HomeMy WebLinkAboutAgenda Report - January 16, 2008 K-04AGENDA ITEM K+A'
Ah CITY OF LODI
COUNCIL COMMUNICATION
AGENDA TITLE: Review of City's Annual Financial Report (Fiscal Year 2006-07) by Macias, Gini &
O'Connell, LLP
MEETING DATE: January 16,2008
PREPARED BY: Deputy City Manager/Internal Services Director
RECOMMENDED ACTION: Receive for file the following reports and financial statements
submitted by Macias, Gini & O'Connell, LLP and the Finance
Department for Fiscal -Year 2006-07:
• The Combined Annual Financial & Single Audit Report
• Management Report
• Report on Applying Agreed-upon Procedures
BACKGROUND INFORMATION: The annual audit was conducted to assure the City Council and
other interested parties that the City's financial records and reports
are prepared in accordance with generally accepted accounting
principles (GAAP), that internal controls are adequate to safeguard
the City against loss from unauthorized use or disposition of assets and that the City has complied with
all agreements and covenants to obtain grant funds and debt financing. Macias, Gini & O'Connell, LLP
( "MGO )ssued an "unqualified opinion." Scott Brunner, Director of MGO will be present to do the
presentation and answer questions during the Council meeting.
The reports will be provided to Federal and State oversight agencies, bond trustees and insurance
companies for their review and evaluation. Copies of the reports are provided to the City Council and
also available to the public by contacting the Financial Services Division or the City's website at
www.lodi-goy and at the Lodi Public Library.
Certificate of Achievement
The City received a Certificate of Achievement for Excellence in Reportingfrom the Government Finance
Officers Association of United States and Canada (GFOA) for the 14'" year and the California Society of
Municipal Finance Officers (CSMFO) for the ninth year in a row. A copy of the GFOA certificate is
included in the 2006-07 Financial Reports.
FISCAL IMPACT: N/A
FUNDING AVAILABLE: N/A
J es R. Krueger
Deputy City Manage r/Internal Services Director
APPROVED:
co King, City Manager
CITY OF LODI
Agreed -Upon Procedures Report For
Gann Appropriations Limit
For the Fiscal Year Ended June 30,2007
3000 S Street, Suite 300
Sacramento, CA 95816
® 916.928.4600
®y® 2175 N. California Boulevard. Suite 445
Walnut Creek, CA 94596
925 274 0190
MACIAS GIN I & O'CON N ELL LLF 515S Figueroa Street, Suite 325
Los Angeles, C A 90071
CERTIFIED PUBLIC ACCOUNTANTS S MANAGEMENT CONSULTANTS LI $ at ! $00
402 West Broadway, Suite 400
§an Diego, CA 92101
41° 5.73 12
City Council
Lodi, California
INDEPENDENT ACCOUNTANT'S REPORT
ONAPPLYING AGREED- UPON PROCEDURES
RELATED TO THEARTICLEXHIB
A PPR OPRIA TIONS LIMIT CALCULATION
We have performed the procedures enumerated below to the accompanying Appropriations
Limit Worksheet of the City of Lodi, California (City) for the fiscal year ended June 30, 2007.
These procedures, which were agreed to by the City Council of the City of Lodi, California, and
the League of California Cities (as presented in the publication entitled Agreed-upon Procedures
Applied to the Appropsiations Limitation Prescribed by Article XIII -B of the California
Constitutions), were performed solely to assist the City in meeting the requirements of Section
1.5 of Article XIIIB of the California Constitution. The City management is responsible for the
Appropriations Limit Worksheet. This agreed-upon procedures engagement was conducted in
accordance with attestation standards established by the American Institute of Certified Public
Accountants. The sufficiency of the procedures is solely the responsibility of those parties
specified in this report. Consequently, we make no representation regarding the sufficiency of
the procedures described below either for the purpose for which this report has been requested or
for any other purpose.
The procedures performed and our findings were as follows:
1. We obtained the City's reports setting forth the calculations necessary to establish the
City's appropriations limit and documentation utilized to calculate such limit for
fiscal year 2006-07.
