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Home My WebLink AboutFY2005-06 Basic Finincial StatementsCity of San Rafael San Rafael, California Basic Financial Statements and Independent Auditors' Report For the year ended June 30, 2006 C&L Caporicci & Larson Certified Public Accountants City of San Rafael Basic Financial Statements For the year ended June 30, 2006 Table of Contents Pa e INTRODUCTORY SECTION: Tableof Contents...................................................................................................................................................... n TransmittalLetter...................................................................................................................................................... v Directoryof City Officials........................................................................................................................................ xi Mapof City's Location............................................................................................................................................. xii Organization Chart ................ .. FINANCIAL SECTION: IndependentAuditors' Report..............................................................................................................................1 Management's Discussion and Analysis............................................................................................................. 3 Basic Financial Statements: Governmental -Wide Financial Statements: Statementof Net Assets..............................................................................................................................19 Statement of Activities and Changes in Net Assets................................................................................ 20 Fund Financial Statements: Governmental Funds: BalanceSheet.......................................................................................................................................... 26 Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets............................................................................... 27 Statement of Revenues, Expenditures and Changes in Fund Balances - GovernmentalFunds...................................................................................................................... 29 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental -Wide Statement of Activities and Changes in Net Assets.......................................................................................... 30 Proprietary Funds: Statementof Net Assets........................................................................................................................ 32 Statement of Revenues, Expenses and Changes in Retained Earnings ......................................... 33 Statementof Cash Flows...................................................................................................................... 34 Notes to Basic Financial Statements................................................................................................................. 35 City of San Rafael Basic Financial Statements For the year ended June 30, 2006 Table of Contents, Continued Page FINANCIAL SECTION Continued: Required Supplementary Information: Budgets and Budgetary Accounting: Budgetary Comparison Schedule - General Fund ...................................... 75 ..................................... Budgetary Comparison Schedule - Traffic and Housing Mitigation SpecialRevenue Fund.................................................................................................................... 76 Budgetary Comparison Schedule - Household Hazmat Facility Special Revenue Fund........... 77 Marin County Employees' Retirement System Schedule of Funding Progress .................................. 78 Supplementary Information: Budgetary Comparison Schedule - Redevelopment Agency Capital Projects Fund ............................... 81 Non -Major Governmental Funds: CombiningBalance Sheet........................................................................................................................... 86 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................... 90 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Recreation Revolving Special Revenue Fund.................................................................................... 94 Baypoint Lagoons Assessment District Special Revenue Fund............................................I.......... 95 Gas Tax Special Revenue Fund........................................................................................................... 96 Childcare Special Revenue Fund........................................................................................................ 97 Street Maintenance and Cleaning Special Revenue Fund............................................................... 98 Loch Lomond Assessment District Special Revenue Fund............................................................. 99 Library Special Revenue Fund............................................................................................................100 Public Safety Special Revenue Fund...................................................................................................101 Stormwater Special Revenue Fund.....................................................................................................102 Development Services Special Revenue Fund..................................................................................103 Grants Special Revenue Fund..............................................................................................................104 .......................... Parkland Dedication Special Revenue Fund ................................................. ..........105 Emergency Medical Services Special Revenue Fund.......................................................................106 Business Improvement Special Revenue Fund.................................................................................107 Sewer Maintenance Special Revenue Fund.......................................................................................108 Peacock Gap Assessment District Debt Service Fund......................................................................109 Mariposa Assessment District Debt Service Fund............................................................................110 1997 Financing Authority Revenue Bonds Debt Service Fund.......................................................111 ll City of San Rafael Basic Financial Statements For the year ended June 30, 2006 Table of Contents, Continued Page FINANCIAL SECTION, Continued: Supplementary Information, Continued: RedevelopmentAgency Debt Service Fund......................................................................................112 CapitalImprovement Capital Projects Fund.....................................................................................113 Bedroom Tax Capital Projects Fund...................................................................................................114 Park Capital Projects Capital Projects Fund......................................................................................115 Open Space Capital Projects Fund......................................................................................................116 Internal Service Funds: Combining Statement of Net Assets...................................................................................................118 Combining Statement of Revenues, Expenses and Changes in Net Assets..................................120 Combining Statement of Cash Flows.................................................................................................122 STATISTICAL SECTION: NetAssets by Component.......................................................................................................................................125 Changesin Net Assets..............................................................................................................................................126 FundBalances of Governmental Funds.................................................................................................................128 Changes in Fund Balances of Governmental Funds............................................................................................129 Assessed Value and Estimated Actual Value of Taxable Property....................................................................130 Direct and Overlapping Property Tax Rates.........................................................................................................131 TopTen Property Taxpayers...................................................................................................................................132 Property Tax Levies and Collections......................................................................................................................133 Ratiosof Outstanding Debt by Type......................................................................................................................134 Ratios of General Bonded Debt Outstanding........................................................................................................135 Computation of Direct and Overlapping Debt.....................................................................................................136 LegalDebt Margin Information..............................................................................................................................138 Full -Time Equivalent City Government Employees by Function......................................................................140 Capital Asset Statistics by Function.......................................................................................................................141 iii This page intentionally left blank. iv cIry of 400K Mayer Albert J. Boro Council Members Paul M. Cohen Barbara Heller Cyr N. Miller Gary 0 Phillips December 29, 2006 Htnorable Mayor Members of the City Council City of San Rafael, California The Comprehensive Annual Financial Report (CAFR) of the City of San Rafael, California for the fiscal year ended June 30, 2006 is hereby submitted. The CAFR includes the independent auditor's report. The City Charter (Article VII, Section 12) requires that an independent Certified Public Accountant, hired by the City Council, conduct an annual audit of the City's financial transactions and issue appropriate reports to the City Council. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City management and is based upon a comprehensive framework of internal control that is established for this purpose. Because the cost of internal control should not exceed the anticipated benefits derived from such a system, the objective is to provide reasonable assurance that the financial statements are free of material m.sstatements. We believe that the data enclosed is accurate in all material respects, and presented in a manner designed to fairly set forth the financial position and results of operations of the City. All significant disclosures necessary to enable the reader to gain an understanding of the City's financial affairs have been included. Caporicci and Larson, a firm of licensed certified public accountants, have audited the City of San Rafael's financial statements. They have issued and unqualified ("clean") opinion on the City's financial statements for the year ended June 30, 2006. The analysis of the financial condition and the result of operations are in the Management's Discussion and Analysis document in the Financial Section. This Comprehensive Annual Financial Report is presented in three sections: 1. Introductory Section - This section includes this transmittal letter, the City's organizational chart, a list of municipal officers, and most recent certificates awarded to the City for excellence in financial reporting. 2. Financial Section - Included in this section are the Auditor's Report, Management's Discussion and Analysis, Basic Financial Statements, Combining and Individual Fund Statements, and the required schedules and information. 3. Statistical Section - Although this section contains substantial financial information, these tables differ from financial statements in that they present some non -accounting data, cover multiple fiscal years, and are designed to provide demographic and economic data and reflect financial trends. Pfofile of the City The Mission San Rafael Archangel was founded in 1817. San Rafael was incorporated in 1874 and became a charter city in 1913 by vote within the City. The City Council is composed of five members; four are elected at large to four-year terms. The mayor is elected separately to a four-year term. Both the City Attorney and City Clerk are elected positions. San Rafael has a Council -Manager form of government. The City Manager, appointed by the Council, serves as chief executive officer and is responsible for the day-to-day administration of City affairs. There are ten Boards and Commissions that are appointed by the City Council. The City currently has a land area of 22 square miles that includes 17 square miles of land and five of water and tidelands. San RafaeI's population in 2006 is 57,349. 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 and cultural and civic hub of Marin County. Abundant recreational facilities are available in and around the San Rafael area. In addition to the City's cultural, park and recreational resources, there are other attractions that include Muir Woods, five State parks, the San Francisco area, Oakland and the nearby wine country. Each year business merchants and the San Rafael Redevelopment Agency sponsor community events, including the Classic Car Parade, Farmers' Market, Winter Wonderland, Italian Street Painting Festival and the Parade of Lights. San Rafael is home to Marin County's cultural activities. Marin Center presents numerous ballets, concerts and speaking engagements. The Falkirk Cultural Center provides art exhibits and children's programming. The City provides a full range of municipal services. These include police and fire protection, paramedic response, park maintenance, park development & recreation, library, child care, planning and zoning, building, sewer service, street maintenance, economic development, and general administrative services. The City offers twenty parks, three community centers, one library, and one public pool. Marin Municipal Water District, a separate government agency, provides water to the residents and businesses of the City of San Rafael. San Rafael has abundant shopping areas, including our downtown as well as two major shopping centers, Northgate Mall and Montecito Shopping Center. The City operates on a two-year budget cycle. The two-year budget process requires that each vi department submit two one-year expenditure plans and revenue estimates to the City Council for approval. At six month intervals over the two year cycle, Department Directors present performance reports to the City Manager and City Council to summarize budget status to date and to measure progress against established program goals and objectives. The Department Directors are responsible for containing expenditures within their budgeted appropriations as approved by the City Council. The level of budgetary control is the department within each fund. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Encumbered amounts in the operating budget lapse one year after the end of the fiscal year. Capital improvements are administered by the CIP Coordinating Committee. Specific projects are established for each unique improvement and normally run into multiple fiscal years. Project budgets are established in the year the each project commences. The City has adopted a set of "financial management principles' which reflect how San Rafael manages its assets, infrastructure and resources. These principles have guided budget development and resource allocation, and are integral to the data contained in this CAFR. These principles are intended to guide management and City Council actions throughout the City organization and community processes. Factors Affecting Financial Condition Local Economy. San Rafael is a regional employment center. The number of jobs within the City exceeds the number of employed residents. Our diversified economic mix includes high-tech, financial, service based, entertainment and industrial businesses. Successes for the past several years have been lead by the Redevelopment Agency's commitment to a revitalization of downtown. Partnerships with community members and the Chamber of Commerce have paved the way for both new businesses as well as expansion needs of existing companies. Tourism and travel continue to support hotel and related industries and many come from all over the world to enjoy the physical beauty of San Rafael and the surrounding areas. General Fund Budget. The City's overall financial condition was turbulent once again in fiscal year 2005-2006. A loss of $979,000 under Proposition 1A, coupled with higher employee benefit costs, flat retail sales, and a sluggish economy necessitated the closure of a $3.4 million General Fund budget gap. Actions included: ➢ increases in existing fees or the establishment of new fees, and ➢ taking advantage of one time sources of money from the Vehicle License Fee loan repayment and ERAF funds, totaling $1.8 million in fiscal year 2004-2005. This sum was added to our operating reserves in the prior fiscal year with the expectation it would be used as a one time source to close the 2005-2006 projected deficit, and ➢ Most importantly, not wishing to further erode essential services beyond the millions of dollars in reductions and loss of 30 General Fund employee positions over the past few years. Therefore, the City planned to reduce reserves for all of the $3.4 million and put the direction of the City's future in the hands of San Rafael voters. With a thoughtful strategy, a high level of public trust, and numerous community outreach initiatives, a campaign was developed around a 1/2 cent Transaction and Use Tax vii (TUT) that could provide approximately $4.2 million in new General Fund revenues. In November of 2005, 70 percent of San Rafael voters approved Measure "S", which provides a TUT to be used for all essential City services for a period of 10 years. Although the use of reserves was estimated to be $3.4 million for fiscal year 2005- 2006, actual results required only a draw of $2.6 million, leaving an operating reserve of roughly $3 million. This level of contingency reflects only 6.7 percent of the 10 percent reserve established by City policy, and will require about $1.5 million additional future resources in order to return to the 10 percent stated Policy level. Appropriations Limit. The City remained well below the voter mandated Gann Appropriations Limit for the fiscal year 2005-2006, reaching only 82 percent of the legal limit. The Gann Limit was $52.4 million and the City's appropriations subject to the limit were $43.2 million. Cash Management. The City follows the practice of pooling cash and investments of all funds with the City Treasurer. The City maintains these temporarily idle funds under the "prudent person" rule. This affords the City a broad spectrum of investment opportunities as long as the investment is deemed prudent and allowable under current legislation of the State of California, and the terms of the City's Investment Policies. Examples of investment instruments include U.S. Treasury notes, commercial paper, corporate bonds and the State of California investment.. pool. Investment policies are updated by the City Council each year; also, Monthly Investment Reports appear on both the Agency and Council's agenda. At the end of the fiscal year the City's Portfolio, excluding invested bond proceeds, stood at $37.2 million. The average yield for the year was 3.8 percent and the City earned $1.1 million in interest income. The recognized investment income in the financial statements includes the effect of market value fluctuations. This approach resulted in a recognized return of 3.5 percent (as compared to the 3.8 percent without adjusting for market value fluctuations). The City's investment practice of "hold to maturity" will, over time, offset the effect of market fluctuations on reported earnings. Risk Management. The City operates two Risk Management programs: General Liability and Workers' Compensation, with insurance coverage of $25 million per occurrence for liability claims and $10,000,000 for workers compensation. Deductible/self-insurance amounts are established at $5001,000 for general liability and $250,000 for workers compensation. The General Liability program receives its funding from various funds through indirect cost allocation. The Workers' Compensation Program receives its funding through charges to the benefiting departments/funds of the City. Both programs are reported as internal service funds. Pension and Other Post Employment Benefits. The City provides retirement benefits to its employees thru a contract with the Marin County Employees Retirement Association (MCERA). This is a defined benefit program under which the City is obligated to fund the plan to ensure that it will fully meet its obligations. The plan is funded with employee and employer contributions. The employee contribution rates are fixed based upon an 'age of entry' system. The employer contribution rates are set each year by MCERA based on annual actuarial studies. Visi The City also contributes towards retiree health premiums. The City contracts with the California Public Employee Retirement System (PERS) to administer health benefit programs for retirees. A portion of the City's health insurance cost for retirees is funded by MCERA. At the end of the fiscal year there were over 225 retired employees receiving this benefit. Awards and Acknowledgments Certificates of Achievement. To be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized CAFR, whose contents conform to program standards published by the Government Finance Officers Association of the United States and Canada (GFOA). Due to budget constraints, staff turnover and other citywide priorities, the City of San Rafael did not participate in this program for the prior year's audit period (fiscal year 2004-2005). We believe our current report conforms to the Certificate requirements. Again, due to -higher priorities in our organization, sufficient time and resources could not be directed toward the Certificate Program. Therefore we did not submit our CAFR to GFOA to determine its eligibility for another certificate. Acknowledgements. The preparation of the comprehensive annual financial report on a timely basis was made possible by the dedicated service of the entire staff of the Finance Division staff and our auditors from Caporicci and Larson. Each member of the department and the audit team has our sincere appreciation for the contributions made in the preparation of this report. Special thanks go to Cindy Mosser, Finance Director for leading the City's portion of the audit engagement, to Van Bach, Accounting Supervisor, for shouldering much of the needed audit coordination and schedule preparation, and to Carl Tregner for working diligently on the financial worksheet and statement preparation. Lastly, support by the Mayor and City Council members has allowed the Management Services staff to continuing providing professional financial leadership to the San Rafael community. Staff works passionately to continue producing high quality products, including award winning annual financial reports. The City Council's openness to change and support in planning and conducting the operations of the City in a responsible, progressive manner empowers staff to achieve important goals for our City. Respectfully submitted, Ke ordhoffI U City nager ix Nancy Mackle Interim Assistant City Manager City Officials City Council Albert J. Boro, Mayor Paul M. Cohen, Council Member Barbara Heller, Council Member Cyr N. Miller, Council Member Gary O. Phillips, Council Member Elected Officials Gary T. Ragghianti, City Attorney Jeanne M. Leoncini, City Clerk Management Team Ken Nordhoff, City Manager Nancy Mackle, Interim Assistant City Manager Lydia Romero, Assistant to the City Manager Bob Brown, Community Development Director David Dodd, Library Director Gus Guinan, Assistant City Attorney Nancy Mackle, Economic Development Director Carlene McCart, Community Services Director John Montenero, Interim Fire Chief Andy Preston, Public Works Director Tom Simms, Interim Police Chief xi City of San Rafael Boards & Commissions ORGANIZATION CHART Electorate City Council ADA Access Advisory Committee Board of Library Trustees Design Review Board Bicycle & Pedestrian Advisory Committee Citizens Advisory Committee on Redevelopment Fire Commission Geotechnical Review I I I Marin Commission on Board m Aging Marin/Sonoma Mosquito & Vector Control District Board Planning Commission Park & Recreation Commission Traffic Coordinating Committee xW This page intentionally left blank. xiv C&L Caporicci & Larson Certifted Public Accountants INDEPENDENT AUDITORS' REPORT To the Honorable Mayor and Members of die City Council of the City of San Rafael San Rafael, California 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, California (City), as of and for the year ended June 30, 2006, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of the San Rafael Sanitation District (District), which is presented as a discrete component unit in the accompanying financial statements. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion on the basic financial statements, insofar as it relates to the amounts included for the District in the accompanying basic financial statements, is based on the report of the other auditors. We conducted our audit in accordance with generally accepted auditing standards in the United States 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. Ir1 our ophuon, the basic financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2006, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with generally accepted accounting principles in the United States. As described in Note 1 to the basic financial statements, the City adopted Statement of the Governmental Accounting Standards Board No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and Insurance Recoveries, No. 44, Economic Condition Reporting: The Statistical Section (an amendment of NCGA Statement 1), No. 46, Net Assets Restricted by Enabling Legislation, and No. 47, Accounting for Termination Benefits. In accordance with Government Auditing Standards, we have also issued our report dated October 6, 2005, 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 grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Toll Free Ph: (877) 862-2200 Toll Free Fax: (866) 436-0927 Oakland Orange County 180 Grand Ave., Suite 1365 9 Corporate Park, Suite 100 Oakland, California 94612 Irvine, California 92606 Sacramento San Diego 777 Campus Commons Rd., Suite 200 4858 Mercury, Suite 106 Sacramento, California 95825 San Diego, California 92111 To the Honorable Mayor and Members of the City Council of the City of San Rafael San Rafael, California The accompanying Required Supplementary Information, such as management's discussion and analysis, budgetary comparison information and other information as listed in the table of contents is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the Required Supplementary Information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City's basic financial statements. The accompanying supplementary information is presented for purpose of additional analysis and is not a required part of the basic financial statements. The supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. 6�;ee-: Oakland, California October 13, 2006 Expense Activities - Daring the fiscal year the City's total expenses ($80.2 million) exceeded revenues for governmental and business -type activities ($78.9 million) by $1.3 million. Excluding Depreciation (non -cash expense of $6.6 million), collected revenues were $5.3 million above expenses. Changes in Net Assets - The City's total net assets decreased by $1.3 million in fiscal year 2006. Net assets of governmental activities decreased by $2.7 million, while net assets of the business type activities increased by $1A million. Fund Highlights: Governmental Funds - Fund Balances- As of the close of fiscal year 2006, the City's governmental funds reported combined ending fund balances of $34.5 million, a decrease of $6.0 million from the prior year. Of this total amount, $23.9 million represents reserved fund balances and $9.6 million is designated. General Fund - The fund balance of the general fund on June 30, 2006 was $5.7 million, a decrease of $2.5 million from the prior year. $2.3 million was held in reserve, and $3.1 million is designated to meet our 10% reserve requirement as defined by the City's Financial Management Policies. Long -Term Debt: The City's total outstanding debt decreased by $2.8 million (4.9 percent) during the fiscal year, which reflects payment on outstanding assessment district bonds and Redevelopment debt. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City's basic financial statements, which are comprised of three components: 1) 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. The City's component units consist of the following: The Redevelopment Agency of the City of San Rafael (Agency) and the San Rafael Joint Powers Financing Authority (Authority). These component units are, for practical purposes, departments of the City and have been included in the basic financial statements as an integral part of the primary government using the blended method. This report also contains other supplementary information in addition to the basic financial statements for further information and analysis. Management's Discussion and Analysis Fiscal Year Ended June 30, 2006 M.a.x :.3.ca--- 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, certain interfund receivables, payables and other interfund activity have been eliminated as prescribed by Government Accounting Standards Board (GASB) Statement No. 34. The Statement of Net Assets and the Statement of Activities and Changes in Net Assets report information about the City as a whole and about its activities. 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 Assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities and Changes in Net Assets presents information showing how the City's net assets changed during the year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of timing of related cash flows. In the Statement of Net Assets and the Statement of Activities and Changes in Net Assets, we separate the City activities as follows: Governmental Activities —Most of the City's basic services are reported in this category, including Public Safety, Public Works and Parks, Community Development and Redevelopment, Cultural and Recreation and Government Administration (finance, human resources, legal, City Clerk and City Manager operations). Property, sales and use taxes, user fees, interest income, franchise fees, hotel taxes, business license and property transfer taxes, plus state and federal grants finance these activities. Business -Type Activities —The City charges a fee to customers to cover all or most of the costs of certain services it provides. The City's Parking Services program is reported as a business -type activity. Discretely Presented Component Units - The government -wide financial statements include not only the City itself (known as the primary government), but also a legally separate entity, the San Rafael Sanitation District 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 itself. The government -wide financial statements can be found on pages 17 through 21 of this report. 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 can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. 4 NOW Management's Discussion and Analysis Fiscal Year Ended June 30, 2006 The fund financial statements provide detail information about each of the City's most significant funds, called Major Funds. The concept of Major Funds, and the determination of which are major funds, was established by GASB Statement 34 and replaces the concept of combining like funds and presenting them in total. Instead, 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 83 through 93 of tl-is 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 information may be useful in evaluating a government's near -term financial capacity. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for government funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. 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 reconciliation's are presented on the page immediately following each governmental fund financial statement. The City has twenty-eight governmental funds, of which three 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, Redevelopment Agency, Household Hazmat Facility and Traffic and Housing Mitigation. Data from the other twenty-four governmental funds are combined into a single, aggregated presentation. The basic governmental fund financial statements can be found on pages 25 through 30 of this report. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements on pages 86 through 93 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 report 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. 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 fleet of vehicles, building maintenance, radio systems, telephone systems, personal computer replacement program, self-insurance for worker's compensation, dental, public liability, and employee benefits programs. Because these services predominantly benefit governmental rather than business -type functions, they have been included within governmental activities in the governmental -wide financial statements. Proprietary 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 31 through 34 of this report. Management's Discussion and Analysis Fiscal Year Ended June 30, 2006 .,.,NxIM, .1,F a61... 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 35 through 72 of this report. Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. One section includes budgetary comparison statements for the major funds (general, redevelopment agency, household hazmat facility, and traffic and housing mitigation). 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 part-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 73 through 78 of this report. GOVERNMENT -WIDE FINANCIAL ANALYSIS Statement of Net Assets Net assets are a good indicator of the City's financial position. During this fiscal year, net assets of the City were $221.1 million, which is a decrease of $1.3 million from the prior year. The following is the condensed Statement of Net Assets for the fiscal years ended June 30, 2005 and 2006. City of San Rafael Statements of Net Assets June 30, (Amounts in Millions) Governmental Activities Increase Business -Type Activities Increase 2006 2005 (Decrease) 2006 2005 (Decrease) Assets: Current assets $ 46.8 $ 55.8 $ (9.0) $ 2.3 $ 2.1 $ 0.2 Capital assets, net 216.1 216.4 (0.3) 17.3 16.2 1.1 Total assets 262.9 272.2 (9.3) 19.6 18.3 1.3 Liabilities: Current liabilities 9.5 12.5 (3.0) 0.3 0.3 - Long-term liabilities 44.2 48.5 (4.3) 7.3 7.5 (0.2) Total liabilities 53.7 61.0 (7.3) 7.6 7.8 (0.2) Net Assets: Invested in capital assets, net of related debt 175.8 194.7 (18.9) 9.8 8.6 1.2 Restricted 0.6 2.4 (1.8) - - - Unrestricted 32.8 14.1 18.7 2.1 1.9 0.2 $ 209.2 $ 211.2 $ (2.0) $ 11.9 $ 10.5 $ 1.4 Total net assets 6 At June 30, 2006, the largest portion of net assets (91.6 percent) consists of the City's investment in capital assets net of related debt. This component portrays the total amount of funds required to acquire those assets less any related debt used for such acquisition that is still outstanding. The City uses these capital assets to provide services to citizens. The decrease in total net assets from 2004-2005 to 2005-2006 is largely attributable to a netting of capital assets acquisition against depreciation expense for the year. Total depreciation for this current year was $6.9 million, while capital asset acquisition totaled $7.1 million, leaving a net change (increase) of $.2 million. 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. A portion of the City's net assets (.3 percent) is subject to restrictions imposed by external parties and their use is determined by those restrictions and agreements. The remainder of net assets, $34.5 million, may be used to meet the City's ongoing operations. For the year ended June 30, 2006, the City reported positive balances in all three categories of net assets for governmental activities. Business -type activities reported positive net assets in capital and unrestricted net assets. 7 Management's Discussion andAnalysis Fiscal Year Ended June 30, 2006 Statement of Activities The following is the condensed Statement of Activities and Changes in Net Assets for the fiscal years ended June 30, 2006 and 2005: Revenues: Program revenues General revenues Total revenues Expenses Change in net assets before transfers Transfers Net Assets: Beginning, as restated Ending (Amounts in Millions) Governmental Activities Increase Business -Type Activities Increase 2006 2005 (Decrease) 2006 2005 (Decrease) $ 23.5 $ 19.3 $ 4.2 $ 3.0 $ 2.6 $ 0.4 51.2 49.9 1.3 1.2 - 1.2 74,7 69.2 5.5 4.2 2.6 1.6 77.4 70.8 6.6 2.8 2.4 0.4 (2.7) (1.6) (1.1) 1.4 0.2 1.2 Governmental Activities. 211.8 212.8 $ 209.1 $ 211.2 10.5 10.3 $ 11.9 $ 10.5 The City's governmental activities decreased net assets by $2.7 million, which represents a 1.3% decrease from last year. Key elements of this change were as follows: Revenue highlights: • Property Tax revenues increased by $3.5 million or 20.1 percent in fiscal year 2006 due to the State s classification of the Vehicle License Fee (VLF) backfill, which was changed to an "In -lieu VLF" classification in FY2004-2005 to a property tax classification. The rationale is that the measurement and growth is now based on assessed valuations for fiscal year 2005-2006 and beyond. • Sales tax increased by.$1.1 million or approximately 6.2 percent compared to fiscal year 2005. The increase in sales tax revenues includes the new voter approved transaction and use tax. In November 2005, the citizens passed a half -cent transaction and use tax effective April 2006. Over all the sales tax remained relatively flat and is dependent on consumer retail and business related activity in the City. • Motor vehicles revenues decreased by $4.3 million or 92 percent. The decrease is due to the reclassification of the State's VLF fee to property tax and from the one-time proceeds received from the sale of the VLF receivable in FY2004-2005. • Other Tax revenues increased by $1.8 million or approximately 35.2 percent compared to fiscal year 2005. The increases were primarily due to increases in franchise fees, which now include North San Rafael refuse area ($347K); increases in transient occupancy taxes ($203K) and increases in business license tax ($137K). Also, $1.1 million was classified as property tax in fiscal year 2005. 8 Management's Discussion and Analysis Fiscal Year Ended June 30, 2006 Governmental Activities - Revenues: 18% Governmental Activities Revenues By Source June 30, 2006 F- 00 rni 10% 7r,0/ 1 l % G`F %O Governmental Activities - Expenses: Governmental Activities Expenses by Function June 30, 2006 F 44% 3( EM Property Taxes Sales Taxes ❑ Other Taxes EI Charges for Services ■ Miscellaneous Capital Grants and Contributions Investment Earnings 13 General Government ■ Public Safety ❑ Public Works and Parks Community Development ■ Culture and Recreation IM Debt Service Total expenses for governmental activities were $75.7 million (not including interest on long-term debt of $1.7 million). Program revenues offset total expenditures as follows: • Those who directly benefited from programs contributed $16.8 million in charges for services. • A total of $3.9 million in capital projects was funded by outside agencies through capital grants and contributions. 9 As a result, total expenses that were funded by tax revenues; investment income and other general revenues were $56.9 million. Functional expenses for the years ended June 30, 2006 were as follows: Expenses by Function For the fiscal year ended June 30, 2006 Function Amount General Government Public Safety Public works and parks Community development Culture and recreation Interest on Debt Total Expenses Business -Type Activities: $ 6,252,533 333,178,537 23,401,246 4,194,249 8,652,445 1,725,559 Percent of Total 8.1 % 42.9% 30.2 % 5.4 % 11.2% 2.2 % $ 77,404,569 100.01/1. Net assets for business -type activities were $11.9 million, an increase of $1.4 million from the prior fiscal year. Parking services is the City's only business type activity and income is derived from program revenues of $3.0 million. Program revenues include parking meter coin at $1.2 million, and parking garage hourly parking at $0.3 million. Revenues also include parking and non vehicle code fines totaling $1.2 million and $0.4 million for garage parking permits. Total expenses for parking services were $2.8 million during fiscal year 2005-2006. FINANCIAL ANALYSIS OF INDIVIDUAL FUNDS Governmental Fwids 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 particular, unreserved 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 the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $34.5 million. Approximately, $.9 million of this amount constitutes unreserved and undesignated fund balance, which is available for spending at the government's discretion. The remainder of fund balance is reserved to indicate that it is not available for spending because it has already been legally committed. General Fund - The General Fund is the prinucnj operating fund of the city. At the end of the current fiscal year, unreserved fund balance of the general fund was $3.4 million, while total fund balance reached $5.7 million. $3.1 million is held as part of the 10 percent designated, unreserved fund balance for emergencies and cash flow cycles as defined in San Rafael's Financial Management Policies. As a measure of the general funs liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 6.6 percent of total general fund expenditures including transfers out, while total fund balance represents 10.6 percent of that same amount. 10 Management's Discussion and Analysis Fiscal Year Ended June 30, 2006 The available fund balance of the City s general fund decreased by $2.5 million during the current fiscal year. This decrease resulted from: The winter storm expenditures in excess of $.8 million with minimal reimbursements from FEMA; True -up payment for the triple flip reduced the revenues by 10 percent from prior year. • Expenditures increased with personnel costs mainly benefit costs leading the way. Redevelopment Agency Fund - The Redevelopment Agency is responsible for assisting in the clearance and rehabilitation of areas determined to be in a declining condition in the City. The Agency's operations are funded primarily by the issuance of debt, which is expected to be repaid out of property tax increment revenue generated by increased in property assessed values in the redevelopment areas. The Redevelopment Agency Capital Project Fund was established to account for capital improvement projects related to the various redevelopment areas. At the end of fiscal year 2006, the reserved fund balance was $8.1 million, a decrease of $5.1 million from the prior year. Expenditures exceeded revenues by $5.1 million. The decrease is primarily related to $8.9 million in expenditures for capital improvement projects including the final settlement payment for the 3rd and C Street parking structure and the Pickleweed Community Center expansion. The entire fund balance as of June 30, 2006 was reserved for future capital project and housing programs. Proprietary Funds The Cites proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. As discussed in the business -type activities previously, the City's net assets increased by $1.4 million as a result of operations in the Parking Services fund. GENERAL FUND BUDGETARY HIGHLIGHTS The final amended budget totaled $38.1 million, including a decrease of $533,373 to the originally adopted budget. The amendments can be briefly summarized as follows: 1. Decreases in the following budgets: o General Government $149,113 o Public Safety 247,109 o Public Works and Parks 76,049 o Community Development/Redevelopment 47,547 o Culture and Recreation 13,555 During the year, however, revenues exceeded budgetary estimates and expenditures exceeded the final budgetary estimate. Overall, revenues exceeded expenditures by $2.2 million. Transfers out exceeded transfers in by $3.0 million. 11 Management's Discussion and Analysis Fiscal Year Ended June 30, 2006 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The City's investment in capital assets for its governmental and business -type activities as of June 30, 2006 amounts to $233.4 million, net of accumulated depreciation of $93.3 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 total additions to the City's investment in capital assets for the current fiscal year was $.8 million, net of accumulated depreciation and retirements. Major capital asset additions during the current fiscal included a major land purchase, work in process on a parking garage, pump station, and dispatch center, replacement of seven vehicles, and roadway improvements. Capital Projects ➢ The Pickleweed Community Center expansion and renovation project had a grand reopening in the summer of 2006. The final settlement payment with the surety company for the 3rd and C Street parking structure was made in December 2005. The City had storm damage in two incidents, flooding and landslides, during the year. Additional information on the City's capital assets can be found in Note 5A on pages 53 through 56 of this report. Debt Administration As of June 30, 2006, the City had outstanding debt issues as listed below. Not included in the following table is the Community Facilities District No.1 Special Tax Bond, which is backed by property tax levies against property owners. The City has no obligation for these bonds. Certain specific revenues back each of the City's other bonds or General Fund lease payments and carry respectable ratings. The City's long-term obligations for the fiscal years 2005 and 2006 were as follows: Governmental Business -Type Activities Activities Total 2006 2005 2006 2005 Revenue Bonds $ 1.2 $ 1.7 $ 7.5 $ 7.6 Bonds 0.1 0.3 - - Tax Allocation Bonds 39.7 41.5 - - Redevelopment note 0.2 0.2 - - Capitalized Leases 0.4 0.5 - - Compensated Absences 5.0 5.0 - - Total Outstanding Debt $ 46.6 $ 49.2 $ 7.5 $ 7.6 2006 2005 $ 8.7 $ 9.3 0.1 0.3 39.7 41.5 0.2 0.2 0.4 0.5 5.0 5.0 $ 54.1 $ 56.8 12 Management's Discussion and Analysis Fiscal Year Ended June 30, 200b ECONOMIC CLIMATE AND NEXT YEAR'S BUDGET In November 2005, the citizens of San Rafael passed Measure S with a 70 percent voter approval. This measure amended the Municipal Code to establish a .50 percent transactions and use tax within the City of San Rafael, effective April 1, 2006. This transactions and use tax, estimated at $5.8 million for Fiscal Year 2006- 2007, provides much needed funds for a structural deficit and will allow the City to maintain essential services. Many factors were considered in preparing the City's budget for Fiscal Year 2006-2007. Salaries and benefits are tied to the labor agreements with each bargaining group. Forecasted expenses related to supplies, services, utilities and capital assets are adjusted by the use of a CPI formula. Fiscal Year 2005-2006 baseline operating costs were indexed by 1.4 percent for Fiscal Year 2006-2007. Major revenue changes were the new transactions and use tax and property tax increase of 4-5% based upon valuation changes and development (although very limited in San Rafael). Sales tax has remained relatively flat for the City. In November 2006, the citizens of San Rafael, CSA #19, and CSA #13 passed a tax measure to increase the Paramedic Tax for Fiscal Year 2007-2008. The increase is estimated to cover the cost of the paramedic program for four years starting with Fiscal Year 2007 2008. For Fiscal Year 2006-2007, the General Fund will supplement any shortfall which currently is estimated at $450,000. The City will also start the repayment process with the Marin County Superior Court for the overpayment received in court fines and traffic school. The total overpayment received from the County was $1.1 million and it will be repaid in five years, starting January 2007. REQUEST FOR INFORMATION 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 Management Services Department - Financial Services Division,1400 Fifth Avenue, Room 204, San Rafael, California 94901. 