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City of Santa Cruz, California
COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2007
Cover and Photo by Natalia Duarte
City of Santa Cruz State of California
Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2007
Prepared by Sandra Benoit Cheryl Fyfe Tori Hannah Kathryn Mintz Ralph Reader
Raymond Chin Ray Galindo
Kim Wigley Shelley Horrow Natalia Duarte
City of Santa Cruz Comprehensive Annual Financial Report For the year ended June 30, 2007 Table of Contents
INTRODUCTORY SECTION
Page
Transmittal Letter ................................................................................................................................................... i GFOA Certificate of Achievement for Excellence in Financial Reporting.................................................... xi Map of Santa Cruz...............................................................................................................................................xii Organization Chart ............................................................................................................................................xiii Directory of City Officials of the City of Santa Cruz.....................................................................................xiv FINANCIAL SECTION Independent Auditors’ Report........................................................................................................................... 1 Management’s Discussion and Analysis ......................................................................................................... 3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets..........................................................................................................................22 Statement of Activities and Changes in Net Assets ...........................................................................24 Fund Financial Statements: Government Fund Financial Statements: Balance Sheet .....................................................................................................................................30 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets................................................................31 Statement of Revenues, Expenditures and Changes in Fund Balances ....................................32 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets ..............................................................33 Proprietary Fund Financial Statements: Statement of Net Assets ...................................................................................................................36 Statement of Revenues, Expenses and Changes in Net Assets ..................................................40 Statement of Cash Flows..................................................................................................................42 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Assets .................................................................................................48 Statement of Changes in Fiduciary Net Assets.............................................................................49 Index to Notes to Basic Financial Statements ............................................................................................51 Notes to Basic Financial Statements ............................................................................................................53
City of Santa Cruz Comprehensive Annual Financial Report For the year ended June 30, 2007 Table of Contents, Continued
FINANCIAL SECTION, Continued
Page
Required Supplementary Information: Budgetary Information....................................................................................................................................98 Budgetary Comparison Schedule – General Fund ...............................................................................102 Reconciliation of Net Changes in Fund Balances – Budgetary to GAAP Basis: General Fund .......................................................................................................................................103 Budgetary Comparison Schedule – Redevelopment Agency ............................................................104 Reconciliation of Net Changes in Fund Balances – Budgetary to GAAP Basis: Redevelopment Agency .....................................................................................................................105 Defined Benefit Pension Plan .........................................................................................................................107 Supplementary Information: Non-Major Governmental Funds: Combining Balance Sheet.........................................................................................................................112 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................114 Schedule of Budget and Actual Revenues – General Fund .................................................................116 Schedule of Budget and Actual Expenditures and Other Financing Uses for Legally Adopted Appropriations by Department – General Fund .............................................118 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Police Special Revenue Fund.............................................................................................................120 State Highway Special Revenue Fund .............................................................................................121 Traffic Impact Fee Fund .....................................................................................................................122 Parks and Recreation Fund................................................................................................................123 Housing and Community Development Fund...............................................................................124 Transportation Development Act.....................................................................................................125 General Obligation Bond Debt Service ............................................................................................126 General Capital Improvement Projects............................................................................................127 Reconciliation of Net Changes in Fund Balances – Budgetary to GAAP Basis: Non-Major Governmental Funds .....................................................................................................128 Internal Service Funds: Combining Statement of Net Assets.......................................................................................................130 Combining Statement of Activities and Changes in Net Assets.........................................................131 Combining Statement of Cash Flows .....................................................................................................132
City of Santa Cruz Comprehensive Annual Financial Report For the year ended June 30, 2007 Table of Contents, Continued
FINANCIAL SECTION, Continued
Page
Private-Purpose Trust Funds: Combining Statement of Fiduciary Net Assets .....................................................................................134 Combining Statement of Changes in Fiduciary ....................................................................................135 Agency Funds: Combining Statement of Fiduciary Net Assets .....................................................................................138 Combining Statement of Changes in Assets and Liabilities................................................................139 STATISTICAL SECTION (Unaudited) Net Assets by Component..................................................................................................................................... 143 Changes in Net Assets ........................................................................................................................................... 144 Fund Balances of Governmental Funds .............................................................................................................. 146 Changes in Fund Balances of Governmental Funds ......................................................................................... 149 General Governmental Tax Revenue by Source ................................................................................................ 150 General Fund Revenue by Source ........................................................................................................................ 152 Assessed Value of Taxable Property.................................................................................................................... 153 Direct and Overlapping Property Tax Rates ...................................................................................................... 154 Principal Property Tax Owners ............................................................................................................................ 155 Property Tax Levies and Collections ................................................................................................................... 157 Ratios of Outstanding Debt by Type .................................................................................................................. 158 Ratios of General Bonded Debt Outstanding ..................................................................................................... 160 Computation of Direct and Overlapping Debt .................................................................................................. 161 Legal Debt Margin Information ........................................................................................................................... 162 Pledged-Revenue Coverage.................................................................................................................................. 164 Demographics and Economic Statistics............................................................................................................... 166 Principal Employers............................................................................................................................................... 167 Number of City Employees by Department....................................................................................................... 168 Operating Indicators by Function ........................................................................................................................ 169 Capital Asset Statistics by Function..................................................................................................................... 170
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809 Center Street, Room 8, Santa Cruz, CA 95060 831 420-5052 Fax: 831 420-5051 www.ci.santa-cruz.ca.us
November 30, 2007
To the Honorable Mayor, Members of the City Council and Citizens of the City of Santa Cruz, California: Comprehensive Annual Financial Report In accordance with the City Charter, the Comprehensive Annual Financial Report of the City of Santa Cruz for the fiscal year ended June 30, 2007, is submitted for your information and review. Various financing covenants and regulations associated with restricted funding sources also require the City of Santa Cruz, California (City) to publish a complete set of financial statements presented in conformance with generally accepted accounting principles (GAAP) and audited by a firm of licensed certified public accountants. Pursuant to the requirements noted above, we hereby issue the Comprehensive Annual Financial Report of the City of Santa Cruz, California for the fiscal year ended June 30, 2007. This report consists of management's representations concerning the finances of the City of Santa Cruz. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Santa Cruz has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the City of Santa Cruz's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Santa Cruz's comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Caporicci & Larson, a firm of licensed certified public accountants, has audited the City of Santa Cruz's financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Santa Cruz for the fiscal year ended June 30, 2007, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial presentation. The independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Santa Cruz’s financial statements for the fiscal year ended June 30, 2007, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report.
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The independent audit of the financial statements of the City of Santa Cruz was part of a broader, federally mandated "Single Audit" designed to meet the needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of Santa Cruz’s separately issued Single Audit Report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Santa Cruz's MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City of Santa Cruz, incorporated in 1866, is located on the northern part of the Monterey Bay approximately 74 miles south of San Francisco and 30 miles from San Jose. The City of Santa Cruz was first founded in 1769 by the Spanish explorer Don Gaspar de Portola, who, along with Father Junipero Serra, began land based settlement in the area. Santa Cruz is the county seat for the County of Santa Cruz, and is a charter city which operates under the provisions of a voter-approved charter. The City has an area of 12 square miles and an estimated population of 57,553 as of January 2007. Santa Cruz is the home to the University of California, Santa Cruz (UCSC) which first opened in 1965 and has a current enrollment of over 15,000 students. UCSC has received worldwide recognition in the past few years for its high quality academic programs and sponsored research programs such as the California Institute for Quantitative Biomedical Research (QB3), the Center for Information Technology Research in the Interest of Society (CITRIS), and the Laboratory for Adaptive Optics. The area’s major industries include agriculture, tourism, manufacturing, food processing, and technology. Like other cities in California, the City of Santa Cruz has limited ability to set tax rates. The State Constitution (Prop 13) establishes a maximum rate for property tax and limits the growth of assessed value. Prop 13 sets the limit for increases of the property tax rate to 2% per year, but upon sale, full value becomes the assessed value. The property tax collected is allocated among the jurisdictions in the City's tax rate areas based on criteria established by the State Legislature. The City receives 21% of the property tax assessed against property within the City limits. The rates and tax base of two of the City's other major general revenues, sales and use tax and motor vehicle in lieu fees (VLF), are also controlled by the Legislature. Changes to existing local taxes and any new taxes require voter approval. Taxes used for general purposes are subject to approval by a simple majority of voters while taxes levied for specific purposes require a twothirds majority of voters. Assessments must be approved by a two-thirds vote with voting rights apportioned based on the amount of the assessment. In addition, fees for facilities and services are subject to requirements that they not be set at levels that exceed the reasonable costs of providing services. As a result, fund balances generated by differences between fee revenue and related expense are retained and designated for services and facilities that benefit fee payers. The City of Santa Cruz has operated under the council-manager form of government since its incorporation in 1866. Policy-making and legislative authority are vested in a seven member governing council consisting of the Mayor and six Council Members. The City Council is responsible, among other things, for passing ordinances, adopting the budget, approving nominees to commissions, and hiring the City Manager, City Clerk and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City and for appointing the heads of the various departments. The Council is elected on a non-partisan basis. Council Members serve four-year ii
staggered terms, with either three or four Council Members elected every two years. The Mayor is selected by a majority of the City Council and serves a one year term. The Mayor and Council Members are elected at large, and all are subject to two term limits. The City of Santa Cruz provides a broad range of services including police and fire protection, construction and maintenance of streets, parks, flood control and other infrastructure, a wharf facility, recreational and cultural activities including a performing arts center and human services programs. It also operates municipal utilities for Water, Wastewater, Stormwater, and Refuse in addition to enterprise operations for parking facilities and a golf course. The water utility provides water service beyond the municipal boundaries and has a total service population of approximately 90,000. Certain infrastructure construction and community development activities are provided through a legally separate Redevelopment Agency. The Council sits as the Redevelopment Agency's board, and the Agency functions as a department of the City. Therefore, the City of Santa Cruz Redevelopment Agency has been included as an integral part of the City of Santa Cruz’s financial statements. Many major public services delivered within the City's boundaries, including education, and public transportation are provided by other agencies. The City of Santa Cruz is not financially accountable for the operations of the franchisees or these government agencies. As required by the City Charter, an annual budget is adopted by the City Council no later than the first regular meeting in July for the fiscal year beginning July first. As part of the budget process, all City departments submit budget requests for the next fiscal year. These requests are reviewed, and a final City Manager recommended budget showing estimated revenues and expenditures of the City is prepared. This proposed budget is transmitted to the City Council and made available to the public for review. Study sessions and a public hearing are conducted before final adoption of the budget by the City Council. The City Manager is authorized to approve appropriation transfers within any department up to a specified amount; however, any new appropriation or appropriation transfer between departments requires approval by the City Council. Several supplemental appropriations were necessary during the year and are reflected in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at the department level. The Council reviews budget results at the mid-year review and at budget adoption. Redevelopment budgets are adopted annually along with an annual report. The ongoing review and long range planning focus for financial management provides numerous opportunities to identify and respond to changes in revenues and expenditures and in community priorities. Factors Affecting Financial Condition We think that the information presented in the financial statements is best understood when it is considered from the broader perspective of the context within which the City of Santa Cruz operates. Economic Conditions and Outlook The City of Santa Cruz’s economic growth began to slow during the FY 2002 fiscal year and declined significantly through FY 2004. Tax revenues have shown steady positive growth for the last 10 years. The recent improvements in the local economy are being offset by significant labor cost increases and have resulted in projecting minimal increases in fund balance for future years. The local economy is linked to a large degree to the economy of the nearby Silicon Valley region, whose growth continues to improve. Over the last four year period, ending with fiscal year 2007, there has been substantial growth in assessed value of real property. The assessed value is approximately $6.2 billion which is an increase of $.5 billion or 8.7% increase over FY 2006. Property Tax revenues are up $2.1 million or 11.6% over the previous year. iii
Property tax revenues have increased 7% or more every year for the past 10 years, the dollar increase in 10 years is $10.9 million or 116.1%. Property values are expected to hold steady over the next few years, and taxes are expected to continue to increase due to the turnover of Prop 13 homes which will become fully taxable. An important event affecting City revenues took place in August 2005. At a special election called by the City Council, voters approved, by a 58% majority, continuation of a franchise tax on municipal utilities. This tax was previously charged as a type of fee which had been deemed invalid in recent court cases without voter approval. Another significant event that took place in recent years was the approval of a ¼ cent transactions and use tax by the voters. On October 8, 2003, the California Governor approved SB 566 which authorized cities to seek voter approval to levy a transactions and use tax in multiples of 0.25%. City Council authorized submitting Measure F, the ¼ cent sales tax measure, to the voters in March 2003. This is a five-year general tax which was approved by a 69% majority and is effective July 1, 2007. In November 2007, the voters approved Measure H, making the Measure F ¼ cent sales tax permanent and approving an additional ¼ cent sales tax to become effective April 1, 2007. Measure H is a Transaction and Use Tax and is not tied to site of the sale. The Measure H tax went into effect April 1, 2007, and the first quarter returns were 10% above original estimates, due mostly to the improvements in the local economy. The total Sales Tax (including the transaction tax) rate for Santa Cruz is 8.5%. Historical Trend Information Property Tax The historical trend for property tax has been very positive showing substantial growth given the assessed value of property is approximately $6.2 billion with growth in this year of 8.7%. Property Tax revenues are up $2.1 million or 11.6% over the previous year.
CITY OF SANTA CRUZ PROPERTY TAX In $ Millions 25.0
20.0
15.0
10.0
5.0
FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07
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Sales & Use Tax, Local Transactions and Use Tax and Supplemental Property Tax In-Lieu of Sales Tax Although sales tax revenues have consistently trended up over the past 10 years, beginning in FY06, there is significant upward movement, due to improvements in the local economy and increases in tourism. FY 07 was the 100th anniversary of the Santa Cruz Boardwalk; the celebration brought large numbers of visitors to the City. Sales tax increased $1.1 million or 9.4% in FY 07 over FY 06.
CITY OF SANTA CRUZ SALES TAX In $ Millions 14.0 12.0 10.0 8.0 6.0 4.0 2.0 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07
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Transient Occupancy Tax Transient Occupancy Tax (TOT) declined after 2001, initial declines were related to September 11th and the resulting lack of tourists. However, in Fiscal Year 02, The University of California acquired the Holiday Inn on a 10 year lease to use as a dormitory. This reduced the rooms available to pay TOT by 170. There have been no new hotels to make up for the reduction in rooms; however, rates have increased and TOT is again trending up. The Coast Hotel, the City’s major upscale hotel is in process of a remodel which will significantly upgrade the interior of the hotel. Their intention is to increase rates when the remodel is complete.
CITY OF SANTA CRUZ TRANSIENT OCCUPANY TAX In $ Millions 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07
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Utility Users Tax The utility users tax is the third largest revenue source for the City, coming after property tax and sales tax. The utility users tax is comprised of a tax on eight utilities; electric, wired telecom, wireless telecom, natural gas, cable, water, wastewater, and refuse (the last three being municipal utilities). The rate for the tax is 7% and hasn’t changed since October 1991. Clarifications of how the tax is applied were implemented in 1993 and 1994. Modest increases over the last three years can be attributed to a number of factors. There have been declines in electric and wired telecom while wireless telecom, gas, and cable have increased. The most significant factor for the rise in overall revenues point to the Water, Wastewater, and Refuse municipal utilities and the increase tax revenues due to recent customer rate increases.
CITY OF SANTA CRUZ UTILITY USERS TAX In $ Millions 8.4 8.2 8.0 7.8 7.6 7.4 7.2 7.0 6.8 6.6 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07
Risk management. The City of Santa Cruz uses a program of self-insurance for workers’ compensation and general liability claims, and employs a professional risk manager, supplemented by a professional claim administration firm, to minimize losses. The City is self-insured for workers' compensation up to $500,000 per occurrence. Santa Cruz participates in a multi-agency joint powers authority to provide excess insurance coverage for liability coverage. The joint powers authority and the City rely on estimates prepared by professional actuaries to set aside funds adequate to meet potential future losses. Excess coverage purchased through the joint powers authority covers claims in excess of $1,000,000 for general liability claims. As reflected in the financial statements, the Risk Management internal service fund had deficit net assets as of June 30, 2007, of $2.9 million, an improvement of $1.4 due to lower actual claims reducing the actuarial liabilities.
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Health care costs. The City contracts with CalPERS for employee health care coverage. program, employer premiums increased: • • •
Under this
15.2 % in FY 05 9.4% in FY 06 12.5% in FY 07
Expected increases for FY 08 are 8.4%. PERS manages rates to stay under the overall market due to their size and therefore the ability to affect rates. State budget. California faced budget deficits in previous years. noteworthy changes in state/local finance law. •
This imbalance created a number of
The “Triple Flip” In FY 04, the State of California issued State Deficit Reduction bonds under Proposition 57. Wall Street wanted a dedicated revenue stream. The State of California then devised a method to secure the dedicated revenue stream called the “Triple Flip”. 1. The State would take 25% of the local government 1% sales tax (Cities and Counties). This is to continue for nine (9) years, beginning in FY 05. 2. In January (6 months into the fiscal year), the State would require the Counties to take property tax which was earmarked for schools and pay back the first 6 months of the sales tax takeaway to the local governments. The State will then have the counties pay the estimated next 6 months in May. The difference between the estimated and actual sales tax in one year will be corrected in the next year payments. 3. Then the State, using State General Fund monies, would pay back the schools. The Sales Tax taken by the State in FY 06 was $2.3 million and it was repaid by the County in the form of “Property Tax in Lieu of Sales Tax”. Santa Cruz County pays the City in December and April our estimated 6 months payments. Beginning in FY07, the County now charges the City an administrative fee on this repayment of sales tax, The amount was 100 thousand dollars.
•
VLF-Property Tax Swap for FY 07 was $3.8 million. In 1999, the state began reducing the vehicle license fee (VLF) rate charged to vehicle owners, and backfilling city and county revenue losses from this tax reduction with state subventions. The FY 2005 state budget package permanently replaced the VLF backfill by shifting an equal amount of K-14 property taxes to cities and counties. Increased state aid offsets K-14 school district revenue losses.
•
FY 05 Property Tax Shift. The FY 05 state budget package included a $1.3 billion shift of property taxes (called ERAF III) from noneducational local agencies (cities, counties, special districts, and redevelopment agencies) to K-14 school districts. Unlike the two permanent property tax shifts enacted in the 1990’s, this tax shift sunseted in FY 07.
•
Proposition 1A. In 2004, state voters amended the State Constitution to prohibit the state from permanently reallocating the property tax in any county noneducation local agencies to K-14 school districts. Also, this measure generally requires a two-thirds vote of the Legislature to change the distribution of property taxes amounts for local agencies.
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Cash management and policies Cash temporarily idle during the year was invested in obligations of the U.S. Treasury and agencies of the Federal government, and the State Treasurer's Local Agency Investment Pool (LAIF). Maturities of the investments range from one day to 3.5 years, with an average maturity of 219 days. The average yield on investments not held by fiscal agents was 3.5%. The City has reduced the days to maturity by 123 days and the yields have increased an average of 68 basis points. Investment income includes appreciation in the fair value of investments. Increases in fair value during the current year, however, do not necessarily represent trends that will continue; nor is it always possible to realize such amounts. It is the City’s policy to hold investments to maturity; therefore, gains and losses due to temporary market value fluctuations are rarely realized. Major Initiatives The City of Santa Cruz operates four municipal utilities, including Water, Wastewater, Stormwater, and Refuse. The Water Department had not made any major capital improvements for the past 10 to 15 years while a new water supply project was being developed. Now, in order to address the pressing needs of an aging infrastructure and the need for a new water supply, the Water Department has embarked upon an ambitious program of capital improvements. The Bay Street Water Reservoir project began in FY 07 and amounted to a $13.8 million increase in Capital Assets. Major distribution and supply projects are planned, including a desalination plant. The National Marine Sanctuary Program (NMSP), an agency of the National Oceanic and Atmospheric Administration (NOAA), and the City of Santa Cruz are partnering to design and construct the Monterey Bay National Marine Sanctuary Education Center. The Education Center in the City of Santa Cruz will function as the Monterey Bay National Marine Sanctuary’s premier visitor center. The site was chosen after the NMSP studied 23 locations along California’s Central Coast, settling on the City’s ¾-acre “Fun Spot” property in the Santa Cruz beach area, visited by an estimated 3 million people per year. Formal design of the sanctuary project began in FY 07. The City will continue to use Development Impact Fees to enhance and upgrade park facilities. These fees will also be used for improvements to the greenbelt. The Parks and Recreation Department will continue to seek grants and other funding to renovate and upgrade outdated facilities. The development of Depot Park and the Multi Modal Station is an example of a successful partnership among numerous agencies. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Santa Cruz for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2006. The Certificate of Achievement is the highest form of recognition in the area of government accounting and financial reporting, and its attainment represents a significant accomplishment by a government and its management. In order to be awarded a Certificate of Achievement, the City publishes an easily readable and efficiently organized financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for one year only. We believe that our current comprehensive annual financial report (CAFR) meets the Certificate of Achievement Program’s requirements.
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Acknowledgements The Finance Department takes great pride in the preparation of this report. The professionalism, commitment and effort of the entire staff of the Finance Department have made this presentation possible. We would like to express our appreciation to all the members of the other departments who assisted and contributed to the preparation of this report. We also want to thank the partners and staff of our auditors for their assistance and support. We wish to also express our sincere thanks to the City Manager, the Mayor and the City Council Members for their unfailing support for maintaining the highest standards of professionalism in the management of the City of Santa Cruz's financial operations. Respectfully submitted,
Sandra Benoit Director of Finance
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DIRECTORY OF CITY OFFICIALS CITY OF SANTA CRUZ Mayor Ryan Coonerty Vice Mayor Cynthia Mathews
Councilmember Mike Rotkin
Councilmember Ed Porter
Councilmember Lynn Robinson
Councilmember Emily Reilly
Councilmember Tony Madrigal
City Manager, Richard C. Wilson
Assistant City Manager .....................................................................Martín Bernal Chief of Fire ......................................................................................Ron Oliver Chief of Police...................................................................................Howard Skerry City Attorney .....................................................................................John G. Barisone City Clerk ..........................................................................................Lesile Cook Director of Finance............................................................................Sandra Benoit Director of Human Resources ...........................................................Lisa Sullivan Director of Information Technology .................................................Sharon Caiocca Director of Libraries ..........................................................................Anne M. Turner Director of Parks and Recreation ......................................................Dannettee E. Shoemaker Director of Planning and Community Development.........................Greg Larson Director of Public Works and City Engineer ....................................Mark Dettle Director of Redevelopment Agency..................................................Ceil Cirillo Director of Water Department...........................................................Bill Kocher
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To the Honorable Mayor and Members of the City Council of the City of Santa Cruz Santa Cruz, California Page 2 The accompanying Required Supplementary Information, such as Management’s Discussion and Analysis, budgetary comparison information and other information as listed in the table of contents, is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the Required Supplementary Information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City’s basic financial statements. The accompanying Supplementary Information is presented for purpose of additional analysis and is not a required part of the basic financial statements. The Supplementary Information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The Introductory and Statistical Sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.
Irvine, California November 30, 2007
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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Management's Discussion and Analysis As management of the City of Santa Cruz we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City of Santa Cruz for the fiscal year ended June 30, 2007. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on page i of this report.
Financial Highlights – Primary Government (in $ millions) •
Government-Wide Highlights: Net Assets - The assets of the City of Santa Cruz exceeded its liabilities at the close of the fiscal year by $436.1. Of total Net Assets, $106.0 or 24.3% was reported as unrestricted net assets and may be used to meet the government’s ongoing obligations to citizens and creditors. Restricted net assets of $13.6 may be used for the City’s ongoing obligations related to programs with external restrictions. The remaining $316.5 represents the City’s investment in capital assets, less any related outstanding debt used to acquire those assets. Changes in Net Assets - The City’s total net assets increased by $19.9 or 2.7% in fiscal year 2007. The increase in Net Assets represents the degree to which revenues exceed expenses. The increase in net assets for governmental funds ($8.4) is a result of the reduction in expenses due to staff vacancies and moderate increases in revenue, mostly sales tax. The sales tax increase relates to the passage of a ballot measure which increased the tax rate by one-quarter percent. Business type activities increased net assets ($11.5) due to rate increases, reduced expenses resulting from grant funding and the delay of some programs.
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Fund Highlights: Governmental Funds – Governmental funds include general, special revenue, debt service, and capital projects funds. As of the close of fiscal year 2007, the City’s governmental funds, including the Redevelopment Agency Fund, reported a combined ending fund balance of $49.2 which is an increase of $2.3 or 4.9% from the prior year. Approximately 68.3% of this amount, or $33.6, represents the unreserved fund balance available for appropriation. 58.3% of the unreserved fund balance, or $19.6, has been designated for various purposes. General Fund – Total fund balance of the General Fund on June 30, 2007 was $26.4, an increase of $3.6 or 15.8% from the prior year. 84.8% of the total fund balance, or $22.4, was unreserved. Of the unreserved fund balance, $8.5, or approximately 32.2%, is designated for various purposes. The designations include $6.4 for the City public trust, and varying amounts for other activities. The remaining unreserved balance of $13.9, or 52.7% of unreserved fund balance, is undesignated.
Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.
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Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. They are comprised of the statement of net assets and statement of activities and changes in net assets. 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 or decreases 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 most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., interest expense due but unpaid). Both of the above government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, parks and recreation, library, public works, transit, community and economic development and social services. The business-type activities of the City include the four municipal utilities: water, wastewater, refuse and stormwater; and also the golf course and parking enterprises. Blended Component Units – Component units are legally separate entities that meet certain criteria and would be misleading if their data were not included in this report. This report includes two separate legal entities in this category; The City of Santa Cruz Redevelopment Agency, and The Santa Cruz Public Improvement Financing Corporation. In this report all component units are blended with the primary government because the governing boards are substantively the same as the primary government, and the component units serve the primary government exclusively. The government-wide financial statements can be found on pages 21 - 25 of this report. Fund 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 GASB 34 and replaces the concept of combining like funds and presenting them in total. Instead, each major fund is presented individually, with all nonmajor funds summarized and presented in a single column. Individual fund data on the nonmajor funds is presented in the form of combining statements and schedules in the Supplemental Information section of this report on pages 111 through 115 of this report. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund 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 financing requirements.
5
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the 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. The City has ten governmental funds, of which two 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 for the City’s two major funds – the General Fund and the Redevelopment Agency Fund. Data from the other eight governmental funds are combined into a single, aggregated presentation. The basic governmental fund financial statements can be found on pages 27 through 33 of this report. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements on pages 111 through 115 of this report. Proprietary Funds – The City maintains two different types of proprietary funds – enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the four municipal utilities; water, wastewater, storm water, and refuse; and also the golf and parking enterprises. 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 equipment operations and maintenance, stores inventory, telecommunications, and risk management activities. 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. The fund financial statements for the proprietary funds provide separate information for the four municipal utilities; water, wastewater, storm water, and refuse; and also the golf course and parking enterprises. Conversely, the internal service funds are combined into a single aggregated column in the proprietary fund statements. Individual fund data for the internal service funds is provided in the form of combining statements on pages 129 - 132 of this report. Prior-period adjustments made in the Proprietary Funds amount to $.6 reduction of Net Assets. Part of the adjustments ($.3) in the Water Fund and ($.1) in the Wastewater Fund relates to projects capitalized in prior years which should have been expensed. The other adjustment was in Parking ($.2) and relates to land posted to Parking in error in FY 03. The basic proprietary fund financial statements can be found on page 35 - 45 of this report. Fiduciary Funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. Fudiciary funds represent agency funds and private-purpose trust funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations and use the accrual basis of accounting. Agency funds include activities of the Library Joint Powers Authority, Payroll Payables and Special Assessments. Trust funds are used to account for resources legally held in trust for special purposes, such as McCaskill Trust for Local History, McCaskill Trust for Visually Impaired and the Finkeldey Trust for Musical Literature. 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 53 - 96 of this report. 6
Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Santa Cruz’s progress in funding its obligation to provide pension benefits to its employees, as well as providing a budgetary comparison schedule for the General Fund and the Redevelopment Agency Fund. Required supplementary information can be found on pages 97 - 107 of this report. Additional budgetary schedules for the General Fund and the combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information in the section of this report titled Supplemental Information. Combining and individual statements and schedules can be found on pages 116 - 128 of this report.
Government-Wide Financial Analysis (in $ millions) Net Assets. As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City of Santa Cruz, combined net assets (governmental and businesstype activities) totaled $436.1 at the close of the fiscal year ending June 30, 2007. By far the largest portion of the City’s net assets $316.5 or 72.6% reflects its investment in capital assets (e.g., land, streets, bridges, water and sewer lines, buildings, machinery, and equipment), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net assets $13.5 or 3.1% represents resources that are subject to external restrictions on how they may be used. The remaining $106.0 or 24.3% of the City’s net assets, are “unrestricted,” and may be used to meet the government’s ongoing obligations to citizens and creditors. City of Santa Cruz's Net Assets (amounts expressed in $ millions)
Current assets Noncurrent assets Capital assets
$
Governmental Activities 2007 2006 57.9 $ 53.3 6.8 8.6 157.8 154.7
$
Business-Type Activities 2007 2006 69.6 $ 56.4 18.1 33.3 257.9 249.9
$
Total 2007 127.5 $ 26.7 415.7
2006 109.7 40.1 404.6
224.3
214.8
345.6
339.6
569.9
554.4
Current liabilities Noncurrent liabilities
14.9 27.1
11.9 29.1
10.9 81.0
11.5 85.3
25.8 108.1
23.4 114.4
Total liabilities
42.0
41.0
91.9
96.8
133.9
137.8
144.2 13.4 24.6
142.2 12.1 19.4
164.2 78.0
164.3 78.5
308.4 13.4 102.6
306.5 12.1 97.9
Total assets
Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets
$
182.3
$
173.8
$
7
242.2
$
242.8
$
424.5
$
416.6
Changes in Net Assets. The City’s net assets increased by $20.0 or 4.8%, from the prior fiscal year. The City’s expenses cover a range of services. Further analysis is provided within the governmental and business-type activity sections. City of Santa Cruz Changes in Net Assets (amounts expressed in $ millions) Governmental Activities 2007 Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Property taxes Sales and use taxes Franchise taxes Transient occupancy taxes Utility users taxes Admissions taxes Other taxes Total taxes Unrestricted grants and contributions Unrestricted investment earnings Gain (loss) on sale of assets Miscellaneous
$
Business-Type Activities
2006
25.0 5.4 5.7 36.1
$
24.7 2.1 2.5 29.3
2007
$
Total
2006
56.9 1.7 58.6
$
51.2 2.5 53.7
2007
$
2006
81.9 5.4 7.4 94.7
$
75.9 2.1 5.0 83.0
24.6 12.8 2.6 3.8 8.3 1.9 2.4 56.4 2.6 0.3 2.7
22.4 11.7 2.1 3.4 8.3 1.7 2.4 52.0 1.1 1.4 0.5
3.6 0.1 0.5
2.1 0.1 0.5
24.6 12.8 2.6 3.8 8.3 1.9 2.4 56.4 6.2 0.4 3.2
22.4 11.7 2.1 3.4 8.3 1.7 2.4 52.0 1.1 3.5 0.1 1.0
98.1
84.3
62.8
56.4
160.9
140.7
12.5 29.6 12.0 9.6 11.5 0.7 10.6 1.8 1.3 -
9.8 27.2 11.7 9.2 9.0 0.6 7.4 2.6 0.9 -
16.2 15.4 13.0 2.6 1.9 2.2
15.2 16.2 12.7 3.0 1.9 2.3
12.5 29.6 12.0 9.6 11.5 0.7 10.6 1.8 1.3 16.2 15.4 13.0 2.6 1.9 2.2
9.8 27.2 11.7 9.2 9.0 0.6 7.4 2.6 0.9 15.2 16.2 12.7 3.0 1.9 2.3
89.6
78.4
51.3
51.3
140.9
129.7
8.5
5.9
11.5
5.1
20.0
11.0
-
0.1
-
(0.1)
-
-
8.5
6.0
11.5
5.0
20.0
11.0
Net assets, beginning of year Prior period adjustment (Note 16)
173.8 0.1
162.2 -
242.8 (0.6)
232.5
416.6 (0.5)
394.7 -
Net assets, beginning of year (as restated)
173.9
167.8
242.2
237.8
416.1
405.6
Total revenues Expenses: General government Public safety Parks and recreation Library Public works Transit Community and economic development Social services Interest and charges on long term debt Water Wastewater Refuse Parking Storm water Golf course Total expenses Increase (decrease) in net assets before transfers Transfers Change in net assets
Net assets - end of year
$
182.4
8
$
173.8
$
253.7
$
242.8
$
436.1
$
416.6
Governmental Activities. Governmental activities increased the City’s net assets by $8.5. A comparison of the cost of services by function for the City’s governmental activities is shown below, along with the revenues used to cover the net expenses of the governmental activities. Governmental Activities (amounts expressed in $ millions) 2007
2006
Expenses net of program revenues: General government
$
Public safety
(5.9)
$
(5.1)
(25.3)
(23.7)
Parks and recreation
(8.0)
(8.2)
Library
(0.8)
(0.7)
Public works
(5.4)
(2.9)
Transit
3.2
0.9
Community and economic development
(8.2)
(5.9)
Social services
(1.8)
(2.6)
Interest and fiscal charges on long-term debt
(1.3)
(0.9)
Total expenses net of program revenues governmental activities
(53.5)
(49.1)
Property taxes
24.6
22.4
Sales and use taxes
12.8
11.7
Franchise taxes
2.6
2.1
Transient occupancy taxes
3.8
3.4
Utility users taxes
8.3
8.3
Admission taxes
1.9
1.7
Other taxes
2.4
2.4
56.4
52.0
General revenues and transfers: General revenues:
Total taxes Unrestricted grants and contributions
-
1.1
Unrestricted investment earnings
2.6
1.4
Gain on sale of assets
0.3
0.0
Miscellaneous
2.7
0.5
Transfers Total general revenues and transfers $
Change in governmental activities net assets
9
-
0.1
62.0
55.1
8.5
$
6.0
Governmental Expenses. Total governmental activity expenses were $89.6 in fiscal year 2007. The largest expenses were incurred for public safety, parks and recreation, public works and general government. These expenses do not include capital outlays, which are now reflected in the City’s capital assets.
EXPENSES FOR GOVERNMENTAL ACTIVITIES FY 2007
Social Services 2%
Interest on Debt 1% General Government 14%
Community Dev. 12% Transit 1%
Public Works 13%
Public Safety 33% Library 11%
Parks & Recreation 13%
Governmental Revenues. Per GASB 34, program revenues are derived directly from the program itself or from parties outside the reporting government’s taxpayers or citizenry. They reduce the net cost of the function to be financed from the government’s general revenues. Total program revenues from governmental activities were $29.3 in fiscal year 2007. Governmental program revenues derive primarily from charges for services, which include licenses and permits, planning fees, developer fees, recreation charges, traffic and other fines and forfeitures, charges to the Library Joint Powers Authority for personnel services provided, and several other revenues. Program revenues under the operating grants and contributions category include revenues restricted for specific purposes, such as gasoline tax and other federal, state and local grants. Program revenues in the capital grants and contributions category also include federal, state and local grants, but are restricted specifically to be used for capital projects or acquisitions.
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General revenues are all other revenues not categorized as program revenues, and include all taxes, unrestricted grants, contributions and investment earnings, gains on sales of capital assets, and other miscellaneous revenues. Total general revenues from governmental activities were $62.8 in fiscal year 2007. Taxes of $56.4 comprised 89.8% of the City’s general revenues for fiscal year 2007. The largest single source of general revenues received during fiscal year 2007 was $24.6 of property taxes, or 39.1% of general revenues, followed by $12.7 of sales and use taxes, or 20.2% of general revenues.
REVENUES BY SOURCE GOVERNMENTAL ACTIVITIES FY 2007
Capital Grants 5%
Interest Earnings 3%
Miscellaneous Revenue 4%
Property Tax 25%
Operating Grants 5% Sales Tax 13% Charges for Service 26%
Other Taxes 2%
Franchise Tax 3%
Adm ission Tax 2%
Utility User Tax 8%
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Transient Occupancy Tax 4%
Business Type Activities. Net assets for business-type activities were $253.7, an increase of $11.5 from the prior fiscal year. Total program revenues for business-type activities were $58.6. The largest program revenues were charges for services of $56.9. Other program revenues included capital grants and contributions of $1.7. Total expenses for the business-type activities were $51.3 during fiscal year 2007.
REVENUE AND EXPENSE BUSINESS ACTIVITIES, FY 2007 30 25 20 Revenue Expense
15 10 5
W
W
at er as te w at er R ef us e Pa rk in St g or m wa G te ol r fC ou rs e
0
12
REVENUES BY SOURCE BUSINESS ACTIVITIES FY 2006
Operating Grants 0%
Capital Grants 3% General Revenue 7%
Charges for Service 90%
Financial Analysis of Individual Funds (in $ millions) As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds - The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $49.2 which is an increase of $2.3 or 4.9% over the previous year. Approximately $33.6 of the fund balance is unreserved fund balance, which is available for spending at the government’s discretion. Unreserved fund balance increased by $2.2 or 7.0% over the previous year. It should, however, be noted that 58.3% of the unreserved fund balance, or $19.6, has been designated for various purposes, such as debt service, capital projects, public art, police programs and the City Public Trust, leaving $14.0 unreserved and undesignated. The remainder of fund balance $15.6 is reserved to indicate that it is not available for spending because it has already been legally committed. General Fund – Total fund balance of the General Fund on June 30, 2007 was $26.4, an increase of $3.6 or 15.8% over the prior year. Approximately 85% of this amount, or $22.4, was unreserved. Of the unreserved fund balance, $8.5, or 32.2% has been designated for specific uses. The designations include $6.4 for the City Public Trust, and $1.6 for Accrued Compensated Absences (i.e. vacations), and varying small amounts for other activities, such as unemployment insurance, housing, parks and recreation programs, and equipment and facilities maintenance. The remaining unreserved balance of $13.9, or 52.7% of unreserved fund balance, is undesignated and represents an increase of $2.5 or 21.9% over the previous year. 13
As a measure of the General Fund’s liquidity, it may be useful to compare unreserved fund balance, the undesignated portion of the unreserved fund balance, and the total fund balance to total fund expenditures. Unreserved fund balance ($22.4) represents 33.2% of total General Fund expenditures ($67.5), including transfers out. Unreserved and undesignated fund balance ($13.9) represents 20.6% of total expenditures, and total fund balance ($26.4) represents 39% of total fund expenditures ($67.5). The 20.6% percent of total expenditures that is represented by the undesignated, unreserved fund balance ($13.9) exceeds the City Council’s targeted minimum reserve level of 10% of the operating budget for the General Fund. Increase in fund balance is a result of savings realized in Police due to vacant positions $2.4; Parks and Recreation of $1.4 mostly due to delays in hiring park rangers, other vacancies and hiring temporaries for permanent positions; Public Works $.9 due to vacancies in positions; Planning $.9 due to savings for professional services and from vacancies; Finance $.1 due to vacant positions; Redevelopment Administration $.3 due to vacant positions; and other miscellaneous savings throughout the City. Revenue collections in the General Fund met or exceeded expectations. Redevelopment Agency Fund – The City of Santa Cruz Redevelopment Agency is responsible for redevelopment of areas identified under the Community Redevelopment Law as being blighted. 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 increases in property assessed values in the redevelopment areas. At the end of fiscal year 2007, the total fund balance of the Redevelopment Agency Fund was $15.9, a decrease of $1.6 from the prior year, or 11.2%. Of that amount, $6.8 is reserved to indicate that it is not available for spending because it has already been legally committed. The remainder of the unreserved fund balance of $ 9.1 is designated for either debt service or capital projects and represents an increase of $1.1 or 13.8% over the previous year. The Redevelopment Agency Fund had revenues of $12.3, including $11.0 of property tax increment revenue. Expenditures in this fund amounted to $10.6 which is a decrease of $3.6 over the previous year due to decreases in capital expenditures for the Salz Tannery Project. Proprietary Funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. They include both enterprise funds and internal service funds. For the government-wide financial statements, the internal service funds are consolidated with governmental activities, and the enterprise funds comprise the business-type activities. As discussed in the business-type activities section previously, the City’s net assets increased by $6.0 as a result of operations in the enterprise funds. Net assets ($2.0 negative) in the internal service funds represent a decreased deficit of $1.3 or 39.4% over prior year ($3.3 negative). The decrease is due to decreases in expenditures in risk management due to changes in the actuarial projections.
General Fund Budgetary Highlights. The final amended General Fund budget, including transfers out and advances, totaled $76.5 and included amendments to the original budget resulting in a $2.6 increase in operating expenditure appropriations. The principal amendments can be summarized as follows:
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Operating Appropriations Increases. Significant Appropriations Increases: • • • • • • •
Group Health Internal Service fund was combined with the General Fund, $1.2 Legal expenses for UCSC Litigation, $.6 Prior year project carryover, Hwy 1/17 Merge Lanes, $.1 Parks Department salaries, equipment, park ranger program funded by Measure H funds, $.1 Police Department salaries, equipment, safety program funded by Measure H funds, $ .1 Fire Department equipment funded by OTS Grant, $.1 Many other miscellaneous adjustments, $.4
These appropriations were offset by reduced expenditures in other areas of $8.2. Savings were realized in Police due to vacant positions $2.4; Parks and Recreation of $1.4 mostly due to delays in hiring park rangers, other vacancies and hiring temporaries for permanent positions; Public Works $.9 due to vacancies in positions; Planning $.9 due to savings for professional services and from vacancies; Finance $.1 due to vacant positions; Redevelopment Administration $.3 due to vacant positions; and other miscellaneous savings throughout the City. Revenue collections in the General Fund met or exceeded budget. Those revenues which were better than budget are Sales and Use Tax ($.6), Transient Occupancy ($.1), Admissions ($.2), Property Transfer ($.4), and Investment Earnings ($.4). Capital Assets and Debt Administration (in $ millions) Capital Assets. The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2007, amounts to $415.7, net of accumulated depreciation of $270.0. This investment in capital assets includes land, land improvements, infrastructure, buildings, machinery and equipment, lease improvements, software, 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 capital assets were $18.6 net of depreciation. Additions included $6.5 moved from construction in progress to capital assets. Capital assets for the current fiscal year, after restatements and deletions, were $11.1, net of accumulated depreciation. Major capital asset additions during the current fiscal year included the following: 1. 2. 3. 4. 5. 6.
Bay Street Reservoir, $13.8 Recycling Facility Upgrades, $2.3 Vehicles, $ 2.5 Skate Park, $1.4 Beach Street Bike Path, $1.0 Sewer System Improvements, $.6
15
Changes in capital assets from the prior year (as restated) are shown in the following table. Additional information on the City’s capital assets can be found in Note 5 on pages 70 - 73 of this report. Capital Assets (net of depreciation) (amounts expressed in $ millions) Governmental Activities
Business-Type Activities
June 30 2007 Land
$
50.6
Construction in progress Land improvements Infrastructure
June 30 2006
$
2007
50.5
$
Total 2006
11.6
$
2007
11.9
$
2006
62.2
$
62.4
10.8
5.1
23.3
10.4
34.1
15.5
7.0
4.0
4.0
3.3
11.0
7.3
168.6
65.0
177.8
106.6
346.4
171.6
Buildings
35.4
26.5
160.2
107.9
195.6
134.4
Machinery and equipment
10.6
3.0
23.2
9.5
33.8
12.5
Lease improvements
0.7
0.4
0.1
0.1
0.8
0.5
Software
1.1
0.2
0.6
0.2
1.7
0.4
Totals
$
284.8
$
154.7
$
400.8
$
249.9
$
685.6
$
404.6
Debt Administration (in millions) Long Term Debt - At the end of the current fiscal year, the City had $121.3 in long term debt outstanding compared to $127.7 last year, a decrease of $6.4 or 5.0%. Decreases to claims and judgments payable ($.6) due to the settlement of a large claim, and normal retirements through annual debt service. The debt associated with governmental activities increased by $2.2 or 6.1% from $36.0 to $33.8. Business-type activity debt was decreased by $4.2 or 4.6% from $91.7 to $87.5. The major increase in debt during the year included lease purchase of refuse trucks. The City currently has $7.1 in outstanding general obligation debt. This debt was approved by voters in November 1998, and authorized an ad valorem tax override for acquisition of open space property, improvements to fire stations, acquisition of a fire administration headquarters building, and construction of a community park. This tax override is currently assessed at $9 per $100,000 of assessed value. The largest single debt obligation of the City is a note payable to the State of California for the construction of secondary treatment improvements at the City's wastewater treatment plant. As of June 30, 2007, the outstanding balance on this note was $35.4. The chart below illustrates the changes in bonds, notes, loans and leases payable for the year ending June 30, 2007.
Bonds, Notes, Loans and Leases Payable (amounts expressed in $ millions) Governmental Activities
Business-Type Activities
June 30 2007 Certificates of participation
$
Revenue bonds payable
June 30 2006
4.1
$
2007 4.2
$
Total 2006
19.2
$
2007
20.9
$
2006
23.3
$
25.1
-
-
22.6
23.3
22.6
General obligation bonds
7.1
7.1
-
-
7.1
23.3 7.1
Notes payable
2.9
4.2
35.3
37.8
38.2
42.0
Tax allocation bonds payable
5.0
5.1
-
-
5.0
5.1
Capital lease obligations
1.0
1.2
3.5
3.1
4.5
4.3
Other long-term liabilities
0.9
1.0
-
-
0.9
1.0
Totals
$
21.0
$
22.8
16
$
80.6
$
85.1
$
101.6
$
107.9
The City of Santa Cruz also has significant liabilities for claims and judgments, compensated absences (accrued vacation pay), and landfill closure and post-closure costs. The amounts and changes of these liabilities are shown below. Claims and Judgments, Compensated Absences, and Landfill Closure Costs Payable (amounts expressed in $ millions) June 30 2007 Claims and judgements
$
June 30, 2007 2006
10.4
$
11.0
$
Increase
Percent
(Decrease)
Change
(0.6)
-5.5%
Due in less
Due in more
than one year
than one year
$
$
2.9
7.5
Compensated absences
3.2
2.9
0.3
10.3%
2.2
1.0
Closure and post closure landfill costs
6.1
5.8
0.3
5.2%
-
6.1
0.6
6.9%
Totals
$
9.3
$
8.7
$
$
2.2
$
7.1
Additional information on the City of Santa Cruz’s long term debt can be found in Note 6 to the financial statements. Economic Climate The City of Santa Cruz, and Santa Cruz County for that matter, is closely tied to the regional economy of the nine-county San Francisco Bay Area and to Silicon Valley in particular. Fiscal Year 2007 showed signs of recovery at the national level, along with the Bay Area and Silicon Valley. Local private employers include a diverse array of manufacturing, business services, retail, hotel and food services, and biotechnology companies. In addition to the local private employers, the local economy also benefits from the University of California Santa Cruz. The University is a major employer, and has potential spin-off benefits from federal and state funded scientific research ventures including biomedical research, technology research, and adaptive optics. The state, and the bay area in particular, experienced modest growth in jobs, personal income, and tourism in 2007 and the economy is expected to continue to improve during 2007, albeit modestly. However, the bay area regional economic opportunities and challenges including continued job growth, housing prices, and interest rates. The national economic problems will, of course, have an affect on the local economy as well.
Requests for Information This financial report is designed to provide a general overview of the City’s finances for all of its citizens, taxpayers, customers, investors and creditors. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the City of Santa Cruz, Finance Department, 809 Center Street, Room 8, Santa Cruz, CA 95060.
17
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18
BASIC FINANCIAL STATEMENTS
19
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20
GOVERNMENT-WIDE FINANCIAL STATEMENTS
21
City of Santa Cruz Statement of Net Assets June 30, 2007
Primary Government Governmental
Business-Type
Activities
Activities
Total
ASSETS Current assets: Cash and cash equivalents
$
Restricted cash and cash equivalents Interest receivable
42,640,326
$
56,087,726
$
98,728,052
3,026,030
2,803,575
5,829,605
832,087
1,055,772
1,887,859
Taxes receivable
4,306,295
-
4,306,295
Accounts receivable - net
1,819,818
7,166,955
8,986,773
Due from other governments
2,725,206
1,085,238
3,810,444
Notes receivable - due within one year
209,215
-
209,215
Loans receivable - due within one year
69,600
-
69,600 1,151,684
-
1,151,684
Prepaid items
Intergovernmental receivable - due within one year
475,776
209,784
685,560
Inventories
194,132
-
194,132
1,630,012
30,000
1,660,012
57,928,497
69,590,734
127,519,231
283,042
1,369,711
1,652,753
Notes receivable - due in more than one year
5,878,047
401,058
6,279,105
Loans receivable - due in more than one year
1,338,317
-
1,338,317
-
15,008,579
15,008,579
Deferred charges
268,466
2,099,149
2,367,615
Long-term internal balances
805,249
Deposits Total current assets Noncurrent assets: Restricted investments
Intergovernmental receivable - due in more than one year
(805,249)
-
Capital assets: Land Land improvements Infrastructure
50,609,567
11,590,526
62,200,093
7,024,152
3,956,018
10,980,170
168,644,770
177,843,083
346,487,853
Buildings
35,421,568
160,220,644
195,642,212
Machinery and equipment
10,602,374
23,223,969
33,826,343
Lease improvements
724,114
70,000
794,114
1,102,389
555,257
1,657,646
Construction in progress
10,758,619
23,346,697
34,105,316
Total capital assets
284,887,553
400,806,194
685,693,747
(127,114,151)
(142,893,351)
(270,007,502)
Total capital assets, net
157,773,402
257,912,843
415,686,245
Total noncurrent assets
166,346,523
275,986,091
442,332,614
Total assets
224,275,020
345,576,825
569,851,845
Software
Less accumulated depreciation
See accompanying Notes to Basic Financial Statements.
22
City of Santa Cruz Statement of Net Assets, Continued June 30, 2007
Primary Government Governmental
Business-Type
Activities
Activities
Total
LIABILITIES Current liabilities: Accounts payable and other current liabilities
$
Intergovernmental payable
6,689,918
$
2,896,841
$
9,586,759
2,438
-
2,438
Interest payable
210,494
1,355,408
1,565,902
Unearned revenue
883,491
67,024
950,515
Deposits payable
317,303
47,065
364,368
Claims and judgments payable - due within one year
2,943,930
-
2,943,930
Compensated absences payable - due within one year
1,612,688
555,243
2,167,931
Bonds, notes, loans and leases payable - due within one year
2,134,425
5,973,258
8,107,683
14,794,687
10,894,839
25,689,526
Total current liabilities Noncurrent liabilities: Claims and judgments payable - due in more than one year
7,498,625
-
7,498,625
Compensated absences payable - due in more than one year
806,344
277,621
1,083,965
18,760,273
74,662,628
93,422,901
-
6,055,236
6,055,236
Total noncurrent liabilities
27,065,242
80,995,485
108,060,727
Total liabilities
41,859,929
91,890,324
133,750,253
144,203,036
172,324,984
316,528,020
Capital projects
4,285,115
-
4,285,115
Debt service
5,701,004
-
5,701,004
Public safety
148,312
-
148,312
92,338
-
92,338
Bonds, notes, loans and leases payable - due in more than one year Landfill closure costs
NET ASSETS Invested in capital assets, net of related debt Restricted for:
Parks and recreation Community and economic development Unrestricted Total net assets
3,421,905
-
3,421,905
24,563,381
81,361,517
105,924,898
$
182,415,091
$
253,686,501
$
436,101,592
Bal. Sheet Net Assets - IS Net Assets $
-
$
-
$
-
See accompanying Notes to Basic Financial Statements.
23
City of Santa Cruz Statement of Activities and Changes in Net Assets For the year ended June 30, 2007
Program Revenues
Functions/Programs
Charges for Services
Expenses
Operating
Capital
Grants and Contributions
Grants and Contributions
Total
Primary government: Governmental activities: General government
$
12,494,563
$
5,507,904
$
1,033,655
$
-
$
6,541,559
Public safety
29,646,507
3,410,308
895,204
87,504
4,393,016
Parks and recreation
12,002,102
3,011,980
40,439
910,660
3,963,079 8,894,858
9,644,172
8,894,858
-
-
11,509,715
4,072,956
2,008,490
12,202
6,093,648
646,548
-
-
3,794,755
3,794,755
10,616,686
108,009
1,462,166
864,517
2,434,692
1,758,216
-
-
-
-
1,304,447
-
-
-
-
89,622,956
25,006,015
5,439,954
5,669,638
36,115,607
Water
16,203,872
22,442,267
-
1,112,837
23,555,104
Wastewater
15,377,903
13,978,613
-
206,207
14,184,820
Refuse
12,974,413
15,108,051
15,575
-
15,123,626
Parking
2,632,045
2,697,863
-
79,093
2,776,956
Storm water
1,938,275
875,730
-
264,112
1,139,842
Golf course
2,165,390
1,770,614
24,895
-
1,795,509
Library Public works Transit Community and economic development Social services Interest and fiscal charges on long-term debt Total governmental activities Business-type activities:
Total business-type activities Total primary government
51,291,898 $
140,914,854
56,873,138 $
81,879,153
40,470 $
5,480,424
1,662,249 $
7,331,887
General Revenues: Taxes: Property taxes Sales and use taxes Franchise taxes Transient occupancy taxes Utility users taxes Admission taxes Other taxes Total taxes Unrestricted investment earnings Gain on sale of assets Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets - beginning of year (as restated) Net assets - end of year See accompanying Notes to Basic Financial Statements.
24
58,575,857 $
94,691,464
Net (Expense) Revenue and Changes in Net Assets Governmental Activities
Business-Type Activities
$
$
(5,953,004)
$
(5,953,004)
(25,253,491)
-
(25,253,491)
(8,039,023)
-
(8,039,023)
(749,314)
-
(749,314)
(5,416,067)
-
(5,416,067)
3,148,207
-
3,148,207
(8,181,994)
-
(8,181,994)
(1,758,216)
-
(1,758,216)
(1,304,447)
-
(1,304,447)
(53,507,349)
-
(53,507,349)
-
7,351,232
7,351,232
-
(1,193,083)
(1,193,083)
-
2,149,213
2,149,213
-
144,911
144,911
-
(798,433)
(798,433)
-
(369,881)
(369,881)
-
7,283,959
7,283,959
(53,507,349)
7,283,959
(46,223,390)
24,593,312
-
24,593,312
12,770,015
-
12,770,015
2,607,388
-
2,607,388
3,750,509
-
3,750,509
8,288,655
-
8,288,655
1,909,012
-
1,909,012
2,466,711
-
2,466,711
56,385,602
-
56,385,602
2,628,122
3,637,989
6,266,111
322,288
51,527
2,648,223 3,367
373,815
530,158 (3,367)
3,178,381 -
61,987,602
4,216,307
66,203,909
8,480,253
11,500,266
19,980,519
173,934,838 $
-
Total
182,415,091
242,186,235 $
253,686,501
416,121,073 $
436,101,592
25
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26
FUND FINANCIAL STATEMENTS
27
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28
Governmental Fund Financial Statements General Fund - The General Fund is used to account for sources and uses of financial resources traditionally associated with governments, and which are not required to be accounted for in another fund. Redevelopment Agency Fund - The Redevelopment Agency fund is used to account for all the activities of the City of Santa Cruz Redevelopment Agency. This includes the accumulation of resources for and the payment of interest and principal on debt issued to finance redevelopment activities, and general redevelopment operations. Other Governmental Funds - Other Governmental funds is the aggregate of all the non-major governmental funds.
29
City of Santa Cruz Balance Sheet Governmental Funds June 30, 2007
Major Funds
Other
Total
General
Redevelopment
Governmental
Governmental
Fund
Agency
Funds
Funds
ASSETS Cash and cash equivalents
$
Interest receivable Taxes receivable
19,019,016
$
8,417,311
$
8,353,702
$
35,790,029
204,876
180,335
376,282
761,493
3,311,927
357,069
637,299
4,306,295
Accounts receivable - net
935,181
101,305
776,302
1,812,788
Due from other governments
325,222
-
2,399,984
2,725,206
3,895,686
-
-
3,895,686
475,776
-
-
475,776
Cash and cash equivalents
-
3,016,345
9,685
3,026,030
Investments
-
-
283,042
283,042
-
3,016,345
292,727
3,309,072
Due from other funds Prepaid items Restricted assets:
Total restricted assets Deposits
237,553
-
-
237,553
Notes receivable - net
266,964
4,874,571
945,727
6,087,262
-
-
1,407,917
1,407,917
2,131,815
351,000
-
2,482,815
Loans receivable - net Advances to other funds Inventory of land held for resale - net Total assets
-
60,491
-
60,491
$
30,804,016
$
17,358,427
$
15,189,940
$
63,352,383
$
3,358,803
$
240,637
$
2,854,696
$
6,454,136
LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and other current liabilities Due to other funds
-
-
3,330,360
Intergovernmental payable
-
-
2,438
2,438
125,728
-
700,742
826,470 883,491
Deferred revenue
3,330,360
Unearned revenue
617,556
-
265,935
Deposits payable
151,509
165,794
-
317,303
-
1,005,400
1,229,332
2,234,732
Advances from other funds Claims and judgments payable Total liabilities
131,000
-
-
131,000
4,384,596
1,411,831
8,383,503
14,179,930
4,006,713
6,820,346
4,788,047
15,615,106 8,488,474
Fund Balances: Reserved Unreserved, designated, reported in: General fund
8,488,474
-
-
Redevelopment Agency fund
-
9,126,250
-
9,126,250
Special revenue funds
-
-
1,053,286
1,053,286
Debt service funds
-
-
909,576
909,576 13,924,233
Unreserved, undesignated, reported in: General fund
13,924,233
-
-
Special revenue funds
-
-
2,851,774
2,851,774
Capital projects funds
-
-
(2,796,246)
(2,796,246)
26,419,420
15,946,596
6,806,437
49,172,453
Total fund balances Total liabilities and fund balances
$
30,804,016
See accompanying Notes to Basic Financial Statements.
30
$
17,358,427
$
15,189,940
$
63,352,383
City of Santa Cruz
Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets June 30, 2007
Total Fund Balances - All Governmental Funds
$
49,172,453
Amounts reported for Governmental Activities in the Statement of Net Assets were different because: Capital assets used in governmental activities are not current financial resources. Therefore, they are not reported in the governmental funds. Except for the internal service funds reported below, the capital assets are adjusted as follows: Non-depreciable
GovernmentWide Statement of Net Assets
Internal Service Funds
$
$
Depreciable, net
61,368,186 96,405,216
$
Total capital assets
157,773,402
$
-
61,368,186
(195,360)
96,209,856
(195,360)
157,578,042
Interest payable on long-term debt does not require current financial resources. Therefore, interest payable is not reported as a liability in the governmental funds.
(210,494)
Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and equipment management, to individual funds. The assets and liabilities of the Internal Service Funds are included in governmental activities in the statement of net assets. Equipment Operations Fund
713,332
Stores Services Fund
-
Telecommunications Fund
209,420
Risk Management Fund
(2,874,767)
Total internal service funds
(1,952,015)
Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Noncurrent liabilities were not due and payable in the current period. Therefore, they are not reported in the governmental funds. Except for the internal service funds reported above, the long-term liabilities are adjusted as follows. Compensated absences payable - due within one year
826,470 GovernmentWide Statement of Net Assets
Internal Service Funds
$
$
Compensated absences payable - due in more than one year
(1,612,688) (806,344)
Bonds, notes, loans and leases payable - due within one year Bonds, notes, loans and leases payable - due in more than one year Total long-term liabilities
$
30,599
(1,582,089)
15,300
(791,044)
(2,134,425)
-
(2,134,425)
(18,760,273)
-
(18,760,273)
45,899
(23,267,831)
(23,313,730)
$
Certain transactions related to debt issuance and refunding are reported as expenditures and other financing sources/uses in the governmental funds. For the statement of net assets, the net amount of these transactions is capitalized as deferred charges, and will be amortized as an adjustment to interest expense over the remaining life of the debt. Net Assets of Governmental Activities
268,466 $
See accompanying Notes to Basic Financial Statements.
31
182,415,091
City of Santa Cruz Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2007
Major Funds Other
Total
General
Redevelopment
Governmental
Governmental
Fund
Agency
Funds
Funds
REVENUES: Taxes
$
Licenses and permits Intergovernmental
42,837,408
$
11,022,799
$
2,525,395
$
56,385,602
824,258
-
-
824,258
1,563,745
-
9,400,129
10,963,874 19,852,885
Charges for services
19,786,417
-
66,468
Fines and forfeitures
2,218,082
-
24,465
2,242,547
Use of money and property
3,061,718
844,921
468,706
4,375,345
187,732
384,865
1,891,666
2,464,263
70,479,360
12,252,585
14,376,829
97,108,774
Other revenues Total revenues EXPENDITURES: General government
12,261,663
-
-
12,261,663
Public safety
28,469,065
-
105,000
28,574,065
Parks and recreation
9,653,531
-
-
9,653,531
Library
9,693,097
-
-
9,693,097
Public works
4,233,034
-
707,017
4,940,051
Transit Community and economic development
-
-
646,548
646,548
13,424
8,235,291
1,780,277
10,028,992
Social services
1,651,827
-
106,389
1,758,216
Capital outlay
1,338,184
156,159
13,373,594
14,867,937
178,385
1,649,689
375,794
2,203,868
47,643
571,423
459,766
1,078,832
67,539,853
10,612,562
17,554,385
95,706,800
2,939,507
1,640,023
(3,177,556)
1,401,974
Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from asset disposition Transfers in
62,804
-
285,737
348,541
615,094
8,288
637,132
1,260,514
Transfers out
(677)
Total other financing sources (uses) Net change in fund balances
-
(708,812)
(709,489)
214,057
899,566
677,221
8,288
3,616,728
1,648,311
(2,963,499)
2,301,540
22,802,692
14,298,285
9,769,936
46,870,913
FUND BALANCES: Beginning of year End of year
$
26,419,420
See accompanying Notes to Basic Financial Statements.
32
$
15,946,596
$
6,806,437
$
49,172,453
City of Santa Cruz Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets For the year ended June 30, 2007
Net Change in Fund Balances - All Governmental Funds
$
2,301,540
Amounts reported for governmental activities in the Statement of Activities and Changes in Net Assets were different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period, excluding the internal service funds, which are reported below.
2,984,924
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and capital contributions) is to increase net assets.
(26,253)
Revenues considered "unavailable" at the end of the previous fiscal year were collected during the current year and are reported as revenues in the governmental funds. These revenues were previously included in the statement of activities.
145,718
Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.
(278,400)
Proceeds of long-term debt and payments to refunding bond escrow agents are reported as financing sources/uses in governmental funds. In the statement of net assets, however, issuing or refinancing debt affects noncurrent liabilities.
(25,627)
Certain costs related to issuing new debt and refunding existing debt are reported as expenditures and financing uses in the governmental funds, but are capitalized in the statement of net assets, and will be amortized over the remaining life of the debt.
(116,262)
Repayment of principal is an expenditure in governmental funds, but reduces noncurrent liabilities in the statement of net assets.
2,203,868
Accrued but unpaid and accreted interest on long-term debt is reported in the statement of activities, but does not require the use of current financial resources. Therefore, it is not reported as an expenditure in the governmental funds.
(82,832)
Internal service funds are used by management to charge the costs of certain activities, such as insurance and equipment management, to individual funds. The net revenue of the internal service funds is reported with governmental activities. Change in Net Assets of Governmental Activities
1,373,577 $
See accompanying Notes to Basic Financial Statements.
33
8,480,253
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34
Proprietary Fund Financial Statements Water - Accounts for the activities of the City's water utility, which provides water delivery services to the residents of the City and some residents of the County. Wastewater - Accounts for the activities of the City's wastewater utility, which provides wastewater collection and treatment services to the residents of the City and some residents of the County. Refuse - Accounts for the activities of the City's refuse utility, which provides refuse pick-up services, recycling services, and a sanitary landfill for residents of the City. Parking - Accounts for the activities of the Downtown Parking District, which provides parking facilities in the downtown area. Storm Water - Accounts for storm water utility fees on properties within the City limits. These fees provide funding for flood control improvements associated with the U.S. Army Corps of Engineers San Lorenzo River Flood Control project, storm water pollution prevention programs, and measures to comply with the U.S. Environmental Protection Agency Non-Point Pollution Discharge Emissions Standards Program (NPDES). Golf Course - Accounts for the activities of the Delaveaga Golf Course, which provides recreational facilities to the public. Internal Service Funds - These funds are used to provide goods and services by one department or agency to other departments or agencies of the City on a cost reimbursement basis.