Finding: No exceptions were noted as a result of our procedures.
2. We determined that the current appropriations limit and annual adjustment factors
used to calculate the appropriations limit for fiscal year 2006-07 set forth in the
accompanying Appropriations Limit Worksheet and the aforementioned City reports,
were adopted by resolution of the City Council. We also determined that the
population and inflation options were selected by a recorded vote of the City Council.
Finding: No exceptions were noted as a result of our procedures.
www.mgocpa.com / n Independent Member of the BDO Seidman Allioncr
3. For the accompanying Appropriations Limit Worksheet, we added the appropriations
limit, fiscal year 2005-06, amount to the annual adjustment amount and agreed the
resulting amount to the appropriations limit, fiscal year 2006-07, as adopted, amount.
Finding: No exceptions were noted as a result of our procedures.
4. We agreed the current year information presented in the accompanying
Appropriations Limit Worksheet to the appropriate aforementioned City reports.
Finding: No exceptions were noted as a result of our procedures.
5. We agreed the appropriations limit, fiscal year 2005-06, amount presented in the
accompanying Appropriations Limit Worksheet to the prior year appropriations limit
adopted by the City Council.
Finding: No exceptions were noted as a result of our procedures.
We were not engaged to, and did not perform an examination, the objective of which would
be the expression of an opinion on the accompanying Appropriations Limit Worksheet.
Accordingly, we do not express such an opinion. Had we performed additional procedures,
other matters might have come to our attention that would have been reported to you. No
procedures have been performed with respect to the determination of the appropriation limit
for the base year, as defined by Article XIII -B of the California Constitution.
This report is intended solely for the information and use of the City Council and
management and is not intended to be and should not be used by anyone other than these
specified parties.
Certified Public Accountants
Sacramento, California
May 3,2007
2
CITY OF LODI
APPROPRIATIONS LIMIT WORKSHEET
FOR THE FISCAL YEAR ENDED JUNE 30,2007
Appropriations limit, fiscal year 2005-06
Adjustment factors:
Population increase, 2006-07
Inflation increase, 2006-07
Total adjustment factor
Annual adjustment
Appropriations limit, fiscal year 2006-07, as adopted
Amount
66,082,118
1.0030
1.0396
4.2719%
2,822.948
$ 68,905,066
CITY OF LODI, CALIFORNIA
Report to Management
For the Year Ended June 30,2007
CITY OF LODI, CALIFORNIA
Report to Management
For the Year Ended June 30,2007
Table of Contents
Page(s)
TransmittalLetter.........................................................................................................................................
RequiredCommunications........................................................................................................................ 2-4
Current Year Management Comment and Recommendation.......................................................................
Status of Prior Year Recommendations.................................................................................................. 6-10
MACIAS GINI & 01CONNELL LLP
CERTIFIED PUDLIC ACCOUNTANTS S MANAGEMENT CONSULTANTS
City Council
City of Lodi, California
3000 S Street, Suite 300
Sacramento. CA 95816
916.928.4600
2175 N. California Boulevard,Suite 645
Walnut Creek, CA 94596
925.274.0190
515 S. Figueroa Street. Suite 325
Los Angeles. CA 90071
213.286.6400
402 West Broadway, Suite 400
San Diego, CA 92101
619.573.1 112
We have audited the financial statements of the City of Lodi, California (City) for the year ended
June 30, 2007, and have issued our report thereon dated December 5, 2007. Professional standards
require that we provide you with information related to our audit. That information is included in
the Required Communications section of this report.
Also, in planning and performing our audit of the financial statements of the City for the year ended
June 30, 2007, we considered the City's internal controls in order to determine our auditing
procedures for the purpose of expressing an opinion on the financial statements, and not to provide
assurance on internal control over financial reporting.
During our audit for the fiscal year ended June 30, 2007, we became aware of a certain matter that
represents an opportunity for strengthening the City's internal control and operational efficiency.
