and Special Revenue Funds. Encumbrance accounting, under which purchase orders for expenditures are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of the budgetary process. All unencumbered appropriations lapse at year end. L Cash Equivalents For purposes of the statement of cash flows, the City considers all highly liquid investments (including all restricted assets) with maturity of three months or less when purchased to be cash equivalents. The City maintains a cash and investment pool that is available for use by all funds. As the proprietary funds' share of this pool is readily available when needed, such share is also considered to be cash equivalent. Deposit assets in the proprietary funds are related to insurance and benefits and are not considered cash equivalents for purposes of the statement of cash flows. 47
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) J. Capital Assets Contributed capital assets are valued at their estimated fair market value on the date contributed. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are recorded at acquisition value. All other capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. The City has included the value of all infrastructure capital assets into its Basic Financial Statements using the Basic Approach for infrastructure reporiing. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Capital assets are recorded if acquisition or construction costs exceed $25,000. Depreciation is provided using the straight-line method which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year's pro rata share of the cost of capital assets. The City has assigned the useful lives listed below to capital assets: Buildings, improvements, and structures Machinery and equipment Infrastructure District 20-50 years 4-20 years 15 -50 years Collection systems and facilities purchased or constructed are stated at cost. Assets contributed have been recorded at the fair market value at the date received. Interest is capitalized for assets constructed when applicable. The costs of normal repairs and maintenance that do not add to the value of an asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets, as applicable. Applicable capital assets must be capitalized for amounts $1,000 or above and may be capitalized for amounts from $500 to $1,000 if determined to be sensitive. Depreciation is provided by the straight-line method over the estimated useful lives of capital assets as follows: Subsurface lines Sewer collection facilities General plant & administrative facilities 48 50-80 years 5-50 years 3-15 years
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) K. Compensated Absences Compensated absences are accrued as earned. Upon termination, employees are paid for all unused vacation at their current hourly rates. Unused sick leave may be compensable up to 600 hours, depending upon the provisions of the MOUs, which vary by bargaining unit. The long-term portion of the liability for compensated absences for governmental fund type operations is recorded as compensated absences in the government-wide financial statements. Compensated absences are liquidated by the fund that has recorded the liability. Proprietary fund liabilities are recorded within their respective funds. The long-term portion of governmental activities compensated absences is liquidated primarily by the General Fund. The changes of the compensated absences were as follows: G:>vemmental Business-Type Activities Activities Total Beginning Balance $4,448,932 $141,625 $4,590,557 Additions 3,424,331 95,069 3,519,400 Payments (3,277,608) (101,230) (3,378,838) Ending Balance $4,595,655 $135,464 $4,731,119 Current Portion $574,457 $16,933 $591,390 L. Property Tax Levy, Collection and Maximum Rates State of California Constitution Article XIlI A provides that the combined maximum property tax rate on any given property may not exceed 1 % of its assessed value unless an additional amount for general obligation debt has been approved by voters. Assessed value is calculated at 100% of market value as defined by Article XIlI A and may be adjusted by no more than 2% per year unless the property is sold, transferred, or substantially improved. The State Legislature has determined the method of distribution of receipts from a 1 % tax levy among the counties, cities, school districts and other districts. Marin County assesses properties, bills for and collects property taxes on the schedule that follows: Valuation/lien dates Levy dates Due dates ( delinquent as of) Secured January 1 July 1 50% on November 1 (December 10) 50% on February 1 (April 10) 49 Unsecured January 1 July 1 July 1 (August 31)
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 that is sufficient, in the opinion of the Country Assessor, to secure payment of the taxes. Unsecured property comprises all taxable property not attached to land, such as personal property or business property. Every tax levied by a county that becomes a lien on secured property has priority over all present and future private liens arising pursuant to State law on the secured property, regardless of the time of the creation of the other liens. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on other property owned by the taxpayer. Property taxes are levied and recorded as revenue when received in the fiscal year of levy because of the adoption of the "alternate method of property tax distribution," known as the Teeter Plan, by the City and the County of Marin. The Teeter Plan authorized the auditor-controller of the County of Marin to allocate 100% of the secured property taxes billed, but not yet paid. The County of Marin remits tax monies to the City in three installments, as follows: District 55% remitted on December 15 40% remitted on April 15 5% remitted on June 15 The County of Marin levies taxes and places liens on real property as of January 1 on behalf of the District. Unsecured property taxes are levied throughout the year. M. Sewer Charges Sewer charges are billed and collected on behalf of the District by the County of Marin as a special assessment on annual property tax billings. Property taxes are levied on January 1 and are due in two equal installments on November 1 and February 1. In accordance with the Teeter Plan, the County remits to the District all charges which are assessed and the county retains responsibility for collecting past due amounts. The Teeter Plan provides that the County advance the District its share of the annual gross levy of secured property taxes and special assessments. In consideration, the District gives the County of Marin its rights to penalties and interest on delinquent secured property tax receivables and actual proceeds collected. N. Connection Fees Connection fees represent a one-time contribution of resources to the District imposed on contractors and developers for the purpose of financing capital improvements. Connection fees are recognized after non-operating revenues (expenses) in the statement of revenues, expenses and changes in net position. The District utilizes connection fees received on a first-in-first-out basis to finance current year capital projects. Accordingly, if there is a balance of connection fees available at year-end, it is classified as restricted net position. 50
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 0. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the rep01ted amounts of assets and liabilities and disclosure of contingent asset and liabilities at the dates of the financial statements and the repo1ted amounts of revenues and expenditures/expenses during the repo1ting periods. Actual results could differ from those estimates. P. New Funds In fiscal year 2017-2018, the City established a Special Revenue Fund, Loch Lomond Marina #2 Community Facilities District, for the purpose of rep01ting tax assessments and maintenance expenditures of the District. Q. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market pa1ticipants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Level 1 inputs are quoted prices (unadjusted) 111 active markets for identical assets or liabilities. Level 2 inputs are inputs -other than quoted prices included within level 1 -that are observable for an asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for an asset or liability. If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement. I NOTE 2 -CASH AND INVESTMENTS A. Policies The City maintains an investment policy that emphasizes safety, liquidity and reasonable market yield. This policy is reviewed and approved by the City Council annually. The City invests in individual investments and in investment pools. Individual investments are evidenced by specific identifiable securities instruments, or by an electronic ently registering the owner in the records of the institution issuing the security, called the book enhy system. In order to increase security, the City employs the trust depa1tment of a bank as the custodian of ce1tain City managed investments, regardless of their form. 51
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 2 -CASH AND INVESTMENTS (Continued) California Law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the City's cash on deposit, or first trust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. Under California Law this collateral is held in a separate investment pool by another institution in the City's name and places the City ahead of general creditors of the institution. The City's investments are carried at fair value, as required by generally accepted accounting principles. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year. B. Classification Cash and investments as of June 30, 2018, are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of City debt instruments or agency agreements. Statement ofNet Position: City of San Rafael: Cash and investments available for operations Restricted cash and investments Total Primacy Givemment Cash and Investments San Rafael Sanitation District (Component Unit) Cash and investments available for operations Total San Rafael Sanitation District Cash and Investments Statement ofFiduciacy Net Position (separate statement): Successor Agency to the Redevelopment Agency: Cash and investments available for operations Restricted cash and investments Total Successor Agency Cash and Investments Pt San Pedro RoadAssessment District Agency Fund Total Fiduciary Cash and Investments Total Cash and Investments $58,897,003 50,816,452 109,713,455 30,502,613 30,502,613 194,173 53 194,226 286,396 480,622 $140,696,690 The City does not normally allocate investments by fund. Each proprietary fund's portion of Cash and Investments Available for Operations is in substance a demand deposit available to finance operations, and is considered a cash equivalent in preparing the statement of cash flows. 52
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2018
NOTE 2 - CASH AND INVESTMENTS (Continued)
C. Investments Authorized by the California Government Code and the City’s Investment Policy
The City’s investment policy and the California Government Code allow the City to invest in the
following securities provided the credit ratings of the issuers are acceptable to the City and
approved percentages and maturities are not exceeded. The table below also identifies certain
provisions of the California Government Code, or the City’s Investment Policy where it is more
restrictive:
Minimum Maximum Maximum
Maximum Credit Percentage of Investment in
Authorized Investment Type Maturity Quality (A) Portfolio One Issuer
U.S. Government Obligation 5 years N/A No limit No limit
U.S. Agency Securities and Instruments 5 years N/A No limit No limit
Repurchase Agreements 1 year A-1 No limit No limit
Prime Commercial Paper 270 days A-1 25% 10% of total
outstanding
commercial paper
Bankers’ Acceptances 180 days A-1 40% $2,000,000
Medium-Term Corporate Notes 5 years A 30% 5% of portfolio
Negotiable Certificates of Deposit 5 years A-1 30% 5% of portfolio
Non-negotiable Certificates of Deposit 5 years N/A 30% 5% of portfolio
Local Agency Investment Fund N/A N/A N/A N/A
Money Market Mutual Funds N/A AAA 10% N/A
Limited Obligation Improvement Bonds Related to
Special Assessment Districts and Special Tax Districts 30 years N/A N/A N/A
(A) At time of purchase
The San Rafael Sanitation District maintains all of its cash in the County of Marin pooled
investment fund for the purpose of increasing interest earnings through pooled investment
activities.
The County Pool includes both voluntary and involuntary participation from external entities.
The District is a voluntary participant. The State of California statutes require certain special
districts and other governmental entities to maintain their cash surplus with the County Treasurer.
The District has approved by resolution, the investment policy of the County of Marin which
complies with the California Government Code.
53DRARAFTRADRA A
A-1
A-1
80 days A-1 40
ears A
5 years N/
N/A N/A
N/A
nds Related t
d Special Tax Di 30
l Sanitation District mal Sanitation District
fund for the purpose offund for the purpose of
ncludes bncludes b
ntarntar
.-1
dYS
5 ye0c A
5 years A-1
"vears ~IA
Ntr.
y .
to
.cial Tax istricts 'lye·
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 2 -CASH AND INVESTMENTS (Continued) D. Investments Authorized by Debt Agreements The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if there are insufficient resources to meet debt repayment obligations. The California Government Code requires these funds to be invested in accordance with City ordinance bond indentures or State statute. The table below identifies the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements: Maxinunn Maximwn Percentage of Authoriz.ed Investment T~ Maturity Minirmnn Credit Qualitv (A) Portfolio U.S. Treasury Obligations 5 years to no NIA NoLirnit maximwn U.S. Agency Securities 3 - 5 years NIA NoLirnit U.S. Agency Instrwnents 5 years NIA NoLirnit Repurchase Agreements I year A-1 NoLirnit Bankers' Acceptances 360 days Highest Category Rating NoLirnit Money Market Fllllds NIA Highest Category Rating NoLirnit Prime Commercial Paper 270 days Highest Category Rating NoLirnit Guaranteed Investment Contracts (fully NIA Highest Category Rating NoLirnit collateralized) (B) Municipal Obligations NIA Two Highest Category Ratings NoLirnit Medium-Term Corporate Notes 5 Years A NoLirnit Non-Negotiable Certificates ofDeposit ISO Days NIA NoLirnit Negotiable Certificates of Deposit 5 Years NIA NoLirnit Local Agency Investment Flllld NIA NIA NIA (A) At time of purchase. (B) Guaranteed Investment Contracts must be fully collateralized with U.S. Treasury Obligations or U.S. Agency Obligations. 54
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 2 -CASH AND INVESTMENTS (Continued) E. GASB 72 Fair Value Hierarchy The following is a summary of the fair value hierarchy of the fair value of investments of the City as of June 30, 2018: City: Money Markel Mutual Funds U.S. Treasury Notes U.S. Agency Securities and Instruments Medium-Term Corporate Notes Investment in Pt. San Pedro Bonds Total Investments California Asset Management Program Local Agency Investment Fund County Investment Pool Cash in banks and 011 hand Total City and Investments Fiduciary: Total Investments Cash in banks and 011 hand Total Fiduciary Cash and Investments Total City and Fiduciary Cash and Investments San Rafael Sanitary District: County lnvest111ent Pool Total District's Cash and Investments Total Cash and Investments (a) Level I $4,434,364 $4,434,364 (b) Level 2 $213,248 15,5 I 5,090 3,034,527 $18,762,865 (c) Level3 Total $213,248 4,434,364 15,5 I 5,090 3,034,527 $1,455,700 (d) ----'-1,4_5_5.,_,7_00_ $1,455,700 24,652,929 50,094,575 I 9,455,6 I 8 77,770 15,432,563 109,713,455 480,622 480,622 110,194,077 30,502,613 30,502,613 $140,696,690 Source: The above GASE 72 classiflcations info the different Input levels are provided by the US Bank /11stitutional Trust & Custody. (a) Level I inputs are quoted prices in active market for identical assets. These are quoted prices in active markets for identical assets at the measurement date. An active market for the asset is a market in which transactions for the asset occur with sufficient frequency and volume to provide pricing information on an ongoing basis. (b) Level 2 inputs are significant other observable inputs. These inputs include: a) Quoted prices for similar assets in active markets; b) Quoted prices for identical or similar assets in markets that are not active; and c) Inputs other than quoted prices that are observable for an asset. (c) Level 3 inputs are significant unobservable inputs. These inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date. (d) This pertains to the City-owned bonds of its investments in Pt. San Pedro that has no trading market and is thus listed under Level 3. This bond is valued using discounted cash now techniques. 55
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 2 -CASH AND INVESTMENTS (Continued) F. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City also manages its interest rate risk by holding most investments to maturity, thus reversing unrealized market gains and losses. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity or earliest call date: Type ofinvestment City: Money Market Mutual Funds California Asset Management Program Local Agency Investment Fund County Investment Pool U.S. Treasury Notes U.S. Agency Securities and Instruments Medium-Term Corporate Notes Investment in Pt. San Pedro Bonds Total Investments Cash in banks and on hand Total City Cash and Investments Fiduciary: Cash in banks and on hand Total Fiduciary Cash and Investments Total City and Fiduciary Cash and Investments San Rafael Sanitary District: County Investment Pool Total District's Cash and Investments Total Cash and Investments 56 12Months or Less $213,248 50,094,575 19,455,618 77,770 1,488,930 5,238,723 2,540,547 $79,109,411 More than 12Months $2,945,434 10,276,367 493,980 1,455,700 $15,171,481 Total $213,248 50,094,575 19,455,618 77,770 4,434,364 15,515,090 3,034,527 1,455,700 94,280,892 15,432,563 109,713,455 480,622 480,622 110,194,077 30,502,613 30,502,613 $140,696,690
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 2 -CASH AND INVESTMENTS (Continued) The City is a patticipant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City rep01ts its investment in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF, which are recorded on an am01tized cost basis. Included in LAIF's investment po1tfolio are collateralized m01tgage obligations, m01tgage-backed securities, other asset-backed securities, loans to ce1tain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations. At June 30, 2018, these investments matured in an average of 193 days. Money Market Mutual Funds are available for withdrawal on demand. The investment pmtfolio of the Money Market Mutual Fund had an average maturity of27 to 47 days at June 30, 2018. During this fiscal year, the City invested the proceeds of the 2018 Authority Lease Revenue Bonds with the California Asset Management Program (CAMP). CAMP is a California Joint Powers Authority established in 1989 to provide California public agencies with professional investment services. The CAMP Pool is a permitted investment for all local agencies under California Government Code Section 5360l(p). CAMP is directed by a Board of Trustees, which is made up of experienced local government finance directors and treasurers. CAMP investments are limited to investments pe1mitted by subdivisions (a) to (n), inclusive, of Section 53601 of the California Government Code. The City repo1ts its investments in CAMP at the fair value amounts provided by CAMP, which is the same as the value of the pool share in accordance with GASB 79 requirements. At June 30, 2018, the fair value was approximate to the City's cost. At June 3 0, these investments have an average maturity of 3 5 days. The City, as a CAMP shareholder, may withdraw all or any po1tion of the funds in its CAMP account at any time by redeeming shares. The CAMP Declaration of Trust permits the CAMP trustee to suspend the right of withdrawal from CAMP or to postpone the date of payment of redemption proceeds if the New York Stock Exchange is closed other than for customary weekend and holiday closings, if trading on the New York Stock Exchange is restricted, or if, in the opinion of the CAMP trustees, an emergency exists such that disposal of the CAMP pool securities or determination of its net asset value is not reasonably practicable. If the right of withdrawal is suspended, the City may either withdraw its request for that withdrawal or receive payment based on the net asset value of the CAMP pool next dete1mined after termination of the suspension of the right of withdrawal. The County's investment pool is not registered with the Securities and Exchange Commission as an investment company. The pool has a credit rating of "AAANl ." Investments made by the Treasurer are regulated by the California Government Code and by the County's investment policy. The objectives of the policy are in order of priority, safety, liquidity, yield, and public trust. The County has established a treasmy oversight committee to monitor and review the management of public funds maintained in the investment pool in accordance with Aiticle 6 Section 27131 of the California Government Code. The oversight committee and the Board of Supervisors review and approve the investment policy annually. The County Treasurer prepares and submits a comprehensive investment rep01t to the members of the oversight committee and the investment pool pmticipants eveiy month. The repo1t covers the types of investments in the pool, maturity dates, par value, actual costs and fair value. 57
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 2 -CASH AND INVESTMENTS (Continued) G. Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of June 30, 2018, for each of the Primary Government's investment types as provided by Standard and Poor's or Moody's investment rating systems, except as noted: Investments City ( except Fiduciary Funds): Money Market Mutual Funds California Asset Management Program County Investment Pool U.S. Treasury Notes U.S. Agency Securities and Instruments Medium-Term Corporate Notes Local Agency Investment Fund Investment in Pt. San Pedro Bonds Total City Investments Component Unit: Investment in County Pool Total Investments H. Concentration Risk Amount Invested $213,248 50,094,575 77,770 4,434,364 15,515,090 3,034,527 19,455,618 1,455,700 94,280,892 30,502,613 $124,783,505 Percentage of Investments NRSRO Rating <1% Aaa/AAA 53% AAAm <1% Aaa/AAA 5% AA+ 16% AA+ 3% A,A+, AA-, AA 21% Not Rated 2% Not Rated AAA/Vl Included in the table at Note G above are the following significant investments in any one issuer other than U.S. Treasury securities, mutual funds, and external investment pools. Reporting Unit Issuer Investment Type Amount Entity-wide Federal Home Loan Bank Federal Agencies Obligation $5,212,513 58
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 3 -INTER-FUND TRANSACTIONS A. Transfers Resources may be transferred from one City fund to another. Transfers routinely fund capital projects or capital outlays, lease or debt service payments, and operating expenses. Transfers between funds during the fiscal year ended June 30, 2018, were as follows: From Fund To Fund Amount General Fund Essential Facilities Capital Projects Fund $61,776,607 (A) Building M aintenanre Internal Servire Fund 1,080,800 (G) Non-Major Governmental Funds 2,350,000 (B) Traffic and Housing Mitigation Fund Gas Tax Fund 223,650 (E) Non-Major Governmental Funds 487,571 (B) Gas Tax Fund General Fund 400,000 (C) Traffic and Housing Mitigation Fund 148,788 (D) Parking Servires Enterprise Fund General Fund 480,831 (C) Vehicle Replarement Internal Service Fund 51,826 (H) Non-Major Governmental Funds 100,000 (B) Internal Servire Funds General Fund 475,513 (C) Non-Major Governmental Funds 135,923 (B) Non-Major Governmental Funds Gas Tax Fund 22,463 (E) Building M aintenanre Internal Servire Fund 132,725 (F) Essential Facilities Capital Projects Fund 1,700,000 (A) Non-Major Governmental Funds 50,618 (B) $69,617,315 (A) Transfers to the Essential Facilities Capital Project Fund for Fire Stations 52 and 57, Public Safety Center and related Projects. (B) Transfers to the Non-Major Governmental Funds were for administrative costs, grant matching, recreation, and other program (C) Transfers to the General Fund were for street maintenanre support, administrative costs and pension obligation bond debt servire principal and interest payment. (D) Transfer to Traffic and Housing Mitigation Fund was for program support. (E) Transfer to the Gas Tax Fund were to close out ADA Projects Fund and for program support. (F) Transfers to the Building Maintenanre Internal Servire Fund were for program support. (G) Transfers for PG&E loan proreeds for energy improvement project. (H) Transfer ofFixed Asset Vehicle from Parking to Fire Department. B. Internal Balances GASB 34 requires internal balances to be presented in the Government-wide financial statements only. They represent the net interfund receivables and payables remaining after the elimination of all such balances within governmental and business-type activities. 59
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 4 -LOANS RECEIVABLE A. Summary of Loans Receivable The City has identified the portion of fund balance represented by these loans as nonspendable or restricted as discussed in Note 8. At June 30, 2018, these loans totaled: Employee Loans Centertown Associates One "H" Street Associates Fire Chief Loan Total B. Employee Loans $3,751 250,169 45,716 160,390 $460,026 The City administers a computer loan program that supports the use of technology by employees. Employees are permitted to borrow up to $1,500 for the purchase of computer hardware and software. The loans are interest-free, have maximum terms of one year, and are repaid through automatic payroll deductions. As of June 30, 2018, the balance of the employee loans receivable was $3,751. C. Centertown Associates Loan On August 20, 1990, the former Redevelopment Agency loaned Centertown Associates, Ltd, $303,000 at 3% interest due semiannually. The loan was made for the construction of a 60-unit affordable Centertown apartment complex and is fully secured by a deed of trust. The final payment is due on July 31, 2065. With the dissolution of the Redevelopment Agency effective February 1, 2012, the assets of the Agency's Low and Moderate Income Housing fund, including the Centertown Associates loan, were assumed by the City's Low and Moderate Income Housing Special Revenue Fund. As of June 30, 2018, the balance of the loan including principal and accrued interest was $250,169. D. One "H" Street Associates Loan On January 18, 1994, the City loaned One "H'' Street Associates $100,000 at zero percent interest with annual payments of $2,857 and with a final payment due January 18, 2034. As of June 30, 2018, the balance of this loan was $45,716. E. Fire Chief Loan On September 17, 2007, the City Council approved a Home Loan Agreement to provide the Fire Chief with housing assistance. Under the Agreement, which was executed on October 3, 2007, the City loaned the Fire Chief $600,000 to assist in the purchase of his primary residence. The loan is secured by a recorded deed of trust. The initial interest rate to be charged was 5.25% through August 31, 2008. On September 1, 2008, and on each September 1 following, until the loan is paid off, the interest rate of the loan will be adjusted based upon the then reported quarter-to-date Local Agency Investment Fund rate on the City's investment portfolio. As of June 30, 2018, the balance of the loan was $160,390. 60
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 4 -LOANS RECEIVABLE (Continued) F. Other Receivables The City provides staffing to San Rafael Sanitation District (District) under a contractual arrangement originated in 1987 that requires the District to pay all related employee costs incurred by the City on its behalf. Accordingly, the cost of providing pension and post-employment health benefits incurred by the City for the District staff but not yet funded are reflected by the District as an obligation, and by the City as a noncurrent receivable. The obligation as of June 30, 2018 is $4,621,437, and is composed of the following: Long-term receivable from San Rafael Sanitation District: Defined benefit pension liability allocation (GASB 68) Other post-employment benefit liability allocation (GASB 75) Total long-term receivable from San Rafael Sanitation District 61 $3,492,468 1,128,969 $4,621,437
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 !NOTE 5-CAPITAL ASSETS Changes in capital assets during the fiscal year consisted of: Balance June 30, 2017 Additions Retirements Governmental Activities Capital assets not being depreciated: Land $83,662,359 Construction in progress 11,846,875 $27,307,018 ($235,870) Total capital assets no! being depreciated 95,509,234 27,307,018 (235,870) Capital assets being depreciated: Land improvements 9,020,097 Buildings and structures 42,895,504 Machinery and equipment 18,840,995 3,057,422 (988,90 I) Infrastructure 197,024,880 Total capital assets being depreciated 267,781 476 3,057,422 (988,901) Less accumulated depreciation for: Land improvements {6,070,139) (270,056) Buildings and structures (18,290,283) (1,262,812) Machinery and equipment ( 12,69 I ,607) (1,224,115) 963,677 Infrastructure (126,732,516) (4,936,280) Total accumulated depreciation (163,784,545) (7,693,263) 963,677 Total net capital assets being depreciated I 03,996,931 (4,635,841) (25,224) Total governmental activity capital assets $ I 99,506, I 65 $22,671,177 ($261,094) Balance June 30, 2017 Additions Retirements Business-ty1ic Activities Capital assets not being depreciated: Land $8,620,853 Total cap ital assets not being depreciated 8,620,853 Capital assets being depreciated: Buildings and structures 10,713,814 Machinery and equipment 1,212,070 $9,953 ($31,932) Total cap ital assets being depreciated 11,925,884 9,953 (31,932) Less accumulated depreciation for: Buildings and structures (3,099,959) (205,363) Machinery and equip men! (1,003,171) (36,026) 31,932 Total accumulated depreciation (4,103,130) (241,389) 31,932 Total net capital assets being depreciated 7,822,754 (231,436) Total business-type activity capital assets $16,443,607 ($231,436) 62 Balance Transfers June 30, 2018 $83,662,359 ($3,197,905) 35 720,l 18 (3,197,905) 119,382 477 9,020,097 663,190 43,558,694 61,780 20,971,296 2,534,715 199,559,595 3,259,685 273, I 09,682 (6,340,195) (19,553,095) (12,952,045) (131,668,796) t 110,s 14,131 l 3,259,685 I 02,595,551 $61,780 $221,978,028 Balance Transfers June 30, 2018 $8,620,853 8,620,853 10,713,814 ($61,780) I, 128,311 (61,780) 11,842,125 (3,305,322) (1,007,265) (4,312,587) (61,780) 7,529,538 ($6 I ,780) $16,150,391
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 5 -CAPITAL ASSETS (Continued) I San Rafael Sanitation District Capital assets not being depreciated: Land and easements Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Subsurface lines Sewage collection facilities General plant and administration Total capital assets being depreciated Less accumulated depreciation for: Subsurface lines Sewage collection facilities General plant and administration Total accumulated depreciation Total net capital assets being depreciated Total District's capital assets Balance June 30, 2017 $115,329 272,032 387,361 35,180,273 42,128,689 1,653,110 78,962,072 (11,297,771) (18,562,466) {1,096,878} {30,957,115} 48,004,957 $48,392,318 Transfers & Balance Additions Retirements Adjustments June 30, 2018 $115,329 $1!813,747 {$1,309!975} 775,804 1,813,747 {1,309,975} 891,133 64,893 1,309,975 36,555,141 77,114 42,205,803 117,780 {$94,612} 1,676,278 259,787 {94,612} 1,309,975 80,437,222 (565,647) (11,863,418) (1,129,270) (19,691,736) {137,878} 94,612 {1,140,144} {1,832,795} 94,612 {32,695,298} {1,573,008} 1,309,975 47,741,924 $240,739 $48,633,057 Capital Asset Contributions -Some capital assets may have been acquired using Federal and State grant funds, or were contributed by developers or other governments. These contributions are accounted for as revenues at the time the capital assets are contributed. Depreciation Allocation -Depreciation expense is charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or program are as follows: Governmental Activities General government Public safety Public works and parks Community development Culture and recreation Total Governmental Activities Business-type Activities Parking services Total Business-type Activities 63 $157,802 849,918 5,823,897 48,630 813,016 $7,693,263 $241,389 $241,389