35
City of Santa Cruz Statement of Net Assets Proprietary Funds June 30, 2007
Enterprise Funds
Water
Wastewater
Refuse
Parking
ASSETS Current assets: Cash and cash equivalents
$
31,622,891
$
8,846,168
$
9,283,779
$
3,675,928
Restricted cash and cash equivalents
103,261
671,680
1,239,032
513,577
Interest receivable
384,675
494,115
108,274
42,184
3,740,192
1,717,406
1,551,135
35,026
-
581,999
-
41,431
Accounts receivable - net Due from other governments Notes receivable - due within one year
-
-
-
-
Intergovernmental receivable - due within one year
-
1,151,684
-
-
76,285
50,857
82,642
-
Inventories
Prepaid items
-
-
-
-
Deposits
-
-
-
30,000
35,927,304
13,513,909
12,264,862
4,338,146
Total current assets Noncurrent assets: Restricted investments Notes receivable - due in more than one year Intergovernmental receivable - due in more than one year
-
-
1,080,087
-
401,058
-
-
-
-
15,008,579
-
-
13,585
89,332
-
-
431,843
261,749
294,169
202,329
3,654,410
1,371,330
98,575
4,638,102
71,900
910,270
-
280,701
54,474,851
51,627,684
19,746,219
805,464
Buildings
9,204,251
126,672,607
2,709,093
20,398,375
Machinery and equipment
6,038,540
3,717,114
12,589,999
196,242
-
70,000
-
-
249,431
196,557
99,336
9,933
Advances to other funds Deferred charges Capital assets: Land Land improvements Infrastructure
Lease improvements Software Construction in progress
21,742,895
Less accumulated depreciation
466,907
25,465
346,709
(36,453,960)
(69,535,415)
(18,700,885)
(7,221,185)
Total capital assets (net of accumulated depreciation)
58,982,318
115,497,054
16,567,802
19,454,341
Total noncurrent assets
59,828,804
130,856,714
17,942,058
19,656,670
Total assets
95,756,108
144,370,623
30,206,920
23,994,816
See accompanying Notes to Basic Financial Statements.
36
Enterprise Funds
Governmental Activities Internal
Storm Water
$
Golf Course
2,658,907 611
$
Total
53 275,414
29,685
(3,161)
$
Service Funds
56,087,726
$
6,850,297
2,803,575
-
1,055,772
70,594 7,030
36,810
86,386
7,166,955
454,208
7,600
1,085,238
-
-
-
-
-
-
-
1,151,684
-
-
-
209,784
-
-
-
-
133,641
-
-
30,000
1,392,459
3,180,221
366,292
69,590,734
8,454,021
-
289,624
1,369,711
-
-
-
401,058
-
-
-
15,008,579
-
-
-
102,917
-
775,912
133,147
2,099,149
-
8,822
1,819,287
11,590,526
242,277
2,450,870
3,956,018
-
50,954,503
234,362
177,843,083
-
-
1,236,318
160,220,644
-
6,421
675,653
23,223,969
1,157,143
-
-
70,000
-
-
-
555,257
336,296
764,721
-
23,346,697
-
(9,385,974)
(1,595,932)
(142,893,351)
(1,298,079)
42,590,770
4,820,558
257,912,843
195,360
43,366,682
5,243,329
276,894,257
195,360
46,546,903
5,609,621
346,484,991
8,649,381
(Continued)
37
City of Santa Cruz Statement of Net Assets, Continued Proprietary Funds June 30, 2007
Major Funds
Water
Wastewater
Refuse
Parking
LIABILITIES Current liabilities: Accounts payable and other current liabilities
$
1,252,702
Due to other funds Interest payable Unearned revenue Deposits payable
$
842,029
$
575,325
$
79,998
-
-
-
-
185,000
911,273
118,362
50,121
622
-
48,013
-
27,561
58
603
18,843
Claims and judgments payable
-
-
-
-
Compensated absences payable
240,141
122,562
162,452
8,735
due in less than one year
293,126
2,699,538
2,355,291
205,000
Total current liabilities
1,999,152
4,575,460
3,260,046
362,697 351,000
Bonds, notes, loans and leases payable
Noncurrent liabilities: Advances from other funds
-
-
-
Claims and judgments payable
-
-
-
-
Compensated absences payable
120,070
61,281
81,226
4,367
12,553,584
36,412,158
10,217,696
5,940,000
-
-
6,055,236
-
Bonds, notes, loans and leases payable due in more than one year Landfill closure costs Total noncurrent liabilities
12,673,654
36,473,439
16,354,158
6,295,367
Total liabilities
14,672,806
41,048,899
19,614,204
6,658,064
Invested in capital assets, net of related debt
45,741,818
74,047,454
2,812,472
13,108,004
Unrestricted
35,341,484
29,274,270
7,780,244
4,228,748
NET ASSETS
Total net assets
$
81,083,302
$
103,321,724
$
10,592,716
$
17,336,752
$
-
$
-
$
-
$
-
See accompanying Notes to Basic Financial Statements.
38
Major Funds
Governmental Activities Internal
Storm Water
$
Golf Course
54,701
$
-
Total
92,086
$
Service Funds
2,896,841
$
235,782
557,166
557,166
8,160
58,031
32,621
1,355,408
-
-
18,389
67,024
-
-
-
47,065
-
-
-
-
2,812,930
1,861
19,492
555,243
30,599
170,000
250,303
5,973,258
-
284,593
970,057
11,452,005
3,087,471
-
-
351,000
-
-
-
-
7,498,625
931
9,746
277,621
15,300
5,770,000
3,769,190
74,662,628
-
-
-
6,055,236
-
5,770,931
3,778,936
81,346,485
7,513,925
6,055,524
4,748,993
92,798,490
10,601,396
36,490,770
124,466
172,324,984
4,000,609
736,162
81,361,517
$
40,491,379
$
860,628
$
253,686,501
$
-
$
-
$
-
195,360 (2,147,375) $
(1,952,015)
(Concluded)
39
City of Santa Cruz Statement of Revenues, Expenses and Changes in Net Assets Proprietary Funds For the year ended June 30, 2007
Enterprise Funds
Water
Wastewater
Refuse
Parking
OPERATING REVENUES: Charges for services
$
22,442,267
$
13,978,613
$
15,108,051
$
2,697,863
Use of property
6,600
-
-
139,548
Other revenues
246,898
1,304
49,863
44,920
22,695,765
13,979,917
15,157,914
2,882,331
7,138,553
4,472,202
5,770,172
996,117
Total operating revenues OPERATING EXPENSES: Personnel services Services, supplies, and other charges
6,927,313
5,368,800
4,726,929
835,390
Depreciation and amortization
1,865,073
4,362,255
1,866,235
486,577
Total operating expenses
15,930,939
14,203,257
12,363,336
2,318,084
Operating income (loss)
6,764,826
2,794,578
564,247
(223,340)
NONOPERATING REVENUES (EXPENSES): Intergovernmental Investment earnings Interest expense and fiscal charges Debt issuance costs Gain (loss) on sale of capital assets
-
206,207
15,575
79,093
1,826,747
801,488
531,447
191,062
(258,573)
(1,152,180)
(574,272)
(304,051)
(14,360)
(22,466)
(36,805)
(9,910)
3,067
2,680
(4,726)
50,506
(68,781)
6,700
Total nonoperating revenues (expenses)
1,556,881
(164,271)
Income (loss) before contributions and transfers
8,321,707
(387,611)
2,725,797
570,947
1,112,837
-
-
-
-
-
Capital contributions Transfers in
7,644
Transfers out
-
(777)
(5,038)
(5,196)
-
(5,196)
-
Total contributions and transfers
1,119,704
(5,038)
Change in net assets
9,441,411
(392,649)
2,720,601
570,947
7,872,115
16,922,805
NET ASSETS: Beginning of year
72,019,358
Prior period adjustment (Note 16)
(377,467)
Beginning of year, as restated End of year
103,829,258 (114,885)
71,641,891 $
81,083,302
See accompanying Notes to Basic Financial Statements.
40
-
103,714,373 $
103,321,724
(157,000)
7,872,115 $
10,592,716
16,765,805 $
17,336,752
Enterprise funds
Governmental Activities Internal
Storm Water
$
Golf Course
875,730
$
1,770,614
$
Service Funds
56,873,138
$
7,905,452
-
1,120
147,268
-
-
187,173
530,158
21,947
875,730
1,958,907
57,550,564
7,927,399
92,984
833,364
19,303,392
1,198,645
224,972
909,479
18,992,883
5,059,535
1,322,031
205,446
10,107,617
86,192
1,639,987
1,948,289
48,403,892
6,344,372
(764,257)
10,618
9,146,672
1,583,027
264,112
24,895
589,882
-
122,023
17,954
3,490,721
339,102
(241,333)
(206,620)
(2,737,029)
(56,955)
(10,481)
(150,977)
-
-
-
51,527
-
87,847
(174,252)
1,244,124
338,208
(676,410)
(163,634)
10,390,796
1,921,235
-
-
1,112,837
-
-
-
7,644
129,288
-
-
(11,011)
(676,946)
-
-
1,109,470
(676,410)
(163,634)
11,500,266
1,373,577
242,835,587
(3,325,592)
41,167,789
$
Total
1,024,262
-
-
41,167,789
1,024,262
40,491,379
$
860,628
(894)
(547,658)
(649,352)
-
242,186,235 $
253,686,501
(3,325,592) $
(1,952,015)
41
City of Santa Cruz Combining Statement of Cash Flows Proprietary Funds For the year ended June 30, 2007
Major Funds
Water
Wastewater
Refuse
Parking
CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers and users
$
Cash received from interfund services provided
21,570,235
$
656,678
13,058,038
$
28,555
14,218,492
$
2,403
2,684,952 9,241
Cash payments to suppliers for goods and services
(5,658,218)
(3,981,135)
(2,177,661)
(958,507)
Cash payments to employees for services
(7,106,775)
(4,492,632)
(5,786,226)
(991,625)
Cash payments for interfund services used
(2,061,278)
(1,026,603)
(2,276,388)
(38,392)
-
(105,336)
(70,383)
79,093
Cash payments to other governments Cash received from (payments to) others Net cash provided (used) by operating activities
253,498
1,362
49,863
184,468
7,654,140
3,482,249
3,960,100
969,230
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in
7,644
Transfers out
(777)
Advances from other funds
-
Advances to other funds Receipts from other governments Net cash provided (used) by noncapital financing activities
-
-
-
(5,038)
(5,196)
-
-
-
254,499
8,045
10,669
-
-
-
1,120,317
26,575
50,413
14,912
1,125,948
21,379
304,912
1,112,837
-
-
-
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital contributions Purchase and construction of capital assets
(15,878,467)
(882,626)
(1,706,340)
138,675
Principal paid on capital debt
(379,430)
(2,314,975)
(1,145,540)
(191,427)
Interest paid on capital debt
(215,509)
(1,236,160)
(626,807)
(314,248)
Proceeds from sales of capital assets
3,067
2,680
(4,725)
50,506
Net cash provided (used) by capital and related financing activities
(15,357,502)
(4,431,081)
(3,483,412)
(316,494)
12,000,000
-
(21,987)
-
-
-
-
1,762,026
815,871
497,027
175,807
13,762,026
815,871
475,040
666,935
6,073,576
992,987
973,107
1,624,583
25,652,576
8,524,861
9,549,704
2,564,922
CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales and maturities of investments Interest receivables Investment income received Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents
491,128
CASH AND CASH EQUIVALENTS: Beginning of year End of year
$
31,726,152 -
See accompanying Notes to Basic Financial Statements.
42
$
9,517,848 -
$
10,522,811 -
$
4,189,505 -
Major Funds
Governmental Activities Internal
Storm Water
$
$
Golf Course
875,977
$
Total
1,747,596
$
Service Funds
54,155,290
$
696,877
166,159
-
-
(346,777)
(602,020)
(13,724,318)
(3,088,114)
7,763,957
(91,999)
(829,557)
(19,298,814)
(1,188,787)
64,800
(322,744)
(5,660,605)
(3,093,352)
9,148
-
(87,478)
-
-
745,459
1,234,650
-
511,149
738,734
17,315,602
559,863
-
-
7,644
-
-
(11,011)
(547,658)
-
(439,293)
(184,794)
-
-
439,293
-
458,007
-
579,563
24,895
1,801,763
-
1,018,856
(414,398)
2,071,609
(547,658)
-
-
1,112,837
-
(433,894)
(43,896)
(18,806,548)
(8,296)
(87,261)
(226,825)
(4,345,458)
(21,060)
(300,219)
(218,394)
(2,911,337)
(870)
-
-
(821,374)
(489,115)
(24,898,978)
-
145,628
12,614,769
-
-
-
-
(12,438)
112,637
22,515
3,385,883
339,101
112,637
168,143
16,000,652
326,663
821,268
3,364
10,488,885
308,642
1,838,250
272,103
48,402,416
6,541,655
2,659,518 -
$
275,467 -
51,528
$
58,891,301 -
(30,226)
$
6,850,297 (Continued)
43
City of Santa Cruz Combining Statement of Cash Flows, Continued Proprietary Funds For the year ended June 30, 2007
Major Funds
Water
Wastewater
Refuse
Parking
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (loss)
$
6,764,826
$
(223,340)
$
2,794,578
$
564,247
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization
1,865,073
4,362,255
1,866,235
486,577
-
-
303,829
-
(222,466)
(891,973)
(898,079)
(1,651)
(43,919)
(33,238)
(47,139)
3,495
Inventories
-
-
-
-
Notes and loans receivable
-
25,962
-
-
(748,264)
229,764
(101,332)
(82,416)
Estimated closure/postclosure costs Changes in assets and liabilities: Accounts receivable Prepaid items
Accounts payable and other current liabilities Due to other funds
-
-
-
-
Deferred revenue
-
-
10,573
-
Deposits payable
7,112
350
(2,019)
(47)
Claims and judgments payable
-
58
-
-
Compensated absences payable
31,778
12,808
31,085
997
889,314
3,705,589
1,165,522
404,983
Total adjustments Net cash provided (used) by operating activities
$
See accompanying Notes to Basic Financial Statements.
44
7,654,140
$
3,482,249
$
3,960,100
$
969,230
Major Funds
Governmental Activities Internal
Storm Water
$
$
Golf Course
(764,257)
$
Total
10,618
$
Service Funds
9,146,672
$
1,588,357
1,322,031
205,446
10,107,617
86,192
-
-
303,829
-
247
(23,018)
190
5,397
(115,214)
-
-
-
(2,036,940)
24,664 4,410 (247,385)
-
-
(47,857)
(20,682)
(770,787)
25,962
-
557,166
557,166
-
-
10,573
-
-
5,396
(152) (668,531)
-
-
58
795
3,807
81,270
1,275,406
728,116
8,168,930
511,149
$
738,734
$
17,315,602
(229,266) (3,518) -
5,092 (1,028,494) $
559,863
(Concluded)
45
This page intentionally left blank.
46
Fiduciary Fund Financial Statements Private - Purpose Trust Funds: Private-purpose trust funds are used to report the trust arrangements under which the principal and income benefit the Library Joint Powers Authority. Agency Funds: Agency funds are used to account for resources held by the City in a custodial capacity. These funds account for the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments.
47
City of Santa Cruz Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2007
PrivatePurpose
Agency
Trust Funds
Funds
ASSETS Cash and cash equivalents
$
Restricted cash and cash equivalents
537,000
$
-
1,644,287 75,985
Receivables: Interest receivable Taxes receivable Accounts receivable
6,147
16,701
-
651,199
-
530,842
Due from other governments
-
27,620
Prepaid items
-
-
Total assets
$
543,147
$
-
$
2,946,634
LIABILITIES Accounts payable and other current liabilities
$
Due to other governments
-
841,384 1,281,985
Deposits payable
-
533,653
Payable to bondholders
-
289,612
Total liabilities
-
NET ASSETS Held in trust for library programs
$
See accompanying Notes to Basic Financial Statements.
48
543,147
$
2,946,634
City of Santa Cruz Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the year ended June 30, 2007
PrivatePurpose Trust Funds ADDITIONS: Investment earnings
$
Total additions
28,205 28,205
DEDUCTIONS: Library programs
9,027
Total deductions
9,027
Change in net assets
19,178
NET ASSETS: Beginning of year
523,969
End of year
$
See accompanying Notes to Basic Financial Statements.
49
543,147
This page intentionally left blank.
50
City of Santa Cruz Index to Notes to the Basic Financial Statements For the year ended June 30, 2007
Page Note 1 - Summary of Significant Accounting Policies..................................................................................53 A. B. C. D. E. F. G. H. I. J. K. L. M. N. O. P. Q. R.
Reporting Entity..............................................................................................................................53 Basis of Accounting and Measurement Focus............................................................................53 Use of Restricted/Unrestricted Net Assets.................................................................................56 Cash, Cash Equivalents and Investments ...................................................................................56 Restricted Cash and Investments with Fiscal Agents................................................................56 Prepaid Items ..................................................................................................................................57 Inventories .......................................................................................................................................57 Interfund Transactions...................................................................................................................57 Capital Assets..................................................................................................................................58 Interest Payable...............................................................................................................................58 Deferred Revenue ...........................................................................................................................59 Compensated Absences .................................................................................................................59 Bond Premiums, Discounts, and Issuance Costs .......................................................................59 Long-Term Debt..............................................................................................................................59 Net Assets ........................................................................................................................................60 Fund Balances – Reservations and Designations .......................................................................60 Property Taxes ................................................................................................................................60 Use of Estimates..............................................................................................................................60
Note 2 - Cash Deposits and Investments .........................................................................................................60 A. Cash Deposits..................................................................................................................................61 B. Investments .....................................................................................................................................62 C. Risk Disclosures ..............................................................................................................................63 Note 3 – Receivables ............................................................................................................................................66 Note 4 – Interfund Balances and Transactions ...............................................................................................67 A. Government-Wide Financial Statements ....................................................................................67 B. Fund Financial Statements ............................................................................................................68 Note 5 – Capital Assets ........................................................................................................................................70 A. Government-Wide Financial Statements ....................................................................................70 B. Fund Financial Statements ............................................................................................................73
51
City of Santa Cruz Index to Notes to the Basic Financial Statements, Continued For the year ended June 30, 2006
Page Note 6 – Long-Term Debt....................................................................................................................................73 A. Governmental Activities Long-Term Debt .................................................................................73 B. Proprietary Fund Obligations .......................................................................................................79 Note 7 – Risk Management and Self Insurance..............................................................................................85 Note 8 – Landfill Closure and Postclosure Costs ...........................................................................................87 Note 9 – Retirement Plans...................................................................................................................................88 A. Pension Plan ....................................................................................................................................88 Note 10 – Post-Employment Retirement Benefits ..........................................................................................90 Note 11 – Commitments and Contingencies ...................................................................................................90 Note 12 – Operating Leases ................................................................................................................................92 Note 13 – Reserved and Designated Fund Balances ......................................................................................93 Note 14 – Deficit Net Assets ...............................................................................................................................94 Note 15 – Subsequent Events .............................................................................................................................94 Note 16 – Prior Period Adjustments..................................................................................................................95 A. Government-Wide Financial Statements ....................................................................................95 B. Fund Financial Statements ............................................................................................................95
52
City of Santa Cruz
Notes to Basic Financial Statements For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of Santa Cruz, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. A. Reporting Entity The City was incorporated as a town in 1866 under the laws of the State of California. It became a City in 1876. The City is a charter city administered under a council/manager form of government. The financial statements present the City and its component units (legally separate entities for which the City is considered to be financially accountable). Component units include those entities for which the City may have governing authority or is in a relationship of financial benefit or burden. Component units also include entities that are fiscally dependent upon the City. The financial activities of these entities are integrally related to those of the City and, therefore, blended with those of the City. Blending involves aggregating/merging component unit data and data from the City at the combined financial statement level. Based on the above criteria, the accompanying financial statements include the financial activities of the following entities as blended component units. Separate financial statements of these entities can be obtained from the Finance Department of the City. City of Santa Cruz Redevelopment Agency - The City of Santa Cruz Redevelopment Agency (Agency) was formed in 1956 to improve social, physical and economic conditions of the City by constructing a series of commercial, residential and public buildings in the downtown area. The City's Council members are the Agency's Directors and have full accountability for the Agency's fiscal matters. Santa Cruz Public Improvement Financing Corporation - The Santa Cruz Public Improvement Financing Corporation (Corporation) is a non-profit benefit corporation organized and operated under the laws of the State of California. The primary purpose of the Corporation is to serve as a financing vehicle for the City. The City Council has final responsibility for the operations of the Corporation. B. Basis of Accounting and Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Government - Wide Financial Statements The City’s Government-Wide Financial Statements include a Statement of Net Assets and a Statement of Activities and Changes in Net Assets. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. 53
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Government - Wide Financial Statements, Continued These basic financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Certain types of transactions are reported as program revenues for the City in three categories: Charges for services ¾ Operating grants and contributions ¾ Capital grants and contributions ¾
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the businesstype activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities and Changes in Net Assets, internal service fund transactions have been eliminated; however, those transactions between governmental and businesstype activities have not been eliminated. The following interfund activities have been eliminated: Due to/from other funds Advances to/from other funds ¾ Transfers in/out ¾ ¾
For its business type activities, the City applies all applicable GASB pronouncements currently in effect, as well as Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) of the Committee on Accounting Procedure that do not conflict with or contradict GASB pronouncements. Governmental Fund Financial Statements Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net assets as presented in these statements to the net assets presented in the Government-Wide Financial Statements. The City has presented all major funds that met the applicable criteria. All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. 54
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements, Continued Revenues are recorded when received in cash, except for that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred. Deferred revenues arise when potential revenues do not meet both the “measurable” and “available” criteria for recognition in the current period. Deferred revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when the government has a legal claim to the resources, the deferred revenue is removed from the Balance Sheet and revenue is recognized. The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of Revenues, Expenses and Changes in Net Assets, and a Statement of Cash Flows for each major proprietary fund. A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the Government-Wide Financial Statements. Internal Service Funds may be used to report any activity that provides goods or services to other funds, departments, or agencies of the primary government. Examples are Equipment Operations, Stores Services, Telecommunications, and Risk Management Funds. Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts. In accordance with GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Government Entities that Use Proprietary Fund Accounting, the City applies all GASB pronouncements currently in effect as well as FASB Statements and Interpretations, APB Opinions and ARB of the Committee on Accounting Procedure that do not conflict with or contradict GASB pronouncements. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses. 55
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Fiduciary Fund Financial Statements Fiduciary Fund Financial Statements include a Statement of Net Assets and a Statement of Changes in Fiduciary Net Assets. The City's fiduciary funds represent agency funds and private-purpose trust funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The agency funds are accounted for using the accrual basis of accounting. Agency funds include Library Joint Powers Authority, Payroll Payables, and Special Assessments. The privatepurpose trust funds are used to account for resources legally held in trust for special purposes, such as McCaskill Trust for Local History, McCaskill Trust for Visually Impaired, and The Finkeldey Trust for Musical Literature. C. Use of Restricted/Unrestricted Net Assets When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the City’s policy is to apply restricted net assets first. D. Cash, Cash Equivalents and Investments Cash and cash equivalents are considered to be amounts in demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. For purposes of both the balance sheet and statements of cash flows, cash and cash equivalents includes not only currency on hand, but deposits in the City’s cash and investment pool. These deposits have the same characteristics for the participating funds as demand deposit accounts, in that the funds may deposit additional cash at any time and also effectively withdraw cash at any time without prior notice or penalty. Cash and cash equivalents also include restricted cash and money market funds held by fiscal agents. The City’s cash and investments are stated at fair value, which is based on a quoted market price. This includes all investments except the City’s investment in the California Local Agency Investment Fund (LAIF). LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available. The City valued its investments in LAIF as of June 30, 2007, by multiplying its account balance with LAIF times a fair value factor determined by LAIF (.999545022). This fair value factor was determined by dividing the total aggregate fair value for all LAIF participants by total aggregate amortized cost. E. Restricted Cash and Investments with Fiscal Agents Certain restricted cash and investments are held by fiscal agents for the redemption of bonded debt and for acquisition and construction of capital projects. F. Prepaid Items Certain payments applicable to future accounting periods are recorded as prepaid items. Prepaid items do not reflect current appropriable resources and, thus, an equivalent portion of fund balance is reserved. 56
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued G. Inventories Inventories consist of material and supplies which are stated at cost using the first-in, first-out method. Inventories are recognized as expenditures when consumed rather than when purchased. H. Interfund Transactions Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the long-term portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the Government-Wide Financial Statements as “internal balances.” I.
Capital Assets Capital assets are defined by the City as assets having an estimated useful life in excess of one year, and an initial, individual cost in excess of the capitalization thresholds described below: Infrastructure Land improvements Buildings and lease improvements Machinery and equipment Software (if qualified)
$
25,000 10,000 10,000 5,000 5,000
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are valued at their estimated fair market value on the date donated. Assets acquired under capital leases are capitalized in accordance with generally accepted accounting principles. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest accrued during capital assets construction, if any, is capitalized for the businesstype activities and proprietary funds as part of the asset cost. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset’s useful life are not capitalized. Capital assets are reported in the applicable governmental or business-type activities in the Government-Wide Financial Statements. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Land improvements Buildings and lease improvements Water tanks and water mains Underground sewer lines Other infrastructure Machinery and equipment Software ( if qualified)
57
20 years 15-50 years 30-50 years 50 years 5-100 years 5-20 years 5 years
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued I.
Capital Assets, Continued Assets are grouped by asset type into one of the following accounts – land, land improvements, infrastructure assets (e.g. roads, bridges, sidewalks, and similar items), buildings (and improvements), machinery and equipment, lease improvements, software, and construction in progress. GASB issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local governments’ Basic Financial Statements. In accordance with Statement No. 34, the City has included the value of all infrastructure in the fiscal year 2003 Basic Financial Statements. For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34 for infrastructure reporting. Estimated historical costs were developed in one of three ways: (1) historical records; (2) standard unit costs appropriate for the construction/acquisition date; or (3) present cost indexed by a reciprocal factor of the price increase from the construction/acquisition date to the current date. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date on a straight line, unrecovered cost method was computed using industry accepted life expectancies for each infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation from the estimated historical cost.
J.
Interest Payable In the Government-Wide Financial Statements, interest payable on long-term debt is recognized as the liability is incurred for governmental fund types and proprietary fund types. In the Fund Financial Statements, propriety fund types recognize the interest payable when the liability is incurred.
K. Deferred Revenue In the Government-Wide Financial Statements, deferred revenue is recognized for transactions for which revenue has not yet been earned. Typical transactions recorded as deferred revenues in the Government-Wide Financial Statements are long-term assessments, long-term loans receivable, and prepaid charges for services. In the Fund Financial Statements, deferred revenue is recorded when transactions have not yet met the revenue recognition criteria based on the modified accrual basis of accounting. The City records deferred revenue for transactions for which revenues have not been earned, or for which funds are not available to meet current financial obligations. Typical transactions for which deferred revenue is recorded are grants received but not yet earned or available, interest on interfund advances receivable, long-term assessments and loans receivable.
58
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued L. Compensated Absences The City has accumulated unpaid regular vacation leave (for all departments) which is accounted for in accordance with GAAP. The maximum accumulation of vacation leave is limited to the total number of hours accruable during two years. Employees are paid 100% of their accumulated vacation pay when they terminate their employment for any reason. Employees are allowed a partial payoff of accumulated sick leave up to a certain maximum amount. M. Bond Premiums, Discounts, and Issuance Costs For governmental type activities, bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bond proceeds are reported as other financing sources net of the applicable premium or discount. Issuance costs, whether or not withheld from the actual net proceeds received, are reported as debt service expenditures. For business type activities, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using a straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs and costs in excess of net assets acquired are reported as other assets in the accompanying financial statements. N. Long-Term Debt Government-Wide Financial Statements - Long-term debt and other long-term obligations are reported as liabilities in the appropriate activities. Fund Financial Statements - With the exception of advances from other funds, the governmental fund financial statements do not present long-term liabilities. However, the long term debt is shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the GovernmentWide Statement of Net Assets. O. Net Assets In the Government-Wide Financial Statements, net assets are classified in the following categories: Invested in Capital Assets, net of Related Debt – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. Restricted Net Assets – This amount is restricted by external creditors, grantors, contributors, laws or regulations of other governments. Unrestricted Net Assets – This amount is all net assets that do not meet the definition of “invested in capital assets, net of related debt” or “restricted net assets.”
59
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued P. Fund Balances - Reservations and Designations In the Fund Financial Statements, governmental funds report reservations of fund balances for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balances represent tentative management plans that are subject to change. Q. Property Taxes Assessed property values are determined annually by the County Assessor as of March 1, and become a lien on real property at July 1. Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County bills and collects property taxes and remits them to the City under the State authorized method of apportioning taxes whereby all local agencies, including cities, receive from the county their respective shares of the amount of ad valorem taxes collected. Property tax revenues are recognized when levied provided the measurement and availability criteria have been met. R. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions.
2. CASH DEPOSITS AND INVESTMENTS The following is a summary of cash, cash equivalents, and investments, including restricted cash and investments with fiscal agents at June 30, 2007: Government-Wide Statement of Net Assets Governmental Business-Type Activities Activities Total
Statement of Fiduciary Net Assets
Total
Unrestricted assets: Cash and cash equivalents
$
Total unrestricted assets Restricted assets: Cash and cash equivalents Investments with fiscal agents Total restricted assets Grand Total
$
42,640,326
$
56,087,726
$
98,728,052
$
2,181,287
$
100,909,339
42,640,326
56,087,726
98,728,052
2,181,287
100,909,339
3,026,030 283,042
2,803,575 1,369,711
5,829,605 1,652,753
75,985 -
5,905,590 1,652,753
3,309,072
4,173,286
7,482,358
75,985
7,558,343
45,949,398
$
60,261,012
60
$
106,210,410
$
2,257,272
$
108,467,682
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
2. CASH DEPOSITS AND INVESTMENTS, Continued The City pools its available cash for investment purposes. Investment income from this pool is allocated to each fund based on its proportionate share of the pool. Cash and investments not pooled include bond proceeds held by fiscal agents, and other amounts required to be segregated by bond indentures or other regulations. Investment income from cash and investments with fiscal agents is credited directly to the related fund. Cash, cash equivalents, and investments consisted of the following at June 30, 2007: Cash and cash equivalents: Pooled cash deposits
$
Outstanding checks
1,784,555 (3,868,492)
Other deposits and cash held by City
41,810
Certificates of deposit
596,000
Money market mutual funds available for debt service
7,462
Federal securities
64,656,826
State local agency investment fund
37,691,178
Total cash and cash equivalents
100,909,339
Restricted cash and cash equivalents: Pooled cash deposits
521,474
Other cash deposits
78,785
Money market mutual funds held by fiscal agents
2,262,641
Investment contracts held by fiscal agents
9,758
State local agency investment fund
3,032,932
Total restricted cash and cash equivalents
5,905,590
Restricted Investments: Federal securities held by fiscal agents
1,652,753
Total investments
1,652,753
Total cash, cash equivalents, and investments
$
108,467,682
A. Cash Deposits At June 30, 2007, the carrying amounts of the City’s cash deposits were ($1,441,868), net of outstanding checks in the amount of $3,868,492. Bank balances before reconciling items were $2,450,036. The total bank balance was collateralized or insured with securities held by the pledging financial institutions in the City’s name as discussed below. The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name. 61
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
2. CASH DEPOSITS AND INVESTMENTS, Continued A. Cash Deposits, Continued The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure city deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $100,000 by the Federal Deposit Insurance Corporation. B. Investments The investments made by the City treasurer are limited to those allowable under State statutes as incorporated into the City’s Investment Policy, dated May 31, 2007, which is more conservative than that allowed by State statute. The scope of the investment policy includes all activities of the City and the following reporting entities: ¾ ¾ ¾
City of Santa Cruz City of Santa Cruz Redevelopment Agency Santa Cruz Public Improvement Financing Corporation
Under provisions of this policy, the City is authorized to invest in the following types of investments: ¾ ¾ ¾ ¾ ¾ ¾
¾ ¾
¾
Money market accounts deposited with a nationally or state-chartered bank. Bonds issued by the City. Purchases of this type shall not exceed five years to maturity. U.S. Treasury bills, notes, bonds, or certificates of indebtedness, or those securities backed by the full faith and credit of the U.S. Government with maturities not to exceed five years. Obligations, participations, or other instruments of, or issued by, a Federal agency or a United States government-sponsored enterprise with maturities not to exceed five years. Bankers’ acceptances with a term not to exceed 180 days’ maturity or 40% of the City’s portfolio. Nonnegotiable and nontransferable certificates of deposit issued by a nationally or statechartered bank, state or federal credit union, or by a state-licensed branch of a foreign bank. Purchases may not exceed 30% of the City’s portfolio with no more than 5% of the portfolio deposited with a single issuer. State of California Local Agency Investment Fund as long as the total amount of City and Agency combined funds invested does not exceed the limit set by LAIF. Shares of beneficial interest issued by diversified management companies investing in authorized securities and obligations (e.g., money market mutual funds). Purchases shall not exceed 20% of the City’s portfolio with no more than 10% of the portfolio in a single mutual fund. Repurchase agreements with primary dealers of the Federal Reserve with specific terms and conditions. The market value of securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities, and the value shall be adjusted no less than quarterly. Securities that can be pledged for collateral consist only of investments permitted within this policy with a maximum maturity of five years. Purchases shall not exceed 92 days to maturity and 20% of the portfolio. 62
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
2. CASH DEPOSITS AND INVESTMENTS, Continued B. Investments, Continued Bond proceeds held by fiscal agents to be used only for specific capital outlay, payments of certain longterm debt and maintaining required reserves are invested in accordance with the requirements and restrictions of the City’s investment policy and as permitted by specific State statutes, applicable City ordinance or resolution, and bond indenture requirements. The City is a participant in LAIF, which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2007, included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities: Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options. Asset-Backed Securities: generally mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables. As of June 30, 2007, the City had $40,724,110 invested in LAIF accounts, which had invested 3.466% of the pool investments in structured notes and asset-backed securities. The City’s share of structured notes and asset-backed securities due to its holdings in LAIF amounted to approximately 1.284% of investments at June 30, 2007. C. Risk Disclosures Interest Rate Risk - In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the weighted average maturity of its investment portfolio to two and-one half (2 ½) years or less. The City is in 100% compliance with this provision of the investment policy. At June 30, 2007, the City had the following investment maturities: Investment Type
Fair Value
U.S. Treasuries
$
U.S. Agencies U.S. Treasury Money Market Mutual Funds Certificates of Deposit Local Agency Investment Fund Guaranteed Investment Contract Total Fair Value of Investments only*
$
Maturity (Days)
2,993,830
96
63,315,749
251
2,270,103
1
596,000
1,180
40,724,110
176
9,758
275
109,909,550
Portfolio Weighted Average Maturity (Days)
219
Portfolio Weighted Average Maturity (Years)
0.60
*Does not include net amount of bank balances
63
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
2. CASH DEPOSITS AND INVESTMENTS, Continued C. Risk Disclosures, Continued Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations. Investments in callable bonds are investments that, although having clearly defined maturities, allow for the issuer to redeem or call such bonds earlier than their respective maturity dates. The investor must then replace the called bonds with investments that may have lower yield than the original bonds. As a result, the fair value of the callable bonds is highly sensitive to changes in interest rates. As of June 30, 2007, the City held $18,954,880 in callable securities, which amounted to approximately 17.25% of investments at June 30, 2007. The investment policy limits the purchase of callable U.S. Agency instruments to discreet calls and those that pay 100% of the principal at the redemption date. In addition, purchases of callable U.S. Agency instruments are not to exceed 30% of the value of the portfolio. The City is in compliance with these provisions of the investment policy. Credit Risk - State law limits investments in commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations. The City’s investments are rated as follows: Moody's
Standard & Poor's
Aaa Aaa Aaa Aaa
AAA AAA AAA AAA
Not Rated Aaa Aaa Aaa
AAAm AAAm AAAm AAAm-G
Aaa
AAA
Not Rated
Not Rated
U.S. Agencies Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association U.S. Treasury Money Market Mutual Funds Blackrock Provident - Treasury Trust Fund Blackrock Provident - Treasury Fund Goldman Sachs - Financial Square Treasury Obligations Goldman Sachs - Treasury Instruments Portfolio Guaranteed Investment Contract Trinity Plus Funding Company External Pool State of California - Local Agency Investment Fund
The City’s investment policy requires that the management company of mutual funds must have attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. The investment in BlackRock Treasury Trust Money Market Mutual Fund is rated by only one nationally recognized statistical rating organization; however, it is approved by the National Association of Investors Corporation. Concentration of Credit Risk - The City’s investment policy states that not more than 25% of the portfolio shall be invested in any one entity or any one instrument to protect the City from concentration of credit risk, with the following exceptions: U.S. Treasury Obligations and the external investment pool (State of California – Local Agency Investment Fund). In addition, purchases of mutual funds must not exceed 20% of the value of the portfolio. Purchases in a single mutual fund may not exceed 10% of the value of the portfolio. The City is in 100% compliance with these provisions of the investment policy. 64
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
2. CASH DEPOSITS AND INVESTMENTS, Continued C. Risk Disclosures, Continued The following chart presents investments in any one issuer (other than U.S. Treasury securities and external investment pools) that represent 5% or more of total investments at June 30, 2007: Percentage of Investment Type
Amount Invested
Federal Farm Credit Bank
$
Investments
10,458,484
9.52%
Federal Home Loan Bank
22,722,405
20.67%
Federal Home Loan Mortgage Corporation
11,916,540
10.84%
Federal National Mortgage Association
18,218,320
16.58%
63,315,749
57.61%
Total
$
The following chart presents the City’s investments in money market mutual funds by issuer at June 30, 2007: U.S. Treasury Money Market
Percentage of
Mutual Funds
Amount Invested
Blackrock Provident - Treasury Trust Fund
$
Investments
31,058
0.03%
350
0.00%
Goldman Sachs - Treasury Instruments Portfolio
1,147,953
1.04%
Goldman Sachs - Financial Square Treasury Obligations
1,090,742
0.99%
2,270,103
2.06%
Blackrock Provident - Treasury Fund
Total
$
Custodial Credit Risk - For deposits, custodial credit risk is the risk that, in the event of the failure of a deposit financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s investment policy does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the provision for deposits stated in Note 2A. $2,350,036 of the City’s deposits with financial institutions in excess of federal depository insurance limits was held in uncollateralized accounts. Of the City’s total cash and investment balance at June 30, 2007, $3,932,614 is held by fiscal agents, not in the name of the City, and invested as follows: $9,758 in a guaranteed investment contract; $1,652,753 in federal agency securities; and $2,270,103 in money market mutual funds.
65
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
3. RECEIVABLES Government-Wide Statements The following is a summary of receivables net of allowances for uncollectible amounts at June 30, 2007: Government-Wide Statement of Net Assets
Interest receivable
Governmental
Business-Type
Activities
Activities
$
832,087
$
Statement of Fiduciary
Total
1,055,772
$
1,887,859
Net Assets $
Total
22,848
$
1,910,707
Taxes receivable
4,306,295
-
4,306,295
651,199
Accounts receivable, net
1,819,818
7,166,955
8,986,773
530,842
9,517,615
Due from other governments
2,725,206
1,085,238
3,810,444
27,620
3,838,064
Notes receivable
6,087,262
401,058
6,488,320
-
6,488,320
Loans receivable
1,407,917
-
1,407,917
-
1,407,917
-
16,160,263
16,160,263
-
16,160,263
Intergovernmental receivable Total
$
17,178,585
$
25,869,286
$
43,047,871
$
1,232,509
4,957,494
$
44,280,380
Fund Financial Statements At June 30, 2007, the Fund Financial Statements show the following notes, loans and intergovernmental receivables: Notes Receivable - in the General Fund $266,964 (net of an allowance for uncollectible amounts of $371,925) consists of a note from Neary Lagoon Partners in the amount of $78,800; a promissory note from Santa Cruz Shaffer Road Investors for housing developments in the amount of $82,879; a loan to the River Street Shelter for repairs in the amount of $12,900; a loan to First Night Santa Cruz for $20,000; Harvey West Assessment District notes in the amount of $95,500; employee computer loans in the amount of $5,683; various notes for housing improvement activities in the Housing In-Lieu program of $273,127; and $70,000 in loans to two borrowers participating in the Accessory Dwelling Unit Loan Program. Some notes are secured by a deed of trust. The Redevelopment Agency Fund notes receivable balance of $4,874,571 (net of an allowance of $516,740) represents loans for low/moderate income housing projects. There are two types of loan repayment for these notes: due upon sale or transfer and lump sum payment at maturity. Interest rates range from 0% to 7%. The notes are all secured by a deed of trust. The $18,501 note receivable in the Public Works special revenue fund pertains to traffic impact fees owed to the City by an individual (“promissor”) who renovated residential property for commercial purposes. Any default results in the forfeiture of building permits issued to the promissor. Notes receivable in the Parks and Recreation special revenue fund of $245,896 pertain to a promissory note for housing developments – development impact fees. There is no interest on this promissory note. Loan repayment is deferred to a future date when monthly repayment will begin. The note is secured by a personal guarantee from Santa Cruz Shaffer Road Investors, LP, a California limited partnership.
66
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
3. RECEIVABLES, Continued In addition to a $75,000 interest-free loan made to the Homeless Services Center for local shelter operations payable in February 2017, notes receivable in the Housing and Community Development special revenue fund of $681,330 (net of an allowance of $1,369,408) consist of loans for buildings damaged in the 1989 earthquake. There are two types of loan repayments: monthly repayment and deferred to a future date when monthly repayment will begin. The interest rate on these notes is 3%. The notes are all secured by a deed of trust. Notes receivable in the enterprise funds are made up of two notes totaling $401,058. Both are due from Neary Lagoon Partners for water system connection fees pertaining to a low-moderate income housing project. These notes do not bear interest, and repayment is deferred until 2019. Loans Receivable - in other governmental funds $1,407,917 (net of an allowance of $5,335,072) consists of loans for rehabilitation of low/moderate income housing. The loans are made with Federal funds from the Department of Housing and Urban Development (HUD). The City administers these funds for HUD. There are four types of loan repayment schedules: monthly installments, due upon sale or transfer, deferred to a future date when monthly repayment will begin, and no repayment if the property remains in use for low/moderate income housing for a specified time period. Interest rates range from 0% to 7%. The loans are all secured by a deed of trust on the property being rehabilitated. Intergovernmental Receivables - in the enterprise funds $16,160,263 ($1,151,684 due within one year and $15,008,579 due in more than one year) is owed by the County of Santa Cruz for its share of a State Water Resources Board loan for wastewater treatment plant upgrades. Payments of interest and principal from the County of Santa Cruz are due in annual installments of $1,604,172, at an interest rate of 2.8%, with the final payment due August 1, 2018. Allowance for uncollectible notes and loans - When considerable uncertainty exists as to the collectability of a note (as determined by management) due to the terms of the loan or other factors, it is offset by an allowance for uncollectible notes.
4. INTERFUND BALANCES AND TRANSACTIONS A. Government-Wide Financial Statements Long-Term Internal Balances At June 30, 2007, the City had the following long-term internal balances: Internal Balances Payable Governmental Activities Internal Balances Receivable Business-Type Activities
67
$
805,249
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
4. INTERFUND BALANCES AND TRANSACTIONS, Continued A. Government-Wide Financial Statements, Continued This balance consists of the net amount of long-term advances between the Redevelopment Agency Fund and the Water, Wastewater and Parking enterprise funds. The advances are due to fund various projects. Transfers The City had the following transfers for the year ending June 30, 2007: Transfers In Governmental Activities Transfers Out Business-Type Activities
$
3,367
Transfers are made from the enterprise funds to the General Capital Improvement capital projects fund to finance a share of project expenses or debt service costs for projects from which those funds receive benefit. B. Funds Financial Statements The City had the following due to/from other funds as of June 30, 2007:
Due to Other Funds
Due from Other Funds
General
Non-Major Governmental Funds Golf Course Funds Internal Service Funds Total
$
Fund
Total
3,330,360
3,330,360
557,166
557,166
8,160
8,160
3,895,686
$
3,895,686
The outstanding balances between funds result mainly from a timing difference between when interest revenues are earned and when they are received for amounts which are transferred from the earning fund to the General Fund.
68
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
4. INTERFUND BALANCES AND TRANSACTIONS, Continued B. Funds Financial Statements, Continued Long-Term Advances
Advances from Other Funds
The City had the following long-term advances as of June 30, 2007: Advances to Other Funds
Redevelopment Agency Fund
Redevelopment
Water
Wastewater
General
Agency
Enterprise
Enterprise
Fund
Fund
Fund
Fund
$
Non-Major Governmental Funds
902,483
$
-
1,229,332
Parking Enterprise Fund $
2,131,815
13,585
-
-
Total
$
89,332
-
351,000 $
$
351,000
$
1,005,400
-
$
Total
1,229,332 -
13,585
$
89,332
351,000 $
2,585,732
Long-term advances were made 1) from the General Fund, the Water Enterprise Fund, and the Wastewater Enterprise Fund to the Redevelopment Agency Fund to finance redevelopment projects, 2) from the General Fund to the Housing and Community Development Special Revenue Fund as a deposit for matching grant funds, 3) from the Redevelopment Agency Fund to the Parking Enterprise Fund to finance two parking capital improvements projects. Transfers In/Out The City had the following transfers for the year ending June 30, 2007: Transfers In Non-Major General
Redevelopment Governmental Fund
Transfers Out
Fund General Fund
$
Non-Major Governmental Funds
-
Funds
$
66,220
-
$
677
8,288
634,304
$
Enterprise
Internal Service
Funds
Funds -
$
-
Total -
$
-
677 708,812
Enterprise Funds: Water Wastewater Refuse Internal Service Funds Total
-
-
777
-
-
777
1,216
-
-
3,822
-
5,038
-
-
1,374
3,822
-
5,196
547,658 $
615,094
$
8,288
$
637,132
$
7,644
129,288 $
129,288
676,946 $
1,397,446
Transfers are used to 1) move interest revenues from the earning fund to the General Fund, 2) move revenues from the General Fund and other funds to the General Capital Improvement Capital Projects Fund for financing various capital projects, and 3) to move unrestricted tax revenues from the General Capital Improvement Capital Projects Fund to the General Fund as an operating subsidy. 69
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
5. CAPITAL ASSETS A. Government-Wide Financial Statements At June 30, 2007 the City’s capital assets consisted of the following: Governmental
Business-Type
Activities
Activities
Total
Capital Assets: Capital assets, not being depreciated: Land
$
Construction in progress Subtotal, capital assets, not being depreciated
50,609,567
$
11,590,526
$
62,200,093
10,758,619
23,346,697
34,105,316
61,368,186
34,937,223
96,305,409
Capital assets, being depreciated: Land improvements
7,024,152
3,956,018
10,980,170
168,644,770
177,843,083
346,487,853
Buildings
35,421,568
160,220,644
195,642,212
Machinery and equipment
10,602,374
23,223,969
33,826,343
724,114
70,000
794,114
1,102,389
555,257
1,657,646
Subtotal, capital assets, being depreciated
223,519,367
365,868,971
589,388,338
Total capital assets
284,887,553
400,806,194
685,693,747
Infrastructure
Lease improvements Software
Less accumulated depreciation: Land improvements
(1,740,472)
(869,828)
(2,610,300)
(106,789,432)
(74,094,311)
(180,883,743)
Buildings
(9,718,039)
(55,806,172)
(65,524,211)
Machinery and equipment
(7,539,275)
(11,663,756)
(19,203,031)
Lease improvements
(370,457)
(14,234)
(384,691)
Software
(956,476)
(445,050)
(1,401,526)
(127,114,151)
(142,893,351)
(270,007,502)
Infrastructure
Total accumulated depreciation Total capital assets, net
$
70
157,773,402
$
257,912,843
$
415,686,245
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
5. CAPITAL ASSETS, Continued A. Government-Wide Financial Statements, Continued The following is a summary of capital assets for governmental activities: Prior Period Balance
Adjustments
July 1, 2006
(Note 15)
Balance Additions
Deletions
June 30, 2007
Governmental Activities: Capital assets, not being depreciated: Land
$
Construction in progress Subtotal, capital assets, not being depreciated
50,452,567
$
157,000
$
-
$
-
$
50,609,567
5,108,592
-
8,708,354
(3,058,327)
10,758,619
55,561,159
157,000
8,708,354
(3,058,327)
61,368,186
Capital assets, being depreciated: Land improvements Infrastructure
5,393,352
-
1,630,800
-
7,024,152
167,322,095
-
1,322,675
-
168,644,770
Buildings
35,421,568
-
35,600
(35,600)
35,421,568
Machinery and equipment
10,279,605
-
744,437
(421,668)
10,602,374
724,114
-
-
-
724,114
1,056,070
-
46,319
-
1,102,389
Subtotal, capital assets, being depreciated
220,196,804
-
3,779,831
(457,268)
223,519,367
Total capital assets
275,757,963
157,000
12,488,185
(3,515,595)
284,887,553
Lease improvements Software
Less accumulated depreciation: Land improvements Infrastructure
(1,394,671)
-
(345,801)
-
(1,740,472)
(102,361,142)
-
(4,428,290)
-
(106,789,432)
Buildings
(8,950,969)
-
(767,070)
-
(9,718,039)
Machinery and equipment
(7,210,260)
-
(724,430)
395,415
(7,539,275)
Lease improvements
(296,913)
-
(73,544)
-
(370,457)
Software
(808,382)
-
(148,094)
-
(956,476)
(121,022,337)
-
(6,487,229)
395,415
(127,114,151)
Total accumulated depreciation Total capital assets, net
$
154,735,626
$
157,000
71
$
6,000,956
$
(3,120,180)
$
157,773,402
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
5. CAPITAL ASSETS, Continued A. Government-Wide Financial Statements, Continued Depreciation expense of the governmental activities for the year ended June 30, 2007 was $6,487,229 and was distributed among City departments as follows: General government: City Council City Clerk Human Resources Finance Information Technology Non-Departmental Internal service funds
$
Total general government Public safety: Police Fire
6,781 5,529 23,758 190,420 7,977 157,877 86,192 478,534 410,960 253,717
Total public safety
664,677
Parks and Recreation Library Public Works Planning and Community Development Redevelopment Total depreciation expense
2,082,144 26,800 3,152,972 8,156 73,946 $ 6,487,229
The following is a summary of capital assets for business-type activities: Prior Period Adjustments (Note 15)
Balance July 1, 2006
Additions
Deletions
Balance June 30, 2007
Business-type Activities: Capital assets, not being depreciated: Land Construction in process
$
11,931,526 10,436,904
Subtotal, capital assets, not being depreciated
22,368,430
Capital assets, being depreciated: Land improvements Infrastructure Buildings Machinery and equipment Lease improvements Software
3,956,018 180,436,253 160,134,334 20,026,950 70,000 555,258
Subtotal, capital assets, being depreciated
365,178,813
Total capital assets
387,547,243
Less accumulated depreciation: Land improvements Infrastructure Buildings Machinery and equipment Lease improvements Software
249,863,264
$
(649,352) -
(137,683,979) $
(157,000) (492,352) (649,352)
(675,258) (73,818,113) (52,271,065) (10,573,668) (11,434) (334,441)
Total accumulated depreciation Total capital assets, net
$
$
72
(649,352)
16,870,800
$
$
11,590,526 23,346,697
16,870,800
(3,652,655)
34,937,223
1,078,911 86,310 4,636,891 -
(3,672,081) (1,439,872) (1)
3,956,018 177,843,083 160,220,644 23,223,969 70,000 555,257
5,802,112
(5,111,954)
365,868,971
22,672,912
(8,764,609)
400,806,194
(194,570) (3,945,598) (3,535,107) (2,318,933) (2,800) (110,609)
3,669,400 1,228,845 -
(869,828) (74,094,311) (55,806,172) (11,663,756) (14,234) (445,050)
(10,107,617) $
(184,000) (3,468,655)
12,565,295
4,898,245 $
(3,866,364)
(142,893,351) $
257,912,843
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
5. CAPITAL ASSETS, Continued B. Funds Financial Statements Business-type activities depreciation expense for the year ended June 30, 2007 is as follows: Water
$
1,865,073
Wastewater
4,362,255
Refuse
1,866,235
Parking
486,577
Storm Water
1,322,031
Golf Course
205,446
Total depreciation expense
$
10,107,617
The funds financial statements do not present general government capital assets consequently, they are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets.
6. LONG-TERM DEBT A. Governmental Activities Long-Term Debt Classification
Compensated absences Claims and judgments
Balance
Accreted
July 1, 2006
Interest
$
2,108,335
$
Additions -
11,007,290
-
Certificates of participation
4,239,123
-
$
10,442,555
2,943,930
7,498,625
4,096,138
150,848
3,945,290
-
-
Tax allocation bonds payable
5,125,000
-
Capital lease obligations
1,247,913
-
944,836
-
2,558,193
$
2,419,032
$
1,612,688
$
806,344
(185,577)
7,055,865
193,004
6,862,861
(1,384,539)
2,920,487
1,421,374
1,499,113
(120,000)
5,005,000
125,000
4,880,000
27
(282,313)
965,627
146,019
819,608
16,235
(109,490)
851,581
98,180
753,401
$ (4,920,873)
$ 33,756,285
6,691,043
$ 27,065,242
100,000 -
$
Than One Year
(142,985)
115,367
115,367
One Year
(706,104)
-
4,205,026
$
June 30, 2007
141,369
7,126,075
$ 36,003,598
Due in More
$ (1,989,865)
General obligation bonds
Total
Amount
Due Within
2,300,562
Notes payable
Other long-term liabilities
Retirements
Amount Balance
$
Compensated absences and Claims and judgments As shown in the table above, the total amount outstanding at June 30, 2007 was $2,419,032 for compensated absences and $10,442,555 for claims and judgments. In prior years, compensated absences have been liquidated by the General Fund. Claims and judgments are paid by the separate internal service funds for each liability.
73
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Certificates of Participation Certificates of Participation payable at June 30, 2007, are comprised of the following individual issues: Redevelopment Agency certificates of participation are part of the $2,080,000 Golf and Redevelopment Agency Certificates described under enterprise debt. The outstanding balance relating to the Agency at June 30, 2007, was $176,138. The Agency amount due within one year is $55,848 and amount due in more than one year is $120,290. For more information refer to the City of Santa Cruz Redevelopment Agency Basic Financial Statements. The City issued certificates in April 2001, in the amount of $4,415,000, to be used for the Civic Center Improvement Project. The certificates provide funds to finance the acquisition, construction and improvement of the project. The obligation of the City to make the lease payments does not constitute a debt of the City or the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State or any political subdivision thereof is obligated to levy or pledge any form of taxation. Annual payments are $75,000 - $270,000. The certificates bear interest at 4.6% - 5% and are payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2001. Principal is payable annually on April 1 through the year 2031. The balance outstanding at June 30, 2007, was $3,920,000. The amount due within one year is $95,000 and amount due in more than one year is $3,825,000. The annual debt service requirements on the certificates of participation at June 30, 2007, were as follows: For the Year Ending June 30, 2008 2009 2010 2011 2012-2016 2017-2021 2022-2026 2027-2031 Total
Principal $
$
Interest
150,848 153,713 161,577 105,000 600,000 750,000 955,000 1,220,000 4,096,138
$
$
198,448 191,844 185,052 177,835 812,125 658,315 452,750 189,250 2,865,619
Total $
$
349,296 345,557 346,629 282,835 1,412,125 1,408,315 1,407,750 1,409,250 6,961,757
General Obligation Bonds In March 1999, the City issued $6,998,473 in general obligation bonds. The proceeds were used to upgrade fire stations, acquire open space property, and construct a community park and a fire administration facility. Annual payments ranging from $142,625 to $354,010 began September 1, 2000, and continue through September 1, 2029; interest ranges from 3.5% to 8.0%. The bonds are subject to early redemption at the option of the City beginning in 2008. 74
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued General Obligation Bonds, Continued The bonds are secured by and will be paid with annual ad valorem tax levies on all property subject to taxation within the City. The bonds were issued in two series. Series A consisted of $4,500,000 of general obligation bonds, and Series B consisted of $2,498,473 of general obligation bonds - capital appreciation bonds. During fiscal year ended June 30, 2007, $185,577 principal payments were made on the bonds. The balance outstanding of Series A bonds at June 30, 2007 was $4,015,000. The carrying value of the Series B bonds was increased to $3,040,865 in order to reflect the accreted interest due at June 30, 2007. The total balance outstanding at June 30, 2007 was $7,055,865. The annual debt service requirements on the general obligation bonds at June 30, 2007, were as follows: For the Year Ending June 30, 2008
Principal $
Interest
193,004
$
Total
233,546
$
426,550
2009
199,781
237,617
437,398
2010
205,937
241,998
447,935
2011
208,582
244,570
453,152
2012
213,768
249,272
463,040
2013-2017
1,142,922
1,313,398
2,456,320
2018-2022
1,299,821
1,416,715
2,716,536
2023-2027
1,506,721
1,485,529
2,992,250
2028-2032
1,032,693
909,057
1,941,750
Sub-total
6,003,229
6,331,702
12,334,931
Accreted Interest
1,052,636
-
1,052,636
Total
$
7,055,865
$
6,331,702
$
13,387,567
Notes Payable In July 2001, the Redevelopment Agency received Housing Enabled by Local Partnerships (HELP) Loan funds from the State of California, to be used to finance the acquisition, development, demolition of existing structures, and the construction of a multifamily rental apartment complex in the Beach Target Area. The proceeds for the note are to be repaid by July 2011 with an interest rate of 3%. The balance outstanding at June 30, 2007, was $812,487. In March 2006, the Redevelopment Agency received loan funds, from Salz Leathers, Inc., to be used to finance the acquisition of land. The proceeds of the note are to be repaid by March 2009 with an interest rate of 5%. The balance outstanding at June 30, 2007, was $2,028,000.
75
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Notes Payable, Continued In January 2007, the City received loan funds, from Greg Fyvie, to be used for renovation of Lawn Bowling Park. The proceeds of the note are to be repaid by January 2011 with no annual interest. The balance outstanding at June 30, 2007, was $80,000. Tax Allocation Bonds In October 2004, The Redevelopment Agency issued $5,245,000 in tax allocation bonds. The proceeds were used, together with other funds, to redeem, on December 1, 2004, all of the Agency’s outstanding 1996 Merged Earthquake Recovery and Reconstruction Project Area Tax Allocation Refunding Bonds, in the amount of $2,505,000, and to raise additional funds for programs, projects and activities related to the Redevelopment Project. Annual principal payments of $120,000 - $305,000 will be made through October, 2031; interest ranges from 2.50% to 4.625%. The 2004 Tax Allocation Bonds will be secured by a pledge of and first lien of the tax increment revenues derived from the Redevelopment Project, net of certain amounts which are payable to other taxing agencies. The balance outstanding at June 30, 2007 was $5,005,000. The annual debt service requirements on the tax allocation bonds at June 30, 2007, were as follows: For the Year Ending June 30, 2008
Principal $
Interest
125,000
$
202,954
Total $
327,954
2009
130,000
199,766
329,766
2010
130,000
196,516
326,516
2011
135,000
192,866
327,866
2012
140,000
188,566
328,566
2013-2017
775,000
864,228
1,639,228
2018-2022
945,000
696,553
1,641,553
2023-2027
1,165,000
472,453
1,637,453
2028-2032
1,460,000
175,024
1,635,024
Total
$
$
5,005,000
76
3,188,926
$
8,193,926
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Lease Obligations In August 2001, the City acquired miscellaneous vehicles, equipment and computer software under a capital lease agreement payable in semi-annual installments of $331,597 though August 2006, with an interest rate of 4.46%. This lease has been allocated to the General Fund, the Water, Wastewater, Refuse and Parking enterprise funds, and the Agency. The lease has been fully paid off as of June 30, 2007.
In June 2002, the City acquired land under a capital lease agreement with Zion’s First National Bank in the amount of $765,000. The agreement is payable in semi-annual installments of $61,362 through 2021, with a 4.88% interest rate through January 2007 and a variable interest rate thereafter. From January 2007 through January 2021, the interest is to be recomputed, for each interest period, based on 90% of the current Index Rate. The balance outstanding at June 30, 2007 was $612,086. In July 2004, the City entered into a five year capital lease agreement to obtain financing in the amount of $580,000 for the purchase of a seventy-five foot aerial fire truck to replace a 1979 Crown Telesquirt unit. The first interest payment of $9,657 is due in February, 2005, with annual installment payments of $125,781 beginning in August 2005 and ending in August 2009. Interest is at the rate of 3.33% and the payments will be made from the General Fund. The balance outstanding at June 30, 2007 was $353,541. The annual debt service requirements on the capital leases at June 30, 2007, were as follows: For the Year Ending June 30, 2008
Principal $
Interest
146,019
$
40,199
Total $
186,218
2009
151,302
34,914
186,216
2010
156,780
29,436
186,216
2011
36,681
22,903
59,584
2012
38,384
21,161
59,545
2013-2017
220,372
71,666
292,038
2018-2022
216,089
20,637
236,726
Total
$
965,627
$
77
240,916
$
1,206,543
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Other Long-Term Liabilities The Redevelopment Agency is obligated under three separate Owner Participation Agreements (OPA) for various portions of the $1,250,000 Chestnut Street Special Assessment District Debt. Under the first OPA of the Redevelopment Agency owes $26,936 as of June 30, 2007. Under the second OPA, the Redevelopment Agency owes $225,981. Under the third OPA the Redevelopment Agency assumes responsibility for an additional 48.68% of the Special Assessment Debt contingent upon the availability of tax increment. The Redevelopment Agency is currently liable under this OPA for $598,664 and interest, currently estimated at $67,334. The debt is to be paid from tax increment revenues derived from the project. The annual debt service requirements for other long-term liabilities outstanding at June 30, 2007, are as follows: For the Year Ending June 30,
Principal
Interest
Total
2008 2009 2010 2011 2012 2013-2017
$
98,180 105,174 111,859 118,852 129,272 288,244
$
26,272 20,714 14,705 8,381 1,607 -
$
124,452 125,888 126,564 127,233 130,879 288,244
Total
$
851,581
$
71,679
$
923,260
Conduit Debt - During the fiscal year 2003, the Agency issued variable rate demand multifamily housing revenue bonds to provide funding for loans made to Santa Cruz Shaffer Road Investors L.P., and 1010 Pacific Investors L.P. (both California limited partnerships). The revenue bonds were used to finance a portion of the costs of building a 206-unit multifamily residential development and for the rehabilitation and equipping of a 113-unit multifamily residential development within the city limits. The housing facilities are to be occupied by persons of low and very low income, to the extent required by federal tax law. The bonds were issued under a Trust Indenture, dated July 1, 2002 between the Agency, and Wells Fargo Bank, National Association, as trustee. For the Shaffer Road Apartments, the Agency issued 2002 Series A bonds and 2002 Series A-T in the amounts of $29,925,000 and $2,750,000 respectively. For the 1010 Pacific Avenue Apartments, 2002 Series B bonds in the amount of $21,650,000 were issued. The amount outstanding as of June 30, 2007 is $53,525,000. The bonds mature on August 15, 2035. The bonds and interest are limited obligations of the Agency, payable solely from the “trust estate” which is specifically assigned and pledged to such purposes to the extent provided in the Official Statements. The trust estate includes the Agency’s interest in the loans made to the developer, including rights to receive payments on the loans, and rights to certain bond proceeds and related revenues. The Official Statements contain more information regarding the trust estate. The City is in no way obligated to repay the debt in the event of default and the debt is not recorded in the accompanying financial statements. 78
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations A summary of long-term debt transactions of the City for the enterprise funds for the year ended June 30, 2007, is as follows: Classification Amount
Amount
Balance
Due Within
Due in More
Retirements
June 30, 2007
One Year
then One Year
$
$
Balance July 1, 2006 Compensated absences Landfill closure costs
$
751,594
Additions $
905,634
5,751,407
303,829
Certificates of participation
20,915,877
-
Revenue bonds payable
23,265,000
-
Notes payable
37,822,337 3,145,352
2,783,506
Lease obligations Total
$ 91,651,567
$
(824,364) -
832,864
$
555,243
$
277,621
6,055,236
-
(1,732,015)
19,183,862
1,799,151
17,384,711
(665,000)
22,600,000
590,000
22,010,000
-
(2,485,068)
35,337,269
2,553,787
32,783,482
1,574,043
(1,204,640)
3,514,755
1,030,320
2,484,435
$ (6,911,087)
$ 87,523,986
6,528,501
$ 80,995,485
$
6,055,236
Compensated absences As shown in the table above, the total amount outstanding at June 30, 2007 was $832,864 for compensated absences. In prior years, compensated absences have been liquidated primarily by enterprise funds. Landfill closure costs As shown in the table above, the total amount outstanding at June 30, 2007 was $6,055,236 for landfill closure costs. Refer to Note 8 for landfill closure details. Certificates of Participation Certificates of Participation payable at June 30, 2007, are comprised of the following individual issues: Santa Cruz Golf and Redevelopment Agency Certificates, issued in November, 1998, in the amount of $2,080,000, was used to refinance an issue used for improvements to the City's golf course and projects within the City's redevelopment plan areas. Annual payments of $125,000 to $215,000 will be made through May 2010; interest ranges from 3.5% to 4.25%. Annual debt service is covered by lease payments made by the City and secured by covenants made by the City in a lease with the Corporation. The balance outstanding relating to the Golf Course fund at June 30, 2007, was $438,862. Santa Cruz Parking Certificates issued in November 1998, in the amount of $7,955,000, were used for the construction of a second parking structure in the downtown area. The certificates are a liability of the Parking Enterprise Fund. Annual payments are $155,000 - $445,000. The certificates bear interest at 3.5% to 4.9%. Interest is payable semi-annually on May 1 and November 1 and principal is payable annually on May 1 through the year 2028. The balance outstanding at June 30, 2007, was $6,145,000. 79
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations, Continued Certificates of Participation, Continued Santa Cruz Refuse Certificates, issued in October 1999, in amount of $4,345,000, were issued to repay the Wastewater Enterprise Fund for earlier loans to construct a tunnel at the City’s landfill and a leachate line from the landfill to the City’s sewer treatment plant. Annual payments of $100,000 to $245,000 will be made through October 2024; interest ranges from 4.0% to 5.625%. The balance outstanding at June 30, 2007, was $3,585,000. Santa Cruz Refuse Certificates issued in March 2001, in the amount of $7,500,000, were used in the purchase of certain property and improvements, and to finance the acquisition, construction and improvement of the project. The installment payments are payable solely from and secured by a first pledge of certain revenues of the City’s Refuse Enterprise Fund. Annual payments are $45,000 to $720,000. The certificates bear interest at 3.5% to 4.875%. Interest represented by the certificates will be payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2001. Principal is payable annually on October 1 through the year 2021. The certificates are subject to optional and mandatory prepayment. The balance outstanding at June 30, 2007, was $4,950,000. Santa Cruz Refuse Certificates, issued in May 2004, in the amount of $1,590,000 was used to refinance the Santa Cruz Landfill Certificates issued in 1993. Annual payments of $495,000 to $545,000 will be made through 2008: Interest ranges from 4.0 % to 5.375%. The City is obligated, subject to abatement, under the Agreement to pay the certificate payments from any source of legally available funds. The City is currently liable and may become liable on other obligations payable from general revenues, some of which may have priority over the lease payments. The balance outstanding relating to the Refuse Fund at June 30, 2007, was $545,000. Santa Cruz Golf Agency Certificates issued in May 2004, in the amount of $3,700,000 was used to finance the acquisition and construction of improvements to the DeLaveaga Golf Course. Annual payments of $ 90,000 to $ 260,000 will be made through 2029; interest ranges from 4.0% to 5.375%. The City is obligated, subject to abatement, under the Agreement to pay the certificate payments from any source of legally available funds. The City is currently liable and may become liable on other obligations payable from general revenues, some of which may have priority over the lease payments. The balance outstanding relating to the Golf Course Fund at June 30, 2007 was $3,520,000.
