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Home My WebLink About2001-2002 Comprehensive Annual Financial Report (Entire Document) .~ - - - .. "'!llIJI!llIl .. - - lIP'I"" - - CITY OF MOUNTAIN VIEW, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT - FOR THE YEAR ENDED JUNE 30, 2002 - - - - PREPARED BY THE - DEPARTMENT OF FINANCE AND ADMINISTRATIVE SERVICES - .. Robert F. Locke, Finance and Administrative Services Director Patty J. Kong, Assistant Finance and Administrative Services Director Steve A. Loukopoulos, Accounting Officer ,..." - """" - - - .... ~ - ... ,... \"d" ,... .... """ Wi - ... This Page Left Intentionally Blank III . . .. .. If, - . .. .. II .. .. II .. - . .. .. II .. III iii . II . ..... ... IIiltrIIiiii ..... .... - .. - .... - -- IiiiIiiWII ~~ ~ '-",<.,,;,1 ..... - - - - ... .... ...... - - - - CITY OF MOUNTAIN VIEW, CALIFORNIA Comprehensive Annual Financial Report For the Year Ended June 30, 2002 Table of Contents I INTRODUCTORY SECTION I Exhibit Letter of Transmittal........................................................................................................................1 Directory of City Officials...............................................................................................................2 City Government Organization...................................................................................................... ..3 GFOA Certificate of Achievement for Excellence in Financial Reporting.....................................4 CSMFO Certificate of Award for Outstanding Financial Reporting...............................................5 I FINANCIAL SECTION Page Independent Auditors' Report on Basic Financial Statements .................................................1 Management's Discussion and Analysis......................................................................................3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets................................................................................................... ..22 Statement of Activities...................................................................................................... .23 Fund Financial Statements: Governmental Funds: Balance Sheet............................................................................................................... .24 Reconciliation of Governmental Fund Balance with Governmental Activities Net Assets....................................................................................................................... .25 Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) ..........26 Reconciliation of the Net Change in Fund Balances Total Governmental Funds with the Statement of Activities........ ................... ........ ........... ........................... 27 ...' CITY OF MOUNTAIN VIEW, CALIFORNIA Comprehensive Annual Financial Report """" For the Year Ended June 30, 2002 "'""' Table of Contents ... . Page .. I FINANCIAL SECTION (Continued) I ... Statements of Revenues, Expenditures and Changes in Fund Balances- Budget and Actual: General Fund ..................... .,. ................. .............. ........... ........... ............... .......... .......... .28 Revitalization Authority Fund................................................................................ ..29 Shoreline Golf Links Fund...................................................................................... ..30 .. .. ... II Shoreline Regional Park Community Fund ..............................................................31 Proprietary Funds: Statement of Net Assets............................................................................................... .32 .. III . . Statement of Revenues, Expenses and Changes in Fund Net Assets ............................33 III JIlt Statement of Cash Flows......................................;.................... ................................... .34 .. . Fiduciary Funds: Statement of Fiduciary Net Assets.. ...... .................... .............................. ....... .......... .....35 .. .. Notes to Basic Financial Statements ....... ........ ...... ...... ............ .......... .......... ................ ...........37 Supplemental Information: ... . NOll-major Governmental FUllds: .. Combining Balance Sheets......................................................................................... ....... 74 . Combining Statement of Revenues, Expenditures and Changes in Fund Balances................................. ............................................................................... 80 11IIIII . Combining Statement of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual............................................................................. 86 .. . [nlemal Service Funds: - Combining Statement of Net Assets ...... ............................ ......... ........................................... 92 'IIi Combining Statement of Revenues, Expenses and Changes in Fund Net Assets ................94 Combining Statement of Cash Flows.... ............... .... ........... ........ ........................ ................... 96 .. . Fiduciary Funds: Combining Statement of Changes in Assets and Liabilities................................................! 00 JIIIII .. III . Wilt;;'''ll - .... .... - ~ ..... - - - -- - - .... .~ - .. to,,, - - - - .. - .. .... - ..... ..... CITY OF MOUNTAIN VIEW, CALIFORNIA Comprehensive Annual Financial Report For the Year Ended June 30, 2002 Table of Contents Page I STATISTICAL SECTION I General Revenues by Source - Last Ten Fiscal Years .........................................................104 General Government Expenditures by Function - Last Ten Fiscal Years............................ 105 Appropriations Limit - Last Ten Fiscal Years .....................................................................106 Property Tax Levies and Collections - Last Ten Fiscal Years .............................................107 Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years ..........108 Property Tax Rates - Direct and Overlapping Governments- Last Ten Fiscal years....................................... ........................ ...........................................109 Special Assessment Billings and Collections - Last Ten Fis'cal Years.. ..............................111 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita - Last Ten Fiscal Years .........................................................112 Ratio of Annual Debt Service for General Bonded Debt to General Governmental Expenditures - Last Ten Fiscal Years ...........................................113 Property Value, Construction and Bank Deposits - Last Ten Fiscal Years .........................114 Demographic Statistics - Last Ten Fiscal Years ..................................................................115 Computation of Legal Debt Margin .....................................................................................116 Schedule of Direct and Overlapping Debt ...........................................................................117 Top Ten Property Owners................................................................................................... .118 Miscellaneous Statistics...................................................................................................... .119 Schedule of Insurance in Force........................................................................................... .120 Surety Bonds of Principal Officers.... ................... ................ ........................ .................. .....122 I COMPONENT UNIT FINANCIAL STATEMENTS MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY ...........................123 MOUNTAIN VIEW REVITALIZATION AUTHORITY.....................................................153 ~ ,IlIII! \oM - .... .. .. This Page Left Intentionally Blank .. .. .. II . . .. ifili - - .. ., .. .. ... . .. .. .. .. ... 11III .. .. .. .. .. . ~ Pxhihit ] - ~ ~ ~ September 26, 2002 ... ~~1 Honorable Mayor, City Council and Citizens of Mountain View: ... I am pleased to present the Comprehensive Annual Financial Report (CAFR) of the City of Mountain View, California (City) for the fiscal year ended June 30, 2002, with the Independent Auditors' Report, submitted in compliance with City Charter Section 1106. This is the first year the City has prepared the CAFR using the new financial reporting requirements prescribed by the Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments. GASB Statement No. 34 requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of a Management's Discussion & Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors. .,,", ~ This report consists of management's representations concerning the finances of the City and its component units, the Mountain View Revitalization Authority (Authority), Mountain View Shoreline Regional Park Community (Community) and the City of Mountain View Capital Improvements Financing Authority (MVCIFA) as of June 30, 2002. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the govern- ment's assets from loss, theft or misuse and to compile sufficiently reliable information for the preparation of the City's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City's compre- hensive 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. The City's financial statements have been audited by Maze & Associates, a firm of independent licensed certified public accountants selected by and reporting to the City . ",;J FINANCE AND ADMINISTRATIVE SERVICES DEPARTMENT 500 CASTRO STREET, P.O. BOX 7540 . MOUNTAIN VIEW, CA 94039-7540 . 650-903-6316 . FAX 650-903-6576 - Honorable Mayor and City Council and Citizens of Mountain View September 26, 2002 Page 2 - - ... - - Council. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2002 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 statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City's financial statements for the fiscal year ended June 30, 2002 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. .. - .. .. - - - .. The independent audit of the financial statements of the City was part of a broader, Federally mandated "Single Audit" designed to meet the special 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 state- ments, 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's separately issued Single Audit report. All - .. .. .. .. PROFILE OF THE GOVERNMENT - With a population of 71,610, the City is located in the heart of Silicon Valley, occupies approximately 12 square miles and is approximately 36 miles southeast of the City of San Francisco and 15 miles northwest of the City of San Jose (the County seat). .. .. - The City is a charter city incorporated on November 7, 1902 and is celebrating its Centennial birthday this year. The City Charter was originally approved by voters in 1952 and the City operates under a Council-Manager form of government. The seven Councilmembers are elected at large for four-year terms that are staggered so three or four seats are filled at the general municipal election in November of every even- numbered year. Service on the Council is limited to two consecutive terms. Each year in January, the Council elects one of its members as Mayor and another as Vice Mayor. .. - .. - .. - The City provides the following full range of municipal services which are reflected in this report: .. .. . General government (City management, legal, human resources and financial activities); .. .. .. - . .. - - ... - - .. .. .... - .. - .. - - ...... .... t'f, ~.l1 - ""'Of. - ..... -- W!lIi' - .... - ~ - - .... - ~ -,.. Honorable Mayor and City Council and Citizens of Mountain View September 26, 2002 Page 3 · Public safety (Police, fire and paramedic services); . Public works (Engineering, design and utility maintenance); . Community development (Community land use development); and . Culture and recreation (Library, parks, recreation, performing arts and golf course) . The report also includes financial information regarding City-provided water, waste- water and solid waste utility enterprise activities. The financial reporting entity includes all funds and account groups of the primary government (i.e., the City) as well as all of its component units. Component units are legally separate government entities for which the primary government is financially accountable. Financially accountable is defined by the GASB because the City Council exercises control through appointment of the governing boards and approval of the budget. However, this does not mean the City assumes the obligations or liabilities of these entities. The Community, Authority and MVCIFA are component units of the City. Separate financial statements for the Community and Authority are included in the City's CAFR. (There is no legal requirement for a separate component unit report for the MVCIFA.) Therefore, these agencies are included in the reporting entity. No other agencies or activities associated with the City or utilizing a name similar to the City's meet the established criteria for inclusion in the reporting entity and, accordingly, are excluded from this report. The budget process begins in November of each year, when all City departments begin preparation of their budget proposals for the upcoming fiscal year. Departments submit budget requests to the Budget Review Team (consisting of the Assistant City Manager and the Finance and Administrative Services Director) in late December. The Budget Review Team reviews these requests and submits recommen- dations to the City Manager. The City Manager assesses the Budget Review Team's recommendations, meets with department heads for further discussion and submits recommendations to the City Council in the form of the Narrative Budget Report in May. The City Council is then III Honorable Mayor and City Council and Citizens of Mountain View September 26, 2002 Page 4 .. - - - .. able to review and discuss the recommendations prior to the presentation of the Proposed Budget. .... .. In early June, the Proposed Budget is presented to the City Council and considered at public hearings. The City Charter requires that the annual budget be adopted prior to the beginning of each fiscal year Guly 1). ... .. The City maintains extensive budgetary controls. The objective of these controls is to ensure compliance with legal provisions embodied in the annual budget adopted by the City Council. Budgets are approved at the fund and department level (legal level of control) and may not be exceeded without City Council approval. Transfers and adjustments between funds, departments and capital projects must be submitted to the City Council for approval. The City Charter requires approval by five votes of the seven-member City Council in order to amend the budget. Department heads are responsible for managing expenditures within their budget and assuring funds are only expended for properly authorized City expenses. Department heads are also responsi- ble for expending funds consistent with the goals and objectives approved by the City Council. III - - lIIII ... .. . . .. Activities of the General Fund, certain Special Revenue Funds and certain Capital Project Funds are included in the annually adopted budget. The City also maintains an encumbrance accounting system as one method of maintaining budgetary control that reserves annual amounts that have been committed for varying reasons (e.g., contracts, purchase orders). Outstanding encumbrances at year end are reappropriated as part of the following year's budget pursuant to the City Charter. - .. iii ... .. Debt Service Funds are budgeted by adoption of the indenture provisions for the life of the debt and/ or are budgeted each year in the fund obligated for payment of the annual debt service. .. .. Each year, the City adopts a Five-Year Capital Improvement Program but funds only the first year of the program. General capital improvements are budgeted on a project rather than annual basis and appropriations continue until project completion. Budgetary control for these general capital improvements is exercised at the project level. III .. ... .. .. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. .. ... ... III .. .. . - .... - - ~ - - - ...... - - - - - ... ,-- - .... .. ,~.. ~ "'_.. .... ~ .- ... - .. 1fliI'I'l\ - >iM'''' ..... Honorable Mayor and City Council and Citizens of Mountain View September 26, 2002 Page 5 FACTORS AFFECTING FINANCIAL CONDITION The information presented in the financial statements is perhaps best understood when it is considered from a broader perspective of the environment within which the City operates. Local Economy Mountain View is centrally located in the heart of the Silicon Valley between San Jose and San Francisco with a population of 71,610 residents and a daytime population that expands to over 100,000 people. In the past eight years, Mountain View has seen significant growth in terms of residential and commercial development that has contributed to a diverse and balanced community. Since 1995, the City has seen more than 1,800 residential units created and over 4.6 million square feet of commercial/ office space developed. Over the years, many leading companies, including Intuit, Synopsys, Veritas, Verisign and SGI, have located their headquarters in Mountain View. A number of companies, including Microsoft, Nokia and AOL/Netscape, also recognized the value of the right location in Silicon Valley and have built substantial corporate campuses in Mountain View. Biotechnology is a growing economic sector in Mountain View. Currently, Mountain View is home to Alza/Johnson & Johnson Corporation and 36 other biotech companies. The City is attractive to these growing biotech businesses because of Mountain View's close proximity to research universities that include Stanford, D.C. San Francisco, D.C. Berkeley and San Jose State; the presence of a scientific/ engineering-oriented labor base; and the ability to cluster with the various biotech firms. Mountain View is committed to developing and strengthening its diverse business community. Long-Term Financial Planning The City has been fortunate in regard to significant growth of General Operating Fund revenues in the past several years, which has allowed for selected service enhancements in high-priority areas. However, the overall National, State and local economies remained weak during Fiscal Year 2001-02 and General Operating Fund revenues have reflected this change. Revenues for governmental fund types cumulatively declined 7.7 percent over the prior year. Honorable Mayor and City Council and Citizens of Mountain View September 26, 2002 Page 6 .. .. - .. .. .. The adopted Fiscal Year 2002-03 budget contains no service enhancements, but certain expenditure reductions necessary to maintain the City's future financial well-being. The City has adopted a balanced budget for Fiscal Year 2002-03. ,.. .. In addition, the City has several initiatives under way intended to have a positive effect on the City's economic health and its services provided to residents and businesses. A few of the major initiatives are outlined below. .. .. - New Community Center Plans-A two-story design concept was approved for a new Community Center in Rengstorff Park. The new building will replace the present Community Center building, which is nearly 40 years old and in need of major upgrades. The construction of a new building was determined to be more cost-effective than renovating the old one. - .. .. - - Plans call for a 37,000 square foot facility located on the site of the current building. The new Community Center will provide space for current Community Center programs as well as two multipurpose rooms for community meetings and additional recreation programs. The building will also include a large assembly hall with a kitchen that will be available for community events and private functions. The second floor of the building will provide space for nonprofit organizations and social service programs, and for Community Services Department staff. In addition, the design includes siting and parking for a future child-care building of up to 7,000 square feet to be constructed as a separate project. The project is scheduled to be completed in summer 2005. . . III .. .. . . Hotel Plans for Shoreline Area-The City continued to evaluate proposals for the development of a hotel and conference center on a City-owned parcel of land at the corner of Shoreline Boulevard and Charleston Road. The development is intended to fulfill the City's long-standing goal of locating a full-service hotel with significant conferencing capability in Mountain View. The new development will include a 250- to 300-room hotel and 25,000 to 35,000 square feet. - .. ... .. .. Efficiency Studio Housing Project-Plans for an Efficiency Studio Housing project to be built at the intersection of San Antonio Road and California Street moved forward as the City Council gave final approval to the design concept and a Planned Community Permit for the 120-unit project. The purpose of the project is to increase the amount of affordable housing in the City by providing living units for low-wage residents and seniors on fixed incomes. . - .. . IlIlII Final approval enables ,the nonprofit developer of the project, Charities Housing, to apply for California Tax Credit Funding, which is expected to be the major source of . .. . .. .. tiiliiif - - - - - - - - - - - - - - - - - '- ..... 'i!i.... ... - - ,~ - - - ~ .,.. .'''''' Honorable Mayor and City Council and Citizens of Mountain View September 26, 2002 Page 7 funding for the project. The City Council has also allocated about $5.3 million to date in Community Development Block Grant and HOME program funds for the project. Management believes the City is taking the necessary combination of expenditure controls and revenue enhancements to maintain the quality of services to the community in a financially responsible manner. Cash Management Policies and Practices Cash temporarily idle during the year may be invested in a variety of securities, including obligations of the U.s. Treasury, agencies and instrumentalities, commercial paper, medium-term notes, municipal bonds of the City or its component units and the State of California Local Agency Investment Fund (LAIF). The maturities of the investments generally range from 30 days to 5 years, with the exception of commercial paper which typically matures between one and seven days. The average maturity of the portfolio was 2.05 years as of June 30, 2002. Cash flow necessary for day-to-day operations is invested in LAIF or short-term commercial paper. The average portfolio yield for the fiscal year was 5.4 percent with a modified duration of 1.85 as of June 30, 2002. The City's Investment Policy requires the portfolio be managed and performance evaluated by comparison to a published benchmark index of securities with charac- teristics similar to those permitted in the City's Investment Policy. The investment objective is to match the duration and total return of the benchmark index. For Fiscal Year 2001-02, the City's portfolio had a total return of 7.01 percent and average duration of 1.84 compared to the benchmark total return of 6.94 percent and average duration of 1.84. The portfolio met the performance criteria for the year and was in full compliance with all Investment Policy and legal requirements. The provisions of GASB Statement No. 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools," requires the City to report certain investments at fair value in the balance sheet and recognize the corresponding change in fair value in the financial statements. Risk Management The City is exposed to various risks of loss related to torts, errors and omissions; injuries to employees or others; unemployment and health care of employees. The City has established various self-insurance programs to account for and finance its uninsured risks of loss. The activities of the self-insurance programs are recorded in the ... Honorable Mayor and City Council and Citizens of Mountain View September 26, 2002 Page 8 .. ... .. .. .. Internal Service Funds. Under the self-insurance programs, the City retains the risk of loss up to a maximum of $500,000 for general liability claims, $250,000 for Workers' Compensation claims, both supplemented with excess insurance, and the actual costs incurred for unemployment benefits. .... .. .. The City has accrued amounts for all known general liability and Workers' Compensation claims considered to be probable loss contingencies as of June 30, 2002. In addition, estimated amounts for adverse loss development and claims incurred but not reported have been accrued. .. .. .. .. Additional information on the City's risk management activities can be found in Note 10 of the notes to the financial statements. .. .. Pension and Other Postemployment Benefits .. The City is a member of the California Public Employees Retirement System (PERS). PERS sets the contribution rates for each represented and nonrepresented group in the City. For Fiscal Year 2001-02, the employer contribution rates were: .. .. Group Rate (%) 11III .. Police and Fire (Public Safety) All Others 16.268 0.000 ... . .. There is no unfunded actuarial accrued liability calculated as of June 30, 2000, the most recent information available, and the City has made all required contributions for Fiscal Year 2001-02. .. .. .. The City also provides certain health care benefits for eligible retired employees under third-party insurance plans. As of the end of the June 30, 2002 fiscal year, there were 199 participants receiving benefits which are financed on a pay-as-you-go basis. GAAP do not require governments to report a liability in the financial statements in connection with an employer's obligation to provide these benefits. However, the actuarial liability calculated is $21.0 million and the City has accumulated $10.6 million for this liability in an internal service fund. ... .. .. .. .. .. Additional information on the City's employee retirement plan and postemployment benefits can be found in Notes 8 and 9, respectively, in the notes to the financial statements. ... .. . .. .. . - - - - - .... - - - - - - .,. .. - - ,1'!'tl!Il - .... ~ ..... Honorable Mayor and City Council and Citizens of Mountain View September 26, 2002 Page 9 A WARDS AND ACKNOWLEDGMENTS For the 12th consecutive year, the Government Finance Officers Association (GFOA) awarded a certificate of achievement for excellence in financial reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2001. For the 18th year, the City received a certificate of award for outstanding financial reporting from the California Society of Municipal Finance Officers (CSMFO) for the fiscal year ended June 30, 2001. Both awards are valid for a one-year period only. We believe that our current Comprehensive Annual Financial Report continues to meet both programs' require- ments and will be submitted to the GFOA and the CSMFO to determine its eligibility for certificates. The preparation of the Comprehensive Annual Financial Report was made possible by the dedication of the entire Finance and Administrative Services Department staff, in particular Patty Kong, Assistant Finance and Administrative Services Director; Steve Loukopoulos, Accounting Officer; and May Jen and Beryl Delavan, Accountants. Every individual deserves recognition and thanks for their commitment to the City and their profession. We would also like to thank the City Manager and members of the City Council for their support in managing the financial operations of the City in a responsible manner. Sincerely, Robert F. Locke ~ Finance and Administrative Services Director - - ...... ..... - - .. - - - RFL/PJK/5/FIN 546-09-19-02L^ -. - .. Exhibit 2 .. - City of Mountain View, California .. Directory of City Officials .... - City Council .. Sally J. Lieber, Mayor - R. Michael Kasperzak, Jr., Vice Mayor Ralph Faravelli Matt Pear Rosemary Stasek Mary Lou Zoglin .. .. .... III .. City Staff .. Kevin C. Duggan, City Manager Nadine P. Levin, Assistant City Manager Michael D. Martello, City Attorney Angelita M. Salvador, City Clerk Robert F. Locke, Finance and Administrative Services Director Kathy Farrar, Employee Services Director Elaine Costello, Community Development Director Cathy R. Lazarus, Public Works Director David A. Muela, Community Services Director Karen Burnett, Library Services Director Marc Revere, Fire Chief Scott S.G. Vermeer, Police Chief . III ~ .. .. . .. .. - .. . .. .. .. .. .. .. . .. .. .. .. - .. - - - ~ '*-- - .. - - - ... -- - ,... - - .. - ....~' ..... - ... - ,.,., - - - tIiidi z o ~ H < N ~ Z ~ C) ~ o H Z ~ ~ Z ~ ~ > o U ~ H ~ U ...J (3 Z :J o o >- !::: o OZZ zQQ <(t;(Cf.) 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Certificate of Achievement for Excellence in Financial Reporting Presented to City of Mountain View, California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2001 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. ot~~e~ J(!ze:::~ - Exhibit 4 - - .. - .. .. .. IIIll .. .. .. .. - .. .. .. .. lilt . .. . .. ... - .. .. - - .. .. . - III .. . III .. V) ~ ~ ~ .~ LI L, OIL, -. 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This Page Left Intentionally Blank .. . .. .. III .. " . .- .. - .. III III .. III .. III - .. III .. .. . ~ AAAZE & · ., 'A ASSOCIA TES ACCOUNTANCY CORPORATION INDEPENDENT AUDITORS' REPORT 1931 San Miguel Drive - Suite 100 ON BASIC FINANCIAL STATEMENTS Walnut Creek, California 94596 (925) 930-0902. FAX (925) 930-0135 E-Mail: maze@mazeassociates.com Website: www.mazeassociates.com Honorable Mayor and City Council City of Mountain View, California We have audited the basic financial statements of the City of Mountain View (City) as of and for the year ended June 30, 2002, as listed in the Table of Contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. ,itk' We conducted our audit in accordance with generally accepted auditing standards in the United States of America and the standards for financial audit contained in Government Auditing Standards (1994 Revision), issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above present fairly in all material respects the financial position of the City as of June 30, 2002 and the results of its operations and the cash flows of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles in the United States of America. w..,..., The basic financial statements referred to above follow the requirements of Government Accounting Standards Board (GASB) Statements No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments, No. 36, Recipient Reporting for Certain Non-exchange Revenues, an Amendment of GASB Statement No. 33, No. 37, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments; Omnibus, and No. 38, Certain Financial Statement Note Disclosures, as discussed in Note 1 to the basic financial statements. Management's Discussion and Analysis and Required Supplemental Information is supplementary information required by the GASB, but is not part of the basic financial statements. We have applied certain limited procedures to this information, principally inquiries of management regarding the methods of measurement and presentation of this information, but we did not audit this information and we express no opinion on it. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The "supplemental information" section listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of the City. Such information has been subjected to the auditing procedures applied in our 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. In accordance with Government Auditing Standards, we have also issued reports dated September 26, 2002, on our consideration of the City's internal control structure and on its compliance with laws and regulations. The Statistical Section listed in the Table of Contents was not audited by us, and we do not express an opinion on this information. September 26, 2002 1t1-f?fAS5~ .~ 1 A Professional Corporation - "';l~ ...., ~ .... - ~ ... - - """ .. This Page Left Intentionally Blank - - - - ... - .. .. .. - ~i - ..... - - - $'''' - - '* .. ... - .. .~ - - - .~ ... - - .... .. - - - .. - - - - ..... - -- - - - - - .. ~ - MANAGEMENT'S DISCUSSION AND ANALYSIS This section of the City of Mountain View's (City) Comprehensive Annual Financial Report presents a narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2002. We encourage readers to consider the information presented here in conjunction with additional information that has been furnished in our letter of transmittal. FINANCIAL HIGHLIGHTS The City was affected by the national economic recession, the downturn in the high- technology sector and the tragic events of September 11, 2001, all of which have caused a significant reduction in City revenues. However, the City's commitment to financial stability has allowed the City to position itself to weather this current downturn in the economy. Although the City was prepared for a slowing in the economy, the magnitude of the downturn with the prospect of a slow economic recovery prompted the City to initiate proactive steps to mitigate the impact to the City. During Fiscal Year 2002, the City Council adopted $5.6 million as an economic stabilization contingency to absorb the possibility of revenue declines. In addition, $9.5 million has been set aside in a budget transition reserve for future economic uncertainties. The following are some of the key financial highlights for the fiscal year: . The assets of the City exceeded its liabilities at the close of the fiscal year ended June 30, 2002 by $681.0 million (net assets). Of this amount, $164.5 million (unrestricted net assets) may be used to meet the City's ongoing obligations. . The City's total net assets increased by $33.5 million during the fiscal year. . As of June 30, 2002, the City's governmental funds reported combined ending fund balances of $177.0 million. Approximately 71.8 percent of this amount, $127.1 million, is unreserved fund balance and is available to meet the City's current and future needs. . At the end of the fiscal year, the unreserved fund balance for the General Fund was $58.0 million or 88.2 percent of total General Fund expenditures. . The City's total long-term debt decreased by $39.5 million compared with the prior year. This decrease resulted primarily from the defeasance of approximately $59.4 million of revenue and tax allocation bonds, netted with refunding debt issued in the amount of $23.6 million (net of deferred amount on refunding). In addition, a net $3.7 million of debt was retired during the normal course of business. 3 - ... ... .. . Following the events of September 11, 2001, which served to further weaken the economy, the City's sales and hotel tax showed significant drops from budget estimates. - .... 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. ... .. ... ..... 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. ... .. 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. - .. lilt The statement of activities 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, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave. .. ... .. lilt .. 11II. Both of the 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, public works, community development, and culture and recreation. The business-type activities of the City include water, wastewater and solid waste operations. .. .. .. .. .. .. The government-wide financial statements include not only the City itself (known as the primary government) but also three legally separate entities for which the City is financially accountable: (1) Mountain View Shoreline Regional Park Community (SRPC); (2) Mountain View Revitalization Authority (Authority); and (3) City of Mountain View Capital Improvement Financing Authority (Financing Authority). rill .. ... .. .. 4 III III ........ - - - - - ..... ... """ - 1fII!III!II! - - -- ...., *:ii;4i \ff,.~' - - ,--. - - - ~ .. - ...... - Although legally separate from the City, these component units are blended with the primary government because of their relationship to the City. In addition, separate financial information for the SRPC and Authority component units are included within the City's CAFR. Fund Financial Statements The fund financial statements are designed to report information about groupings of related accounts which are 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 the following three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in determining what financial resources are available in the near future to finance the City's programs. 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 maintains several individual governmental funds organized according to their type (special revenue, debt service and capital projects funds). Information 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 General Fund, Revitalization Authority, Shoreline Golf Links, Shoreline Regional Park Community and Capital Projects Funds, all of which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its major funds. Budgetary comparison statements have been provided for these funds to demonstrate compliance with budgets. 