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HomeMy WebLinkAboutFin Financial Reports FY2010-11c`rY OF Agenda Item No: 3 r Meeting Date: December 19, 2011 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: FINANCE Prepared by: Janet Pendoley Interim Finance Director City Manager Approval-`��-�� SUBJECT: FY 2010-2011 ANNUAL FINANCIAL AUDIT REPORT; THE GANN APPROPRIATION LIMIT REPORT, AND THE MEMORANDUM ON INTERNAL CONTROL RECOMMENDATION: ACCEPT THE FY 2010-2011 ANNUAL FINANCIAL AUDIT REPORT; ACCEPT THE GANN APPROPRIATION LIMIT REPORT; AND ACCEPT THE MEMORANDUM ON INTERNAL CONTROL BACKGROUND: As is required by both local code and State law, the City of San Rafael must complete an annual audit of its financial activities. The auditing firm of Maze and Associates, Accountancy Corporation conducted the audit for fiscal year 2010-2011. Their work was completed in accordance with generally accepted auditing standards; Government Auditing_ Standards, issued by the Comptroller General of the United States; and the provisions of Office of Management and Budget Circular A-133, Audits of State and Local Government and Non -Profit Organizations. The Federal Government requires that any local agency expending $500,000 or more in combined federal grant funds, either directly or indirectly in a fiscal year, is subject to a separate audit on those programs and a separate Single Audit Report is issued. This threshold amount did occur in fiscal year 2010-2011; therefore, this separate audit report is required. This report will be presented at a later date. The requirements of Section 1.5 of Article XIIIB of the California Constitution is met with an agreed upon procedure report applied to the Gann Appropriation Limit calculated for the year ending June 30, 2012. A Memorandum on Internal Control is also prepared by the auditors to help identify areas that could help improve the City's organization and controls over financial activities. This report is enclosed separately with this staff report. FOR CITY CLERK ONLY Council Meeting: i -- 1 €q I ;� v x / l .. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 The City Council's approval and acceptance of fiscal year 2010-2011 Audited Financial Report, the report on the Gann Appropriation Limit calculation, and the Memorandum of Internal Control are needed to remain in compliance with local charter, State and Federal law. ANALYSIS: The actual results of the City's financial activities are presented in the Government -Wide Financial Statements with governmental activities and business -type activities presented separately. Net assets are a good indicator of the City's financial position. During this fiscal year, net assets of the City were $200.1 million, which is a decrease of $7.8 million from the prior year, primarily resulting from delayed replacement of depreciating assets. A financial summary of expenditures and revenues is shown in the Statement of Activities and Changes in Net Assets. Supplementary explanatory information is provided in the Management's Discussion and Analysis (MD&A) section beginning on page 3. The MD&A provides key highlights and a summary view of performance of financial activities for the year ended June 30, 2011. The Agreed -Upon Procedures report for the Gann Appropriations Limit required three steps to be performed including testing the accuracy of the calculations and comparison of information presented. No exceptions were noted in the three steps for the years ended June 30, 2012. Our auditors are required to communicate to the City Council matters that come to their attention relating to the audit in a report entitled Memorandum on Internal Control. Section one of this report, entitled Schedule of Other Matters, addresses items that are considered by the auditors to be worthy of note to the Council. Three recommendations were outlined in this section. The first recommendation is that two Redevelopment Agency obligations be identified with greater specificity on the Enforceable Obligation Payment Schedule. The second recommendation mentions the staff s request for auditor assistance in determining the closing entries for the City's Pension Obligation Bond (POB) funds. The third recommendation discusses best practices in the area of information system security. Finally, one prior year recommendation, highlighting the City's budget, liquidity and low reserves, was included to provide staff the opportunity to comment on the current year status. The second section of this report, entitled Required Communications, addresses several areas relating to accounting practices and internal controls. No areas were identified as having deficiencies that the auditors considered to be material weaknesses for fiscal year 2010-2011. FISCAL IMPACT: No fiscal impact occurs by having the Council accepts these reports. The fiscal year 2010-2011 Annual Financial Audit Reports and related reports are presented as the actual results of the City and Agency financial activities for the year. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 OPTIONS: The City Council can choose to: 1) Accept the Fiscal Year 2010-2011 Annual Financial Audit, Agreed -Upon Procedures report for the Gann Appropriations Limits and the Memorandum on Internal Control Structure as presented; or 2) Reject the reports and not file them with numerous County, State and Federal agencies as required. Rejecting these reports would leave the City out of compliance with applicable laws. ACTION REQUIRED: Staff recommends Council accept the reports and letters as presented. Attachments: Comprehensive Annual Financial Report Appropriations Limit Increments Memorandum on Internal Control W:Ilmanagernent Services- WorkFile'Tinance- Workfile\Council Material\Staff Reports\201 1\Ciq,Audit report fV201 0-11 Am L� i COMPREHENSIVE ANNUAL FINANCIAL REPOR FOR THE FISCAL YEAR ENDING JUNE 307 201 COMPREHENSIVE ANNUAL For the Fiscal Year Ended June 30, 2011 City of Rafael, San I • r M P.O. Box i • r w • n o • /US Prepared FinanceDepartment Janet Pendoley, Interim Finance This Page Left Intentionally Blank SECTION CITY OF SAN RAFAEL, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2011 Table of Contents INTRODUCTORY SECTION TABLE OF CONTENTS Letter of Transmittal .... ...... ...... ...... ............. _ ...... v Mission Statement ... __ ...... ............ ........ .......... x Cit -v Officials ... ....... ........ ....... .......... .... xi LocationMap ......... ....... .......... _ .... - ..... ...... ...... ......... ....... ... xii Organization Chart ... .......... ......... .............. ...... .......... ........ xiii FINANCILAL SECTION I Independent Auditor's Report on Basic Financial Statements ... ............... __ ...... Management's Discussion and Analysis ... - ....... ........ ...... ......... ...................... 3 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets ... ...... ____ .......... ___ ............ ............. ...... _... 17 Statement of Activities ..... ...... ....... _ ... _ ....... ___ ... ... ...... ____ ... ____ ......... _ 18 Fund Financial Statements: Major Governmental Funds: Balance Sheet ... - ... __ .... _ ....... ............. ........ ....... ..... 22 Balance Sheet - Reconciliation of Governmental Fund Balances to Net Assets of Governmental Activities .... __ ........ ...... ___,25 Statement of Revenues, Expenditures, and Changes in Fund Balances........................................26 Reconciliation of the Net Change in Fund Balances - Total Governmental Funds with the Statement of Activities ...... ... __ .............. ...... __ 28 Proprietary Funds: Statement of Net Assets.... .... ........ ...... ........ 30 Statement of Revenues, Expenses., and Changes in Fund Net Assets.. ..... ...... __ 31 , Statement of Cash Flo,,vs .. ..... __ .... ____ .... ... .... .... ... __ )2 i CITY OF SAN RAFAEL, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2011 Table of Contents FINANCIAL SECTION (Continued) I Notes to Basic Financial Statements.. ......... ............ _ ...................................... ....................... 33 Required Supplementary Information: Schedules of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual - Budgetary Basis General Fund ..... ...... .......... ............. ...... 74 Traffic and Housing Mitigation Special Revenue Fund .... ...... _ ......... ...... 75 Gas Tax Special Revenue Fund.. ....... ___ .... _ ....... __ .... ..... ...... ............ ................ 76 Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual - Budgetary Basis Redevelopment Agency Capital Projects Fund ....... ___ .... .......... ............. _ .... __ .......... __ 78 Non -major Governmental Funds: Combining Balance Sheet.. .......... ___ ........ __ ...... __ ........... .... __ ................ ____ .... __ ....... ___ ....... 82 Combining Statement of Revenues, Expenditures, and Changes inFund Balance..... ......... __ .............. .... ____ ....... .... ___ .......... ...... .......... ..... 88 Budgeted Non -major Government Funds: Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual. . ......... ........... _ ..... __ ................ _ ........ ... __94 Internal Service Funds: Combining Statement of Net Assets ... - ..... __ ...... __ ........ ........... _ .... __ ........ 104 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets...........................106 Combining Statement of Cash Flows. .... ___ ....... ____ ......... 108 CITY OF SAN RAFAEL, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2011 Table of Contents STATISTICAL SECTION Financial Trends: Net Assets by Component — Last Nine Fiscal Years.. .... __ ...................................... ........... .......... 112 Changes in Net Assets — Last Nine Fiscal Years ......... __ ....... ...... ................ .......... __ ............ 114 Fund Balances of Governmental Funds — Last Ten Fiscal Years........................................................... 118 Changes in Fund Balance of Governmental Funds — Last Ten Fiscal Years.......................................... 120 Revenue Capacity: Assessed and Estimated Actual Value of Taxable Property — Last Ten Fiscal Years ... ....... ____ 122 Property Tax Rates - All Direct and Overlapping Governments— Last Ten Fiscal Years......................123 Principal Property Tax Payers — Current Year and Ten Years Ago.......................................................124 Property Tax Levies and Collections — Last Ten Fiscal Years ... ___ ......... ...... __ ....... ......... ___ 125 Debt Capacity: Ratio of Outstanding Debt by Type — Last Ten Fiscal Years ... ....... ........... ___­_ 126 Computation of Direct and Overlapping Debt ..... ......... ....... ___ .......... 127 Computation of Legal Bonded Debt Margin .. . _ _ . ...... ....... ....... ............. ....... 128 Revenue Bond Coverage Parking Facility — Last Eight Fiscal 129 Redevelopment Pledged Revenue Coverage — Last Ten Fiscal Years ................................................... 130 Demographic and Economic Information: Demographic and Economic Statistics — Last Ten Fiscal Years ............................................................131 Principal Employers..,.... ....... ........ ......... 132 Operating Information: Full -Time Equivalent City Govermnent Employees by Function — Last Ten Fiscal Years. .... 133 Operating Indicators by Function[Prograrn — Last Ten Fiscal Years .... ...... ... 134 Capital Asset Statistics by Function,/Program — Last Teti Fiscal Years .................................................136 H This Page Left Intentionally Blank (I FY 0I M­,Yos GARY 0. Pii­'LLIPS Cou?,,cL?Steak Div mn. m CON NOLLY HELLF-R COUNCILMEMBFR KARL LE11TtIM 6000 1 I'll, -C0vNC1 -mm '_'.14E1!3ER kivn.w CUY'_1,GAN 14,CCULLOUCH December 15, 2011 Honorable Mayor, Members of the City Council and Residents of San Rafael: The Comprehensive Arinual Financial Report (CAFR) of the City of San Rafael for the year ended June 30, 2011, is hereby submitted as mandated by both local ordinances and State of California statutes. These ordinances and statutes require that the City of San Rafael annually issue a report on its financial position and activity, and that an independent firm of certified public accountants audits this report, Responsibility for both the data accuracy, and the completeness and fairness of the presentation, rests with management. To the best of our knowledge and belief, the data presented is accurate in all material respects and is reported in a mariner that presents fairly the financial position and results of operations of the various funds and component units of the City of San Rafael. The financial statements are prepared in accordance with Generally Accepted Accounting Principles as promulgated by the Governmental Accounting Standards Board (GASB) and include the report of the independent certified public accounting firm, Maze and Associates Accountancy Corporation. Further, the CAFR is prepared in accordance with procedures and policies set by the Government Finance Officers Association. The analysis of the financial condition and the result of operations are in the Management's Discussion and Analysis document in the financial section. The CAFR is organized into three sections: I � Introductory section, which is unaudited, includes this letter of transmittal, an organizational chart and a list of the City of San Rafael's elected and appointed officials, 1 Financial section includes the general-purpose financial statements, related footnote disclosures, and the combining and individual fund and account group financial statements and schedules, as well as the independent auditors' report, 1 Statistical section, which is unaudited, includes selected financial and demographic information, presented on a multi-year basis. Generally, ten-year data is presented for expenditures, revenues, assessed valuation for local properties and construction activity. REPORTING ENTITY — PROFILE OF THE GOVERNMENT The City of San Rafael provides a full range of municipal services required by statute or char] namely: Fire, Police, Community Development (encompassing Building, Planning and Co Enforcement), Public Works, Community Services (both Recreation and Child Care program 1400 F-,FrH AVENUE - PO SM 151560 * SAN RAFAEL, CA 94915-1560 MKWC I rYOFSAN'RASAFL - ORG V Redevelopment, Library and Management Services. The City Council is financially accountable for the San Rafael Redevelopment Agency and the San Rafael Joint Powers Financing Authority. These entities are considered blended component units and are combined with the City's figures in this report. The San Rafael Sanitation District is a discretely presented component unit of the City of San Rafael and is presented independent of City financial information. For a further explanation of these entities, refer to Footnote No. I in the Financial Section of the CAFR. The City participates in various organizations through formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these agencies exercise full powers and authorities within the scope of the related Joint Powers Agreement including the preparation of annual budgets, accountability for all funds, and the power to make and execute contracts. Obligations and liabilities of the separate entities are not those of the City. For a further explanation of these separate entities, refer to Footnote No. 13 in the CAFR. 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. 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 Rafael's population in 2011 was 58,136. 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 SRDA 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. ECONOMIC CONDITION 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. Approximately 72 percent of workers in San Rafael work for companies, 10 percent work for the government and 14 percent are self-employed. The median income for San Rafael households is $72,389. There may be slight economic improvement for the fiscal year 2011-2012. Sales tax trends for fiscal year 2010-2011 are slightly better than fiscal year 2009-2010, while property taxes are expected to be flat. Job growth looks to get better in the coming months. 12 CAFR TRANSMITTAL LETTER The economy will grow slowly the rest of t1tis year, and job gains will be limited. Major reductions to the City fiscal year 2011-2012 budget included compensation reduction, layoffs, furloughs, and reducing service hours. These changes were needed to balance fiscal year 2011-2012. The compensation reduction and furloughs will continue into fiscal year 2012-2013 budget. MAJOR INITIATIVES CurrentFear Projects Accoplis ants and Service ltTorts The City Council adopted a one-year budget in July of 2011 for the 2011-2012 fiscal year. These objectives support Department goals, the City Council's five-year goals, and our Mission Statement. Progress reports are provided to the City Council and community at six-month intervals during the two-year budget. The City issued the Tax and Revenue Anticipation Notes (TRANS) to bridge the gap between its regular flow of operating expenditures and the receipts of its semi-annual property taxes. M CAFR TRANSMITTAL LETTER San Rafael's fiscal practices are codified in the City's Financial Management Policies. The Policies were adopted to manage current and long-term financial resources, allow for adequate controls, and most importantly, to encourage input and participation in the City's financial affairs. 11110T.Mys I I _klylj' = The City's Management Team is responsible for establishing and maintaining internal controls to ensure that the City's assets are adequately protected from loss, theft or misuse. In addition, management controls should ensure that proper accounting data is collected so as to prepare reports in conformance with generally accepted accounting principles. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss ftom unauthorized use or disposition; and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived. All internal control evaluations occur within the above framework. We believe the City's internal accounting controls adequately safeguard assets and provide reasonable assurance that financial transactions are properly recorded. Budget Controls - The City develops a budget based upon Council priorities and Department objectives. The Finance Department maintains a traditional line item budget by major function. Budget control is accomplished at the functional or division level within each fund. This budget creates a comprehensive management and fiscal system aimed at achieving the objectives of each operating level consistent with those that have been set for the community by the City Council. Each department director is responsible for accomplishing goals within his or her functional area and monitoring the use of their budget allocations consistent with policies set by the City Council and monitored by the City Manager. OTHER INFORMATION Indendent Audit - the Charter of the City of San Rafael requires an annual audit of the City's pe financial records and transactions by an independent certified public accounting firm. This year, the accounting firm of Maze and Associates Accountancy Corporation perfon-ned the audit, The audit requirement has been met and the auditors' opinion has been included in this report. Ackno�y�lcde�nt - The preparation of this document was accomplished through the diligent, dedicated efforts of the Finance Department's staff. Appreciation goes to Van Bach, Accounting Supervisor, Helen Yu, Accountant, and Carl Tregner, Accountant. All of these top-notch employees were instrumental in coordinating the annual audit in a timely and professional manner. Lastly, staffs support by the Mayor and City Council Members, with an emphasis on community focus and customer service, has allowed the Finance Dep hent to bring professional level financial leadership and management home to San Rafael. Staff expects 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, CAFR TRANSMITTAL LETTER progressive manner empowers staff to achieve important goals through a commitment to excellence, professionalism and community interest. Respectfully submitted, Nancy Mackle] City Manager Interim Finance Director M MISSION STATEMENT The Mission of the City of San Rafael is to enhance the quality, of life and to provide for a safe, healthy, prosperous and livable environment in partnership with the community. Our vision for San Rafael is to be a vibrant economic and cultural center reflective of our diversity, with unique and distinct neighborhoods in a beautiful natural environment, sustained by active and informed residents and a responsible innovative local government. January 1996 Albert J. Boro, Mayor .1 Barbara Heller, Vice- Mayor Greg Brockbank, Council Member Damon Connolly, Council Member Marc Levine, Council Member 0 AOF City Officials City Council Albert J. Boro, Mayor Greg Brockbank, Council Member Damon Connolly, Council Member Barbara Heller, Council Member Marc B. Levine, Council Member Elected Officials Rob Epstein, City Attorney Esther Beirne, City Clerk Management 'Team Nancy Mackle, City Manager Jim Schutz, Assistant City, Manager Bob Brown, Community Development Director David Dodd, Library Director Chris Gray, Fire Chief Stephanie Lovette, Economic Development Director Carlene McCart, Community Services Director Janet Pendoley, Interim Finance Director Nader Mansourian, Public Works Director Matt Odetto, Police Chief Doris Toy, District Manager/Engyineer-SRSD xi LOCATION MAP EM This Page Left ffitentionally Blank- INDEPENDENT ALTDITOR'S REPORT ON BASIC FINANCIAL STATEMENTS To the Honorable Mayor and Members of the City Council City of San Rafael, California We have audited the 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 as of and for the year ended June 30, 2011; 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 component unit financial statements of the San Rafael Sanitation District (District), which represents 15% and 13% of the assets and revenues and 3% and 9% of liabilities and expenses of the reporting entity, respectively. These component unit financial statements were audited by other auditors, whose report thereon has been famished to use Our opinion, insofar as it relates to the amounts included for this entity, is based solely on the report of these other auditors. We conducted our audit in accordance with generally accepted auditing standards in the United States of America and the standards for 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 as to 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion 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 of San Rafael as of June 30, 2011, and the respective changes in the financial position and cash flows, where applicable, thereof for the year then ended, in conformity with generally accepted accounting principles in the United States of America. As disclosed in Note 17, the State of California adopted Al3x1 26 on June 28, 2011, which suspends all new redevelopment activities except for limited specified activities as of that date and dissolves redevelopment agencies effective October 1, 2011. The State simultaneously adopted ABxl 27 which allows redevelopment agencies to avoid dissolution by opting into an *'alternative voluntary redevelopment program" requiring specified substantial annual contributions to local schools and special districts. These conditions raise substantial doubt about the ability of the City of San Rafael Redevelopment Agency, a component unit of the City, to continue as a going concern, However, on August 11, 2011, the California Supreme Court issued a partial stay of ABxl 26 and a full stay of A]3xl 27, but the partial stay did not include the section of ABxl 26 that suspends all new redevelopment activities. As a result, the accompanying financial statements have been prepared assuming that the City of San Rafael Redevelopment Agency will continue as a going concern. The activities of the City of San Rafael Redevelopment Agency are included in the Redevelopment Agency Capital Projects Fund and Redevelopment Agency Debt Service Fund of the accompanying financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. As of July 1, 2010. the City adopted the provision of Governmental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions. As discussed in Note 9 to the financial statements, the provisions of this statement affect the classification of fund balances reported in the financial statements. In accordance with Government Auditing Standards, we have also issued our report dated October 28, 2011, on our consideration of the City of San Rafael's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Management's Discussion and Analysis and the Required Supplemental Information are not a required part of the basic financial statements but are supplementary information required by the Government 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 this information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The supplemental information listed in the Table of Contents is presented for purposes of additional analysis and is not a required part of the basic statements of the City of San Rafael. This 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. The introductory section listed in the Table of Contents have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. October 28, 2011 CITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2011 This analysis of the City of San Rafael's (City) financial performance provides an overview of the City's financial activities for the fiscal year ended June 30, 2011. Please read it in conjunction with the basic financial statements and the accompanying notes to those basic financial statements. FINANCIAL HIGHLIGHTS Government -Wide Highlights: 0 NetAssets - The assets of the City exceeded its liabilities at fiscal year ending June 30, 2011 by $200.1 million. 0 Expense Activities - During the fiscal year the City's total revenues ($87.3 million) are less than expenses for governmental and business -type activities ($95.1 million) by $7.8 million, Excluding, Depreciation (non-cash expense of $7.7 million), collected revenues were $0.1 million above expenses. 0 Changes in Net Assets -- The City's total net assets decreased by $7.8 million in fiscal year 2011. Net assets of Governmental activities decreased by $7,6 million, while net assets of the business type activities decreased by $0.2 million. Fund Highlights: 0 Governmental Funds - Fund Balances- As of the close of fiscal year 2011, the City's governmental funds reported combined ending fund balances of $34.4 million, a decrease of $1.1 million from the prior year. Of this total amount, $19.5 million represents restricted fund balances, $4,4 million is committed fund balances, and $9.5 million is assigned fund balances. General Fund - The fund balance of the general fund on June 30, 2011 was $6.8 million, representing no increase from the prior year. $0.6 million is nonspendable, � $0.2 million is restricted, $0.6 million is committed, $5.4 million is assigned, which includes $1.3 million for emergencies and cash flow needs and is to be used to meet our 10% reserve requirement as defined by the city's financial management policies. Lang -Term Debt: The City's total outstanding debt increased by $1.0 million (4.6 percent) during the fiscal year, which reflects payment on redevelopment debt, court fine repayment note, capitalized lease obligations, and the issuance of $4,490,000 in 2010 taxable pension obligation bonds. 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. CITY OF SAN FAE+ L Management's Discussion and Analysis Fiscal Year Ended June 30, 20'11 Government -Wine 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, City activities are separated 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 Economic Development, 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 19 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. 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 GASES 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 82 through 10 1 of this report. MY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2011 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 thirty-two governmental funds, of which four are considered major funds for presentation purposes. Each major fund is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances, The City's four major funds are - the General Fund, Redevelopment Agency Capital Projects, Gas Tax, and Traffic and Housing Mitigation. Data from the other twenty-seven governmental funds are combined into a single, aggregated presentation. The basic governmental fund financial statements can be found on pages 22 through 28 of this report. Individual fund data for each of these non - major governmental funds is provided in the form of combining statements on pages 82 through 101 of this report. Z:� 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 z:1 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 30 through 32 of this report Fiduciary= FuntA, — The Cit-, currently has no fiduciary funds. CITY OF SAN RAFAEL, Management's Discussion and Analysis Fiscal Year Ended June 30, 2011 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 33 through 69 of this report. Required Supplementary Information hi 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 capital project, gas tax, 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 74 through 76 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 $200.1 million, which is a decrease of $8.0 million from the prior year. The following is the condensed Statement of Net Assets for the fiscal years ended June 30, 2010 and 2011. City of San Rafael Statements of Net Assets June 30, (Amounts in Millions) Governmental Activities Increase Business -Type Activities Increase 2011 2010 (Decrease) 2011 2010 (Decrease) Assets: Current assets $ 51.0 S 40.4 S 10,6 2.4 $ 2.4 Capital assets, net 2 021 . 