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 6-LONG TERM DEBT I A. The City generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt. A summary of governmental and business-type activities transactions for the fiscal year ended June 30, 2018, are as follows: Authorized Balance Balance Current and Issued June 30, 2017 Additions Retirements June 30, 2018 Portion Governmental Activities: 2018 Authority Lease Revenue Bonds 4.00%-5.00%, due 6/1/2034 $45,485,000 $45,485,000 $45,485,000 Add: unamortized bond premium 8,248,397 $121,300 8,127,097 2010 Taxable Pension Obligation Bonds 6.00%-6.25%, due 7/1/2025 4,490,000 $4,390,000 205,000 4,185,000 $420,000 Total Pension Obligation Bonds 4,390,000 53,733,397 326,300 57,797,097 420,000 PG & E City Hall HV AC Retrofit Note Payable 0.00%, due 11/30/2023 334,585 212,558 33,280 179,278 33,280 PG & E Street Light Retrofit Note Payable 0.00%, due 8/31/2019 233,896 90,765 41,892 48,873 41,892 PG & E CEC Efficiency Note Payable 1.00%, due 12/22/2017 1,178,813 1,080,800 1,080,800 Total Governmental Long-tenn Debt $4,693,323 $54,814,197 $401,472 $59,106,048 $495,172 Business-type Activities PG & E Parking Lot Lighting Retrofit Note Payable 0.00%, due 11/30/2023 $66,380 $41,388 $6,817 $34,571 $6,816 2012 Authority Lease Revenue Refunding Bonds 2.00-4.00%, due 4/1/2033 6,750,000 5,444,999 270,000 5,174,999 275,000 Less: unamortized bond discount {11,4222 {7252 (10,6972 Total Enterprise Fund Debt $5,474,965 $276,092 $5,198,873 $281,816 2018 Authority Lease Revenue Bonds On March 5, 2018, the Authority issued 2018 Authority Lease Revenue Bonds in the amount of $45,485,000 bearing interest at rates from 4.00% to 5.00%. The proceeds of the bonds were provided for replacement of two fire stations and construction of a public safety center. Interest on the Bonds is payable semiannually on June 1 and December 1. Principal payable on the Bonds will be paid on June 1 starting on June 1, 2021. The Bonds maturing on or prior to June 1, 2028 are not subject to optional redemption prior to their maturity. The Bonds maturing on or after June 1, 2029 are subject to optional redemption as a whole or in part on any date after June 1, 2028 at the option of the Authority, at a redemption price equal to the principal amount of the Bonds subject to redemption, plus accrued interest to the date fixed for redemption, without premium. 64
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 6 -LONG-TERM DEBT (Continued) ! B. 2010 Taxable Pension Obligation Bonds On July 1, 2010, the City issued 2010 Taxable Pension Obligation Bonds in the amount of $4,490,000 bearing interest at rates from 6.00% to 6.25%. Principal payments are due annually on July 1 and interest is payable semiannually on January 1 and July 1. The Bonds were issued to prefund a portion of the obligations of the City to the Marin County Employees' Retirement Association. Payment of the principal and interest on the Bonds is not limited to any special source of funds and is payable from any legally available moneys of the City. The City is not empowered or obligated to levy or pledge taxes to make payments on the Bonds. C. Pacific Gas and Electric Note Payable PG&E Lighting Retrofit On September 30, 2013, the City executed a note payable agreement with Pacific Gas and Electric (PG&E) in the amount of $634,861, bearing no interest. The debt was assumed as a means to finance energy-efficient retrofit projects which include updating existing heating, ventilation and air conditioning (HV AC) unit in City Hall and converting the street and parking lot light to light emitting diode (LED). $334,585 of the loan is for the HV AC projects and $300,276 of the loan is for the LED projects. Repayment of the loan commenced in December 2013, and is due monthly until paid in full in 2023. PG&E CEC Efficiency On September 5, 2017, City Council approved the execution of a note payable agreement with Pacific Gas and Electric (PG&E) in the amount of $1,178,813, bearing interest at 1 %. The debt was assumed as a means to finance the execution of various energy efficiency system upgrades to City facilities and street lights. The upgrades will include interior and exteriors lighting upgrades and energy management control systems. As of June 30, 2018, the loan obligation was $1,080,800, the project is ongoing and additional note proceeds are expected in fiscal year 2018-2019. Payments will commence in December 2020, and are due semi-annually until paid in full in 2027. 65
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 6 -LONG-TERM DEBT (Continued) I D. 2012 Authority Lease Revenue Refunding Bonds On August 7, 2012, the Authority issued 2012 Authority Lease Revenue Refunding Bonds in the amount of $6,750,000 bearing interest at rates from 2.00% to 4.00%. The proceeds of the Series 2012 Bonds were used to repay the Authority's 2003 Authority Lease Revenue Bonds that financed the construction of the 3rd and C Street parking structure and achieved lower interest rates and lower annual debt service payments. The refunding resulted in a net present value savings to the City in debt service of $670,496. In addition, the requisition price exceeded the net carrying amount of the old debt by $295,278. The Series 2012 Bonds are payable from lease payments made by the City to the Authority for leasing the City facilities. The rights to these lease payments have been irrevocably transferred by the Authority to the Trustee. Activities related to the Series 2012 Bonds are reported in the Parking Services Enterprise Fund. Principal payments are due annually on April I and interest is payable semiannually on October I and Apri I I. The Bonds maturing on or prior to Apri I I, 2022 are not subject to optional redemption prior to their maturity. The Bonds maturing on or after April l, 2023 are subject to optional redemption as a whole or in pait on any date after April I, 2022 at the option of the Authority, at a redemption price equal to the principal amount of the Bonds subject to redemption, plus accrued interest to the date fixed for redemption, without premium. E. Future Debt Service Future debt service requirements, including interest, at June 30, 2018, are as follows: For the Year Ended June 30 2019 2020 2021 2022 2023 2024 -2028 2029 -2033 2034 -2038 2039 -2040 Totals Reconciliation ofLong-tenn debt: Add: unamortized premium Less: unamortized discount Governmental Activities Principal Interest $495,172 $2,480,062 485,261 2,454,112 2,472,320 2,447,858 2,662,320 2,340,346 2,862,320 2,223,965 16,498,078 8,743,871 21,295,200 4,315,189 4, I 00,200 217,169 108,080 2,702 50,978,951 $25,225,274 8,127,097 $59, I 06,048 66 Business-type Activities Principal $281,816 291,816 296,816 306,816 316,816 1,695,491 2,019,999 5,209,570 (10,697) $5,198,873 Interest $178,088 169,838 161,288 152,588 143,588 564,400 241,806 $1,611,596
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 7 -DEBT WITHOUT CITY COMMITMENT I The City has sponsored the issuance of the following debt, for which the City is not liable for repayment but acts as an agent for the property owners and bondholders: San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds-2000A California Statewide Communities Development Authority Revenue Bonds-2002 San Rafael Redevelopment Agency Variable Rate Demand Multifamily Housing Revenue Bonds-2001A San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds-2001 San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds-2007 Series A Multifamily Housing Revenue Bonds-2007 Series B Pt. San Pedro Road Median Landscaping Assessment District Limited Obligation Bonds-2012 I NOTE 8 -NET POSITION AND FUND BALANCE A. Net Position Project Description 162-175 Belvedere Apartments St. Marks School 55 Fairfax Apartments San Rafael Commons Apartments Martinelli House Project Martinelli House Pt. San Pedro Road Median Landscaping Original Amount $3,590,529 5,605,000 3,000,000 6,100,000 6,000,000 1,000,000 1,750,000 Outstanding June 30, 2018 $1,042,152 3,460,000 2,000,000 4,725,000 1,896,396 190,802 1,455,700 Net Position is the excess of all the City's assets and deferred outflow over all its liabilities, and deferred inflows regardless of fund. Net Position is divided into three captions. These captions apply only to Net Position, which is determined only at the Government-wide level and business type activity and are described below: Net Investment in Capital Assets describes the portion of Net Position which is represented by the current net book value of the City's capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted describes the portion of Net Position which is restricted to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. Unrestricted describes the portion of Net Position which is not restricted to use. 67
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 8 -NET POSITION AND FUND BALANCE (Continued) I B. Fund Balance In the fund financial statements, fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables, less its liabilities. The City's fund balances are classified in accordance with Governmental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the City to classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint: Nonspendable represents balances set aside that do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, and land held for redevelopment are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by resolution of the City Council which may be altered only by resolution of the City Council. Nonspendable amounts subject to council commitments are included along with spendable resources. Assigned fund balances are amounts constrained by the City's intent that they be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Manager as designated by the City Council and may be changed at the discretion of the City Council or City Manager. This authorization is given through Resolution No. 13173 which adopts the City's Fund Balance Policy. This category includes nonspendables, when it is the City's intent to use proceeds or collections for a specific purpose; and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual General Fund balance and residual fund deficits, if any, of other governmental funds 68
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 8 -NET POSITION AND FUND BALANCE (Continued) I Detailed classifications of the City's fund balances, as of June 30, 2018, are below: Seecial Revenue Funds Traffic and Essential Facilities Housing Capital Projects General Fund Mitigation Gas Tax Fund Fund balances: Nonspendable: Loans receivable $164,141 Prepaids 844,093 Total Nonspendable 1,008,234 Restricted for: Assessment District capital projects Baypoint Lagoons Assessment District Bedroom tax capital projects Childcare Development services Emergency medical services 1997 financing authority revenue bonds debt service Gas tax $5,992,281 Grants Household hazmat facility Library Library assessment Loch Lomond #10 Community Facilities District Fund Loch Lomond Marina #2 Community Facilities District Fund Low and Moderate Income Housing Mariposa Assessment District debt service Measure A Open Space Measure E -Public Safety Facility $49,209,052 Parkland dedication Peacock Gap Assessment District debt service Public safety Pt. San Pedro -Maintenance Portion Recreation revolving Storm water Traffic and housing mitigation $6,306,373 Total Restricted 6,306,373 5,992,281 49,209,052 69 Other Governmental Funds Total $164,141 $302,366 1,146,459 302,366 1,310,600 301,512 301,512 260,017 260,017 86,535 86,535 1,571,814 1,571,814 681,493 681,493 967,066 967,066 148,874 148,874 5,992,281 762,861 762,861 342,353 342,353 2,323,676 2,323,676 648,704 648,704 663,537 663,537 205,567 205,567 906,935 906,935 16,573 16,573 404,067 404,067 49,209,052 602,440 602,440 2,875 2,875 114,879 114,879 104,738 104,738 276,443 276,443 589,023 589,023 6,306,373 11,981,982 73,489,688 (Continued)
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 8-NET POSITION AND FUND BALANCE (Continued) I Seecial Revenue Funds Traffic and Essential Facilities Other Housing Capital Projects Governmental General Fund Mitigation Gas Tax Fund Funds Total Committed to: Capital improvement capital projects $1,748,219 $1,748,219 Park capital projects 6,764 6,764 Total Committed 1,754,983 1,754,983 Assigned to: Contractual commitments $38,537 38,537 MOU -One time payment 1,102,257 1,102,257 Emergency and cash flow 7,500,000 7,500,000 Infrastructure reserve 600,000 600,000 General plan/ long-range planning 1,973,926 1,973,926 Open space capital projects 115,942 115,942 Total Assigned 11,214,720 115,942 11,330,662 Total Fund Balances $12,222,954 $6,306,373 $5,992,281 $49,209,052 $14,155,273 $87,885,933 I NOTE 9 -PENSION PLANS A. Plan Description The City's defined benefit retirement plan is administered by the Marin County Employees' Retirement Association (MCERA), a retirement system established in July 1950 and governed by the California Constitution; the County Employees Retirement Law of 1937 (CERL or 1937 Act, California government Code Section 31450 et seq.); the Public Employees' Pension Reform Act of 2013 (PEPRA, Government Code Section 7522); the provisions of California Government Code Section 7500 et seq; and the bylaws, procedures, and policies adopted by MCERA's Board of Retirement. The Marin County Board of Supervisors may also adopt resolutions, as permitted by the CERL and PEPRA, which may affect the benefits ofMCERA members. MCERA operates as a cost-sharing multiple employer defined benefit plan for the City and eight other participating employers: County of Marin, Local Agency Formation Commission (LAFCO), Marin City Community Services District, Marin County Superior Court, Marin/Sonoma Mosquito and Vector Control District, Novato Fire Protection District, Southern Marin Fire Protection District, and Tamalpais Community Services District. Separate actuarial valuations are performed for these other agencies and districts, and the responsibility for funding their plans rest with those entities. Post-retirement benefits are administered by MCERA to qualified retirees. Copies of MCERA's annual financial reports, which include required supplementary information (RSI) for each plan may be obtained from their office at One Mcinnis Parkway, Suite 100, San Rafael, CA 94903 or online at www.mcera.org. 70
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 9 -PENSION PLANS (Continued) I B. Benefit Provisions Service Retirement: MCERA's service retirement benefits are based on the years of credited service, final average compensation, and age at retirement, according to the applicable statutory formula. Members who qualify for service retirement are entitled to receive monthly retirement benefits for life. General members hired prior to January 1, 2013 are eligible to retire once they attain the age of 50 (except Misc Tier 2, whereby the minimum age is 55) and have acquired 10 or more years of retirement service credit. A member with 30 years of service is eligible to retire regardless of age. A member who is age 70 or older is eligible to retire regardless of service credit. General members who are first hired on or after January 1, 2013 are eligible to retire once they have attained the age of 52, and have acquired 5 years of retirement service credit, or age 70, regardless of service. Safety members hired prior to January 1, 2013 are eligible to retire once they attain the age of 50 and have acquired 10 or more years of retirement service credit. A member with 20 years of service is eligible to retire regardless of age. A member who is age 70 or older is eligible to retire regardless of service. Safety members who are first hired on or after January 1, 2013 are eligible to retire once they have attained the age of 50, and have acquired 5 years of retirement service credit, or age 70, regardless of service. Disability Retirement: A member with five years of service, regardless of age, who becomes permanently incapacitated for the performance of duty is eligible to apply for a non-service connected disability retirement. Any member who becomes permanently incapacitated for the performance of duty as a result of injury or disease arising out of and in the course of employment is eligible to apply for a service-connected disability retirement, regardless of service length or age. Death Benefits: MCERA provides specified death benefits to beneficiaries and members' survivors. The death benefits provided depend on whether the member is active or retired. The basic active member death benefit consists of a members' retirement contributions plus interest plus one month's pay for each full year of service (up to a maximum of six month's pay). Retiring members may choose from five retirement benefit payment options. Most retirees elect to receive the unmodified allowance which provides the maximum benefit to the retiree and continuance of 60% of the retiree's allowance to the surviving spouse or registered domestic partner after the retiree's death. Other death benefits may be available based on the years of service, marital status, and whether the member has minor children. Cost of Living Adjustment: Retirement allowances are indexed for inflation. Most retirees receive automatic basic cost of living adjustments (COLA's) based upon the Urban Consumer Price Index (UCPI) for the San Francisco Bay Area. These adjustments go into effect on April 1 of each year. Annual COLA increases are statutorily capped at 2%, 3%, or 4% depending upon the member's retirement tier. When the UCPI exceeds the maximum statutory COLA for the member's tier, the difference is accumulated for use in future years when the UCPI is less than the maximum statutory COLA. The accumulated percentage carryover is known as the COLA Bank. 71
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 9 -PENSION PLANS (Continued) I C. Funding Policy The funding policy of MCERA provides for actuarially determined periodic contributions by the City at rates such that sufficient assets will be available to pay plan benefits when due. The employer rates for normal cost are determined using the Entry Age Normal Actuarial Cost Method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The City contribution rates for the year ended June 3 0, 2018 were as follows: Employer Employee Contnbution Rate Contnbution Rate Benefit Basis City of San Rafael Misc Tier 1 52.67% 0.00% -16.82% 2.7%@55 Highest year City of San Rafael Misc Tier2 50.02% 7.89"/o -12.57% 2.0%@55 Average three highest years City of San Rafael Fire Tier 1 74.12% 0.00% -19.79% 3.0%@55 Highest year City of San Rafael Fire Tier 2 71.40% 11.34%-17.69% 3.0%@55 Average three highest years City of San Rafael Safety Police Tier 1 73.31% 00.00%-19.79% 3.0%@55 Highest year City of San Rafael Safety Police Tier 2 73.75% 11.34% -17.69% 3.0%@55 Average three highest years PEPRAMisc 44.19"/o 9.18% -10.18% 2.0%@62 Average three highest years PEPRA Safety 62.82% 14.53% 2.7%@57 Average three highest years These rates were determined by MCERA, based on the actuarial valuation dated June 30, 2016. The actual rate of return on investments during that year was 2.07% on a market value basis net of investment expenses, as compared to the 7 .25% assumption. The City uses the actuarially determined percentages of payroll to calculate and pay contributions to MCERA. Contributions to the plan from the City were $20,167,435 or the year ended June 30, 2018, based on a total payroll of $44,080,689, of which $36,349,651 represented the basis for the plan contributions. Of the total payroll subject to plan contributions, $1,433,662 is attributable to the San Rafael Sanitation District (SRSD), a component unit of the City. Effective with the June 30, 2013 valuation, the Unfunded Actuarial Liability (UAL) as of June 30, 2013 is being amortized over a closed 17-year period (14 years remaining as of June 30, 2016), except for the additional UAL attributable to the outstanding unfunded actuarial loss from 2009, which is being amortized over a separate closed period (currently 22 years). Effective with the June 30, 2014 valuation, any new sources of UAL due to actuarial gains and losses or method changes are amortized over a closed 24-year period, with a 5-year ramp up period at the beginning of the period, a 4-year ramp down at the end of the period, and 15 years of level payments as a percentage of payroll between the ramping periods. This new amortization method for gains and losses is similar to a 20-year amortization period with level payments as a percentage of payroll, in conjunction with a traditional 5-year asset smoothing. Assumption changes are amortized over a closed 22-year period, with a 3-year ramp up period, 2-year ramp down period, and 17 years of level payments as a percentage of payroll. 72
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 J NOTE 9 -PENSION PLANS (Continued) I D. Pension Liability and Pension Expense The City's net pension liability (NPL) has been determined for the financial reporting period ended June 30, 2018 based on the following methodology: The City's NPL as of June 30, 2016 was updated to the measurement date of June 30, 2017, using the actual City's plan assets as of June 30, 2017 and estimating the change in the City's liabilities between July 1, 2016 and June 30, 2017. This estimate is based on a projection of the City's long term contributions to the pension plan relative to the projected contributions of all participating employers. The resulting NPL for the City under this calculation is $120,649,687, or 32.718% of the total MCERA NPL of $368,756,305 (reference MCERA's GASB 67/68 report as of June 30, 2017). This compares to the previous year's NPL of $167,054,850, or 34.9538% of the total MCERA NPL of $477,930,440 (reference MCERA's GASB 67/68 report as ofJune 30, 2016). In addition to the reporting of the NPL as of June 30, 2018, the City reported deferred inflows of $31,607,575 and deferred outflows of $18,395,737 as of the measurement date June 30, 2017. The City reported post-measurement date outflows of $20,167,435 from actual fiscal year 2017-2018 pension contributions. Deferred inflows include deferred investment gains and adjustments to assumptions based on actual positive results. Deferred inflows have a positive impact on net assets (offsetting the NPL) and will be recognized in future reporting periods. Deferred outflows include deferred investment losses, adjustments to assumptions based on actual negative results, and contributions made after the measurement date. Deferred outflows have a negative impact on net assets (similar to the NPL) and will be recognized in future reporting periods. The net impact of these pension liability related entries on the City's Statement of Net Position before allocations to the San Rafael Sanitation District is $113,694,090. After allocations to the San Rafael Sanitation District, the net impact on the City's Statement of Net Position is $110,201,622. Under GASB 68, the City's pension expense is based on the Plan's pension expense, adjusted for the City's actual contributions and net pension liability. Three components are used to calculate pension expense: (1) changes in the net pension liability; (2) changes in benefit terms (if any): and (3) changes in actuarial assumptions and experience. Pension expense is calculated using a different methodology than that used to derive the actuarially determined annual contribution to the Plan. Actual pension contributions during the reporting year were $20,167,435. Because pension expense is affected by annual changes in the net pension liability, volatility is to be expected. For the current measurement period, investment returns above the assumed rate were responsible for the decrease in net pension liability and had a corresponding impact on pension expense. 73
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 9 -PENSION PLANS (Continued) I The table below provides a summary of the key results during the reporting period: Summary of Results Measurement Date Description 6/30/2017 Net Pension Liability $120,649,687 Deferred Inflows 31,607,575 Deferred Outflows (18 395 737) Impact on Net Position before Deferred Outflows from Contributions 133,861,525 Additional Deferred Outflows -Contributions Subsequent to Measurement Date (20 167 435 Impact on Statement of Net Position before Allocations 113 694 090 Allocation ofNPL to SRSD 3,740,703 Allocation ofDeferred Inflows (measurement date) to SRSD 979,982 Allocation ofDeferred Outflows (measurement date) to SRSD (570 354' Impact on Net Position before Allocation of Deferred Outflows from Contributions to SRSD 4,150,331 Allocation of Additional Deferred Outflows (Contributions) to SRSD (657 863' Long-Term Receivable from SRSD, due to pension obligations (see Note 4F) 3.492 468 Impact on Statement ofNet Position, net of receivable from SRSD $110 201 622 Pension Exoense ($ Amount) 21 503 841 Projection of Total Pension Liability and Net Pension Liability Measurement Date 6/30/2016 $167,054,850 22,096,113 (55 004,455) 134,146,508 (20 003,001) 114 143 507 5,320,236 703,700 (1 751 740) 4,272,196 (648 480) 3 623 716 $110,519 791 30 799 273 Total Pension Liability {TPL) is the actuarial present value of projected benefit payments attributed to past periods of employee service. For the purposes of Governmental Accounting Standards Board Statement No. 68 (GASB 68), MCERA and the City have adopted a measurement date of June 30, 2017. The beginning of year measurement of TPL is based on the actuarial valuation as of June 30, 2016. The TPL at the end of the measurement year, June 30, 2017, is also measured as of the valuation date of June 30, 2016, and projected to June 30, 2017. The Plan Fiduciary Net Position (FNP) is the fair or market value of assets. The FNP at the beginning of the year is based on the actuarial valuation as of June 30, 2016. The FNP at the end of the measurement year, June 30, 2017, is also measured as of the valuation date of June 30, 2016, and projected to June 30, 2017. The Net Pension Liability (NPL) is the City liability for benefits provided through its defined benefit plan administered by MCERA. It is calculated by reducing the TPL by the FNP. The long-term portion of the governmental activities' NPL is liquidated primarily by the General Fund. 74
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 9 -PENSION PLANS (Continued) I Actuarial assumptions: The total pension liability as of June 30, 2017 (measurement date) was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions applied to all prior periods included in the measurement. The key assumptions in the valuation were: Actuarial assumptions: Expected Return on Assets Discount Rate Price Inflation Salary Increases Administrative Expenses Post-Retirement COLA Mortality Rates for Healthy Members and Inactives 7.25 percent per year, net of investment expenses 7 .25 percent per year 2.75% per year 3% per year plus merit component based on employee classification and years of service. Administrative expenses in the actuarial valuation are assumed to be $4.774 million for FY 2016-17, to be split between employees and employers based on their share of the overall contributions. Administrative expenses shown in this report are based on the actual FY 2016-17 amounts. Post-retirement COLAs are assumed at a rate of2.7% for members with a 4% COLA cap, 2.6% for members with a 3% COLA cap, and 1.9% for members with a 2% COLA cap. Rates of mortality for active members are specified by CalPERS 2014 Pre-Retirement Non-Industrial Death Rates (plus Duty-Related Death rates for Safety members), with the 20-year static projection used by CalPERS replaced by generational improvements from a base year of 2009 using Scale MP-2014. 75
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 9 -PENSION PLANS (Continued) Asset A/location Policy and Expected Long-term Rate of Return by Asset Class The Board of Retirement has adopted an Investment Policy Statement (IPS), which provides the framework for the management of MCERA's investments. The IPS establishes MCERA's investment objectives and defines the principal duties of the Retirement Board, the custodian bank, and the investment managers. The asset allocation plan is an integral part of the IPS and is designed to provide an optimum and diversified mix of asset classes with return expectations to satisfy expected liabilities while minimizing risk exposure. MCERA currently employs external investment managers to manage its assets subject to the provisions of the policy. Plan assets are managed on a total return basis with a long term objective of achieving and maintaining a fully funded status for the benefits provided through the Plan. The following was the Retirement Board's adopted asset allocation policy as of June 30, 2017: Long-Term Expected Rate Target Long-Term Expected of Return Asset Class Allocation Real Rate of Return (with the effect of inflation) Domestic Equity 32% 4.60% 7.35% International Equity 22% 4.75% 7.50% Fixed Income 23% 0.75% 3.50% Real Assets 15% 5.60% 8.35% Private Equity 8% 5.10% 7.85% Total 100% The Long-Term returns are calculated using a 10-year geometric return derived from arithmetic returns and the associated risk (standard deviation). Determination of Discount Rate The discount rate used to measure the Total Pension Liability was 7.25%. Related to the discount rate is the funding assumption that employees will continue to contribute to the plan at the required rates and employers will continue the historical and legally required practice of contributing to the plan based on an actuarially determined contribution, reflecting a payment equal to annual normal cost, a portion of the expected administrative expenses, an amortization payment for the extraordinary losses from 2009 amortized over a closed period (22 years remaining as of the June 30, 2016 actuarial valuation) and an amount necessary to amortize the remaining Unfunded Actuarial Liability as a level percentage of payroll over a closed period (14 years remaining as of the June 30, 2016 actuarial valuation). A change in the discount rate would affect the measurement of the TPL. A lower discount rate results in a higher TPL and higher discount rates results in a lower TPL. Because the discount rate does not affect the measurement of assets, the percentage change in the NPL can be very significant for a relatively small change in the discount rate. A one percent decrease in the discount rate increases the TPL by approximately 13% and increases the NPL by approximately 96%. A one percent increase in the discount rate decreases the TPL by approximately 11 % and decreases the NPL by approximately 79%. 76
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 9 -PENSION PLANS (Continued) The table below shows the sensitivity of the NPL to a one percent decrease and a one percent increase in the discount rate: Sensitivity of Net Pension Liability to Changes in Discount Rate Description Total Pension Liability Fiduciary Net Position Net Pension Liability Fiduciary Net Position as a Percentage of the Total Pension Liability 1% Decrease 6.25% $994,119,281 757 834 016 $236,285,265 76.2% Discount Rate 7.25% $878,483,703 757,834,016 $120,649,687 86.3% 1% Increase 8.25% $783,364,452 757,834,016 $25,530,436 96.7% Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Pension Resources The impact of experience gains or losses and assumption changes on the Total Pension Liability (TPL) are recognized in the proportionate share of the pension expense over the average expected remaining service life of all active and inactive members of the plan. As of the measurement date, this recognition period was 4 years. The following tables show the current balance and sources of deferred outflows and inflows related to the City's defined benefit retirement plan, and the scheduled recognition of these deferred amounts: Description Differences between expected and actual experience Changes in assumptions Change in proportion Changes in proportion and difference between City contributions and proportionate share of contributions Actual FY 17-18 contributions (post measurement date) Net difference between projected and actual earnings on pension plan investments Deferred Inflows and Outflows Before Allocations Allocation to SRSD Allocation of Deferred Inflows (measurement date) Allocation of Deferred Outflows (measurement date) Net Deferred Inflows and Outflows 77 Deferred Outflows of Resources $11,840,124 6,555,613 20,167,435 $38,563,172 $570,354 657,863 $37,334,955 Deferred Inflows of Resources $2,796,865 9,651,379 9,380,643 9,778,688 $31,607,575 $979,982 $30,627,593
CITY OF SAN RAFAEL
NOTES TO BASIC FINANCIAL STATEMENTS
For the Year Ended June 30, 2018
NOTE 9 – PENSION PLANS (Continued)
The $20,167,435 reported as deferred outflows of resources related to contributions subsequent to
the measurement date will be recognized as a reduction of the net pension liability in the year ended
June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to pensions will be recognized as pension expense as follows:
Amortization
Year ended June 30 Amount
2019 ($906,402)
2020 (3,053,891)
2021 (2,885,383)
2022 (6,366,162)
($13,211,838)
Subsequent Change to Discount Rate
Subsequent to MCERA’s preparation of the GASB 67/68 report as of June 30, 2017, MCERA has
changed the discount rate from 7.25% to 7.00% for use in subsequent actuarial valuations and
GASB 67/68 reporting. Decreases in the discount rate serve to increase the measurement of the
total pension liability and therefore the net pension liability.