5 .. .. - - Proprietary funds are generally used to account for services for which the City charges customers-either external customers or internal customers or departments of the City. Proprietary funds provide the same type of information as shown in the government- wide financial statements, only in more detail. The City maintains two different types of proprietary funds. ~ till ... .. 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 its water, wastewater and solid waste operations, all of which are considered to be major funds of the City. .. - .. Internal service funds are used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its fleet maintenance and equipment replacement and various other self-insurance liability programs. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. The internal service funds are combined into a single, aggregated presentation in the propriety fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. - .... .. ... .. .. .. Fiduciary funds are used to account for resources held for the benefit of empl!Jyees of the City and parties outside the City. Since the resources of these funds are not available to support the City's own programs, they are not reflected in the government- wide financial statements. The accounting used for fiduciary funds is much like that used for proprietary funds. .. .. .. .. ... Notes to the Financial Statements fIIIII The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. .. . Required Supplementary Information ... .. In addition to the basic financial statements and accompanying notes, this report presents certain required supplementary information concerning the City's progress in funding its obligation to provide pension benefits to its employees. ... .. - Combining Statements .. The combining statements referred to earlier in connection with nonmajor funds, internal service funds and fiduciary funds are presented immediately following the required supplementary information. - .. - till 6 .. ,. ... - .... - ~ ~ - ~ - "'*"' - - -- - ,..... -.- ~ ... ~ """ ~ - - - - - ,,,.... .... 4M'l .. - ..... GOVERNMENT-WIDE FINANCIAL ANALYSIS This is the first year the City has presented its financial statements under the new reporting model required by the Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statement, and Management's Discussion and Analysis (MD&A) for State and Local Governments. Because this reporting model changes significantly both the recording and presentation of financial data, the City has not restated prior fiscal years for the purposes of providing comparative information for the MD&A. In future years, when prior-year information is available, a comparative analysis of government-wide data will be included in this report. Analysis of Net Assets As noted earlier, net assets may serve as a useful indicator of a government's financial position. For the City, assets exceeded liabilities by $681.0 million at the end of the fiscal year. The following is a condensed summary of the City's net assets for governmental- and business-type activities: 7 .. .. - Statement of Net Assets June 30, 2002 (Dollars in thousands) .. - .. Business- Type Activities .. Governmental Activities Total .. ... Assets: .. Current and other assets Capital assets $222,942 501,131 53,960 34,636 276,902 535,767 ... 'lilt Total assets 724,073 88,596 812,669 .. .. Liabilities: Current and other liabilities Noncurrent liabilities 15,154 114,428 1,419 693 16,573 115,121 .. .. Total liabilities 129,582 2,112 131,694 .. lIlIIt .. Invested in capital assets, net of related debt Restricted Unrestricted .. 425,650 56,229 112,612 34,636 -0- 51,848 460,286 56,229 164,460 .. .. Total net assets $594,491 86,484 680,975 - ... The largest portion of the City's net assets at $460.3 million, or 67.6 percent, reflects its investment in capital assets (e.g., land, buildings, other improvements, etc.) less any related debt used to acquire those assets that are 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 liquidated for these liabilities. .. .. - - - .. Another significant portion of the City's net assets, $164.5 million or 24.2 percent, represents unrestricted net assets, which may be used to meet the City's ongoing obligations. For governmental activities, the City reported a positive balance of $112.6 million of unrestricted net assets, and for business-type activities, the City reported a positive balance of $51.8 million of unrestricted net assets. .. .. .. .. - .. 8 .. .. ~ - - - - ~ .... 1M!M - ,~ - ~ - ~ ...... ...... ~ ],(~ - - - - .. - .... - tiIt#if' .. An additional portion of the City's net assets of $56.2 million represents resources that are subject to external restrictions on how they may be used. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets for the governmental and the business-type activities. 9 - - - - ~ - - - - WIllI - - - ..... ifi;'~lf .- ~' ~ - - - - - - ...... ~ ....\'1. The City's net assets overall increased by $33.5 million during the current fiscal year. This increase is explained in the governmental and business-type activities discussion below and is primarily a result of revenues exceeding expenses. Governmental Activities Revenues by Source Interest earnings 12% Other 2% Franchise fees 6% Utility users tax 4% Transient occupancy tax-1' 2% ,- , / ! Sales taxes 14% I L_~__.~___ Bond issuance Property taxes 34% Governmental Activities Expenditures by Type Culture and recreation 21% Interest on long- term debt 8% ~ Community development-/ 5% I I I I I I~_____--- Public works 16% General government 17% ___________.....J 11 Charges for services 20% Operating grants and contributions 5% Capital grants and contributions 1% ~ Public safety 33% I . I -~ ... .. - Governmental activities increased the City's net assets by $28.1 million, accounting for 83.8 percent of the total increase in the City's net assets. Key factors of this increase are as follows: .. - ... . The primary factor for the increase in net assets for governmental activities is related to the refunding of debt by the City. .. .., . Revenues exceeded expenditures. - Business-type activities increased the City's net assets by $5.4 million, accounting for 16.2 percent of the total increase in the City's net assets. Key factors for this increase are as follows: - - - . Water net assets increased by $3.7 million, primarily due to the funding of capital assets. .. .. . Wastewater net assets decreased by $105,000, primarily due to the loss of major commercial waste generators over the past couple of years. The loss in revenues is not completely offset by a reduction of expenses due to fixed costs related to the treatment of wastewater. .. .. .. ... . Solid Waste net assets increased by $1.8 million as there was a significant reduction in the cost of disposing refuse. - . FINANCIAL ANALYSIS OF THE CITY'S FUNDS .. .. 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 resources that are available for spending. 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. Types of governmental funds reported by the City include the General Fund, Special Revenue Funds, D~bt Service Funds and Capital Project Funds. .. .. ... .. - - As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $177.0 million, a decrease of $12.9 million in comparison to the prior year. The largest component for the decrease ($24.8 million) is related to the retirement of debt in the Capital Improvements Financing Authority Fund, a nonmajor fund. Approximately $127.1 million of total fund balance constitutes unreserved fund balance, which is available for spending at the City's discretion. The remainder of fund balance is reserved to indicate that it is not available for new - .. ... .. lIlII 'III 12 .. . - .. - - - ....- ~. ... - /fIIllMt - - IlllIlII!III - ~,<<i ~ ~?~ - - - - .".. - ..,., - ....'''' .ili spending because it has already been committed: (1) restricted cash and investments ($4.6 million); (2) to pay debt service ($1.1 million); (3) to reflect loans, receivables, advances and other assets that are long-term in nature and, thus, do not represent available spendable resources ($32.4 million); and (4) to liquidate existing contracts and purchase orders ($11.8 million). Revenues for governmental functions overall totaled approximately $125.8 million in the fiscal year ended June 30, 2002, which represents a decrease of $10.5 million from the fiscal year ended June 30, 2001. Expenditures for governmental functions, totaling $103.1 million, increased by. approximately 2.6 percent from the prior fiscal year. In the fiscal year ended June 30, 2002, revenues for governmental functions exceeded expenses by approximately $22.8 million or 22.1 percent. The General Fund is used to account for all revenues and expenditures necessary to carry out basic government activity of the City that is not accounted for through other funds. At the end of the current fiscal year, unreserved fund balance was $58.0 million while total fund balance was $79.5 million. As a measure of the General Fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 88.2 percent of total fund expenditures of $65.7 million, while total fund balance represents 121.0 percent of that same amount. The fund balance of the City's General Fund decreased by $4.7 million during the current fiscal year. This entire $4.7 million can be attributed to the City transferring $5.0 million to call outstanding debt during the current fiscal year. Although total General Fund revenues declined from the prior year, revenues exceeded expenditures by $5.3 million. The Revitalization Authority Fund accounts for the activities of the Authority, which was created to prepare and carry out redevelopment plans for a designated area of the City. The Authority Fund's revenues were $2.8 million in Fiscal Year 2002, an increase of $574,000. Property tax increment revenues were $2.5 million in Fiscal Year 2002, up $514,000 from Fiscal Year 2001. Fund expenditures were $232,000 in Fiscal Year 2002, nearly the same as the prior year; all of it community development-related. The Authority Fund balance of $5.0 million, as of the end of the fiscal year, may be used only for redevelopment purposes. Of this amount, $1.9 million was reserved for loans receivable, outstanding encumbrances and land held for resale, and was not available for expenditure, while $3.1 million was unreserved fund balance. 13 .. .. .. The Shoreline Golf Links Fund accounts for revenues from user fees at Shoreline Golf Links and related golf operations and improvements. .. -- Revenues were $4.1 million in Fiscal Year 2002, an increase of $771,000 from the prior year. Nearly all of this increase is attributable to the $719,000 increase in charges for services revenue. Expenditures were $3.2 million in Fiscal Year 2002, an increase of $385,000. Culture and recreation services expenditures accounted for all of this Increase. .. .. .. -- The Fund ended Fiscal Year 2002 with a $2.8 million deficit in fund balance, of which $179,000 was reserved for inventory and encumbrances outstanding and a negative $3.0 million was unreserved. The negative unreserved fund balance is related to the acquisition cost of $5.1 million for the golf course, which shall be repaid as funds become available. - - - .. .. The Shoreline Regional Park Community Fund receives property tax increment revenues on property within the Community. The Fund accounts for the revenues and expenditures of the Community. .. .. Revenues were $25.0 million in Fiscal Year 2002, an increase of $2.6 million. Property tax increment revenues increased to $23.2 million in Fiscal Year 2002, up $2.5 million from Fiscal Year 2001. Expenditures were $4.8 million in Fiscal Year 2002, slightly less than the prior year. Of this amount, $3.0 million was expended on general government and $1.5 million on culture and recreation. .. .. .. .. .. There were net transfers to other funds of $9.5 million in Fiscal Year 2002. Of this amount, $1.4 million was transferred to the General Fund for debt service payments, $3.2 million was for capital projects and $4.1 million was used to call a portion of the outstanding 1992 Tax Allocation Bonds; an additional $5.5 million was for payments of principal and interest on outstanding debt. .. ... III The Fiscal Year 2002 year-end fund balance of $26.0 million may be used only for expenditures in the Community project area. Of this amount, $178,000 was reserved for outstanding encumbrances and $5.1 million for advances to other funds and are not available for expenditure. The remaining $20.7 million was unreserved. ... .. ... .. ... The General Capital Projects Fund accounts for all general capital improvements on a pay-as-you-go basis for projects not funded from proprietary funds. .. ... Revenues were $7.0 million in Fiscal Year 2002, a decrease of $1.6 million from the prior year. Revenue from use of money and property declined $799,000 due to declines in interest rates as well as a slight decline in cash balances. Intergovernmental revenues declined to $1.1 million in Fiscal Year 2002, down $139,000 from Fiscal Year 2001. Expenditures were $16.2 million in Fiscal Year 2002, $3.8 million less than the prior - ... .. .. WIll 14 .. .. il!!Iffi1I ... - - ~ - - ... - - -.... - - - ..... ---'" - ~. - - - .... - - - .. -"""" ~ l"""'""" ... year. Of this amount, $15.4 million was expended on capital outlays and $748,000 on public works. Net transfers from other funds were $6.5 million in Fiscal Year 2002. The Fund's Fiscal Year 2002 year-end fund balance of $42.2 million may be used for capital projects. Of this amount, $9.8 million was reserved for restricted cash and investments and outstanding encumbrances, and is not available for expenditure. The balance of $32.4 million was designated primarily for capital projects. Proprietary Funds: The City's proprietary funds provide the same type of information found in the government-wide financial statements but in more detail. At the end of the fiscal year, the unrestricted net assets for the Water, Wastewater and Solid Waste Funds were $23.4 million, $18.4 million and $9.8 million, respectively. The internal service funds which are used to account for certain governmental activities had unrestricted net assets of $29.2 million. The total growth in net assets for the proprietary funds was $5.4 million. Factors concerning the finances of these funds have been addressed previously in the discussion of the City's business-type activities. Fiduciary Funds: The City maintains fiduciary funds for the assets held in trust to benefit agencies outside of the City or employees. As of June 30, 2002, the net assets of these funds totaled $2.0 million, representing an increase of $832,000 in total net assets since June 30, 2001. The increase is primarily related to the timing of payments made in the Payroll Fund. GENERAL FUND BUDGETARY HIGHLIGHTS General Fund differences between the original Fiscal Year 2002 budget and the final amended budget resulted in a $343,000 increase in budgeted revenues and a $3.4 million increase in expenditure appropriations. Approximately $2.0 million of the adjustment is related to prior-year encumbrances that carry forward at the beginning of the year as specified in the City's Charter. An additional $1.0 million appropriation was established for the payment of compensated absences as provided by Council resolution. The balance of adjustments were made mid-year for various operational needs not anticipated during budget adoption and grants or reimbursements received during the year. CAPIT AL ASSETS AND DEBT ADMINISTRATION Capital Assets The City's capital assets for its governmental and business-type activities as of June 30, 2002, amount to $535.8 million (net of accumulated depreciation). Capital assets include 15 .. ... -- land, construction in progress, buildings and improvements, machinery and equipment, and infrastructure. The total increase in the City's capital assets for Fiscal Year 2002 was $5.7 million or 1.1 percent. ... ... """ Capital assets, net of depreciation, for the governmental and business-type activities are presented below to illustrate changes from the prior year: ... .. Capital Assets June 30, 2002 (Dollars in thousands) ... .. ... Governmental Activities Business-Type Activities Total 2002 2001 2002 2001 2002 2001 Land $69,852 69,732 220 220 70,072 69,952 Construction in progress 66,358 92,620 9,075 8,508 75,433 101,128 Buildings 96,169 92,968 8,927 8,927 105,096 101,895 Improvements other than Bldgs. 48,079 24,759 42,075 37,913 90,154 62,672 Machinery & Equipment 16,665 14,646 1,574 1,574 18,239 16,220 Traffic Signals 5,255 4,832 -0- -0- 5,255 4,832 Streetlights 7,445 7,422 -0- -0- 7,445 7,422 Bridges and Culverts 7,925 7,925 -0- -0- 7,925 7,925 Sidewalks, curbs and gutters 102,155 101,607 -0- -0- 102,155 101,607 Streets and roads 229,902 218,212 -0- -0- 229,902 218,212 Less accumulate depreciation (148,674) (135,613) (27,235) (26,182) (175,909) (161,795) $501.131 499.110 34.636 30.960 535.767 530 .070 - III . ... .. III .. ... .. Major capital asset events during the current fiscal year included the following: III III . Governmental activities capital assets increased a total of $15.1 million with a net $13.1 million increase in accumulated depreciation. ... - . Construction in progress (CIP) decreased by $25.7 million as capital projects were completed and capitalized as streets and roads and other improvements. III . ... . Some of the major assets capitalized from CIP were: Crittenden storm pump station; North Bayshore parking circulation; Charleston Slough renovation; Evelyn Avenue construction, Segment 1; and Shoreline Golf Links renovation, Front 9. .. ... - For government-wide financial statement presentation, all depreciable capital assets were depreciated from acquisition date to the end of the current fiscal year. Fund financial statements record capital asset purchases as expenditures. .. III ... The City's infrastructure assets are recorded at historical cost in the government-wide financial statements as required by GASB Statement No. 34. .. .. III 16 - .. - - .. Additional information about the City's capital assets can be found in Note 4 to the financial statements. !IIllfIlMII. - -.. - - ~ - - - - ~ - '~.. .-1/1 ...... .... ~ - ,.,..,.. - - .. - - - Debt Administration As of June 30, 2002, the City had $114.4 million of outstanding long-term debt related to governmental activities and $693,000 related to business-type activities, for a total of $115.1 million. Debt outstanding as of June 30, 2002 with a comparison to prior year and the net change follows: Debt Outstanding (Dollars in thousands) As of As of Tune 30, 2002 Tune 30, 2001 Net Change Revenue and tax allocation bonds $ 54,962 100,377 (45,415) Certificates of participation 16,208 7,810 8,398 Special assessment debt 2,713 3,135 (422) Compensated absences 5,680 5,366 314 Landfill containment 34,865 37,207 (2,342) Total government activity debt 114,428 153,895 (39,467) Business-type activity 693 646 47 Total $115.121 154.541 (39.420) There were two new debt issues in Fiscal Year 2002-the $17.5 million 2001 Tax Allocation Bond issue and the $10.7 million 2001 Refunding Certificates of Participation issue. The proceeds from the 2001 Tax Allocation Bond issue were used along with cash on hand to defease the $20.2 million remaining outstanding balance of the 1992 Tax Allocation Bonds. This defeasance resulted in a net present value savings of $1.9 million. The proceeds from the 2001 Certificates of Participation issue in conjunction with cash on hand were used to defease the City portion of the 1992 Revenue Bonds. The outstanding principal of the 1992 Revenue Bonds was $39.2 million at the time of the defeasance, all of which was removed from the City's balance sheet. This defeasance resulted in a net present value savings of $1.8 million. The City Charter limits bonded indebtedness for General Obligation bonds to 15 percent of the total assessed valuation of all real and personal property within the City. The City has no general obligation debt outstanding as of June 30, 2002. 17 ... ... .... The City received an underlying "AAA" credit rating from Standard & Poor's in August 2001. IIiiIi - Additional information regarding the City's long-term obligations can be found in Note 7 to the financial statements. llIIIII ... ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES .. ... . The City currently faces a less favorable economic environment from the market decline in the technology industry. The unemployment rate in the City continues to rise from 4.8 percent to 5.5 percent as of November 2001 and 2002. Although this rate is rising, it is lower than the County and State unemployment rates of 6.9 percent and 6.0 percent, respectively, for November 2001, and 7.8 percent and 6.3 percent, respectively, for November 2002. .. llIIIII - - .. . Overall, property taxes for the City are expected to increase for the upcoming fiscal year as new development is completed and comes onto the tax roll. However, office vacancy rates remain high-approximately 24 percent City-wi de-and unsecured property tax is anticipated to decline for Fiscal Year 2003. III! .. .. . Sales tax revenue is expected to continue to decline but at a slower pace as the economy stabilizes. .. .. . . Other taxes comprised of Transient Occupancy Tax (TOT) and Utility Users Tax (UUT) are anticipated to continue to decline and may not meet budget estimates for Fiscal Year 2003. The impacts of the continued slow economy have resulted in less travel and higher office vacancy rates, which translate into lower TOT and UUT tax revenues. III WI' .. .. . With the State facing its largest budget deficit in history, the actions it may take that may negatively impact the City's revenue base are unknown at this time. However, the City remains committed to taking the necessary actions to adopt a balanced budget annually. .. .. .. .. . Increases in water and wastewater rates of 3 percent and 8 percent, respectively, have been adopted for Fiscal Year 2003. No rate change for Fiscal Year 2003 was adopted for solid waste. .. .. All of these factors were considered in preparing the City's budget for Fiscal Year 2003. .. WI' .. . .. .. 18 .. .. - 'MIlIl. - REQUEST FOR INFORMATION '~ - These financial statements are intended to provide citizens, taxpayers, investors and creditors with a general overview of the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be directed to the Finance and Administrative Services Department, 500 Castro Street, Mountain View, California, 94039-7540. - .... PK/5/FIN 546-12-13-02R-E^ - -. .... - >>..... ...'~; ~ .~ - '\8lIII - ~ - ..... 19 - - - ~ ... - .... ... .. .. .. .. .. This Page Left Intentionally Blank .... - .. .. .. .. .. .. .. .. .. .. ... .. - ... .... ... - .. .... .. ... .. .. .. - - .. ""'" iIIlII """'" iIIlII - .. ... .. - - This Page Left Intentionally Blank 'IJW!: .. - - - - ~ - - - ... - - - .. - .. - ... "",. iIiiiilrot IIIIl!! CITY OF MOUNTAIN VIEW, CALIFORNIA .. .. Statement of Net Assets .. June 30, 2002 (Dollars in Thousands) "" Governmental Business - Type Activities Activities Total .. Assets: .. Cash and investments (Note 3) $ 217,449 27,150 244,599 .. Restricted cash and investments (Note 3) 4,652 0 4,652 Receivables: .. Accounts (net of allowances) 528 5,034 5,562 Special assessments 2,311 0 2,311 - Interest 2,796 678 3,474 Loans (Note 5) 9,364 0 9,364 .. Taxes 3,853 0 3,853 .. Due from other governments 850 1,099 1,949 Internal balances (19,999) 19,999 0 .. Inventory 400 0 400 Deposits and prepaid costs 13 0 13 .. Land held for resale 725 0 725 Capital assets, net of depreciation (Note 4) 501,131 34,636 535,767 lIllII .. Total assets 724,073 88,596 812,669 III Liabilities: Accounts payable and accrued costs 7,581 1,280 8,861 . Accrued self-insurance claims (Note 10) 3,969 0 3,969 Refundable deposits 467 139 606 III Deferred revenue 3,137 0 3,137 11IIII Noncurrent liabilities (Note 7) Due within one year 4,862 0 4,862 .. Due in more than one year 109,566 693 110,259 . Total liabilities 129,582 2,112 131,694 .. Net Assets: .. Invested in capital assets, net of related debt 425,650 34,636 460,286 Restricted for: lIIIl! Capital projects 14,767 0 14,767 Debt service 4,183 0 4,183 .. Low and moderate income housing 2,977 0 2,977 Shoreline Regional Park Community 24,792 0 24,792 .. Revitalization Authority 1,895 0 1,895 .. Other purposes 7,615 0 7,615 Unrestricted 112,612 51,848 164,460 .. Total net assets $ 594,491 86,484 680,975 .. See accompanying notes to financial statements. ... .. .. .. .. . 22 . .. - CITY OF 1\10llNTAI;'Ii VIEW, CALIFORNIA - Statement of Activities For the Year Ended June 30, 2002 (Dollars in Thousands) .. Pro~ram Revenues Operatin~ Capital Charl!.cs for Grants and Grants and .. Fu nctions/Pro~rams Expen ses Services Contributions Contributions Governmental Activities: - General government $ 16,754 7,080 347 0 Public safety 32,089 765 335 0 .. Public works 15,711 1,218 1,562 1,459 Community development 5,265 10,641 3,349 1 Culture and recreation 20,745 6,081 337 38 - Interest on long term debt 7,79] 0 0 0 .. Total governmental activities 98,355 25,785 5,930 1,498 - Business-type Activities: Water 11,815 13,679 0 0 Wastewater 9,862 8,830 0 0 .. Solid Waste 6,968 8,504 0 0 - Total business-type activities 28,645 31,013 0 0 - Total $ ]27,000 56,798 5,930 1,498 - General revenues: Taxes: Property taxes Sales taxes Transient occupancy tax Utility users tax Franchise & business Interest eamings Other Gain (loss) on sale of capital assets Bond issuance premium Transfers .. - .. - - Total general revenues and transfers Change in net assets ..... Beginning net assets - Ending net assets - See accompanying notes to financial statements. ~ - - .. - - - .. - ... - - - 23 - Net (Expense) Revenue and Chan~es in Net Assets Governmental Activities (9,327) (30,989) (I 1,472) 8,726 (14,289) (7,791) (65,142) 0 0 0 0 (65,142) 43,476 17,259 2,874 4,713 7,973 15,089 2,888 0 349 (1,400) 93,221 28,079 566,412 $ 594,491 Business-type Activities Total (9,327) (30,989) (11,472) 8,726 (14,289) (7,791) (65,142) 1,864 (1,032) 1,536 1,864 (1,032) 1,536 2,368 2,368 2,368 (62,774) 0 43,476 0 17,259 0 2,874 0 4,713 0 7,973 1,681 16,770 0 2,888 (5) (5) 0 349 1,400 0 3,076 96,297 5,444 33,523 81,040 647,452 86,484 680,975 .. CITY OF MOUNTAIN VIEW, CALIFORNIA ... Governmental Funds .. Balance Sheet June 30,2002 (Dollars in Thousands) IIlli Shoreline - Regional General Other Total Revitalization Shoreline Park Capital Governmental Governmental .. General Authority Golf Links Community Projects Funds Funds ... Assets Cash and investments $ 61,345 5,273 2,427 34,215 64,522 16,686 .. 184,468 Restricted cash and investments 2,837 0 0 0 172 1,560 4,569 Receivables: ... Accounts (net of allowances) 282 0 0 0 41 205 528 Special assessments: .. Delinquent 0 0 0 0 0 5 5 Deferred 0 0 0 0 0 2,306 2,306 ... Interest 1,249 71 43 587 0 386 2,336 Loans 0 1,072 0 0 0 8,292 9,364 .. Taxes 3,723 0 0 0 0 130 3,853 Due from other governments 850 0 0 0 0 0 850 JIll Inventory 279 0 121 0 0 0 400 Deposits and prepaid costs 13 0 0 0 0 0 13 .. Land for resale 0 725 0 0 0 0 725 Advances to other funds 15,990 0 0 5,100 0 0 21,090 ... Total assets $ 86,568 7,141 2,591 39,902 64,735 29,570 230,507 .. Liabilities and fund balances ... Liabilities: Accounts payable and accrued costs $ 3,220 16 142 33 2,385 7 5,803 . Accrued landfill containment costs 0 0 0 0 168 0 168 Accrued compensated absences 575 0 0 0 0 0 575 II Refundable deposits 307 0 5 2 0 153 467 Deferred revenue 2,948 0 189 0 0 2,314 5,451 . Advances from other funds 0 2,147 5,100 13,843 19,999 0 41,089 II Total liabilities 7,050 2,163 5,436 13,878 22,552 2,474 53,553 .. Fund balances: Reserved for: .. Restricted cash and investments 2,837 0 0 0 172 1,560 4,569 Debt service 0 0 0 0 0 1,067 1,067 .. Loans receivable 0 1,072 0 0 0 8,284 9,356 Due from other governments 850 0 0 0 0 0 850 ... Inventory 279 0 121 0 0 0 400 Deposits and prepaid costs 13 0 0 0 0 0 13 .. Advances to other funds 15,990 0 0 5,100 0 0 21,090 Encumbrances 1,575 93 58 178 9,615 297 11,816 ... Land held for resale 0 725 0 0 0 0 725 Unreserved: .. Designated for: Capital improvement program 7,746 0 0 0 29,678 4,014 41,438 Contingency operating 3,492 0 0 0 0 0 3,492 JIll Emergencies 7,250 0 0 0 0 0 7,250 - Revenue stabilization 5,696 0 0 0 0 0 5,696 Budget transition 1,500 0 0 0 0 0 1,500 Property management 1,600 0 0 0 0 0 1,600 ... Strategic land acquisition 4,552 0 0 0 0 0 4,552 .. Unrealized gain on investments 2,032 122 46 857 2,718 320 6,095 Compensated absences 3,678 0 0 0 0 0 3,678 General fund 20,428 0 0 0 0 0 20,428 .. Undesignated: .. Reported in: Special revenue funds 0 2,966 (3,070) 19,889 0 10,064 29,849 Capital projects funds 0 0 0 0 0 1,490 1,490 .. Total fund balances (deficit) 79,518 4,978 (2,845) 26,024 42,183 27,096 176,954 III Total liabilities and fund balances $ 86,568 7,141 2,591 39,902 64,735 29,570 230,507 lIII!! See accompanying notes to financial statements. 24 . - CITY OF MOUNTAIN VIEW, CALIFORNIA - Reconciliation of Governmental Fund Balance with Governmental Activities Net Assets For the Year Ended June 30, 2002 (Dollars in Thousands) - ... .. TOTAL FUND BALANCES - TOTAL GOVERNMENTAL FUNDS Amounts reported for Governmental Activities in the Statement of Net Assets are different from those reported in the Governmental Funds above because of the following: - .. CAPITAL ASSETS Capital assets used in Governmental Activities are not current assets or financial resources and therefore are not reported in the Governmental Funds. 'll!IIlII .. - ALLOCATION OF INTERNAL SERVICE FUND NET ASSETS Internal service funds are not governmental funds. However, they are used by management to charge the costs of certain activities, such as insurance and central services and maintenance, to individual governmental funds. The net current assets of the Internal Service Funds are therefore included in Governmental Activities in the following line items in the Statement of Net Assets. Cash and investments Restricted cash and investments Interest receivable Accounts payable Accrued compensated absences Accrued self-insurance claims - - - :.,,~ .. - ACCRUAL OF NON-CURRENT REVENUES AND EXPENSES Revenues in the statement of activities that do no provide current financial resources are not reported as revenues in the funds. - - LONG TERM ASSETS AND LIABILITIES The assets and liabilities below are not due and payable in the current period and therefore are not reported in the Funds: Long-term debt and other obligations, net of loss on refunding Interest payable Non-current portion of compensated absences - - NET ASSETS OF GOVERNMENTAL ACTIVITIES .. See accompanying notes to financial statements. ..~.. .. - - - - - - - - - 1M - 25 - $ 176,954 501,131 32,981 83 460 (190) (120) (3,969) 2,314 (109,760) (1,588) (3,805) $ 594,491 .. CITY OF MOUNTAIN VIEW, CALIFORNIA .. Governmental Funds .. Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) .. For the Year Ended June 30, 2002 (Dollars in Thousands) Shoreline ... Regional General Other Total Revitalization Shoreline Park Capital Governmental Governmental IlIlI General Authority Golf Links Community Projects Funds Funds III!I Revenues: Taxes $ 39,326 2,453 0 23,176 0 4,533 69,488 .. Licenses, permits and fees 4,728 0 0 0 0 1,730 6,458 Fines and forfeitures 538 0 0 0 0 0 538 - Use of money and property 9,498 335 143 1,727 5,726 1,844 19,273 Intergovernmental revenues 5,032 0 0 0 1,071 5,053 11,156 IlIlI Charges for services 9,082 0 3,876 0 0 2,671 15,629 Other 2,833 0 71 56 163 178 3,301 - Total revenues 71,037 2,788 4,090 24,959 6,960 16,009 125,843 .. Expenditures: Current: III!I General govemment 1],804 0 0 2,956 0 562 15,322 Public safety 29,118 0 0 55 0 312 29,485 .. Public works 7,146 0 0 164 748 14 8,072 Community development 3,991 232 0 118 11 846 5,198 ... Culture and recreation 13,014 0 3,143 1,456 6 0 17,619 Capital outlay 656 0 42 12 15,394 144 16,248 .. Debt service: Principal repayment 0 0 0 0 0 5,195 5,195 Interest and fiscal charges 0 0 0 0 0 5,940 5,940 III!I Total expenditures 65,729 232 3,185 4,761 16,159 13,013 103,079 .. Excess (deficiency) of revenues over .. (under) expenditures 5,308 2,556 905 20,198 (9,199) 2,996 22,764 III Other financing sources (uses): Bond proceeds 0 0 0 0 0 28,240 28,240 .. Bond issuance premium (discount) 0 0 0 0 0 349 349 Payment to bond escrow agent 0 0 0 0 0 (60,747) (60,747) .. Transfers in 5,598 165 148 4,914 18,036 18,995 47,856 Transfers (out) (15,565) (729) (501) (14,373) (11,503) (8,653) (51,324) .. Total other financing sources (uses) (9,967) (564) (353) (9,459) 6,533 (21 ,816) (35,626) .. Excess (deficiency) of revenues and other financing sources over (under) .. expenditures and other financing uses (4,659) 1,992 552 10,739 (2,666) (18,820) ( 12,862) .. Beginning fund balances (deficit), as restated 84,177 2,986 (3,397) 15,285 44,849 45,916 189,816 .. Ending fund balance (deficit) $ 79,518 4,978 (2,845) 26,024 42,183 27,096 176,954 .. See accompanying notes to financial statements. - .. - .. ... II .. .. 26 II1II .. .... - - - 't!,~ .. - - .... - - .. - .. .. - .. ~ - .... .. ~ .. ... - - - - - .... - ~ .. .... - -- - CITY OF MOUNTAIN VIEW, CALIFORNIA Reconciliation of the Net Change in Fund Balances Total Governmental Funds with the Statement of Activities For the Year Ended June 30,2002 (Dollars in Thousands) The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis. NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS Amounts reported for governmental activities in the Statement of Activities are different because of the following: CAPITAL ASSETS TRANSACTIONS Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. The capital outlay expenditures are therefore added back to fund balance Depreciation expense is deducted from the fund balance (Depreciation expense is net of internal service fund depreciation of $12 thousand which has already been allocated to serviced funds.) Retirements of capital assets, net of accumulated depreciation LONG TERM DEBT PROCEEDS AND PA YMENTS Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of bond principal is an expenditure in the governmental funds, but in the Statement of Net Assets the repayment reduces long-term liabilities. Proceeds from the issuance of debt are deducted from fund balance Repayment of debt principal is added back to fund balance Payment to bond escrow agent is added back to fund balance Amortization of loss on refunding is deducted from fund balance ACCRUAL OF NON-CURRENT ITEMS The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and therefore are not reported as revenue or expenditures in governmental funds (net change): Long-Term compensated absences Long-Term landfill containment Interest payable Deferred revenue ALLOCA TION OF INTERNAL SERVICE FUND ACTIVITY Internal Service Funds are used by management to charge the costs of certain activities, such as equipment acquisition, maintenance, and insurance to individual funds. The portion of the net revenue (expense) of these Internal Service Funds arising out of their transactions with governmental funds is reported with governmental activities, because they service those activities. Change in Net Assets - All Internal Service Funds CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES 27 $ (12,862) 15,965 (13,965) (26) (28,240) 5,195 60,747 (315) (286) 1,370 (1,536) (521 ) 2,553 $ 28,079 .. CITY OF MOUNTAIN VIEW, CALIFORNIA ... General Fund "'" Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual .- For the Fiscal Year Ended June 30, 2002 (Dollars in Thousands) .... Bud~eted Amounts ... Actual Amounts Variance with Ori~inal Final Bud~etary Basis Final Bud~et ... . III Revenues: Taxes $ 43,170 43,170 39,326 (3,844) .. Licenses, permits and fees 6,050 6,050 4,728 (1,322) Fines and forfeitures 405 405 538 133 .. Use of money and property 9,613 9,613 9,498 (115) Intergovernmental revenues 4,960 5,176 5,032 (144) .. Charges for services 9,664 9,664 9,082 (582) Other 526 653 2,833 2,180 III .. Amounts available for appropriation 74,388 74,731 71,037 (3,694) Expenditures: ... Current: iii General government: City Council 225 237 152 85 II1II City Clerk 482 544 461 83 City Attorney 1,164 1,240 1,240 0 II City Manager 1,715 1,804 1,051 753 Employee services 2,504 3,550 2,690 860 .. Finance and administrative services 6,656 7,103 6,210 893 .. Public safety: Fire 13,315 13,512 13,272 240 111 Police 16,221 16,488 15,846 642 Public works 9,271 9,431 7,146 2,285 . Community development 4,672 5,017 3,991 1,026 Culture and recreation: ... Community services 9,689 9,942 9,149 793 Library services 4,031 4,075 3,865 210 IIIIIi Capital outlay 668 1,055 656 399 III Total expenditures 70,613 73,998 65,729 8,269 .. Excess (deficiency) of revenues over .. (under) expenditures 3,775 733 5,308 4,575 ... Other financing sources (uses): !lilt Transfers in 3,197 3,197 5,598 2,401 Transfers (out) (14,933) (15,849) (15,565) 284 .. Total other financing sources (uses) (11,736) (12,652) (9,967) 2,685 III Excess (deficiency) of revenues and other .. financing sources over (under) expenditures and other financing uses (7,961) (11,9]9) (4,659) 7,260 l1li. . Beginning fund balances 84,177 84,177 84,] 77 0 Ending fund balances $ 76,216 72,258 79,518 7,260 111 III See accompanying notes to financial statements. 