0DU (6,2) 17.4 17.8 (0,4) Total assets 253.0 248.6 4.4 19,8 20.2 (0A) Liabilities: Current liabilities 16.3 8.9 7A 0.4 0.4 Long-term liabilities 493 443 4.6 6.6 6.8 (0.2) Total liabilities 65,6 53.6 12,0 -.o 7.2 (0.2) Net Assets: invested in capital assets, net of related debt 1743 173.5 0.8 10,8 11.0 Restricted 213 26,2 (4.9) - Unrestricted (8-2) (4.6) (3.6) 1.9 10 (0,1) Total net assets S 187.4 $ 195.1 (7.7) S 12,7 13.0 (0.3) At June 30, 2011, the largest portion of net assets (92.5 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 M CfrY OF SAN RAFAEL', Management's Discussion and Analysis Fiscal Year Ended .Tune 30, 2011 total net assets from fiscal year 2010 to fiscal year 2011 is largely attributable to a netting of capital assets acquisition against depreciation expense for the year. Total depreciation for this current year was $7.9 million, while capital asset acquisition totaled $1.4 million, leaving a net decrease of $6.5 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 (10.7 percent) is subject to restrictions imposed by external parties and their use is determined by those restrictions and agreements, The City issued a Tax and Revenue Anticipation Notes (TRANS) for fiscal year 2010-2011 in amount of $6.0 million, which was repaid in July 2011, This amount is reflected in increased current assets and current liabilities. For the year ended June 30, 2011, the City reported positive balances of net assets in capital and restricted net assets for governmental activities. Business -type activities reported positive net assets in capital and unrestricted net assets. Net Assets I # of $50,00 $0.00 ($50.00) Invesment in Capital Assets, Restricted net of related debt iE12011 $185.10 $21.30 Unrestricted im Total Net Assets $200.1 CITY OF SAN RAFAET Management's Discussion and Analysis Fiscal Year Ended June 30, 2011 Statement ofAetivities The following is the condensed Statement of Activities and Changes in Net Assets for the fiscal years ended June 30, 2011 and 2010: Revenues: Program revenues General revenues Total revenues Expenses Change in net assets before transfers 'transfers Net Assets: Beginning, as restated Ending GovernmentalAedvilies: Governmental Activities 2011 2010 For the Fiscal Years Ended June 30, (Amounts in Millions) Increase Business Type Activities Increase (Decrease) 2011 2010 (Decrease) $ 25-5 $ 25.8 $ (0.3) 4.0 57.7 53.6 4.1 - 83.2 79.4 3.8 4.0 913 88.6 2.7 3.7 4.2 (0.2) 4.2 (02) 4.0 (0.3) (9 2) 1.1 0,3 01 0.1 0h5 0.5 $ - (0.5) (0.5) $ - 195.0 203.7 $ 187,4 195.0 12,9 13.2 12,7 -$ 12.9 The City's governmental activities decreased net assets by $7,6 million, -which represents a 3.9% decrease from last year. Key elements of this change were as follows: Revenue highlights.- • Sales tax including Triple Flip Backfill tax and Measure S use tax increased by $2.6 million or approximately 13 .5 percent compared to fiscal year 2010. • Paramedic tax increased by $172,000 or 4.9 percent, • Motor vehicles revenues increased by $126,000 or 73.E percent due to receipt of excess MVLF revenue collections by state for fiscal years 2007 through 2010. • Transient Occupancy Tax revenues increased by $86,000 or 5.5 percent, • Investment earnings decreased by $126,000 or 41.6 percent. M CITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30,2011 Governmental Activities - Revenues. 0.4% 6.7% 2,6% 24.5% 12.9% Governmental Activities - Expenses: Governmental Activitie Revenues By Source June 30, 2011 n Property 'taxes IM Sales Taxes 26.5% E] Other Taxe s [I Charges for Services EMiscellaneous 26L% E]Grants and Contributions III nvestment Earnings GovernmenW Activities Expenses by Function June 30, 2011 Memral Government INPublic Safety OPublic Works and Parks IlCommunity, Development ECulture and Recreation El Debt Service Total expenses for governmental activities Nvere $89,7 million (not including interest on long-term debt of $1.6 million). Proaram revenues off -set total expenditures as follows: * Those who directly benefited from programs contributed $20.0 million in charges for services. * A total of $1.9 million in capital projects Was funded by outside agencies through capital grants and contributions. I 'CITY 0FSAN :RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2011 As a result, total expenses that were funded by tax revenues; investment income and other general revenues were $67.8 million. Functional expenses for the years ended June 30, 2011 were as follows: Expenses by Function For the fiscal year endedJ une 30, 2011 Function Amount GCnet-dl Government Pu bl is Safety Pub! is vAorls and parks Corntrunitydewlopmert Cukm and recreation Interest on Debt Total Fxpenses Business -Type Activities. - Percent of Total 8,269,846 9.1% 44,735,486 49.0% 17,408,038 19.1% 7,831,274 &6% 11,461,375 125% 1,621,605 1.8% $ 91327,624 100.0% Net assets for business -type activities were $12,71 million, a $0.2 million decrease from the prior fiscal year. Parking services is the City's only business type activity and income is derived from program revenues of $4.0 million. Program revenues include parking meter coin at $1.5 million, and parking garage hourly parking at $0.7 million. Revenues also include parking and non -vehicle code fines totaling $1.8 million, Total expenses for parking services were $3.7 million and transfers out to general fund for support totaled $0.5 million during fiscal year 2011. FINANCIAL ANALYSIS OF INDWIDUAL FUNDS Governmental Funds Fund Balance Classifications In February 2009, the Government Accounting Standards Board (GASB) issued Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions" that is applicable to the financial statements issued by governmental entities for the reporting period ended June 30, 2011, The objective of GASB statement No. 54 is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions, Before GASB 54, fund balances for the governmental funds were classified in three categories- reserved, unreserved designated and unreserved undesignated. Under GASB 54, fund balances are classified in five categories: nonspendable, restricted, committed, assigned, and unassigned based on hierarchy of constraint. Further details on fund balance classifications can be found in Note 913, 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, unassigned fund z:1 balance may serve as a useful measure of a government's net resources available for spending at the end of the fi iscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $34.4 million. $1.0 million is nonspendable, $19.5 million is restricted, $4.4 million is committed. and $9.5 million is assigned. H CITY OF SAN RAFAEL' Management's Discussion and Analysis Fiscal Year Ended June 30, 2011 General Fund — The General Fund is the primary operating fund of the city. At the end of the current fiscal year, the fund balance of the general fund was $6.8 million. $0.6 million was classified as nonspendable. $0.08 million for assessment districts and $0.12 million for a court fine audit was classified as restricted. $0.6 million for project development was classified as committed. $5.4 million of the fund balance comprised of $3.5 for worker's compensations claims, $0.4 million for liability claims and $0.2 million for encumbrances and $1.3 million for emergency and cash flow needs were classified as assigned. The $1.3 million is intended to be used for emergency and cash flow, needs. The goal is to set aside 10% for emergencies and cash flows as defined by the City's Financial Management Policies. Redevelop,ment.Agency Capital Project Fund — The Redevelopment Agency is responsible for assisting in the clearance and Z., 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 2011, the restricted fund balance was $4.7 million, which was for future capital project and housing programs. Proprietary Funds The City -'s 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 decreased by $02) million as a result of operations in the Parking Services fund. GENERAL FUND BUDGETARY HIGHLIGHTS The final amended General Fund budget projected total revenue at $52.7 million, total expenditures at $54.6 million, total interfund transfers at a net of $1.7 million, with the resulting projected decrease in fund balance of ($131,957). Actual revenues, at $53.6 million, exceeded budget by $1.0 million. Actual expenditures at $54.3 million and transfers at $0.6 million fell short of budget by $0.2 million and $1.0 million, respectively. As a result there was a net decrease to the fund balance of ($16,284). CITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2011 CAPITAL ASSETS AND DEBT ADMiLNISTRATION Capital Assets The City's investment in capital assets for its governmental and business -type activities as of June 30, 2011 amounts to $219.4 million, net of accumulated depreciation of $128.7 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 $1.4 million, offset by accumulated depreciation and retirements of $7.9 million . thereby equaling a net decrease of $6.5 million. Major capital asset additions during the current fiscal included work in process such as the City Hall HVAC Upgrades, Canal Street Pedestrian Access & Safety Improvements, Safe Routes to Schools Sun Valley Elementary, and Traffic Signal Cabinet & Controller Upgrades. Capital Projects � Northgate Gap Closure project was completed in 2011 Additional information on the City's capital assets can be found in Note 5 on pages 48 through 49 of this report, Debt Administration As of June 30, 2011, the City had outstanding debt issues as listed below. Not included in the following table is the Community Facilities District No. I 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 2011 and 2010 were as follows: 12 Governmental Business -Type Activities Activities Total 2011 2010 2011 2010 2011 2010 Revenue Bonds S S 6.6 $ 6.8 6.6 6.8 Special Assessment Bonds - - - - Tax Allocation Bonds 33.3 35.4 333 35.4 Taxable Pension Obligation Bonds 4.5 - - 45 Court Fine Promissory note 0.1 0.4 - 0.1 0A Redevelopment note 0.2 02 - 0,2 0.2 Capitalized Leases O'l 01 - - 01 O'l Compensated Absences 4.1 4.3 0.1 0.2 43 4.5 Total Outstanding Debt S 42.3 40.4 6.8 7.0 49.1 S 47.4 12 CITY OF SAN RAFAEL Management's Discussion and Analysis Fiscal Year Ended June 30, 2011 ECONOMIC CLIMATE AND NEXT YEAR'S BUDGET Many factors were considered in preparing the City's budget for fiscal year 2011-2012. In July, the budget was balanced with strategic remedies such as: o Total compensation reduction of 4.0% for all employee groups resulting in a savings of $1.5 million to the general Fund. o Use of pension reserves resulting is savings of $1.0 million to the General Fund. o Elimination of 6 positions for a total saving of $0.8 million in the General Fund and an additional 4 positions for a total savings of $0.3 million in the Parking Fund, The trend for sales tax, the city's biggest tax revenue generator, appears to be slightly better than fiscal year 2011. A 1.7 % increase is estimated for fiscal year 2012. The sale of property is expected to increase causing a 5% increase in our property transfer tax. TheCity's second largest tax generator is property tax. The City is expecting the fiscal year 2012 tax roll to remain relatively flat with a zero percent increase over the previous year. The City's largest expenditure by far relates to personnel costs. Salaries and benefits are tied to the labor agreements with each bargaining group. As indicated above., all bargaining groups agreed to a 2 year contract that provides an across z1_ the board pay reduction equal 4.0%. This contract will extend through the fiscal year 2012-13. In an effort to balance its budget, the State of California adopted ABx 1 26 on June 28, 2011, which suspends all new redevelopment agencies effective October 1, 2011. The State simultaneously adopted ABxI 27 which allows redevelopment agencies to avoid dissolution by opting into an "alternative voluntary redevelopment program" requiring substantial annual contributions to local school and special districts. On July 18, the California Redevelopment Association, the league of California Cities and others challenged the validity and constitutionality of ABx 126 and 27 to the California Supreme Court. On August 11, 2011, as modified on August 17, 2011, the California Supreme Court agreed to hear the case and issued a partial stay of ABxI 26 and a full stay of ABx 1 27, but the stay did not include the section of ABxI 26 that suspends all new redevelopment activities. It is anticipated that the Court will render its decision before January 15, 2012, the date the first voluntary program payment is due. The San Rafael City Council and San Rafael Redevelopment Agency Board have chosen to participate in the Voluntary Alternative Redevelopment Program pursuant to Part 1.9 of the California Community Redevelopment Law. The City Council's intention was verified by the passage of Ordinance 1899 on September 19, 2011. Please refer to Note 17 for further discussion on the potential consequences to the Agency from the decision of the Supreme Court. 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 — Finance Department, 1400 Fifth Avenue, Room 204, San Rafael, California 94901. I, This Paae Left Intentionally Blank I CITY OF SAN RAF AEL STATEMENT OF NET ASSETS AND STATE-TIVIENT OF ACTIVITIES I The Statement of Net Assets and the Statement of Activities summarize the entire City's financial activities and fmancial position. The Statement of Net Assets reports the difference between the City's total assets and the City's total liabilities, including all the City's capital assets and all its long-term debt. The Statement of Net Assets focuses the reader on the composition of the City's net assets, by subtracting total liabilities from total assets. The Statement of Net Assets summarizes the financial position of all the City's Governmental Activities in a single column, and the financial position of all the City's Business -Type Activities in a single column-, these columns are followed by a total column which presents the financial position of the entire City. The City's Governmental Activities include the activities of its General Fund, along with all its Special Revenue, Capital Projects and Debt Service Funds. Since the City's Internal Service Funds service these Funds, their activities are consolidated with Governmental Activities, after eliminating inter -fund transactions and balances. The City's Business Type Activities include all its Enterprise Fund activities. The Statement of Activities reports increases and decreases in the City's net assets. It is also prepared on the full accrual basis, which means it includes all the City's revenues and all its expenses, regardless of when cash changes hands. This differs from the "modified accrual" basis used in the Fund financial statements which reflect only current assets, current liabilities, available revenues and measurable expenditures, The Statement of Activities presents the City's expenses first, listed by program, and follows these with the expenses of its business -type activities. Program revenues—that is, revenues which are generated directly by these programs—are then deducted from program expenses to arrive at the net expense of each governmental and business -type program, The City's general revenues are then listed in the Governmental Activities or Business -type Activities column, as appropriate, and the Change in Net Assets is computed and reconciled with the Statement of Net Assets. Both these Statements include the financial activities of the City, the City of San Rafael Redevelopment Agency, and the San Rafael Joint Powers Financing Authority which are legally separate but are component units of the City because they are controlled by the City, which is financially accountable for their activities. The balances and the activities of the discretely presented component units of the San Rafael Sanitation District are included in these statements as separate columns. 15 This Page Left Intentionally Blank CITY OF SAN RAFAEL STATEMENT OF NET ASSETS JUNE 30, 2011 See accompanying notes to financial statements N Component Unit Primary Government San Rafael Governmental Business -Type pe Sanitation Activities Activities Total District ASSFTS Cash and investments available for operations (Note 2) $41.184,733 - $2,303,855 $43,48M88 $13,137,705 Restricted cash and investments (Note 2) 736,767 736,767 472,130 Receivables: Accounts 2,337,172 29,549 2,366,720 3,189 Taxes 4,295,718 4,295,718 Grants 1,425,544 1,425,544 Interest 65,012 65,012 560 Loans (Note 4) 926,902 926,902 Prepaid expenses and others 40,111 40,111 144,749 Capital assets (Note 5): Nondepreciable 85,035,325 8,620,853 93,656,178 1,244.776 Depreciable, net 116,952,579 8,802,739 125,755,318 32,083,335 Total Assets 251999,863 19,756,995 272,756,858 47,086,442 LIABILITIES Accounts payable 3,927,590 123,518 4,051,108 1,142,026 Deposits payable 35,276 35,276 Interest payable 321,104 78,535 399,639 15,510 Developer bonds payable 346,766 346,766 Arbitrage payable 25,127 25,127 Interest payable 111,157 111,157 Claims payable (Note 14): Due in one year 2,200,000 2,200,000 Due in more than one year 1,770,1717 1,7710,1717 Compensated absences (Note ID: Due in one year 740,718 15,769 756,487 Due in more than one year 3,37 1 ,594 167,134 3,538,728 Long-term debt (Note 6 and 7): Due in one year 8,598,320 185,000 8,783,320 940,000 Due in more than one year 35,632,499 6,445,000 42,077,499 Net OPEB liability (Note 12) 8,485,000 8,485,000 Total Liabilities 65,565,328 7,014,956 72,580,284 2,097,536 NETASSETS (Note 9): Invested in capital assets, net of related debt 174,281,922 10,793,592 185,075,514 32,845,291 Restricted for Special revenue projects 13,556,816 13,556,816 Capital projects 4,201.575 4,2015575 Debt service (2,559,712) 2,554,712) Redevelopment po:.;ects 6,124,259 6,124,258 Total Restrcted Net Assets 21,-22,937 21,322,937 Unrestricted i"8.170,324) 1,9487447 (6,221,877) 12,143,615 Total Net Assets $187,434,535 $12,742,039 S200,176,574 544,988,906 See accompanying notes to financial statements N CITY OF SAN RAFAEL STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2011 Business -t) pe Activities Parking services 3,785,751 4,011,333 Total Business -type Activities 3,785,751 4,011,333 Total Primary Government $95,113,375 $23,996,063 53,651,902 $1,857,670 Component Unit San Rafael Sanitation District 59,677,630 $12,223,779 General revenues: Taxes: Property Sales Paramedic \140tor vehicles Transient occupancy Franchises Business licenses Other Investment earnings Miscellarxous, Aid from other governmental agencies Transfers Total general revenues and transfers Change in Net Assets Net Assets, beginning of year Net Assets, end of � ear See accompanying notes '0 Financial statements, In Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary Government Governmental Activities: General government $8,269,846 $1,636,542 $500,651 Public safety 44,735,486 6,167,925 845,169 Public works and parks 17,408,038 4,141,103 1,564,703 $1,857,670 Community development ,'redevelopment 1,804,650 2,676-663 Culture and recreation 11,487,999 5,362,497 741,3779 Interest on long-term debt 1,621,605 Total Governmental Activities 91,321,624 19,984,730 3,651,902 1,.857,670 Business -t) pe Activities Parking services 3,785,751 4,011,333 Total Business -type Activities 3,785,751 4,011,333 Total Primary Government $95,113,375 $23,996,063 53,651,902 $1,857,670 Component Unit San Rafael Sanitation District 59,677,630 $12,223,779 General revenues: Taxes: Property Sales Paramedic \140tor vehicles Transient occupancy Franchises Business licenses Other Investment earnings Miscellarxous, Aid from other governmental agencies Transfers Total general revenues and transfers Change in Net Assets Net Assets, beginning of year Net Assets, end of � ear See accompanying notes '0 Financial statements, In Net (Expenses) Revenues and Changes in Net Assets Component Primary Government Unit San Rafael Governmental Business -Type Sanitation Activities Activities Total District ($6,132,653) (56,132,653) (37,722,392) (3.7,722,392) (9,844,562) (9,844,562) (5,127,987) (5,,127,987) (5,384,123) (5,384,123) (1,621,605) (1,621,605) (65,833,322) (65,833,322 19 5225.582 225,582 225.582 225,582 (65,833,322) 225,582 (65,607,740) $2,546,149 21,632,733 21,632,733 1,214,519 21,623,445 21,623-3,445 3,661,064 3,661,064 297,425 297,425 1,644,262 1,644,262 2,990,539 2,990,539 2,296,460 2,296,460 1,930, 531 1,930,531 176,502 11,878 188,380 59,265 1,496,1 74 1,496,174 6,499 463,600 (463,600) 58,212,735 (451.722; 57,761,013 1,280,283 (7,620,5871 (226.140] 1',846,?27.i 3.826,432 195,055,122 12,968= 179 208A-23,301 41,162,474 $187,434,535 512,742,039 52011,176,574 $44,9881906 19 This Page Left Intentionally Blank I FUND FINANCIAL STATEMENTS I Major funds are defined generally as having significant activities or balances in the current year. The funds described below were determined to be Major Funds by the City in fiscal 2011. Individual non -major funds may be found in the Supplemental section. GENERAL FUND Established to accounts for all financial resources and transactions except those required to be accounted for in other funds. TRAFFIC AND HOUSING MITIGATION FUND Established to maintain a long-term developer deposits for major housing and street improvement projects. GAS TAX FUND Established to receive and expend the City's allocation of the State gasoline taxes. REDEVELOPMENT AGENCY CAPITAL PROJECTS FUND Established to account for the capital projects activities of the San Rafael Redevelopment Agency. 21 CITY OF SAN RAFAEL GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2011 ASSETS Cash and investments available for operations (Note 21) Restricted cash and investments (Mote 2) Receivables: Accounts Taxes Grants Interest Loans (dote 4) Due from other funds ('vote 3A) Prepaid expenses Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Deposit, payable Developer bonds payable Arbitrage payable Note payable ( Note 6) Interest payable Due to other funds (wrote 3A) Deferred revenue Compensated absences (Note 1J) Total Liabilities Fund Balances (Note 9): Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances $1,427,725 51,1419,654 Redevelopment 35,276 Traffic and Agency 320,266 Housing Capital General Mitigation Gas Tax Projects $9,897,730 $9,093,397 $1,875,751 55,485,855 76,015 420.992 173,993 75,499 95,576 4,008,611 178,383 2,024 87021,057 510,814 26,624 60,326 4,658 549,722 62,858 314,322 40,111 9,093,397 1,138,226 4,684,936 $14,806,568 59,156,255 $2,640,447 $6,356,051 $1,427,725 51,1419,654 5149,042 35,276 320,266 25,000 25127, 6,080,000 111.157 6,267 26,624 40,366 87021,057 1,199,654 225,79.+ 589,833 562,858 314,32' 200,238 9,093,397 1,138,226 4,684,936 555,561 28,816 1,120,000 5,439,8-179 273,751 5,000 6,785,511 9,156,255 1,440,793 6,124,258 514,8116,568 59,156,255 $2,640.447 $6,1350051 See accompanying notes to basic financial statements 12 Other Total Governmental Governmental Funds Funds $10,213, 792 $36,566,525 10,590 507,597 926,510 1,271,578 106,640 4,295,718 888,106 1,425,544 28 65,012 926,902 474,644 474,644 474,644 40,111 512,620,316 $45,573,631 $880,463 $3,650>884 35,276 1,560 346,766 25,127 6,080,000 111,157 474,644 474,644 329,859 362,750 252 40,618 1,686, 719 11, t 31,222 967,013 4,372,808 19,489,605 2.715,506 4,419,883 3,845178 9,563,908 10,933,592 34,440,409 $12,620,310 $45,573,631 This Page Left Intentionally Blank CITY OF SAN RAFAEL GOVERNMENTAL FUNDS BALANCE SHEET - RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO NET ASSETS OF GOVERNMENTAL ACTIVITIES JUNE 30, 2011 Total fund balances reported on the governmental funds balance sheet $34,410,409 Amounts reported for Governmental Activities in the Statement of Net Assets are different from those reported in the Governmental Funds because of the following: Capital assets used in Governmental Activities are not financial resources and, therefore, are not reported in the Governmental Funds, 201,987,904 Internal service funds are used by management to charge the cost of management of communication, telephone, building, fleet maintenance, equipment replacement, workers' compensation, employee benefits, insurance, and pose -retirement healthcare benefits to individual funds, I he assets and liabilities are included in Governmental Activities in the Statement of Net Assets. 1,152,266 Interest payable on Long-term debt does not require the use of current financial resources and, therefore; are not reported in the Governmental Funds. (321,104) Long-term liabilities, inetuding bonds payable, are not due and payable in the current period and, therefore, are not reported in the Governmental Funds. (33,660,819) Long-term compensated absences (4,071,694) Net OPEB liability ( 8,485,000}) Claims payable (3,970,177) Deferred revenue 312.750 Net assets of governmental activities $187,434,535 See accompanying notes to financial statements 25 CITY OF SAN RAFAEL GOVERNMENTAL Ft","DS STATEMENT OF REVEN­tjES. EXPENDITtiRES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2011 RFVENUES Taxes and special assessments Licenses and permits Fines and forfeitures Use of money and properties Intergovernmental Charges for services Other revenue Total Revenues EXPEIN DITU RES Current: General government Public safety Public works and parks Community development /redevelopment Culture and recreation Capital outlay Capital improv=ement / special projects Debt service: Principal (Note 7) Interest and fiscal charges Total Expencitures EXCESS (DEFICIENM OF REVENNUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES tIJSES" Transfers in (Now 33) Transfcrs out (Note 3B) Total Other Financing Sources (Uses} Net Change in Fund Ba!ances Redevelopment Traffic and Agency Housing Capital General Mitigation Gas Tax Projects $42,346,707 $936,383 1,416,772 34,098,697 862,820 7-475,774 148,213 $47,928 30,981 60,464 6,645,495 2,700,095 1,819,641 22,115 528,261 29,525 395.558 83,ol5 1109,020 53.635,206 70,043 3,322,958 1.135,392 6,789,829 40,481, 34,098,697 7-475,774 68,376 18,790 106,893 3,074,897 1,452,454 2,211,033 162,267 701,403 152,814 2,432,293 307,119 239,106 105,156 5,',309,573 68376 3,152,486 1,906,946 674-367) 1h67 170472 (771,554), 2,146,685 520,000 141,379 {2,288,602) (1,301119) 658,08', (781,119,) 141,371) t;6-284) (610 647) (630,175) FIUNID BALANCES, BEGINNING OF YEAR 6,8(1,!,795 9'54-589 2, ;51.4''1) 6,'54 433 FUND BALANCES. END OF YEAR —$("785-111-, $9,156,255 ...-.SI,440,793 $6,124,258 See accornpanlrg notes to fina'-ICA staternenis 26 Other Total Governmental Governmental Funds Funds $8,165,040 $51,448,130 6,868,555 1,416,7'-2 2,996,343 862,821) 113,128 380,720 1518,537 11,864,127 13 ,489,208 15,988,750 438,652 1,026,845 24,724,565 82,848,164 32,832 6,863,142 6,868,555 40,957,252 2,996,343 10,666,176 4527,351 7,856,789 10,067 822 881,813 1,745,483 3,348,636 6,240',861 2,251,232 2,531,338 1,343, 754 1,448,910 25,620.054 85,057,435 (895489) (2,169271) 2,193,7701 5,806,834 (I,067,605) (4,6573=6) 1,131,165 1,149,508 235,676 (1,019,763) 10,697,916 35,460,172- $10,933,592 5,460,=72 $10,933,592 $34,440,409 27 CITY OF SAN RAFAEL Reconciliation of the NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FI.,NDS with the STATEMENT OF ACTIVITIES FOR THF. YEAR ENDED JUNE 30, 201 1 NET CHANGE IN FUND BALANCES -TOTAL GOVERNME\T AL FUNDS Amounts reported for Governmental Activities in the Statement of Activities are different because of the following: Capital Assets Transactions Governmental funds report capital outlays as expenditures. Ilowever, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. Capital outlay and capital projects expenditures are therefore added back to fund balance Nori-capitalized capital outlay expenditures were reclassified to various governmental activities Depreciation expense is deducted from the fluid balance Loss on retirement of capital assets is deducted from the fund balance Long -Term Debt Proceeds and Payments Bond proceeds provide current financial resources to governmental funds, but issuin„ debt increases long-term liabilities in the Statement of Net Assets. Repayment of bond principal is an expenditure in the governmental funds, but in the Statement ot'Net Assets the repayment reduces tong -term liabilities. Principal debt service payments are added back to fund balance Bond interest accretion is deducted from fund balance Bond premium amortization is added back to fund balance Accrual of Ideon -Current Items The amount below included in the Statement of Activities does not require the use of current financial resources and therefore is not reported as revenue or expenditures in governmental funds (net chta.ge); Interest payable Compensated absences Deferred revenue Net OPER iiabihP, Claims Payable Allocation of internal Service Fund Activities Interna service f:nd - are used n, management -01 charge the costs of certain activities to individual i'unds. Ric net re,enue ofthe internal service fund is reported with governmental. activities. c.h a€ee in Net Assets ot'GoNerrimental Actrviues See acct nupanv.nt, notes to financial statements -r 8 ($1,619,`x63_) '.9'86.344 (6,631,483) (7,545 706) 2,530,333 (247,311) ?9,860 (5,184) 20,5,288 3615750 (2,220,000) i703,630j MAJOR PROPRIETARY FUNDS Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges. The City reported its only enterprise fund as a major proprietary fund. 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. 