80
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations, Continued Certificates of Participation, Continued The annual debt service requirements on the certificates of participation at June 30, 2007, were as follows: For the Year Ending June 30,
Principal
Interest
Total
2008 2009 2010 2011 2012 2013-2017 2018-2022 2023-2027 2028-2032
$
1,799,151 1,306,288 823,423 670,000 690,000 3,995,000 5,105,000 3,845,000 950,000
$
904,066 830,538 786,841 751,332 721,962 3,094,902 1,994,448 795,945 63,369
$
2,703,217 2,136,826 1,610,264 1,421,332 1,411,962 7,089,902 7,099,448 4,640,945 1,013,369
Total
$
19,183,862
$
9,943,403
$
29,127,265
Annual principal and interest requirements for the certificates of participation are apportioned to the various funds based on the percentage share of certificate proceeds. Revenue Bonds Payable 2005 WasteWater Revenue Refunding Bonds, issued in November 2005, in the amount of $4,715,000 was used to refinance the Series B Sewer Revenue Bonds issued in February 1994. Annual payments of $200,000 to $350,000 will be made through November 2023; interest ranges from 3.0% to 4.50%. Annual debt service is payable solely from and secured by a lien on net revenues of the City’s sewer system. The balance outstanding at June 30, 2007, was $4,510,000. 2005 Storm Water Revenue Refunding Bonds, issued in September 2005, in the amount of $6,100,000 was used to refinance the Santa Cruz Storm Water Certificates issued in October 1999. Annual payments of $160,000 to $385,000 will be made through October 2029; interest ranges from 3.0% to 4.375%. The bonds are special obligations of the City payable solely from the revenues received by the City from the ownership and operation of the Storm Water Enterprise. All revenues are irrevocably pledged to the payment of the bonds. The balance outstanding at June 30, 2007, was $5,940,000. 2006 Water Revenue Bonds issued in May 2006, in the amount of $12,450,000 was used to finance construction of a new transmission main connecting the Graham Hill Water Treatment Plant to the Bay Street Reservoir. Annual payments of $220,000 to $555,000 will be made through March 2036; interest ranges from 4.0% to 4.625%. The bonds are special obligations of the City payable from the Net Revenues received by the City from the ownership and operation of the City’s Water System. The balance outstanding at June 30, 2007, was $12,150,000. 81
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations, Continued Revenue Bonds Payable, Continued The annual debt service requirements on the revenue bonds at June 30, 2007, were as follows: Ending June 30, 2008
Principal $
Interest
590,000
$
939,456
Total $
1,529,456
2009
615,000
917,606
1,532,606
2010
635,000
895,831
1,530,831
2011
660,000
874,019
1,534,019
2012
680,000
851,150
1,531,150
2013-2017
3,780,000
3,860,073
7,640,073
2018-2022
4,565,000
3,031,466
7,596,466
2023-2027
4,475,000
2,024,243
6,499,243
2028-2032
3,885,000
1,106,428
4,991,428
2033-2037
2,715,000
327,207
3,042,207
Total
$
22,600,000
$
14,827,479
$
37,427,479
Under conditions of the various revenue bond covenants, the Wastewater Enterprise Fund is required to provide adequate cash and maintain adequate revenues to cover future bond payments. Cash and investments set aside for this purpose is shown in the financial statements as restricted cash and investments. Under conditions of the storm water revenue refunding bond covenant, the Storm Water Enterprise Fund is required to maintain adequate revenues to cover future bond payments. Under conditions of the water revenue bond covenant, the Water Enterprise Fund is required to maintain adequate revenues to cover future bond payments. Notes Payable State of California loans for the construction of a water main line north of the City. Proceeds for the note were received in September 1995, to be repaid in semi-annual installments of $46,679, including interest at 2.973%, through October 2015. This debt is recorded in the Water Enterprise Fund. The balance outstanding at June 30, 2007, was $696,710. State of California loans for the construction of secondary treatment improvements at the City's wastewater treatment plant. Loan proceeds were received as the City incurred project expenditures. Repayment began August 1999. Annual payments of $3,417,099, including interest at 2.8%, will be made through August 2018. This debt is recorded in the Wastewater Enterprise Fund. The balance outstanding at June 30, 2007, was $34,340,559. 82
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations, Continued Notes Payable, Continued State of California loans for the construction of certain solid waste facilities to assist them to achieve or improve compliance with state minimum standards. Proceeds were received in March 2001, and the loan is to be repaid in $33,333 annual payments of principal through 2016. No interest is due on the principal balance of the loan outstanding. This debt is recorded in the Refuse Enterprise Fund. The balance outstanding at June 30, 2007, was $300,000. The annual debt service requirements on the notes at June 30, 2007, were as follows: For the Year Ending June 30, 2008
Principal $
Interest
2,553,787
$
981,752
Total $
3,535,539
2009
2,624,582
910,958
3,535,540
2010
2,697,248
838,295
3,535,543
2011
2,771,987
763,553
3,535,540
2012
2,848,804
686,736
3,535,540
2013-2017
15,299,171
2,205,441
17,504,612
2018-2022
6,541,690
276,016
6,817,706
Total
$
$
35,337,269
6,662,751
$
42,000,020
Lease Obligations The City leases equipment in the Refuse, Water, Wastewater, Parking, and Golf Course funds under various capital lease agreements payable in semi-annual and annual installments through August 2006 with interest rates ranging from 4.5% to 5.9%. In November 2002, the City entered into another equipment lease in the amount of $1,038,840 payable in sixty months. The payments are due in ten consecutive semi-annual payments, and each payment includes 3.26% interest per year on the unpaid balance. In December 2003, the City entered into an equipment lease agreement in the amount of $656,182 payable in sixty months. The payments are due in ten consecutive semi-annual payments, and each payment includes 3.13% interest per year on the unpaid principal. The combined Refuse, Water, Wastewater, Parking, and Golf Course funds balance outstanding at June 30, 2007, was $164,139. In January 2005, The City acquired four refuse trucks under a capital lease agreement payable in semiannual installments of $88,482 through February 2009 with an annual interest rate of 3.04%. This lease has been allocated to the Refuse fund. The balance outstanding at June 30, 2007, was $340,878. In April 2005, the City acquired twenty-five receptacles, three recycling trucks and a truck retrofit under a capital lease agreement payable in semi-annual installments of $85,636 through May 2010 with an annual interest rate of 3.70%. This lease has been allocated to the Refuse Fund. The balance outstanding at June 30, 2007, was $482,124. 83
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations, Continued Lease Obligations, Continued In December 2005, the City entered into a capital lease agreement for lease rental of two fairway mowers. The lease is payable in quarterly installments of $9,584 through December 2010 with an annual interest rate of 3.90%. The lease has been allocated to the Golf Course Fund. The balance outstanding at June 30, 2007 was $60,632. In June 2, 2006, the City acquired one (1) front loader and five (5) side-loaders under a capital lease agreement payable in semi-annual installments of $135,798 through June 2011 with an annual interest rate of 4.16%. This lease has been allocated to the Refuse Fund. The balance outstanding at June 30, 2007, was $991,365 In December 2006, the City acquired three (3) trucks, one (1) street sweeper and (1) one sewer /storm drain vactor truck under a capital lease agreement payable in semi-annual installments of $118,213 through December 2011 with an annual interest rate of 3.88%. This lease has been allocated to the Refuse and Waste Water Funds. The balance outstanding at June 30, 2007 was $967,659 In May 2007, the City acquired one (1) Caterpillar D&T Waste Bulldozer under a capital lease agreement payable in semi-annual installments of $56,519 through May 2012 with an annual interest rate of 3.98%. This lease has been allocated to the Refuse Fund. The balance outstanding at June 30, 2007 was $507,958 The annual debt service requirements on the lease obligations at June 30, 2007, were as follows: For the Year Ending June 30, 2008
Principal $
Interest
1,030,320
$
125,208
Total $
1,155,528
2009
899,438
89,034
988,472
2010
755,677
55,830
811,507
2011
603,604
27,045
630,649
2012
225,716
5,536
231,252
Total
$
3,514,755
84
$
302,653
$
3,817,408
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
7. RISK MANAGEMENT AND SELF-INSURANCE The City has an established Risk Management Fund (an internal service fund) to account for a self-insurance program. For the period ending June 30, 2007, the City was self-insured for workers' compensation up to $500,000 per occurrence and for general liability up to $1,000,000 per occurrence. Claims in excess of these amounts are insured. The City is also completely self-insured for unemployment insurance, vision, and dental insurance claims, and this self-insurance program is accounted for in the General Fund. The City contracts with outside administrators to administer these programs. There were no significant reductions in insurance coverage. Settlements have not exceeded insurance coverage in any of the past three fiscal years. In January 1997, the City joined the Authority for California Cities Excess Liability (ACCEL). ACCEL is a joint powers authority organized under the provisions of Section 6500 et. seq. of the California Government code. ACCEL was founded in 1986 to provide medium-sized California cities self-funding for catastrophic losses. There are currently twelve members. ACCEL operates a liability risk pooling program which is subject to an annual independent financial audit and biennial actuarial study. ACCEL is governed by a twelve member Board of Directors. Each member agency appoints a representative to the Board of Directors. Each member of the Board of Directors has a single vote for policy and charter changes. ACCEL is funded by its member participants and, at the discretion of its Board of Directors, may assess the members for additional premiums (in an unlimited amount) in the event ACCEL assets at any time are insufficient to discharge its liabilities. For the 2006-2007 fiscal year, ACCEL charged its members $0.60 per one-hundred dollars of payroll for the self-funded $4,000,000 excess of a $1,000,000 member self-insured retention. Members also purchased commercial excess insurance limits of $30,000,000 excess of $5,000,000. In addition to the $35,000,000 program limits, eight members purchased optional limits of $10,000,000. Members were also charged administrative costs in equal amounts. The City’s share of administrative costs was $29,716 during the 2006-2007 fiscal year. ACCEL’s day-to-day operations are administered by Alliant Insurance Services, Inc. (Alliant) contracted by ACCEL to provide accounting, risk consulting, insurance brokerage, and program administration services. Alliant’s responsibility also includes the administration of policies and procedures as set forth by the ACCEL Joint Powers Authority Agreement, By-laws, and by the Board of Directors. ACCEL provides coverage above each member’s self-insured retention (SIR), subject to aggregate limit. Historically, nine members have $500,000 SIRS and two members have $1,000,000 SIRS. ACCEL provided an optional coverage of $500,000 excess of $500,000 per occurrence through 1989-90; however, this coverage is no longer available. Prior to July 1, 1990, ACCEL pooled losses incurred by its members up to $10,000,000. Effective July 1, 1990, ACCEL created a reinsurance pool within the $9,000,000 excess of $1,000,000 layer by purchasing $5,000,000 excess of $5,000,000 coverage. On July 1, 1997, ACCEL further reduced its exposure and purchased coverage of $17,000,000 excess of $3,000,000 coverage. Due to favorable market conditions, ACCEL purchased coverage of $19,000,000 excess of $1,000,000 effective July 1, 1998. Six members with SIR of $500,000 purchased additional coverage of $500,000 excess of $500,000 (including the City of Santa Cruz). As of July 1, 2000, nine members purchased insurance of $19,500,000 excess of $1,000,000. ACCEL was fully insured through June 30, 2003. 85
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
7. RISK MANAGEMENT AND SELF-INSURANCE, Continued As of July 1, 2003, the Authority purchased a reinsurance covering $20,000,000 excess of $2,000,000 and pooled losses in the layer $1,000,000 excess of $1,000,000. All members have SIR of $1,000,000. ACCEL members may participate in the purchase of other insurance, such as excess worker’s compensation and excess liability over $12,000,000 per occurrence where risk is not transferred to the pool. Effective September 1, 2003, ACCEL purchased excess insurance for all losses in excess of $2,000,000 per occurrence. ACCEL does not administer claims for these programs; therefore, no revenue or expense is reflected in ACCEL’s financial statements. ACCEL has a retrospective rating plan whereby all premiums collected, together with related investment income earned, in excess of pooled losses and loss expenses for each program year will be returned to members beginning five years after the end of the program year. Losses and loss expenses are allocated to each member based on a weighted actual loss formula. At the June 2007 Board of Directors meeting, a retrospectively rated refund was made available for distribution to the members for program years 2 through 16 in the amount of $11,236,868. Members may elect to have returned all or a portion of their refund, or choose to retain the funds in the respective program year in the name of the member city. The City of Santa Cruz’ retrospective rated refund is $673,531. Summary audited financial information for ACCEL as of and for the year ended June 30, 2007, is as follows: Assets Cash and investments Other assets
$
26,449,674 1,268,205
Total assets
$
27,717,879
$
11,672,000 15,201,949 747,392
Liabilities and Net Assets Unpaid claims liability Retrospectively rated refunds liability Other liabilities Total liabilities Net assets
27,621,341 96,538
Total liabilities and net assets
$
27,717,879
$
8,829,522 1,294,694 362,592
Revenues Premiums earned Investment income Administrative fees Total revenues
10,486,808 Expenses
Loss provision and premiums paid General and administrative
$
Total expenses
10,124,218 362,590 10,486,808
Net income / (loss) Net assets, beginning of year
96,538
Net assets, end of year
$
86
96,538
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
7. RISK MANAGEMENT AND SELF-INSURANCE, Continued Complete financial statements for ACCEL can be obtained from Alliant Insurance Services, Inc., 600 Montgomery Street, 9th Floor, San Francisco, CA 94111. Risk Management Fund revenues are primarily premium charges received from other funds and are planned to match expenses of insurance premiums for coverage in excess of self-insured amounts, estimated payments resulting from self-insurance programs, and operating expenses. Department charges are based on historical experience. Claims known to be payable and the estimated liability for the balance, based on a case-by-case review of all claims is recorded as claims payable. An additional estimate of the amount to be paid for claims incurred, but not reported, is also recorded as claims payable. Changes in the Risk Management Fund's claims liability amount for the years ended June 30, 2005 through 2007 are as follows: CLAIMS PAYABLE
June 30, 2005
$
Beginning
Claims
Balance
Incurred
14,376,121
$
3,350,942
Ending Payments $
(2,463,787)
Balance $
15,263,276
June 30, 2006
10,719,455
2,686,917
(2,399,082)
11,007,290
June 30, 2007
11,007,290
2,988,351
(3,553,086)
10,442,555
The General Fund and Redevelopment Agency Fund typically have been used in prior years to liquidate the liability for claims and judgments. 8. LANDFILL CLOSURE AND POSTCLOSURE COSTS In accordance with requirements established by the California Integrated Waste Management Board, the City has recognized a portion of the landfill's closure and postclosure care (closure) costs. These cost estimates are based on the amount of landfill used to date. The total estimated costs are as follows: Total estimated closure costs Total estimated postclosure costs Total estimated closure and postclosure costs
$
4,521,425 8,771,956
$
13,293,381
The City has increased the landfill’s capacity through excavations and plans to continue excavating in future years to increase capacity. This effort has also increased the estimates of the closure and postclosure costs. At June 30, 2007, the estimated landfill closure cost liabilities of $6,055,236 and estimated annual landfill closure cost of $303,828 were calculated as follows:
87
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
8. LANDFILL CLOSURE AND POSTCLOSURE COSTS, Continued Total estimated closure and postclosure costs
$
Percent of used capacity to total capacity
13,293,381 45.55%
Estimate landfill closure and postclosure cost liability Miscellaneous adjustments
6,055,135 101
Estimated total closure and postclosure costs liability
6,055,236
Previous closure costs accrued
5,751,408
Fiscal year 2007 expense for closure and postclosure costs
$
303,828
The landfill has an estimated remaining capacity of 5,708,635 cubic yards and has a projected closure date of January 2038. Based upon the requirements of the California Integrated Waste Management Board, the City set aside $166,558 to fund future closure and post closure costs for the year ended June 30, 2007. All cash is invested. The market value of the invested cash at June 30, 2007 was $3,369,908, and is available to provide for closure and postclosure costs. Total funds accumulated as of June 30, 2007, are comprised as follows: Closure
$
Postclosure
1,413,733 1,956,175
Total
$
3,369,908
The City has demonstrated acceptable financial assurance to the California Integrated Waste Management Board through an agreement pledging revenue for corrective actions costs on September 26, 2006. Sufficient funds to cover these potential costs are available in the Refuse Fund’s unrestricted cash account. The estimated closure and corrective action costs are current estimates based on data provided by an independent consultant and are subject to changes in inflation, technological advancements, or regulatory changes. 9. RETIREMENT PLANS A. Pension Plan Plan Description The City contributes to the California Public Employees' Retirement System (PERS); an agent multiple-employer defined benefit pension plan. The Police and Fire Safety plans are required to participate in a risk pool since there were less than 100 active members in at least one valuation since June 30, 2003. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS’ Annual Financial Report may be obtained from their Executive Office located at 400 P Street, Sacramento, CA 95814. 88
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
9. RETIREMENT PLANS, Continued A. Pension Plan, Continued Funding Policy City employees are required to contribute 9% for safety employees and 11.163% for all other employees of their annual covered salary. The City employer is required to contribute at an actuarially determined rate; the fiscal year 2007 rate is 8.988% for miscellaneous employees, 35.164% for police safety employees, and 38.825% for fire safety employees of annual covered payroll. There is a cost sharing agreement with miscellaneous employees whereby the employee is required to pay the employer share above 6.354%, a portion on a pre-tax basis and a portion on a post-tax basis. In fiscal year 2007, the City amended its Miscellaneous Employees PERS contract to provide for Section 21548 Pre-Retirement Optional Settlement 2 Death Benefits. The additional cost to the City is 0.211% of the annual payroll. The contribution requirements of City employees and the City employer are established and may be amended by PERS. Annual Pension Cost For fiscal year 2007, the City’s annual pension cost of $6,462,742 for PERS was equal to the City’s required and actual contributions. The required contribution was determined as part of the June 30, 2004, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumption included (a) 7.75% investment rate of return (net of administrative expenses); (b) projected salary increases ranging from 3.25% to 14.45% depending on age, service, and type of employment, and (c) 2% per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3.0%. The actuarial value of PERS assets was determined using techniques that smooth the effects of volatility in the market value of investments over a fifteen-year period. PERS unfunded actuarial accrued liability (or surplus) is being amortized as a level percentage of projected payroll on a closed basis. The amortization period at June 30, 2004 was 16 years for public safety police employees, 16 years for public safety fire employees, and 30 years for miscellaneous employees for prior and current service unfunded liability. Fiscal
Annual
Percentage
Net
Year
Pension
of APC
Pension
Ended
Cost (APC)
Contributed
Obligation
June 30, 2005
6,175,176
100%
-
June 30, 2006
6,330,030
100%
-
June 30, 2007
6,462,742
100%
-
89
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
10. POST-EMPLOYMENT RETIREMENT BENEFITS Retiree Medical Plan The City contracts with CalPERS for retiree health care benefits. Covered employees who retire under the provisions of the City’s contract with CalPERS are eligible to continue CalPERS medical coverage. The City’s contribution rate for retiree enrollment is the minimum amount provided under Government Code Section 22892 of the Public Employees Medical and Hospital Care Act. The minimum rates for the following calendar years are listed below: • • • •
2006 - $64.60 2007 - $80.80 2008 - $97.00 2009 – CPI Adjustment
On June 30, 2007, 153 retired employees were eligible for the Retiree Medical Plan benefits. In fiscal year 2007, the City paid $135,096 towards the Retiree Medical Plan and recognized these expenditures as they were paid. Retiree Medical Incentive All part-time and full-time regular employees that meet specified Memorandum of Understanding (MOU) continuous service and minimum age requirements are also eligible to receive a retiree medical incentive. Miscellaneous employees must have at least 10 years of continued service with the City and be at least 55 years of age; and Public Safety employees must have a minimum of 5 years of continued service with the City and be at least 50 years of age. Retiree medical incentives will be provided until the retiree becomes eligible for Medicare or discontinues CalPERS medical coverage. On June 30, 2007, there were 70 participants in the retirement medical incentive program. In fiscal year 2007, the City paid $97,605 towards retiree medical incentives and recognized these expenditures as they were paid.
11. COMMITMENTS AND CONTINGENCIES The City participates in a number of Federally assisted grant programs, of which the principal grants are the Disaster Assistance Program, Community Development Block Grant (CDBG), Home Investments Partnership Program (HOME) grant program, various Department of Justice and Department of Transportation grant programs. These programs are subject to program compliance audits by the grantors or their representatives. The amount, if any, of expenditures, which may be disallowed by the granting agencies upon audit, cannot be determined at this time although the City expects such amounts to be immaterial.
90
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
11. COMMITMENTS AND CONTINGENCIES, Continued The California Legislature granted tidal and submerged lands in trust to the City to be used for a number of statewide purposes in furtherance of navigation, commerce and fisheries. In accordance with this legislation, revenues derived from the Wharf are required to be used for purposes permitted under the grant statute. There are a number of lawsuits presently against the City. While the ultimate outcome of these lawsuits is not determinable, in the opinion of the City Attorney and City management, recovery from the City, if any, would not have a material effect on the accompanying financial statements. The following schedule summarizes the major contractual commitments of the City as of June 30, 2007: Major Commitments and Contracts for Professional Services: Highway 1 Bike/Pedestrian Underpass
$
140,621
Tannery Arts Projects
185,446
Tait St. Diversion Study
144,850
GHWTP Electrical Improvelemts
361,166
Sanitary Sewer Flow Model
158,684
Geotech Services Newell Creek Dam
169,000
MBNMS Visitor Center
363,684
Bay St Reservoir Reconstruction SDC
114,963
Total major professional services
1,638,414
Major Commitments and Contracts for Capital Projects: Loan from South County Housing Corp
216,669
North Coast Rehabilitation
808,943
Felton Booster Pump Station Upgrade
561,157
Bay St System Transmission Improvement Project
2,713,893
Santa Cruz County Kinsley St Improvement Project
3,319,953
Archaeological Service for Bay St Reservoir
459,952
Desal Pilot Study on Water Supply
287,163
Total major capital projects
8,367,730
Total Commitments and Contracts
$
91
10,006,144
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
12. OPERATING LEASES The City is obligated under various operating leases for the use of land, buildings, office space and equipment. Lease expenditures, primarily for governmental funds, for the year ended June 30, 2007 were $225,213. Future minimum lease payments required by lease agreements that have initial or remaining noncancelable lease terms in excess of one year as of June 30, 2007 are as follows: Year Ending June 30, 2008
Balance $
86,752
2009
67,896
2010
23,078
Total future minimum lease payments
$
177,726
The City leases (as lessor) office facilities, buildings, and wharf facilities under operating leases to various entities and individuals. Total revenues from these leases for the year ending June 30, 2007 were $899,912. The total cost of leased assets as of June 30, 2007 was $27,714,643, and the accumulated depreciation of those assets that are depreciable amounted to $7,644,810. Future estimated revenues from these leases are as follows: Year Ending June 30, 2008
Amount $
953,983
2009
859,114
2010
748,565
Future years
4,570,593
92
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
13. RESERVED AND DESIGNATED FUND BALANCES Fund balances at June 30, 2007, have been reserved and designated for the following purposes: Redevelopment
Special
Debt
Capital
General
Agency
Revenue
Service
Projects
Fund
Fund
Funds
Fund
Funds
Total
Reserved for: Encumbrances
$
Noncurrent receivables and advances Prepaid items Debt service General plan update Capital projects Low and moderate income housing Total reserved
861,056
$
432,752
$
1,199,314
$
-
$
1,499,485
$
3,992,607
2,398,778
4,915,571
2,089,248
-
-
9,403,597
475,774
-
-
-
-
475,774
-
64,063
-
-
-
64,063
15,000
-
-
-
-
15,000
-
-
-
-
-
-
256,105
1,407,960
-
-
-
1,664,065
4,006,713
6,820,346
3,288,562
-
1,499,485
15,615,106
1,586,577
Designated for: 1,582,089
-
4,488
-
-
Capital projects
Accrued compensated absences
-
6,285,781
-
-
-
6,285,781
City public trust
6,436,475
-
-
-
-
6,436,475 42,584
Computer loan program CPVAW Debt service Equipment maintenance Housing Housing in-lieu program
42,584
-
-
-
-
3,245
-
-
-
-
3,245
-
2,840,469
-
909,576
-
3,750,045
49,536
-
-
-
-
49,536
-
-
299,478
-
-
299,478 206,013
206,013
-
-
-
-
Kiosk maintenance
31,632
-
-
-
-
31,632
Museum building
28,021
-
-
-
-
28,021
Parks and recreation programs
22,048
-
-
-
-
22,048
1,985
-
-
-
-
1,985
-
-
118,262
-
-
118,262
8,143
-
631,058
-
-
639,201
33,157
-
-
-
-
33,157
Planning/zoning programs Police programs Public works programs Street trees Unemployment insurance
16,944
-
-
-
-
16,944
Youth/teen programs
26,602
-
-
-
-
26,602
Total designated
8,488,474
9,126,250
1,053,286
909,576
-
19,577,586
Unreserved, Undesignated
13,924,233
-
2,851,774
-
(2,796,246)
13,979,761
Total fund balances
$
26,419,420
$
15,946,596
93
$
7,193,622
$
909,576
$
(1,296,761)
$
49,172,453
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
14. DEFICIT NET ASSETS The City had total net assets of $4,171,528 as of June 30, 2007, which was comprised of the General Capital Improvement Fund deficit net assets of $1,296,761 and the Risk Management Internal Service Fund deficit net assets of $2,874,767. The General Capital Improvement Fund deficit will be cleared with additional utility contributions and transfers from the General Fund once the undergrounding of utilities is complete. The Risk Management Internal Service Fund’s deficit is due to estimated workers’ compensation claims liabilities in excess of cash and other assets available in the fund, positively offset by the liability insurance net assets. It is anticipated that this deficit will be made up in future years by increased contributions from other City funds. The City has established an actuarially approved plan to fund the increased liability over a number of years. A detail listing of deficit net assets by fund is shown below: Net Assets Capital Improvement Fund
$
(1,296,761)
Risk Management Fund: Workers' compensation insurance
(3,300,551)
Liability insurance
425,784
Total
(2,874,767) $
Total net assets
(4,171,528)
15. SUBSEQUENT EVENTS On July 10, 2007, the City of Santa Cruz City Council approved a Resolution of Intention to issue debt to provide financing for the purchase of the Union Locust Building, to provide space for Library Administration and book processing, and for the Water Utility Administration offices. The City plans to issue Lease Revenue Bonds in the principal amount of $6,880,000 on December 4, 2007. The City of Santa Cruz Public Financing Authority will sell 2007 Lease Revenue bonds in the amount of $6,880,000 on December 4, 2007. The bonds are for 30 years. The City, which has a AA credit rating, will not provide insurance on the bonds, but will offer the bidder’s option allowing the winning bidder to purchase insurance on the bonds. The average annual debt service on the bonds is $430,000, to be paid two thirds by the Library and one third by the Water Utility. Payments are due December 31st and June 30th of each year.
94
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
16. PRIOR PERIOD ADJUSTMENTS A. Government-Wide Financial Statements The City recorded the following prior period adjustments in the Government-Wide Financial Statements. Adjustments to the Governmental Activities include an increase of $157,000 in Capital assets – land, belonging to the Redevelopment fund and incorrectly recorded in the Parking Enterprise Fund during the GASB 34 conversion. Adjustments to the Business-Type Activities include the $157,000 reduction in Capital assets – land in the Parking Enterprise Fund, and corrections to the Water and Wastewater Enterprise Funds in the total amount of $492,352 originally recorded in Capital assets Construction in Progress, and reclassified as prior-year expenditures. Accordingly, the net assets as of July 1, 2006, have been restated as follows: Prior Period Adjustments
Net Assets, as Previously
Capital
Net Assets,
Reported
Assets
As Restated
Government-Wide Financial Statements Governmental Activities: Net assets
$
173,777,838
Total governmental activities
$
157,000
$
173,934,838
173,777,838
157,000
173,934,838
242,835,587
(649,352)
242,186,235
242,835,587
(649,352)
242,186,235
Business-Type Activities: Net assets Total business-type activities Total government-wide
$
416,613,425
$
(492,352)
$
416,121,073
B. Funds Financial Statements The City recorded the following prior period adjustments in the fund financial statements. Adjustments to the Water and Wastewater Enterprise Funds in the total amount of $492,352 originally recorded in Capital assets - Construction in Progress, and reclassified as prior-year expenditures. Adjustments in the Parking Enterprise Fund include $157,000 in Capital assets – Land, belonging to the Redevelopment fund and incorrectly recorded in the Parking enterprise fund during the GASB 34 conversion. Accordingly, the net assets as of July 1, 2006, have been restated as follows: Prior Period Adjustments
Net Assets, as Previously
Capital
Net Assets,
Reported
Assets
As Restated
Major Enterprise Funds Water
$
Wastewater Parking Total business-type activities
$
95
(377,467)
$
71,641,891
103,829,258
72,019,358
(114,885)
$
103,714,373
16,922,805
(157,000)
192,771,421
$
$
(649,352)
16,765,805 $
192,122,069
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96
REQUIRED SUPPLEMENTARY INFORMATION
97
City of Santa Cruz Required Supplementary Information For the year ended June 30, 2007
1. BUDGETARY INFORMATION An annual budget is adopted by the City Council no later than the first regular meeting in July for the fiscal year beginning July first. As part of the budget process, all City departments submit budget requests for the next fiscal year. These requests are reviewed, and a final City Manager recommended budget showing estimated revenues and expenditures of the City is prepared. This proposed budget is transmitted to the City Council and made available to the public for review. Study sessions and a public hearing are conducted before final adoption of the budget by the City Council. The City Manager is authorized to approve appropriation transfers within any department up to a specified amount; however, any new appropriation or appropriation transfer between departments requires approval by the City Council. Several supplemental appropriations were necessary during the year and are reflected in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at the department level. Under the City Charter, all unexpended appropriations shall lapse at the end of the fiscal year unless they are lawfully committed, or are required by law to be continuously appropriated from year to year. Lawfully committed amounts include amounts legally encumbered at year end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the governmental fund types. Encumbrances outstanding at year-end are reported as reservation of fund balances since they do not constitute expenditures or liabilities, and re-appropriations in the subsequent year provide authority to complete these transactions as expenditures. In addition, project-length (or non-lapsing) budgets are adopted for capital improvement and other projects, and grant-funded projects or programs that may not be completed within the fiscal year during which the budget appropriation for the project or program originates. Under these circumstances, the appropriation continues until project or program completion, or unless the appropriation is subsequently amended or rescinded by the City Council. In the Budgetary Comparison Schedules, the “Original Budget” column includes the final adopted budget amounts, re-appropriations for prior year encumbrances, and continuing appropriations for project-length budgets automatically carried over from prior years. The City Charter requires the City Council, upon recommendation of the City Manager and after providing sufficient funds to meet debt service and operating needs, to annually set aside in the enterprise funds an amount to be used for the acquisition and betterment of plant facilities. Such amounts, if any, would be shown in the financial statements as cash and investments held for betterment of plant facilities. No such funds were set aside during the year ended June 30, 2007.
98
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007
1. BUDGETARY INFORMATION, Continued Budgets are adopted each year for all general, special revenue, debt service, and capital projects funds. These governmental fund budgets are prepared on a basis consistent with generally accepted accounting principles (GAAP), except in the following areas: ¾
Budgetary basis revenues include repayments of loan principal. Budgetary basis expenditures include loans made. On a GAAP basis both of these are considered as reclassifications of fund balance (between reserved and unreserved fund balance).
¾
GAAP basis revenues include the fair value adjustment to investment earnings. GAAP basis expenditures include compensated absences expense. Neither of these are included in the budgetary basis.
A reconciliation of differences between budgetary and GAAP revenues and expenditures follows the budget comparison schedules.
99
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100
BUDGETARY SCHEDULES
101
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007 Budgetary Comparison Schedule, General Fund Variance with Budgeted Amounts Original
Final
Actual Amounts
Positive
(Budgetary Basis)
(Negative)
Budget to GAAP Actual Amounts Differences
(GAAP Basis)
REVENUES: Taxes
$
40,598,617
$
41,840,617
$
42,837,408
$
996,791
$
-
$
42,837,408
Licenses and permits
660,750
685,750
824,258
138,508
-
824,258
Intergovernmental
936,200
1,345,795
1,563,745
217,950
-
1,563,745
External
15,871,678
16,048,658
15,937,955
(110,703)
-
15,937,955
Internal
2,987,930
4,192,003
3,848,462
(343,541)
-
3,848,462
Interagency
1,008,124
1,008,124
797,529
(210,595)
(797,529)
-
19,867,732
21,248,785
20,583,946
(664,839)
(797,529)
19,786,417
Fines and forfeitures
2,019,200
2,019,200
2,218,082
198,882
-
2,218,082
Use of money and property
2,499,537
2,556,994
2,900,491
343,497
161,227
3,061,718
144,690
880,977
187,732
-
187,732
66,726,726
70,578,118
71,115,662
General government
11,915,487
14,249,508
12,261,663
1,987,845
Public safety
30,643,828
31,023,163
28,469,065
2,554,098
-
28,469,065
Parks and recreation
10,754,233
10,803,375
9,653,531
1,149,844
-
9,653,531
Library
10,099,964
10,099,964
9,693,097
406,867
-
9,693,097
Public works
4,698,421
4,896,756
4,233,034
663,722
-
4,233,034
Community and economic development
1,015,624
1,176,676
812,875
363,801
Social services
1,647,114
1,653,979
1,651,827
2,152
1,424,769
1,787,146
1,338,184
448,962
Charges for services:
-
Subtotal charges for services
Other revenues Total revenues
(693,245) 537,544
(636,302)
70,479,360
EXPENDITURES: Current:
Capital outlay
12,261,663
13,424
(799,451)
1,651,827 -
1,338,184
-
Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES
218,375
218,375
178,385
39,990
-
178,385
47,690
47,690
47,643
47
-
47,643
72,465,505
75,956,632
68,339,304
7,617,328
(799,451)
67,539,853
(5,738,779)
(5,378,514)
2,776,358
8,154,872
163,149
2,939,507
OTHER FINANCING SOURCES (USES): Proceeds from asset disposition
-
11,458
62,804
51,346
-
62,804
Proceeds from long-term debt issued
-
-
-
-
-
-
72,178
617,178
82,208
(534,970)
1,078,000
428,000
615,094
187,094
-
(2,381,875)
(538,875)
538,198
-
Total other financing sources (uses)
(1,231,697)
517,761
Net change in fund balance
(6,970,476)
17,983,761
Loan principal receipts Transfers in Transfers out
(677)
-
(82,208)
615,094 (677)
759,429
241,668
(82,208)
677,221
(4,860,753)
3,535,787
8,396,540
80,941
3,616,728
18,287,187
18,287,187
-
3,893,153
22,802,692
FUND BALANCE: Beginning of the year End of year
$
11,013,285
$
13,426,434
102
$
21,822,974
$
8,396,540
$
3,974,094
$
26,419,420
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007
General Fund Reconciliation of Net Changes in Fund Balances - Budgetary to GAAP Basis: Net Change in Fund Balances - Budgetary Basis
$
3,535,787
The amount reported in the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances was different because: Interagency charges for personnel services provided to the redevelopment agency are a revenue and expenditure on a budgetary basis, but are eliminated in the Statement of Revenues, Expenditures, and
(797,529)
Changes in fund balances because the redevelopment agency is part of the reporting entity.
799,451
Unrealized gains and losses on investments, which are considered a component of investment income in the Statement of Revenues, Expenditures and Changes in Fund Balances, are not included as revenue on a budgetary basis.
161,227
On a budgetary basis, the City records loan principal receipts as revenue, but on a GAAP basis, the receipts reduce receivables.
(82,208)
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances
$
3,616,728
$
21,822,974
Reconciliation of Fund Balances - Budgetary to GAAP Basis: Fund Balances - Ending - Budgetary Basis Cumulative effect of unrealized gains and losses on investments
(8,262)
Cumulative effect of transfer of unrealized gains/losses on investments from Group Health to the General Fund
(7,278)
Reserved and designated balances unavailable for appropriation
3,029,897
Designated for noncurrent component of compensated absences
1,582,089
Fund Balances - Ending - GAAP Basis
$
103
26,419,420
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007
Budgetary Comparison Schedule, Redevelopment Agency Final Budget Budgeted Amounts Original
Final
Actual Amounts
Positive
(Budgetary Basis)
(Negative)
Budget to GAAP Actual Amounts Differences
(GAAP Basis)
REVENUES: Tax increment
$
9,845,831
$
10,035,000
$
11,022,799
$
987,799
$
-
$
11,022,799
Use of money and property
542,861
537,442
788,641
251,199
Other revenues
162,000
502,000
384,865
(117,135)
10,550,692
11,074,442
12,196,305
10,420,262
11,733,731
9,367,291
2,366,440
(1,132,000)
8,235,291
2,219,322
2,411,322
156,159
2,255,163
-
156,159
4,563,691
5,127,895
5,235,544
(3,585,855)
1,649,689
591,027
602,847
571,423
31,424
-
571,423
-
-
-
-
-
-
17,794,302
19,875,795
15,330,417
4,545,378
(4,717,855)
10,612,562
(7,243,610)
(8,801,353)
(3,134,112)
5,667,241
4,774,135
1,640,023
3,820,098
4,406,670
4,141,786
Total revenues
1,121,863
56,280
844,921
-
384,865
56,280
12,252,585
EXPENDITURES: Current: Community and economic development Capital outlay Debt service: Principal Interest and fiscal charges Bond issuance costs Total expenditures REVENUES OVER (UNDER) EXPENDITURES
(107,649)
OTHER FINANCING SOURCES (USES): Loan proceeds Long term advance proceeds
(264,884)
(4,141,786)
-
-
-
-
28,193
28,193
27,501
(692)
(27,501)
-
310,000
310,000
-
(310,000)
-
-
Premiums on bonds sold
-
-
-
Payment to refunded bond escrow agent
-
-
-
8,288
-
8,288
(4,169,287)
8,288
Loan principal receipts Proceeds from long-term debt issued
Transfer in from City of Santa Cruz Total other financing sources (uses) Net change in fund balance
-
-
8,288
4,158,291
4,744,863
4,177,575
(3,085,319)
(4,056,490)
1,043,463
(1,585,970)
(7,653,137)
(3,337,064)
10,836,098
10,836,098
10,836,098
(567,288) 5,099,953
604,848
1,648,311
1,546,064
(1,791,000)
3,462,187
14,298,285
FUND BALANCE: Beginning of the year End of year
$
7,750,779
$
6,779,608
104
$
11,879,561
$
5,099,953
$
4,067,035
$
15,946,596
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007
Redevelopment Agency Fund Reconciliation of Net Changes in Fund Balances - Budgetary to GAAP Basis: Net Change in Fund Balances - Budgetary Basis
$
1,043,463
The amount reported in the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances was different because: Unrealized gains and losses on investments, which are considered a component of investment income in the Statement of Revenues, Expenditures and Changes in Fund Balances, are not included as revenue on a budgetary basis.
56,280
The Agency budgets for loan disbursements which will not be repaid within the current year. Although these amounts are recorded as long-term receivables on the Governmental Funds Balance Sheet, they are not available for appropriation.
1,132,000
On a budgetary basis, the Agency records loan principal receipts as revenue, but on a GAAP basis, they reduce receivables.
(27,501)
Proceeds of both short term loans and long term advances from the City are considered budgetary resources, but are not revenues on a GAAP basis.
(4,141,786)
The Agency budgets for both short term and long term loan and advance principal repayments to the City, but these payments are not considered expenditures on a GAAP basis.
3,585,855
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances
$
1,648,311
$
11,879,561
Reconciliation of Fund Balances - Budgetary to GAAP Basis: Fund Balances - Ending - Budgetary Basis Reconciling item for prior year reserve
47,622
Cumulative effect of unrealized gains and losses on investments
(15,312)
Noncurrent advances from City
(1,005,400)
Reserved balances unavailable for appropriation
5,040,125
Fund Balances - Ending - GAAP Basis
$
All funds are reserved or designated for debt service, capital projects, or low and moderate income housing.
105
15,946,596
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106
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007
PUBLIC EMPLOYEE RETIREMENT SYSTEM (PERS) SCHEDULE OF FUNDING PROGRESS Miscellaneous Employees Unfunded (Overfunded) Unfunded
Actuarial
Entry Age
(Overfunded)
Liability as
Actuarial
Actuarial
Actuarial
Actuarial
Valuation
Value of
Accrued
Accrued
Funded
Covered
Covered
Date
Assets
Liability
Liability
Ratio
Payroll
Payroll
June 30, 2004
$
139,133,604
$
160,182,390
$
Percentage of
21,048,786
86.9%
$
33,778,451
62.3%
June 30, 2005
150,956,645
170,106,283
19,149,638
88.7%
32,905,030
58.2%
June 30, 2006
164,898,761
183,410,717
18,511,956
89.9%
33,001,059
56.1%
Police Safety Employees Unfunded (Overfunded) Unfunded
Actuarial
Entry Age
(Overfunded)
Liability as
Actuarial
Actuarial
Actuarial
Actuarial
Valuation
Value of
Accrued
Accrued
Funded
Covered
Percentage of Covered
Date
Assets
Liability
Liability
Ratio
Payroll
Payroll
CalPERS Risk Pool Information (see comment below): June 30, 2004
$
4,424,586,846
$
5,383,921,942
$
959,335,096
82.2%
$
575,296,434
166.8%
June 30, 2005
5,295,150,375
6,367,049,264
1,071,898,889
83.2%
664,147,796
161.4%
June 30, 2006
6,102,615,567
7,278,049,834
1,175,434,267
83.8%
754,730,438
155.7%
Fire Safety Employees Unfunded (Overfunded) Unfunded
Actuarial
Entry Age
(Overfunded)
Liability as
Actuarial
Actuarial
Actuarial
Actuarial
Valuation
Value of
Accrued
Accrued
Funded
Covered
Percentage of Covered
Date
Assets
Liability
Liability
Ratio
Payroll
Payroll
CalPERS Risk Pool Information (see comment below): 959,335,096
82.2%
575,296,434
166.8%
June 30, 2005
June 30, 2004
$
5,295,150,375
4,424,586,846
$
6,367,049,264
5,383,921,942
$
1,071,898,889
83.2%
$
664,147,796
161.4%
June 30, 2006
6,102,615,567
7,278,049,834
1,175,434,267
83.8%
754,730,438
155.7%
Since the City has less than 100 active members in Fire and Police plans in at least one valuation since June 30, 2004, the City is required to participate in a risk pool. An actuarial valuation was performed with other participants within the same risk pool. Therefore, standalone information of the schedule of the funding progress for the City was not disclosed. 107
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108
SUPPLEMENTARY INFORMATION
109
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110
Non-Major Governmental Funds Special Revenue Funds: Police - Accounts for state and federal grants and other revenues restricted to be used for police programs. State Highway Funds - This fund is used to account for the City's apportionment of the State excise tax on gasoline and other related grants or receipts that are restricted for the planning, construction and maintenance of streets and roads. It is also used to account for a subvention of the State sales tax on gasoline (Traffic Congestion Relief Funds) that are restricted for street and highway maintenance, and rehabilitation and reconstruction of necessary associated facilities such as drainage and traffic control devices. Traffic Impact Fee Funds - This fund is used for capital improvements to mitigate traffic impacts generated by land development. The fee provides financial resources for improvements to transit stops, bike and pedestrian facilities, signal coordination, park and ride lots, and other alternative transportation sources impacted by development, and is levied on all Citywide projects requiring a building permit (residential remodels and limited expansions expected to generate less than five new trips per day are exempt). Parks and Recreation - Accounts for tax and fee revenues restricted for parks and recreation use. Housing and Community Development - Accounts for receipts and expenditures under the Housing and Community Development Act, which includes Community Development Block Grant funds and HOME program funds. It also is used to account for Red Cross housing reconstruction loan repayments and income and related expenditures for a City-owned rental property. Transportation Development Act Fund - This fund is used to account for receipts of State Transportation Development Act (TDA) funds restricted to be used for specialized or unmet transit needs. Acting as the public agency sponsor, the City contracts with non-profit agencies to meet these obligations. Debt Service Fund: General Obligation Bonds - This fund accounts for the debt service for a $7 million general obligation bond issue approved by voters in November 1998. Funds for payment of principal and interest on the bonds are generated by a property tax override assessment of $9.00 per $100,000 of assessed value. Capital Projects Fund: General Capital Improvement - This fund is used to account for capital improvements for which special projects funds have not been established. A portion of the City's transient occupancy tax receipts, combined with other funding sources, such as grants, provides funding for capital projects of general benefit, such as storm drain improvements, or improvements to public buildings.
111
City of Santa Cruz Combining Balance Sheet Non-Major Governmental Funds June 30, 2007
Special Revenue Housing and Police
State
Traffic
Parks and
Community
Highway
Impact Fee
Recreation
Development
ASSETS Cash and cash equivalents
$
Interest receivable
279,254
$
2,315,418
$
622,364
$
1,702,939
$
2,323,554
3,487
27,327
8,694
20,276
309,421
-
-
-
-
-
3,358
10,010
145,479
-
-
-
266,212
-
-
65,209
Cash and cash equivalents
-
-
-
-
-
Investments
-
-
-
-
-
-
-
-
-
-
Notes receivable - net
-
-
18,501
245,896
681,330
Loans receivable - net
-
-
-
-
1,407,917
Taxes receivable Accounts receivable - net Due from other governments Restricted assets:
Total restricted assets
Total assets
$
286,099
$
2,618,967
$
795,038
$
1,969,111
$
4,787,431
$
-
$
1,141,574
$
-
$
1,921
$
32,605
LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and other current liabilities Due to other funds Intergovernmental payable Deferred revenue Unearned revenue Advances from other funds Total liabilities
350
-
-
6,816
69,904
-
-
-
-
2,438
-
-
163,980
245,896
290,866
137,437
29,237
-
-
-
-
-
-
-
1,140,000
137,787
1,170,811
163,980
254,633
1,535,813
Fund Balances: Reserved
-
336,422
-
-
2,952,140
118,262
4,488
631,058
-
299,478
Special revenue funds
30,050
1,107,246
-
1,714,478
-
Capital projects funds
-
-
-
-
-
148,312
1,448,156
631,058
1,714,478
3,251,618
Unreserved, designated Unreserved, undesignated, reported in:
Total fund balances Total liabilities and fund balances
$
286,099
$
112
2,618,967
$
795,038
$
1,969,111
$
4,787,431
Debt Service
Capital Projects
Transportation
$
General
Total Other
Development
General
Capital
Governmental
Act
Obligation Bond
Improvement
Funds
-
$
870,494
-
8,978
-
30,104
$
239,679
$
(1,901)
8,353,702 376,282
607,195
637,299
-
-
617,455
776,302
-
-
2,068,563
2,399,984
-
-
9,685
9,685
-
-
283,042
283,042
-
-
292,727
292,727
-
-
-
945,727
-
-
-
1,407,917
$
-
$
909,576
$
3,823,718
$
15,189,940
$
-
$
-
$
1,678,596
$
2,854,696
$
-
-
3,253,290
3,330,360
-
-
-
2,438
-
-
-
700,742
-
-
99,261
265,935
-
-
89,332
1,229,332
-
-
5,120,479
8,383,503
-
-
1,499,485
4,788,047
-
909,576
-
1,962,862
-
-
-
2,851,774
-
-
(2,796,246)
(2,796,246)
-
909,576
(1,296,761)
6,806,437
-
$
909,576
$
3,823,718
$
15,189,940
113
City of Santa Cruz Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2007
Housing and Police
State
Traffic
Parks and
Community
Highway
Impact Fee
Recreation
Development
REVENUES: Taxes
$
Intergovernmental
-
$
-
102,097
3,103,117
$
-
$
-
442,783
$
105,840
1,721,938
Charges for services
35,330
470
-
-
-
Fines and forfeitures
24,465
-
-
-
-
Use of money and property
12,884
117,729
29,107
95,252
94,323
-
15,710
181,004
-
245,894
174,776
3,237,026
210,111
643,875
2,062,155
Public safety
105,000
-
-
-
-
Public works
-
707,017
-
-
-
Transit
-
-
-
-
-
Other revenues Total revenues EXPENDITURES: Current:
Community and economic development
-
-
-
-
1,780,277
Social services
-
-
-
-
106,389
3,536
2,683,168
-
52,511
53,464
Capital outlay Debt service: Principal
-
-
-
-
-
Interest and fiscal charges
-
-
-
-
25,519
108,536
3,390,185
-
52,511
1,965,649
210,111
591,364
96,506
Total expenditures REVENUES OVER (UNDER) EXPENDITURES
66,240
(153,159)
OTHER FINANCING SOURCES (USES): Proceeds from asset disposition Transfers in Transfers out Total other financing sources (uses) Net change in fund balances
-
-
-
-
285,737
677
148,416
-
-
-
(1,253)
-
(148,416)
(509,055)
(8,288)
(576)
148,416
(148,416)
(509,055)
277,449
61,695
82,309
373,955
569,363
1,632,169
2,877,663
65,664
(4,743)
FUND BALANCES: Beginning of year End of year
82,648 $
148,312
1,452,899 $
114
1,448,156
$
631,058
$
1,714,478
$
3,251,618
Debt Service
Capital Projects
Transportation
$
General
Total Other
Development
General
Capital
Governmental
Act
Obligation Bond
Improvement
Funds
-
$
646,548
$
584,641
$
1,497,971
-
3,720,589
$
2,525,395 9,400,129
-
-
30,668
66,468
-
-
-
24,465
-
33,243
86,168
468,706
-
-
1,449,058
1,891,666
646,548
617,884
6,784,454
14,376,829
-
-
-
105,000
-
-
-
707,017
646,548
-
-
646,548 1,780,277
-
-
-
-
-
-
106,389
-
-
10,580,915
13,373,594
-
185,577
190,217
375,794
-
230,506
203,741
459,766
646,548
416,083
10,974,873
17,554,385
-
201,801
(4,190,419)
(3,177,556)
-
-
-
285,737
-
-
488,039
637,132
-
-
(41,800)
(708,812)
-
-
446,239
214,057
-
201,801
(3,744,180)
(2,963,499)
-
707,775
2,447,419
9,769,936
-
$
909,576
$
(1,296,761)
$
6,806,437
115
City of Santa Cruz Schedule of Budget and Actual Revenues General Fund For the year ended June 30, 2007
Variance with Final Budget Budgeted Amounts Original
Final
Actual Amounts
Positive
(Budgetary Basis)
(Negative)
REVENUES: Taxes: Property Sales and use
$
13,062,800 11,924,813
$
13,062,800 12,166,813
$
12,985,872 12,770,015
$
(76,928) 603,202
773,000
773,000
787,225
Franchise
2,628,000
2,628,000
2,607,389
(20,611)
Transient occupancy
1,119,800
2,119,800
2,252,538
132,738
230,000
230,000
264,510
34,510
Business license
Parking
14,225
Utility users
8,631,700
8,631,700
8,288,655
(343,045)
Admission
1,700,000
1,700,000
1,909,012
209,012
220,000
220,000
641,579
421,579 22,110
Property transfer Business improvement
190,000
190,000
212,110
Other taxes
118,504
118,504
118,503
40,598,617
41,840,617
42,837,408
996,791
619,500
644,500
761,541
117,041
41,250
41,250
62,717
21,467
660,750
685,750
824,258
138,508
Total taxes
(1)
Licenses and permits: Construction permits Other licenses and permits Total licenses and permits Intergovernmental revenues: -
158,849
198,876
40,027
State
936,200
1,186,946
1,351,869
164,923
Local
-
-
13,000
13,000
936,200
1,345,795
1,563,745
217,950
Federal
Total intergovernmental revenues Charges for services: General government: Legislative
-
-
-
-
Management and support
-
-
845
845
1,074,660
1,117,460
1,262,611
145,151
7,000
7,000
10,940
3,940
1,308,195
1,308,195
1,229,820
Planning and zoning Other general government Public safety: Police
(78,375)
Fire
382,250
392,250
431,586
39,336
Protective inspection
355,200
435,200
634,768
199,568
25,000
25,000
35,634
10,634
46,000
46,000
48,862
2,862
1,488,250
1,488,250
1,451,614
900,000
910,000
971,964
61,964
5,586,555
5,729,355
6,078,644
349,289
Other public safety Parks and recreation: Parks Recreation Other parks and recreation Subtotal of charges for services
116
(36,636)
City of Santa Cruz Schedule of Budget and Actual Revenues, Continued General Fund For the year ended June 30, 2007
Variance with Final Budget Budgeted Amounts Original
Final
Actual Amounts
Positive
(Budgetary Basis)
(Negative)
Charges for services, Continued: Subtotal from previous page
$
5,586,555
$
5,729,355
$
6,078,644
$
349,289
Public works: Engineering Transportation
90,000
90,000
80,521
(9,479)
843,430
877,610
868,606
(9,004)
Community and economic development: Other community and economic development Internal charges for services provided
646,480
646,480
641,489
(4,991)
2,987,930
4,192,003
3,848,462
(343,541)
Interagency personnel services charges: Library
8,705,213
8,705,213
8,268,695
(436,518)
Redevelopment Agency
1,008,124
1,008,124
797,529
(210,595)
Subtotal interagency charges
9,713,337
9,713,337
9,066,224
(647,113)
19,867,732
21,248,785
20,583,946
(664,839)
1,738,000
1,738,000
1,846,688
108,688
281,200
281,200
371,394
90,194
2,019,200
2,019,200
2,218,082
198,882
Investment income
516,183
573,640
891,177
317,537
Rents and royalties
1,983,354
1,983,354
2,009,314
25,960
2,499,537
2,556,994
2,900,491
343,497
Total charges for services Fines and forfeitures: Court and traffic fines Other fines and forfeitures Total fines and forfeitures Use of money and property:
Total use of money and property Other revenues: Contributions and donations
45,040
77,036
84,200
Other miscellaneous revenues
99,650
803,941
103,532
(700,409)
144,690
880,977
187,732
(693,245)
66,726,726
70,578,118
71,115,662
537,544
Proceeds from asset dispositions
-
11,458
62,804
51,346
Proceeds from long-term debt issued
-
-
-
-
72,178
617,178
82,208
(534,970)
1,078,000
428,000
615,094
187,094
1,150,178
1,056,636
760,106
(296,530)
Total other revenues Total revenues
7,164
OTHER FINANCING SOURCES:
Repayment of loans and advances Transfers in Total other financing sources Total revenues and other financing sources
$
67,876,904
117
$
71,634,754
$
71,875,768
$
241,014
City of Santa Cruz Schedule of Budget and Actual Expenditures and Other Financing Uses For Legally Adopted Appropriations by Department - General Fund For the year ended June 30, 2007
Services, Supplies
City Council
$
Personnel
and Other
Debt
Capital
Actual Amounts
Services
Charges
Service
Outlay
(Budgetary Basis)
170,290
$
268,436
$
-
$
-
$
438,726
City Clerk
494,449
116,634
-
75,692
686,775
City Manager
604,978
646,101
-
-
1,251,079
City Attorney Human Resources Finance Information Technology
15,007
627,639
-
-
642,646
721,730
1,375,550
-
293
2,097,573
1,829,174
462,600
-
1,125
2,292,899
1,000,933
453,356
232,603
1,686,892
14,038,998
3,519,430
-
520,065
18,078,493
8,670,024
835,759
164,712
140,514
9,811,009
Parks and Recreation
6,869,258
3,306,833
-
151,726
10,327,817
Library
8,296,617
1,396,480
-
-
9,693,097
Public Works
3,150,025
1,069,663
-
206,765
4,426,453
Planning and Community Development
2,054,694
965,981
-
9,401
3,030,076
799,451
18,912
-
-
818,363
13,405
2,982,685
-
-
2,996,090
Police Fire
Redevelopment Administration Non-Departmental Debt service
-
-
61,316
-
61,316
Capital projects
-
-
-
-
-
48,729,033
18,046,059
226,028
1,338,184
68,339,304
Advances to other funds
-
-
-
-
-
Transfers out
-
-
-
-
677
Total expenditures
Total expenditures and other financing uses
$
48,729,033
$
18,046,059
Budget to GAAP Differences: See reconciliation in Required Supplementary Information Note 1.
118
$
226,028
$
1,338,184
$
68,339,981
Variance with Final Budget -
$
$
Final
Positive
Budget to GAAP
Actual Amounts
Budget
(Negative)
Differences
(GAAP Basis)
447,148
$
8,422
$
-
$
438,726
759,092
72,317
-
686,775
1,365,030
113,951
-
1,251,079
647,263
4,617
-
642,646
2,365,546
267,973
-
2,097,573
2,436,852
143,953
-
2,292,899
1,878,919
192,027
-
1,686,892
20,543,774
2,465,281
-
18,078,493
9,891,048
80,039
-
9,811,009
11,715,946
1,388,129
-
10,327,817
10,099,964
406,867
-
9,693,097
5,302,573
876,120
-
4,426,453
3,904,091
874,015
-
3,030,076
1,123,592
305,229
(799,451)
18,912
3,414,431
418,341
-
2,996,090
61,363
47
-
61,316
-
-
-
-
75,956,632
7,617,328
(799,451)
67,539,853
-
-
-
-
538,875
538,198
-
677
76,495,507
$
8,155,526
$
(799,451)
$
67,540,530
119
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Police Special Revenue Fund For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Intergovernmental
$
Charges for services
102,097
$
102,097
36,000
Fines and forfeitures Use of money and property Total revenues
$
102,097
36,000
35,330
$
-
$
102,097
-
35,330
-
-
24,465
-
24,465
7,181
7,181
10,056
2,828
12,884
145,278
145,278
171,948
2,828
174,776
105,664 2,097
105,664 2,097
105,000 3,536
-
105,000 3,536
107,761
107,761
108,536
-
108,536
37,517
37,517
63,412
2,828
66,240
EXPENDITURES: Current: Public safety: Police Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) Net change in fund balance
(500)
(500)
677 (1,253)
-
677 (1,253)
(500)
(500)
(576)
-
(576)
37,017
37,017
62,836
2,828
65,664
85,640
85,640
85,640
(2,992)
82,648
FUND BALANCE: Beginning of the year End of year
$
122,657
$
122,657
120
$
148,476
$
(164)
$
148,312
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual State Highway Special Revenue Fund For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Intergovernmental
$
Charges for services Use of money and property Other revenues Total revenues
8,787,909
-
3,103,117
-
$
9,334,648 -
$
3,103,117 470
$
-
470
32,946
32,946
104,143
13,586
117,729
-
-
15,710
-
15,710
8,820,855
9,367,594
3,223,440
13,586
3,237,026
739,818 9,385,951
761,418 9,911,090
707,017 2,683,168
-
707,017 2,683,168
-
-
-
-
-
10,125,769
10,672,508
3,390,185
-
3,390,185
(1,304,914)
(1,304,914)
EXPENDITURES: Current: Public works: Transportation Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES
(166,745)
13,586
(153,159)
OTHER FINANCING SOURCES (USES): Proceeds from asset disposition Transfers in Total other financing sources (uses) Net change in fund balance
235,000
300,000 599,000
148,416
-
148,416
235,000
899,000
148,416
-
148,416
(405,914)
(18,329)
(1,069,914)
13,586
(4,743)
FUND BALANCE: Beginning of the year End of year
1,464,028 $
394,114
1,464,028 $
1,058,114
121
1,464,028 $
1,445,699
(11,129) $
2,457
1,452,899 $
1,448,156
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Traffic Impact Fee Fund For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Intergovernmental
$
Charges for services
-
$
-
-
Use of money and property Other revenues Total revenues
$
-
-
$
-
-
-
$
-
-
-
27,918
1,189
29,107
1,926
1,926
181,004
-
181,004
1,926
1,926
208,922
1,189
210,111
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,926
1,926
208,922
1,189
210,111
EXPENDITURES: Current: Public works: Transportation Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out
(85,000)
(149,000)
(148,416)
-
(148,416)
Total other financing sources (uses)
(85,000)
(149,000)
(148,416)
-
(148,416)
Net change in fund balance
(83,074)
(147,074)
60,506
1,189
61,695
571,440
571,440
571,440
(2,077)
569,363
FUND BALANCE: Beginning of the year End of year
$
488,366
$
424,366
122
$
631,946
$
(888)
$
631,058
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Parks and Recreation Fund For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Taxes
$
Intergovernmental Use of money and property Total revenues
523,000
$
523,000
$
442,783
$
-
$
442,783
595,000
595,000
105,840
-
105,840
45,586
45,586
73,256
21,996
95,252
1,163,586
1,163,586
621,879
21,996
643,875
-
52,600
52,511
-
52,511
-
52,600
52,511
-
52,511
1,163,586
1,110,986
569,368
21,996
591,364
EXPENDITURES: Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) Net change in fund balance
(667,000)
(690,900)
(509,055)
-
(509,055)
(667,000)
(690,900)
(509,055)
-
(509,055)
496,586
420,086
60,313
1,648,201
1,648,201
1,648,201
21,996
82,309
FUND BALANCE: Beginning of the year End of year
$
2,144,787
$
2,068,287
123
$
1,708,514
(16,032) $
5,964
1,632,169 $
1,714,478
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Housing and Community Development Fund For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Intergovernmental
$
Use of money and property Other revenues Total revenues
4,282,550
$
4,544,333
$
1,721,938
$
-
$
1,721,938
50,129
50,129
81,308
13,015
94,323
-
-
245,894
-
245,894
4,332,679
4,594,462
2,049,140
13,015
2,062,155
4,294,506
4,842,653
2,073,625
(293,348)
1,780,277
106,659 599,785
106,389 614,785
106,389 53,464
-
36,000
545,000 56,000
25,519
-
106,389 53,464 25,519
5,036,950
6,164,827
2,258,997
(293,348)
1,965,649
EXPENDITURES: Current: Community and economic development: Housing and community development Social services: CDBG social services Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES
(704,271)
(1,570,365)
(209,857)
306,363
96,506
87,376 553,280 (259,000)
342,000 87,376 1,163,280 67,000 (259,000)
285,737 138,124 610,000 (8,288)
(138,124) (610,000) -
285,737 (8,288)
381,656
1,400,656
1,025,573
(748,124)
277,449
815,716
(441,761)
373,955
OTHER FINANCING SOURCES (USES): Proceeds from asset dispositions Loan principal receipts Proceeds from long-term debt Transfers in Transfers out Total other financing sources (uses) Net change in fund balance
(322,615)
(169,709)
FUND BALANCE: Beginning of the year End of year
1,631,300 $
1,308,685
1,631,300 $
1,461,591
124
1,631,300 $
2,447,016
1,246,363 $
804,602
2,877,663 $
3,251,618
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Transportation Development Act For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Intergovernmental
$
Total revenues
646,548
$
646,548
$
646,548
$
-
$
646,548
646,548
646,548
646,548
-
646,548
646,548
646,548
646,548
-
646,548
646,548
646,548
646,548
-
646,548
-
-
-
-
-
-
-
-
-
-
EXPENDITURES: Current: Transit Total expenditures REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE: Beginning of the year End of year
$
-
$
-
125
$
-
$
-
$
-
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Obligation Bond For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Taxes
$
517,023
$
517,023
$
584,641
$
-
$
584,641
Use of money and property
12,904
12,904
33,243
-
33,243
Total revenues
529,927
529,927
617,884
-
617,884
185,577 230,673
185,577 230,673
185,577 230,506
-
185,577 230,506
416,250
416,250
416,083
-
416,083
113,677
113,677
201,801
-
201,801
711,143
711,143
711,143
EXPENDITURES: Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE: Beginning of the year End of year
$
824,820
$
824,820
126
$
912,944
(3,368) $
(3,368)
707,775 $
909,576
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Capital Improvement Projects For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Taxes
$
Intergovernmental
2,300,700
$
3,818,780
Charges for services Use of money and property Other revenues Total revenues
1,300,700
$
5,719,090
1,497,971
$
3,720,589
-
$
1,497,971
-
3,720,589
-
-
30,668
-
30,668
50,000
50,000
52,251
33,917
86,168
3,443,592
3,550,263
1,449,058
-
1,449,058
9,613,072
10,620,053
6,750,537
33,917
6,784,454
15,462,496
16,439,873
10,580,915
-
10,580,915
201,328 204,722
221,328 204,722
190,217 203,741
-
190,217 203,741
15,868,546
16,865,923
10,974,873
-
10,974,873
(6,255,474)
(6,245,870)
(4,224,336)
33,917
(4,190,419)
2,000,000 2,708,971 (1,056,750)
2,650,307 (56,750)
488,039 (41,800)
-
488,039 (41,800)
3,652,221
2,593,557
446,239
-
446,239
(2,603,253)
(3,652,313)
(3,778,097)
33,917
(3,744,180)
2,178,391
2,178,391
2,178,391
269,028
2,447,419
EXPENDITURES: Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from long-term debt Transfers in Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of the year End of year
$
(424,862)
$
(1,473,922)
127
$
(1,599,706)
$
302,945
$
(1,296,761)
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Non-Major Governmental Funds For the year ended June 30, 2007
Other Governmental Funds Reconciliation of Net Changes in Fund Balances - Budgetary to GAAP Basis: Net Change in Fund Balances - Budgetary Basis
$
(2,595,254)
The amount reported in the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances was different because: Unrealized gains and losses on investments, which are considered a component of investment income in the Statement of Revenues, Expenditures and Changes in Fund Balances, are not included as revenue on a budgetary basis.