28 ... III IilW CITY OF MOUNTAIN VIEW, CALIFORNIA - Revitalization Authority Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual For the Fiscal Year Ended June 30,2002 (Dollars in Thousands) .. f:~ ... Budgeted Amounts Original Final Actual Amounts Budgetary Basis Variance with Final Budget -- - - Revenues: .. Taxes $ 1,804 1,804 2,453 649 Use of money and property 130 130 335 205 - Amounts available for appropriation 1,934 1,934 2,788 854 .. - Expenditures: Cu rrent: - Community development 434 581 232 349 - Total expenditures 434 581 232 349 .. Excess (deficiency) of revenues over (under) expenditures 1,500 1,353 2,556 1,203 - .. Other financing sources (uses): Transfers in 0 100 165 65 ~ Transfers (out) (766) (765) (729) 36 ... Total other financing sources (uses) (766) (665) (564) '101 - Excess (deficiency) of revenues and other .. financing sources over (under) expenditures and other financing uses 734 688 1,992 1,304 ... Beginning fund balances 2,986 2,986 2,986 0 .. Ending fund balances $ 3,720 3,674 4,978 1,304 - .. See accompanying notes to financial statements. - .. ~ - - - ... .. - ..... 29 "",. III CITY OF MOUNTAIN VIEW, CALIFORNIA 'till Shoreline Golf Links Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits)- Budget and Actual For the Fiscal Year Ended June 30, 2002 (Dollars in Thousands) .. .. ... Budgeted Amounts ... Original Final Actual Amounts Budgetary Basis Variance with Final Budget .. .. ... Revenues: Use of money and property $ 187 187 143 (44) Charges for services 3,734 3,832 3,876 44 Other 0 0 71 71 Amounts available for appropriation 3,921 4,019 4,090 71 Expenditures: Current: Community services 3,100 3,215 3,143 72 Capital outlay 47 58 42 16 Total expenditures 3,147 3,273 3,185 88 Excess (deficiency) of revenues over (under) expenditures 774 746 905 159 Other financing sources (uses): Transfers in 0 0 148 148 Transfers (out) (516) (501 ) (501) 0 Total other financing sources (uses) (516) (501 ) (353) 148 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 258 245 552 307 Beginning fund balances (deficits) (3,397) (3,397) (3,397) 0 Ending fund balances (deficits) $ (3,139) (3,152) (2,845) 307 See accompanying notes to financial statements. .. ... .. .. .. ... ... ... .. .. .. .. ... 0IlII) .. .. ... .. .. .. JIll III till .. .. .. .. 30 .. .. ... CITY OF MOUNTAIN VIEW, CALIFORNIA - Shoreline Regional Park Community - Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual j\Ao>"'!>. For the Fiscal Year Ended June 30,2002 (Dollars in Thousands) .. Budgeted Amounts Actual Amounts Variance with Original Final Budgetary Basis Final Budget ..... - Revenues: ... Taxes $ 2],293 2] ,293 23,] 76 ],883 Use of money and property ],446 ] ,446 ],727 28] - Other 15 15 56 41 - Amounts available for appropriation 22,754 22,754 24,959 2,205 - Expenditures: .. Current: General government: .... City Attorney ]0 10 0 10 City Manager 114 237 ]73 64 .. Finance and administrative services 2,795 2,804 2,783 2] Public safety: - Fire 75 75 55 20 .- Public works 288 290 164 ]26 Community development ]48 ]55 1]8 37 ~ Culture and recreation: Community services ],679 ],834 ],456 378 .. Capital outlay 0 ]6 12 4 - Total expenditures 5,109 5,421 4,761 660 .., Excess (deficiency) of revenues over (under) expenditures 17,645 17,333 20,198 2,865 - - Other financing sources (uses): Transfers in 0 ]26 4,914 4,788 - Transfers (out) (15,369) (15,369) (14,373) 996 .. Tota] other financing sources (uses) (15,369) (15,243) (9,459) 5,784 - Excess (deficiency) of revenues and other - financing sources over (under) expenditures and other financing uses 2,276 2,090 10,739 8,649 - Beginning fund balances 15,285 15,285 15,285 0 - Ending fund balances $ 17,561 17,375 26,024 8,649 -. - See accompanying notes to financial statements. - - ..... - 31 .... CITY OF MOUNTAIN VIEW, CALIFORNIA Proprietary Funds Statement of Net Assets June 30, 2002 (Dollars in Thousands) Business-type Activities-Enterprise Funds Governmental Activities- Internal Service Water Wastewater Solid Waste Totals Funds Assets: Cash and investments $ 6,900 12,545 7,705 27,150 32,981 Restricted cash and investments 0 0 0 0 83 Receivables: Accounts (net of allowances) 1,967 1,353 1,714 5,034 0 Interest 334 239 105 678 460 Due from other governments 0 0 1,099 1,099 0 Advances to other funds 15,320 4,522 157 19,999 0 Land, buildings, and equipment 29,034 23,416 346 52,796 264 Construction in progress 7,300 1,487 288 9,075 0 Accumulated depreciation (11,173) (15,817) (245) (27,235) (179) Total assets 49,682 27,745 11 , 169 88,596 33,609 Liabilities: Accounts payable and accrued costs 637 33 610 1,280 190 Accrued compensated absences 359 221 113 693 120 Accrued self-insurance costs 0 0 0 0 3,969 Refundable deposits 139 0 0 139 0 Total liabilities 1,135 254 723 2,112 4,279 Net Assets: Invested in capital assets 25,161 9,086 389 34,636 85 Restricted for financial assurance mechanism 0 0 231 231 0 Unrestricted 23,386 18,405 9,826 51,617 29,245 Total net assets $ 48,547 27,491 10,446 86,484 29,330 See accompanying notes to financial statements. 32 .. ... ... .. ... .. .. .. . .. ... .. 1111 III .. .. 1111!1 .... iIoo\ .. .. .. .. .. - ... ... .. - .. ... .. \l1li .. .. .. . III ..., CITY OF MOUNTAIN VIEW, CALIFORNIA - Proprietary Funds .. Statement of Revenues, Expenses and Changes in Fund Net Assets "-'0l~ For the Fiscal Year Ended June 30, 2002 (Dollars in Thousands) .. Business-type Activities-Enterprise Funds Governmental Activities- ...... Internal Service - Water Wastewater Solid Waste Totals Funds Operating revenues: - Charges for sales and services $ 13,260 8,698 8,425 30,383 2,611 Other 419 132 79 630 1,529 .... Total operating revenues 13,679 8,830 8,504 31,013 4,140 - - Operating expenses: Salaries and related expenses 3,202 1,710 1,321 6,233 994 - Self-funded insurance 0 0 0 0 2,177 Cost of sales and services 5,473 5,595 4,353 15,421 0 - General and administrative 2,522 2,079 1,278 5,879 2,635 Depreciation 618 478 16 1,112 12 - Total operating expenses 11,815 9,862 6,968 28,645 5,818 - Operating income (loss) 1,864 ( 1 ,032) 1,536 2,368 (1,678) .., Nonoperating revenues (expenses): Interest income 297 866 518 1,681 2,163 - Loss on disposal of assets 0 (5) 0 (5) 0 - Net nonoperating revenues 297 861 518 1,676 2,163 .. Income (loss) before transfers 2,161 (171) 2,054 4,044 485 .. Transfers in 1,862 446 22 2,330 2,141 - Transfers (out) (303) (380) (247) (930) (73) - Net transfers 1,559 66 (225) 1,400 2,068 - Change in net assets 3,720 (105) 1,829 5,444 2,553 ... Beginning net assets 44,827 27,596 8,617 81,040 26,777 - - Ending net assets $ 48,547 27,491 10,446 86,484 29,330 .... See accompanying notes to financial statements. - .... - -- .. - .. 33 - .. CITY OF MOUNTAIN VIEW, CALIFORNIA .. Proprietary Funds - Statement of Cash Flows For the Fiscal Year Ended June 30,2002 (Dollars in Thousands) .. ...... Business-type Activities-Enterprise Funds Governmental Activities- .. Internal Service Water Wastewater Solid Waste Totals Funds .. Cash flows from operating activities: .. Receipts from customers $ 13,421 8,752 8,850 31,023 4,140 Payments to suppliers (6,898) (6,747) (6,033) (19,678) (2,703) III Payments to employees (3,152) (1,697) (1,337) (6,186) (996) Internal activity - payments to other funds (1,143) (1,118) (664) (2,925) (22) .. Claims paid 0 0 0 0 (1,759) Other receipts (payments) 419 132 79 630 0 .. Net cash provided (used) by operating activities 2,647 (678) 895 2,864 (1,340) . Cash flows from non-capital financing activities: .. Transfers in 1,862 446 22 2,330 2,141 Transfers (out) (303) (380) (247) (930) (73) . Net Cash provided (used) by Noncapital till Financing Activities 1,559 66 (225) 1,400 2,068 lit Cash flows from capital and related financing activities: Acquisition and construction of fixed assets, net (4,431) (189) (173) (4,793) (59) - Advances to other funds for construction in progress (3,652) (1,978) (127) (5,757) 0 Refunds from other funds for construction in progress 4,431 189 173 4,793 0 ..- Net Cash Flows provided (used) by Capital and .... Related Financing Activities (3,652) (1,978) (127) (5,757) (59) .. Cash from investing activities: Interest received 335 906 516 1,757 2,178 .... Net increase (decrease) in cash and cash equivalents 889 (1,684) 1,059 264 2,847 "'" 0 Cash and cash equivalents at beginning of period 6,011 14,229 6,646 26,886 30,217 "'" Cash and cash equivalents at end of period $ 6,900 12,545 7,705 27,150 33,064 - Reconciliation of operating income (loss) to net cash - provided by operating activities: ..... Operating income (loss) $ 1,864 (1,032) 1,536 2,368 (1,678) Adjustments to reconcile operating income to net cash provided by operating activities: ... Depreciation 618 478 16 1,112 12 .. Change in assets and liabilities: Receivables, net 166 54 (674) (454) 0 Accounts and other payables (1) (178) 17 (162) 326 "'- Other receipts (payments) 0 0 0 0 0 - Net cash provided (used) by operating activities $ 2,647 (678) 895 2,864 (1,340) - See accompanying notes to financial statements. .. .. .. .. . 34 .. . - ... CITY OF MOUNTAIN VIEW, CALIFORNIA - Fiduciary Funds .. Statement of Fiduciary Net Assets June 30, 2002 (Dollars in Thousands) ,~ .. ,,;,0- - Agency Funds - Assets: .. Cash and investments (Note 3) $ 1,803 Restricted cash (Note 3) 152 - - Total assets $ 1,955 ~ Liabilities: - Accrued payroll $ 1,445 Sports Pavillion maintenance 81 ~ Collections payable 429 .. Total liabilities $ 1,955 - See accompanying notes to financial statements. - - ~ - ~ ~ ~ - - - .... - - ... ... - ~ - 35 - .. .. .. ... - - ., .. .. .. .. .. This Page Left Intentionally Blank ... .. ... - - .. .. .. . ... ... - .. .. .. - 'lilt .. .. .. ... .. .. .. . . ~ ,,,.. - - - .... - - - ~.""""" - ~ - ,~ .. .~ - - - - - - - - - - .... - - CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Mountain View (City) was incorporated in 1902 and is a charter city, having had its first charter granted by the State of California in 1952. The City operates under the Council-Manager form of government and provides the following services: public safety (police and fire), public works and utilities, community development, community and leisure services, and administration and support services. A. Reporting Entity The accompanying basic financial statements present the financial activity of the City, which is the primary government presented, along with the financial activities of its component units, which are entities for which the City is financially accountable. Although they are separate legal entities, blended component units are in substance part of the City's operations and are reported as an integral part of the City's financial statements. The City's component units, which are described below, are all blended. The Mountain View Shoreline Regional Park Community (Community) - is a separate government entity created for the purpose of developing approximately 1,550 acres of bayfront lands. The Community is controlled by the City and has the same governing board as the City, which also performs all accounting and administrative functions for the Community. Its financial activities have been aggregated and merged (termed "blended") with those of the City in the accompanying financial statements in the Shoreline Regional Community Park Special Revenue and Capital Projects Funds and the Tax Allocation Bond Debt Service Funds. Separate financial statements for the Community are also included in the City's Comprehensive Annual Financial Report. The Mountain View Revitalization Authority (Authority) - is a separate government entity whose purpose is to prepare and implement plans for improvement, rehabilitation, and development of an area within the City. The Authority is controlled by the City and has the same governing board as the City, which also performs all accounting and administrative functions for the Authority. Its financial activities have been aggregated and merged (termed "blended") with those of the City in the accompanying financial statements in the Revitalization Authority Special Revenue Fund and the PolicelFire Building Refunding 1995 Certificates of Participation Debt Service Fund. Separate financial statements for the Authority are also included in the City's Comprehensive Annual Financial Report. 37 .. CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 .. ... I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ... .. The City of Mountain View Capital Improvement Financing Authority (Financing Authority) - is a separate government entity whose purpose is to assist with the financing or refinancing of certain public capital improvements within the City, principally the 1992 Community Tax Allocation Bond and the 1988 City Hall Certificates of Participation. The Financing Authority is controlled by the City and has the same governing body as the City, which also performs all accounting and administrative functions for the Financing Authority. The financial activities of the Financing Authority have been aggregated and merged (termed "blended") with those of the City in the accompanying financial statements in the City of Mountain View Capital Improvement Financing Authority Debt Service Fund. Separate financial statements for the Financing Authority are not required and therefore, not issued. - .. .. .. . JIll - .. B. Basis of Presentation - The City's basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the U.S.A. -- - - These standards require that the financial statements described below be presented. .. Government-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the primary government (the City) and its component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. .. - ... lIIIi ... .. .. The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and (c) development fees and permits, which are capital grants under California law. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. .. MIl .. ... ... ... .. .. .. .. .. 38 .. .. &IliilIW CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 !IJIIa .. I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) - Fund Financial Statements: The fund financial statements provide information about the City's funds, including fiduciary funds and blended component units. Separate statements for each fund category-governmental, proprietary, and fiduciary-are presented. The emphasis of fund financial statements is on major individual governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. - - - Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. - - .- C. Major Funds .. .. Major funds are defined as funds which have either assets, liabilities, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total of governmental and enterprise funds. Major governmental and business-type funds are identified and presented separately in the fund financial statements. All other funds, called non-major funds, are combined and reported in a single column, regardless of their fund-type. The General Fund is always a major fund, and the City may select other funds it believes should be presented as major funds. The City selected the Mountain View Revitalization Authority for presentation as a major fund because of its importance. 1l8lIII ... - - - The City reports the following major governmental funds in the accompanying financial statements: - - General Fund - This is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. - - - The Revitalization Authority Fund - This fund accounts for the activities of the Authority which was created to prepare and carry out redevelopment plans for a designated area of the City. - Shoreline Golf Links Fund - This fund accounts for revenues from user fees at Shoreline Golf Links and related golf course operations and improvements. - - Shoreline Regional Park Community Fund - This fund receives tax increment revenues on property within the Community. The fund accounts for the revenues and expenditures of the Community. - - 39 - .. CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 ... ..... I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ... - General Capital Projects Fund - This fund accounts for all general capital improvements on a pay-as-you-go basis for projects not funded from proprietary funds. - .. The City reports all its enterprise funds as major funds in the accompanying financial statements: - .. Water Fund - This fund accounts for the expenses related to the operation, maintenance and capital outlay required to supply, distribute and meter water, which are paid from revenues derived from user fees. .. - .. Wastewater Fund - This fund accounts for the expenses related to the operation, maintenance and capital outlays required to provide wastewater services, which are paid from revenues derived from user fees. The City has an agreement with the City of Palo Alto to purchase treatment capacity at the Palo Alto Regional Water Quality Control Plant. -. .. - Solid Waste Fund - This fund accounts for disposal services, recycling operations, other solid waste operations and certain costs related to maintenance of the closed landfill sites. Collection operations are provided by an outside private contractor. The City has an agreement with the Cities of Palo Alto and Sunnyvale for disposal transfer capacity at the Sunnyvale Materials and Recovery Transfer (SMaRT) Station. 11I/II - . The City also reports the following fund types: .. . .. [ntemal Service funds. These funds account for equipment maintenance and replacement; retiree's health and employee benefits plans; and for worker's compensation, unemployment self-insurance, general liability self-insurance, and property insurance coverage; all of which are provided to other departments on a cost-reimbursement basis. .. ..... .. Fiduciary funds. These Agency funds account for assets held by the City as an agent for individual, private organizations, and other governments. ... ,"",' D. Basis of Accounting .. The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. - ... .. - ... - .. - .. 40 .. .. iiliiwi - - - ..... "" - ~ ... ..~ ... ~ .... ..... - .. - ... ,... - ~ - ,- - - - - - ..... - ..... CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, landfill containment costs and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Those revenues susceptible to accrual are property taxes, sales taxes, gas taxes, utility user taxes, transient occupancy taxes, earned grant entitlements, special assessments due within the current year, certain intergovernmental revenues, and interest revenue. All other revenue items are considered to be measurable and available only when cash is received. Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net assets may be available to finance program expenditures. The City's policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary. Certain indirect costs are included in program expenses reported for individual functions and activities. The City follows Statements and Interpretations of the Financial Accounting Standards Board and its predecessors that were issued on or before November 30, 1989, in accounting for its business-type activities, unless they conflict with Government Accounting Standards Board pronouncements. As a general rule the effect of interfund activity has been eliminated from the government- wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the government's business type activities and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 41 III CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 - '"'" I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ... .... Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. - ... - III Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds and internal service funds are charges to customers for sales and services. The City also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. .. - ,. .. .. ... .. III When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. . E. Inventory of Materials and Supplies .. . Inventories are valued at cost (first in, first out). Inventories of the General Fund consist of expendable supplies held for consumption. The cost is recorded as an expenditure at the time individual inventory items are consumed. Inventories of the Shoreline Golf Links Special Revenue Fund consist of merchandise held for resale to consumers. The cost is recorded as an expenditure at the time individual inventory items are sold. Reported General and Special Revenue Fund inventories are equally offset by a fund balance reserve which indicates that they do not constitute available spendable resources even though they are a component of net current assets. III!I\ .. -- .. ... ... F. Property Tax .... - Santa Clara County assesses properties and it bills, collects, and distributes property taxes to the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are levied on Julyl for the fiscal year. ~ ... .. Secured property tax is due in two installments, on November 1 and February 1, and becomes a lien on those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property tax is due on July 1, and becomes delinquent on August 31. Collection of delinquent accounts is the responsibility of the County, which retains all penalties. .. .. ,. - .. 42 . .. iiiiiW' 'YM .., - - - - - - ~ - .~ - ;!l~ - ... ..... "'_'C\f 4"""'" - - ... - - - - ~ - - - CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The term "unsecured" refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the property being taxed. Property tax revenues are recognized by the City in the fiscal year they are assessed, provided they become available as defined above. G. Compensated Absences Compensated absences representing vacation, sick leave pay and related costs of Governmental Fund Types that are expected to be liquidated with expendable available financial resources are reported as an expenditure and a fund liability of the governmental fund that will pay them. Amounts not expected to be liquidated with expendable available financial resources are reported in the Statement of Net Assets in addition to the balance reported in the Governmental Funds Balance Sheet. The entire vacation, sick leave pay and related costs in Proprietary Fund Types are accrued when incurred and" reported as a fund liability. The City uses the termination payment method for the calculation of compensated absences. H. Land Heldfor Resale At June 30,2002 the Authority had one parcel purchased in fiscal year 2000, which is being held for future development projects. The parcel is accounted for at the lower of cost or net realizable value. I. Use of Estimates The accompanying basic financial statements have been prepared on the modified accrual and/or accrual basis of accounting in accordance with generally accepted accounting principles. This requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. I NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING A. Budgets and Budgetary Accounting The City adopts an annual budget on or before June 30 for the ensuing fiscal year for the General Fund and all Special Revenue Funds except the Deferred Assessments Fund, Grants Fund and Police Asset Forfeitures Fund. 43 - CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 .. .. I NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING (Continued) .... - No annual budgets are adopted for the Debt Service Funds. Repayment of the debt is authorized by the adoption of the indenture provisions for the life of the debt. .. - The Storm Drain Construction and Park Land Dedication Capital Projects Funds are budgeted annually. All other Capital Projects Funds are budgeted on a project basis. Such budgets are based on a project time frame, rather than a fiscal year "operating" time frame, whereby unused appropriations continue until project completion. .. - .. Budget appropriations become effective each July 1. The City Council may amend the budget during the fiscal year. The legal level of budgetary control has been established at the fund and department level. Appropriations generally lapse at the end of the fiscal year to the extent they have not been expended or encumbered. .. - .. .. All Governmental Fund Type annual budgets are presented on a basis consistent with the basic financial statements prepared in accordance with generally accepted accounting principles. -- .. City Council must approve appropnatIon increases to departmental budgets; however, management may transfer Council-approved budgeted amounts within fund and departmental expenditure classifications. Judgments, settlements and accrual entries are not subject to budgetary control and expenditures exceeding budget due to these items do not constitute a violation of budget policy or control. Supplemental appropriations were approved during the course of the year as needed. .. . .. .. .. B. Ellcumbrallce Accoulltillg iii -- Under encumbrance accounting, purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of formal budgetary integration. Encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities and are automatically reappropriated for inclusion in the following year's budget. .. .. .. .... I NOTE 3 - CASH & INVESTMENTS - ... The City's investments are carried at fair value, as required by generally accepted accounting principles. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year. .. .. .. The City pools cash from all sources and all funds except Restricted Cash and Investments with Fiscal Agents so that it can be invested at the maximum yield, consistent with safety and liquidity, while individual funds can make expenditures at any time. - - .. .. 44 . III .., ",. - ..... - .... tiliatW - .~ - - .., - .~ - ~;d - - ~ - .... - - - - ~ CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 I NOTE 3 - CASH & INVESTMENTS (Continued) I Investment income is allocated among funds on the basis of average daily cash and investment balances in each fund, unless there are specific legal or contractual requirements to do otherwise. A. Categorization of Credit Risk of Securities Instruments The City invests in individual investments and in investment pools. Individual investments are evidenced by specific identifiable pieces of paper called securities instruments, or by.an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system. In order to increase security, the City employs the Trust Department of a bank as the custodian of certain City managed investments, regardless of their form. The City categorizes its individual securities instruments in ascending order to reflect the relative risk of loss of these instruments. This risk is called Credit Risk, the lower the number, the lower the risk. The three levels of risk prescribed by generally accepted accounting principles are described below: Category 1 - The City is the registered owner of securities held in book entry form by the Bank's Trust Department. Securities instruments in this category are in the City's name and are in the possession of the Trust Department of the Bank employed by the City solely for this purpose. Category 2 - Securities instruments and book entry form securities in this category are in the Bank's name but are held by the Bank's Trust Department in a separate account in the City's name. Category 3 - Includes only City-owned securities instruments or book entry form securities which were not in the City's name and not held by the Bank's Trust Department. Pooled Investments - Pooled investments are not categorized because of their pooled, rather than individual, nature. 45 .. CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 .. "'" -- I NOTE 3 - CASH AND INVESTMENTS (Continued) I - Investments are carried at fair value and are categorized as follows at June 30, 2002 (dollars in thousands): - .. Cash and Investments Available for Operations Restricted Total Category 1 IlIvestmellts: U.S. Treasury obligations $ 107,072 0 107,072 U.S. Agency obligations 107,574 0 107,574 Municipal Bonds 138 0 138 Pooled IlIvestmellts (11011 Categorized): Local Agency Investment Fund 29,309 4,353 33,662 Mutual funds (government securities) 0 47 47 Total investments 244,093 4,400 248,493 Cash in banks and on hand 2,309 404 2,713 Total cash and investments $ 246,402 4,804 251,206 - .. - .. - .. - -- .. .. The City must maintain required amounts of cash and investments with trustees under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if the City fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with City ordinance, bond indentures or State statute. All these funds have been invested as permitted under the Code. . -- . ... . Investments in municipal bonds shown above represent the City's investment in its 2000 Yardis Court Special Assessment Debt. The balance as of June 30, 2002 is stated at amortized cost, which approximates fair value. .... .. ... Cash and investments are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of City debt instruments or Agency agreements (dollars in thousands): - .. Cash and investments Restricted cash and investments Cash and investments of the City Cash and investments in Fiduciary Funds (separate statement) Total cash and investments .. $ 244,599 4,652 249,251 1,955 251,206 .. ... $ ... .. .. - ... III 46 .- .. ~. ;iMIfJ .. - - ,... - - .,... - - .... ~ .... - ~. .... ...... - - ....... - - - - .,.,., - ~ - CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 I NOTE 3 - CASH AND INVESTMENTS (Continued) I B. Cash Deposits California Law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the City's cash on deposit or first trust deed mortgage notes with a value of 150% of the City's cash on deposit as collateral for these deposits. Under California Law collateral is held in the City's name and places the City ahead of general creditors of the institution. At June 30, 2002, the total market value of securities held in the pool collateralizing the City's deposits was $1,416,000. The City has waived collateral requirements for the portion of deposits covered by federal deposit Insurance. Cash in banks is entirely insured (Category 1) or collateralized by the institution holding the deposit (Category 2), as discussed above. The carrying amount of the City's cash deposits was $2,713,000 at June 30, 2002. At that date bank balances before reconciling items were $1,227,000 million, of which $488,000 was insured (Category 1) and $739,000 was collateralized as discussed above (Category 2) at June 30, 2002. c. Authorized City Investments The City's investment policy and the California Government Code allow the City to invest in the following: Securities of the U.S. Government or its agencies Mortgage-backed Securities Commercial Paper Banker's Acceptances Medium-term Notes issued by U.S. corporations Mutual Funds invested in U.S. Government securities Certificates of Deposit Municipal Bonds issued by the City or any of its component units California Local Agency Investment Fund The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City reports its investment in LAIF at the fair value amount provided by LAIF. The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage- backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. 47 .. CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 \iIIlII "" ... I NOTE 3 - CASH AND INVESTMENTS (Continued) I - Cash and investments with an original maturity of three months or less are used in preparing Proprietary Fund statements of cash flows because these assets are highly liquid and are expended to liquidate liabilities arising during the year. .. - .. I NOTE 4 - CAPITAL ASSETS I .. .. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair market value on the date contributed. The City defines capital assets as assets with an initial individual cost of more than $3,000 and an estimated useful life in excess of two years. - .. ... Depreciation is provided using the straight line method, which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The City has assigned the useful lives listed below to capital assets. .. .. .., Buildings Improvements Machinery and equipment Traffic signals Street lights Bridges and culverts Sidewalks, curbs and gutters Streets and roads 25 to 50 years 5 to 50 years 3 to 10 years 20 years 50 years 60 years 40 years 40 years ... .. ... . . III .... Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. - -. .. 11;;: .. ..... .. .. .. ... .. .. .. 48 .. .. iiiiliW ~ - - ..... - - - tiIi;:;i..... - - ... ~ .. ~ - fIiiiiiff ~ - - ~ ... - - - ~ CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 I NOTE 4 - CAPITAL ASSETS (Continued) A. Capital Asset Additions and Retirements Capital assets at June 30, 2002 comprise (dollars in thousands): Balance at Balance at June 30, 2001 Additions Retirements Transfers June 30, 2002 Govemmelltal activities Capital assets not being depreciated: Land $ 69,732 0 0 120 69,852 Construction in progress 92,620 14,719 0 (40,981) 66,358 Total capital assets not being depreciated 162,352 14,719 0 (40,861) 136,210 Capital assets being depreciated: Buildings 92,968 0 0 3,201 96,169 Improvements other than buildings 24,759 0 0 23,320 48,079 Machinery and equipment 14,646 1,305 (942) 1,656 16,665 Tramc signals 4,832 0 0 423 5,255 Street lights 7,422 0 0 23 7,445 Bridges and culverts 7,925 0 0 0 7,925 Sidewalks, curbs and gutters 101,607 0 0 548 102,155 Streets and roads 218,212 0 0 11,690 229,902 Total capital assets being depreciated 472,371 1,305 (942) 40,861 513,595 Less accumulated depreciation for: Buildings (24,592) (2,482) 0 0 (27,074) Improvements other than buildings (11,495) (1,728) 0 0 (13,223) Machinery and equipment (11,147) (1,523) 916 0 (11,754) Tramc signals (1,712) (120) 0 0 (1,832) Street lights (4,388) (I 77) 0 0 (4,565) Bridges and culverts (1,447) (189) 0 0 (1,636) Sidewalks, curbs and gutters (25,402) (2,425) 0 0 (27 ,827) Streets and roads (55,430) (5,333) 0 0 (60,763) Total accumulated depreciation (135,613) (13,977) 916 0 (148,674) Net capital assets being depreciated 336,758 (12,672) (26) 40,861 364,921 Governmental activity capital assets, net $ 499,110 2,047 (26) 0 501,131 49 - CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 - ... .... I NOTE 4 - CAPITAL ASSETS (Continued) - Balance at Balance at June 30, 2001 Additions Retirements Transfers June 30, 2002 Business-type activities Capital assets, not being depreciated: Land $ 220 0 0 0 220 Construction in progress 8,508 4,719 0 (4,152) 9,075 Total capital assets not being depreciated 8,728 4,719 0 (4,152) 9,295 Capital assets, being depreciated: Buildings 8,927 0 0 0 8,927 Improvements other than buildings 37,913 10 0 4,152 42,075 Machinery and equipment 1,574 64 (64) 0 1,574 Total capital assets being depreciated 48,414 74 (64) 4,152 52,576 Less accumulated depreciation for: Buildings (7,439) (171) 0 0 (7,610) Improvements other than buildings (17,375) (887) 0 0 (18,262) Machinery and equipment (1,368) (54) 59 0 (1,363) Total accumulated depreciation (26,182) (1,112) 59 0 (27,235) Net capital assets being depreciated 22,232 (1,038) (5) 4,152 25,341 Business-type activity capital assets, net $ 30,960 3,681 (5) 0 34,636 B. Depreciation Allocation ... .. .. .. .. .. .. .. .. ~ ... -- . .. III - . Depreciation expense was charged to functions and programs based on their usage of the related assets. The amounts allocated to each function were as follows (dollars in thousands): .. .. Governmental Activities: General government $ 1,388 Public safety 1,313 Public works 8,523 Community development 20 Culture and recreation 2,733 $ 13,977 Business-type Activities: Water $ 618 Wastewater 478 Solid Waste 16 $ 1,112 ... .. - .. ... .. - .. - - .. WIll 50 . III - ~ - .~ - "!!<Ii' ",,1llIlI ..... -- ./rf""" "Iii ... .~ iii.. -... -. .... ..-. - - .