NOTE 10 – PUBLIC AGENCY RETIREMENT SYSTEM (DEFINED CONTRIBUTION
RETIREMENT PLANS)
The City contributes to the Public Agency Retirement System (PARS), which administers a defined
contribution retirement plan. A defined contribution retirement plan provides retirement benefits in
return for services rendered, provides an individual account for each participant, and specifies how
contributions to the individual’s accounts are determined instead of specifying the amount of
benefits the individual is to receive. The benefits a participant will receive depend on the amount
contributed to the participant’s account, and the returns earned on investments on those
contributions. The Plan’s trust administrator is Phase II, P.O. Box 12919, Newport Beach,
California 92658.
As established by the plan, all eligible part-time and temporary employees of the City become
participants in the plan from the date that they are hired. An eligible employee is any employee
who, at any time during which the employer maintains this plan, is not accruing a benefit under the
Marin County Employees’ Retirement Fund.
As determined by the plan, each employee must contribute 3.75% of gross earnings to the plan. The
City contributes an additional 3.75% of the employee’s gross earnings. Contributions made by an
employee and the employer vest immediately.
During the year, the City and employees each contributed $115,100. The total covered payroll of
employees participating in the plan for the year ended June 30, 2018, was $3,069,322. The total
payroll for the year was $44,080,689.
78
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 11-POST-EMPLOYMENT HEALTH CARE BENEFITS Plan Description The City provides certain health care benefits for retired employees and their spouses under an Agent Multi-Employer Defined Benefit Plan. The benefit provisions were established under the authority of the 193 7 Act, Section 31450, et. seq. of the Government Code. Employees who meet the vesting criteria become eligible for these benefits if they receive a retirement benefit from the Marin County Employees' Retirement Association within 120 days of retirement from City employment. The provisions and benefits of the City's Other Post Employment Benefit Plan, in effect at June 30, 2018, are summarized as follows: Elected Officials, Mid-Management, & Unrepresented I Management All other Bargaining Units Eligibility Retire directly from the City: -Age 50 (age 55 if hired> 7/1/11) with 10 years services Qncluding reciprocity) OR -30 years service (Miscellaneoos), 20 years service (Safety) OR • Age 70 -Disabilitv Retirement Benefit Hired< 1/1/09 Full premium/cap IHired < 1/1/10 Up to cap Hired> 1/1/09 PEMHCA Min Hired> 1/1/10 PEMHCA Min Surviving Spouse Benefit Continuation to surviving soouse Medicare Part B Hired < 4/1/07 Full reimbursement JNone Hired 2'. 4/1/07 None Other No Dental Vision, or Life Benefits Membership in the plan consisted of the following at June 30, 2017, the measurement date: Active plan members Inactive employees or beneficiaries currently receiving benefit payments Inactive employees entitled to but not yet receiving benefit payments Total Funding Policy and Actuarial Assumptions 366 337 0 703 The City's net OPEB liability was measured using a Total OPEB Liability and Fiduciary Net Position measured as of June 30, 2017, using an actuarial valuation of the same date. The following actuarial assumptions were used in the valuation: 4.5% investment rate of return and (b) 2.75% of general inflation increase, and ( c) a healthcare trend of declining annual increases ranging from 7.5% in 2019 to 4.0% for the years starting 2076. In addition, the fixed dollar benefit amounts are assumed to be held flat in the future and the premium related benefits are assumed to increase with the healthcare trend rate. 79
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 11-POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) The actuarial assumptions used in the June 3 0, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2016 through June 30, 2017. The long-term expected rate of return on OPEB 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 OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Target Asset Class Allocation Public Equity 57% Fixed Income 27% TIPS 5% Commodities 3% REITs 8% Total 100% Assumed Long-Term Rate of Inflation Assumed Long-Term Investment Expenses Expected Long-Term Net Rate of Return Discount Rate Long-Term Expected Real Rate of Return 4.82% 1.47% 1.29% 0.84% 3.76% 2.75% n/a 6.78% 6.75% Long-Term Expected Rate of Return (with the effect of inflation} 7.57% 4.22% 4.04% 3.59% 6.51% The Expected Long-Term Rate of Return is provided by CalPERS' Strategic Asset Allocation Overview in August 2014 -Strategy 1. 80
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 11-POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) I Discount Rate The discount rate used to measure the total OPEB liability was 6. 75 percent. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be sufficient to make projected benefit payments and the plan assets are expected to be invested using the strategy to achieve the expected return. Change in Net OPEB Liability Increase (Decrease) Total OPEB Plan Fiduciary Net NetOPEB liability Position liability/(Asset) Balance at June 30, 2016 Changes Recognized for the Measureirent Period: Service Cost Interest on the total OPEB liability Changes in benefit terms Difference between ellpected and actual ellperience Changes ofassumptions Contributions from the employer Net investment income Administrative ellpenses Benefit payments and refunds Net Changes during July I, 2016 to June 30, 2017 Balance at June 30, 2017 (Measureirent Date) (a) $49,543,000 789,000 3,540,000 (4,107,000) 4,831,000 (3,015,000) 2,038,000 $51,581,000 (b) (c) = (a) -(b) $15,758,000 $33,785,000 789,000 3,540,000 (4,107,000) 4,831,000 3,475,000 (3,475,000) 1,675,000 (1,675,000) (8,000) 8,000 (3,015,000) 2,127,000 (89,000) $17,885,000 $33,696,000 The benefit payments and refunds includes implied subsidy benefit payments in the amount of $782,000. Sensitivity of the net OPEB liability to changes in the discount rate The following presents the net OPEB liability of the City, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.75 percent) or 1-percentage-point higher (7.75 percent) than the current discount rate: Plan's Net OPEB Liability/(Asset) Discount Rate -1 % (5.75%) $39,904,000 Current Discount Rate (6.75%) $33,696,000 Discount Rate +1 % (7.75%) $28,511,000 Sensitivity of the net OPEB liability to changes in the health care cost trend rates Plan's Net OPEB Liability/(Asset) Discount Rate -1 % $30,184,000 Healthcare Cost Trend Rates $33,696,000 81 Discount Rate +1 % $38,007,000
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL ST A TEMENTS For the Year Ended June 30, 2018 I NOTE 11-POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) Detailed information about the OPEB plan's fiduciaiy net position is available in the separately issued plan financial report. That repo1t may be obtained from the California Public Employees' Retirement System, CERBT, P.O. Box 942703, Sacramento, CA. 94229. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources related to OPEB Components of OPEB Expense for fiscal year 2017-2018 were as follows: Service Cost Interest on Total OPES Liability Projected earning on investments Employee contributions Administrative expense Change in benefits Recognition ofdefeJTed outflows/inflows: Experience Assumptions Asset Returns OPES Expense $789,000 3,540,000 (1,159,000) 8,000 (708,000) 833,000 92,000 $3,395,000 Components of deferred outflows of resources and deferred inflows of resources related to OPEB at June 30, 2018 were as follows: Deferred outnm,s of resources: Differences between exµectcd and actual exµerience Changes of assumptions Net difference between projected and actual earnings on plan investments Employer contributions made subsequent to the measurement elate Total deferred outtlom of resources Deferred innm,s of resources: Differences between exvectecl and actual e:---perience Total deferred inflows of resources Gmcrnmental Acthities $3,917,586 168,096 3,482,120 $7,567,802 $3,321,843 $3,321,843 Bus iness-Typc Activities $80,414 3,904 80,880 $165,198 $77,157 $77,157 Total $3,998,000 172,000 3,563,000 $7,733,000 $3,399,000 $3,399,000 The difference between projected OPEB plan investment earnings and actual earnings is amo1tized over a five-year period. The remaining gains and losses are amo1tized over the expected average remaining service life. 82
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 11-POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) $3,563,000 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ended June 30, 2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as future OPEB expense as follows: Measurement Period Amortized Ended June 30 Amount 2019 $216,000 2020 216,000 2021 217,000 2022 22,000 2023 100,000 $771,000 The table below provides a summary of the key results during this reporting period. Summary of Results Measurement Date Measurement Date Description June 30, 2017 June 30, 2016 Net OPEB Liability $33,696,000 $33,785,000 Deferred Inflows 3,399,000 -Deferred Outflows (4,170 000) (780,000) Impact on Net Position before deferred contnbutions 32,925,000 33,005,000 Additional Deferred Outflows -Contnbutions subsequent to measurement date (3,563,000) (3,475,000) Impact on Statement of Net Position before Allocations 29,362 000 29 530 000 Allocation of NOL to SRSD 1,295,611 1,034,395 Allocation of Deferred Inflows (measurement date) to SRSD 130,692 -Allocation of Deferred Outflows (measurement date) to SRSD (160,337) (23,881) Impact on Net Position before deferred contnbutions to SRSD 1,265,966 1,010,514 Allocation of Additional Deferred Outflows ( contnbutions) to SRSD (136,997) (106,394) Long-Term Receivable from SRSD, due to OPEB obligations (see Note 4F) 1,128,969 904,120 Impact on Statement of Net Positions, net of receivable from SRSD 28,233,031 28,625,880 OPEB Expense($ Amount) 3,395,000 3,283,000 Covered Employee Payroll($ Amount) 32,885,135 32,126,272 Actuarial data is comprised from a variety of complex inputs. It is therefore subject to change between measurement dates. As a result, the Net OPEB Liability used to calculate the SRSD allocation percentage in fiscal year ended June 30, 2017 ($33,524,000) varies slightly from the figure reported in the actuarial report dated June 30, 2018 ($33,786,000) by $262,000. 83
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 12 -JOINTLY GOVERNED ORGANIZATIONS The City participates in the jointly governed organizations discussed below 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 Agreements 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. Each joint organization is governed by a board consisting of representatives from member municipalities. Each board controls the operations of the respective joint organization, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on that board. Obligations and liabilities of this joint organization are not the City's responsibility and the City does not have an equity interest in the assets of each joint organization except upon dissolution of the joint organization. A. The Marin County Integrated On-Line Library System (System) The MARINet Library Consortium was formed to provide for the procurement, ownership, operation, maintenance, and governance of shared library services among the libraries, public and academic, in Marin County. Current services shared and paid for on a consortia! level through annual membership dues include an integrated library system including patron database, cataloging system, and online catalog of materials; delivery of items between libraries in Marin, a statewide library delivery service called Link+, numerous online resources, and more. The Governing Board of the System consists of the library director or designated alternate of each participant in the System. In accordance with the cost sharing formula developed by the library directors of the participants, the City's share of annual operating costs is 16.39% or $247,011 for the year ended June 30, 2018. Financial statements of the System can be obtained from the County Librarian, Marin County Free Library, Marin County Civic Center, 3501 Civic Center Drive, San Rafael, California 94903. B. The Marin General Services Authority (MGSA) The MGSA was formed by the County of Marin and twelve local agencies to acquire street light facilities, operate the facilities during an eminent domain action against PG&E, and coordinate the subsequent transfer of the facilities to the individual local agencies. Each of the local agency's share of contributions was based on the number of street lights to be acquired in the local agency's individual jurisdiction in relation to the total number of street lights to be acquired by the MSLAJP A. MGSA services now include street light maintenance, abandoned vehicle abatement, taxicab regulation and administrative responsibility for MarinMap. The City's contribution to MGSA was $688,072 for the year ended June 30, 2018. Financial statements of the MGSA can be obtained at 555 Northgate Drive, Suite 230, San Rafael, California 94903. 84
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 12 -JOINTLY GOVERNED ORGANIZATIONS (Continued) C. The Marin Emergency Radio Authority (MERA) MERA was formed on February 28, 1998, by the County of Marin and 25 local agencies within the County to plan, finance, implement, manage, own, and operate a County-wide public safety and emergency radio system. The Governing Board consists of one representative from each member. In February 2010, MERA refinanced its 1999 Revenue Bonds; the 1999 bonds were originally issued in the amount of $26,940,000 to finance the acquisition of the system. The 2010 refunding bonds were issued at a premium of $934,832 above their par value of $18,575,000. These bonds mature annually through 2021 and bear interest from 2% to 4%. Similar to the original bonds, the refunding bonds are special obligations of MERA and are secured by the Members' service payments. One February 1, 2007, MERA borrowed $2,250,000 from Citizens Business Bank. The note is being amortized over 14 ½ years at an annual interest rate of 4.43%. Loan Payments are funded by member operating payments. The costs of maintenance, operation, and debt service are divided on a pro rata share based on an agreed-upon formula established by a majority of the Governing Board. The members entered into a Project Operating Agreement on February 1, 1999. Under the Operating Agreement, members are obligated to contribute service payments to cover the Authority's operations and debt service. The City's portion of the obligation is 16.913%. The first operating service payment was in July 1999. The first debt service payment was in August 2002. The City contributed $319,449 of the Authority's operation and debt service for the fiscal year ended June 30, 2018. The City has established a reserve in its internal service funds to pay future service payments. Financial statements of the MERA can be obtained at 95 Rowland Way, Novato, California 94945. D. The Countywide Planning Agency The Agency was established on October 16, 1990, by the County of Marin and the cities of Belvedere, Corte Madera, Fairfax, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon to implement countywide performance standards for traffic, housing, water and sewer facilities, and environmental protection to ensure that residential and commercial growth does not exceed local water, sewer and transportation capacities. The Governing Board of the Countrywide Planning Agency consists of one member of the County Board of Supervisors and one member of the City Council of each participating city. Financial statements of the Agency can be obtained at 3501 Civic Center Drive, San Rafael, California 94903. E. The Marin Telecommunications Agency The Agency was established to regulate the rates for cable television service and equipment and to advise the participants of their license authority. The Governing Board of the Marin Telecommunications Agency consists of one member from each of the eleven participating agencies. The City's contribution to the Agency was $72,914 for the year ended June 30, 2018. Financial statements of the Agency can be obtained at 555 Northgate Drive, Suite 230, San Rafael, California 94903. 85
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 12 -JOINTLY GOVERNED ORGANIZATIONS (Continued) I F. The Marin County Hazardous and Solid Waste Joint Powers Authority The Authority was established by the County, local cities, and waste franchising districts to finance, prepare and implement source reduction and recycling elements on a county-wide integrated waste management plan as required by State Assembly Bill 939. The City's contribution to the Authority was $17,850 for the year ended June 30, 2018. Financial statements of the Authority can be obtained at 3501 Civic Center Drive, San Rafael, California 94903. G. Central Marin Sanitation Agency (CMSA) fu October 1979, the District entered into a joint powers agreement with three neighboring sanitation agencies in central Marin County forming the Central Marin Sanitation Agency (CMSA). CMSA serves as a regional wastewater treatment plant for its four member agencies and San Quentin Prison (SQ) and is governed by a six-member Board of Commissioners, two appointed by the Board of Directors of the San Rafael Sanitation District (SRSD), two appointed by the Board of Directors of the San Rafael Sanitation District No. 1 (SD 1), one appointed by the governing board of Sanitary District No. 2 (SD 2), and one appointed by the City Council of the City of Larkspur (Larkspur). Total project costs for the joint venture were funded from federal (75%) and state (12.5%) clean water grants and from local shares (12% total) allocated among the member agencies and SQ based upon the weighted average of the strength and volume of sewage flows per member at inception of the project. Final individual local shares of total project costs were approximately $7.6 million for SRSD, $6.3 million for SD 1, $1.6 million for SD 2, $1 million for Larkspur, and $1.4 million for SQ. CMSA derives its annual funding for its operations and capital programs almost exclusively from service charges to member agencies. The joint powers agreement does not provide an explicit measurable right as required to establish an equity interest for any of the joint venture participants, and in addition to, stipulates that all excess capital funds, if any, and all excess administration, operations and maintenance funds from whatever source, if any, are the property of CMSA. The financial statements of the Agency are available at the CMSA office. Condensed financial information for the Agency is presented below for June 30, 2017 and 2016, the most recent information available. 2017 2016 Total assets $99,239,615 $106,391,299 Deferred outflows of resources 5,961,780 2,092,186 Total liabilities (61,321,187) (60,370,523) Deferred inflows of resources (1,260,848) (2,487,504) Net position $42,619,360 $45,625,458 Total revenues $17,235,271 $16,952,527 Total expenses (16,793,252) (16,834,929) Total contributions and adjustments (1,283,532) 162,705 Prior period adjustment (2,164,585) Change in net position ($3,006,098) $280,303 86
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 13 -RISK MANAGEMENT A. City The City is exposed to various exposures related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City established the Risk Management Internal Service Fund to account for and finance its uninsured risks of loss. The City manages risk by participating in a public entity risk pool (described below), purchasing insurance and by retaining certain risks. Risk Coverage Liability Coverage The City is a member of the California Joint Powers Risk Management Authority (CJPRMA) which covers general liability claims up to $40,000,000. The purpose of CJPRMA is to spread the adverse effects of general liability losses among the member agencies. The City also purchases commercial insurance for property damage claims with an insured amount of $121,046,940. The City is self-insured up to $500,000 for each general liability claim and $25,000 for each property damage claim. Once the self-insured retention is met CJPRMA becomes responsible for payment of all liability claims up to the limit. The City contributed a total of $328,857 in liability coverage premiums during the fiscal year ended June 30, 2018. Five years after settlement of all claims for a program year, CJPRMA will retroactively adjust premium deposits for any excess or deficiency in deposits related to paid claims and reserves. Financial statements for the risk pools may be obtained from CJPRMA at 3201 Doolan Road, Suite 285, Livermore, California 94551. Workers' Compensation Coverage The City purchases insurance for workers' compensation through Safety National Casualty Corporation Excess Workers' Compensation and Employers Liability Insurance with coverage up to statutory limits. The City is self-insured up to $1,000,000 for each worker's compensation claim. Insurance Internal Service Funds and Financial Reporting The City records estimated liabilities for claims filed up to the amounts for which it retains risk in the General Liability and Workers Compensation Internal Service Funds. Charges to the General Fund and other funds are based on relative general liability and workers compensation risk associated with the activities of each fund. Charges are recorded in the funds as expenditures or expenses and as revenues in the respective internal service funds. The Governmental Accounting Standards Board (GASB) requires municipalities to record their liability for uninsured claims and to reflect the current portion of this liability as an expenditure in their financial statements. As discussed above, the City has coverage for such claims, but it has retained the risk for the deductible or uninsured portion of these claims. 87
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 13 -RISK MANAGEMENT (Continued) I The City's liability for uninsured general liability claims and workers' compensation claims, including claims incurred but not reported, are reported in the Statements of Net Position. General Workers' Totals, as ofJune 30 Liabili!}'. * Compensation** 2018 2017 Balance, beginning ofyear $2,581,529 $6,165,809 $8,747,338 $8,588,566 Current year claims and changes in estimates 1,781,739 820,144 2,601,883 1,878,276 Claims paid {805,361} {1,000,185} {1,805,546} {1,719,504} Balance, end of year $3,557,907 $5,985,768 $9,543,675 $8,747,338 Due in one year $1,484,580 $1,212,156 $2,696,736 $2,653,288 Due in more than one year 2,073,327 4,773,612 6,846,939 6,094,050 Total claim liabilities $3,557,907 $5,985,768 $9,543,675 $8,747,338 * Liability based on an actuarial valuation as ofMarch 31, 2018, extrapolated to June 30, 2018 ** Liability based on an actuarial valuation as ofDecember31, 2017, extrapolated to June 30, 2018 The claims settlements have not exceeded insurance coverage for the past three years. B. District The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and natural disaster. The District participates in a joint powers agreement with other entities forming the California Sanitation Risk Management Authority (CSRMA), a public entity risk pool operating as a common risk management and insurance program for 60 member entities. CSRMA is governed by a Board of Directors composed of one representative from each member agency and meets three times per year in conjunction with conferences of the California Association of Sanitation Agencies. The Board controls the operations of CSRMA, including selection of management and approval of operating budgets, independent of any influence by member entities. The District pays annual premiums to CSRMA for its primary insurance and property insurance programs. Primary and property insurance programs are fully insured wherein CSRMA purchases insurance as a group thereby reducing its costs. CSMRA provides both fully insured and pooled insurance programs for its participating member entities. Because all employees of the District are contracted employees from the City of San Rafael, workers' compensation insurance is not carried by the District but is provided through the City. The District's primary and property insurance programs transfer risk to commercial insurance policies for claims above deductibles, while the District retains risk for claims to the extent of deductibles. Settled claims for CSRMA have not exceeded coverage in any of the past three fiscal years. 88
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 13 -RISK MANAGEMENT (Continued) I The following summarizes active insurance policies as of June 30, 2018 together with coverage limits for each insured event: Insurance Program Limits Coverage Descrietion CSRMA -Allied World Ins. $3,000,000 Gen/Mgt liability -aggregate CSRMA -Allied World Ins. $1,000,000 Gen/Mgt liability -occurrence CSRMA -Allied World Ins. $1,000,000 Auto liability -accident CSR MA -Allied World Ins. $4,000,000 Excess liability CSRMA -Public Entity Property Insurance Program (P.E.P.I.P.) $12,157,866 Special form property CSRMA -Illinois Union Ins. $25,000,000 Pollution liability -tier I CSRMA -Illinois Union Ins. $2,000,000 Pollution liability -tier 2 CSRMA -Lloyds of London $2,000,000 Cyber liability -third party CSR MA -Lloyds of London $2,000,000 Cyber liability -third party CSRMA -Travelers Ins. $25,000 Identity theft The financial statements of CSRMA are available at their office: I 00 Pine Street, I ]I" Floor, San Francisco, CA 94111. Condensed financial information for CSRMA is presented below for the years ended June 30, 2017 and 2016 (latest infor111ation available). Assets Liabilities Net assets Revenues Expenses Increase (decrease) in net assets I NOTE 14 -COMMITMENTS AND CONTINGENCIES A. City Litigation 2017 2016 $28,419,707 $28,336,567 (17,241,037) (16,735,609) $11,178,670 $11,600,958 $11,166,523 $11,843,583 (11,588,811) ( I 0,946,085) (422,288) $897,498 The City is subject to litigation arising in the normal course of business. In the opinion of the City Attorney there is no pending litigation which is likely to have a material adverse effect on the financial position of the City as of June 30, 2018. Mc(jor Contrncts In December 2017, the City entered into a contract for the construction of a public safety administrative center and fire station in the amount of $36,727,000. The primary source of funding for these projects comes fro111 a portion of General Fund revenues attributable to the Measure E Transactions and Use Tax. Lease Revenue Bonds were issued in March 2018 in order to ensure sufficient funds are on hand to support these contracts. Similarly, contracts for the construction of fire stations 52 and 57 were entered into for the amount of $19,098,834. 89