13 This page intentionally left blank 14 BASIC FINANCIAL STATEMENTS 15 This page intentionally left blank 16 GOVERNMENT -WIDE FINANCIAL STATEMENTS 17 This page intentionally left blank. 18 City of San Rafael Statement of Net Assets June 30, 2006 ASSETS Current assets: Cash and investments Restricted cash and investments: Held by fiscal agents Receivables: Accounts Taxes Grants Interest Loans Prepaid expenses Total current assets Noncurrent assets: COP issuance costs, net Capital assets: Nondepreciable assets Depreciable assets, net Total capital assets Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Deposit payable Interest payable Developer bonds payable Arbitrage payable Unearned revenue Compensated absences - due within one year Insurance claims payable - due within one year Long -tern debt - due within one year Total current liabilities Long-term liabilities: Compensated absences - due in more than one year Insurance claims payable - due in more than one year Long-term debt - due in more than one year Total long -tern liabilities Total liabilities NET ASSETS Investments in capital assets, net of related debt Restricted Unrestricted Total net assets See accompanying Notes to Basic Financial Statements Discrete Component Primary Government Unit San Rafael Governmental Business -Type Sanitation Activities Activities Total District $ 34,982,589 $ 2,251,769 $ 37,234,358 $ 7,257,496 3,124,260 148 3,124,408 485,571 1,910,808 35,622 1,946,430 75,093 5,337,302 - 5,337,302 - 335,938 - 335,938 - 360,853 - 360,853 5,427 708,805 - 708,805 - - - - 36,702 46,760,555 2,287,539 49,048,094 7,860,289 - - - 42,258 90,614,383 8,673,615 99,287,998 729,653 125,512,162 8,600,822 134,112,984 23,285,999 216,126,545 17,274,437 233,400,982 24,015,652 216,126,545 17,274,437 233,400,982 24,057,910 262,887,100 19,561,976 282,449,076 31,918,199 2,932,564 86,702 3,019,266 192,269 31,594 - 31,594 - 167,117 85,267 252,384 52,246 424,548 - 424,548 - 25,127 - 25,127 - 218,431 1,913 220,344 - 3,574,660 - 3,574,660 - 2,163,514 155,000 2,318,514 380,000 9,537,555 328,882 9,866,437 624,515 1,475,115 - 1,475,115 - 3,346,192 - 3,346,192 - 39,361,931 7,300,000 46,661,931 2,472,828 44,183,238 7,300,000 51,483,238 2,472,828 53,720,793 7,628,882 61,349,675 3,097,343 175,806,100 9,819,435 185,625,535 21,205,082 620,889 - 620,889 438,752 32,739,318 2,113,659 34,852,977 7,177,022 $ 209,1664307 $ 11,933,094 $ 221,099,401 $ 28,820,856 19 City of San Rafael Statement of Activities and Changes in Net Assets For the year ended June 30, 2006 Program Revenues Charges Operating Capital Total for Grants and Grants and Program Functions/Programs Expenses Services Contributions Contributions Revenues Primary government: Governmental activities: General government $ 6,252,533 $ 402,094 $ 75,419 $ - $ 477,513 Public safety 33,178,537 5,085,679 606,936 114,000 5,806,615 Public works and parks 23,401,246 3,799,861 1,217,060 1,293,696 6,300,617 Community development/redevelopment 4,194,249 3,190,832 - 2,518,676 5,709,508 Culture and recreation 8,652,445 4,368,274 846,155 20,102 5,234,531 Interest on long-term debt (unallocated) 1,725,559 - - - - Total governmental activities 77,404,569 16,846,740 2,745,570 3,936,474 23,528,784 Business -type activity: Parking services 2,761,511 3,025,380 - - 3,025,380 Total primary government $ 80,166,080 $ 19,872,120 $ 2,745,570 $ 3,936,474 $ 26,554,164 Component unit: San Rafael Sanitation District $ 6,148,915 $ 6,340,773 $ - $ - $ 6,340,773 General revenues: Taxes: Property taxes Sale taxes Special assessments Motor vehicles Other Total taxes Investment earnings Miscellaneous Aid from other governmental agencies Transfers Total general revenues and transfers Change in net assets Net assets - beginning of year, as restated Net assets - end of year See accompanying Notes to Basic Financial Statements. 20 Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business -type $ (5,775,020) $ - $ (5,775,020) $ (27,371,922) - (27,371,922) (17,100,629) - (17,100,629) 1,515,259 - 1,515,259 (3,417,914) - (3,417,914) (1,725,559) - (1,725,559) (53,875,785) - (53,875,785) Discrete Component Unit San Rafael Sanitation District (53,875,785) 263,869 (53,611,916) - - - 191,858 20,848,887 - 20,848,887 179,479 18,188,524 - 18,188,524 - 3,017,488 - 3,017,488 - 372,726 - 372,726 - 6,963,448 - 6,963,448 - 49,391,073 - 49,391,073 179,479 1,248,409 44,536 1,292,945 237,206 361,195 - 361,195 - - 1,309,893 1,309,893 645,804 201,191 (201,191) - - 51,201,868 1,153,238 52,355,106 1,062,489 (2,673,917) 1,417,107 (1,256,810) 1,254,347 211,840,224 10,515,987 222,356,211 27,566,509 $ 209,166,307 $ 11,933,094 $ 221,099,401 $ 28,820,856 21 This page intentionally left blank 22 FUND FINANCIAL STATEMENTS Governmental Fund Financial Statements Proprietary Fund Financial Statements 23 This page intentionally left blank. 24 GOVERNMENTAL FUND FINANCIAL STATEMENTS General Fund - Accounts for all financial resources and transactions except those required to be accounted for in other funds. Redevelopment Agency Capital Projects Fund - Accounts for the RDA Capital Improvement Fund are for improvement projects. Traffic and Housing Mitigation Fund -- Established to maintain long-term developer deposits for major housing and street improvement projects. 25 City of San Rafael Balance Sheet Governmental Funds June 30, 2006 Major Funds Special Revenue Redevelopment Funds Agency Traffic and Household Non -Major Total Capital Housing Hazmat Governmental Governmental General Projects Fund Mitigation Facility Funds Funds ASSETS Cash and investments $ 2,180,765 $ 4,335,054 $ 9,600,240 $ 51,959 $ 10,843,738 $ 27,011,756 Cash with fiscal agents 66,886 2,699,031 - - 358,343 3,124,260 Receivables: Accounts 140,462 37,325 - 574,448 235,084 987,319 Taxes 4,186,359 984,314 - - 166,629 5,337,302 Grants 18,775 42,444 - - 274,719 335,938 Interest 308,875 51,978 - - - 360,853 Loans 326,588 280,491 80,000 - 21,726 708,805 Total assets $ 7,228,710 $ 8,430,637 $ 9,680,240 $ 626,407 $ 11,900,239 $ 37,866,233 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 1,101,526 $ 299,509 $ 2,210 $ 591,402 $ 680,141 $ 2,674,788 Deposit Payable 31,594 - - - - 31,594 Developer bonds payable 398,048 25,000 - - 1,500 424,548 Arbitrage payable - 25,127 - - - 25,127 Deferred revenue - 18,735 - - 221,422 240,157 Total liabilities 1,531,168 368,371 2,210 591,402 903,063 3,396,214 Fund Balances: Reserved 2,335,391 8,062,266 9,598,030 10,427 3,933,001 23,939,115 Unreserved: Designated, reported in: General Fund 3,086,216 - - - - 3,086,216 Special revenue funds - - - - 6,536,227 6,536,227 Undesignated, reported in: Major funds 275,935 - 80,000 24,578 - 380,513 Non -major funds reported in: Special revenue funds - - - - 527,948 527,948 Total fund balances 5,697,542 8,062,266 9,678,030 35,005 10,997,176 34,470,019 Total liabilities and fund balances $ 7,228,710 $ 8,430,637 $ 9,680,240 $ 626,407 $ 11,900,239 $ 37,866,233 See accompanying Notes to Basic Financial Statements. 26 City of San Rafael Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets June 30, 2006 Total Fund Balances - Total Governmental Funds $ 34,470,019 Amounts reported for governmental activities in the Statement of Net Assets were different because: Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. Capital assets were adjusted as follows: Non -depreciable 90,614,383 Depreciable, net 125,512,162 Total capital assets 216,126,545 Deferred revenue recorded in the Fund Financial statements resulting from activities in which revenues were earned under the full accrual basis of accounting but funds were not available under the modified accrual basis of accounting are reclassified as revenues in the Government - Wide Financial Statements. 21,726 Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in Governmental Funds Balance Sheet. (167,117) Internal service funds were used by management to charge the costs of certain activities, such as insurance, to individual funds. The assets and liabilities of the Internal service funds were included in governmental activities in the Government -Wide Statement of Net Assets. 5,290,354 Long-term liabilities were not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet. Compensated absences (5,049,775) Long-term debt (41,525,445) Total long-term liabilities (46,575,220) Net Assets of Governmental Activities $ 209,166,307 See accompanying Notes to Basic Financial Statements. 27 This page intentionally left blank 28 City of San Rafael Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2006 REVENUES: Taxes and special assessments Licenses and permits Fines and forfeitures Use of money and property Intergovernmental Charges for services Other revenue Total revenues EXPENDITURES: Current: General government Public safety Public works and parks Community development/ redevelopment Culture and recreation Capital outlay Capital improvement/special projects Debt service: Capitalized lease obligation Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES Major Funds Special Revenue Redevelopment Funds Agency Traffic and Household Non -Major Total Capital Housing Hazmat Governmental Governmental General Projects Fund Mitigation Facility I'mids Funds $ 37,316,540 $ 984,314 $ - $ - $ 6,600,690 $ 44,901,544 1,169,927 - - 5,103 - 1,175,030 622,494 - - - - 622,494 401,632 348,900 264,830 163 301,033 1,316,558 6,021,170 1,888,960 - 15,010 3,780,777 11,705,917 1,823,411 21,500 997,086 1,092,885 9,169,690 13,104,572 223,914 656,977 - 1,650 592,537 1,475,078 47,579,088 3,900,651 1,261,916 1,114,811 20,444,727 74,301,193 61141,552 - - - 58,786 6,200,338 27,926,658 - - 1,212,038 4,183,271 33,321,967 6,318,640 - 61,129 - 4,242,816 10,622,585 2,702,210 1,481,874 - - - 4,184,084 1,710,065 - - - 6,699,768 8,409,833 45,249 - - 12,399 2,763 60,411 816,328 7,426,075 901,003 64,966 3,992,500 13,200,872 130,315 - - - - 130,315 - - - - 2,525,000 2,525,000 - - - - 1,878,265 1,878,265 45,791,017 8,907,949 962,132 1,289,403 23,583,169 80,533,670 1,788,071 (5,007,298) 299,784 (174,592) (3,138,442) (6,232,477) OTHER FINANCING SOURCES (USES): Transfers hi 965,780 - - 172,000 5,787,327 6,925,107 Transfers out (5,278,870) (56,663) (16,254) - (1,321,129) (6,672,916) Total other financing sources (uses) (4,313,090) (56,663) (16,254) 172,000 4,466,198 252,191 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (2,525,019) (5,063,961) 283,530 (2,592) 1,327,756 (5,980,286) FUND BALANCES: Beginning of year 8,222,561 13,126,227 9,394,500 37,597 9,669,420 40,450,305 End of year $ 5,697,542 $ 8,062,266 $ 9,678,030 $ 35,005 $ 10,997,176 $ 34,470,019 See accompanying Notes to Basic Financial Statements. 29 City of San Rafael Reconciliation of the Governmental. Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government -Wide Statement of Activities and Changes in Net Assets For the year ended June 30, 2006 Net Change in Fund Balances - Total Governmental Funds $ (5,980,286) Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlay including capital improvement/special projects as expenditures. However, in the Government -Wide Statement of Activities and Changes in Net Assets, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount of capital assets recorded in the current period. 5,803,241 Depreciation expense on capital assets is reported in the Government -Wide Statement of Activities and Changes in Net Assets, but it does not require the use of current financial resources. Therefore, depreciation expense is not reported as expenditures in governmental funds. (6,649,196) Loss on the disposal of capital assets is reported in the Government -Wide Statement of Activities and Changes in Net Assets, but they it does not require the use of current financial resources. Therefore, it is not reported in the Governmental Funds (54,263) Expenses for compensated absences accrued but not paid are reported in the Government -Wide Statement of Activities and Changes in Net Assets, but they do not require the use of current financial resources. Therefore, compensated absences are not reported as expenditures in governmental funds. This amount represents current compensated absences expense incurred. (12,220) Bond proceeds and proceeds from long-term debt provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Government -Wide Statement of Net Assets. Repayment of bond principal is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the Government -Wide Statement of Net Assets. This amount represents long-term debt repayments 2,525,000 This amount represents capitalized lease obligation payments 130,315 Total long-term debt 2,655,315 Interest expense on long-term debt is reported in the Government -Wide Statement of Activities and Changes in Net Assets, but it does not require the use of current financial resources. The following amount represents the change in accrued interest from prior year. 152,706 Certain revenues that have not met the revenue recognition criteria in the Fund Financial statements are recognized as revenue in the Government -Wide Financial Statements. 21,726 Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net revenue of the internal service funds is reported with governmental activities. 1,389,060 Change in Net Assets of Governmental Activities $ (2,673,917) See accompanying Notes to Basic Financial Statements. 30 PROPRIETARY FUND FINANCIAL STATEMENTS Parking Services Fund - Established to maintain parking garages, lots and spaces in the Downtown Parking District (established over 40 years ago), and to pay for parking enforcement, meter collection, and downtown office services. 31 City of San Rafael Statement of Net Assets Proprietary Funds June 30, 2006 Major Fund Governmental Activities Parking Internal Services Service Funds ASSETS Current assets: Cash and investments $ 2,251,769 $ 7,970,833 Cash with fiscal agent 148 - Receivables: Accounts 35,622 923,489 Interest - - Loans - - Due from other fund - 419,424 Prepaid expenses - - Total current assets 2,287,539 9,313,746 Noncurrent assets: COP issuance costs, net - - Capital assets: Nondepreciable assets 8,673,615 - Depreciable assets, net 8,600,822 - Total capital assets 17,274,437 - Total noncurrent assets 17,274,437 - Total assets 19,561,976 9,313,746 LIABILITIES Current liabilities: Accounts payable 86,702 257,776 Interest payable 85,267 - Due to other funds - 419,424 Insurance claims payable - 3,346,192 Deferred revenue 1,913 - Long-term debt - due within one year 155,000 - Total ,current liabilities 328,882 4,023,392 Long -tern liabilities: Long-term debt - due in more than a year 7,300,000 - Total liability 7,628,882 4,023,392 NET ASSETS Invested in capital assets, net of related debt 9,819,435 - Restricted - - Unrestricted 2,113,659 5,290,354 Total net assets $ 11,933,094 $ 5,290,354 See accompanying Notes to Basic Financial Statements. 32 City of San Rafael Statement of Cash Flows Proprietary Funds For the year ended June 30, 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash payments to suppliers for goods and services Cash received from/to other funds Other operating revenues Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Property taxes Aid from governmental agencies Transfers in Transfers out Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: Cash paid for capital acquisitions Interest received from certificates of participation principal cash Principal payment on financing authority liability Principal payments on certificates of participation Interest expenses and fiscal charges Net cash provided (used) by capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Investment income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Changes in operating assets and liabilities: Accounts receivable Loans receivable Prepaid items Accounts payable Connection fees Insurance claims payable Deferred revenue Total adjustments Net cash provided (used) by operating activities Major Fund Governmental Activities Parking Internal Services Service Funds $ 1,508,575 $ - (1,528,611) (6,541,586) - 7,544,626 913,796 - 893,760 1,003,040 - 317,000 (201,191) (368,000) (201,191) (51,000) (5,696) (150,000) (345,566) (501,262) 4036 206,542 44,536 206,542 235,843 1,158,582 2,016,074 6,812,251 $ 2,251,917 $ 7,970 833 $ 618,451 $ 1,233,518 251,494 - 22,601 (83,708) - 5,000 1,199 216,702 (368,472) 15 - 275,309 (230,478) $ 893,760 $ 1,003,940 See accompanying Notes to Basic Financial Statements. 34 City of San Rafael Statement of Revenues, Expenses and Changes in Net Assets Proprietary Funds For the year ended June 30, 2006 OPERATING REVENUES: Charges for current services Refunds Connection fees Other operating revenues Total operating revenues OPERATING EXPENSES: Personnel Insurance premiums and claims Maintenance and repairs Sewage collection Sewage treatment Depreciation and amortization General and administrative Total operating expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES): Property taxes Aid from governmental agencies Investment income Interest expense Loss on disposal of fixed assets Total nonoperating revenues INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS Contribution from other City funds Transfers in Transfers out Cbange in net assets NET ASSETS: Beginning of year End of year Major Fund Governmental Activities Parking Internal Services Service Funds $ 1,485,974 $ 6,535,789 - 513,499 1,539,406 952,505 3,025,380 8,001,793 1,437,718 - - 2,886,620 97,107 397,594 251,494 - 625,610 3,484,061 2,406,929 6,768,275 618,451 1,233,518 44,536 206,542 (344,441) - (10,141) - (310,046) 206,542 308,405 1,440,060 1,309,893 - - 317,000 (201,191) (368,000) 1,417,107 1,389,060 10,515,987 3,901,294 $ 11,933,094 $ 5,290,354 See accompanying Notes to Basic Financial Statements. 33 NOTES TO BASIC FINANCIAL STATEMENTS 35 City of San Rafael Notes to Basic Financial Statements For the year ended June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of San Rafael (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard -setting body for establishing governmental accounting and financial reporting principles. A. Reporting Entity The City maintains a Council -Manager form of government and provides the following services: public safety (police and fire), public works, community development, library, parks, recreation, childcare, and general administrative services. As required by GAAP, these basic financial statements present the City (the primary government) and its component units. Component units generally are legally separate entities for which a primary government is financially accountable. Financial accountability ordinarily involves meeting both of the following criteria set forth in GASB Statement No. 14: the primary government is accountable for the potential component unit, and the primary government is able to impose its will upon the potential component unit, or there is a possibility that the potential component unit may provide specific financial benefits or impose specific financial burdens on the primary government. In addition to having the same governing board, the City is financially accountable for the San Rafael Redevelopment Agency and the San Rafael Joint Powers Financing Authority, and management activities of both entities are conducted by City staff. The two legally separate entities are, in substance, part of the City's operations and are, therefore, blended into the City's basic financial statements. The City is also financially accountable for the San Rafael Sanitation District (District), since two of its three board members are appointed by the City Council. This legally separate entity is discretely presented in a separate column in the City's financial statement. The component units discussed in this note are included in the City's reporting entity because of the significance of its operational or financial relationships with the City. Each component unit has a June 30 year end. Separately issued component unit financial statements can be obtained at the City of San Rafael, Finance Division,1400 Fifth Avenue, Room 204, San Rafael, California 94901. Blended Component Units San Rafael Redevelopment Agency' - The San Rafael Redevelopment Agency (Agency) was established under the provisions of the Community Redevelopment Law (California Health and Safety Code, commencing with Section 33000) primarily to assist in the clearance and rehabilitation of areas determined to be in a declining condition in the City. Financial activity of the Agency commenced in July 1983. Under the Agency's Redevelopment Plan (Plan), approved in November 1982, the Agency is to assist in the development of the property located in the central San Rafael business core and east San Rafael. The Agency receives incremental tax revenues on the developed property due to increases in assessed value. The Agency functions as an independent entity. The City Council serves as the governing board of the Agency. The Agency's assets, liabilities, revenues and expenditures (other than those applicable to its capital assets and long-term debt) are reported in the Fund Financial Statements. The Agency s capital assets and long-term debt are reported with the Governmental Activities in the Government -Wide Financial Statements. 01 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES, Continued A. Reporting Entity, Continued Blended Component Units, Continued San Rafael Toint Powers Financing Authorit< - The San Rafael Joint Powers Financing Authority (Authority) was created by the City of San Rafael 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 activities of the City. All of the Authority's assets, liabilities, revenues and expenditures are reported in the Fund Financial Statements. The Agency's capital assets and long-term debt are reported with the Governmental Activities in the Government -Wide Financial Statements. 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 City contracts with the District to maintain the collection systems in the City and 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 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 end is June 30 and its separately issued component unit financial statements can be obtained at Central Marin Sanitation Agency, Finance Department,1301 Andersen Drive, San Rafael, California 94901. B. Basis of Accounting and Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity with its own self -balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses. These funds are established for the purpose of carrying out specific activities or certain objectives in accordance with specific regulations, restrictions or limitations. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Government -Wide Financial Statements The City's Government -Wide Financial Statements include a Statement of Net Assets and a Statement of Activities and Changes in Net Assets. These statements present summaries of Governmental and Business - Type Activities for the City accompanied by a total column. A Discretely Presented Component Unit Activities column is presented after the total column. 