~ - .,,~ - - - - - ..... CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 I NOTE 4 - CAPITAL ASSETS (Continued) C. Construction Commitments The City has active construction projects at June 30, 2002. The projects include buildings and building improvements, improvements to parks, trails and other facilities, street, sidewalks and traffic signal improvements, and water system improvements. Commitments with contractors for construction at June 30 are as follows (dollars in thousands): Spent to Date Remaining Commitment Buildings and building improvements Improvements to other facilities Streets, sidewalks, and traffic signals improvements Water system improvements $ 3,034 3,876 1,593 1,428 2,149 3,311 2,392 1,305 Total $ 6,718 12,370 All commitments are funded from general, special revenue fund, and enterprise fund revenues transferred to the various projects in the capital projects fund. I NOTE 5 - LOANS RECEIVABLE I At June 30, 2002, the City's notes and loans receivable, by loan type, was comprised of the following (dollars in thousands): CDBG Rehabilitation Loans CDBG Blimp Loans Support Network for Women Ginzton Terrace Latham Street Apartments Project Match Shorebreeze Apartments Central Park Apartments Stoney Pine Charities HomeSafe Pacific Autism Center for Education Charities Housing Development Corportion Land Lease Deferred Assessments Total 51 $ 409 24 55 517 1,941 132 1,068 2,018 124 100 20 2,948 8 $ 9,364 .. CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 .. ~ ... I NOTE 5 - LOANS RECEIVABLE (Continued) - A. Housing Loans .. - The City engages in programs designed to encourage construction or improvement of housing for persons with low- to moderate-income or other such projects. Under these programs, grants or loans are provided under favorable terms to homeowners or developers who agree to spend these funds in accordance with the City's terms. Since the City does not expect to collect these loans in the near term, they have been offset by reserved fund balance in the fund financial statements. - IIl!II .. ... CnBG Rehabilitation Loans - ... The City administers a housing rehabilitation loan program initially funded with Community Development Block Grants funds. Under this program, individuals with incomes below a stated level are eligible to receive low interest loans for rehabilitation work on their home. These loans are secured by deeds of trust, which may be subordinated with the prior written consent of the City. The loan repayments may be amortized over the life of the loans, deferred to maturity or a combination of both. There are 14 such loans totaling $409,000 as of June 30, 2002. .. IIl!II .... .. . CnBG Blimp Loans III .. Blimp Loans are Rehabilitation Loans which require monthly payments. There are 2 Blimp loans outstanding totaling $24,000 as of June 30, 2002. ... . B. Support Network/or Women .. On December 23, 1980 the City loaned $55,000 to Mid-Peninsula Support Network for the acquisition and rehabilitation of a residential structure for the purpose of providing temporary shelter for battered parents and their children. The loan was funded by Community Development Block Grant (CDBG) Funds. The loan becomes payable upon demand by the City upon failure to comply with the terms of the loan agreement. The loan carries a 12% annual interest rate, and shall accrue beginning 30 days following the date of demand. The loan is collateralized by a first deed of trust. - ... ... 11IIII .. .. ... - ... 11IIII .. .. ... 52 .. . fiNii;ij' ~ .. ~ - ... - .\l!'fIItlIIlIl - - .... - - - ... ..... ..... - - - ,,.., - - ~ - - - ..,. CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 I NOTE 5 - LOANS RECEIVABLE (Continued) C. Gillztoll Terrace On December 11, 1991 the City loaned $380,000 to the Mid-Peninsula Housing Coalition for predevelopment and land acquisition costs related to the development of a 107 unit affordable senior housing complex located at 375 Oaktree Drive. On May 1, 1993 the City amended the loan agreement and loaned Mid-Peninsula Housing Coalition an additional $215,000 for the purpose of paying park and recreation fees required prior to occupancy of the land. On February 12, 1996 excess funds not used were returned to the City in the amount of $78,000. The loan balance of $517,000 was funded by Community Development Block Grant Funds (CDBG). The loan is deferred until June 1, 2013, at which time the loan balance and accrued interest will become due and payable, at 6% simple interest. The loan is collateralized by a first deed of trust. D. Latham Street Apartments On August 30, 1995 the City and the Authority loaned $2,067,000 to the Mid-Peninsula Housing Coalition for the acquisition and rehabilitation of a 75 unit apartment complex at 2230 Latham Street to provide affordable housing for very low- to moderate-income families. The loan was funded by $992,000 of Authority Housing Set-Aside Funds, $688,000 of Community Development Block Grants (CDBG) Funds and $387,000 of HOME Grant Funds. The various components of the loan are to be repaid over a 20 to 24 year period at 3% annual simple interest. The loan is collateralized by a first deed of trust. E. Project Match On May I, 1997 the City loaned $132,000 to Project Match for the acquisition of the house located at 1675 South Wolfe Road, Sunnyvale, to provide affordable housing for low- income seniors. The loan was funded by HOME Grant Funds. The loan is to be repaid over a 30 year period at 3% annual simple interest. The loan is collateralized by a second deed of trust. F. S/lOrebreeze Apartments On June 1, 1997 the City loaned $1,068,000 to the Mid-Peninsula Housing Coalition for the acquisition and rehabilitation of a 120 unit apartment complex at 460 Shoreline Boulevard to provide affordable housing for very low- to moderate income families. The loan was funded by $320,000 of HOME Grant Funds and $748,000 of Community Development Block Grant (CDBG) Funds. The various components of the loan are to be repaid over a 30 year period at 3% simple interest. The loan is collateralized by a second deed of trust. 53 ... CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 - "" .. I NOTE 5 - LOANS RECEIVABLE (Continued) ..... G. Central Park Apartments .. - On July 1, 1998 the City and the Authority loaned $2,200,000 to the Mid-Peninsula Housing Coalition for the acquisition and rehabilitation of a 149 unit apartment complex known as Central Park Apartments at 90 Sierra Vista Avenue to be used to provide housing for seniors of very low to low income. The entire project was funded by 3 loans: $388,000 from Authority Housing Set-Aside Funds to be repaid over 9 years, commencing in fiscal year 1999 and bearing 3% annual interest; $1,200,000 of CDBG Funds to be repaid over 36 years commencing in fiscal year 2013 and bearing 3% annual interest; and $612,000 from HOME Grant Funds to be repaid over 21 years commencing in fiscal year 2005 and bearing 3% annual interest. - .. .. .. - H. Stoney Pine Charities ... .. .. On August 16, 2000 the City loaned $124,000 to the Stoney Pine Charities Housing Corporation for the construction of a 23 unit apartment complex at 212 North Mathilda Avenue and 271-283 West California Avenue, Sunnyvale, to provide affordable housing for very low-income persons with developmental disabilities. The loan was funded by $9,000 of Community Development Block Grants Funds and $115,000 of HOME Grant Funds. The loans bear simple interest at 3%, but repayment of interest and principal is deferred for 40 years. The loans and accumulated interest remain deferred upless during the term of the loan, or after 40 years, the apartments no longer meet the affordability test for very low-income persons with developmental disabilities, or if the property is sold or transferred. The loan is collateralized by a second deed of trust. - . . .. .. - .. 1. HomeSafe .... - On February 21, 2001 the City loaned $100,000 to the HomeSafe Santa Clara L.P. for the construction of a 25-unit apartment complex at 611 EI Camino Real, Santa Clara, to provide affordable housing for women and children who are victims of domestic violence. The loan was funded by $100,000 of HOME Grant Funds. The loan bears simple interest at 3%, but repayment of interest and principal is deferred for 55 years. The loan and accumulated interest are deferred for 55 years unless during the term of the loan, the apartments no longer meet the affordability test for low and very low-income victims of domestic violence, or if the property is sold or transferred. The loan is collateralized by a first deed of trust. ... .. .. .. .... .. -. .. - .. .. till 54 .. .. ~ CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 ,.. - I NOTE 5 - LOANS RECEIVABLE (Continued) - J. Pacific Autism Center for Education .iiliiW On October 15,2001, the City loaned $20,000 to the Pacific Autism Center for Education for the purchase of a single family residence located at 854 Gary Avenue, Sunnyvale, to provide a home for very low- to low-income developmentally disabled persons. The loan was funded by $20,000 of CDBG Grant Funds. The loan bears interest at 6%, but repayment of interest and principal is deferred unless the residence no longer meets the affordability test for very low- to low-income developmentally disabled persons, or if the property is sold or transferred. The loan is secured by a fourth deed of trust. .... ..... - ..... K. Charities Housing Development Corporation Land Lease ..... On April 25, 2002 the City approved loaning up to $3,240,000 of Community Development Block Grant Funds and HOME Funds to Charities Housing Development Corporation for the prepayment of a 65 year lease for approximately 1.688 acres of unimproved land. The land must be used to provide affordable housing for low and very- low income persons. The loan is provided at 0% interest with repayment deferred until the project is constructed and at least 90% occupied. As of June 30, 2002 the balance loaned is $2,948,000, of which $2,208,000 is CDBG funds and $740,000 is HOME Funds. - .... ....' L. Deferred Assessments ...... Deferred assessments are loans for special assessment improvements made to property owners who qualify under the City's deferred assessment program. As of June 30, 2002, $8,000 was owed the City under this program. -"" I NOTE 6 - INTERFUND TRANSACTIONS A. Transfers Between Funds ~ - With Council approval, resources may be transferred from one City fund to another. The purpose of the majority of transfers is to reimburse a fund that has made an expenditure on behalf of another fund. Less often, transfers may be made to open or close a fund. - - - - - - 55 -.. .. CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 .. ""' ..... I NOTE 6 - INTERFUND TRANSACTIONS (Continued) - .. Transfers between funds during the fiscal year ended June 30, 2002 were as follows (dollars in thousands): A To fund development activities. B To fund debt service payments. C To refund remaining balances on completed capital improvement projects. D Contribution to Geographic Information System and environmental management programs. E To redistribute prior property taxes based on the County's revised allocation factors for prior years. F Contribution to utility billing and management activities paid for by the Water fund. G Recurring transfers Fund Receiving Transfers General Fnnd Revitalization Authority Shoreline Golf Links Shoreline Regional Park Com 01 unity General Capital Projects Non-M ajor Governmental Water Wastewater Solid Waste Internal Service Total Interfund Transfers The reasons for these transfers are set forth below: - Amount Fund Making Transfers Transferred Revitalization Authority 6 A Shoreline Regional Park Community 1,439 B General Capital Projects 2,828 C Non-M ajor Governmental I, 117 G Water 142 D Wastewater 49 D Solid Waste 17 D General Fund 37 E General Capital Projects 65 C N on-M ajor G overnm ental 63 G General Capital Projects 148 C General Fund 46 E General Capital Projects 4,788 C Non-Major Governmental 80 G General Fund 6,975 G Shoreline Golf Links 355 G Shoreline Regional Park Community 3,249 G Non-M ajor Governmental 7,392 G Water 26 G Wastewater 39 G General Fund 6,874 G Revitalization Authority 722 G Shoreline Regional Park Community 9,662 G General Capital Projects 1,737 C General Capital Projects 1,469 C W astew ater 197 F Solid Waste 123 F Internal Service 73 G General Capital Projects 446 C General Capital Projects 22 C General Fund 1,633 G Revitalization Authority I G Shoreline Golf Links 146 G Shoreline Regional Park Community 23 G Non-Major Governmental I G Water 135 G W astew ater 95 G Solid Waste 107 G $ 52,327 - .. wi .. .. . .. - .. .. . .. .. .. .. .. .. ... .. - .. .. .. ... III ... .. ... .. 56 .. .. """"" ..... CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 ~ - NOTE 6 - INTERFUND TRANSACTIONS (Continued) ... B. Long-Term In terfund Advances ~ The Funds below had made advances, which were not expected to be repaid within the next year. These long-term interfund advances are expected to be repaid out of future revenues. The balances outstanding as of June 30, 2002 were as follows (dollars in thousands): ~iif Fund Making Advance Fund Receiving Advance Amount of Advance $ 2,147 13,843 5,100 15,320 4,522 157 $ 41,089 - Ceneral Fund Revitalization Authority Special Revenue Fund Shoreline Regional Park Community Special Revenue Fund .!J!tI!IIIl - Special Revenue Fund: Shoreline Regional Park Community Shoreline Golf Links Special Revenue Fund - Enterprise Funds: Water Enterprise Fund Wastewater Enterprise Fund Solid Waste Enterprise Fund Capital Projects Fund: General Capital Projects General Capital Projects General Capital Projects - .... Revitalization Authority advance of $1,734,000 will be repaid at a reamortized interest rate of 6% over the seventeen-year remaining life of the Authority. Payments are scheduled to start in fiscal year 2003. The remaining advance of $413,000 will be paid in full upon the sale of the property located at 253-255 Franklin Street. - Shoreline Regional Park Community advance is being repaid over a period of 28 years at 10% interest in equal annual installments, which began in fiscal 1989. ..... Shoreline Golf Links advance of $5,100,000 for the acquisition of the golf course will be repaid as resources become available in the fund. ~ - General Capital Projects advances totaling $19,999,000 at June 30, 2002 are part of the City's capital projects budgeting and funding process, whereby resources from enterprise funds are advanced to the General Capital Projects fund where the project will be completed and the costs incurred. - - C. Internal Balances - .... Internal balances are presented only in the city-wide financial statements. They represent the net interfund receivables and payables remaining after the elimination of all such balances within governmental and business-type activities. --. ..... - 57 ~"'" .. CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 .. ~ ... I NOTE 7 - LONG-TERM OBLIGATIONS I - A. Governmental Long-Term Obligations ... - The City generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt. The City's debt issues and transactions are summarized below and discussed in detail thereafter. - - Long-term obligations as of June 30, 2002 follow (dollars in thousands): fill .. Original Balance Balance Due Within Issue June 30, June 30, One Amount 2001 Additions Retirements 2002 Year Governmelltal Activity Debt: Revenue and Tax Allocation Bonds: Shoreline Regional Park Community: 1992 Tax Allocation Refunding Bonds 4.0% to 6.5%, due 2016 $ 28,229 20,204 0 (20,204) 0 0 1993 Tax Allocation Bonds 3.1 % to 5.75%, due 2018 25,465 21,140 0 (725) 20,415 760 1996 Tax Allocation Bonds 4.0% to 5.6%, due 2021 21,750 19,825 0 (540) 19,285 565 2001 Tax Allocation Bonds 3.5% to 5.25%, due 2016 17,520 0 17,520 0 17,520 870 Less deferred amount on refunding (2,419) 0 (2,419) 161 (2,258) 0 90,545 61,169 15,101 (21,308) 54,962 2,195 Capital Improvement Financing Authority 1992 Revenue Bonds 4.0% to 6.5%, due 2016 56,478 39,208 0 (39,208) 0 0 Total Revenue and Tax Allocation Bonds 147,023 100,377 15,101 (60,516) 54,962 2,195 Certificates of Participation: Revitalization Authority 1995 Refunding 4.0% to 6.0%, due 2016 9,175 7,810 0 (325) 7,485 340 City 2001 Refunding 3.5% to 4.75%, due 2015 10,720 0 10,720 0 10,720 590 Less deferred amount on refunding (2,151) 0 (2,151) 154 (I ,997) 0 Total Certificates of Participation 17,744 7,810 8,569 (171) 16,208 930 (Continued) .. .. .. .. . .. . lilt .. .. III .lIIlIl .. ... ... - ... .. .. .. .. - .. .. .. 58 .. . - CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements - For the Year Ended June 30,2002 - NOTE 7 - LONG-TERM OBLIGATIONS - (Continued) - Original Balance Balance Due Within Issue June 30, June 30, One Amount 2001 Additions Retirements 2002 Year ~ Special Assessment Debt with City Commitment: 1986 California Street Underground ....... 5.25%-8.20%, due 09/01/06 290 592 0 (45) 245 40 - t 986 Plymouth 5.25%-8.20%, due 09/01/06 1,133 555 0 (75) 480 80 ~ 1986 Charleston-Joaquin-Huff Improvements - 6%-8.2%, due 09/02/07 2,690 1,250 0 (170) 1,080 185 1990 Alta Avenue - 6.50%-8.00%, due 09/02/06 845 470 0 (65) 405 70 1996 Centre-Church-El Ranchito-Bay - 4.10%-6.375%, due 09/02/22 561 375 0 (10) 365 10 - 2000 Yardis Court 7%, due 09/02/20 195 195 0 (57) 138 4 ... - Total Special Assessment Debt with City Commitment 6,016 3,135 0 (422) 2,713 389 ... Compensated Absences 5,366 314 0 5,680 1,180 ...... Landfill Containment 37,207 0 (2,342) 34,865 168 Total Governmental Activity Debt $ 170,783 153,895 23,984 (63,451) 114,428 4,862 ~ Business-Type Activities: Compensated Absences $ 646 47 0 693 0 \&.;". B. Descriptions of Long-Term Obligations - 1992 Tax Allocation Refunding Bonds Shoreline Regional Park Community - On April 30, 1992 the Community issued bonds in the amount of $28,229,000 to advance refund the 1986 Tax Allocation Bonds Series-A and the 1987 Tax Allocation Bonds Series- A. - - - On July 24, 2001 the Community defeased the bonds by placing the proceeds of the 2001 Tax Allocation Bonds in the amount of $17,520,000, as well as $5,775,000 in funds on hand, in an irrevocable trust to provide for all future debt payments. Accordingly, the trust account assets and the liability for the defeased Bonds are not included in the financial statements. At June 30, 2002 the 1992 Tax Allocation Bonds outstanding with a final maturity value of $5,060,000 are considered defeased. - - - ..... 59 .... CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 .. .. ~ .... I NOTE 7 - LONG-TERM OBLIGATIONS - (Continued) I - 1992 Revenue Bonds Capital Improvement Financing Authority - In fiscal 1992, the Financing Authority was created and issued bonds in the amount of $56,478,000 to advance refund the City's lease obligation under the 1988 City Hall Certificates of Participation. The City transferred ownership of the City Hall site and improvements to the Financing Authority and then entered into a 24-year lease for such property with the Financing Authority. The Financing Authority assigned base lease payments to a trustee for the benefit of the owners of the 1992 Revenue Bonds. The lease payments are scheduled to be sufficient to pay the principal and interest on the 1992 Revenue Bonds when due. When the bonds are repaid and the lease expires, ownership of the property will revert back to the City. ... - .. - .. - ... ... On July 24,2001 the City defeased the bonds by placing the proceeds of the 2001 Revenue Refunding Bonds in the amount of $10,720,000, as well as $11,646,000 in funds on hand, in an irrevocable trust to provide for all future debt payments. Accordingly, the trust account assets and the liability for the defeased Bonds are not included in the financial statements. At June 30, 2002 the 1992 Revenue Bonds outstanding with a final maturity value of $5,305,000 are considered defeased. .. - ... ... .. 1993 Tax Allocation Bonds Shoreline Regional Park Community - On September 8, 1993 the Community issued bonds in the amount of $25,465,000 to provide financing for .. certain landfill closure projects. Principal payments are payable annually on August 1 and .. interest payments semi-annually on August 1 and February 1 from property tax revenues generated within the Community. .. .. 1995 Refunding Bonds Revitalization Authority Certificates of Participation - In fiscal 1996, the City transferred ownership of the PoliceIFire Building to the Authority and then entered into a 20-year lease for such property with the Authority. Simultaneously, the Authority entered into an indebtedness agreement in the amount of $9,175,000, whereby the Authority pledges tax increment revenue in amounts equal to the lease payments. The City has assigned the indebtedness payments to a trustee for the benefit of the owners of the 1995 Certificates of Participation (COPs). The indebtedness payments are scheduled to be sufficient in both time and amount, to pay the principal and interest on the 1995 COPs when due. To the extent the indebtedness payments are not sufficient to pay the principal and interest on the 1995 COPs, the City is obligated to make lease payments sufficient to satisfy the principal and interest payments on the 1995 COPs when due. When the 1995 COPs are repaid and the lease expires, ownership of the property will revert back to the City. .. ... .. .. IlIIIIIII .., .. .. .. .. .. .. .. .. 60 .. . ... - - - tIiiIItiIIri' .-. - - - - - - - '/!'i"""" .-'<1' -.."" - - - - - =-- ... -- .... ~,c'" CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 I NOTE 7 - LONG-TERM OBLIGATIONS - (Continued) I 1996 Tax Allocation Bonds Shoreline Regional Park Community - On August 15, 1996 the Community issued bonds in the amount of $21,750,000 to provide financing for land purchases, including road, water, sewer, and other public improvements within the Community. Principal payments are payable annually on August 1 and interest payments semi-annually on August 1 and February 1 from property tax revenues generated within the Community. 2001 Tax Allocation Bonds Shoreline Regional Park Community - On July 24, 2001, the Community issued $17,520,000 of Tax Allocation Refunding Bonds, 2001 Series A, to refund a portion of the Community's 1992 Tax Allocation Bonds. The reacquisition price exceeded the net carrying amount of the old Bonds by $2,419,000. This amount is being netted against the new debt and amortized over the remaining life of the new debt issue which is equivalent to the life of the refunded Bonds. The refunding resulted in an overall savings of $9,995,000. The net present value of the savings, less the City's cash payment of $5,775,000, resulted in an economic gain of$I,872,000. Principal payments are payable annually on August 1 and interest payments semi-annually on August 1 and February 1 from property tax revenues generated within the Community. 2001 Refunding Certificates of Participation - On July 24, 2001, the City issued $10,720,000 of 2001 Refunding Certificates of Participation to refund a portion of the City's obligations under a 1992 Lease Agreement. The Financing Authority's 1992 Revenue Bonds were used to purchase the obligations of the City under the 1992 Lease Agreement, therefore the 2001 Refunding Certificates of Participation will effectively defease a portion of the outstanding 1992 Revenue Bonds. The reacquisition price exceeded the net carrying amount of the old COPs by $2,151,000. This amount is being netted against the new debt and amortized over the remaining life of the new debt issue which is equivalent to the life of the refunded COPs. The refunding resulted in an overall savings of $17,652,000. The net present value of the savings, less the City's cash payment of $11,646,000, resulted in an economic gain of $1,819,000. The 2001 Refunding COPs are collateralized by revenue received from the City by the Trustee under the City Hall/Community Theater complex lease agreement. Principal payments are payable annually on August 1 and interest payments semi-annually on August 1 and February 1 from general revenues of the City. Special Assessment Debt with City Commitment - Special assessment districts exist in the City to provide improvements to properties located within those districts. Properties are assessed for the cost of improvements; these assessments are payable over the term of the debt issued to finance the improvements. The total amount of the assessment is recorded as a receivable and a deferred revenue at the time the related debt is issued, and is reduced as assessments are collected. 61 .. CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 - ~ .... I NOTE 7 - LONG-TERM OBLIGATIONS - (Continued) I - The City is committed to be the purchaser of last resort or to advance available City funds to repay this debt in the event of default by any property owners of these districts. The City accounts for resources available to pay special assessment debt in its Special Assessment Debt Service Fund. .. ... - - These Special Assessment Bonds were issued at various times to provide financing for electrical and community service facilities, street and utility improvements, water and sewer connections, storm drain improvements, and other related projects. .. - Principal payments are payable annually, and interest payments semiannually. .. .. C. Debt Service Requirements (dollars in thousands): . Annual debt service requirements to maturity for long-term debt follows (dollars III thousands) : ... .. Governmental Activities .. For the Year Ending June 30 Principal Interest . 2003 2004 2005 2006 2007 2008-2012 2013-2017 2018-2022 Total $ 3,514 3,694 3,874 4,060 4,255 21,545 26,681 10,515 78,138 3,940 3,770 3,594 3,398 3,196 12,964 6,621 1,203 38,686 .. II .. . .. $ .. .. Reconciliation oflong-term debt prinicpal: .. Principal requirement as reported above Less: deferred amount on refunding Total long-term debt principal $ 78,138 (4,255) $ 73,883 ... .. -- There are a number of limitations, covenants and restrictions contained in the various bond indentures. The City is in compliance with all material limitations, covenants and restrictions. ... .. . D. Landfill Containment .. The City is responsible for managing and controlling methane gas and containment of leachate at three former City-operated landfill sites. .. .. - 62 .. .. Iihi. .... - - - ~ ~ ~ - - - - ....., ---ji .. - ... ~ - - - - -- - 'it..,~ CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 I NOTE 7 - LONG-TERM OBLIGATIONS - (Continued) I As of June 30, 2002, City engineers and professional engineering consultants have estimated that the maximum total cost for potential pollution containment and control at such landfill sites, excluding post-closure care costs, is approximately $24,133,000. As the landfill-related projects were funded by the Community in fiscal 1994, the liability has been transferred to the City's General Capital Projects Fund. As of June 30, 2002, approximately $23,965,000 million of the obligation has been spent on landfill closure. City engineers and consultants have estimated the current portion of the remaining obligation to be approximately $168,000. Accordingly, this amount has been accrued in the City's General Capital Projects Fund. Pursuant to a Postclosure Maintenance Plan filed with the State, the City is obligated for additional postclosure care costs in the amount of$1,370,000 annually for a period of thirty (30) years. The remaining amount of this obligation as of June 30, 2002 is approximately $34,865,000. Annual revenues from the Solid Waste Enterprise Fund will fund the postclosure care costs. In accordance with a State-mandated Financial Assurance Mechanism (FAM), the City has pledged future Solid Waste Enterprise Fund revenues in the amount of $1,370,000 per year for postclosure care costs on two of its landfill sites. The third landfill site does not require a F AM to be established for the closure of the site, and, therefore, is excluded from the obligation. The estimated costs of closure and postclosure care are subject to changes such as the effects of inflation, revision of laws and other variables. E. Debt without City Commitment As part of the City's program to provide affordable rental housing for low and moderate income households, it assisted the developer of the Villa-Mariposa housing project in the issuance of multifamily housing revenue bonds. These bonds are secured by a First Deed of Trust on the project and by municipal insurance, and are payable solely out of revenues from the project. Neither the faith and credit nor the taxing power of the City, the State, or any political subdivision thereof are pledged for the payment of the principal or interest on the bonds. The outstanding balance due on these bonds at June 30, 2002 was $18,300,000. 63 .. CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 .. ~ ... I NOTE 8 - EMPLOYEE RETIREMENT PLAN - A. Plan Description .. - All permanent employees are required to participate in the Public Employees' Retirement Fund (Fund) of the State's Public Employees Retirement System (PERS). The Fund is an agent multiple-employer defined benefit retirement plan that acts as a common investment and administrative agent for various local and state government agencies within California. The Fund provides retirement provides retirement, disability, and death benefits based on the employee's years of service age and highest year of compensation. Employees vest after five years of service and normally receive retirement benefits at age 50 for public safety employees and age 55 for miscellaneous employees (nonsafety employees). .. - .. .. .. Benefit provisions and all other requirements are established by State statute and City resolution. Copies of PERS' annual financial report may be obtained from their Executive Office-400 P Street, Sacramento, California, 95814. .. .. - B. Funding Policy .. .. Participants are required to contribute 9.0 percent of covered payroll for public safety personnel and 7.0 percent for miscellaneous employees. The City is required to contribute at an actuarially determined rate. The contribution requirements of the plan members and the City are established and may be amended by PERS. . .. .. C. Actuarially Determined Contribution Requirements and Contributions .. II Effective July 1, 1997, the City adopted GASB Statement No. 27, Accountingfor Pensions by State and Local Government Employers. There was no net pension obligation at the time of transition upon implementation of GASB Statement No. 27. For fiscal year 2002, the City's annual pension costs for PERS was equal to the City's required and actual contributions. The required contributions were determined as part of the June 30, 1999 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions include (a) 8.25 percent investment rate of return (net of administrative expenses), (b) projected annual salary increases that vary by duration of service, and (c) 3.75 percent per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3.5 percent. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility of the market value of investments over a four-year period (smoothed market value). Investment gains and losses are accumulated as they are realized and ten percent of the net balance is amortized annually. The PERS unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The amortization period of the unfunded actuarial liability ends on June 30, 2016. .. .. .. ... - - ... III ... .. .. .. .. .. 64 .. .. - CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 - .. ~ I NOTE 8 - EMPLOYEE RETIREMENT PLAN (Continued) - D. Trend Information - Three-year historical trend information is presented below (dollars in thousands): Fiscal Annual Percentage Net Year Pension of APC Pension .. Ended Cost (APC) Contributed Obligation - 2000 $ 3,266 100% - 2001 512 100% 2002 2,420 100% - E. Funding Progress - The following schedule of funding progress is presented for the most recent actuarial valuations as oOune 30, 2000 (dollars in thousands): - - Unfunded Entry Age Unfunded Annual (Overfunded) Valuation Accrued Value of (Overfunded) Funded Covered Liability as % Date Liability Assets Liability Ratio Payroll of Payroll 1998 $ 152,605 173,975 (21,370) 114.0% 32,494 (65.766%) 1999 171,139 199,085 (27,946) 116.3% 37,204 (75.116%) 2000 202,491 224,390 (21,899) 110.8% 39,739 (55.107%) - \iI,ic,,;, I NOTE 9 - POST -EMPLOYMENT BENEFITS ...., By Council resolution, the City provides certain health care benefits for retired employees (spouse and dependents are not included) under third-party insurance plans. Employees who have worked for the City for a minimum of 5 to 10 years (depending on the labor group) if hired prior to July 1, 1989 and 15 years if hired subsequent to July 1, 1989, are eligible for this benefit. As of June 30, 2002, approximately 199 participants were eligible to receive benefits. Expenses are recognized as insurance claims or premiums are paid. For fiscal 2002, expenses totaled $571,000 - - - - - - - 65 ~.'" CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 .. .. 'IlIl\ ..... I NOTE lO-RISKMANAGEMENT - The City is exposed to various risks of loss related to torts, errors and omissions, injuries to employees or others, unemployment and health care of employees. The City has established various self-insurance programs to account for and finance its uninsured risks of loss. The activities of the self-insurance programs are recorded in the Internal Service Funds. Under the self-insurance programs, the City retains the risk of loss up to a maximum of $500,000 for general liability claims, $250,000 for workers' compensation claims with statutory excess insurance and actual costs incurred for unemployment benefits. .. - .. .. .. - For general liability claims, the City has excess liability coverage through the Authority for California Cities Excess Liabilities (ACCEL) to cover the risk of loss for claims in excess of $500,000 per incident. ACCEL is a joint powers authority of medium-sized California municipalities which pools catastrophic general liability, automobile liability and public officials errors and omissions losses. ACCEL coverage consists of an excess insurance policy purchased for a limit of $19,500,000 per occurrence, with an aggregate limit of $19,500,000. .. .. .. .. .. Charges to the General Fund and other insured funds are determined from an analysis of self-insured claims costs and reserve requirements and are recorded as operating expenditures or expenses of such funds and operating revenues of the various Internal Service Funds. .. . .. . Estimated liabilities are recorded for claims in cases where such amounts are reasonably determinable and where the liability is likely for claims which are incurred through the end of the fiscal year but not reported until after that date. The estimated liability is determined based upon historical claims data and independently determined estimates of the amounts needed to pay prior and current year claims. .. . - .. Changes in accrued self-insurance claims for the fiscal year ended June 30 were as follows (dollars in thousands): .... .. 2002 2001 Beginning Balance $ 3,551 4,089 Liability for current and prior fiscal year claims and claims incurred but not reported (IBNR) 1,492 725 Claims paid (1,074) (1,263) Ending Balance $ 3,969 3,551 - .. .... III - III - .. .. .. 66 .. . .... CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30,2002 - - !il';MIJil I NOTE 11 - NET ASSETS AND FUND BALANCES .. A. Net Assets - Net Assets is the excess of all the City's assets over all its liabilities, regardless of fund. Net Assets are divided into three captions on the Statement of Net Assets. These captions apply only to Net Assets, which is determined only at the Government-wide level, and are described below: - ~ - Invested in Capital Assets, net of related debt describes the portion of Net Assets which is represented by the current net book value of the City's capital assets, less the outstanding balance of any debt issued to finance these assets. - ~ Restricted describes the portion of Net Assets which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. These principally include developer fees received for use on capital projects, debt service requirements, and redevelopment funds restricted to low and moderate income purposes. . - - ..... Unrestricted describes the portion of Net Assets which is not restricted as to use. B. Fund Balances, Reserves and Designations ~ ... In the fund financial statements, fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables, less it's liabilities. Portions of a fund's balance may be reserved or designated for future expenditure. ~ Fund balances/retained earnings consist of reserved and unreserved amounts. Reserved fund balances/retained earnings represent that portion of fund balance/retained earnings which are not available for appropriation or are legally segregated for a specific future use. The remaining portion is unreserved fund balance/retained earnings. - - Portions of unreserved fund balance may be designated to indicate tentative plans for financial resource utilization in a future period, such as for general contingencies or capital projects. Such plans or intentions are subject to change. - - - Accumulated retained earnings of the Internal Service Funds are in accordance with City reserve policies. - ..... - .... - 67 ~ ... CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 - ~ ... I NOTE 11 - NET ASSETS AND FUND BALANCES (Continued) - C. Fund Balance Restatement .. - During fiscal year 2002, the City determined that loans which had been funded by the Department of Housing and Urban Development prior to 1997 had not been recorded in the financial statements. Accordingly, the balances for loans receivable and fund balance in the Grants Special Revenue Fund have been restated and increased $1,771,000 to reflect these loans. .. - - I NOTE 12 - COMMITMENTS AND CONTINGENCIES ... - A. Litigation .. .. The City is a defendant in several lawsuits and other matters arising in the normal course of operations. The City's management and legal counsel are of the opinion that the potential ... claims against the City not covered by insurance resulting from such litigation would not WIllI materially affect the financial position of the City. lIlIiI\ B. Grant Programs .. The City participates in Federal and State grant programs. These programs have been audited through the fiscal year ended June 30, 2002 by the City's independent accountants in accordance with the provisions of the federal Single Audit Act amendments of 1996 and applicable State requirements. No cost disallowances were proposed as a result of these audits; however, these programs are still subject to further examination by the grantors and the amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial. .. . .. . ... .. C. City of Palo Alto Regional Water Quality Control Plant ... The City has an agreement with the City of Palo Alto to purchase treatment capacity at the Palo Alto Regional Water Quality Control Plant. The agreement provides that the City will purchase capacity for 50 years. The agreement also provides for Palo Alto to set service charges annually with quarterly billings based on estimated use. A reconciliation of actual to estimated charges is completed annually. For fiscal 2002, these costs totaled $5,595,000. .. - .. - .. .. .. .. .. .. . 