29 crry OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF'.NETASSETS JUNE 30, 2011 Business -type Activities - Enterprise Governmental Funds Activities Parking Internal Services Service Funds ASSETS Current Assets: Cash and investments available for operations (Note 2) S2,324,995 $4,597,070 Restriced cash and investments {Note 2) 229,170 Accounts receivable 29,548 1,065,594 Due front other funds (Note 3A) 803,158 Total Current Assets 2,354,541 6,694,992 Noncurrent Assets: Capital assets ( ' Note 5): Nondepreciable 020,853 Depreciable, net 81802,739 Total Noncurrent Assets 17.4237592 Total Assets 19,778T33 6,694,992 LIABILITIES Current Liabilities: Accounts payable 123,518 270,706 Interest payable 78,53-5 Due to other funds (Note 3A) 803,158 Compensated absences, due in one year (Note IJ) 15,' ' 769 Lona -term debt, due in one year (Note 185,000 Total Current Liabilities 402,822 1,073,864 Noncurrent Liabilities: Compensated absences (Note IJ) 167-134 Long-term debt (Note 7) 6,445,000 4.4913,000 Total Noncurrent Liabilities 6,612, 13 34 4,490,000 Total liabililies I4,956 5,5.63,864 NET ASSETS (Note 9): Invested in capital assets, net of related debt 10,793,592 Llnresiricted 1,969,585 1. 1 -3 1, 128 Total Net Assets 12,763,177 S1,131J28 Some amounts reported for husiness- type acovifie.s in the Statement of Net Assets are different because Certain internal service fund assets and liabilities are included with business-ly a activities. (21,138) Net assets hus;ness-tvS12,742.o3i) PC aeuvales See accompanying notes to fittancial staten-icits 30 CITY OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS FOR THE YEAR ENDED JUNE 30, 2011 Business -type Activities - Enterprise Governmental Parking Internal OPERATING REVEN(JES Charges for current services $2,154,308 $9,405,657 Other operating revenues 1,857,1125 2,002,980 Total Operating Revenues 4,011,333 11,408.637 OPERATING EXPENSES Personnel 2,17/5,631 Insurance premiums and claims 6,101,491 Maintenance and repairs 41,321 110,635 Depreciation 332,233 General and administrative 884,459 744,613 OPEB Expense - 4,009,971 Total Operating Expenses 3,433,644 14,966,710 Operating Income 577,689 441,927 NONOPER'TING REVENUES (EXPENSES) Investment income 11,878 19,147 Interest expense (319,391) (511,512) Total Nonoperating Revenues (Expenses,' (307,513) (492,365) Income Before Transfers 270,17/6 (50,438) Transfers in (Note 3B) 358,032 Transfers out (Note 3B) (463,600) (1,043,940) Change in Net Assets (193,424) (736346) NET ASSETS, BEGI-NINING OF YEAR 12,956,601 1-867,474 NET ASSETS, END OF YEAR 12,763„ 177 $1,131,128 Change in Net Assets (133,424) Sonne amounts reported for business-a"ne activities in the Statement of Activities are difterent because the portion of the net mcorne of certain internal service funds is reported with the business -type activities which those funds serviced. k31/16) Change in Net Assets of Busfiiess-type Activities ($226,1404 See iccornpanying notes to linan6al statements 31 CITY OF SAN RAFAEL PROPRIETARY FUNDS STATE LENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2011 See acctipanyng, n()tes to basic financiaktatemen't 32 Business -type Activities - Enterprise Governmental Funds Activities Parking Internal Services Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers/other funds S2J54,308 $9,393,746 Cash payments to suppliers for goods and services (912,843) (107597,894) Cash payments to employees {2,180,301' I Other operating revenues 1,882,161 2,002,980 Cash Flows from Operating Activities 943,325 798,832 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Interfund payments (463,600) (685,908) Cash Flows from Noncapital Financing Activities (463,600) (685,908) CASH FLOWS FROM CAPITAL AND RI EATED FINANCING AC'flVFffES Proceeds received from issuance of Ion-, term debt 4,260,830 Principal payments on certificates of participation (175,000) Interest expenses and fiscal charges (511 ,512) Cash Flows from Capital and Related Financing Activities i496J41) 3,749,33418 CASH FLOWS FROM INVESTING ACTIVITIES Investment income 11 ,878 19,147 Cash Flows from Investing Activities I I,878 1%147 NET INCREASE IN CASH AND CASH EQUIVALENTS (4,538, 3,981,389 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 21329,531 715,681 CASH AND CASH EQUIVALENTS, END OF YEAR S2,324,993 $4,597,070 FUND BALANCFS. BEGINNING OF YEAR provided by operating activities: Operating income S57 7,689 S441,92-7 Ad-justments to reconcile operating income to cash flows from operating activities; Depreciation *32,2 1 Net change in assets and habilitre : Accounts receivable 25j16 Prepaids and deposits; 5,025 12 5,24 1 Accounts payable 7,912 243+5 Compensated absence oblqgations (4 67(l) Claims ow, able Net Cash provided bv in) Operating: Actvides S9437325 5798,832 See acctipanyng, n()tes to basic financiaktatemen't 32 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES I A. Description of the Financial Reporting Entity As required by generally accepted accounting principles, the financial statements present the City of San Rafael (the City) as the Primary Government, with its component units for which the City is considered financially accountable. The component units discussed below are included in the City's reporting entity because of the significance of their operational and financial relationships with the City. B. Description of Blended Component Units The accompanying basic financial statements include all funds and boards and commissions that are controlled by the City Council, The basic financial statements include the City's blended component units, entities for which the City is considered to be financially accountable. A blended component unit, although a legally separate entity.. is in substance, part of the City's operations and so data from this entity is combined with the City, The City's following blended component units are described below. 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 detennined 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 cast 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 goveming 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. San Rafael Joint Powers Financing Authority — The San Rafael Joint Powers Financing Authority (Authority) was created by the City of San Rafael pursuant to Articles I and 2 of Chapter 5 of Division 7 of Title I of the Government Code of the State of California for the purpose of assisting in the financing and refinancing of certain assessment district activities in the City. All of the Authority's assets, liabilities, revenues and expenditures Financial Statements. The Agency's capital assets and long-term Governmental Activities in the Government -Wide Financial Statements 33 are reported in the Fund debt are reported with the CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Co C. Description of Discretely Presented Component Unit San Rafael Sanitation District — The San Rafael Sanitation District (District) was formed in 1947 under Section 4700 of the California Health and Safety Code to provide wastewater transmission over the southern two-thirds of the City and adjacent unincorporated areas. The 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 in 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. D. Basis of Presentation Government -wide Statements - The Statement of Net Assets and the Statement of Activities display information about the primary government (the City) and its component units, These statements include the financial activities of the overall City government, except for fiduciary activities. Interfund transfers and amounts owed between funds within the primary government have been eliminated from the statements. Amounts representing interfund services and uses remain in the statements. These statements distinguish between the governmental and business - type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business -type activities are financed in whole or in part by fees charged to external parties. The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business -type activities of the City and for each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a pariieular program and (c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the City's funds, including fiduciary funds and blended component units. Separate statements for each fund category — governmental and proprietary — are presented. The emphasis of fund financial statements is on major individual governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. 34 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE t - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. E. Major Funds Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/expenses, equal to ten percent of their fund -type total and five percent of the grand total, The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds. The City reported the following major governmental funds in the accompanying financial statements: General Fund — Accounts for all financial resources and transactions except those required to be accounted for in other funds. Traffic and Housing Mitigation Fund — Established to maintain long-term developer deposits for major housing and street improvement projects. Gas Tax Fund - Established to receive and expend the City's allocation of the State gasoline taxes. Redevelopment Agency Capital Projects Fund — Consist of five funds; 1) the 1999 Agency Bonds Funds, 2) the 2002 Agency Bonds Funds, 3) the RDA Capital Improvement Fund (for improvement projects), 4) project Administration Fund, and 5) the Housing Fund. The City reported its only enterprise fund as a major fund in the accompanying financial statements. The enterprise funds is: Parking Services Fund — Established to maintain parking garages, lots and spaces in the Downtown Parking District (established over 40 vears ago), and to pay for parking enforcement, meter collection, and downtown officer services. The City also reports the following fund types: Internal Service Funds - These funds account for: building-, maintenance, employee benefits, liability insurance, workers' compensation, dental insurance, and employee retirement, all of which are provided to other departments on a cost -reimbursement basis. 35 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE I - SUNEVIARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued F. Basis ofAccounting The government -wide, proprietary and discretely presented component unit financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available, The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds from long-term debt and acquisitions under capital leases are reported as other financing sources. Those revenues susceptible to accrual are property and sales taxes, certain intergovernmental revenues, interest revenue, charges for services, fines and forfeitures. Sales taxes collected and held by the state at year end on behalf of the City are also recognized as revenue. Other receipts and taxes are recognized as revenue when the cash is received. Non-exchange transactions, in which the City gives or receives value without directly, receiving or giving equal value in exchange, include taxes, giants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Under the terms of grant agreements, the City may fund certain programs with a combination of cost -reimbursement grants, categorical block grants, and general revenue. Thus, both restricted and unrestricted net assets may be made available to finance program expenditures. The City's policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary. The City considers restricted shared state revenues such as gasoline taxes and public safety sales taxes, restricted locally imposed transportation sales taxes, fines, forfeitures, licenses, permits, charges for services, and program grants as program revenues. Certain indirect costs are included in program expenses reported for individual functions and activities. The City follows statements and interpretations of the Financial Accounting Standards Board and its predecessors that were issued on or before November 30, 1989, in accounting for its business - type activities, unless they conflict with Government Accounting Standards Board pronouncements. 36 CITY OF SAN RAF AEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2411 NOTE 1- SUMMARY OF SIGNIFICANT ACCOLTNTING POLICIES (Continued) G. Budgets, Budgetary Accounting, And Encumbrances 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, except for capital projects funds. Projects in Capital Projects Fund are budgeted by the Council on a multi-year basis. From the effective date of the budget, which is adopted at the department level, the amounts stated therein as proposed expenditures become appropriations to the various City departments. The City Council may amend the budget by resolution during the fiscal year. 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. 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 a reservation 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. The following Major Special Revenue Fund incurred expenditures in excess of their budget. Sufficient resources were available within each department to finance these overages. Gas Tax Special Revenue Fund S1,500,931 H. Cash Equivalents For purposes of the statement of cash flows, the City considers all highly liquid investments (including all restricted assets) with maturity of three months or less when purchased to be cash equivalents, The City maintains a cash and investment pool that is available for use by all funds. As the proprietary funds' share of this pool is readily available when needed, such share is also considered - to be cash equivalent. Deposit assets in the proprietary funds are related to insurance and benefits and are not considered cash equivalents for purposes of the statement of cash flows. L Capital Assets All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair market value on the date contributed. The City has included the value of all infrastructure capital assets into its Basic Financial Statements using the Basic Approach for infrastructure reporting. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. W CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 I NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I Capital assets, excluding infrastructure, are recorded if acquisition or construction costs exceeds $5,000. The similar threshold for infrastructure is $25,000. Depreciation is provided using the straight-line method which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that years pro rata share of the cost of capital assets. The City has assigned the useful lives listed below to capital assets: Buildings, improvements, and structures 20 — 50 years Machinery and equipment 5 — 15 years Infrastructure 15 — 50 years J, Compensated Absences Compensated absences are accrued as earned. Upon termination, employees are paid for all unused vacation at their current hourly rates. Unused sick leave based upon the rate of two to three percent (2%-3%) for each year of service, one half of accumulated sick leave becomes vested, up to a maximum amount as specified under labor contract provisions. The vested portion is available for current use or, if unused, is payable at termination or retirement. The long-term portion of the liability for compensated absences for governmental fund type operations is recorded as compensated absences in the government -wide financial statements. Compensated absences are liquidated by the fund that has recorded the liability. Proprietary fund liabilities are recorded within their respective funds. The changes of the compensated absences were as follows: 38 Governmental Business -Type 'P Activities Activities Total Beginning Balance $4,276,982 $187.573 $4,464,555 Additions 3,660,856 116,090 3,776,946 Payments (3,825,526) (1220,760) (3,946,286) Ending Balance $4,112,312 S181903. $4,295,215 Current Portion $740,718 $15.769 $756,487 38 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 1- SLIIMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued} K. Property Tax Levy, Collection and _'Maximum Rates State of California Constitution Article XIII A provides that the combined maximum property tax rate on any given property may not exceed 1% of its assessed value unless an additional amount for general obligation debt has been approved by voters. Assessed value is calculated at 100% of market value as defined by Article X111 A and may be adjusted by no more than 2% per year unless the property is sold, transferred, or substantially improved. The State Legislature has determined the method of distribution of receipts from a 1% tax levy among the counties, cities, school districts and other districts. Marin County assesses properties, bills for and collects property taxes on the schedule that follows: Secured Unsecured Valuatiortlien dates January I January I Levy dates July I July I Due dates (delinquent as of) 50% on November I (December 10) July I (August 3 1) 50% on February I (April 10) The term "unsecured" refers to taxes on personal property other than land and buildings. These taxes are secured by liens on the property being taxed. Property taxes are levied and recorded as revenue when received in the fiscal year of levy because of the adoption of the '-alternate method of property tax distribution," known as the Teeter Plan, by the City and the County of Marin. The Teeter Plan authorized the auditor -controller of the County of Marin to allocate 100% of the secured property taxes billed, but not yet paid. The County of Marin remits tax monies to the City in three installments, as follows: 55% remitted on December 15 40% remitted on April 15 5% remitted on June 15 L. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asset and liabilities at the dates of the financial statements and the reported amounts of revenues and expenditures,"ex.penses during the reporting periods. Actual results could differ from those estimates. IV. New Fund The City created Employee Retirement Internal Service Fund in fiscal year 2011 to account for a special parcel tax dedicated to public library services and facilities, equipment, and technology improvements, The City also created Library Assessment Special Revenue Fund to account for the principal payments, interest payments, and related cost of the 2010 Taxable Pension Obligation Bonds. 39 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 =NOTE 2 - CASH AND INVESTMENTS The City's goal is to invest at the maximum yield, consistent with safety and liquidity, while individual funds can process payments for expenditures at any time. A. Policies The City invests in individual investments and in investment pools. Individual investments are evidenced by specific identifiable securities instruments, or by -an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system. In order to increase security, the City employs the Trust Department of a bank as the custodian of certain City managed investments, regardless of their form. California Law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the City's cash on deposit, or first trust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. Under California Law this collateral is held in a separate investment pool by another institution in the City's name and places the City ahead of general creditors of the institution. The City's investments are carried at fair value, as required by generally accepted accounting principles. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year. B. Classification Cash and investments as of June 30, 2011, are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of City debt instruments or agency agreements. Financial Statement Presentation: Statement of Net Assets: City of San Rafael: Cash and investments available for operations Restricted cash and investments Total Primary Government Cash and Investments San Rafael Sanitation District: Cash and investments available for operations Restricted cash and investments Total San Rafael Sanitation District Cash and Investments Total Cash and Investments 40 $43,488,588 736,767 44,225,355 13.137.705 472.130 13,609.835 $57,835,190 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 CASH AND INVESTMENTS (Continued} The City does not allocate investments by fund. Each proprietary fund's portion of Cash and Investments Available for Operations is in substance a demand deposit available to finance operations, and is considered a cash equivalent in preparing the statement of cash flows. C. Investments Authorized by the California Government Code and the City's Investment Policy The City's investment policy and the California Government Code allow the City to invest in the following provided the credit ratings of the issuers are acceptable to the City; and approved percentages and maturities are not exceeded. The table below also identifies certain provisions of the California Government Code, or the City's Investment Policy where it is more restrictive: The District adopted the investments policy of the Treasurer and Tax Collector of the County of Marin. Accordingly.. the District, following the County, may invest in U.S. Treasury and agency securities, commercial papers, bankers' acceptances, time deposits, repurchase agreements, and the State of California LAIL. The District, additionally, may invest in the Marin Country Investment Pool. At year-end, the District's investments were in compliance with the above provisions 41 Minimum Maximum Maximum Maximum Credit Percentage of Investment in Authorized Investment Type Maturity Quality Portfolio One Issuer U.S. Government Obligation 5 years No limit No limit U.S. Agency Securities and 5 years AAA No limit No limit Instruments Repurchase Agreements I year A-] No limit No limit Prime Commercial Paper 270 days A-1 25% $1,000,000 Bankers' Acceptances 180 days A -I 40% $2,000,000 Medium -Term Corporate Notes 5 years A 30% $1,000,000 Negotiable Certificates of Deposit 5 years AA 30% No limit Non-negotiable Certificates 180 days N/A No limit No limit of Deposit Local Agency Investment Fund N/A N/A N/A NIA Money Market Mutual Funds N/A AAA 10% N/A Limited Obligation Improvement 30 years NT/A N/A N/A Bonds related to Special Assessment Districts and Special Tax Districts The District adopted the investments policy of the Treasurer and Tax Collector of the County of Marin. Accordingly.. the District, following the County, may invest in U.S. Treasury and agency securities, commercial papers, bankers' acceptances, time deposits, repurchase agreements, and the State of California LAIL. The District, additionally, may invest in the Marin Country Investment Pool. At year-end, the District's investments were in compliance with the above provisions 41 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 2 - CASH AND INVESTMENTS {Continued) D. Investments Authorized by Debt Agreements The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain, debt issues. These funds are unexpended, bond proceeds or are pledged as reserves to be used if the City fails to meet its obligations under these debt issues. The California Goverriment, Code requires these -funds to be invested in accordance with City ordinance bond indentures or State statute. The tater below identifies the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements: Maximum Maximum Minimum Credit Percentage of Authorized Investment Type _TMaturity Portfolio 5 years to no U.S. Treasury Obligations maximum N//A ',No Limit U.S. Agency Securities 3- 5 years N/A No Limit U.S. Agency Instruments 5 years AAA No Limit Repurchase Agreements I year A-1 No limit Category Bankers' Acceptances 360 days Highest Rating No Limit Category Money Market Funds N/A Highest Rating No Limit Category Prime Commercial Paper 2710 days Highest Rating No Limit Guaranteed Investment Contracts Category (fully collateralized) (A) Highest Rating No Limit Two Highest Municipal Obligations N/A Category Ratings No Limit Medium -Term Corporate Notes 5 Years A No Limit Non -Negotiable Certificates of Deposit 180 Days IN, tA No Limit Negotiable Certificates of Deposit 5 Years N/A No limit Local Agency Investment Fund NWA N/A -N/A (A) Guaranteed Investment Contracts must be fully collateralized with U.S. Treasury Obligations or U.S. Agency Obligations. 42 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 I NOTE 2 - CASH AND INVESTMENTS (Continued}j E. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City also manages its interest rate risk by holding most investments to maturity, thus reversing unrealized market gains and losses. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity or earliest call date: Type of Investment 12 Months or Less 13 to 24 Months Total City: U.S. Federal Agency Securities $1,003,295 $1,5017995 $2,505,290 Money Market Mutual Funds 1,680,499 1,680,499 Local Agency Investment Fund 38,112,057 38,112,057 Corporation Notes 507,885 507,885_ Total Investments $40,7195,851 $2,004,880 42,805,731 Cash in banks and on hand 1,419,624 Total City Cash and Investments 44,225,355 San Rafael Sanitation District: Cash in banks and short-term pooled investments 13.609,835_ Total District's Cash and Investments 11609,835_ Total Cash and Investments $57,835,140= The City is a participant in the Local Agency Investment Fund (LATE) that is regulated by California Government Code Section 164219 under the oversight of the Treasurer of the State Of California. The City reports its investment in L),N-IF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIT's investment portfolio are collateralized mortgage obligations, mortgage-backed securities., other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, Z-1 United States Treasury Notes and Bills, and corporations. At June 30, 2011, these investments matured in an average of 21317 days. Money Market Mutual Funds are available for withdrawal on demand and at June 30, 2011, matured in an average of 19 days. 43 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 I NOTE 2 - CASH AND INVESTMENTS (Continued) F. Credit Rhvk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of June 30, 2011, for each of the Primary -Government's investment types as provided by Standard and Poor's or Fitch investment rating systems, except as noted: Type of Investment Aa2/.AA— Aaa/AAA City: U.S. Federal Agency Securities $2,505,290 Money Market Mutual Funds 1,680,499 Corporation Notes 5507,885 Total rated investments Not rated: Local Agency Investment Fund Cash in banks and on hand Total City Cash and Investments San Rafael Sanitation District: Not rated: Cash in banks and short-term pooled investments $13,609,835 Total District's Cash and Investments Total Cash and Investments Total 54,693,6714 3 8,112,057 1,419,624 44.225,355 13,609,835 $57,835,190 On August 5, 2011, Standard & Poor's Ratings Services (S&P) lowered its long-term credit rating on the United States of America from AAA to AA -i% At the same time, S&P affirmed its A- I+ short-term rating on the United States of America. On August 8, 2011, S&P lowered its issuer credit ratings and related issue ratings on ten of twelve Federal Home Loan Banks (FHLBs) and the senior debt issued by the FHLB System from AAA to AA+. S&P also lowered the ratings on the senior debt issued by the Federal iarm, Credit Banks (FFCB) from AAA toAA-'-. and lowered the senior issue ratings on Fannie Mae (FNMA) and Freddie Mac (FHI-MC) from AAA to AA-�-. The A subordinated debt rating and the C rating on the preferred stock of these entities remained unchanged. Finally, S&P affirmed the short- term issue ratings for these entities at A-1-4-. As of June 30, 2011, the City's investments in these agencies were as follows: FHLB $1,503,870, FFCB $501,245 and FHLMC $500,175. M CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 CASH AND INVESTMENTS (Continued) G. Concentration of Credit Risk Investments in any one issuer, other than U. S. Treasury securities, money market mutual funds, and California Local Agency Investment Funds that represent 5% or more of total City-wide investments are as follows at June 30, 2011: Reporting Unit Issuer Investment Type Amount Entity -wide Federal Home Loan Bank Federal Agencies Obligation $1,503,870 General Fund Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal Farm Credit Bank GE Capital Corporate Medium Term Notes NOTE 3 - INTER -FUND TRANSACTIONS A. Inter; fund Receivables and Payables Federal Agencies Obligation 1,503,870 Federal Agencies Obligation 500,175 Federal Agencies Obligation 501,245 Corporate Bonds 507,885 Amounts due to or due from other funds reflect inter -fund balances for services rendered or short- term loans expected to be repaid in the next fiscal year. As of June 30, 2011, the Childeare Special Revenue Fund owed the Recreation Revolving Special Revenue Fund $29,304 and the Sewer Maintenance Special Revenue Fund owed the Storm -water Special Revenue Fund $445,340. The Employee Benefits Internal Service Fund owed the Liability Insurance Internal Service Funds $803,158 respectively as of June 30, 2011. B. Transfers Resources may be transferred from one City fund to another. Transfers routinely fund capital projects or capital outlays, lease or debt service payments, operating expenses and low and moderate -income housing projects, 45 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 I NOTE 3 - INITER-FUND TRANSACTIONS (Continued) Transfers between funds during the fiscal year ended June 30, 2011, were as follows: From Fund General Fund Gas Tax Fund Non Major Governmental Funds Parking Services Enterprise Funds Internal Service Funds To Fund Amount Non -Major Governmental Funds 1,930,5710 A Internal Service Funds 358.032 B General Fund 1,301,119 C General Fund 406.226 C Gas Tax Fund 520,000 C Redevelopment Agency Capital Projects Fund 141,379 D General Fund 398,600 C Non -Major Governmental Funds 65,000 A General Fund 840,740 C Non -Major Governmental Funds 203.200 A $6,164,866 (A) Transfers to the Non -Major Governmental Funds were for administrative costs, program support, capital projects, special projects and housing portion of debt service, (B) Transfers to the Internal Service Funds were to fund internal operations. (C) Transfers to the General Fund and Gas Tax Fund were for street maintenance support, admin costs, and dispatch contract. (D) Transfers to the Redevelopment Agency Capital Projects fund were for administrative costs and to fund capital projects. C. Internal Balances Internal balances are presented in the Entity -wide financial statements only. They represent the net interfund receivables and payables remaining after the elimination of all such balances within governmental and business -type activities. NOTE 4 — LOANS RECEIVABLE AND DEFERRED REVEN­LTE I A. Summary of Loans Receivable The City has reserved the portion of fund balance represented by these loans, At June 30, 2011, these loans totaled: Employees' Loans $20,247 Centertown Associates 314,322 One "11" Street Associates 62.858 Fire Chief Loan 529,475 Total $926.902 M CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 4 — LOANS RECEIVABLE AND DEFERRED REVENUE (Continued} B. Employee Loans 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 fmancial assistance from the City in the form of a no interest loan repaid through automatic payroll deductions. C. Centertown Associates The City loaned Centertown Associates, Ltd.. $303,000 at 3% interest due semiannually. The loan was made for the construction of a 60 -unit affordable Centerto-'vn apartment complex and is fully secured by a deed of trust. The final payment is due on July 31, 2065. D. One "H" Street Associates The City loaned One "H" Street Associates $100,000 at zero percent interest with annual payments of $2.857 and with a final payment due January 18, 2034. The loan was made in connection with an affordable housing project located at One "H" Street. E. Fire Chief Loan On September 17, 2007, the City Council approved a Home Loan Agreement to provide the Fire Chief with housing assistance. Under the Agreement, which was executed on October 3, 2007, the City loaned the Fire Chief $600,000 to assist in the purchase of his primary residence. The loan is secured by a recorded Deed of Trust. The initial interest rate to be charged was 5.25% through August 31, 2008. On September 1. 