37, City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued The Government -Wide financial statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well. as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Certain types of transactions reported as program revenues for the City are reported in three categories: Charges for services Operating grants and contributions Capital grants and contributions Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the business -type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business -type activities have not been eliminated. The following interfund activities have been eliminated: • Due to, Due from other funds • Transfers in, transfers out Governmental Fund Financial Statements Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non -major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net assets as presented in these statements to the net assets presented in the government -wide financial statements. The City has presented all major funds that meet specific qualifications. The following are the descriptions for each major fund. General Fund - Accounts for all financial resources and transactions except those required to be accounted for in other funds. Redevelopment Agency Fund - Consist of five funds; 1) the 1999 Agency Bonds Funds, 2) the 2002 Agency Bonds Funds, and 3) the RDA Capital Improvement Fund are for improvement projects. Additionally, there are 4) Project Administration Fund and 5) the Housing Fund. Traffic and Housing Mitigation Fund - Established to maintain long-term developer deposits for major housing and street improvement projects. 38 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, taxpayer -assessed tax revenues (sales taxes, transient occupancy taxes, franchise taxes, etc.), grant revenues and earnings on investments. Expenditures are recorded in the accounting period in which the related fund liability is incurred. Reconciliation of the Fund Financial Statements to the Government -Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. Proprietary Fund Financial Statements Proprietary fund financial statements include a Statement of Net Assets, a Statement of Revenues, Expenses and Change in Net Assets, and a Statement of Cash Flows for all proprietary funds. Parking Services Fund - Established to maintain parking garages, lots and spaces in the Downtown Parking District (established over 40 years ago), and to pay for parking enforcement, meter collection, and downtown officer services. Columns representing a discretely presented component unit and internal service fields are also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the government -wide financial statements. Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Change in Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as nonoperating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses. 39.. City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES, Continued C. Interest Payable In the government -wide financial statements, interest payable of long-term debt is recognized as the liability is incurred for governmental fund types and proprietary fund types. In the fund financial statements, governmental fund types recognize the interest expenditures on long-term debt when payment is due. In the propriety fund types the interest payable is recognize when the liability is hicuned. D. Use of Restricted and Unrestricted Net Assets When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the City's policy is to apply restricted net assets first. E. Cash, Cash Equivalents and Investments The City pools cash resources of its various funds to facilitate cash management. Cash in excess of current requirements is invested and reported as investments. It is the City's intent to hold current investments until maturity. However, the City may, in response to market conditions, sell investments prior to maturity in order to improve the quality, liquidity or yield of the portfolio. The pooled interest earned is allocated quarterly to each fund based on an average of quarterly opening and closing balances of cash and investments. The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and highly liquid investments with original maturity of three months or less from the date of acquisition. In accordance with GASB Statement No. 40, Deposit and Investment Disclosures (Amendment of GASB No. 3), certain disclosure requirements for Deposits and Investment Risks were made in the following areas: Interest Rate Risk • Credit Risk ❑ Overall ❑ Custodial Credit Risk ❑ Concentrations of Credit Risk In addition, other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end and other disclosures. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. 40 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 200b 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES, Continued E. Cash, Cash Equivalents and Investments, Continued The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF), which has invested a portion of the pool funds in Structured Notes and Asset - Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset -Backed Securities are subject to market risk as to change in interest rates. F. Short -Term Inter fund Receivables/Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as "due from other funds' or "due to other funds" on the balance sheet. Short-term loans are classified as interfund receivables or payables. G. Property Tax Levy Collection and Maximum Rates The State of California (State) Constitution. Article XIIIA provides that the combined maximum property tax rate on any given property may not exceed one percent (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 XIIIA and may be adjusted by no more than two percent (2%) per year unless the property is sold, transferred, or improved. The State Legislature has determined the method of distribution of receipts from a one percent (1 %) tax levy among the counties, cities, school districts, and other districts. Marin County assesses, bills for, and collects property taxes as follows: Secured Unsecured Lien dates January 1 January 1 Levy dates July 1 July 1 Due dates 50% on November 1 and July 1 50% on February 1 Delinquent as of December 10 (for November) August 31 April 10 (for February) The term "unsecured" refers to taxes on personal property other than real estate, land, and buildings. These taxes are secured by liens on the property being taxed. 41'. City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES, Continued G. Property Tax Levy Collection and Maximum Rates, Continued Property taxes levied are 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 authorizes 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: 55 % remitted on December 15 40 % remitted on April 15 5 % remitted on June 15 H. Taxpayer -Assessed Taxes Accrual In accordance with GASB Statement No. 22, Accounting for Taxpayer -Assessed Tax Revenues in Governmental Funds, the City recognizes taxpayer -assessed taxes in governmental funds as follows: Sales Taxes - The City accrues actual advances from the State Board of Equalization received in July and August of the subsequent fiscal year, as these amounts are both measurable and available to the City to meet its financial obligation for the current period. Public Safety Sales Tax (Proposition 172 Sales Tax) - The City accrues July and August receipts of the public safety sales tax on the basis consistent with the accrual of regular sales taxes. Transient Occupancy Taxes - The City collects transient occupancy taxes on a quarterly basis. The taxes assessed for the quarter ended June 30 are due by July 31 of the subsequent fiscal year. The City accrues all transient occupancy taxes for the June 30th quarter received subsequent to the fiscal year end. Gas Taxes -- The City accrues gas taxes assessed for the month ended June 30, as these amounts are both measurable and available to the City a month after the fiscal year end. Franchise Fees - The City collects cable franchise fees on a quarterly basis and refuse franchise fees on a monthly basis. The taxes assessed for the quarter ended June 30 are due by July 31 of the subsequent fiscal year. The City accrues all franchise fees for the June 30th period received subsequent to the fiscal year end. L Capital Assets Capital assets, which include land, land improvements, buildings and structures, machinery and equipment, and infrastructure assets (e.g. bridges, sidewalks, and similar items), are reported in the applicable governmental or business -type activities in the Government -Wide Financial Statements. Capital assets are recorded at historical cost or estimated historical cost if actual cost is not available. Donated assets are valued at their estimated fair value on the date donated. 42 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES, Continued L Capital Assets, Continued City policy has set the capitalization threshold for reporting capital assets at the following: General Capital Assets $5,000 - $50,000 Infrastructure Capital Assets $25,000 - $250,000 For capital assets, depreciation is recorded on a straight-line basis over the estimated useful lives of the assets as follows: Buildings and Improvements 20 - 25 years Machinery and Equipment 4 -15 years Infrastructure 15 - 50 years GASB Statement No. 34 requires the inclusion of infrastructure capital assets in local governments' basic financial statements. In accordance with GASB Statement No. 34, the City has included the value of all infrastructure capital assets into its Basic Financial Statements using the Basic Approach for infrastructure reporting. The City defines infrastructure capital assets as the basic physical assets that allow the City to function. The assets include: • Bridges Street system Roadways • Storm Drain System Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, and traffic control devices (signs, signals and pavement markings). These subsystems were not delineated in the Basic Financial Statements. The appropriate operating department maintains information regarding the subsystems. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date on a straight line method using industry accepted life expectancies for each infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation from the original cost. Interest accrued during construction of capital assets, if any, is capitalized for the business -type activities and proprietary funds as part of the asset cost. The collection systems and facilities of the Sanitation District (District) are stated at cost less accumulated depreciation. Assets contributed have been recorded at the fair market value at the date received. Maintenance and repairs are charged to expense as incurred. Improvements are capitalized and depreciated over the remaining estimated useful lives of the related capital asset. Depreciation is computed using the straight-line method over the useful lives of the assets. 43 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES, Continued L Capital Assets, Continued A summary of the estimated useful lives of the capital assets of the District is as follows: Subsurface lines 50 years Sewage collection facilities 5 - 50 years General plant and administrative facilities 3 -15 years J. Long -Term Lease Accounting Capital assets acquired through long-term lease contracts are capitalized at the time the contract is executed. The related assets and liabilities are recorded in the appropriate activity. K. Compensated Absences The City accounts for compensated absences (unpaid vacation, sick leave, compensatory time, and administrative leave) expected to be currently payable as accrued payroll and benefits liability in the governmental funds to which they relate. The balance of the earned and vested, but unused, compensated absences expected to be paid subsequent to the end of the current fiscal year is recorded as a liability in the governmental activities of the Governmental -Wide Financial Statements. Effective July 2001, the requirement that employees hired before October, 1979 be eligible for a portion of unused sick leave was eliminated. No expenditure was recorded for these amounts. L. Claims and Judgments Claims and judgments are recognized as expenditures when it is probable that the liability has been incurred and the amount of the loss can be reasonably estimated. The expenditures are accounted for in the internal service funds. M. Appropriation Limit Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), the City is restricted as to the amount ofannual appropriations from proceeds of taxes. For the fiscal year ended June 30, 2007, based on calculations by the City's management, proceeds of taxes did not exceed related appropriations. Further, Section 5 of Article XIIIB allows the City to designate a portion of fund balances for general contingencies to be used for any purpose. N. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 44 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 1. REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES, Continued O. NetAssets/Fund Balance Government -Wide Financial Statements Invested in Capital Assets, Net of Related Debt - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. Restricted - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of governments. Unrestricted - This amount is all net assets that do not meet the definition of "invested in capital assets, net of related debt" or "restricted net assets" as defined above. Fund Financial Statements Reservations of fund balances of governmental funds and net assets of proprietary funds are created to either satisfy legal covenants including State laws, that require a portion of the fund equity be segregated, or identify the portion of the fund equity not available for future expenditures. P. Implementation of New GASB Pronouncements In 2006, the City adopted new accounting standards in order to conform to the following Governmental Accounting Standards Board Statements: ➢ GASB Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries - The Statement establishes accounting and financial reporting standards for impairment of capital assets. A capital asset is considered impaired when its service utility has declined significantly and unexpectedly. This Statement also clarifies and establishes accounting requirements for insurance recoveries. ➢ Statement No. 44, Economic Condition Reporting: The Statistical Section (Amendment of NCGA Statement 1) -- The Statement establishes the objectives of the statistical section and the five categories of information it contains; financial trends information, revenue capacity information, debt capacity information, demographic and economic information, and operating information. ➢ GASB Statement No. 46, Net Assets Restricted by Enabling Legislation - The Statement addresses selected issues and amends GASB Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. The Statement enhances the usefulness and comparability of net asset information and clarifies the meaning of legal enforceability. The Statement also specifies accounting and financial reporting requirements for restricted net assets. ➢ GASB Statement No. 47, Accounting for Termination Benefits - The Statement provides accounting guidance for state and local governmental employers regarding benefits (such as early -retirement incentives and severance benefits) provided to employees that are terminated. The Statement requires recognition of the cost of involuntary termination benefits in the period in which a government becomes obligated to provide benefits to terminated employees. 45.. City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 2. CASH AND INVESTMENTS The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds, which the City Treasurer invests to enhance interest earnings. The pooled interest earned is allocated quarterly to each fund based on an average of quarterly opening and closing balances of cash and investments. A. Cash Deposits The carrying amounts of the City's cash deposits were $1,140,274 at June 30, 2006. Bank balances at June 30, 2006 were $2,610,945 which were fully insured and collateralized with securities held by the pledging financial institutions in the City's name as discussed below. The California Goven-unent Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name. The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City's total cash deposits. The City may waive collateral requirements for cash deposits which are fully insured up to $100,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on to the various funds based on the period -end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. B. Investments The City is authorized by State statutes and in accordance with the City's Investment Policy (the Policy), adopted on April 18, 2005, to invest in the following: Maximum Maximum Maximum Percentage of Investment in Authorized Investment Type Maturity Portfolio One Issuer U.S. Government Obligation 5 years No limit No limit U.S. Agency Securities and Instruments 5 years No limit No limit Repurchase agreements 1 year No limit No limit Primer Commercial Paper 270 days 25% $1,000,000 Banker Acceptance 180 days 40% $2,000,000 Medium -Term Corporate Notes 5 years 30% $1,000,000 Negotiable Certificates of Deposit 5 years 30% No limit Non-negotiable certificates of Deposit 180 days No Imit No limit Local Agency Investment Fund N/A N/A N/A Money Market/Mutual Funds N/A 10% N/A 46 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 2. CASH AND INVESTMENTS, Continued B. Investments, Continued In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, investments were stated at fair value using the aggregate method in all fields and component units, resulting in the following investment income in all funds: Interest income $ 1,126,319 Unrealized gain in changes in fair value of investments 166,626 Total investment income $ 1,292,945 The City's portfolio value fluctuates in an inverse relationship to any change in interest rate. Accordingly, if interest rates rise, the portfolio value will decline. If interest rates fall, the portfolio value will rise. In accordance with GASB Statement No. 31, the portfolio for year-end reporting purposes is treated as if it were all sold. Therefore, fund balance must reflect the portfolio's change in value. These portfolio value changes are unrealized unless sold. The City's policy is to buy and hold investments until maturity. The City's investments are carried at fair value as required by generally accepted accounting principles. The City is a voluntary participant 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's investments with LAIF at June 30, 2006, include a portion of the pool funds invested in Structured Notes and Asset -Backed Securities. These investments include the following: Structured Notes - Debt securities (other than asset -backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options. Asset -Backed Securities, generally mortgage -backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables. As of June 30, 2006, the City had $22,530,660 invested in LAIF, which had invested 4.76% of the pool investment funds in Structured Notes and Asset -Backed Securities. The LAIF fair value factor of 0.998185821 was used to calculate the fair value of the investments in LAIF. 47. City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 2. CASH AND INVESTMENTS, Continued C. Summary of Cash and Investments The following is a summary of cash and investments at June 30, 2006: Government -Wide Statement of Net Assets Governmental Business -Type Activities Activities Total Cash and Investments $ 34,982,589 $ 2,251,769 $ 37,234,358 Restricted Cash and Investments $ 3,124,260 $ 148 $ 3,124,408 Total Cash and Investments $ 40,358,766 The following is a breakdown of cash deposits and investments at June 30, 2006: Total Cash deposits $ 1,140,274 Investments 36,094,084 Total Cash and Investments $ 37,234,358 D. Risk Disclosures Interest Risk: Interest rate risk is the market value fluctuation due to overall changes in the interest rates. It is mitigated by limiting the average maturity of the City's portfolio not to exceed five years. Investments stated at fair value held in the City Treasury grouped by maturity date at June 30, 2006, are shown below: Investment Type U.S. Treasury Bill Securities of U.S. Government Treasury and Agencies: FHLB FNMA FHLMC FFCB Commercial Paper: GE Capital Local Agency Investment Funds Total Investment Maturities (in years) Fair Value 1 year or less 1-2 years 2-3 years 3-4 years 4-5 years $ . 1,488,350 $ 991,100 $ 497,250 $ - $ - $ - 2,969,044 - 980,100 1,988,944 - - 3,443,200 1,474,800 979,200 - - 989,200 3,955,920 1,991,670 - 981,300 495,250 487,700 723,200 - - 483,300 239,900 - 983,710 983,710 - - - - 22,530,660 22,530,660 - - - - $ 36,094,084 $ 27,971,940 $ 2,456,550 $ 3,453,544 $ 735,150 $ 1,476,900 48 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 2. CASH AND INVESTMENTS, Continued D. Risk Disclosures, Continued Liquidity Standard: As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy shall be matched with anticipated cash flow and known future liabilities. Credit Risk. Credit risk is the risk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. According to the City's investment policy, no more than 10% of the total portfolio or $1,000,000 whichever is less, may be invested in securities of any single issuer, other than the U.S. Government, its agencies and instrumentalities, and LAIR If a security is downgraded by either Moody's or S&P to a level below the minimum quality required by the City, it shall be the City's policy to sell that security as soon as practicable. At June 30, 2006, the City's investments had the following ratings: Credit Quality Ratings Moody's S&P U.S. Treasury Bills Aaa AAA Securities of U.S. Government Agencies: FHLB Aaa AAA FNMA Aaa AAA FHLMC Aaa AAA FFCB Aaa AAA Commercial Paper: GE Capital P1 A-1+ Local Agency Investment Funds Not Rated Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. None of the City's investments were subject to custodial credit risk. E. Cash and Investments with Fiscal Agents The funds deposited with fiscal agents can be held in cash or invested in various securities. The fiscal agents can invest in securities as outlined in trust agreements, provided the investments are within the limits imposed by State statutes upon the entity. At June 30, 2006, cash and investments with fiscal agents totaling $3,124,408 were recorded at fair value. 49. City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 2. CASH AND INVESTMENTS, Continued F. Component Unit -Sanitation District Cash and Investments All of the District's cash is deposited with the County of Marini s pooled cash and investments account, except cash related to the certificates of participation which is invested in an open-end mutual fund held in trust by the District's custodial agent. Fair values for the pooled cash and investments were provided by the County of Marin as the pool's sponsor. The fair value of the open-end mutual fund was based upon the unit share price at June 30, 2006. The Fitch credit quality rating for the Marin County Pool at June 30, 2006 was AAA/V1+. The District's investment in this pool do not represent specific securities in physical or book entry form, and accordingly, are not exposed to custodial credit risk. Cash and investments at June 30, 2006, consisted of the following: Cash and investments $ 7,742,992 Petty cash 75 Total $ 7,743,067 Unrestricted cash: Cash $ 7,257,496 Restricted cash: Certificates of participation 485,571 Total $ 7,743,067 3. LOANS RECEIVABLE The City had the following loans receivable at June 30, 2006: Loan to City Manager $ 309,637 Employees' Computer Loans 16,951 Centertown Associates 280,491 One "H " Street Associates 80,000 Muir Terrance Homes 21,726 Total $ 708,805 On August 1, 1996, the City made a 30-year loan to the City Manager in the amount of $392,040, at an interest rate equivalent to the Local Agency Investment Fund interest rate, for the purchase of a home. The loan is secured by a Deed of Trust. The principal and interest are payable monthly commencing September 1,1996 through August 31, 2026. The outstanding balance at June 30, 2006 was $309,637. 