68 .. . .... - CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 - - I NOTE 12 - COMMITMENTS AND CONTINGENCIES (Continued) - D. Sunnyvale Material Recovery and Transfer (SMaRT) Station ...... - During fiscal 1993, the City entered into a Memorandum of Understanding (MOU) with the City of Sunnyvale to obtain solid waste and recycling services at the Sunnyvale Materials Recovery and Transfer (SMaRT) Station. The MOU provides that the City has capacity share of 23.45 percent of this facility for 30 years. Annual service charges are determined based on a debt service component, as well as actual per-ton charges. For fiscal 2002, these costs totaled $4,353,000. - - - - - I NOTE 13 - LEASING ARRANGEMENTS - A. Shoreline Amphitheatre Partners - In fiscal 1986, the City and the Community, as lessors, entered into a 35-year operating lease with the Shoreline Amphitheatre Partners (SAP), an entity not affiliated with the City or the Community. This lease provides for the rental of City land underneath the Shoreline Amphitheatre. The lease payments include a minimum lease payment and a portion equal to a percentage of gross receipts, including concession revenues, of Shoreline Amphitheatre operations. A substantial portion of the future minimum lease payments was paid in advance by SAP in fiscal 1997 as permitted in the lease agreement. ... - ..... The lease payments based on gross receipts totaled approximately $968,000 in fiscal 2002. .... B. Silicon Graphics, Inc. ~ In fiscal 1995, the City, as lessor, entered into a 55-year lease with Silicon Graphics, Inc. (SGI), an entity not affiliated with the City. This lease provides for the rental of City land located within the Community upon which SGI has constructed a 500,000 square foot corporate campus. ~ In fiscal 1997, the City, as lessor, entered into another 55-year lease with SGI. This lease provides for the rental of City land located within the Community upon which SGI has constructed a second 556,000 square foot facility. - - - In fiscal 2001, SGI assigned both of the lease agreements above to Goldman Sachs, Inc., an entity not affiliated with SGI or the City. - .. - - .... - 69 "*"'",.. III CITY OF MOUNTAIN VIEW, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2002 ... - - I NOTE 13 - LEASING ARRANGEMENTS (Continued) I - The future minimum lease payments due to the City under the aforementioned leases follow (dollars in thousands): WIll ... ... Year Ending June 30 Amount 2003 $ 3,934 2004 4,091 2005 4,065 2006 3,658 2007 3,450 Thereafter 159,018 Total $ 178,216 .. ., .. .. ... .. .. .. ... . .. .. ... .. .. .. III .. - .., - .. .. .. - .. .. .. 70 .. .. ~ - - - .... .... - - - - - - - - - ... - .... - ........ .... - - "'"' - - ... - ... - ... ... - - NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS The Gas Tax Fund accounts for gas tax revenues received from the State and expended for construction and maintenance of City streets. The Construction and Conveyance Tax Fund accounts for revenues from taxes on real property transferred in the City. These revenues are used for acquisition, improvement, maintenance, expansion or implementation of the Capital hnprovements Program. The Below Market Housing Fees Fund accounts for fees paid by developers in lieu of providing 10% of new residential units available to low and moderate income households. The Transit Oriented Development Fund accounts for revenues that will be used to encourage development and rejuvenation of areas served by transit facilities. The Parking District No.2 Fund accounts for revenues received for off-street parking in the District and for annual ad valorem rate and direct assessments levied against the property owners within the District. The Grants Fund accounts for grants received, including Community Development Block Grants, the Local Law Enforcement Block Grant Program, the Supplemental Law Enforcement Services Fund and the Measure A/B Pavement Management Program. The Police Asset Forfeitures Fund accounts for funds derived from criminal assets seized by police, primarily from illegal narcotics sales activity. The Cable Television Fund accounts for cable franchise revenues received and costs contributed to a third party for the development and operations of the local cable television system. The Deferred Assessments Fund accounts for a program which allows certain property owners to defer up to 100 percent of any special assessment levied on their property. The assessment becomes due upon certain specified occurrences. DEBT SERVICE FUNDS The Police/Fire Building Refunding 1995 Certificates of Participation Fund accounts for resources used for the purpose of paying the principal, interest and related costs on the 1995 Refunding Certificates of Participation as they become due. The Special Assessments Fund accounts for resources financed by special assessments levied against property receiving special benefits, contributions from other funds for general benefits and certain reserve requirements. 71 - h* :JlIlII!IJ NON-MAJOR GOVERNMENTAL FUNDS (Continued) """ The Shoreline Community 1992 Tax Allocation and Refunding Bond Fund accounts for resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 1992 Tax Allocation and Refunding Bonds as they become due. ... - .. .. The Shoreline Community 1993 Tax Allocation Bond Fund accounts for the resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 1993 Tax Allocation Bonds as they become due. III III The Shoreline Community 1996 Tax Allocation Bond Fund accounts for the resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 1996 Tax Allocation Bonds as they become due. tIIII III ... The Shoreline Community 2001 Tax Allocation Bond Fund accounts for the resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 2001 Tax Allocation Bonds as they become due. . .. .... The 2001 Refunding Certificates of Participation Fund accounts for the resources used for the purpose of paying the principal, interest and related costs on the 2001 Refunding Certificates of Participation as they become due. .. ... The Capital Improvements Financing Authority Fund accounts for resources used for the purpose of paying the principal, interest and related costs on the 1992 revenue bonds as they become due. These bonds were retired in fiscal year 2002. tIIII III CAPITAL PROJECTS FUNDS .. 1M The Storm Drain Construction Fund accounts for revenues derived from off-site drainage fees used for storm drain projects in the Capital Improvements Program. IIII!I II The Park Land Dedication Fund (previously titled the Recreation Construction Fund) accounts for revenues derived from fees on residential subdivisions used for park and recreation projects. .. .. .. ... The Special Assessment Construction Fund accounts for capital improvement construction funded from the proceeds of special assessment debt. .. ... .. ... .. III .. ... 72 .. ... - - - - ..... .. - ... - .... - - - ..... This Page Left Intentionally Blank - ... ... - WII"'I! .... - .J - ..... ... .. - - """ .. - .... - - - ... - CITY OF MOUNTAIN VIEW, CALIFORNIA - Non-Major Governmental Funds ... Combining Balance Sheets June 30, 2002 (Dollars in Thousands) ,IVm SPECIAL REVENUE FUNDS ... Below - Construction Market Transit & Conveyance Housing Oriented .. Gas Tax Tax Fees Development 1M Assets .. Assets: Cash and investments $ 320 6,270 266 713 ... Restricted cash and investments 0 0 0 0 Receivables: . Accounts (net of allowances) 0 0 0 0 III Special assessments: Delinquent 0 0 0 0 . Deferred 0 0 0 0 Interest 20 144 6 23 III Loans 0 0 0 0 Taxes 130 0 0 0 .. , Total assets $ 470 6,414 272 736 .. Liabilities and fund balances .. ... Liabilities: Accounts payable and accrued costs $ 0 0 0 0 .. Refundable deposits 0 0 ]53 0 Deferred revenue 0 0 0 0 .. Total liabilities 0 0 153 0 ... ... Fund balances: rII Reserved for: .. Restricted cash and investments 0 0 0 0 Debt service 0 0 0 0 .. Loans receivable 0 0 0 0 Encumbrances 0 0 20 0 . Unreserved: Designated for: iI.ii Capital improvement program 0 0 0 0 III Unrealized gain on investments 0 115 14 0 Undesignated 470 6,299 85 736 1lII Total fund balances 470 6,414 1] 9 736 III Total liabilities and fund balances $ 470 6,414 272 736 1111 III .. ... - ... 74 .. .. ~,:f ~ - - - .... Parking Police Asset Cable Deferred District #2 Grants Forfeitures Television Assessments .. - .... 2,608 118 39 604 338 IJlIIlmlI 0 0 0 750 0 .. 0 205 0 0 0 .... 0 0 0 0 0 0 0 0 0 0 - 59 6 0 0 0 0 8,284 0 0 8 - 0 0 0 0 0 - 2,667 8,613 39 1,354 346 .... .. ...."" 3 4 0 0 0 0 0 0 0 0 .... 0 0 0 0 8 - 3 4 0 0 8 w,' ..... - 0 0 0 750 0 ~.,~ 0 0 0 0 0 0 8,284 0 0 0 - 10 237 0 25 0 - - 1,116 0 0 0 0 73 9 0 26 0 .... 1,465 79 39 553 338 .... 2,664 8,609 39 1,354 338 - 2,667 8,613 39 1,354 346 ilMI - (Continued) ... .... ... 75 - .. CITY OF MOUNTAIN VIEW, CALIFORNIA ~ Non-Major Governmental Funds - Combining Balance Sheets June 30, 2002 (Dollars in Thousands) .. DEBT SERVICE FUNDS - . Police/Fire Shoreline Shoreline Building Special Community Community - 1995 C.O.P. Assessments 1992 T.A. 1993 T.A. . - Assets: Cash and investments $ 0 1,062 0 0 III Restricted cash and investments 784 0 0 0 Receivables: ... Accounts (net of allowances) 0 0 0 0 II Special assessments: Delinquent 0 5 0 0 lIIJ Deferred 0 2,306 0 0 Interest 0 0 0 0 III Loans 0 0 0 0 Taxes 0 0 0 0 - Total assets $ 784 3,373 0 0 .. Liabilities and fund balances .. . Liabilities: Accounts payable and accrued costs $ 0 0 0 0 .. Refundable deposits 0 0 0 0 Deferred revenue 0 2,306 0 0 III Total liabilities 0 2,306 0 0 .. \1' Fund balances: .. Reserved for: - Restricted cash and investments 784 0 0 0 Debt service 0 1,067 0 0 ... Loans receivable 0 0 0 0 Encumbrances 0 0 0 0 .. Unreserved: Designated for: iIIIl Capital improvement program 0 0 0 0 - Unrealized gain on investments 0 0 0 0 Undesignated 0 0 0 0 .. Total fund balances 784 1,067 0 0 . Total liabilities and fund balances $ 784 3,373 0 0 .. 'IIllIII - . - .. 76 .. .. 'i!:i:lji, - IiIIlI """ .... Capital Shoreline Shoreline 2001 Improvements - Community Community Refunding Financing 1996 T.A. 2001 T.A. C.O.P. Authority ... - ... 0 0 0 0 - 0 15 11 0 - 0 0 0 0 ~ 0 0 0 0 0 0 0 0 - 0 0 0 0 0 0 0 0 0 0 0 0 - 0 15 11 0 - - ~ 0 0 0 0 0 0 0 0 - 0 0 0 0 ..- 0 0 0 0 - - - 0 15 11 0 0 0 0 0 0 0 0 0 - 0 0 0 0 ... ... 0 0 0 0 0 0 0 0 ..... 0 0 0 0 - 0 15 11 0 - 0 15 11 0 ... ~ (Continued) III! - - - 77 ..... ... CITY OF MOUNTAIN VIEW, CALIFORNIA Non-Major Governmental Funds "'l'1I'l\ Combining Balance Sheets June 30, 2002 (Dollars in Thousands) CAPITAL PROJECTS FUNDS ""'" Total IilOOI Storm Park Special Nonmajor Drain Land Assessments Governmental 11IIIII Construction Dedication Construction Funds - Assets IIIIIlI Assets: IIlII Cash and investments $ 693 3,053 602 16,686 Restricted cash and investments 0 0 0 1,560 Receivables: .. Accounts (net of allowances) 0 0 0 205 IIIl Special assessments: Delinquent 0 0 0 5 .. Deferred 0 0 0 2,306 Interest II 117 0 386 III Loans 0 0 0 8,292 Taxes 0 0 0 130 - Total assets $ 704 3,170 602 29,570 ... Liabilities and fund balances "" ... Liabilities: Accounts payable and accrued costs $ 0 0 0 7 .- Refundable deposits 0 0 0 153 Deferred revenue 0 0 0 2,314 III Total liabilities 0 0 0 2,474 .. - Fund balances: .. Reserved for: III Restricted cash and investments 0 0 0 1,560 Debt service 0 0 0 1,067 III Loans receivable 0 0 0 8,284 Encumbrances 0 0 5 297 ... Unreserved: Designated for: ... Capital improvement program 684 1,617 597 4,014 III Unrealized gain on investments 20 63 0 320 Un designated 0 1,490 0 11 ,554 ... Total fund balances 704 3,170 602 27,096 'III Total liabilities and fund balances $ 704 3,170 602 29,570 .. - ... .. .. .. 78 .. .. ..... - - ~ ... .... - .... - .. - This Page Left Intentionally Blank .... ~ ... - .... - - - ... - .... - - - - - -- .. - - .. .. CITY OF MOUNTAIN VIEW, CALIFORNIA '~(. Non-Major Governmental Funds """ Combining Statement of Revenues, Expenditures and Changes in Fund Balances ..... June 30,2002 (Dollars in Thousands) .... SPECIAL REVENUE FUNDS .. Below Construction Market Transit - & Conveyance Housing Oriented Gas Tax Tax Fees Development - Revenues: .. Taxes $ 0 4,093 0 0 Licenses, permits and fees 0 0 0 0 .. Use of money and property 0 257 20 38 Intergovernmental revenues 1,548 0 0 0 . Charges for services 0 0 344 1,973 . Other 0 0 0 0 Total revenues 1,548 4,350 364 2,011 ... III Expenditures: Current: - General government 0 0 0 0 Public safety 0 0 0 0 .. Public works 14 0 0 0 Community development 0 0 255 0 -- Capital outlay 0 0 0 0 .. Debt service: Principal repayment 0 0 0 0 .. Interest and fiscal charges 0 0 0 0 .. Total expenditures 14 0 255 0 - Excess (deficiency) of revenues over .. (under) expenditures 1,534 4,350 109 2,011 Other financing sources (uses): ... Bond proceeds 0 0 0 0 .. Bond issuance premium (discount) 0 0 0 0 Payment to bond escrow agent 0 0 0 0 .. Transfers in 371 753 7 0 Transfers (out) (2,062) (3,845) 0 (1,275) ... Sales of general fixed assets 0 0 0 0 ... Total other financing sources (uses) (1,691 ) (3,092) 7 (1,275) - Excess (deficiency) of revenues and other - financing sources over (under) expenditures and other financing uses (157) 1,258 116 736 ... Beginning fund balances, as restated 627 5,156 3 0 - Ending fund balances $ 470 6,414 119 736 .- . III .. III 80 .. III ....' - ... - .... - Police Parking Asset Cable Deferred ... District #2 Grants Forfeitures Television Assessments - 52 0 0 0 0 .. 69 0 0 640 0 239 160 0 55 0 - 3,493 10 0 0 2 - 354 0 0 0 0 2 9 0 73 79 - 718 3,662 10 768 79 ~ 0 0 0 562 0 .. 0 312 0 0 0 - 0 0 0 0 0 101 490 0 0 0 .... 0 33 0 51 0 - 0 0 0 0 0 0 0 0 0 0 .. 101 835 0 613 0 - """. 2,827 10 79 617 155 ~~ - 0 0 0 0 0 0 0 0 0 0 - 0 0 0 0 0 280 15 0 0 0 - (584) (1) 0 (192 ) 0 0 0 0 0 0 ... - (304) 14 0 (192) 0 - - 313 2,841 10 (37) 79 - 2,351 5,768 29 1,391 259 - 2,664 8,609 39 1,354 338 - (Continued) .. - iIIIII ~~~ 81 iIIIII CITY OF MOUNTAIN VIEW, CALIFORNIA Non-Major Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances June 30, 2002 (Dollars in Thousands) DEBT SERVICE FUNDS Police/Fire Shoreline Shoreline Building Special Community Community 1995 C.O.P. Assessments 1992 T.A. 1993 T.A. Revenues: Taxes $ 0 388 0 0 Licenses, permits and fees 0 0 0 0 Use of money and property 32 211 2 0 Intergovernmental revenues 0 0 0 0 Charges for services 0 0 0 0 Other 0 0 0 0 Total revenues 32 599 2 0 Expenditures: Current: General government 0 0 0 0 Public safety 0 0 0 0 Public works 0 0 0 0 Community development 0 0 0 0 Capital outlay 0 0 0 0 Debt service: Principal repayment 325 370 1,060 725 Interest and fiscal charges 433 237 1,027 1,167 Total expenditures 758 607 2,087 1,892 Excess (deficiency) of revenues over (under) expenditures (726) (8) (2,085) (1,892) Other financing sources (uses): Bond proceeds 0 0 17,520 0 Bond issuance premium (discount) 0 0 368 0 Payment to bond escrow agent 0 0 (21,563) 0 Transfers in 723 0 5,759 1,891 Transfers (out) 0 0 0 0 Sales of general fixed assets 0 0 0 0 Total other financing sources (uses) 723 0 2,084 1,891 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (3) (8) (1) (I) Beginning fund balances, as restated 787 1,075 Ending fund balances $ 784 1,067 0 0 - ..... 11'III w M .. IIIIIIII ... II1llI ~ - . . '" ~ .. III "tI/I w .. .. .. - .. .. .. .. ... .. .. .. .. 82 .- .. i11M' .... "'"', ... Capital - Shoreline Shoreline 2001 Improvements Community Community Refunding Financing .. 1996 T.A. 2001 T.A. C.O.P. Authority 0 0 0 0 "!Il> 0 0 0 0 0 1 1 575 0 0 0 0 - 0 0 0 0 0 0 0 0 ~ 0 575 .... - 0 0 0 0 - 0 0 0 0 .... 0 0 0 0 0 0 0 0 ""'" 0 0 0 0 -""'" 540 0 0 2,175 1,061 398 224 1,393 .... 1,601 398 224 3,568 .... ..", (1,601) (397) (223) (2,993) - - 0 0 0 1 0,720 0 0 0 (19) - 0 0 0 (39,184) 1,600 412 234 6,634 - 0 0 0 0 0 0 0 0 .~ - 1,600 412 234 (21,849) - - (1) 15 11 (24,842) - 0 0 24,842 - 0 15 11 0 (Continued) .... - .... ........ 83 .... .. CITY OF MOUNTAIN VIEW, CALIFORNIA Non-Major Governmental Funds - Combining Statement of Revenues, Expenditures and Changes in Fund Balances .,. June 30, 2002 (Dollars in Thousands) .... CAPITAL PROJECTS FUNDS .. Total Storm Park Special Nonmajor .. Drain Land Assessments Governmental Construction Dedication Construction Funds .. Revenues: .. Taxes $ 0 0 0 4,533 Licenses, permits and fees 0 1,021 0 1,730 . Use of money and property 44 209 0 1,844 Intergovernmental reven ues 0 0 0 5,053 ... Charges for services 0 0 0 2,671 III Other 15 0 0 178 Total revenues 1,230 16,009 ... 59 0 .- Expenditures: Current: .. General government 0 0 0 562 Public safety 0 0 0 312 .. Public works 0 0 0 14 Community development 0 0 0 846 . Capital outlay 0 0 60 144 " Debt service: Principal repayment 0 0 0 5,195 .. Interest and fiscal charges 0 0 0 5,940 .- Total expenditures 0 0 60 13,013 ... Excess (deficiency) of revenues over .... (under) expenditures 59 1,230 (60) 2,996 Other financing sources (uses): .. Bond proceeds 0 0 0 28,240 - Bond issuance premium (discount) 0 0 0 349 Payment to bond escrow agent 0 0 0 (60,747) ... Transfers in 44 272 0 18,995 Transfers (out) (26) (668) 0 (8,653) .. Sales of general fixed assets 0 0 0 0 ... Total other financing sources (uses) 18 (396) 0 (21,816) .. Excess (deficiency) of revenues and other -- financing sources over (under) expenditures and other financing uses 77 834 (60) ( 18,820) III Beginning fund balances, as restated 627 2,336 662 45,916 .. Ending fund balances $ 704 3,170 602 27,096 - .. III ... ... 84 .. . - - ... lftilMl .... - - - ... - - .... This Page Left Intentionally Blank ... - ..... .... iiii.li ....,. - - - - - - - - - - - - - CITY OF MOllNTAIN VIEW, CALIFORNIA Budgeted Non-Major Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual For the Fiscal Year Ended June 30, 2002 (Dollars in Thousands) Construction & Conveyance Gas Tax Tax Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Revenues: Taxes $ 0 0 0 2,051 4,093 2,042 Licenses, permits and fees 0 0 0 0 0 0 Use of money and property 80 0 (80) 470 257 (213) Intergovernmental 1,388 1,548 160 0 0 0 Charges for services 0 0 0 0 0 0 Other 0 0 0 0 0 0 Total revenues 1,468 1,548 80 2,521 4,350 1,829 Expenditures: Current: General government: City Manager 0 0 0 0 0 0 Public works 0 14 (14) 0 0 0 Community development 0 0 0 0 0 0 Capital outlay 0 0 0 0 0 0 Total expenditures 0 14 (14) 0 0 0 Excess (deficiency) of revenues over (under) expenditures 1,468 1,534 66 2,521 4,350 1,829 Other financing sources (uses); Transfers in 0 371 371 0 753 753 Transfers (out) (2,062) (2,062) 0 (3,845) (3,845) 0 Total other financing sources (uses) (2,062) (1,691) 371 (3,845) (3,092) 753 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses $ (594) (157) 437 (1,324) 1,258 2,582 Adjustment to budgetary basis Funds not budgeted Grants 0 0 Police Assets Forfeitures 0 0 Deferred Assessments 0 0 Police/Fire Building 1995 e.O.P. 0 0 Special Assessments 0 0 Shoreline Community 1992 T.A. 0 0 Shoreline Community 1993 T.A. 0 0 Shoreline Community 1996 T.A. 0 0 Shoreline Community 200 I T.A. 0 0 2001 Refunding e.O.P. 0 0 Capital Improvements Financing Authority 0 0 Special Assessments Construction 0 0 Beginning fund balances 627 5,156 Ending fund balances $ 470 6,414 86 III .. II1II ... .... .... .. .. III ... ..} .. .. ... .. .. .. lIIJII .. - .. .. .. .. .. . ... - ... .. .. .. .. - .. .. .. .. - - .... Below Market Transit Oriented Parking - Housing Fees Development District #2 Variance Variance Variance -, Favorable Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable) - .. 0 0 0 0 0 0 57 52 (5) 0 0 0 0 0 0 60 69 9 .... 0 20 20 0 38 38 213 239 26 0 0 0 0 0 0 4 2 (2) ...... 0 344 344 0 1,973 1,973 160 354 194 0 0 0 0 0 0 2 2 0 ... 0 364 364 0 2,011 2,011 496 718 222 - - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 275 255 20 0 0 0 156 101 55 - 0 0 0 0 0 0 0 0 0 - 275 255 20 0 0 0 156 101 55 - (275) 109 384 0 2,011 2,011 340 617 277 - - 0 7 7 0 0 0 0 280 280 0 0 0 (2,490) (1,275) 1,215 (584) (584) 0 .- (584) (304) 0 7 7 (2,490) (1,275) 1,215 280 - - (275) 116 391 (2,490) 736 3,226 (244) 313 557 .. - 0 0 0 0 0 0 - 0 0 0 0 0 0 ..... 0 0 0 0 0 0 - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1W 0 0 0 "'"" 3 0 2,351 ... 119 736 2,664 - (Continued) - - - - 87 - CITY OF MOllNTAIN VIEW, CALIFORNIA Budgeted Non-Major Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual For the Fiscal Year Ended June 30, 2002 (Dollars in Thousands) Cable Storm Drain Television Construction Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budl!;et Actual (Unfavorable) Revenues: Taxes $ 0 0 0 0 0 0 Licenses, pennits and fees 640 640 0 0 0 0 Use of money and property 41 55 14 40 44 4 Intergovernmental 0 0 0 0 0 0 Charges for services 0 0 0 0 0 0 Other 73 73 0 5 15 10 Total revenues 754 768 14 45 59 14 Expenditures: Current: General government: City Manager 641 562 79 0 0 0 Public works 0 0 0 0 0 0 Community development 0 0 0 0 0 0 Capital outlay 55 51 4 0 0 0 Total expenditures 696 613 83 0 0 0 Excess (deficiency) of revenues over (under) expenditures 58 155 97 45 59 14 Other financing sources (uses): Transfers in 0 0 0 0 44 44 Transfers (out) (192) (192) 0 (26) (26) 0 Total other financing sources (uses) (192) (192) 0 (26) 18 44 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses $ (134) (37) 97 19 77 58 Adjustment to budgetary basis Funds not budgeted Grants 0 0 Police Assets Forfeitures 0 0 DefclTed Assessments 0 0 Police/Fire Building 1995 C.O.P. 0 0 Special Assessments 0 0 Shoreline Community 1992 TA. 0 0 Shoreline Community 1993 T.A. 0 0 Shoreline Community 1996 TA. 0 0 Shoreline Community 200 I T.A. 0 0 2001 Refunding C.O.P. 0 0 Capital Improvements Financing Authority 0 0 Special Assessments Construction 0 0 Beginning fund balances 1,391 627 Ending fund balances $ 1,354 704 88 .. - - ..... lilt .. - .. .. ... .. .. ... ... .. ... .. .. ... .. . .. - .. .. .. .. .... - . - 11III .. - 11III .. .. .. ,'Il!-' illl". - - ..... 89 .... ',';;-:i\ I"'t 'wi "'" J,jdt .. lilt This Page Left Intentionally Blank .. .. .. ..- .. .. - . III .. .. - ... .. .. ~ .. - .. .... .. - .. . .. .. - - ..... INTERNAL SERVICE FUNDS """" The Equipment Maintenance and Replacement Fund accounts for equipment maintenance services provided to other funds and the replacement of certain equipment. ~ .... .... The Workers' Compensation Insurance Fund accounts for the City's self-insurance program for Workers' Compensation benefits and for the administration of safety and loss prevention programs. - .'/fMI!I The Unemployment Self-Insurance Fund accounts for State- and Federal-mandated unemployment insurance benefits for employees. - - The Liability Self-Insurance Fund accounts for the City's general liability self-insurance program. - - The Retirees' Health Plan Fund accounts for the health plan expenses incurred for retired City employees. - - The Employee Benefits Plan Fund accounts for the City's self-insurance retention health plan, vision, and other benefits for City employees. - - - - - ~ - - ~ - ~ - - - - -~ - 91 - CITY OF MOUNTAIN VIEW, CALIFORNIA Internal Service Funds Combining Statement of Net Assets June 30, 2002 (Dollars in Thousands) Equipment Workers' Maintenance Compensation Unemployment Liability Replacement Insurance Self-Insurance Self-Insurance Assets: Cash and investments $ 11,366 4,597 555 4,446 Restricted cash and investments 0 83 0 0 Receivables: Interest 156 63 8 61 Machinery and equipment 264 0 0 0 Accumulated depreciation (179) 0 0 0 Total assets 11,607 4,743 563 4,507 Liabilities: Liabilities: Accounts payable and accrued costs 137 29 0 18 Accrued compensated absences 120 0 0 0 Accrued self-insurance claims 0 3,744 0 225 Total liabilities 257 3,773 0 243 Net Assets: Invested in capital assets 85 0 0 0 Unrestricted 11,265 970 563 4,264 Total net assets $ 11,350 970 563 4,264 . .. - ... -- .. - .. .. .. .. .. ... .. .. ,. .. III .. .. .. .. .. .. .. .. - .. - .. .. .. .. ... .. .. 92 .. - - ,;j~ .... ,,,,'~~ \ti.. Retirees' Health Plan Employee Benefits Plan Total - ~;;;:... -- 11,706 311 0 0 168 4 0 0 0 0 11,874 315 32,981 83 .. 460 264 (179) 33,609 - .....- - -- 4 2 190 0 0 120 0 0 3,969 4 2 4,279 0 0 85 11,870 313 29,245 11,870 313 29,330 - - - ,~ - - - -- ~;( ~ - ~~ .. ..... - - - - .. ..,., - - 93 - CITY OF MOUNTAIN VIEW, CALIFORNIA Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Assets For the Fiscal Year Ended June 30, 2002 (Dollars in Thousands) Equipment Workers' Maintenance Compensation Unemployment Liability Replacement Insurance Self-Insurance Self-Insurance Operating revenues: Service fees $ 1,439 0 0 583 Other 94 1,330 47 40 Total operating revenues 1,533 1,330 47 623 Operating expenses: Salaries and related expenses 840 154 0 0 Self-funded insurance 0 2,001 19 153 General and administrative 1,717 226 2 67 Depreci ati on 12 0 0 0 Total operating expenses 2,569 2,381 21 220 Operating income (loss) (1,036) (1,051) 26 403 Nonoperating revenues (expenses): Interest income 723 306 37 281 Total nonoperating revenues 723 306 37 281 Income (loss) before transfers (313) (745) 63 684 Transfers: Transfers in 2,141 0 0 0 Transfers (out) (73) 0 0 0 Net transfers 2,068 0 0 0 Change in net assets 1,755 (745) 63 684 Beginning net assets 9,595 1,715 500 3,580 Ending net assets $ 11,350 970 563 4,264 .. .. ~ ... ... .. ... fill III - - . .. . - .. - . ... .. .. .. ... - .. .. - ~ ... WIll .. .. .. - .. .. 94 .. . - MiIflI!II .... ~ ... Retirees' Employee Health Plan Benefits Plan Total - ~ 524 65 2,611 ... 18 0 1,529 ~'""'" 542 65 4,140 ... 0 0 994 ~ 0 4 2,177 571 52 2,635 - 0 0 12 .,";; 571 56 5,818 - (29) 9 (1,678) - - 795 21 2,163 - 795 21 2,163 8 766 30 485 - - 0 0 2,141 0 0 (73) .... 0 0 2,068 - 766 30 2,553 11,104 283 26,777 - 11,870 313 29,330 A~ - .~ - -..... - - .., 95 - II CITY OF MOUNTAIN VIEW, CALIFORNIA Internal Service Funds Combining Statement of Cash Flows For the Fiscal Year Ended June 30, 2002 (Dollars in Thousands) Equipment Workers' Maintenance Compensation Unemployment Liability Replacement Insurance Self-Insurance Self-Insurance Cash flows from operating activities: Receipts from customers $ 1,533 1,330 47 623 Payments to suppliers (1,806) (218) (2) (56) Payments to employees (842) (154 ) 0 0 Internal activity - payments to other funds (22) 0 0 0 Claims paid 0 (1,065) (19) (671) Net cash provided (used) by operating activities (1,137) (1 07) 26 (104 ) Cash flows from non-capital financing activities: Transfers in 2,141 0 0 0 Transfers out (73) 0 0 0 Net cash provided by Noncapital Financing Activities 2,068 0 0 0 Cash flows from capital and related financing activities: Acquisition of capital assets (59) 0 0 0 Cash from investing activities: Interest and dividends 715 312 37 287 Net increase (decrease) in cash and cash equivalent 1,587 205 63 183 Cash and cash equivalents at beginning of period 9,779 4,475 492 4,263 Cash and cash equivalents at end of period $ 11,366 4,680 555 4,446 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ (1,036) (1,051) 26 403 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 12 0 0 0 Change in assets and liabilities: Accounts and other payables (113) 944 0 (507) Net cash provided (used) by operating activities $ (1,137) (107) 26 (104) .. .... .... ... .... .. .. .. .. - - .. WI ill - .. WI IlIIII .. . . .. .. ... .. ... ~ .. .. .. - .. - .. . 96 .. .. - ~ .... ,,'..... - Retirees' Employee - Health Plan Benefits Plan Total ... 542 65 4,140 ~ ( 568) (53) (2,703) 0 0 (996) -- 0 0 (22) - 0 (4) (1,759) - (26) 8 (1,340) ~ 0 0 2,141 - 0 0 (73) ~ 0 0 2,068 .... ... 0 0 (59) - 806 21 2,178 - 780 29 2,847 - 10,926 282 30,217 - ... 11,706 311 33,064 ~ ........... (29) 9 (1,678) 0 0 0 12 - 0 3 (I) 326 - (26) 8 (1,340) ~ .... -- .' - - .- .... .JPM\ 97 - . - 111111!,. ... ... "@II .. - .. .. This Page Left Intentionally Blank ... . .. . .. .. - .. - .. .. - - .... .. . .. .. - .. .. I11III . - ... . .. - - ~~ - AGENCY FUNDS - The Payroll Agency Fund accounts for payroll-related liabilities. - The Mountain View Sports Pavilion Agency Fund accounts for maintenance funds deposited on behalf of the Mountain View School District to cover the District's share of operating costs associated with a gymnasium located at Graham Middle School. - The Center for the Performing Arts Agency Fund accounts for money received by the Center for the Performing Arts. - The Fire Union Agency Fund accounts for money received on behalf of the Fire Union used for union activities. - The Police Union Agency Fund accounts for money received on behalf of the Police Union used for union activities. ...., - The Flexible Benefits Plan Agency Fund accounts for the assets and liabilities of the employer's flexible benefits plan established under Internal Revenue Code Section 125. - - The SCC Data Communications Joint Funding Agreement Agency Fund accounts for the assets and liabilities of the countywide radio interoperability and public safety radio and data communications task force feasibility study. liiiu.w' ....... - - ... - - ~ - 99 ... .. CITY OF MOUNTAIN VIEW, CALIFORNIA Agency Funds Combining Statement of Changes in Assets and Liabilities For the Year Ended June 30, 2002 (Dollars in Thousands) Balance Balance June 30, 2001 Additions Deductions June 30, 2002 Payroll Fund Assets: Cash and investments $ 769 1,445 769 1,445 Liabilities: Accrued payroll $ 769 1,445 769 1,445 Sports Pavillion Fund Assets: Cash and investments $ 129 81 129 81 Liabilities: Sports Pavillion maintenance $ 129 81 129 81 Center For The Performing Arts Fund Assets: Restricted cash $ 76 116 76 116 Liabilities: Collections payable $ 76 116 76 116 Fire Union Fund Assets: Cash and investments $ 21 8 21 8 Liabilities: Collections payable $ 21 8 21 8 - .... - -- w .. - - - - ., .. .. .. .. .. .. - . III . ... - .. .. - ., .. .. .. .. WIllI - - 'III 100 ... 'III - .~ ... Balance Balance June 30, 2001 Additions Deductions June 30, 2002 Police Union Fund .;.,4i Assets: Cash and investments $ 0 7 0 7 Liabilities: - Collections payable $ 0 7 0 7 Flexible Benefits Plan Fund """ Assets: Restricted cash $ 34 36 34 36 - Liabilities: Collections payable $ 34 36 34 36 - SCC Data Comm Joint Funding Agreement - Assets: Cash and investments $ 94 262 94 262 - Liabilities: Collections payable $ 94 262 94 262 ...... All Agency Funds - Assets: Cash and investments $ 1,013 1,803 1,013 1,803 Restricted cash 110 152 110 152 Total assets $ 1,123 1,955 1,123 1,955 Liabilities: .... Accrued payroll $ 769 1,445 769 1,445 Sports Pavillion maintenance 129 81 129 81 - Collections payable 225 429 225 429 ..... Total liabilities $ 1,123 1,955 1,123 1,955 '- NJ!'ill\ ... ,~ - - - 101 - III .. ... .... -- .." - .. This Page Left Intentionally Blank .. .. .. .. .... .. .. .., . .. - .. .. .. - .., .- .. .. - ... .... .. .. - - .. .. .. .. I I I ~ I I I I I I I I I I I I I I I This Page Left Intentionally Blank CITY OF MOUNTAIN VIEW, CALIFORNIA GENERAL REVENUES BY SOURCE (a) LAST TEN FISCAL YEARS (DOLLARS IN THOUSANDS) $70,000 $60,000 $55,000 $50,000 $45,000 $40,000 $35.000 $30,000 SlS,OOO 520,000 S15,OOO $10,000 $5,000 $0 1993 1994 199' 1996 1997 1998 1999 2000 2001 2002 _Taxes . Licenses. Permits and fees [] Fines and Forfeitures DUse ofMooey and Property .lnlcrgovemmental Revenue . Charges fIX Services . Other Revcoue Fiscal Licenses, Permits Fines and Use of Money Intergovernmental Chsrges Other Vear Taxes and Fees Forfeitures and Property Revenue for Services Revenue Total 1993 S 44,343 1,151 164 10,730 5,594 4,960 2,974 69,916 1994 43,109 2,912 161 9,994 5,030 5,549 2,297 69,052 1995 43,803 3,376 161 9,065 5,289 7,459 2,023 71,176 1996 49,113 4,078 149 10,420 6,648 8,834 3,645 82,887 1997 52,712 5,046 144 13,188 6,333 H,073 H,003 99,499 1998 57,083 5,651 180 14,655 7,872 10,951 4,498 100,890 1999 57,150 6,116 296 11,933 8,726 13,519 3,882 10 1,622 2000 63,556 6,686 400 12,990 9,443 13,018 7,891 H3,984 2001 78,764 6,675 458 20,613 9,240 13,450 7,137 136,337 2002 69,488 6,458 538 19,273 H,156 15,629 3,301 125,843 (a) General revenues by source shown arc for the following funds of the City: General Fund, Special Revenue, Debt Service and Capital Projects. 104 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I CITY OF MOUNTAIN VIEW, CALIFORNIA GENERAL GOVERNMENT EXPENDITURES BY FUNCTION (0) LAST TEN FISCAL YEARS (DOLLARS IN THOUSANDS) $3.5,000 - $" 1993 '994 '99' 1996 199' '99' 1999 2000 2001 2002 . GencraI Oovcmment . Public Safety C Public Works C Conununity Development . Cultwe &. Re<:reation . Ct.pilal Outlay . Debt Service Fiscal General Public Public Community CuI'ure & Capilal Deb' Year Government Safely Works Development Recreation Oullay Service Tolal \993 S 8,362 16,43\ 4,868 3,739 10,154 \4,807 18,385 76,746 \994 9,304 16,897 4,779 2,76\ 9,718 17,595 15,337 76,391 \995 \2,276 17,678 5,442 3,55\ 9,985 14,245 12,881 76,058 1996 11,711 18,719 5,290 3,276 17,118 14,749 11,314 82,177 1997 10,876 19,337 5,562 3,594 12,770 28,210 12,728 93,077 1998 11,052 21,189 5,719 5,418 13,793 25,081 12,081 94,333 1999 13,395 24,182 6,444 3,866 14,482 23,470 11,563 97,402 2000 13,074 25,166 6,536 4,307 14,946 30,375 11,708 106,112 2001 13,316 26,163 7,360 4,785 16,153 21,277 11,384 100,438 2002 15,322 29,485 8,072 5,198 17,619 16,248 11,135 103,079 <aJ General expenditures by function shown are for the following funds of the City: General Fund, Special Revenue, Debt Service and Capital Projects. 105 CITY OF MOUNTAIN VIEW, CALIFORNIA APPROPRIATIONS LIMIT LAST TEN FISCAL YEARS (DOLLARS IN THOUSANDS) SI40,OOO S130,OOO SI20,OOO SIIO,OOO SIOO,OOO S9O,OOO S8O,OOO $70,000 $60,000 150,000 140,000 $30,000 1993 1994 199' ~ ::::::::;:::::: ~ --- 1996 1997 1998 1999 2000 2001 -+- Appropriations Limit --- Appropriations Subject to Limit (I) (2) (1)'(2) Fiscal Vear Percent Year to Year Change Population Factor Appropriations Limit Appropriations Subject 10 Limit CPIIPIIA V Factor (a) Ratio of Change 1993 1.0100 (A) 1.0148 (b) 1.0249 $ 78,063 2.49% $ 31,718 (c) 1994 1.0272 (P) 1.0171 1.0448 81,557 4.48% 31,695 1995 1.0154 (A) 1.0160 (b) 1.0316 84,139 3.17% 31,897 1996 1.0472 (P) 1.0154 (b) 1.0633 89.467 6.33% 33,825 1997 1.0467 (P) 1.0108 (b) 1.0580 94,657 5.80% 37,613 1998 1.0467 (P) 1.0216 (b) 1.0693 101,217 6.93% 43,033 1999 1.0415 (P) 1.0228 1.0652 107,821 6.52% 45,835 2000 1.0453 (P) 1.0173 (b) 1.0634 114,656 6.34% 43,510 2001 1.0491 (P) 1.0163 (b) 1.0662 122,246 6.62% 44,901 2002 1.0782 (P) 1.0147 (b) 1.0940 133,743 9.40% 52,325 Data Source: (a) "e" refers to Consumer Price Index "PH refers to Per Capita Personal Income "AIO refers to Assessed Valuation or non-residential construction (b) Population change of the County (c) It was determined that it is not necessary to include proceeds of taxes in certain funds that were previously included. 106 I I I --' I I I I 2002 I I Percentage of Limit Appropriated I 40.63% 38.86% 37.91% 37.81% 39.74% 42.51% 42.51% 37.95% 36.73% 39.12% I I I I I I I I I I I I I m I I I I I I I I I I I I I I CITY OF MOUNTAIN VIEW, CALIFORNIA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (DOLLARS IN THOUSANDS) $40,000 S3S,OOO $30,000 525,000 $20,000 m.ooo 1993 1994 1996 2000 2002 2001 1997 1998 1999 199' -+- Total Taxes Collected Percent Delinquent Tolal Fiscal Taxes Current of Levy Tax Taxes Percent of Year Levied (al Collections Collected Collections Collected Levy 1993 S 23,436 S 23,001 98,14% S 165 S 23,166 98.85% 1994 22,253 22,205 99.79% 1 (bl 22,206 99.79"10 1995 21,115 21,097 99.91% 2 21,099 99.92% 1996 (c) 21,017 21,017 100.00% 0 21,017 100.00% 1997 21,081 21.081 100.00% 0 21,081 100.00% 1998 25,057 25,057 100.00% 0 25,057 100.00% 1999 27,185 27,185 100.00% 0 27,185 100.00% 2000 29,644 29,644 100.00% 0 29,644 100.00% 2001 35,406 35,406 100.00% 0 35,406 100.00% 2002 39,601 39,601 100.00% 0 39,601 100.00% (al Levies include real and personal property. (b) The City selected to participate in the "Teeter" plan offered by the County whereby cities receive 100% of the taxes levied in exchange for foregoing any interest and penalties collected on delinquent taxes. The "Teeter" plan does not apply to Special Assessment Districts. (c) Beginning in Fiscal Year in 1995-96, amounts exclude Special Assessments. Source: To Fiscal Year 1994-95, Santa Clara County Department of Finance From Fiscal Year 1995-96, City of Mountain View 107 I CITY OF MOUNTAIN VIEW, CALIFORNIA ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (DOLLARS IN THOUSANDS) I $10,000 I ~ ~ I I . Real Property I 1993 1994 I99S 1996 1997 1998 1999 2000 2001 2002 ~ ~ I I I 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 I . Per10flll Property I Real Property Personal Property Exemptions Total Ratio of Total Assessed to Fiscal Assessed Estimated Assessed Estimated Gross Estimated Total Estimated ~ Value Actual Value (8) Value Actual Value Real Property Assessed Value Actual Value (a) Actual Value 1993 $ 4,959,913 NIA 1,071,666 1,071,666 (132,253) 5,899,326 NIA NIA 1994 5,230,170 NIA 1,109,558 1,109,558 (255,699) 6,084,029 NIA NIA 1995 5,193,289 NIA 971,462 971,462 (175,077) 5,989,674 NIA NIA 1996 5,352,033 NIA 1,005,958 1,005,958 (187,694) 6,170,297 NIA NIA 1997 5,430,717 NIA 1,096,539 1,096,539 (125,224) (b) 6,402,032 NIA NIA 1998 5,664,768 NIA 1,453,089 1,453,089 (135,681) 6,982,176 NIA NIA 1999 6,616,087 NIA 1,235,470 1,235,470 {I 40,389) 7,711,168 NIA NIA 2000 7,165,568 NIA 1,505,821 1,505,821 (119,235) 8,552,154 NIA NIA 2001 7,979,310 NIA 1,134,494 1,134,494 (138,135) 9,575,069 NIA NIA 2002 8,981,713 NIA 2,063,069 2,063,069 (144,887) 10,899,895 NIA NIA (a) Data is not available in California. (b) Homeowners exemption not included in total exemptions. Source: Santa Clara County Assessor I I I I I I I 108 I I I I I I I I I I i I I I I I I I I I CITY OF MOUNTAIN VIEW, CALIFORNIA PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS (DOLLARS IN THOUSANDS) $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 1993 1997 2001 2002 1998 1999 2000 1994 1995 1996 I_ City - County 0 School I!l Special District I Fiscal City County School Special District Total Overlappin~ Total Assessed Year Debt Percent Debt Percent Debt Percent Debt Percent Debt Percent Value (a) 1993 $ 42,327 0.8?