86,531
The City budgets for loan disbursements which will not be repaid within the current year. Although these amounts are recorded as long-term receivables on the Governmental Funds Balance Sheet, they are not available for appropriation.
293,348
On a budgetary basis, the City records loan principal receipts as revenue, but on a GAAP basis, these receipts reduce receivables.
(748,124)
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances
$
(2,963,499)
$
5,694,889
Reconciliation of Fund Balances - Budgetary to GAAP Basis: Fund Balances - Ending - Budgetary Basis Cumulative effect of unrealized gains and losses on investments
14,730
Noncurrent advances payable
(1,229,332)
Intergovernmental payable to be repaid from future appropriations
(2,438)
Reserved balances unavailable for appropriation
2,328,588
Fund Balances - Ending - GAAP Basis
$
128
6,806,437
INTERNAL SERVICE FUNDS Equipment Operations - This fund is used to account for the expenses related to city-wide fleet operations and maintenance activities, including vehicles, communications equipment, and other pooled equipment. Internal contributions to support this fund are based on cost recovery through charges to user departments and funds. These charges do not include the cost of equipment replacement. Stores Services - Accounts for the costs of operating a centralized warehouse used by the City. Telecommunications - This fund is used to account for the expenses related to the acquisition of communications equipment and ongoing maintenance of the telephone network including the main telephone switch, voice mail system, pagers, cell phones, and fax machines. Internal contributions to support this fund are based on cost recovery through user departments and funds. These charges do not include the cost of equipment replacement. Risk Management - Accounts for the expenses of the City's insurance program, including costs related to claims, administration, legal defense, and insurance premiums. Internal contributions to support this fund are based on cost recovery through charges to departments and funds. The following insurance activities are provided for in this fund: Workers' Compensation Insurance Liability Insurance Group Health Insurance
129
City of Santa Cruz Combining Statement of Net Assets All Internal Service Funds June 30, 2007
Equipment
Stores
Telecommun-
Risk
Operations
Services
ications
Management
Total
ASSETS Current assets: Cash and cash equivalents
$
671,232
$
-
$
96,452
$
6,082,613
$
6,850,297
Interest receivable
7,630
-
469
62,495
Accounts receivable - net
7,030
-
-
-
7,030
133,641
-
-
-
133,641
-
-
-
1,392,459
1,392,459
819,533
-
96,921
7,537,567
8,454,021
402,406
-
746,577
8,160
1,157,143
Inventories Deposits Total current assets
70,594
Noncurrent assets: Capital assets: Machinery and equipment Software
-
-
336,296
(331,839)
-
(959,576)
(6,664)
70,567
-
123,297
1,496
195,360
70,567
-
123,297
1,496
195,360
890,100
-
220,218
7,539,063
8,649,381
123,239
-
10,268
102,275
235,782
7,630
-
530
-
8,160
Claims and judgments payable
-
-
-
2,812,930
2,812,930
Compensated absences payable
30,599
-
-
-
30,599
Total current liabilities
161,468
-
10,798
2,915,205
3,087,471
-
-
-
7,498,625
7,498,625
Less accumulated depreciation
-
336,296 (1,298,079)
Total capital assets (net of accumulated depreciation) Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable and other current liabilities Due to other funds
Noncurrent liabilities: Claims and judgments payable Compensated absences payable
15,300
-
-
-
15,300
Total noncurrent liabilities
15,300
-
-
7,498,625
7,513,925
176,768
-
10,798
10,413,830
10,601,396
70,567
-
123,297
642,765
-
86,123
Total liabilities NET ASSETS Invested in capital assets, net of related debt Unrestricted Total net assets
$
713,332
$
130
-
$
209,420
1,496
195,360
(2,876,263) $
(2,874,767)
(2,147,375) $
(1,952,015)
City of Santa Cruz Combining Statement of Revenues, Expenses and Changes in Net Assets All Internal Service Funds For the year ended June 30, 2007
Equipment
Stores
Telecommun-
Risk
Operations
Services
ications
Management
Total
OPERATING REVENUES: Charges for services - internal
$
2,457,712
$
-
$
216,144
$
5,090,101
$
7,763,957
Charges for services - external
97,479
-
44,016
-
141,495
Other revenues
13,509
-
-
8,438
21,947
2,568,700
-
260,160
5,098,539
7,927,399
805,870
-
98,441
294,334
1,198,645
Total operating revenues OPERATING EXPENSES: Personnel services Services, supplies, and other charges
1,650,598
-
106,415
3,302,522
5,059,535
Depreciation and amortization
20,231
-
64,329
1,632
86,192
Total operating expenses
2,476,699
-
269,185
3,598,488
6,344,372
92,001
-
(9,025)
1,500,051
1,583,027
34,344
-
1,999
302,759
339,102
-
-
-
33,450
-
1,999
302,759
338,208
125,451
-
(7,026)
1,802,810
1,921,235
129,288
-
-
-
129,288
Operating income (loss) NONOPERATING REVENUES (EXPENSES): Investment earnings Interest expense and fiscal charges
(894)
Total nonoperating revenues (expenses) Income (loss) before transfers Transfers in Transfers out
Change in net assets
(894)
(27,932)
(226,658)
(1,109)
(421,247)
(676,946)
101,356
(226,658)
(1,109)
(421,247)
(547,658)
226,807
(226,658)
(8,135)
486,525
226,658
1,381,563
1,373,577
(4,256,330)
(3,325,592)
NET ASSETS: Beginning of year End of year
$
713,332
$
131
-
217,555 $
209,420
$
(2,874,767)
$
(1,952,015)
City of Santa Cruz Combining Statement of Cash Flows All Internal Service Funds For the year ended June 30, 2007
Equipment Operations
Stores Services
Telecommunications
Risk Management
$
$
Total
CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers and users Cash received from interfund services provided Cash payments to suppliers for goods and services Cash payments to employees for services Cash received from (payments to) others
$
Net cash provided (used) by operating activities
121,455 2,457,712 (1,790,799) (797,384) 16,135
$
7,119
126,216 (953) 125,263
44,016 216,144 (160,997) (98,222) (142) 799
688 5,090,101 (1,262,534) (293,181) (3,108,392)
$
166,159 7,763,957 (3,088,114) (1,188,787) (3,093,352)
426,682
559,863
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in/out Net cash provided (used) by noncapital financing activities
101,356
(226,658)
(1,109)
(421,247)
(547,658)
101,356
(226,658)
(1,109)
(421,247)
(547,658)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase and construction of capital assets Principal paid on capital debt Interest paid on capital debt Net cash provided (used) by capital and related financing activities
(8,296) (21,060) (870)
-
-
-
(8,296) (21,060) (870)
(30,226)
-
-
-
(30,226)
(2,626) 34,343
954 -
143 1,999
(10,909) 302,759
(12,438) 339,101
31,717
954
2,142
291,850
326,663
CASH FLOWS FROM INVESTING ACTIVITIES: Interests receivable Investment income received Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents
109,966
(100,441)
1,832
297,285
308,642
561,266
100,441
94,620
5,785,328
6,541,655
CASH AND CASH EQUIVALENTS: Beginning of year End of year
$
671,232
$
-
$
96,452
$
6,082,613
$
6,850,297
$
95,720
$
-
$
(8,806)
$
1,501,443
$
1,588,357
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization Changes in current assets and liabilities: Accounts receivable Prepaid items Inventories Accounts payable and other current liabilities Due to other funds Deposits payable Claims and judgments payable Compensated absences payable
20,231
Total adjustments Net cash provided (used) by operating activities
$
132
-
64,329
23,976 (324) (133,641) (6,561) 2,626 5,092
5,000 129,288 (8,072) (953) -
(27) (54,555) (142) -
(88,601)
125,263
9,605
7,119
$
125,263
$
799
1,632
$
86,192
688 (239) (243,032) (160,078) (5,049) (152) (668,531) -
24,664 4,410 (247,385) (229,266) (3,518) (152) (668,531) 5,092
(1,074,761)
(1,028,494)
426,682
$
559,863
Private-Purpose Trust Funds McCaskill Trust - Local History - is restricted in purpose to promulgate local history. The principal and income benefit the Library Joint Powers Authority, McCaskill Trust - Visually Impaired - is restricted in purpose to providing library materials for the visually impaired. The principal and income benefit the Library Joint Powers Authority. The Finkeldey Trust - is restricted in purpose for the acquisition of musical literature. The principal and income benefit the Library Joint Powers Authority.
133
City of Santa Cruz Combining Statement of Fiduciary Net Assets Private-Purpose Trust Funds June 30, 2007
McCaskill
McCaskill
Total
Trust - Local
Trust - Visually
Finkeldey
Private-Purpose
History
Impaired
Trust
Trust Funds
ASSETS Cash and cash equivalents
$
269,107
$
256,952
$
10,941
$
537,000
Receivables: Interest receivable Total assets
3,094
2,927
126
6,147
272,201
259,879
11,067
543,147
NET ASSETS Held in trust for library programs
$
272,201
134
$
259,879
$
11,067
$
543,147
City of Santa Cruz Combining Statement of Changes in Fiduciary Net Assets Private-Purpose Trust Funds For the year ended June 30, 2007
McCaskill
McCaskill
Trust - Local
Trust - Visually
Finkeldey
Private-Purpose
Total
History
Impaired
Trust
Trust Funds
ADDITIONS: Investment earnings
$
Total additions
14,177
$
13,441
$
587
$
28,205
14,177
13,441
587
28,205
4,649
3,623
755
9,027
Total deductions
4,649
3,623
755
9,027
Change in net assets
9,528
9,818
(168)
19,178
262,673
250,061
DEDUCTIONS: Library programs
NET ASSETS: Beginning of year End of year
$
272,201
135
$
259,879
11,235 $
11,067
523,969 $
543,147
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136
Agency Funds Library Joint Powers Authority - Used to account for funds held by the City in an agency capacity for the Library Joint Powers Authority, which was established to finance the operations of the former City/County library system. Trust Deposit Holding - This fund is used to hold cash deposits received from outside parties on a temporary basis. Payroll Payables - Used to account for cash transferred from various funds to pay for payroll liabilities, which are paid out of this fund. Special Assessments - Accounts for assets held by the City in an agency capacity for special assessment districts. The City acts as agent for collection of principal and interest payments from the property owners and remits these monies to the bondholders. If funds are not available, the City is under no obligation to make bond payments from its own funds.
137
City of Santa Cruz Combining Statement of Fiduciary Net Assets Agency Funds June 30, 2007
Library
Trust
Total
Joint Powers
Deposit
Payroll
Special
Agency
Authority
Holding
Payables
Assessments
Funds
ASSETS Cash and cash equivalents
$
Restricted Cash and cash equivalents
665,882
$
532,915
-
-
$
244,315
$
-
201,175
$
75,985
1,644,287 75,985
Receivables: 13,652
1,228
-
1,821
16,701
Taxes receivable
Interest receivable
640,568
-
-
10,631
651,199
Accounts receivable
530,842
-
-
-
530,842
27,620
-
-
-
27,620
Due from other governments Total assets
$
1,878,564
$
534,143
$
244,315
$
595,552
$
1,517
$
244,315
$
289,612
$
-
$
2,946,634
LIABILITIES Accounts payable and other current liabilities
$
Due to other governments Deposits payable Payable to bondholders Total liabilities
$
-
1,027
532,626
-
-
533,653
-
-
-
289,612
289,612
1,878,564
$
534,143
138
-
$
244,315
-
841,384
1,281,985
$
289,612
1,281,985
$
2,946,634
City of Santa Cruz Combining Statement of Changes in Assets and Liabilities Agency Funds For the year ended June 30, 2007
Balance July 1, 2006 Library Joint Powers Authority Assets: Cash and cash equivalents Receivables: Interest receivable Taxes receivable Accounts receivable Due from other governments Total assets Liabilities: Accounts payable and other current liabilities Due to other governments Deposit payable Total liabilities Trust Deposit Holding Assets: Cash and cash equivalents Interest receivable Total assets Liabilities: Accounts payable and other current liabilities Deposits payable Total liabilities Payroll Payables Assets: Cash and cash equivalents Total assets Liabilities: Accounts payable and other current liabilities Total liabilities Special Assessments Assets: Cash and cash equivalents Investments Restricted cash and cash equivalents Receivables: Interest receivable Taxes receivable Total assets Liabilities: Payable to bondholders Total liabilities
$
510,464
Additions
$
10,813 553,799 527,368 16,467
12,958,192
Balance June 30, 2007
Deletions
$
61,803 640,568 527,384 27,620
12,802,774
$
58,964 553,799 523,910 16,467
665,882 13,652 640,568 530,842 27,620
$
1,618,911
$
14,215,567
$
13,955,914
$
1,878,564
$
507,536 1,110,680 695
$
3,787,784 171,305 332
$
3,699,768 -
$
595,552 1,281,985 1,027
$
1,618,911
$
3,959,421
$
3,699,768
$
1,878,564
$
521,125 1,472
$
1,544,139 8,041
$
1,532,349 8,285
$
532,915 1,228
$
522,597
$
1,552,180
$
1,540,634
$
534,143
$
5,521 517,076
$
1,095,156 1,545,506
$
1,099,160 1,529,956
$
1,517 532,626
$
522,597
$
2,640,662
$
2,629,116
$
534,143
$
246,417
$
70,052,566
$
70,054,668
$
244,315
$
246,417
$
70,052,566
$
70,054,668
$
244,315
$
246,417
$
693,782,719
$
693,784,821
$
244,315
$
246,417
$
693,782,719
$
693,784,821
$
244,315
$
178,624 89,494 -
$
352,186 89,985
$
329,635 89,494 14,000
$
201,175 75,985
1,975 9,885
6,774 10,630
6,928 9,884
1,821 10,631
$
279,978
$
459,575
$
449,941
$
289,612
$
279,978
$
9,634
$
-
$
289,612
$
279,978
$
9,634
$
-
$
289,612
139
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140
STATISTICAL SECTION (Unaudited)
This part of the City of Santa Cruz'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.
Contents
Page
Financial Trends
143 - 149
These tables contain trend information to help the reader understand how the city's financial performance and well-being have changed over time. Revenue Capacity
150 - 157
These tables contain information to help the reader assess the city's most significant local revenue source, the property tax. Debt Capacity
158 - 164
These tables 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. Demographic and Economic Information
166 - 167
These tables offer demographic and economic indicators to help the reader understand the environment within which the city's financial activities take place. Operating Information
168 - 170
These tables 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.
Sources:
Unless otherwise noted, the information in these tables is derived from the comprehensive annual financial reports for the relevant year.
141
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142
City of Santa Cruz
TABLE 1
Net Assets By Component Last Five Fiscal Years
Fiscal Year Ended June 30 2003
2004
2005
2006
2007
$ 136,369,360
$ 136,556,019
$ 139,024,926
$ 142,216,967
$ 144,203,036
Restricted
10,441,164
11,411,611
10,105,142
12,132,237
13,648,674
Unrestricted
16,662,826
12,267,438
18,695,330
19,428,634
24,563,381
$ 163,473,350
$ 160,235,068
$ 167,825,398
$ 173,777,838
$ 182,415,091
$ 168,876,424
$ 174,395,150
$ 179,988,569
$ 164,275,405
$ 172,324,984
-
-
704,469
-
-
62,492,429
58,267,139
57,125,277
78,560,182
81,361,517
$ 231,368,853
$ 232,662,289
$ 237,818,315
$ 242,835,587
$ 253,686,501
Governmental activities: Invested in capital assets, net of related debt
Total governmental activities net assets Business-type activities: Invested in capital assets, net of related debt Restricted Unrestricted Total business-type activities net assets Primary government: Invested in capital assets,
$ 305,245,784
$ 310,951,169
$ 319,013,495
$ 306,492,372
$ 316,528,020
Restricted
net of related debt
10,441,164
11,411,611
10,809,611
12,132,237
13,648,674
Unrestricted
79,155,255
70,534,577
75,820,607
97,988,816
105,924,898
$ 394,842,203
$ 392,897,357
$ 405,643,713
$ 416,613,425
$ 436,101,592
Total primary government net assets
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available.
Source: City of Santa Cruz Finance Department
143
City of Santa Cruz
TABLE 2
Changes in Net Assets Last Five Fiscal Years
2003 Expenses Governmental activities: General government Public safety Parks and recreation Library Public works Transit Community and economic development Social services Interest and fiscal charges
$
2004
$
10,382,020 23,770,732 12,312,469 8,441,896 9,790,984 569,247 8,265,841 1,976,456 979,508
Fiscal Year Ended June 30 2005
11,451,699 27,054,407 13,022,089 8,697,195 9,618,748 588,183 7,140,903 1,803,125 1,126,311
$
9,889,427 27,218,149 11,944,976 8,934,173 7,801,586 586,896 7,719,248 1,715,326 1,066,994
$
2006
9,755,194 27,227,214 11,715,023 9,179,637 9,047,430 624,214 7,414,895 2,563,680 883,866
2007
$
12,494,563 29,646,507 12,002,102 9,644,172 11,509,715 646,548 10,616,686 1,758,216 1,304,447
Total governmental activities expenses
76,489,153
80,502,660
76,876,775
78,411,153
89,622,956
Business-type activities: Water Wastewater Refuse Parking Storm Water Golf course
13,994,913 14,824,444 14,824,819 2,222,770 2,165,345 1,745,322
13,707,644 15,456,161 14,924,093 2,471,710 1,956,563 1,811,128
14,643,440 15,524,855 14,581,347 2,565,800 2,150,359 1,781,330
15,204,565 16,192,904 12,700,841 2,960,225 1,925,661 2,325,920
16,203,872 15,377,903 12,974,413 2,632,045 1,938,275 2,165,390
Total business-type activities expenses
49,777,613
50,327,299
51,247,131
51,310,116
51,291,898
$ 126,266,766
$ 130,829,959
$ 128,123,906
$ 129,721,269
$ 140,914,854
$
$
$
$
$
Total primary government expenses Program Revenues Governmental activities: Charges for services: General government Public safety Parks and recreation Library Public works Transit Community and economic development Operating grants and contributions Capital grants and contributions
3,945,684 1,950,228 3,798,713 7,005,781 3,459,306 432,651 3,979,717 5,823,628
3,938,389 2,760,629 3,956,257 7,672,089 3,083,205 110,889 3,165,361 4,864,757
3,814,053 3,230,321 2,863,615 8,152,865 4,008,187 115,183 2,829,078 5,141,507
4,662,211 3,041,137 3,191,193 8,478,112 4,253,232 66,643 996,327 2,125,537 2,499,565
5,507,904 3,410,308 3,011,980 8,894,858 4,072,956 108,009 5,439,954 5,669,638
Total governmental activities program revenues
30,395,708
29,551,576
30,154,809
29,313,957
36,115,607
Business-type activities: Charges for services: Water Wastewater Refuse Parking Storm Water Golf course Operating grants and contributions Capital grants and contributions
14,278,839 11,461,188 13,341,636 2,209,631 892,378 1,867,914 85,446 2,312,416
15,687,800 11,664,391 14,583,240 2,478,911 862,150 1,933,684 138,515 3,391,001
17,283,215 11,911,915 14,562,560 2,635,129 872,569 992,439 369,968 6,439,375
19,480,617 13,079,711 13,525,848 2,654,549 869,490 1,608,752 15,704 2,480,435
22,442,267 13,978,613 15,108,051 2,697,863 875,730 1,770,614 40,470 1,662,249
Total business-type activities program revenues
46,449,448
50,739,692
55,067,170
53,715,106
58,575,857
Total primary government program revenues
76,845,156
80,291,268
85,221,979
83,029,063
94,691,464
(46,093,445) (3,328,165)
(50,951,084) 412,393
(46,721,966) 3,820,039
(49,097,196) 2,404,990
(53,507,349) 7,283,959
Net (expense)/revenue: Governmental activities Business-type activities Total primary government net (expense)/revenue
$
(49,421,610)
144
$
(50,538,691)
$
(42,901,927)
$
(46,692,206)
$
(46,223,390)
City of Santa Cruz
TABLE 2
Changes in Net Assets Last Five Fiscal Years
2003 General Revenues and Other Changes in Net Assets Governmental activities: Taxes Property taxes Sales and use taxes Frachise taxes Transient occupancy taxes Utility users taxes Admission taxes Other taxes Unrestricted grants and contributions Investment earnings Gain (loss) on sale of assets Extraordinary items Miscellaneous Transfers
$
Total governmental activities
2004
15,078,406 8,291,244 3,132,743 2,932,256 7,592,049 1,664,150 2,000,338 4,526,808 1,095,006 (4,963) 477,109 673,184 57,444
$
47,515,774
Business-type activities: Unrestricted grants and contributions Investment earnings Gain (loss) on sale of assets Miscellaneous Transfers $
Change in Net Assets Governmental activities Business-type activities
$
Total primary government
$
$
$
2006
22,384,981 11,738,917 2,136,686 3,385,148 8,304,371 1,715,133 2,303,363 1,121,274 1,380,087 24,318 487,841 67,517
2007
$
55,049,636
222 1,469,180 97,529 (78,584)
479,985
50,485,980
16,476,980 11,383,231 3,478,971 3,067,869 8,080,171 1,629,164 2,107,273 4,562,277 846,634 60,093 577,892 78,584 52,349,139
250 717,261 (11,712) 108,532 (334,346)
2,970,206
Total primary government
15,792,225 9,084,026 3,329,454 3,016,463 7,638,926 1,724,330 2,480,973 2,565,897 437,672 716,218 679,168 334,346 47,799,698
2,421,200 60,717 545,733 (57,444)
Total business-type activities
Fiscal Year Ended June 30 2005
61,987,602
2,079,379 91,920 508,500 (67,517)
1,488,347
24,593,312 12,770,015 2,607,388 3,750,509 8,288,655 1,909,012 2,466,711 2,628,122 322,288 2,648,223 3,367
3,637,989 51,527 530,158 (3,367)
2,612,282
4,216,307
$
48,279,683
$
53,837,486
$
57,661,918
$
66,203,909
1,422,329 (357,959)
$
(3,151,386) 892,378
$
5,627,173 5,308,386
$
5,952,440 5,017,272
$
8,480,253 11,500,266
1,064,370
$
(2,259,008)
$
10,935,559
$
10,969,712
$
19,980,519
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. Source: City of Santa Cruz Finance Department
145
City of Santa Cruz Fund Balances of Governmental Funds Last Ten Fiscal Years
Fiscal Year Ended June 30 1999 2000
1998 General Fund Reserved Unreserved, designated Unreserved, undesignated Total General Fund All other governmental funds Reserved Unreserved, designated, reported in: Redevelopment Agency fund Special revenue funds Debt service funds Capital projects funds Unreserved, undesignated, reported in: Redevelopment Agency fund Special revenue funds Capital projects funds Total all other governmental funds
2001
$
9,540,038 9,939,971
$
5,600,632 11,351,018
$
6,215,738 12,011,261
$
4,906,611 5,194,894 9,170,827
$
19,480,009
$
16,951,650
$
18,226,999
$
19,272,332
$
5,458,871
$
10,138,359
$
11,383,565
$
13,204,616
$
1,416,538 -
1,236,971 1,502,558 -
1,210,456 890,922 -
1,351,077 1,092,974 -
1,467,435 1,839,601
1,418,246 2,158,532
(63,288) 1,508,205
861,078 671,223
10,182,445
Source: City of Santa Cruz Finance Department
146
$
16,454,666
$
14,929,860
$
17,180,968
TABLE 3
2002
Fiscal Year Ended June 30 2004 2005
2003
2006
2007
$
4,008,809 6,392,382 6,974,625
$
5,237,443 5,922,853 4,806,652
$
4,388,586 7,638,171 5,964,197
$
3,870,996 7,435,828 8,729,971
$
4,327,113 7,120,993 11,354,586
$
4,006,713 8,488,474 13,924,233
$
17,375,816
$
15,966,948
$
17,990,954
$
20,036,795
$
22,802,692
$
26,419,420
$
14,174,955
$
12,311,339
$
13,691,282
$
10,721,195
$
11,148,536
$
11,608,393
$
994,997 2,591,507 -
4,014,256 589,008 470,840
3,987,557 509,404 457,945
6,497,637 476,904 557,277 91,180
7,958,925 536,451 707,775 92,641
9,126,250 1,053,286 909,576 -
(948,602) 660,747 1,558,754
(55,035) 1,747,678 446,564
2,207,906 (1,444,460)
3,185,320 2,196,529
3,341,962 281,931
2,851,774 (2,796,246)
19,032,358
$
19,524,650
$
19,409,634
$
147
23,726,042
$
24,068,221
$
22,753,033
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148
City of Santa Cruz
TABLE 4
Changes in Fund Balances of Governmental Funds Last Five Fiscal Years
Fiscal Year Ended June 30 2005 2006
2003
2004
$ 40,691,186 614,012 14,011,928 16,952,167 1,587,698 2,859,096 449,907
$ 42,529,756 529,649 10,258,114 17,191,373 1,805,734 2,345,707 592,012
$ 46,268,500 603,344 11,479,068 17,968,817 2,032,817 2,821,174 686,853
$ 52,035,729 615,448 5,696,237 19,347,463 1,965,235 3,234,159 1,049,925
$ 56,385,602 824,258 10,963,874 19,852,885 2,242,547 4,375,345 2,464,263
77,165,994
75,252,345
81,860,573
83,944,196
97,108,774
9,673,413 22,920,677 9,773,346 8,412,201 5,592,617 569,247 7,954,378 1,976,456 11,340,680
8,967,025 24,843,763 9,721,229 8,528,577 4,539,192 588,183 6,332,156 1,803,125 9,553,173
9,390,901 26,692,313 9,593,982 8,980,823 4,248,358 586,896 6,640,932 1,715,326 7,846,456
9,666,858 26,938,629 9,402,529 9,250,499 4,158,916 624,214 8,436,468 1,693,267 11,921,789
12,261,663 28,574,065 9,653,531 9,693,097 4,940,051 646,548 10,028,992 1,758,216 14,867,937
1,116,090 839,345 -
1,718,937 851,721 -
2,231,549 966,238 276,569
1,149,776 921,517 -
2,203,868 1,078,832 -
80,168,450
77,447,081
79,170,343
84,164,462
95,706,800
Excess of revenues over (under) expenditures
(3,002,456)
(2,194,736)
2,690,230
(220,266)
1,401,974
Other financing sourses (uses) Proceeds from asset dispositions Proceeds from long-term debt issued Premiums on bonds sold Payment to refunded bond escrow agent Transfers in Transfers out
777,750 1,565,684 (1,357,286)
756,823 3,244,346 (2,139,754)
139,104 5,825,000 23,994 (2,571,681) 1,928,681 (1,793,079)
25,256 3,200,000 861,257 (758,170)
348,541 1,260,514 (709,489)
1,861,415
3,552,019
3,328,343
899,566
$ 6,242,249
$ 3,108,077
$ 2,301,540
Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Use of money and property Other revenues Total revenues Expenditures General government Public safety Parks and recreation Library Public works Transit Community and economic development Social services Capital outlay Debt service: Principal Interest and fiscal charges Bond issuance costs Total expenditures
Total other financing sources (uses) Net change in fund balances Debt service as a percentage of noncapital expenditures
986,148 $ (2,016,308)
$
2.8%
(333,321)
3.8%
4.9%
2007
2.9%
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Prior to that implementation, expenditure amounts were categorized differently in the fund statements. Information is not available now to reclassify those prior years' expenditures into comparable categories for this table. Source: City of Santa Cruz Finance Department 149
4.1%
City of Santa Cruz General Governmental Tax Revenues by Source1 Last Ten Fiscal Years
Fiscal Year Ended
Sales
June 30 1998
Property $
and Use
9,784,131
$
Franchise
7,191,934
$
1,736,039
$
Transient
Utility
Occupancy
Users
2,716,397
$
6,557,490
Admission $
1,539,111
1999
10,484,409
7,415,341
2,476,604
3,174,694
6,912,440
1,502,540
2000
12,176,209
8,857,748
2,771,014
3,541,396
7,149,619
1,583,897
2001
13,342,450
9,790,693
2,851,830
3,900,905
8,246,829
1,611,318
2002
14,944,971
9,126,341
2,996,907
3,131,378
7,627,331
1,612,526
2003
15,629,920
8,291,244
3,132,743
2,932,256
7,592,049
1,664,150
2004
15,792,225
9,084,026
2005
16,501,921
11,383,231
2006
22,348,981
2007
24,593,312
5
4
11,738,917 12,770,015
6
3,329,454
3,016,463
7,638,926
1,724,330
3,478,971
3,067,869
8,080,171
1,629,164
2,136,686
3,385,148
8,304,371
1,715,133
2,607,388
3,750,509
8,288,655
1,909,012
Notes:
1
This table includes all governmental fund types.
2
Beginning with fiscal year 2003, business improvement taxes include the Co-op Retail Management Business Real Property Improvement District.
3
Prior to fiscal year 2003, business license taxes were shown in Permits and Licenses.
4
A new quarter-cent sales tax override was implemented in fiscal year 2005. This temporary tax is scheduled to end on June 30, 2009.
5
Beginning in fiscal year 2006, property taxes include amounts for Property Taxes In Lieu of Vehicle License Fees.
6
A new permanent quarter-cent sales tax override was implemented in fiscal year 2007. In addition, the temporary quarter-cent sales tax override previously implemented in fiscal year 2005 was made permanent in fiscal year 2007.
Source: City of Santa Cruz Finance Department
150
TABLE 5
Parks and Parking $
147,877
Business Improvement2 $
175,114
Property
$
162,915
Recreation
Business License3
Transfer $
Facilities -
$
Total -
$
30,011,008
192,352
167,500
186,624
-
-
32,512,504
158,229
170,369
219,132
-
-
36,627,613
178,373
183,711
200,041
-
-
40,306,150
194,646
175,868
194,632
-
-
40,004,600
199,371
273,965
191,042
784,446
551,514
41,242,700
221,133
296,536
276,466
792,893
357,305
42,529,757
221,790
292,422
325,305
777,308
510,348
46,268,500
229,629
316,742
562,723
777,068
417,202
51,932,600
264,510
330,614
641,579
787,225
442,783
56,385,602
151
City of Santa Cruz
TABLE 6
General Fund Revenues by Source Last Ten Fiscal Years
Fiscal Year
Licenses
Ended June 30 1998
Taxes $
23,292,917
$
Charges
Fines
Use of Money
and
Inter-
for
and
and
Other
Permits
Governmental
Services
Forfeitures
Property
Revenues
1,366,948
$
3,410,230
$
6,290,188
$
1,064,554
$
3,623,968
$
280,513
Total $
39,329,318
1999
24,918,906
1,397,862
4,170,892
6,729,820
1,397,833
3,794,000
213,496
42,622,809
2000
27,646,368
1,595,964
4,732,311
6,566,033
1,347,496
3,574,121
324,802
45,787,095
2001
30,258,503
1,342,471
5,281,661
7,009,901
1,286,990
4,152,368
327,692
49,659,586
2002
29,238,472
1,267,939
5,339,612
7,151,012
1,282,697
3,577,774
397,896
48,255,402
2003
30,027,154
614,012
4,788,035
16,693,936
1,555,481
2,252,373
308,104
56,239,095
2004
31,696,322
529,649
3,745,601
16,865,754
1,799,557
2,086,163
418,764
57,141,810
2005
34,384,206
603,344
5,465,642
17,799,213
2,022,779
2,333,922
276,565
62,885,671
2006
39,495,863
615,448
1,073,997
19,062,464
1,962,697
2,541,909
216,721
64,969,099
2007
42,837,408
824,258
1,563,745
19,786,417
2,218,082
3,061,718
187,732
70,479,360
Notes: Beginning in fiscal year 2003, charges for personnel services provided to the Library Joint Powers Authority were included in General Fund charges for services, as well as charges for interfund personnel services provided. Also, prior to fiscal year 2003, business license taxes were shown in licenses and permits.
Source:
City of Santa Cruz Finance Department
152
City of Santa Cruz
TABLE 7
Assessed Value of Taxable Property Last Ten Fiscal Years
Fiscal Year Ended
Real Property
June 30
Residential
1998
$ 2,672,618,165
1999
2,760,380,015
Commercial $
398,841,413
Other $
449,610,460
Total
80,522,177
$ 3,151,981,755
87,470,143
3,297,460,618
$
Total
Total
Personal
Assessed
Direct Tax
Property
Value
Rate
176,321,921
$ 3,328,303,676
0.000%
186,050,833
3,483,511,451
0.000%
2000
2,980,522,986
510,282,517
92,665,671
3,583,471,174
198,830,667
3,782,301,841
0.009%
2001
3,193,569,036
537,141,067
113,773,535
3,844,483,638
207,913,809
4,052,397,447
0.009%
2002
3,494,071,877
611,373,783
111,624,535
4,217,070,195
237,668,331
4,454,738,526
0.009%
2003
3,657,553,824
663,946,747
122,103,592
4,443,604,163
237,898,436
4,681,502,599
0.009%
2004
3,882,699,208
700,948,081
123,781,647
4,707,428,936
225,168,674
4,932,597,610
0.009%
2005
4,150,085,545
755,991,976
126,848,221
5,032,925,742
217,439,195
5,250,364,937
0.009%
2006
4,563,844,105
788,484,799
110,751,935
5,463,080,839
216,627,737
5,679,708,576
0.009%
2007
5,032,785,543
841,223,841
112,527,378
5,986,536,762
219,805,452
6,206,342,214
0.009%
Notes: Total Direct Tax Rate is from Table 8. With the passage of a constitutional amendment (Proposition 13) and subsequently enacted State legislation, property is assessed according to a base year rather than on a percentage of market value. Accordingly, a reliable estimate of actual value of taxable property within the City is not possible.
Source: County of Santa Cruz Auditor-Controller's Office County of Santa Cruz Assessor's Office
153
City of Santa Cruz
TABLE 8 1
Direct and Overlapping Property Tax Rates Last Ten Fiscal Years
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
-
$ 0.009
$ 0.009
$ 0.009
$ 0.009
$ 0.009
$ 0.009
$ 0.009
$ 0.009
-
0.009
0.009
0.009
0.009
0.009
0.009
0.009
0.009
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
Direct Rates: Debt service
$
-
Total Direct Rate
-
$
Overlapping Rates2: County3
1.000
School Districts: Cabrillo College
-
0.014
0.007
0.012
0.021
0.019
0.019
0.038
0.037
0.024
Santa Cruz Schools
-
0.038
0.016
0.077
0.067
0.075
0.074
0.068
0.081
0.027
Bonny Doon Schools
0.056
0.056
0.019
0.021
0.035
0.036
0.034
0.033
0.029
0.023
Live Oak Schools
0.058
0.052
0.050
0.046
0.043
0.037
0.023
0.042
0.043
0.052
Scotts Valley Schools
0.087
0.087
0.077
0.073
0.052
0.084
0.055
0.054
0.050
0.044
1.201
1.247
1.169
1.229
1.218
1.251
1.205
1.235
1.240
1.170
$ 1.201
$ 1.247
$ 1.178
$ 1.238
$ 1.227
$ 1.260
$ 1.214
$ 1.244
$ 1.249
$ 1.179
Total Overlapping Rate Total Direct and Overlapping Rate
Notes: 1
Rates are per $100.00 of assessed value.
2
Overlapping rates are those of entities that apply to property owners within the City of Santa Cruz. Not all overlapping rates apply to all property owners (e.g., the rates for school districts apply only to the proportion of the city's property owners whose property is located within the geographic boundaries of the school district).
3
The passage of a constitutional amendment (Proposition 13) in June 1978 limits the property tax rate to a base of $1.00 per $100.00. The $1.00 rate is levied by the County and apportioned to local agencies according to a formula perscribed by the California legislature.
Source:
County of Santa Cruz Auditor - Controller's Office
154
City of Santa Cruz
TABLE 9
Principal Property Tax Owners Current Year and Nine Years Ago
Fiscal Year Ended June 30 2007
1998 Percentage
Percentage
of Total Assessed
of Total
Assessed
Assessed
Rank
Valuation
Valuation
44,807,943
1
0.722%
Cypress Point RE Investors LLC
40,341,510
2
0.650%
-
-
S C Beach Hotel Partners LLC
36,750,000
3
0.592%
-
-
Santa Cruz Shaffer Road Investors
32,328,651
4
0.521%
-
-
Tax Owner Santa Cruz Seaside Company
Valuation $
$
Assessed
24,563,417
Rank
Valuation
2
0.705%
1010 Pacific Investors
22,068,579
5
0.356%
-
-
CRRI/Seagate Ocean Street LLC
21,414,917
6
0.345%
-
-
222 Columbia Streeet LLC
20,525,460
7
0.331%
-
-
Cooper House LLC
20,223,262
8
0.326%
-
-
Harmony Partners LLC
18,358,801
9
0.296%
-
-
Wave Crest Development Inc
17,946,554
10
0.289%
-
-
Silicon Systems Inc
-
-
160,621,705
1
4.611%
Thomas J. Lipton, Inc.
-
-
18,375,960
3
0.528%
Fremont Central Investment
-
-
13,958,736
4
0.401%
The Price Company
-
-
13,774,455
5
0.395%
Outlook Apartments
-
-
13,180,866
6
0.378%
Frederick Electronics Corporation
-
-
13,016,156
7
0.374%
Pacific Square Ltd Partners
-
-
11,433,996
8
0.328%
Western Business Park
-
-
10,056,900
9
0.289%
Sequoia Equities III, LLC
-
-
8,887,340
10
0.255%
Totals
$
274,765,677
Total assessed value
$
6,206,342,214
4.427%
Notes: Tax owners and values presented in this table reflect the County's Assessment Roll Reports.
Source: County of Santa Cruz Assessor's Office
155
$
287,869,531
$
3,483,511,451
8.264%
This page is intentionally left blank.
156
City of Santa Cruz
TABLE 10 1
Property Tax Levies and Collections Last Ten Fiscal Years
Outstanding Fiscal
Total
Year Ended
Total Tax 2
June 30 1998
Levy $
9,396,855
Current Tax Collections $
2
Percent
Delinquent
of Levy
Tax
Collected
Collections
Total
3
$
-
Delinquent
Collections
Outstanding
Tax
as Percent of
Delinquent
Collections
Current Levy
$
Taxes $
Taxes as Percent of
3
Current Levy
9,396,855
100.0%
9,396,855
100.0%
-
-
1999
10,104,672
10,104,672
100.0%
-
10,104,672
100.0%
-
-
2000
11,732,295
11,732,295
100.0%
-
11,732,295
100.0%
-
-
2001
12,516,202
12,516,202
100.0%
-
12,516,202
100.0%
-
-
2002
14,190,378
14,190,378
100.0%
-
14,190,378
100.0%
-
-
2003
14,639,056
14,639,056
100.0%
-
14,639,056
100.0%
-
-
2004
15,335,693
15,335,693
100.0%
-
15,335,693
100.0%
-
-
2005
16,013,591
16,013,591
100.0%
-
16,013,591
100.0%
-
-
2006
18,191,952
18,191,952
100.0%
-
18,191,952
100.0%
-
-
2007
20,310,069
20,310,069
100.0%
-
20,310,069
100.0%
-
-
Notes: 1
This table includes levies and collections for the Redevelopment Agency.
2
Does not include amounts for Property Taxes in Lieu of Vehicle License Fees
3
Because it adopted a new method of distributing property taxes (commonly referred to as the "Teeter Plan"), the County is now responsible for all delinquent secured property taxes.
Source:
County of Santa Cruz Auditor-Controller's Office City of Santa Cruz Finance Department
157
City of Santa Cruz Ratios of Outstanding Debt By Type Last Ten Fiscal Years
Fiscal Year Ended June 30 1998
1999
2000
2001
2002
Governmental Activities: General obligation bonds
$
Tax allocation bonds
-
$
6,998,473
$
7,176,298
$
7,299,481
$
7,286,115
3,690,000
3,540,000
3,385,000
3,225,000
3,055,000
569,946
555,921
518,392
4,890,431
4,769,607
-
854,158
1,583,610
1,649,722
3,355,410
Notes
-
-
-
-
1,500,000
Other
-
-
-
531,900
998,692
4,259,946
11,948,552
12,663,300
17,596,534
20,964,824
Wastewater revenue bonds
20,570,000
19,745,000
5,210,000
5,085,000
4,955,000
Storm water revenue bonds
-
-
-
-
-
Certificates of participation Capital leases
Total Governmental Activities Business-type Activities:
Water revenue bonds
-
-
-
-
Golf course revenue bonds
225,000
155,000
80,000
-
-
Certificates of Participation
9,221,558
14,251,608
22,339,568
28,985,383
28,047,650
Leases
2,175,315
1,619,560
2,353,054
2,942,887
2,926,370
Notes
51,938,582
50,976,494
48,894,934
47,221,604
44,988,271
Total Business-type Activities
84,130,455
86,747,662
78,877,556
84,234,874
80,917,291
Total Primary Government
$
88,390,401
$
98,696,214
$
91,540,856
$
101,831,408
$
101,882,115
Personal income1
$
1,570,062,816
$
1,709,289,000
$
1,890,711,810
$
2,154,291,172
$
2,096,039,335
Debt as percentage of personal income Population2
5.63%
5.77%
4.84%
4.73%
4.86%
53,172
54,575
56,046
55,028
55,085
Debt per capita
1,662
1,808
1,633
1,851
1,850
Assessed value3
4,932,597,610
5,250,364,937
5,679,708,576
4,681,502,599
4,932,597,610
Debt as percentage of assessed value
1.79%
1.88%
1.61%
2.18%
Notes: 1
Personal income is calculated based on data from the US Department of Commerce, Bureau of Economic Analysis (refer to Table 16).
Source:
2
State Department of Finance
3
County of Santa Cruz Assessor's Office
City of Santa Cruz Finance Department
158
2.07%
TABLE 11
Fiscal Year Ended June 30 2003 $
2004
7,260,759
$
2005
7,228,152
$
2006
7,183,381
$
2007
7,126,075
$
7,055,866
2,880,000
2,695,000
5,245,000
5,125,000
5,005,000
4,642,350
4,513,661
4,377,108
4,239,123
4,096,139
2,450,555
1,765,216
1,766,635
1,247,913
965,627
1,500,000
1,624,706
1,334,942
4,205,026
2,920,485
985,663
920,263
1,029,804
944,836
851,581
19,719,327
18,746,998
20,936,870
22,887,973
20,894,698
4,955,000
4,820,000
4,680,000
4,715,000
4,510,000
-
-
-
6,100,000
5,940,000
-
-
-
12,450,000
12,150,000
-
-
-
-
-
28,047,650
29,831,339
28,662,892
20,915,877
19,183,861
4,624,099
3,939,187
3,108,344
3,145,352
3,514,756
44,883,261
42,593,574
40,240,469
37,822,337
35,337,269
82,510,010
81,184,100
76,691,705
85,148,566
80,635,886
$
102,229,337
$
99,931,098
$
97,628,575
$
108,036,539
$
101,530,584
$
2,085,569,904
$
2,109,542,853
$
2,247,596,565
$
2,365,518,375
$
2,638,747,497
4.90%
4.74%
4.34%
4.57%
3.85%
55,633
56,289
56,451
56,925
57,553
1,838
1,775
1,729
1,898
1,764
4,681,502,599
4,932,597,610
5,250,364,937
5,679,708,576
6,206,342,214
2.18%
2.03%
1.86%
1.90%
159
1.64%
City of Santa Cruz
TABLE 12
Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years
Fiscal
Less: Amount
Year
General
Available
Percentage
Debt
Ended
Obligation
in Debt
of Assessed
Per
June 30
Bonds
Service Fund
Value
Capita
1998
$
-
$
-
Total $
-
-
$
Assessed Value1
Population2
-
$3,328,303,676
53,172
1999
6,998,473
12
6,998,461
0.20%
128
3,483,511,451
54,575
2000
7,176,298
125,218
7,051,080
0.19%
126
3,782,301,841
56,046
2001
7,299,481
277,763
7,021,718
0.17%
128
4,052,397,447
55,028
2002
7,286,115
324,117
6,961,998
0.16%
126
4,454,738,526
55,085
2003
7,260,759
389,184
6,871,575
0.15%
124
4,681,502,599
55,633
2004
7,228,153
457,945
6,770,208
0.14%
120
4,932,597,610
56,289
2005
7,183,381
557,277
6,626,104
0.13%
117
5,250,364,937
56,451
2006
7,126,075
707,777
6,418,298
0.11%
113
5,679,708,576
56,925
2007
7,055,866
909,576
6,146,290
0.10%
107
6,206,342,214
57,553
Source:
1
County of Santa Cruz Assessor's Office
2
State Department of Finance City of Santa Cruz Finance Department
160
City of Santa Cruz
TABLE 13
Computation of Direct and Overlapping Debt June 30, 2007
2006-2007 Assessed Valuation
$ 6,206,342,214
Redevelopment Incremental Valuation: Adjusted Assessed Valuation:
1,025,341,376 $ 5,181,000,838 Total
Percentage
Amount
Debt
Applicable
Applicable
Outstanding
to City (1)
to City
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Cabrillo Joint Community College District
$ 182,685,343
19.936%
Santa Cruz High School District
92,532,244
54.622%
50,542,962
Santa Cruz Elementary School District
23,975,466
94.275%
22,602,871
Live Oak School District
20,534,975
3.306%
678,886
Scotts Valley Unified School District
20,345,000
0.027%
City of Santa Cruz
6,003,228
100.000%
6,003,228 (2)
City of Santa Cruz 1915 Act Bonds
1,475,000
100.000%
1,475,000
Total Direct and Overlapping Tax and Assessment Debt
$
36,420,150
5,493
$ 117,728,590
$ 347,551,256
DIRECT AND OVERLAPPING GENERAL FUND DEBT: Santa Cruz County Certificates of Participation
73,135,799
20.224%
14,790,984
Santa Cruz County Office of Education Certificates of Participation
11,605,000
20.224%
2,346,995
Cabrillo Joint Community College District Certificates of Participation
2,845,000
19.936%
567,179
Scotts Valley Unified School District Certificates of Participation
4,190,000
0.027%
1,131
Santa Cruz City Schools Certificates of Participation
5,340,000
54.622%
2,916,815
Live Oak School District Certificates of Participation
3,920,000
3.306%
City of Santa Cruz General Fund Obligations
7,985,000
100.000%
894,969
100.000%
894,969
3,265,000
7.074%
230,966
Santa Cruz Consolidated Emergency Communication Center Monterey Bay Unified Air Pollution Control District Authority
129,595 7,985,000 (3)
29,863,634 (4)
Total Direct and Overlapping General Fund Debt
$ 113,180,768
$
Combined Total Debt
$ 460,732,024
$ 147,592,224
Notes: (1) Percentage of overlapping agency's assessed valuation located within boundaries of the city. (2) Excludes interest accretion amounts. (3) Excludes issues self-supporting from enterprise revenues ($6,760,000). (4) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and nonbonded capital lease obligations. Ratios to 2006-2007 Assessed Valuation: Direct Debt ($6,003,228)
0.10%
Total Direct and Overlapping Tax and Assessment Debt
1.90%
Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($14,883,197)
0.29%
Combined Total Debt
2.85% $0
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/07: Source: California Municipal Statistics, Inc.
161
City of Santa Cruz Legal Debt Margin Information Last Ten Fiscal Years
Fiscal Year Ended June 30
Debt limit
1998
1999
2000
2001
2002
$ 499,245,551
$ 522,526,718
$ 567,345,276
$ 607,859,617
$ 668,210,779
-
6,998,461
7,051,080
7,021,718
6,961,998
$ 499,245,551
$ 515,528,257
$ 560,294,196
$ 600,837,899
$ 661,248,781
Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit
0.00%
1.34%
1.24%
Notes: Section 1418 of the Charter of the City of Santa Cruz limits general obligation bond indebtedness to 15% of the total assessed valuation of all real personal property within the City.
Source: County of Santa Cruz Auditor-Controller's Office City of Santa Cruz Finance Department
162
1.16%
1.04%
TABLE 14
Fiscal Year Ended June 30 2003
2004
2005
2006
$ 702,225,390
$ 739,889,642
$ 787,554,741
$ 851,956,286
6,871,575
6,770,208
6,626,104
6,418,298
$ 695,353,815
$ 733,119,434
$ 780,928,637
$ 845,537,988
0.98%
0.92%
0.84%
2007 $
930,951,332 6,146,290
$
0.75%
924,805,042
0.66%
Legal Debt Margin Calculation For Fiscal Year 2006-07: Total assessed value
$ 6,206,342,214
Debt limit (15% of total assessed value)
930,951,332
Debt applicable to limit: General obligation bonds (reported at accreted value)
7,055,866
Less: Amount available in debt service fund for repayment of bonds
909,576
Total net debt applicable to limit
6,146,290
Legal debt margin
$
163
924,805,042
City of Santa Cruz Pledged-Revenue Coverage Last Ten Fiscal Years
Fiscal Year Ended June 30 1998
1999
2000
2001
2002
Wastewater Revenue Bonds: Wastewater charges and other
$
10,730,501
$
12,179,844
$
12,846,315
$
11,585,518
$
12,146,047
Less: operating expenses
6,054,987
7,379,231
7,856,133
7,275,278
8,929,861
Net available revenue
4,675,514
4,800,613
4,990,182
4,310,240
3,216,186
Debt service: Principal
725,000
765,000
115,000
120,000
125,000
Interest
1,234,454
1,227,031
296,608
290,733
284,608
Total
1,959,454
1,992,031
411,608
410,733
409,608
2.39
2.41
12.12
10.49
7.85
Coverage Water Revenue Bonds: Water charges and other
$
14,468,484
$
14,425,845
$
-
$
-
$
-
Less: operating expenses
7,319,245
8,546,215
-
-
-
Net available revenue
7,149,239
5,879,630
-
-
-
Debt service: Principal
380,000
380,000
-
-
-
Interest
19,850
9,925
-
-
-
Total
399,850
389,925
-
-
-
17.88
15.08
-
-
-
Coverage Storm Water Revenue Bonds: Storm Water charges and other
$
-
$
-
$
-
$
-
$
-
Less: operating expenses
-
-
-
-
-
Net available revenue
-
-
-
-
-
Principal
-
-
-
-
-
Interest
-
-
-
-
-
Total
-
-
-
-
-
-
-
-
-
-
Debt service:
Coverage Certificates of Participation: Special assessments and other
$
-
$
-
$
-
$
11,510,578
$
12,080,193
Less: operating expenses
-
-
-
8,519,131
9,747,000
Net available revenue
-
-
-
2,991,447
2,333,193
Principal
-
-
-
110,000
100,000
Interest
-
-
-
223,868
537,580
Total
-
-
-
333,868
637,580
-
-
-
8.96
3.66
Debt service:
Coverage
Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest or depreciation.
Source:
City of Santa Cruz Finance Department
164
TABLE 15
Fiscal Year Ended June 30 2003 $
$
$
$
2004
12,306,445
$
2005
12,230,219
$
2006
12,578,070
$
2007
12,394,292
$
13,194,297
9,415,409
9,855,372
9,964,418
8,591,034
8,652,114
2,891,036
2,374,847
2,613,652
3,803,258
4,542,183
130,000
135,000
140,000
150,000
205,000
278,233
271,608
264,733
256,233
177,386
408,233
406,608
404,733
406,233
382,386
7.08
5.84
6.46
9.36
11.88
-
$
-
$
-
$
18,692,531
$
21,116,648
-
-
-
11,775,892
12,478,247
-
-
-
6,916,639
8,638,401
-
-
-
-
300,000
-
-
-
121,517
516,277
-
-
-
121,517
816,277
-
-
-
56.92
10.58
-
$
-
$
-
$
-
$
838,920
-
-
-
-
236,769
-
-
-
-
602,151
-
-
-
-
160,000
-
-
-
-
235,985
-
-
-
-
395,985
-
-
-
-
1.52
12,422,235
$
13,577,644
$
13,121,028
$
13,218,521
$
13,289,170
10,447,158
11,045,892
11,350,148
9,859,552
8,947,378
1,975,077
2,531,752
1,770,880
3,358,969
4,341,792
145,000
695,000
720,000
755,000
785,000
529,300
514,088
487,153
457,327
426,011
674,300
1,209,088
1,207,153
1,212,327
1,211,011
2.93
2.09
1.47
2.77
3.59
165
City of Santa Cruz
TABLE 16
Demographic and Economic Statistics Last Ten Fiscal Years
Fiscal Year June 30
Population1
Unemployment Rate2
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
53,172 54,575 56,046 55,028 55,085 55,633 56,289 56,451 56,925 57,553
7.9% 7.3% 6.4% 5.2% 5.8% 7.5% 7.9% 7.2% 6.4% 5.6%
Ended
Total
Per Capita
Personal
Personal Income3
Income $
1,570,063 1,709,289 1,890,712 2,154,291 2,096,039 2,085,570 2,109,543 2,247,597 2,365,518 2,638,747
$
29,528 31,320 33,735 39,149 38,051 37,488 37,477 39,815 41,555 45,849
Notes: Total Personal Income and Taxable Sales amounts are in thousands.
Source:
1
State Department of Finance
2
State Employment Development Department
3
U.S. Department of Commerce, Bureau of Economic Analysis
4
State Board of Equalization (based on most recent four quarters of data available)
166
Per Capita Taxable Sales4 $
680,283 634,138 725,287 828,500 809,628 761,208 761,986 795,060 813,834 828,447
Taxable Sales $
12,794 11,620 12,941 15,056 14,698 13,683 13,537 14,084 14,297 14,395
City of Santa Cruz
TABLE 17
Principal Employers Current Year and One Year Ago
Fiscal Year Ended June 30 2007
2006 Percentage
Number of Employees
Rank
Percentage
of Total
Number of
Employment
Employees
of Total Rank
Employment
Employer: University of California at Santa Cruz County of Santa Cruz City of Santa Cruz Plantronics Santa Cruz Beach-Boardwalk Costco Community Bridges Crow's Nest Lightsurf Technology Inc. Santa Cruz Biotechnology Incorporated Santa Cruz Sentinel
4,523 2,627 1,083 494 347 257 212 195 168 158
Totals
10,064
Total employment1
96,100
1 2 3 4 5 6 7 8 9 10
4.707% 2.734% 1.127% 0.514% 0.361% 0.267% 0.221% 0.203% 0.175% 0.164%
4,250 2,358 1,066 476 347 257 212 195
1 2 3 4 5 6 7 8
4.570% 2.535% 1.146% 0.512% 0.373% 0.276% 0.228% 0.210%
158 174
10 9
0.170% 0.187%
10.472%
9,493
93,000
This table shows the data for the current fiscal year and one year ago because earlier years' data is not available.
Source:
1
U.S. Department of Labor - Bureau of Labor Statistics City of Santa Cruz Business License database City of Santa Cruz Finance Department
167
10.208%
City of Santa Cruz
TABLE 18 1
Number of City Employees by Department Last Ten Fiscal Years
Fiscal Year Ended June 30 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Departments: City Clerk
7
7
7
7
7
7
7
7
7
7
City Manager
5
5
5
5
5
5
5
5
4
5
Human Resources
12
12
12
13
13
13
12
12
13
14
Finance
34
34
36
38
38
38
36
35
38
27
-
-
-
-
-
-
-
-
-
16
120
122
126
134
136
133
126
124
125
132
52
53
55
59
59
58
55
54
53
55
Parks and Recreation
113
114
118
126
127
125
118
116
111
105
Library
115
116
120
128
130
127
120
118
119
118
Public Works
209
212
219
235
239
232
219
216
216
232
28
28
30
31
32
31
30
29
27
28
Information Technology 2 Police Fire
Planning and Community Development Redevelopment
8
8
8
9
9
9
8
8
9
10
Water
84
85
89
94
96
94
89
87
88
91
Total
768
787
796
825
879
891
872
825
722
749
Notes: 1
Personnel authorizations budgeted. Figures rounded to whole numbers.
2
Information Technology was part of the Finance Department previously, but it is now a separate department.