50 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 3. LOANS RECEIVABLE, Continued Effective February 1, 2000, the City agreed to loan employees up to $2,500 for the purchase of computer hardware and software. The loan program, which stipulates that employees may not have more than one loan outstanding, provides financial assistance from the City in the form of a no interest loan repaid through automatic payroll deductions. The outstanding balance at June 30, 2006 was $16,951. The City loaned Centertown Associates, Ltd. $303,000 at 3% interest due semiannually. The final payment is due on July 31, 2065. The outstanding balance at June 30, 2006 was $280,491. The City loaned One "H" Street Associates $100,000 at 0% interest with annual payments of $2,857 and with a final payment due January 18, 2034. The loan is in connection with the affordable housing project located at One "H" Street. The outstanding balance at June 30, 2006 was $80,000. In April 1996, Muir Terrace Homes entered into an agreement with the City to defer all development fee payments except the Traffic Mitigation fee which is waived for Below Market Rate units. The payments are due when the developer has sold all the units for low -mod income housing. The outstanding balance at June 30, 2006 was $21,726. 4. INTERFUND TRANSACTIONS A. Due To/Froin Other Funds At June 30, 2006, the City had the following due to/from other funds: Due From Other Funds Internal Due To Other Finds Service Fund Internal Service Funds $ 419,424 The amounts due to and from internal service funds represent temporary negative cash balances pending receivables. Current inter -fund balances arise in the normal course of operations and are expected to be repaid shortly after the end of the fiscal year. 51 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 4. INTERFUND TRANSACTIONS, Continued B. Transfers Transfers for the year ended June 30, 2006, were as follows: Major Funds: General Fund Redevelopment Agency Capital Projects Fund Q Traffic and Housing Mitigation Special v Revenue Fund w R Non -Major Governmental Funds w Parking Services Enterprise Fund Internal Service Funds Total Transfers In Major Funds Proprietary Household Non -Major Fund General Hazmat Governmental Internal Fund Facility Funds Service Fund Total $ - $ 172,000 $ 4,819,870 $ 287,000 $ 5,278,870 - - 56,663 - 56,663 - - 16,254 - 16,254 493,589 - 827,540 - 1,321,129 134,191 - 67,000 - 201,191 338,000 - - 30,000 368,000 $ 965,780 $ 172,000 $ 5,787,327 $ 317,000 $ 7,242,107 Transfers to the General Fund were for administrative costs and claims liabilities. Transfers to the Household Hazmat Facility Special Revenue Funds were for program support. Transfers to the Non -Major Governmental Funds were for administrative costs, capital projects and special projects. Transfers to the Internal Service Funds were for benefits and claims reserves. 52 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 5. CAPITAL ASSETS A. Government -Wide Financial Statements At June 30, 2006 the City's capital assets consisted of the following: Discrete Governmental Business -Type Component Activities Activities Total Unit Non -depreciable assets: Land $ 82,146,643 $ 8,620,853 $ 90,767,496 $ 115,329 Construction in process 8,467,740 52,762 8,520,502 614,324 Total non -depreciable assets 90,614,383 8,673,615 99,287,998 729,653 Depreciable assets: Land improvements 7,419,678 - 7,419,678 - Buildings and structures 27,057,835 8,808,876 35,866,711 - Machinery and equipment 14,192,858 897,144 15,090,002 - Infrastructure 168,987,948 - 168,987,948 - Subsurface lines - - - 12,152,655 Sewage collection facilities - - - 28,348,164 General plant and administration - - - 359,695 217,658,319 9,706,020 227,364,339 40,860,514 Less accumulated depreciation (92,146,157) (11105,198) (93,251,355) (17,574,515) Total depreciable assets, net 125,512,162 8,600,822 134,112,984 23,285,999 Total capital assets $ 216,126,545 $ 17,274,437 $ 233,400,982 $ 24,015,652 53 City of San Rafael f Notes to Basic Financial Statements, Continued f '' For the year ended June 30, 2006 5. CAPITAL ASSETS, Continued A. Government -Wide Financial Statements, Continued The following is a summary of capital assets for governmental activities for the year ended June 30, 2006: Prior Period Balance Adjustments/ Balance July 1, 2005 Additions Retirements Reclassifications June 30, 2006 Governmental Activities: Capital assets, not being depreciated: Land $ 82,146,643 $ - $ - $ - $ 82,146,643 Construction in progress 8,383,859 5,420,447 - (5,336,566) 8,467,740 Total capital assets, not being depreciated 90 530,502 5,420,447 - (5,336,566) 90,614,383 Capital assets, being depreciated: Land improvements 7,419,678 - - - 7,419,678 Buildings and structures 24,831,954 - - 2,225,881 27,057,835 Machinery and equipment 12,851,149 382,794 (387,908) 1,346,823 14,192,858 Infrastructure 166,408,256 - - 2,579,692 168,987,948 Total capital assets, being depreciated 211,511,037 382,794 (387,908) 6,152,396 217,658,319 Accumulated depreciation: Land improvements (2,790,448) (274,647) - - (3,065,095) Buildings and structures (5,541,962) (677,610) - (60,131) (6,279,703) Machinery and equipment (7,135,402) (903,887) 333,645 (180,000) (7,885,644) Infrastructure (70,182,794) (4,793,052) - 60,131 (74,915,715) Total accumulated depreciation (85,650,606) (6,649,196) 333,645 (180,000) (92,146,157) Total capital assets, being depreciated, net 125,860,431 (6,266,402) (54,263) 5,972,396 125,512,162 Governmental activities capital assets, net $ 216,390,933 $ (845,955) $ (54,263) $ 635,830 $ 216,126,545 Depreciation expense by program for capital assets for the year ended June 30, 2006 were as follows: General government $ 128,270 Public safety 591,659 Public works and parks 5,595,712 Community development/redevelopment 51,710 Culture and recreation 281,845 Total depreciation expense $ 6,649,196 54 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 5. CAPITAL ASSETS, Continued A. Government -Wide Financial Statements, Continued The following is a summary of capital assets for business -type activities: Business -type Activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings and structures Machinery and equipment Total capital assets, being depreciated Accumulated depreciation Buildings and structures Machinery and equipment Tess accumulated depreciation Total capital assets, being depreciated, net Business -type activities capital assets, net Balance Balance July 1, 2005 Additions Retirements Reclassification June 30, 2006 $ 8,614,064 $ 328,037 8,942,101 6,789 $ - $ - $ 8,620,853 78,612 - (353,887) 52,762 85,401 (353,887) 8,673,615 7,578,688 1,230,188 - - 8,808,876 559,093 - (15,836) 353,887 897,144 8,137,781 1,230,188 (15,836) 353,887 9,706,020 (721,170) (176,177) - - (897,3q (138,229) (75,317) 5,695 - (207,851) (859,399) (251,494) 5,695 - (1,105,198) 7,278,382 978,694 (10,141) 353,887 8,600,822 $ 16,220,483 $ 1,064,095 $ (10,141) $ - $ 17,274,437 Depreciation expense for parking services activities was $251,494 for the year ended June 30, 2006. 55 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 5. CAPITAL ASSETS, Continued A. Government -Wide Financial Statements, Continued The following is a summary of the District's fixed assets at June 30, 2006: Balance Reclassification/ Balance July 1, 2005 Additions Retirements June 30, 2006 Capital assets, not being depreciated: Land $ 115,329 $ - $ - $ 115,329 Construction in progress 2,548,633 (1,934,309) - 614,324 Total capital assets, not being depreciated Capital assets, being depreciated: Subsurface lines Sewage collection facilities General plant and administration Total capital assets, being depreciated Accumulated depreciation Subsurface lines Sewage collection facilities General plant and administration Less accumulated depreciation Total capital assets, being depreciated, net Capital assets, net 2,663,962 (1,934,309) 7 )o AWL 12,152,655 - - 12,152,655 25,495,451 2,852,713 - 28,348,164 218,500 141,195 - 359,695 37,866,606 2,993,908 en urn F;1n (7,521,554) (228,821) - (7,750,375) (9,060,871) (682,134) - (9,743,005) (55,208) (25,927) - (81,135) (16,637,633) (936,882) - (17,574,515) 21,228,973 2,057,026 - 23,285,999 $ 23,892,935 $ 122,717 $ - $ 24,015,652 Depreciation expense for the District was $936,882 for the year ended June 30, 2006. 6. COMPENSATED ABSENCES The City accrues a liability for vested and unpaid compensated absences (accrued vacation, sick leave, compensatory time and administrative leave). The balance at June 30, 2006 was $5,049,775. Balance Balance Due in Due in More July 1, 2005 Additions Deletions June 30, 2006 One Year Than One Year Governmental Activities: Compensated Absences $ 5,037,555 $ 3,977,024 $ (3,964,804) $ 5,049,775 $ 3,574,660 $ 1,475,115 56' City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 7. LONG-TERM DEBT Govenimental Activities Long-term debt outstanding for Governmental Activities at June 30, 2006, was as follows: Governmental Activities: San Rafael Joint Powers Financing Authority: 1997 Authority Revenue Bonds San Rafael Redevelopment Agency Tax Allocation Bonds: Series 1999 Series 2002 Total tax allocation bonds Special Assessment Bonds (with governmental commitment): Peacock Gap Refunding Mariposa Road Assessment Total special assessment bonds Note Payable Capitalized Lease Obligations Total governmental long -tern debt Balance Balance July 1, 2005 Additions Deletions June 30, 2006 $ 1,685,000 $ - $ (530,000) $ 1,155,000 $ 20,189,004 - (630,000) 19,559,004 21,325,000 - (1,145,000) 20,180,000 41,514,004 - (1,775,000) 39,739,004 Due in Due in More One Year Than One Year 185,000 $ 970,000 665,000 18,894,004 1,165,000 19,015,000 1,830,000 37,909,004 205,000 - (205,000) - - - 65,000 - (15,000) 50,000 15,000 35,000 270,000 - (220,000) 50,000 15,000 35,000 169,000 - - 169,000 - 169,000 542,756 - (130,315) 412,441 133,514 278,927 $ 44,180,760 $ - $ (2,655,315) $ 41,525,445 $ 2,163,514 $ 39,361,931 A. 1997 Authority Revenue Bonds -Original Issue $5,250,000 On January 28, 1997, the Authority issued the 1997 Authority Revenue Bonds in the amount of $5,250,000 bearing interest at rates from 4.00% to 6.00%. The proceeds of the bonds were used to consolidate and refund the previously issued Limited Obligation Refunding Bonds. The bonds mature annually each September 2 from 1997 to 2011, in amounts ranging from $20,000 to $555,000. Interest is payable semiannually on March 2 and September 2. The bonds are subject to redemption on any March 2 or September 2 in advance of maturity at the option of the City upon payment of the principal and interest accrued thereon to the date of redemption, plus a redemption premium ranging from 2.00% to 5.00%. Revenues from the repayment of the Refunding Bonds and the reserve account are utilized to meet debt service requirements of the Revenue Bonds. The Refunding Bonds are secured by unpaid reassessments confirmed against private property within the Reassessment District. The outstanding balance of the bonds was $1,155,000 as of June 30, 2006. 57 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 7. LONG-TERM DEBT, Continued A. 1997 Authority Revenue Bonds -Original Issue $5,250,000, Continued The annual debt service requirements on these bonds are as follows: Year Ending June 30, Principal Interest Total 2007 $ 205,000 $ 60,875 $ 265,875 2008 170,000 50,450 220,450 2009 180,000 40,560 220,560 2010 185,000 30,065 215,065 2011 200,000 18,800 218,800 2012 215,000 6,450 221,450 Total $ 1,155,000 $ 207,200 $ 1,362,200 B. 1999 Tax Allocation Bonds - Original Issue $23,504,004 On June 16, 1999, the 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 Agency's Central San Rafael Redevelopment Project Area. The Current Interest Bonds mature annually each December 1 from 2000 to 2022, in amounts ranging from $560,000 to $1,460,000 and bear interest at rates ranging from 4.50% to 5.00%. Interest is payable semiannually on June 1 and December 1. The Current Interest Bonds maturing on or after December 1, 2008, are subject to optional redemption prior to maturity, in whole or in part, either in inverse order of maturity or on a pro rata basis among maturities, on any date on or after December 1, 2007, at a price equal to the principal amount, plus accrued interest on the redemption date, plus a premium ranging from 0.00% to 2.00%. 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 ranging 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, by a pledge and lien on tax revenues and amounts on deposit in certain funds and accounts held by the fiscal agent. The outstanding balance of the bonds was $19,559,004 as of June 30, 2006. 58 ' City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 7. LONG-TERM DEBT, Continued B. 1999 Tax Allocation Bonds -Original Issue $23,504,004, Continued The annual debt service requirements on these bonds are as follows: Year Ending June 30, Principal Interest Total 2007 $ 665,000 $ 834,769 $ 1,499,769 2008 695,000 802,469 1,497,469 2009 730,000 768,625 1,498,625 2010 765,000 733,119 1,498,119 2011 800,000 695,350 1,495,350 2012-2016 4,670,000 2,818,250 7,488,250 2017-2021 7,398,794 1,491,875 8,890,669 2022-2023 3,835,210 144,250 3,979,460 Total $ 19,559,004 $ 8,288,707 $ 27,847,711 C. 2002 Tax Allocation Refunding Bonds - OriginaI Issue $25,020,000 On October 9, 2002, the 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, either in inverse order of maturity or in inverse order of maturity and by lot within any one maturity date, 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 Agency related to the Central San Rafael Redevelopment Project Area. The outstanding balance of the bonds was $20,180,000 as of June 30, 2006. The annual debt service requirements on these bonds are as follows: Year Ending June 30, Principal Interest Total 2007 $ 1,165,000 $ 901,475 $ 2,066,475 2008 1,195,000 876,381 2,071,351 2009 1,235,000 835,149 2,070,149 2010 1,290,000 778,337 2,068,337 2011 1,350,000 718,937 2,068,937 2012-2016 7,885,000 2,468,131 10,353,131 2017-2021 5,445,000 578,069 6,023,069 2022 615,000 13,069 628,069 Total $ 20,180,000 $ 7,169,548 $ 27,349,548 59 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 7. LONG-TERM DEBT, Continued D. Peacock Gap Reassessment District Limited Obligation Refunding Improvement Bonds - Original Issue $2,405,000 On October 7,1993, the City issued Limited Obligation Refunding Improvement Bonds for the Peacock Gap Reassessment District in the amount of $2,405,000. The proceeds of the bonds were used to constitute a trust fund for the redemption and payment of principal and interest on the City of San Rafael Improvement Bonds of the Peacock Gap Improvement District, dated September 4, 1984. Interest is payable semi- annually on each March 2 and September 2, commencing March 2, 1994, at rates ranging from 4.00% to 5.75 %. The bonds were paid off during the fiscal year. E. Mariposa Road Assessment District Limited Obligation Improvement Bonds -Original Issue $233,688 On January 6, 1993, the City issued Limited Obligation Refunding Improvement Bonds for the Mariposa Road Assessment District in the amount of $233,688. The proceeds of the bonds were used to finance the grading and paving of Mariposa Road, to fund a Reserve Fund, and to pay the costs of issuance on the bonds. The bonds were issued as Serial Bonds and mature in various amounts on each September 2 commencing September 2,1994 and ending September 2, 2008. Interest is payable commencing on March 2, 1993, and semiannually thereafter on September 2 and March 2 of each year until maturity, at rates ranging from 4.50% to 6.90%. As of June 30, 2006, the outstanding balance of the bonds was $50,000. The annual debt service requirements on these bonds are as follows: Year landing June 30, Principal Interest Total 2007 $ 15,000 $ 2,926 $ 17,926 2008 15,000 1,898 16,898 2009 20,000 690 20,690 Total $ 50,000 $ 5,514 $ 55,514 F. Note Payable At June 30, 2006, Notes Payable consisted of a $169,000 promissory note bearing interest at 8% with principal and accrued interest due and payable in November 2024. The note was assumed to finance the purchase of certain property by the Agency. The outstanding balance of the loan at June 30, 2006 was $169,000 plus accrued interest of $144,834 which is recorded as interest payable. 60 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 7. LONG-TERM DEBT, Continued G. Capitalized Lease Obligations The City leased two fire trucks in the amount of $668,134. The annual lease payment of $72,295 for five years started in September 2004. The lease expires in 2009. The future minimum lease obligations are due as follows: Year Ending June 30, Trucks 2007 $ 133,524 2008 137,433 2009 141,484 Total $ 412,441 H. Business -Type Activities Long-term debt outstanding for Business -Type Activities at June 30, 2006, was as follows: Balance Balance Due in Due in More July 1, 2005 Additions Deletions June 30, 2006 One Year Than One Year Business -Type Activities: 2003 Authority Lease Revenue Bonds $ 7,605,000 $ - $ (150,000) $ 7,455,000 $ 155,000 $ 7,300,000 L 2003 Authority Lease Revenue Bonds - Original Issue $7,605,000 On March 26, 2003, the Authority issued 2003 Authority Lease Revenue Bonds in the amount of $7,605,000 bearing interest at rates from 3.00% to 4.70%. The proceeds of the bonds were provided for the design and construction of a new public parking garage. The bonds mature annually each April 1 from 2006 to 2033, in amounts ranging from $150,000 to $290,000. Interest is payable semiannually on April 1 and October 1. The bonds maturing on or after April 1, 2011 are subject to optional redemption prior to maturity on or after April 1, 2010 at the option of the City, as a whole on any date. The Lease Revenues are secured by lease payments made by the City to the Authority for leasing the City facilities. The outstanding balance of the bonds was $7,455,000 as of June 30, 2006. 61 City of San Rafael. Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 7. LONG-TERM DEBT, Continued L 2003 Authority Lease Revenue Bonds -Original Issue $7,605,000, Continued The annual debt service requirements on these bonds are as follows: Year Ending June 30, Principal Interest Total 2007 $ 155,000 $ 341,066 $ 496,066 2008 160,000 336,416 496,416 2009 165,000 331,616 496,616 2010 170,000 326,666 496,666 2011 175,000 321,141 496,141 2012-2016 995,000 1,493,849 2,488,849 2017-2021 1,225,000 1,264,413 2,489,413 2022-2026 1,530,000 953,710 2,483,710 2027-2031 1,955,000 534,000 2,489,000 2032-2033 925,000 70,000 995,000 Total $ 7,455,000 $ 5,972,977 $ 13,427,877 J. Discrete Component Unit - San Rafael Sanitation District - 2001 Certificates of Participation - Original Issue $4,710,000 Balance Balance Due in Due in More July 1, 2005 Additions Deletions June 30, 2006 One Year Than One Year 2001 Certificates of Participation $ 3,189,860 $ - $ (337,032) $ 2,852,828 $ 380,000 $ 2,472,828 The District and its Financing Corporation on May 1, 2001 issued $4,710,000 of Certificates of Participation at a discount of $35,121 maturing in 2012. The certificates were to be used (1) to refund in whole the outstanding Series 1991 Certificates of Participation, (2) to finance the District's share of a new construction corporation yard, (3) to fund in whole or in part, a reserve fund for the certificates, and (4) to pay certain costs of issuing the certificates. The certificates are fully registered with principal due annually on August 1 and interest payable semiannually on February 1 and August 1. The certificates are subject to optional prepayment on any date on or after August 1, 2009. Terms of the Trust Agreement call for a premium at 101 % to exercise optional prepayment between August 1, 2009 and July 31, 2010, and no premium August 1, 2010 and after. 62 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 7. LONG-TERM DEBT, Continued r Discrete Component Unit - San Rafael Sanitation District - 2001 Certificates of Participation - Original Issue $4,710,000, Continued The transaction advance refunded the 1991 Certificates by placing an amount in an irrevocable escrow fund sufficient to retire the debt on August 1, 2001, terminating and legally defeasing the 1991 Certificates. The excess of the reacquisition price over the net carrying amount of the debt defeased resulted in a deferred amount on refunding of $250,973. The deferred amount on refunding as well as the discount are carried as a reduction of the certificates of participation to be amortized on a straight-line basis over the life of the new debt as a component of interest expense. The transaction reduced total cash out flows by $44,969 and resulted in an economic gain of $263,736. The outstanding of the 2001 Certificates of Participation was $2,852,828 at June 30, 2006. Total debt outstanding as of June 30, 2006 net of discounts and deferred amount on refunding were as follows: Principal outstanding at June 30, 2005 $ 2,995,000 Less: Discount (17,706) Deferred amomt on refunding (124,466) Net bonds outstanding at June 30, 2006 $ 2,852,828 The annual debt service requirements on these bonds are as follows: Year Ending June 30, Principal Interest Total 2007 $ 380,000 $ 118,170 $ 498,170 2008 395,000 103,050 498,050 2009 410,000 86,745 496,745 2010 430,000 69,310 499,310 2011 440,000 50,820 490,820 2012 940,000 20,680 960,680 Total $ 2,995,000 $ 448,775 $ 3,443,775 63 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 7. LONG-TERM DEBT, Continued K. Other Disclosure The City complied with all significant bond covenants relating to reserve and sinking fund requirements, proof of insurance and budgeted revenue and maintenance costs. 8. NON -CITY OBLIGATIONS The following bond issues were not reported in the City's financial statements because they are special obligations payable solely from and secured by specific revenue sources described in the resolutions and official statements of the respective issues. Neither the faith and credit nor the taxing power of the City, the Agency, the State of California or any political subdivision thereof, is pledged for payment of these bonds. San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds California Statewide Communities Development Authority Revenue Bonds San Rafael Redevelopment Agency Variable Rate Demand Multifamily Housing Revenue Bonds San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds-2001 City of San Rafael Variable Rate Revenue Bonds Project Original Outstanding Description Amount June 30, 2006 162175 Belvedere Apartments $ 3,590,529 $ 1,413,257 St. Marks School 5,605,000 5,495,000 55 Fairfax Apartments 3,000,000 2,900,000 San Rafael Commons Apartments 6,100,000 5,960,000 Kaiser Foundation Hospitals 275,000,000 270,630,000 9. FUND BALANCE RESERVATIONS AND DESIGNATIONS Fund balances consist of reserved and unreserved amounts. Reserved fund balances represent that portion of a fund balance which has been appropriated for expenditure or is legally segregated for a specific future use. The remaining portion is unreserved fund balances. Portions of unreserved fund balances may be designated to indicate tentative plans for financial resource utilization in a future period, such as for general contingencies or capital projects. Such plans or intent are subject to change, have not been legally authorized and may not result in expenditures. 