-1o $ 17,320 0.36% $ 15,879 0.33% $ 6,546 0.13% $ 82,072 1.6'J01o $ 4,870,465 1994 36,530 0.72% 16,534 0.33% 15,078 O.300!. 6,340 0.12% 74,482 1.47% 5,079,443 1995 30,840 0.61% 28,853 0.5T';' 13,313 0.26% 11,822 0.23% 84,828 1.67% 5,033,212 19% 28,675 0.56% 27,632 0.54% 18,988 0.37% 12,035 0.24% 87,330 1.72% 5,079,069 1997 27,710 0.53% 26,734 0.51% 31,759 0.61% 13,366 0.26% 99,569 1.91% 5,221,721 1998 26,345 0.4T'1o 27,535 0.49010 53,532 0.95% 13,174 0.23% 120,586 2.15% 5,620,600 1999 25,004 0.40-10 31,065 0.50% 70,683 1.14% 14,780 0.24% 141,532 2.28% 6,206,363 2000 23,524 0.34% 27,331 0.40010 97,600 1.41% 16,289 0.24% 164,744 2.38% 6,914,m 2001 22,139 0.29% 26,378 0.35% 111,002 1.4T'/o 20,040 0.27% 179,559 2.38% 7,547,092 2002 13,490 0.16% 25,102 0.29"1. 121,120 1.42% 19,407 0.23% 179,119 2.10010 8,525,437 (a) Assessed value net of tax incremental valuation. Source: California Municipal Statistics,lnc. Note: California Municipal Statistics, Inc. uses the equalized roll from the County for assessed valuations. This roll is published in September of the Fiscal Year. 109 This Page Left Intentionally Blank I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I CITY OF MOUNTAIN VIEW, CALIFORNIA SPECIAL ASSESSMENTS BILLINGS AND COLLECTIONS LAST TEN FISCAL YEARS (DOLLARS IN THOUSANDS) CURRENT CURRENT RATIO OF FISCAL ASSESSMENT ASSESSMENT COLLECTIONS YEAR BILLINGS COLLECTIONS TO AMOUNT DUE 1993 $ 1,637 1,629 99.51% 1994 1,980 1,922 97.07% 1995 1,718 1,703 99.13% 1996 1,004 964 96.02% 1997 824 821 99.64% 1998 754 726 96.29% 1999 752 744 98.87% 2000 619 609 98.38% 2001 603 602 99.83% 2002 595 591 99.33% Source: Santa Clara County Controller. III CITY OF MOUNTAIN VIEW, CALIFORNIA RA no OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS (DOLLARS IN THOUSANDS EXCEPT "PER CAPITA" AMOUNTS) Total Less: Net Ratio of Net Net Bonded Fiscal Assessed Gross Debt Service Bonded Bonded Debt to Debt Year Population Value (a) Bonded Debt Funds Deb. Assessed Value Per Capita 1993 69,875 $ 4,870,465 $ 1,870 $ 1,203 $ 667 0.01% $ 9.55 1994 70,835 5,079,443 0 0 0 (b) 0.00% 0.00 1995 71,496 5,033,212 0 0 0 0.00% 0.00 1996 71,300 5,079,069 0 0 0 0.00% 0.00 1997 73,100 5,221,721 0 0 0 0.00% 0.00 1998 74,700 5,620,600 0 0 0 0.00% 0.00 1999 75,200 6,206,363 0 0 0 0.00% 0.00 2000 71,369 6,914,772 0 0 0 0.00% 0,00 2001 72,242 7,547,902 0 0 0 0.00% 0.00 2002 71,610 8,525,437 0 0 0 0.00% 0.00 (a) Assessed values net ofta:< incremental valuation. (b) G.O. Bonds retired in Fiscal Year in 1993-94. Population source: California State Department of Finance. U.S. Department of Commerce, Bureau of the Census. Assessed value and gross bonded debt source: California Municipal Statistics,lnc. 112 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I CITY OF MOUNTAIN VIEW, CALIFORNIA RATIO OF ANNUAL DEBT SERVICE FOR GENERAL BONDED DEBT TO GENERAL GOVERNMENTAL EXPENDITURES LAST TEN FISCAL YEARS (DOLLARS IN THOUSANDS) Ratio of Debt Service Fiscal Total Total General to General Year Principal Interest Debt Service Expenditures (a) Expenditures - 1993 S 475 S 81 S 556 S 76,746 0,72% 1994 (b) 1,280 46 1,326 76,391 1.74% 1995 0 0 0 76,058 0.00% 1996 0 0 0 82,177 0.00% 1997 0 0 0 93,077 0.00% 1998 0 0 0 94,333 0.00% 1999 0 0 0 97,402 0.00% 2000 0 0 0 106,112 0.00% 2001 0 0 0 100,438 0.00% 2002 0 0 0 103,079 0.00% (a) Includes General Fund, Special Revenues, Debt Service and Capital Projects. (b) G.O, Bonds retired in Fiscal Year 1993-94. 113 I CITY OF MOUNTAIN VIEW. CALIFORNIA PROPERTY VALUE. CONSTRUCTION AND BANK DEPOSITS LAST TEN FISCAL YEARS (DOLLARS IN THOUSANDS) Commercial Construction (a) Residential Construction (a) Property Value (b) Fiscal Number Number Bank ~ of Units Value of Units Value Commercial Residential Nontaxable Total Deposits (e) 1993 13 $ 10,114 144 $ 13.273 1,859,884 3.857,452 (132,252) 5,585,084 1,315,289 1994 II 22,902 15 3,154 1,792,404 3,969,808 (255,699) 5,506,513 1,299,773 1995 32 18,731 144 33,905 2,109,301 3.098,988 (175,077) 5,033,212 1,272,393 1996 14 81,309 146 20,399 3,219,044 3,138,947 (187,694) 6,170,297 1,330,017 1997 (d) 259 78,443 546 53,941 3.261,203 3,266,052 (125,224) 6,402,032 1,314,000 1998 (d) 244 141.546 737 66,370 3,624,363 3.493.494 (135,681) 6.982,176 1,272.622 1999 263 222,117 654 92,415 4,000,963 3,850,594 (140,389) 7,711,168 1,281,243 2000 (e) 38 50,546 177 27,214 4,419,183 4,252,206 (119,235) 8.552,1 S4 1,438,107 2001 34 76,496 337 51,858 5,053,029 4,660,775 (138.735) 9,575,069 1,548,978 2002 188 76,856 458 22,903 5,875,272 5,169,510 (144,887) 10,899,895 NIA Source: (a) City of Mountain View Building Inspection. (b) Santa Clara County Assessor. Note: May include or exclude property in Mountain View and surrounding cities. Fiscal Year 1994-95 values are from California Municipal Statistics, Inc. and exclude unsecured property value. 1993 1990f 1995 1996 1997 1m 1999 2000 2001 2002 .~~ 1993 1994 I99S 1996 1991 1991 1999 2000 2001 2002 . Prop:rtyValue (b) I 5100, '90. SlO, 510. S60. SSO. ..... 'l<l. 510. SIO, I I I I I I I I I I I I I (e) California State Banking Department. As of Fiscal Year 1996-97 data not available from the California State Banking Department. Source as of Fisc a! Year 1996-97 FDIC Web site (this does not include Credit Unions, however there are no credit unions currently located in the City of Mountain View). (d) Fiscal Years 1996-97 and 1997-98 revised to include both new construction and alterations. I (e) Fiscal Year 1999-2000 includes new construction only. information for alterations not available. I 114 I I I I CITY OF MOUNTAIN VIEW, CALIFORNIA DEMOGRAPlliC STATISTICS LAST TEN FISCAL YEARS I (DOLLARS IN THOUSANDS) I 80.000 78.000 76.000 I 74.000 "- 72.000 ---- "- ~ ..... "=< I 70.000 68.000 66.000 I 64.000 62.000 60.000 I 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 I -+- Population I I I Population Per Capita I Fiscal Density Personal School Unemployment Year Population (Sq. Mile) Income (a) Enrollment Rate % (a) I 1993 69,875 5,972 $28 6,334 6.90% 1994 70,835 6,054 29 6,284 6.77% 1995 71,496 6,\11 30 6,472 5.70% 1996 71,300 6,094 33 6,510 4.20% I 1997 73,100 6,248 35 6,385 3.10% 1998 74,700 6,385 38 6,262 3.00% 1999 75,200 6,427 41 6,361 3.40% I 2000 71,369 6,100 47 6,238 2.20% 2001 72,242 6,175 55 6,123 4.30% 2002 71,610 6,121 (b) 6,025 7.60% I (a) For Santa Clara County. I (b) Data for fiscal year 2001-02 not available until May 2003 I Source: Santa Clara County Office of Education. State of California, Department of Finance. U.S. Department of Commerce, Bureau of the Census. I Santa Clara County. I 115 Less total bonded debt, general obligation o I I I I I I I I I I I I I I I I I I I CITY OF MOUNTAIN VIEW, CALIFORNIA COMPUTATION OF LEGAL DEBT MARGIN June 30,2002 (DOLLARS IN THOUSANDS) Assessed value (net) - June 30, 2002 Ca) $ 8,525,437 Debt limit - 15% of assessed value 1,278,816 Legal debt margin (b) $ 1,278,816 (a) Source: California Municipal Statistics, Inc., excluding tax allocation increment. (b) The legal debt margin for the City of Mountain View, California, is calculated using a debt limit of 15 percent of the assessed value of property within the City limits. 116 - - .fiIlIIl: - CALIFORNIA MUNICIPAL STATISTICS, INC. 5460 COLLEGE AVENUE OAKLAND. CALIFORNIA 94618 ~ August 12, 2002 ..... - City of Mountain View 500 Castro St., P.O. Box 7540 Mountain View, CA 94039-7540 - CITY OF MOUNTAIN" VIEW ..... 2001-02 Assessed Valuation: Redevelopment Incremental Valuation: Adjusted Assessed Valuation: $10,899,894,606 2.374.457.999 $ 8,525,436,607 ..... OVERLAPPING TAX AND ASSESSMENT DEBT: , Santa Clara County Flood Control and Water Conservation District, Zone W-l Santa Clara County Flood Control and Water Conservation District, Zone NC-l Foothill-DeAnza Community College District Fremont Union High School District Mountain View-Los Altos Union High School District Los Altos School District Mountain View School District Sunnyvale School District Whisman School District City of Mountain View 1915 Act Bonds Midpeninsula Regional Park District TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT Less: Santa Clara County Flood Control and Water Conservation District, Zone NC-l TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT % Aoolicable 5.983% 0.268 14.584 0.490 53.504 13.924 95.737 1.148 95.111 100. 8.604 - ~ - ~ .... DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT: Santa Clara County General Fund Obligations Santa Clara County Board of Education Certificates of Participation FoothiIl-DeAnza Community College District Certificates of Participation Mountain View-Los Altos Union High School District Certificates of Participation Mountain View School District Certificates of Participation Sunnyvale School District Certificates of Participation City of Mountain View General Fuill] Obligations Midpeninsula Regional Park District Certificates of Participation EI Camino Hospital District Authority Santa Clara Valley Water District Certificates of Participation TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT Less: City of Mountain View Certif!c:ites.ofPartfcip.ation: (10(l% se!f-~upp'orting fromt.u increment revenues) EI Camino Hospital District Authority TOTAL NET DIRECT AND OVERLAPPIN"G GENERAL FUND OBLIGATION DEBT ~'"I 4.955% 4.955 14.584 53.504 95.737 1.148 100. 8.604 27.928 4.955 iIiiiJIiili GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Debt 6/30/02 $ 490,008 1,219 14,358,682 453,887 26,237,143 11,836,660 30,248,105 364,3l7 28,476,476 2,770,162 955.044 $116,191,703 1.219 $116,190,484 $23,695,553 916,675 4,423,327 2,605,645 2,111,001 5,223 18,205,000 8,561,856 439,866 9.890 180 $70,854,326 7.485,000 439 866 $62,929,460 $187,046,029 (1) $179,119,944 ... (1) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. ~ Ratios to 2001-02 Assessed Valuation: Total Gross Overlapping Tax and Assessment Debt............................. 1.07% Total Net Overlapping Tax and Assessment Debt ................................ 1.07% - Ratios to Adiusted Assessed Valuation: Gross Combined Direct Debt ($18,205,000) ....................................0.21 % Net Combined Direct Debt ($10,720,000) ........................................0.13% Gross Combined Total Debt ................................................................. 2.19% Net Combined Total Debt..................................................................... 2.10% - STATE SCHOOL BUILDING AID REPAYABLE AS OF 6130/02: $0 .,... 117 SINCE 1932: 415421.3316 TEL: 510 658-2640 FAX: 510 658-2642 INFO@CALMUNI.COM WWW.CALMUNI.COM _'1iiI ... CITY OF MOUNTAIN VIEW, CALIFORNIA TOP TEN PROPERTY OWNERS June 30, 2002 (DOLLARS IN THOUSANDS) .. ... .. .. OWNER Primary Use Assessed Valuation Percentage of Total Assessed Valuation .. .. - Silicon Graphics Inc. Unsecured $ 453,769 4.17% Alza Corporation Industrial 175,499 1.61% BP Shoreline Technology Park Industrial 174,659 1.60% Sun Microsystems Inc. Unsecured 128,758 1.18% Board of Trustees Leland Stanford University Industrial 120,000 1.1 0% Mission West Shoreline LLC Industrial 112,579 1.03% Sobrato Interests 111 Residential 105,259 0.97% Richard T. Peery Trust Industrial 102,677 0.94% Netscape Communications Corporation Unsecured 92,483 0.85% First Securety Bank Trustee Industrial 88,252 0.81% Subtotal $ 1,553,935 14.26% III - .. - III .. III .. .. .. ... . III . .. Fiscal Year 2001-02 Total Net Assessed Valuation $ 10,899,895 lilt .. Source: Santa Clara County Assessor Fiscal Year 2001-02 Combined Tax Rolls. III .. ... .. .. .. 1M .. . III 1M 118 .. . - - - - - ..... - .... - ;,.... "'" - ~ .... ~ ~ ~ - ..... ""'" - ~ - ... - ~ ~ -'''; CITY OF MOUNTAIN VIEW, CALIFORNIA MISCELLANEOUS STATISTICS June 30, 2002 Date of incorporation November 7, 1902 Police Protection: Number of stations I Form of Government Council-Manager Number of police personnel & officers 138 Number of police reserves 16 Number of Employees (excluding police & fire) Number of patrol units 35 Classified 694 Number of calls answered 60,802 Exempt 95 Number oflaw violations: Physical arrests 3,408 Area in square miles 11.7 Traffic violations 7,968 Parking violations 7,538 Name of government facilities and services: Miles of streets 142.4 Sewage System: Number of street lights 3,757 Miles of sanitary sewers 175 Culture and recreation: Miles of storm sewers 79 City parks 31 Number of treatment plants 0 City park acreage 212 Number of storm drain inlets 1,954 Roadway landscaping acreage 119.5 Number of sewer service connections 16,460 Regional parks I Daily average treatment in gallons 8,348,000 Regional park acreage 772 Maximum daily capacity of treatment plant in gallons 14,400,000 Regional park facilities: Golf courses (18 holes) I Water System: Boathouse I Miles of water mains 167 Sailing lake acreage 50 Number of water service connections 16,460 Clubhouse and banquet facility I Number of fire hydrants 2,324 Historic house I Daily average consumption in gallons 12,263,000 Community Gardens 2 Maximum daily capacity of system in gallons 30,800,000 Community Centers I Swimming pools 2 Public Education: Tennis courts 35 Number of elementary schools 7 Senior Center I Number of elementary school instructors 178 Cuesta Tennis Center I Number of middle schools 3 Mountain View Sports Pavillion I Number of middle school instructors 65 Whisman Sports Center I Number of secondary schools 3 Deer Hollow Farm I Number of secondary school instructors 267 Performing Arts Center I Number of community colleges 0 Number of universities 0 Fire Protection: Number of stations 5 Hospitals: Number of fire personnel & officers 102 Number of hospitals I Number of calls for service 4,883 Number of patient beds 426 Number of primary fire inspections conducted 1,503 Number of environmental safety inspections coO( 1,151 119 CITY OF MOUNTAIN VIEW, CALIFORNIA SCHEDULE OF INSURANCE IN FORCE June 30, 2002 ill! Company and Policv Number Premium Limits Policv Period WC Express National Union Fire Insurance, Co. Policy # 415-86-85 7/1/99 - 6/30/02 $ 67,828 Statutory Property, Auto Physical Damage, Loss of Rents Fine Arts (All City Properties) Cal Public Entity Property Ins. Prog. 7/1/01 - 6/30/02 18,038 500 Million Layer I: $5,000,000 Primary Specialty Surplus Ins. Co. - Policy #3ZH 162351 01 Layer II A/B: $495,000,000 excess $5,000,000 Multiple - Policy # LU 0130174 Layer II Cl: $45,000,000 excess $5,000,000 primary Multiple - Policy #s CPP57464 77 /FXL422200/651 00826/US3245/MSP6264/LU130 187 /3ZHl623530 1 Layer II C2: $450,000,000 excess $50,000,000 Multiple - Policy #s LU 0130177 /RHD405087 Layer Ill: $500,000,000 excess $500,000,000 Royal Indemnity Co. - Policy # RHD 405190 Earthquake and Flood Cal Public Entity Property Ins. Prog. 7/1/01 - 6/30/02 212,875 30 Million Boiler and Machinery Cal Public Entity Property Ins. Prog. 7/1/01 - 6/30/02 3,690 100 Million Hartford Steam Boiler Policy # FBP3917011 The Travelers Insurance Co. Policy # M5JBMG445DOO Mobile Equipment Cal Public Entity Mobile Equip. Prog. 7/1/01 - 6/30/02 24,340 2.5 Million per occurrence Twin City Fire Insurance Policy # KGOO02501 Combo Crime Policy and Hartford Fire Insurance 7/1/01 - 7/1/02 1,261 100,000 Bonds Surety Bonds Policy # 57BPEAP3530 10,000 Crime per occur. CGL and E&O and ACCEL 7/1/01 - 6/30/03 260,878 500,000 xs $500,000 Optional Excess Insurance Co. of State of Penn. 19 Million xs $1 Mil Policy # 4700-2916 Travel Accident American International 7/1/01- 6/30/02 750 200,000 Policy # GTP8035078N 50,000 Special Events Diamond State Insurance Co. 1/1/02 - 1/1/03 Paid by 1 Million Policy # CCL0040170 Tenant Flood National Flood Insurance Prog. 7/1/01 - 6/30/02 Building Contents Policy # 2031672682 (Amphitheatre) 723 322,100 255,300 Policy # 2031672690 (Irrigational) 8,397 292,200 243,100 Policy # 2031366897 (Coast Casey) 8,299 204,900 162,400 Policy # 3000245748 (Crittenden) 2,479 500,000 500,000 120 III .. """ .. ... IIIli III .. .. .. - IIIIiIf .. .. III IIIlf III .. .. ., II . .. IIIlf .. .. """ - .... .. .. .. .. . .. . .. ., - - 4.- - Coveral!:e - Excess workers compensation in excess of $250,000 self-insured retention each claim. $5 million of coverage for employer's liability. .~ Policy insures against All Risks of physical loss or damage. Earthquake and flood are covered under separate premium. - ~ ~ - - Purchased through the Cal Public Entity Property Insurance Program (PEPIP). For City Hall, Performing Arts and Library. Real and personal property including loss of rents. Deductible is 5% per location on Earthquake subject to a $25,000 minimum. Flood deductible is $25,000. ~, Purchased through the Cal PEPIP. Coverage includes boiler and machinery. _liOl ~ All Risk floater for items included on schedule of equipment. $5,000 deductible, $750,000 anyone unit to a maximum of $2.5 million per occurrence. ... ~ Policy is endorsed to cover surety bond documented positions (Finance and Administrative Services Director and Investment Officer) and includes all employee blanket bond. ~,\~ Purchased commercial general and auto liability and E&O via ACCEL above $500,000 SIR. Excess included with ACCEL premium. ~ - Accidental death or dismemberment - council, commissioners, full-time employees while traveling on business for the City. ,~ Tenants and permittees of the City n individual premiums charged. - ~ Flood insurance for Pump Stations located in flood zone. Deductible of $5,000 each building and contents. - ..... ~- ...... 121 ~ CITY OF MOUNTAIN VIEW, CALIFORNIA SURETY BONDS OF PRINCIPAL OFFICERS June 30, 2002 .. I11III ... .... .. .. Name and Title Annual Premium Amount of Surety .. .. Finance and Administrative Services Director $ 1,261 (a) 100,000 III .. Public employee blanket bond (Includes City Manager) (a) 100,000 .. .... Investment Officer (a) 100,000 .. ... (a) Annual premium of$I,261 covers documented positions (Finance and Administrative Services Director and Investment Officer) and all employee blanket bond. This premium is also for Crime Policy insurance. .. ... III .. III .. III .. .. .. .. .. .. - .. .. .. .. .. .. .. III 122 .. III - ... - .. - .. - ... - .. - III - .. - III ... .. .~;:'i .. - - - - - - - .. - - .. - .. JlII!!Il" - ... MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY Table of Contents Paee I FINANCIAL SECTION: Independent Auditors' Report .................... ...... ................. ................ ................................ ..........125 Management's Discussion and Analysis.................. ............ ....... ....................... .................... ......127 Component Unit Financial Statements: Government-wide Financial Statements: Statement of Net Assets.. .......... ..................... ............. ......... .................................... .............. 134 Statement of Activities.......... ............ ...................... ......... ....... ........... ........................... ......... 135 Fund Financial Statements: Governmental Funds: Balance Sheet.......... ................ ........................ ......... ......... ............. ......... ........... ................. 136 Statement of Revenues, Expenditures and Changes in Fund Balances ................... .... ................................. .............................. ........ 137 Reconciliation ofthe Net Change in Fund Balances- Total Governmental Funds with the Statement of Activities .............................. ........... ......... ....... ............. ................. ............. 138 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget And Actual........................................................................139 Notes to Financial Statements...................................................................................................... 141 123 .. .. 11III .. .. .. .. .. .. .. IIIII!l .... .. .. This Page Left Intentionally Blank .. .. .... .. III .. - .. .. .. IIIIl: .. .. .. .. .. .. IIIIiI IIIlIIII 11II 1lIIII .. IIIlIIII iii .... AAAZE & · ./~ ASSOCIA TES ... ACCOUNTANCY CORPORATION 1931 San Miguel Drive - Suite 100 Walnut Creek, California 94596 (925) 930-0902. FAX (925) 930-0135 E-Mail: maze@mazeassociates.com Website: www.mazeassociates.com ~ INDEPENDENT AUDITORS' REPORT .I)II!I!fIII - tlM ... The Board of Directors Mountain View Shoreline Regional Park Community City of Mountain View, California lI"W .. We have audited the accompanying component unit financial statements of the Mountain View Shoreline Regional Park Community (Community), a component unit of the City of Mountain View, California, as of and for the year ended June 30, 2002 as listed in the Table of Contents. These component unit financial statements are the responsibility of the Community's management. Our responsibility is to express an opinion on these financial statements based on our audit. - f"'" We conducted our audit in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the component unit financial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the component unit financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. iIIIIi'III\ - - ... In our opinion, the component unit financial statements referred to above present fairly in all material respects the financial position of the Community as of June 30, 2002, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles in the United States of America. ..". ... The basic component unit financial statements referred to above follow the requirements of Government Accounting Standards Board Statements (GASB) No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments, No. 36, Recipient Reporting for Certain Non- exchange Revenues, an Amendment of GASB Statement No. 33, No. 37, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments; Omnibus, and No. 38, Certain Financial Statement Note Disclosures. - ..... Management's Discussion and Analysis and Required Supplemental Information is supplementary information required by the GASB, but is not part of the basic component unit financial statements. We have applied certain limited procedures to this information, principally inquiries of management regarding the methods of measurement and presentation of this information, but we did not audit this information and we express no opinion on it. ''''it-ij;> - ~~~ September 26, 2002 ..... 125 A Professional Corporation - .. - "'" - .. - - ... - - .. - ... This Page Left Intentionally Blank - .. .. - .. .. .. ""C ... - - - .. .. - ... ... .. .. - lliIII .. .. - - - .. - - - .. - - - ... - .. - - ~~. .. - - - - - - - .. - .. - - ... .. - .. - - ..... ,.... ..... MANAGEMENT'S DISCUSSION AND ANALYSIS I This section of the Mountain View Shoreline Regional Park Community's (Community) component unit financial statements presents a narrative overview and analysis of the financial activities of the Community for the fiscal year ended June 30, 2002. We encourage readers to consider the information presented here in conjunction with additional information that has been furnished in our transmittal letter of the City of Mountain View (City). FINANCIAL HIGHLIGHTS The Community's principal revenue source is incremental property taxes, which increased in Fiscal Year 2002. Fiscal Year 2002 financial highlights include the following: . The assets of the Community exceeded its liabilities at the close of the fiscal year ended June 30, 2002 by $65.0 million (net assets). Ofthis amount, $24.8 million (unrestricted net assets) may be used to meet the Community's ongoing obligations. . The Community's total net assets increased by $17.1 million during the fiscal year. . Community-wide revenues included general revenues and transfers of $28.1 million. . Governmental fund balances increased to $26.0 million in Fiscal Year 2002, up $10.7 million from the prior year's $15.3 million. . Governmental fund revenues increased to $25.0 million in Fiscal Year 2002, up $2.6 million from the prior year's $22.4 million. . Governmental fund expenditures are $10.7 million in Fiscal Year 2002, up from $10.5 million in Fiscal Year 2001. OVERVIEW OF THE BASIC FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the Community's basic financial statements. The Community's basic financial statements comprise three components: (1) government-wide financial statements; (2) fund financial statements; and (3) notes to the financial statements. 127 .. .. .. Government-Wide Financial Statements II1II The government-wide financial statements are designed to provide readers with a broad overview of the Community's finances in a manner similar to a private-sector business. .. .. .. The statement of net assets presents information on all of the Community'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 Community is improving or deteriorating. .. .. .. ... The statement of activities presents information showing how the Community'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, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave. .. .. .. ... .. - Fund Financial Statements ... The fund financial statements are designed to report information about groupings of related accounts which are used to maintain control over resources that have been segregated for specific activities or objectives. The Community, 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 Community are govern- mental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial state- ments. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in determining what financial resources are available in the near future to finance the Community's programs. .. .. .. .. ... - .. .. .. 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 Community maintains five individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental .. .. 128 .. III - - - - ... - .... - .... - .. ... .. ifh,..1; - ""'" .. .. - - .... - .. .. - - - - - ""'" .' .... - ... .... - .... fund statement of revenues, expenditures and changes in fund balances for the Community Special Revenue Fund, SRPC 1992 Tax Allocation Fund, SRPC 1993 Tax Allocation Fund, SRPC 1996 Tax Allocation Fund and SRPC 2001 Tax Allocation Fund, all of which are reported as major funds. The Community adopts an annual appropriated budget for its Special Revenue Fund. A budgetary comparison statement has been provided for this fund to demonstrate compliance with budget. 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. GOVERNMENT-WIDE FINANCIAL ANALYSIS This is the first year the Community has presented its financial statements under the new reporting model required by the Governmental Accounting Standards Board (GASB) Statement No. 34 Basic Financial Statement and Management's Discussion and Analysis (MD&A) for State and Local Governments. Because this reporting model changes significantly both the recording and presentation of financial data, the Community has not restated prior fiscal years for the purposes of providing compara- tive information for the MD&A. In future years, when prior-year information is avail- able, a comparative analysis of government-wide data will be included in this report. Analysis of Net Assets As noted earlier, net assets may serve as a useful indicator of a government's financial position. For the Community, assets exceeded liabilities by $65.0 million at the end of the fiscal year. The major components of net assets are as follows: . Total assets of $135.0 million consisted of $95.1 million of capital assets and $39.9 million of other assets. . Total liabilities of $70.0 million consisted of $54.9 million of long-term debt and $15.1 million of other liabilities. . The largest portion of the Community's net assets of $40.2 million is invested in capital assets, net of related debt. . Another significant portion of the Community's net assets of $24.8 million is unrestricted, which may be used to meet the Community's ongoing obligations. . An additional portion of the Community's net assets of $15,000 is restricted for debt service. 129 1111!1 .. ... WI The Community's net assets increased $17.1 million for the fiscal year. This is primarily from the increase in incremental property tax revenues resulting from successful redevelopment activities. ... 11M Statement of Activities ... .. The major component of the Community's Fiscal Year 2002 revenue is $23.2 million from incremental property taxes. This amount compares with $20.7 million in Fiscal Year 2001. Investment earnings accounted for $1.6 million of Community revenues, approximately the same as the prior year. Other miscellaneous revenues include $424,000 and net transfers from the City of Mountain View of $2.9 million. III .. .. IIll Expenses totaled $11.1 million, of which $3.0 million is for general government, $2.7 million for culture and recreation and $5.0 million for interest on long-term debt. ... .. FINANCIAL ANALYSIS OF THE COMMUNITY'S FUNDS 4 - As noted earlier, the Community uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. IIIlII .. The focus of the Community's governmental funds is to provide information on near- term inflows, outflows and balances of resources that are available for spend,ing. Such information is useful in assessing the Community'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. .. lIIIIf - - At June 30, 2002, the Community's funds reported combined fund balances of $26.0 million, an increase of $10.7 million from Fiscal Year 2001's fund balances of $15.3 million. Approximately $20.7 million of this total amount represents unreserved fund balance, which is available for spending at the Community's discretion. The remainder of the fund balance is reserved to indicate that it is not available for new spending because it has already been committed for restricted purposes. .. - ... ... ... Revenues for the fiscal year ending June 30, 2002 totaled $25.0 million, an increase of $2.6 million, or 11.7 percent, over the prior fiscal year. Expenditures totaled $10.7 million, an increase of $257,000, or 2.5 percent, over the prior fiscal year. .. ... IiIIIIl The Community Special Revenue Fund is the general fund for the Community and receives tax increment revenues on property within the Community. The fund accounts for the revenues and expenditures of the Community. At the end of the current fiscal year, the unreserved fund balance was $20.7 million while the total fund balance was $26.0 million. As a measure of the fund's liquidity, it may be useful to compare both the unreserved fund balance and the total fund balance to total fund expenditures. The ... \. . .. .... .. 130 .. III - - - - - .. - .. ... .. - - - - .. .- .. - .. - .. unreserved fund balance represents 435.7 percent of the total fund expenditures of $4.8 million, while the total fund balance represents 546.6 percent of that same amount. The fund balance of the Community's Special Revenue Fund increased by $10.7 million during the current fiscal year. Key factors in this growth are as follows: . Total revenues were $25.0 million in Fiscal Year 2002, an increase of $2.6 million from the prior year. Property tax increment revenues were $23.2 million in Fiscal Year 2002, an increase of $2.5 million from Fiscal Year 2001. Investment earnings increased slightly to $1.7 million as interest rate declines were offset by higher average investment balances. . Expenditures were $4.8 million in Fiscal Year 2002, essentially the same as the prior year. . The Community transferred $9.7 million for debt service in other financing sources, including an additional $4.1 million to defease additional debt. Other net transfers of $203,000 were made from the City. The SRPC 1992 Tax Allocation Fund accounts for resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 1992 Tax Allocation and Refunding Bonds as they become due. During the fiscal year, the Community defeased the 1992 Tax Allocation Bonds (TABs) by placing the proceeds of the 2001 TABs in the amount of $17.5 million, as well as $4.0 million in funds on hand, in an irrevocable trust to provide for all future debt payments. Debt service expenditures included $1.1 million in principal retirement and $1.0 million - in interest payments in Fiscal Year 2002. .. - .. ~ - - .... .. - .. - .. The SRPC 1993 Tax Allocation Fund accounts for resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 1993 Tax Allocation and Refunding Bonds as they become due. Debt service expenditures included $725,000 in principal retirement and $1.2 million in interest payments in Fiscal Year 2002. The SRPC 1996 Tax Allocation Fund accounts for resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 1996 Tax Allocation and Refunding Bonds as they become due. Debt service expenditures included $540,000 in principal retirement and $1.1 million in interest payments in Fiscal Year 2002. 131 .. 'III .. The SRPC 2001 Tax Allocation Fund accounts for resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 2001 Tax Allocation and Refunding Bonds as they become due. .. .. - Debt service expenditures included $398,000 in interest payments in Fiscal Year 2002. .. CAPITAL ASSETS - .. At the end of Fiscal Year 2002, capital assets recorded on the Community's financial statements amount to $95.1 million (net of accumulated depreciation). There were additions of $2.7 million to construction in progress during Fiscal Year 2002, and depreciation of $1.3 million was provided for in Fiscal Year 2002. Further details on capital assets and depreciation charges may be found in Note 4. - .. .. .. DEBT ADMINISTRATION .. As of June 30, 2002, the Community has $55.0 million of outstanding long-term debt. The Community's 2001 Refunding TABs issue is discussed in detail in Note 6 to the financial statements. As of June 30,2002, all debt principal payments were made as scheduled. ;:. .. MII\ .. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS . Overall property taxes for the Community are expected to increase for the upcoming fiscal year as new development is completed and comes onto the tax roll. However, office vacancy rates remain high, and unsecured property tax is anticipated to decline for Fiscal Year 2003. .. .. ... .. .. . The yield on investments purchased have continued to decline as the Federal Reserve has continued to lower key interest rates. - .. These factors were considered in preparing the Community's budget for Fiscal Year 2003. .. .. REQUEST FOR INFORMATION - .. These financial statements are intended to provide citizens, taxpayers, investors and creditors with a general overview of the Community's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be directed to the Finance and Administrative Services Department, 500 Castro Street, Mountain View, California, 94039-7540. .. .. .. " .. PJK/6/FIN/546-12-13-02R-E-1 ^ .. .. 132 .. .. ,..., ... .... - - - - ~ - - - This Page Left Intentionally Blank .~.(4, - - - !lI!\l!f1!IlIl - .,.,: ..... - - - 'If,;~ .. - .. ....... .. - .. ~, - ~ - MOUNT AIN VIEW SHORELINE REGIONAL PARK COMMUNITY till ... ..... Statement of Net Assets June 30, 2002 (Dollars in Thousands) Assets: Cash and investments (Note 3) $ 34,215 Restricted cash and investments (Note 3) 15 Receivables: Interest 587 Advance to City of Mountain View (Note 5) 5,100 Capital assets (net where applicable of accumulated depreciation) (Note 4) 95,116 Total assets 135,033 Liabilities: Accounts payable and accrued costs 33 Interest payable 1,232 Advances from the City of Mountain View (Note 5) 13,843 Refundable deposits 2 Revenue and tax allocation bonds (Note 6): Due in one year 2,195 Due in more than one year 52,767 Total liabilities 70,072 Net Assets: Invested in capital assets, net of related debt 40,154 Restricted for: Debt service 15 Unrestricted 24,792 Total net assets $ 64,961 See accompanying notes to financial statements. .... .. .. .- .. JIll . .. .. .. .. .. .. .. . . . - - .. .. .. .. .ill, ... .. WI/J ..... ... .. - ... .. 134 .. . - MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY - Statement of Activities For the Year Ended June 30,2002 (Dollars in Thousands) - .