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 I NOTE 14 -COMMITMENTS AND CONTINGENCIES (Continued) I B. District As of June 30, 2018, SRSD had several contracts for sewer improvement projects with remaining obligations of approximately $2,041,000, the majority of which are expected to be completed within the 2018-2019 fiscal year. NOTE 15 -SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST FUND (SUCCESSOR AGENCY) ACTMTIES A. Redevelopment Dissolution In an effort to mitigate its budget deficit, the State of California adopted ABxl 26 on June 28, 2011, amended by AB1484 on June 27, 2012, which suspended all new redevelopment activities except for limited specified activities as of that date and dissolved redevelopment agencies on January 31, 2012. The suspension provisions prohibited all redevelopment agencies from a wide range of activities, including incurring new indebtedness or obligations, entering into or modifying agreements or contracts, acquiring or disposing of real property, taking actions to adopt or amend redevelopment plans and other similar actions, except actions required by law or to carry out existing enforceable obligations, as defined in ABxl 26. In addition, ABxl 26 and AB 1484 directed the State Controller to review the activities of all redevelopment agencies and successor agencies to determine whether an asset transfer between an agency and any public agency occurred on or after January 1, 2011. If an asset transfer did occur and the public agency that received the asset is not contractually committed to a third party for the expenditure or encumbrance of the asset, the legislation requires the State Controller to order the asset returned to the redevelopment agency. This review was performed in May 2013, and a report issued on July 29, 2013 (see section B of this footnote). The City elected to become the Successor Agency to the Redevelopment Agency, and on February 1, 2012, the Redevelopment Agency's remaining net assets were distributed to the Successor Agency. ABxl 26 requires the establishment of an Oversight Board to oversee the activities of the Successor Agency and one was established on April 2, 2012. The activities of the Successor Agency are subject to review and approval of the Oversight Board, which is comprised of seven members. The activities of the Successor Agency are reported in the Successor Agency to the Redevelopment Agency Private-Purpose Trust Fund as the activities are under the control of the Oversight Board. The City provides administrative services to the Successor Agency to wind down the affairs of the former Redevelopment Agency. Pursuant to the dissolution of the City of San Rafael Redevelopment Agency, certain assets of the Redevelopment Agency were distributed to the Housing Successor and all remaining Redevelopment Agency assets and liabilities were distributed to the Successor Agency. 90
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 NOTE 15 -SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued) The City elected to become the Housing Successor and on February 1, 2012. Assets and Liabilities relating to the Housing Successor are reported in the City's Low and Moderate Income Housing Special Revenue Fund. B. Redevelopment Property Tax Trust Fund (RPTTF) The Successor Agency's primary source ofrevenue comes from the RPTTF allocation distributed by the County. Property tax revenues for each Project Area are deposited into the RPTTF, which redistributes each Project Area's tax increment under specified formulas. The County Auditor administers the RPTTF and disburses twice annually from this fund pass-through payments to affected taxing entities, an amount equal to the total of obligation payments that are required to be paid from tax increment as denoted on the Recognized Obligation Payment Schedule ("ROPS"). The disbursements are established in the treasury of the Successor Agencies, and various allowed administrative fees and allowances. Any remaining balance is then distributed by the County Auditor back to affected taxing entities under a prescribed method that accounts for pass-through payments. The County Auditor is also responsible for the distributing other monies received from the Successor Agency (from sale of assets, etc.) to the affected taxing entities. Successor agencies in turn will use the amounts deposited into their respective funds for making payments on the principal and interest on loans, and monies advanced to or indebtedness incurred by the dissolved redevelopment agencies. C. Long-Term Debt 1999 Tax A/location Bonds and Capita/Appreciation Bonds On June 16, 1999, the former Agency issued Tax Allocation Bonds in the amount of $23,504,004. The bonds were issued as Current Interest Bonds in the aggregate principal amount of $21,115,000 and as Capital Appreciation Bonds in the original amount of $2,389,004. The proceeds of the bonds were used to finance certain redevelopment activities of benefit to the former Agency's Central San Rafael Redevelopment Project Area. In December 2009 of the former Agency exercised the redemption option of the Current Interest Bonds. The outstanding balance of the Bonds was refunded, on a current basis, through the issuance of the 2009 Tax Allocation Refunding Bonds as discussed below. The Capital Appreciation Bonds mature annually after December 1 from 2018 to 2022, in amounts ranging from $1,440,000 to $2,070,000 and bear interest at rates from 5.58% to 5.60%. Interest on the Capital Appreciation Bonds will compound on each interest premium date and will be payable solely at maturity. The bonds are secured, on parity with the 1992 and 1995 bonds (refunded in 2002), by a pledge and a lien on tax revenues and amounts on deposit in certain funds and accounts held by the fiscal agent. 91
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 NOTE 15 -SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued) 2002 Tax Allocation Refunding Bonds On October 9, 2002, the former Agency issued Tax Allocation Refunding Bonds in the amount of $25,020,000. The proceeds of the bonds were used to refund the 1992 Tax Allocation Refunding Bonds and the 1995 Tax Allocation Bonds. The Bonds mature annually each December 1 from 2002 to 2022, in amounts ranging from $540,000 to $1,920,000 and bear interest at rates ranging from 2.00% to 5.25%. Interest is payable semiannually on June 1 and December 1. The Bonds maturing on or after December 1, 2013, are subject to optional redemption prior to maturity, in whole or in part, and by lot within any one maturity, prior to their respective maturity dates, on any date on or after December 1, 2012, at a price equal to the principal amount, plus accrued interest on the redemption date. The bonds are payable from tax revenues to be derived from the redevelopment activities of the former Agency related to the Central San Rafael Redevelopment Project Area. 2009 Tax Allocation Refunding Bonds On December 14, 2009, the former Agency issued 2009 Tax Allocation Refunding Bonds in the amount of $14,660,000 bearing interest at rates from 3.00% to 5.00%. The proceeds of the Series 2009 Bonds were used to refund the former Agency's 1999 Tax Allocation Current Interest Bonds, to advance funds to the City to finance street and parking improvements for the benefit of the Agency's Central San Rafael Redevelopment Project. Principal payments are due annually on December 30 and interest payable semiannually on June 30 and December 30. The Series 2009 Bonds maturing on or before December 1, 2019, are not subject to optional redemption prior to their respective stated maturities. The Series 2009 Bonds maturing on or after December 1, 2020, are subject to optional redemption as a whole or in part either on a pro rata basis among maturities or in inverse order of maturity, and by lot within any one maturity, prior to their respective maturity dates, at the option of the Agency, on any date on or after December 1, 2019, at a price equal to the principal amount of such Series 2009 Bonds called for redemption, together with interest accrued on the date fixed for redemption, without premium. Use of Tax Increment The former Agency pledged all future tax increment revenues for the repayment of the 1999 Capital Appreciation Bonds, and the 2002 and 2009 Tax Allocation Refunding Bonds. The pledge of all future tax increment revenues ends upon repayment of $16.1 million in remaining debt service on the Bonds, which is scheduled to occur in 2023. For fiscal year June 30, 2018, tax increment revenues amounted to $3 .9 million which was used to make the debt service payments of $3 .6 million. 92
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 NOTE 15 -SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST FUND (SUCCESSOR AGENCY) ACTIVITillS (Continued) The following table summarizes the activity for the fiscal year ended June 30, 2018: Authorized Balance and Issued June 30, 2017 San Rafael Redevelopment Agency I 999 Ta, A llocal ion Bonds Capital Appreciation Bonds 5.58%-5.6%, due 12/1/2022 $2.389,004 $6,4 I 8,508 2002 Ta\'. Allocation Rcfonding Bonds 2.00%-5.25%. due 12/1/2021 25,020,000 4,230.000 2009 Tax Allocation Refiinding Bonds 3.00%-5.00%, due 12/1/2022 14.660,000 7,805,000 Add: deferred bond premium costs 479,162 Total Successor Agency Long-tenn Debt $18,932,670 Debt Service Requirements Annual debt service requirements are shown below: For the Year Ended June 30 2019 2020 2021 2022 2023 Totals Reconciliation of long-term debt: Less: unaccreted discount Add: deferred bond premium costs D. Other Long-Term Ohligatio11s Balance Additions Retirements June 30, 2018 $363,939 $6,782.447 $1,920,000 2,310,000 I, 160,000 6,645,000 79,861 399,30 I $363,939 $3,159,861 $16,136,748 Governmental Activities Principal Interest $3,229,08 I $370,676 3,309,082 3,389,231 3,404,749 3,586,374 $16,918,517 ($I, 181,070) 399,30 I $16,136,748 297,019 214,175 120,819 36,500 $1,039,189 Current Portion $1,479,081 $540,000 1,210,000 $3,229,08 I During the fiscal year ending June 30, 2013, the San Rafael Successor Agency Oversight Board approved two personnel-related obligations of the former Redevelopment Agency. On August 30, 2012, the Oversight Board approved the inclusion of $1,904,43 I, representing the unfunded pension liability attributable to former Redevelopment Agency employees; the repayment is being made in ten equal, annual installments. On Februaiy 26, 2013, the Oversight Board approved the inclusion of $502,000, representing the unfunded OPEB (retiree medical) liability attributable to former Redevelopment Agency employees; the repayment is being made in nine equal, annual installments. 93
DRAFTCITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2018 NOTE 15 -SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRN ATE-PURPOSE TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued) On March 27, 2017, the California State Department of Finance notified the Successor Agency of its determination that Other Post Employment Benefit Obligations (OPEB) would not be allowed. The last approved payment of $55,778, which was received in June 2017, brought the remaining balance to $298,888. This amount was removed from the schedule of obligations of the Successor Agency as of June 30, 2017. The following table summarizes the activity for the fiscal year ended June 30, 2018: Unfunded Pension Liability Total Long-Tenn Obli!!fllions Approved Amount $1,904,431 Annual repayment requirements are shown below: E. Commitment and Contingencies For the Year Fnded June 30 2019 2020 2021 Totals State Approval of Enforceable Obligation Balance June 30, 2017 $761,773 $761,773 Principal $190,443 190,443 190,444 $571,330 Retirements $190,443 $190,443 Balance June 30, 2018 $571,330 $571,330 The Successor Agency prepares a Recognized Obligation Payment Schedule (ROPS) semi-annually that contains all proposed expenditures for the subsequent six-month period. The ROPS is subject to the review and approval of the Oversight Board as well as the State Department of Finance. As of June 30, 2018, the Successor Agency had prepared eleven ROPS, all of which have been approved by the Oversight Board and the California Department of Finance. The Department of Finance has stated that all items on a future ROPS are subject to a subsequent review. The amount, if any, of current obligations that may be denied by the Department of Finance cannot be determined at this time. The City expects such amounts, if any, to be immaterial. 94
DRAFTREQUIRED SUPPLEMENTARY INFORMATION
DRAFTCITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2018 Schedule of the City's Proportionate Share of the Net Pension Liability Last 10 years* City's proportionate share Proportionate share of total pension liability Proportionate share offiduciary net position Proportionate share of the net pension liability Plan fiduciary net position as a percentage of the total pension liability Covered payroll (report date) Net pension liability as a percentage of covered payroll 6/30/2015 30.0453% $677,753,565 603 499 779 $74,253,786 89.04% $31,073,560 236.26% 6/30/2016 36.7394% $907,195,058 764 871931 $142,323,127 84.31% $32,126,272 443.01% • -The fiscal year ended June 30, 2015 was the fust year of implementation, therefore only four years are shown 96 6/30/2017 6/30/2018 34.9538% 32.7180% $900,629,287 $878,483,703 733 574 437 757 834 016 $167 054 850 $120,649,687 84.31% 86.27% $32,885,135 $36,349,651 508.00% 331.91%
DRAFTCITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2018 Schedule of Contributions Defined Benefit Pension Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) Contractually required contribution Contributions in Relation to the Contractually required contribution Contribution Deficiency/ (Excess) Covered payroll Contributions as a percentage of covered payroll Notes to Schedule Valuation Date I Timing $ $ $ 2015 17,802,358 17802358 31,073,560 57.29% 6/30/2013 (for contributions made inFY2014-2015) Key Methods and Assumptions Used to Detennine Contribution Rates (for FY2014-15): Actuarial cost method Amortization method Remaining Amortization period Asset valuation method Inflation Salary increases Investment Rate of Return Retirement Age Healthy Mortality Disabled Mortality Entry Age Normal Cost Method Level percentage of payroll with separate period for Extraordinary Actuarial Loss from 2009 Unfunded liability -17 years / Extraordinary Actuarial Loss -25 years 5-year smoothed market, 80% /120% corridor around market 3.25% 3.25% plus merit component based on employee classification and years of service 7.50% Classic Tiers: Safety -50, Miscellaneous -55; PEPRA Tiers: Safety-57, Miscellaneous -62 Sex distinct RP-2000 Combined Mortality projected to 20 IO using Scale AA with ages set back one year for male members/ two years for female members Sex distinct RP-2000 Combined Mortality projected to 2010 using Scale AA with ages set forward three years for all members 97
DRAFTCITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2018 Schedule of Contributions Defined Benefit Pension Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) (Continued) Contractually required contnbution Contnbutions in Relation to the Contractually required contnbution Contnbution Deficiency/ (mess) Covered payroll Contnbutions as a percentage of covered payroll Notes to Schedule Valuation Date I Timing 2016 $ 19,339,577 19,339,577 $ $ 32,126,272 60.20% 6130/2014 (for contnbutions made in FY2015-2016) Key Methods and Assurrmtions Used to Detennine Contnbution Rates (forFY2015-16}: Actuarial cost method Amortization method Remaining Amortization period Asset valuation method Inflation Salary increases Investment Rate of Return Retirement Age Healthy Mortality Disabled Mortality Fntry Age Normal Cost Method Level percentage of payroll with separate period for Extraordinary Actuarial Loss from 2009 Unfunded liability -16 years / E><traordinary Actuarial Loss -24 years 5-year smoothed market, 80°/., /120"/o corridor around market 3.25% 3.25% plus merit component based on employee classification and years of service 7.25% Classic Tiers: Safety -50, Miscellaneous -55; PEPRA Tiers: Safety -57, Miscellaneous -62 Ca!PERS 2014 Pre-Retirement Non-Industrial Death rates (plus Duty-Related Death rates for Safety Members), with the 20-year static projection used by Ca!PERS replaced by generational improvements from a base year of2009using Scale MP-2014 Ca!PERS 2014 Disability Mortality rates (Non-Industrial rates for Miscellaneous members and Industrial Disability rates for Safety members), adjusted by 90% for Males and Females (Miscellaneous and Safety) with the 20-year static projection used by Ca!PERS replaced by generational improvements from a base year of2009 using Scale MP-2014 98
DRAFTCITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2018 Schedule of Contributions Defined Benefit Pension Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) (Continued) Contractually required contribution Contributions in Relation to the Contractually required contribution Contribution Deficiency/ (Excess) Covered payroll Contributions as a percentage of covered payroll Notes to Schedule Valuation Date/ Timing $ $ $ 2017 20,003,001 20 003 001 32,885,135 60.83% 6/30/2015 (for contributions made in FY20 I 6-20 I 7) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2016-17): Actuarial cost method Amortization method Remaining Amortization period Asset valuation method Inflation Salary increases Investment Rate of Return Retirement Age Healthy Mortality Disabled Mortality Entry Age Normal Cost Method Level percentage of payroll with separate period for Extraordinary Gains or Losses (24 years remaining as of6/30/14), the remaining UAL as of June 30, 2013 (16 years as of6/30/14), and additional layers for unexpected changes in UAL after 6/30/13 (24 years for gains and losses with a 5-year phase-in/out and 22 years for assumption changes with a 3-year phase-in/out). 19 years remaining as ofJune 30, 2016 Market Value 2.75% per year 3.00% plus merit component based on employee classification and years of service 7.25% Classic Tiers: Safety -50, Miscellaneous -55; PEPRA Tiers: Safety -57, Miscellaneous -62 Sex distinct RP-2000 combined mortality projected to 2010 using Scale AA with ages set back one year for male members/two years for female members Sex distinct RP-2000 combined mortality projected to 2010 using Scale AA with ages set forward three years for all members 99
DRAFTCITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2018 Schedule ofContributions Defined Benefit Pension Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) (Continued) Contractually required contnbution Contnbutions in Relation to the Contractually required contnbution Contnbution Deficiency/ (fuess) Covered payroll Contnbutions as a percentage of covered payroll Notes to Schedule Valuation Date I Timing 2018 $ $ $ 6/30/2016 20,167,435 20,167,435 36,349,651 55.48% (forcontnbutions made in FY2017-2018) Key Methods and Assumptions Used to Detennine Contnbution Rates (forFY2016-17): Actuarial cost method Amortization method Remaining Amortization period Asset valuation method Inflation Salary increases Investment Rate of Return Retirement Age Healthy Mortality Disabled Mortality Fntry Age Normal Cost Method Level percentage of payroll with separate period for Extraordinary Gains or Losses (22 years remaining as of 6/30/16), the remaining UAL as of June 30, 2013 (14 years as of 6/30/16), and additional layers forunexpected changes in UAL after 6/30/13 (24 years for gains and losses with a 5-year phase-in/out and 22 years for assumption changes with a 3-yearphase-in/out). 18years remaining as of June 30, 2017 Market Value 2.75% per year 3.00"/o plus merit component based on employee classification and years of service 7.25% Oas sic Tiers: Safety -50, Miscellaneous -55; PEPRA Tiers: Safety -57, Miscellaneous -62 Sex distinct CalPERS 2014 Pre-Retirement Non-Industrial Death rates (plus Duty-Related death rates for Safety members) Sex distinct RP-2000 combined mortality projected to 2010 using Scale AA with ages set forward three years for all members 100
DRAFTCITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2018 SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) Measurement period 2015-16 Total OPEB liability Service cost $ 766,000 $ Interest 3,447,000 Differences between expected and actual experience Assumption changes Benefit payments, including refunds of employee contributions (2,896,000) Net change in total OPEB liability 1,317,000 Total OPEB liability -beginning 48,226,000 Total OPEB liability -ending (a) $ 49,543,000 $ OPEB fiduciary net position Contributions -employer $ 2,896,000 $ Net investment income 157,000 Benefit payments, including refunds of employee contributions (2,896,000) Administrative expense (7,000) Net change in plan fiduciary net position 150,000 Plan fiduciary net position -beginning 15,608,000 Plan fiduciary net position -ending (b) $ 15,758,000 $ Plan net OPEB liability-ending (a) -(b) $ 33,785,000 $ Plan fiduciary net position as a percentage of the total OPEB liability 31.81% Covered employee payroll $ 32,885,135 $ Plan net OPEB liability as a percentage of covered employee payroll 102.74% Historical information is required only for the measurement periods for which GASB 75 is applicable. 101 2016-17 789,000 3,540,000 (4,107,000) 4,831,000 (3,015,000) 2,038,000 49,543,000 51,581,000 3,475,000 1,675,000 (3,015,000) (8,000) 2,127,000 15,758,000 17,885,000 33,696,000 34.67% 36,349,651 92.70%
DRAFTCITY OF SAN RAFAEL REQUIRED SUPPLEMENT ARY INFORMATION For the Year Ended June 30, 2018 SCHEDULE OF CONTRIBUTIONS Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) Actuarially determined contribution Contributions in relation lo the actuarially determined contribution Contribution deficiency (excess) Covered employee payroll Contributions as a percentage of covered employee payroll $ $ $ 2016-17 3,450,000 (3,475,000) (25,000) 36,349,651 10.49% GASB 75 requires this information for plans funding with OPEB trusts be reported in the employer's Required Supplementary Information for IO years or as many years as are available upon implementation. The June 30, 2017 actuarial valuation provided the Actuarially Determined Contributions for fiscal years ending 06/30/17. Notes to Schedule: Actuarially determined contribution rates are calculated as of.lune 30, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Asset Valuation Method Discount Rate Contribution Policy General Inflation Mortality, Retirement, Disability, Termination Mortality Improvement Expected Long-Term Rate of Return on Investments Salary Increases Medical Trend Healthcare participation for future retirees Cap Increases June 30, 2015 Entry Age Normal, Level Percentage of Payroll Level dollar amount, over approximate I 0-year period 19 years remaining as of June 30, 2016 Investment gains and losses spread over 5-year rolling period 7.25% City contributes full ADC 2.75% per annum Same as June 30, 2015 actuarial valuation Mortality projected fully generational with Scale MP-I 4, modified Same as discount rate -expected City contributions projected to Aggregate -3% Merit -6/30/14 MCERA assumptions Non-Medicare -6.5% for 2017, decreasing 0.5% per year to an ultir rate of 4.50% for 2021 and Medicare -6. 7% for 2017, decreasing to ultimate rate of 4.5% for 2021 and later years Capped benefit: I 00% currently covered, 80% currently waived PEMHCA minimum -60% None 102
DRAFTCITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2018 Actuarially determined conlribulion Contribulions in relation lo lhe actuarially determined contribution Contribution deficiency (excess) Covered employee payroll Contributions as a percentage of covered employee payroll SCHEDULE OF CONTRIBUTIONS Lasl Ten Fiscal Years Other Post-Employmcnl Bencfils (OPEB) 2017-18 $ 3,530,000 (3,563,000) $ (33,000) $ 36,350,000 9.71% GASB 75 requires this information for plans funding wilh OPEB lrusls be reported in the employer's Required Supplemenlary lnfonnalion for IO years or as many years as are available upon implementation. The June 30, 2017 actuarial valuation provided the Actuarially Determined Contributions for fiscal years ending 06/30/18. Notes to Schedule: Actuarially determined contribution rates are calculated as of .lune 30, two years prior to the encl of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Asset Valuation Method Discount Rate Contribution Policy General Jnnation Mortality, Retirement, Disability, Termination Mortality Improvement Expected Long-Tenn Rate of Return on Investments Salary Increases Medical Trend Healthcare participation for future retirees Cap Increases .lune 30, 2017 Entry Age Normal. Level Percentage of Payroll Level dollar amount, over approximate I 0-year period 18 years remaining as of .lune 30, 2017 Investment gains and losses spread over 5-year rolling period 6.75% at .lune 30, 2017; 7.25% at June 30, 2016 City contributes full ADC 2.75% per annum Same as .lune 30, 2017 actuarial valuation Pre-retirement mortality: projected 15-year static with 90% of Scale MP-2016 Post-retirement mortality: projected fully generational with Scale MP-2017 Same as discount rate -expected City contributions projected to keep sufficient plan assets to pay all benefits from trust Aggregate -3% Merit -6/30/ 17 MC ERA assumptions Non-Medicare -7 .5% for 2019, decreasing to 4.00% for 2076 and later years and Medicare -6.5% for 2019, decreasing to 4.00% for 2076 and later years Capped benefit: I 00% currently covered, 80% cmTently waived PEMHCA minimum -60% None 103
DRAFT
DRAFTGENERAL FUND AND MAJOR SPECIAL REVENUE FUND BUDGET-TO-ACTUAL STATEMENTS GASB Statement No. 34 dictates that budget-to-actual infonnation in the basic financial statements should be limited to the General Fund and major Special Revenue Funds. This section is provided for the presentation of Budget-to-Actual Statements for the General Fund, Traffic and Housing Mitigation, and the Gas Tax Special Revenue Funds. Budgets are adopted on a basis consistent with Generally Accepted Accounting Principles for the General Fund and Special Revenue Funds. 105
DRAFTCITY OF SAN RAFAEL GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2018 REVENUES Taxes and special assessments Licenses and permits Fines and forfeitures Use of money and properties Intergovernmental Charges for services Other revenue Total Revenues EXPENDITURES Current: General government Public safety Public works and parks Community development Culture and recreation Capital outlay Debt service: Principal Interest and fiscal charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Bonds issued Bond premium Loan issued Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR Budgeted Amounts Original Final $66,848,000 $68,146,000 2,782,001 2,718,001 457,000 361,000 238,200 172,248 3,323,000 4,104,000 2,980,450 2,359,450 504,443 593,000 77,133,094 78,453,699 9,633,840 10,112,800 43,270,572 43,270,572 11,512,555 11,512,550 4,570,436 4,621,013 3,255,719 3,255,719 90,690 210,690 280,172 280,172 271,263 1,016,986 72,885,247 74,280,502 4,247,847 4,173,197 45,485,000 8,248,397 1,080,000 1,356,344 1,356,344 (6,375,000) (65,207,407) (5,018,656) (9,037,666) ($770,809) ($4,864,469) 106 Actual Amounts $68,079,065 2,718,166 384,268 175,230 4,103,766 2,379,046 629,348 78,468,889 9,686,131 43,481,474 11,953,335 4,051,224 3,229,533 225,996 280,172 1,005,636 73,913,501 4,555,388 45,485,000 8,248,397 1,080,800 1,356,344 (65,207,407) (9,036,866) (4,481,478) 16,704,432 $12,222,954 Variance with Final Budget Positive (Negative) ($66,935) 165 23,268 2,982 (234) 19,596 36,348 15,190 426,669 (210,902) (440,785) 569,789 26,186 (15,306) 11,350 367,001 382,191 800 800 $382,991
DRAFTCITY OF SAN RAFAEL TRAFFIC AND HOUSING MITIGATION SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2018 REVENUES Taxes and special assessments Use of money and properties Charges for services Total Revenues EXPENDITURES Current: General government Capital outlay 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 Budgeted Amounts Original $82,000 300,000 382,000 150,000 150,000 232,000 $232,000 107 Final $82,000 940,000 1,022,000 50,900 2,975,021 3,025,921 (2,003,921) 148,788 (711,221) (562,433) ($2,566,354) Actual Amounts $39,619 56,994 662,332 758,945 50,900 2,974,669 3,025,569 (2,266,624) 148,788 (711,221) (562,433) (2,829,057) 9,135,430 $6,306,373 Variance with Final Budget Positive (Negative) $39,619 (25,006) (277,668) (263,055) 352 352 (262,703) ($262,703)
DRAFTCITY OF SAN RAFAEL GAS TAX SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2018 REVENUES Taxes and special assessments Use of money and properties Intergovernmental Charges for services Total Revenues EXPENDITURES Current: General government Public works and parks Capital outlay 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 Budgeted Amounts Original Final $48,000 2,443,942 1,043,600 3,535,542 16,740 4,367,999 3,636,891 8,021,630 (4,486,088) (400,000) (400,000) ($4,886,088) 108 $48,000 2,443,942 1,043,600 3,535,542 16,740 6,239,801 11,361,414 17,617,955 (14,082,413) 246,113 (548,788) (302,675) ($14,385,088) Actual Amounts $44,478 45,748 2,949,961 1,097,941 4,138,128 1,580,271 2,986,597 4,566,868 (428,740) 246,113 (548,788) (302,675) (731,415) 6,723,696 $5,992,281 Variance with Final Budget Positive (Negative) $44,478 (2,252) 506,019 54,341 602,586 16,740 4,659,530 8,374,817 13,051,087 13,653,673 $13,653,673