64 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 9. FUND BALANCE RESERVATIONS AND DESIGNATIONS, Continued A detailed schedule of the fund balances at June 30, 2006, follows: Reserved: Encumbrances Petty: cash General plan Department savings Home loans Loans receivable Debt service Improvement projects Information systems projects Equipment replacement Assessment districts/open space Mello Roos assessment Traffic Mitigation Housing Court fine audit Total reserved Unreserved, Designated: Emergency and cash flow Library/endowments Public safety Grant projects Park projects Street projects Total designated Unreserved, Undesignated Total Major Funds Redevelopment Special Revenue Agency Traffic and Houshold Non -Major Capital Projects Housing Hazmat Governmental General Fund Mitigation Facility Funds Total $ 160,359 $ 96,481 $ - $ - $ 60,682 $ 317,522 3,395 - - - - 3,395 123,152 - - - - 123,152 126,036 - - - - 126,036 500,000 - - - - 500,000 309,637 273,725 - - - 583,362 - - - - 788,006 788,006 - 6,342,060 - - 2,446,578 8,788,638 289,026 - - - - 289,026 - - - 10,427 - 10,427 66,786 - - - 137,735 204,521 - - - - 500,000 500,000 - - 8,883,070 - - 8,883,070 - 1,350,000 714,960 - - 2,064,960 757,000 - - - - 757,000 2,335,391 8,062,266 9,598,030 10,427 3,933,001 23,939,115 3,086,216 - - - 106,352 3,192,568 - - - - 155,149 155,149 - - - - 211,248 211,248 - 1,233,943 1,233,943 - 926,371 926,371 - - - - 3,903,164 3,903,164 3,086,216 - - - 6,536,227 9,622,443 275,935 - 80,000 24,578 527,948 908,461 $ 5,697,542 $ 8,062,266 $ 9,678,030 $ 35,005 $ 10,997,176 $ 34,470,019 65 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 10. EXCESS OF EXPENDITURES OVER APPROPRIATIONS The following funds had departmental expenditures in excess of budget. Sufficient revenues were available to fund these expenditures: Major Funds: Traffic and Housing Mitigation Non -Major Funds: Recreation Revolving Baypoint Lagoon Assessment District Gas Tax Childcare Street Maintenance and Cleaning Loch Lomond Assessment District Development Services Total Excess of Appropriations Expenditures Expenditures $ 59,610 $ 962,132 $ 902,522 2,958,382 3,204,527 246,145 - 9,868 9,868 1,580,759 1,761,769 181,010 3,052,408 3,091,352 38,944 1,793,685 1,821,295 27,610 - 54 54 - 604,073 604,073 $ 9,444,844 $ 11,455,070 $ 2,010,226 Traffic and Housing Mitigation - The traffic signal installation projects were budgeted in previous years but spent in the current year. Recreation Revolving - Higher than expected revenues created higher contractual service costs for programs and classes provided to citizens. Baypoint Lagoon Assessment District - Vegetation management funded by assessments were expended in the current year. Gas Tax - Street resurfacing and 4t1h street rehabilitation projects were budgeted in previous years but spent in the current year. Childcare - Higher than expected revenues created higher supply cost and higher credit card transaction fees. Street Maintenance and Cleaning - Sidewalk replacement projects budgeted in previous years were spent in the current year. Loch Lomond Assessment District - County administrative fees for the assessment was charged to the appropriate fund. Development Services - The Loch Lomond Marina EIR was funded and budgeted in prior years, but spent in the current year. City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 11. EMPLOYEES' RETIREMENT PLAN A. Plan Description The City contributes to the Marin County Employees' Retirement Fund (Fund). All full-time and permanent part-time employees who work at least 75% of a full time position are eligible to participate. The Fund is an agent multiple -employer defined benefit retirement plan that acts as a common investment and administrative agent for various local governmental agencies within the County of Marin. The Fund provides retirement, disability, and death benefits based on the employee's years of service, age, and final compensation. Employees vest after five years of service and are eligible to receive retirement benefits after 10 years of service and having attained the age of 50, or 30 years of service (20 years for safety employees) regardless of age. These benefits provisions and all other requirements are established under the County Employees Retirement Law of 1937. The City's retirement plan is included in a separately issued report from the Marin County Employees' Retirement Fund, which can be obtained from Marin County Employees' Retirement Association, 3501 Civic Center Drive, Room 408, Civic Center, San Rafael, California 94903. B. Funding Policy The funding policy of the Fund provides for actuarially determined periodic contributions by the City at rates such that sufficient assets will be available to pay Fund benefits when due. The City contributed 42.90% and 35.18% of payroll to the Fund for Police and Fire personnel, respectively, and 25.38% for other covered employees for the year ended June 30, 2006. C. Annual Pension Cost The City's annual pension cost to the Fund for the year ended June 30, 2006, of $9,316,354 was equal to the City's required and actual contributions. The annual required contribution was determined as part of the actuarial valuation performed as of June 30, 2005. The employer rates for normal cost is determined using the Entry Age Normal Actuarial Cost Method, a projected benefit cost method. It takes into account those benefits that are expected to be earned in the future as well as those already accrued. The significant assumptions used in the 2005 actuarial valuation include an assumed rate of return on invested assets of 8.25%, annual payroll increases reflecting 4.25% for inflation and an approximate range of 0.54% to 6.62% for merit and longevity. The actual rate of return on investments was a loss of 3.4%. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a period of five years. The Fund also uses the level percentage -open method to amortize the unfunded actuarial liability which was revised to sixteen years left in the amortization period. It is assumed that payroll will increase at an annual inflation rate of 4.25 % over the amortization period. 67 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 11. EMPLOYEES' RETIREMENT PLAN, Continued D. Three -Year Historical Trend Information Fiscal Year Annual Pension Percentage of Net Pension Ending Cost (APC) APC Contributed Obligation 6/30/2004 $ 3,879,356 100% 6/30/2005 7,630,990 100% 6/30/2006 9,316,354 100% 1.2. PUBLIC AGENCY RETIREMENT SYSTEM (DEFINED CONTRIBUTION RETIREMENT PLANS) The City contributes to the Public Agency Retirement System (PARS), which is 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 to be determined instead of specifying the amount of benefits the individual is to receive. The plan is administered by Phase H located at P.O. Box 10009, Costa Mesa, California 92627. Under a defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the participant's account, the returns earned on investments on those contributions, and forfeitures of other participant's benefits that may be allocated to such participant's account. As established by the plan, all eligible non represented employees of the City will become a participant 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. Contributions made by an employee and the employer vest immediately. 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. During the year, the City and employees contributed $72,785. The total covered payroll of employees participating in the plan for the year ended June 30, 2006, was $1,940,933. The total payroll for the year was $35,450,962. Additionally, the City participates in a 401(a) tax qualified plan for eligible non -represented management/mid-management employees. This is an employer only contribution program separate from the Marin County Employees' Retirement Fund. The City Manager, as Plan Administrator, annually determines the percent amount of contribution which can range from 0% to 5% of base salary of eligible employees. During the year, the City contributed $154,019 to the plan on behalf of the eligible employees. 68 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 13. POST -EMPLOYMENT HEALTH CARE BENEFITS The City provides certain health care benefits for retired employees and their spouses. The benefit provisions were established under the authority of the 1937 Act, Section 31450, et. seq. of the Government Code. Substantially all of the City's employees may become eligible for these benefits if they are receiving a retirement benefit from the Marin County Employees' Retirement Fund within 120 days of retirement from City employment. At June 30, 2006, 246 retirees and surviving spouses received post -employment health care benefits. Those expenditures are reduced by reimbursements from the Marin County Retirement Office by the annual amount set forth in the County Retirement Rules and Regulations 1937 Act as amended and in Sections 31450 et. seq. of the Government Code. The cost of retiree health care benefits is recognized as an expenditure as claims are paid. For the fiscal year ended June 30, 2006, those costs totaled $1,564,789 of which $923,489 was reimbursed. 14. RISK MANAGEMENT The City 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 disasters. The City is self -insured up to a maximum of $500,000 for each general liability claim, $750,000 for each workers' compensation claim, and $25,000 for each property damage claim. The City participates in a public agency risk sharing pool (California Joint Powers Risk Management Authority) for general liability claims in excess of the self - insured amounts up to $40,000,000. The City purchases commercial insurance for workers' compensation claims in excess of the self -insured amount up to statutory limits excess. The City also purchases commercial insurance for property damage claims with an insured amount of $65,704,863. The City accounts for and finances its risks of loss in the internal service funds. The City had established a claims liability of $3,346,192 at June 30, 2006, based on the requirement of GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, which requires that a liability forclaims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Settled claims have not exceeded this coverage in any of the past three fiscal years. Changes in the general and workers' compensation claims liabilities for the fiscal years ended June 30, 2004, 2005, and 2006, are as follows: Balance at Current Year Balance at General Beginning of Claims and Changes Claim End of Liability Fiscal Year In Estimates Payments Fiscal Year 2003-04 $ 493,400 $ 835,521 $ (641,776) $ 687,145 2004-05 687,145 716,619 (898,505) 505,259 2005-06 505,259 389,324 (449,520) 445,063 Workers' Balance at Current Year Balance at Compensation Beginning of Claims and Change Claim End of Liability Fiscal Year In Estimates Payments Fiscal Year 2003-04 $ 3,277,333 $ 1,917,432 $ (1,543,886) $ 3,650,879 2004-05 3,650,879 199,115 (640,589) 3,209,405 2005-06 3,209,405 335,898 (644,174) 2,901,129 69, . City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 14. RISK MANAGEMENT, Continued The California Joint Powers Risk Managenent Authority - which began operations in February 1986, is a governmental self-insurance cooperative organized under a joint powers agreement consisting of 22 members which represent over 120 public agencies in California. The Risk Management Authority pools self-insurance losses of charter and associate members, develops risk management programs, and provides for administration of pooled coverage claims. The City paid $359,047 in premiums to the Risk Management Authority during the fiscal year ended June 30, 2006. Condensed financial information for the California Joint Powers Risk Management Authority for the fiscal year ended June 30, 2006, was as follows: Assets $ 75,188,363 Liabilities $ 42,846,283 Net assets 32,342,080 Total liabilities and net assets $ 75,188,363 Revenues $ 15,400,459 Expenses (8,117,221) Refunds to members (4,227,804) Change in net assets $ 3,055,434 15. JOINT VENTURES, JOINTLY GOVERNED ORGANIZATIONS AND RELATED PARTY TRANSACTIONS A. Joint Ventures The City participates in various organizations that are formally organized and are separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these entities exercise full powers and authorities within the scope of the related Joint Powers Agreement including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts, and the right to sue and be sued. Obligations and liabilities of the separate entities are not those of the City. The Marin CounfiLLegrated On -Line Libranj System (System) - was formed to provide for the procurement, ownership, operation, maintenance, and governance of an integrated on-line library system that is jointly owned and operated by the cities of San Rafael, Mill Valley, Sausalito, and the County of Marin. 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 the acquisition cost in the amount of $108,007 represents 18.98 % of ownership in the System. Operating costs for the System are also shared by each participant by applying the cost sharing formula. Financial statements of the System can be obtained at the County Librarian, Marin County Free Library, Civic Center, Administration Building, San Rafael, California 94903. 70 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 15. JOINT VENTURES, JOINTLY GOVERNED ORGANIZATIONS AND RELATED PARTY TRANSACTIONS, Continued A. Joint Ventures, Continued The Marin Street fight Acquisition Toint Powers Authorit! (MSLAJPA) - was formed by the County of Marin and twelve local agencies to acquire street light facilities, operate the facilities during the pendency of an eminent domain action against PG&E, and the subsequent transfer of the facilities to the individual local agencies. The Governing Board consists of five members from the participating 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 MSLAJPA. Financial statements of the MSLAJPA can be obtained at 27 Commercial Blvd. Suite C, Novato, California 94949. The Marin Emergency Radio Authority (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. On February 1, 1999, the Authority issued the 1999 Revenue Bonds in the amount of $26,940,000 with interest rates ranging from 4.75% to 5.01%, maturing on August 15, 2016, to finance the acquisition and installation of the system. The costs of maintenance, operation, and debt service will be 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 operation and debt service. The Cit '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 has established a reserve in its internal service funds to pay future service payments. Financial statements of the MERA can be obtained at 3501 Civic Centre Drive, San Rafael, California 94903. B. Jointly Governed Organizations The Countywide Planning Agencyy - was established by the County of Marin and ten local cities 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 Countywide Planning Agency consists of one member of the County Board of Supervisors and one member of the City Council of each participating city. The Marin Telecommunications Agencyy - was established to regulate the rates for cable television service and equipment and to advise the participants in their exercise of their license authority. The Governing Board of the Marin Telecommunications Agency consists of one member from each of the eleven participating agencies. The Marin Country Hazardous and Solid Waste Toint Powers 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. Friends of San Ram - a California nonprofit Public Benefit Corporation -- was established to help finance and accomplish the City's efforts to erect, construct and maintain public buildings, roads, monuments, plazas, parks, gardens, safety features and similar public improvements and infrastructure. 71 City of San Rafael Notes to Basic Financial Statements, Continued For the year ended June 30, 2006 16. COMMITMENT AND CONTINGENCIES The City is a defendant is various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's legal counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City. The City worked with the Department of Justice (DOJ) to determine the City's compliance with the Americans with Disabilities Act of 1990 (ADA). The DOJ ratified an ADA Settlement Agreement in August 2004 providing a number of specific remedies including timelines, law specific solutions and reporting over the next ten years. For example, several facility deficiencies require resolution within the next year, the City's Web site needs an ADA overhaul, and a significant amount of items relate to curb ramps. The City determined a range of $2,000,000 to $3,000,000 to expend on the remedies determined by the Agreement. However, this is only an estimate and the City does not have a measurable amount at this time. Therefore, no liability has been recorded. On October 1, 2002, the Agency entered into a second amendment to the Section 33401 Tax Sharing Agreement with the San Rafael High School District. This agreement provides for additional payments in the amount of $179,000 each fiscal year beginning with fiscal year 2002-03 through fiscal year 2021-22. 17. PRIOR PERIOD ADJUSTMENTS Government -Wide Financial Statements In the governmental activities, capital assets were understated by $635,830. The City did not record certain Construction In Progress that should have been in the prior years. Governmental Activities Net assets Total Governmental Activities Net Assets, as Previously Reported Prior Period Adjustment Capital Assets $ 211,204,394 $ 635,830 $ 211,204,394 $ 635,830 Net Assets, as Restated q ?II,M0.224 $ 211,840,224 72 REQUIRED SUPPLEMENTARY INFORMATION 73 City of San Rafael Required Supplementary Information For the year ended June 30, 2006 1. BUDGETS AND BUDGETARY ACCOUNTING The City adopts a budget on a biannual basis, to be effective July 1 for the ensuing and subsequent fiscal years. The two year budget reflects estimated revenues and expenditures for each fiscal year. From the effective date of the budget, which is adopted at the department level, the amounts stated therein as proposed expenditures become appropriations to the various City departments. The City Council may amend the budget by resolution during the fiscal year. Expenditures may not exceed appropriations at the departmental 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 total budget. Several supplemental appropriations were approved during the course of the year. The City legally adopts budgets for all its governmental funds, except for the East Francisco Boulevard Assessment District, 1915 Act Bonds and 1997 Reassessment Bonds debt service funds, because the City is only required to make debt service payments in the event of bondholder default. Encumbrance accounting, under which purchase orders, contracts and other commitments for expenditures are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of the budgetary process. Encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities and are carried forward in the subsequent year's budget. All unencumbered appropriations lapse at year end. 74 City of San Rafael Required Supplementary Information, Continued For the year ended June 30, 2006 1. BUDGETS AND BUDGETARY ACCOUNTING, Continued Budgetaj ComCompariwn Schedule, General Fund REVENUES: Taxes and special assessments Licenses and permits Fines and forfeitures Use of money and property Intergovernmental Charges for services Other Total revenues EXPENDITURES: Current: General government Public safety Public works and parks Community development/redevelopment Culture and recreation Capital outlay Capital improvement/special projects Debt service: Capitalized lease obligation Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) $ 35,232,660 $ 35,688,800 $ 37,316,540 $ 1,627,740 944,940 1,169,670 1,169,927 257 903,050 663,050 622,494 (40,556) 350,110 354,110 401,632 47,522 5,421,400 6,818,460 6,021,170 (797,290) 1,692,351 1,769,481 1,823,411 53,930 165,550 165,550 223,914 58,364 4/,J/7,Ubb 747,7b/ 6,044,960 6,256,735 6,141,552 115,183 27,786,430 28,165,240 27,926,658 238,582 6,360,700 6,433,281 6,318,640 114,641 2,466,300 2,471,937 2,702,210 (230,273) 1,738,220 1,743,215 1,710,065 33,150 55,688 67,604 45,249 22,355 120,875 1,003,875 816,328 187,547 - - 130,315 (130,315) 44,573,173 46,141,887 45,791,017 350,870 136,888 487,234 1,788,071 1,300,837 831,960 965,780 965,780 - (4,479,870) (5,012,870) (5,278,870) (266,000) (3,647,910) (4,047,090) (4,313,090) (266,000) $ 3,511,022 $ (3,559,856) (2,525,019) $ 1,034,837 8,222,561 ZP D,o7/,04L 75 City of San Rafael Required Supplementary Information, Continued For the year ended June 30, 2006 x. BUDGETS AND BUDGETARY ACCOUNTING, Continued Budgetary Comparison Schedule, Traft and Housing Mitigation Special Revenue Fund REVENUES: Use of money and property Charges for services Total revenues EXPENDITURES: Current: Public works and parks Capital improvement/special projects Total expenditures REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources/uses Net change in fund balance FUND BALANCE: Beginning of year End of year Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ - $ - $ 264,830 $ 264,830 698,500 997,086 298,586 59,610 59,610 61,129 (1,519) - - 901,003 (901,003) 59,610 59,610 962,132 (902,522) (59,610) 638,890 299,784 (339,106) (16,254) (16,254) - $ (59,610) $ 622,636 283,530 $ 1,465,938 9,394,500 $ 9,678,030 76 City of San Rafael Required Supplementary Information, Continued For the year ended June 30, 2006 1. BUDGETS AND BUDGETARY ACCOUNTING, Continued Budgefaj Comparison Schedule, Household Hazrt2at FacilitiJ Special_Revenue Fund REVENUES: Licenses and permits Use of money and property Intergovernmental Charges for services Other Total revenues EXPENDITURES: Current: Public safety Capital outlay Capital improvement/special projects Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 5,170 $ 5,170 $ 5,103 $ (67) 10,650 10,650 163 (10,487) 16,000 16,000 15,010 (990) 1,460,302 1,328,004 1,092,885 (235,119) - - 1,650 1,650 1,492,122 1,359,824 1,114,811 (245,013) 1,645,132 1,555,818 1,212,038 343,780 12,310 12,310 12,399 (89) - - 64,966 (64,966) 1,657,442 1,568,128 1,289,403 278,725 (165,320) (208,304) (174,592) 33,712 86,000 172,000 172,000 - 86,000 172,000 172,000 - $ (79,320) $ (36,304) (2,592) $ 33,712 37,597 77 City of San Rafael Required Supplementary Information, Continued For the year ended June 30, 2006 {{ 1 2. MARIN COUNTY EMPLOYEES' RETIREMENT SYSTEM SCHEDULE OF FUNDING PROGRESS Actuarial Excess Excess (Deficit) Actuarial Actuarial Accrued (Deficit) Assets Over AA1 Valuation Value Liability (AAL) Assets Funded Covered Asa % of Date * of Assets Entry Age Over AAL Ratio Payroll Payroll 6/30/2003 $ 185,632,000 $ 219,845,000 $ (34,213,000) 84% $ 27,453,000 (124.6)% 6/30/2004 188,956,000 248,665,000 (59,709,000) 76% 29,299,000 (203.8)% 6/30/2005 195,698,000 265,205,000 (69,507,000) 74% 28,357,000 (245.1)% * Latest information available. 78 SUPPLEMENTARY INFORMATION 79 This page intentionally left blank. 80 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Redevelopment Agency Capital Projects Fund - Major Fund For the year ended June 30, 2006 REVENUES: Taxes and special assessment Use of money and property Intergovernmental Charges for services Other Total revenues EXPENDITURES: Current: Community development/redevelopment Capital improvement/special projects Total expenditures REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) $ 953,648 $ 953,648 $ 984,314 $ 30,666 153,240 153,240 348,900 195,660 - - 1,888,960 1,888,960 41,060 8,560 21,500 12,940 10,000 10,000 656,977 646,977 1,157,948 1,125,448 3,900,651 2,775,203 1,688,878 1,707,146 1,481,874 225,272 179,000 4,231,076 7,426,075 (3,194,999) (709,930) (4,812,774) (5,007,298) (194,524) (56,663) $ (709,930) $ (4,869,437) (56,663) - tob,bb0) - (5,063,961) $ (194,524) 13,126,227 $ 8,062,266 81 This page intentionally left blank. 82 NON -MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS: Recreation Revolving Fund - Established to administer the Recreation 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. Gas Tax Fund - Established to receive and expend the City's allocation of the State gasoline taxes. Childcare Fund - Established to administer and account for childcare programs at eleven sites throughout the City. Street Maintenance and Cleaning Fund - Established to maintain the City's streets, public properties and rights of way. Loch Lomond Assessment District Fund - Established to provide maintenance for stormwater and geotechnic mitigation facilities. A Mello Roos District was formed to fund this maintenance. Library Fund - Established to account for restricted library activities that are intended to be self -funding. Public Safety Fund - Established for special police services, which are intended to be self-f Lmduig. Stormwater Fund - Established to provide for a 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, such as the Farmers Market. 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 a countywide Household Hazardous Waste Program. Sewer Maintenance Fund - Established under the terms of the JPA to provide all necessary maintenance to the Sanitation District's gravity collection sewer system. 83 This page intentionally left blank. 84 NON -MAJOR GOVERNMENTAL FUNDS DEBT SERVICE FUNDS: Peacock Gap Assessment District Fund - Established to accumulate funds for the payment of principal and interest for the 1993 Bonds which matures 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 matures 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 matures 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. Redevelopment Agency Fund - Established to account for the principal payments, interest payments, and related costs of the 199 Project Tax Allocation Bonds and 2002 Tax Allocation Refunding Bonds. CAPITAL PROTECTS 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 Districts 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 partnerships with the community. Open Space Fund - Established for the acquisition of open space. 