- - Functions/Programs Expenses .... Governmental Activities: General government $ 2,956 .... Public safety 55 Public works 164 ... Community development 118 Culture and recreation 2,748 ..... Interest on long term debt 5,046 - Total governmental activities $ 11,087 - - General revenues: Property taxes Interest earnings Other Bond issuance premium Transfers from the City of Mountain View Transfers to the City of Mountain View ... - .... Total general revenues and transfers - Change in net assets - Beginning net assets - .. Ending net assets .... See accompanying notes to financial statements. - - .. - - - .... - .... ... ... .~ - - Program Revenues Charges for Services 135 117 117 Net (Expense) Revenue and Changes in Net Assets (2,956) (55) (164) (1) (2,748) (5,046) (10,970) 23,176 1,613 56 368 7,586 (4,711) 28,088 17,118 47,843 $ 64,961 .. MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY Governmental Funds Balance Sheet June 30,2002 (Dollars in Thousands) Shoreline Shoreline Shoreline Shoreline Regional Park Regional Park Regional Park Regional Park Community Community Community Community Total Special 1992 Tax 1993 Tax 1996 Tax 2001 Tax Governmental Revenue Allocation Allocation Allocation Allocation Funds Assets: Cash and investments $ 34,215 0 0 0 0 34,215 Restricted cash and investments 0 0 0 0 15 15 Receivables: Interest 587 0 0 0 0 587 Advance to City of Mountain View 5,100 0 0 0 0 5,100 Total assets $ 39,902 0 0 0 15 39,917 Liabilities and fund balances: Accounts payable and accrued costs $ 33 0 0 0 0 33 Refundable deposits 2 0 0 0 0 2 Advances from the City of Mountain View 13,843 0 0 0 0 13,843 Total liabilities 13,878 0 0 0 0 13,878 Fund balances: Reserved for: Restricted cash and investments 0 0 0 0 15 15 Encumbrances 178 0 0 0 0 178 Advance to City of Mountain View 5,100 0 0 0 0 5,100 Unreserved: Designated for: Unrealized gain on investments 857 0 0 0 0 857 Undesignated 19,889 0 0 0 0 19,889 Total fund balances 26,024 0 0 0 15 26,039 Total liabilities and fund balances $ 39,902 0 0 0 15 .. - ... ~ .. - .. ... .. JIll .. .. .. .. .. ... 11II .. . ... .. -- Amounts reported for Govemmental Activities in the Statement of Net Assets are different from those reported in the Govemmental Funds above because of the following: .. .. CAPITAL ASSETS Capital assets used in Govemmental Activities are not current assets or financial resources and therefore are not reported in the Govemmental Funds. lilt 95,116 AI LONG TERM ASSETS AND LIABILITIES The assets and liabilities below are not due and payable in the current period and therefore are not reported in the Funds: Long-term debt, net of loss on refunding Interest payable ..., NET ASSETS OF GOVERNMENTAL ACTIVITIES (54,962) (1,232) 64,961 .. $ .. See accompanying notes to financial statements. ., ...., .. - .. III 136 .. . - MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY _ Governmental Funds Statement of Revenues, Expenditures and .... Changes in Fund Balances For the Year Ended June 30,2002 (Dollars in Thousands) ~ - ~ ~ Revenues: Taxes Use of money and property Other - Total revenues ~~ .. Expenditures: Current: General government Public safety Public works Community development Culture and recreation Capital outlay Debt service: Principal repayment Interest and fiscal charges ~ - - - Total expenditures - - Excess (deficiency) of revenues over (under) expenditures .. Other financing sources (uses): Long-term debt issued Bond issuance premium (discount) Payment to bond escrow agent Transfers in Transfers (out) Transfers from the City of Mountain View Transfers to the City of Mountain View ... .. --. - Total other financing sources (uses) - Excess (deficiency) of revenues and other financing sources over (under) - expenditures and other financing uses .. Beginning fund balances .. Ending fund balances - See accompanying notes to financial statements. - - .. '" .. ""'" - """'" - Special Revenue $ 23,176 1,727 56 24,959 2,956 55 164 118 1,456 12 4,761 20,198 o o o o (9,662) 4,914 (4,711) (9,459) 10,739 15,285 $ 26,024 Shoreline Shoreline Shoreline Shoreline Regional Park Regional Park Regional Park Regional Park Community Community Community Community Total 1992 Tax 1993 Tax 1996 Tax 2001 Tax Governmental Allocation Allocation Allocation Allocation Funds 0 0 0 0 23,176 2 0 0 I 1,730 0 0 0 0 56 2 0 0 24,962 o o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,060 725 540 0 1,027 1,167 1,061 398 2,087 1,892 1,601 398 (2,085) (1,892) (1,601) (397) 17,520 0 0 0 368 0 0 0 (21,563) 0 0 0 5,759 1,891 1,600 412 0 0 0 0 0 0 0 0 0 0 0 0 2,084 1,891 1,600 412 17,520 368 (21,563) 9,662 (9,662) 4,914 (4,711) (3,472) 2,956 55 164 118 1,456 12 2,325 3,653 10,739 14,223 (1) (I) (I) 15 10,751 o 15,288 o o o 15 26,039 137 MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY Reconciliation of the Net Change in Fund Balances Total Governmental Funds with the Statement of Activities For the Year Ended June 30, 2002 (Dollars in Thousands) The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis. NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS Amounts reported for governmental activities in the Statement of Activities are different because of the following: CAPITAL ASSETS TRANSACTIONS Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. The capital outlay expenditures are therefore added back to fund balance Depreciation expense is deducted from the fund balance Infrastructure and improvements constructed by the Community are capitalized in the Statement of Activities, but are not recorded in the Fund Statements because no cash changed hands. LONG TERM DEBT PROCEEDS AND PAYMENTS Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of bond principal is an expenditure in the governmental funds, but in the Statement of Net Assets the repayment reduces long-term liabilities. Proceeds from the issuance of debt are deducted from fund balance Repayment of debt principal is added back to fund balance Payment to bond escrow agent is added back to fund balance Amortization of loss on refunding is deducted from fund balance ACCRUAL OF NON-CURRENT ITEMS The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and therefore are not reported as revenue or expenditures in governmental funds (net change): Interest payable CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES See accompanying notes to financial statements. 138 .. tIIIlI - ... ... .. - ., - .. $ MIl .. 10,751 .. . .... . 12 .. . (1,292) .. .. 2,672 - .. ... .. .... (17,520) 2,325 21,563 (161) .. ... - .. ... - $ (1,232) 17,118 .. "-' .. .. .. - .. - ... MOUNT AIN VIEW SHORELINE REGIONAL PARK COMMUNITY - Special Revenue Fund .. Statement of Revenues, Expenditures and Changes in Fund Balances ~ Budget and Actual For the Fiscal Year Ended June 30, 2002 (Dollars in Thousands) - Bud2eted Amounts - Actual Amounts Variance with Ori~inal Final Bud~etary Basis Final Bud~et - Revenues: .... Taxes $ 2 I ,293 21,293 23,176 1,883 .... Use of money and property 1,446 1,446 1,727 281 Other 15 15 56 41 - Amounts available for appropriation 22,754 22,754 24,959 2,205 - " Expenditures: Current: IiJj;ji General government: City Attorney 10 10 0 10 ~\ City Manager 114 237 173 64 Finance and administrative services 2,795 2,804 2,783 21 - Public safety: ... Fire 75 75 55 20 Public works 288 290 164 126 .. Community development 148 155 118 37 Culture and recreation: .... Connnunity services 1,679 1,834 1,456 378 Capital outlay 0 16 12 4 - - Total expenditures 5,109 5,421 4,761 660 .. Excess (deficiency) of revenues over (under) expenditures 17,645 17 ,333 20,198 2,865 - - Other financing sources (uses): .... Transfers (out) (10,658) (10,658) (9,662) 996 Transfers from the City of Mountain View 0 126 4,914 4,788 - Transfers to the City of Mountain View (4,711) (4,711) (4,711) 0 - Total other financing sources (uses) (15,369) (15,243) (9,459) 5,784 - Excess (deficiency) of revenues and other - financing sources over (under) expenditures and other financing uses 2,276 2,090 10,739 8,649 .. Beginning fund balances 15,285 15,285 15,285 0 ... - Ending fund balances $ 17,561 17,375 26,024 8,649 - See accompanying notes to financial statements. - - 139 - .. .. .. .. - - .. ." .. .. This Page Left Intentionally Blank .. .. lilt . " .. .. .. .. .. .. .. '., .. III . ... .. - .. . .. '- .. . IIIi .. .. .... - - - - ~. ~ - .... - MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 1 - SUMMARY OF SIGNIFICANT REPORTING POLICIES The Mountain View Shoreline Regional Park Community (Community) was established in 1969 pursuant to the provisions of the Mountain View Shoreline Regional Park Community Act. The purpose of the Community is to provide for the development of approximately 1,550 acres of bay front lands. The Community is an integral part of the City of Mountain View (City). It primarily services the City and the City's City Council serves as governing body of the Community. Therefore, the financial data of the Community has also been included as a blended component unit within the City's comprehensive annual financial report for the year ended June 30,2002. - - A. Basis of Presentation - - .... - .... - - - - - - - ,,# .... - - - '" - ~ }"",", - - The Community's basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the U.S.A. These standards require that the financial statements described below be presented. Government-wide Statements: The Statement of Net Assets and the Statement of Activities include the financial activities of the overall Community government. Eliminations have been made to minimize the double counting of internal activities. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Community's activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the Community's funds. Separate statements for each governmental fund are presented. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. 141 MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 III .... .. .. I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Major Funds ~ .. Major funds are defined as funds that have either assets, liabilities, revenues or expenditures equal to ten percent of their fund-type total and five percent of the grand total of governmental and enterprise funds. Major governmental type funds are identified and presented separately in the Fund financial statements. The Community has determined that all its funds are major funds. ... ." .. - The Community reported the following major governmental funds in the accompanying financial statements: .. .. Special Revenue Fund - This fund accounts for the tax increment revenues received and the general activities of the Community. .. - 1992 Tax Allocation Fund (Debt Service) - This fund accounts for the resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 1992 Tax Allocation Bonds as they become due. .. 11III 1993 Tax Allocation Fund (Debt Service) - This fund accounts for the resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 1993 Tax Allocation Bonds as they become due. .... .. .. - 1996 Tax Allocation Fund (Debt Service) - This fund accounts for the resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 1996 Tax Allocation Bonds as they become due. ,. ... .~... 2001 Tax Allocation Fund (Debt Service) - This fund accounts for the resources used for the purpose of paying the principal, interest and related costs on the Shoreline Regional Park Community 2001 Tax Allocation Bonds as they become due. - ... ... C. Basis of Accounting ... The government-wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. .. - ... - .. l4 .. ~ .. 142 .. .. - - Uw ~ - ""'" - - - .. ."'IIi - - - .... - - - - - ..... - - ... fi>,,, - - .. .... MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The Community considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Non-exchange transactions, in which the Community gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Those revenues susceptible to accrual include taxes, intergovernmental revenues, interest and charges for services. Certain indirect costs are included in program expenses reported for individual functions and activities. D. Property Tax Santa Clara County assesses properties and bills, collects, and distributes property taxes to the Community. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are levied on July 1 for the fiscal year. Secured property tax is due in two installments, on November 1 and February 1, and becomes a lien on those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property tax is due on July 1, and becomes delinquent on August 31. Collection of delinquent accounts is the responsibility of the County, which retains all penalties. The term "unsecured" refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the property being taxed. Property tax revenues are recognized by the Community in the fiscal year they are assessed, provided they become available as defined above. 143 WI MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ..... .. .... - E. Use of Estimates .. The accompanying basic financial statements have been prepared on the modified accrual basis of accounting in accordance with generally accepted accounting principles. This requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. ... flit .. . I NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING . - A. Budgets and Budgetary Accounting .. . The Community adopts an annual budget on or before June 30 for the ensuing fiscal year for the Special Revenue Fund. All Debt Service is budgeted annually in the Special Revenue Fund, the fund obligated for such payments. .. .. Budgeted appropriations become effective each July 1. The Community Board may amend the budget during the fiscal year. The h:igallevel of budgetary control has been established at the fund and department level. Appropriations generally lapse at the end of the fiscal year to the extent they have not been expended or encumbered. .. . . - The Special Revenue Fund's annual budget is presented on a basis consistent with the combined financial statements prepared in accordance with generally accepted accounting principles. - IIlW III Budgeted revenue amounts represent the original budget modified by adjustments authorized during the year. Budgeted expenditure amounts represent original appropriations adjusted for supplemental appropriations during the year and reappropriated amounts for prior-year encumbrances. The Community Board must approve appropriation increases to departmental budgets; however, management may transfer Board-approved budgeted amounts within fund and departmental expenditure classifications. Supplemental appropriations were approved during the course of the year as needed. w ... - .... ... B. Encumbrance Accounting - Under encumbrance accounting, purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of formal budgetary integration. Encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities and are automatically reappropriated for inclusion in the following year's budget. ... - .. '- .. - llIII 144 - . ~...'\' ~ - -~ - - - ~ - --- .... - - - - -. - - ... - - ..... - 't'~# - - ... 16-' - - - "..,. ~;.i MOUNT AIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 3 - CASH AND INVESTMENTS I The Community's cash, except cash with fiscal agents, is included in a City-wide cash and investments pool, the details of which are presented in the City's basic financial statements. The City's investment policy and the California Government Code permit investments in the following: Securities issued by the U.S. Government or an agency of the U.S. Government, mortgage-backed securities, commercial paper, banker's acceptances, medium term notes issued by U.S. corporations, mutual funds invested in U.S. Government securities, certificates of deposit, municipal bonds issued by the City or any of its component units and the State Treasurer's investment pool (Local Agency Investment Fund). As of June 30, 2002 the City's portfolio was composed primarily of investments in securities issued by the U.S. Government and its agencies and the State of California Local Agency Investment Fund. The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City reports its investment in LAIF at the fair value amount provided by LAIF. The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage- backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. I NOTE 4 - CAPITAL ASSETS All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair market value on the date contributed. Capital assets are assets with an initial individual cost of more than $3,000 and an estimated useful life in excess of two years. Depreciation is provided using the straight line method, which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The Community has assigned the useful lives listed below to capital assets. Buildings Improvements Machinery and equipment Traffic signals Street Lights Bridges and culverts Sidewalks, curbs and gutters Streets and roads 25 to 50 years 5 to 50 years 3 to 10 years 20 years 50 years 60 years 40 years 40 years 145 MOUNT AIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 1 NOTE 4 - CAPITAL ASSETS (Continued) I -, Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. '""', /lIIIII\\ ... Capital Assets Additions and Retirements (dollars in thousands): flII!l Balance at Balance at June 30,2001 Additions Transfers June 30, 2002 Goverllm elltal activities Capital assets not being depreciated: Land $ 14,332 0 0 14,332 Construction in progress 50,221 2,672 (17,312) 35,581 Total capital assets not being depreciated 64,553 2,672 (17,312) 49,913 Capital assets being depreciated: Buildings 6,588 0 33 6,621 Improvements other than buildings 4,962 0 13,972 18,934 Machinery and equipment 20 12 7 39 Traffic signals 714 0 0 714 Street lights 1,014 0 0 1,014 Bridges and culverts 3,323 0 0 3,323 Sidewalks, curbs and gutters 7,421 0 0 7,421 Streets and roads 17,085 0 3,300 20,385 Total capital assets being depreciated 41,127 12 17,312 58,451 Less accumulated depreciation for: Buildings (1,737) (215) 0 (1,952) Improvements other than buildings (2,239) (330) (2,569) Machinery and equipment (9) (4) 0 (13) Traffic signals (228) (17) 0 (245) Street lights (178) (24) 0 (202) Bridges and culverts (561 ) (79) 0 (640) Sidewalks, curbs and gutters (1,855) (177) 0 (2,032) Streets and roads (5,149) (446) 0 (5,595) Total accumulated depreciation (11,956) (1,292) 0 (13,248) Net capital assets being depreciated 29,171 (1,280) 17,312 45,203 Governmental activity capital assets, net $' 93,724 1,392 0 95,116 .. .. ." .. ... ..... - .. III .. -- .. .. .. - .. - .. . - !. JIll .. '- - .. WI 146 .. . - MOUNT AIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 5 - INTERFUND TRANSACTIONS - - - A. Transfers Between Funds - With Board approval, resources may be transferred from one Community fund to another. The purpose of the majority of transfers is to reimburse a fund which has made an expenditure on behalf of another fund. Less often, a transfer may be made to open or close a fund. - ~ Transfers between funds during the fiscal year ended June 30, 2002 were as follows (dollars in thousands): "- .... Major Governmental Funds: Special Revenue Fund 1992 Tax Allocation Debt Service Fund 1993 Tax Allocation Debt Service Fund 1996 Tax Allocation Debt Service Fund 2001 Tax Allocation Debt Service Fund $ Transfers In Out 0 9,662 (A) 5,759 0 1,891 0 1,600 0 412 0 9,662 9,662 iIMilroif Total All Funds $ The reason for these transfers are set forth below: - - (A) To fund debt service payments ..... During the year ended June 30, 2002 the Community made transfers to the City in the amount of $4,711,000 to fund debt service payments, fund capital projects, and to fund internal service fund activities. Transfers from the City to the Community were $4,914,000 to refund remaining fund balances on completed capital improvement projects, and an additional $2,672,000 reported in the government-wide statements to transfer completed capital improvement projects to the Community. - - .... """' B. Long-term Advances to the City - The Community advanced the City's Shoreline Golf Links fund $5.1 million for the acquisition of the golf course. The advance will be repaid as resources become available in the fund. ..,.- - - C. Long-term Advances from the City ... ." Improvements to the Community have been partially funded by advances from the City. The Community's management believes that future property tax increment revenues will be sufficient to repay the advances. The advances are being repaid over a period of 28 years at 10% interest in equal annual installments, which began in fiscal 1989. - - iIliIillIIlt 147 '11>.", MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 6 - LONG TERM DEBT OBLIGATIONS A. Composition and Changes The Community generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt. The Community's debt issues and transactions are summarized below and discussed in detail thereafter. The Community's long term debt as of June 30, 2002 follows (dollars in thousands): !III ... .. - \.4 - .. .. - .. Original Issue Balance Amount June 30,2001 Due Balance Within June 30,2002 One Year .. . Additions Retirements ] 992 Tax Allocation Refunding Bonds 4.0% to 6.5%, due 2016 $ 28,229 20,204 0 (20,204) 0 ] 993 Tax Allocation Bonds 3.1% to 5.75%, due 2018 25,465 21,140 0 (725) 20,415 ] 996 Tax Allocation Bonds 4.0% to 5.6%, due 2021 21,750 19,825 0 (540) 19,285 200] Tax Allocation Bonds 3.5% to 5.25%, due 2016 17,520 0 17,520 0 17,520 Less deferred amount: On refunding (2,419) 0 (2,419) 161 (2,258) $ 90,545 61,169 15,101 (21,308) 54,962 B. Description of General Long-Term Obligations 1992 Tax Allocation Refunding Bonds Shoreline Regional Park Community - On April 30, 1992 the Community issued bonds in the amount of $28,228,575 to advance refund the 1986 Tax Allocation Bonds Series-A and the 1987 Tax Allocation Bonds Series- A. On July 24, 2001 the Community defeased the bonds by placing the proceeds of the 2001 Tax Allocation Bonds in the amount of $17,520,000, as well as $5,775,408 in funds on hand, in an irrevocable trust to provide for all future debt payments. Accordingly, the trust account assets and the liability for the defeased Bonds are not included in the financial statements. At June 30, 2002 the 1992 Tax Allocation Bonds outstanding with a final maturity value of $5,060,000 are considered defeased. 1993 Tax Allocation Bonds Shoreline Regional Park Community - On September 8, 1993 the Community issued bonds in the amount of $25,465,000 to provide financing for certain landfill closure projects. Principal payments are payable annually on August 1 and interest payments semi-annually on August 1 and February 1 from property tax revenues generated within the Community. 148 .. .. 0 .. 760 .. 565 III 870 . 0 .. - 2,195 - .. .. - .- .. .. - .. .. - .. " ... - III .. .. - -- - - - - a.."" - - \liO"""'i ~ ~ - - IIiIIliiiIi .,PtIlI .. ... ... .... - ... - - ...JIii .. .... - MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 6 - LONG TERM DEBT OBLIGATIONS (Continued) 1996 Tax Allocation Bonds Shoreline Regional Park Community - On August 15, 1996 the Community issued bonds in the amount of $21,750,000 to provide financing for land purchases, including road, water, sewer, and other public improvements within the Community. Principal payments are payable annually on August 1 and interest payments semi-annually on August 1 and February 1 from property tax revenues generated within the Community. 2001 Tax Allocation Bonds Shoreline Regional Park Community - On July 24, 2001, the Community issued $17,520,000 of Tax Allocation Refunding Bonds, 2001 Series A, to refund the Community's 1992 Tax Allocation Bonds. The reacquisition price exceeded the net carrying amount of the old Bonds by $2,419,000. This amount is being netted against the new debt and amortized over the remaining life of the new debt issue which is equivalent to the life of the refunded Bonds. The refunding resulted in an overall savings of $9,995,241. The net present value of the savings, less the Community's cash payment of $5,775,408, resulted in an economic gain of$I,872,487. Principal payments are payable annually on August 1 and interest payments semi-annually on August 1 and February 1 from property tax revenue generated within the community. C. Debt Service Requirements: The Community's annual debt service requirements to maturity follows (dollars m thousands): Governmental Activities For the Year Ending June 30 Principal Interest 2003 $ 2,195 2,910 2004 2,300 2,810 2005 2,410 2,707 2006 2,515 2,594 2007 2,630 2,476 2008-2012 15,175 10,285 2013-2017 19,615 5,693 2018-2022 10,380 1,187 Total $ 57,220 30,662 Reconciliation of long-term debt prinicpal: Principal requirement as reported above Less: deferred amount on refunding Total long-term debt principal $ 57,220 (2,258) $ 54,962 149 .. MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 ~... .. I NOTE 7 - RISK MANAGEMENT .... t4. The Community is covered under the City's insurance program. The City is exposed to various risks of loss related to torts, errors and omissions, injuries to employees or others, unemployment and health care of employees. The City has established various self- insurance programs to account for and finance its uninsured risks of loss. The activities of the self-insurance programs are recorded in the Internal Service Funds. Under the self- insurance programs, the City retains the risk of loss up to a maximum of $500,000 for general liability claims, $250,000 for workers' compensation claims with statutory excess insurance and actual costs incurred for unemployment benefits. .. AlII .. .. - For general liability claims, the City has excess liability coverage through the Authority for California Cities Excess Liabilities (ACCEL) to cover the risk of loss for claims in excess of $500,000 per incident. ACCEL is a joint powers authority of medium-sized California municipalities which pools catastrophic general liability, automobile liability and public officials errors and omissions losses. ACCEL coverage consists of an excess insurance policy purchased for a limit of $19,500,000 per occurrence, with an aggregate limit of $19,500,000. .. .. .. II .. .. Additional information regarding the City' insurance programs can be found in the City's June 30, 2002 basic financial statements. ... . I NOTE 8 - NET ASSETS AND FUND BALANCES . .. A. Net Assets ... Net Assets is the excess of all the Community's assets over all its liabilities, regardless of fund. Net Assets are divided into three captions on the statement of net assets. These captions apply only to Net Assets, which is determined only at the Government-wide level, and are described below: .. .. .. - Invested in Capital Assets, net of related debt describes the portion of Net Assets which is ... represented by the current net book value of the Community's capital assets, less the outstanding balance of any debt issued to finance these assets. .. Restricted describes the portion of Net Assets which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the Community cannot unilaterally alter. These principally include debt service requirements. .. - .. - Unrestricted describes the portion of Net Assets which is not restricted as to use. .. .. ... - .. 150 .. .. ~-., - - ~''''_i'l -- ..... - "'''' ~ - ~ - ~ - ~ .,.- '*""" ~ ~i - - - MOUNTAIN VIEW SHORELINE REGIONAL PARK COMMUNITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 8 - NET ASSETS AND FUND BALANCES (Continued) B. Fund Balances, Reserves and Designations In the fund financial statements, fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables, less it's liabilities. Portions of a fund's balance may be reserved or designated for future expenditure. Fund balances consist of reserved and unreserved amounts. Reserved fund balances represent that portion of fund balance which are not available for appropriation or are legally segregated for a specific future use. The remaining portion is unreserved fund balance. Portions of unreserved fund balance may be designated to indicate tentative plans for financial resource utilization in a future period, such as for general contingencies or capital projects. Such plans or intentions are subject to change. I. I NOTE 9 - COMMITMENTS AND CONTINGENCIES The Community is a defendant in several lawsuits and other matters arising in the normal course of operations. The Community's management and legal counsel are of the opinion that the potential claims against the Community not covered by insurance resulting from such litigation would not materially affect the financial position of the Community. 151 ~ - IHlI ~, Will ,. - liIIl'\ - This Page Left Intentionally Blank .. .. .. .. MIl .. III ,. .. .. - III .. .. .. - .. . - . .. . '- .. - II . .. ....# ~ - {~i';1lll I.,,,, ~;i4 ~ Wh';f' - ....... ~ ...... ijjW ~ l:'",,,.,J. - ,.... - ...... ~ ... - MOUNTAIN VIEW REVITALIZATION AUTHORITY Table of Contents Pa2e I FINANCIAL SECTION: Independent Auditors' Report ................................ ......................... ......... .............. ......................155 Management's Discussion and Analysis......... ...... ............ ................. ..........................................157 Component Unit Financial Statements: Government-wide Financial Statements: Statement of Net Assets................... .......................... ................. ........................... ...........164 Statement of Activities...................................................................................................... 165 Fund Financial Statements: Governmental Funds: Balance Sheet................................................................................................................. 166 Statement of Revenues, Expenditures and Changes in Fund Balances............................................................................................. 167 Reconciliation ofthe Net Change in Fund Balances- Total Governmental Funds with the Statement of Activities....................................................................................................... 168 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Revitalization Authority................................................................................................ 169 Housing Set-Aside ......... ...... ......... ............. ......... ............... ......... ............................... .... 170 Notes to Financial Statements...................................................................................................... 171 Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............................................................................................................................................. . 181 153 ,.... - w .. ~ .... ., .. ... This Page Left Intentionally Blank - ..- .. .. .. ... .. . .. .., - - - .- .. .. .. .., ... - - .. .- - ., .. .. .., AAAZE & · ./~ ASSOCIA TES ACCOUNTANCY CORPORATION 1931 San Miguel Drive - Suite 100 Walnut Creek, California 94596 (925) 930-0902. FAX (925) 930-0135 E-Mail: maze@mazeassociates.com Website: www.mazeassociates.com INDEPENDENT AUDITORS' REPORT Members of the Mountain View Revitalization Authority City of Mountain View, California We have audited the accompanying component unit financial statements of the Mountain View Revitalization Authority (Authority), a component unit of the City of Mountain View, California as of and for the year ended June 30, 2002, as listed in the Table of Contents. These component unit financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these fmancial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States of America and the standards for fmancial audits contained in Government Auditing Standards (1994 Revision), issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the component unit fmancial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the component unit financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the component unit financial statements referred to above present fairly in all material respects the financial position of the Authority as of June 30, 2002, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles in the United States of America. The basic component unit financial statements referred to above follow the requirements of Government Accounting Standards Board (GASB) Statements No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments, No. 36, Recipient Reporting for Certain Non-e.x;change Revenues, an Amendment of GASB Statement No. 33, No. 37, Basic Financial Statements-and Management's Discussion and Ana~vsis-for State and Local Governments; Omnibus, and No. 38, Certain Financial Statement Note Disclosures. Management's Discussion and Analysis and Required Supplemental Information is supplementary information required by the GASB, but is not part of the basic component unit financial statements. We have applied certain limited procedures to this infomlation, principally inquiries of management regarding the methods of measurement and presentation of this information, but we did not audit this information and we express no opinion on it. ~~,~d'bI September 26,2002 155 A Professional Corporation """, <i;i~:t. - - ,tII!IlI 'WIJIfI ,tII!IlI ",. """ ~ - '1ilIllI' This Page Left Intentionally Blank ... ... .. - .- liiiiii - ... - - ,tII!IlI - ... .. - '""" - ... - ... - ~ - - .. .. ~-w' -- MANAGEMENT'S DISCUSSION AND ANALYSIS ~ This section of the Mountain View Revitalization Authority's (Authority) component unit financial statements presents a narrative overview and analysis of the financial activities of the Authority for the fiscal year ended June 30, 2002. We encourage readers to consider the information presented here in conjunction with additional information that has been furnished in our transmittal letter of the City of Mountain View (City). ""'~4 FINANCIAL HIGHLIGHTS The Authority's principal revenue source is incremental property taxes, which increased in Fiscal Year 2002. Fiscal Year 2002 financial highlights include the following: .. . The assets of the Authority exceeded its liabilities at the close of the fiscal year ended June 30, 2002 by $2.3 million (net assets). Of this amount, $1.9 million (unrestricted net assets) may be used to meet the Authority's ongoing obligations. . The Authority's total net assets increased by $2.1 million during the fiscal year. . Authority-wide revenues included general revenues and transfers of $3.0 million. . Governmental Fund balances increased to $5.8 million in Fiscal Year 2002, up from $3.8 million in Fiscal Year 2001. ~ . Governmental Fund revenues increased to $2.8 million in Fiscal Year 2002, up $555,000 from the prior year's $2.3 million. . Governmental Fund expenditures were $990,000 in Fiscal Year 2002, approximately the same level as Fiscal Year 2001. ~. OVERVIEW OF THE BASIC FINANCIAL STATEMENTS ~ This discussion and analysis are intended to serve as an introduction to the Authority's basic financial statements. The Authority's basic financial statements comprise three components: (1) government-wide financial statements; (2) fund financial statements; and (3) notes to the financial statements. 'i~i14 Government-wide Financial Statements .... The government-wide financial statements are designed to provide readers with a broad overview of the Authority's finances in a manner similar to a private-sector business. .. 157 .- iili:~ IIIIl The statement of net assets presents information on all of the Authority'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 Authority is improving or deteriorating. .. .. - The statement of activities presents information showing how the Authority'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, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave. - - - WIl - .. Fund Financial Statements ... '. The fund financial statements are designed to report information about groupings of related accounts which are used to maintain control over resources that have been segregated for specific activities or objectives. The Authority, 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 Authority are governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the governmental-wide financial statements. However, unlike the government-wide financial statements, governmental fund finan- cial 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 determining what financial resources are available in the near future to finance the Authority's programs. III .. .. .. .. .. - .. .. 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 govern- ment-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 Authority maintains three individual governmental funds. Information is pre- sented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the Revitalization Authority Fund, the Housing Set-Aside Fund and the Police/Fire Building 1995 CO.P. Fund, all of which are reported as major funds. .. - III - ... .. . 158 lIII .. ;w'- _;;4 The Authority adopts an annual appropriated budget for its Revitalization Authority and Housing Set-Aside Funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with budgets. 