DRAFTSUPPLEMENTARY INFORMATION
DRAFTCITY OF SAN RAFAEL ESSENTIAL FACILITIES CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2018 REVENUES Use of money and property Other revenue Total Revenues EXPENDITURES Capital outlay Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER(UNDER)EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR Budgeted Amounts Original Final $4,025,000 4,025,000 (4,025,000) 4,025,000 4,025,000 110 $16,622,567 16,622,567 (16,622,567) 63,476,607 63,476,607 $46,854,040 Actual Amounts $196,846 2,158,166 2,355,012 16,622,567 16,622,567 (14,267,555) 63,476,607 63,476,607 49,209,052 $49,209,052 Variance with Final Budget Positive (Negative) $196,846 2,158,166 2,355,012 2,355,012 $2,355,012
DRAFTNON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Recreation Revolving Fund -Established to administer the Community Services Department's program and facility rental charge and accounts for the Recreation Memorial Fund. Baypoint Lagoons Assessment District Fund -The Baypoint Lagoons Lighting and Landscape District was formed to protect and enhance wildlife habitat and water quality in Baypoint (Spinnaker) Lagoon and the adjacent diked salt marsh. Household Hazmat Facility Fund -Established to account for State mandated hazardous materials information, collection, and reporting. Expenditures include inspection of businesses for compliance with regulations. This fund also serves as the depository for countywide Household Hazardous Waste Program. Childcare Fund -Established to administer and account for childcare programs at ten sites throughout the City. Loch Lomond #10 Community Facilities District Fund -Established to provide maintenance for stormwater and geotechnical mitigation facilities. A Mello Roos District was formed to fund this maintenance. Loch Lomond Marina #2 Community Facilities District Fund -Established to report tax assessments and maintenance expenditures of the District. Library Fund -Established to account for restricted library activities that are intended to be self-funding. Library Assessment Fund -Established to account for a special parcel tax dedicated to public library services and facilities, equipment, and technology improvements. Public Safety Fund -Established for special police services, which are intended to be self-funding. Stormwater Fund -Established to provide for self-funding storm drain maintenance program plus separate programs through the County and Bay Area to educate residents about urban runoff pollution. Development Services Fund -Established to account for development activities that are supported by external sources of funds. This fund does not account for the operating costs of building, planning, and engineering, which are located in the General Fund. Grants Fund -Established to account for grants for the Library, Childcare, Police and Falkirk Cultural Center. Parkland Dedication Fund -Established to account for long-term developer deposits used to enhance and maintain the park structure within City limits. Emergency Medical Services Fund -Established to account for the Emergency Medical Services and Transportation program that provides services to all segments of the community. Business Improvement Fund -Established to account for activities held in Downtown San Rafael. 111
DRAFTNON-MAJOR GOVERNMENTAL FUNDS (Continued) Pt. San Pedro Maintenance Portion Special Revenue Fund -Established to account for ongoing maintenance needs within the Pt. San Pedro assessment district. Low and Moderate Income Housing Special Revenue Fund -Established to account for the activities related to the assets assumed by the City as Housing Successor to the San Rafael Redevelopment Agency for the housing activities of the former Redevelopment Agency. Measure A Open Space Special Revenue Fund -Established to account for the use of proceeds distributed by the County of Marin from Measure A, as well as other supplementary matching or City-funding for the operation or maintenance of open space, park or recreation lands. DEBT SERVICE FUNDS Peacock Gap Assessment District Fund -Established to accumulate funds for the payment of principal and interest for the 1993 Bonds which matured in 2005. The proceeds were used to refund the 1984 Bonds, which provided for the construction of public improvements in the project area. Financing is to be provided by property tax increments generated within the specific geographic region described by the bond assessment district. Mariposa Assessment District Fund -Established to accumulate funds for the payment of principal and interest for the 1993 Bond, which matured in 2008. The proceeds were used to finance the grading and paving of Mariposa Road. 1997 Financing Authority Revenue Bonds Fund -Established to accumulate funds for the payment of principal and interest for the 1997 Revenue Bonds which matured in 2011. The proceeds were used to purchase the previously issued special assessment bonds. Financing is to be provided by property tax increments generated within the specific geographic region described by the bond assessment district. CAPITAL PROJECTS FUNDS Capital Improvement Fund -Established for the costs associated with major capital improvement projects not tied to specific funds elsewhere. Improvements could include medians, parkways, sidewalks, and other public assets. Bedroom Tax Fund -Established to collect funds from multiple-unit housing used to pay for maintaining and developing parks within local neighborhoods. Assessment Districts Fund -Established to account for ongoing construction and improvement needs within the following assessment districts: Peacock Gap, Kerner Boulevard, Sun Valley/Lucas Valley Open Space, East San Rafael Drainage Assessment District 1. Park Capital Projects Fund -Established to account for capital improvements for all City owned parks, whether paid for by City funds, grants, donations, or partnership with the community. Open Space Fund -Established for the acquisition of open space. 112
DRAFT
DRAFTASSETS Cash and investments Restricted cash and investments Receivables: Accounts Taxes Grants Interest Loans Prepaids Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Deposits payable Developer deposits payable Deferred revenue Total Liabilities Fund Balances: Nonspendable Restricted Committed Assigned Total Fund Balances CITY OF SAN RAFAEL NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEETS FOR THE YEAR ENDED JUNE 30, 2018 SPECIAL REVENUE FUNDS Baypoint Lagoons Household Recreation Assessment Hazmat Revolving District Facility Childcare $584,533 $259,852 $207,797 $1,588,156 179,426 403,207 165 24,093 $763,959 $260,017 $611,004 $1,612,249 $255,922 $125,273 $40,434 143,378 231,594 487,516 268,651 40,434 276,443 $260,017 342,353 1,571,815 276,443 260,017 342,353 1,571,815 Total Liabilities and Fund Balances $763,959 $260,017 $611,004 $1,612,249 114 Loch Lomond #10 Community Facilities Dist. $663,436 101 $663,537 $663,537 663,537 $663,537
DRAFTLoch Lomond Marina#2 Community Facilities Dist. $204,238 1,328 $205,566 $205,566 205,566 $205,566 Library $2,324,113 $2,324,113 $437 437 2,323,676 2,323,676 $2,324,113 SPECIAL REVENUE FUNDS Library Assessment $708,010 $708,010 $59,306 59,306 648,704 648,704 $708,010 Public Safety $79,945 37,169 $117,114 $2,235 2,235 114,879 114,879 $117,114 115 Storm water $991,200 15,450 5,299 $1,011,949 $422,926 422,926 589,023 589,023 $1,011,949 Development Services $684,418 28,069 $712,487 $6,440 23,053 1,500 30,993 681,494 681,494 $712,487 Grants $709,359 64,938 $774,297 $11,436 11,436 762,861 762,861 $774,297 (Continued)
DRAFTASSETS Cash and investments Restricted cash and investments Receivables: Accounts Taxes Grants Interest Loans Prepaids Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Deposits payable Developer deposits payable Deferred revenue Total Liabilities Fund Balances: Nonspendable Restricted Committed Assigned Total Fund Balances Total Liabilities and Fund Balances CITY OF SAN RAFAEL NONMAJOR GOVERNMENT AL FUNDS COMBINING BALANCE SHEETS FOR THE YEAR ENDED JUNE 30, 2018 SPECIAL REVENUE FUNDS Emergency Pt. San Pedro Parkland Medical Business Maintenance Dedication Services Improvement Portion $604,678 $526,868 $21,247 $124,598 231,765 33,758 497 250,000 302,366 $604,678 $1,344,757 $21,247 $125,095 $2,237 $75,325 $21,247 $20,357 2,237 75,325 21,247 20,357 302,366 602,441 967,066 104,738 602,441 1,269,432 104,738 $604,678 $1,344,757 $21,247 $125,095 116 Low and Moderate Income Housing $656,069 696 250,169 $906,934 $906,934 906,934 $906,934
DRAFTSPECIAL REVENUE FUNDS Measure A Open Space $241,405 228,083 $469,488 $65,422 65,422 404,066 404,066 $469,488 Peacock Gap Assessment District $2,875 $2,875 $2,875 2,875 $2,875 DEBT SERVICE FUNDS 1997 Mariposa Financing Assessment Authority District Revenue Bonds $16,573 $148,874 $16,573 $148,874 $16,573 $148,874 16,573 148,874 $16,573 $148,874 117 CAPITAL PROJECTS FUNDS Capital Bedroom Assessment Improvement Tax Districts $2,713,263 $86,535 $223,742 625,286 77,770 3,456 $3,342,005 $86,535 $301,512 $1,593,786 1,593,786 $86,535 $301,512 1,748,219 1,748,219 86,535 301,512 $3,342,005 $86,535 $301,512 (Continued)
DRAFTASSETS Cash and investments Restricted cash and investments Receivables: Accounts Taxes Grants Interest Loans Prepaids Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Deposits payable Developer deposits payable Deferred revenue Total Liabilities Fund Balances: Nonspendable Restricted Committed Assigned Total Fund Balances CITY OF SAN RAFAEL NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEETS FOR THE YEAR ENDED JUNE 30, 2018 CAPITAL PROJECTS FUNDS Park Total Non-Major Capital Open Governmental Projects Space Funds $6,764 $115,942 $14,494,490 703,056 895,086 269,231 339,031 4,152 250,169 302,366 $6,764 $115,942 $17,257,581 $2,702,783 23,053 144,878 231,594 3,102,308 302,366 11,981,982 $6,764 1,754,983 $115,942 115,942 6,764 115,942 14,155,273 Total Liabilities and Fund Balances $6,764 $115,942 $17,257,581 118
DRAFT
DRAFTCITY OF SAN RAFAEL COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2018 SPECIAL REVENUE FUNDS Baypoint Lagoons Household Recreation Assessment Hazmat Revolving District Facility Childcare REVENUES Taxes and special assessments $25,368 Use of money and properties $29,593 1,810 $1,265 $11,006 Intergovernmental 15,000 341,315 Charges for services 3,141,976 161,798 3,558,672 Other revenue 26,530 13,957 Total Revenues 3,213,099 27,178 163,063 3,924,950 EXPENDITURES Current: General government Public safety 134,075 Public works and parks 5,487 Culture and recreation 4,854,747 3,660,279 Capital outlay Total Expenditures 4,854,747 5,487 134,075 3,660,279 EXCESS (DEFICIENCY) OF REVENUES OVER(UNDER)EXPENDITURES (1,641,648) 21,691 28,988 264,671 OTHER FINANCING SOURCES (USES) Transfers in 1,800,000 50,000 Transfers out (113,000) Total Other Financing Sources (Uses) 1,800,000 (63,000) Net Change in Fund Balances 158,352 21,691 28,988 201,671 Fund Balance, Beginning 118,091 238,326 313,365 1,370,144 Fund Balance, Ending $276,443 $260,017 $342,353 $1,571,815 120 Loch Lomond #10 Community Facilities Dist. $15,606 4,779 20,385 17,114 17,114 3,271 3,271 660,266 $663,537
DRAFTSPECIAL REVENUE FUNDS Loch Lomond Marina#2 Community Library Public Development Facilities Dist. Library Assessment Safety Storm water Services Grants $204,380 $1,017,358 1,316 $16,800 2,443 $279 $3,813 $37,728 $4,478 6,000 74,900 411,828 657,457 6,788 2,265 840,496 1,677,357 85,926 1,184 205,696 1,706,945 1,019,801 163,370 1,257,321 37,728 661,935 9,327 39,520 107,330 130 306,991 522,402 791,608 15,334 1,038,669 556,450 130 15,334 1,038,669 306,991 1,357,385 39,520 629,732 205,566 1,691,611 (18,868) (143,621) (100,064) (1,792) 32,203 100,000 500,000 (22,463) 100,000 500,000 (22,463) 205,566 1,691,611 (18,868) (43,621) 399,936 (1,792) 9,740 632,065 667,572 158,500 189,087 683,286 753,121 $205,566 $2,323,676 $648,704 $114,879 $589,023 $681,494 $762,861 (Continued) 121
DRAFTCITY OF SAN RAFAEL COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2018 SPECIAL REVENUE FUNDS Emergency Pt. San Pedro -Parkland Medical Business Maintenance Dedication Services Improvement Portion REVENUES Taxes and special assessments $261 $4,922,498 $76,492 Use of money and properties $4,008 17,797 480 Intergovernmental 176,989 Charges for services 2,808,780 Other revenue 34,128 524,708 Total Revenues 38,397 8,450,772 76,972 EXPENDITURES Current: General government 37,307 Public safety 7,188,563 Public works and parks 19,342 123,517 Culture and recreation Capital outlay 52,343 Total Expenditures 71,685 7,225,870 123,517 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (33,288) 1,224,902 (46,545) OTHER FINANCING SOURCES (USES) Transfers in 186,541 Transfers out (1,700,000) Total Other Financing Sources (Uses) 186,541 (1,700,000) Net Change in Fund Balances 153,253 (475,098) (46,545) Fund Balance, Beginning 449,188 1,744,530 151,283 Fund Balance, Ending $602,441 $1,269,432 $104,738 122 Low and Moderate Income Housing $12,095 64,074 76,169 79,585 79,585 (3,416) (3,416) 910,350 $906,934
DRAFTSPECIAL REVENUE FUND Measure A Open Space $458,974 2,425 461,399 172,073 181,969 2,183 356,225 105,174 (70,343) (70,343) 34,831 369,235 $404,066 Peacock Gap Assessment District $2,875 $2,875 DEBT SERVICE FUNDS Mariposa Assessment District $16,573 $16,573 1997 Financing Authority Revenue Bonds $1,077 1,077 1,077 1,077 147,797 $148,874 123 CAPITAL PROJECTS FUNDS Capital Improvement $24,949 141,758 166,707 2,369,831 2,369,831 (2,203,124) 487,571 487,571 (1,715,553) 3,463,772 $1,748,219 Bedroom Tax $9,690 9,690 9,690 9,690 76,845 $86,535 Assessment Districts $732 732 732 732 300,780 $301,512 (Continued)
DRAFTCITY OF SAN RAFAEL COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2018 CAPITAL PROJECTS FUND Total Park Non-Major Capital Open Governmental Projects Space Funds REVENUES Taxes and special assessments $6,730,627 Use of money and properties $1 $839 179,713 Intergovernmental 1,825,247 Charges for services 10,520,775 Other revenue 4,036 2,431,900 Total Revenues 4,037 839 21,688,262 EXPENDITURES Current: General government 273,069 Public safety 8,324,234 Public works and parks 1,139,037 Culture and recreation 25,209 9,594,238 Capital outlay 2,980,807 Total Expenditures 25,209 22,311,385 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (21,172) 839 (623,123) OTHER FINANCING SOURCES (USES) Transfers in 3,124,112 Transfers out (1,905,806) Total Other Financing Sources (Uses) 1,218,306 Net Change in Fund Balances (21,172) 839 595,183 Fund Balance, Beginning 27,936 115,103 13,560,090 Fund Balance, Ending $6,764 $115,942 $14,155,273 124
DRAFT
DRAFTCITY OF SAN RAFAEL BUDGETED NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2018 SPECIAL REVENUE FUNDS Recreation Revolving Baypoint Lagoons Assessment District REVENUES Taxes and special assessments Use of money and properties Intergovernmental Charges for services Other revenue Total Revenues EXPENDITURES Current: General government Public safety Public works and parks Culture and recreation Capital outlay Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) FUND BALANCES, BEGINNING OF YEAR AND OTHER SOURCES AND USES OVER (UNDER) EXPENDITURES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR Final Budget $28,409 10,000 3,098,700 2,750 3,139,859 4,800,693 4,800,693 (1,660,834) 1,800,000 1,800,000 $139,166 Actual $29,593 15,000 3,141,976 26,530 3,213,099 4,854,747 4,854,747 (1,641,648) 1,800,000 1,800,000 158,352 118,091 $276,443 126 Variance Positive (Negative) $1,184 5,000 43,276 23,780 73,240 (54,054) (54,054) 19,186 $19,186 Final Budget $25,500 1,800 27,300 5,488 5,488 21,812 $21,812 Actual $25,368 1,810 27,178 5,487 5,487 21,691 21,691 238,326 $260,017 Variance Positive (Negative) ($132) IO (122) (121) ($121)
DRAFTHousehold Hazmat Facility Final Budget $1,600 156,515 158,115 151,615 151,615 6,500 $6,500 Actual $1,265 161,798 163,063 134,075 134,075 28,988 28,988 313,365 $342,353 Variance Positive (Negative) ($335) 5,283 4,948 17,540 17,540 22,488 $22,488 SPECIAL REVENUE FUNDS Final Budget $6,000 305,782 3,775,000 4,086,782 4,089,615 4,089,615 (2,833) 50,000 (113,000) (63,000) ($65,833) Childcare Actual $11,006 341,315 3,558,672 13,957 3,924,950 3,660,279 3,660,279 264,671 50,000 (113,000) (63,000) 201,671 1,370,144 $1,571,815 127 Variance Positive (Negative) $5,006 35,533 (216,328) 13,957 (161,832) 429,336 429,336 267,504 $267,504 Loch Lomond # 10 Community Facilities District Final Budget $15,610 6,000 21,610 150,054 150,054 (128,444) ($128,444) Actual $15,606 4,779 20,385 17,114 17,114 3,271 3,271 660,266 $663,537 Variance Positive (Negative) ($4) (1,221) (1,225) 132,940 132,940 131,715 $131,715 (Continued)
DRAFTCITY OF SAN RAFAEL BUDGETED NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2018 SPECIAL REVENUE FUNDS Loch Lomond Marina #2 Community Facilities District Library Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) REVENUES Taxes and special assessments $204,380 $204,380 Use of money and properties 1,316 1,316 $15,320 $16,800 $1,480 Intergovernmental 6,000 6,000 Charges for services 7,000 6,788 (212) Other revenue 1,675,726 1,677,357 1,631 Total Revenues 205,696 205,696 1,704,046 1,706,945 2,899 EXPENDITURES Current: General government Public safety Public works and parks $130 130 Culture and recreation 25,000 15,334 9,666 Capital outlay Total Expenditures 130 130 25,000 15,334 9,666 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (130) 205,566 205,696 1,679,046 1,691,611 12,565 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES AND USES OVER (UNDER) EXPENDITURES ($130) 205,566 $205,696 $1,679,046 1,691,611 $12,565 FUND BALANCES, BEGINNING OF YEAR 632,065 FUND BALANCES, END OF YEAR $205,566 $2,323,676 128
DRAFTLibrary Assessment Final Budget $1,054,595 5,600 1,060,195 1,207,221 1,207,221 (147,026) ($147,026) Actual $1,017,358 2,443 1,019,801 1,038,669 1,038,669 (18,868) (18,868) 667,572 $648,704 Variance Positive (Negative) ($37,237) (3,157) (40,394) 168,552 168,552 128,158 $128,158 SPECIAL REVENUE FUNDS Final Budget $400 70,000 1,500 75,000 146,900 312,745 312,745 (165,845) 100,000 100,000 ($65,845) Public Safety Actual $279 74,900 2,265 85,926 163,370 306,991 306,991 (143,621) 100,000 100,000 (43,621) 158,500 $114,879 129 Variance Positive Final (Negative) Budget ($121) $1,000 4,900 765 772,800 10,926 5,000 16,470 778,800 4,731 5,754 892,716 616,635 5,754 1,514,082 22,224 (735,282) 500,000 500,000 $22,224 ($235,282) Stormwater Actual $3,813 411,828 840,496 1,184 1,257,321 9,327 791,608 556,450 1,357,385 (100,064) 500,000 500,000 399,936 189,087 $589,023 Variance Positive (Negative) $2,813 411,828 67,696 (3,816) 478,521 (4,596) 101,108 60,185 156,697 635,218 $635,218 (Continued)
DRAFTCITY OF SAN RAFAEL BUDGETED NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULES OF REVENUES, EXPENDITURES, . AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2018 SPECIAL REVENUE FUNDS Development Services Grants Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) REVENUES Taxes and special assessments Use of money and properties $38,000 $37,728 ($272) $2,000 $4,478 $2,478 Intergovernmental 770,530 657,457 (113,073) Charges for services Other revenue Total Revenues 38,000 37,728 (272) 772,530 661,935 (110,595) EXPENDITURES Current: General government 117,000 39,520 77,480 282,770 107,330 175,440 Public safety 522,421 522,402 19 Public works and parks Culture and recreation Capital outlay Total Expenditures 117,000 39,520 77,480 805,191 629,732 175,459 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (79,000) {l,792~ 77,208 (32,661~ 32,203 64,864 OTHER FINANCING SOURCES (USES) Transfers in Transfers out (22,463) (22,463) Total Other Financing Sources (Uses) (22,463) (22,463) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES AND USES OVER (UNDER) EXPENDITURES ($79,000) (1,792) $77,208 ($55,124) 9,740 $64,864 FUND BALANCES, BEGINNING OF YEAR 683,286 753,121 FUND BALANCES, END OF YEAR $681,494 $762,861 130
DRAFTParkland Dedication Final Budget $6,000 30,000 36,000 237,301 698,374 935,675 (899,675) 186,541 186,541 ($713,134) Actual $261 4,008 34,128 38,397 19,342 52,343 71,685 (33,288) 186,541 186,541 153,253 449,188 $602,441 SPECIAL REVENUE FUNDS Emergency Medical Services Variance Variance Positive Final Positive (Negative) Budget Actual (Negative) $261 $4,860,398 $4,922,498 $62,100 (1,992) 9,000 17,797 8,797 130,000 176,989 46,989 2,550,000 2,808,780 258,780 4,128 265,738 524,708 258,970 2,397 7,815,136 8,450,772 635,636 37,307 (37,307) 7,895,597 7,188,563 707,034 217,959 646,031 863,990 7,895,597 7,225,870 669,727 866,387 (80,461) 1,224,902 1,305,363 (1,700,000) p,700,000) (1,700,000) (1,700,000) $866,387 ($1,780,461) (475,098) $1,305,363 1,744,530 $1,269,432 131 Business Improvement Variance Final Positive Budget Actual (Negative) (Continued)
DRAFTCITY OF SAN RAFAEL BUDGETED NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2018 SPECIAL REVENUE FUNDS Pt. San Pedro-Maintenance Portion Low and Moderate Income Housing Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) REVENUES Taxes and special assessments $73,078 $76,492 $3,414 Use of money and properties 1,440 480 (960) $2,200 $12,095 $9,895 Intergovernmental Charges for services Other revenue 70,000 64,074 (5,926~ Total Revenues 74,518 76,972 2,454 72,200 76,169 3,969 EXPENDITURES Current: General government 210,000 79,585 130,415 Public safety Public works and parks 123,520 123,517 3 Culture and recreation Capital outlay Total Expenditures 123,520 123,517 3 210,000 79,585 130,415 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (49,002) (46,545) 2,457 (137,800) (3,416) 134,384 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES AND USES OVER (UNDER)EXPENDITURES ($49,002) (46,545) $2,457 ($137,800) (3,416) $134,384 FUND BALANCES, BEGINNING OF YEAR 151,283 910,350 FUND BALANCES, END OF YEAR $104,738 $906,934 132
DRAFTSPECIAL REVENUE FUNDS Measure A Open Space Final Budget $466,267 1,600 Variance Positive Actual (Negative) $458,974 2,425 ($7,293) 825 DEBT SERVICE FUNDS Mariposa Assessment District Final Budget Actual Variance Positive (Negative) 1997 Financing Authority Revenue Bonds Variance Final Budget Actual $1,077 Positive (Negative) $1,077 467,867 461,399 (6,468) ________________________ 1, __ 07_7 ____ """'l,_07_7_ 167,999 155,000 485,000 807,999 (340,132) (70,343) (70,343) ($410,475) 172,073 181,969 2,183 356,225 105,174 (70,343) (70,343) 34,831 369,235 $404,066 (4,074) (26,969) 485,000 (2,183) 451,774 445,306 $445,306 $16,573 $16,573 133 1,077 1,077 147,797 $148,874 1,077 $1,077
DRAFT
DRAFTINTERNAL SERVICE FUNDS Internal service funds account for department services and financing performed for other departments within the same governmental jurisdiction. Funding comes from charges assessed to the departments benefiting from the service. Building Maintenance Fund -Established to account for construction projects and cyclical large dollar maintenance tasks (roof, painting) completed on City owned buildings. Vehicle Replacement Fund-Established to provide for the replacement of vehicles. Equipment Replacement Fund -Established to provide for the replacement of computers and equipment. Employee Benefits Fund -This fund is utilized for the payment of retiree benefits, unemployment insurance, accumulated leave requirements and other negotiated benefits not tied to a specific department. Liability Insurance Fund -Established to maintain sufficient reserves for outstanding claims. All costs associated with liability premiums are paid from this fund. Workers' Compensation Fund -Established to maintain sufficient reserves for injury claims. All costs associated with workers compensation, including safety training, wellness programs, claim expenses and insurance premiums are paid from this fund. Dental Insurance Fund -Set up to maintain sufficient reserves for dental claims. All costs associated with dental claims and administrations are paid from this fund. Employee Retirement Fund -Established to maintain sufficient reserves to fund debt service payments on the 2010 Taxable Pension Obligation Bonds and other pension related obligations. OPEB/Retiree Medical Fund -Established to account for activities related to the funding, administration and procurement of retiree medical benefits. Radio Replacement Fund -Established to meet radio system operating costs, capital acquisition and replacement, and operating lease obligations for the Public Works, Fire, Community Development and Police Departments. The Marin Emergency Radio Authority (MERA) is a countywide JP A that has taken the roll in procurement and installation of a new digital radio system. This fund supports San Rafael's portion of the MERA efforts and related contractual obligations. Telephone Replacement Fund -Established to provide ongoing support services for telephone equipment and usage throughout the organization. Sewer Maintenance Fund -Established to record both the cost of providing services to the San Rafael Sanitation District and the charges for those services. 135
DRAFTASSETS Current Assets: Cash and investments Accounts receivable Capital assets: Nondepreciable assets Depreciable assets, net Total Assets LIABILITIES Current Liabilities: Accounts payable Claims payable -due in one year Non-current Liabilities: CITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF NET POSITION JUNE 30, 2018 Building Vehicle Equipment Maintenance Replacement Replacement $282,397 $852,536 $2,914,096 18,969 3,153,481 3,178,275 6,908,054 531,108 6,614,153 7,779,559 3,445,204 268,166 39,302 403,222 Claims payable -due in more than one year Total Liabilities 268,166 39,302 403,222 NET POSITION: Net investment in capital assets 6,331,756 6,908,054 531,108 Unrestricted 14,231 832,203 2,510,874 Total Net Position $6,345,987 $7,740,257 $3,041,982 136 Employee Liability Benefits Insurance $650,183 $3,581,238 650,183 3,581,238 48,814 7,250 1,484,580 2,073,327 48,814 3,565,157 601,369 16,081 $601,369 $16,081
DRAFTWorkers' Compensation $6,005,067 6,005,067 285 1,212,156 4,773,612 5,986,053 19,014 $19,014 Dental Insurance $146,564 146,564 3,684 3,684 142,880 $142,880 Employee Retirement $1,944,579 1,944,579 1,944,579 $1,944,579 OPEB/ Retiree Medical $490,880 490,880 927 927 489,953 $489,953 137 Radio Replacement $130,204 130,204 130,204 $130,204 Telephone Replacement $214,853 214,853 21,480 21,480 193,373 $193,373 Sewer Maintenance $225,571 225,571 225,571 225,571 Total $17,438,168 18,969 3,153,481 10,617,437 31,228,055 1,018,701 2,696,736 6,846,939 10,562,376 13,770,918 6,894,761 $20,665,679
DRAFTCITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2018 Building Vehicle Equipment Employee Maintenance Replacement Replacement Benefits OPERATING REVENUES Charges for current services $550,000 $1,100,000 $3,117,493 $600,000 Other operating revenues 4,096 Total Operating Revenues 550,000 1,100,000 3,117,493 604,096 OPERATING EXPENSES Personnel 505,518 594,043 Insurance premiums and claims Maintenance and repairs (182,825) 36,154 General and administrative 2,764,253 235,957 Depreciation expense 100,453 996,634 106,224 Total Operating Expenses (82,372) 1,032,788 3,375,995 830,000 Operating Income (Loss) 632,372 67,212 (258,502) (225,904) NONOPERATING REVENUES (EXPENSES) Investment income 1,739 10,109 13,280 17,058 Miscellaneous Income 44,124 Loss on sale of capital assets (23,226) Total Nonoperating Revenues (Expenses) 1,739 31,007 13,280 17,058 Net income (loss) before transfers 634,111 98,219 (245,222) (208,846) TRANSFERS IN 1,213,525 51,826 TRANSFERS OUT (135,923) Change in Net Position 1,711,713 150,045 (245,222) (208,846) NET POSITION, BEGINNING OF YEAR 4,634,274 7,590,212 3,287,204 810,215 NET POSITION, END OF YEAR $6,345,987 $7,740,257 $3,041,982 $601,369 138 Liability Insurance $1,989,880 87,974 2,077,854 2,205,496 263,515 2,469,011 (391,157) 21,018 21,018 (370,139) (370,139) 386,220 $16,081