2008, and on each September I following, until the loan is paid off, the interest rate of the loan will be adjusted based upon the then reported quarter -to -date Local Agency Investment Fund rate on the City's investment portfolio. As of June 30, 2011, the balance of the loan was $529,475. M CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 5 - CAPITAL ASSETS I Changes in capital assets during the fiscal year consist of. Less accumulated depreciation for: Balance Balance Land improvements Balance (274,647) _LLIne 30, 2010 Additions Retirements Transfers June 30, 2011 Governmental Activities (10,9614321) (1,320,2374 250,186 (12,033,483) Infrastructure (93,622,',667(4,}314,304) Capital assets not being depreciated, _jLjI7,,17�1 Total accumulated depreciation (118,837 836) (7,545,706) 250,186 (126,133,356) Land $82,464,364 _(7,375145-i 3_06) 293,457 116,952,574 A Total governmental activity capital assets 582,4164,364 Construction in Progress 1,714-752 $1,184,400 (834,134) $293,457 2,570,961 Total capital assets not being depreciated 84,178,5-16 1,184,400 (34,134)_ 457) 85,035,325 Capital assets being depreciated. 11,349,754 Less accumulated depreciation for, Land improvements 8,2367061 ($210,538) $8,1228 1,836,524) Machinery and equipment 8,2367061 Buildings and structures 38,830,105 Total accumulated depreciation 2,214,782) 332.233) 38,830,105 Machinery and equipment 16,089,7788 1705461 (256,492) Total business-t-ype activitv capital assets 16,003,757 Infrastructure 179,722,55$ 293,45? 180 O16,012 Total capital assets being depreciated L42,878,509 170,461 2_56492 293.457 243,085,435 Less accumulated depreciation for: Balance Balance Land improvements (4,161,681) (274,647) (4,438,328) Buildings and structures (11,224,475) Machinery and equipment (10,9614321) (1,320,2374 250,186 (12,033,483) Infrastructure (93,622,',667(4,}314,304) _jLjI7,,17�1 Total accumulated depreciation (118,837 836) (7,545,706) 250,186 (126,133,356) Total net capital assets being depreciated 1124,042,L3 _(7,375145-i 3_06) 293,457 116,952,574 A Total governmental activity capital assets $208,219,189 �,190,845) ($40,440}$201,88-,,904 -- 48 Balance Balance June 30, 2010 Additions Adjustment June 30, 2011 Business -type Activities Capital assets not being depreciated: Land $8,621).853 $8,620,853 Construction m progress Total capital assets not being depreciated 8,620,853 8,620.853 Capital assets being depreciated, Buildings and structures 10,234,52:1 10,234,521 Machinery and equipment 1,115,233 1,1 15,233 Total capital assets being depreciated 11,342,754 11,349,754 Less accumulated depreciation for, Buildings and structures (1,634,214) ($210,538) $8,1228 1,836,524) Machinery and equipment (580,568i ___(8,228) (710,491) Total accumulated depreciation 2,214,782) 332.233) (2,547,015) Total net capital assets beim depreciated 9,134.972 (332.233) 8;802,739 Total business-t-ype activitv capital assets $17.755,825 ($332,233, $1 1,423,592 48 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 I NOTE 5 - CAPITAL ASSETS (Co San Rafael Sanitation District Capital assets not being depreciated: Land and easements Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Subsurface lines Sewage collection facilities General plant and administration Total capital assets being depreciated Less accumulated depreciation for: Subsurface lines Sewage collection facilities General plant and administration Total accumulated depreciation Total net capital assets being depreciated Total District's capital assets Balance Transfers & Balance June 30, 2010 Additions Adjustments June 30, 2011 $115,329 $115329 415,357 5,838,278 ($5,124,188) 1,129,447 530,686 5,838278 (5J24,188) 1»244,776 13,148,145 5,117,965 18,266,110 35,584,748 6,223 35,590,971 833,841 249,741 1,083,582 49,566,734 249,741 5J24,188 54,940,663_ (8,615,873) (245,916) (8,861,789) (12,876,864) (829,300) (13,706,1641 (226,951) (64.414) (291,365) (21,719,688) _qz.1�39,630- (22,859,318) 27,847,046 (889m9) 32,081,345 $28,377,732 --$.4,948,389-- (S5J24,188) $33,326,121 Capital Asset Contributions - Some capital assets may have been acquired using Federal and State grant funds, or were contributed by developers or other governments. These contributions are accounted for as revenues at the time the capital assets are contributed. Depreciation Allocation - Depreciation expense is charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or program are as follows - Governmental Activities General government Public safety Public works and parks Community development/redevelopment Culture and recreation Total Governmental Activities Business -type Activities Parking services 17otal Business -type Activities M $207,468 1,025,300 5,512,500 53,782 746,656 $7,545,706 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 6 —NOTE PAYABLE San Rafael Tax and Revenue Anticipation Note: On July 14, 2010, the City authorized and issued 2010-11 Tax and Revenue Anticipation Notes (TRANS) in the principal amount of $6,080,000. The TRANS were issued to finance City operating expenditures until the City received its semi-annual property taxes, which were pledged for debt service on the TRANS. The TRANS bore interest at 2% per year which was due along with principal on July 28, 2011. During fiscal 2010-11, City property taxes amounting to $14,527,137 represented 43% of the $6,201,262 in principal and interest due and repaid on the TRAN. NOTE 7 - LONG-TERM OBLIGATIONS A summary of governmental and business -type activities transactions for the fiscal year ended June 30, 2011, are as follows; Ground Lease Note Payable, 8.00%, due I lil2024 169,000 169,0000 169,000 Cour Fine Repayment Promissory Note, 3.873%,due November2011 1,133,458 363,328 239,106 124,222 124,222 Telephone System Capitalized Lease- Obligations, 4.28%,due 0530/2012 3',8.'100 135,330 66,2232 69,098 69-098 Total C,overnmentai Long -tem Debt S 3 1 023,646 $4,731,371 $'-,530-338 11, 110,119 $2.518,3210 Business -type Activities 2003 Aatho ity Leasee Revenue Bonds 3.004.70°fc- due 4,'V2033 Tota,, Fater -prise Fund Deb:. San Rafael Sanitation District 2001 Certificates of Part-icipatum 3,2s-4,40%, tine 8/1!2012 Less: unan ortiaed discountissuance cost 71605.0cF $6,8'15,0 $175,090 S6,63"22 ____S] 85,0010 $6,,05, 00 1?75,000 S6,631,,000 5185,000 4,7, 10,000 $1,380,./0103 S440,000 $440,000 $940,000 30,299) (KU99) S479,701 S940,000 $940,000 W Authorized Balance Balance Current and Issued June 30, 2010 Additions Retrements June 30, 2011 Portion Governmental Activities: San Rafael Redevelopment Agency 1999 Tax Allocation Bonds Capital Appreciation Bonds 5.58%-5.6%, due 1211!2022 2,389,0004 $47362,803 $247,371 $4,6100,174 20,02 Tax Allocation Refunding Bonds 2.0{ 00%-5.25%, due 1211/2021 25,020,900 15,295,000 S1,350'000 13,945,000 $1,420,900 2009 Tax Allocation Refunding Bonds 3.004'x-5.09%, due 12/1/2022 14,660,000 14,660,000 875,000 13,185,000 905,00f" Add: deferred bond premium costs 1,038,185 79 ,8860, 958,325 Total Tax Allocation Bonds 35,355,988 247,37/ 2.225,000 33,298,499 2,325,000 2910 Taxable Pension Obligation Bonds 6%-6.25%, due 7{ii2025 4,490,000 4,490,000 4,490,009 Total Pension Obligation Bonds 4,490,000 4,490,000 Ground Lease Note Payable, 8.00%, due I lil2024 169,000 169,0000 169,000 Cour Fine Repayment Promissory Note, 3.873%,due November2011 1,133,458 363,328 239,106 124,222 124,222 Telephone System Capitalized Lease- Obligations, 4.28%,due 0530/2012 3',8.'100 135,330 66,2232 69,098 69-098 Total C,overnmentai Long -tem Debt S 3 1 023,646 $4,731,371 $'-,530-338 11, 110,119 $2.518,3210 Business -type Activities 2003 Aatho ity Leasee Revenue Bonds 3.004.70°fc- due 4,'V2033 Tota,, Fater -prise Fund Deb:. San Rafael Sanitation District 2001 Certificates of Part-icipatum 3,2s-4,40%, tine 8/1!2012 Less: unan ortiaed discountissuance cost 71605.0cF $6,8'15,0 $175,090 S6,63"22 ____S] 85,0010 $6,,05, 00 1?75,000 S6,631,,000 5185,000 4,7, 10,000 $1,380,./0103 S440,000 $440,000 $940,000 30,299) (KU99) S479,701 S940,000 $940,000 W CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 7 - LONG-TERM OBLIGATIONS (Continued) Long Term Debt A. 1999 Tax Allocation Bonds and Capital Appreciation Bonds 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 I 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 I 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, 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%. In December, 2009 of the Agency exercised the redemption option. The outstanding balance of the Bonds were refunded, on a current basis, through the issuance of the 2009 Tax Allocation Refunding Bonds as discussed on Note 7D below. The Capital Appreciation Bonds mature annually after December I from 2018 to 2022, in amounts ranging from $1,440,000 to $2,070.000 and bear interest at rates from 5.58% to 5.60%. Interest on the Capital Appreciation Bonds will compound on each interest premium date and will be payable solely at maturity. The bonds are secured, on parity with the 1992 and 1995 bonds (refunded in 2002), by a pledge and a lien on tax revenues and amounts on deposit in certain funds and accounts held by the fiscal agent. B. 2002 Tax Allocation Refunding Bonds On October 9, 2001 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 I from 2002 to 2022, in amounts ranging from $540,000 to $1.920,000 and bear interest at rates ranging from 2.00% to 5.215%. Interest is payable semiannually on June I and December 1. The Bonds maturing on or after December 1. 2013, are subject to optional redemption prior to maturity, in whole or in part, and by lot within any one maturity, -prior to their respective maturity dates, on any date on or after December 1, 2012. at a price equal to the principal amount, plus accrued interest on the redemption date. The bonds are payable from tax revenues to be derived from the redevelopment activities of the Agency related to the Central San Rafael Redevelopment Project Area. a CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 7 - LONG-TERM OBLIGATIONS (Continued) C. 2009 Tax Allocation Refunding Bonds On December 14, 2009, the Agency issued 2009 Tax Allocation Refunding Bonds in the amount of $14,660,000 bearing interest at rates from 3.00% to 5.00%. The proceeds of the Series 2009 Bonds were used to refund the Agency's 1999 Tax Allocation Current Interest Bonds, to advance funds to the City to finance street and parking improvements for the benefit of the Agency's Central San Rafael Redevelopment Project. Principal payments are due annually on December 30 and interest payable semiannually on June 30 and December 30. The Series 2009 Bonds maturing on or before December 1, 2019, are not subject to optional redemption prior to their respective stated maturities. The Series 2009 Bonds maturing on or after December 1, 2020, are subject to optional redemption as a whole or in part either on a pro rata basis among maturities or in inverse order of maturity, and by lot within any one maturity, prior to their respective maturity dates, at the option of the Agency, on any date on or after December 1, 2019, at a price equal to the principal amount of such Series 2009 Bonds called for redemption, together with interest accrued on the date fixed for redemption, without premium. The Agency has pledged all future tax increment revenues, less amounts required to be set aside in the Low and Moderate Income Housing Fund, for the repayment of the 1999 Capital Appreciation Bonds, and the 2002 and 2009 Tax Allocation Refunding Bonds. The pledge of all future tax increment revenues ends upon repayment of $43 million in remaining debt service on the Bonds, which is scheduled to occur in 2023. For fiscal year 2011 tax increment revenues amounted to $4.5 million and debt service also amounted to $3.6 million, D. 2010 Taxable Pension Obligation Bonds, On July 1, 1010, the City issued 2010 Taxable Pension Obligation Bonds in the amount of $4,490,000 bearing interest at rates from 6,00% to 6.25%. Interest on the Bonds will be payable on January I and July I on each year, commencing January 1, 2011. Principal payable on the Bonds will be paid on July I starting July 1, 2016. The Bonds are being issued to prefund a portion of the obligations of the City to the Marin County Employees' Retirement Association. Payment of the principal and interest on the Bonds is not limited to any special source of funds and is payable from any legally available moneys of the City. The City is not empowered or obligated to levy or pledge taxes to make payments to the Bonds. E. Ntote Payable At June 30, 2011, Note 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, 52 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 INOTE 7 - LONG-TERM OBLIGATIONS (Continued) F. Court Fine Repayment Promissory Note On December 29, 2006, the City signed a promissory note in the amount of $1,133,458 to repay the Superior Court of California, County of Marin. The purpose of the note is to repay the Superior Court for over payment of court revenues. . generated from traffic violations, made to the City from the period July 1999 through June 2006. The note bears interest at 3.873% per annum. Principal and interest are payable monthly commencing from January 2007 until December 2011. G. Telephone System Capital Lease On May 30, 2007, the City entered into a capital lease agreement in the amount of $318,000 to purchase telephone related network equipment and services. Principal and interest payments are due each May 30 and November 30, commencing November 30, 2007, until November 30, 2011. The capital lease bears interest at 4.28% per annum. H. 2003 Authority Lease Revenue Bonds 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 I from 2006 to 2033, in amounts ranging from $150,000 to $2190.000. Interest is payable semiannually on April I and October I. 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. As of June 30, 2011, no redemption has occurred. The Lease Revenues are secured by lease payments made by the City to the Authority for leasing the City facilities. L Discretely Presented Component Unit — San Rafael Sanitation District — 2001 Certificates of Participation The District and its Financing Corporation on May 1. 2001, issued $4.710,000 of Certificates of Participation at a discount of $35,702. 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 certificates, and (4) to pay certain costs of issuing the certificates. The certificates are fully registered with principal due annually on August I and interest payable semi-annually on February I 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, a CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 7 - LONG-TERM OBLIGATIONS (Continued) J Future Debt Services Future debt service requirements, including interest and capital leases, at June 30, 2011, were as follows: For the Year Ended June 3! 2012 2013 2014 2015 2016 2017 - 2021 2022 -2026 2027-2031 2032-2031 Totals Reconciliation of long-term debt: Less unaccredited discount Less unamortized original issue discount Acid deferred bond premium costs 40,412,320 $1x3,2704=7 $6,630,040 $4,315973 (3,219,826) 956,325 $38,150,819 54 940,004 $20180 $940000 Component Unit Governmental Activities IIusu ess-tyne Activities San Rafael Sanitation District Principal Interest Principal Interest Principal Interest 52,518,320 $1,522,222 $185,o8C $314,141 $940,000 $20,680 2,425,000 1,416,78; 1900070 305,741 2,540,000 1,300,088 200,000 299,141 275,040 1,1697/113 2035,000 291,141 2,800,040 1,043,438 215,000 282,085 17,465,000 3,195,382 1,225,0001 1 >4,41A 9,989,000 622,793 1,530,000 953 710 1,955,000 534,000 925.000 70.000 40,412,320 $1x3,2704=7 $6,630,040 $4,315973 (3,219,826) 956,325 $38,150,819 54 940,004 $20180 $940000 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 8 — DEBT WITHOUT CITY COMMITMENT The City has sponsored the issuance of the following debt, for which the City is not liable for repayment but is only acting as an agent for the property owners and bondholders: NOTE 9 — NET ASSETS AND FUND BALANCE A. Net Assets Net Assets is the excess of all the City's assets over all its liabilities, regardless of fund. Net Assets are divided into three captions. These captions apply only to Net Assets, which is determined only at the Government -wide level and business type activity and are described below: Invested in Capital Assets, net of related debt describes the portion of Net Assets which is represented by the current net book value of the City's capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted describes the portion of 'Net Assets which is restricted to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. These principally include assets restricted due to Redevelopment Ageney bond covenants or low and moderate income housing loan agreements. Unrestricted describes the portion of Net Assets which is not restricted to use. N Project Original Outstanding Description Amount June 30, 2011 San Rafael Redevelopment Agency 162-175 Belvedere Multifamily Housing Revenue Bonds Apartments 53,590,529 $1,296,988 California Statewide Communities Development Authority Revenue Bonds St. Marks School 5,605,000 4,835,000 San Rafael Redevelopment Agency Variable Rate Demand Multifamily 55 Fairfax Housing Revenue Bonds Apartments 3,000,000 2,600,000 San Rafael Redevelopment Agency San Rafael Commons Multifamily Housing Revenue Bonds -2001 Apartments 6,100,000 5,560,000 City of San Rafael Kaiser Foundation Variable Rate Revenue Bonds Hospitals 275,000,000 195,630,000 San Rafael Redevelopment Agency Martinelli House Multifamily Housing Revenue Bonds -2007 Series A Project 6,000,000 2,179,699 Multifamily Housing Revenue Bonds -2007 Series B Martinelli House 1,000,000 278,704 NOTE 9 — NET ASSETS AND FUND BALANCE A. Net Assets Net Assets is the excess of all the City's assets over all its liabilities, regardless of fund. Net Assets are divided into three captions. These captions apply only to Net Assets, which is determined only at the Government -wide level and business type activity and are described below: Invested in Capital Assets, net of related debt describes the portion of Net Assets which is represented by the current net book value of the City's capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted describes the portion of 'Net Assets which is restricted to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. These principally include assets restricted due to Redevelopment Ageney bond covenants or low and moderate income housing loan agreements. Unrestricted describes the portion of Net Assets which is not restricted to use. N CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 9 — NET ASSETS AND FUND BALANCE (Continued) B. Fund Balance In the fund financial statements, fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables, less its liabilities. The City's fund balances are classified in accordance with Goverrimental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the City to classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint: Nonspendables represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, and land held for redevelopment are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Encumbrances and nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by formal action of the City Council which may be altered only by formal action of the City Council. Encumbrances and nonspendable amounts subject to council commitments are, included along with spendable resources. Assigned fund balances are amounts constrained by the City's intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Council or its designee and may be changed at the discretion of the City Council or its designee. This category includes encumbrances; Nonspendables, when it is the City's intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds. 56 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 9 -NET ASSETS AND FUND BALANCE (Continued) Detailed classifications of the City's Fund Balances, as of June 30, 2011, are below: Major Special Revenue Funds Redevelcument Traffic and Agency Other General Housing Capital Governmental Fund Mitigation Gas Tax Project Fund, Funds Total Fund balances: Nonspenciable: Loans receivable $549,722 $62,858 $314,322 $926,902 PTepaids 40,111 --4-0-171 I Total Nonspandable7,0 L89.83 3 _62,458 __314322 13 Restricted for: Assessment Districts,, open space 76,015 76,01; Court fine audit 124,223 124,223 Traffic and housing mitigation 9,093,397 197 9,093,397 Gas tax 51,138,226 1,138,226 Redevelopment &,ency capital projects 4,684,936 4,684,936 Recreation revolving $148,038 148,038 Baypoint Lagoons Assessment District 151,771 151,7711 Household hazmat facility 132,527 132,527 Cliddeare 1,61- ' 7 1,617 Street maintenance and cleaning 545,248 545,248 Loch Lomond Assessment District 900,224 900,224 Library 128,867, 128,867 Public safety 201,731 201^31 Storm water 1,086,542 1,086,542 Grant, 620,900 620,900 Emergency medical services 146,542 146,542 Peacock Gap Assessment District debt service 2,875 2,$75 Mariposa Assessment District debt service 16,469 16,469 1997 financing authority revenue bonds debt service 145,196 145,186 Redevelopment Agency debt service 44,831 44,831 Capital improvement capital projects _99 440 �99 441) Total Restricted 200,238 9,043,397 1,138,226 4,684.936 _4372 808 19,489,605 Committed to: Project development 555,561 555,561 Gas tax 28,816 29,816 Recreation revolving 50,356 50,356 Street maintenance and cleaning 92,391 82,395 Library 24,215 24,215 Library assessment 466,418 466,418 Development services 743,541 743,543 Parkland dedication 1,054,633 1,054,633 Business improvemen, 3,716 3,716 Capital improvement capital protects 9XI5 9,835 Bedroom tax capital projects 26,564 26,564 Redevelopment activities 1,120,000 1,120,000 Assessment District capital projects- 81_1 831 Total Committed 5_55 561 _28 816 1,12u,000 2.",15,506 506 4-419.883 Assigned to Contingent liabilities "3,4-16,1 -17 Coatractua: commitments 148,522 148,522 Ernercenc, and cash flow 1,521,°.80 1,321,180 Gas tax 27-33,751 271,77-1 Sewer maintenance 33,3733 33,373 Pali capital projects 29,473 29'4'3 Open space capital projects 13-7.915 137,975 Equipment replacement capital V, cjects 2,99i,41=4 Rad roreplacement capital projects 525,509 525.509 Redevelopment activist-xs 5'61;0 5,000 Telephone replacement capiud projects -- 534 127,5_ 4 Total Assigned 5.439,8'9 273;751 50X;0,845,278 �9563 908 otal F-,rui Balances $6.%85.511 S9,156255 $1 440V,93 (61-41-2518 5110.93333.592 4,4404409 {'7 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 INOTE 10 — EMPLOYEES RETIREMENT PLAN A. Plan Description The City contributes to the Marin County Employees' Retirement Association (Association). All full- time and permanent part-time employees who work at least 75% of a full time position are eligible, to participate. The Association 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 Association 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 Association, which can be obtained from Marin County Employee's Retirement Association, 3501 Civic Center Drive, Room 408, Civic Center, San Rafael, California 94903. B Funding Policy The funding policy of the Association provides for actuarially determined periodic contributions by the City at rates suchthat sufficient assets will be available to pay Fund benefits when due. The City contributed 5168410 and 68,91% of payroll to Fund for Police and Fire personnel, respectively. and 34.90% for other covered employees for the year ended June 30, 2011 C Annual Pension Cost The annual required contribution was determined as part of the actuarial performed as of June 30, 2010, The employer rates for nomial cost is determined using the Entry Age Normal Actuarial Cost Method, 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 2010 actuarial valuation include an assumed rate of return on invested assets of 7.75%, annual payroll increases reflecting 3.5% for inflation and an approximate range of 0.50% to 8.00% for merit and longevity. The actual rate of return on investments was a gain of 8.2%. 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 Association also uses the level percentage -open method to amortize the unfunded actuarial liability which was revised to sixteen years level in the amortization period. It is assumed that payroll will increase at an annual inflation rate of 4.00% over the amortization period. The required contributions and related rates for the year ended June 30 were as follows: Fiscal Year Annual Percentage of Net Ended Pension Cost APC Pension June 30 (APC} Contributed Obligation 2009 $13.746;154 100% $o 2010 12,7145.613 100% 0 2011 15,409.519 100% 0 58 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 10 — EMPLOYEES RETIREMENT PLAN (C The Plans' actuarial value (which differs from market value) and funding progress over the most recent three years available is set forth below at their actuarial valuation date of June 30: NOTE 11 - PUBLIC AGENCY RETIREMENT SYSTEM (DEFINED CONTRIBUTION RETIREMENT PLANS) The City contributes to the Public Agency Retirement System (PARS), which is defined contribution retirement plan. A defined contribution retirement plan provides retirement benefits in return for services rendered, provides an individual account for each participant, and specifies how contributions to the individual's accounts are determined instead of specifying the amount of benefits the individual is to receive. The 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 participants in the plan from the date that they hired. An eligible employee is any employee who, at any time during which the employer maintains this plan, is not accruing a benefit under the Marin County Employees' Retirement Fund. As determined by the plan, each employee must contribute 3.715% of gross earnings to the plan. The City contributes an additional 3.75% of the employee's gross earnings. Contributions made by an employee and the employer vest immediately. a Actuarial Excess Excess (Deficit) Actuarial Actuarial Accrued (Deficit) Assets Over AAI Valuation Value Liability (A -AL) Assets Funded Covered As a % of Date of Assets Entry Age Over AAL Ratio Payroll Payroll _73-0108 $262,677,000 $360,298,000 ($97,621,000) 73% $31,854.000 (306%) 6/30/09 239,841,000 379,801,000 (139,960t000) 63% 32,413,000 (432-/�) 6730710 248,500,000 394,889.000 (146,389,000) 63% 30,320,000 (483%) NOTE 11 - PUBLIC AGENCY RETIREMENT SYSTEM (DEFINED CONTRIBUTION RETIREMENT PLANS) The City contributes to the Public Agency Retirement System (PARS), which is defined contribution retirement plan. A defined contribution retirement plan provides retirement benefits in return for services rendered, provides an individual account for each participant, and specifies how contributions to the individual's accounts are determined instead of specifying the amount of benefits the individual is to receive. The 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 participants in the plan from the date that they hired. An eligible employee is any employee who, at any time during which the employer maintains this plan, is not accruing a benefit under the Marin County Employees' Retirement Fund. As determined by the plan, each employee must contribute 3.715% of gross earnings to the plan. The City contributes an additional 3.75% of the employee's gross earnings. Contributions made by an employee and the employer vest immediately. a CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 11 - PUBLIC AGENCY RETIREMENT SYSTEM (DEFINED CONTRIBUTION RETIREMENT PLANS) (Continued) During the year, the City and employees contributed $69,256. The total covered payroll of employees participating in the plan for the year ended June 30, 2011, was $1,846,827. The total payroll for the year was $37,248,008. 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 Association. 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 $140,271 to the plan on behalf of the eligible employees. NOTE 12 — POST -EM - PLOY WINT 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 Association within 120 days of retirement from City employment. At June 30, 2011, 298 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. Theprovisions and benefits of the City's Other Post Employment Benefit Plan, in effect at June 30, 2011, are summarized as follows: Z Elected Officials, Mid -Management, I & Unrepresented Management All other Bargaining Units Efigibility, Retire directly from the City: Age 50 with 10 years services OR 30 years service (Miscellaneous). 