The Current Year Management Comment and Recommendation section of this report summarizes
our comment and recommendation regarding the matter. We also followed up on those matters we
became aware of during the previous year's audit. Those matters are included in the Status of Prior
Year Recommendations section of this report. This report does not affect our report dated
December 5, 2007, on the basic financial statements of the City.
This letter is intended solely for the information and use of City Council and management and is not
intended to be and should not be used by anyone other than these specified parties.
We would like to thank the City's management and staff for the courtesy and cooperation extended
to us during the course of our engagement. We have discussed our comments and suggestions with
management and would be pleased to discuss them further.
r
CtC cLs C-2rtiII 't 0 IC O uue'1 LLP
Certified Public Accountants
Sacramento, California
December 5,2007
www.mgoepa.com An Independent Member ofthe BDO Seidman Alliance
CITY OF LODI, CALIFORNIA
Report to Management
Required Communications
For the Year Ended June 30,2007
I. Our Responsibility Under U.S. Generally Accepted Auditing Standards and OMB Circular
A-133
As stated in our engagement letter dated July 16, 2003, our responsibility, as described by
professional standards, is to plan and perform our audit to obtain reasonable, but not absolute,
assurance that the basic financial statements are free of material misstatement and are fairly
presented in accordance with U.S. generally accepted accounting principles. Because an audit is
designed to provide reasonable, but not absolute assurance and because we did not perform a
detailed examination of all transactions, there is a risk that material misstatements may exist and
not be detected by us.
In planning and performing our audit, we considered the City's internal control over financial
reporting in order to determine our auditing procedures for the purpose of expressing our
opinions on the basic financial statements and not to provide assurance on the internal control
over financial reporting. We also considered internal control over compliance with requirements
that could have a direct and material effect on a major federal program in order to determine our
auditing procedures for the purpose of expressing our opinion on compliance and to test and
report on internal control over compliance in accordance with OMB Circular A-133.
As part of obtaining reasonable assurance about whether the City's basic financial statements are
free of material misstatement, we performed tests of the City's compliance with certain
provisions of laws, regulations, contracts and grants, noncompliance with which could have a
direct and material effect on the determination of basic financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit.
Also, in accordance with OMB Circular A-133, we examined, on a test basis, evidence about the
City's compliance with the types of compliance requirements described in the U.S. Office of
Management and Budget CircularA433 Compliance Supplement applicable to each of its major
federal programs for the purpose of expressing an opinion on the City's compliance with those
requirements. While our audit provides a reasonable basis for our opinion, it does not provide a
legal determination on the City's compliance with those requirements.
11. Other Information in Documents Containing Audited Financial Statements
Our responsibility for other information in documents containing the governmental unit's
financial statements and report such as an official statement for a bond offering does not extend
beyond the financial information identified in the report. We do not have an obligation to
perform any procedures to corroborate other information contained in these documents.
111. Significant Accounting Policies
Management is responsible for the selection and use of appropriate accounting policies. In
accordance with the terms of our engagement letter, we will advise management about the
appropriateness of accounting policies and their application. The significant accounting policies
used by the City are described in Note 1 to the financial statements. No new accounting policies
were adopted and the application of existing policies was not changed during the year ended June
30, 2007. We noted no transactions entered into by the City during the year that were both
significant and unusual, and of which, under professional standards, we are required to inform
you, or transactions for which there is a lack of authoritative guidance or consensus.
2
CITY OF LODI, CALIFORNIA
Report to Management
Required Communications (Continued)
For the Year Ended June 30,2007
IV. Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management
and are based on management's knowledge and experience about past and current events and
assumptions about future events. Certain accounting estimates are particularly sensitive because
of their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected. The most sensitive estimates
affecting the financial statements were (1) depreciation, (2) allowance for doubtful accounts, (3)
compensated absences, and (4) self-insurance liability.
Depreciation
Management's estimates of the expected lives of capital assets are based on experience and
guidance from the Internal Revenue Service and impact the computation of the depreciation
expense for the year. We evaluated the estimated useful lives of the capital assets for
reasonableness and consistency. The resulting depreciation expense computations were
reviewed for reasonableness in relation to the financial statements taken as a whole.