DRAFTOPEB/ Workers' Dental Employee Retiree Radio Telephone Sewer Compensation Insurance Retirement Medical Replacement Replacement Maintenance Total $856,751 $371,805 $134,189 $2,714,248 $448,660 $386,756 $2,570,902 $14,840,684 5,286 862,572 5,105 965,033 856,751 377,091 134,189 3,576,820 448,660 391,861 2,570,902 15,805,717 2,570,902 3,670,463 1,161,254 385,209 3,781,501 7,533,460 (146,671) 225,613 3,977 678,546 567,521 4,739,382 1,203,311 1,386,867 385,209 3,977 3,781,501 678,546 567,521 2,570,902 16,999,945 (530,116) (8,118) 130,212 (204,681) (229,886) (175,660) (1,194,228) 51,472 1,695 7,974 (1) 1,201 3,199 128,744 44,124 (23,226) 51,472 1,695 7,974 (1) 1,201 3,199 149,642 (478,644) (6,423) 138,186 (204,682) (228,685) (172,461) (1,044,586) 1,265,351 (475,513) (611,436) (478,644) (6,423) (337,327) (204,682) (228,685) (172,461) (390,671) 497,658 149,303 2,281,906 694,635 358,889 365,834 21,056,350 $19,014 $142,880 $1,944,579 $489,953 $130,204 $193,373 $20,665,679 139
DRAFTCITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2018 Building Vehicle Equipment Employee Liability Maintenance Replacement Replacement Benefits Insurance CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers/other funds $550,000 $2,161,589 $3,117,493 $600,000 $1,989,880 Cash payments to suppliers for goods and services 321,568 (36,154) (2,557,037) (187,644) (1,485,383) Cash payments to employees for salaries and benefits (505,518) (594,043) Other operating revenues 4,096 87,974 Cash Flows from Operating Activities 871,568 2,125,435 54,938 (177,591) 592,471 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Interfund receipts 1,213,525 51,826 Interfund payments (135,923) Cash Flows from Noncapital Financing Activities 1,077,602 51,826 'CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (3,286,370) (3,052,284) Proceeds from sale of property 44,124 Cash Flows from Investing Activities (3,286,370) (3,008,160) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 1,739 10,109 13,280 17,058 21,018 Cash Flows from Investing Activities 1,739 10,109 13,280 17,058 21,018 Net increase (decrease) in cash and cash equivalents (1,335,461) (820,790) 68,218 (160,533) 613,489 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,617,858 1,673,326 2,845,878 810,716 2,967,749 CASH AND CASH EQUIVALENTS, END OF YEAR $282,397 $852,536 $2,914,096 $650,183 $3,581,238 Reconciliation of operating income (Joss) to net cash provided by operating activities: Operating income (Joss) $632,372 $67,212 ($258,502) ($225,904) ($391,157) Adjustments to reconcile operating income to cash flows from operating activities: Depreciation 100,453 996,634 106,224 Net change in assets and liabilities: Accounts receivable (18,969) Loans receivable 1,080,558 Accounts payable 138,743 207,216 48,313 7,250 Claims payable 976,378 Net Cash Provided by (Used in) Operating Activities $871,568 $2,125,435 $54,938 ($177,591) $592,471 140
DRAFTWorkers' Dental Compensation Insurance $856,751 $371,805 (1,566,927) (385,149) 5,286 (710,176) (8,058) 51,472 1,695 51,472 1,695 (658,704) (6,363) 6,663,771 152,927 $6,005,067 $146,564 ($530,116) ($8,118) (19) 60 (180,041) ($710,176) ($8,058) OPEB/ Employee Employee Radio Telephone Sewer Retirement Retirement Replacement Replacement Maintenance $134,189 $2,714,248 $448,660 $386,756 $2,570,902 (3,977) (3,797,061) (678,546) (578,463) (2,373,544) 862,572 5,105 130,212 (220,241) (229,886) (186,602) 197,358 (475,513) --------------------Total $15,902,273 (13,328,317) (1,099,561) 965,033 2,439,428 1,265,351 (611,436) (475,513) --------------------__ 6_5_3'-,9_15_ (6,338,654) 44,124 (6,294,530) 7,974 (1) 1,201 3,199 128,744 7,974 (1) 1,201 3,199 128,744 (337,327) (220,242) (228,685) (183,403) 197,358 (3,072,443) 2,281,906 711,122 358,889 398,256 28,213 20,510,611 $1,944,579 $490,880 $130,204 $214,853 $225,571 $17,438,168 $130,212 ($204,681) ($229,886) ($175,660) ($1,194,228) 1,203,311 (18,969) 1,080,558 (15,560) (10,942) $197,358 572,419 796,337 $130,212 ($220,241) ($229,886) ($186,602) $197,358 $2,439,428 141
DRAFT
DRAFTAGENCYFUND Agency Funds account for assets held by the City as agent for individuals, governmental entities, and non-public organizations. Pt. San Pedro Road Assessment District Fund -Established to accumulate funds for payment of principal and interest for Pt. San Pedro Road Median Landscaping Assessment District bonds. 143
DRAFTCITY OF SAN RAFAEL AGENCY FUNDS COMBINING STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED JUNE 30, 2018 Pt. San Pedro Road Assessment District Assets Restricted cash and investments Taxes receivable Total Assets Liabilities Interest payable Due to bondholders Total Liabilities Balance June 30, 2017 $289,768 951 $290,719 $26,614 264,105 $290,719 144 Additions $202,336 983 $203,319 $25,475 177,844 $203,319 Deductions $205,708 951 $206,659 $26,615 180,044 $206,659 Balance June 30, 2018 $286,396 983 $287,379 $25,474 261,905 $287,379
DRAFTCorner of Pourth and <B Street STATISTICAL SECTION
DRAFT
DRAFTSTATISTICAL SECTION This part of the City's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. In contrast to the financial section, the statistical section information is not subject to independent audit. 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: 1. Net Position by Component 2. Changes in Net Position 3. Fund Balances of Governmental Funds 4. Changes in Fund Balance of Governmental Funds Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax: 1. Assessed and Estimated Actual Value of Taxable Property 2. Property Tax Rates, All Overlapping Governments 3. Principal Property Taxpayers 4. Property Tax Levies and Collections 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: 1. Ratio of Outstanding Debt by Type 2. Computation of Direct and Overlapping Debt 3. Computation of Legal Bonded Debt Margin 4. Revenue Bond Coverage Parking Facility 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: 1. Demographic and Economic Statistics 2. Principal Employers Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs: 1. Full-Time Equivalent City Government Employees by Function 2. Operating Indicators by Function/Program 3. Capital Asset Statistics by Function/Program Sources Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports for the relevant year. 145
DRAFT"' "O C 0: "' :I 0 .::: E-< $270,000 $220,000 $170,000 $120,000 $70,000 $20,000 ($30,000) ($80,000) ($130,000) CITY OF SAN RAFAEL NET POSITION BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CNet of Related Debt ■Restricted ■Unrestricted 2009 2010 2011 Governmental activities Net investment in capital assets $178,744,119 $173,536,144 $174,281,922 Restricted 25,721,231 26,150,254 21,322,937 Umestricted (700,985) (4,631,276) (8,170,324) Total governmental activities net position $203,764,365 $195,055,122 $187,434,535 Business-type activities Net investment in capital assets $11,243,637 $10,950,825 $10,793,592 Unrestricted 1,936,958 2,017,354 1,948,447 Total business-type activities net position $13,180,595 $12,968,179 $12,742,039 Primary government Net investments in capital assets $189,987,756 $184,486,969 $185,075,514 Restricted 25,721,231 26,150,254 21,322,937 Umestricted 1,235,973 (2,613,922) (6,221,877) Total primary government net position $216,944,960 $208,023,301 $200,176,574 2012 $192,361,245 24,693,205 10,652,263 $227,706,713 $10,650,558 2,495,889 $13,146,447 $203,011,803 24,693,205 13,148,152 $240,853,160 (a) The City adjusted certain beginning balances during fiscal years 2013-2014, 2014-2015 and 2016-2017. Financial data shown for proceeding years were not adjusted for the presentation. 146
DRAFT2013 $193,222,791 35,780,412 11,151,318 $240,154,521 $10,670,190 2,501,498 $13,171,688 $203,892,981 35,780,412 13,652,816 $253,326,209 2014 $190,286,275 37,339,141 (196,824) $227,428,592 $10,786,591 2,049,957 $12,836,548 $201,072,866 37,339,141 1,853,133 $240,265,140 2015 $190,621,085 33,389,224 (82,336,534) $141,673,775 $10,744,952 (938,519) $9,806,433 $201,366,037 33,389,224 (83,275,053) $151,480,208 2016 $193,707,175 31,286,725 (93,273,480) $131,720,420 $10,958,058 (1,136,050) $9,822,008 $204,665,233 31,286,725 (94,409,530) $141,542,428 147 2017 $199,202,842 29,225,643 (112,913,181) $115,515,304 $10,968,642 (871,620) $10,097,022 $210,171,484 29,225,643 (113,784,801) $125,612,326 2018 $217,170,376 25,549,583 (122,577,233) $120,142,726 $10,951,518 (886,848) $10,064,670 $228,121,894 25,549,583 (123,464,081) $130,207,396
DRAFTExpenses Governmental Activities: General government Public safety Public works and parks Co=unity development Culture and recreation Interest on long-term debt and fiscal charges Total Governmental Activities Expenses Business-Type Activities: Parking services Total Business-Type Activities Expenses Total Primary Government Expenses Component Unit: San Rafael Sanitation District Program Revenues Governmental Activities: Charges for services: General government Public safety Public works and parks Community development Culture and recreation Operating grants and contributions Capital grants and contributions Total Government Activities Program Revenues Business-Type Activities: Charges for services: Parking services Total Business-Type Activities Program Revenues Total Primary Government Program Revenues Component Unit: San Rafael Sanitation District Charges for service Operating grants and contributions Capital grants and contributions Total Component Unit Program Revenues Net (Expense)/Revcnue Governmental Activities Business-Type Activities Total Primary Government Net Expense Component Unit Activities CITY OF SAN RAFAEL CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual Basis of Accounting) 2009 2010 $8,075,344 $8,396,759 42,708,538 42,752,033 23,036,676 17,401,923 5,759,171 6,738,873 11,505,896 11,139,225 1,907,229 2,200,024 92,992,854 88,628,837 3,563,235 4,016,198 3,563,235 4,016,198 $96,556,089 $92,645,035 $9,143,977 $9,087,354 $1,738,685 $1,665,460 5,906,445 6,308,912 4,753,817 3,916,874 2,915,872 2,830,179 5,253,683 5,280,458 3,544,248 3,721,055 7,311,173 2,116,906 31,423,923 25,839,844 4,454,490 4,244,404 4,454,490 4,244,404 $35,878,413 $30,084,248 $10,567,647 $11,559,549 $10,567,647 $11,559,549 ($61,568,931) ($62,788,993) 891,255 228,206 ($60,677,676) ($62,560,787) $1,423,670 $2,472,195 148 2011 2012 $8,269,846 $10,171,332 44,735,486 39,876,910 17,408,038 17,423,033 7,804,650 4,587,557 11,487,999 11,020,663 1,621,605 1,224,991 91,327,624 84,304,486 3,785,751 3,446,482 3,785,751 3,446,482 $95,113,375 $87,750,968 $9,677,630 $10,185,779 $1,636,542 $1,986,791 6,167,925 7,122,396 4,141,103 5,214,267 2,676,663 3,255,367 5,362,497 5,873,147 3,651,902 3,158,281 1,857,670 2,705,696 25,494,302 29,315,945 4,011,333 3,901,175 4,011,333 3,901,175 $29,505,635 $33,217,120 $12,223,779 $12,368,889 $12,223,779 $ I 2,368,889 ($65,833,322) ($54,988,54 I) 225,582 454,693 ($65,607,740) ($54,533,848) $2,546,149 $2,183,1 JO
DRAFT2013 2014 2015 2016 2017 2018 $10,202,530 $9,085,672 $9,099,858 $12,952,983 $10,996,269 $9,835,941 41,966,065 43,800,158 39,968,631 55,399,798 44,366,734 53,231,197 17,695,164 22,125,336 16,893,164 22,929,289 19,845,719 22,084,433 3,403,158 3,451,244 3,128,373 4,307,269 4,242,743 4,040,195 11,330,058 11,846,818 11,198,151 15,026,680 14,131,000 13,285,563 283,805 327,350 284,288 277,263 271,263 884,336 84,880,780 90,636,578 80,572,465 110,893,282 93,853,728 103,361,665 3,545,387 4,125,476 4,249,597 4,762,851 4,188,152 4,627,716 3,545,387 4,125,476 4,249,597 4,762,851 4,188,152 4,627,716 $88,426,167 $94,762,054 $84,822,062 $115,656,133 $98,041,880 $107,989,381 $10,169,082 $11,378,055 $11,375,239 $11,654,767 $11,255,194 $12,235,868 $2,655,749 $2,838,940 $1,379,523 $526,495 $421,393 $517,542 6,478,321 6,014,034 4,966,251 4,939,658 4,264,939 5,628,478 7,837,472 6,101,460 3,078,267 5,157,289 1,804,698 2,362,375 3,984,204 3,279,251 3,796,684 4,004,178 3,850,107 3,814,892 6,075,129 6,417,003 6,537,646 6,683,059 6,941,013 6,819,303 4,085,073 4,698,142 4,185,450 4,678,338 3,965,351 5,142,670 5,876,993 762,719 1,308,027 1,470,953 1,702,993 974,603 36,992,941 30,111,549 25,251,848 27,459,970 22,950,494 25,259,863 3,990,706 4,485,394 5,173,557 5,212,181 5,268,991 5,203,585 3,990,706 4,485,394 5,173,557 5,212,181 5,268,991 5,203,585 $40,983,647 $34,596,943 $30,425,405 $32,672,151 $28,219,485 $30,463,448 $12,413,123 $13,732,496 $14,629,758 $15,414,530 $16,014,016 $16,829,908 36,945 58,440 79,245 105,734 $12,413,123 $13,732,496 $14,629,758 $15,414,530 $16,130,206 $16,994,082 ($47,887,839) ($60,525,029) ($55,320,617) ($83,433,312) ($70,903,234) ($78,101,802) 445,319 359,918 923,960 449,330 1,080,839 575,869 ($47,442,520) ($60,165,111) ($54,396,657) ($82,983,982) ($69,822,395) ($77,525,933) $2,244,041 $2,354,441 $3,254,519 $3,862,215 $4,875,012 $4,758,214 149
DRAFTCITY OF SAN RAFAEL CHANGES IN NET POSITION ( continued) Last Ten Fiscal Years (Accrual Basis of Accounting) Fiscal Year Ended June 30, 2009 2010 2011 General Revenues and Other Changes in Net Position Governmental Activities: Taxes: Property Sales Special assessments Paramedic Motor vehicles Transient occupancy Franchise Business license Other Investment earnings Gain (Loss) on disposal of assets Miscellaneous Special item -Court fines repayment Transfers Total Government Activities Business-Type Activities: Investment earnings Aid from other government agencies Transfers Total Business-Type Activities Total Primaiy Government Component Unit: San Rafael Sanitation District Property Taxes Investment earnings Miscellaneous Aid from other governmental agencies Total Component Unit Special Item Governmental Activities Component Unit Activities Change in Net Position Governmental Activities Business-Type Activities Total Primaiy Government Change in Net Position Component Unit Activities $21,978,859 21,970,262 3,210,317 197,989 1,678,912 2,941,149 2,405,934 1,561,835 717,968 461,224 361,190 57,485,639 49,084 (361,190) (312,106) $57,173,533 $855,511 206,752 3,540 381,144 $1,446,947 ($4,083,292) 579,149 ($3,504,143) $2,870,617 150 $21,684,131 19,055,124 3,489,494 171,518 1,558,243 2,868,332 2,317,664 1,411,583 302,180 221,791 541,390 458,300 54,079,750 17,678 (458,300) (440,622) $53,639,128 $823,187 93,274 415,391 $1,331,852 ($8,709,243) (212,416) ($8,921,659) $3,804,047 $21,632,733 21,623,445 3,661,064 297,425 1,644,262 2,990,539 2,296,460 1,930,531 176,502 1,496,174 463,600 58,212,735 11,878 (463,600) (451,722) $57,761,013 $1,214,519 59,265 0 6,499 $1,280,283 ($7,620,587) (226,140) ($7,846,727) $3,826,432 2012 $20,107,637 22,355,749 3,807,545 1,866,575 3,076,094 2,332,146 3,574,918 205,413 542,816 57,960 57,926,853 7,675 (57,960) (50,285) $57,876,568 $1,192,566 38,191 0 9,613 $1,240,370 $2,938,312 404,408 $3,342,720 $3,423,480
DRAFT2013 2014 2015 2016 2017 2018 $17,317,772 $18,439,619 $ I 9,039,443 $19,998,567 $23,343,140 $24,627,373 24,262,282 27,758,971 32,269,915 34,348,089 31,819,259 34,119,502 3,804,985 3,816,070 3,820,240 4,226,020 5,485,637 4,923,148 2,185,287 2,332,277 2,661,878 3,063,263 2,984,758 3,115,151 3,331,160 3,260,958 3,272,390 3,418,277 3,610,824 3,726,841 2,507,785 2,588,728 2,670,071 2,824,664 2,774,803 2,790,212 2,929,915 3,452,171 3,295,751 3,465,193 1,824,830 2,245,882 991,762 184,171 216,066 300,091 210,628 556,745 2,580,882 1,140,743 2,254,901 1,387,315 2,448,604 5,991,713 423,817 449,917 432,630 448,478 536,000 632,657 60,335,647 63,423,625 69,933,285 73,479,957 75,038,483 82,729,224 3,739 4,375 7,008 14,723 10,810 24,436 (423,817) (449,917) (432,630) (448,478) (536,000) (632,657) (420,078) (445,542) (425,622) (433,755) (525,190) (608,221) $59,915,569 $62,978,083 $69,507,663 $73,046,202 $74,513,293 $82,121,003 $1,177,469 $1,345,018 $1,319,852 $1,367,172 $1,528,047 $1,620,584 25,591 151,729 171,804 46,225 97,090 234,379 0 0 0 10,690 56,589 22,125 35,090 $1,259,649 $1,518,872 $1,526,746 $1,413,397 $1,625,137 $1,865,653 $4,462,815 ($4,462,815) $12,447,808 $2,898,596 $19,075,483 ($9,953,355) $4,135,249 $4,627,422 25,241 (85,624) 498,338 15,575 555,649 (32,352) $12,473,049 $2,812,972 $19,573,821 ($9,937,780) $4,690,898 $4,595,070 $3,503,690 $3,873,313 $318,450 $5,275,612 $6,500,149 $6,623,867 151
DRAFT$95,000 $75,000 $55,000 "' "O $35,000 = e,i "' = 0 $15,000 -= E-< ($5,000) CITY SAN RAFAEL FUNDBALANCESOFGOVERNMENTALFUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) • • • • ~ -~ • -,. ,. l, -----~ --~ -~ ~ ~ ~ --• ..... ..... '----..... -~ ~ ~ 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 □ Total Fund Balance 2009 2010 General Fund Pre-GASB 54 Presentation: Reserved $2,225,775 $1,763,622 Umeserved 1,670,455 5,038,173 GASB 54 Presentation: Nonspendable Restricted Committed Assigned Unassigned Total General Fund $3,896,230 $6,801,795 All Other Governmental Funds Pre-GASB 54 Presentation: Reserved $16,680,568 $15,352,723 Umeserved, reported in: Special Revenue Funds 8,641,239 8,778,027 Capital Project Funds (1,030,293) 4,527,627 Debt Service Funds 3,360,540 Expendable Trust Fund GASB 54 Presentation: Nonspendable Restricted Committed Assigned Total all other governmental funds $27,652,054 $28,658,377 (a) The change in total fund balance for the General Fund and other governmental funds is explained in Management's Discussion and Analysis. 2011 $589,833 200,238 555,561 5,439,879 $6,785,511 $377,180 19,289,367 3,864,322 4,124,029 $27,654,898 (b) The City adjusted certain beginning balances dw-ing fiscal years 2013-2014, 2014-2015 and 2015-2016. Financial data shown for preceding years were not adjusted for the presentation. 152 2012 $527,509 76,188 651,121 1,516,644 $2,771,462 $788,031 16,856,959 5,135,257 5,283,559 $28,063,806
DRAFT2013 2014 2015 2016 2017 ___ 20_1_8 __ (a) $527,235 $503,338 $399,299 $476,316 $508,446 $1,008,234 800,876 2,476,676 6,866,149 12,374,002 16,440,910 14,900,945 I 1,214,720 1,588,500 1,772,577 1,295,041 $3,804,787 $7,369,487 $14,361,801 $18,689,803 $16,704,432 $12,222,954 $51,521 $8,719 $2,359 $9,449 $302,366 20,769,546 30,185,064 31,742,184 27,552,245 $25,812,405 73,489,688 8,447,495 2,185,825 931,871 3,799,421 3,491,708 1,754,983 6,511,850 4,959,533 712,810 119,183 115,103 115,942 $35,780,412 $37,339,141 $33,389,224 $31,480,298 $29,419,216 $75,662,979 153
DRAFTCITY OF SAN RAFAEL CHANGESINFUNDBALANCEOFGOVERNMENTALFUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Year Ended June 30, 2009 2010 2011 2012 Revenues Taxes and special assessments $51,019,143 $47,678,541 $51,448,130 $51,395,116 Licenses and permits 1,472,913 1,518,819 1,416,772 1,648,890 Fines and forfeitures 660,338 787,411 862,820 801,758 Use of money and properties 847,120 433,874 380,720 315,561 Intergovernmental 17,518,670 13,001,703 11,864,127 10,537,396 Charges for services 16,384,265 15,787,325 15,888,750 19,649,433 Other revenue 759,320 716,760 1,026,845 870,957 Total Revenues 88,661,769 79,924,433 82,888,164 85,219,111 Expenditures Current: General government 8,059,526 7,997,067 6,863,142 8,783,873 Public safety 41,209,972 39,574,091 40,967,352 39,311,551 Public works and parks 12,926,646 10,731,669 10,666,176 11,518,822 Community development 5,572,079 4,398,594 4,527,351 3,755,504 Culture and recreation 10,233,361 9,605,684 10,067,822 10,345,673 Capital outlay 5,048,044 1,890,559 1,745,483 1,312,383 Capital improvement/special projects 6,606,857 3,436,608 6,240,861 3,604,171 Debt service: Principal 2,714,358 2,804,258 2,530,338 2,518,320 Interest and fiscal charges 1,683,240 1,979,372 1,448,910 735,221 Total Expenditures 94,054,083 82,417,902 85,057,435 81,885,518 Excess (deficiency) of revenues over (under) expenditures (5,392,314) (2,493,469) (2,169,271) 3,333,593 Other Financing Sources (Uses) Issuance of debt 14,660,000 Payment to refunded bonds (14,315,000) Bond premiums 1,038,185 Proceeds from PG&E loans Proceeds from sale of capital asset 221,791 Transfers in 8,972,495 7,494,560 5,806,834 4,539,646 Transfers (out) (6,614,806) (6,411,150) (4,657,326) (4,864,293) Total other financing sources (uses) 2,357,689 2,688,386 1,149,508 (324,647) Extraordinary Item Transfer to Successor Agency Net Change in fund balances ($3,034,625) $194,917 ($1,019,763) $3,008,946 Debt service as a percentage of noncapital expenditures 5.3% 6.2% 5.2% 4.2% 154
DRAFT2013 2014 2015 2016 2017 2018 $51,549,306 $56,686,142 $61,804,228 $65,866,218 $71,166,891 $74,893,789 1,929,387 1,934,755 2,456,820 2,588,411 2,559,841 2,718,166 734,005 669,553 556,076 435,829 400,283 384,268 325,043 363,089 444,757 460,206 349,349 654,531 11,869,889 11,953,308 13,233,503 13,685,003 8,063,156 8,878,974 23,575,374 19,949,333 15,346,794 14,366,744 13,425,161 14,660,094 4,092,411 2,045,407 1,777,003 3,208,749 1,842,053 5,219,414 94,075,415 93,601,587 95,619,181 100,611,160 97,806,734 107,409,236 10,529,480 8,678,833 10,203,687 11,349,079 10,557,416 10,010,100 41,377,062 41,900,762 43,954,515 47,071,166 49,018,153 51,805,708 12,002,448 13,697,957 12,758,643 14,390,699 16,752,961 17,647,312 2,961,275 3,296,375 3,416,859 3,670,108 3,759,564 4,051,224 10,591,057 11,106,367 11,616,777 12,048,104 12,646,728 12,823,771 4,009,454 2,154,900 4,498,924 4,813,757 2,100,926 22,815,967 5,284,720 7,168,776 2,186,986 4,826,576 7,403,249 208,642 75,172 75,172 175,172 280,172 283,805 327,350 284,288 277,263 271,263 1,005,636 87,039,301 88,539,962 88,995,851 98,521,924 102,685,432 120,439,890 7,036,114 5,061,625 6,623,330 2,089,236 (4,878,698) (13,030,654) 54,814,197 568,481 8,425,474 3,655,302 4,348,149 7,533,364 9,287,007 68,351,964 (6,711,657) (3,053,865) (3,051,499) (6,582,555) (8,454,762) (68,373,222) 1,713,817 1,169,918 1,296,650 950,809 832,245 54,792,939 (2,352,584) $6,397,347 $6,231,543 $7,919,980 $3,040,045 ($4,046,453) $41,762,285 0.4% 0.7% 0.4% 0.4% 0.5% 1.3% 155
DRAFTCITY OF SAN RAFAEL ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS S14,000 ~ S12,000 --------$10,000 ■ ■ ■ ■ ■ ■ ~ S8,000 ~ ~ S6,000 $4,000 $2,000 so 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ~Unsecured Property ~Secured Property Real Proeer!I Total Real Total Fiscal Residential Commercial Industrial Secured Unsecured Total Estimated Direct Year Proeer!I Proeertr Proeer!l Other Proeerty Proeertr Assessed (a) Full Market (a) Tax Rate (b) 2009 $ 7,357,121,277 $ 1,941,927,620 $ 234,669,841 $ 129,177,656 $ 9,662,896,394 $ 374,976,6 I 3 $ 10,037,873,007 $ 10,037,873,007 0.17951% 2010 7,335,863,721 2,052,276,292 244,857,019 130,177,994 9,763,175,026 401,201,906 10,164,376,932 JO, I 64,376,932 0.19215% 201 I 7,215,965,203 2,056,985,417 247,409,955 124,426,487 9,644,787,062 383,414,952 I 0,028,202,014 10,028,202,014 0.17851% 2012 7,317,280,602 2,036,262,351 247,485,238 118,579,648 9, 7 I 9,607,839 384,950,872 10,104,558,711 JO, J04,558, 711 0.17827% 2013 7,265,617,525 1,987,170,644 245,917,096 115,453,836 9,614,159,101 384,534,108 9,998,693,209 9,998,693,209 0.17456% 2014 7,558,708,224 2,009,718,415 245,674,195 130,594,237 9,944,695,071 402,261,887 10,346,956,958 J0,346,956,958 0.11985% 2015 7,991,224,952 2,120,065,908 249,864,918 115,675,852 10,476,831,630 417,217,272 10,894,048,902 J0,894,048,902 0.11657% 2016 8,511,358,216 2,221,843,976 263,830,302 108,982,883 11,106,015,377 400,942,059 11,506,957,436 11,506,957,436 0.11672% 2017 9,025,896,811 2,390,814,514 267,468,956 135,689,202 11,819,869,483 423,545,667 12,243,415,150 12,243,415,150 0.11693% 2018 9,522,645,933 2,532,439,852 276,751,912 128,305,868 12,460,143,565 417,902,554 12,878,046,119 12,878,046,119 0.11709% (a) The State Constitution requires property lo be assessed at one hundred percent of the most recent purchase price, plus an increment ofno more than two percent annually, plus any local over-rides. These values are considered to be full market values. (b) California cities do not set their own direct tax rate. The state constitution establishes the rate al 1% and allocates a portion of that amount, by an annual calculation, to all the taxing entities within a tax rate area. Dal:i Source: Marin County A5scssor 2008/09 -2017/18 Combined Tas Rolls
DRAFTCITY OF SAN RAFAEL PROPERTY TAX RATES ALL OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Fiscal School Misc. Special Year City County (I) Districts Districts Total 2009 0.154 0.295 0.7192 0.0461 1.2139 2010 0.154 0.295 0.7402 0.0461 1.2349 2011 0.154 0.295 0.7542 0.0461 1.2489 2012 0.154 0.295 0.7831 0.0461 1.2779 2013 0.154 0.295 0.7743 0.0461 1.2691 2014 0.154 0.295 0.7890 0.0461 1.2838 2015 0.154 0.295 0.7651 0.0461 1.2599 2016 0.154 0.295 0.7846 0.0695 1.3028 2017 0.154 0.295 0.8251 0.0553 1.3291 2018 0.154 0.295 0.8127 0.0661 1.3275 Notes: ( 1) Like other cities, San Rafael includes several property tax rate areas with different rates. A mean average is indicated. Data Source: Marin County Assessors Office 2008/09 -2017/18 Tax Rate Tables
DRAFTCITY OF SAN RAFAEL PRINCIPAL PROPERTY TAX PAYERS CURRENT FY 2017/18 AND FY 2008/09 FY 2017-2018 Percentage of Total City Taxable Taxable Assessed Assessed Taxpayer Value Value California Corporate Center ACQ LLC $ 261,000,911 2.03% MGP XI Northgate LLC 158,734,209 1.23% Professional Financial Investors Inc 80,677,719 0.63% BRE Prope1ties lnc 62,385,259 0.48% South Valley Apmtments LLC 53,045,451 0.41% Coastal City Pmtners LLC 46,565,701 0.36% Regency Center II Associates LP 46,317,622 0.36% $ Northbay Properties II 45,976,145 0.36% Bay Apartment Communities Inc 43,612,049 0.34% Barbara Fasken 1995 Trust ET AL 43,324,046 0.34% Northgate Mall Associates SR Corporation Center Phase 1 & 2 Hines San Rafael LLC Sutter Health Marin Sanitary Service 4040 Civic Center LLC Rafael Town Center Investors LLC Subtotal $ 841,639,112 6.54% $ Total Net Assessed Valuation: Fiscal Year2017-2018 $ 12,878,046,119 Fiscal Year 2008-2009 $ 10,037,950,007 FY 2008-2009 Percentage of Total City Taxable Taxable Assessed Assessed Value Value 40,911,379 0.41% 33,950,419 0.34% 34,497,679 0.34% 97,270,425 0.97% 89,644,871 0.89% 80,929,782 0.81% 41,564,999 0.41% 38,347,115 0.38% 36,205,533 0.36% 33,948,747 0.34% 527,270,949 5.25%
DRAFT$28 CITY OF SAN RAFAEL PROPERTY TAX LEVIES AND COLLECTIONS (1) LAST TEN FISCAL YEARS .... $25 $22 ---~~ -...,, V ...,, -----...,, --"' $19 = 3 :§ $16 $12 -+-Allocations --$9 ---4-Apportionments $6 2009 2010 2011 2012 2013 2014 2015 2016 2017 Fiscal Year Rate Levies Allocations Collections A22ortionments Delinguencies 2009 1.00 (2) $ 21,978,859 (2) $ 21,978,859 (2) 2010 1.00 (2) 21,702,536 (2) 21,702,536 (2) 2011 1.00 (2) 21,632,731 (2) 21,632,731 (2) 2012 1.00 (2) 20,704,368 (2) 20,704,368 (2) 2013 1.00 (2) 20,883,041 (2) 20,883,041 (2) 2014 1.00 (2) 22,001,357 (2) 22,001,357 (2) 2015 1.00 (2) 22,376,457 (2) 22,376,457 (2) 2016 1.00 (2) 23,636,093 (2) 23,636,093 (2) 2017 1.00 (2) 25,173,651 (2) 25,173,651 (2) 2018 1.00 (2) 22,811,511 (2) 22,811,511 (2) Notes: (1) Includes deductions for County property tax administration. (2) Information not applicable. All general purpose property taxes are levied by the county and allocated to other governmental entities. 2018 Delinquent taxes as a Percent of Allocations 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
DRAFTCITY OF SAN RAFAEL RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS $60 $50 $40 ., C :a $30 i $20 $10 S-2009 2010 2011 2012 2013 2014 2015 Governmental Activities RDA Tax Financing Court Fine Capitalized Pension Fiscal Allocation Authority Note Promissory Lease Obligation Year Bonds Revenue Bonds Payable Note Obligations Bonds 2009 $ 35,793,692 $ 455,000 $ 169,000 $ 594,100 $ 198,816 2010 35,355,988 169,000 363,328 135,330 2011 33,298,499 169,000 124,222 69,098 $ 4,490,000 2012 169,000 4,490,000 2013 169,000 4,490,000 2014 528,839 4,490,000 2015 453,667 4,490,000 2016 378,495 4,490,000 2017 303,323 4,390,000 2018 1,308,951 4,185,000 Business-Type Activities Parking Total Percentage Fiscal Services Note Primary of Personal Year Bonds Payable Total Government Income (a) 2009 $ 6,975,000 $ 6,975,000 $ 44,185,608 1.67% 2010 6,805,000 6,805,000 42,828,646 1.85% 2011 6,630,000 6,630,000 44,780,819 1.87% 2012 6,445,000 6,445,000 11,104,000 0.46% 2013 6,445,000 6,445,000 11,104,000 0.44% 2014 6,186,403 $ 61,836 6,248,239 11,267,078 0.43% 2015 5,942,128 55,020 5,997,148 10,940,815 0.41% 2016 5,692,853 48,204 5,741,057 10,609,552 0.38% 2017 5,433,577 41,388 5,474,965 10,168,288 0.35% 2018 5,164,303 34,572 5,198,875 56,177,826 n/a Notes : Debt amounts exclude any premiums, discounts, or other amortization amounts. In August 2012, the series 2003 parking services bonds were refunded with series 2012 refunding bonds. Data Sources: City of San Rafael State of California. Department of Finance (population) U.S. Department of commerce, Bureau of the Census (income) (a) See Schedule of Demographic and Economic Statistics for personal income and population data. □ Totnl Governmental ll Totnl Business 2016 2017 2018 Lease Revenue Bonds Total $ 37,210,608 36,023,646 38,150,819 4,659,000 4,659,000 5,018,839 4,943,667 4,868,495 4,693,323 $ 45,485,000 50,978,951 Per Capita (a) 757.08 728.11 770.28 190.45 190.85 192.38 184.77 175.13 167.13 926.25