20 years service (Safety) OR Disability Retirement Benefit Hired 5111,09 Full premium/cap Hired -5 1/IA 0 Up to cap Hired > 1.`1/09 PEMHCA Min Hired > 1:' 1 /10 PEMHCA Min Surviving Spouse Benefit Continuation to surviving spouse Medicare Part B Hired < 41/1"07 Full reimbursement None Hired > 4! 1/07 None Other No Dental, Vision, or Life Benefits Z CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 I NOTE 12 — POST -EMPLOYMENT HEALTH CARE BENEFITS (Continued) I Funding Policy and Actuarial Assumptions The annual required contribution (ARC) was determined as part of a June 30, 2009, actuarial valuation using the entry age normal actuarial cost method. This is a projected benefit cost method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions included (a) 4.50% investment rate of return and (b) 3,50% of general inflation increase, and (c) a healthcare trend of declining annual increases ranging from 9.80% in 2012 to 5.00% for years starting 2018. In addition, the fixed dollar benefit amounts are assumed to increase according to general inflation in the future and the premium related benefits are assumed to increase with the healthcare trend rate. The actuarial methods and assumptions used include techniques that smooth the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a Iona -term perspective and actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to revision at least biannually as results are compared to past expectations and new estimates are made about the future. The City's OPER unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll using a maximum 30 year combined amortization period. Funding Progress and Funded Status During the fiscal year ended June 30, 2011, the City has recorded a Net OPER Obligation in the Statement of Net Assets, representing the difference between the ARC and actual contributions, as presented below: Amounts (in thousands) Annual required contribution (ARC) $4,025 Interest on net OPER obligation 335 Adjustment to annual required contribution (492) Annual OPER cost 3,868 Contributions made: Benefits payment 2,648 Trust prefunding (1,000) Total contributions 1,648 Change in net OPER obli.-ation,`(asset) 2,220 Net OPER Obligation (Asset) at June 30, 21010 61265 Net OPEB Obligation (Asset) at June 30, 2011 $8,485 61 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 INOTF 12 - POST-EMPLOY-MENT HEALTH CARE BENEFITS (Continued) I In accordance with the City's budget, the City's annual contributions to the Plan are based on pay-as- you-go financing. Generally accepted accounting principles permit assets to be treated as OPER assets and deducted from the Actuarial Accrued Liability when such assets are placed in an irrevocable trust or equivalent arrangement. Contributions a 401 (h) account held and administered by the MCERA were made by the City in prior years and were included in the June 30, 2009, actuarial study. During the fiscal year ended June 30, 2011, the City has calculated and recorded the Net OPER Obligation, representing the difference between the ARC, and contributions, as presented below: Annual Annual Pension Cost Required (000's omitted) Contribution Fiscal Year (ARC) Ended (000's ornifted) June 30, 2009 $4,269 June 30, 2010 4,390 June 30, 2011 4,025 Annual Actual Pension Cost Contribution (000's omitted) _(220"s omitted) $4,269 $2,236 5,576 1,344 3,868 1,648 Percentage Net OPEB of ARC Obligation Contributed (000's omitted) 52% 52,033 31% 6,265 41% 8,485 The Schedule of Funding Progress presents trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Trend data from the June 30, 2009, actuarial study is presented below: 62 Overfunded (Underfunded) Actuarial Actuarial Unfunded Liability as Value of Accrued Accrued Covered a Percentage of Valuation Assets Liability Liability Funded Payroll Covered Date (000's omitted) (000's omitted) (000's omitted) _Ratio (000's omitted) Payroll 6/30/2007 $14,563 $52.767 ($38,204) 28% $38,480 -99.28% 6/3012009 12,773 56,262 (43,489) 23% 36,470 -119,25% 62 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 INOTE 13 — JOINTLY GOVERNED ORGANIZATIONS The City participates in the jointly governed organizations discussed below through form4lly organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these entities exercise full powers and authorities within the scope of the related Joint Powers Agreements including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Each joint organization is governed by a board consisting of representatives from member municipalities. Each board controls the operations of the respective joint organization, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on that board. Obligations and liabilities of this joint organization are not the City's responsibility and the City does not have an equity interest in the assets of each joint organization except upon dissolution of the joint organization, A. The Marin County Integrated On -Line Library System (System) The Marin County Integrated On -Line Library System was formed to provide for the procurement, ownership, operation, maintenance, and governance of an integrated on-line 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 1739% of ownership in the System. Operating costs for the System are also shared by each participant by applying the cost sharing formula. The City contributed $124,02225 to the System for operating costs for the year ended June 30, 2011, Financial statements of the System can be obtained at the County Librarian, Marin County Free Library, Civic Center, Administration Building, San Rafael, California 94903. B. The Marin General Services Authority (MGS.4) The MGSA was formed by the County of Marin and twelve local agencies to acquire street light facilities, operate the facilities during the tendency of an eminent domain action against PG&E, and the subsequent transfer of the facilities to the individual local agencies. Each of the local agency's share of contributions was based on the number of street lights to be acquired in the local agency's individual jurisdiction in relation to the total number of street lights to be acquired by the MSLAJPA. The City's contribution to MGSA was $3,134 for the year ended June 30, 2011. Financial statements of the MGSA can be obtained at 27 Commercial Boulevard, Suite C. Novato, CA 94949. 63 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 NOTE 13 — JOINTLY GOVERNED ORGAN11ZATIONS (Cont C. The 111arin Emergency Radio Authority (MER4) 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 sen•ice. The City's portion of the obligation is 16.913%. The first operating service payment was in July 1999. The first debt service payment was in August 2002, The City contributed $255,876 for the Authority's operation and debt service for the fiscal year ended June 30, 2011. 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. D. The Countywide Planning Agency The Agency 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 Countrywide Planning Agency consists of one member of the County Board of Supervisors and one member of the City Council of each participating city. Financial statements of the Agency can be obtained at 3501 Civic Center Drive, San Rafael, California 94903. E. The Marin Telecommunications Agency The Agency was established to regulate the rates for cable television service and equipment and to advise the participants of their license authority. The Governing Board of the Marin Telecommunications Agency consists of one member from each of the eleven participating agencies, The City's contribution to the Agency was $84,879 for the year ended June 30, 2011. Financial statements of the Agency can be obtained at 371 Bel Marin Keys Blvd, Suite 100, Novato, CA 94949. F. The Marin Couniy Hazardous and Solid Waste Joint Powers Authority The Authority was established by the County, local cities, and waste franchising districts to finance, prepare and implement source reduction and recycling elements on a county -wide integrated waste management plan as required by State Assembly Bill 939. The City's contribution to the Authority was $13,220 for the year ended June 30, 2011. Financial statements of the Authority can be obtained at 3501 Civic Center Drive, San Rafael, California 94903. CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 INOTE 13 — JOINTLY GOVERNED ORGANIZATIONS (Cont G. Friends of San Rafael Friends of San Rafael is a California nonprofit Public Benefit Corporation 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 improvement and infrastructure. Financial statements of the Corporation can be obtained at P.O. Box 151560, San Rafael, CA 94915. I NOTE 14 - RISK MANAGEMENT The City manages risk by participating in the public entity risk pools described below and by retaining certain risks. Public entity risk pools are formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, those entities exercise fall powers and authorities within the scope of the related Joint Powers Agreements including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Each risk pool is governed by a board consisting of representatives from member municipalities. Each board controls the operations of the respective risk pool, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on that board. Obligations and liabilities of these risk pools are not the City's responsibility. A. Risk Coverage Liability Coverage The City is a member of the California Joint Powers Risk Management Authority (CJPRNtA) which covers general liability claims up to $40,000,000. The City also purchases commercial insurance for property damage claims with an insured amount of $100,967,912. The City is self-insured up to a maximum of $500,000 for each general liability claim and $215,000 for each property damage claim. Once the self-insured retention is met CJPR-MA becomes responsible for payment of all claims up to the limit. During the fiscal year ended June 30, 2011, the City contributed $221,808 for coverage during the current year and received a refund of $154,687 of prior year excess contributions. Financial statements for the risk pools may be obtained from CJPRMA, 2333 San Ramon Valley Blvd,, Suite 250, San Ramon, CA 95608. Workers' Compensation Coverage The City purchased insurance for workers' compensation through AIG Excess Workers' Compensation and Employers Liability Insurance with coverage up to statutory limits, The City is self-insured up to a minimum of $750,000 for each worker's compensation claim. M CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 INOTE 14 - RISK MANAGEMENT (Continued) I The contributions made to each risk pool equal the ratio of their respective payrolls to the total payrolls of all entities participating in the same layer of each program, in each program year. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. B. Insurance Internal Service Funds The Governmental Accounting Standards Board (GASB) requires municipalities to record their liability for uninsured claims and to reflect the current portion of this liability as an expenditure in their financial statements. As discussed above, the City has coverage for such claims, but it has retained the risk for the deductible or uninsured portion of these claims. The City's liability for uninsured general liability claims and workers* compensation claims, including claims incurred but not reported, are reported in the Statement of Net Assets. The liability is based on historical trend information provided by its third party administrators and was computed as follows at June 30: The claims settlements have not exceeded insurance coverage for the past three years. INOTE 15 - COM-11MIT-TNIENTS AND CONTLNGENCIIWLFS The City is subject to litigation arising in the normal course of business. In the opinion of the City Attorney there is no pending litigation which is likely to have a material adverse effect on the financial position of the City. In 2004, the City of San Rafael entered into a Settlement Agreement with the federal Department of Justice to bring City managed programs, activities, services and facilities into compliance with the Americans with Disabilities Act (ADA). The City, has made significant progress over the past seven years and is in the process of completing the few remaining projects identified in the Settlement Agreement. M General Workers' Totals. as of June 30 Liability _ Compensation 2011 2010 Balance, beginning of year $517,694 S3,080,893 S3,598,587 $3,716,971 Current year claims and changes in estimates 466,7798 1,920,491 2,387;289 1,000,464 Claims paid (549,776) (1,465,923) (2,015fi99) (1,118,848) Balance, end of year $431,716 $3,535,461 $3.970.177 $3,598,587 Current portion $300,000 $1,900,000 $2,200,000 $2,200,000 The claims settlements have not exceeded insurance coverage for the past three years. INOTE 15 - COM-11MIT-TNIENTS AND CONTLNGENCIIWLFS The City is subject to litigation arising in the normal course of business. In the opinion of the City Attorney there is no pending litigation which is likely to have a material adverse effect on the financial position of the City. In 2004, the City of San Rafael entered into a Settlement Agreement with the federal Department of Justice to bring City managed programs, activities, services and facilities into compliance with the Americans with Disabilities Act (ADA). The City, has made significant progress over the past seven years and is in the process of completing the few remaining projects identified in the Settlement Agreement. M CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 FNOTE 15 - COMMITMENTS AND CONTINGENCIES (Continued) Among those projects is the construction of 800 curb ramps throughout San Rafael. As of October 2011, the City has construction 354 ramps with plans to install the remaining ramps over the life of the Agreement, which expires in 2014. On October 1, 2002, the City of San Rafael Redevelopment Agency entered into a second amendment to Section 33401 Tax Sharing Agreement with San Rafael High School District. This agreement provides for additional payrrierits in the amount of $179,000 each fiscal year beginning with fiscal year 2002-03 through fiscal year 2021-22, I NOTE 16 — SUPPLEMENTAL EDUCATION REVENUE AUGMENTATION FUND (SERAF) The State of California adopted AB26 4X in July 2009 which directs that a portion of the incremental property taxes received by redevelopment agencies, based on the property taxes received in fiscal year 2006-07, be paid instead to the County supplemental educational revenue augmentation fund (SERAF) in fiscal years 2009-10 and 2010-11. The State Department of Finance determines each agency's SERAF payment by November 15 of each year, and payments are due by May 10 of the applicable year. The Agency made its final SERAF payment of $282,450 in fiscal year 2010-11. I NOTE 17 — SUBSEQUENT EVENTS I A. Tax and Revenue Anticipation Notes Subsequent to June 30, 2011, the City of San Rafael issued the 2011-12 Tax and Revenue Anticipation Notes (TRANS) in the principal amount of $6,000,000 which is due on August 3, 2012, along with unpaid interest accruing. TRANs are short-term, tax-free bonds issued for the purpose of covering potential cash-flow deficits for governmental agencies that rely heavily on property tax distributions as a source of revenue. The City is issuing the TRANS to bridge the gap between its regular flow of operating expenditures and the receipt of its semi-annual property, taxes. The City does not expect any direct fiscal impact from the issuance of the TR.,,sNs because the actual size of the issuance is based on the City's anticipated cash flow needs. The TRATNI is repayable from future City property tax revenues. B. Proposed Dissolution of Redevelopment Agencies In an effort to balance its budget, the State of California adopted Al3xI 26 on June 28, 2011, which suspends all new, redevelopment activities except for limited specified activities as of that date and dissolves redevelopment agencies effective October 1, 201 i, The State simultaneously adopted ABxl 217 which allows redevelopment agencies to avoid dissolution by the City` opting into an "alternative voluntary redevelopment program" requiring specified substantial annual contributions to local schools and special districts. Concurrently with these two measures, the State passed various budget and trailer bills that are related and collectively constitute the Redevelopment Restructuring Acts, If all sponsoring communities were to opt -in to the voluntary program, these contributions amount to an - estimated $1.1 billion for fiscal year 201'� and an estimated 5400 million in each succeeding year. If the City fails to make the voluntary program payment, the Agency would become subject to the dissolution provisions of ABxl 216. 67 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 I NOTE 17 — SUBSEQUENT EVENTS (Continued) I On July 18, 2011, the California Redevelopment Association, the League of California Cities and others challenged the validity and constitutionality of ABxI 26 and 27 to the California Supreme Court on numerous grounds, including that the acts violate certain provisions of the California Constitution, On August 11, 2011, as modified on August 17, 2011, the California Supreme Court agreed to hear the case and issued a partial stay of ABxI 26 and a full stay of ABxI 27, but the stay did not include the section of ABxI 26 that suspends all new redevelopment activities. It is anticipated that the Court will render its decision before January 15, 2012, the date the first voluntary program payment is due. The suspension provisions of ABxI 26 prohibit all redevelopment agencies from a wide range of activities, including incurring new indebtedness or obligations, entering into or modifying agreements or contracts, property, acquiring or disposing of real , taking actions to adopt or amend redevelopment M I I plans and other similar actions, except actions required by law or to carry out existing enforceable I i obligations, as defined in ABxI 26. During the suspension period, an agency s required to prepare an Enforceable Obligation Payment Schedule no later than August 29, 2011, that allows it to continue to pay certain obligations. The Agency Board adopted its Enforceable Obligation Payment Schedule (FOPS} on September 6, 2011. The San Rafael City Council and San Rafael Redevelopment Agency Board have chosen to participate in the Voluntary Alternative Redevelopment Program pursuant to Part L9 of the California Community Redevelopment Law. The City Council's intention was verified by the passage of Ordinance 1899 on September 19, 2011. In addition, the suspension provisions require the State Controller to review the activities of all redevelopment agencies to determine whether an asset transfer between an agency and any public agency occurred on or after January, 1, 2011. If an asset transfer did occur and the public agency that received the asset is not contractually committed to a third party for the expenditure or encumbrance of the asset, the State Controller is required to order the asset returned to the redevelopment agency, The State Controller's Office has not yet provided any information about the timing or the process for this statewide asset transfer review. The Agency is currently subject to the suspension provisions as described above. These facts indicate that there is more than a remote possibility the Agency may not continue as a going concern beyond October 1, 2011. The continuation of the Agency beyond October 1, 2011 will initially depend upon whether the Supreme Court rules in favor of the petitioners. There are three possible consequences to the Agency from a decision of the Supreme Court, when it is rendered: If the Supreme Court detennines that both ABx1 26 and ABxl 217 are valid, then the City will consider whether it will enact an ordinance to opt -in to the alternative voluntary redevelopment program. If enacted. the City would be required to make annual payments to the County Auditor - Controller and the Agency would no longer be subject to the suspension provisions. The State Department of Finance calculated the City's Voluntary Program payment for fiscal year 2012 to be 5299,490. M CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2011 INOTE 17 — SU-BSEQLTENT EVENTS (Continued) I If the Supreme Court determines that both ABxI 26 and ABxI 27 are valid and the City decides not to participate in the alternative voluntary redevelopment program, or if the Supreme Court determines that ABxl 26 is valid, but ABxI 27 is not valid, the Agency will continue to be subject to the suspension provisions and would be dissolved in accordance with certain provisions of ABxI 26. Prior to dissolution, any transfers of Agency assets subsequent to January 1, 2011 to the City, that were not obligated to third parties or encumbered may be subject to the State Controller's review discussed above and required to be returned to the Agency. Upon dissolution, all assets and obligations of the Agency would be transferred to a successor agency. If the Supreme Court determines that both ABxl 26 and ABxI 27 are invalid, the Agency would no longer be subject to the suspension provisions and would continue in existence under California Redevelopment Law as it existed prior to the enactment of ABx 1 26 and ABx 1 27. As of October 28, 2011, the Supreme Court has not ruled on the case and the Agency is subject to the suspension provisions as discussed above, M This Page Left Intentionally Blank REQUIRED SUPPLEMENTAL INFORMATION I a This Page Left Intentionally Blank GENERAL FUND AND MAJOR SPECIAL REVENUE FUND BUDGET -TO -ACTUAL STATEMENTS GASB Statement 34 dictates that budget -to -actual information in the basic financial statements should be limited to the General Fund and major Special Revenue Funds. This section is provided for the presentation of Budget -to -Actual Statements for the General Fund, Traffic and Housing Mitigation, and the Gas Tax Special Revenue Funds. CITY OF SAN RAFAEL GENERAL FUND SCHEDULE OF REVE'_vUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2011 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (1,766,056) (1,856,641) (674,367) Variance with OTHER FINANCING SOURCES (USES) Final Budget Transfers in Budgeted Amounts Actual Positive (806,415) Original Final Amounts (Negative) REVENUES Total Other Financing Sources (Uses) 1,715,204 1,724,084 658,083 Taxes and special assessments $41,678,130 $41,938,136 342,346,707 5408,577 Licenses and permits 1,228,224 1,228,224 1,416,772 188,548 Fines and forfeitures 742,546 742,540 862,820 120,280 Use of money and properties 198,860 140,076 148,213 8,137 Intergovernmental 6,698,780 6,698,780 6,645,495 (53,285) Charges for services 1,7841164 1,784,164 1,819,641 35,477 Other revenue 127,780 16',780 395,558 227,778 Total Revenues 52,438,478 52.699,694 53,635,206 935,512 EXPEND1TtTRES Current: General government 7,456,047 7,088,476 6,789,829 298,647 Public safety 33,418,610 33,681,198 34,098,697 (417,499) Public works and parks 7,874,226 7,967,785 7„475,774 492,611 Community development/redevelopment 3,010,108 3,006,276 1674,897 (68,627) Culture and recreation 2,142.429 y 2,124,336 2,211,633 (86,697) Capital outlay 44,850 54,850 162,267 (1011,417) Capital improvement/special projects 33,060 35,560 152,814 (117,314) Debt service: Principal 239,876 239,870 239,166 764 Interest and fiscal charges 357,450 105,156 251294 Total Expenditures 54,218,534 54,555,735 54,309,573 246,162 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (1,766,056) (1,856,641) (674,367) 1,181,674 OTHER FINANCING SOURCES (USES) Transfers in 3,742,446 3,753,106 2,946,685 (806,415) Transfers out (2,027,200) (1629,016) (2,288,602) (259,586) Total Other Financing Sources (Uses) 1,715,204 1,724,084 658,083 (1,066,661) Net Change in Fund Balances ($44,856) (5131,957) (16,284) $115;673 FUND BALANCES, BEGIN'NINC OF YEAR 6,801,795 FIND BALANCES. S. END OF YEAR S6 785.511 74 CITY OF SAN RAFAEL TRAFFIC AND HOUSING MITIGATION` SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2011 REVENUES Use of money and properties Charges for sen ices Total Revenues EKPFNDITURFS Current: Public works and parks Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER {UNDER) EXPENDITURES Net Change in Fund Balances FUND BALANCES, BEGIN \IIN(i OF YEAR FUND BALANCES, END OF YEAR 75 ($47,970} $108,396 1,667 ($106,729) 9,154,588 $9,156,255 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) $21,000 $176,8314 $4',928 ($128,906) 22,115 22,115 21,000 176,834 70,043 {106,791} 68,970 68,438 68,376 62 68,970 68,438 68.376 62 (47,970) 108,396 1,667 (106,729) 75 ($47,970} $108,396 1,667 ($106,729) 9,154,588 $9,156,255 CITY OF SAN RAFAEL GAS TAX SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 38, 2811 EXPENDITURES Variance with Current: Final Budget Budgeted Amounts Actual Positive 28,447 Original Final Amounts (Negative) REVENUES 595,162 701,403 (106,241) Use of money and properties $32,860 525,044 $10.98" ($14,057) Intergovernmental 1,375,550 2,421,949 2,700,09; 278,146 Charges for services —(1 ,500,93 1) 528,261 528,261 Other rev enue 83,615 83,615 Total Revenues 1,408,410 2,446,993 3,322,958 875,965 EXPENDITURES Current: Public works and parks 28.135 28,447 18,790 9,657 Capital outlay 595,162 701,403 (106,241) Capital improvement/special projects 1,027,946 2,432,293 (1,404,347) Total Expenditures 28,135 1,651,555 3,152,486 —(1 ,500,93 1) EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 1,380,275 795,438 170,472 (624,966) OTHER FINANCING SOURCES (USES) Transfers in 520,000 520,0{00 Transfers (out) (15404,050) (1 404.050) (1,301,119) 102,931 Total Other Financing Sources (Uses) (1,404,050) (884,040) (;81,119) 102,931 1 Net Change in Fund Balances ($23,775) ($88,612) ($610,647) (5522,035) FUND BALANCES, BEGINNING OF YEAR 2,051,440 FUND BALANCES, END OF YEAR 51,440.793 In 77 CITY OF SAN RAFAEL REDEVELOPMENT AGENCY CAPITAL PROJECTS FL,��D SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2011 REVENUES Taxes and special assessments Use of mane; and properties Intergovernmental Charges for services Other revenue Total Revenues EXPENDITURES Crirrentr General government Public works and parks Community developmendredevelopment Capital outlay Capital improvement/special projects Total Expenditures OTHER FINANCING SOURCES (USES) Proceeds from sale of capital asset Transfers in Transfers (out) Total Other Financing Sources i Uses) Net Assets (Accumulated Deficit), beginning of year OVER (UNDER) EXPENDITURES Net Change in Fund Balances FUND BALANI ES. BEGINNING OF YEAR F1JND BALANCES, END OF YEAR W 6,754.433 $6,124,258 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) $900000 $900,000 .$936,383 $36,383 193,710 102,385 60,464 (41,921) 20,000 (20,000) 13,580 13,250 29,525 16,275 109,020 109,020 1,107,290 1,035,635 1,135,392 99,757 42,090 34,673 40,481 (5,808) 108,450 108,324 106,893 1,431 1,611,060 1,641,702 1,452.454 189,248 623,120 549,620 307,118 242,502 2384,720 2,334,319 1,906,946 427,373 433,309 141,379 (291,9301 (291,930) 291,930 141,379 141,379 (1,277,430) (1,157,305) {630,175} 527,130 ($1,277,430) (51,157,305) (630,175) 5527,130 W 6,754.433 $6,124,258 NON -MAJOR GOVERN -MENTAL 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. Household Hazmat Facility Fund - Established to account for State mandated hazardous materials information, collection, and reporting, Expenditures include inspection of businesses for compliance with regulations. This fund also serves as the depository for countywide Household Hazardous Waste Program. Childcare Fund — Established to administer and account for childcare programs at eleven sites throughout the City. Street Maintenance and Cleaning Fund — Established to maintain the City's streets, pubic 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. Library Assessment Fund — Established to account for a special parcel tax dedicated to public library services and facilities, equipment, and technology improvements. Public Safety Fund — Established for special police services, which are intended to be self -funding, Stormwater Fund — Established to provide for self -funding storm drain maintenance program plus separate programs through the County and Bay Area to educate residents about urban runoff pollution. Development Services Fund — Established to account for development activities that are supported by external sources of funds. This fund does not account for the operating costs of building, planning, and engineering, which are located in the General Fund, Grants Fund — Established to account for grants for the Library, Childcare, Police and Falkirk Cultural Center. Parkland Dedication Fund — Established to account for long-term developer deposits used to enhance and maintain the park structure within City limits. Emergency Medical Services Fund — Established to account for the Emergency Medical Services and Transportation program that provides services to all segments of the community. 