Source:
City of Santa Cruz Budget Document
168
City of Santa Cruz
TABLE 19
Operating Indicators By Function Last Five Fiscal Years
Fiscal Year Ended June 30 2003
2004
2005
2006
2007
Function: City Clerk Hours for creating the agenda for posting
326
305
291
**
300
**
**
600
600
600
450
280
180
400
100
40
-
60
120
-
Number of recruitments
**
**
**
**
87
Number of applications
**
**
**
**
2,155
Advisory body hours Election hours Initiative/referendum petitions processing hours Human Resources
Workers compensation claim payments
$
1,537,964
$
2,129,667
$
1,872,387
$
1,400,696
$
2,850,283
Police Calls for service
**
76,069
76,498
70,065
67,932
Cases
**
14,717
14,076
14,212
12,917
Fire Emergency calls
4,606
4,623
4,631
5,006
5,231
Inspections
1,603
1,853
1,727
1,794
1,223
275
306
305
294
236
Parks and Recreation Number of classes Facility rentals: Parks (Picnic Areas)
961
892
760
831
762
**
7,753
7,534
7,348
7,562
181
146
183
193
190
Louden Nelson Civic Auditorium Swimming pool Special events produced
**
200
167
146
162
32
30
20
22
22
1,877,256
1,856,142
1,899,739
1,975,986
2,051,331
289,726
288,821
293,525
313,496
322,971
470
432
432
438
430
Library (all locations) Items checked out Queries handled Open hours/week Pubic Works Overlay (square footage)
-
Seal coat (square footage)
-
524,963 -
-
251,106
351,239
-
320,879
342,000
Sewer 144
72
85
106
41
Average daily flow (MGD)
New connections
10.53
9.52
9.92
11.39
9.00
Annual total flow (MG)
3,843
3,475
3,621
4,157
3,283
23,724
23,799
23,924
24,044
24,253
10
10
10
9
9
3,603
3,660
3,448
3,340
3,369
$22
$25
$30
$34
$41
Water Active accounts Averge daily consumption (MGD) Annual consumption (MG) Averge monthly residential bill
This table shows data for the last five fiscal years. Prior years' data is not available. ** Unavailable Source: City of Santa Cruz Departments
169
City of Santa Cruz
TABLE 20
Capital Asset Statistics By Function Last Ten Fiscal Years
Fiscal Year Ended June 30 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Function: Public Safety Police: Stations Vehicular patrol units Fire stations
1
1
1
1
1
1
1
1
1
1
43
55
55
78
78
43
43
61
61
63
3
3
3
3
3
3
3
3
3
3
Public Parking 19
20
21
23
22
26
20
21
21
20
Spaces
1,916
1,369
4,939
5,094
5,235
5,397
5,124
5,149
5,149
5,132
Parking meters
2,014
1,953
1,945
1,741
1,764
1,695
1,714
1,764
1,764
1,888
28
29
29
29
30
30
30
30
30
30
1,350
1,450
1,450
1,457
1,970
1,970
1,970
1,970
1,970
1,970
13
11
11
11
17
17
17
17
17
17
Swimming pools
1
1
1
1
1
1
1
1
1
1
Tennis courts
7
7
7
7
7
7
7
8
8
6
Golf course
1
1
1
1
1
1
1
1
1
1
Central library
1
1
1
1
1
1
1
1
1
1
Branch libraries within city
2
2
2
2
2
2
2
2
2
2
Branch libraries in county
7
8
7
7
7
7
7
7
7
7
Bookmobile
-
-
-
1
1
1
1
1
1
1
145
145
136
136
136
136
136
136
136
136
9
9
13
13
13
13
13
13
13
13
2,310
2,335
2,335
2,800
2,825
2,825
2,893
2,893
2,893
2,893
200
200
208
62
148
148
151
151
151
151
35
35
35
8
50
50
50
50
50
50
300
300
300
300
300
300
300
290
291
291
1,850
1,890
1,890
1,904
1,913
1,997
2,019
2,089
2,060
2,060
Lots
Parks and Recreation Parks Parks acreage Playgrounds
Libraries
Streets Miles of paved streets Miles of alleys Street lights Sewer Miles of sanitary sewers Miles of storm drains Water Miles of water mains Fire hydrants
Source:
City of Santa Cruz Departments
170
COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2007
Cover and Photo by Natalia Duarte
City of Santa Cruz State of California
Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2007
Prepared by Sandra Benoit Cheryl Fyfe Tori Hannah Kathryn Mintz Ralph Reader
Raymond Chin Ray Galindo
Kim Wigley Shelley Horrow Natalia Duarte
City of Santa Cruz Comprehensive Annual Financial Report For the year ended June 30, 2007 Table of Contents
INTRODUCTORY SECTION
Page
Transmittal Letter ................................................................................................................................................... i GFOA Certificate of Achievement for Excellence in Financial Reporting.................................................... xi Map of Santa Cruz...............................................................................................................................................xii Organization Chart ............................................................................................................................................xiii Directory of City Officials of the City of Santa Cruz.....................................................................................xiv FINANCIAL SECTION Independent Auditors’ Report........................................................................................................................... 1 Management’s Discussion and Analysis ......................................................................................................... 3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets..........................................................................................................................22 Statement of Activities and Changes in Net Assets ...........................................................................24 Fund Financial Statements: Government Fund Financial Statements: Balance Sheet .....................................................................................................................................30 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets................................................................31 Statement of Revenues, Expenditures and Changes in Fund Balances ....................................32 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets ..............................................................33 Proprietary Fund Financial Statements: Statement of Net Assets ...................................................................................................................36 Statement of Revenues, Expenses and Changes in Net Assets ..................................................40 Statement of Cash Flows..................................................................................................................42 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Assets .................................................................................................48 Statement of Changes in Fiduciary Net Assets.............................................................................49 Index to Notes to Basic Financial Statements ............................................................................................51 Notes to Basic Financial Statements ............................................................................................................53
City of Santa Cruz Comprehensive Annual Financial Report For the year ended June 30, 2007 Table of Contents, Continued
FINANCIAL SECTION, Continued
Page
Required Supplementary Information: Budgetary Information....................................................................................................................................98 Budgetary Comparison Schedule – General Fund ...............................................................................102 Reconciliation of Net Changes in Fund Balances – Budgetary to GAAP Basis: General Fund .......................................................................................................................................103 Budgetary Comparison Schedule – Redevelopment Agency ............................................................104 Reconciliation of Net Changes in Fund Balances – Budgetary to GAAP Basis: Redevelopment Agency .....................................................................................................................105 Defined Benefit Pension Plan .........................................................................................................................107 Supplementary Information: Non-Major Governmental Funds: Combining Balance Sheet.........................................................................................................................112 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................114 Schedule of Budget and Actual Revenues – General Fund .................................................................116 Schedule of Budget and Actual Expenditures and Other Financing Uses for Legally Adopted Appropriations by Department – General Fund .............................................118 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Police Special Revenue Fund.............................................................................................................120 State Highway Special Revenue Fund .............................................................................................121 Traffic Impact Fee Fund .....................................................................................................................122 Parks and Recreation Fund................................................................................................................123 Housing and Community Development Fund...............................................................................124 Transportation Development Act.....................................................................................................125 General Obligation Bond Debt Service ............................................................................................126 General Capital Improvement Projects............................................................................................127 Reconciliation of Net Changes in Fund Balances – Budgetary to GAAP Basis: Non-Major Governmental Funds .....................................................................................................128 Internal Service Funds: Combining Statement of Net Assets.......................................................................................................130 Combining Statement of Activities and Changes in Net Assets.........................................................131 Combining Statement of Cash Flows .....................................................................................................132
City of Santa Cruz Comprehensive Annual Financial Report For the year ended June 30, 2007 Table of Contents, Continued
FINANCIAL SECTION, Continued
Page
Private-Purpose Trust Funds: Combining Statement of Fiduciary Net Assets .....................................................................................134 Combining Statement of Changes in Fiduciary ....................................................................................135 Agency Funds: Combining Statement of Fiduciary Net Assets .....................................................................................138 Combining Statement of Changes in Assets and Liabilities................................................................139 STATISTICAL SECTION (Unaudited) Net Assets by Component..................................................................................................................................... 143 Changes in Net Assets ........................................................................................................................................... 144 Fund Balances of Governmental Funds .............................................................................................................. 146 Changes in Fund Balances of Governmental Funds ......................................................................................... 149 General Governmental Tax Revenue by Source ................................................................................................ 150 General Fund Revenue by Source ........................................................................................................................ 152 Assessed Value of Taxable Property.................................................................................................................... 153 Direct and Overlapping Property Tax Rates ...................................................................................................... 154 Principal Property Tax Owners ............................................................................................................................ 155 Property Tax Levies and Collections ................................................................................................................... 157 Ratios of Outstanding Debt by Type .................................................................................................................. 158 Ratios of General Bonded Debt Outstanding ..................................................................................................... 160 Computation of Direct and Overlapping Debt .................................................................................................. 161 Legal Debt Margin Information ........................................................................................................................... 162 Pledged-Revenue Coverage.................................................................................................................................. 164 Demographics and Economic Statistics............................................................................................................... 166 Principal Employers............................................................................................................................................... 167 Number of City Employees by Department....................................................................................................... 168 Operating Indicators by Function ........................................................................................................................ 169 Capital Asset Statistics by Function..................................................................................................................... 170
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809 Center Street, Room 8, Santa Cruz, CA 95060 831 420-5052 Fax: 831 420-5051 www.ci.santa-cruz.ca.us
November 30, 2007
To the Honorable Mayor, Members of the City Council and Citizens of the City of Santa Cruz, California: Comprehensive Annual Financial Report In accordance with the City Charter, the Comprehensive Annual Financial Report of the City of Santa Cruz for the fiscal year ended June 30, 2007, is submitted for your information and review. Various financing covenants and regulations associated with restricted funding sources also require the City of Santa Cruz, California (City) to publish a complete set of financial statements presented in conformance with generally accepted accounting principles (GAAP) and audited by a firm of licensed certified public accountants. Pursuant to the requirements noted above, we hereby issue the Comprehensive Annual Financial Report of the City of Santa Cruz, California for the fiscal year ended June 30, 2007. This report consists of management's representations concerning the finances of the City of Santa Cruz. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Santa Cruz has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the City of Santa Cruz's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Santa Cruz's comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Caporicci & Larson, a firm of licensed certified public accountants, has audited the City of Santa Cruz's financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Santa Cruz for the fiscal year ended June 30, 2007, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial presentation. The independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Santa Cruz’s financial statements for the fiscal year ended June 30, 2007, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report.
i
The independent audit of the financial statements of the City of Santa Cruz was part of a broader, federally mandated "Single Audit" designed to meet the needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of Santa Cruz’s separately issued Single Audit Report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Santa Cruz's MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City of Santa Cruz, incorporated in 1866, is located on the northern part of the Monterey Bay approximately 74 miles south of San Francisco and 30 miles from San Jose. The City of Santa Cruz was first founded in 1769 by the Spanish explorer Don Gaspar de Portola, who, along with Father Junipero Serra, began land based settlement in the area. Santa Cruz is the county seat for the County of Santa Cruz, and is a charter city which operates under the provisions of a voter-approved charter. The City has an area of 12 square miles and an estimated population of 57,553 as of January 2007. Santa Cruz is the home to the University of California, Santa Cruz (UCSC) which first opened in 1965 and has a current enrollment of over 15,000 students. UCSC has received worldwide recognition in the past few years for its high quality academic programs and sponsored research programs such as the California Institute for Quantitative Biomedical Research (QB3), the Center for Information Technology Research in the Interest of Society (CITRIS), and the Laboratory for Adaptive Optics. The area’s major industries include agriculture, tourism, manufacturing, food processing, and technology. Like other cities in California, the City of Santa Cruz has limited ability to set tax rates. The State Constitution (Prop 13) establishes a maximum rate for property tax and limits the growth of assessed value. Prop 13 sets the limit for increases of the property tax rate to 2% per year, but upon sale, full value becomes the assessed value. The property tax collected is allocated among the jurisdictions in the City's tax rate areas based on criteria established by the State Legislature. The City receives 21% of the property tax assessed against property within the City limits. The rates and tax base of two of the City's other major general revenues, sales and use tax and motor vehicle in lieu fees (VLF), are also controlled by the Legislature. Changes to existing local taxes and any new taxes require voter approval. Taxes used for general purposes are subject to approval by a simple majority of voters while taxes levied for specific purposes require a twothirds majority of voters. Assessments must be approved by a two-thirds vote with voting rights apportioned based on the amount of the assessment. In addition, fees for facilities and services are subject to requirements that they not be set at levels that exceed the reasonable costs of providing services. As a result, fund balances generated by differences between fee revenue and related expense are retained and designated for services and facilities that benefit fee payers. The City of Santa Cruz has operated under the council-manager form of government since its incorporation in 1866. Policy-making and legislative authority are vested in a seven member governing council consisting of the Mayor and six Council Members. The City Council is responsible, among other things, for passing ordinances, adopting the budget, approving nominees to commissions, and hiring the City Manager, City Clerk and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City and for appointing the heads of the various departments. The Council is elected on a non-partisan basis. Council Members serve four-year ii
staggered terms, with either three or four Council Members elected every two years. The Mayor is selected by a majority of the City Council and serves a one year term. The Mayor and Council Members are elected at large, and all are subject to two term limits. The City of Santa Cruz provides a broad range of services including police and fire protection, construction and maintenance of streets, parks, flood control and other infrastructure, a wharf facility, recreational and cultural activities including a performing arts center and human services programs. It also operates municipal utilities for Water, Wastewater, Stormwater, and Refuse in addition to enterprise operations for parking facilities and a golf course. The water utility provides water service beyond the municipal boundaries and has a total service population of approximately 90,000. Certain infrastructure construction and community development activities are provided through a legally separate Redevelopment Agency. The Council sits as the Redevelopment Agency's board, and the Agency functions as a department of the City. Therefore, the City of Santa Cruz Redevelopment Agency has been included as an integral part of the City of Santa Cruz’s financial statements. Many major public services delivered within the City's boundaries, including education, and public transportation are provided by other agencies. The City of Santa Cruz is not financially accountable for the operations of the franchisees or these government agencies. As required by the City Charter, an annual budget is adopted by the City Council no later than the first regular meeting in July for the fiscal year beginning July first. As part of the budget process, all City departments submit budget requests for the next fiscal year. These requests are reviewed, and a final City Manager recommended budget showing estimated revenues and expenditures of the City is prepared. This proposed budget is transmitted to the City Council and made available to the public for review. Study sessions and a public hearing are conducted before final adoption of the budget by the City Council. The City Manager is authorized to approve appropriation transfers within any department up to a specified amount; however, any new appropriation or appropriation transfer between departments requires approval by the City Council. Several supplemental appropriations were necessary during the year and are reflected in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at the department level. The Council reviews budget results at the mid-year review and at budget adoption. Redevelopment budgets are adopted annually along with an annual report. The ongoing review and long range planning focus for financial management provides numerous opportunities to identify and respond to changes in revenues and expenditures and in community priorities. Factors Affecting Financial Condition We think that the information presented in the financial statements is best understood when it is considered from the broader perspective of the context within which the City of Santa Cruz operates. Economic Conditions and Outlook The City of Santa Cruz’s economic growth began to slow during the FY 2002 fiscal year and declined significantly through FY 2004. Tax revenues have shown steady positive growth for the last 10 years. The recent improvements in the local economy are being offset by significant labor cost increases and have resulted in projecting minimal increases in fund balance for future years. The local economy is linked to a large degree to the economy of the nearby Silicon Valley region, whose growth continues to improve. Over the last four year period, ending with fiscal year 2007, there has been substantial growth in assessed value of real property. The assessed value is approximately $6.2 billion which is an increase of $.5 billion or 8.7% increase over FY 2006. Property Tax revenues are up $2.1 million or 11.6% over the previous year. iii
Property tax revenues have increased 7% or more every year for the past 10 years, the dollar increase in 10 years is $10.9 million or 116.1%. Property values are expected to hold steady over the next few years, and taxes are expected to continue to increase due to the turnover of Prop 13 homes which will become fully taxable. An important event affecting City revenues took place in August 2005. At a special election called by the City Council, voters approved, by a 58% majority, continuation of a franchise tax on municipal utilities. This tax was previously charged as a type of fee which had been deemed invalid in recent court cases without voter approval. Another significant event that took place in recent years was the approval of a ¼ cent transactions and use tax by the voters. On October 8, 2003, the California Governor approved SB 566 which authorized cities to seek voter approval to levy a transactions and use tax in multiples of 0.25%. City Council authorized submitting Measure F, the ¼ cent sales tax measure, to the voters in March 2003. This is a five-year general tax which was approved by a 69% majority and is effective July 1, 2007. In November 2007, the voters approved Measure H, making the Measure F ¼ cent sales tax permanent and approving an additional ¼ cent sales tax to become effective April 1, 2007. Measure H is a Transaction and Use Tax and is not tied to site of the sale. The Measure H tax went into effect April 1, 2007, and the first quarter returns were 10% above original estimates, due mostly to the improvements in the local economy. The total Sales Tax (including the transaction tax) rate for Santa Cruz is 8.5%. Historical Trend Information Property Tax The historical trend for property tax has been very positive showing substantial growth given the assessed value of property is approximately $6.2 billion with growth in this year of 8.7%. Property Tax revenues are up $2.1 million or 11.6% over the previous year.
CITY OF SANTA CRUZ PROPERTY TAX In $ Millions 25.0
20.0
15.0
10.0
5.0
FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07
iv
Sales & Use Tax, Local Transactions and Use Tax and Supplemental Property Tax In-Lieu of Sales Tax Although sales tax revenues have consistently trended up over the past 10 years, beginning in FY06, there is significant upward movement, due to improvements in the local economy and increases in tourism. FY 07 was the 100th anniversary of the Santa Cruz Boardwalk; the celebration brought large numbers of visitors to the City. Sales tax increased $1.1 million or 9.4% in FY 07 over FY 06.
CITY OF SANTA CRUZ SALES TAX In $ Millions 14.0 12.0 10.0 8.0 6.0 4.0 2.0 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07
v
Transient Occupancy Tax Transient Occupancy Tax (TOT) declined after 2001, initial declines were related to September 11th and the resulting lack of tourists. However, in Fiscal Year 02, The University of California acquired the Holiday Inn on a 10 year lease to use as a dormitory. This reduced the rooms available to pay TOT by 170. There have been no new hotels to make up for the reduction in rooms; however, rates have increased and TOT is again trending up. The Coast Hotel, the City’s major upscale hotel is in process of a remodel which will significantly upgrade the interior of the hotel. Their intention is to increase rates when the remodel is complete.
CITY OF SANTA CRUZ TRANSIENT OCCUPANY TAX In $ Millions 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07
vi
Utility Users Tax The utility users tax is the third largest revenue source for the City, coming after property tax and sales tax. The utility users tax is comprised of a tax on eight utilities; electric, wired telecom, wireless telecom, natural gas, cable, water, wastewater, and refuse (the last three being municipal utilities). The rate for the tax is 7% and hasn’t changed since October 1991. Clarifications of how the tax is applied were implemented in 1993 and 1994. Modest increases over the last three years can be attributed to a number of factors. There have been declines in electric and wired telecom while wireless telecom, gas, and cable have increased. The most significant factor for the rise in overall revenues point to the Water, Wastewater, and Refuse municipal utilities and the increase tax revenues due to recent customer rate increases.
CITY OF SANTA CRUZ UTILITY USERS TAX In $ Millions 8.4 8.2 8.0 7.8 7.6 7.4 7.2 7.0 6.8 6.6 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07
Risk management. The City of Santa Cruz uses a program of self-insurance for workers’ compensation and general liability claims, and employs a professional risk manager, supplemented by a professional claim administration firm, to minimize losses. The City is self-insured for workers' compensation up to $500,000 per occurrence. Santa Cruz participates in a multi-agency joint powers authority to provide excess insurance coverage for liability coverage. The joint powers authority and the City rely on estimates prepared by professional actuaries to set aside funds adequate to meet potential future losses. Excess coverage purchased through the joint powers authority covers claims in excess of $1,000,000 for general liability claims. As reflected in the financial statements, the Risk Management internal service fund had deficit net assets as of June 30, 2007, of $2.9 million, an improvement of $1.4 due to lower actual claims reducing the actuarial liabilities.
vii
Health care costs. The City contracts with CalPERS for employee health care coverage. program, employer premiums increased: • • •
Under this
15.2 % in FY 05 9.4% in FY 06 12.5% in FY 07
Expected increases for FY 08 are 8.4%. PERS manages rates to stay under the overall market due to their size and therefore the ability to affect rates. State budget. California faced budget deficits in previous years. noteworthy changes in state/local finance law. •
This imbalance created a number of
The “Triple Flip” In FY 04, the State of California issued State Deficit Reduction bonds under Proposition 57. Wall Street wanted a dedicated revenue stream. The State of California then devised a method to secure the dedicated revenue stream called the “Triple Flip”. 1. The State would take 25% of the local government 1% sales tax (Cities and Counties). This is to continue for nine (9) years, beginning in FY 05. 2. In January (6 months into the fiscal year), the State would require the Counties to take property tax which was earmarked for schools and pay back the first 6 months of the sales tax takeaway to the local governments. The State will then have the counties pay the estimated next 6 months in May. The difference between the estimated and actual sales tax in one year will be corrected in the next year payments. 3. Then the State, using State General Fund monies, would pay back the schools. The Sales Tax taken by the State in FY 06 was $2.3 million and it was repaid by the County in the form of “Property Tax in Lieu of Sales Tax”. Santa Cruz County pays the City in December and April our estimated 6 months payments. Beginning in FY07, the County now charges the City an administrative fee on this repayment of sales tax, The amount was 100 thousand dollars.
•
VLF-Property Tax Swap for FY 07 was $3.8 million. In 1999, the state began reducing the vehicle license fee (VLF) rate charged to vehicle owners, and backfilling city and county revenue losses from this tax reduction with state subventions. The FY 2005 state budget package permanently replaced the VLF backfill by shifting an equal amount of K-14 property taxes to cities and counties. Increased state aid offsets K-14 school district revenue losses.
•
FY 05 Property Tax Shift. The FY 05 state budget package included a $1.3 billion shift of property taxes (called ERAF III) from noneducational local agencies (cities, counties, special districts, and redevelopment agencies) to K-14 school districts. Unlike the two permanent property tax shifts enacted in the 1990’s, this tax shift sunseted in FY 07.
•
Proposition 1A. In 2004, state voters amended the State Constitution to prohibit the state from permanently reallocating the property tax in any county noneducation local agencies to K-14 school districts. Also, this measure generally requires a two-thirds vote of the Legislature to change the distribution of property taxes amounts for local agencies.
viii
Cash management and policies Cash temporarily idle during the year was invested in obligations of the U.S. Treasury and agencies of the Federal government, and the State Treasurer's Local Agency Investment Pool (LAIF). Maturities of the investments range from one day to 3.5 years, with an average maturity of 219 days. The average yield on investments not held by fiscal agents was 3.5%. The City has reduced the days to maturity by 123 days and the yields have increased an average of 68 basis points. Investment income includes appreciation in the fair value of investments. Increases in fair value during the current year, however, do not necessarily represent trends that will continue; nor is it always possible to realize such amounts. It is the City’s policy to hold investments to maturity; therefore, gains and losses due to temporary market value fluctuations are rarely realized. Major Initiatives The City of Santa Cruz operates four municipal utilities, including Water, Wastewater, Stormwater, and Refuse. The Water Department had not made any major capital improvements for the past 10 to 15 years while a new water supply project was being developed. Now, in order to address the pressing needs of an aging infrastructure and the need for a new water supply, the Water Department has embarked upon an ambitious program of capital improvements. The Bay Street Water Reservoir project began in FY 07 and amounted to a $13.8 million increase in Capital Assets. Major distribution and supply projects are planned, including a desalination plant. The National Marine Sanctuary Program (NMSP), an agency of the National Oceanic and Atmospheric Administration (NOAA), and the City of Santa Cruz are partnering to design and construct the Monterey Bay National Marine Sanctuary Education Center. The Education Center in the City of Santa Cruz will function as the Monterey Bay National Marine Sanctuary’s premier visitor center. The site was chosen after the NMSP studied 23 locations along California’s Central Coast, settling on the City’s ¾-acre “Fun Spot” property in the Santa Cruz beach area, visited by an estimated 3 million people per year. Formal design of the sanctuary project began in FY 07. The City will continue to use Development Impact Fees to enhance and upgrade park facilities. These fees will also be used for improvements to the greenbelt. The Parks and Recreation Department will continue to seek grants and other funding to renovate and upgrade outdated facilities. The development of Depot Park and the Multi Modal Station is an example of a successful partnership among numerous agencies. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Santa Cruz for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2006. The Certificate of Achievement is the highest form of recognition in the area of government accounting and financial reporting, and its attainment represents a significant accomplishment by a government and its management. In order to be awarded a Certificate of Achievement, the City publishes an easily readable and efficiently organized financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for one year only. We believe that our current comprehensive annual financial report (CAFR) meets the Certificate of Achievement Program’s requirements.
ix
Acknowledgements The Finance Department takes great pride in the preparation of this report. The professionalism, commitment and effort of the entire staff of the Finance Department have made this presentation possible. We would like to express our appreciation to all the members of the other departments who assisted and contributed to the preparation of this report. We also want to thank the partners and staff of our auditors for their assistance and support. We wish to also express our sincere thanks to the City Manager, the Mayor and the City Council Members for their unfailing support for maintaining the highest standards of professionalism in the management of the City of Santa Cruz's financial operations. Respectfully submitted,
Sandra Benoit Director of Finance
x
xi
xii
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DIRECTORY OF CITY OFFICIALS CITY OF SANTA CRUZ Mayor Ryan Coonerty Vice Mayor Cynthia Mathews
Councilmember Mike Rotkin
Councilmember Ed Porter
Councilmember Lynn Robinson
Councilmember Emily Reilly
Councilmember Tony Madrigal
City Manager, Richard C. Wilson
Assistant City Manager .....................................................................Martín Bernal Chief of Fire ......................................................................................Ron Oliver Chief of Police...................................................................................Howard Skerry City Attorney .....................................................................................John G. Barisone City Clerk ..........................................................................................Lesile Cook Director of Finance............................................................................Sandra Benoit Director of Human Resources ...........................................................Lisa Sullivan Director of Information Technology .................................................Sharon Caiocca Director of Libraries ..........................................................................Anne M. Turner Director of Parks and Recreation ......................................................Dannettee E. Shoemaker Director of Planning and Community Development.........................Greg Larson Director of Public Works and City Engineer ....................................Mark Dettle Director of Redevelopment Agency..................................................Ceil Cirillo Director of Water Department...........................................................Bill Kocher
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To the Honorable Mayor and Members of the City Council of the City of Santa Cruz Santa Cruz, California Page 2 The accompanying Required Supplementary Information, such as Management’s Discussion and Analysis, budgetary comparison information and other information as listed in the table of contents, is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the Required Supplementary Information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City’s basic financial statements. The accompanying Supplementary Information is presented for purpose of additional analysis and is not a required part of the basic financial statements. The Supplementary Information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The Introductory and Statistical Sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.
Irvine, California November 30, 2007
2
MANAGEMENT’S DISCUSSION AND ANALYSIS
3
Management's Discussion and Analysis As management of the City of Santa Cruz we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City of Santa Cruz for the fiscal year ended June 30, 2007. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on page i of this report.
Financial Highlights – Primary Government (in $ millions) •
Government-Wide Highlights: Net Assets - The assets of the City of Santa Cruz exceeded its liabilities at the close of the fiscal year by $436.1. Of total Net Assets, $106.0 or 24.3% was reported as unrestricted net assets and may be used to meet the government’s ongoing obligations to citizens and creditors. Restricted net assets of $13.6 may be used for the City’s ongoing obligations related to programs with external restrictions. The remaining $316.5 represents the City’s investment in capital assets, less any related outstanding debt used to acquire those assets. Changes in Net Assets - The City’s total net assets increased by $19.9 or 2.7% in fiscal year 2007. The increase in Net Assets represents the degree to which revenues exceed expenses. The increase in net assets for governmental funds ($8.4) is a result of the reduction in expenses due to staff vacancies and moderate increases in revenue, mostly sales tax. The sales tax increase relates to the passage of a ballot measure which increased the tax rate by one-quarter percent. Business type activities increased net assets ($11.5) due to rate increases, reduced expenses resulting from grant funding and the delay of some programs.
•
Fund Highlights: Governmental Funds – Governmental funds include general, special revenue, debt service, and capital projects funds. As of the close of fiscal year 2007, the City’s governmental funds, including the Redevelopment Agency Fund, reported a combined ending fund balance of $49.2 which is an increase of $2.3 or 4.9% from the prior year. Approximately 68.3% of this amount, or $33.6, represents the unreserved fund balance available for appropriation. 58.3% of the unreserved fund balance, or $19.6, has been designated for various purposes. General Fund – Total fund balance of the General Fund on June 30, 2007 was $26.4, an increase of $3.6 or 15.8% from the prior year. 84.8% of the total fund balance, or $22.4, was unreserved. Of the unreserved fund balance, $8.5, or approximately 32.2%, is designated for various purposes. The designations include $6.4 for the City public trust, and varying amounts for other activities. The remaining unreserved balance of $13.9, or 52.7% of unreserved fund balance, is undesignated.
Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.
4
Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. They are comprised of the statement of net assets and statement of activities and changes in net assets. 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 or decreases 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 most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., interest expense due but unpaid). Both of the above government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, parks and recreation, library, public works, transit, community and economic development and social services. The business-type activities of the City include the four municipal utilities: water, wastewater, refuse and stormwater; and also the golf course and parking enterprises. Blended Component Units – Component units are legally separate entities that meet certain criteria and would be misleading if their data were not included in this report. This report includes two separate legal entities in this category; The City of Santa Cruz Redevelopment Agency, and The Santa Cruz Public Improvement Financing Corporation. In this report all component units are blended with the primary government because the governing boards are substantively the same as the primary government, and the component units serve the primary government exclusively. The government-wide financial statements can be found on pages 21 - 25 of this report. Fund 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 GASB 34 and replaces the concept of combining like funds and presenting them in total. Instead, each major fund is presented individually, with all nonmajor funds summarized and presented in a single column. Individual fund data on the nonmajor funds is presented in the form of combining statements and schedules in the Supplemental Information section of this report on pages 111 through 115 of this report. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund 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 financing requirements.
5
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the 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. The City has ten governmental funds, of which two 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 for the City’s two major funds – the General Fund and the Redevelopment Agency Fund. Data from the other eight governmental funds are combined into a single, aggregated presentation. The basic governmental fund financial statements can be found on pages 27 through 33 of this report. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements on pages 111 through 115 of this report. Proprietary Funds – The City maintains two different types of proprietary funds – enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the four municipal utilities; water, wastewater, storm water, and refuse; and also the golf and parking enterprises. 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 equipment operations and maintenance, stores inventory, telecommunications, and risk management activities. 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. The fund financial statements for the proprietary funds provide separate information for the four municipal utilities; water, wastewater, storm water, and refuse; and also the golf course and parking enterprises. Conversely, the internal service funds are combined into a single aggregated column in the proprietary fund statements. Individual fund data for the internal service funds is provided in the form of combining statements on pages 129 - 132 of this report. Prior-period adjustments made in the Proprietary Funds amount to $.6 reduction of Net Assets. Part of the adjustments ($.3) in the Water Fund and ($.1) in the Wastewater Fund relates to projects capitalized in prior years which should have been expensed. The other adjustment was in Parking ($.2) and relates to land posted to Parking in error in FY 03. The basic proprietary fund financial statements can be found on page 35 - 45 of this report. Fiduciary Funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. Fudiciary funds represent agency funds and private-purpose trust funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations and use the accrual basis of accounting. Agency funds include activities of the Library Joint Powers Authority, Payroll Payables and Special Assessments. Trust funds are used to account for resources legally held in trust for special purposes, such as McCaskill Trust for Local History, McCaskill Trust for Visually Impaired and the Finkeldey Trust for Musical Literature. 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 53 - 96 of this report. 6
Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Santa Cruz’s progress in funding its obligation to provide pension benefits to its employees, as well as providing a budgetary comparison schedule for the General Fund and the Redevelopment Agency Fund. Required supplementary information can be found on pages 97 - 107 of this report. Additional budgetary schedules for the General Fund and the combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information in the section of this report titled Supplemental Information. Combining and individual statements and schedules can be found on pages 116 - 128 of this report.
Government-Wide Financial Analysis (in $ millions) Net Assets. As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City of Santa Cruz, combined net assets (governmental and businesstype activities) totaled $436.1 at the close of the fiscal year ending June 30, 2007. By far the largest portion of the City’s net assets $316.5 or 72.6% reflects its investment in capital assets (e.g., land, streets, bridges, water and sewer lines, buildings, machinery, and equipment), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net assets $13.5 or 3.1% represents resources that are subject to external restrictions on how they may be used. The remaining $106.0 or 24.3% of the City’s net assets, are “unrestricted,” and may be used to meet the government’s ongoing obligations to citizens and creditors. City of Santa Cruz's Net Assets (amounts expressed in $ millions)
Current assets Noncurrent assets Capital assets
$
Governmental Activities 2007 2006 57.9 $ 53.3 6.8 8.6 157.8 154.7
$
Business-Type Activities 2007 2006 69.6 $ 56.4 18.1 33.3 257.9 249.9
$
Total 2007 127.5 $ 26.7 415.7
2006 109.7 40.1 404.6
224.3
214.8
345.6
339.6
569.9
554.4
Current liabilities Noncurrent liabilities
14.9 27.1
11.9 29.1
10.9 81.0
11.5 85.3
25.8 108.1
23.4 114.4
Total liabilities
42.0
41.0
91.9
96.8
133.9
137.8
144.2 13.4 24.6
142.2 12.1 19.4
164.2 78.0
164.3 78.5
308.4 13.4 102.6
306.5 12.1 97.9
Total assets
Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets
$
182.3
$
173.8
$
7
242.2
$
242.8
$
424.5
$
416.6
Changes in Net Assets. The City’s net assets increased by $20.0 or 4.8%, from the prior fiscal year. The City’s expenses cover a range of services. Further analysis is provided within the governmental and business-type activity sections. City of Santa Cruz Changes in Net Assets (amounts expressed in $ millions) Governmental Activities 2007 Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Property taxes Sales and use taxes Franchise taxes Transient occupancy taxes Utility users taxes Admissions taxes Other taxes Total taxes Unrestricted grants and contributions Unrestricted investment earnings Gain (loss) on sale of assets Miscellaneous
$
Business-Type Activities
2006
25.0 5.4 5.7 36.1
$
24.7 2.1 2.5 29.3
2007
$
Total
2006
56.9 1.7 58.6
$
51.2 2.5 53.7
2007
$
2006
81.9 5.4 7.4 94.7
$
75.9 2.1 5.0 83.0
24.6 12.8 2.6 3.8 8.3 1.9 2.4 56.4 2.6 0.3 2.7
22.4 11.7 2.1 3.4 8.3 1.7 2.4 52.0 1.1 1.4 0.5
3.6 0.1 0.5
2.1 0.1 0.5
24.6 12.8 2.6 3.8 8.3 1.9 2.4 56.4 6.2 0.4 3.2
22.4 11.7 2.1 3.4 8.3 1.7 2.4 52.0 1.1 3.5 0.1 1.0
98.1
84.3
62.8
56.4
160.9
140.7
12.5 29.6 12.0 9.6 11.5 0.7 10.6 1.8 1.3 -
9.8 27.2 11.7 9.2 9.0 0.6 7.4 2.6 0.9 -
16.2 15.4 13.0 2.6 1.9 2.2
15.2 16.2 12.7 3.0 1.9 2.3
12.5 29.6 12.0 9.6 11.5 0.7 10.6 1.8 1.3 16.2 15.4 13.0 2.6 1.9 2.2
9.8 27.2 11.7 9.2 9.0 0.6 7.4 2.6 0.9 15.2 16.2 12.7 3.0 1.9 2.3
89.6
78.4
51.3
51.3
140.9
129.7
8.5
5.9
11.5
5.1
20.0
11.0
-
0.1
-
(0.1)
-
-
8.5
6.0
11.5
5.0
20.0
11.0
Net assets, beginning of year Prior period adjustment (Note 16)
173.8 0.1
162.2 -
242.8 (0.6)
232.5
416.6 (0.5)
394.7 -
Net assets, beginning of year (as restated)
173.9
167.8
242.2
237.8
416.1
405.6
Total revenues Expenses: General government Public safety Parks and recreation Library Public works Transit Community and economic development Social services Interest and charges on long term debt Water Wastewater Refuse Parking Storm water Golf course Total expenses Increase (decrease) in net assets before transfers Transfers Change in net assets
Net assets - end of year
$
182.4
8
$
173.8
$
253.7
$
242.8
$
436.1
$
416.6
Governmental Activities. Governmental activities increased the City’s net assets by $8.5. A comparison of the cost of services by function for the City’s governmental activities is shown below, along with the revenues used to cover the net expenses of the governmental activities. Governmental Activities (amounts expressed in $ millions) 2007
2006
Expenses net of program revenues: General government
$
Public safety
(5.9)
$
(5.1)
(25.3)
(23.7)
Parks and recreation
(8.0)
(8.2)
Library
(0.8)
(0.7)
Public works
(5.4)
(2.9)
Transit
3.2
0.9
Community and economic development
(8.2)
(5.9)
Social services
(1.8)
(2.6)
Interest and fiscal charges on long-term debt
(1.3)
(0.9)
Total expenses net of program revenues governmental activities
(53.5)
(49.1)
Property taxes
24.6
22.4
Sales and use taxes
12.8
11.7
Franchise taxes
2.6
2.1
Transient occupancy taxes
3.8
3.4
Utility users taxes
8.3
8.3
Admission taxes
1.9
1.7
Other taxes
2.4
2.4
56.4
52.0
General revenues and transfers: General revenues:
Total taxes Unrestricted grants and contributions
-
1.1
Unrestricted investment earnings
2.6
1.4
Gain on sale of assets
0.3
0.0
Miscellaneous
2.7
0.5
Transfers Total general revenues and transfers $
Change in governmental activities net assets
9
-
0.1
62.0
55.1
8.5
$
6.0
Governmental Expenses. Total governmental activity expenses were $89.6 in fiscal year 2007. The largest expenses were incurred for public safety, parks and recreation, public works and general government. These expenses do not include capital outlays, which are now reflected in the City’s capital assets.
EXPENSES FOR GOVERNMENTAL ACTIVITIES FY 2007
Social Services 2%
Interest on Debt 1% General Government 14%
Community Dev. 12% Transit 1%
Public Works 13%
Public Safety 33% Library 11%
Parks & Recreation 13%
Governmental Revenues. Per GASB 34, program revenues are derived directly from the program itself or from parties outside the reporting government’s taxpayers or citizenry. They reduce the net cost of the function to be financed from the government’s general revenues. Total program revenues from governmental activities were $29.3 in fiscal year 2007. Governmental program revenues derive primarily from charges for services, which include licenses and permits, planning fees, developer fees, recreation charges, traffic and other fines and forfeitures, charges to the Library Joint Powers Authority for personnel services provided, and several other revenues. Program revenues under the operating grants and contributions category include revenues restricted for specific purposes, such as gasoline tax and other federal, state and local grants. Program revenues in the capital grants and contributions category also include federal, state and local grants, but are restricted specifically to be used for capital projects or acquisitions.
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General revenues are all other revenues not categorized as program revenues, and include all taxes, unrestricted grants, contributions and investment earnings, gains on sales of capital assets, and other miscellaneous revenues. Total general revenues from governmental activities were $62.8 in fiscal year 2007. Taxes of $56.4 comprised 89.8% of the City’s general revenues for fiscal year 2007. The largest single source of general revenues received during fiscal year 2007 was $24.6 of property taxes, or 39.1% of general revenues, followed by $12.7 of sales and use taxes, or 20.2% of general revenues.
REVENUES BY SOURCE GOVERNMENTAL ACTIVITIES FY 2007
Capital Grants 5%
Interest Earnings 3%
Miscellaneous Revenue 4%
Property Tax 25%
Operating Grants 5% Sales Tax 13% Charges for Service 26%
Other Taxes 2%
Franchise Tax 3%
Adm ission Tax 2%
Utility User Tax 8%
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Transient Occupancy Tax 4%
Business Type Activities. Net assets for business-type activities were $253.7, an increase of $11.5 from the prior fiscal year. Total program revenues for business-type activities were $58.6. The largest program revenues were charges for services of $56.9. Other program revenues included capital grants and contributions of $1.7. Total expenses for the business-type activities were $51.3 during fiscal year 2007.
REVENUE AND EXPENSE BUSINESS ACTIVITIES, FY 2007 30 25 20 Revenue Expense
15 10 5
W
W
at er as te w at er R ef us e Pa rk in St g or m wa G te ol r fC ou rs e
0
12
REVENUES BY SOURCE BUSINESS ACTIVITIES FY 2006
Operating Grants 0%
Capital Grants 3% General Revenue 7%
Charges for Service 90%
Financial Analysis of Individual Funds (in $ millions) As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds - The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $49.2 which is an increase of $2.3 or 4.9% over the previous year. Approximately $33.6 of the fund balance is unreserved fund balance, which is available for spending at the government’s discretion. Unreserved fund balance increased by $2.2 or 7.0% over the previous year. It should, however, be noted that 58.3% of the unreserved fund balance, or $19.6, has been designated for various purposes, such as debt service, capital projects, public art, police programs and the City Public Trust, leaving $14.0 unreserved and undesignated. The remainder of fund balance $15.6 is reserved to indicate that it is not available for spending because it has already been legally committed. General Fund – Total fund balance of the General Fund on June 30, 2007 was $26.4, an increase of $3.6 or 15.8% over the prior year. Approximately 85% of this amount, or $22.4, was unreserved. Of the unreserved fund balance, $8.5, or 32.2% has been designated for specific uses. The designations include $6.4 for the City Public Trust, and $1.6 for Accrued Compensated Absences (i.e. vacations), and varying small amounts for other activities, such as unemployment insurance, housing, parks and recreation programs, and equipment and facilities maintenance. The remaining unreserved balance of $13.9, or 52.7% of unreserved fund balance, is undesignated and represents an increase of $2.5 or 21.9% over the previous year. 13
As a measure of the General Fund’s liquidity, it may be useful to compare unreserved fund balance, the undesignated portion of the unreserved fund balance, and the total fund balance to total fund expenditures. Unreserved fund balance ($22.4) represents 33.2% of total General Fund expenditures ($67.5), including transfers out. Unreserved and undesignated fund balance ($13.9) represents 20.6% of total expenditures, and total fund balance ($26.4) represents 39% of total fund expenditures ($67.5). The 20.6% percent of total expenditures that is represented by the undesignated, unreserved fund balance ($13.9) exceeds the City Council’s targeted minimum reserve level of 10% of the operating budget for the General Fund. Increase in fund balance is a result of savings realized in Police due to vacant positions $2.4; Parks and Recreation of $1.4 mostly due to delays in hiring park rangers, other vacancies and hiring temporaries for permanent positions; Public Works $.9 due to vacancies in positions; Planning $.9 due to savings for professional services and from vacancies; Finance $.1 due to vacant positions; Redevelopment Administration $.3 due to vacant positions; and other miscellaneous savings throughout the City. Revenue collections in the General Fund met or exceeded expectations. Redevelopment Agency Fund – The City of Santa Cruz Redevelopment Agency is responsible for redevelopment of areas identified under the Community Redevelopment Law as being blighted. 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 increases in property assessed values in the redevelopment areas. At the end of fiscal year 2007, the total fund balance of the Redevelopment Agency Fund was $15.9, a decrease of $1.6 from the prior year, or 11.2%. Of that amount, $6.8 is reserved to indicate that it is not available for spending because it has already been legally committed. The remainder of the unreserved fund balance of $ 9.1 is designated for either debt service or capital projects and represents an increase of $1.1 or 13.8% over the previous year. The Redevelopment Agency Fund had revenues of $12.3, including $11.0 of property tax increment revenue. Expenditures in this fund amounted to $10.6 which is a decrease of $3.6 over the previous year due to decreases in capital expenditures for the Salz Tannery Project. Proprietary Funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. They include both enterprise funds and internal service funds. For the government-wide financial statements, the internal service funds are consolidated with governmental activities, and the enterprise funds comprise the business-type activities. As discussed in the business-type activities section previously, the City’s net assets increased by $6.0 as a result of operations in the enterprise funds. Net assets ($2.0 negative) in the internal service funds represent a decreased deficit of $1.3 or 39.4% over prior year ($3.3 negative). The decrease is due to decreases in expenditures in risk management due to changes in the actuarial projections.
General Fund Budgetary Highlights. The final amended General Fund budget, including transfers out and advances, totaled $76.5 and included amendments to the original budget resulting in a $2.6 increase in operating expenditure appropriations. The principal amendments can be summarized as follows:
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Operating Appropriations Increases. Significant Appropriations Increases: • • • • • • •
Group Health Internal Service fund was combined with the General Fund, $1.2 Legal expenses for UCSC Litigation, $.6 Prior year project carryover, Hwy 1/17 Merge Lanes, $.1 Parks Department salaries, equipment, park ranger program funded by Measure H funds, $.1 Police Department salaries, equipment, safety program funded by Measure H funds, $ .1 Fire Department equipment funded by OTS Grant, $.1 Many other miscellaneous adjustments, $.4
These appropriations were offset by reduced expenditures in other areas of $8.2. Savings were realized in Police due to vacant positions $2.4; Parks and Recreation of $1.4 mostly due to delays in hiring park rangers, other vacancies and hiring temporaries for permanent positions; Public Works $.9 due to vacancies in positions; Planning $.9 due to savings for professional services and from vacancies; Finance $.1 due to vacant positions; Redevelopment Administration $.3 due to vacant positions; and other miscellaneous savings throughout the City. Revenue collections in the General Fund met or exceeded budget. Those revenues which were better than budget are Sales and Use Tax ($.6), Transient Occupancy ($.1), Admissions ($.2), Property Transfer ($.4), and Investment Earnings ($.4). Capital Assets and Debt Administration (in $ millions) Capital Assets. The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2007, amounts to $415.7, net of accumulated depreciation of $270.0. This investment in capital assets includes land, land improvements, infrastructure, buildings, machinery and equipment, lease improvements, software, 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 capital assets were $18.6 net of depreciation. Additions included $6.5 moved from construction in progress to capital assets. Capital assets for the current fiscal year, after restatements and deletions, were $11.1, net of accumulated depreciation. Major capital asset additions during the current fiscal year included the following: 1. 2. 3. 4. 5. 6.
Bay Street Reservoir, $13.8 Recycling Facility Upgrades, $2.3 Vehicles, $ 2.5 Skate Park, $1.4 Beach Street Bike Path, $1.0 Sewer System Improvements, $.6
15
Changes in capital assets from the prior year (as restated) are shown in the following table. Additional information on the City’s capital assets can be found in Note 5 on pages 70 - 73 of this report. Capital Assets (net of depreciation) (amounts expressed in $ millions) Governmental Activities
Business-Type Activities
June 30 2007 Land
$
50.6
Construction in progress Land improvements Infrastructure
June 30 2006
$
2007
50.5
$
Total 2006
11.6
$
2007
11.9
$
2006
62.2
$
62.4
10.8
5.1
23.3
10.4
34.1
15.5
7.0
4.0
4.0
3.3
11.0
7.3
168.6
65.0
177.8
106.6
346.4
171.6
Buildings
35.4
26.5
160.2
107.9
195.6
134.4
Machinery and equipment
10.6
3.0
23.2
9.5
33.8
12.5
Lease improvements
0.7
0.4
0.1
0.1
0.8
0.5
Software
1.1
0.2
0.6
0.2
1.7
0.4
Totals
$
284.8
$
154.7
$
400.8
$
249.9
$
685.6
$
404.6
Debt Administration (in millions) Long Term Debt - At the end of the current fiscal year, the City had $121.3 in long term debt outstanding compared to $127.7 last year, a decrease of $6.4 or 5.0%. Decreases to claims and judgments payable ($.6) due to the settlement of a large claim, and normal retirements through annual debt service. The debt associated with governmental activities increased by $2.2 or 6.1% from $36.0 to $33.8. Business-type activity debt was decreased by $4.2 or 4.6% from $91.7 to $87.5. The major increase in debt during the year included lease purchase of refuse trucks. The City currently has $7.1 in outstanding general obligation debt. This debt was approved by voters in November 1998, and authorized an ad valorem tax override for acquisition of open space property, improvements to fire stations, acquisition of a fire administration headquarters building, and construction of a community park. This tax override is currently assessed at $9 per $100,000 of assessed value. The largest single debt obligation of the City is a note payable to the State of California for the construction of secondary treatment improvements at the City's wastewater treatment plant. As of June 30, 2007, the outstanding balance on this note was $35.4. The chart below illustrates the changes in bonds, notes, loans and leases payable for the year ending June 30, 2007.
Bonds, Notes, Loans and Leases Payable (amounts expressed in $ millions) Governmental Activities
Business-Type Activities
June 30 2007 Certificates of participation
$
Revenue bonds payable
June 30 2006
4.1
$
2007 4.2
$
Total 2006
19.2
$
2007
20.9
$
2006
23.3
$
25.1
-
-
22.6
23.3
22.6
General obligation bonds
7.1
7.1
-
-
7.1
23.3 7.1
Notes payable
2.9
4.2
35.3
37.8
38.2
42.0
Tax allocation bonds payable
5.0
5.1
-
-
5.0
5.1
Capital lease obligations
1.0
1.2
3.5
3.1
4.5
4.3
Other long-term liabilities
0.9
1.0
-
-
0.9
1.0
Totals
$
21.0
$
22.8
16
$
80.6
$
85.1
$
101.6
$
107.9
The City of Santa Cruz also has significant liabilities for claims and judgments, compensated absences (accrued vacation pay), and landfill closure and post-closure costs. The amounts and changes of these liabilities are shown below. Claims and Judgments, Compensated Absences, and Landfill Closure Costs Payable (amounts expressed in $ millions) June 30 2007 Claims and judgements
$
June 30, 2007 2006
10.4
$
11.0
$
Increase
Percent
(Decrease)
Change
(0.6)
-5.5%
Due in less
Due in more
than one year
than one year
$
$
2.9
7.5
Compensated absences
3.2
2.9
0.3
10.3%
2.2
1.0
Closure and post closure landfill costs
6.1
5.8
0.3
5.2%
-
6.1
0.6
6.9%
Totals
$
9.3
$
8.7
$
$
2.2
$
7.1
Additional information on the City of Santa Cruz’s long term debt can be found in Note 6 to the financial statements. Economic Climate The City of Santa Cruz, and Santa Cruz County for that matter, is closely tied to the regional economy of the nine-county San Francisco Bay Area and to Silicon Valley in particular. Fiscal Year 2007 showed signs of recovery at the national level, along with the Bay Area and Silicon Valley. Local private employers include a diverse array of manufacturing, business services, retail, hotel and food services, and biotechnology companies. In addition to the local private employers, the local economy also benefits from the University of California Santa Cruz. The University is a major employer, and has potential spin-off benefits from federal and state funded scientific research ventures including biomedical research, technology research, and adaptive optics. The state, and the bay area in particular, experienced modest growth in jobs, personal income, and tourism in 2007 and the economy is expected to continue to improve during 2007, albeit modestly. However, the bay area regional economic opportunities and challenges including continued job growth, housing prices, and interest rates. The national economic problems will, of course, have an affect on the local economy as well.
Requests for Information This financial report is designed to provide a general overview of the City’s finances for all of its citizens, taxpayers, customers, investors and creditors. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the City of Santa Cruz, Finance Department, 809 Center Street, Room 8, Santa Cruz, CA 95060.
17
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18
BASIC FINANCIAL STATEMENTS
19
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20
GOVERNMENT-WIDE FINANCIAL STATEMENTS
21
City of Santa Cruz Statement of Net Assets June 30, 2007
Primary Government Governmental
Business-Type
Activities
Activities
Total
ASSETS Current assets: Cash and cash equivalents
$
Restricted cash and cash equivalents Interest receivable
42,640,326
$
56,087,726
$
98,728,052
3,026,030
2,803,575
5,829,605
832,087
1,055,772
1,887,859
Taxes receivable
4,306,295
-
4,306,295
Accounts receivable - net
1,819,818
7,166,955
8,986,773
Due from other governments
2,725,206
1,085,238
3,810,444
Notes receivable - due within one year
209,215
-
209,215
Loans receivable - due within one year
69,600
-
69,600 1,151,684
-
1,151,684
Prepaid items
Intergovernmental receivable - due within one year
475,776
209,784
685,560
Inventories
194,132
-
194,132
1,630,012
30,000
1,660,012
57,928,497
69,590,734
127,519,231
283,042
1,369,711
1,652,753
Notes receivable - due in more than one year
5,878,047
401,058
6,279,105
Loans receivable - due in more than one year
1,338,317
-
1,338,317
-
15,008,579
15,008,579
Deferred charges
268,466
2,099,149
2,367,615
Long-term internal balances
805,249
Deposits Total current assets Noncurrent assets: Restricted investments
Intergovernmental receivable - due in more than one year
(805,249)
-
Capital assets: Land Land improvements Infrastructure
50,609,567
11,590,526
62,200,093
7,024,152
3,956,018
10,980,170
168,644,770
177,843,083
346,487,853
Buildings
35,421,568
160,220,644
195,642,212
Machinery and equipment
10,602,374
23,223,969
33,826,343
Lease improvements
724,114
70,000
794,114
1,102,389
555,257
1,657,646
Construction in progress
10,758,619
23,346,697
34,105,316
Total capital assets
284,887,553
400,806,194
685,693,747
(127,114,151)
(142,893,351)
(270,007,502)
Total capital assets, net
157,773,402
257,912,843
415,686,245
Total noncurrent assets
166,346,523
275,986,091
442,332,614
Total assets
224,275,020
345,576,825
569,851,845
Software
Less accumulated depreciation
See accompanying Notes to Basic Financial Statements.
22
City of Santa Cruz Statement of Net Assets, Continued June 30, 2007
Primary Government Governmental
Business-Type
Activities
Activities
Total
LIABILITIES Current liabilities: Accounts payable and other current liabilities
$
Intergovernmental payable
6,689,918
$
2,896,841
$
9,586,759
2,438
-
2,438
Interest payable
210,494
1,355,408
1,565,902
Unearned revenue
883,491
67,024
950,515
Deposits payable
317,303
47,065
364,368
Claims and judgments payable - due within one year
2,943,930
-
2,943,930
Compensated absences payable - due within one year
1,612,688
555,243
2,167,931
Bonds, notes, loans and leases payable - due within one year
2,134,425
5,973,258
8,107,683
14,794,687
10,894,839
25,689,526
Total current liabilities Noncurrent liabilities: Claims and judgments payable - due in more than one year
7,498,625
-
7,498,625
Compensated absences payable - due in more than one year
806,344
277,621
1,083,965
18,760,273
74,662,628
93,422,901
-
6,055,236
6,055,236
Total noncurrent liabilities
27,065,242
80,995,485
108,060,727
Total liabilities
41,859,929
91,890,324
133,750,253
144,203,036
172,324,984
316,528,020
Capital projects
4,285,115
-
4,285,115
Debt service
5,701,004
-
5,701,004
Public safety
148,312
-
148,312
92,338
-
92,338
Bonds, notes, loans and leases payable - due in more than one year Landfill closure costs
NET ASSETS Invested in capital assets, net of related debt Restricted for:
Parks and recreation Community and economic development Unrestricted Total net assets
3,421,905
-
3,421,905
24,563,381
81,361,517
105,924,898
$
182,415,091
$
253,686,501
$
436,101,592
Bal. Sheet Net Assets - IS Net Assets $
-
$
-
$
-
See accompanying Notes to Basic Financial Statements.
23
City of Santa Cruz Statement of Activities and Changes in Net Assets For the year ended June 30, 2007
Program Revenues
Functions/Programs
Charges for Services
Expenses
Operating
Capital
Grants and Contributions
Grants and Contributions
Total
Primary government: Governmental activities: General government
$
12,494,563
$
5,507,904
$
1,033,655
$
-
$
6,541,559
Public safety
29,646,507
3,410,308
895,204
87,504
4,393,016
Parks and recreation
12,002,102
3,011,980
40,439
910,660
3,963,079 8,894,858
9,644,172
8,894,858
-
-
11,509,715
4,072,956
2,008,490
12,202
6,093,648
646,548
-
-
3,794,755
3,794,755
10,616,686
108,009
1,462,166
864,517
2,434,692
1,758,216
-
-
-
-
1,304,447
-
-
-
-
89,622,956
25,006,015
5,439,954
5,669,638
36,115,607
Water
16,203,872
22,442,267
-
1,112,837
23,555,104
Wastewater
15,377,903
13,978,613
-
206,207
14,184,820
Refuse
12,974,413
15,108,051
15,575
-
15,123,626
Parking
2,632,045
2,697,863
-
79,093
2,776,956
Storm water
1,938,275
875,730
-
264,112
1,139,842
Golf course
2,165,390
1,770,614
24,895
-
1,795,509
Library Public works Transit Community and economic development Social services Interest and fiscal charges on long-term debt Total governmental activities Business-type activities:
Total business-type activities Total primary government
51,291,898 $
140,914,854
56,873,138 $
81,879,153
40,470 $
5,480,424
1,662,249 $
7,331,887
General Revenues: Taxes: Property taxes Sales and use taxes Franchise taxes Transient occupancy taxes Utility users taxes Admission taxes Other taxes Total taxes Unrestricted investment earnings Gain on sale of assets Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets - beginning of year (as restated) Net assets - end of year See accompanying Notes to Basic Financial Statements.
24
58,575,857 $
94,691,464
Net (Expense) Revenue and Changes in Net Assets Governmental Activities
Business-Type Activities
$
$
(5,953,004)
$
(5,953,004)
(25,253,491)
-
(25,253,491)
(8,039,023)
-
(8,039,023)
(749,314)
-
(749,314)
(5,416,067)
-
(5,416,067)
3,148,207
-
3,148,207
(8,181,994)
-
(8,181,994)
(1,758,216)
-
(1,758,216)
(1,304,447)
-
(1,304,447)
(53,507,349)
-
(53,507,349)
-
7,351,232
7,351,232
-
(1,193,083)
(1,193,083)
-
2,149,213
2,149,213
-
144,911
144,911
-
(798,433)
(798,433)
-
(369,881)
(369,881)
-
7,283,959
7,283,959
(53,507,349)
7,283,959
(46,223,390)
24,593,312
-
24,593,312
12,770,015
-
12,770,015
2,607,388
-
2,607,388
3,750,509
-
3,750,509
8,288,655
-
8,288,655
1,909,012
-
1,909,012
2,466,711
-
2,466,711
56,385,602
-
56,385,602
2,628,122
3,637,989
6,266,111
322,288
51,527
2,648,223 3,367
373,815
530,158 (3,367)
3,178,381 -
61,987,602
4,216,307
66,203,909
8,480,253
11,500,266
19,980,519
173,934,838 $
-
Total
182,415,091
242,186,235 $
253,686,501
416,121,073 $
436,101,592
25
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26
FUND FINANCIAL STATEMENTS
27
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28
Governmental Fund Financial Statements General Fund - The General Fund is used to account for sources and uses of financial resources traditionally associated with governments, and which are not required to be accounted for in another fund. Redevelopment Agency Fund - The Redevelopment Agency fund is used to account for all the activities of the City of Santa Cruz Redevelopment Agency. This includes the accumulation of resources for and the payment of interest and principal on debt issued to finance redevelopment activities, and general redevelopment operations. Other Governmental Funds - Other Governmental funds is the aggregate of all the non-major governmental funds.
29
City of Santa Cruz Balance Sheet Governmental Funds June 30, 2007
Major Funds
Other
Total
General
Redevelopment
Governmental
Governmental
Fund
Agency
Funds
Funds
ASSETS Cash and cash equivalents
$
Interest receivable Taxes receivable
19,019,016
$
8,417,311
$
8,353,702
$
35,790,029
204,876
180,335
376,282
761,493
3,311,927
357,069
637,299
4,306,295
Accounts receivable - net
935,181
101,305
776,302
1,812,788
Due from other governments
325,222
-
2,399,984
2,725,206
3,895,686
-
-
3,895,686
475,776
-
-
475,776
Cash and cash equivalents
-
3,016,345
9,685
3,026,030
Investments
-
-
283,042
283,042
-
3,016,345
292,727
3,309,072
Due from other funds Prepaid items Restricted assets:
Total restricted assets Deposits
237,553
-
-
237,553
Notes receivable - net
266,964
4,874,571
945,727
6,087,262
-
-
1,407,917
1,407,917
2,131,815
351,000
-
2,482,815
Loans receivable - net Advances to other funds Inventory of land held for resale - net Total assets
-
60,491
-
60,491
$
30,804,016
$
17,358,427
$
15,189,940
$
63,352,383
$
3,358,803
$
240,637
$
2,854,696
$
6,454,136
LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and other current liabilities Due to other funds
-
-
3,330,360
Intergovernmental payable
-
-
2,438
2,438
125,728
-
700,742
826,470 883,491
Deferred revenue
3,330,360
Unearned revenue
617,556
-
265,935
Deposits payable
151,509
165,794
-
317,303
-
1,005,400
1,229,332
2,234,732
Advances from other funds Claims and judgments payable Total liabilities
131,000
-
-
131,000
4,384,596
1,411,831
8,383,503
14,179,930
4,006,713
6,820,346
4,788,047
15,615,106 8,488,474
Fund Balances: Reserved Unreserved, designated, reported in: General fund
8,488,474
-
-
Redevelopment Agency fund
-
9,126,250
-
9,126,250
Special revenue funds
-
-
1,053,286
1,053,286
Debt service funds
-
-
909,576
909,576 13,924,233
Unreserved, undesignated, reported in: General fund
13,924,233
-
-
Special revenue funds
-
-
2,851,774
2,851,774
Capital projects funds
-
-
(2,796,246)
(2,796,246)
26,419,420
15,946,596
6,806,437
49,172,453
Total fund balances Total liabilities and fund balances
$
30,804,016
See accompanying Notes to Basic Financial Statements.
30
$
17,358,427
$
15,189,940
$
63,352,383
City of Santa Cruz
Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets June 30, 2007
Total Fund Balances - All Governmental Funds
$
49,172,453
Amounts reported for Governmental Activities in the Statement of Net Assets were different because: Capital assets used in governmental activities are not current financial resources. Therefore, they are not reported in the governmental funds. Except for the internal service funds reported below, the capital assets are adjusted as follows: Non-depreciable
GovernmentWide Statement of Net Assets
Internal Service Funds
$
$
Depreciable, net
61,368,186 96,405,216
$
Total capital assets
157,773,402
$
-
61,368,186
(195,360)
96,209,856
(195,360)
157,578,042
Interest payable on long-term debt does not require current financial resources. Therefore, interest payable is not reported as a liability in the governmental funds.
(210,494)
Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and equipment management, to individual funds. The assets and liabilities of the Internal Service Funds are included in governmental activities in the statement of net assets. Equipment Operations Fund
713,332
Stores Services Fund
-
Telecommunications Fund
209,420
Risk Management Fund
(2,874,767)
Total internal service funds
(1,952,015)
Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Noncurrent liabilities were not due and payable in the current period. Therefore, they are not reported in the governmental funds. Except for the internal service funds reported above, the long-term liabilities are adjusted as follows. Compensated absences payable - due within one year
826,470 GovernmentWide Statement of Net Assets
Internal Service Funds
$
$
Compensated absences payable - due in more than one year
(1,612,688) (806,344)
Bonds, notes, loans and leases payable - due within one year Bonds, notes, loans and leases payable - due in more than one year Total long-term liabilities
$
30,599
(1,582,089)
15,300
(791,044)
(2,134,425)
-
(2,134,425)
(18,760,273)
-
(18,760,273)
45,899
(23,267,831)
(23,313,730)
$
Certain transactions related to debt issuance and refunding are reported as expenditures and other financing sources/uses in the governmental funds. For the statement of net assets, the net amount of these transactions is capitalized as deferred charges, and will be amortized as an adjustment to interest expense over the remaining life of the debt. Net Assets of Governmental Activities
268,466 $
See accompanying Notes to Basic Financial Statements.
31
182,415,091
City of Santa Cruz Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2007
Major Funds Other
Total
General
Redevelopment
Governmental
Governmental
Fund
Agency
Funds
Funds
REVENUES: Taxes
$
Licenses and permits Intergovernmental
42,837,408
$
11,022,799
$
2,525,395
$
56,385,602
824,258
-
-
824,258
1,563,745
-
9,400,129
10,963,874 19,852,885
Charges for services
19,786,417
-
66,468
Fines and forfeitures
2,218,082
-
24,465
2,242,547
Use of money and property
3,061,718
844,921
468,706
4,375,345
187,732
384,865
1,891,666
2,464,263
70,479,360
12,252,585
14,376,829
97,108,774
Other revenues Total revenues EXPENDITURES: General government
12,261,663
-
-
12,261,663
Public safety
28,469,065
-
105,000
28,574,065
Parks and recreation
9,653,531
-
-
9,653,531
Library
9,693,097
-
-
9,693,097
Public works
4,233,034
-
707,017
4,940,051
Transit Community and economic development
-
-
646,548
646,548
13,424
8,235,291
1,780,277
10,028,992
Social services
1,651,827
-
106,389
1,758,216
Capital outlay
1,338,184
156,159
13,373,594
14,867,937
178,385
1,649,689
375,794
2,203,868
47,643
571,423
459,766
1,078,832
67,539,853
10,612,562
17,554,385
95,706,800
2,939,507
1,640,023
(3,177,556)
1,401,974
Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from asset disposition Transfers in
62,804
-
285,737
348,541
615,094
8,288
637,132
1,260,514
Transfers out
(677)
Total other financing sources (uses) Net change in fund balances
-
(708,812)
(709,489)
214,057
899,566
677,221
8,288
3,616,728
1,648,311
(2,963,499)
2,301,540
22,802,692
14,298,285
9,769,936
46,870,913
FUND BALANCES: Beginning of year End of year
$
26,419,420
See accompanying Notes to Basic Financial Statements.
32
$
15,946,596
$
6,806,437
$
49,172,453
City of Santa Cruz Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets For the year ended June 30, 2007
Net Change in Fund Balances - All Governmental Funds
$
2,301,540
Amounts reported for governmental activities in the Statement of Activities and Changes in Net Assets were different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period, excluding the internal service funds, which are reported below.
2,984,924
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and capital contributions) is to increase net assets.
(26,253)
Revenues considered "unavailable" at the end of the previous fiscal year were collected during the current year and are reported as revenues in the governmental funds. These revenues were previously included in the statement of activities.
145,718
Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.
(278,400)
Proceeds of long-term debt and payments to refunding bond escrow agents are reported as financing sources/uses in governmental funds. In the statement of net assets, however, issuing or refinancing debt affects noncurrent liabilities.
(25,627)
Certain costs related to issuing new debt and refunding existing debt are reported as expenditures and financing uses in the governmental funds, but are capitalized in the statement of net assets, and will be amortized over the remaining life of the debt.
(116,262)
Repayment of principal is an expenditure in governmental funds, but reduces noncurrent liabilities in the statement of net assets.
2,203,868
Accrued but unpaid and accreted interest on long-term debt is reported in the statement of activities, but does not require the use of current financial resources. Therefore, it is not reported as an expenditure in the governmental funds.
(82,832)
Internal service funds are used by management to charge the costs of certain activities, such as insurance and equipment management, to individual funds. The net revenue of the internal service funds is reported with governmental activities. Change in Net Assets of Governmental Activities
1,373,577 $
See accompanying Notes to Basic Financial Statements.
33
8,480,253
This page intentionally left blank.
34
Proprietary Fund Financial Statements Water - Accounts for the activities of the City's water utility, which provides water delivery services to the residents of the City and some residents of the County. Wastewater - Accounts for the activities of the City's wastewater utility, which provides wastewater collection and treatment services to the residents of the City and some residents of the County. Refuse - Accounts for the activities of the City's refuse utility, which provides refuse pick-up services, recycling services, and a sanitary landfill for residents of the City. Parking - Accounts for the activities of the Downtown Parking District, which provides parking facilities in the downtown area. Storm Water - Accounts for storm water utility fees on properties within the City limits. These fees provide funding for flood control improvements associated with the U.S. Army Corps of Engineers San Lorenzo River Flood Control project, storm water pollution prevention programs, and measures to comply with the U.S. Environmental Protection Agency Non-Point Pollution Discharge Emissions Standards Program (NPDES). Golf Course - Accounts for the activities of the Delaveaga Golf Course, which provides recreational facilities to the public. Internal Service Funds - These funds are used to provide goods and services by one department or agency to other departments or agencies of the City on a cost reimbursement basis.