Allowance for uncollectible accounts
Management's estimates as to the collectibility of accounts receivable is based on historical
experience and trends. The resulting valuation and allowance were reviewed for reasonableness
in relation to the financial statements taken as a whole.
Compensated absences
Management's estimate of the compensated absence accrual is based on outstanding vacation
hours at current hourly rates. We evaluated the key factors and assumptions used to develop the
compensated absence accrual in determining that it is reasonable in relation to the financial
statementstaken as a whole.
Self-insurance liability
Management's estimate of the self-insurance liability is based on the development of amounts
from the various consultants' actuarial studies. For general liability and workers' compensation
for the current year, the present value of estimated outstanding losses is reported at the 70%
confidence level. We evaluated the actuaries' qualifications, key factors, and assumptions used
to develop the claims and judgments payable in determining that it is reasonable in relation to the
financial statements taken as a whole.
V. Audit Adjustments
For the purposes of this report, professional standards define an audit adjustment as a proposed
correction of the financial statements that, in our judgment, may not have been detected except
through our auditing procedures. An audit adjustment may or may not indicate matters that
could have a significant effect on the City's financial reporting process (that is, cause future
financial statements to be materially misstated). In our judgment, none of the adjustments we
proposed, whether recorded or unrecorded by the City, either individually or in the aggregate,
indicate matters that could have a significant effect on the City's financial reporting process.
CITY OF LODI, CALIFORNIA
Report to Management
Required Communications (Continued)
For the Year Ended June 30,2007
VI. Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting
or auditing matter that could be significant to the basic financial statements or the auditor's
report. We are pleased to report that no such disagreements arose during the course of our audit.
VII. Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a
consultation involves application of an accounting principle to the governmental unit's financial
statements or a determination of the type of auditor's opinion that may be expressed on those
statements, our professional standards require the consulting accountant to check with us to
determine that the consultant has all the relevant facts. To our knowledge, there were no such
consultations with other accountants.
VIII. Issues Discussed Prior to Retention of Independent Auditors
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the City's auditors.
However, these discussions occurred in the normal course of our professional relationship and
our responses were not a condition to our retention.
IX. Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing our audit.
rd
CITY OF LODI, CALIFORNIA
Report to Management
Current Year Management Comment and Recommendation
For the Year Ended June 30, 2007
INTERNAL SERVICE FUNDS
Condition
Internal service funds are expressly designed to function as cost -reimbursement devices. That is, an
internal service fund is simply a means of accumulating costs related to a given activity on an accrual
basis so that the costs can subsequently be allocated to the benefiting funds in the form of fees and
charges. During our audit of the City's financial statements for the period ending June 30, 2007, we
noted that the internal service fund does not appear to be recovering the full cost of providing medical
insurance benefits to other funds and/or user departments.
We examined, on a test basis, monthly Ca1PERS invoice billings of health insurance premiums for active
participants enrolled in the health care plans offered by Ca1PERS, the cost of which were expensed in the
internal service fund, however, the revenue reported by the internal service funds were consistently less
than the related costs of the medical benefits provided. Absent a reconciliation of the enrolled
participants in the Ca1PERS health care plans and the City's internal payroll and Human Resources
system, the costs related to the Ca1PERS invoice billings of health insurance premiums could be
permanently stranded in the internal service fund, and therefore, the user departments not being charged
their proportionate share of the costs.
Recommendation
We encourage management and/or authorized employees to perform a monthly reconciliation of the
enrolled participants in the health care plans as reported by Ca1PERS in the monthly health insurance
invoice roster detail with the City's internal payroll system and HR records to ensure accuracy and
completeness of the roster. This strengthens control and ensures that the costs are properly and timely
allocated according to the user department or fund and that City is only being charged for current
employees at authorized rates.