DRAFTCITY OF SAN RAFAEL COMPUTATION OF DIRECT AND OVERLAPPING DEBT June 30, 2018 2017-18 Assessed Valuation: OVERLAPPING TAX AND ASSESSMENT DEBT: Marin Community College District San Rafael High School District Tamalpais Union High School District Dixie School District Ross School District Ross Valley School District San Rafael School District Marin Healthcare District Marin Emergency Radio Authority Parcel Tax Obligations TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT DIRECT AND OVERLAPPING GENERAL FUND DEBT: $ $ Marin County Certificates of Participation $ Marin County Pension Obligation Bonds Marin County Transit District General Fund Obligations Marin Municipal Water District General Fund Obligations Marin Community College District Certification of Participation San Rafael School District Certificates of Participation Marin Emergency Radio Authority Revenue Bonds City of San Rafael General Fund Obligations City of San Rafael Pension Obligations TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT 12,878,046,119 Total Debt 6/30/2018 310,065,000 63,280,315 109,685,000 31,520,810 18,399,034 43,596,489 63,724,158 378,740,000 33,000,000 87,862,953 90,530,000 90,919 73,968 9,690,834 3,275,000 7,705,000 51,992,826 4,185,000 Less: City of San Rafael lease revenue bonds supported by parking revenues TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT OVERLAPPING TAX INCREMENT DEBT (Successor Agency) $ TOTAL GROSS DIRECT DEBT TOT AL NET DIRECT DEBT TOTAL OVERLAPPING DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOT AL DEBT (I) The percentage ofoverlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the p011ion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (2) Include city $1,343,523 PG&E notes. 11,344,004 % Applicable (I) 17.302% 78.363% 0.080% 66.114% 1.528% 0.012% 83.700% 20.813% 17.277% 17.289% 17.289% 17.289% 22.038% 17.315% 83.694% 16.913% 100.000% 100.000% 100.000% City's Share of Debt 6/30/2018 $ 53,647,446 49,588,353 87,748 20,839,668 281,137 5,232 53,337,120 78,827,156 5,701,410 $ 262,315,27 I $ 15,190,626 15,651,732 15,719 16,301 1,677,968 2,740,979 1,303,147 51,992,826 4,185,000 92,774,297 5,175,000 $ 87,599,297 $ 11,344,004 56,177,826 51,002,826 308,952,600 365,130,426 359,955,426 (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to 2017-18 Assessed Valuation: Total Overlapping Tax and Assessment Debt Total Gross Direct Debt ($55,097,026) Total Net Direct Debt ($49,922,026) Gross Combined Total Debt Net Combined Total Debt Ratios to Redevelopment Incremental Valuation ($2,831,146,323 Total Overlapping Tax Increment Debt Data Source: M1111iServices 2.04% 0.44% 0.40% 2.84% 2.80% 0.40% (2) (3)
DRAFTFiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CITY OF SAN RAFAEL COMPUTATION OF LEGAL BONDED DEBT MARGIN June 30, 2018 ASSESSED VALUATION: BONDED DEBT LIMIT (3.75% OF ASSESSED VALUE) (a) LESS AMOUNT OF DEBT SUBJECT TO LIMIT: LEGAL BONDED DEBT MARGIN Total Net Debt Legal Debt Applicable to Debt Limit Limit Margin $ 376,420,238 $ 37,210,608 $ 339,209,630 381,164,135 36,023,646 345,140,489 376,057,576 38,150,819 337,906,757 378,920,952 4,659,000 374,261,952 374,950,995 4,659,000 370,291,995 388,010,886 5,018,839 382,992,047 408,526,834 4,943,667 403,583,167 431,510,904 4,868,495 426,642,409 459,128,068 4,693,323 454,434,745 482,926,729 50,978,951 431,947,778 $ 12,878,046,119 482,926,729.46 50,978,951.00 $ 431,947,778 Total net debt applicable to the limit as a percentage of debt limit 10.97% 10.44% 11.29% 1.24% 1.26% 1.31% 1.22% 1.14% 1.03% 11.80% NOTE: (a) California Government Code, Section 43605 sets the debt limit at 15%. The Code section was enacted prior to the change in basing assessed value to full market value when it was previously 25% of market value. Thus, the limit shown as 3.75% is one-fourth Source: City of San Rafael's Finance Department
DRAFT7.00 6.00 5.00 4.00 3.00 2.00 -1.00 0.00 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 ·2017 2018 Notes: 2009 2010 2011 Gross Operating Revenue (1) Expenses (2) $ 4,425,813 $ 2,980,083 4,262,082 3,343,680 4,023,211 3,101,4Jl 3,908,664 2,870,718 3,994,446 3,121,964 4,489,769 3,716,552 5,180,554 4,031,161 5,226,904 3,739,321 5,279,801 2,425,281 5,219,721 4,320,695 2012 CITY OF SAN RAFAEL REVENUE BOND COVERAGE PARKING FACILITY LAST TEN FISCAL YEARS 2013 2014 2015 __.Coverage 2016 Debt Service Reguirements Net Revenue Available for Debt Service Principal Interest $ 1,445,730 $ 165,000 $ 330,379 $ 918,402 170,000 325,285 921,800 175,000 319,391 1,037,946 185,000 312,291 872,481 310,000 240,012 773,217 245,000 210,063 1,149,393 245,000 205,163 1,487,583 250,000 199,613 2,854,520 260,000 192,038 899,026 270,000 184,163 2017 2018 Total Coverage 495,379 2.92 495,285 1.85 494,391 1.86 497,291 2.09 550,012 1.59 455,063 1.70 450,163 2.55 449,613 3.31 452,038 6.31 454,163 1.98 On March 26, 2003, the City Financing Authority issued lease revenue bonds for the design and construction of a new parking facility. On August 12,2012, the City Financing Authority refunded the series 2003 lease revenue bonds with series 2012 lease revenue refunding bonds to take advantage oflower interest rates. (I) Includes all Parking Facility Operating Revenues and Non-operating Interest Revenue (2) Includes all Parking Facility Operating Expenses less Depreciation and Interest Data Source: Sa11 Rafael Fi11a11ce Department Reve1111e a11d Expenditure Status Reports
DRAFT23.50% 23.00% 22.50% 22.00% CITY OF SAN RAFAEL DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS ,,--... ■ City Population as a% of County Population 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 ■ Personal Income (2) (in thousands) $50 (/) "C C: <II $45 (/) :I 0 .c: $40 I-$35 $30 1:1"1 '\,<.::S :-,,.1::1 '\,1::1 :-,,.'-'\,1::1 :(\, '\,1::1 :-,,.'? '\,1::1 ~ ~ :-,,.':> '\,1::1 :-..." '\,1::1 :-..."-~ -------+--Per Capita Personal Income (2) ■ Unemployment Rate(%) Personal Per Capita Average Marin Fiscal City Income (2) Personal Unemployment County Year Population (I) (in thousands) Income (2) Rate (3) Population 2009 $ 58,363 $ 2,642,978 $ 45,288 9.30% $ 258,618 2010 58,822 2,317,704 39,402 9.80% 260,651 2011 58,136 2,389,222 40,978 8.80% 254,692 2012 58,305 2,438,291 41,908 5.50% 254,790 2013 58,182 2,538,895 43,351 4.70% 254,007 2014 58,566 2,621,228 44,531 4.50% 255,846 2015 59,214 2,699,436 44,558 3.70% 258,972 2016 60,582 2,817,497 46,308 3.40% 262,274 2017 60,842 2,943,227 48,374 3.30% 263,604 2018 60,651 n/a n/a n/a 263,886 Source: (I) State of California, Department of Finance -Demographic Research Unit. The data represents the City's population as of January I, of each year. (2) 2007-2009 Income Data--Demographic Estimates are based on the last available census. Projections are developed by incorporating all of the prior census data released to date. 2010 and later-Income -US Census Bureau, most recent American Community Survey (3) Unemployment Data: California Employment Development Department City Population % of County 22.57% 22.57% 22.83% 22.88% 22.91% 22.89% 22.87% 23.10% 23.08% 22.98%
DRAFTCITY OF SAN RAFAEL PRINCIPAL EMPLOYERS FISCAL YEAR 2017-2018 LAST TEN CALENDAR YEARS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Employer (Al (A) (A) (A) (A) (A) (A) (A) (A) (A) Autodesk, Inc. 0.00% 719 2.28% 748 2.28% 763 2.33% 1,095 3.52% 1,000 3.27% 878 3.25% 928 3.44% 1,028 3.83% 1,200 4.32% Kaiser Pcmmnentc 2,092 6.62% 2,061 6.52% 662 2.02% 1,575 4.82% 1,637 5.26% 1,756 5.74% 1,803 6.68% 1,330 4.93% 1,311 4.88% 2,267 8.15% San Rafael Elcmcntary/Hi_l!,h Schools Dist(! 700 2.22% 700 2.22% 650 I.98% 650 1.99% 600 1.93% 600 1.96% 600 2.22% 600 2.22% 600 2.23% 575 2.07% City of Son Rafael 410 1.30% 454 1.44% 577 l.76% 581 1.78% 666 2.14% 643 2.10% 521 1.93% 592 2.19% 630 2.34% 633 2.28% MHN 350 1.14% 350 1.30% 350 1.30% 350 1.30% Doruinicnn University of California 319 1.01% 456 1.44% 485 1.48% 422 1.29% 354 l.14% 347 1.13% 346 1.28% 336 1.24% 370 1.38% 508 1.83% Bradley Real Estate 256 0.81% 280 0.89% 435 1.33% 418 1.28% 385 1.24% 369 1.21% 376 1.39% 350 1.30% Macy's 380 1.16% 380 1.22% 380 1.24% 380 1.41% 450 1.67% 445 1.66% Wells Fargo Bank 0.00% 310 0.98% 326 0.99% 306 0.9-1% 308 0.99% 334 1.09% FICO 0.00% 0.00% 300 0.91% Fair Issac Corp 300 0.92% 300 0.96% 350 1.26% Community Action Marin 300 0.95% 255 0.81% 220 0.67% 225 0.69% 300 0.96% 300 0.98% Safeway 0.00% 0.00% 841 3.11% 452 1.67% 452 1.68% Comcast 0.00% 0.00¾ 620 2.30% 619 2.29% 619 2.30% Guide Dogs for the Blind 200 0.63% 203 0.64% 225 0.69% 287 1.07% Bernard Osher Marin JCC 0.00% 0.00% 200 0.61¾ Buckelew Programs 106 0.34% 240 0.76% 186 0.57% Ghilolli Bros. 175 0.55% 175 0.55% 150 0.46% 240 0.86% Golden Gate Bridge Hi.~way & Trnnsp. Dist. 0.00% 0.00% 828 2.98% YMCA 0.00% 0.00% 348 1.25% San Ro.foci City High School District 0.00% 0.00% 250 0.90% United Markets 150 0.47% 0.00% Tola.ls 4.708 14.90% 5.853 18.52% 5.314 16.20% 5,620 17.19% 6.025 19.37% 6.079 19.87% 6.715 24.87% 6.007 22.25% 6.092 22.67% 7.199 25.90% Number of FTE employees in Marin locations (A) Percentage oftotol employment Note: From the EDD website, it shows that the Totnl 2018 Emplo,1nent in the Citv orS11n Rnfoe\ was 31,600 of which it is used ns the d~nominntor for the 2018 pcrccnlll_gcs are calculnlcd D:ala SourcH: SI alt' ofC:1\lfoml:a, Employmtnl Dtnlopmcnt Dt"p:artmtnl, Ubor ;lbrkt'I lnrom11tlon Dhislon & North Day Bw-lnrss ,Joum,I (,\nnual DookorUsls)
DRAFTCITY OF SAN RAFAEL FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Function General Government Public Safety Public Works and Parks Community Development Culture and Recreation Total □ General Government □ Public Works and Parks ■ Culture and Recreation 2009 2010 58.88 56.88 183.00 165.00 78.80 60.80 34.50 26.75 85.90 83.49 441.08 392.92 Data Source: City of San Rafael's Finance Department o Public Safety ■ Community Development 2011 2012 2013 2014 54.35 55.23 53.23 55.11 166.00 162.00 163.00 168.00 62.80 62.00 60.00 61.00 26.75 18.25 18.25 17.80 89.82 81.56 80.76 83.66 399.72 379.04 375.24 385.57 300.00 200.00 150.00 100.00 50.00 0.00 2015 2016 58.11 60.61 171.75 175.75 62.00 62.00 17.80 19.80 84.23 84.25 393.89 402.41 2017 2018 62.11 60.11 176.55 175.35 63.00 66.67 20.00 21.00 84.35 87.35 406.01 410.48
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DRAFTCITY OF SAN RAFAEL OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2009 2010 Function/Program Public safety: Fire: Inspection permit issued 196 307 Police: Police calls for service 42,227 42,227 Law violations: Part I crimes 2,352 2,352 Physical arrests (adult and juvenile) 4,487 4,487 Traffic violations 5,777 5,777 Parking violations 44,913 42,806 Public works Street resurfacing (miles) (Eng Div) 2.77 2.77 Potholes repaired (square miles) NIA NIA Asphalt used for street repairs (tons) NIA NIA Culture and recreation: Recreation class paiticipants 8,000 9,524 Library: Items in collection (thousands) 124.40 151.88 Total items borrowed (thousands) NIA 371.12 Note: NIA denotes i11formatio11 not available. 2011 2012 294 282 39,512 39,537 2,180 2,101 3,102 2,981 8,190 4,048 34,590 32,492 7.40 NIA NIA NIA 10,809 178.9 9,000 12,075 158.30 159.18 435.66 366.46
DRAFT2013 2014 2015 2016 2017 2018 307 261 282 198 233 186 42,707 51,261 55,805 57,026 53,567 51,013 2,523 2,289 2,533 2,523 2,392 2,326 2,951 3,227 3,450 3,453 2,526 2,019 3,448 4,498 4,168 3,252 3,341 2,758 30,881 38,814 36,398 34,803 36,169 36,208 2.70 9.00 6.40 6.76 2.32 2.50 NIA NIA NIA NIA NIA NIA 7,500 10,700 11,000 7,195 5,800 4,730 7,082 9,857 10,023 12,725 13,493 12,842 125.92 168.62 127.76 227.89 117,354 115,812 392.23 478.96 443.64 469.79 327,297 324,452
DRAFTCITY OF SAN RAFAEL CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2009 2010 2011 Function/Program Public safety: Fire stations 6 6 6 Police stations 1 1 Police Fleet Public works Miles of streets 173 173 173 Street lights 4,435 4,435 4,435 Parking District lights Traffic Signals 89 89 89 Culture and recreation: Community services: City parks 20 20 20 City parks acreage 42 42 42 Playgrounds 14 14 14 City trails 20 20 20 Community gardens 1 1 1 Community centers 4 4 4 Senior centers 0 0 0 Sports centers 0 0 0 Performing arts centers 0 0 0 Swimming pools 1 1 1 Tennis comts 10 10 10 Basketball Comts 5 5 5 Baseball/softball diamonds 5 5 5 Soccer/football fields 2 2 2 Library: City Libraries 2 2 2 Wastewater: Miles of sanitary sewers 179 179 179 Data Source: City of San Rafael's Finance Department 2012 6 173 4,435 89 20 42 14 20 1 4 0 0 0 10 5 5 2 2 179
DRAFT2013 6 173 4,435 89 20 42 14 20 1 4 0 0 0 1 10 5 5 2 2 179 2014 6 173 4,435 89 20 42 14 20 1 4 0 0 0 1 10 5 5 2 2 145 2015 6 173 4,435 89 20 42 14 20 1 4 0 0 0 1 10 5 5 2 2 145 2016 6 173 4,435 89 20 42 14 20 1 4 0 0 0 1 10 5 5 2 2 145 2017 6 173 4,435 89 20 42 14 20 1 4 0 0 0 10 5 5 2 2 145 2018 6 1 173 4,435 89 20 42 14 20 1 4 0 0 0 1 10 5 5 2 2 145
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DRAFTINDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED UPON PROCEDURES FOR COMPLIANCE WITH THE PROPOSITION 111 2018-2019 APPROPRIATIONS LIMIT INCREMENT Honorable Mayor and Members of the City Council City of San Rafael, California We have performed the procedures below, which were agreed to by the City of San Rafael, on the Appropriations Limit Worksheet (Worksheet) for the year ended June 30, 2018. The City's management is responsible for the Worksheet. These procedures, which were suggested by the League of California Cities and presented in their Article XIIIB Appropriations Limitation Uniform Guidelines, were performed solely to assist you in meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution. The sufficiency of these procedures is solely the responsibility of the City. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures and associated findings were as follows: A. We obtained the Worksheet and determined that the 2018-2019 Appropriations Limit of $133,688,947 and annual adjustment factors were adopted by Resolution of the City Council. We also determined that the population and inflation options were selected by a recorded vote of the City Council. B. We recomputed the 2018-2019 Appropriations Limit by multiplying the 2017-2018 Prior Year Appropriations Limit by the Total Growth Factor. We recomputed the Total Growth Factor by multiplying the population option by the inflation option. C. For the Worksheet, we agreed the Per Capita Income Factor, City Population Factor and County Population Factor to California State Department of Finance Worksheets. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on the Worksheet. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of management and the City Council and is not intended to be and should not be used by anyone other than those specified parties; however, this restriction is not intended to limit the distribution of this report, which is a matter of public record. Pleasant Hill, California October 5, 2018
DRAFTCITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL AND REQUIRED COMMUNICATIONS FOR THE YEAR ENDED JUNE 30, 2018
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DRAFTCITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL AND REQUIRED COMMUNICATIONS For The Year Ended June 30, 2018 Table of Contents Memorandum on Internal Control .................................................................................................. I Schedule of Other Matters ...................................................................................................... 3 Required Communications ............................................................................................................... 5 Significant Audit Findings ............................................................................................................ 5 Accounting Policies ................................................................................................................ 5 Unusual Transactions, Controversial or Emerging Areas .................................................... 5 Accounting Estimates ............................................................................................................. 6 Disclosures .............................................................................................................................. 6 Difficulties Encountered in Performing the Audit ................................................................ 6 Corrected and Uncorrected Misstatements ............................................................................ 6 Disagreements with Management. ......................................................................................... 7 Management Representations ................................................................................................. 7 Management Consultations with Other Independent Accountants ...................................... 7 Other Audit Findings or Issues ............................................................................................... 7 Other Information Accompanying the Financial Statements ....................................................... 7
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DRAFTMEMORANDUM ON INTERNAL CONTROL To the City Council of the City of San Rafael, California We have audited the basic financial statements of the City of San Rafael for the year ended June 30, 2018, and have issued our report thereon dated October 5, 2018. Our opinions on the basic financial statements and this report, insofar as they relate to San Rafael Sanitation District (District), are based solely on the report of other auditors. In planning and performing our audit of the basic financial statements of the City of San Rafael, in accordance with auditing standards generally accepted in the United States of America, we considered the City's internal control over financial reporting (internal control) as a basis for designing our auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. In addition, because of inherent limitations in internal control, including the possibility of management override of controls, misstatements due to error or fraud may occur and not be detected by such controls. Given these limitations during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Included in the Schedule of Other Matters are recommendations not meeting the above definitions that we believe are opportunities for strengthening internal controls and operating efficiency. This communication is intended solely for the information and use of management, City Council, others within the organization, and agencies and pass-through entities requiring compliance with Government Auditing Standards, and is not intended to be and should not be used by anyone other than these specified parties. Pleasant Hill, California October 5, 2018 1
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DRAFTCITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS NEW GASB PRONOUNCEMENTS OR PRONOUNCEMENTS NOT YET EFFECTIVE The following comment represents new pronouncements taking effect in the next two years. We have cited them here to keep you abreast of developments: Effective in fiscal year 2018-19: GASB 83 -Certain Asset Retirement Obligations This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement. GASB 84 -Fiduciary Activities This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. Effective in fiscal year 2019-20: GASB 87 -Leases This Statement will increase the usefulness of governments' financial statements by requiring reporting of certain lease liabilities that currently are not reported. It will enhance comparability of financial statements among governments by requiring lessees and lessors to report leases under a single model. This Statement also will enhance the decision-usefulness of the information provided to financial statement users by requiring notes to financial statements related to the timing, significance, and purpose of a government's leasing arrangements. 3
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DRAFTREQUIRED COMMUNICATIONS To the City Council of the City of San Rafael, California We have audited the basic financial statements of the City of San Rafael for the year ended June 30, 2018. We did not audit the financial statements of the San Rafael Sanitation District, as of and for the year ended June 30, 2018, which represent 22%, 36%, and 14% of the assets, net position and revenues, respectively, of the entity-wide reporting entity. These component unit financial statements were audited by another auditor, whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for this entity, is based solely on the report of the other auditor. Professional standards require that we communicate to you the following information related to our audit under generally accepted auditing standards and Government Auditing Standards and the Uniform Guidance. Significant Audit Findings Accounting Policies Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of San Rafael are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year, except as indicated below. The following Governmental Accounting Standards Board (GASB) pronouncements became effective, but did not have a material effect on the financial statements: GASB 81-GASB 85-GASB 86-Irrevocable Split-Interest Agreements Omnibus 2017 Certain Debt Extinguishment Issues Unusual Transactions, Controversial or Emerging Areas We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. 5
DRAFTAccounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate(s) affecting the City's financial statements were: • Estimated Net Pension Liabilities and Pension-Related Deferred Outflows and Inflows of Resources: Management's estimate of the net pension liabilities and deferred outflows/inflows of resources are disclosed in Note 9 to the financial statements and are based on actuarial studies determined by a consultant, which are based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimate and determined that it is reasonable in relation to the basic financial statements taken as a whole. • Estimated Net OP EB Liability: Management's estimate of the net OPEB liability is disclosed in Note 11 to the financial statements and is based on actuarial study determined by a consultant, which is based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimate and determined that it is reasonable in relation to the basic financial statements taken as a whole. • Management's estimate of the depreciation: is based on useful lives determined by management. These lives have been determined by management based on the expected useful life of assets as disclosed in Note 1 to the financial statements. We evaluated the key factors and assumptions used to develop the depreciation estimate and determined that it is reasonable in relation to the basic financial statements taken as a whole. • Estimated Fair Value of Investments: As of June 30, 2018, cash and investments were measured by fair value. Fair value is essentially market pricing in effect as of June 30, 2018. These fair values are not required to be adjusted for changes in general market conditions occurring subsequent to June 30, 2018. Disclosures The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit's financial statements taken as a whole. 6
DRAFTProfessional standards require us to accumulate all known and likely unconected misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. We have no such misstatements to report to the City Council. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in a management representation letter dated October 5, 2018. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Information Accompanying the Financial Statements We applied certain limited procedures to the required supplementary information that accompanies and supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the required supplementary information and do not express an opinion or provide any assurance on the required supplementary information. We were engaged to report on the supplementary information which accompany the financial statements, but are not required supplementary information. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. 7
DRAFTWe were not engaged to report on the Introductory and Statistical Sections which accompany the financial statements, but are not required supplementary information. Such information has 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 it. ****** This information is intended solely for the use of City Council and management and is not intended to be, and should not be, used by anyone other than these specified parties. Pleasant Hill, California October 5, 2018 8
DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
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DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM FOR THE YEAR ENDED JUNE 30, 2018 Table of Contents INTRODUCTORY SECTION: Table of Contents ........................................................................................................................................... i FINANCIAL SECTION: Independent Auditor's Report .................................................................................................................. I Basic Financial Statements Balance Sheet ......................................................................................................................................... 3 Statement of Revenue, Expenditures and Changes in Fund Balance ........................................................................................................................................ 4 Notes to Basic Financial Statements ...................................................................................................... 5 Supplementary Information Schedule of A wards ............................................................................................................................. I 0 Combining Statement of Revenues, Expenditures and Changes in Fund Balance ................................................................................................................................ 11 Schedule of Expenditures by State Categories .................................................................................... 12 Schedule of Reimbursable Administrative Costs ................................................................................ 13 Schedule of Equipment Expenditures Utilizing Contract Funds ...................................................... 14 Schedule of Renovation and Repair Expenditures Utilizing Contract Funds .................................... 14 Audited Attendance and Fiscal Reports/Audited Fiscal Repo1ts: CSPP7280 -California State Preschool Programs ........................................................................... 15 Audited Reserve Account Activity Report... ..................................................................................... 18 Compliance Report Independent Auditor's Report on Internal Control over Financial Reporting and on Comp I iance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ....................................................................... 19
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DRAFTINDEPENDENT AUDITOR'S REPORT To the Honorable Members of the City Council City of San Rafael, California Report on the Finandal Statements We have audited the accompanying financial statements of the City of San Rafael Child Development Program (Program) of the City of San Rafael, California, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the Program'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 the 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 Program'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 Program'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 opinion.