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. GOVERNMENT-WIDE FINANCIAL ANALYSIS iIiilM/i; This is the first year the Authority has presented its financial statements under the new reporting model required by the Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statement, and Management's Discussion and Analysis (MD&A) for State and Local Governments. Because this reporting model changes significantly both the recording and presentation of financial data, the Authority has not restated prior fiscal years for the purposes of providing comparative information for the MD&A. In future years, when prior-year information is available, a comparative analysis of government-wide data will be included in this report. "'iw<ii 1o:'ii."i.Il" Analysis of Net Assets ..... As noted earlier, net assets may serve as a useful indicator of a government's financial position. For the Authority, assets exceeded liabilities by $2.3 million at the end of the fiscal year. The major components of net assets follows: -- . Total assets of $12.1 million consisted of $4.2 million of capital assets and $7.9 million of other assets. . Total liabilities of $9.8 million consisted of $7.5 million of long-term debt and $2.3 million of other liabilities. ~,..-,,,, . The largest portion of the Authority's net assets of $3.0 million is restricted for the purpose of providing low- and moderate-income housing in the City. . Another significant portion of the Authority's net assets of $1.9 million is unrestricted, which may be used to meet the Authority's ongoing obligations. ~ . An additional portion of the Authority's net assets of $784,000 is restricted for debt service. '"'" The Authority's net assets increased $2.1 million for the fiscal year. This is primarily from the increase in incremental property tax revenues resulting from successful redevelopment activities. ........ 159 - )"Hlt - .. Statement of Activities - The major component of the Authority's Fiscal Year 2002 revenue is $2.5 million from incremental property taxes. This amount compares with $1.9 million in Fiscal Year 2001 and increased as the result of successful redevelopment efforts by the Authority. Investment earnings accounted for $367,000 of Authority revenues, up from Fiscal Year 2001's $326,000. Other revenues included $159,000 net transfers from the City. ... "II! fill - Total expenses were $907,000, of which $368,000 was for community development and $539,000 was for interest on long-term debt. .. - .. FINANCIAL ANALYSIS OF THE AUTHORITY'S FUNDS .. As noted earlier, the Authority uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. .. .. The focus of the Authority's governmental funds is to provide information on near-term inflows, outflows and balances of resources that are available for spending. Such information is useful in assessing the Authority'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. .. III .. .. .. At June 30, 2002, the Authority's funds reported combined fund balances of $5.8 million, an increase of $2.0 million from Fiscal Year 2001's fund balances of $3.8 million. Approximately $3.1 million of this total amount represents unreserved fund balance, which is available for spending at the Authority's discretion. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed for restricted purposes. - .. - "" Revenues for the fiscal year ending June 30, 2002 totaled $2.8 million, an increase of $555,000 or 24.5 percent over the prior fiscal year. Expenditures totaled $990,000, an increase of $34,000 over the prior fiscal year. .. .. - ... The Revitalization Authority Fund is the general fund for the Authority and accounts for the activities of the Authority, which was created to prepare and carry out redevel- opment plans for a designated area of the City. At the end of the current fiscal year, unreserved fund balance was $1.2 million while total fund balance was $2.0 million. As a measure of the general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 509.9 percent of total fund expenditures of $232,000, while total fund balance represents 862.5 percent of that same amount. - .. ... . .. ... - . 160 .. - The fund balance of the Authority's fund increased by $1.4 million during the current fiscal year. Key factors in this growth are as follows: . Total revenues were $2.7 million in Fiscal Year 2002, an increase of $569,000. Property tax increment revenues were $2.5 million in Fiscal Year 2002, an increase of $514,000 from Fiscal Year 2001. Investment earnings for Fiscal Year 2002 at $235,000 was $55,000 higher than the prior year as interest rate declines were offset by higher average investment balances. . Expenditures were $232,000 in Fiscal Year 2002, approximately the same as the pnor year. . Included in other financing sources in Fiscal Year 2002 were net transfers out of $1.2 million, representing property tax increment collected by the Revitalization Authority Fund that was transferred to the Housing Set-aside Fund and the Debt Service Fund. - _>if The Housing Set-Aside Fund accounts for the portion of property tax increment required under California law to be set aside to fund low- and moderate-income housing expenditures. The Authority's loans to nonprofit corporations developing low- and moderate-income housing are accounted for in this fund. These loans are described in detail in Note 5 to the financial statements. - The fund balance of the Housing Set-Aside Fund increased by $591,000 during the current fiscal year as a result of investment earnings and the transfer of 20 percent of property tax increment from the Revitalization Authority Fund. The Police/Fire Building 1995 CO.P. Fund accounts for resources used for the purpose of paying the principal, interest and related costs on the Authority's Certificates of Participation, which are more fully described in Note 7 to the financial statements. These Certificates of Participation are secured by property tax increment revenue. The fund balance of this fund decreased $3,000 as a result of utilizing funds for the payment of debt service. Debt service expenditures included $325,000 in principal retirement and $433,000 in interest payments in Fiscal Year 2002. CAPIT AL ASSETS ~ - At the end of Fiscal Year 2002, capital assets recorded on the Authority's financial statements amount to $4.2 million (net of accumulated depreciation). There were no additions during Fiscal Year 2002, and depreciation of $136,000 was provided for in Fiscal Year 2002. Further details on capital assets and depreciation charges may be found in Note 4. 161 - - DEBT ADMINISTRATION .. The Authority's Refunding Certificates of Participation debt issue is discussed in detail in Note 7 to the financial statements. At June 30, 2002, the Authority's indebtedness under this issue was $7.5 million, which was secured by property tax increment. There were no new debt issues in Fiscal Year 2002; debt principal payments were made as scheduled. .. - .. .. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS .. .. . Overall property taxes for the Authority are expected to increase for the upcoming fiscal year as new development is completed and comes onto the tax roll. However, office vacancy rates remain high, and unsecured property tax is anticipated to decline for Fiscal Year 2003. .. .. ... .. . State actions require a shift of tax increment of $74,000 to the Educational Relief Augmentation Fund (ERAF) for the Authority for Fiscal Year 2003. .. .. . The construction of a downtown parking structure to be partially financed from unreserved fund balance of the Authority is planned. The parking structure will feature approximately 20,000 square feet of retail space on the ground floor and is expected to be completed in Fiscal Year 2005. .. III . All of these factors were considered in preparing the Authority's budget for Fiscal Year 2003. IIiIf - .. REQUEST FOR INFORMATION - These financial statements are intended to provide citizens, taxpayers, investors and creditors with a general overview of the Authority's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be directed to the Finance and Administrative Services Department, 500 Castro Street, Mountain View, California, 94039-7540. .. .. - .. .. PJK/8/FIN 546-12-13-02R^ .. .. .. . All ... ... .. 162 . .. iiiir;U# .... J1~;1;l "~.;;iI -- This Page Left Intentionally Blank ..... -... ...... - ~"" .. MOUNTAIN VIEW REVITALIZATION AUTHORITY IIIIIi Statement of Net Assets June 30, 2002 (Dollars in Thousands) Assets: Cash and investments (Note 3) $ 5,273 Restricted cash and investments (Note 3) 784 Receivables: Interest 71 Loans (Note 5) 1,072 Land held for resale 725 Capital assets (net where applicable of accumulated depreciation) (Note 4) 4,175 Total assets 12,100 Liabilities: Accounts payable and accrued costs 16 Interest payable 106 Advances from the City of Mountain View (Note 6) 2,147 Refunding Certificates of participation (Note 7) Due in one year 340 Due in more than one year 7,145 Total liabilities 9,754 Net Assets: Invested in capital assets, net of related debt (3,310) Restricted for: Debt service 784 Low and moderate income housing 2,977 Unrestricted 1,895 Total net assets $ 2,346 See accompanying notes to financial statements. .. .. .. .. .. lilt - - - - .. .. .. - .. .. .. - .. .. .. .. .. .. .. WIll ., .. lilt .. .. .. - .. 164 .. lilt - MOUNTAIN VIEW REVITALIZATION AUTHORITY '""'" Statement of Activities For the Year Ended June 30,2002 (Dollars in Thousands) - :~.'",~i1 Functions/Programs ~ Community development $ 368 Interest on long term debt 539 Total program expenses 907 ,",~;,... General revenues: Taxes 2,453 ""'" Interest earnings 367 Transfers from the City of Mountain View 165 Transfers to the City of Mountain View (6) .,.,. Total general revenues and transfers 2,979 Change in net assets 2,072 ~ Beginning net assets 274 Ending net assets $ 2,346 'iiiiF"iiI See accompanying notes to financial statements. ~"-<'" ~",".,. .- ...... ~ 'Wt;."."" 165 II!lJ MOUNTAIN VIEW REVITALIZATION AUTHORITY Governmental Funds Balance Sheet June 30, 2002 (Dollars in Thousands) Police/Fire Total Revitalization Housing Building Governmental Authority Set-Aside 1995 C.O.P. Funds Assets: Cash and investments $ 3,387 1,886 0 5,273 Restricted cash and investments 0 0 784 784 Receivables: Interest 52 19 0 71 Loans 0 1,072 0 1,072 Land for resale 725 0 0 725 Total assets $ 4,164 2,977 784 7,925 Liabilities and fund balances: Accounts payable and accrued costs $ 16 0 0 16 Advances from City of Mountain View 2,147 0 0 2,147 Total liabilities 2,163 0 0 2,163 Fund balances (deficits): Reserved for: Restricted cash and investments 0 0 784 784 Loans receivable 0 1,072 0 1,072 Encumbrances 93 0 0 93 Land held for resale 725 0 0 725 Unreserved: Designated for: Unrealized gain on investments 122 0 0 122 Undesignated 1,061 1,905 0 2,966 Total fund balances 2,001 2,977 784 5,762 Total liabilities and fund balances $ 4,164 2,977 784 .. .. .. .. .. .. .. - - .. .. .. .. .. .. III . . ... - .. .. .. ... .. .. ., Amounts reported for Governrnental Activities in the Statement of Net Assets are different from those reported in the Governrnental Funds above because of the following: - CAPITAL ASSETS Capital assets used in Governrnental Activities are not current assets or fmancial resources and therefore are not reported in the Governrnental Funds. .. 4,175 .. III LONG TERM ASSETS AND LIABILITIES The assets and liabilities below are not due and payable in the current period and therefore are not reported in the Funds: Long-term debt Interest payable - - NET ASSETS OF GOVERNMENTAL ACTIVITIES (7,485) (I 06) 2,346 .. $ . See accompanying notes to financial statements. 166 . .. - MOUNTAIN VIEW REVITALIZATION AUTHORITY Governmental Funds - Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30,2002 (Dollars in Thousands) Police/Fire Total Revitalization Housing Building Governmental Authority Set-Aside 1995 C.O.P. Funds Revenues: Taxes $ 2,453 0 0 2,453 Use of money and property 235 100 32 367 Total revenues 2,688 100 32 2,820 ~ Expenditures: Current: Conununity development 232 0 0 232 ~ Debt service: Principal repayment 0 0 325 325 Interest and fiscal charges 0 0 433 433 Total expenditures 232 0 758 990 Excess (deficiency) of revenues over - (under) expenditures 2,456 100 (726) 1,830 Other financing sources (uses): 'f!!li>~ Transfers in 0 491 723 1,214 Transfers (out) (1,214) 0 0 (1,214) ~ Transfers from the City of Mountain View 165 0 0 165 Transfers to the City of Mountain View (6) 0 0 (6) .... Total other financing sources (uses) (1,055) 491 723 159 Excess (deficiency) ofrevenues and other financing sources over (under) expenditures and other financing uses 1,401 591 (3) 1,989 Beginning fund balances 600 2,386 787 3,773 Ending fund balances $ 2,001 2,977 784 5,762 See accompanying notes to financial statements. ..... - '!i..,,'; ~ 167 MOUNTAIN VIEW REVITALIZATION AUTHORITY Reconciliation of the Net Change in Fund Balances Total Governmental Funds with the Statement of Activities For the Year Ended June 30, 2002 (Dollars in Thousands) The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis. NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS Amounts reported for governmental activities in the Statement of Activities are different because of the following: CAPITAL ASSETS TRANSACTIONS Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. Depreciation expense is deducted from the fund balance LONG TERM DEBT PROCEEDS AND PAYMENTS Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of bond principal is an expenditure in the governmental funds, but in the Statement of Net Assets the repayment reduces long-term liabilities. Repayment of debt principal is added back to fund balance ACCRUAL OF NON-CURRENT ITEMS The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and therefore are not reported as revenue or expenditures in governmental funds (net change): Interest payable .. .. .. .. .. .. .. lit ... - $ 1,989 ... .. ... ... .. .. (136) .. - . .. 325 .. .. .. ... (1 06) .. CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES 2,072 .. $ See accompanying notes to financial statements. 168 .. ... .. .. .. III .. .. - . .. .. - MOUNTAIN VIEW REVITALIZATION AUTHORITY - Revitalization Authority Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual For the Fiscal Year Ended June 30,2002 (Dollars in Thousands) k..'" Bud~eted Amounts Ori~inal Final Actual Amounts Bud~etary Basis Variance with Final Bud~et Revenues: Taxes $ 1,804 1,804 2,453 649 %i:;I;Ijj Use of money and property 115 115 235 120 Amounts available for appropriation 1,919 1,919 2,688 769 Expenditures: Current: Community development 434 581 232 349 Total expenditures 434 581 232 349 Excess (deficiency) ofrevenues over -- (under) expenditures 1,485 1,338 2,456 1,118 ~ Other financing sources (uses): Transfers (out) (1,121) (1,250) (1,214) 36 Transfers from the City of Mountain View 0 100 165 65 Transfers to the City of Mountain View (6) (6) (6) 0 ..... Total other financing sources (uses) (1,127) (1,156) ( 1 ,055) 101 ~,,'i'i Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 358 182 1,401 1,219 Beginning fund balances 600 600 600 0 ~"';<;,... Ending fund balances $ 958 782 2,001 1,219 ~"'~ See accomanying notes to financial statements. - - i!i;:",.",' ~ 169 'iiI;".", .. MOUNTAIN VIEW REVITALIZATION AUTHORITY .. Housing Set-Aside Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual For the Fiscal Year Ended June 30, 2002 (Dollars in Thousands) .. .. - "" Budgeted Amounts ... Original Final Actual Amounts Budgetary Basis Variance with Final Budget fill ... .. Revenues: Use of money and property $ 15 15 100 85 Amounts available for appropriation 15 15 100 85 Other financing sources (uses): Transfers in 361 491 491 0 Total other financing sources (uses) 361 491 491 0 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 376 506 591 85 Beginning fund balances 2,386 2,386 2,386 0 Ending fund balances $ 2,762 2,892 2,977 85 See accomanying notes to financial statements. - III .. .. ... .. .. .. . - - .. .. .. .. ... .. filii ... .. - .. - .. - .. 170 . .. ~ MOUNTAIN VIEW REVIT ALIZA TION AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 .~ I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Mountain View Revitalization Authority (Authority) was established in 1969 under the Provisions of the Redevelopment Law (California Health and Safety Code) to provide an improved physical, social and economic environment in the Plan Area. ~ ~. The Authority is an integral part of the City of Mountain View (City). It primarily services the City and the City's City Council serves as the governing body of the Authority. Therefore, the financial data of the Authority has also been included as a blended component unit within the City's comprehensive annual financial report for the year ended June 30, 2002. -;;.,"""" The Authority's primary source of revenue is incremental property taxes, which are computed and allocated to the Authority in the following manner: a. The assessed valuation of all property within each Authority project area is determined and "frozen" for allocation purposes on the date of adoption of that project area's Revitalization Plan by a designation of a fiscal year assessment roll. b. Increments in property taxes resulting from any increase in assessed values after the adoption of a Revitalization Plan are allocated to the Authority; all property taxes on the "frozen" assessed valuation of the property are allocated to the City and other districts receiving taxes from the project area. -... ~ The Authority has no power to levy or collect taxes. Any legislative property tax reduction would lower the amount of tax revenues that would otherwise be available to pay principal and interest on debt or loans from the City and any increase in the tax rate or assessed valuation or any elimination of present exemptions would increase the amount of tax revenues available for this purpose. The Authority is also authorized to finance the Revitalization Plan from other sources, including assistance from the City, the State and federal governments, interest income and the issuance of Authority debt. A. Basis of Presentation ~ The Authority's basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the U.S.A. These standards require that the financial statements described below be presented. .. Government-wide Statements: The Statement of Net Assets and the Statement of Activities include the financial activities of the overall Authority government. Eliminations have been made to minimize the double counting of internal activities. ~<..... 171 MOUNTAIN VIEW REVIT ALIZA TION AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 1 - SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES (Continued) The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Authority's activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the Authority's funds. Separate statements for each governmental fund are presented. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. B. Major Funds Major funds are defined as funds that have either assets, liabilities, revenues or expenditures equal to ten percent of their fund-type total and five percent of the grand total of governmental and enterprise funds. Major governmental type funds are identified and presented separately in the Fund financial statements. All of the Authority's funds are major funds. The Authority reported the following major governmental funds in the accompanymg financial statements: Revitalization Authority (Special Revenue) - This fund accounts for the activities to prepare and carry out redevelopment plans for the designated development project area. .. .. .. . .. III - III .. .. .. III ilia .. .. .. III . ... .. .. . .. Housing Set-Aside (Special Revenue) - This fund accounts for the required 20% revenue set- .. aside and related expenses for Housing activities .. The Police/Fire Building Refunding 1995 Certificates of Participation Fund (Debt Service) .- - This fund accounts for the resources used for the purpose of paying the principal, interest, and related costs on the 1995 Refunding Certificates of Participation as they become due. .. - C. Basis of Accounting The government-wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. 172 .. . .. . .. .. ... .. .. . MOUNTAIN VIEW REVITALIZATION AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 .4> I NOTE 1 - SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The Authority considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long- term debt and acquisitions under capital leases are reported as other financing sources. Non-exchange transactions, in which the Authority gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Those revenues susceptible to accrual include taxes, intergovernmental revenues, interest and charges for services. Certain indirect costs are included in program expenses reported for individual functions and activities. D. Property Tax ... ~"" Santa Clara County assesses properties and bills, collects, and distributes property taxes to the Authority. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are levied on July1 of the fiscal year. w''''' Secured property tax is due in two installments, on November 1 and February 1, and becomes a lien on those dates. It becomes delinquent on December 1 0 and April 10, respectively. Unsecured property tax is due on July 1, and becomes delinquent on August 31. Collection of delinquent accounts is the responsibility of the County, which retains all penalties. - The term "unsecured" refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the property being taxed. Property tax revenues are recognized by the Authority in the fiscal year they are assessed, provided they become available as defined above. - 173 MOUNTAIN VIEW REVITALIZATION AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 1 - SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES (Continued) E. Land Heldfor Resale At June 30, 2002 the Authority had one parcel purchased in fiscal year 2000, which is being held for future development projects. The parcel is accounted for at the lower of cost or net realizable value. F. Use of Estimates The accompanying basic financial statements have been prepared on the modified accrual basis of accounting in accordance with generally accepted accounting principles. This requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. I NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING A. Budgets and Budgetary Accounting The Members of the Authority adopt an annual budget on or before June 30 for the ensuing fiscal year for the Special Revenue Funds. The Debt Service is budgeted annually in the Special Revenue Fund, the fund obligated for such payments. Budgeted appropriations become effective each July 1. The Members of the Authority may amend the budget during the fiscal year. The legal level of budgetary control has been established at the fund and department level. Appropriations generally lapse at the end of the fiscal year to the extent they have not been expended or encumbered. The Special Revenue Funds' annual budgets are presented on a basis consistent with the combined financial statements prepared in accordance with generally accepted accounting principles. Budgeted revenue amounts represent the original budget modified by adjustments authorized during the year. Budgeted expenditure amounts represent original appropriations adjusted for supplemental appropriations during the year and reappropriated amounts for prior-year encumbrances. The Members of the Authority must approve appropriation increases to departmental budgets; however, management may transfer approved budgeted amounts within fund and departmental expenditure classifications. Supplemental appropriations were approved during the course of the year as needed. 174 .- '- .. .. .. .. - ... - - ... .. .. .. .. .. .. .. . .. .. .. III .. .. .. .. .. .. . .. . .. .. .. III III . -'" MOUNTAIN VIEW REVIT ALIZA TION AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 .... I NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING (Continued) B. Encumbrance Accounting Under encumbrance accounting, purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of formal budgetary integration. Encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities and are automatically reappropriated for inclusion in the following year's budget. '~,J,Jaj I NOTE 3 - CASH AND INVESTMENTS ~ The Authority's cash, except cash with fiscal agents, is included in a City-wide cash and investments pool, the details of which are presented in the City's basic financial statements. The City's investment policy and the California Government Code permit investments in the following: Securities issued by the U.S. Government or an agency of the U.S. Government, mortgage-backed securities, commercial paper, banker's acceptances, medium term notes issued by U.S. corporations, mutual funds invested in U.S. Government securities, certificates of deposit, municipal bonds issued by the City or any of its component units and the State Treasurer's investment pool (Local Agency Investment Fund). As of June 30, 2002 the City's portfolio was composed primarily of investments in securities issued by the U.S. Government and its agencies and the State of California Local Agency Investment Fund ~ The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City reports its investment in LAIF at the fair value amount provided by LAIF. The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. tiif;I;j iliIiIle;.., 'b<~ I NOTE 4 -CAPITAL ASSETS fiiI;t All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair market value on the date contributed. - 175 ..... MOUNTAIN VIEW REVITALIZATION AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 .. - I NOTE 4 -CAPITAL ASSETS (Continued) I .. Depreciation is provided using the straight line method, which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The Authority has assigned the useful lives listed below to capital assets. .. .. WII .. Buildings Improvements 25 to 50 years 5 to 50 years .. .. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. .. .. Capital assets at June 30, 2002 comprise (dollars in thousands): .. . Balance at Balance at .. June 30,2001 Additions June 30, 2002 .. .. Governmental activities Capital assets being depreciated: Buildings $ 5,394 Accumulated depreciation (1,090) Improvements other than buildings 10 Accumulated depreciation (3) Govemmental activity capital assets, net $ 4,31 I o (135) o (1) 5,394 (1,225) 10 (4) .. .. - .. - (136) 4,175 - .. I NOTE 5 - NOTES RECEIVABLE .. - At June 30, 2002 the Authority's notes and loans receivable totaled (dollars in thousands): - Latham Street Apartments Central Park Apartments Total $ 866 206 $ 1,072 .. . - .. l1li .. .. lit 176 . .. Wff MOUNTAIN VIEW REVITALIZATION AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Wo;ti I NOTE 5 - NOTES RECEIVABLE (Continued) A. Latham Street Apartments On August 30, 1995 the City and the Authority loaned $2,067,000 to the Mid-Peninsula Housing Coalition for the acquisition and rehabilitation of a 75 unit apartment complex at 2230 Latham Street to provide affordable housing for very low- to moderate-income families. The loan was funded by $992,000 of Authority Housing Set-Aside Funds, $688,000 in Community Development Block Grants (CDBG) Funds and $387,000 in HOME Grant Funds. The various components of the loan are to be repaid over a 20 to 24 year period at 3% annual simple interest. The loan is collateralized by a first deed of trust. B. Central Park Apartments ~ On July 1, 1998 the City and the Authority loaned $2,200,000 to the Mid-Peninsula Housing Coalition for the acquisition and rehabilitation of a 149 unit apartment complex known as Central Park Apartments at 90 Sierra Vista Avenue to be used to provide housing for seniors of very low to low income. The entire project was funded by 3 loans: $388,000 from Authority Housing Set-Aside Funds to be repaid over 9 years, commencing in fiscal year 1999 and bearing 3% annual interest; $1,200,000 of CDBG Funds to be repaid over 36 years commencing in fiscal year 2013 and bearing 3% annual interest; and $612,000 from HOME Grant Funds to be repaid over 21 years commencing in fiscal year 2005 and bearing 3% annual interest. '~ I NOTE 6 - INTERFUND TRANSACTIONS Mi;"...; A. Transfers Between Funds ;~' With the approval of the Members of the Authority, resources may be transferred from one Authority fund to another. The purpose of the majority of transfers is to reimburse a fund which has made an expenditure on behalf of another fund. Less often, a transfer may be made to open or close a fund. -..,...' Transfers between funds during the fiscal year ended June 30, 2002 were as follows (dollars in thousands) : Transfers - In Out Revitalization Authority Special Revenue Fund $ 0 1,214 ~ Housing Set-Aside Special Revenue Fund 491 0 Police/Fire Building 1995 C. O.P. Fund 723 0 Total All Funds $ 1,214 1,214 177 MOUNTAIN VIEW REVITALIZATION AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 6 - INTERFUND TRANSACTIONS (Continued) During the fiscal year ended June 30, 2002 the Authority made transfers to the City in the amount of $6,000 to fund development activities. Transfers from the City to the Authority totaled $165,000 to redistribute prior property taxes based on the County's revised allocation factors for prior years and to refund remaining balances on completed capital improvement projects. B. Long-Term Advancesfrom the City Improvements to the Authority have been partially funded by advances from the City. The Authority's management believes that future property tax increment revenues will be sufficient to repay the advances. The advance of $1,734,000 will be repaid at a reamortized interest rate of 6% over the seventeen-year remaining life of the Authority. Payments are scheduled to start in fiscal year 2003. The remaining advance of $413,000 will be paid in full upon the sale of the property located at 253-255 Franklin Street. I NOTE 7 - GENERAL LONG TERM DEBT A. Composition and Changes The Authority's long term debt as of June 30, 2002 follows (dollars in thousands): Original Issue Balance Amount . June 30, 2001 Balance Due Within June 30, 2002 One Year Retiremen ts 1995 Refunding Certificates of Participation 4.0% 106.0%, due 2016 $ 9.175 (325) 7,485 7,810 B. Description of Long-Term Obligations 1995 Refunding Bonds Revitalization Certificates of Participation - In fiscal 1996, the City transferred ownership of the PolicelFire Building to the Authority and thtm entered into a 20-year lease for such property with the Authority. Simultaneously, the Authority entered into an indebtedness agreement whereby the Authority pledges tax increment revenue in amounts equal to the lease payments. The City has assigned the indebtedness payments to a trustee for the benefit of the owners of the 1995 Certificates of Participation (COPs). The indebtedness payments are scheduled to be sufficient, in both time and amount, to pay the principal and interest on the 1995 COPs when due. To the extent the indebtedness payments are not sufficient to pay the principal and interest on the 1995 COPs, the City is obligated to make lease payments sufficient to satisfy the principal and interest payments on the 1995 COPs when due. When the 1995 COPs are repaid and the lease expires, ownership of the property will revert back to the City. 178 - "~;ij.i:,, -, \lillIl l1li 'IllII .. - .. .. .. .. .. .. .. .. .. .. IIIl .. III .. 340 IIIl .. .... .. .. ... ... .. .... .. lilt .. III .. l1li .. ~;, MOUNTAIN VIEW REVITALIZATION AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 iIlIiiiIdi I NOTE 7 - GENERAL LONG TERM DEBT (Continued) C. Debt Service Requirements The Authority's annual debt service requirements to maturity follows (dollars in thousands): ~,~ Governmental Activities For the Year Ending June 30 Principal Interest 2003 $ 340 415 2004 355 398 2005 370 380 2006 390 360 2007 410 340 2008-2012 2,410 1,325 2013-2017 3,210 504 Total $ 7,485 3,722 ._WI I NOTE 8 - RISK MANAGEMENT !>;;'!Ii'" The Authority is covered under the City's insurance program. The City is exposed to various risks of loss related to torts, errors and omissions, injuries to employees or others, unemployment and health care of employees. The City has established various self-insurance programs to account for and finance its uninsured risks of loss. The activities of the self- insurance programs are recorded in the Internal Service Funds. Under the self-insurance programs, the City retains the risk of loss up to a maximum of $500,000 for general liability claims, $250,000 for workers' compensation claims with statutory excess insurance and actual costs incurred for unemployment benefits. ~. a"'''' ~~>1 ,... For general liability claims, the City has excess liability coverage through the Authority for California Cities Excess Liabilities (ACCEL) to cover the risk of loss for claims in excess of $500,000 per incident. ACCEL is a joint powers authority of medium-sized California municipalities which pools catastrophic general liability, automobile liability and public officials errors and omissions losses. ACCEL coverage consists of an excess insurance policy purchased for a limit of$19,500,000 per occurrence, with an aggregate limit of$19,500,000. .~ Additional information regarding the City's insurance programs can be found in the City's June 30, 2002 basic financial statements. 179 MOUNTAIN VIEW REVIT ALIZA TION AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 I NOTE 9 - NET ASSETS AND FUND BALANCES A. Net Assets Net Assets is the excess of all the Authority's assets over all its liabilities, regardless of fund. Net Assets are divided into three captions on the statement of net assets. These captions apply only to Net Assets, which is determined only at the Government-wide level, and are described below: Invested in Capital Assets, net of related debt describes the portion of Net Assets which is represented by the current net book value of the Authority's capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted describes the portion of Net Assets which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the Authority cannot unilaterally alter. These principally include developer fees received for use on capital projects, debt service requirements, redevelopment funds restricted to low and moderate income purpos~s. Unrestricted describes the portion of Net Assets which is not restricted as to use. B. Fund Balances, Reserves and DesignatiO/IS In the fund financial statements, fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables, less it's liabilities. Portions of a fund's balance may be reserved or designated for future expenditure. Fund balances consist of reserved and unreserved amounts. Reserved fund balances represent that portion of fund balance which are not available for appropriation or are legally segregated for a specific future use. The remaining portion is unreserved fund balance. Portions of unreserved fund balance may be designated to indicate tentative plans for financial resource utilization in a future period, such as for general contingencies or capital projects. Such plans or intentions are subject to change. I NOTE 10 - COMMITMENTS AND CONTINGENCIES The Authority is a defendant in severallawstiits and other matters arising in the normal course of operations. The Authority's management and legal counsel are of the opinion that the potential claims against the Authority not covered by insurance resulting from such litigation would not materially affect the financial position of the Authority. 180 '~', .. '- .. loiIIt - .. .. .. .. .. .. .. .. .. III .. .. .. .. WI .. - .. WI .. .. .. . .. .. .. . JIlt .. """ AAAZE & · ." ASSOCIA TES --------------------------.---------....--------------...-----.-..--....--...----.------.-.---- -_..__.~_.----_._..-_._---_._----_.__.__._'-_.__._--,.---.-----,. ACCOUNTANCY CORPORATION 1931 San Miguel Drive - Suite 100 Walnut Creek, California 94596 (925) 930-0902. FAX (925) 930-0135 E-Mail: maze@mazeassociates.com Website: www.mazeassociates.com REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Mountain View Revitalization Authority City of Mountain View, California We have audited the financial statements of the Mountain View Revitalization Authority (Authority) as of and for the year ended June 30, 2002, and have issued our report thereon dated September 26, 2002. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to [mancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the Authority's [mancial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of [mancial statement amounts. Those provisions include provisions of laws and regulations identified in the Guidelines for Compliance Audits of California Redevelopment Agencies, issued by the State Controller. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Authority's internal control over [mancial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over [mancial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over [mancial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended for the information of the Members of the Authority, management and federal awarding agencies and pass-through entities. However, this report is a matter of public record and its distribution is not limited. 7J;1~/~ September 26, 2002 181 A Professional Corporation tml - \itllili .. - This Page Left Intentionally Blank ... .. ... .. - - ... - .. .. - ... .. .. - - .. .. .. .. .. .. .. .. - ..