79 NON ,'MAJOR GOVERNMENTAL FUNDS Business Improvement Fund — Established to account for activities held in Downtown San Rafael, such as the Farmers Market. Sewer Maintenance Fund — Established under the terms- of the JPA to provide all necessary maintenance to the Sanitation District's gravity collection sewer system. DEBT SERVICE FUNDS Peacock Gap Assessment District Fund — Established to accumulate funds for the payment of principal and interest for the 1993 Bonds which mature 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 1999 Project Tax Allocation Bonds, 2002 Tax Allocation Refunding Bonds, and 2009 Tax Allocation Refunding Bonds. CAPITAL PROJECTS FUNDS Capital Improvement Fund — Established for the costs associated with major capital improvement projects not tied to specific funds elsewhere. Improvements could include medians, parkways, sidewalks, and other public assets. Bedroom Tax Fund — Established to collect funds from multiple -unit housing used to pay for maintaining and developing parks within local neighborhoods. Assessment Districts Fund — Established to account for ongoing construction and improvement needs within the following assessment districts: Peacock Gap, Kerner Boulevard, Sun Valleyitucas Valley Open Space, East San Rafael Drainage Assessment District 1, Park Capital Projects Fund — Established to account for capital improvements for all City owned parks, whether paid for by City funds, grants, donations, or partnership with the community. Open Space Fund — Established for the acquisition of open space, M NON -MAJOR GOVERNMENTAL FUNDS Equipment Replacement Fund - Established to provide replacement of equipment. Radio Replacement Fund - Established to meet radio system operating costs, capital acquisition and replacement, and operating lease obligations for the Public Works, Fire, Community Development and Police Departments. The Marin Emergency Radio Authority (MERA) is a countywide JPA that has taken the roll in procurement and installation of a new digital radio system. This fund supports San Rafael's portion of the MERA efforts and related contractual obligations. Telephone Replacement Fund — Established to provide ongoing support services for telephone equipment and usage throughout the City. a ASSETS Cash and investments Restricted cash and investments Receivables: Accounts Taxes Grants Interest Due from other funds Total Assets CITY OF SAN RAFAEL NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2011 SPECIAL REVENUE FUNDS Baypoint Lagoons Household Recreation Assessment Ha7jnat Revolving District Facility _ $317469 $1517264 $183,188 Street Maintenance Childcare and Cleaning $611,998 173,978 91229 $24,653 15,645 507 L462 39,539 29,304 $522,213 $151,771 $274,417 $64,192 $627,643 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 5124,978 $141,890 $33,271 Developer bonds payable Due to other funds 29,304 Deferred revenue 198,841 Compensated absences Total Liabilities 323,819 141,890 62,575 Fund Balances: Nonspendable Restricted 148,038 5151,771 132,521 1,617 $545,248 Committed 50;356 82,395 Assiuned Total Fund Balances 198,394 151,771 132,527 1,617 E27,643 Total Liabilities and Fund Balances $522213 $151.771 $274,417 $64,192 $627,643 M SPECIAL REVENUE FUNDS Loch Lomond 1 L749 Assessment 693 Library Public 147,359 Development District Library Assessment Safety Stormwater Services Grants $899,919 $101,083 $464,683 $184,424 $639,814 $743,501 $149,251 9011,224 153,082 466,418 201,731 18,000 743,543 20,000 $900,224 $165,831 305 $202,424 16,789 $763,501 15,818 64,748 (Continued) 619,008 445,340 $900,224 $165,831 $480,872 5242,424 $1,106,972 $763,501 $768259 $12,497 $14,454 $693 $14,430 $18„458 $147,359 L500 252 1 L749 14,454 693 14.430 19,958 147,359 $9010,224 128,867 201,731 1,086,542 620,900 24,215 466,418 743,543 9011,224 153,082 466,418 201,731 1,086,542 743,543 620,9017 $900,224 $165,831 $480,872 $202,424 $1,1610,972 $763,501 $768,259 (Continued) 83 CITY OF SAN RAFAEL NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30.2011 ASSETS Cash and investments 51,126,472 5161,339 $3,930 $2,875 Restricted cash and investments Receivables: Accounts $572,525 `Faxes 73,221 Grants 18,963 Interest Due from other funds Total Assets $1,145,435 5174.560 51930 $572,525 $2,875 LI,ABILITIES AND FL -ND BALANCES DEBT SERVICE SPECIAL REVENUE FUNDS FUNDS Emergency Peacock Gap Parkland Medical Business Sewer Assessment Dedication Services Improvement Maintenance District ASSETS Cash and investments 51,126,472 5161,339 $3,930 $2,875 Restricted cash and investments Receivables: Accounts $572,525 `Faxes 73,221 Grants 18,963 Interest Due from other funds Total Assets $1,145,435 5174.560 51930 $572,525 $2,875 LI,ABILITIES AND FL -ND BALANCES Liabilities: Accounts payable $90,802 $28,618 $214 $93,812 Developer bonds payable Due to other funds 445,340 Deferred revenue Compensated absences Total Liabilities 90,8172 28,018 214 5339,152 Fund Balances: Nonspendable Restricted 146,542 $2,875 Committed 1,054,633 3,716 .Assigned 33,373 Total Fund Balances 1,054,633 146,542 3,716 33,373 2.875 Total Liabilities and Fund Balances $1,145,435 $174,560 $3,939 $572,525 $2,875 84 DEBT ShRVICE FU`\DS 199, Redevelopment Mariposa Financing Agency Assessment Authority Debt Capital District Revenue Bonds Service Improvement $16,469 $145,186 $34,213 5111,942 10.590 144,386 28 CAPITAL PROJECT FUNDS Park Bedroom Assessment Capital Tax Districts Projects $26,564 , $264,658 $29,4-73 $16,469 $145,186 $44,831 $256,328 $26,564 S264,658 $29,473 $16,035 $10,827 131,018 147,053 10,827 $16,469 $145,186 $44,831 99,440 9,835 $26,564 253,831 $29,473 16,469 145,186 44,831 109, 275 26,564 253,831 29,473 $16,469 $145,186 $44,831 $256,328 $26,564 $264,658 _$29,4-13 (Continued) 85 CITY OF SAN RAFAEL NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2011 M CAPTIAL PROJECT FUNDS Total Non -Major Open Equipment " Radio Telephone Governmental Space Replacement Replacement Replacement Funds ASSET'S Cash and investments $137,975 $3,091,312 $525,509 $149,881 $10,213,792 Restricted cash and investments 10,590 Receivables: Accounts 1 480 926,510 Taxes 106,640 Grants 888,106 Interest 28 Due from other funds 474,644 Total Assets $137,975 $3,101,792 $525,509 $149,881 $12,620,310 LIABELITIES AND FUND BALANCES Liabilities? Accounts payable $1IOX8 $22,347 $880,463 Developer bonds payable 1,500 Due to other funds 474,644 Deferred revenue 329,859 Compensated absences 252 Total Liabilities 110,378 22,347 1,686,718 Fund Balances: N onspendable Restricted 4,372,808 Committed 1,715,506 Assined $137,975 2,991,414 $525,509 127,534 3,845,278 Total Fund Balances 137,975 2,991,414 525,509 121,534 10,933,592 Total Liabilities and Fund Balances $137,975 $3,101,792 $525.509 $149,881 $12,62031 0 M This Page Left Intentionally Blank CITY OF SAN RAFAEL CO141BINING STATEMENT OF RFVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2011 SPECIAL REVENUE FUNDS Baypoint Lagoons Household Street Recreation Assessment Flazinat Maintenance Revolving District Facility Childcare and Cleaning REVENUES Taxes and special assessments $25,368 Use of money and properties $L382 737 $518 $88 $4,458 Intergovernmental 20,060 5,156 265,429 15,645 Charges for services 2,243,443 1,234,157 3,003,866 Other revenue 55,404 2.6010 3.010 590 Total Revenues 2320,229 26,105 1,242,431 3,272,393 20,693 EXPENDITURES Current: General government Public safety (,241,239 Public works and parks 4,345 41,655 Culture and recreation 3,565,431 3,4923088 Capital outlay Capital improvement/special projects 57,488 Debt service: Principal Interest and fiscal charges Total Expenditures 3,622,919 4345 1,241,239 3,492,088 41,655 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (1,302,690) 21,760 1,192 (219,695) (20,962) OTHER FINANCING SOURCES {USES) Transfers in 1,277,200 203,200 Transfers out (520,000} Total Other Financing Sources (,Uses] 1,277,200 203,200 (52((,000) Net Change in Fund Balances (25,490; 21,760 1,192 (16,495) (5407962) Fund Balance, Be>inning 223,884 130,011 131,335 18,1 i 2 1,168,605 Fund Balance, Ending $198,39=1 S151,771 $132.527 $1.617 $627,643 M SPECIAL REVENUE FUNDS Loch Lomond Assessment Library Public Development District Library Assessment Safety Stormwater Services Grants $15,228 $895,664 4,700 $36,316 1,335 $985 $5,202 $31;168 $1,253 316,683 69,993 1,792,668 4,686 5,601 795,448 26,810 3.223 107,650 226,288 5,300 19,928 360,908 896,999 87,229 800,650 284,266 1,799,221 143,739 100,600 53 967,127 79,500 430581 289,189 325,496 53,483 244,556 15,756 237,338 1,419,200 53 324.056 430,581 159,495 1,292,623 237,338 1,861,872 19,875 36,852 466,418 (72,266) (491,973) 46,928 (62,651) 65.000 600.000 53,370 (7,476) 65,000 600,000 45,894 19,875 36,852 466,418 ',266) 108,027 46,928 (16,757) 880,349 116,230 208.997 978,515 696,615 637,657 $900,224 $153,082 $466,418 $20L731 $1,086,542 $743,543 $620,900 (Continued) 89 CITY OF SAN RAFAEL COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THF YEAR ENDED JUNE 30, 2011 DEBT SERVICE SPECIAL REVENUE FUNDS FUNDS Emergency Peacock Gap Parkland Medical Business Sewer Assessment Dedication Services Improvement Maintenance District REVENUES Taxes and special assessments $483 $3,661,064 Use of money and properties 6,211 126 $39 Intergovernmental 18,963 13,000 Charges for services 1,661,227 $2,181,462 Other revenue 15,250 Total Revenues 25,65" 5,322,417 28,289 2,181,462 EXPENDITURES Current: General government 3,105 29,727 Public safety 5,383,677 Public works and parks 1,983,163 Culture and recreation Capital outlay 189,834 Capital improvement/special projects Debt service: Principal Interest and fiscal charges Total Expenditures 189,834 5,386,782 29,727 1,983,163 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (164,177) (64,365) (1,438) 198,299 OTHER FINANCING SOURCES (USES) Transfers in Transfers out (190,000) (207,003) Total Other Financing Sources (Uses) (140,000) (207,000) Net Change in Fund Balmnces (164,177) (254,365) (1,438) (8,70I) Fund Balance, Beginning i.218,81C 400.907 5,154 42,074 $2,875 Fund Balance_ Ending $1,054,633 $146,542 $3,716 $33373 $2,875 M DEBT SERVICE FL NIDS CAPITAL PROJECT FUNDS 9,915 1997 Redevelopment klariposa Financing Agency Park Assessment Authority Debt Capital Bedroom Assessment Capital District Revenue Bonds Service Improvement Tax Districts - Projects 3,563fi63 $3,563,663 9,915 $3,570 $87 $768 123 123 88 $116 $151 30090 7,020 $1,000 (1,7%) 141,379) 213,313 (11,750) (141,379) 68,094 6,869 87 1168 3563,786 214,313 3,658 68,210 7,020 ff 264,96-5) 9,915 38,120 73,437 2,225,000 1,338,663 3,563fi63 338,402 9,915 38,120 87 768 123 (124.089) (6257) 30090 7,020 (1,7%) 141,379) (11,750) (141,379) 8 7 t982) 123 (265,468) (6,251) 30,090 7,020 16,382 146,168 44,708 374,743 32,821 --$223,741 22,453 $16,469 $145,186 $44,831 $109,275 $26,564 $253,831 $29.473 (Continued) ff CITY OF SAN RAFAFL COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2011 REVENUES Taxes and special assessments Use of money and properties Intergovernmental Charges for services Other revenue Total Revenues EXPENDITURES Current' General government Public safety Public works and parks Culture and recreation Capital outlay Capital improvement/special projects Debt service: Principal Interest and fiscal charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (t?SES) Transfers in Transfers out Total Other Financing Sources (Uses), Net Change in Fund Balances Fund Balance, Beenining Fund Balance, Ending CAPITAL PROJECT FUNDS Total Non -Major Open Equipment Radio Telephone Governmental Space Replacement Replacement Replacement Funds 3,763 458,533 568,555 3,763 458,533 568,555 32,832 6,868,655 2,996,343 7,856,789 881,813 270,010 3,348,636 66,232 2,291,232 5,091 1,343,754 341,333 25,620,054 (3,034) 690,075 81,485 37,136 (895,489) 'x,198,770 (1,06",605) 1,131,165 (3,634) 690,075 81,485 37,136 235,676 141,009 2301,339 444.024 90.398 10,697,916 $137,975 52,991.414 $525,509 $1271,534 $10,933,592 $8,165,040 $729 $14,699 $1,380 $469 113,128 2,518,537 1,092,535 648,660 378,000 13,489,208 41,374 438,652 724 1,148,608 630,040 378,469 24,724,565 3,763 458,533 568,555 3,763 458,533 568,555 32,832 6,868,655 2,996,343 7,856,789 881,813 270,010 3,348,636 66,232 2,291,232 5,091 1,343,754 341,333 25,620,054 (3,034) 690,075 81,485 37,136 (895,489) 'x,198,770 (1,06",605) 1,131,165 (3,634) 690,075 81,485 37,136 235,676 141,009 2301,339 444.024 90.398 10,697,916 $137,975 52,991.414 $525,509 $1271,534 $10,933,592 This Page Left Intentionally Blank CITY OF SAN RAFAEL BUDGETED NONMAJOR GOVERNMENTAL, FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES I-NFUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2011 REVENUES Taxes and special assessments Licenses and permits Fines and forfeitures Use of money and properties Intergovernmental Charges for services Other revenue Total Revenues EXPENDITURES Current; General government Public safety Public works and parks Culture and recreation Capital outlay Capital improvementispecial projects Debt service: Principal Interest and fiscal charges Total Expenditures EXCESS (DEFICIENCY) OF PFVFNUES OVER (UNDER) EXPFNDFFURFS OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses', FUND BALANCES, BEGINNING OF YEAR AND OTHER SOURCES AND USES OVER k �UNDFR` EXPENDITURES , I FUND BALANCE -S, BFCTINNING OFYFAR FUND BALANCES, END OF YEAR SPECIAL REVENUE FUNDS Recreation Revolving Baypoint Lagoons Assessment District Variance Variance Final positive Final Positive Budget Actual (Negative) Budget Actual (Negative) 3,346,741 3,565,431 (218,690) $25,000 $25,368 $368 $954 $1,382 $428 2,254 737 0;517) 20,000 20,000 2,374,630 2,243,443 (131,187) 29,850 55,404 25,554 2,425,434 2,320229 (105,205) 27,254 26,105 (1J49) 3,346,741 3,565,431 (218,690) 2,480 2,480 25,000 57,488 (32.488) 3.374,221 3.622,919 (248,698) 4,345 (4,345) 4,345 (4,345; (948,7871) 1,302,690) (351903) 27,254 21,760 (5,494) 1,277100 1,27171,200 1,277200 1,277200 $328,413 (25,490') ($351903) $27,254 223,884 $198,394 M 21,760 ($5J94) 130,611 $151,771 SPECIAL REVENUE FUNDS Household Hamat Facility Childcare Street Maintenance and Cleaning Variance Variance Variance Final Positive Final Positive Final Positive Budget Actual (Negative) Budget AetuaI (Negative) Budget Actual (Negative) $1,075 5518 ($557) $224 $88 ($236) $12,831 $4,458 ($8,373) 7,330 5,156 (2,174) 274,200 265,429 (8,771) 15,645 15,645 1,473,280 1,234,157 (239,123} 3,239,450 3,003,866 (235,584) 3010 2,606 2,300 3,010 3,010 2,580 590 (1,990) 1,481,985 1,242,431 (239,554} 3.513,874 3.272,393 (241,481) 15,411 20,693 5,282 1,419,220 1,241,239 177,981 3,667,585 3492,088 175,497 11,890 11,896 3,200 3;200 132 41,655 (41,523) 1,422,420 1,241,239 181,181 3,679,475 3J92,088 187,387 132 41,655 (413523) 59,565 1,192 (58,373) (165,601) (219,695) (54,094) 15,279 (20,962) (36,241) 202,700 203,200 500 (45,500) 45,500 (520,060) (520,000) 157,260 203,200 46,060 (520,660) (520,000) $597165 1,192 $58,373; ($8,401) (16.495) ($8,094) (W4,721} (540,6962) ($36,241) 131,335 18,1 12 1.1613,605 $132,527 $1,61 7 $627,643 Continued) 95 CITY OF SAN RAFAEL BUDGETED NONlvLAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2011 REVENUES Taxes and special assessments Licenses and permits Fines and forfeitures Use of money and properties Intergovernmental Charges for services Other revenue Total Revenues EXPENDITURES Current: General government Public safety Public works and parks Culture and recreation Capital outlay Capital improvement/special projects Debt service Principle Interest and fiscal charges Total Expenditures EXCESS( ' (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 0'11-IER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources tUses, EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES AND USES 0VF'.R ("UNDER) EXPENDITURES FUND BALANCES, BEGIN-NING OF YEAR FUND BALANCES, END OF YEAR SPECIAL REVENUE FUNDS Loch Lomond Assessment District Library Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) $15,200 $15,228 $28 16,788 4700 (12,088) $42,008 $36,316 ($5,692) 291,530 316,683 25,153 4,000 4,686 686 3,F000 3,223 (30,777) 31,988 19,928 (12,060) 371,539 360,908 (10,630 50 53 (3) 157,803 719,500 78,303 205.835 244,556 (38,721) 50 53 (3) 363,638 324,056 39,582 31,938 19,875 (12,063) 7,900 36,852 28,952 $31,938 19,875 ($12,063) $7,900 36,852 $28.952 830.349 5900,224 w 116230 $153,082 SPECIAL REVENUE FUNDS Library Assessment Public Safe v Stormevater Variance Variance Variance Final Positive Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative) $875,500 $895,664 $20,164 1,335 1,335 $3,458 $985 (52,473) 17,063 $5,202 (11,861) 65,350 69,993 4,6433 3,000 5,601 2,601 793,000 795,448 2,448 500 10,650 10,150 875,500 896,999 21,499 72,308 8i`,229 14,921 817,323 800,650 (16,673) 458,651 430,581 28-070 152,453 143,739 8,714 1,000 15,756 (14,756) 1,159,503 967,127 183,376 .324,744 325,496 (756) 458,651 430,58I 28,070 153,453 159,495 (6,1342) 1,475,243 1,291623 182,620 1 416,849 466,418 49,569 (81,145) (72,266) 8,879 657,920) (491,973) 165,947 65,G0i) 65,030 600,000 600,000 65.(1913 65,009 600,006 600,000 $416,849 466,418 $49,569 ($16,145) (7,266, $8,879 {$57.920; 108,027 $165,947 2138,997 978,515 $466,418 $2111,731 $1,686,542 (Continued) CITY OF SAN RAFAEL BUDGETED NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND, ACTUAL FOR THE YEAR ENDED JUNE 30, 2011 REVENUES Taxes and special assessments Licenses and permits Fines and forfeitures Use of money and properties Intergovernmental Charges for services Other revenue Total Revenues EXPENDITURES Current: General government Public- safety Public works and parks Culture and recreation Capital outlay Capital improvement/special projects Debt service: Principle Interest and fiscal charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTIIER FINANCING SOURCES (USES) I"ransfers in Transfers out Total Other Financing Sources (Uses) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES AND USES OVER (UNDER) EXPENDI'T'URES FUND BALANCES, BFCTINNING OF YEAR FUND BAi,ANCES, END OF YEAR SPECIAL REVENUE FUNDS Development Services Grants Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) $37,071 $31,168 ($5,4031 $8,454 $1,253 ($7,201) 33,524 945,025 1,742,668 847,641- 47,64226,810 26,810 26,8110 226,288 226,288 67,000 5,300 (61,700) 37,671 284,266 247,195 1,020,480 1,799,221 778,741 100,000 100,000 334,496 289,189 45,307 52,500 53,483 (983) 237,338 (237,338) 541,988 1,419,200 (827,212) 237,338 (237,338) L078,984 1,861,872 (782,888) 37,0'1 46,928 $9,857 (58;51)4) (112,(151} (41147) 51,816 53,370 1,554 (41,G00) (7,476) 33,524 10.816 45.894 35.078 $37,071 46,928 $9,857 ($47,6881 06,75711 $30,931 690;.615 637,657- $74' 543 $743,543 M 103,077 189,834 {86,757) 5,695,163 5,38h782 218,381 39,580 295727 9,853 23,920 1164,177) (188,097) 186,936 (64365) (251,301) (486) {1,4381 (952) (190,000) (190,000) (190,000) (190-000 $23,920 (164,177) $188,097) ($3,0641 1254,365) ($251,301) (,$486} (1,438; ($952) 1,218,817 400,907 5,154 SI.05033 $146,542 $3,716 (Continued) ME SPECLAi REVENUE FUNDS Parkland Dedication Emergency Medical Services Business Improvement Variance Variance Variance Final Positive Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative) $483 $483 5305,000 $3,661,064 ($23,936) $23,920 6,211 (17;709) 7,099 126 (6,973) $64 $39 ($25) 103,077 18,963 (84,114) 16,510 13,000 (3,510) 2,100,+000 1,661,227 (438,773) 22,520 15,250 (7,270) 126,997 25,657 (101,340) 5,792,099 5322,417 (469,682) 39,094 28,289 (IOM5) 3,105 (3,105) 39,580 29,727 9,853 5,599,163 5,383,677 215,486 $103,077 189;834 (86,757) 6,000 6,000 103,077 189,834 {86,757) 5,695,163 5,38h782 218,381 39,580 295727 9,853 23,920 1164,177) (188,097) 186,936 (64365) (251,301) (486) {1,4381 (952) (190,000) (190,000) (190,000) (190-000 $23,920 (164,177) $188,097) ($3,0641 1254,365) ($251,301) (,$486} (1,438; ($952) 1,218,817 400,907 5,154 SI.05033 $146,542 $3,716 (Continued) ME CITY 0PSAN RAFaEL BUDGETED N0wmAx)nGOVERNMENTAL FL -NDS C0Mnnvm0SCHEDULE 0FREVENUES, EXPENDITURES, AND CHANGES mFUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE m.zo/| SPECIAL REVENUE FUNDS DEBT SERVICE FUND u Maintenance Mariposa Assessment District Variance Variance Final Positive emu| nm//i°, Budget Actual Budget Actual ncvsmocs Taxes and special assessments uvou,es and permits Fines and forfeitures Use ofmoney and properties %313 $m ($226) /otergu"onnm^nrm Charges for services S2394.434 Sx.|o/.w� (212.972) Other revenue Total Revenues 2,394,4342//1,46-1(212,972) 313 97_1226L Ezpovo|TomES cnoem: General government Public safety Public works and parks 2.176.73* 1,983.163 |vs.sn Culture and recreation Capital outlay Capital improvement/special projouts Debt service: p*o"pl* Interest and fiscal charges Total Expenditures 2,176�734_ l983,163L 193,57I_ EXCESS y/spCIEmcY0opREVENUES OVER (uwnsn)szpsmmT!RES 217,700L198,299(19,4l1) 313L87l226l nrI/cxFINANCING SOURCES (ooen) r,^onfers/o z*:nstersout l2 1 �07,000L��00 Total omzf`nonnnineSources (o*es) _-_(2.17,700)12077000L10,700 EXCESS (osrmswcv)nrxsyswoso AND OTHER SOURCES AND USES OVER (UNDER) EXPENDITURES <u.ro�) nr FU -ND BALANCES, BEGINNING opWEAR 42,074 16�82_ FomoBALANCES, END orYEAR 230,845 768 (230,077) 3,563,940 3,563,786 (154' ), 123,000 DEBT SERVICE FUND 123,000 2,225,000 2,225 000 1997 Financing Authority Revenue Bonds Redevelopment Agency Debt Service Variance 1,338,940 Variance Final Positive Final Positive _24,460 Actual (Negative) Budget Actual (Negative) —Budget 3,563,940 $228,000 ($228,000) $1563;940 $3,561663 ($277) 2,845 $768 (2,077) 123 123 230,845 768 (230,077) 3,563,940 3,563,786 (154' ), 123,000 123,000 2,225,000 2,225 000 24,460 1,338,940 1,338,663 277 _24,460 147,460 3,563,940 3,561663 277 _147J60 83,385 768 ($82,617} 123 5123 291,930 (292,930) (1,750) (1.750) 291,930 (1,750) 0,7510) — $81,635 (982'1 ($82,61?) 123 $123 146,168 44,708 $145, i 86 $44,831 m This Page Left Intentionally Blank INTERNAL SERVICE FUNDS Internal service funds account for department services and financing performed for other departments within the same governmental jurisdiction. Funding comes from charges assessed to the departments benefiting from the sei'% ice. Building Maintenance Fund - Established to account for construction projects and cyclical large dollar maintenance tasks (roof, painting) completed on City owned buildings. Employee Benefits Fund - This fund is utilized for the payment of retiree benefits, unemployment insurance, accumulated leave requirements and other negotiated benefits not tied to a specific department. Liability Insurance Fund - Established to maintain sufficient reserves for outstanding claims. All costs associated with liability premiums are paid from this fund, Workers' Compensation Fund - Established to maintain sufficient reserves for injury claims, All costs associated with workers compensation, including safety training, wellness programs, claim expenses and insurance premiums are paid from this fund. Dental Insurance Fund - Set up to maintain sufficient reserves for dental claims. All costs associated with dental claims and administrations are paid from this fund. Employee Retirement Fund — Set up to account for the principal payments, interest payments, and related cost of the 2010 Taxable Pension Obligation Bonds. ASSETS Current Assets: Cash and investments Restricted cash and investments Accounts receivable Due from other funds Total Assets LIABILITIES Current Liabilities: Accounts payable Due to other funds Non-current Liabilities: Long term debt Total Liabilities NET ASSETS: Unrestricted 'Total veL Assets CITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET ASSETS JUNE 30, 2011 Building Employee Maintenance Benefits Liability Workers' Insurance Compensation $354,019 91765,322 $596,687 $1,065,594 803,158 354,019 1,065,594 1,568,480 596,687 8,195 242,614 7,744 12,082 803,158 8,195 1,045,772 7,744 12.082 345,824 19,822 1,560,736 584,605 $345,824 $19,822 51,560,736 $584,605 104 Dental Employee Insurance Retirement Total $113,010 $2,768,032 $4,597,070 229,170 229,170 1,065,594 803,158 113,010 2,997,202 6,694,992 71 270,706 803,158 4,490,000 4,490,000 71 4,490.000 5,563,864 112,939 (1,492,798) 1,131,128 $112,939 ($1,492,798) $1,131,128 105 CITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBENING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS FOR THE YEAR ENDED JUNE 30, 2011 106 Building Employee Liability Workers' Maintenance Benefits Insurance Compensation OPERATING REVENUES Charges for current services $110,690 $1,292,154 $1,569,880 $1,941,176 Other operating revenues 1,839,980 154,687 Total Operating Revenues 110,690 3,132,134 1,724,567 1,941,176 OPERATING EXPENSES Insurance premiums and claims 2,790,908 996,515 1,855,109 Maintenance and repairs 110,635 General and administrative 744,613 OPER expense Total Operating Expenses 110,635 3,535,521 996,515 1,855,109 Operating Income (Loss) 55 (403,387) 728,052 86,067 NONOPERATING REVENUES (EXPENSES} Investment income 2,210 5,657 3,477 Interest expense Total Nonoperating Revenues (Expenses) 2,210 5,657 3,477 Net income (loss) before transfers 2,265 (403,387) 733,709 _89,544 Transfers in 140,000 218,032 Transfers on,, (73,200) Change in Net Assets 69,065 (185355) 733,709 89_544 NIETASSETS, BEGINNING OF YEAR 276,759 205,177 827,027 495,061 NET ASSETS, END OF YEAR $34-5,824 $19,822 S1 560) 736 $584,605 106 Dental Employee Insurance Retirement Total $499,534 $3,992,223 $9,405,657 8,313 2,402,980 507,847 3,992,223 11,408,637 458,959 6,101,491 110,635 744,613 4,009,971 4,009,971 458,959 4,009,971 10,966,710 48,888 (17, 448) 441,927 601 7,202 19,147 (511,512) (511,512) 601 (,504,310) (492,365) 49,489 (522,058) (50,438) 358,032 (970,740) (1,043,940) 49,489 (1,492,798) (736,346) 63,450 1,867,474 $112,939 ($1,492,798) $1,131,128 I= CITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 34, 2011 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers/other funds Cash payments to suppliers for goods and services Other operating revenues Cash Flows from Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Proceeds from issuance of long term debt Interfund receipts (payments) Interest expense Cash Flows from Noncapital Financing Activities CASH FLOWS FROM INVESTING ACTIviTiEs Investment received Cash Flows from Investing Activities ,Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) Net change in assets and liabilities: Accounts receivable Prepaids and deposits Accounts payable Net Cash Provided by (Used in) Operating Activities 108 Building Employee Liability Workers' Maintenance Benefits ---Insurance Compensation $110,690 $1,280,243 $1,569,884 $1,941,176 (102,440) (3,295,729) (988,834) (1,738,2161 765,322 1,839,980 154,697 8,250 (175,506) 735,733 202,960 66,800 175,506 23,932 18,594 66,800 175,506 23,932 18,594 2,210 5,657 3,477 2,210 5,657 3A77 77,260 765,322 225,031 276,759 371,656 $354.019 $765,322 $596,687 $55 ($403,387) S728,052 $86,067 (11,911) 125,241 8,195 239,792 7,681 (8,348) 58,250 ($175,506) $735.733 $202,960 Dental Employee Insurance Retirement Total $499,534 $3,992.223 $9,393,746 (462,704) (4,009.97 1 1) (10,597,894) 8,313 2,002.980 45,143 -(1-7,748) 798,832 4,260,830 4,260,930 (970,740) (685,908) (511 ,512) (511,512) 2.778,578 3,063,410 601 7,202 19,147 601 7,202 19,147_ 45,744 2,768.032 3,881,389 67,266 715,681 $113,010 $2,768,032 $4,597,070 $48,888 ($17,748) $441,927 (11,911) 125.241 (3,745) 243,575 $798,832 $45.143 {$27,748) M This Page Left Intentionally Blank STATISTICAL STATISTICAL SECTION This part of the City's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. In contrast to the financial section, the statistical section information is not subject to independent audit. Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well being have changed over time: 1, Net Assets by Component 2. Changes in Net Assets 3. Fund Balances of Governmental Funds 4. Changes in Fund Balance of Governmental Funds Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue source, the property, tax: I. Assessed and Estimated Actual Value of Taxable Property 1 Property Tax Rates, All Overlapping Governments 3. , Principal Property Taxpayers 4, Property Tax Levies and Collections Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future: 1. Ratio of Outstanding Debt by Type 1 Computation of Direct and Overlapping Debt 3, Computation of Legal Bonded Debt Margin 4. Revenue Bond Coverage Parking Facility 5. Redevelopment Pledged Revenue Coverage Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place: 1. Demographic and Economic Statistics 2. Principal Employers Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs: 1. Full -Time Equivalent City Government Employees by Function 2, Operating Indicators by FunctiowProgram 3, Capital Asset Statistics by FunctionTrograin Sources Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports for the relevant year. The City implemented GASB Statement 34 in 2003; schedules presenting governmentwide information include information beginning in that year. T h $240,000 0 U S $190,000 a n $140,000 d $90,000 ($10000) 2003 2004 2005 2006 2007 2008 2009 2010 2011 CITY OF SAN RAFAEL NET ASSETS BY COMPONENT Last Nine Fiscal Years (accrual basis of accounting) Governmental activities Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net assets Business-hpe activities Invested in capital assets, net of related debt Unrestricted Total business -type activities net assets Primary government Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets ONet ofRelated Debt MRestricted MUnrestricted 2003 As of June 30 2004 $198,031,181 $202,215,793 $194,658,126 2,933,294 2,708,397 2,378.,641 16,216,230 9,775,565 14,167,627 $217,180,705 $214,699,755 $211,204,394 $8,464,417 $8,7497750 $8,615,483 1,078,245 1,447,467 1,900,504 $9,542,662 $10,197,217 $10,515,987 $206,495,598 $210,965,543 $203,273,609 2,933,2294 2,708,397 2,378,641 17,294,475 11,223,032 16,068,131 $226,723,367 $224,896,972 $221,720,381 w 2006 2007 2008 As of June 30 2009 2010 2011 $175,806,100 $171,849,149 $176,724,820 $178,744,119 $173,536,144 $174,281,922 620,889 31,124,935 26,848,900 25,721,231 26,150,254 21,322,937 32,739,318 4,499,136 4,273,937 (700,985) (4,631,276) (8,170,324) $209,166,307 $207,473,220 $207,847,657 $203,764,365 $195,055,122 $187,434,535 $9,819,435 $9,717,501 $10,130,329 $11,243,637 $10,950,825 $10,793,592 I113,659 2,226,838 2,471,117 1,936,958 2,017,354 1,948,447 $11,933,094 $11,944,339 $12,601,446 $13,180,595 $12,968,179 $12,742,039 $185,625,535 $181,566,650 $186,855,149 $189,987,756 $184,486,969 $185,075,514 620,889 31,124,935 26,848,900 25,721,231 26,150,254 21,322,937 34,852,977 6325,974 61745,054 1,235,973 (2,613,922) (6,221,877) $221,099,401 $219,417,559 $220,449,103 $216,944,960 $208,023,301 $200,176,574 113 CITY OF SAN RAFAEL CHANGES IN NET ASSETS Last Nine Fiscal Years (Accrual Basis of Accounting) Business-'I'ype Activities: Parking services 1,245,316 1,539,441 Fiscal Year Ended June 30, 2,761,511 2003 2004 2005 2006 Expenses Total Primary Government Expenses $81,381,239 $66,992,396 $73,263,656 Governmental Activities: Component Unit: General government $5,555,915 $5,074,335 $5,895,390 $6,252,533 Public safety 30,476,353 301453,108 32,891,692 33,178,537 Public works and parks 27,237,899 16,043,092 16,820,453 23,401,246 Community development 1 redevelopment 3,727,315 3,921,422 4,624,345 4,194,249 Culture and recreation 9,055,681 7,444,339 8,450,017 8,652,4 45 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-'I'ype Activities: Parking services 1,245,316 1,539,441 2,451,941 2,761,511 Total Business -Type Activities Expenses 1,245,3I6 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 Component Unit: San Rafael Sanitation District $5,708,208 $5,297,737 $5,288.582 $6,148,915 Program Revenues Governmental Activities: Charges for services: General government $1,433,372 $1,487,595 $I,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 1,9745527 1190,832 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 Government 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 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 Component Unit: Charges for services: San Rafael Sanitation D}striet $5<566,610 $5,811,437 $6,060,993 $6,340.773 Net (Expense)/Revenue Governmental Activities ($59,970,685) ($4794,838) ($51,540,618) ($53,875,785) Business -Type Activities 565,163 767,991 152,125 263,869 Total Primary= Government Net Expense (559,405,522) ($46.526,847) ($51,388,493) ($53,611,916) Component UnitActivities ($141,598) $513,700 $772,411 $191,858 W 2007 2008 2009 2010 2011 $8,908,433 $8,621,079 $8,075,344 $8,396,759 $8,269,846 37,271,272 40,845,347 42,708,538 42,752,033 44,735,486 20,998,749 22,105,367 23,036,676 17,401,923 17,408,038 4,384,408 5,811,866 5,759,171 6,738,873 7,804,650 9,729,485 10,300,230 11,505,896 11,139,225 11,487,999 2,183,683 1,989,620 1,907,229 2,200,024 1,621,605 83,476,030 89,673,509 92,992,854 88,628,837 91,327,624 3,110,254 3,282,235 3,561235 4,016,198 3,785,751 3,110,254 3,282,235 3,563,235 4,016,198 3,785,751 $86,586,284 $92955,744 $96,556,089 $92,645,035 $95,113,375 $6,656,432 $8,090,636 $9,143,977 $9,087,354 $9,677,630 $1,512,814 $1,494,784 $1,738,685 $1,665,460 $1,636,542 5,279,785 5,562,072 5,906,445 6,308,912 6,167,925 4,030,060 4,983,288 4,753,817 3,916,874 4,141,103 2,815,009 3,247,024 2,915,872 2,830,179 2,676,663 4,521,004 4,870,884 5,253,683 5,280,458 5,362,497 3,701,901 3,463,616 3,544,248 3,721,055 3,651,902 2,786,761 3,239,509 7,311,173 2,116,906 1,857,670 24,647,334 26,861,177 31,423,923 25,839,844 25,494,302 3,242,046 4,161,936 4,454,490 4,244,404 4,011,333 3,242,946 4,161,936 4,454,490 4,244,404 4,011,333 $27,889,380 $31,023,113 $35,878,413 $30,084,248 $29,505,635 $7,857,916 $9,366,305 $10,567,647 $11,559,549 $12,223,779 {$58,828,696} ($62,82,332) ($61,568,93Ij ($62,788,9931 ($65,833,322) 131,792 879,701 891,255 228,206 225,582 ($58696,904) ($61,932,631) ($60,677,676) ($62,560,787} ($65,607,740) $1,201,484 $1;275.669 $1,423,670 $2,472,195 $2,546,149 115 CITY OF SAN RAFAEL CHANGES IN NET ASSETS (continued) Last Nine Fiscal Years (Accrual Basis of Accounting) 2003 2004 2005 2006 General Revenues and Other Changes in Net Assets Governmental Activities: Taxes: Property $13,983,697 $14,895388 $17,385,722 $20,848,887 Sales 16,779,878 17,166,966 17332,100 18,188,524 Special assessments 3,055,575 3,329,680 3,642,184 3,017,488 Paramedic Motor vehicles 3,317,710 2,495,598 4,657,817 372,726 Transient occupancy Franchises Business licenses Other 5,465,495 5,476,044 5,151.205 6,963,448 Investment earnings 1,897,339 809,242 1,112,548 11248,409 Gain (Loss) on disposal ol'assets (500,819) Miscellaneous 1,843,458 498,200 876,907 361,195 Special item - Court fines repayment Transfers 232,398 142,970 15,720 201,191 Total Government Activities 46,074,731 44,813,888 49,974,203 51,201,868_ Business -Type Activities: Investment earnings 17,772 29,534 28,522 44,536 Aid from other government agencies 40.735 L309,893 Transfers (232,398) (142,970) (15.720) (201,191) Total Business -Type Activities (214t626) (113,436) 53,537 1,153,238 Total Primary Government ovemment $45,860,105 S,14,700A52 $50,027,740 $52,355,106_ Component Univ San Rafael Sanitation District Property Taxes $560,269 $591,078 $125,959 $179,479 Investment earnings 104,358 75,739 117,348 237,206 Miscellaneous 154,919 Aid from other governmental agencies 141,314 609,419 645,804 Total Component Unit $805,941 $821,736 $852,726 $1,062,489 Change in Net Assets Governmental Activities ($13,895,954) ($2,480,950) ($1,566,415) ($2,673,91717) Business -Type Activities 350,537 654,555 205,662 1,417,107 Total Primary Government (W,545,4177) ($1,826,395) ($1360,753) ($1,256,810) Change in Net Assets Component Unit Activities $664,343 $1,335,436 $1.625,137 $1,254.347 2007 2008 2009 2010 2011 $20,360,475 22,195,606 $21,978,859 S21,684,131 $21,632,733 24,484,356 25,764,457 21,970,262 19,055,124 21,623,445 2,998,925 3,503,555 3,210,317 3,489,494 3,661,064 331,620 257,320 197,989 171,518 297,425 1,678,912 1,558,243 1,644,262 2,941,149 2,868,332 2,990,539 2,405,934 2,317,664 2,296,460 81830,955 9,242,241 1,561,835 1,411,583 1,930,531 1,669,181 1,583,056 717,968 302,180 176,502 221,791 491.488 296,454 461,224 541,390 1,496,174 (1,133,458) 212,170 344,080 361,190 458,300 463,600 58,245,712 63,186,769 57,485,639 54,079,750 58,212,735_ 91,623 121,486 49,084 17,678 11,878 (212,170) (344,080) (361,190) (458,300) (463fi06) (120,547) (222,594) ....... L312,106 (440,622) (451,722) $58,125,165 $62,964,175 $57,173,533 $53,639,128 $57,761,013 $755,763 $803.071 $855,511 $823,187 $1,214,519 367,887 341,032 206,752 93,274 59,265 3,546 3,540 340.642 577,860 381,144 415,391 6,499 $1,464,292 $1,725,509 $1,446,947 $1,331,852 $1.280,283 ($582,984) $374,437 ($4,083,292) ($8,709,243) ($7,620,587) 11,245 657,107 579,149 (212,416) (226,140) ($571739) $1,031,544_ ($3,504,143) ($8,921,659] ($7,846,727) $2,66-5,76S3,001,1' 18 $2,870,617 $3,804,047 $3,826,432 m CITY SAN RAFAEL FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Total Fund Balance Wfutal Fund Balance AsofJune 3l) 2002 2003 2004 2005 2006 General Fund Pre -GASB 54 Presentation, Reserved $3,347,494 $2,357,904 $1,451,036 $2,442,881 $2,335,391 Unreserved 5,112,926 4,139,618 4,246,152 5,779,680 3,362,151 GASB 54 Presentation: Nonspendable Restricted Committed Assigned Unassigned Total General Fund $8,460,420 $6497,522 $5,697,188 $8,222,561 _$5,697,542 All Other Governmental Funds Pre -GASB 54 Presentation Reserved $22,579,186 S36t695,31 8 $32,471,197 $26,599,557 521,603,724 Unreserved, reported in: Special Revenue Funds 13, 195,852 6,317,972 5,574,048 5,628,187 7,168,753 Capital Project Funds Debt Service Funds Expendable Trust Fund 422,188 GASB 54 Presentation Nonspendable Restricted Committed Assigned Unassigned Total all other govemmental funds $36,197,226 141913,290 $38,045,245 $32,227,744 $28-772,477 (a) The change in total fiand balance for the General Fund and other governmental funds is explained in Management's Discussion and Analysis, -As of June 30 2007 2008 2009 2010 2011 $905;0168 $2,196,153 $2,2225775 $1,763,622 5,1316,929 4,022,612 1,67 455 5,038,173 $589,833 200,238 555,561 5,439,874 $5,921,997 $6,218765 $3,896,230 $6,8001,795 $6,785,511 (a} $20,773,760 $17,594,142 $16,680,568 $15,352,723 8,1137,477 7413,808 8,641,239 8,778,027 35,430 (1,037,293) 4,527,627 4,734,986 3,315 764 3,360,540 $377,18{} 19,289,367 3,864 322 4,124,029 $33,616,223 $28,364,144 $27,652,054 $28,658,377 $27.654,898 (a CITY OF SAN RAFAEL CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Expenditures Current: General government 6188,702 4,740,703 Fiscal Year Ended June 30, 5,539,141 6,200,338 Public safety 2002 2003 2004 2005 2006 Revenues 9,329,346 9,491,552 9,257,991 9,294,419 10,622,585 Taxes and special assessments $38,530,602 $39,284,643 $40,875,826 $42,901,520 $44,901,544 Licenses and permits 690,077 735,109 928,303 929,993 1,175,030 Fines and forfeitures 773,239 770,632 791,975 1,088,459 622,494 Use of money and properties 2,465,306 1,897,339 1,024,199 1,244,406 1,316,558 Intergovernmental 8,590,790 9,405,422 8,049,002 10,522,095 11,705,917 Charges for services 9,704,113 10,102,392 10,423,754 11,407,622 13,104,572 Other revenue 1,148,767 3,568,297 735,976 1,135,485 1,475,078 Total Revenues 61,902,894 65,763,834 62,829,035 69,229,580 74,301,193 Expenditures Current: General government 6188,702 4,740,703 5,014,452 5,539,141 6,200,338 Public safety 25,898,206 28,041,079 28,863,197 31,784,872 33,321,967 Public works and parks 9,329,346 9,491,552 9,257,991 9,294,419 10,622,585 Community development; redevelopment 3,610,108 3,253,947 3,875,542 3,763,614 4184,084 Culture and recreation 7,477,117 7,176,097 7,145,264 7,538,607 8,409,833 Capital outlay 307,483 125,884 31,703 1,027,267 60,411 Capital improvement% special projects 15360,086 11,058,796 9,825,103 9253,661 13,200,872 Debt service: (6,432,801) (42,971,248) (4,979,898) (7,740,3241 ( 672,916) Capitalized lease obligation (682,757) 197,132 10,775 141,197 130,315 Principal 1,849,000 24 290,000 2,360,000 2,585,000 2,525,000 Interest and fiscal charges 2,641,111 4,046,170 2,456,357 2,1417,673 1,878,265 Total Expenditures 72,661,159 92,421,366 68,840,384 73,068,501 80,533,670 Excess (deficiency) of revenues over (under)expendit es (10,758.265) (26,657,526) (6,(}11,349) (3,838,921) (6,232,477) Other Financing Sources (Uses) Issuance of debt 32,625,000 Payment to refunded bonds Bond premiums Capital lease for equipment acquisition Contribution from Sanitation District 744,556 Proceeds from sale of capital asset Transfers in 5,750,044 42,503,976 5,222,868 8,636,544 6,925,10"7 I,ansfers(out) (6,432,801) (42,971,248) (4,979,898) (7,740,3241 ( 672,916) Total other financing sources (uses) (682,757) 32,902,284 242,970 896 220 252,191 Nor Change it fund balances ($11,441,022) $6,244,758 ($5,768,379) ($2,942,701) ($5,980,286) Debt service as a percentage of noncapital expenditures 7.9°fn 35,1% 8.2% 7.8% 6.71 Fiscal Year Ended June 30, 200'7 2008 200 2010 2011 $52,472,246 $56,129,195 $51,019,143 $47,678,541 $51,448,130 1,157,981 1,489,748 1,472,913 1,518,819 1,416,772 515.528 797,481 560,338 787,411 862,820 1,744,688 1,584,508 847,120 433,874 380,720 12,760,496 12,081,968 17,518,670 13,(X)1,703 11,864,127 13,504,621 15,647,460 16,384,265 15,787,325 15,888,750 1,468,743 815,704 759,320 716,760 1,026,845 83,624,303 88,505,664 88,661.769 79,924,433 82,888,164 8,188,999 8,288,170 8,059,526 7,997,067 6,863,142 36;264,321 40,299,862 41,209,972 39,574,091 40,967,352 11,972,537 13,641,665 12,926,646 I0,731,669 10,666,176 4,319,042 5,786,661 5,572,079 4,398,594 4,527,351 9,005,370 9,820,365 10,233,361 9,605 684 10,067,822 6,716,630 6,243,517 5,048,044 1,890,559 1,745,483 1,189,613 5,124,091 6,606,857 3,436,608 6,2407861 2,287 255 2,504,370 2,714,358 2,804,258 2,530,338 1,829,091 1,776,354 1,683,240 1,979,372 1,448,910 81,772,858 93,485,055 94,654,083 82,417,902 85,057,435 1,851,445 (4,979,391) (5,392,314) (2,493,469) (2:169,271) 14,660,000 (14,315,000) 1,038,185 318,000 221,791 6,812,260 6,353,216 8,972,495 7.494,560 5,806,834 (6,958,046) (6,329,136) (6,614,806} (6,411,15(1) (4,657,326) 172.214 24,180 2357,689 2,688,386 1,149,508 $2,023,659 ($4,955,311) (94,034,625 $194,117 ($1,019,763) 5.6% 51% 5.3% 6.2% -5 2% 121 $12,000 $10,000 $8v000 $6,000 $4,000 $2,000 so k ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST NINE FISCAL YEARS 2003 2004 2005 2006 2007 2008 2009 2010 2011. —0—Unsecured Property Secured Property Fiscal Year Residential Property Ileal Property Commercial Industrial ProRerty Property dither Total Real Secured Property Unsecured Property Total Assessed (a} Total Estimated Direct Full Market fail Tax Rate h 2003 $4,827,556,658 $ 1,480,344,464 $128,546,036 $74,236,658 $6,510,683,816 $445,297,553 $6,955,981,369 $6955,981,369 0.20678°1 2004 5,160,984,286 1514,445,365 130,514,420 91,737,340 6,897,681,411 431,291,562 7,328,972,973 7,328,972,973 0.20661% 2005 5,510,630,728 1.546,579,852 146,8221250 91875,824 7,297,908,654 406,163,129 7,704,071,783 7,704,071,783 0.19903% 2006 6,018,318,932 1,618,091,589 177,974,231 91,321,393 7,905,706,145 407,016,133 8,312,722,278 8,312,722,278 0.19349% 2007 6,544,841,348 1,745,483,576 197,040,979 122,977,950 8,610,343,853 376,890,454 8,987,234,307 8,987,234,307 0.18087% 2008 7,024,610,641 1,824,656,505 214,341,528 105,409,028 9,169,017,702 362,727,209 9,531,744,911 9,531,744,911 0..17718% 2009 7,357,121,277 1,941,927,620 234,669,841 129,177,656 9,662,896,394 374,976,613 10,037,87307 10,037,873,007 0,17951% 2010 7,335,863,721 2,052,276;292 244,857,019 130,177,994 9,763,175,026 401,201,906 10,164,376,932 10,164,376,932 0.19215% 2011 7,215,965,203 2,056,985,417 2.47,409,955 124,426,487 9,6114,787,062 383,414,952 10,028,202,014 10,028,202,014 0.17851% Soa—: HdL Core. & Cone, Iam Count•{ Assessor 200i/02-2014111 Combined Tax Ro(1s (a) The State Constitution requires property to be assessed at one hundred percent of the most recent purchase price, plus an increment of no more than two percent annually, plus any local over -rides. These values are considered to be full market values_ (b) California cities dr not set their own direct tax rate. The state constitution establishes the rate at I % and allocates a portion of that amount, by an Dual calculation, to all the taxing entities within a tax rate area. Im CITY OF SAN RAFAEL PROPERTY TAX RATES ALL OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Fiscal School Misc. Special Year City County (1) Districts Districts Total 2002 0.154 0.295 0.5873 0.0461 1,0820 2003 0.154 0.295 0.6163 0.0461 1.1110 2004 0.154 0.295 0.6483 0.0461 1.1430 2005 0.154 0.295 0.6593 0.0461 1.1540 2006 0,154 0.295 0.6828 0.0461 1.1775 2007 0.154 0.295 0.7160 0.0461 1.2107 2008 0.154 0.295 0.7225 0.0461 1,2172 2009 0.154 0.295 0.7192 0.0461 1,2139 2010 0.154 0.295 0,7402 0.0461 1.2349 2011 0.154 0.295 0.7542 0.0461 1.2489 Notes. (1) Like other cities, San Rafael includes several property tax rate areas with different rates. A mean average is indicated. Source; Marin County Assessors Office 2001;'02 - 2010'11 Tax Rate Tables 123 CITY OF SAN RAFAEL PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND EIGHT YEARS AGO Taxpayer Northgate Mall Associates SR Corporation Center Phase I SR Corporation Center Phase Two Corac LLC Sutter Health Robert Dickson Trust Regency Center 11 Associates LP Northbay Properties I I Marm Sanitary Service Kilroy Realty LP AMG Realty Partners LP Lucas Digital Ltd. LLC Autodesk Inc 4040 Civic Center LLC Tele-Vue Systems Inc Bay Apartment Communities Subtotal Total Net Assessed Valuation: Fiscal Year 2010-2011 Fiscal Year 2002-2003 2010-11 2002-2003 41,900,697 Percentage 37,334,639 Percentage 34,090,441 of Total City 30,959,326 of Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Value Value Value Value $124,804,203 1.24% $80,357,695 1.16% 78,722,382 0.79% 45,538,519 0,65% 71,885,994 032% 59,878,503 0.60% 0.00% 48,295,644 0-48% 0.00% 43,972,278 0,44% 0,00% 41,605,911 0.41% 36,325,034 0.52% 38,739,218 0,39% 30,142,083 0A3% 38,498,898 0.38% 0.00% 36,499,999 0,36% 0.00% $582,903,030 5.81% $10,028,202,014 $6,955.981,369 68,508,225 0.98% 41,900,697 0.60% 37,334,639 0.54% 34,090,441 0A9% 30,959,326 0.45% 30,619,158 0.44% $435.,775,817 6,26% Source: I IdL Corea &Cone, Marin County ,'Asessor2002-2003 & 2010-2011 Net Taxable Value History 124 $25 O $22 $19 $16 $12 $9 $6 CITY OF SAN RAFAEL LAST TEN FISCAL YEARS 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Delinquent taxer Fiscal as a Percent of Year Rate Levies Allocations Collecti2L-A!222qonmentsDalinqueneies Allocations 2002 1.00 (2) 12,293,952 (2) $12,293,952 (2) 0.0% 2003 1.00 (2) 13,983,697 (2) 13,983,697 (2) 0.0% 2004 1.00 (2) 14,895,188 (2) 14,895,188 (2) 0.0% 2005 1.00 (2) 17,385,722 (2) 17,385.722 (2) 0.0% 2006 1.00 (2) 20,848,887 (2) 20,848,887 (2) 0.0% 2007 1.00 (2) 20,360,475 (2) 20,360,475 (2) 0.0% 2008 1 M (2) 22, 195,606 (2) 22,195,606 (2) 0,0% 2009 1.00 (2) 21,978,859 (2) 21,978,859 (2) 0,0% 2010 1.00 (11) 21,702,536 (2) 21,702,536 (2) 0.0% 2011 1.00 (2) 21,632,731 (2) 21,632,731 (2) 0.0% Notes: (1) Includes deductions lbr County vrovertv tax administration. (2) Information not aniflicable. All General vuroose vrovertv taxes are levied by the county and allocated to other aovernmental entities. Source: San Rafael Finance Department Revenue Reports am $60 $50 $40 $30 $20 $10 CITY F SAN AAFAEL O W�;W-34 LAST TEN FISCAL YEARS Note : Debt amounts exclude any premiums, discounts, or other amortization amounts, Sources: City of San Rafael State of California, Department of Finance (population) U.S. Department of commerce, Bureau of the Census (income) (a) See Schedule of Demographic and Economic Statistics for personal income and population data, 126 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Governmental Activities RDA Tax Financing Court Fine Capitalized Pension Fiscal Allocation Authority Note Promissory Lease Obligation Year Bonds Revenue Bond! Payable Note Obligations Bonds Total 2002 $43,479,004 $3,335,000 $ 169,000 - - - $ 46,983,004 2003 44,914,000 2,820,000 169,000 - - - 47,903,000 2004 43,239,004 2,340,000 169,000 - - - 45,748,004 2005 41,514,004 1,685,000 169,000 - - - 43,368,004 2006 40,849,107 1,155,000 169,000 - $ 412,441 - 42,585548 2007 39,217,501 950,000 169,000 $ 1,029,717 596,927 - 41,963,145 2008 37,537,161 780,000 169,000 816,119 401,155 - 39,703,435 2009 35,793,692 455,000 169,000 594,100 198,816 - 37,210,608 2010 35,355,988 0 169,000 363,328 135,330 - 36,023,646 2011 33,298,499 0 169,000 124,222 69,098 $ 4,490,000 38,150,819 Business -Type Activities Parking Total Percentage Fiscal Services Primary of Personal Per Year Bonds Total Government IncoELUA �taa 2002 -$46,983,004 123% $ 828.76 2003 $ 7,605,000 $7,605,000 55,508,000 154% 973.72 2004 7,605,000 7,605,000 53,353,004 2.34% 933.04 2005 7,605,000 7,605,000 50,973,004 114% 890.76 2006 7,455,000 7,455,000 50,040,548 1.97% 872.56 2007 7,300,000 7,300,000 49.263,145 1,85% 848,68 2008 7,140,000 7,140,000 46,843,435 1.73% 804.39 2009 6,975,000 6,975,000 44,185,608 1.67% 757.08 2010 6,805,000 6.805,000 42,828,646 1,85% 728.11 2011 6,630,000 6,630,000 44,780,819 N/A 770,28 Note : Debt amounts exclude any premiums, discounts, or other amortization amounts, Sources: City of San Rafael State of California, Department of Finance (population) U.S. Department of commerce, Bureau of the Census (income) (a) See Schedule of Demographic and Economic Statistics for personal income and population data, 126 CITY OF SAN RAFAEL COMPUTATION OF DIRECT AND OVERLAPPING DEBT June 30, 2011 2010-11 Assessed Valuation: $10,028,202,014 Redevelopment Incremental Valuation: 2,246,741,694 Adjusted Assessed Valuation: $7,781,460320 (1) Percentage of overlapping agency's assessed valuation located within boundaries of the city, (2) Include city's share of Marin Emergency Radio Authority refunding revenue bonds., (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non - bonded capital lease obligations. Ratios to 2010-11 Assessed Valuation: Total Overlapping Tax and Assessment Debt L21% Ratios to Adjusted Assessed Valuation: Gross Combined Direct Debt ($14,261,032) 0.18% Net Combined Direct Debt ($7,631,032) 0,10% Gross Combined Total Debt 2.15% Net Combined Total Debt 2,07% STATE SCHOOL BUILDING All) REPAYABLE AS OF 6/30/1 $0 Source: California Municipal Statistics, Inc, 127 Total Debt City's Share of OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/2011 O/o Debt 6/30/09 Marin Community College District $180,400,000 14.992010 $27,045,568 San Rafael High School District 53,320,315 74254% 39,592,467 Tamalpais Union High School District 167,530,000 0.085% 142,401 Dixie School District 7,805,810 67208% 5,246,129 Ross School District 18364,941 1.674% 307,429 Ross Valley School District 23,149,639 0.008% 1,852 San Rafael School District 61,823,301 78,402% 48,470,704 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $120,806,550 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Marin County Certificates of Participation $79.984,112 14967% $11,971,222 Marin County Pension Obligations 111,480,000 14967% 16,685,212 Marin County Transit District General Fund Obligations 219,185 14,967% 32,805 Marin Municipal Water District General Fund Obligations 178,320 19.117% 34,089 Marin Community College District Certification of Participation 2,855.834 14.992% 428,147 San Rafael School District Certificates of Participation 4,085,000 78.402% 3,201722 City of San Rafael General Fund Obligations 9,771,032 100,000% 9,771,032 (2) City of San Rafael Pension Obligations 4,490,000 100.000% 4,490,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $46,615,229 Less: City of San Rafael lease revenue bonds supported by enterprise revenues 6,630,000 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUNJ) DEBT 39,985,229 TOTAL GROSS DIRECT DEBT $14,261,032 TOTAL NET DIRECT DEBT $7,631,032 TOTAL OVERLAPPING DEBT $153,160,747 GROSS COMBINED TOTAL DEBT $167.421,779 (3) NE FCOMBINED TOTAL DEBT $160,791,779 (1) Percentage of overlapping agency's assessed valuation located within boundaries of the city, (2) Include city's share of Marin Emergency Radio Authority refunding revenue bonds., (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non - bonded capital lease obligations. Ratios to 2010-11 Assessed Valuation: Total Overlapping Tax and Assessment Debt L21% Ratios to Adjusted Assessed Valuation: Gross Combined Direct Debt ($14,261,032) 0.18% Net Combined Direct Debt ($7,631,032) 0,10% Gross Combined Total Debt 2.15% Net Combined Total Debt 2,07% STATE SCHOOL BUILDING All) REPAYABLE AS OF 6/30/1 $0 Source: California Municipal Statistics, Inc, 127 CITY OF SAN RAFAEL COMPUTATION OF LEGAL BONDED DEBT MARGIN 6/30/20111 Source: California Municipal Statistics. Inc, and City of San Rafael's Management Service Department Note: Data not available for 2002 128 ASSESSED VALUATION: $10,028,202,014 BONDED DEBT LIMIT` (3.75% OF ASSESSED VALUE) (a) 376,057,576 LESS AMOUNT OF DEBT SUBJECT TO LIMIT: 37,788,499 LEGAJ_ BONDED DEBT MARGIN $338,269,077 Total net debt Total :Vet Debt Legal applicable to the limit Fiscal Debt Applicable to Debt as a percentage Year Limit Limit Margin of debt limit 2002 n/a $43,479,004 n/a n/a 2003 $ 260,849,301 44,914,000 $ 215,935,301 20.80% 2004 274,836,486 43,239,004 231,597,482 1&67% 2005 288,902,692 41,514,004 247,388,688 16.78% 2006 311,727,085 40,849, 107 270,877,978 15.08% 2007 337,021,287 39,217.501 297,803,786 13,17% 2008 357,440,434 37,537,161 319,903,273 1133% 2009 376.420,238 35,793,692 340,626,546 10.51% 2010 381,164,135 35,355,988 345,808,147 10.22% 2011 376,057,576 37,788,499 338,269,077 11,17% NOTE: (a) California Government Code, Section 43605 sets the debt limit at 15%. The Code section was enacted prior to the change in basing assessed value to fall market value when it was previously 25% of market value. Thus, the limit shown as 3.75% is one-fourth Source: California Municipal Statistics. Inc, and City of San Rafael's Management Service Department Note: Data not available for 2002 128 4.00 3.00 2.00 1.00 0.00 CITY OF SAN RAFAEL REVENUE BOND COVERAGE PARKING FACILITY LAST EIGHT FISCAL YEARS 2004 2005 2006 2007 2008 2009 2010 2011 -P— Coverage Debt Service Requirements Net Revenue Fiscal Gross Operating Available for Year Revenue (1) Expenses (2) Debt Service Principal Interest Total Coverage 2044 S 2,336,966 $1,498,740 S 838,22E - - - N/A 2005 2,632,588 1,964,713 667,875 - $ 431,958 $ 431,958 1.55 2006 3,069,915 1155,435 914,480 $ 150,000 344,441 494,441 1.85 2007 3,331,754 2,344,285 987,469 155,000 339,904 494,904 2.00 2008 4,089,112 2,692,08E 1,397,026 160,000 335,216 495,21E 2.82 2009 41425,813 2,980,083 1,445,730 165,000 330,379 495379 2.92 2010 4,262,082 3.343,680 918,402 170,000 325,285 495,285 1.85 2011 4,023,211 3,101,411 921,800 175,000 319,391 494,391 1.86 Notes: On March 26, 2003, the City Financing Authority issued lease revenue bonds for the design and construction of a new park (1) Includes all Parking Facility Operating Revenues and Non-operating Interest Revenue (2) Includes all Parking Facility Operating Expenses less Depreciation and Interest Source: City of San Rafael Annual Financial Statements 129 CITY OF SAN RAFAEL REDEVELOPMENT PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS 1999 RDA Tax Allocation Bonds (1) Funding Source: RDA tax increment revenues Fiscal Year Available Revenue Debt Service Requirements Principal Interest Total Coverage 2002 $1,499,475 $525,000 $974,445 $1,499,445 1,00 2003 1,499,600 550,000 949,600 1,499,600 L00 2004 1,497,881 575,000 922,881 1,497,881 1.00 2005 1,499,856 605,000 894,856 1,499,856 1,00 2006 1,495,525 630,000 865,525 1,495,525 1.00 2007 1,499,769 665,000 834,769 1,499,769 1.00 2008 1,497,469 695,000 802,469 1,497,469 1.00 2009 1,498,625 730,000 768,625 1,498,625 1.00 2010 1,255,830 765,000 490,830 1,255,830 1.00 2011 0 0 0 0 0 2002 RDA Tax Allocation Bonds Funding Source: RDA tax increment revenues Fiscal Year Available Revenue Debt Service Requirements Principal Interest Total Coverage 2002 NIA N/A NIA N/A N/A 2003 $2,069,768 $1,475,000 $ 594,768 $ 2,069,768 1.00 2004 2,069,425 1,100,000 969,425 2,069,425 1.00 2005 2,067,225 1,120,000 947,225 2,067,225 1.00 2006 2,069,575 1,145,000 924,575 2,069,575 1.00 2007 2,066,475 1,165,000 901,475 1066,475 1.00 2008 2,070,381 1,195,000 876,381 2,071,381 1.00 2009 2,070,150 1,235,000 835,150 2,070,150 1.00 2010 2,068,338 1,290,000 778,338 2,068,338 1.00 2011 2,068,938 1,350,000 718,938 2,068,938 1,00 2009 RDA Tax Allocation Bonds (1) Funding Source: RDA tax increment revenues Fiscal Available Debt Service Requirements Year Revenue Principal Interest Total Coverage 2010 $265,445 $ 265,445 $ 265,445 1.00 2011 1,494,725 $ 875,000 619,725 1,494,725 1.00 Notes: The 1999 RDA Tax Allocation Bonds, Current Interest Bonds portion were refunded by the issr 2009 RDA Tax Allocation Bonds in December 2009. The Capital Appreciation Bunds mature annually December 1 2018. No pledged revenue is required for 1999 Capital Appreciation Bonds at June 30, 201 Source: San Rafael Finance Department 130 CITY OF SAN RAFAEL ZVV4 LVW ZVV4 LUV3 ZUVD LW :1 ZVVO IVV'J /V IV ZV1 I 0 City Population as a % of Count), Population MIN .2 ME $35 W Per Capita Personal Income (2) $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 21102 2003 2004 2005 2006 2007 2008 2009 2010 2011 E Personal Income (2) (in thousands 0 Unemployment Rate (1/4) Source (1) State of California, Department of Finance - Demographic Research Unit, The data represents the City's population January 1, of each year. (2) Regional Economic Information System, Bureau of Economic Analysis, U.S. Department of Commerce. Data is Ma county-Nvide rate. (3) Employment Development Department, Labor Market Information Division, Data represents Marin county -wide rat, only and is not seasonally adjusted, 131 Personal Per Capita Average Marin city Fiscal city Income (2) Personal Unemployment County Population Year t2211!ation (i) _(m �thousands Income (2) Late (3) Population 0x'0 of County 2002 56,691 $2,110.465 $ 37,269 4.90% 250,078 2167010 2003 57,006 2,181,297 38,152 4.90% 249,808 21820'0 2004 57,182 2,282,733 39,991 4,40% 251,330 22.75% 2005 57,224 2,382,096 41,765 3.900/0 252,485 22.66% 2006 57,349 2,544,221 44,400 3.50010 253,341 2164010 2007 58,047 2,663,922 46,152 3.70% 255,982 2168% 2008 58,235 2,703,213 46,557 4M% 257,406 22.62% 2009 58,363 2,642,978 45,288 7.60% 258,618 22.57% 2010 584822 2,317,704 39,402 9M% 260,651 22.57% 2011 58,136 n/a n/a 9,60% 254,692 22,83010 Source (1) State of California, Department of Finance - Demographic Research Unit, The data represents the City's population January 1, of each year. (2) Regional Economic Information System, Bureau of Economic Analysis, U.S. Department of Commerce. Data is Ma county-Nvide rate. (3) Employment Development Department, Labor Market Information Division, Data represents Marin county -wide rat, only and is not seasonally adjusted, 131 CITY OF SAN RAFAEL PRINCIPAL EMPLOYERS FISCAL YEAR 2010-2011 Source: State of California, Employment Development Department, Labor Market Information Division San Francisco Business Times, 2011 Book of Lists Note: Total employment in the City of San Rafael as of June 2011 was 27,000 132 Percentage of Number of total employment Employer Employees in San Rafael Kaiser Permanente 1,330 4.93% Autodesk, Inc. 928 3.44% City of San Rafael 592 2.19% Comcast 619 2.29% Safeway 452 1.67% Macy's 450 1.67% Dominican University of California 336 1.24% MHN 350 1.30% Bradley Real Estate 350 1.30% Guide Dogs for the Blind 280 1.04% Totals 5,407 20.03% Source: State of California, Employment Development Department, Labor Market Information Division San Francisco Business Times, 2011 Book of Lists Note: Total employment in the City of San Rafael as of June 2011 was 27,000 132 ■ IN 300.00 250.00 200.00 150.00 100.00 50.00 0.00 CITY OF SAN RAFAEL UAMW �Pq- VM -;k LAST TEN FISCAL YEARS 2002 2002 2004 2005 2006 2007 2008 2009 2010 2011 El General Government * Public Works and Parks * Culture and Recreation IM Public Safety El Community Development/Redevelopment 2002 2002 2004 2005 2006 2007 2008 2009 2010 2011 Function General Government 39.20 41.73 49.27 47.02 53.71 59.38 59.88 58.88 56.88 54.35 Public Safety 203.03 203.03 201.63 193.13 188.86 189.00 186.00 183.00 165.00 166.00 Public Works and Parks 80.70 79.95 76.70 7180 74.80 76.80 78.80 78.80 60.80 62.80 Community Development Redevelopment 30.28 29,75 28.75 26.75 26.43 31.00 34.50 34.50 2635 26.75 Culture and Recreation 83.76 83.76 83.26 7933 77.49 80.22 85.90 85.90 83.49 89.82 Total 436.97 438.22 439.61 419.43 421.29 436.40 445.08 441.08 392.92 399.72 Source: City of San Rafael 133 CITY OF SAN RAFAEL OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS M 2002 2003 2004 2005 2006 2007 Function/Program Public safety: Fire: Inspection permit issued N/A NIA N/A N/A N/A 143 Police: Police calls for service N/A N/A NIA N/A N/A 43,480 Law violations: Part I crimes N/A N/A N/A N/A N/A 2,557 Physical arrests (adult and juvenile) N/A N/A NI/A NIA N/A 3,809 1'raffic violations N/A N/A NIA NIA N/A 5,197 Parking violations 15,468 26,308 30,946 39,421 33,610 36,228 Public works Street resurfacing (miles') (Eng- Div) N/A 1,20 5,770 6,80 1.08 N/A Potholes repaired (square miles) N/A N/A N/A VA N/A N/A Asphalt used for street repairs (tons) N/A N/A N/A N/A N/A N/A Culture and recreation: Recreation class participants 6,000 7,000 7,000 7,000 8,000 8,000 Items in collection (thousands) Library: Items in collection (thousands) 121.85 128,12 118.24 121,81 123.12 124.46 Total items borrowed (thousands) 336.57 338,60 33233 29930 333.15 359,41 'VVastewater Residential connections Commercial connections Other connections Average daily sewage treatment (millions of gallons) 6,976 6.976 6.976 6.976 6.976 6,976 Note- N/A denotes information not available. M Function/Program Public safety: Fire. Inspection permit issued Police: Police calls for service Law violations: Part I crimes Physical arrests (adult and juvenile) Traffic violations Parking violations Public works Street resurfacing , (miles) (Eng Div) Potholes repaired (square miles) Asphalt used for street repairs (tons) Culture and recreation: Recreation class participants Items in collection (thousands) Library: Items in collection (thousands) Total items borrowed (thousands) Wastewater Residential connections Commercial connections Other connections Average daily sewage treatment (millions of gallons) Note: N/A denotes information not available. 