35
City of Santa Cruz Statement of Net Assets Proprietary Funds June 30, 2007
Enterprise Funds
Water
Wastewater
Refuse
Parking
ASSETS Current assets: Cash and cash equivalents
$
31,622,891
$
8,846,168
$
9,283,779
$
3,675,928
Restricted cash and cash equivalents
103,261
671,680
1,239,032
513,577
Interest receivable
384,675
494,115
108,274
42,184
3,740,192
1,717,406
1,551,135
35,026
-
581,999
-
41,431
Accounts receivable - net Due from other governments Notes receivable - due within one year
-
-
-
-
Intergovernmental receivable - due within one year
-
1,151,684
-
-
76,285
50,857
82,642
-
Inventories
Prepaid items
-
-
-
-
Deposits
-
-
-
30,000
35,927,304
13,513,909
12,264,862
4,338,146
Total current assets Noncurrent assets: Restricted investments Notes receivable - due in more than one year Intergovernmental receivable - due in more than one year
-
-
1,080,087
-
401,058
-
-
-
-
15,008,579
-
-
13,585
89,332
-
-
431,843
261,749
294,169
202,329
3,654,410
1,371,330
98,575
4,638,102
71,900
910,270
-
280,701
54,474,851
51,627,684
19,746,219
805,464
Buildings
9,204,251
126,672,607
2,709,093
20,398,375
Machinery and equipment
6,038,540
3,717,114
12,589,999
196,242
-
70,000
-
-
249,431
196,557
99,336
9,933
Advances to other funds Deferred charges Capital assets: Land Land improvements Infrastructure
Lease improvements Software Construction in progress
21,742,895
Less accumulated depreciation
466,907
25,465
346,709
(36,453,960)
(69,535,415)
(18,700,885)
(7,221,185)
Total capital assets (net of accumulated depreciation)
58,982,318
115,497,054
16,567,802
19,454,341
Total noncurrent assets
59,828,804
130,856,714
17,942,058
19,656,670
Total assets
95,756,108
144,370,623
30,206,920
23,994,816
See accompanying Notes to Basic Financial Statements.
36
Enterprise Funds
Governmental Activities Internal
Storm Water
$
Golf Course
2,658,907 611
$
Total
53 275,414
29,685
(3,161)
$
Service Funds
56,087,726
$
6,850,297
2,803,575
-
1,055,772
70,594 7,030
36,810
86,386
7,166,955
454,208
7,600
1,085,238
-
-
-
-
-
-
-
1,151,684
-
-
-
209,784
-
-
-
-
133,641
-
-
30,000
1,392,459
3,180,221
366,292
69,590,734
8,454,021
-
289,624
1,369,711
-
-
-
401,058
-
-
-
15,008,579
-
-
-
102,917
-
775,912
133,147
2,099,149
-
8,822
1,819,287
11,590,526
242,277
2,450,870
3,956,018
-
50,954,503
234,362
177,843,083
-
-
1,236,318
160,220,644
-
6,421
675,653
23,223,969
1,157,143
-
-
70,000
-
-
-
555,257
336,296
764,721
-
23,346,697
-
(9,385,974)
(1,595,932)
(142,893,351)
(1,298,079)
42,590,770
4,820,558
257,912,843
195,360
43,366,682
5,243,329
276,894,257
195,360
46,546,903
5,609,621
346,484,991
8,649,381
(Continued)
37
City of Santa Cruz Statement of Net Assets, Continued Proprietary Funds June 30, 2007
Major Funds
Water
Wastewater
Refuse
Parking
LIABILITIES Current liabilities: Accounts payable and other current liabilities
$
1,252,702
Due to other funds Interest payable Unearned revenue Deposits payable
$
842,029
$
575,325
$
79,998
-
-
-
-
185,000
911,273
118,362
50,121
622
-
48,013
-
27,561
58
603
18,843
Claims and judgments payable
-
-
-
-
Compensated absences payable
240,141
122,562
162,452
8,735
due in less than one year
293,126
2,699,538
2,355,291
205,000
Total current liabilities
1,999,152
4,575,460
3,260,046
362,697 351,000
Bonds, notes, loans and leases payable
Noncurrent liabilities: Advances from other funds
-
-
-
Claims and judgments payable
-
-
-
-
Compensated absences payable
120,070
61,281
81,226
4,367
12,553,584
36,412,158
10,217,696
5,940,000
-
-
6,055,236
-
Bonds, notes, loans and leases payable due in more than one year Landfill closure costs Total noncurrent liabilities
12,673,654
36,473,439
16,354,158
6,295,367
Total liabilities
14,672,806
41,048,899
19,614,204
6,658,064
Invested in capital assets, net of related debt
45,741,818
74,047,454
2,812,472
13,108,004
Unrestricted
35,341,484
29,274,270
7,780,244
4,228,748
NET ASSETS
Total net assets
$
81,083,302
$
103,321,724
$
10,592,716
$
17,336,752
$
-
$
-
$
-
$
-
See accompanying Notes to Basic Financial Statements.
38
Major Funds
Governmental Activities Internal
Storm Water
$
Golf Course
54,701
$
-
Total
92,086
$
Service Funds
2,896,841
$
235,782
557,166
557,166
8,160
58,031
32,621
1,355,408
-
-
18,389
67,024
-
-
-
47,065
-
-
-
-
2,812,930
1,861
19,492
555,243
30,599
170,000
250,303
5,973,258
-
284,593
970,057
11,452,005
3,087,471
-
-
351,000
-
-
-
-
7,498,625
931
9,746
277,621
15,300
5,770,000
3,769,190
74,662,628
-
-
-
6,055,236
-
5,770,931
3,778,936
81,346,485
7,513,925
6,055,524
4,748,993
92,798,490
10,601,396
36,490,770
124,466
172,324,984
4,000,609
736,162
81,361,517
$
40,491,379
$
860,628
$
253,686,501
$
-
$
-
$
-
195,360 (2,147,375) $
(1,952,015)
(Concluded)
39
City of Santa Cruz Statement of Revenues, Expenses and Changes in Net Assets Proprietary Funds For the year ended June 30, 2007
Enterprise Funds
Water
Wastewater
Refuse
Parking
OPERATING REVENUES: Charges for services
$
22,442,267
$
13,978,613
$
15,108,051
$
2,697,863
Use of property
6,600
-
-
139,548
Other revenues
246,898
1,304
49,863
44,920
22,695,765
13,979,917
15,157,914
2,882,331
7,138,553
4,472,202
5,770,172
996,117
Total operating revenues OPERATING EXPENSES: Personnel services Services, supplies, and other charges
6,927,313
5,368,800
4,726,929
835,390
Depreciation and amortization
1,865,073
4,362,255
1,866,235
486,577
Total operating expenses
15,930,939
14,203,257
12,363,336
2,318,084
Operating income (loss)
6,764,826
2,794,578
564,247
(223,340)
NONOPERATING REVENUES (EXPENSES): Intergovernmental Investment earnings Interest expense and fiscal charges Debt issuance costs Gain (loss) on sale of capital assets
-
206,207
15,575
79,093
1,826,747
801,488
531,447
191,062
(258,573)
(1,152,180)
(574,272)
(304,051)
(14,360)
(22,466)
(36,805)
(9,910)
3,067
2,680
(4,726)
50,506
(68,781)
6,700
Total nonoperating revenues (expenses)
1,556,881
(164,271)
Income (loss) before contributions and transfers
8,321,707
(387,611)
2,725,797
570,947
1,112,837
-
-
-
-
-
Capital contributions Transfers in
7,644
Transfers out
-
(777)
(5,038)
(5,196)
-
(5,196)
-
Total contributions and transfers
1,119,704
(5,038)
Change in net assets
9,441,411
(392,649)
2,720,601
570,947
7,872,115
16,922,805
NET ASSETS: Beginning of year
72,019,358
Prior period adjustment (Note 16)
(377,467)
Beginning of year, as restated End of year
103,829,258 (114,885)
71,641,891 $
81,083,302
See accompanying Notes to Basic Financial Statements.
40
-
103,714,373 $
103,321,724
(157,000)
7,872,115 $
10,592,716
16,765,805 $
17,336,752
Enterprise funds
Governmental Activities Internal
Storm Water
$
Golf Course
875,730
$
1,770,614
$
Service Funds
56,873,138
$
7,905,452
-
1,120
147,268
-
-
187,173
530,158
21,947
875,730
1,958,907
57,550,564
7,927,399
92,984
833,364
19,303,392
1,198,645
224,972
909,479
18,992,883
5,059,535
1,322,031
205,446
10,107,617
86,192
1,639,987
1,948,289
48,403,892
6,344,372
(764,257)
10,618
9,146,672
1,583,027
264,112
24,895
589,882
-
122,023
17,954
3,490,721
339,102
(241,333)
(206,620)
(2,737,029)
(56,955)
(10,481)
(150,977)
-
-
-
51,527
-
87,847
(174,252)
1,244,124
338,208
(676,410)
(163,634)
10,390,796
1,921,235
-
-
1,112,837
-
-
-
7,644
129,288
-
-
(11,011)
(676,946)
-
-
1,109,470
(676,410)
(163,634)
11,500,266
1,373,577
242,835,587
(3,325,592)
41,167,789
$
Total
1,024,262
-
-
41,167,789
1,024,262
40,491,379
$
860,628
(894)
(547,658)
(649,352)
-
242,186,235 $
253,686,501
(3,325,592) $
(1,952,015)
41
City of Santa Cruz Combining Statement of Cash Flows Proprietary Funds For the year ended June 30, 2007
Major Funds
Water
Wastewater
Refuse
Parking
CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers and users
$
Cash received from interfund services provided
21,570,235
$
656,678
13,058,038
$
28,555
14,218,492
$
2,403
2,684,952 9,241
Cash payments to suppliers for goods and services
(5,658,218)
(3,981,135)
(2,177,661)
(958,507)
Cash payments to employees for services
(7,106,775)
(4,492,632)
(5,786,226)
(991,625)
Cash payments for interfund services used
(2,061,278)
(1,026,603)
(2,276,388)
(38,392)
-
(105,336)
(70,383)
79,093
Cash payments to other governments Cash received from (payments to) others Net cash provided (used) by operating activities
253,498
1,362
49,863
184,468
7,654,140
3,482,249
3,960,100
969,230
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in
7,644
Transfers out
(777)
Advances from other funds
-
Advances to other funds Receipts from other governments Net cash provided (used) by noncapital financing activities
-
-
-
(5,038)
(5,196)
-
-
-
254,499
8,045
10,669
-
-
-
1,120,317
26,575
50,413
14,912
1,125,948
21,379
304,912
1,112,837
-
-
-
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital contributions Purchase and construction of capital assets
(15,878,467)
(882,626)
(1,706,340)
138,675
Principal paid on capital debt
(379,430)
(2,314,975)
(1,145,540)
(191,427)
Interest paid on capital debt
(215,509)
(1,236,160)
(626,807)
(314,248)
Proceeds from sales of capital assets
3,067
2,680
(4,725)
50,506
Net cash provided (used) by capital and related financing activities
(15,357,502)
(4,431,081)
(3,483,412)
(316,494)
12,000,000
-
(21,987)
-
-
-
-
1,762,026
815,871
497,027
175,807
13,762,026
815,871
475,040
666,935
6,073,576
992,987
973,107
1,624,583
25,652,576
8,524,861
9,549,704
2,564,922
CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales and maturities of investments Interest receivables Investment income received Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents
491,128
CASH AND CASH EQUIVALENTS: Beginning of year End of year
$
31,726,152 -
See accompanying Notes to Basic Financial Statements.
42
$
9,517,848 -
$
10,522,811 -
$
4,189,505 -
Major Funds
Governmental Activities Internal
Storm Water
$
$
Golf Course
875,977
$
Total
1,747,596
$
Service Funds
54,155,290
$
696,877
166,159
-
-
(346,777)
(602,020)
(13,724,318)
(3,088,114)
7,763,957
(91,999)
(829,557)
(19,298,814)
(1,188,787)
64,800
(322,744)
(5,660,605)
(3,093,352)
9,148
-
(87,478)
-
-
745,459
1,234,650
-
511,149
738,734
17,315,602
559,863
-
-
7,644
-
-
(11,011)
(547,658)
-
(439,293)
(184,794)
-
-
439,293
-
458,007
-
579,563
24,895
1,801,763
-
1,018,856
(414,398)
2,071,609
(547,658)
-
-
1,112,837
-
(433,894)
(43,896)
(18,806,548)
(8,296)
(87,261)
(226,825)
(4,345,458)
(21,060)
(300,219)
(218,394)
(2,911,337)
(870)
-
-
(821,374)
(489,115)
(24,898,978)
-
145,628
12,614,769
-
-
-
-
(12,438)
112,637
22,515
3,385,883
339,101
112,637
168,143
16,000,652
326,663
821,268
3,364
10,488,885
308,642
1,838,250
272,103
48,402,416
6,541,655
2,659,518 -
$
275,467 -
51,528
$
58,891,301 -
(30,226)
$
6,850,297 (Continued)
43
City of Santa Cruz Combining Statement of Cash Flows, Continued Proprietary Funds For the year ended June 30, 2007
Major Funds
Water
Wastewater
Refuse
Parking
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (loss)
$
6,764,826
$
(223,340)
$
2,794,578
$
564,247
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization
1,865,073
4,362,255
1,866,235
486,577
-
-
303,829
-
(222,466)
(891,973)
(898,079)
(1,651)
(43,919)
(33,238)
(47,139)
3,495
Inventories
-
-
-
-
Notes and loans receivable
-
25,962
-
-
(748,264)
229,764
(101,332)
(82,416)
Estimated closure/postclosure costs Changes in assets and liabilities: Accounts receivable Prepaid items
Accounts payable and other current liabilities Due to other funds
-
-
-
-
Deferred revenue
-
-
10,573
-
Deposits payable
7,112
350
(2,019)
(47)
Claims and judgments payable
-
58
-
-
Compensated absences payable
31,778
12,808
31,085
997
889,314
3,705,589
1,165,522
404,983
Total adjustments Net cash provided (used) by operating activities
$
See accompanying Notes to Basic Financial Statements.
44
7,654,140
$
3,482,249
$
3,960,100
$
969,230
Major Funds
Governmental Activities Internal
Storm Water
$
$
Golf Course
(764,257)
$
Total
10,618
$
Service Funds
9,146,672
$
1,588,357
1,322,031
205,446
10,107,617
86,192
-
-
303,829
-
247
(23,018)
190
5,397
(115,214)
-
-
-
(2,036,940)
24,664 4,410 (247,385)
-
-
(47,857)
(20,682)
(770,787)
25,962
-
557,166
557,166
-
-
10,573
-
-
5,396
(152) (668,531)
-
-
58
795
3,807
81,270
1,275,406
728,116
8,168,930
511,149
$
738,734
$
17,315,602
(229,266) (3,518) -
5,092 (1,028,494) $
559,863
(Concluded)
45
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46
Fiduciary Fund Financial Statements Private - Purpose Trust Funds: Private-purpose trust funds are used to report the trust arrangements under which the principal and income benefit the Library Joint Powers Authority. Agency Funds: Agency funds are used to account for resources held by the City in a custodial capacity. These funds account for the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments.
47
City of Santa Cruz Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2007
PrivatePurpose
Agency
Trust Funds
Funds
ASSETS Cash and cash equivalents
$
Restricted cash and cash equivalents
537,000
$
-
1,644,287 75,985
Receivables: Interest receivable Taxes receivable Accounts receivable
6,147
16,701
-
651,199
-
530,842
Due from other governments
-
27,620
Prepaid items
-
-
Total assets
$
543,147
$
-
$
2,946,634
LIABILITIES Accounts payable and other current liabilities
$
Due to other governments
-
841,384 1,281,985
Deposits payable
-
533,653
Payable to bondholders
-
289,612
Total liabilities
-
NET ASSETS Held in trust for library programs
$
See accompanying Notes to Basic Financial Statements.
48
543,147
$
2,946,634
City of Santa Cruz Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the year ended June 30, 2007
PrivatePurpose Trust Funds ADDITIONS: Investment earnings
$
Total additions
28,205 28,205
DEDUCTIONS: Library programs
9,027
Total deductions
9,027
Change in net assets
19,178
NET ASSETS: Beginning of year
523,969
End of year
$
See accompanying Notes to Basic Financial Statements.
49
543,147
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50
City of Santa Cruz Index to Notes to the Basic Financial Statements For the year ended June 30, 2007
Page Note 1 - Summary of Significant Accounting Policies..................................................................................53 A. B. C. D. E. F. G. H. I. J. K. L. M. N. O. P. Q. R.
Reporting Entity..............................................................................................................................53 Basis of Accounting and Measurement Focus............................................................................53 Use of Restricted/Unrestricted Net Assets.................................................................................56 Cash, Cash Equivalents and Investments ...................................................................................56 Restricted Cash and Investments with Fiscal Agents................................................................56 Prepaid Items ..................................................................................................................................57 Inventories .......................................................................................................................................57 Interfund Transactions...................................................................................................................57 Capital Assets..................................................................................................................................58 Interest Payable...............................................................................................................................58 Deferred Revenue ...........................................................................................................................59 Compensated Absences .................................................................................................................59 Bond Premiums, Discounts, and Issuance Costs .......................................................................59 Long-Term Debt..............................................................................................................................59 Net Assets ........................................................................................................................................60 Fund Balances – Reservations and Designations .......................................................................60 Property Taxes ................................................................................................................................60 Use of Estimates..............................................................................................................................60
Note 2 - Cash Deposits and Investments .........................................................................................................60 A. Cash Deposits..................................................................................................................................61 B. Investments .....................................................................................................................................62 C. Risk Disclosures ..............................................................................................................................63 Note 3 – Receivables ............................................................................................................................................66 Note 4 – Interfund Balances and Transactions ...............................................................................................67 A. Government-Wide Financial Statements ....................................................................................67 B. Fund Financial Statements ............................................................................................................68 Note 5 – Capital Assets ........................................................................................................................................70 A. Government-Wide Financial Statements ....................................................................................70 B. Fund Financial Statements ............................................................................................................73
51
City of Santa Cruz Index to Notes to the Basic Financial Statements, Continued For the year ended June 30, 2006
Page Note 6 – Long-Term Debt....................................................................................................................................73 A. Governmental Activities Long-Term Debt .................................................................................73 B. Proprietary Fund Obligations .......................................................................................................79 Note 7 – Risk Management and Self Insurance..............................................................................................85 Note 8 – Landfill Closure and Postclosure Costs ...........................................................................................87 Note 9 – Retirement Plans...................................................................................................................................88 A. Pension Plan ....................................................................................................................................88 Note 10 – Post-Employment Retirement Benefits ..........................................................................................90 Note 11 – Commitments and Contingencies ...................................................................................................90 Note 12 – Operating Leases ................................................................................................................................92 Note 13 – Reserved and Designated Fund Balances ......................................................................................93 Note 14 – Deficit Net Assets ...............................................................................................................................94 Note 15 – Subsequent Events .............................................................................................................................94 Note 16 – Prior Period Adjustments..................................................................................................................95 A. Government-Wide Financial Statements ....................................................................................95 B. Fund Financial Statements ............................................................................................................95
52
City of Santa Cruz
Notes to Basic Financial Statements For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of Santa Cruz, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. A. Reporting Entity The City was incorporated as a town in 1866 under the laws of the State of California. It became a City in 1876. The City is a charter city administered under a council/manager form of government. The financial statements present the City and its component units (legally separate entities for which the City is considered to be financially accountable). Component units include those entities for which the City may have governing authority or is in a relationship of financial benefit or burden. Component units also include entities that are fiscally dependent upon the City. The financial activities of these entities are integrally related to those of the City and, therefore, blended with those of the City. Blending involves aggregating/merging component unit data and data from the City at the combined financial statement level. Based on the above criteria, the accompanying financial statements include the financial activities of the following entities as blended component units. Separate financial statements of these entities can be obtained from the Finance Department of the City. City of Santa Cruz Redevelopment Agency - The City of Santa Cruz Redevelopment Agency (Agency) was formed in 1956 to improve social, physical and economic conditions of the City by constructing a series of commercial, residential and public buildings in the downtown area. The City's Council members are the Agency's Directors and have full accountability for the Agency's fiscal matters. Santa Cruz Public Improvement Financing Corporation - The Santa Cruz Public Improvement Financing Corporation (Corporation) is a non-profit benefit corporation organized and operated under the laws of the State of California. The primary purpose of the Corporation is to serve as a financing vehicle for the City. The City Council has final responsibility for the operations of the Corporation. B. Basis of Accounting and Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Government - Wide Financial Statements The City’s Government-Wide Financial Statements include a Statement of Net Assets and a Statement of Activities and Changes in Net Assets. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. 53
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Government - Wide Financial Statements, Continued These basic financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Certain types of transactions are reported as program revenues for the City in three categories: Charges for services ¾ Operating grants and contributions ¾ Capital grants and contributions ¾
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the businesstype activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities and Changes in Net Assets, internal service fund transactions have been eliminated; however, those transactions between governmental and businesstype activities have not been eliminated. The following interfund activities have been eliminated: Due to/from other funds Advances to/from other funds ¾ Transfers in/out ¾ ¾
For its business type activities, the City applies all applicable GASB pronouncements currently in effect, as well as Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) of the Committee on Accounting Procedure that do not conflict with or contradict GASB pronouncements. Governmental Fund Financial Statements Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net assets as presented in these statements to the net assets presented in the Government-Wide Financial Statements. The City has presented all major funds that met the applicable criteria. All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. 54
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements, Continued Revenues are recorded when received in cash, except for that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred. Deferred revenues arise when potential revenues do not meet both the “measurable” and “available” criteria for recognition in the current period. Deferred revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when the government has a legal claim to the resources, the deferred revenue is removed from the Balance Sheet and revenue is recognized. The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of Revenues, Expenses and Changes in Net Assets, and a Statement of Cash Flows for each major proprietary fund. A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the Government-Wide Financial Statements. Internal Service Funds may be used to report any activity that provides goods or services to other funds, departments, or agencies of the primary government. Examples are Equipment Operations, Stores Services, Telecommunications, and Risk Management Funds. Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts. In accordance with GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Government Entities that Use Proprietary Fund Accounting, the City applies all GASB pronouncements currently in effect as well as FASB Statements and Interpretations, APB Opinions and ARB of the Committee on Accounting Procedure that do not conflict with or contradict GASB pronouncements. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses. 55
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Fiduciary Fund Financial Statements Fiduciary Fund Financial Statements include a Statement of Net Assets and a Statement of Changes in Fiduciary Net Assets. The City's fiduciary funds represent agency funds and private-purpose trust funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The agency funds are accounted for using the accrual basis of accounting. Agency funds include Library Joint Powers Authority, Payroll Payables, and Special Assessments. The privatepurpose trust funds are used to account for resources legally held in trust for special purposes, such as McCaskill Trust for Local History, McCaskill Trust for Visually Impaired, and The Finkeldey Trust for Musical Literature. C. Use of Restricted/Unrestricted Net Assets When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the City’s policy is to apply restricted net assets first. D. Cash, Cash Equivalents and Investments Cash and cash equivalents are considered to be amounts in demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. For purposes of both the balance sheet and statements of cash flows, cash and cash equivalents includes not only currency on hand, but deposits in the City’s cash and investment pool. These deposits have the same characteristics for the participating funds as demand deposit accounts, in that the funds may deposit additional cash at any time and also effectively withdraw cash at any time without prior notice or penalty. Cash and cash equivalents also include restricted cash and money market funds held by fiscal agents. The City’s cash and investments are stated at fair value, which is based on a quoted market price. This includes all investments except the City’s investment in the California Local Agency Investment Fund (LAIF). LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available. The City valued its investments in LAIF as of June 30, 2007, by multiplying its account balance with LAIF times a fair value factor determined by LAIF (.999545022). This fair value factor was determined by dividing the total aggregate fair value for all LAIF participants by total aggregate amortized cost. E. Restricted Cash and Investments with Fiscal Agents Certain restricted cash and investments are held by fiscal agents for the redemption of bonded debt and for acquisition and construction of capital projects. F. Prepaid Items Certain payments applicable to future accounting periods are recorded as prepaid items. Prepaid items do not reflect current appropriable resources and, thus, an equivalent portion of fund balance is reserved. 56
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued G. Inventories Inventories consist of material and supplies which are stated at cost using the first-in, first-out method. Inventories are recognized as expenditures when consumed rather than when purchased. H. Interfund Transactions Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the long-term portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the Government-Wide Financial Statements as “internal balances.” I.
Capital Assets Capital assets are defined by the City as assets having an estimated useful life in excess of one year, and an initial, individual cost in excess of the capitalization thresholds described below: Infrastructure Land improvements Buildings and lease improvements Machinery and equipment Software (if qualified)
$
25,000 10,000 10,000 5,000 5,000
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are valued at their estimated fair market value on the date donated. Assets acquired under capital leases are capitalized in accordance with generally accepted accounting principles. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest accrued during capital assets construction, if any, is capitalized for the businesstype activities and proprietary funds as part of the asset cost. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset’s useful life are not capitalized. Capital assets are reported in the applicable governmental or business-type activities in the Government-Wide Financial Statements. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Land improvements Buildings and lease improvements Water tanks and water mains Underground sewer lines Other infrastructure Machinery and equipment Software ( if qualified)
57
20 years 15-50 years 30-50 years 50 years 5-100 years 5-20 years 5 years
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued I.
Capital Assets, Continued Assets are grouped by asset type into one of the following accounts – land, land improvements, infrastructure assets (e.g. roads, bridges, sidewalks, and similar items), buildings (and improvements), machinery and equipment, lease improvements, software, and construction in progress. GASB issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local governments’ Basic Financial Statements. In accordance with Statement No. 34, the City has included the value of all infrastructure in the fiscal year 2003 Basic Financial Statements. For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34 for infrastructure reporting. Estimated historical costs were developed in one of three ways: (1) historical records; (2) standard unit costs appropriate for the construction/acquisition date; or (3) present cost indexed by a reciprocal factor of the price increase from the construction/acquisition date to the current date. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date on a straight line, unrecovered cost method was computed using industry accepted life expectancies for each infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation from the estimated historical cost.
J.
Interest Payable In the Government-Wide Financial Statements, interest payable on long-term debt is recognized as the liability is incurred for governmental fund types and proprietary fund types. In the Fund Financial Statements, propriety fund types recognize the interest payable when the liability is incurred.
K. Deferred Revenue In the Government-Wide Financial Statements, deferred revenue is recognized for transactions for which revenue has not yet been earned. Typical transactions recorded as deferred revenues in the Government-Wide Financial Statements are long-term assessments, long-term loans receivable, and prepaid charges for services. In the Fund Financial Statements, deferred revenue is recorded when transactions have not yet met the revenue recognition criteria based on the modified accrual basis of accounting. The City records deferred revenue for transactions for which revenues have not been earned, or for which funds are not available to meet current financial obligations. Typical transactions for which deferred revenue is recorded are grants received but not yet earned or available, interest on interfund advances receivable, long-term assessments and loans receivable.
58
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued L. Compensated Absences The City has accumulated unpaid regular vacation leave (for all departments) which is accounted for in accordance with GAAP. The maximum accumulation of vacation leave is limited to the total number of hours accruable during two years. Employees are paid 100% of their accumulated vacation pay when they terminate their employment for any reason. Employees are allowed a partial payoff of accumulated sick leave up to a certain maximum amount. M. Bond Premiums, Discounts, and Issuance Costs For governmental type activities, bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bond proceeds are reported as other financing sources net of the applicable premium or discount. Issuance costs, whether or not withheld from the actual net proceeds received, are reported as debt service expenditures. For business type activities, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using a straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs and costs in excess of net assets acquired are reported as other assets in the accompanying financial statements. N. Long-Term Debt Government-Wide Financial Statements - Long-term debt and other long-term obligations are reported as liabilities in the appropriate activities. Fund Financial Statements - With the exception of advances from other funds, the governmental fund financial statements do not present long-term liabilities. However, the long term debt is shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the GovernmentWide Statement of Net Assets. O. Net Assets In the Government-Wide Financial Statements, net assets are classified in the following categories: Invested in Capital Assets, net of Related Debt – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. Restricted Net Assets – This amount is restricted by external creditors, grantors, contributors, laws or regulations of other governments. Unrestricted Net Assets – This amount is all net assets that do not meet the definition of “invested in capital assets, net of related debt” or “restricted net assets.”
59
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued P. Fund Balances - Reservations and Designations In the Fund Financial Statements, governmental funds report reservations of fund balances for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balances represent tentative management plans that are subject to change. Q. Property Taxes Assessed property values are determined annually by the County Assessor as of March 1, and become a lien on real property at July 1. Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County bills and collects property taxes and remits them to the City under the State authorized method of apportioning taxes whereby all local agencies, including cities, receive from the county their respective shares of the amount of ad valorem taxes collected. Property tax revenues are recognized when levied provided the measurement and availability criteria have been met. R. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions.
2. CASH DEPOSITS AND INVESTMENTS The following is a summary of cash, cash equivalents, and investments, including restricted cash and investments with fiscal agents at June 30, 2007: Government-Wide Statement of Net Assets Governmental Business-Type Activities Activities Total
Statement of Fiduciary Net Assets
Total
Unrestricted assets: Cash and cash equivalents
$
Total unrestricted assets Restricted assets: Cash and cash equivalents Investments with fiscal agents Total restricted assets Grand Total
$
42,640,326
$
56,087,726
$
98,728,052
$
2,181,287
$
100,909,339
42,640,326
56,087,726
98,728,052
2,181,287
100,909,339
3,026,030 283,042
2,803,575 1,369,711
5,829,605 1,652,753
75,985 -
5,905,590 1,652,753
3,309,072
4,173,286
7,482,358
75,985
7,558,343
45,949,398
$
60,261,012
60
$
106,210,410
$
2,257,272
$
108,467,682
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
2. CASH DEPOSITS AND INVESTMENTS, Continued The City pools its available cash for investment purposes. Investment income from this pool is allocated to each fund based on its proportionate share of the pool. Cash and investments not pooled include bond proceeds held by fiscal agents, and other amounts required to be segregated by bond indentures or other regulations. Investment income from cash and investments with fiscal agents is credited directly to the related fund. Cash, cash equivalents, and investments consisted of the following at June 30, 2007: Cash and cash equivalents: Pooled cash deposits
$
Outstanding checks
1,784,555 (3,868,492)
Other deposits and cash held by City
41,810
Certificates of deposit
596,000
Money market mutual funds available for debt service
7,462
Federal securities
64,656,826
State local agency investment fund
37,691,178
Total cash and cash equivalents
100,909,339
Restricted cash and cash equivalents: Pooled cash deposits
521,474
Other cash deposits
78,785
Money market mutual funds held by fiscal agents
2,262,641
Investment contracts held by fiscal agents
9,758
State local agency investment fund
3,032,932
Total restricted cash and cash equivalents
5,905,590
Restricted Investments: Federal securities held by fiscal agents
1,652,753
Total investments
1,652,753
Total cash, cash equivalents, and investments
$
108,467,682
A. Cash Deposits At June 30, 2007, the carrying amounts of the City’s cash deposits were ($1,441,868), net of outstanding checks in the amount of $3,868,492. Bank balances before reconciling items were $2,450,036. The total bank balance was collateralized or insured with securities held by the pledging financial institutions in the City’s name as discussed below. The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name. 61
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
2. CASH DEPOSITS AND INVESTMENTS, Continued A. Cash Deposits, Continued The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure city deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $100,000 by the Federal Deposit Insurance Corporation. B. Investments The investments made by the City treasurer are limited to those allowable under State statutes as incorporated into the City’s Investment Policy, dated May 31, 2007, which is more conservative than that allowed by State statute. The scope of the investment policy includes all activities of the City and the following reporting entities: ¾ ¾ ¾
City of Santa Cruz City of Santa Cruz Redevelopment Agency Santa Cruz Public Improvement Financing Corporation
Under provisions of this policy, the City is authorized to invest in the following types of investments: ¾ ¾ ¾ ¾ ¾ ¾
¾ ¾
¾
Money market accounts deposited with a nationally or state-chartered bank. Bonds issued by the City. Purchases of this type shall not exceed five years to maturity. U.S. Treasury bills, notes, bonds, or certificates of indebtedness, or those securities backed by the full faith and credit of the U.S. Government with maturities not to exceed five years. Obligations, participations, or other instruments of, or issued by, a Federal agency or a United States government-sponsored enterprise with maturities not to exceed five years. Bankers’ acceptances with a term not to exceed 180 days’ maturity or 40% of the City’s portfolio. Nonnegotiable and nontransferable certificates of deposit issued by a nationally or statechartered bank, state or federal credit union, or by a state-licensed branch of a foreign bank. Purchases may not exceed 30% of the City’s portfolio with no more than 5% of the portfolio deposited with a single issuer. State of California Local Agency Investment Fund as long as the total amount of City and Agency combined funds invested does not exceed the limit set by LAIF. Shares of beneficial interest issued by diversified management companies investing in authorized securities and obligations (e.g., money market mutual funds). Purchases shall not exceed 20% of the City’s portfolio with no more than 10% of the portfolio in a single mutual fund. Repurchase agreements with primary dealers of the Federal Reserve with specific terms and conditions. The market value of securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities, and the value shall be adjusted no less than quarterly. Securities that can be pledged for collateral consist only of investments permitted within this policy with a maximum maturity of five years. Purchases shall not exceed 92 days to maturity and 20% of the portfolio. 62
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
2. CASH DEPOSITS AND INVESTMENTS, Continued B. Investments, Continued Bond proceeds held by fiscal agents to be used only for specific capital outlay, payments of certain longterm debt and maintaining required reserves are invested in accordance with the requirements and restrictions of the City’s investment policy and as permitted by specific State statutes, applicable City ordinance or resolution, and bond indenture requirements. The City is a participant in LAIF, which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2007, included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities: Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options. Asset-Backed Securities: generally mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables. As of June 30, 2007, the City had $40,724,110 invested in LAIF accounts, which had invested 3.466% of the pool investments in structured notes and asset-backed securities. The City’s share of structured notes and asset-backed securities due to its holdings in LAIF amounted to approximately 1.284% of investments at June 30, 2007. C. Risk Disclosures Interest Rate Risk - In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the weighted average maturity of its investment portfolio to two and-one half (2 ½) years or less. The City is in 100% compliance with this provision of the investment policy. At June 30, 2007, the City had the following investment maturities: Investment Type
Fair Value
U.S. Treasuries
$
U.S. Agencies U.S. Treasury Money Market Mutual Funds Certificates of Deposit Local Agency Investment Fund Guaranteed Investment Contract Total Fair Value of Investments only*
$
Maturity (Days)
2,993,830
96
63,315,749
251
2,270,103
1
596,000
1,180
40,724,110
176
9,758
275
109,909,550
Portfolio Weighted Average Maturity (Days)
219
Portfolio Weighted Average Maturity (Years)
0.60
*Does not include net amount of bank balances
63
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
2. CASH DEPOSITS AND INVESTMENTS, Continued C. Risk Disclosures, Continued Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations. Investments in callable bonds are investments that, although having clearly defined maturities, allow for the issuer to redeem or call such bonds earlier than their respective maturity dates. The investor must then replace the called bonds with investments that may have lower yield than the original bonds. As a result, the fair value of the callable bonds is highly sensitive to changes in interest rates. As of June 30, 2007, the City held $18,954,880 in callable securities, which amounted to approximately 17.25% of investments at June 30, 2007. The investment policy limits the purchase of callable U.S. Agency instruments to discreet calls and those that pay 100% of the principal at the redemption date. In addition, purchases of callable U.S. Agency instruments are not to exceed 30% of the value of the portfolio. The City is in compliance with these provisions of the investment policy. Credit Risk - State law limits investments in commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations. The City’s investments are rated as follows: Moody's
Standard & Poor's
Aaa Aaa Aaa Aaa
AAA AAA AAA AAA
Not Rated Aaa Aaa Aaa
AAAm AAAm AAAm AAAm-G
Aaa
AAA
Not Rated
Not Rated
U.S. Agencies Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association U.S. Treasury Money Market Mutual Funds Blackrock Provident - Treasury Trust Fund Blackrock Provident - Treasury Fund Goldman Sachs - Financial Square Treasury Obligations Goldman Sachs - Treasury Instruments Portfolio Guaranteed Investment Contract Trinity Plus Funding Company External Pool State of California - Local Agency Investment Fund
The City’s investment policy requires that the management company of mutual funds must have attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. The investment in BlackRock Treasury Trust Money Market Mutual Fund is rated by only one nationally recognized statistical rating organization; however, it is approved by the National Association of Investors Corporation. Concentration of Credit Risk - The City’s investment policy states that not more than 25% of the portfolio shall be invested in any one entity or any one instrument to protect the City from concentration of credit risk, with the following exceptions: U.S. Treasury Obligations and the external investment pool (State of California – Local Agency Investment Fund). In addition, purchases of mutual funds must not exceed 20% of the value of the portfolio. Purchases in a single mutual fund may not exceed 10% of the value of the portfolio. The City is in 100% compliance with these provisions of the investment policy. 64
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
2. CASH DEPOSITS AND INVESTMENTS, Continued C. Risk Disclosures, Continued The following chart presents investments in any one issuer (other than U.S. Treasury securities and external investment pools) that represent 5% or more of total investments at June 30, 2007: Percentage of Investment Type
Amount Invested
Federal Farm Credit Bank
$
Investments
10,458,484
9.52%
Federal Home Loan Bank
22,722,405
20.67%
Federal Home Loan Mortgage Corporation
11,916,540
10.84%
Federal National Mortgage Association
18,218,320
16.58%
63,315,749
57.61%
Total
$
The following chart presents the City’s investments in money market mutual funds by issuer at June 30, 2007: U.S. Treasury Money Market
Percentage of
Mutual Funds
Amount Invested
Blackrock Provident - Treasury Trust Fund
$
Investments
31,058
0.03%
350
0.00%
Goldman Sachs - Treasury Instruments Portfolio
1,147,953
1.04%
Goldman Sachs - Financial Square Treasury Obligations
1,090,742
0.99%
2,270,103
2.06%
Blackrock Provident - Treasury Fund
Total
$
Custodial Credit Risk - For deposits, custodial credit risk is the risk that, in the event of the failure of a deposit financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s investment policy does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the provision for deposits stated in Note 2A. $2,350,036 of the City’s deposits with financial institutions in excess of federal depository insurance limits was held in uncollateralized accounts. Of the City’s total cash and investment balance at June 30, 2007, $3,932,614 is held by fiscal agents, not in the name of the City, and invested as follows: $9,758 in a guaranteed investment contract; $1,652,753 in federal agency securities; and $2,270,103 in money market mutual funds.
65
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
3. RECEIVABLES Government-Wide Statements The following is a summary of receivables net of allowances for uncollectible amounts at June 30, 2007: Government-Wide Statement of Net Assets
Interest receivable
Governmental
Business-Type
Activities
Activities
$
832,087
$
Statement of Fiduciary
Total
1,055,772
$
1,887,859
Net Assets $
Total
22,848
$
1,910,707
Taxes receivable
4,306,295
-
4,306,295
651,199
Accounts receivable, net
1,819,818
7,166,955
8,986,773
530,842
9,517,615
Due from other governments
2,725,206
1,085,238
3,810,444
27,620
3,838,064
Notes receivable
6,087,262
401,058
6,488,320
-
6,488,320
Loans receivable
1,407,917
-
1,407,917
-
1,407,917
-
16,160,263
16,160,263
-
16,160,263
Intergovernmental receivable Total
$
17,178,585
$
25,869,286
$
43,047,871
$
1,232,509
4,957,494
$
44,280,380
Fund Financial Statements At June 30, 2007, the Fund Financial Statements show the following notes, loans and intergovernmental receivables: Notes Receivable - in the General Fund $266,964 (net of an allowance for uncollectible amounts of $371,925) consists of a note from Neary Lagoon Partners in the amount of $78,800; a promissory note from Santa Cruz Shaffer Road Investors for housing developments in the amount of $82,879; a loan to the River Street Shelter for repairs in the amount of $12,900; a loan to First Night Santa Cruz for $20,000; Harvey West Assessment District notes in the amount of $95,500; employee computer loans in the amount of $5,683; various notes for housing improvement activities in the Housing In-Lieu program of $273,127; and $70,000 in loans to two borrowers participating in the Accessory Dwelling Unit Loan Program. Some notes are secured by a deed of trust. The Redevelopment Agency Fund notes receivable balance of $4,874,571 (net of an allowance of $516,740) represents loans for low/moderate income housing projects. There are two types of loan repayment for these notes: due upon sale or transfer and lump sum payment at maturity. Interest rates range from 0% to 7%. The notes are all secured by a deed of trust. The $18,501 note receivable in the Public Works special revenue fund pertains to traffic impact fees owed to the City by an individual (“promissor”) who renovated residential property for commercial purposes. Any default results in the forfeiture of building permits issued to the promissor. Notes receivable in the Parks and Recreation special revenue fund of $245,896 pertain to a promissory note for housing developments – development impact fees. There is no interest on this promissory note. Loan repayment is deferred to a future date when monthly repayment will begin. The note is secured by a personal guarantee from Santa Cruz Shaffer Road Investors, LP, a California limited partnership.
66
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
3. RECEIVABLES, Continued In addition to a $75,000 interest-free loan made to the Homeless Services Center for local shelter operations payable in February 2017, notes receivable in the Housing and Community Development special revenue fund of $681,330 (net of an allowance of $1,369,408) consist of loans for buildings damaged in the 1989 earthquake. There are two types of loan repayments: monthly repayment and deferred to a future date when monthly repayment will begin. The interest rate on these notes is 3%. The notes are all secured by a deed of trust. Notes receivable in the enterprise funds are made up of two notes totaling $401,058. Both are due from Neary Lagoon Partners for water system connection fees pertaining to a low-moderate income housing project. These notes do not bear interest, and repayment is deferred until 2019. Loans Receivable - in other governmental funds $1,407,917 (net of an allowance of $5,335,072) consists of loans for rehabilitation of low/moderate income housing. The loans are made with Federal funds from the Department of Housing and Urban Development (HUD). The City administers these funds for HUD. There are four types of loan repayment schedules: monthly installments, due upon sale or transfer, deferred to a future date when monthly repayment will begin, and no repayment if the property remains in use for low/moderate income housing for a specified time period. Interest rates range from 0% to 7%. The loans are all secured by a deed of trust on the property being rehabilitated. Intergovernmental Receivables - in the enterprise funds $16,160,263 ($1,151,684 due within one year and $15,008,579 due in more than one year) is owed by the County of Santa Cruz for its share of a State Water Resources Board loan for wastewater treatment plant upgrades. Payments of interest and principal from the County of Santa Cruz are due in annual installments of $1,604,172, at an interest rate of 2.8%, with the final payment due August 1, 2018. Allowance for uncollectible notes and loans - When considerable uncertainty exists as to the collectability of a note (as determined by management) due to the terms of the loan or other factors, it is offset by an allowance for uncollectible notes.
4. INTERFUND BALANCES AND TRANSACTIONS A. Government-Wide Financial Statements Long-Term Internal Balances At June 30, 2007, the City had the following long-term internal balances: Internal Balances Payable Governmental Activities Internal Balances Receivable Business-Type Activities
67
$
805,249
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
4. INTERFUND BALANCES AND TRANSACTIONS, Continued A. Government-Wide Financial Statements, Continued This balance consists of the net amount of long-term advances between the Redevelopment Agency Fund and the Water, Wastewater and Parking enterprise funds. The advances are due to fund various projects. Transfers The City had the following transfers for the year ending June 30, 2007: Transfers In Governmental Activities Transfers Out Business-Type Activities
$
3,367
Transfers are made from the enterprise funds to the General Capital Improvement capital projects fund to finance a share of project expenses or debt service costs for projects from which those funds receive benefit. B. Funds Financial Statements The City had the following due to/from other funds as of June 30, 2007:
Due to Other Funds
Due from Other Funds
General
Non-Major Governmental Funds Golf Course Funds Internal Service Funds Total
$
Fund
Total
3,330,360
3,330,360
557,166
557,166
8,160
8,160
3,895,686
$
3,895,686
The outstanding balances between funds result mainly from a timing difference between when interest revenues are earned and when they are received for amounts which are transferred from the earning fund to the General Fund.
68
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
4. INTERFUND BALANCES AND TRANSACTIONS, Continued B. Funds Financial Statements, Continued Long-Term Advances
Advances from Other Funds
The City had the following long-term advances as of June 30, 2007: Advances to Other Funds
Redevelopment Agency Fund
Redevelopment
Water
Wastewater
General
Agency
Enterprise
Enterprise
Fund
Fund
Fund
Fund
$
Non-Major Governmental Funds
902,483
$
-
1,229,332
Parking Enterprise Fund $
2,131,815
13,585
-
-
Total
$
89,332
-
351,000 $
$
351,000
$
1,005,400
-
$
Total
1,229,332 -
13,585
$
89,332
351,000 $
2,585,732
Long-term advances were made 1) from the General Fund, the Water Enterprise Fund, and the Wastewater Enterprise Fund to the Redevelopment Agency Fund to finance redevelopment projects, 2) from the General Fund to the Housing and Community Development Special Revenue Fund as a deposit for matching grant funds, 3) from the Redevelopment Agency Fund to the Parking Enterprise Fund to finance two parking capital improvements projects. Transfers In/Out The City had the following transfers for the year ending June 30, 2007: Transfers In Non-Major General
Redevelopment Governmental Fund
Transfers Out
Fund General Fund
$
Non-Major Governmental Funds
-
Funds
$
66,220
-
$
677
8,288
634,304
$
Enterprise
Internal Service
Funds
Funds -
$
-
Total -
$
-
677 708,812
Enterprise Funds: Water Wastewater Refuse Internal Service Funds Total
-
-
777
-
-
777
1,216
-
-
3,822
-
5,038
-
-
1,374
3,822
-
5,196
547,658 $
615,094
$
8,288
$
637,132
$
7,644
129,288 $
129,288
676,946 $
1,397,446
Transfers are used to 1) move interest revenues from the earning fund to the General Fund, 2) move revenues from the General Fund and other funds to the General Capital Improvement Capital Projects Fund for financing various capital projects, and 3) to move unrestricted tax revenues from the General Capital Improvement Capital Projects Fund to the General Fund as an operating subsidy. 69
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
5. CAPITAL ASSETS A. Government-Wide Financial Statements At June 30, 2007 the City’s capital assets consisted of the following: Governmental
Business-Type
Activities
Activities
Total
Capital Assets: Capital assets, not being depreciated: Land
$
Construction in progress Subtotal, capital assets, not being depreciated
50,609,567
$
11,590,526
$
62,200,093
10,758,619
23,346,697
34,105,316
61,368,186
34,937,223
96,305,409
Capital assets, being depreciated: Land improvements
7,024,152
3,956,018
10,980,170
168,644,770
177,843,083
346,487,853
Buildings
35,421,568
160,220,644
195,642,212
Machinery and equipment
10,602,374
23,223,969
33,826,343
724,114
70,000
794,114
1,102,389
555,257
1,657,646
Subtotal, capital assets, being depreciated
223,519,367
365,868,971
589,388,338
Total capital assets
284,887,553
400,806,194
685,693,747
Infrastructure
Lease improvements Software
Less accumulated depreciation: Land improvements
(1,740,472)
(869,828)
(2,610,300)
(106,789,432)
(74,094,311)
(180,883,743)
Buildings
(9,718,039)
(55,806,172)
(65,524,211)
Machinery and equipment
(7,539,275)
(11,663,756)
(19,203,031)
Lease improvements
(370,457)
(14,234)
(384,691)
Software
(956,476)
(445,050)
(1,401,526)
(127,114,151)
(142,893,351)
(270,007,502)
Infrastructure
Total accumulated depreciation Total capital assets, net
$
70
157,773,402
$
257,912,843
$
415,686,245
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
5. CAPITAL ASSETS, Continued A. Government-Wide Financial Statements, Continued The following is a summary of capital assets for governmental activities: Prior Period Balance
Adjustments
July 1, 2006
(Note 15)
Balance Additions
Deletions
June 30, 2007
Governmental Activities: Capital assets, not being depreciated: Land
$
Construction in progress Subtotal, capital assets, not being depreciated
50,452,567
$
157,000
$
-
$
-
$
50,609,567
5,108,592
-
8,708,354
(3,058,327)
10,758,619
55,561,159
157,000
8,708,354
(3,058,327)
61,368,186
Capital assets, being depreciated: Land improvements Infrastructure
5,393,352
-
1,630,800
-
7,024,152
167,322,095
-
1,322,675
-
168,644,770
Buildings
35,421,568
-
35,600
(35,600)
35,421,568
Machinery and equipment
10,279,605
-
744,437
(421,668)
10,602,374
724,114
-
-
-
724,114
1,056,070
-
46,319
-
1,102,389
Subtotal, capital assets, being depreciated
220,196,804
-
3,779,831
(457,268)
223,519,367
Total capital assets
275,757,963
157,000
12,488,185
(3,515,595)
284,887,553
Lease improvements Software
Less accumulated depreciation: Land improvements Infrastructure
(1,394,671)
-
(345,801)
-
(1,740,472)
(102,361,142)
-
(4,428,290)
-
(106,789,432)
Buildings
(8,950,969)
-
(767,070)
-
(9,718,039)
Machinery and equipment
(7,210,260)
-
(724,430)
395,415
(7,539,275)
Lease improvements
(296,913)
-
(73,544)
-
(370,457)
Software
(808,382)
-
(148,094)
-
(956,476)
(121,022,337)
-
(6,487,229)
395,415
(127,114,151)
Total accumulated depreciation Total capital assets, net
$
154,735,626
$
157,000
71
$
6,000,956
$
(3,120,180)
$
157,773,402
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
5. CAPITAL ASSETS, Continued A. Government-Wide Financial Statements, Continued Depreciation expense of the governmental activities for the year ended June 30, 2007 was $6,487,229 and was distributed among City departments as follows: General government: City Council City Clerk Human Resources Finance Information Technology Non-Departmental Internal service funds
$
Total general government Public safety: Police Fire
6,781 5,529 23,758 190,420 7,977 157,877 86,192 478,534 410,960 253,717
Total public safety
664,677
Parks and Recreation Library Public Works Planning and Community Development Redevelopment Total depreciation expense
2,082,144 26,800 3,152,972 8,156 73,946 $ 6,487,229
The following is a summary of capital assets for business-type activities: Prior Period Adjustments (Note 15)
Balance July 1, 2006
Additions
Deletions
Balance June 30, 2007
Business-type Activities: Capital assets, not being depreciated: Land Construction in process
$
11,931,526 10,436,904
Subtotal, capital assets, not being depreciated
22,368,430
Capital assets, being depreciated: Land improvements Infrastructure Buildings Machinery and equipment Lease improvements Software
3,956,018 180,436,253 160,134,334 20,026,950 70,000 555,258
Subtotal, capital assets, being depreciated
365,178,813
Total capital assets
387,547,243
Less accumulated depreciation: Land improvements Infrastructure Buildings Machinery and equipment Lease improvements Software
249,863,264
$
(649,352) -
(137,683,979) $
(157,000) (492,352) (649,352)
(675,258) (73,818,113) (52,271,065) (10,573,668) (11,434) (334,441)
Total accumulated depreciation Total capital assets, net
$
$
72
(649,352)
16,870,800
$
$
11,590,526 23,346,697
16,870,800
(3,652,655)
34,937,223
1,078,911 86,310 4,636,891 -
(3,672,081) (1,439,872) (1)
3,956,018 177,843,083 160,220,644 23,223,969 70,000 555,257
5,802,112
(5,111,954)
365,868,971
22,672,912
(8,764,609)
400,806,194
(194,570) (3,945,598) (3,535,107) (2,318,933) (2,800) (110,609)
3,669,400 1,228,845 -
(869,828) (74,094,311) (55,806,172) (11,663,756) (14,234) (445,050)
(10,107,617) $
(184,000) (3,468,655)
12,565,295
4,898,245 $
(3,866,364)
(142,893,351) $
257,912,843
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
5. CAPITAL ASSETS, Continued B. Funds Financial Statements Business-type activities depreciation expense for the year ended June 30, 2007 is as follows: Water
$
1,865,073
Wastewater
4,362,255
Refuse
1,866,235
Parking
486,577
Storm Water
1,322,031
Golf Course
205,446
Total depreciation expense
$
10,107,617
The funds financial statements do not present general government capital assets consequently, they are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets.
6. LONG-TERM DEBT A. Governmental Activities Long-Term Debt Classification
Compensated absences Claims and judgments
Balance
Accreted
July 1, 2006
Interest
$
2,108,335
$
Additions -
11,007,290
-
Certificates of participation
4,239,123
-
$
10,442,555
2,943,930
7,498,625
4,096,138
150,848
3,945,290
-
-
Tax allocation bonds payable
5,125,000
-
Capital lease obligations
1,247,913
-
944,836
-
2,558,193
$
2,419,032
$
1,612,688
$
806,344
(185,577)
7,055,865
193,004
6,862,861
(1,384,539)
2,920,487
1,421,374
1,499,113
(120,000)
5,005,000
125,000
4,880,000
27
(282,313)
965,627
146,019
819,608
16,235
(109,490)
851,581
98,180
753,401
$ (4,920,873)
$ 33,756,285
6,691,043
$ 27,065,242
100,000 -
$
Than One Year
(142,985)
115,367
115,367
One Year
(706,104)
-
4,205,026
$
June 30, 2007
141,369
7,126,075
$ 36,003,598
Due in More
$ (1,989,865)
General obligation bonds
Total
Amount
Due Within
2,300,562
Notes payable
Other long-term liabilities
Retirements
Amount Balance
$
Compensated absences and Claims and judgments As shown in the table above, the total amount outstanding at June 30, 2007 was $2,419,032 for compensated absences and $10,442,555 for claims and judgments. In prior years, compensated absences have been liquidated by the General Fund. Claims and judgments are paid by the separate internal service funds for each liability.
73
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Certificates of Participation Certificates of Participation payable at June 30, 2007, are comprised of the following individual issues: Redevelopment Agency certificates of participation are part of the $2,080,000 Golf and Redevelopment Agency Certificates described under enterprise debt. The outstanding balance relating to the Agency at June 30, 2007, was $176,138. The Agency amount due within one year is $55,848 and amount due in more than one year is $120,290. For more information refer to the City of Santa Cruz Redevelopment Agency Basic Financial Statements. The City issued certificates in April 2001, in the amount of $4,415,000, to be used for the Civic Center Improvement Project. The certificates provide funds to finance the acquisition, construction and improvement of the project. The obligation of the City to make the lease payments does not constitute a debt of the City or the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State or any political subdivision thereof is obligated to levy or pledge any form of taxation. Annual payments are $75,000 - $270,000. The certificates bear interest at 4.6% - 5% and are payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2001. Principal is payable annually on April 1 through the year 2031. The balance outstanding at June 30, 2007, was $3,920,000. The amount due within one year is $95,000 and amount due in more than one year is $3,825,000. The annual debt service requirements on the certificates of participation at June 30, 2007, were as follows: For the Year Ending June 30, 2008 2009 2010 2011 2012-2016 2017-2021 2022-2026 2027-2031 Total
Principal $
$
Interest
150,848 153,713 161,577 105,000 600,000 750,000 955,000 1,220,000 4,096,138
$
$
198,448 191,844 185,052 177,835 812,125 658,315 452,750 189,250 2,865,619
Total $
$
349,296 345,557 346,629 282,835 1,412,125 1,408,315 1,407,750 1,409,250 6,961,757
General Obligation Bonds In March 1999, the City issued $6,998,473 in general obligation bonds. The proceeds were used to upgrade fire stations, acquire open space property, and construct a community park and a fire administration facility. Annual payments ranging from $142,625 to $354,010 began September 1, 2000, and continue through September 1, 2029; interest ranges from 3.5% to 8.0%. The bonds are subject to early redemption at the option of the City beginning in 2008. 74
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued General Obligation Bonds, Continued The bonds are secured by and will be paid with annual ad valorem tax levies on all property subject to taxation within the City. The bonds were issued in two series. Series A consisted of $4,500,000 of general obligation bonds, and Series B consisted of $2,498,473 of general obligation bonds - capital appreciation bonds. During fiscal year ended June 30, 2007, $185,577 principal payments were made on the bonds. The balance outstanding of Series A bonds at June 30, 2007 was $4,015,000. The carrying value of the Series B bonds was increased to $3,040,865 in order to reflect the accreted interest due at June 30, 2007. The total balance outstanding at June 30, 2007 was $7,055,865. The annual debt service requirements on the general obligation bonds at June 30, 2007, were as follows: For the Year Ending June 30, 2008
Principal $
Interest
193,004
$
Total
233,546
$
426,550
2009
199,781
237,617
437,398
2010
205,937
241,998
447,935
2011
208,582
244,570
453,152
2012
213,768
249,272
463,040
2013-2017
1,142,922
1,313,398
2,456,320
2018-2022
1,299,821
1,416,715
2,716,536
2023-2027
1,506,721
1,485,529
2,992,250
2028-2032
1,032,693
909,057
1,941,750
Sub-total
6,003,229
6,331,702
12,334,931
Accreted Interest
1,052,636
-
1,052,636
Total
$
7,055,865
$
6,331,702
$
13,387,567
Notes Payable In July 2001, the Redevelopment Agency received Housing Enabled by Local Partnerships (HELP) Loan funds from the State of California, to be used to finance the acquisition, development, demolition of existing structures, and the construction of a multifamily rental apartment complex in the Beach Target Area. The proceeds for the note are to be repaid by July 2011 with an interest rate of 3%. The balance outstanding at June 30, 2007, was $812,487. In March 2006, the Redevelopment Agency received loan funds, from Salz Leathers, Inc., to be used to finance the acquisition of land. The proceeds of the note are to be repaid by March 2009 with an interest rate of 5%. The balance outstanding at June 30, 2007, was $2,028,000.
75
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Notes Payable, Continued In January 2007, the City received loan funds, from Greg Fyvie, to be used for renovation of Lawn Bowling Park. The proceeds of the note are to be repaid by January 2011 with no annual interest. The balance outstanding at June 30, 2007, was $80,000. Tax Allocation Bonds In October 2004, The Redevelopment Agency issued $5,245,000 in tax allocation bonds. The proceeds were used, together with other funds, to redeem, on December 1, 2004, all of the Agency’s outstanding 1996 Merged Earthquake Recovery and Reconstruction Project Area Tax Allocation Refunding Bonds, in the amount of $2,505,000, and to raise additional funds for programs, projects and activities related to the Redevelopment Project. Annual principal payments of $120,000 - $305,000 will be made through October, 2031; interest ranges from 2.50% to 4.625%. The 2004 Tax Allocation Bonds will be secured by a pledge of and first lien of the tax increment revenues derived from the Redevelopment Project, net of certain amounts which are payable to other taxing agencies. The balance outstanding at June 30, 2007 was $5,005,000. The annual debt service requirements on the tax allocation bonds at June 30, 2007, were as follows: For the Year Ending June 30, 2008
Principal $
Interest
125,000
$
202,954
Total $
327,954
2009
130,000
199,766
329,766
2010
130,000
196,516
326,516
2011
135,000
192,866
327,866
2012
140,000
188,566
328,566
2013-2017
775,000
864,228
1,639,228
2018-2022
945,000
696,553
1,641,553
2023-2027
1,165,000
472,453
1,637,453
2028-2032
1,460,000
175,024
1,635,024
Total
$
$
5,005,000
76
3,188,926
$
8,193,926
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Lease Obligations In August 2001, the City acquired miscellaneous vehicles, equipment and computer software under a capital lease agreement payable in semi-annual installments of $331,597 though August 2006, with an interest rate of 4.46%. This lease has been allocated to the General Fund, the Water, Wastewater, Refuse and Parking enterprise funds, and the Agency. The lease has been fully paid off as of June 30, 2007.
In June 2002, the City acquired land under a capital lease agreement with Zion’s First National Bank in the amount of $765,000. The agreement is payable in semi-annual installments of $61,362 through 2021, with a 4.88% interest rate through January 2007 and a variable interest rate thereafter. From January 2007 through January 2021, the interest is to be recomputed, for each interest period, based on 90% of the current Index Rate. The balance outstanding at June 30, 2007 was $612,086. In July 2004, the City entered into a five year capital lease agreement to obtain financing in the amount of $580,000 for the purchase of a seventy-five foot aerial fire truck to replace a 1979 Crown Telesquirt unit. The first interest payment of $9,657 is due in February, 2005, with annual installment payments of $125,781 beginning in August 2005 and ending in August 2009. Interest is at the rate of 3.33% and the payments will be made from the General Fund. The balance outstanding at June 30, 2007 was $353,541. The annual debt service requirements on the capital leases at June 30, 2007, were as follows: For the Year Ending June 30, 2008
Principal $
Interest
146,019
$
40,199
Total $
186,218
2009
151,302
34,914
186,216
2010
156,780
29,436
186,216
2011
36,681
22,903
59,584
2012
38,384
21,161
59,545
2013-2017
220,372
71,666
292,038
2018-2022
216,089
20,637
236,726
Total
$
965,627
$
77
240,916
$
1,206,543
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Other Long-Term Liabilities The Redevelopment Agency is obligated under three separate Owner Participation Agreements (OPA) for various portions of the $1,250,000 Chestnut Street Special Assessment District Debt. Under the first OPA of the Redevelopment Agency owes $26,936 as of June 30, 2007. Under the second OPA, the Redevelopment Agency owes $225,981. Under the third OPA the Redevelopment Agency assumes responsibility for an additional 48.68% of the Special Assessment Debt contingent upon the availability of tax increment. The Redevelopment Agency is currently liable under this OPA for $598,664 and interest, currently estimated at $67,334. The debt is to be paid from tax increment revenues derived from the project. The annual debt service requirements for other long-term liabilities outstanding at June 30, 2007, are as follows: For the Year Ending June 30,
Principal
Interest
Total
2008 2009 2010 2011 2012 2013-2017
$
98,180 105,174 111,859 118,852 129,272 288,244
$
26,272 20,714 14,705 8,381 1,607 -
$
124,452 125,888 126,564 127,233 130,879 288,244
Total
$
851,581
$
71,679
$
923,260
Conduit Debt - During the fiscal year 2003, the Agency issued variable rate demand multifamily housing revenue bonds to provide funding for loans made to Santa Cruz Shaffer Road Investors L.P., and 1010 Pacific Investors L.P. (both California limited partnerships). The revenue bonds were used to finance a portion of the costs of building a 206-unit multifamily residential development and for the rehabilitation and equipping of a 113-unit multifamily residential development within the city limits. The housing facilities are to be occupied by persons of low and very low income, to the extent required by federal tax law. The bonds were issued under a Trust Indenture, dated July 1, 2002 between the Agency, and Wells Fargo Bank, National Association, as trustee. For the Shaffer Road Apartments, the Agency issued 2002 Series A bonds and 2002 Series A-T in the amounts of $29,925,000 and $2,750,000 respectively. For the 1010 Pacific Avenue Apartments, 2002 Series B bonds in the amount of $21,650,000 were issued. The amount outstanding as of June 30, 2007 is $53,525,000. The bonds mature on August 15, 2035. The bonds and interest are limited obligations of the Agency, payable solely from the “trust estate” which is specifically assigned and pledged to such purposes to the extent provided in the Official Statements. The trust estate includes the Agency’s interest in the loans made to the developer, including rights to receive payments on the loans, and rights to certain bond proceeds and related revenues. The Official Statements contain more information regarding the trust estate. The City is in no way obligated to repay the debt in the event of default and the debt is not recorded in the accompanying financial statements. 78
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations A summary of long-term debt transactions of the City for the enterprise funds for the year ended June 30, 2007, is as follows: Classification Amount
Amount
Balance
Due Within
Due in More
Retirements
June 30, 2007
One Year
then One Year
$
$
Balance July 1, 2006 Compensated absences Landfill closure costs
$
751,594
Additions $
905,634
5,751,407
303,829
Certificates of participation
20,915,877
-
Revenue bonds payable
23,265,000
-
Notes payable
37,822,337 3,145,352
2,783,506
Lease obligations Total
$ 91,651,567
$
(824,364) -
832,864
$
555,243
$
277,621
6,055,236
-
(1,732,015)
19,183,862
1,799,151
17,384,711
(665,000)
22,600,000
590,000
22,010,000
-
(2,485,068)
35,337,269
2,553,787
32,783,482
1,574,043
(1,204,640)
3,514,755
1,030,320
2,484,435
$ (6,911,087)
$ 87,523,986
6,528,501
$ 80,995,485
$
6,055,236
Compensated absences As shown in the table above, the total amount outstanding at June 30, 2007 was $832,864 for compensated absences. In prior years, compensated absences have been liquidated primarily by enterprise funds. Landfill closure costs As shown in the table above, the total amount outstanding at June 30, 2007 was $6,055,236 for landfill closure costs. Refer to Note 8 for landfill closure details. Certificates of Participation Certificates of Participation payable at June 30, 2007, are comprised of the following individual issues: Santa Cruz Golf and Redevelopment Agency Certificates, issued in November, 1998, in the amount of $2,080,000, was used to refinance an issue used for improvements to the City's golf course and projects within the City's redevelopment plan areas. Annual payments of $125,000 to $215,000 will be made through May 2010; interest ranges from 3.5% to 4.25%. Annual debt service is covered by lease payments made by the City and secured by covenants made by the City in a lease with the Corporation. The balance outstanding relating to the Golf Course fund at June 30, 2007, was $438,862. Santa Cruz Parking Certificates issued in November 1998, in the amount of $7,955,000, were used for the construction of a second parking structure in the downtown area. The certificates are a liability of the Parking Enterprise Fund. Annual payments are $155,000 - $445,000. The certificates bear interest at 3.5% to 4.9%. Interest is payable semi-annually on May 1 and November 1 and principal is payable annually on May 1 through the year 2028. The balance outstanding at June 30, 2007, was $6,145,000. 79
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations, Continued Certificates of Participation, Continued Santa Cruz Refuse Certificates, issued in October 1999, in amount of $4,345,000, were issued to repay the Wastewater Enterprise Fund for earlier loans to construct a tunnel at the City’s landfill and a leachate line from the landfill to the City’s sewer treatment plant. Annual payments of $100,000 to $245,000 will be made through October 2024; interest ranges from 4.0% to 5.625%. The balance outstanding at June 30, 2007, was $3,585,000. Santa Cruz Refuse Certificates issued in March 2001, in the amount of $7,500,000, were used in the purchase of certain property and improvements, and to finance the acquisition, construction and improvement of the project. The installment payments are payable solely from and secured by a first pledge of certain revenues of the City’s Refuse Enterprise Fund. Annual payments are $45,000 to $720,000. The certificates bear interest at 3.5% to 4.875%. Interest represented by the certificates will be payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2001. Principal is payable annually on October 1 through the year 2021. The certificates are subject to optional and mandatory prepayment. The balance outstanding at June 30, 2007, was $4,950,000. Santa Cruz Refuse Certificates, issued in May 2004, in the amount of $1,590,000 was used to refinance the Santa Cruz Landfill Certificates issued in 1993. Annual payments of $495,000 to $545,000 will be made through 2008: Interest ranges from 4.0 % to 5.375%. The City is obligated, subject to abatement, under the Agreement to pay the certificate payments from any source of legally available funds. The City is currently liable and may become liable on other obligations payable from general revenues, some of which may have priority over the lease payments. The balance outstanding relating to the Refuse Fund at June 30, 2007, was $545,000. Santa Cruz Golf Agency Certificates issued in May 2004, in the amount of $3,700,000 was used to finance the acquisition and construction of improvements to the DeLaveaga Golf Course. Annual payments of $ 90,000 to $ 260,000 will be made through 2029; interest ranges from 4.0% to 5.375%. The City is obligated, subject to abatement, under the Agreement to pay the certificate payments from any source of legally available funds. The City is currently liable and may become liable on other obligations payable from general revenues, some of which may have priority over the lease payments. The balance outstanding relating to the Golf Course Fund at June 30, 2007 was $3,520,000.