85 City of San Rafael Combining Balance Sheet Non -Major Governmental Funds June 30, 2006 ASSETS Cash and investments Cash with fiscal agent Receivables: Accounts Tax Grants Loans Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Developer bonds payable Deferred revenue Total liabilities Fund Balances (Note 9): Reserved Unreserved: Designated Undesignated Total fund balances Total liabilities and fund balances Special Revenue Baypoint Lagoon Street Recreation Assessment Gas Maintenance Revolving District Tax Childcare and Cleaning $ 342,686 $ 40,160 $ 1,836,564 $ 7,115 $ 994,613 220,307 - - - - - 127 150,860 - - - - - 26,521 - $ 562,993 $ 40,287 $ 1,987,424 33,636 $ 994,613 $ 105,615 $ 5,526 $ $7,830 $ 33,128 $ 42,121 199,696 - - - - 305,311 5,526 87,830 33,128 42,121 - - 1,899,594 - 952,492 257,682 34,761 - 508 - 257,682 34,761 1,899,594 508 952,492 $ 562,993 $ 40,287 $ 1,987,424 $ 33,636 $ 994,613 86 Special Revenue Loch Lomond Emergency Assessment Public Development Parkland Medical District library Safety Stormwater Services Grants Dedication Services $ 730,997 $ 114,422 $ 196,728 $ 1,046,484 $ 250,105 $ 1,264,701 $ 875,076 $ 125,338 - - 14,777 - - - - - 66 - - 2,734 - - - 11,344 - 64,687 - - - 126,591 51,295 - - - - - - - 21,726 - $ 731,063 $ 179,109 $ 211,505 $ 1,049,218 $ 250,105 $ 1,391,292 $ 948,097 $ 136,682 $ - $ 23,960 $ 257 $ 40,213 $ 117,064 $ 1OZ382 $ - $ 30,330 - - - - 1,500 - - - - - - - - - 21,726 - - 23,960 257 40,213 118,564 102,382 21,726 30,330 500,000 - - - 131,541 54,967 - - - 155,149 211,248 11009,005 - 1,233,943 926,371 106,352 231,063 - - - - - - - 731,063 155,149 211,248 11009,005 131,541 1,288,910 926,371 106,352 $ 731,063 $ 179,109 $ 211,505 $ 1,049,218 $ 250,105 $ 1,391,292 $ 948,097 $ 136,682 (Continued) 87 City of San Rafael Combining Balance Sheet Non -Major Governmental Funds, Continued June 30, 2006 Special Revenue Debt Service Peacock 1997 Gap Mariposa Financing Business Sewer Assessment Assessment Authority Improvement Maintenance District District Revenue Bonds ASSETS Cash and investments $ 3,997 $ 116,998 $ 2,875 $ 48,224 $ 345,226 Cash with fiscal agent - - - - 357,649 Receivables: Accounts - - - - - Tax _ - - 94 1,404 Grants - - - - - Loans - - - - - Total assets $ 3,997 $ 116,998 $ 2,875 $ 48,318 $ 704,279 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 63 $ 74,925 $ - $ - $ - Developer bonds payable - - - - - Deferred revenue - - - - - Total liabilities 63 74,925 - - - Fund Balances (Note 9): Reserved - - 2,875 48,318 704,279 Unreserved: Designated - 42,073 - - - Undesignated 3,934 - - - - Total fund balances 3,934 42,073 2,875 48,318 704,279 Total liabilities and fund balances $ 3,997 $ 116,998 $ 2,875 $ 48,318 $ 704,279 88 Debt Service Capital Projects Total Park Non -Major Redevelopment Capital Bedroom Assessment Capital Open Governmental Agency Improvement Tax Districts Projects Space Funds $ 31,840 $ 1,907,667 $ 188,365 $ 223,741 $ 12,081 $ 137,735 $ 10,843,738 694 - - - - - 358,343 - - - - - - 235,084 - - 166,629 - - - 5,625 - 274,719 - - - - - - 21,726 $ 32,534 $ 1,907,667 $ 188,365 $ 223,741 $ 17,706 $ 137,735 $ 11,900,239 $ - $ 16,727 $ - $ - $ - $ - $ 680,141 - - - - - 1,500 - - - - 221,422 16,727 - - - - 903,063 32,534 1,890,940 188,365 223,741 17,706 137,735 3,933,001 - - - - - - 6,536,227 - - - - - - 527,948 32,534 1,890,940 188,365 223,741 17,706 137,735 10,997,176 $ 32,534 $ 1,907,667 $ . 188,365 $ 223,741 $ 17,706 $ 137,735 $ 11,900,239 (Concluded) 89 City of San Rafael Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non -Major Governmental Funds For the year ended June 30, 2006 11� TWILIM's Taxes and special assessments Licenses and permits Pines and forfeitures Use of money and property Intergovernmental Charges for current services Other revenue Total revenues EXPENDITURES: Current: General government Public safety Public works and parks Culture and recreation Capital outlay Capital improvement/special projects Debt service: Principal retirement Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES: Beginning of year End of year Special Revenue Baypoint Lagoons Street Recreation Assessment Gas Maintenance Revolving District Tax Childcare and Cleaning $ - $ 25,368 $ - $ - $ - 7,996 874 34,849 1,171 16,897 - - 1,195,928 374,274 973,714 1,725,314 - 1,100,180 2,576,814 - 10,732 - 3,276 - 56,185 1,744,042 26,242 2,334,233 2,952,259 1,046,796 - 9,868 120,639 - 1,669,784 3,120,283 - - 3,088,860 - 271 - - 2,492 - 83,973 - 1,641,130 - 151,511 3,204,527 9,868 1,761,769 3,091,352 1,821,295 (1,460,485) 16,374 572,464 (139,093) (774,499) 1,413,000 - 138,915 190,590 1,618,620 - - (304,200) (71,120) (122,661) 1,413,000 - (165,285) 119,470 1,495,959 (47,485) 16,374 407,179 (19,623) 721,460 305,167 18,387 1,492,415 20,131 231,032 $ 257,682 $ 34,761 $ 1,899,594 $ 508 $ 952,492 90 Special Revenue Loch Lomond Emergency Assessment Public Development Parkland Medical District Library Safety Stormwater Service Grants Dedication Services $ 13,257 $ - $ - $ - $ - $ - $ - $ 2,668,491 19,284 57,074 4,563 23,526 12,407 33,335 23,223 - - 131,565 77,506 - - 826,734 - - - 6,433 4,445 798,873 33,151 - 9,681 1,506,213 - 23,043 280 51,199 254,493 146,040 - - 32,541 218,115 86,794 873,598 300,051 1,006,109 32,904 4,174,704 - - - - - 7,497 - - - - 141,539 - - 100,000 - 3,941,733 54 - - 1,149,065 - - - - - 175,137 - - - 315,488 - - - 83,636 6,405 336,883 604,073 786,689 - - 54 258,773 147,943 1,485,949 604,073 1,209,674 - 3,941,733 32,487 (40,658) (61,149) (612,350) (304,022) (203,565) 32,904 232,971 112,000 908,714 - 404,539 - 180,500 (320,449) - - - - - (370,760) (320,449) 112,000 908,714 - 404,539 - (190,260) 32,487 (361,107) 50,851 296,364 (304,022) 200,974 32,904 42,711 698,576 516,256 160,397 712,641 435,563 1,087,936 893,467 63,641 $ 731,063 $ 155,149 $ 211,248 $ 1,009,005 $ 131,541 $ 1,288,910 $ 926,371 $ 106,352 (Continued) 91 City of San Rafael Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non -Major Governmental Funds, Continued For the year ended June 30, 2006 REVENUES: Taxes and special assessments Licenses and permits Fines and forfeitures Use of money and property Intergovernmental Charges for current services Other revenue Total revenues EXPENDITURES: Current: General government Public safety Public works and parks Culture and recreation Capital outlay Capital improvement/special projects Debt service: Principal retirement Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES: Beginning of year End of year Special Revenue Debt Service Peacock 1997 Gap Mariposa Financing Business Sewer Assessment Assessment Authority Improvement Maintenance District District Revenue Bonds $ - $ - $ - $ 20,297 $ 284,072 362 1,405 - 1,115 20,734 32,500 - - - - - 1,408,586 - - - 16,546 - - - - 49,408 1,409,991 - 27,412 304,806 48,501 - - - - 1,293,406 - - - - - 205,000 15,000 530,000 - - 6,331 5,166 76,669 48,501 1,293,406 211,331 20,166 606,669 907 116,585 (211,331) 7,246 (301,863) - (115,180) (2,580) (150) (4,920) - (115,180) (2,580) (150) (4,920) 907 1,405 (213,911) 7,096 (306,783) 3,027 40,668 216,786 41,222 1,011,062 $ 3,934 $ 42,073 $ Z875 $ 48,318 $ 704,279 92 Debt Service Capital Projects Total Park Non -Major Redevelopment Capital Bedroom Assessment Capital Open Governmental Agency Improvement Tax District Projects Space Funds $ 3,565,100 $ - $ 18,105 $ - $ - $ - $ 6,600,690 518 32,985 4,882 - 162 3,671 301,033 - 148,454 - - 20,102 - 3,780,777 _ - - - - - 9,169,690 - 27,000 - - 3,743 - 592,537 3,565,618 208,439 22,987 - 24,007 3,671 20,444,727 2,788 58,786 - 4,183,271 - - - - - - 4,242,816 - - - - - - 6,699,768 _ - _ _ - - 2,763 - 284,574 - - 13,626 - 3,992,500 1,775,000 - - - - - 2,525,000 1,790,099 - - - - - 1,878,265 3,565,099 284,574 - 13,626 Z788 23,583,169 519 (76,135) 22,987 - 10,381 883 (3,138,442) 820,449 - - - - 5,787,327 - - - (91109) - (1,321,129) 820,449 - - (9,109) - 4,466,198 519 744,314 22,987 1,272 883 1,327,756 32,015 1,146,626 165,378 223,741 16,434 136,852 9,669,420 $ 32,534 $ 1,890,940 $ 188,365 $ 993,741 $ 17,706 $ 137,735 $ 10,997,176 (Concluded) 93 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Recreation Revolving Special Revenue Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Use of money and property $ 1,520 $ 1,520 $ 7,996 $ 6,476 Intergovernmental 1,000 1,000 - (1,000) Charges for current services 1,460,200 1,460,200 1,725,314 265,114 Other revenue 4,490 4,490 10,732 6,242 Total revenues 1,467,210 1,467,210 1,744,042 276,832 EXPENDITURES: Current: Culture and recreation 2,896,750 2,899,922 3,120,283 (220,361) Capital outlay 6,060 6,060 271 5,789 Capital improvement/special projects 52,400 52,400 83,973 (31,573) Total expenditures 2,955,210 2,958,382 3,204,527 (246,145) REVENUES OVER (UNDER) EXPENDITURES (1,498,000) (1,491,172) (1,460,485) 30,687 OTHER FINANCING SOURCES (USES): Transfers in 1,413,000 1,413,000 1,413,000 - Total other financing sources (uses) 1,413,000 1,413,000 1,413,000 - Net change in fund balance $ (75,020) $ (78,172) (47,485) $ 30,687 FUND BALANCE: Beginning of year 305,167 End of year $ 257,682 94 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Baypoint Lagoons Assessment District Special Revenue Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Taxes and special assessments $ 25,000 $ 25,000 $ 25,368 $ 368 Use of money and property 400 400 874 474 Total revenues 25,400 25,400 26,242 842 EXPENDITURES: Current: Public works and parks - - 9,868 (9,868) Total expenditures - - 9,868 (9,868) Net change in fund balance $ 25,400 $ 25,400 16,374 $ (9,026) FUND BALANCE: Beginning of year 18,387 End of year $ 34,761 95 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Gas Tax Special Revenue Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Use of money and property $ 30,420 $ 30,420 $ 34,849 $ 4,429 Intergovernmental 1,154,900 1,154,900 1,195,928 41,028 Charges for current services 500,000 500,000 1,100,180 600,180 Other revenue - - 3,276 3,276 Total revenues 1,685,320 1,685,320 2,334,233 648,913 EXPENDITURES: Current: Public 'works and parks 130,240 130,759 120,639 10,120 Capital improvement/special projects 1,450,000 1,450,000 1,641,130 (191,130) Total expenditures 1,580,240 1,580,759 1,761,769 (181,010) REVENUES OVER (UNDER) EXPENDITURES 105,080 104,561 572,464 467,903 OTHER FINANCING SOURCES (USES): Transfers in - 138,915 138,915 - Transfers out (304,200) (304,200) (304,200) - TotaI other financing sources (uses) (304,200) (165,285) (165,285) - Net change in fund balance $ 105,080 $ 104,561 407,179 $ 302,618 FUND BALANCE: Beginning of year 1,492,415 End of year $ 1,899,594 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Childcare Special Revenue Fund For the year ended June 30, 2006 REVENUES: Use of money and property Intergovernmental Charges for current services Other revenue Total revenues EXPENDITURES: Current: Culture and recreation Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) $ - $ - $ 1,171 $ 1,171 351,690 353,935 374,274 20,339 2,478,515 2,478,515 2,576,814 98,299 1,500 1,500 - (1,500) 2,831,705 2,833,950 2,952,259 118,309 3,024,540 3,041,328 3,088,860 (47,532) 11,080 11,080 2,492 8,588 3,035,620 3,052,408 3,091,352 (38,944) (203,915) (218,458) (139,093) 79,365 189,590 189,590 190,590 (1,000) (71,120) (71,120) (71,120) - 118,470 118,470 119,470 - $ (85,445) $ (99,988) (19,623) $ 80,365 20,131 $ 508 97 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Street Maintenance and Cleaning Special Revenue Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Use of money and property $ 11,150 $ 11,150 $ 16,897 $ 5,747 Intergovernmental 16,220 16,220 973,714 957,494 Other revenue 2,390 2,390 56,185 53,795 Total revenues 29,760 29,760 1,046,796 1,017,036 EXPENDITURES: Current: Public works and parks 1,655,420 1,693,685 1,669,784 23,901 Capital improvement/special projects 100,000 100,000 151,511 (51,511) Total expenditures 1,755,420 1,793,685 1,821,295 (27,610) REVENUES OVER (UNDER) EXPENDITURES (1,725,660) (1,763,925) (774,499) 989,426 OTHER FINANCING SOURCES (USES): Transfers in 1,618,620 1,618,620 1,618,620 - Transfers out - (122,661) (122,661) - Total other financing sources (uses) 1,618,620 1,495,959 1,495,959 - Net change in fund balance $ (107,040) $ (267,966) 721,460 $ 989,426 FUND BALANCE: Beginning of year 231,032 End of year $ 952,492 98 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Loch Lomond Assessment District Special Revenue Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Taxes and special assessments $ 13,000 $ 13,000 $ 13,257 $ 257 Use of money and property 10,500 10,500 19,284 8,784 Total revenues 23,500 23,500 32,541 9,041 EXPENDITURES: Current: Public works and parks - - 54 (54) Total expenditures - - 54 (54) Net change in fund balance $ 23,500 $ 23,500 32,487 $ 8,987 FUND BALANCE: Beginning of year 698,576 End of year $ 731,063 99 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Library Special Revenue Fund For the year ended June 30, 2006 REVENUES: Use of money and property Intergovernmental Charges for current services Other revenue Total revenues EXPENDITURES: Current: Culture and recreation Capital improvement/special projects Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) $ 40,000 $ 40,000 $ 57,074 $ 17,074 129,700 129,700 131,565 1,865 5,000 5,000 6,433 1,433 70,000 70,000 23,043 (46,957) 244,700 244,700 218,115 (26,585) 169,520 169,520 175,137 (5,617) 116,250 116,250 83,636 32,614 285,770 285,770 258,773 26,997 (41,070) (41,070) (40,658) 412 - - (320,449) (320,449) - - (320,449) (320,449) $ (41,070) $ (41,070) (361,107) $ (320,037) 516,256 $ 155,149 100 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Public Safety Special Revenue Fund For the year ended June 30, 2006 REVENUES: Fines and forfeitures Use of money and property Intergovernmental Charges for current services Other revenue Total revenues EXPENDITURES: Current: Public safety Capital improvement/special projects Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) $ 12,170 $ 12,170 $ - $ (12,170) 900 900 4,563 3,663 61,850 117,850 77,506 (40,344) 28,400 28,400 4,445 (23,955) 2,500 2,500 280 (2,220) 105,820 161,820 86,794 (75,026) 137,060 187,967 141,538 46,429 14,500 115,500 6,405 109,095 151,560 303,467 147,943 155,524 (45,740) (141,647) (61,149) 80,498 - - 112,000 112,000 - - 112,000 112,000 $ (45,740) $ (141,647) 50,851 $ 192,498 160,397 $ 211,249 101 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Stormwater Special Revenue Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Fines and forfeitures $ 2,090 $ Z090 $ - $ (2,090) Use of money and property 10,140 10,140 23,526 13,386 Charges for current services 825,000 825,000 798,873 (26,127) Other revenue - - 51,199 51,199 Total revenues 837,230 837,230 873,598 36,368 EXPENDITURES: Current: Public works and parks 1,235,590 1,237,922 1,149,065 88,857 Capital improvement/special projects 550,000 550,000 336,883 213,117 Total expenditures 1,785,590 1,787,922 1,485,948 301,974 REVENUES OVER (UNDER) EXPENDITURES (948,360) (950,692) (612,350) 338,342 OTHER FINANCING SOURCES (USES): Transfers in 852,050 908,714 908,714 - Total other financing sources (uses) 852,050 908,714 908,714 - Net change in fund balance $ (96,310) $ (41,978) 296,364 $ 338,342 FUND BALANCE: Beginning of year 712,641 End of year $ 1,009,005 102 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Development Services Special Revenue Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES: Use of money and property $ 10,140 $ 10,140 $ 12,407 $ 2,267 Charges for services - - 33,151 33,151 Other - - 254,493 254,493 Total revenues 10,140 10,140 300,051 289,911 EXPENDITURES: Capital improvement/special projects - - 604,073 (604,073) Total expenditures - - 604,073 (604,073) Net change in fund balance $ 10,140 $ 10,140 (304,022) $ (314,162) FUND BALANCE: Beginning of year 435,563 End of year $ 131,541 103 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Grants Special Revenue Fund For the year ended June 30, 2006 REVENUES: Use of money and property Intergovernmental Other revenue Total revenues EXPENDITURES: Current: General government Public safety Culture and recreation Capital improvement/special projects Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) $ 1,420 $ 1,420 $ 33,335 $ 31,915 634,910 1,475,587 826,734 (648,853) 7,500 165,000 146,040 (18,960) 643,830 1,642,007 1,006,109 (635,898) 11,020 11,020 7,497 3,523 - 100,000 100,000 - 222,700 245,570 315,488 (69,918) 858,320 1,730,610 786,689 943,921 1,092,040 2,087,200 1,209,674 877,526 (448,210) (445,193) (203,565) 241,628 395,430 404,539 404,539 - 395,430 404,539 404,539 - $ (52,780) $ (4Q654) 200,974 $ 241,628 1,087,936 $ 1,288,910 104 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Parkland Dedication Special Revenue Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Use of money and property $ - $ - $ 23,223 $ 23,223 Charges for current services - - 9,681 9,681 Total revenues - - 32,904 32,904 Net change in fund balance $ - $ - 32,904 $ 32,904 FUND BALANCE: Beginning of year 893,467 End of year $ 926,371 105 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual. Emergency Medical Services Special Revenue Fund For the year ended June 30, 2006 REVENUES: Taxes and special assessments Use of money and property Charges for current services Total revenues EXPENDITURES: Current: Public safety Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfer in Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) $ 2,704,000 $ 2,704,000 $ 2,668,491 $ (35,509) 2,000 2,000 - (2,000) 1,415,000 1,485,750 1,506,213 20,463 4,121,000 4,191,750 4,174,704 (17,046) 3,948,520 3,948,561 3,941,733 6,828 28,010 28,010 - 28,010 3,976,530 3,976,571 3,941,733 34,838 144,470 215,179 232,971 17,792 180,500 180,500 180,500 - (324,940) (370,760) (370,760) - (144,440) (190,260) (190,260) - $ 30 $ 24,919 42,711 $ 17,792 63,641 $ 106,352 106 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Business Improvement Special Revenue Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Use of money and property $ 510 $ 510 $ 362 $ (148) Intergovernmental 35,000 35,000 32,500 (2,500) Other revenue 20,850 20,850 16,546 (4,304) Total revenues 56,360 56,360 49,408 (6,952) EXPENDITURES: Current: General government 57,020 57,020 48,501 8,519 Total expenditures 57,020 57,020 48,501 8,519 Net change in fund balance $ (660) $ (660) 907 $ (1,567) FUND BALANCE: Beginning of year 3,027 End of year $ 3,934 107 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Sewer Maintenance Special Revenue Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Use of money and property $ 5,070 $ 5,070 $ 1,405 $ (3,665) Charges for services 1,478,420 1,478,420 1,408,586 (69,834) Total revenues 1,483,490 1,483,490 1,409,991 (73,499) EXPENDITURES: Current: Public works and parks 1,367,070 1,368,331 1,293,406 74,925 Total expenditures 1,367,070 1,368,331 1,293,406 74,925 REVENUES OVER (UNDER) EXPENDITURES 116,420 115,159 116,585 1,426 OTHER FINANCING SOURCES (USES): Transfers out (115,180) (115,180) (115,180) - Total other financing sources (uses) (115,180) (115,180) (115,180) - Net change in fund balance $ 1,240 $ (21) 1,405 $ 1,426 FUND BALANCE: Beginning of year 40,668 End of year $ 42,073 108 City of San Rafael. Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Peacock Gap Assessment District Debt Service Fund For the year ended June 30, 2006 REVENUES: Taxes and special assessments Use of money and property Total revenues EXPENDITURES: Debt service: Principal retirement Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Budgeted Amounts Original Final Variance from Final Budget Actual Positive Amount (Negative) $ 205,330 $ 205,330 $ - $ (205,330) 10,140 10,140 - (10,140) 215,470 215,470 - (215,470) 205,000 205,000 205,000 - 10,470 10,470 6,331 4,139 215,470 215,470 211,331 4,139 - - (211,331) (211,331) (2,580) (2,580) (2,580) - (2,580) (2,580) (2,580) - $ (2,580) $ (2,580) (213,911) $ (211,331) 216,786 $ Z875 109 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Mariposa Assessment District Debt Service Fund For the year ended June 30, 2006 REVENUES: Taxes and special assessments Use of money and property Total revenues EXPENDITURES: Debt service: Principal retirement Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) $ 19,500 $ 19,500 $ 26,297 $ 6,797 1,010 1,010 1,115 105 20,510 20,510 27,412 6,902 15,000 15,000 15,000 - 5,510 5,510 5,166 344 20,510 20,510 20,166 344 - - 7,246 7,246 (150) (150) (150) - (150) (150) (150) - $ (150) $ (150) 7,096 $ 7,246 41,222 $ 48,318 110 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual 1997 Financing Authority Revenue Bonds Debt Service Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Taxes and special assessments $ 629,090 $ 629,090 $ 284,072 $ (345,018) Use of money and property 8,010 8,010 20,734 12,724 Total revenues 637,100 637,100 304,806 (332,294) EXPENDITURES: Debt service: Principal retirement 513,000 513,000 530,000 (17,000) Interest and fiscal charges 124,010 124,010 76,669 47,341 Total expenditures 637,010 637,010 606,669 30,341 REVENUES OVER (UNDER) EXPENDITURES 90 90 (301,863) (301,953) OTHER FINANCING SOURCES (USES): Transfers out (4,920) (4,920) (4,920) - Total other financing sources (uses) (4,920) (4,920) (4,920) - Net change in fund balance $ (4,830) $ (4,830) (306,783) $ (301,953) FUND BALANCE: Beginning of year End of year 1,011,062 $ 704,279 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Redevelopment Agency Debt Service Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive j Original Final Amount (Negative) REVENUES: Taxes and special assessments $ 3,565,110 $ 3,565,110 $ 3,565,100 $ (10) Use of money and property - - 518 518 Total revenues 3,565,110 3,565,110 3,565,618 508 EXPENDITURES: Debt service: Principal retirement 1,775,000 1,775,000 1,775,000 - Interest and fiscal charges 1,790,105 1,790,105 1,790,099 6 Total expenditures 3,565,105 3,565,105 3,565,099 6 REVENUES OVER (UNDER) EXPENDITURES 5 5 519 514 OTHER FINANCING SOURCES (USES): Transfers out - - - - Total other financing sources (uses) - - - - i Net change in fund balance $ 5 $ 5 519 $ 514 FUND BALANCE: Beginning of year 32,015 End of year $ 32,534 112 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Capital Improvement Capital Projects Fund For the year ended June 30, 2006 REVENUES: Use of money and property Intergovernmental Otherrevenue Total revenues EXPENDITURES: Capital improvement/special projects Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of year End of year Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) $ - $ - $ 32,985 $ 32,985 - - 148,454 148,454 - - 27,000 27,000 - - 208,439 208,439 78,930 899,379 284,574 614,805 78,930 899,379 284,574 614,805 (78,930) (899,379) (76,135) - - 570,449 820,449 250,000 - 570,449 820,449 250,000 $ (78,930) $ (328,230) 744,314 $ (1,073,244) 1,146,626 $ 1,890,940 113 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual Bedroom Tax Capital Projects Fund For the year ended June 30, 2006 Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Taxes and special assessments $ - $ - $ 18,105 $ 18,105 Use of money and property - - 4,882 4,882 Total revenues - - 22,987 22,987 Net change in fund balance $ - $ - FUND BALANCE: Beginning of year End of year 22,987 $ 22,987 165,378 $ 188,365 114 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Park Capital Projects Capital Projects Fund For the year ended June 30, 2006 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) REVENUES: Use of money and property $ - $ - $ 162 $ 162 Intergovernmental - - 20,102 20,102 Other revenues 14,000 14,000 3,743 (10,257) Total revenues 14,000 14,000 24,007 10,007 EXPENDITURES: Capital improvement/special projects 25,000 21,000 13,626 7,374 Total expenditures 25,000 21,000 13,626 7,374 REVENUES OVER (UNDER) EXPENDITURES (11,00 _ (7,000) 10,381 17,381 OTHER FINANCING SOURCES (USES): Transfers out - (9,109) (9,109) - Total other financing sources (uses) - (91109) (9,109) - Net change in fund balance $ (11,000) $ (16,109) 1,272 $ 17,381 FUND BALANCE: Beginning of year 