2008 2009 2010 2011 2177 196 307 294 43,488 42,227 42,227 39,512 2,314 2,352 2,352 2,180 4,182 4,48' 4,48' , 3,102 9.241 5,777 5,777 8,190 42,481 44,913 42,806 34,590 4.95 2.77 2.77 7.40 KIA N/A N/A N/A N/A N / �A N'/1A 112,6 8,000 8,000 9,524 9,000 NIA 124,40 151,88 158,30 N/A N/A 371.12 435.66 6,976 6,976 6.976 6.976 Function/Program Public safety: Fire stations Police stations Police Fleet Public works Miles of streets Street lights Parking District lights Traffic Signals Culture and recreation: Community services: City parks City parks acreage Playgrounds City trails Community gardens Communih, centers Senior centers Sports centers Performing arts centers Swimming pools Tennis courts Basketball Courts Baseball/softball diamonds Soccer"football fields Library: City Libraries Wastewater Miles of sanitarysewers Number of treatment plants ( 1) Source: City of San Rafael CITY OF SAN RAFAEL CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2002 2003 2004 2005 2006 2007 6 6 6 6 6 6 1 1 1 1 1 1 171 171 172 172 173 173 4,200 4,200 4,333 4,333 4,435 4,435 85 85 85 85 89 89 19 19 19 19 19 19 41 41 41 41 41 41 13 13 13 13 13 13 15 Is 15 15 15 20 2 2 2 2 1 1 4 4 4 4 4 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 to 1 10 1 to 1 10 1 10 1 10 5 5 5 5 5 5 5 5 5 5 5 5 2 1 2 1 2 t 2 1 2 1 2 1 176,90 178,40 179,15 179.15 179.15 179.15 51.40 1 5150 1 57.60 1 5760 1 57,60 1 57.60 1 136 Function/Program Public safety: Fire stations Police stations Police Fleet Public works Miles of streets Street lights Parking District lights Traffic Signals Culture and recreation: Community services: City parks City parks acreage Playgrounds City trails Community gardens Community centers Senior centers Sports centers Performing arts centers Swimming pools Tennis courts Basketball Courts Baseball/softball diamonds Soccer/football fields Library: City Libraries Wastewater Miles of sanitary sewers Number of treatment plants (1) Source: City of San Rafael 2008 2009 2010 2011 6 6 6 6 1 1 1 1 173 173 173 173 4,435 4,435 4,435 4,435 89 89 89 89 20 20 20 20 42 42 42 42 14 14 14 14 20 1 20 20 20 4 1 4 1 4 1 4 0 0 0 0 0 0 0 0 0 1 0 0 0 10 1 to 1 10 1 10 5 5 5 5 5 5 5 5 2 2 2 1 ? 2 179,15 179,15 179 179 57.60 1 57.60 1 58 1 58 1 137 This Page Left Intentionally Blank MAZE & ASSOCIATES ACCOUNTANCY CORPORATION `�47 Buskirk- Aa 1 S H A �­i ` asant Hi" hif ig, 9 4523 I& I 1� C X2 0-09, , FA3X(S;,, 936 0135 Count mxw' Honorable Mayor and Members of the City Council City of San Rafael, California We have applied the procedures below to the Appropriations Limitation Worksheet for the City of San Rafael for the year ended June 30, 2012. These procedures, which were suggested by the League of California Cities and presented in their Article XHM Appropriations Limitation Uniform Guidelines were performed solely to assist you in meeting the requirements of Section 1.5 of Article XUR3 of the California Constitution. This engagement to apply agreed-upon procedures was performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the specified users of this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. This report is intended for the information of management and the City Council; however, this Zn restriction is not intended to limit the distribution of this report, which is a matter of public record. The procedures you requested us to perform and our findings were as follows: A. We obtained the Appropriations Limitation Worksheet and determined that the 2011-2012 Appropriation Limit of $100,987,678 and annual adjustment factors were adopted by resolution of the City Council. There is a $3,890,000 increase due to Measure I. We also determined that the population and inflation options were, selected by a recorded vote of the City Council, B. We recomputed the 2011-2012 Current Appropriations Limit by multiplying the 2010-2011 Appropriations Limit by the annual adjustment factors and adding $3,890,000 of addition tax under the Measure I initiative passed by the citizens of the City of San Rafael in November 2010. C. For the Appropriations Limitation Worksheet, we agreed the Per Capita Income, County and City Population Factors to California State Department of Finance Worksheets. These agreed-upon procedures are substantially less in scope than an audit, the objective of which is the expression of an opinion on the Worksheet. Accordingly, we do not express such an opinion. I -lad we performed additional procedures or had we made an audit of the Appropriations Limitation Worksheet and the other completed worksheets described above- matters might have come to our attention, which would have been reported to you. 1 CA October 24, 2011 A Proressdun_�"' Corsicna6cn CITY OF SAN RAFAEL MEMORAN-DU­,N'I ON INTERNAL CONTROL AND REQUIRED COTMMUNICATIONS FOR ME YEAR ENDED JU-TN'E 30, 2011 This Page Left Intentionally Blank CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL AND REQUIRED COMMUNICATIONS For the Year Ended June 3U,2O11 Table of Contents Memorandum omInternal Control .................................................................................. ................. l Schedule ofOther Matters ............................................................. ..................... ....... .......... 3 Schedule of Prior Year Other Matters .................................................. ..................... ............. 7 Financial Statement Audit Assurance .............................. ........ ..... —................ .... --- ........ p Other Information Included with the Audited Financial Statements ........ ............... .......... 9 AccountingPolicies .... ....... ................. ............................................... —............ —............. D Unusual Transactions, Controversial or Emerging Areas ................................... ............... lO Estimates......................................................... ....................................................................... lO Disagreements with Management ............................................. ........................................... O RetentionIssues .......... ..................... ................................................ ---........... ............... l8 Ddfi"oltiea............................ .................................. ............................... .................... —.... lO AuditAdjustments ....................................................................................................... This Page Left Intentionally Blank MAZE & ASSOCIATES ACCCOUNTANCY CORPORATION AIIEMOR-NNDUM ON LNTERINNAL CONTROL 347-6 Svskh-k A 2 1 9 JI -IB!, i s>'a X (92�.,, 930-0 135 October 218, 2011 To the City Council of the City of San Rafael San Rafael, California We have audited the financial statements of the City of San Rafael for the year ended June 30, 2011, and have issued our report thereon dated October 28, 2011, In planning and performing our audit of the financial statements of the City of San Rafael as of and for the year ended June 30, 2011, in accordance with auditing standards generally accepted in the United States of America, we considered the City's internal control over financial reporting (internal control' as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements Will not be prevented, or detected and corrected on a timely basis. We did not identify any deficiencies in internal control that we consider to be material weaknesses, as defined above. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and, therefore, there can be no assurance that all such deficiencies have been identified. In addition, because of inherent limitations in internal control, including the possibility of management override of controls, misstatements due to errors or fraud may occur and not be detected by such controls. Included in the Schedule of Other Matters are recommendations not meeting the above definitions that we believe to be of potential benefit to the City. The City's written responses included in this report have not been subjected to the auditing procedures applied in the audit of the Financial statements and, accordingly, we express no opinion on them This communication is intended solely for the information and use of management, City Council, others within the City, and agencies and pass-through, entities requiring compliance with generally accepted Z� C� C, government auditing standards. and is not intended to be and should not be used by anyone other than these specified parties. , -0-- b LAAA96 This Page Left Intentionally Blank CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS 2011-01 -- Enforceable Obligations Payment Schedule California Health and Safety Code Section 34169(8)(1) requires the redevelopment agency to: ".....adopt an Enforceable Obligation Payment Schedule that lists all of the obligations that are enforceable within the meaning of subdivision (d) of Section 34167 which includes the following information about each obligation: (4) The project name associated with the obligation. (B) The payee. (C) A short description of the nature qf the work, product, service, facility, or other thing of value for which payment is to he made. (D) The amount of payments obligated to be made, by month, through December 2011. The Enforceable Obligation Payment Schedule (EOPS) adopted by the Agency on September 6, 2011, listed two obligations which show "various" as payees. These obligations amounted to $23,470 for maintenance of RDA offices and $44,130 for legal services. We recommend that the Agency amend the FOPS to include payee information on the Schedule, Management Response: Agency staff will update the FOPS to reflect the payee information. 2011-02 -- Year -End Adjustment Assistance On July 1, 2010, the City issued the 2010 Taxable Pension Obligation Bonds in the amount of $4,490,000 to preimid a portion of the obligations of the City to the Marin County Employees' Retirement Association (MCERA), The bond proceeds were deposited in a separate account with MCERA. Every pay period, MCER-.A, drew down the City's actuarial required contributions to MCERA from this account. During the year, while the activities in this account were monitored by the City, its corresponding balance in the City's general ledger was not adjusted to reflect the activities. During the year-end audit, City staff brought this item to our attention and requested our assistance in recording the appropriate entries. The balance in this account as of June 30, 2011 was $229,170. Management Response: The department's practice in accounting for funds held by a fiscal agent is to monitor funds during the fiscal year and to post a final general ledger reconciliation at year end. Due to unique aspects of this bond, staff delayed the year-end general ledger reconciliation in order to confirm the appropriate entries with the auditors. 2011-03 -- Information System Review We conducted an Information Systems Review with Our audit which encompassed the financial information system and the network environment that houses it. Currently, there are no Information Technology standards to which local governments are required to conform. Indeed there are a wide varier} of informal guidelines and suggested controls from many different organizations which local governments can use to implement appropriate controls to ensure adequate security over information technology, Our Information Technology staff have reviewed these informal guidelines and concluded that the certification and accreditation framework developed by the National Institute of Standards and 'I echnology (NIST) for the Federal Information Security Management CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL Act (FISMA) are the most appropriate for local government. NIST and FISTMA represent the minimum security requirements for federal government agencies information systems. NIST recommends these for state and local governments. Our procedures included performing an external network scan based on NIST criteria and in determining that internal control provides for: • Internet access defenses including hacker prevention., detection and deterrent systems • Security of data from physical or network access • Adequately protecting data from unauthorized internal access • Reasonable measures to ensure continuation of service 0 Information systems risk management We noted a few areas during our Information System Review that could be improved, A summary of these recommendations which we believe are "best practices", are as follows: Payment Card Industry Compliance The City is not in compliance with the Payment Card Industry Data Sccurity, Standard (PCI -DSS), Any organization that processes credit cards is required to comply with PCI -DSS, even if the processing is oritsourced. Failure to meet compliance requirements results in higher transaction fees and liability if a security breach is found. Because the City accepts credit cards as a form of payment, the City must be compliant with the applicable controls. A udit/Event Logging The City does not appear to have audit logs on the financial application server, such that any change, addition or deletion of user accounts within the application are tracked and monitored, The City should have audiCevent logs of any addition, deletion or change in financial application user accounts and that log should be monitored by someone without the rights to effect such changes, In addition, any administrative access such as upgrades or application modifications by IT personnel, outside consultants or vendors should also be logged and reviewed.` Password 11anagement on the Tinancial Application The City does not enforce regular password changes or require the use of complex passwords for users on the financial application. There should be a 'written policy for the regular changing of financial system account passwords and the use of complex passwords for users. An automatic enforcement of this policy would be optimum, There should be enforced password complexity for the financial system to reduce the risks of easy guessing and brute force attacks against the passwords. Required use of unique alpha numeric and special character combinations along with a password length of at least 8 characters is optimum. There should be a policy that requires a limit on repeating financial system account passwords. This will stop users from circumventing password change controls. An automatic enforcement of this policy would be optimum. Users should not share passwords with other users nor use password easily guessed by other users. "State, 'local, and tribal governments, as Nsell as private sector or.garrzatior,,s are encouraged to --on-sider using these V-1didelines, as appropriate." NIST SP 800-3-1, Rev I pg I I - For more info: -ation on AA;T/Event log mara_-,-,--,ent see NIST SP 800-92 Guidc w Con-ipu;�er Secarity Log -1%1a--,.age -rktnL CITY OF SAN RAFAEL N1FM0R,1N­DIJTTNI ON INTERNAL CONTROL Pass -word J14anagetnent-for Operating Systems The City does not enforce regular password changes or require the use of complex passwords for users. There should be a writ -ten policy for the regular changing of operating system account passwords and the use of complex passwords for users. An automatic enforcement of this policy would be optimum. There should be enforced password complexity for the operating system to reduce the risks of easy guessing and brute force attacks against the passwords. Required use of unique alpha numeric and special character combinations along with a password length of at least 8 characters is optimum. There should be a policy that requires a lit -nit on repeating operating system account passwords. This will stop users from circumventing password change controls. An automatic enforcement of this policy would be optimum. Users should not share passwords with other users nor use password easily guessed by other users. Session Locks The City does not have session locks turned on for the financial application or the workstation operating systems. A session lock is a temporary lockout of the operating system or financial application when a user stops work and typically moves away from the immediate physical vicinity of the computer. Generally, employees may leave their workstation for lunch or break and not log off or log out of the application. This leaves the operating system or financial application open and available to any passerby. Any person with physical access would be able to perform any tasks the absent user has privileges or rights to do. At the very least workstations should be set to lock out the workstation after a period of inactivity. Best practice would be to have both the operating system and financial application have lockouts after a period of inactivity, Management Response: Payment Card Industry Compliance Our IT Department along with our consultant from MarinIT continues to work diligently installing all the updates needed to make our network PCI -DSS compliant, AuditlEvent Logging The City's Eden Financial System has an audit history for each application, Password I�Iamgeinenl on the Financial Application Password Management for Operating Systems Session Locks The IT Division has begun implementing various technical changes to the City's computer network in order to bolster security. We are currently in the process of implementing changes to address issues identified in previous audit reports as high risk, especially as they pertain to PCI compliance. We will then continue to address other, lower priority, potential security issues, Additionally, IT has begun addressing physical security of our communications and computer equipment by initiating inventory control of all City owned devices. Our next plan is to work on addressing access control and user management issues. This Page Left 1p.tentionally Blank CITY OF SAN, RAFAEL MEMORANDUM ON LNINTERNAL CONTROL SCHEDULE OF PRIOR YEAR OTHER MATTERS 2010-01 - Budgets and Cash Balances In current year, the City's General Fund budget and liquidity remains a top priority. As of June 30. 1010, General Fund available fund balances amounted to $1.4 million. This amount represents ten days of general fund expenditures, a very low level of reserves. During this year's audit, we reviewed the City's financial condition and satisfied ourselves that the City had sufficient resources available that it could continue as a going concern through June 30, 2010, Continued deficit spending reduces the likelihood that the City will be able to continue as a going concern, meaning the City is able to pay its bills on time. With our next audit we will again be required to review the City's financial condition and determine the likelihood of the City's status as a going concern. Actual expenditures for fiscal year 2009-10 totaled $52.7 million and exceeded revenues by $835 thousand, compared to fiscal year 2008-09 expenditures of $56.5 million which exceeded that year's revenues by $21 million. While we acknowledge the City's effort in taking steps in cutting down expenditures, we recommend the City to continue to work toward a balanced budget, meaning current year revenues are sufficient to pay for current year expenditures. Balancing the budget should continue to be the top priority. Secondarily, close management and comparison of actual activities against the budget should be continued to ensure further costs reductions are made as needed. Lastly, the City must continue to monitor its cash and investments balance in order to ensure that cash balance, needed for the "dry spell" and to finance cash flows, is maintained for the overall City. Management Response: The City's financial condition continues to be a top priority. Significant cost cutting measures occurred in January 2010 which included layoffs, eliminations of vacant positions, and reductions in operating expenditures, Full year savings will occur in fiscal year 2010-2011. To help maintain its cash flow, the City issued a $6.08 million 'Fax and Revenue Anticipation Note in July 2010. Also, to help achieve some short term relief on the City's increasing pension costs, the City issued $4.49 million in Pension Obligation Bonds (POB), The POB will generate revenues to off -set the V�l pension increases for fiscal year 2010-2011 and one or more additional year. Current Year Status: The City continues to make sound financial management its number one priority. Over the past several years, there has been continuous cost cutting measures implemented including layoffs, elimination of vacant positions, and reductions in operating expenditures. Most recently, the City's employee groups all bargained a two year contract for 2011-2013 in which they agreed to an across-the-board 4% reduction in total compensation. As a result of these major efforts, the City was able to end FY 2011-12 with a General Fund Balance of $6,785,511, a reduction of only 516,284 from the previous year. After many years of declining fund balances, this reflects a significant step toward achieving financial stability. Further, in Its 2011-12 General Fund Budget.. the City was able to adopt a balanced budget in which current year revenues are adequate to cover current expenditures. This provides further confirmation that the City has taken the first steps on the path to restoring its financial health, This Page Left Intentionally Blank MAZE & ASSOCIATES ACCOUNTANCY CORPORATION REQUIRED COMINfuNICATIONS 314 -16-f Husklr!,-i A ve, e 2 -15 Hill, Californi 6W,-, asard 325) 9-30-090 2 F, X (9,-25�j 3 -013 m October 28, 2011 To the City Council of the City of San Rafael San Rafael, California We have audited the financial statements of the City of San Rafael as of and for the year ended June 30, 2011, and have issued our report thereon dated October 28, 2011. Professional standards require that we advise you of the following matters relating to our audit, Financial Statement Audit Assurance: Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit in accordance with generally accepted auditing standards does not provide absolute assurance about, or guarantee the accuracy of, the financial statements. Because of the concept of reasonable assurance and because we did not perform a detailed examination of all transactions, there is an inherent risk that material errors, fraud, or illegal acts may exist and not be detected by us, Other Information Included with the Audited Financial Statements: Pursuant to professional standards, our responsibility as auditors for other information in documents containing the City's audited financial statements does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. Our responsibility also includes communicating to you any information that we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements. This other information and the extent of our procedures are explained in our audit report. Accounting Policies: Management has the responsibility to select and use appropriate accounting, policies. A summary of the significant accounting policies adopted by the City is included in Note I to the financial statements. During fiscal year 2010-11, there have been no initial selections of accounting policies and no changes in significant accounting policies. However, the City adopted the provisions of the following GASB Statement during the year: GASB Statement No. 54 — Fund Balance Reportink, and Governmental Fund Tvpe pe I finitions -- This Statement established fund balance classifications that comprise a hierarchy, based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds, The City's financial statements, as well as Note 9 to the financial statements, were modified to include required disclosures. GASB Statement 59 -- Financial Instruments Omnibus -- The objective of this Statement is to update and improve existing standards regarding financial reporting and disclosure requirements of certain financial instruments and external investment pools for which significant issues have been identified in practice. This is a technical clean up pronouncement that had no material impact to the financial statements. I Pror�-Ssfoi,,af Cor, o"'ap,ioa 9 Unusual Transactions, Controversial or Emerging Areas: No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant ificant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Note 17B to the financial 4-1 statements discussed proposed dissolution of redevelopment agencies in California. Estimates: Accounting estimates are an integral part of the financial statements prepared by management and are based on management's current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting, estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management's current judgments. The most sensitive accounting, estimates affecting the financial statements are depreciation, compensated absences and fair values of Investments. Management's estimate of the depreciation., is based on useful lives determined by management. These lives have been determined by management based on the expected useful fife of assets as disclosed in Note 1. We evaluated the key factors and assumptions used to develop the depreciation estimate and determined that it is reasonable in relation to the basic financial statements taken as a whole. Accrued compensated absences.- are estimated using accumulated unpaid leave hours and hourly pay rates in effect at the end of the fiscal year. We evaluated the key factors and assumptions used to develop the accrued compensated absences and determined that it is reasonable in relation to the basic financial statements taken as a while, Estimated Fair Value of Investments: As of June 30, 2011, the primary government of the City, held approximately $44 million of cash and investments, as measured by fair value. Fair value is essentially market pricing in effect as of June 30, 2011. These fair values are not required to be adjusted for changes in general market conditions occurring subsequent to June 30, -1011, Disagreements with Management: For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the City's financial Z:� - statements or the auditor's report. No such disagreements arose during the course of the audit. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Z, I Retention Issues: We did not discuss any major issues with management regarding the application of accounting principles and auditing standards that resulted in a condition to our retention as the City's auditors. Difficulties: We encountered no serious difficulties in dealing with management relating to the Z, performance of the audit. a Audit Adjustments: For purposes of this communication, professional standards define an audit adjustment, whether or not recorded by the City, as a proposed correction of the financial statements that, in our judgment, may not have been detected except through the audit procedures performed. These adjustments may include those proposed by us but not recorded by the City that Could potentially cause future financial statements to be materially misstated, even though we have concluded that the adjustments are not material to the current financial statements. We did not propose any audit adjustments that, in out judgment, could have a significant effect, either individually or in the aggregate, on the City's financial reporting process. Uncorrected Misstatements: Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. We have no such misstatements to report to the audit committee, This report is intended solely for the information and use of the City Council, its committees, and management and is not intended to be and should not be used by anyone other than these specified parties. M This Page Left Intentionally Blank SAN RAFAEL CITY COUNCIL INSTRUCTIONS: USE THIS FORM WITH EACH SUBMITTAL OF A CONTRACT, AGREEMENT, ORDINANCE OR RESOLUTION BEFORE APPROVAL BY COUNCIL / AGENCY. FROM: ffla•=: uTmlluM DATE: Janet Pendoley Finance Department December 15, 2011 SRRA / SRCC AGENDA ITEM NO DATE OF MEETING: 12/19/11 fwF TITLE OF DOCUMENT: FY 2010-2011 ANNUAL FINANCIAL AUDIT REPORT; THE GANN APPROPRIATION LIMIT REPORT, AND THE MEMORANDUM ON INTERNAL CONTROL i Depa meat Head (signature) (LOWER HALF OF FORM FOR APPROVALS ONLY) APPROVED AS COUNCIL / AGENCY AGENDA ITEM: City Manager (signature) NOT signa re) NOT APPROVED City Attorney (signature)