80
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations, Continued Certificates of Participation, Continued The annual debt service requirements on the certificates of participation at June 30, 2007, were as follows: For the Year Ending June 30,
Principal
Interest
Total
2008 2009 2010 2011 2012 2013-2017 2018-2022 2023-2027 2028-2032
$
1,799,151 1,306,288 823,423 670,000 690,000 3,995,000 5,105,000 3,845,000 950,000
$
904,066 830,538 786,841 751,332 721,962 3,094,902 1,994,448 795,945 63,369
$
2,703,217 2,136,826 1,610,264 1,421,332 1,411,962 7,089,902 7,099,448 4,640,945 1,013,369
Total
$
19,183,862
$
9,943,403
$
29,127,265
Annual principal and interest requirements for the certificates of participation are apportioned to the various funds based on the percentage share of certificate proceeds. Revenue Bonds Payable 2005 WasteWater Revenue Refunding Bonds, issued in November 2005, in the amount of $4,715,000 was used to refinance the Series B Sewer Revenue Bonds issued in February 1994. Annual payments of $200,000 to $350,000 will be made through November 2023; interest ranges from 3.0% to 4.50%. Annual debt service is payable solely from and secured by a lien on net revenues of the City’s sewer system. The balance outstanding at June 30, 2007, was $4,510,000. 2005 Storm Water Revenue Refunding Bonds, issued in September 2005, in the amount of $6,100,000 was used to refinance the Santa Cruz Storm Water Certificates issued in October 1999. Annual payments of $160,000 to $385,000 will be made through October 2029; interest ranges from 3.0% to 4.375%. The bonds are special obligations of the City payable solely from the revenues received by the City from the ownership and operation of the Storm Water Enterprise. All revenues are irrevocably pledged to the payment of the bonds. The balance outstanding at June 30, 2007, was $5,940,000. 2006 Water Revenue Bonds issued in May 2006, in the amount of $12,450,000 was used to finance construction of a new transmission main connecting the Graham Hill Water Treatment Plant to the Bay Street Reservoir. Annual payments of $220,000 to $555,000 will be made through March 2036; interest ranges from 4.0% to 4.625%. The bonds are special obligations of the City payable from the Net Revenues received by the City from the ownership and operation of the City’s Water System. The balance outstanding at June 30, 2007, was $12,150,000. 81
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations, Continued Revenue Bonds Payable, Continued The annual debt service requirements on the revenue bonds at June 30, 2007, were as follows: Ending June 30, 2008
Principal $
Interest
590,000
$
939,456
Total $
1,529,456
2009
615,000
917,606
1,532,606
2010
635,000
895,831
1,530,831
2011
660,000
874,019
1,534,019
2012
680,000
851,150
1,531,150
2013-2017
3,780,000
3,860,073
7,640,073
2018-2022
4,565,000
3,031,466
7,596,466
2023-2027
4,475,000
2,024,243
6,499,243
2028-2032
3,885,000
1,106,428
4,991,428
2033-2037
2,715,000
327,207
3,042,207
Total
$
22,600,000
$
14,827,479
$
37,427,479
Under conditions of the various revenue bond covenants, the Wastewater Enterprise Fund is required to provide adequate cash and maintain adequate revenues to cover future bond payments. Cash and investments set aside for this purpose is shown in the financial statements as restricted cash and investments. Under conditions of the storm water revenue refunding bond covenant, the Storm Water Enterprise Fund is required to maintain adequate revenues to cover future bond payments. Under conditions of the water revenue bond covenant, the Water Enterprise Fund is required to maintain adequate revenues to cover future bond payments. Notes Payable State of California loans for the construction of a water main line north of the City. Proceeds for the note were received in September 1995, to be repaid in semi-annual installments of $46,679, including interest at 2.973%, through October 2015. This debt is recorded in the Water Enterprise Fund. The balance outstanding at June 30, 2007, was $696,710. State of California loans for the construction of secondary treatment improvements at the City's wastewater treatment plant. Loan proceeds were received as the City incurred project expenditures. Repayment began August 1999. Annual payments of $3,417,099, including interest at 2.8%, will be made through August 2018. This debt is recorded in the Wastewater Enterprise Fund. The balance outstanding at June 30, 2007, was $34,340,559. 82
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations, Continued Notes Payable, Continued State of California loans for the construction of certain solid waste facilities to assist them to achieve or improve compliance with state minimum standards. Proceeds were received in March 2001, and the loan is to be repaid in $33,333 annual payments of principal through 2016. No interest is due on the principal balance of the loan outstanding. This debt is recorded in the Refuse Enterprise Fund. The balance outstanding at June 30, 2007, was $300,000. The annual debt service requirements on the notes at June 30, 2007, were as follows: For the Year Ending June 30, 2008
Principal $
Interest
2,553,787
$
981,752
Total $
3,535,539
2009
2,624,582
910,958
3,535,540
2010
2,697,248
838,295
3,535,543
2011
2,771,987
763,553
3,535,540
2012
2,848,804
686,736
3,535,540
2013-2017
15,299,171
2,205,441
17,504,612
2018-2022
6,541,690
276,016
6,817,706
Total
$
$
35,337,269
6,662,751
$
42,000,020
Lease Obligations The City leases equipment in the Refuse, Water, Wastewater, Parking, and Golf Course funds under various capital lease agreements payable in semi-annual and annual installments through August 2006 with interest rates ranging from 4.5% to 5.9%. In November 2002, the City entered into another equipment lease in the amount of $1,038,840 payable in sixty months. The payments are due in ten consecutive semi-annual payments, and each payment includes 3.26% interest per year on the unpaid balance. In December 2003, the City entered into an equipment lease agreement in the amount of $656,182 payable in sixty months. The payments are due in ten consecutive semi-annual payments, and each payment includes 3.13% interest per year on the unpaid principal. The combined Refuse, Water, Wastewater, Parking, and Golf Course funds balance outstanding at June 30, 2007, was $164,139. In January 2005, The City acquired four refuse trucks under a capital lease agreement payable in semiannual installments of $88,482 through February 2009 with an annual interest rate of 3.04%. This lease has been allocated to the Refuse fund. The balance outstanding at June 30, 2007, was $340,878. In April 2005, the City acquired twenty-five receptacles, three recycling trucks and a truck retrofit under a capital lease agreement payable in semi-annual installments of $85,636 through May 2010 with an annual interest rate of 3.70%. This lease has been allocated to the Refuse Fund. The balance outstanding at June 30, 2007, was $482,124. 83
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
6. LONG-TERM DEBT, Continued B. Proprietary Fund Obligations, Continued Lease Obligations, Continued In December 2005, the City entered into a capital lease agreement for lease rental of two fairway mowers. The lease is payable in quarterly installments of $9,584 through December 2010 with an annual interest rate of 3.90%. The lease has been allocated to the Golf Course Fund. The balance outstanding at June 30, 2007 was $60,632. In June 2, 2006, the City acquired one (1) front loader and five (5) side-loaders under a capital lease agreement payable in semi-annual installments of $135,798 through June 2011 with an annual interest rate of 4.16%. This lease has been allocated to the Refuse Fund. The balance outstanding at June 30, 2007, was $991,365 In December 2006, the City acquired three (3) trucks, one (1) street sweeper and (1) one sewer /storm drain vactor truck under a capital lease agreement payable in semi-annual installments of $118,213 through December 2011 with an annual interest rate of 3.88%. This lease has been allocated to the Refuse and Waste Water Funds. The balance outstanding at June 30, 2007 was $967,659 In May 2007, the City acquired one (1) Caterpillar D&T Waste Bulldozer under a capital lease agreement payable in semi-annual installments of $56,519 through May 2012 with an annual interest rate of 3.98%. This lease has been allocated to the Refuse Fund. The balance outstanding at June 30, 2007 was $507,958 The annual debt service requirements on the lease obligations at June 30, 2007, were as follows: For the Year Ending June 30, 2008
Principal $
Interest
1,030,320
$
125,208
Total $
1,155,528
2009
899,438
89,034
988,472
2010
755,677
55,830
811,507
2011
603,604
27,045
630,649
2012
225,716
5,536
231,252
Total
$
3,514,755
84
$
302,653
$
3,817,408
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
7. RISK MANAGEMENT AND SELF-INSURANCE The City has an established Risk Management Fund (an internal service fund) to account for a self-insurance program. For the period ending June 30, 2007, the City was self-insured for workers' compensation up to $500,000 per occurrence and for general liability up to $1,000,000 per occurrence. Claims in excess of these amounts are insured. The City is also completely self-insured for unemployment insurance, vision, and dental insurance claims, and this self-insurance program is accounted for in the General Fund. The City contracts with outside administrators to administer these programs. There were no significant reductions in insurance coverage. Settlements have not exceeded insurance coverage in any of the past three fiscal years. In January 1997, the City joined the Authority for California Cities Excess Liability (ACCEL). ACCEL is a joint powers authority organized under the provisions of Section 6500 et. seq. of the California Government code. ACCEL was founded in 1986 to provide medium-sized California cities self-funding for catastrophic losses. There are currently twelve members. ACCEL operates a liability risk pooling program which is subject to an annual independent financial audit and biennial actuarial study. ACCEL is governed by a twelve member Board of Directors. Each member agency appoints a representative to the Board of Directors. Each member of the Board of Directors has a single vote for policy and charter changes. ACCEL is funded by its member participants and, at the discretion of its Board of Directors, may assess the members for additional premiums (in an unlimited amount) in the event ACCEL assets at any time are insufficient to discharge its liabilities. For the 2006-2007 fiscal year, ACCEL charged its members $0.60 per one-hundred dollars of payroll for the self-funded $4,000,000 excess of a $1,000,000 member self-insured retention. Members also purchased commercial excess insurance limits of $30,000,000 excess of $5,000,000. In addition to the $35,000,000 program limits, eight members purchased optional limits of $10,000,000. Members were also charged administrative costs in equal amounts. The City’s share of administrative costs was $29,716 during the 2006-2007 fiscal year. ACCEL’s day-to-day operations are administered by Alliant Insurance Services, Inc. (Alliant) contracted by ACCEL to provide accounting, risk consulting, insurance brokerage, and program administration services. Alliant’s responsibility also includes the administration of policies and procedures as set forth by the ACCEL Joint Powers Authority Agreement, By-laws, and by the Board of Directors. ACCEL provides coverage above each member’s self-insured retention (SIR), subject to aggregate limit. Historically, nine members have $500,000 SIRS and two members have $1,000,000 SIRS. ACCEL provided an optional coverage of $500,000 excess of $500,000 per occurrence through 1989-90; however, this coverage is no longer available. Prior to July 1, 1990, ACCEL pooled losses incurred by its members up to $10,000,000. Effective July 1, 1990, ACCEL created a reinsurance pool within the $9,000,000 excess of $1,000,000 layer by purchasing $5,000,000 excess of $5,000,000 coverage. On July 1, 1997, ACCEL further reduced its exposure and purchased coverage of $17,000,000 excess of $3,000,000 coverage. Due to favorable market conditions, ACCEL purchased coverage of $19,000,000 excess of $1,000,000 effective July 1, 1998. Six members with SIR of $500,000 purchased additional coverage of $500,000 excess of $500,000 (including the City of Santa Cruz). As of July 1, 2000, nine members purchased insurance of $19,500,000 excess of $1,000,000. ACCEL was fully insured through June 30, 2003. 85
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
7. RISK MANAGEMENT AND SELF-INSURANCE, Continued As of July 1, 2003, the Authority purchased a reinsurance covering $20,000,000 excess of $2,000,000 and pooled losses in the layer $1,000,000 excess of $1,000,000. All members have SIR of $1,000,000. ACCEL members may participate in the purchase of other insurance, such as excess worker’s compensation and excess liability over $12,000,000 per occurrence where risk is not transferred to the pool. Effective September 1, 2003, ACCEL purchased excess insurance for all losses in excess of $2,000,000 per occurrence. ACCEL does not administer claims for these programs; therefore, no revenue or expense is reflected in ACCEL’s financial statements. ACCEL has a retrospective rating plan whereby all premiums collected, together with related investment income earned, in excess of pooled losses and loss expenses for each program year will be returned to members beginning five years after the end of the program year. Losses and loss expenses are allocated to each member based on a weighted actual loss formula. At the June 2007 Board of Directors meeting, a retrospectively rated refund was made available for distribution to the members for program years 2 through 16 in the amount of $11,236,868. Members may elect to have returned all or a portion of their refund, or choose to retain the funds in the respective program year in the name of the member city. The City of Santa Cruz’ retrospective rated refund is $673,531. Summary audited financial information for ACCEL as of and for the year ended June 30, 2007, is as follows: Assets Cash and investments Other assets
$
26,449,674 1,268,205
Total assets
$
27,717,879
$
11,672,000 15,201,949 747,392
Liabilities and Net Assets Unpaid claims liability Retrospectively rated refunds liability Other liabilities Total liabilities Net assets
27,621,341 96,538
Total liabilities and net assets
$
27,717,879
$
8,829,522 1,294,694 362,592
Revenues Premiums earned Investment income Administrative fees Total revenues
10,486,808 Expenses
Loss provision and premiums paid General and administrative
$
Total expenses
10,124,218 362,590 10,486,808
Net income / (loss) Net assets, beginning of year
96,538
Net assets, end of year
$
86
96,538
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
7. RISK MANAGEMENT AND SELF-INSURANCE, Continued Complete financial statements for ACCEL can be obtained from Alliant Insurance Services, Inc., 600 Montgomery Street, 9th Floor, San Francisco, CA 94111. Risk Management Fund revenues are primarily premium charges received from other funds and are planned to match expenses of insurance premiums for coverage in excess of self-insured amounts, estimated payments resulting from self-insurance programs, and operating expenses. Department charges are based on historical experience. Claims known to be payable and the estimated liability for the balance, based on a case-by-case review of all claims is recorded as claims payable. An additional estimate of the amount to be paid for claims incurred, but not reported, is also recorded as claims payable. Changes in the Risk Management Fund's claims liability amount for the years ended June 30, 2005 through 2007 are as follows: CLAIMS PAYABLE
June 30, 2005
$
Beginning
Claims
Balance
Incurred
14,376,121
$
3,350,942
Ending Payments $
(2,463,787)
Balance $
15,263,276
June 30, 2006
10,719,455
2,686,917
(2,399,082)
11,007,290
June 30, 2007
11,007,290
2,988,351
(3,553,086)
10,442,555
The General Fund and Redevelopment Agency Fund typically have been used in prior years to liquidate the liability for claims and judgments. 8. LANDFILL CLOSURE AND POSTCLOSURE COSTS In accordance with requirements established by the California Integrated Waste Management Board, the City has recognized a portion of the landfill's closure and postclosure care (closure) costs. These cost estimates are based on the amount of landfill used to date. The total estimated costs are as follows: Total estimated closure costs Total estimated postclosure costs Total estimated closure and postclosure costs
$
4,521,425 8,771,956
$
13,293,381
The City has increased the landfill’s capacity through excavations and plans to continue excavating in future years to increase capacity. This effort has also increased the estimates of the closure and postclosure costs. At June 30, 2007, the estimated landfill closure cost liabilities of $6,055,236 and estimated annual landfill closure cost of $303,828 were calculated as follows:
87
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
8. LANDFILL CLOSURE AND POSTCLOSURE COSTS, Continued Total estimated closure and postclosure costs
$
Percent of used capacity to total capacity
13,293,381 45.55%
Estimate landfill closure and postclosure cost liability Miscellaneous adjustments
6,055,135 101
Estimated total closure and postclosure costs liability
6,055,236
Previous closure costs accrued
5,751,408
Fiscal year 2007 expense for closure and postclosure costs
$
303,828
The landfill has an estimated remaining capacity of 5,708,635 cubic yards and has a projected closure date of January 2038. Based upon the requirements of the California Integrated Waste Management Board, the City set aside $166,558 to fund future closure and post closure costs for the year ended June 30, 2007. All cash is invested. The market value of the invested cash at June 30, 2007 was $3,369,908, and is available to provide for closure and postclosure costs. Total funds accumulated as of June 30, 2007, are comprised as follows: Closure
$
Postclosure
1,413,733 1,956,175
Total
$
3,369,908
The City has demonstrated acceptable financial assurance to the California Integrated Waste Management Board through an agreement pledging revenue for corrective actions costs on September 26, 2006. Sufficient funds to cover these potential costs are available in the Refuse Fund’s unrestricted cash account. The estimated closure and corrective action costs are current estimates based on data provided by an independent consultant and are subject to changes in inflation, technological advancements, or regulatory changes. 9. RETIREMENT PLANS A. Pension Plan Plan Description The City contributes to the California Public Employees' Retirement System (PERS); an agent multiple-employer defined benefit pension plan. The Police and Fire Safety plans are required to participate in a risk pool since there were less than 100 active members in at least one valuation since June 30, 2003. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS’ Annual Financial Report may be obtained from their Executive Office located at 400 P Street, Sacramento, CA 95814. 88
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
9. RETIREMENT PLANS, Continued A. Pension Plan, Continued Funding Policy City employees are required to contribute 9% for safety employees and 11.163% for all other employees of their annual covered salary. The City employer is required to contribute at an actuarially determined rate; the fiscal year 2007 rate is 8.988% for miscellaneous employees, 35.164% for police safety employees, and 38.825% for fire safety employees of annual covered payroll. There is a cost sharing agreement with miscellaneous employees whereby the employee is required to pay the employer share above 6.354%, a portion on a pre-tax basis and a portion on a post-tax basis. In fiscal year 2007, the City amended its Miscellaneous Employees PERS contract to provide for Section 21548 Pre-Retirement Optional Settlement 2 Death Benefits. The additional cost to the City is 0.211% of the annual payroll. The contribution requirements of City employees and the City employer are established and may be amended by PERS. Annual Pension Cost For fiscal year 2007, the City’s annual pension cost of $6,462,742 for PERS was equal to the City’s required and actual contributions. The required contribution was determined as part of the June 30, 2004, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumption included (a) 7.75% investment rate of return (net of administrative expenses); (b) projected salary increases ranging from 3.25% to 14.45% depending on age, service, and type of employment, and (c) 2% per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3.0%. The actuarial value of PERS assets was determined using techniques that smooth the effects of volatility in the market value of investments over a fifteen-year period. PERS unfunded actuarial accrued liability (or surplus) is being amortized as a level percentage of projected payroll on a closed basis. The amortization period at June 30, 2004 was 16 years for public safety police employees, 16 years for public safety fire employees, and 30 years for miscellaneous employees for prior and current service unfunded liability. Fiscal
Annual
Percentage
Net
Year
Pension
of APC
Pension
Ended
Cost (APC)
Contributed
Obligation
June 30, 2005
6,175,176
100%
-
June 30, 2006
6,330,030
100%
-
June 30, 2007
6,462,742
100%
-
89
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
10. POST-EMPLOYMENT RETIREMENT BENEFITS Retiree Medical Plan The City contracts with CalPERS for retiree health care benefits. Covered employees who retire under the provisions of the City’s contract with CalPERS are eligible to continue CalPERS medical coverage. The City’s contribution rate for retiree enrollment is the minimum amount provided under Government Code Section 22892 of the Public Employees Medical and Hospital Care Act. The minimum rates for the following calendar years are listed below: • • • •
2006 - $64.60 2007 - $80.80 2008 - $97.00 2009 – CPI Adjustment
On June 30, 2007, 153 retired employees were eligible for the Retiree Medical Plan benefits. In fiscal year 2007, the City paid $135,096 towards the Retiree Medical Plan and recognized these expenditures as they were paid. Retiree Medical Incentive All part-time and full-time regular employees that meet specified Memorandum of Understanding (MOU) continuous service and minimum age requirements are also eligible to receive a retiree medical incentive. Miscellaneous employees must have at least 10 years of continued service with the City and be at least 55 years of age; and Public Safety employees must have a minimum of 5 years of continued service with the City and be at least 50 years of age. Retiree medical incentives will be provided until the retiree becomes eligible for Medicare or discontinues CalPERS medical coverage. On June 30, 2007, there were 70 participants in the retirement medical incentive program. In fiscal year 2007, the City paid $97,605 towards retiree medical incentives and recognized these expenditures as they were paid.
11. COMMITMENTS AND CONTINGENCIES The City participates in a number of Federally assisted grant programs, of which the principal grants are the Disaster Assistance Program, Community Development Block Grant (CDBG), Home Investments Partnership Program (HOME) grant program, various Department of Justice and Department of Transportation grant programs. These programs are subject to program compliance audits by the grantors or their representatives. The amount, if any, of expenditures, which may be disallowed by the granting agencies upon audit, cannot be determined at this time although the City expects such amounts to be immaterial.
90
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
11. COMMITMENTS AND CONTINGENCIES, Continued The California Legislature granted tidal and submerged lands in trust to the City to be used for a number of statewide purposes in furtherance of navigation, commerce and fisheries. In accordance with this legislation, revenues derived from the Wharf are required to be used for purposes permitted under the grant statute. There are a number of lawsuits presently against the City. While the ultimate outcome of these lawsuits is not determinable, in the opinion of the City Attorney and City management, recovery from the City, if any, would not have a material effect on the accompanying financial statements. The following schedule summarizes the major contractual commitments of the City as of June 30, 2007: Major Commitments and Contracts for Professional Services: Highway 1 Bike/Pedestrian Underpass
$
140,621
Tannery Arts Projects
185,446
Tait St. Diversion Study
144,850
GHWTP Electrical Improvelemts
361,166
Sanitary Sewer Flow Model
158,684
Geotech Services Newell Creek Dam
169,000
MBNMS Visitor Center
363,684
Bay St Reservoir Reconstruction SDC
114,963
Total major professional services
1,638,414
Major Commitments and Contracts for Capital Projects: Loan from South County Housing Corp
216,669
North Coast Rehabilitation
808,943
Felton Booster Pump Station Upgrade
561,157
Bay St System Transmission Improvement Project
2,713,893
Santa Cruz County Kinsley St Improvement Project
3,319,953
Archaeological Service for Bay St Reservoir
459,952
Desal Pilot Study on Water Supply
287,163
Total major capital projects
8,367,730
Total Commitments and Contracts
$
91
10,006,144
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
12. OPERATING LEASES The City is obligated under various operating leases for the use of land, buildings, office space and equipment. Lease expenditures, primarily for governmental funds, for the year ended June 30, 2007 were $225,213. Future minimum lease payments required by lease agreements that have initial or remaining noncancelable lease terms in excess of one year as of June 30, 2007 are as follows: Year Ending June 30, 2008
Balance $
86,752
2009
67,896
2010
23,078
Total future minimum lease payments
$
177,726
The City leases (as lessor) office facilities, buildings, and wharf facilities under operating leases to various entities and individuals. Total revenues from these leases for the year ending June 30, 2007 were $899,912. The total cost of leased assets as of June 30, 2007 was $27,714,643, and the accumulated depreciation of those assets that are depreciable amounted to $7,644,810. Future estimated revenues from these leases are as follows: Year Ending June 30, 2008
Amount $
953,983
2009
859,114
2010
748,565
Future years
4,570,593
92
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
13. RESERVED AND DESIGNATED FUND BALANCES Fund balances at June 30, 2007, have been reserved and designated for the following purposes: Redevelopment
Special
Debt
Capital
General
Agency
Revenue
Service
Projects
Fund
Fund
Funds
Fund
Funds
Total
Reserved for: Encumbrances
$
Noncurrent receivables and advances Prepaid items Debt service General plan update Capital projects Low and moderate income housing Total reserved
861,056
$
432,752
$
1,199,314
$
-
$
1,499,485
$
3,992,607
2,398,778
4,915,571
2,089,248
-
-
9,403,597
475,774
-
-
-
-
475,774
-
64,063
-
-
-
64,063
15,000
-
-
-
-
15,000
-
-
-
-
-
-
256,105
1,407,960
-
-
-
1,664,065
4,006,713
6,820,346
3,288,562
-
1,499,485
15,615,106
1,586,577
Designated for: 1,582,089
-
4,488
-
-
Capital projects
Accrued compensated absences
-
6,285,781
-
-
-
6,285,781
City public trust
6,436,475
-
-
-
-
6,436,475 42,584
Computer loan program CPVAW Debt service Equipment maintenance Housing Housing in-lieu program
42,584
-
-
-
-
3,245
-
-
-
-
3,245
-
2,840,469
-
909,576
-
3,750,045
49,536
-
-
-
-
49,536
-
-
299,478
-
-
299,478 206,013
206,013
-
-
-
-
Kiosk maintenance
31,632
-
-
-
-
31,632
Museum building
28,021
-
-
-
-
28,021
Parks and recreation programs
22,048
-
-
-
-
22,048
1,985
-
-
-
-
1,985
-
-
118,262
-
-
118,262
8,143
-
631,058
-
-
639,201
33,157
-
-
-
-
33,157
Planning/zoning programs Police programs Public works programs Street trees Unemployment insurance
16,944
-
-
-
-
16,944
Youth/teen programs
26,602
-
-
-
-
26,602
Total designated
8,488,474
9,126,250
1,053,286
909,576
-
19,577,586
Unreserved, Undesignated
13,924,233
-
2,851,774
-
(2,796,246)
13,979,761
Total fund balances
$
26,419,420
$
15,946,596
93
$
7,193,622
$
909,576
$
(1,296,761)
$
49,172,453
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
14. DEFICIT NET ASSETS The City had total net assets of $4,171,528 as of June 30, 2007, which was comprised of the General Capital Improvement Fund deficit net assets of $1,296,761 and the Risk Management Internal Service Fund deficit net assets of $2,874,767. The General Capital Improvement Fund deficit will be cleared with additional utility contributions and transfers from the General Fund once the undergrounding of utilities is complete. The Risk Management Internal Service Fund’s deficit is due to estimated workers’ compensation claims liabilities in excess of cash and other assets available in the fund, positively offset by the liability insurance net assets. It is anticipated that this deficit will be made up in future years by increased contributions from other City funds. The City has established an actuarially approved plan to fund the increased liability over a number of years. A detail listing of deficit net assets by fund is shown below: Net Assets Capital Improvement Fund
$
(1,296,761)
Risk Management Fund: Workers' compensation insurance
(3,300,551)
Liability insurance
425,784
Total
(2,874,767) $
Total net assets
(4,171,528)
15. SUBSEQUENT EVENTS On July 10, 2007, the City of Santa Cruz City Council approved a Resolution of Intention to issue debt to provide financing for the purchase of the Union Locust Building, to provide space for Library Administration and book processing, and for the Water Utility Administration offices. The City plans to issue Lease Revenue Bonds in the principal amount of $6,880,000 on December 4, 2007. The City of Santa Cruz Public Financing Authority will sell 2007 Lease Revenue bonds in the amount of $6,880,000 on December 4, 2007. The bonds are for 30 years. The City, which has a AA credit rating, will not provide insurance on the bonds, but will offer the bidder’s option allowing the winning bidder to purchase insurance on the bonds. The average annual debt service on the bonds is $430,000, to be paid two thirds by the Library and one third by the Water Utility. Payments are due December 31st and June 30th of each year.
94
City of Santa Cruz
Notes to Basic Financial Statements, Continued For the year ended June 30, 2007
16. PRIOR PERIOD ADJUSTMENTS A. Government-Wide Financial Statements The City recorded the following prior period adjustments in the Government-Wide Financial Statements. Adjustments to the Governmental Activities include an increase of $157,000 in Capital assets – land, belonging to the Redevelopment fund and incorrectly recorded in the Parking Enterprise Fund during the GASB 34 conversion. Adjustments to the Business-Type Activities include the $157,000 reduction in Capital assets – land in the Parking Enterprise Fund, and corrections to the Water and Wastewater Enterprise Funds in the total amount of $492,352 originally recorded in Capital assets Construction in Progress, and reclassified as prior-year expenditures. Accordingly, the net assets as of July 1, 2006, have been restated as follows: Prior Period Adjustments
Net Assets, as Previously
Capital
Net Assets,
Reported
Assets
As Restated
Government-Wide Financial Statements Governmental Activities: Net assets
$
173,777,838
Total governmental activities
$
157,000
$
173,934,838
173,777,838
157,000
173,934,838
242,835,587
(649,352)
242,186,235
242,835,587
(649,352)
242,186,235
Business-Type Activities: Net assets Total business-type activities Total government-wide
$
416,613,425
$
(492,352)
$
416,121,073
B. Funds Financial Statements The City recorded the following prior period adjustments in the fund financial statements. Adjustments to the Water and Wastewater Enterprise Funds in the total amount of $492,352 originally recorded in Capital assets - Construction in Progress, and reclassified as prior-year expenditures. Adjustments in the Parking Enterprise Fund include $157,000 in Capital assets – Land, belonging to the Redevelopment fund and incorrectly recorded in the Parking enterprise fund during the GASB 34 conversion. Accordingly, the net assets as of July 1, 2006, have been restated as follows: Prior Period Adjustments
Net Assets, as Previously
Capital
Net Assets,
Reported
Assets
As Restated
Major Enterprise Funds Water
$
Wastewater Parking Total business-type activities
$
95
(377,467)
$
71,641,891
103,829,258
72,019,358
(114,885)
$
103,714,373
16,922,805
(157,000)
192,771,421
$
$
(649,352)
16,765,805 $
192,122,069
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96
REQUIRED SUPPLEMENTARY INFORMATION
97
City of Santa Cruz Required Supplementary Information For the year ended June 30, 2007
1. BUDGETARY INFORMATION An annual budget is adopted by the City Council no later than the first regular meeting in July for the fiscal year beginning July first. As part of the budget process, all City departments submit budget requests for the next fiscal year. These requests are reviewed, and a final City Manager recommended budget showing estimated revenues and expenditures of the City is prepared. This proposed budget is transmitted to the City Council and made available to the public for review. Study sessions and a public hearing are conducted before final adoption of the budget by the City Council. The City Manager is authorized to approve appropriation transfers within any department up to a specified amount; however, any new appropriation or appropriation transfer between departments requires approval by the City Council. Several supplemental appropriations were necessary during the year and are reflected in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at the department level. Under the City Charter, all unexpended appropriations shall lapse at the end of the fiscal year unless they are lawfully committed, or are required by law to be continuously appropriated from year to year. Lawfully committed amounts include amounts legally encumbered at year end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the governmental fund types. Encumbrances outstanding at year-end are reported as reservation of fund balances since they do not constitute expenditures or liabilities, and re-appropriations in the subsequent year provide authority to complete these transactions as expenditures. In addition, project-length (or non-lapsing) budgets are adopted for capital improvement and other projects, and grant-funded projects or programs that may not be completed within the fiscal year during which the budget appropriation for the project or program originates. Under these circumstances, the appropriation continues until project or program completion, or unless the appropriation is subsequently amended or rescinded by the City Council. In the Budgetary Comparison Schedules, the “Original Budget” column includes the final adopted budget amounts, re-appropriations for prior year encumbrances, and continuing appropriations for project-length budgets automatically carried over from prior years. The City Charter requires the City Council, upon recommendation of the City Manager and after providing sufficient funds to meet debt service and operating needs, to annually set aside in the enterprise funds an amount to be used for the acquisition and betterment of plant facilities. Such amounts, if any, would be shown in the financial statements as cash and investments held for betterment of plant facilities. No such funds were set aside during the year ended June 30, 2007.
98
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007
1. BUDGETARY INFORMATION, Continued Budgets are adopted each year for all general, special revenue, debt service, and capital projects funds. These governmental fund budgets are prepared on a basis consistent with generally accepted accounting principles (GAAP), except in the following areas: ¾
Budgetary basis revenues include repayments of loan principal. Budgetary basis expenditures include loans made. On a GAAP basis both of these are considered as reclassifications of fund balance (between reserved and unreserved fund balance).
¾
GAAP basis revenues include the fair value adjustment to investment earnings. GAAP basis expenditures include compensated absences expense. Neither of these are included in the budgetary basis.
A reconciliation of differences between budgetary and GAAP revenues and expenditures follows the budget comparison schedules.
99
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100
BUDGETARY SCHEDULES
101
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007 Budgetary Comparison Schedule, General Fund Variance with Budgeted Amounts Original
Final
Actual Amounts
Positive
(Budgetary Basis)
(Negative)
Budget to GAAP Actual Amounts Differences
(GAAP Basis)
REVENUES: Taxes
$
40,598,617
$
41,840,617
$
42,837,408
$
996,791
$
-
$
42,837,408
Licenses and permits
660,750
685,750
824,258
138,508
-
824,258
Intergovernmental
936,200
1,345,795
1,563,745
217,950
-
1,563,745
External
15,871,678
16,048,658
15,937,955
(110,703)
-
15,937,955
Internal
2,987,930
4,192,003
3,848,462
(343,541)
-
3,848,462
Interagency
1,008,124
1,008,124
797,529
(210,595)
(797,529)
-
19,867,732
21,248,785
20,583,946
(664,839)
(797,529)
19,786,417
Fines and forfeitures
2,019,200
2,019,200
2,218,082
198,882
-
2,218,082
Use of money and property
2,499,537
2,556,994
2,900,491
343,497
161,227
3,061,718
144,690
880,977
187,732
-
187,732
66,726,726
70,578,118
71,115,662
General government
11,915,487
14,249,508
12,261,663
1,987,845
Public safety
30,643,828
31,023,163
28,469,065
2,554,098
-
28,469,065
Parks and recreation
10,754,233
10,803,375
9,653,531
1,149,844
-
9,653,531
Library
10,099,964
10,099,964
9,693,097
406,867
-
9,693,097
Public works
4,698,421
4,896,756
4,233,034
663,722
-
4,233,034
Community and economic development
1,015,624
1,176,676
812,875
363,801
Social services
1,647,114
1,653,979
1,651,827
2,152
1,424,769
1,787,146
1,338,184
448,962
Charges for services:
-
Subtotal charges for services
Other revenues Total revenues
(693,245) 537,544
(636,302)
70,479,360
EXPENDITURES: Current:
Capital outlay
12,261,663
13,424
(799,451)
1,651,827 -
1,338,184
-
Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES
218,375
218,375
178,385
39,990
-
178,385
47,690
47,690
47,643
47
-
47,643
72,465,505
75,956,632
68,339,304
7,617,328
(799,451)
67,539,853
(5,738,779)
(5,378,514)
2,776,358
8,154,872
163,149
2,939,507
OTHER FINANCING SOURCES (USES): Proceeds from asset disposition
-
11,458
62,804
51,346
-
62,804
Proceeds from long-term debt issued
-
-
-
-
-
-
72,178
617,178
82,208
(534,970)
1,078,000
428,000
615,094
187,094
-
(2,381,875)
(538,875)
538,198
-
Total other financing sources (uses)
(1,231,697)
517,761
Net change in fund balance
(6,970,476)
17,983,761
Loan principal receipts Transfers in Transfers out
(677)
-
(82,208)
615,094 (677)
759,429
241,668
(82,208)
677,221
(4,860,753)
3,535,787
8,396,540
80,941
3,616,728
18,287,187
18,287,187
-
3,893,153
22,802,692
FUND BALANCE: Beginning of the year End of year
$
11,013,285
$
13,426,434
102
$
21,822,974
$
8,396,540
$
3,974,094
$
26,419,420
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007
General Fund Reconciliation of Net Changes in Fund Balances - Budgetary to GAAP Basis: Net Change in Fund Balances - Budgetary Basis
$
3,535,787
The amount reported in the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances was different because: Interagency charges for personnel services provided to the redevelopment agency are a revenue and expenditure on a budgetary basis, but are eliminated in the Statement of Revenues, Expenditures, and
(797,529)
Changes in fund balances because the redevelopment agency is part of the reporting entity.
799,451
Unrealized gains and losses on investments, which are considered a component of investment income in the Statement of Revenues, Expenditures and Changes in Fund Balances, are not included as revenue on a budgetary basis.
161,227
On a budgetary basis, the City records loan principal receipts as revenue, but on a GAAP basis, the receipts reduce receivables.
(82,208)
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances
$
3,616,728
$
21,822,974
Reconciliation of Fund Balances - Budgetary to GAAP Basis: Fund Balances - Ending - Budgetary Basis Cumulative effect of unrealized gains and losses on investments
(8,262)
Cumulative effect of transfer of unrealized gains/losses on investments from Group Health to the General Fund
(7,278)
Reserved and designated balances unavailable for appropriation
3,029,897
Designated for noncurrent component of compensated absences
1,582,089
Fund Balances - Ending - GAAP Basis
$
103
26,419,420
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007
Budgetary Comparison Schedule, Redevelopment Agency Final Budget Budgeted Amounts Original
Final
Actual Amounts
Positive
(Budgetary Basis)
(Negative)
Budget to GAAP Actual Amounts Differences
(GAAP Basis)
REVENUES: Tax increment
$
9,845,831
$
10,035,000
$
11,022,799
$
987,799
$
-
$
11,022,799
Use of money and property
542,861
537,442
788,641
251,199
Other revenues
162,000
502,000
384,865
(117,135)
10,550,692
11,074,442
12,196,305
10,420,262
11,733,731
9,367,291
2,366,440
(1,132,000)
8,235,291
2,219,322
2,411,322
156,159
2,255,163
-
156,159
4,563,691
5,127,895
5,235,544
(3,585,855)
1,649,689
591,027
602,847
571,423
31,424
-
571,423
-
-
-
-
-
-
17,794,302
19,875,795
15,330,417
4,545,378
(4,717,855)
10,612,562
(7,243,610)
(8,801,353)
(3,134,112)
5,667,241
4,774,135
1,640,023
3,820,098
4,406,670
4,141,786
Total revenues
1,121,863
56,280
844,921
-
384,865
56,280
12,252,585
EXPENDITURES: Current: Community and economic development Capital outlay Debt service: Principal Interest and fiscal charges Bond issuance costs Total expenditures REVENUES OVER (UNDER) EXPENDITURES
(107,649)
OTHER FINANCING SOURCES (USES): Loan proceeds Long term advance proceeds
(264,884)
(4,141,786)
-
-
-
-
28,193
28,193
27,501
(692)
(27,501)
-
310,000
310,000
-
(310,000)
-
-
Premiums on bonds sold
-
-
-
Payment to refunded bond escrow agent
-
-
-
8,288
-
8,288
(4,169,287)
8,288
Loan principal receipts Proceeds from long-term debt issued
Transfer in from City of Santa Cruz Total other financing sources (uses) Net change in fund balance
-
-
8,288
4,158,291
4,744,863
4,177,575
(3,085,319)
(4,056,490)
1,043,463
(1,585,970)
(7,653,137)
(3,337,064)
10,836,098
10,836,098
10,836,098
(567,288) 5,099,953
604,848
1,648,311
1,546,064
(1,791,000)
3,462,187
14,298,285
FUND BALANCE: Beginning of the year End of year
$
7,750,779
$
6,779,608
104
$
11,879,561
$
5,099,953
$
4,067,035
$
15,946,596
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007
Redevelopment Agency Fund Reconciliation of Net Changes in Fund Balances - Budgetary to GAAP Basis: Net Change in Fund Balances - Budgetary Basis
$
1,043,463
The amount reported in the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances was different because: Unrealized gains and losses on investments, which are considered a component of investment income in the Statement of Revenues, Expenditures and Changes in Fund Balances, are not included as revenue on a budgetary basis.
56,280
The Agency budgets for loan disbursements which will not be repaid within the current year. Although these amounts are recorded as long-term receivables on the Governmental Funds Balance Sheet, they are not available for appropriation.
1,132,000
On a budgetary basis, the Agency records loan principal receipts as revenue, but on a GAAP basis, they reduce receivables.
(27,501)
Proceeds of both short term loans and long term advances from the City are considered budgetary resources, but are not revenues on a GAAP basis.
(4,141,786)
The Agency budgets for both short term and long term loan and advance principal repayments to the City, but these payments are not considered expenditures on a GAAP basis.
3,585,855
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances
$
1,648,311
$
11,879,561
Reconciliation of Fund Balances - Budgetary to GAAP Basis: Fund Balances - Ending - Budgetary Basis Reconciling item for prior year reserve
47,622
Cumulative effect of unrealized gains and losses on investments
(15,312)
Noncurrent advances from City
(1,005,400)
Reserved balances unavailable for appropriation
5,040,125
Fund Balances - Ending - GAAP Basis
$
All funds are reserved or designated for debt service, capital projects, or low and moderate income housing.
105
15,946,596
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106
City of Santa Cruz Required Supplementary Information, Continued For the year ended June 30, 2007
PUBLIC EMPLOYEE RETIREMENT SYSTEM (PERS) SCHEDULE OF FUNDING PROGRESS Miscellaneous Employees Unfunded (Overfunded) Unfunded
Actuarial
Entry Age
(Overfunded)
Liability as
Actuarial
Actuarial
Actuarial
Actuarial
Valuation
Value of
Accrued
Accrued
Funded
Covered
Covered
Date
Assets
Liability
Liability
Ratio
Payroll
Payroll
June 30, 2004
$
139,133,604
$
160,182,390
$
Percentage of
21,048,786
86.9%
$
33,778,451
62.3%
June 30, 2005
150,956,645
170,106,283
19,149,638
88.7%
32,905,030
58.2%
June 30, 2006
164,898,761
183,410,717
18,511,956
89.9%
33,001,059
56.1%
Police Safety Employees Unfunded (Overfunded) Unfunded
Actuarial
Entry Age
(Overfunded)
Liability as
Actuarial
Actuarial
Actuarial
Actuarial
Valuation
Value of
Accrued
Accrued
Funded
Covered
Percentage of Covered
Date
Assets
Liability
Liability
Ratio
Payroll
Payroll
CalPERS Risk Pool Information (see comment below): June 30, 2004
$
4,424,586,846
$
5,383,921,942
$
959,335,096
82.2%
$
575,296,434
166.8%
June 30, 2005
5,295,150,375
6,367,049,264
1,071,898,889
83.2%
664,147,796
161.4%
June 30, 2006
6,102,615,567
7,278,049,834
1,175,434,267
83.8%
754,730,438
155.7%
Fire Safety Employees Unfunded (Overfunded) Unfunded
Actuarial
Entry Age
(Overfunded)
Liability as
Actuarial
Actuarial
Actuarial
Actuarial
Valuation
Value of
Accrued
Accrued
Funded
Covered
Percentage of Covered
Date
Assets
Liability
Liability
Ratio
Payroll
Payroll
CalPERS Risk Pool Information (see comment below): 959,335,096
82.2%
575,296,434
166.8%
June 30, 2005
June 30, 2004
$
5,295,150,375
4,424,586,846
$
6,367,049,264
5,383,921,942
$
1,071,898,889
83.2%
$
664,147,796
161.4%
June 30, 2006
6,102,615,567
7,278,049,834
1,175,434,267
83.8%
754,730,438
155.7%
Since the City has less than 100 active members in Fire and Police plans in at least one valuation since June 30, 2004, the City is required to participate in a risk pool. An actuarial valuation was performed with other participants within the same risk pool. Therefore, standalone information of the schedule of the funding progress for the City was not disclosed. 107
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108
SUPPLEMENTARY INFORMATION
109
This page intentionally left blank.
110
Non-Major Governmental Funds Special Revenue Funds: Police - Accounts for state and federal grants and other revenues restricted to be used for police programs. State Highway Funds - This fund is used to account for the City's apportionment of the State excise tax on gasoline and other related grants or receipts that are restricted for the planning, construction and maintenance of streets and roads. It is also used to account for a subvention of the State sales tax on gasoline (Traffic Congestion Relief Funds) that are restricted for street and highway maintenance, and rehabilitation and reconstruction of necessary associated facilities such as drainage and traffic control devices. Traffic Impact Fee Funds - This fund is used for capital improvements to mitigate traffic impacts generated by land development. The fee provides financial resources for improvements to transit stops, bike and pedestrian facilities, signal coordination, park and ride lots, and other alternative transportation sources impacted by development, and is levied on all Citywide projects requiring a building permit (residential remodels and limited expansions expected to generate less than five new trips per day are exempt). Parks and Recreation - Accounts for tax and fee revenues restricted for parks and recreation use. Housing and Community Development - Accounts for receipts and expenditures under the Housing and Community Development Act, which includes Community Development Block Grant funds and HOME program funds. It also is used to account for Red Cross housing reconstruction loan repayments and income and related expenditures for a City-owned rental property. Transportation Development Act Fund - This fund is used to account for receipts of State Transportation Development Act (TDA) funds restricted to be used for specialized or unmet transit needs. Acting as the public agency sponsor, the City contracts with non-profit agencies to meet these obligations. Debt Service Fund: General Obligation Bonds - This fund accounts for the debt service for a $7 million general obligation bond issue approved by voters in November 1998. Funds for payment of principal and interest on the bonds are generated by a property tax override assessment of $9.00 per $100,000 of assessed value. Capital Projects Fund: General Capital Improvement - This fund is used to account for capital improvements for which special projects funds have not been established. A portion of the City's transient occupancy tax receipts, combined with other funding sources, such as grants, provides funding for capital projects of general benefit, such as storm drain improvements, or improvements to public buildings.
111
City of Santa Cruz Combining Balance Sheet Non-Major Governmental Funds June 30, 2007
Special Revenue Housing and Police
State
Traffic
Parks and
Community
Highway
Impact Fee
Recreation
Development
ASSETS Cash and cash equivalents
$
Interest receivable
279,254
$
2,315,418
$
622,364
$
1,702,939
$
2,323,554
3,487
27,327
8,694
20,276
309,421
-
-
-
-
-
3,358
10,010
145,479
-
-
-
266,212
-
-
65,209
Cash and cash equivalents
-
-
-
-
-
Investments
-
-
-
-
-
-
-
-
-
-
Notes receivable - net
-
-
18,501
245,896
681,330
Loans receivable - net
-
-
-
-
1,407,917
Taxes receivable Accounts receivable - net Due from other governments Restricted assets:
Total restricted assets
Total assets
$
286,099
$
2,618,967
$
795,038
$
1,969,111
$
4,787,431
$
-
$
1,141,574
$
-
$
1,921
$
32,605
LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and other current liabilities Due to other funds Intergovernmental payable Deferred revenue Unearned revenue Advances from other funds Total liabilities
350
-
-
6,816
69,904
-
-
-
-
2,438
-
-
163,980
245,896
290,866
137,437
29,237
-
-
-
-
-
-
-
1,140,000
137,787
1,170,811
163,980
254,633
1,535,813
Fund Balances: Reserved
-
336,422
-
-
2,952,140
118,262
4,488
631,058
-
299,478
Special revenue funds
30,050
1,107,246
-
1,714,478
-
Capital projects funds
-
-
-
-
-
148,312
1,448,156
631,058
1,714,478
3,251,618
Unreserved, designated Unreserved, undesignated, reported in:
Total fund balances Total liabilities and fund balances
$
286,099
$
112
2,618,967
$
795,038
$
1,969,111
$
4,787,431
Debt Service
Capital Projects
Transportation
$
General
Total Other
Development
General
Capital
Governmental
Act
Obligation Bond
Improvement
Funds
-
$
870,494
-
8,978
-
30,104
$
239,679
$
(1,901)
8,353,702 376,282
607,195
637,299
-
-
617,455
776,302
-
-
2,068,563
2,399,984
-
-
9,685
9,685
-
-
283,042
283,042
-
-
292,727
292,727
-
-
-
945,727
-
-
-
1,407,917
$
-
$
909,576
$
3,823,718
$
15,189,940
$
-
$
-
$
1,678,596
$
2,854,696
$
-
-
3,253,290
3,330,360
-
-
-
2,438
-
-
-
700,742
-
-
99,261
265,935
-
-
89,332
1,229,332
-
-
5,120,479
8,383,503
-
-
1,499,485
4,788,047
-
909,576
-
1,962,862
-
-
-
2,851,774
-
-
(2,796,246)
(2,796,246)
-
909,576
(1,296,761)
6,806,437
-
$
909,576
$
3,823,718
$
15,189,940
113
City of Santa Cruz Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2007
Housing and Police
State
Traffic
Parks and
Community
Highway
Impact Fee
Recreation
Development
REVENUES: Taxes
$
Intergovernmental
-
$
-
102,097
3,103,117
$
-
$
-
442,783
$
105,840
1,721,938
Charges for services
35,330
470
-
-
-
Fines and forfeitures
24,465
-
-
-
-
Use of money and property
12,884
117,729
29,107
95,252
94,323
-
15,710
181,004
-
245,894
174,776
3,237,026
210,111
643,875
2,062,155
Public safety
105,000
-
-
-
-
Public works
-
707,017
-
-
-
Transit
-
-
-
-
-
Other revenues Total revenues EXPENDITURES: Current:
Community and economic development
-
-
-
-
1,780,277
Social services
-
-
-
-
106,389
3,536
2,683,168
-
52,511
53,464
Capital outlay Debt service: Principal
-
-
-
-
-
Interest and fiscal charges
-
-
-
-
25,519
108,536
3,390,185
-
52,511
1,965,649
210,111
591,364
96,506
Total expenditures REVENUES OVER (UNDER) EXPENDITURES
66,240
(153,159)
OTHER FINANCING SOURCES (USES): Proceeds from asset disposition Transfers in Transfers out Total other financing sources (uses) Net change in fund balances
-
-
-
-
285,737
677
148,416
-
-
-
(1,253)
-
(148,416)
(509,055)
(8,288)
(576)
148,416
(148,416)
(509,055)
277,449
61,695
82,309
373,955
569,363
1,632,169
2,877,663
65,664
(4,743)
FUND BALANCES: Beginning of year End of year
82,648 $
148,312
1,452,899 $
114
1,448,156
$
631,058
$
1,714,478
$
3,251,618
Debt Service
Capital Projects
Transportation
$
General
Total Other
Development
General
Capital
Governmental
Act
Obligation Bond
Improvement
Funds
-
$
646,548
$
584,641
$
1,497,971
-
3,720,589
$
2,525,395 9,400,129
-
-
30,668
66,468
-
-
-
24,465
-
33,243
86,168
468,706
-
-
1,449,058
1,891,666
646,548
617,884
6,784,454
14,376,829
-
-
-
105,000
-
-
-
707,017
646,548
-
-
646,548 1,780,277
-
-
-
-
-
-
106,389
-
-
10,580,915
13,373,594
-
185,577
190,217
375,794
-
230,506
203,741
459,766
646,548
416,083
10,974,873
17,554,385
-
201,801
(4,190,419)
(3,177,556)
-
-
-
285,737
-
-
488,039
637,132
-
-
(41,800)
(708,812)
-
-
446,239
214,057
-
201,801
(3,744,180)
(2,963,499)
-
707,775
2,447,419
9,769,936
-
$
909,576
$
(1,296,761)
$
6,806,437
115
City of Santa Cruz Schedule of Budget and Actual Revenues General Fund For the year ended June 30, 2007
Variance with Final Budget Budgeted Amounts Original
Final
Actual Amounts
Positive
(Budgetary Basis)
(Negative)
REVENUES: Taxes: Property Sales and use
$
13,062,800 11,924,813
$
13,062,800 12,166,813
$
12,985,872 12,770,015
$
(76,928) 603,202
773,000
773,000
787,225
Franchise
2,628,000
2,628,000
2,607,389
(20,611)
Transient occupancy
1,119,800
2,119,800
2,252,538
132,738
230,000
230,000
264,510
34,510
Business license
Parking
14,225
Utility users
8,631,700
8,631,700
8,288,655
(343,045)
Admission
1,700,000
1,700,000
1,909,012
209,012
220,000
220,000
641,579
421,579 22,110
Property transfer Business improvement
190,000
190,000
212,110
Other taxes
118,504
118,504
118,503
40,598,617
41,840,617
42,837,408
996,791
619,500
644,500
761,541
117,041
41,250
41,250
62,717
21,467
660,750
685,750
824,258
138,508
Total taxes
(1)
Licenses and permits: Construction permits Other licenses and permits Total licenses and permits Intergovernmental revenues: -
158,849
198,876
40,027
State
936,200
1,186,946
1,351,869
164,923
Local
-
-
13,000
13,000
936,200
1,345,795
1,563,745
217,950
Federal
Total intergovernmental revenues Charges for services: General government: Legislative
-
-
-
-
Management and support
-
-
845
845
1,074,660
1,117,460
1,262,611
145,151
7,000
7,000
10,940
3,940
1,308,195
1,308,195
1,229,820
Planning and zoning Other general government Public safety: Police
(78,375)
Fire
382,250
392,250
431,586
39,336
Protective inspection
355,200
435,200
634,768
199,568
25,000
25,000
35,634
10,634
46,000
46,000
48,862
2,862
1,488,250
1,488,250
1,451,614
900,000
910,000
971,964
61,964
5,586,555
5,729,355
6,078,644
349,289
Other public safety Parks and recreation: Parks Recreation Other parks and recreation Subtotal of charges for services
116
(36,636)
City of Santa Cruz Schedule of Budget and Actual Revenues, Continued General Fund For the year ended June 30, 2007
Variance with Final Budget Budgeted Amounts Original
Final
Actual Amounts
Positive
(Budgetary Basis)
(Negative)
Charges for services, Continued: Subtotal from previous page
$
5,586,555
$
5,729,355
$
6,078,644
$
349,289
Public works: Engineering Transportation
90,000
90,000
80,521
(9,479)
843,430
877,610
868,606
(9,004)
Community and economic development: Other community and economic development Internal charges for services provided
646,480
646,480
641,489
(4,991)
2,987,930
4,192,003
3,848,462
(343,541)
Interagency personnel services charges: Library
8,705,213
8,705,213
8,268,695
(436,518)
Redevelopment Agency
1,008,124
1,008,124
797,529
(210,595)
Subtotal interagency charges
9,713,337
9,713,337
9,066,224
(647,113)
19,867,732
21,248,785
20,583,946
(664,839)
1,738,000
1,738,000
1,846,688
108,688
281,200
281,200
371,394
90,194
2,019,200
2,019,200
2,218,082
198,882
Investment income
516,183
573,640
891,177
317,537
Rents and royalties
1,983,354
1,983,354
2,009,314
25,960
2,499,537
2,556,994
2,900,491
343,497
Total charges for services Fines and forfeitures: Court and traffic fines Other fines and forfeitures Total fines and forfeitures Use of money and property:
Total use of money and property Other revenues: Contributions and donations
45,040
77,036
84,200
Other miscellaneous revenues
99,650
803,941
103,532
(700,409)
144,690
880,977
187,732
(693,245)
66,726,726
70,578,118
71,115,662
537,544
Proceeds from asset dispositions
-
11,458
62,804
51,346
Proceeds from long-term debt issued
-
-
-
-
72,178
617,178
82,208
(534,970)
1,078,000
428,000
615,094
187,094
1,150,178
1,056,636
760,106
(296,530)
Total other revenues Total revenues
7,164
OTHER FINANCING SOURCES:
Repayment of loans and advances Transfers in Total other financing sources Total revenues and other financing sources
$
67,876,904
117
$
71,634,754
$
71,875,768
$
241,014
City of Santa Cruz Schedule of Budget and Actual Expenditures and Other Financing Uses For Legally Adopted Appropriations by Department - General Fund For the year ended June 30, 2007
Services, Supplies
City Council
$
Personnel
and Other
Debt
Capital
Actual Amounts
Services
Charges
Service
Outlay
(Budgetary Basis)
170,290
$
268,436
$
-
$
-
$
438,726
City Clerk
494,449
116,634
-
75,692
686,775
City Manager
604,978
646,101
-
-
1,251,079
City Attorney Human Resources Finance Information Technology
15,007
627,639
-
-
642,646
721,730
1,375,550
-
293
2,097,573
1,829,174
462,600
-
1,125
2,292,899
1,000,933
453,356
232,603
1,686,892
14,038,998
3,519,430
-
520,065
18,078,493
8,670,024
835,759
164,712
140,514
9,811,009
Parks and Recreation
6,869,258
3,306,833
-
151,726
10,327,817
Library
8,296,617
1,396,480
-
-
9,693,097
Public Works
3,150,025
1,069,663
-
206,765
4,426,453
Planning and Community Development
2,054,694
965,981
-
9,401
3,030,076
799,451
18,912
-
-
818,363
13,405
2,982,685
-
-
2,996,090
Police Fire
Redevelopment Administration Non-Departmental Debt service
-
-
61,316
-
61,316
Capital projects
-
-
-
-
-
48,729,033
18,046,059
226,028
1,338,184
68,339,304
Advances to other funds
-
-
-
-
-
Transfers out
-
-
-
-
677
Total expenditures
Total expenditures and other financing uses
$
48,729,033
$
18,046,059
Budget to GAAP Differences: See reconciliation in Required Supplementary Information Note 1.
118
$
226,028
$
1,338,184
$
68,339,981
Variance with Final Budget -
$
$
Final
Positive
Budget to GAAP
Actual Amounts
Budget
(Negative)
Differences
(GAAP Basis)
447,148
$
8,422
$
-
$
438,726
759,092
72,317
-
686,775
1,365,030
113,951
-
1,251,079
647,263
4,617
-
642,646
2,365,546
267,973
-
2,097,573
2,436,852
143,953
-
2,292,899
1,878,919
192,027
-
1,686,892
20,543,774
2,465,281
-
18,078,493
9,891,048
80,039
-
9,811,009
11,715,946
1,388,129
-
10,327,817
10,099,964
406,867
-
9,693,097
5,302,573
876,120
-
4,426,453
3,904,091
874,015
-
3,030,076
1,123,592
305,229
(799,451)
18,912
3,414,431
418,341
-
2,996,090
61,363
47
-
61,316
-
-
-
-
75,956,632
7,617,328
(799,451)
67,539,853
-
-
-
-
538,875
538,198
-
677
76,495,507
$
8,155,526
$
(799,451)
$
67,540,530
119
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Police Special Revenue Fund For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Intergovernmental
$
Charges for services
102,097
$
102,097
36,000
Fines and forfeitures Use of money and property Total revenues
$
102,097
36,000
35,330
$
-
$
102,097
-
35,330
-
-
24,465
-
24,465
7,181
7,181
10,056
2,828
12,884
145,278
145,278
171,948
2,828
174,776
105,664 2,097
105,664 2,097
105,000 3,536
-
105,000 3,536
107,761
107,761
108,536
-
108,536
37,517
37,517
63,412
2,828
66,240
EXPENDITURES: Current: Public safety: Police Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) Net change in fund balance
(500)
(500)
677 (1,253)
-
677 (1,253)
(500)
(500)
(576)
-
(576)
37,017
37,017
62,836
2,828
65,664
85,640
85,640
85,640
(2,992)
82,648
FUND BALANCE: Beginning of the year End of year
$
122,657
$
122,657
120
$
148,476
$
(164)
$
148,312
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual State Highway Special Revenue Fund For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Intergovernmental
$
Charges for services Use of money and property Other revenues Total revenues
8,787,909
-
3,103,117
-
$
9,334,648 -
$
3,103,117 470
$
-
470
32,946
32,946
104,143
13,586
117,729
-
-
15,710
-
15,710
8,820,855
9,367,594
3,223,440
13,586
3,237,026
739,818 9,385,951
761,418 9,911,090
707,017 2,683,168
-
707,017 2,683,168
-
-
-
-
-
10,125,769
10,672,508
3,390,185
-
3,390,185
(1,304,914)
(1,304,914)
EXPENDITURES: Current: Public works: Transportation Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES
(166,745)
13,586
(153,159)
OTHER FINANCING SOURCES (USES): Proceeds from asset disposition Transfers in Total other financing sources (uses) Net change in fund balance
235,000
300,000 599,000
148,416
-
148,416
235,000
899,000
148,416
-
148,416
(405,914)
(18,329)
(1,069,914)
13,586
(4,743)
FUND BALANCE: Beginning of the year End of year
1,464,028 $
394,114
1,464,028 $
1,058,114
121
1,464,028 $
1,445,699
(11,129) $
2,457
1,452,899 $
1,448,156
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Traffic Impact Fee Fund For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Intergovernmental
$
Charges for services
-
$
-
-
Use of money and property Other revenues Total revenues
$
-
-
$
-
-
-
$
-
-
-
27,918
1,189
29,107
1,926
1,926
181,004
-
181,004
1,926
1,926
208,922
1,189
210,111
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,926
1,926
208,922
1,189
210,111
EXPENDITURES: Current: Public works: Transportation Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out
(85,000)
(149,000)
(148,416)
-
(148,416)
Total other financing sources (uses)
(85,000)
(149,000)
(148,416)
-
(148,416)
Net change in fund balance
(83,074)
(147,074)
60,506
1,189
61,695
571,440
571,440
571,440
(2,077)
569,363
FUND BALANCE: Beginning of the year End of year
$
488,366
$
424,366
122
$
631,946
$
(888)
$
631,058
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Parks and Recreation Fund For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Taxes
$
Intergovernmental Use of money and property Total revenues
523,000
$
523,000
$
442,783
$
-
$
442,783
595,000
595,000
105,840
-
105,840
45,586
45,586
73,256
21,996
95,252
1,163,586
1,163,586
621,879
21,996
643,875
-
52,600
52,511
-
52,511
-
52,600
52,511
-
52,511
1,163,586
1,110,986
569,368
21,996
591,364
EXPENDITURES: Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) Net change in fund balance
(667,000)
(690,900)
(509,055)
-
(509,055)
(667,000)
(690,900)
(509,055)
-
(509,055)
496,586
420,086
60,313
1,648,201
1,648,201
1,648,201
21,996
82,309
FUND BALANCE: Beginning of the year End of year
$
2,144,787
$
2,068,287
123
$
1,708,514
(16,032) $
5,964
1,632,169 $
1,714,478
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Housing and Community Development Fund For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Intergovernmental
$
Use of money and property Other revenues Total revenues
4,282,550
$
4,544,333
$
1,721,938
$
-
$
1,721,938
50,129
50,129
81,308
13,015
94,323
-
-
245,894
-
245,894
4,332,679
4,594,462
2,049,140
13,015
2,062,155
4,294,506
4,842,653
2,073,625
(293,348)
1,780,277
106,659 599,785
106,389 614,785
106,389 53,464
-
36,000
545,000 56,000
25,519
-
106,389 53,464 25,519
5,036,950
6,164,827
2,258,997
(293,348)
1,965,649
EXPENDITURES: Current: Community and economic development: Housing and community development Social services: CDBG social services Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES
(704,271)
(1,570,365)
(209,857)
306,363
96,506
87,376 553,280 (259,000)
342,000 87,376 1,163,280 67,000 (259,000)
285,737 138,124 610,000 (8,288)
(138,124) (610,000) -
285,737 (8,288)
381,656
1,400,656
1,025,573
(748,124)
277,449
815,716
(441,761)
373,955
OTHER FINANCING SOURCES (USES): Proceeds from asset dispositions Loan principal receipts Proceeds from long-term debt Transfers in Transfers out Total other financing sources (uses) Net change in fund balance
(322,615)
(169,709)
FUND BALANCE: Beginning of the year End of year
1,631,300 $
1,308,685
1,631,300 $
1,461,591
124
1,631,300 $
2,447,016
1,246,363 $
804,602
2,877,663 $
3,251,618
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Transportation Development Act For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Intergovernmental
$
Total revenues
646,548
$
646,548
$
646,548
$
-
$
646,548
646,548
646,548
646,548
-
646,548
646,548
646,548
646,548
-
646,548
646,548
646,548
646,548
-
646,548
-
-
-
-
-
-
-
-
-
-
EXPENDITURES: Current: Transit Total expenditures REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE: Beginning of the year End of year
$
-
$
-
125
$
-
$
-
$
-
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Obligation Bond For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Taxes
$
517,023
$
517,023
$
584,641
$
-
$
584,641
Use of money and property
12,904
12,904
33,243
-
33,243
Total revenues
529,927
529,927
617,884
-
617,884
185,577 230,673
185,577 230,673
185,577 230,506
-
185,577 230,506
416,250
416,250
416,083
-
416,083
113,677
113,677
201,801
-
201,801
711,143
711,143
711,143
EXPENDITURES: Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE: Beginning of the year End of year
$
824,820
$
824,820
126
$
912,944
(3,368) $
(3,368)
707,775 $
909,576
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Capital Improvement Projects For the year ended June 30, 2007
Budgeted Amounts Original
Final
Actual Amounts
Budget to GAAP
Actual Amounts
(Budgetary Basis)
Differences
(GAAP Basis)
REVENUES: Taxes
$
Intergovernmental
2,300,700
$
3,818,780
Charges for services Use of money and property Other revenues Total revenues
1,300,700
$
5,719,090
1,497,971
$
3,720,589
-
$
1,497,971
-
3,720,589
-
-
30,668
-
30,668
50,000
50,000
52,251
33,917
86,168
3,443,592
3,550,263
1,449,058
-
1,449,058
9,613,072
10,620,053
6,750,537
33,917
6,784,454
15,462,496
16,439,873
10,580,915
-
10,580,915
201,328 204,722
221,328 204,722
190,217 203,741
-
190,217 203,741
15,868,546
16,865,923
10,974,873
-
10,974,873
(6,255,474)
(6,245,870)
(4,224,336)
33,917
(4,190,419)
2,000,000 2,708,971 (1,056,750)
2,650,307 (56,750)
488,039 (41,800)
-
488,039 (41,800)
3,652,221
2,593,557
446,239
-
446,239
(2,603,253)
(3,652,313)
(3,778,097)
33,917
(3,744,180)
2,178,391
2,178,391
2,178,391
269,028
2,447,419
EXPENDITURES: Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from long-term debt Transfers in Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCE: Beginning of the year End of year
$
(424,862)
$
(1,473,922)
127
$
(1,599,706)
$
302,945
$
(1,296,761)
City of Santa Cruz Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Non-Major Governmental Funds For the year ended June 30, 2007
Other Governmental Funds Reconciliation of Net Changes in Fund Balances - Budgetary to GAAP Basis: Net Change in Fund Balances - Budgetary Basis
$
(2,595,254)
The amount reported in the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances was different because: Unrealized gains and losses on investments, which are considered a component of investment income in the Statement of Revenues, Expenditures and Changes in Fund Balances, are not included as revenue on a budgetary basis.