DRAFTOpinions In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Program as of June 30, 2018, and changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Program's basic financial statements as a whole. The Supplementary Information as listed in the Table of Contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. The Supplementary Information as listed in the Table of Contents is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and in conformity with the CDE Audit Guide, issued by the California Department of Education, 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 Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 5, 20 I 8 on our consideration of the Program'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 Program's internal control over financial reporting and compliance. Pleasant Hill, California October 5, 20 I 8 2
DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM BALANCE SHEET JUNE 30, 2018 ASSETS Cash (Note 3) Grants receivable (Note 4) Total Assets LIABlLITIES AND FUND BALANCE Accounts payable Total Liabilities Fund balance, restricted (Note 5) Total Liabilities and Fund Balance See accompanying notes to financial statements 3 $1,588,156 24,093 $1,612,249 $40,434 40,434 1,571,815 $1,612,249
DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2018 REVENUES State grants: Current year grants CDBG preschool grant First five school readiness grants Local grant Interest Parent fees Other Total Revenues EXPENDITURES Certified salaries Classified Salaries Employee benefits Training and instruction Office supplies Books and supplies Utilities and housekeeping services Travel and conference Rentals Services and other operating expenditures Equipment Insurance Renovation and repair Total Expenditures OTHER FINANCrNG SOURCES (USES) Transfers in from the City Transfers out to the City Total Transfers CHANGE TN FUND BALANCE FUND BALANCE, Beginning of year End of year See accompanying notes to financial statements 4 $221,745 20,000 81,570 18,000 11,006 3,558,672 13,957 3,924,950 1,821,581 51,932 1,236,456 1,626 2,932 137,443 35,546 4,208 18,530 281,508 27,814 31,759 8,944 3,660,279 50,000 (113,000) (63,000) 201,671 1,370,144 $1,571,815
DRAFT!NOTE 1-ORGANIZATION CITY OF SAN RAFAEL CHrLD DEVELOPMENT PROGRAM Notes to the Basic Financials Statements For the Year Ended June 30, 2018 The City of San Rafael operates the Child Development Program encompassing nine childcare centers within the City of San Rafael. One of these centers provides day care services to subsidized families under the Child Development Program funded by the California Department of Education, which includes the Preschool program. The City is financially accountable for the activities of the Program. The Program has no employees and substantially all staff services which it requires are performed by the City's personnel. Costs incurred by the City to provide such services including compensation, retirement, and other benefit costs are reimbursed by the Program. These basic financial statements present only the activities of the Program and are not intended to present the financial position of the City of San Rafael, California, or the results of its operations. The financial statements of the Program are included as a Special Revenue Fund in the City's financial statements. I NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of Acco1111tillg The accounting and reporting treatment applied to a fund is determined by its measurement focus. 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. Operating statements of governmental funds present increases (revenues and other financial sources) and decreases (expenditures and other financial uses) in net current assets. The Program's financial activities are accounted for using the modified accrual basis of accounting. Under this method, revenues are recognized when measureable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred. Revenues considered susceptible to accrual include charges for services, federal and state grants, and interest. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable. B. Fund Balance Fund Balance is the excess of all the Program's assets over all its I iabi I ities. 5
DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financials Statements For the Year Ended June 30, 2018 !NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Fair Value Meas11reme11ts Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Level I inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs -other than quoted prices included within level 1 -that are observable for an asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for an asset or liability. If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement. I NOTE 3 -CASH AND INVESTMENTS The Program's cash is included in a City-wide cash and investment pool, the details of which are presented in the City's basic financial statements. The Program pools cash from all sources with the City of San Rafael so that it can be invested at the maximum yield, consistent with safety and liquidity, while individual funds can make expenditures at any time. The City's investment policy and the California Government Code permit investments in Securities of the U.S. Government or its agencies, Certificates of Deposit, Negotiable Cettificates of Deposit, Banker's Acceptances, Commercial Paper, the State of California Local Authority Investment Fund (LAIF Pool), Repurchase Agreements, Medium-Term Corporate Notes, Limited Obligation Improvement Bonds related to special assessment districts and special tax districts, and Money Market/Mutual Funds. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The City of San Rafael pooled investments is an uncategorized input not defined as Level 1, Level 2, or Level 3 input. 6
DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financials Statements For the Year Ended June 30, 2018 I NOTE 4 -GRANTS RECEIVABLE The Program has the following grants receivable at June 30, 2018: Agency Grant Marin County First 5 Grant Total I NOTE 5 -FUND BALANCES Amount $24,093 $24,093 Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables, less its liabilities. The City's fund balances are classified based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint. Nonspendable represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, and land held for redevelopment are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by formal action of the City Council which may be altered only by formal action of the City Council. Nonspendable amounts subject to council commitments are included along with spendable resources. Assigned fund balances are amounts constrained by the City's intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Council or its designee and may be changed at the discretion of the City Council or its designee. This category includes nonspendables, when it is the City's intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds. 7
DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financials Statements For the Year Ended June 30, 20 I 8 I NOTE 6 -CONTINGENCIES AND COMMITMENTS The Program participates in Federal, State and County grant programs that are fully or partially funded by grants received from other governmental units. Expenditures financed by grants are subject to audit by the appropriate grantor government. If expenditures are disallowed due to noncompliance with grantor program regulations, the City may be required to reimburse the grantor government. As of June 30, 2018, some amounts of grant expenditures have not been audited, but the City believes that disallowed expenditures, if any, based on subsequent audits will not have a material effect on any individual governmental funds or the overall financial condition of the City. 8
DRAFTSUPPLEMENT ARY INFORMATION
DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF A WARDS FOR THE YEAR ENDED JUNE 30, 2018 Pass-Through Identifying Award Program CFDA # Number Amount Federal Awards US Department of Housing and Urban Development, Pass-through the County of Marin Comnrnnity Development Block Grant 14.218 40CDBG I 7CD4527 $20,000 Total Federal Awards $20,000 State Awards State of California Department of Education Child Development Division State Preschool Program FY2018 CSPP-7280 $221,745 Total State Awards $221,745 County Award County of Marin First Five -Preschool CSRl-21-009-10 $81,570 Local Awards Marin Child Care Council NIA $18,000 Total Local Awards $18,000 Total State, Federal Awards, and Local $341,315 10 Revenue Exeenditures $20,000 $20,000 $20,000 $20,000 $221,745 $260,151 $221,745 $260,151 $81,570 $81,570 $18,000 $18,000 $18,000 $18,000 $341,315 $379,721
DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM COMBINJNG STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2018 State Preschool Program Total CDE Non-COE (CSPP 7280) CD Contracts Programs REVENUES State grants: Cun·ent year grants $221,745 $221,745 CDBG preschool grant $20,000 First Five school readiness grants 81,570 Local grants 18,000 Interest 11,006 Parent fees -noncertified children 3,558,672 Other 13,957 Total Revenues 221,745 221,745 3,703,205 EXPENDITURES Certified salaries 72,543 72,543 1,749,038 Classified salaries 51,932 51,932 Employee benefits 109,701 109,701 I, 126,755 Training and instruction 1,626 Office supplies 2,932 Books and supplies 10,488 10,488 126,955 Utilities and housekeeping services 35,546 Travel and conference 4,208 Rentals 18,530 Services and other operating expenditures 15,487 15,487 266,021 Equipment 27,814 Insurance 31,759 Renovation and repair 8,944 Total Expenditures 260,151 260,151 3,400,128 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (38,406) (38,406) 303,077 OTHER FINANCING SOURCE (USES) Transfers in from other programs 50,000 50,000 Transfers out to other programs (113,000) Total Transfers 50,000 50,000 (113,000) CHANGE IN FUND BALANCE $11,594 $11,594 $190,077 11 Total $221,745 20,000 81,570 18,000 11,006 3,558,672 13,957 3,924,950 1,821,581 51,932 1,236,456 1,626 2,932 137,443 35,546 4,208 18,530 281,508 27,814 31,759 8,944 3,660,279 264,671 50,000 ( I 13,000) (63,000) $201,671
DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF EXPENDITURES BY STATE CATEGORJES FOR THE YEAR ENDED JUNE 30, 2018 EXPENDITURES: 11000 1100 1200 Certified personnel salaries Teachers' salaries Administration 1300 Supervisors' salaries 1600 Infant educators 2001 2100 2300 2400 2500 2600 13000 3200 3300 3400 3600 14000 4200 4300 4500 4600 5000 5100 5200 5300 5400 5500 5600 5700 5800 16000 Classified personnel salaries Instructional aides' salaries Clerical and other office salaries Maintenance and operations salaries Food services salaries Transportation salaries Employee benefits Payroll taxes (Medicare) Other benefits Health and welfare Workers' compensation insurance Books and supplies Other books lnstructional materials and supplies Other supplies Food supplies Services and other operating expenditures Lecturer Travel and conferences Memberships and dues Insurance Utilities and housekeeping services Rentals, leases and repairs Audit expense Other direct services & admin. Capital Outlay 6100 Sites and improvements of sites 6200 Buildings and improvements of buildings 6400 Equipment (program-related) 6500 Equipment replacement (program related) Depreciation Costs capitalized as Fixed Assets TOTAL OF REIMBURSABLE AND ONREIMBURSABLE EXPENDITURES CSPP-7280 State Preschool Program $72,543 72,543 $51,932 51,932 $109,701 3,087 41,280 62,344 2,990 $10,488 10,488 $15,487 2,113 I, 144 1,179 11,051 $260,151 We have examined the claims filed for reimbursement and the original records supporting the transactions recorded under the contracts listed above to an extent considered necessa1y to assure ourselves that the amounts claimed by the contractor were eligible for reimbursement, reasonable, necessary, and adequately supported, according to governing laws, regulations, and contract provisions. 12 Totals $72,543 1 72,543 $51,932 51,932 $109,701 3,087 41,280 62,344 2,990 $10,488 I 10,488 $15,487 2,113 I, 144 1,179 11,05 I $260,151
DRAFTCITY OF SAN RAFAEL CHlLD DEVELOPMENT PROGRAM SCHEDULE OF REIMBURSABLE ADMINISTRATIVE COSTS FOR THE YEAR ENDED JUNE 30, 2018 Administrative Costs (Audit Fees) Total Administrative Costs 13 CSPP-7280 State Preschool Program $3,470 $3,470
DRAFTCITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF EQUIPMENT EXPENDITURES UTILIZING CONTRACT FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Expenditures Under $7,500 Unit Cost Expenditures Over $7,500 Unit Cost with COD Approval Expenditures Over $7,500 Unit Cost Without COD Approval Cost Item Cost Item Cost Item None None None SCHEDULE OF RENOVATION AND REPAIR EXPENDITURES UTILIZING CONTRACT FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Expenditures Under$ I 0,000 Unit Cost Cost Item None Expenditures Over $ I 0,000 Unit Cost with COD Approval Cost Item None 14 Expenditures Over $10,000 Unit Cost Without COD Approval Cost Item None
DRAFTAUDITED ATTENDANCE AND FISCAL REPORT for California State Preschool Programs Agency Name: City of San Rafael Child Development Program Vendor No. 21-2193 June 30, 2018 Contract No. CSPP 7280 Independent Auditor's Name: Maze & Associates COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E SECTION I -CERTIFIED CHILDREN DAYS OF CUMULATIVE ADJUSTED DAYS ENROLLMENT FISCAL YEAR PER AUDIT CUMULATIVE FISCAL ADJUSTMENT OF ENROLLMENT FORM CDFS 8501 ADJUSTMENTS YEAR PER AUDIT FACTOR PER AUDIT Three and Four Year Olds Full-time-plus --1.1800 -Full-time --1.0000 -Three-quarters-time --0.7500 -One-half-time 8,481 (96) 8,385 0.6193 5,192.831 Exceptional Needs Full-time-plus --1.4160 -Full-time --1.2000 -Three-quarters-time --0.9000 -One-half-time --0.6193 -Limited and Non-English Proficient Full-time-plus --1.2980 -Full-time --1.1000 -Three-quarters-time --0.8250 -One-half-time --0.6193 -At Risk of Abuse or Neglect Full-time-plus --1.2980 -Full-time --1.1000 -Three-quarters-time --0.8250 -One-half-time --0.6193 -Severely Disabled Full-time-plus --1.7700 -Full-time --1.5000 -Three-quarters-time --1.1250 -One-half-time --0.6193 -TOTAL DAYS OF ENROLLMENT 8,481 (96) 8,385 5,192.831 DAYS OF OPERATION 175 175 DAYS OF ATTENDANCE 8,481 (96) 8,385 G NO NONCERTIFIED CHILDREN -Check this box, omit page 2, and continue to Section III if no noncertified Comments -If necessary, attach additional sheets to explain adjustments: Adjustments identified in Column B are adjustments made by the City as part of year end closing. AUD 8501, Page 1 of 4 (FY 2016-17) California Department of Education 15
DRAFTAUDITED ATTENDANCE AND FISCAL REPORT for California State Preschool Programs Agency Name: City of San Rafael Child Development Program Vendor No. 21-2193 Fiscal Year End: June 30, 2018 Contract No. CSPP 7280 COLUMN A COLUMN B COLUMN C CUMULATIVE FISCAL AUDIT ADJUSTMENT CUMULATIVE FISCAL YEAR PER YEAR PER FORM INCREASE OR AUDIT SECTION Ill -REVENUE CDFS 8501 (DECREASE) RESTRICTED INCOME Child Nutrition Programs $0 County Maintenance of Effort (EC ~ 8279) 0 Uncashed Checks to Providers 0 Other (Specify): 0 Other (Specify): 0 Subtotal $0 $0 $0 Transfer from Reserve -General 0 Transfer from Reserve -Professional Development 0 Subtotal $0 $0 $0 Family Fees for Certified Children 0 Interest Earned on Apportionments 0 UNRESTRICTED INCOME Family Fees for Noncertified Children 0 Head Start Program (EC§ 8235(b)) 0 Other (Specify): 0 Other (Specify): 0 TOTAL REVENUE $0 $0 $0 SECTION IV -REIMBURSABLE EXPENSES Direct Payments to Providers (FCCH Only) $0 1000 Certificated Salaries 72,543 72,543 2000 Classified Salaries 51,932 51,932 3000 Employee Benefits 109,701 109,701 4000 Books and Supplies 10,488 10,488 5000 Services and Other Operating Expenses 15,487 15,487 6100/6200 Other Approved Capital Outlay 0 6400 New Equipment (program-related) 0 6500 Replacement Equipment (oroaram-relatedJ 0 Depreciation or Use Allowance 0 Start-Up Expenses (service level exemption) 0 Budget Impasse Credit 0 Indirect Costs Rate: 0.00% (Rate is Self-Calculating) 0 TOTAL EXPENSES CLAIMED FOR REIMBURSEMENT $260,151 $0 $260,151 TOTAL ADMINISTRATIVE COSTS ~oci,d,O;a,,ctioolVabo,e) $3,470 $3,470 FOR CDE-A&I USE ONLY: Independent Auditor's Assurances on Agency's compliance with Contract Funding Tenns and Conditions and Program Requirements of the Caliromia Department of Education, Early Education and Support Division: Eligibility, enrollment, and attendance records are being maintained as required (check YES or NO): COMMENTS. If necessary, attach additional sheets to explain adjustments: IJI YES Adjustments identified in Column B are adjustments made to report audit fees as administrative costs. 0 NO • Explain any discrepancies. Reimbursable expenses claimed above are eligible for reimbursement, reasonable, necessary, and adequately supported (check YES or NO): I I YES I I NO • Exolain any discrepancies. I ✓1 NO SUPPLEMENTAL REVENUES OR EXPENSES· Check this box and om~ oaoe 4 if there are no suoolementat revenues or AUO 8501, Page 3 of 4 (FY 2016-17) California Department of Education 16
DRAFTPlease Read Instructions Before Completing Report AUDITED ATTENDANCE AND FISCAL REPORT for California State Preschool Programs Agency Name: Citt of San Rafael Child Development Program Vendor No. 21-2193 Fiscal Year End: June 30, 2018 Contract No. CSPP 7280 COLUMN A COLUMN B COLUMN C CUMULATIVE AUDIT ADJUSTMENT CUMULATIVE FISCAL FISCAL YEAR PER INCREASE OR YEAR PER AUDIT SECTION V -SUPPLEMENTAL REVENUE FORM CDFS 8501 (DECREASE) Enhancement Funding $3,400 ($3,400) $0 Other (Specify): 0 0 0 TOTAL SUPPLEMENTAL REVENUE $3,400 ($3,400) $0 SECTION VI -SUPPLEMENTAL EXPENSES EXPENSES RELATED TO SUPPLEMENTAL REVEf\ 1000 Certificated Salaries $0 $0 $0 2000 Classified Salaries 0 3000 Employee Benefits 0 4000 Books and Supplies 3,698 (3,698) 0 5000 Services and Other Operating Expenses 0 6000 Equipmenl/Other Capital Outlay 0 Depreciation or Use Allowance 0 Indirect Costs 0 NONREIMBURSABLE EXPENSES 6100-6500 Nonreimbursable Capital Outlay 0 Other: e.g., Entertainment Expenses 0 Other (Specify): 0 0 TOTAL SUPPLEMENTAL EXPENSES $3,698 ($3,698) $0 COMMENTS -If necessary, attach additional sheets to explain adjustments: Adjustments identified in Column B are adjustments made by the City as part of year end closing. AUD 8501, Page 4 of 4 (FY 2011-12) 17 California Department of Education
DRAFTAUDITED RESERVE ACCOUNT ACTIVITY REPORT Agency Name: City of San Rafael Child Development Program Fiscal Year End: June 30, 2018 Vendor No. 21-2193 Independent Auditor's Name: Maze & Associates RESERVE ACCOUNT TYPE (Check One): COLUMN A COLUMN B COLUMN C 0 Center Based AUDIT PER AGENCY ADJUSTMENT PER AUDIT 0 Resource and Referral INCREASE OR 0 Alternative Payment (DECREASE) LAST YEAR: 1. Beginning Balance (must equal ending balance from Last Year's AUD 9530-A) $0 2. Plus Transfers from Contracts to Reserve Account (based on last year's post-audit CDFS 9530, Section IV): Contract No. CSPP 6261 $0 Contract No. 0 Contract No. 0 Contract No. 0 Contract No. 0 Contract No. 0 Total Transferred from Contracts to Reserve Account $0 $0 $0 3. Less Excess Reserve to be Billed (enter as a positive amount any excess amount calculated by CDFS on last year's post-audit CDFS 9530) $0 4. Ending Balance on Last Year's Post-Audit CDFS 9530 $0 $0 $0 THIS YEAR: 5. Plus Interest Earned This Year on Reserve Funds (column A must agree with this year's CDFS 9530-A, Section II) $0 6. Less Transfers to Contracts from Reserve Account (column A amounts must agree with this year's CDFS 9530-A, Section Ill; and column C amounts must be reported on this year's AUD forms for respective contracts): CSPP -General Contract No. CSPP 7280 $0 Contract No. 0 CSPP -Professional Development Contract No. $0 Contract No. 0 Subtotal $0 $0 $0 Other Contracts Contract No. $0 Contract No. 0 Contract No. 0 Contract No. 0 Contract No. 0 Subtotal $0 $0 $0 Total Transferred to Contracts from Reserve Account $0 $0 $0 7. Ending Balance or June 30, 2018 (column A must agree with this year's CDFS 9530-A, Section IV) $0 $0 $0 COMMENTS -If necessary, attach additional sheets to explain adjustments: AUD 9530-A, Page 1 of 1 (FY 2016-17) California Department of Education 18
DRAFTINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Members of the City Council City of San Rafael, California We have audited, in accordance with the 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, the basic financial statements of the City of San Rafael Child Development Program (Program), California, as of and for the year ended June 30, 2018, and the related notes to the financial statements, and have issued our repo1t thereon dated October 5, 2018. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Program's internal control over financial repo1ting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Program's internal control. Accordingly, we do not express an opinion on the effectiveness of Program's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Program's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Program's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be repo1ted under Government Auditing Standards. 19
DRAFTPurpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and comp I iance and the results of that testing, and not to provide an opinion on the effectiveness of the Program's internal control or on compliance. This repo1i is an integral paii of an audit performed in accordance with Govemment Auditing Standards in considering the Program's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Pleasant Hill, California October 5, 2018 20
DRAFTCITY OF SAN RAFAEL SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2018
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DRAFTCITY OF SAN RAFAEL SINGLE AUDIT REPORT For The Year Ended June 30, 2018 TABLE OF CONTENTS Schedule of Findings and Questioned Costs ............................................................................... I Section I -Summary of Auditor's Results ........................................................................... l Section II -Financial Statement Findings ........................................................................... 2 Section III -Federal Award Findings and Questioned Costs .............................................. 2 Schedule of Expenditures of Federal Awards ............................................................................. 5 Notes to Schedule of Expenditures of Federal Awards .............................................................. 7 Independent Auditor's Repo,t on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .................. 9 Independent Auditor's Report on Compliance for Each Major Federal Program; Repo1t on Internal Control Over Compliance; and Repo1t on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ..... 11
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DRAFTCITY OF SAN RAFAEL SCHEDULE OF FINDINGS AND QUESTIONED COSTS For The Year Ended June 30, 2018 SECTION I-SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP Internal control over financial repo1iing: • Material weakness(es) identified? • Significant deficiency(ies) identified? Noncompliance material to financial statements noted? Federal A wards Internal control over major federal programs: • Material weakness(es) identified? • Significant deficiency(ies) identified? Type of auditor's report issued on compliance for major federal programs: Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.5 l 6(a)? Identification of major programs: X X Unmodified Yes Yes Yes Yes Yes X No None __ X__ Reported X No X No None ____ Reported Unmodified Yes No ----CFDA#(s) 20.205 Name of Federal Program or Cluster Highway Planning and Constt_·u_c_ti_o1_1 ________________ _ Dollar tlu·eshold used to distinguish between type A and type B programs: $750.000 Auditee qualified as low-risk auditee? Yes ---X No ----
DRAFTSECTION II -FINANCIAL STATEMENT FINDINGS Our audit did not disclose any significant deficiencies, or material weaknesses or instances of noncompliance material to the basic financial statements. We have also issued a separate Memorandum on Internal Control dated October 5, 2018 which is an integral part of our audits and should be read in conjunction with this repo1i. SECTION III -FEDERAL AW ARD FINDINGS AND QUESTIONED COSTS Our audit disclosed the following findings and questioned costs required to be reported in accordance with Uniform Guidance. Finding reference number: 2018-001 CFDA number: 20.205 CFDA Title: Highway Planning and Construction Name of Federal Agency: US Department ofTransportation Federal Award Identification number and year: BRLO-5043(038)-awarded in 2017, HSIPL 5043 (037)-awarded in 2017 and RSTPL-6406(014) -awarded in 2015 Name of pass-through Entity: State of Califomia Department of Transportation Criteria: ln accordance with the Uniform Guidance Standards Section 200.303 -Internal Controls, "The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States and the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)." In order to maintain effective internal controls, all reimbursement requests should be prepared and approved by two separate employees before being submitted to the grantor. Condition: During our review of reimbursement requests, it was noted that the reimbursement requests for the grant projects were not reviewed by another employee prior to being submitted to the grantor. Effect: The City is not in compliance with the above requirement as listed in the Uniform Guidance Standards for Federal grants. Cause: The City's current practice of preparing reimbursement requests does not include a separate layer of review prior to being submitted to the grantor. Recommendation: We recommend that the City ensure that all reimbursement requests be prepared and approved by two separate employees before they are submitted to the grantor. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City. 2
DRAFTFinding reference number: 2018-002 CFDA number: 20.205 CFDA Title: Highway Planning and Construction Name of Federal Agency: US. Department of Transportation Federal Award Identification number and year: HSIPL 5043 (037)-awarded in 2017 Name of pass-through Entity: State ofCal(fornia Department a/Transportation Criteria: In accordance with the Compliance Supplement Requirements-Wage Rate Requirements -"All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by Federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor. ...... This includes a requirement for the contractor or subcontractor to submit to the non-federal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance ...... ". Condition: During our review of ce1tified payrolls for the grant project, we noted that the subcontractors failed to submit a copy of payroll and a ce1tificate of compliance to the City. Effect: The City is out of compliance with the Compliance Supplement Requirements Wage Rate Requirements. Cause: The prime contractor for the project failed to submit ce1tified payrolls to the City for subcontractors for the duration of the project. Recommendation: We recommend that the City obtain ce1tified payrolls from the subcontractors and ensure that future ce1tified payrolls are obtained throughout the duration of the grant. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City. 3
DRAFTFinding reference number: 2018-003 CFDA number: 20.205 CFDA Title: Highway Planning and Construction Name of Federal Agency: US. Department a/Transportation Federal Award Identification number and year: HS IPL 5043 (037)-awarded in 2017 and BRLO 5043 (038)-awarded in 2017 Name of pass-through Entity: State a/California Department a/Transportation Criteria: In accordance with the requirements of Uniform Guidance, the City should only report federal grant expenditures in the Schedule of Expenditures of Federal Awards (SEF A). Condition: During our testing, we found that the City incorrectly included local match amounts in the original SEFA provided for our audit. Effect: The City is not in compliance with the Unifonn Guidance requirements for reporting federal grant expenditures on the SEF A. Cause: The City accounts for federal award expenditures in the same general ledger accounts that the City accounts for local match expenditures. During the preparation of the SEF A, the City used the entire account balance and did not exclude the non-federal amounts. Recommendation: It is recommended the City develop procedures to compile information regarding federal awards the City receives and ultimately expends. A record keeping system which allows City staff to track federal expenditures separately from non-federal expenditures throughout the year could help alleviate the pressure of compiling the SEF A at the end of the year. The information derived from this system should be complete, accurate, and easily accessible by City staff in order to prepare the SEF A at year end. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City. 4
DRAFTCITY OF SAN RAFAEL SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS For the Fiscal Year Ended June 30, 2018 Federal Grnntor/ Pass-Through Gran tor/Program or Cluster Title U.S. Department of Housing and Urban Development Pass-Through County of Marin, California Community Development Block Grants/ Entitlement Grants Childcare Total U.S. Department of Housing and Urban Development U.S. Department of Health and Human Services Pass-Through the California Health and Human Services Agency Medical Assistance Program Department of Health Care Services -Ground Emergency Medical Transportation Pass-Through County of Marin, California Special Programs for the Aging Title Ill, Part B -Grants for Supportive Services and Senior Centers Total U.S. Department of Health and Human Services U.S. Department of Transportation, Pass-Through Programs Pass-Through State of California Department of Transportation Highway Planning and Construction Southern Heights Bridge Replacement SR Downtown Parking and Wayfinding Study 2nd Street at Grand Ave Intersection Modification Subtotal for Highway Planning and Construction Pass-Through California Office of Traffic Safety State and Community Highway Safety Selective Traffic Enforcement Program FY20l 7 Selective Traffic Enforcement Program FY20l 8 Subtotal for State and Community Highway Safety Total U.S. Department ofTransportation U.S. Department of Justice, Direct Program Bulletproof Vest Partnership Program PD Vest Grant 2018 Total U.S. Department of Justice U.S. Department of Homeland Security, Pass-Through Programs Pass-Through State of California Governer's Office of Emergency Services Local Hazard Mitigation Plan Federal CFDA Number 14.218 93.778 93.044 20.205 20.205 20.205 20.600 20.600 16.607 Pass-Through Iden ti rying Number 40CDBG I 7CD4527 SFY 2013-14 10-204 BRL0-5043(038) RSTPL-6406(014) HISPL-5043 (037) PTl7115 PT18l3I Emergency Slide Repair 97.047 FEMA-PDM-2015-CA Total U.S. Department of Homeland Security Total Federal Expenditures See Accompanying Notes to Schedule of Expenditures of Federal Awards 5 $ $ Federal Expenditures 20,000 20,000 168,272 10,000 178,272 251,998 2,495 499,907 754,400 44,325 56,982 101,307 855,707 13,789 13,789 269,129 269,129 1,336,897
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DRAFTCITY OF SAN RAFAEL NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS For The Year Ended June 30, 2018 NOTE 1 -REPORTING ENTITY The Schedule of Expenditure of Federal Awards (the Schedule) includes expenditures of federal awards for the City of San Rafael, California, and its component units as disclosed in the notes to the Basic Financial Statements, except for federal awards of the San Rafael Sanitation District (District). Federal awards expended by this entity, if any, are excluded from the Schedule and are subject to a separate Single Audit performed by other auditors. NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the measurement focus applied. All governmental funds and agency funds are accounted for using the modified accrual basis of accounting. All proprietary funds are accounted for using the accrual basis of accounting. Expenditures of Federal Awards reported on the Schedule are recognized when incurred. NOTE 3 -INDIRECT COST ELECTION The City has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. 7
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DRAFTINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Members of the City Council City of San Rafael, California We have audited, in accordance with the 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, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component unit each major fund, and the aggregate remaining fund information of the City as of and for the year ended June 30, 20 I 8, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our repoti thereon dated October 5, 2018. Our report includes a reference to other auditors who audited the financial statements of San Rafael Sanitation District, as described in our report on the City's financial statements. This report does not include the results of the other auditors' testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. · Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the city's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the ' circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 9
DRAFTComplia11ce and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be repotted under Government Auditing Standards. We have also issued a separate Memorandum on Internal Control dated October 5, 2018 which is an integral part of our audit and should be read in conjunction with this report. Purpose of this Report The purpose of this repo1t is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Pleasant Hill, California October 5, 2018 10
DRAFTINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS REQUIRED BY THE UNIFORM GUIDANCE To the Honorable Members of the City Council City of San Rafael, California Report 011 Complia11cefor Each Major Federal Program We have audited the City's compliance with the types of compliance requirements described in the 0MB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2018. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Ma11age111e11t's Respo11sibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Respo11sibility Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City's compliance. Opi11io11 011 Each Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the yearendedJune30,2018. I 1
DRAFTOther Matters The results of our auditing procedures disclosed instances of noncompliance which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings as items 2018-001, 2018-002, and 2018-003. Our opinion on each major federal program is not modified with respect to these matters. The City's response to the noncompliance findings identified in our audit are described in the accompanying Corrective Action Plan. The City's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Report on Intemal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, we identified certain deficiencies in internal control over compliance, as described in the accompanying schedule of findings and questioned costs as item 2018-003 that we consider to be a significant deficiency. The City's response to the internal control over compliance findings identified in our audit are described in the accompanying Corrective Action Plan. The City's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over comp! iance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. 12
DRAFTReport on Scltedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the City as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our repott thereon dated October 5, 2018, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required patt of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. Pleasant Hill, California October 5, 2018 13
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