16,434 End of year $ 17,706 115 City of San Rafael Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Open Space Capital Projects Fund For the year ended June 30, 2006 REVENUES: Use of money and property Total revenues EXPENDITURES: Current: General government Total expenditures Net change in fund balance FUND BALANCE: Beginning of year End of year Variance from Final Budget Budgeted Amounts Actual Positive Original Final Amount (Negative) $ 5,070 $ 5,070 $ 3,671 $ (1,399) 5,070 5,070 3,671 (1,399) 12,000 12,000 2,788 9,212 12,000 12,000 2,788 9,212 $ (6,930) $ (6,930) 883 $ 7,813 136,852 $ 137,735 116 INTERNAL SERVICE FUNDS 117 City of San Rafael Combining Statement of Net Assets All Internal Service Funds June 30, 2006 Equipment Building Employee Liability Worker's Replacement Maintenance Benefits Insurance Compensation ASSETS Current assets: Cash and investments $ 1,310,461 $ 606,102 $ - $ 795,535 $ 3,914,373 Accounts receivable - - 923,489 - - Due from other funds 419,424 - - - - Total assets 1,729,885 606,102 923,489 795,535 3,914,373 LIABILITIES Current liabilities: Accounts payable 9,795 27,649 137,941 65,850 3,882 Due to other funds - - 419,424 - - Insurance claims payable - - - 445,063 2,901,129 Total liabilities 9,795 27,649 557,365 510,913 2,905,011 NET ASSETS Unrestricted 1,720,090 578,453 366,124 284,622 1,00%362 Total net assets $ 1,720,090 $ 578,453 $ 366,124 $ 284,622 $ 1,009,362 118 Dental Radio 'Telephone Insurance Replacement Replacement Total $ 7,251 $ 1,322,144 $ 14,967 $ 7,970,833 - - - 923,489 - - - 419,424 7,251 1,322,144 14,967 9,313,746 - - 12,659 257,776 - - - 419,424 - - - 3,346,192 - - 12,659 4,023,392 7,251 1,322,144 2,308 5,290,354 $ 7,251 $ 1,322,144 $ 2,308 $ 5,290,354 119 City of San Rafael Combining Statement of Revenues, Expenses and Changes in Net Assets All Internal Service Funds For the year ended June 30, 2006 Equipment Building Employee Liability Worker's Replacement Maintenance Benefits Insurance Compensation OPERATING REVENUES: Charges for services $ 1,141,820 $ 70,970 $ 1,303,765 $ 1,341,100 $ 1,798,345 Refunds - - 301,448 61,489 135,562 Other operating revenues 29,016 - 923,489 - - Total operating revenues 1,170,836 70,970 2,528,702 1,402,589 1,933,907 OPERATING EXPENSES: General and administrative 527,902 - 2,203,134 - - Insurance premiums and claims - - - 1,204,482 1,257,050 Capital improvement project 270,370 127,224 - - - Total operating expenses 798,272 127,224 2,203,134 1,204,482 1,257,050 OPERATING INCOME (LOSS) 372,564 (56,254) 325,568 198,107 676,857 NONOPERATING REVENUES: Investment income 43,407 10,339 - 19,242 99,308 Total nonoperating revenues 43,407 10,339 - 19,242 99,308 INCOME (LOSS) BEFORE OPERATING TRANSFERS 415,971 (45,915) 325,568 217,349 776,165 OTHER FINANCING SOURCES (USES): Proceeds from sale of assets - - - - - Transfers in - 282,000 - - 20,000 Transfers out (250,000) - - (118,000) - Total other financing sources (uses) (250,000) 282,000 - (118,000) 20,000 Net income (loss) 165,971 236,085 325,568 99,349 796,165 NET ASSETS: Beginning of year 1,554,119 342,368 40,556 185,273 213,197 End of year $ 1,720,090 $ 578,453 $ 366,124 $ 284,622 $ 1,009,362 120 Dental Radio Telephone Insurance Replacement Replacement Total $ 408,689 $ 258,250 $ 212,850 $ 6,535,789 15,000 - - 513,499 - - - 952,505 423,689 258,250 212,850 8,001,793 - 527,136 225,889 3,484,061 425,088 - - 2,886,620 - - - 397,594 425,088 527,136 225,889 6,768,275 (1,399) (268,886) (13,039) 1,233,518 945 32,954 347 206,542 945 32,954 347 206,542 (454) (235,932) (12,692) 1,440,060 - - 15,000 317,000 - (368,000) - - 15,000 (51,000) (454) (235,932) 2,308 1,389,060 7,705 1,558,076 - 3,901,294 $ 7,251 $ 1,322,144 $ 2,308 $ 5,290,354 121 City of San Rafael Combining Statement of Cash Flows All Internal Service Funds For the year ended June 30, 2006 Equipment Building Employee Liability Worker's Replacement Maintenance Benefits Insurance Compensation CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from other funds $ 1,170,836 $ 75,970 $ 2,066,535 $ 1,402,589 $ 1,933,907 Cash payments to suppliers for goods and services (415,366) (116,692) (2,066,535) (1,216,095) (1,561,444) Net cash provided (used) by operating activities 755,470 (40,722) - 186,494 372,463 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out Net cash provided (used) by noncapital financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Interest revenue Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year 282,000 - - 20,000 (250,000) - - (118,000) - (250,000) 282,000 - (118,000) 20,000 43,407 10,339 - 19,242 99,308 43,407 10,339 - 19,242 99,308 548,877 251,617 - 87,736 491,771 761,584 354,485 - 707,799 3,422,602 $ 1,310,461 $ 606,102 $ - $ 795,535 $ 3,914,373 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIIES: Operating income (loss) $ 372,564 $ (56,254) $ 325,569 $ 198,107 $ 676,857 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Changes in operating assets and liabilities: Due to/from other funds 378,459 - (378,459) - - Accounts receivable - - (83,708) - - Loans receivable - 5,000 - - - Accounts payable 4,447 10,532 136,599 48,583 3,882 Insurance claims payable - - - (60,196) (308,276) Total adjustments 382,906 15,532 (325,568) (11,613) (304,394) Net cash provided (used) by operating activities $ 755,470 $ (40,722) $ - $ 186,494 $ 372,463 2 Dental Radio Telephone Insurance Replacement Replacement Total $ 423,689 $ 258,250 $ 212,850 $ 7,544,626 (425,088) (527,136) (213,230) (6,541,586) (1,399) (268,886) (380) 1,003,040 15,000 317,000 - (368,000) - - 15,000 (51,000) 945 32,954 347 206,542 945 32,954 347 206,542 (454) (235,932) 14,967 1,158,582 7,705 1,558,076 - 6,812,251 $ 7,251 $ 1,322,144 $ 14,967 $ 7,970,833 $ (1,399) $ (268,886) $ (13,039) $ 1,233,518 - - (83,708) - - - 5,000 12,659 216,702 - (368,472) 12,659 (230,478) $ (1,399) $ (268,886) $ (380) $ 1,003,040 123 This page intentionally left blank. 124 City of San Rafael Net Assets by Component Last Four Fiscal Years (accrual basis of accounting) Governmental activities: Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net assets Business -type activities: Invested in capital assets, net of related debt Restricted Unrestricted Total business -type activities net assets Primary government: Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets San Rafael Sanitation District: Invested in capital assets, net of related debt Restricted Unrestricted Total discrete component unit net assets 2003 2004 2005 2006 $ 198,031,181 $ 202,215,793 $ 194,658,126 $ 175,806,100 2,933,294 2,708,397 2,378,641 620,889 16,216,230 9,775,565 14,167,627 32,739,318 $ 217,180,705 $ 214,699,755 $ 211,204,394 $ 209,166,307 $ 8,464,417 $ 8,749,750 $ 8,615,483 $ 9,819,435 1,078,245 1,447,467 1,900,504 2,113,659 $ 9,542,662 $ 10,197,217 $ 10,515,987 $ 11,933,094 $ 206,495,598 $ 210,965,543 $ 203,273,609 $ 185,625,535 2,933,294 2,708,397 2,378,641 620,889 17,294,475 11,223,032 16,068,131 34,852,977 $ 226,723,367 $ 224,896,972 $ 221,720,381 $ 221,099,401 $ 18,888,125 $ 18,673,455 $ 20,753,646 $ 21,205,082 417,121 418,421 426,901 438,752 5,300,690 6,849,496 6,385,962 7,177,022 $ 24,605,936 $ 25,941,372 $ 27,566,509 $ 28,820,856 The City of San Rafael implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. 125 City of San Rafael. Changes in Net Assets Last Four Fiscal Years (accrual basis of accounting) 2003 2004 2005 2006 Expenses: Governmental activities: General government $ 5,555,915 $ 5,074,335 $ 5,895,390 $ 6,252,533 Public safety 30,476,353 30,453,108 32,891,692 33,178,537 Public works and parks 27,237,899 16,043,092 16,820,453 23,401,246 Community development/redevelopment 3,727,315 3,921,422 4,624,345 4,194,249 Culture and recreation 9,055,681 7,444,339 9,450,017 8,652,445 Interest on long-term debt 4,082,760 2,516,659 2,129,818 1,725,559 Total governmental activities expenses 80,135,923 65,452,955 70,811,715 77,404,569 Business -type activities: Parking services 1,245,316 1,539,441 2,451,941 2,761,511 Total business -type activities expenses 1,245,316 1,539,441 2,451,941 2,761,511 Total primary government expenses 81,381,239 66,992,396 73,263,656 80,166,080 Program revenues: Governmental activities: Charges for services: General government 1,433,372 1,487,595 1,831,269 402,094 Public safety 2,530,916 2,203,371 4,315,141 5,085,679 Public works and parks 3,072,849 2,697,858 3,298,076 3,799,861 Community development/redevelopment 1,691,427 1,982,211 1,974,527 3,190,832 Culture and recreation 3,688,418 3,960,777 3,924,360 4,368,274 Operating grants and contributions 6,003,700 5,252,820 3,321,135 2,745,570 Capital grants and contributions 1,744,556 573,485 606,589 3,936,474 Total governmental activities program revenues 20,165,238 18,158,117 19,271,097 23,528,784 Business -type activities: Charges for services: Parking services 1,810,479 2,307,432 2,604,066 3,025,380 Operating grants and contributions Capital grants and contributions - - - - Total business -type activities program revenues 1,810,479 2,307,432 2,604,066 3,025,380 Total primary government program revenues 21,975,717 20,465,549 21,875,163 26,554,164 Net revenues (expenses): Governmental activities (59,970,685) (47,294,838) (51,540,618) (53,875,785) Business -type activities 565,163 767,991 152,125 263,869 Total net revenues (expenses) 59,405,522 i46,526,847) (51,388,493) (53,611,916) 126 City of San Rafael Changes in Net Assets Last Four Fiscal Years (accrual basis of accounting) General revenues and other changes in net assets: Governmental activities: Taxes: Property Taxes Sale Taxes Special Assessments Motor Vehicles Other _ Investment earnings Miscellaneous Loss on disposal of assets Transfers Total governmental activities Business -type activities: Investment income Aid from other governmental agencies Transfers Total business -type activities Total primary government Changes in net assets Governmental activities Business -type activities Total primary government 2003 2004 2005 2006 $ 13,983,697 $ 14,895,188 $ 17,385,722 $ 22,498,584 16,779,878 17,166,966 17,132,100 14,570,084 3,055,575 3,329,680 3,642,184 3,017,488 3,317,710 2,495,598 4,657,817 372,726 5,465,495 5,476,044 5,151,205 8,932,191 1,897,339 809,242 1,112,548 1,248,409 1,843,458 498,200 876,907 361,195 (500,819) - - - 232,398 142,970 15,720 201,191 46,074,731 44,813,888 49,974,203 51,201,868 17,772 29,534 28,522 44,536 - - 40,735 1,309,893 (232,398) (142,970) (15,720) (201,191) (214,626) (113,436) 53,537 1,153,238 45,860,105 44,700,452 50,027,740 52,355,106 (13,895,954) (2,480,950) (1,566,415) (2,673,917) 350,537 654,555 205,662 1,417,107 $ (13,545,417) $ (1,826,395} $ (1,360,753) $ (1,256,819) The Cihj of San Rafael implemented GASB 34 for the fiscal year ended June 30, 2003. Infonnation prior to the implementation of GASB 34 is not available. 127 City of San Rafael Fund Balances of Governmental Funds Last Four Fiscal Years (modified accrual basis of accounting) 2003 2004 2005 2006 General fund: Reserved $ 2,357,904 $ 1,451,036 $ 2,442,881 $ 2,335,391 Unreserved 4,139,618 4,246,152 5,779,680 3,362,151 Total general fund $ 6,497,522 $ 5,697,188 $ 8,222,561 $ 5,697,542 All other governmental funds: Reserved $ 36,695,318 $ 32,471,197 $ 26,599,557 $ 21,603,724 Unreserved, reported in: Special revenue funds 6,317,972 5,574,048 5,628,187 7,168,753 Capital projects funds - - - - Total all other governmental funds $ 43,013,290 $ 38,045,245 $ 32,227,744 $ 28,772,477 The City of San Rafael has elected to show only four years of data far this schedule. 128 City of San Rafael Changes in Fund Balances of Governmental Funds Last Four Fiscal Years (modified accrual basis of accounting) Revenues: Taxes Licenses and permits Fines & Penalties Interest & use of property Intergovernmental revenues Charges for services Other Total revenues Expenditures Current: General government Public safety Public works and parks Community development/redevelopement Culture and recreation Capital Outlay Capital improvement /special projects Debt service: Capitalized lease obligation Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Proceeds from issuance of debt Contribution from Sanitation District Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Debt service as a percentage of noncapital expenditures 2003 2004 2005 2006 $ 39,284,643 $ 40,875,826 $ 42,901,520 $ 44,901,544 735,109 928,303 929,993 1,175,030 770,632 791,975 1,088,459 622,494 1,897,339 1,024,199 1,244,406 1,316,558 9,405,422 8,049,002 10,522,095 11,705,917 10,102,392 10,423,754 11,407,622 13,104,572 3,568,297 735,976 1,135,485 1,475,078 65,763,834 62,829,035 69,229,580 74,301,193 4,740,703 5,014,452 5,539,191 6,200,338 28,041,079 28,863,197 31,784,872 33,321,967 9,491,552 9,257,991 9,294,419 10,622,585 3,253,947 3,875,542 3,763,614 4,184,084 7,176,097 7,145,264 7,538,607 8,409,833 125,884 31,703 1,027,267 60,411 11,058,796 9,925,103 9,253,661 13,200,872 197,132 24,290,000 4,046,170 Q7 All qAn 10,775 141,197 130,315 2,360,000 2,585,000 2,525,000 2,456,357 2,140,673 1,878,265 68,840,384 73,068,501 80,533,670 26,657,526 (6,011,349) (3,838,921) (6,232,477) 32,625,000 - - - 744,556 - - - 42,503,976 5,222,868 8,636,544 6,925,107 42,971,248 (4,979,898) (7,740,324) (6,672,916} 32,902,284 242,970 896,220 252,191 $ 6,244,758 $ (5,768,379) $ (2,942,701) $ (5,980,289 54.1% 8.9% 8.4% 7.2% The City of San Rafael has elected to show only four years of data for this schedule. 129 City of San Rafael Assessed Value and Estimated Actual Value of Taxable Property Last Four Fiscal Years (in thousands of dollars) Fiscal Year Ended June 30 2003 2004 2005 2006 Secured $ 6,502,120,862 6,887,011,624 7,294,055,669 7,902,266,919 Unsecured $ 445,297,553 $ 431,291,562 406,163,129 407,016,133 Taxable Less: Assessed Exemptions 1 VaIue - $ 6,947,418,415 - 7,318,303,186 - 7,700,218,798 - 8,309,283,052 1 Beginning with the fiscal year ended June 30, 2003, exemptions are netted directly against the individual property categories. Total Direct Tax Rate 0.322% 0.320% 0.308% 0.308 % NOTE: In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 20/.). With few exceptions, property is only re -assessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: Marin County Assessor's Office as summarized by HdL Coren & Cone 130 City of San Rafael Direct and Overlapping Property Tax Rates (Rate per $100 of assessed value) Last Four Fiscal Years City Direct Rates: City basic rate Redevelopment agency Total City Direct Rate Overlapping Rates: Bay Area Air Quality Management County General County School Service Fund Marin Community College Marin County Open Space Marin County Transit District Marin-Sonoma Mosquito Abatement San Rafael High Schools San Rafael Sanitation San Rafael Schools - Elementary Dixie School Bonds 2000 Marin Comm. College Bonds 2004 San Rafael High School Bonds 1999A San Rafael High School Bonds 1999B San Rafael High School Bonds 2002A San Rafael High School Bonds 2002B Total Direct Rate 2003 0.15359 2004 0.15359 2005 0.15359 2006 0.15359 0.15359 0.15359 0.15359 0.15359 0.00222 0.00222 0.00222 0.00222 0.29502 0.29502 0.29502 0.29502 0.02731 0.02731 0.02731 0.02731 0.07960 0.07960 0.07960 0,07960 0.01158 0.01158 0.01158 0.01158 0.00676 0.00676 0.00676 0.00676 0.00346 0.00346 0.00346 0.00346 0.17056 0.17056 0.17056 0.17056 0.02204 0.02204 0.02204 0.02204 0.22786 0.22786 0.22786 0.22786 0.02200 0.02100 0.01900 0.01930 0.00000 0.00000 0.00000 0.01880 0.00400 0.00400 0.00400 0.00350 0,00400 0.00300 0.00300 0.00340 0.00000 0.00900 0.00800 0.00350 0.00000 0.00000 0.00800 0.01640 1.03000 1.03700 1.04200 1.06490 NOTE: In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. Source. Marin County Assessor's Office 131 City of San Rafael Top Ten Property Tax Payers Current Year and Three Years Ago 2006 2003 Percent of Percent of Total City Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Tax a er Number of Parcels Value Value Value Value San Rafael Yard NF (8) $ 46,926,592 1.69 % $ 45,466,680 1.84% Lucas Digital/Lucas Arts (15) 34,794,055 1.16% 41,900,697 1.87% Marin Sanitary Service (6) 30,964,668 1.12% 27,713,993 1.12% Rafael Town Center Investors LLC (1) 30,662,293 1.10% 24,764,600 1.00% Montecito Market Place Associates (2) 21,425,100 0.77% 20,237,685 0.82% Home Depot USA Inc. (1) 21,178,221 0.76% 20,077,833 0.81 % Tele Vue Systems Inc. (9) - - 30,959,326 0.80% Jack W. Fritz (1) 18,330,720 0.66% - Albert Lofts Apartments LLC (2) 17,424,112 0.63% 15,080,772 0.61% Parker Jonathan 40, Et. Al. (2) - - 17,701,678 0.72% MC2 Capital Partners LLC (5) 17,186,998 0.62% - - Toys R Us Inc. (3) 14,819,789 0.53 % 13,983,394 0.57% $ 253,712,548 9.04% $ 257,886,658 10.16% The amounts shown above include assessed value data for both the City and the Redevelopment Agency. Source: Marin County Assessor's Office 132 City of San Rafael Property Tax Levies and Collections Last Ten Fiscal Years Collected within the Fiscal Taxes Levied Fiscal Year of Levy Collections in Total Collections to Date Year Ended for the Percent Subsequent Percent June 30 Fiscal Year Amount of Levy Years Amount of Levy 1997* $ 8,210,688 $ 8,210,688 100.00% N/A N/A 0.00% 1998* 8,195,563 8,195,563 100.00% N/A N/A 0.00% 1999* 8,661,660 8,661,660 100.00% N/A N/A 0.00% 2000* 8,844,272 8,844,272 100.00% N/A N/A 0.00% 2001* 9,895,312 9,895,312 100.00% N/A N/A 100.00% 2002* 10,620,967 10,620,967 100.00% N/A N/A 100.00% 2003* 11,165,974 11,165,974 100.00% N/A N/A 100.00% 2004* 11,841,291 11,841,291 100.00% N/A N/A 100.00% 2005* 12,401,426 12,401,426 100.00% N/A N/A 100.00% 2006* 11,584,881 11,584,881 100.00% N/A N/A 100.00% NOTE: *Beginning FYE 93/94, the City began participating in the Teeter Plan through the County. Every year, the County distributes the full amount of secured property taxes levied to the City and the County retains any delinquent taxes collected, including interest and penalties. In 93/94, the County paid the City a lump -sum amount for all outstanding delinquencies. Source: County Auditor Controller's Office 133 City of San Rafael Ratios of Outstanding Debt by Type Last Ten Fiscal Years Fiscal Year Ended June 30 Governmental Activities General Tax Obligation Allocation Bonds Bonds Loans Total Governmental Activities Business -type Activities Parking Total Authority Certificates of Business -type Bonds Participation Activities Total Primary Government 2000 $ - $ 45,899,004 $ - $ 45,899,004 $ - $ - $ - $ 45,899,004 2001 - 44,719,004 - 44,719,004 - - - 44,719,004 2002 - 43,479,004 - 43,479,004 - - - 43,479,004 2003 - 44,914,004 - 44,914,004 - - - 44,914,004 2004 - 43,239,004 - 43,239,004 - - - 43,239,004 2005 - 41,514,004 - 41,514,004 7,605,000 - 7,605,000 49,119,004 2006 - 39,739,004 - 39,739,004 7,455,000 - 7,455,000 47,194,004 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 134 City of San Rafael Ratio of General Bonded Debt Outstanding Last Ten Fiscal Years (In Thousands, except Per Capita) Fiscal Year Ended June 30 Outstanding General Bonded Debt General Tax Obligation Allocation Bonds Bonds Total 2000 $ - $ 45,899 $ 45,899 2001 - 44,719 44,719 2002 - 43,479 43,479 2003 - 44,914 44,914 2004 - 43,239 43,239 2005 - 41,514 41,514 2006 - 39,739 39,739 General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (of which, the City has none). 1 Assessed value has been used because the actual value of taxable property is not readily available in the State of California. Percent of Assessed Per Value 1 Capita 0.83 % 838.31 0.74% 785.33 0.66 % 767.41 0.65 % 785.95 0.59 % 759.71 0.54% 725.46 0.48 % 692.93 135 City of San Rafael I. Computation of Direct and Overlapping Debt I, June 30, 2006 I' 2005-06 Assessed Valuation: Redevelopment Incremental Valuation: Adjusted Assessed Valuation: DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: City of San Rafael City of San Rafael 1915 Act Bonds Marin Community College District San Rafael High School District Tamalpais Union High School District Dixie School District San Rafael School District Ross Valley School District TOTAL GROSS DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND OBLIGATION DEBT: Marin County Certificates of Participation Marin County Pension Obligations Marin County Transit District General Fund Obligations Marin County Water District General Fund Obligations Marin Community College District Certificates of Participation Dixie School District Certificates of Participation San Rafael School District Certificates of Participation City of San Rafael General Fund Obligations TOTAL OVERLAPPING GENERAL FUND OBLIGATION DEBT GROSS COMBINED TOTAL DEBT $ 8,309,283,052 1,817,965,060 $ 6,491,317,992 (1) Percentage of overlapping agency's assessed valuation located within the boundaries of the city. (2) Excludes any optional bond calls that may have occurred after 9/3/04 (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded capital lease obligations. Ratios to 2005-06 Assessed Valuation: Total Overlapping Tax and Assessment Debt ................1.45% Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($11,396,721) ..................... .18% Combined Total Debt ............................................ 2.50% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/06: $0 % Applicable (1) Debt 6/30/05 100.000 $ - 100.000 1,414,000 (2) 15.332 11,499,000 73.811 44,504,575 0.096 110,035 65.964 6,125,292 78.566 56,754,744 0.010 1,738 $ 120,409,384 15.303 $ 8,059,090 15.303 17,262,549 15.303 42,092 19.707 44,100 15.332 464,687 65.964 841,041 78.566 3,535,470 100.000 11,396,721 Overlapping governments are those that coincide, at least in part with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each 41,645,750 $ 162,055,134 (3) Source: Califonda Municipal Statistics, Inc. 136 This page intentionally left blank. 137 Assessed valuation Redevelopment incremental Valuation Adjusted assessed valuation Conversion percentage Adjusted assessed valuation Debt limit percentage Debt limit Total net debt applicable to limit: General obligation bonds Legal debt margin Fiscal Year 1997 1998 1999 2000 $ 4,712,137,772 $ 4,944,722,690 $ 5,163,095,206 $ 5,537,739,272 958,599,112 1,012,701,872 1,050, 944,840 1,149,552,469 3,753,538,660 3,932,020,818 4,112,150,366 4,388,186,803 25% 25% 25% 25% 938,384,665 983,005,205 1,028,037,592 1,097,046,701 15% 15% 15% 15% 140,757,700 147,450,781 154,205,639 164,557,005 $ 140,757,700 $ 147,450,781 $ 154,205,639 $ 164,557,005 Total debt applicable to the limit as a percentage of debt limit 0.0% 0.0% The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state. Source: California Municipal Statistics, Inc. and the City of San Rafael's Finance Department 0.0% 0.0% 138 Fiscal Year 2001 2002 2003 2004 2005 2006 $ 6,026,335,000 $ 6,573,753,689 $ 6,947,418,415 $ 7,318,303,186 $ 7,700,218,798 $ 8,309,283,052 1,242,758,183 1,444,400,886 1,558,030,161 1,610,566,919 1,687,053,641 1,817,965,060 4,783,576,817 5,129,352,803 5,389,388,254 5,707,736,267 6,013,165,157 6,491,317,992 25% 25% 25% 25% 25% 25% 1,195,894,204 1,282,338,201 1,347,347,064 1,426,934,067 1,503,291,289 1,622,829,498 15% 15% 15% 15% 15% 15% 179,384,131 192,350,730 202,102,060 214,040,110 225,493,693 243,424,425 - - 12,015,128 11,864,629 11,708,211 11,396,721 $ 179,384,131 $ 192,350,730 $ 190,086,932 $ 202,175,481 $ 213,785,482 $ 232,027,704 0.0% 0.0% 5.9% 5.5% 5.2% 4.7% 139 City of San Rafael Full-time and Part-time City Employees by Function Last Ten Fiscal Years Full -Time and Part-time Employees as of June 30 Function 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 General government 25 28 29 30 32 33 44 43 41 46 Public safety 194 195 200 202 202 203 203 202 193 188 Public works and parks 71 68 73 76 79 80 80 77 73 74 Community development/redevopment 20 23 27 28 29 32 30 29 27 25 Culture and recreation 62 61 81 82 83 84 84 83 81 77 Total 372 375 409 418 425 432 441 434 415 410 Source: City Budget Office 140 City of San Rafael Capital Asset Statistics by Function Last Seven Fiscal Years Fiscal Year Fiscal Year 2000 2001 2002 2003 2004 2005 2006 Police: Stations 1 1 1 1 1 1 1 Sub -Stations 2 2 2 2 2 2 2 Fire: Fire stations 6 6 6 6 6 6 6 Public works: Streets (miles) 165.00 165.00 171.00 171.00 172.00 172.00 173.00 Streetlights 4,167 4,167 4,200 4,200 4,333 4,333 4,435 Traffic signals 86 86 85 85 85 85 89 Parks and recreation: Parks 22 22 22 22 22 20 20 Number of Acres 146 146 146 146 149 149 149 Community centers 3 3 3 3 3 3 3 Source: City of San Rafael 141