86,531
The City budgets for loan disbursements which will not be repaid within the current year. Although these amounts are recorded as long-term receivables on the Governmental Funds Balance Sheet, they are not available for appropriation.
293,348
On a budgetary basis, the City records loan principal receipts as revenue, but on a GAAP basis, these receipts reduce receivables.
(748,124)
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances
$
(2,963,499)
$
5,694,889
Reconciliation of Fund Balances - Budgetary to GAAP Basis: Fund Balances - Ending - Budgetary Basis Cumulative effect of unrealized gains and losses on investments
14,730
Noncurrent advances payable
(1,229,332)
Intergovernmental payable to be repaid from future appropriations
(2,438)
Reserved balances unavailable for appropriation
2,328,588
Fund Balances - Ending - GAAP Basis
$
128
6,806,437
INTERNAL SERVICE FUNDS Equipment Operations - This fund is used to account for the expenses related to city-wide fleet operations and maintenance activities, including vehicles, communications equipment, and other pooled equipment. Internal contributions to support this fund are based on cost recovery through charges to user departments and funds. These charges do not include the cost of equipment replacement. Stores Services - Accounts for the costs of operating a centralized warehouse used by the City. Telecommunications - This fund is used to account for the expenses related to the acquisition of communications equipment and ongoing maintenance of the telephone network including the main telephone switch, voice mail system, pagers, cell phones, and fax machines. Internal contributions to support this fund are based on cost recovery through user departments and funds. These charges do not include the cost of equipment replacement. Risk Management - Accounts for the expenses of the City's insurance program, including costs related to claims, administration, legal defense, and insurance premiums. Internal contributions to support this fund are based on cost recovery through charges to departments and funds. The following insurance activities are provided for in this fund: Workers' Compensation Insurance Liability Insurance Group Health Insurance
129
City of Santa Cruz Combining Statement of Net Assets All Internal Service Funds June 30, 2007
Equipment
Stores
Telecommun-
Risk
Operations
Services
ications
Management
Total
ASSETS Current assets: Cash and cash equivalents
$
671,232
$
-
$
96,452
$
6,082,613
$
6,850,297
Interest receivable
7,630
-
469
62,495
Accounts receivable - net
7,030
-
-
-
7,030
133,641
-
-
-
133,641
-
-
-
1,392,459
1,392,459
819,533
-
96,921
7,537,567
8,454,021
402,406
-
746,577
8,160
1,157,143
Inventories Deposits Total current assets
70,594
Noncurrent assets: Capital assets: Machinery and equipment Software
-
-
336,296
(331,839)
-
(959,576)
(6,664)
70,567
-
123,297
1,496
195,360
70,567
-
123,297
1,496
195,360
890,100
-
220,218
7,539,063
8,649,381
123,239
-
10,268
102,275
235,782
7,630
-
530
-
8,160
Claims and judgments payable
-
-
-
2,812,930
2,812,930
Compensated absences payable
30,599
-
-
-
30,599
Total current liabilities
161,468
-
10,798
2,915,205
3,087,471
-
-
-
7,498,625
7,498,625
Less accumulated depreciation
-
336,296 (1,298,079)
Total capital assets (net of accumulated depreciation) Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable and other current liabilities Due to other funds
Noncurrent liabilities: Claims and judgments payable Compensated absences payable
15,300
-
-
-
15,300
Total noncurrent liabilities
15,300
-
-
7,498,625
7,513,925
176,768
-
10,798
10,413,830
10,601,396
70,567
-
123,297
642,765
-
86,123
Total liabilities NET ASSETS Invested in capital assets, net of related debt Unrestricted Total net assets
$
713,332
$
130
-
$
209,420
1,496
195,360
(2,876,263) $
(2,874,767)
(2,147,375) $
(1,952,015)
City of Santa Cruz Combining Statement of Revenues, Expenses and Changes in Net Assets All Internal Service Funds For the year ended June 30, 2007
Equipment
Stores
Telecommun-
Risk
Operations
Services
ications
Management
Total
OPERATING REVENUES: Charges for services - internal
$
2,457,712
$
-
$
216,144
$
5,090,101
$
7,763,957
Charges for services - external
97,479
-
44,016
-
141,495
Other revenues
13,509
-
-
8,438
21,947
2,568,700
-
260,160
5,098,539
7,927,399
805,870
-
98,441
294,334
1,198,645
Total operating revenues OPERATING EXPENSES: Personnel services Services, supplies, and other charges
1,650,598
-
106,415
3,302,522
5,059,535
Depreciation and amortization
20,231
-
64,329
1,632
86,192
Total operating expenses
2,476,699
-
269,185
3,598,488
6,344,372
92,001
-
(9,025)
1,500,051
1,583,027
34,344
-
1,999
302,759
339,102
-
-
-
33,450
-
1,999
302,759
338,208
125,451
-
(7,026)
1,802,810
1,921,235
129,288
-
-
-
129,288
Operating income (loss) NONOPERATING REVENUES (EXPENSES): Investment earnings Interest expense and fiscal charges
(894)
Total nonoperating revenues (expenses) Income (loss) before transfers Transfers in Transfers out
Change in net assets
(894)
(27,932)
(226,658)
(1,109)
(421,247)
(676,946)
101,356
(226,658)
(1,109)
(421,247)
(547,658)
226,807
(226,658)
(8,135)
486,525
226,658
1,381,563
1,373,577
(4,256,330)
(3,325,592)
NET ASSETS: Beginning of year End of year
$
713,332
$
131
-
217,555 $
209,420
$
(2,874,767)
$
(1,952,015)
City of Santa Cruz Combining Statement of Cash Flows All Internal Service Funds For the year ended June 30, 2007
Equipment Operations
Stores Services
Telecommunications
Risk Management
$
$
Total
CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers and users Cash received from interfund services provided Cash payments to suppliers for goods and services Cash payments to employees for services Cash received from (payments to) others
$
Net cash provided (used) by operating activities
121,455 2,457,712 (1,790,799) (797,384) 16,135
$
7,119
126,216 (953) 125,263
44,016 216,144 (160,997) (98,222) (142) 799
688 5,090,101 (1,262,534) (293,181) (3,108,392)
$
166,159 7,763,957 (3,088,114) (1,188,787) (3,093,352)
426,682
559,863
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in/out Net cash provided (used) by noncapital financing activities
101,356
(226,658)
(1,109)
(421,247)
(547,658)
101,356
(226,658)
(1,109)
(421,247)
(547,658)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase and construction of capital assets Principal paid on capital debt Interest paid on capital debt Net cash provided (used) by capital and related financing activities
(8,296) (21,060) (870)
-
-
-
(8,296) (21,060) (870)
(30,226)
-
-
-
(30,226)
(2,626) 34,343
954 -
143 1,999
(10,909) 302,759
(12,438) 339,101
31,717
954
2,142
291,850
326,663
CASH FLOWS FROM INVESTING ACTIVITIES: Interests receivable Investment income received Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents
109,966
(100,441)
1,832
297,285
308,642
561,266
100,441
94,620
5,785,328
6,541,655
CASH AND CASH EQUIVALENTS: Beginning of year End of year
$
671,232
$
-
$
96,452
$
6,082,613
$
6,850,297
$
95,720
$
-
$
(8,806)
$
1,501,443
$
1,588,357
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization Changes in current assets and liabilities: Accounts receivable Prepaid items Inventories Accounts payable and other current liabilities Due to other funds Deposits payable Claims and judgments payable Compensated absences payable
20,231
Total adjustments Net cash provided (used) by operating activities
$
132
-
64,329
23,976 (324) (133,641) (6,561) 2,626 5,092
5,000 129,288 (8,072) (953) -
(27) (54,555) (142) -
(88,601)
125,263
9,605
7,119
$
125,263
$
799
1,632
$
86,192
688 (239) (243,032) (160,078) (5,049) (152) (668,531) -
24,664 4,410 (247,385) (229,266) (3,518) (152) (668,531) 5,092
(1,074,761)
(1,028,494)
426,682
$
559,863
Private-Purpose Trust Funds McCaskill Trust - Local History - is restricted in purpose to promulgate local history. The principal and income benefit the Library Joint Powers Authority, McCaskill Trust - Visually Impaired - is restricted in purpose to providing library materials for the visually impaired. The principal and income benefit the Library Joint Powers Authority. The Finkeldey Trust - is restricted in purpose for the acquisition of musical literature. The principal and income benefit the Library Joint Powers Authority.
133
City of Santa Cruz Combining Statement of Fiduciary Net Assets Private-Purpose Trust Funds June 30, 2007
McCaskill
McCaskill
Total
Trust - Local
Trust - Visually
Finkeldey
Private-Purpose
History
Impaired
Trust
Trust Funds
ASSETS Cash and cash equivalents
$
269,107
$
256,952
$
10,941
$
537,000
Receivables: Interest receivable Total assets
3,094
2,927
126
6,147
272,201
259,879
11,067
543,147
NET ASSETS Held in trust for library programs
$
272,201
134
$
259,879
$
11,067
$
543,147
City of Santa Cruz Combining Statement of Changes in Fiduciary Net Assets Private-Purpose Trust Funds For the year ended June 30, 2007
McCaskill
McCaskill
Trust - Local
Trust - Visually
Finkeldey
Private-Purpose
Total
History
Impaired
Trust
Trust Funds
ADDITIONS: Investment earnings
$
Total additions
14,177
$
13,441
$
587
$
28,205
14,177
13,441
587
28,205
4,649
3,623
755
9,027
Total deductions
4,649
3,623
755
9,027
Change in net assets
9,528
9,818
(168)
19,178
262,673
250,061
DEDUCTIONS: Library programs
NET ASSETS: Beginning of year End of year
$
272,201
135
$
259,879
11,235 $
11,067
523,969 $
543,147
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136
Agency Funds Library Joint Powers Authority - Used to account for funds held by the City in an agency capacity for the Library Joint Powers Authority, which was established to finance the operations of the former City/County library system. Trust Deposit Holding - This fund is used to hold cash deposits received from outside parties on a temporary basis. Payroll Payables - Used to account for cash transferred from various funds to pay for payroll liabilities, which are paid out of this fund. Special Assessments - Accounts for assets held by the City in an agency capacity for special assessment districts. The City acts as agent for collection of principal and interest payments from the property owners and remits these monies to the bondholders. If funds are not available, the City is under no obligation to make bond payments from its own funds.
137
City of Santa Cruz Combining Statement of Fiduciary Net Assets Agency Funds June 30, 2007
Library
Trust
Total
Joint Powers
Deposit
Payroll
Special
Agency
Authority
Holding
Payables
Assessments
Funds
ASSETS Cash and cash equivalents
$
Restricted Cash and cash equivalents
665,882
$
532,915
-
-
$
244,315
$
-
201,175
$
75,985
1,644,287 75,985
Receivables: 13,652
1,228
-
1,821
16,701
Taxes receivable
Interest receivable
640,568
-
-
10,631
651,199
Accounts receivable
530,842
-
-
-
530,842
27,620
-
-
-
27,620
Due from other governments Total assets
$
1,878,564
$
534,143
$
244,315
$
595,552
$
1,517
$
244,315
$
289,612
$
-
$
2,946,634
LIABILITIES Accounts payable and other current liabilities
$
Due to other governments Deposits payable Payable to bondholders Total liabilities
$
-
1,027
532,626
-
-
533,653
-
-
-
289,612
289,612
1,878,564
$
534,143
138
-
$
244,315
-
841,384
1,281,985
$
289,612
1,281,985
$
2,946,634
City of Santa Cruz Combining Statement of Changes in Assets and Liabilities Agency Funds For the year ended June 30, 2007
Balance July 1, 2006 Library Joint Powers Authority Assets: Cash and cash equivalents Receivables: Interest receivable Taxes receivable Accounts receivable Due from other governments Total assets Liabilities: Accounts payable and other current liabilities Due to other governments Deposit payable Total liabilities Trust Deposit Holding Assets: Cash and cash equivalents Interest receivable Total assets Liabilities: Accounts payable and other current liabilities Deposits payable Total liabilities Payroll Payables Assets: Cash and cash equivalents Total assets Liabilities: Accounts payable and other current liabilities Total liabilities Special Assessments Assets: Cash and cash equivalents Investments Restricted cash and cash equivalents Receivables: Interest receivable Taxes receivable Total assets Liabilities: Payable to bondholders Total liabilities
$
510,464
Additions
$
10,813 553,799 527,368 16,467
12,958,192
Balance June 30, 2007
Deletions
$
61,803 640,568 527,384 27,620
12,802,774
$
58,964 553,799 523,910 16,467
665,882 13,652 640,568 530,842 27,620
$
1,618,911
$
14,215,567
$
13,955,914
$
1,878,564
$
507,536 1,110,680 695
$
3,787,784 171,305 332
$
3,699,768 -
$
595,552 1,281,985 1,027
$
1,618,911
$
3,959,421
$
3,699,768
$
1,878,564
$
521,125 1,472
$
1,544,139 8,041
$
1,532,349 8,285
$
532,915 1,228
$
522,597
$
1,552,180
$
1,540,634
$
534,143
$
5,521 517,076
$
1,095,156 1,545,506
$
1,099,160 1,529,956
$
1,517 532,626
$
522,597
$
2,640,662
$
2,629,116
$
534,143
$
246,417
$
70,052,566
$
70,054,668
$
244,315
$
246,417
$
70,052,566
$
70,054,668
$
244,315
$
246,417
$
693,782,719
$
693,784,821
$
244,315
$
246,417
$
693,782,719
$
693,784,821
$
244,315
$
178,624 89,494 -
$
352,186 89,985
$
329,635 89,494 14,000
$
201,175 75,985
1,975 9,885
6,774 10,630
6,928 9,884
1,821 10,631
$
279,978
$
459,575
$
449,941
$
289,612
$
279,978
$
9,634
$
-
$
289,612
$
279,978
$
9,634
$
-
$
289,612
139
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140
STATISTICAL SECTION (Unaudited)
This part of the City of Santa Cruz'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.
Contents
Page
Financial Trends
143 - 149
These tables contain trend information to help the reader understand how the city's financial performance and well-being have changed over time. Revenue Capacity
150 - 157
These tables contain information to help the reader assess the city's most significant local revenue source, the property tax. Debt Capacity
158 - 164
These tables 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. Demographic and Economic Information
166 - 167
These tables offer demographic and economic indicators to help the reader understand the environment within which the city's financial activities take place. Operating Information
168 - 170
These tables 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.
Sources:
Unless otherwise noted, the information in these tables is derived from the comprehensive annual financial reports for the relevant year.
141
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142
City of Santa Cruz
TABLE 1
Net Assets By Component Last Five Fiscal Years
Fiscal Year Ended June 30 2003
2004
2005
2006
2007
$ 136,369,360
$ 136,556,019
$ 139,024,926
$ 142,216,967
$ 144,203,036
Restricted
10,441,164
11,411,611
10,105,142
12,132,237
13,648,674
Unrestricted
16,662,826
12,267,438
18,695,330
19,428,634
24,563,381
$ 163,473,350
$ 160,235,068
$ 167,825,398
$ 173,777,838
$ 182,415,091
$ 168,876,424
$ 174,395,150
$ 179,988,569
$ 164,275,405
$ 172,324,984
-
-
704,469
-
-
62,492,429
58,267,139
57,125,277
78,560,182
81,361,517
$ 231,368,853
$ 232,662,289
$ 237,818,315
$ 242,835,587
$ 253,686,501
Governmental activities: Invested in capital assets, net of related debt
Total governmental activities net assets Business-type activities: Invested in capital assets, net of related debt Restricted Unrestricted Total business-type activities net assets Primary government: Invested in capital assets,
$ 305,245,784
$ 310,951,169
$ 319,013,495
$ 306,492,372
$ 316,528,020
Restricted
net of related debt
10,441,164
11,411,611
10,809,611
12,132,237
13,648,674
Unrestricted
79,155,255
70,534,577
75,820,607
97,988,816
105,924,898
$ 394,842,203
$ 392,897,357
$ 405,643,713
$ 416,613,425
$ 436,101,592
Total primary government net assets
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available.
Source: City of Santa Cruz Finance Department
143
City of Santa Cruz
TABLE 2
Changes in Net Assets Last Five Fiscal Years
2003 Expenses Governmental activities: General government Public safety Parks and recreation Library Public works Transit Community and economic development Social services Interest and fiscal charges
$
2004
$
10,382,020 23,770,732 12,312,469 8,441,896 9,790,984 569,247 8,265,841 1,976,456 979,508
Fiscal Year Ended June 30 2005
11,451,699 27,054,407 13,022,089 8,697,195 9,618,748 588,183 7,140,903 1,803,125 1,126,311
$
9,889,427 27,218,149 11,944,976 8,934,173 7,801,586 586,896 7,719,248 1,715,326 1,066,994
$
2006
9,755,194 27,227,214 11,715,023 9,179,637 9,047,430 624,214 7,414,895 2,563,680 883,866
2007
$
12,494,563 29,646,507 12,002,102 9,644,172 11,509,715 646,548 10,616,686 1,758,216 1,304,447
Total governmental activities expenses
76,489,153
80,502,660
76,876,775
78,411,153
89,622,956
Business-type activities: Water Wastewater Refuse Parking Storm Water Golf course
13,994,913 14,824,444 14,824,819 2,222,770 2,165,345 1,745,322
13,707,644 15,456,161 14,924,093 2,471,710 1,956,563 1,811,128
14,643,440 15,524,855 14,581,347 2,565,800 2,150,359 1,781,330
15,204,565 16,192,904 12,700,841 2,960,225 1,925,661 2,325,920
16,203,872 15,377,903 12,974,413 2,632,045 1,938,275 2,165,390
Total business-type activities expenses
49,777,613
50,327,299
51,247,131
51,310,116
51,291,898
$ 126,266,766
$ 130,829,959
$ 128,123,906
$ 129,721,269
$ 140,914,854
$
$
$
$
$
Total primary government expenses Program Revenues Governmental activities: Charges for services: General government Public safety Parks and recreation Library Public works Transit Community and economic development Operating grants and contributions Capital grants and contributions
3,945,684 1,950,228 3,798,713 7,005,781 3,459,306 432,651 3,979,717 5,823,628
3,938,389 2,760,629 3,956,257 7,672,089 3,083,205 110,889 3,165,361 4,864,757
3,814,053 3,230,321 2,863,615 8,152,865 4,008,187 115,183 2,829,078 5,141,507
4,662,211 3,041,137 3,191,193 8,478,112 4,253,232 66,643 996,327 2,125,537 2,499,565
5,507,904 3,410,308 3,011,980 8,894,858 4,072,956 108,009 5,439,954 5,669,638
Total governmental activities program revenues
30,395,708
29,551,576
30,154,809
29,313,957
36,115,607
Business-type activities: Charges for services: Water Wastewater Refuse Parking Storm Water Golf course Operating grants and contributions Capital grants and contributions
14,278,839 11,461,188 13,341,636 2,209,631 892,378 1,867,914 85,446 2,312,416
15,687,800 11,664,391 14,583,240 2,478,911 862,150 1,933,684 138,515 3,391,001
17,283,215 11,911,915 14,562,560 2,635,129 872,569 992,439 369,968 6,439,375
19,480,617 13,079,711 13,525,848 2,654,549 869,490 1,608,752 15,704 2,480,435
22,442,267 13,978,613 15,108,051 2,697,863 875,730 1,770,614 40,470 1,662,249
Total business-type activities program revenues
46,449,448
50,739,692
55,067,170
53,715,106
58,575,857
Total primary government program revenues
76,845,156
80,291,268
85,221,979
83,029,063
94,691,464
(46,093,445) (3,328,165)
(50,951,084) 412,393
(46,721,966) 3,820,039
(49,097,196) 2,404,990
(53,507,349) 7,283,959
Net (expense)/revenue: Governmental activities Business-type activities Total primary government net (expense)/revenue
$
(49,421,610)
144
$
(50,538,691)
$
(42,901,927)
$
(46,692,206)
$
(46,223,390)
City of Santa Cruz
TABLE 2
Changes in Net Assets Last Five Fiscal Years
2003 General Revenues and Other Changes in Net Assets Governmental activities: Taxes Property taxes Sales and use taxes Frachise taxes Transient occupancy taxes Utility users taxes Admission taxes Other taxes Unrestricted grants and contributions Investment earnings Gain (loss) on sale of assets Extraordinary items Miscellaneous Transfers
$
Total governmental activities
2004
15,078,406 8,291,244 3,132,743 2,932,256 7,592,049 1,664,150 2,000,338 4,526,808 1,095,006 (4,963) 477,109 673,184 57,444
$
47,515,774
Business-type activities: Unrestricted grants and contributions Investment earnings Gain (loss) on sale of assets Miscellaneous Transfers $
Change in Net Assets Governmental activities Business-type activities
$
Total primary government
$
$
$
2006
22,384,981 11,738,917 2,136,686 3,385,148 8,304,371 1,715,133 2,303,363 1,121,274 1,380,087 24,318 487,841 67,517
2007
$
55,049,636
222 1,469,180 97,529 (78,584)
479,985
50,485,980
16,476,980 11,383,231 3,478,971 3,067,869 8,080,171 1,629,164 2,107,273 4,562,277 846,634 60,093 577,892 78,584 52,349,139
250 717,261 (11,712) 108,532 (334,346)
2,970,206
Total primary government
15,792,225 9,084,026 3,329,454 3,016,463 7,638,926 1,724,330 2,480,973 2,565,897 437,672 716,218 679,168 334,346 47,799,698
2,421,200 60,717 545,733 (57,444)
Total business-type activities
Fiscal Year Ended June 30 2005
61,987,602
2,079,379 91,920 508,500 (67,517)
1,488,347
24,593,312 12,770,015 2,607,388 3,750,509 8,288,655 1,909,012 2,466,711 2,628,122 322,288 2,648,223 3,367
3,637,989 51,527 530,158 (3,367)
2,612,282
4,216,307
$
48,279,683
$
53,837,486
$
57,661,918
$
66,203,909
1,422,329 (357,959)
$
(3,151,386) 892,378
$
5,627,173 5,308,386
$
5,952,440 5,017,272
$
8,480,253 11,500,266
1,064,370
$
(2,259,008)
$
10,935,559
$
10,969,712
$
19,980,519
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is not available. Source: City of Santa Cruz Finance Department
145
City of Santa Cruz Fund Balances of Governmental Funds Last Ten Fiscal Years
Fiscal Year Ended June 30 1999 2000
1998 General Fund Reserved Unreserved, designated Unreserved, undesignated Total General Fund All other governmental funds Reserved Unreserved, designated, reported in: Redevelopment Agency fund Special revenue funds Debt service funds Capital projects funds Unreserved, undesignated, reported in: Redevelopment Agency fund Special revenue funds Capital projects funds Total all other governmental funds
2001
$
9,540,038 9,939,971
$
5,600,632 11,351,018
$
6,215,738 12,011,261
$
4,906,611 5,194,894 9,170,827
$
19,480,009
$
16,951,650
$
18,226,999
$
19,272,332
$
5,458,871
$
10,138,359
$
11,383,565
$
13,204,616
$
1,416,538 -
1,236,971 1,502,558 -
1,210,456 890,922 -
1,351,077 1,092,974 -
1,467,435 1,839,601
1,418,246 2,158,532
(63,288) 1,508,205
861,078 671,223
10,182,445
Source: City of Santa Cruz Finance Department
146
$
16,454,666
$
14,929,860
$
17,180,968
TABLE 3
2002
Fiscal Year Ended June 30 2004 2005
2003
2006
2007
$
4,008,809 6,392,382 6,974,625
$
5,237,443 5,922,853 4,806,652
$
4,388,586 7,638,171 5,964,197
$
3,870,996 7,435,828 8,729,971
$
4,327,113 7,120,993 11,354,586
$
4,006,713 8,488,474 13,924,233
$
17,375,816
$
15,966,948
$
17,990,954
$
20,036,795
$
22,802,692
$
26,419,420
$
14,174,955
$
12,311,339
$
13,691,282
$
10,721,195
$
11,148,536
$
11,608,393
$
994,997 2,591,507 -
4,014,256 589,008 470,840
3,987,557 509,404 457,945
6,497,637 476,904 557,277 91,180
7,958,925 536,451 707,775 92,641
9,126,250 1,053,286 909,576 -
(948,602) 660,747 1,558,754
(55,035) 1,747,678 446,564
2,207,906 (1,444,460)
3,185,320 2,196,529
3,341,962 281,931
2,851,774 (2,796,246)
19,032,358
$
19,524,650
$
19,409,634
$
147
23,726,042
$
24,068,221
$
22,753,033
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148
City of Santa Cruz
TABLE 4
Changes in Fund Balances of Governmental Funds Last Five Fiscal Years
Fiscal Year Ended June 30 2005 2006
2003
2004
$ 40,691,186 614,012 14,011,928 16,952,167 1,587,698 2,859,096 449,907
$ 42,529,756 529,649 10,258,114 17,191,373 1,805,734 2,345,707 592,012
$ 46,268,500 603,344 11,479,068 17,968,817 2,032,817 2,821,174 686,853
$ 52,035,729 615,448 5,696,237 19,347,463 1,965,235 3,234,159 1,049,925
$ 56,385,602 824,258 10,963,874 19,852,885 2,242,547 4,375,345 2,464,263
77,165,994
75,252,345
81,860,573
83,944,196
97,108,774
9,673,413 22,920,677 9,773,346 8,412,201 5,592,617 569,247 7,954,378 1,976,456 11,340,680
8,967,025 24,843,763 9,721,229 8,528,577 4,539,192 588,183 6,332,156 1,803,125 9,553,173
9,390,901 26,692,313 9,593,982 8,980,823 4,248,358 586,896 6,640,932 1,715,326 7,846,456
9,666,858 26,938,629 9,402,529 9,250,499 4,158,916 624,214 8,436,468 1,693,267 11,921,789
12,261,663 28,574,065 9,653,531 9,693,097 4,940,051 646,548 10,028,992 1,758,216 14,867,937
1,116,090 839,345 -
1,718,937 851,721 -
2,231,549 966,238 276,569
1,149,776 921,517 -
2,203,868 1,078,832 -
80,168,450
77,447,081
79,170,343
84,164,462
95,706,800
Excess of revenues over (under) expenditures
(3,002,456)
(2,194,736)
2,690,230
(220,266)
1,401,974
Other financing sourses (uses) Proceeds from asset dispositions Proceeds from long-term debt issued Premiums on bonds sold Payment to refunded bond escrow agent Transfers in Transfers out
777,750 1,565,684 (1,357,286)
756,823 3,244,346 (2,139,754)
139,104 5,825,000 23,994 (2,571,681) 1,928,681 (1,793,079)
25,256 3,200,000 861,257 (758,170)
348,541 1,260,514 (709,489)
1,861,415
3,552,019
3,328,343
899,566
$ 6,242,249
$ 3,108,077
$ 2,301,540
Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Use of money and property Other revenues Total revenues Expenditures General government Public safety Parks and recreation Library Public works Transit Community and economic development Social services Capital outlay Debt service: Principal Interest and fiscal charges Bond issuance costs Total expenditures
Total other financing sources (uses) Net change in fund balances Debt service as a percentage of noncapital expenditures
986,148 $ (2,016,308)
$
2.8%
(333,321)
3.8%
4.9%
2007
2.9%
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Prior to that implementation, expenditure amounts were categorized differently in the fund statements. Information is not available now to reclassify those prior years' expenditures into comparable categories for this table. Source: City of Santa Cruz Finance Department 149
4.1%
City of Santa Cruz General Governmental Tax Revenues by Source1 Last Ten Fiscal Years
Fiscal Year Ended
Sales
June 30 1998
Property $
and Use
9,784,131
$
Franchise
7,191,934
$
1,736,039
$
Transient
Utility
Occupancy
Users
2,716,397
$
6,557,490
Admission $
1,539,111
1999
10,484,409
7,415,341
2,476,604
3,174,694
6,912,440
1,502,540
2000
12,176,209
8,857,748
2,771,014
3,541,396
7,149,619
1,583,897
2001
13,342,450
9,790,693
2,851,830
3,900,905
8,246,829
1,611,318
2002
14,944,971
9,126,341
2,996,907
3,131,378
7,627,331
1,612,526
2003
15,629,920
8,291,244
3,132,743
2,932,256
7,592,049
1,664,150
2004
15,792,225
9,084,026
2005
16,501,921
11,383,231
2006
22,348,981
2007
24,593,312
5
4
11,738,917 12,770,015
6
3,329,454
3,016,463
7,638,926
1,724,330
3,478,971
3,067,869
8,080,171
1,629,164
2,136,686
3,385,148
8,304,371
1,715,133
2,607,388
3,750,509
8,288,655
1,909,012
Notes:
1
This table includes all governmental fund types.
2
Beginning with fiscal year 2003, business improvement taxes include the Co-op Retail Management Business Real Property Improvement District.
3
Prior to fiscal year 2003, business license taxes were shown in Permits and Licenses.
4
A new quarter-cent sales tax override was implemented in fiscal year 2005. This temporary tax is scheduled to end on June 30, 2009.
5
Beginning in fiscal year 2006, property taxes include amounts for Property Taxes In Lieu of Vehicle License Fees.
6
A new permanent quarter-cent sales tax override was implemented in fiscal year 2007. In addition, the temporary quarter-cent sales tax override previously implemented in fiscal year 2005 was made permanent in fiscal year 2007.
Source: City of Santa Cruz Finance Department
150
TABLE 5
Parks and Parking $
147,877
Business Improvement2 $
175,114
Property
$
162,915
Recreation
Business License3
Transfer $
Facilities -
$
Total -
$
30,011,008
192,352
167,500
186,624
-
-
32,512,504
158,229
170,369
219,132
-
-
36,627,613
178,373
183,711
200,041
-
-
40,306,150
194,646
175,868
194,632
-
-
40,004,600
199,371
273,965
191,042
784,446
551,514
41,242,700
221,133
296,536
276,466
792,893
357,305
42,529,757
221,790
292,422
325,305
777,308
510,348
46,268,500
229,629
316,742
562,723
777,068
417,202
51,932,600
264,510
330,614
641,579
787,225
442,783
56,385,602
151
City of Santa Cruz
TABLE 6
General Fund Revenues by Source Last Ten Fiscal Years
Fiscal Year
Licenses
Ended June 30 1998
Taxes $
23,292,917
$
Charges
Fines
Use of Money
and
Inter-
for
and
and
Other
Permits
Governmental
Services
Forfeitures
Property
Revenues
1,366,948
$
3,410,230
$
6,290,188
$
1,064,554
$
3,623,968
$
280,513
Total $
39,329,318
1999
24,918,906
1,397,862
4,170,892
6,729,820
1,397,833
3,794,000
213,496
42,622,809
2000
27,646,368
1,595,964
4,732,311
6,566,033
1,347,496
3,574,121
324,802
45,787,095
2001
30,258,503
1,342,471
5,281,661
7,009,901
1,286,990
4,152,368
327,692
49,659,586
2002
29,238,472
1,267,939
5,339,612
7,151,012
1,282,697
3,577,774
397,896
48,255,402
2003
30,027,154
614,012
4,788,035
16,693,936
1,555,481
2,252,373
308,104
56,239,095
2004
31,696,322
529,649
3,745,601
16,865,754
1,799,557
2,086,163
418,764
57,141,810
2005
34,384,206
603,344
5,465,642
17,799,213
2,022,779
2,333,922
276,565
62,885,671
2006
39,495,863
615,448
1,073,997
19,062,464
1,962,697
2,541,909
216,721
64,969,099
2007
42,837,408
824,258
1,563,745
19,786,417
2,218,082
3,061,718
187,732
70,479,360
Notes: Beginning in fiscal year 2003, charges for personnel services provided to the Library Joint Powers Authority were included in General Fund charges for services, as well as charges for interfund personnel services provided. Also, prior to fiscal year 2003, business license taxes were shown in licenses and permits.
Source:
City of Santa Cruz Finance Department
152
City of Santa Cruz
TABLE 7
Assessed Value of Taxable Property Last Ten Fiscal Years
Fiscal Year Ended
Real Property
June 30
Residential
1998
$ 2,672,618,165
1999
2,760,380,015
Commercial $
398,841,413
Other $
449,610,460
Total
80,522,177
$ 3,151,981,755
87,470,143
3,297,460,618
$
Total
Total
Personal
Assessed
Direct Tax
Property
Value
Rate
176,321,921
$ 3,328,303,676
0.000%
186,050,833
3,483,511,451
0.000%
2000
2,980,522,986
510,282,517
92,665,671
3,583,471,174
198,830,667
3,782,301,841
0.009%
2001
3,193,569,036
537,141,067
113,773,535
3,844,483,638
207,913,809
4,052,397,447
0.009%
2002
3,494,071,877
611,373,783
111,624,535
4,217,070,195
237,668,331
4,454,738,526
0.009%
2003
3,657,553,824
663,946,747
122,103,592
4,443,604,163
237,898,436
4,681,502,599
0.009%
2004
3,882,699,208
700,948,081
123,781,647
4,707,428,936
225,168,674
4,932,597,610
0.009%
2005
4,150,085,545
755,991,976
126,848,221
5,032,925,742
217,439,195
5,250,364,937
0.009%
2006
4,563,844,105
788,484,799
110,751,935
5,463,080,839
216,627,737
5,679,708,576
0.009%
2007
5,032,785,543
841,223,841
112,527,378
5,986,536,762
219,805,452
6,206,342,214
0.009%
Notes: Total Direct Tax Rate is from Table 8. With the passage of a constitutional amendment (Proposition 13) and subsequently enacted State legislation, property is assessed according to a base year rather than on a percentage of market value. Accordingly, a reliable estimate of actual value of taxable property within the City is not possible.
Source: County of Santa Cruz Auditor-Controller's Office County of Santa Cruz Assessor's Office
153
City of Santa Cruz
TABLE 8 1
Direct and Overlapping Property Tax Rates Last Ten Fiscal Years
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
-
$ 0.009
$ 0.009
$ 0.009
$ 0.009
$ 0.009
$ 0.009
$ 0.009
$ 0.009
-
0.009
0.009
0.009
0.009
0.009
0.009
0.009
0.009
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
Direct Rates: Debt service
$
-
Total Direct Rate
-
$
Overlapping Rates2: County3
1.000
School Districts: Cabrillo College
-
0.014
0.007
0.012
0.021
0.019
0.019
0.038
0.037
0.024
Santa Cruz Schools
-
0.038
0.016
0.077
0.067
0.075
0.074
0.068
0.081
0.027
Bonny Doon Schools
0.056
0.056
0.019
0.021
0.035
0.036
0.034
0.033
0.029
0.023
Live Oak Schools
0.058
0.052
0.050
0.046
0.043
0.037
0.023
0.042
0.043
0.052
Scotts Valley Schools
0.087
0.087
0.077
0.073
0.052
0.084
0.055
0.054
0.050
0.044
1.201
1.247
1.169
1.229
1.218
1.251
1.205
1.235
1.240
1.170
$ 1.201
$ 1.247
$ 1.178
$ 1.238
$ 1.227
$ 1.260
$ 1.214
$ 1.244
$ 1.249
$ 1.179
Total Overlapping Rate Total Direct and Overlapping Rate
Notes: 1
Rates are per $100.00 of assessed value.
2
Overlapping rates are those of entities that apply to property owners within the City of Santa Cruz. Not all overlapping rates apply to all property owners (e.g., the rates for school districts apply only to the proportion of the city's property owners whose property is located within the geographic boundaries of the school district).
3
The passage of a constitutional amendment (Proposition 13) in June 1978 limits the property tax rate to a base of $1.00 per $100.00. The $1.00 rate is levied by the County and apportioned to local agencies according to a formula perscribed by the California legislature.
Source:
County of Santa Cruz Auditor - Controller's Office
154
City of Santa Cruz
TABLE 9
Principal Property Tax Owners Current Year and Nine Years Ago
Fiscal Year Ended June 30 2007
1998 Percentage
Percentage
of Total Assessed
of Total
Assessed
Assessed
Rank
Valuation
Valuation
44,807,943
1
0.722%
Cypress Point RE Investors LLC
40,341,510
2
0.650%
-
-
S C Beach Hotel Partners LLC
36,750,000
3
0.592%
-
-
Santa Cruz Shaffer Road Investors
32,328,651
4
0.521%
-
-
Tax Owner Santa Cruz Seaside Company
Valuation $
$
Assessed
24,563,417
Rank
Valuation
2
0.705%
1010 Pacific Investors
22,068,579
5
0.356%
-
-
CRRI/Seagate Ocean Street LLC
21,414,917
6
0.345%
-
-
222 Columbia Streeet LLC
20,525,460
7
0.331%
-
-
Cooper House LLC
20,223,262
8
0.326%
-
-
Harmony Partners LLC
18,358,801
9
0.296%
-
-
Wave Crest Development Inc
17,946,554
10
0.289%
-
-
Silicon Systems Inc
-
-
160,621,705
1
4.611%
Thomas J. Lipton, Inc.
-
-
18,375,960
3
0.528%
Fremont Central Investment
-
-
13,958,736
4
0.401%
The Price Company
-
-
13,774,455
5
0.395%
Outlook Apartments
-
-
13,180,866
6
0.378%
Frederick Electronics Corporation
-
-
13,016,156
7
0.374%
Pacific Square Ltd Partners
-
-
11,433,996
8
0.328%
Western Business Park
-
-
10,056,900
9
0.289%
Sequoia Equities III, LLC
-
-
8,887,340
10
0.255%
Totals
$
274,765,677
Total assessed value
$
6,206,342,214
4.427%
Notes: Tax owners and values presented in this table reflect the County's Assessment Roll Reports.
Source: County of Santa Cruz Assessor's Office
155
$
287,869,531
$
3,483,511,451
8.264%
This page is intentionally left blank.
156
City of Santa Cruz
TABLE 10 1
Property Tax Levies and Collections Last Ten Fiscal Years
Outstanding Fiscal
Total
Year Ended
Total Tax 2
June 30 1998
Levy $
9,396,855
Current Tax Collections $
2
Percent
Delinquent
of Levy
Tax
Collected
Collections
Total
3
$
-
Delinquent
Collections
Outstanding
Tax
as Percent of
Delinquent
Collections
Current Levy
$
Taxes $
Taxes as Percent of
3
Current Levy
9,396,855
100.0%
9,396,855
100.0%
-
-
1999
10,104,672
10,104,672
100.0%
-
10,104,672
100.0%
-
-
2000
11,732,295
11,732,295
100.0%
-
11,732,295
100.0%
-
-
2001
12,516,202
12,516,202
100.0%
-
12,516,202
100.0%
-
-
2002
14,190,378
14,190,378
100.0%
-
14,190,378
100.0%
-
-
2003
14,639,056
14,639,056
100.0%
-
14,639,056
100.0%
-
-
2004
15,335,693
15,335,693
100.0%
-
15,335,693
100.0%
-
-
2005
16,013,591
16,013,591
100.0%
-
16,013,591
100.0%
-
-
2006
18,191,952
18,191,952
100.0%
-
18,191,952
100.0%
-
-
2007
20,310,069
20,310,069
100.0%
-
20,310,069
100.0%
-
-
Notes: 1
This table includes levies and collections for the Redevelopment Agency.
2
Does not include amounts for Property Taxes in Lieu of Vehicle License Fees
3
Because it adopted a new method of distributing property taxes (commonly referred to as the "Teeter Plan"), the County is now responsible for all delinquent secured property taxes.
Source:
County of Santa Cruz Auditor-Controller's Office City of Santa Cruz Finance Department
157
City of Santa Cruz Ratios of Outstanding Debt By Type Last Ten Fiscal Years
Fiscal Year Ended June 30 1998
1999
2000
2001
2002
Governmental Activities: General obligation bonds
$
Tax allocation bonds
-
$
6,998,473
$
7,176,298
$
7,299,481
$
7,286,115
3,690,000
3,540,000
3,385,000
3,225,000
3,055,000
569,946
555,921
518,392
4,890,431
4,769,607
-
854,158
1,583,610
1,649,722
3,355,410
Notes
-
-
-
-
1,500,000
Other
-
-
-
531,900
998,692
4,259,946
11,948,552
12,663,300
17,596,534
20,964,824
Wastewater revenue bonds
20,570,000
19,745,000
5,210,000
5,085,000
4,955,000
Storm water revenue bonds
-
-
-
-
-
Certificates of participation Capital leases
Total Governmental Activities Business-type Activities:
Water revenue bonds
-
-
-
-
Golf course revenue bonds
225,000
155,000
80,000
-
-
Certificates of Participation
9,221,558
14,251,608
22,339,568
28,985,383
28,047,650
Leases
2,175,315
1,619,560
2,353,054
2,942,887
2,926,370
Notes
51,938,582
50,976,494
48,894,934
47,221,604
44,988,271
Total Business-type Activities
84,130,455
86,747,662
78,877,556
84,234,874
80,917,291
Total Primary Government
$
88,390,401
$
98,696,214
$
91,540,856
$
101,831,408
$
101,882,115
Personal income1
$
1,570,062,816
$
1,709,289,000
$
1,890,711,810
$
2,154,291,172
$
2,096,039,335
Debt as percentage of personal income Population2
5.63%
5.77%
4.84%
4.73%
4.86%
53,172
54,575
56,046
55,028
55,085
Debt per capita
1,662
1,808
1,633
1,851
1,850
Assessed value3
4,932,597,610
5,250,364,937
5,679,708,576
4,681,502,599
4,932,597,610
Debt as percentage of assessed value
1.79%
1.88%
1.61%
2.18%
Notes: 1
Personal income is calculated based on data from the US Department of Commerce, Bureau of Economic Analysis (refer to Table 16).
Source:
2
State Department of Finance
3
County of Santa Cruz Assessor's Office
City of Santa Cruz Finance Department
158
2.07%
TABLE 11
Fiscal Year Ended June 30 2003 $
2004
7,260,759
$
2005
7,228,152
$
2006
7,183,381
$
2007
7,126,075
$
7,055,866
2,880,000
2,695,000
5,245,000
5,125,000
5,005,000
4,642,350
4,513,661
4,377,108
4,239,123
4,096,139
2,450,555
1,765,216
1,766,635
1,247,913
965,627
1,500,000
1,624,706
1,334,942
4,205,026
2,920,485
985,663
920,263
1,029,804
944,836
851,581
19,719,327
18,746,998
20,936,870
22,887,973
20,894,698
4,955,000
4,820,000
4,680,000
4,715,000
4,510,000
-
-
-
6,100,000
5,940,000
-
-
-
12,450,000
12,150,000
-
-
-
-
-
28,047,650
29,831,339
28,662,892
20,915,877
19,183,861
4,624,099
3,939,187
3,108,344
3,145,352
3,514,756
44,883,261
42,593,574
40,240,469
37,822,337
35,337,269
82,510,010
81,184,100
76,691,705
85,148,566
80,635,886
$
102,229,337
$
99,931,098
$
97,628,575
$
108,036,539
$
101,530,584
$
2,085,569,904
$
2,109,542,853
$
2,247,596,565
$
2,365,518,375
$
2,638,747,497
4.90%
4.74%
4.34%
4.57%
3.85%
55,633
56,289
56,451
56,925
57,553
1,838
1,775
1,729
1,898
1,764
4,681,502,599
4,932,597,610
5,250,364,937
5,679,708,576
6,206,342,214
2.18%
2.03%
1.86%
1.90%
159
1.64%
City of Santa Cruz
TABLE 12
Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years
Fiscal
Less: Amount
Year
General
Available
Percentage
Debt
Ended
Obligation
in Debt
of Assessed
Per
June 30
Bonds
Service Fund
Value
Capita
1998
$
-
$
-
Total $
-
-
$
Assessed Value1
Population2
-
$3,328,303,676
53,172
1999
6,998,473
12
6,998,461
0.20%
128
3,483,511,451
54,575
2000
7,176,298
125,218
7,051,080
0.19%
126
3,782,301,841
56,046
2001
7,299,481
277,763
7,021,718
0.17%
128
4,052,397,447
55,028
2002
7,286,115
324,117
6,961,998
0.16%
126
4,454,738,526
55,085
2003
7,260,759
389,184
6,871,575
0.15%
124
4,681,502,599
55,633
2004
7,228,153
457,945
6,770,208
0.14%
120
4,932,597,610
56,289
2005
7,183,381
557,277
6,626,104
0.13%
117
5,250,364,937
56,451
2006
7,126,075
707,777
6,418,298
0.11%
113
5,679,708,576
56,925
2007
7,055,866
909,576
6,146,290
0.10%
107
6,206,342,214
57,553
Source:
1
County of Santa Cruz Assessor's Office
2
State Department of Finance City of Santa Cruz Finance Department
160
City of Santa Cruz
TABLE 13
Computation of Direct and Overlapping Debt June 30, 2007
2006-2007 Assessed Valuation
$ 6,206,342,214
Redevelopment Incremental Valuation: Adjusted Assessed Valuation:
1,025,341,376 $ 5,181,000,838 Total
Percentage
Amount
Debt
Applicable
Applicable
Outstanding
to City (1)
to City
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Cabrillo Joint Community College District
$ 182,685,343
19.936%
Santa Cruz High School District
92,532,244
54.622%
50,542,962
Santa Cruz Elementary School District
23,975,466
94.275%
22,602,871
Live Oak School District
20,534,975
3.306%
678,886
Scotts Valley Unified School District
20,345,000
0.027%
City of Santa Cruz
6,003,228
100.000%
6,003,228 (2)
City of Santa Cruz 1915 Act Bonds
1,475,000
100.000%
1,475,000
Total Direct and Overlapping Tax and Assessment Debt
$
36,420,150
5,493
$ 117,728,590
$ 347,551,256
DIRECT AND OVERLAPPING GENERAL FUND DEBT: Santa Cruz County Certificates of Participation
73,135,799
20.224%
14,790,984
Santa Cruz County Office of Education Certificates of Participation
11,605,000
20.224%
2,346,995
Cabrillo Joint Community College District Certificates of Participation
2,845,000
19.936%
567,179
Scotts Valley Unified School District Certificates of Participation
4,190,000
0.027%
1,131
Santa Cruz City Schools Certificates of Participation
5,340,000
54.622%
2,916,815
Live Oak School District Certificates of Participation
3,920,000
3.306%
City of Santa Cruz General Fund Obligations
7,985,000
100.000%
894,969
100.000%
894,969
3,265,000
7.074%
230,966
Santa Cruz Consolidated Emergency Communication Center Monterey Bay Unified Air Pollution Control District Authority
129,595 7,985,000 (3)
29,863,634 (4)
Total Direct and Overlapping General Fund Debt
$ 113,180,768
$
Combined Total Debt
$ 460,732,024
$ 147,592,224
Notes: (1) Percentage of overlapping agency's assessed valuation located within boundaries of the city. (2) Excludes interest accretion amounts. (3) Excludes issues self-supporting from enterprise revenues ($6,760,000). (4) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and nonbonded capital lease obligations. Ratios to 2006-2007 Assessed Valuation: Direct Debt ($6,003,228)
0.10%
Total Direct and Overlapping Tax and Assessment Debt
1.90%
Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($14,883,197)
0.29%
Combined Total Debt
2.85% $0
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/07: Source: California Municipal Statistics, Inc.
161
City of Santa Cruz Legal Debt Margin Information Last Ten Fiscal Years
Fiscal Year Ended June 30
Debt limit
1998
1999
2000
2001
2002
$ 499,245,551
$ 522,526,718
$ 567,345,276
$ 607,859,617
$ 668,210,779
-
6,998,461
7,051,080
7,021,718
6,961,998
$ 499,245,551
$ 515,528,257
$ 560,294,196
$ 600,837,899
$ 661,248,781
Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit
0.00%
1.34%
1.24%
Notes: Section 1418 of the Charter of the City of Santa Cruz limits general obligation bond indebtedness to 15% of the total assessed valuation of all real personal property within the City.
Source: County of Santa Cruz Auditor-Controller's Office City of Santa Cruz Finance Department
162
1.16%
1.04%
TABLE 14
Fiscal Year Ended June 30 2003
2004
2005
2006
$ 702,225,390
$ 739,889,642
$ 787,554,741
$ 851,956,286
6,871,575
6,770,208
6,626,104
6,418,298
$ 695,353,815
$ 733,119,434
$ 780,928,637
$ 845,537,988
0.98%
0.92%
0.84%
2007 $
930,951,332 6,146,290
$
0.75%
924,805,042
0.66%
Legal Debt Margin Calculation For Fiscal Year 2006-07: Total assessed value
$ 6,206,342,214
Debt limit (15% of total assessed value)
930,951,332
Debt applicable to limit: General obligation bonds (reported at accreted value)
7,055,866
Less: Amount available in debt service fund for repayment of bonds
909,576
Total net debt applicable to limit
6,146,290
Legal debt margin
$
163
924,805,042
City of Santa Cruz Pledged-Revenue Coverage Last Ten Fiscal Years
Fiscal Year Ended June 30 1998
1999
2000
2001
2002
Wastewater Revenue Bonds: Wastewater charges and other
$
10,730,501
$
12,179,844
$
12,846,315
$
11,585,518
$
12,146,047
Less: operating expenses
6,054,987
7,379,231
7,856,133
7,275,278
8,929,861
Net available revenue
4,675,514
4,800,613
4,990,182
4,310,240
3,216,186
Debt service: Principal
725,000
765,000
115,000
120,000
125,000
Interest
1,234,454
1,227,031
296,608
290,733
284,608
Total
1,959,454
1,992,031
411,608
410,733
409,608
2.39
2.41
12.12
10.49
7.85
Coverage Water Revenue Bonds: Water charges and other
$
14,468,484
$
14,425,845
$
-
$
-
$
-
Less: operating expenses
7,319,245
8,546,215
-
-
-
Net available revenue
7,149,239
5,879,630
-
-
-
Debt service: Principal
380,000
380,000
-
-
-
Interest
19,850
9,925
-
-
-
Total
399,850
389,925
-
-
-
17.88
15.08
-
-
-
Coverage Storm Water Revenue Bonds: Storm Water charges and other
$
-
$
-
$
-
$
-
$
-
Less: operating expenses
-
-
-
-
-
Net available revenue
-
-
-
-
-
Principal
-
-
-
-
-
Interest
-
-
-
-
-
Total
-
-
-
-
-
-
-
-
-
-
Debt service:
Coverage Certificates of Participation: Special assessments and other
$
-
$
-
$
-
$
11,510,578
$
12,080,193
Less: operating expenses
-
-
-
8,519,131
9,747,000
Net available revenue
-
-
-
2,991,447
2,333,193
Principal
-
-
-
110,000
100,000
Interest
-
-
-
223,868
537,580
Total
-
-
-
333,868
637,580
-
-
-
8.96
3.66
Debt service:
Coverage
Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest or depreciation.
Source:
City of Santa Cruz Finance Department
164
TABLE 15
Fiscal Year Ended June 30 2003 $
$
$
$
2004
12,306,445
$
2005
12,230,219
$
2006
12,578,070
$
2007
12,394,292
$
13,194,297
9,415,409
9,855,372
9,964,418
8,591,034
8,652,114
2,891,036
2,374,847
2,613,652
3,803,258
4,542,183
130,000
135,000
140,000
150,000
205,000
278,233
271,608
264,733
256,233
177,386
408,233
406,608
404,733
406,233
382,386
7.08
5.84
6.46
9.36
11.88
-
$
-
$
-
$
18,692,531
$
21,116,648
-
-
-
11,775,892
12,478,247
-
-
-
6,916,639
8,638,401
-
-
-
-
300,000
-
-
-
121,517
516,277
-
-
-
121,517
816,277
-
-
-
56.92
10.58
-
$
-
$
-
$
-
$
838,920
-
-
-
-
236,769
-
-
-
-
602,151
-
-
-
-
160,000
-
-
-
-
235,985
-
-
-
-
395,985
-
-
-
-
1.52
12,422,235
$
13,577,644
$
13,121,028
$
13,218,521
$
13,289,170
10,447,158
11,045,892
11,350,148
9,859,552
8,947,378
1,975,077
2,531,752
1,770,880
3,358,969
4,341,792
145,000
695,000
720,000
755,000
785,000
529,300
514,088
487,153
457,327
426,011
674,300
1,209,088
1,207,153
1,212,327
1,211,011
2.93
2.09
1.47
2.77
3.59
165
City of Santa Cruz
TABLE 16
Demographic and Economic Statistics Last Ten Fiscal Years
Fiscal Year June 30
Population1
Unemployment Rate2
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
53,172 54,575 56,046 55,028 55,085 55,633 56,289 56,451 56,925 57,553
7.9% 7.3% 6.4% 5.2% 5.8% 7.5% 7.9% 7.2% 6.4% 5.6%
Ended
Total
Per Capita
Personal
Personal Income3
Income $
1,570,063 1,709,289 1,890,712 2,154,291 2,096,039 2,085,570 2,109,543 2,247,597 2,365,518 2,638,747
$
29,528 31,320 33,735 39,149 38,051 37,488 37,477 39,815 41,555 45,849
Notes: Total Personal Income and Taxable Sales amounts are in thousands.
Source:
1
State Department of Finance
2
State Employment Development Department
3
U.S. Department of Commerce, Bureau of Economic Analysis
4
State Board of Equalization (based on most recent four quarters of data available)
166
Per Capita Taxable Sales4 $
680,283 634,138 725,287 828,500 809,628 761,208 761,986 795,060 813,834 828,447
Taxable Sales $
12,794 11,620 12,941 15,056 14,698 13,683 13,537 14,084 14,297 14,395
City of Santa Cruz
TABLE 17
Principal Employers Current Year and One Year Ago
Fiscal Year Ended June 30 2007
2006 Percentage
Number of Employees
Rank
Percentage
of Total
Number of
Employment
Employees
of Total Rank
Employment
Employer: University of California at Santa Cruz County of Santa Cruz City of Santa Cruz Plantronics Santa Cruz Beach-Boardwalk Costco Community Bridges Crow's Nest Lightsurf Technology Inc. Santa Cruz Biotechnology Incorporated Santa Cruz Sentinel
4,523 2,627 1,083 494 347 257 212 195 168 158
Totals
10,064
Total employment1
96,100
1 2 3 4 5 6 7 8 9 10
4.707% 2.734% 1.127% 0.514% 0.361% 0.267% 0.221% 0.203% 0.175% 0.164%
4,250 2,358 1,066 476 347 257 212 195
1 2 3 4 5 6 7 8
4.570% 2.535% 1.146% 0.512% 0.373% 0.276% 0.228% 0.210%
158 174
10 9
0.170% 0.187%
10.472%
9,493
93,000
This table shows the data for the current fiscal year and one year ago because earlier years' data is not available.
Source:
1
U.S. Department of Labor - Bureau of Labor Statistics City of Santa Cruz Business License database City of Santa Cruz Finance Department
167
10.208%
City of Santa Cruz
TABLE 18 1
Number of City Employees by Department Last Ten Fiscal Years
Fiscal Year Ended June 30 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Departments: City Clerk
7
7
7
7
7
7
7
7
7
7
City Manager
5
5
5
5
5
5
5
5
4
5
Human Resources
12
12
12
13
13
13
12
12
13
14
Finance
34
34
36
38
38
38
36
35
38
27
-
-
-
-
-
-
-
-
-
16
120
122
126
134
136
133
126
124
125
132
52
53
55
59
59
58
55
54
53
55
Parks and Recreation
113
114
118
126
127
125
118
116
111
105
Library
115
116
120
128
130
127
120
118
119
118
Public Works
209
212
219
235
239
232
219
216
216
232
28
28
30
31
32
31
30
29
27
28
Information Technology 2 Police Fire
Planning and Community Development Redevelopment
8
8
8
9
9
9
8
8
9
10
Water
84
85
89
94
96
94
89
87
88
91
Total
768
787
796
825
879
891
872
825
722
749
Notes: 1
Personnel authorizations budgeted. Figures rounded to whole numbers.
2
Information Technology was part of the Finance Department previously, but it is now a separate department.
Source:
City of Santa Cruz Budget Document
168
City of Santa Cruz
TABLE 19
Operating Indicators By Function Last Five Fiscal Years
Fiscal Year Ended June 30 2003
2004
2005
2006
2007
Function: City Clerk Hours for creating the agenda for posting
326
305
291
**
300
**
**
600
600
600
450
280
180
400
100
40
-
60
120
-
Number of recruitments
**
**
**
**
87
Number of applications
**
**
**
**
2,155
Advisory body hours Election hours Initiative/referendum petitions processing hours Human Resources
Workers compensation claim payments
$
1,537,964
$
2,129,667
$
1,872,387
$
1,400,696
$
2,850,283
Police Calls for service
**
76,069
76,498
70,065
67,932
Cases
**
14,717
14,076
14,212
12,917
Fire Emergency calls
4,606
4,623
4,631
5,006
5,231
Inspections
1,603
1,853
1,727
1,794
1,223
275
306
305
294
236
Parks and Recreation Number of classes Facility rentals: Parks (Picnic Areas)
961
892
760
831
762
**
7,753
7,534
7,348
7,562
181
146
183
193
190
Louden Nelson Civic Auditorium Swimming pool Special events produced
**
200
167
146
162
32
30
20
22
22
1,877,256
1,856,142
1,899,739
1,975,986
2,051,331
289,726
288,821
293,525
313,496
322,971
470
432
432
438
430
Library (all locations) Items checked out Queries handled Open hours/week Pubic Works Overlay (square footage)
-
Seal coat (square footage)
-
524,963 -
-
251,106
351,239
-
320,879
342,000
Sewer 144
72
85
106
41
Average daily flow (MGD)
New connections
10.53
9.52
9.92
11.39
9.00
Annual total flow (MG)
3,843
3,475
3,621
4,157
3,283
23,724
23,799
23,924
24,044
24,253
10
10
10
9
9
3,603
3,660
3,448
3,340
3,369
$22
$25
$30
$34
$41
Water Active accounts Averge daily consumption (MGD) Annual consumption (MG) Averge monthly residential bill
This table shows data for the last five fiscal years. Prior years' data is not available. ** Unavailable Source: City of Santa Cruz Departments
169
City of Santa Cruz
TABLE 20
Capital Asset Statistics By Function Last Ten Fiscal Years
Fiscal Year Ended June 30 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Function: Public Safety Police: Stations Vehicular patrol units Fire stations
1
1
1
1
1
1
1
1
1
1
43
55
55
78
78
43
43
61
61
63
3
3
3
3
3
3
3
3
3
3
Public Parking 19
20
21
23
22
26
20
21
21
20
Spaces
1,916
1,369
4,939
5,094
5,235
5,397
5,124
5,149
5,149
5,132
Parking meters
2,014
1,953
1,945
1,741
1,764
1,695
1,714
1,764
1,764
1,888
28
29
29
29
30
30
30
30
30
30
1,350
1,450
1,450
1,457
1,970
1,970
1,970
1,970
1,970
1,970
13
11
11
11
17
17
17
17
17
17
Swimming pools
1
1
1
1
1
1
1
1
1
1
Tennis courts
7
7
7
7
7
7
7
8
8
6
Golf course
1
1
1
1
1
1
1
1
1
1
Central library
1
1
1
1
1
1
1
1
1
1
Branch libraries within city
2
2
2
2
2
2
2
2
2
2
Branch libraries in county
7
8
7
7
7
7
7
7
7
7
Bookmobile
-
-
-
1
1
1
1
1
1
1
145
145
136
136
136
136
136
136
136
136
9
9
13
13
13
13
13
13
13
13
2,310
2,335
2,335
2,800
2,825
2,825
2,893
2,893
2,893
2,893
200
200
208
62
148
148
151
151
151
151
35
35
35
8
50
50
50
50
50
50
300
300
300
300
300
300
300
290
291
291
1,850
1,890
1,890
1,904
1,913
1,997
2,019
2,089
2,060
2,060
Lots
Parks and Recreation Parks Parks acreage Playgrounds
Libraries
Streets Miles of paved streets Miles of alleys Street lights Sewer Miles of sanitary sewers Miles of storm drains Water Miles of water mains Fire hydrants
Source:
City of Santa Cruz Departments
170
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