Management ReSDonse
Staff in the Human Resources Division have been tasked with the review of all health insurance bills to
ascertain whether the appropriate amount is being charged to other departments of the City. This review
of bills should be done by the Human Resources staff since they are the most familiar with staffing
additions, deletions and other changes. In addition to this review by Human Resources, there needs to be
a continuing reconciliation done by the Budget Division staff to ensure that amounts that are charged to
departments for health insurance do in fact get budgeted appropriately and are also charged correctly in
the payroll cost reporting system.
Management is implementing a reconciliation process that will utilize staff in the Budget Division to
ensure that health insurance and other internal service fund charges are being appropriately monitored to
ensure that they are allocated to all operating departments in an appropriate manner.
5
CITY OF LODI, CALIFORNIA
Report to Management
Status of Prior Year Recommendations
For the Year Ended June 30,2007
The following is a summary of the status of prior years' recommendations. For more detail of the
original conditions and recommendations, please refer to the management reports for the years in which
the original findings were communicated.
FROM YEAR ENDED JUNE 30,2006 -
ADMINISTRATION OF THE COMMUNITY DEVELOPMENT BLOCK GRANT
Current Year Status
Beginning approximately October 2006, the City has benefited from the contract services of a third parry
to handle the preparation and processing of CDBG Program disbursements, documentation and
recordkeeping. The Community Improvement Manager retains responsibility for the compliance review
requirements and approval of all grant expenditures and of all documentation. Therefore, we consider
the recommendation implemented.
FROM YEAR ENDED JUNE 30,2005 -
ENVIRONMENTAL REMEDIATION
Current Year Status
Condition unchanged. Prior recommendation remains.
Current YearManagementResponse
A plan is being developed for the remediation of environmental contamination. The plan could not be
developed until the litigation efforts related to all of the contaminated areas were close to being
concluded. Most of these litigation efforts have concluded and the City is close to finalizing settlements
with all parties. Efforts are now underway and will continue for the next twelve to eighteen months to
develop the most cost effective means for cleanup of the contamination.
INFORMATION TECHNOLOGY (IT)
Information Technology Administration — Policies and Procedures
Current Year Status
In process of being implemented. The Electronic Media Acceptable Usage Policy has not yet been
adopted for use within the City. A review of the draft policy found that it does not define specific
password standards that define the minimum password length, complexity of expiration period.
Current YearRecommendation
The City should make a concerted effort to update the current administrative policies and procedures to
include sections pertaining to computer network security, password protection and specific configuration
standards, and confidentiality of information.
Current YearManagement Response
Management agrees. Adoption should occur in fiscal year 2008-09
CITY OF LODI, CALIFORNIA
Report to Management
Status of Prior Year Recommendations (Continued)
For the Year Ended June 30,2007
Information Technology Administration — New -Hire Training
Current Year Status
Considered implemented.
Logical Security — Departing Employees
Current Year Status
Not implemented. Prior recommendations remain.
Current YearManaQenient Response
Management agrees. Procedures should be implemented during fiscal year 2008-09.
Logical Security — Access Rights
Current Year Status
In process of being implemented. User lists are periodically reviewed by ISD to identify obsolete
accounts and user appropriateness. In addition, department heads are annually sent a list of users within
their departments and their access rights. The Deputy City Manager is also sent a list for review. Even
though these informal procedures are being conducted, they have not been formally documented
requiring quarterly reviews and do not ensure that the lists are being reviewed to ensure appropriate
authorization rights are being enforced. Prior recommendation remains.
Current YearManagement Response
Management agrees. Policy covering this recommendation should be completed during fiscal year 2008-
09.
Accounting System Development and Maintenance
Current Year Status
In process of being implemented. Prior recommendation remains
Current Year Management Response
Management agrees. Staff has implemented a change control process that includes authorization and
notification of all significant changes made to the city's network or systems environment and
documentation of same. A policy covering change control procedures will be developed by 6/30/08.
Packaged Accounting Software and Systems Software — Selection Method
Current Year Status
Still in process of being implemented. Original recommendation remains.
Current YearManagement Response
Management agrees. Documentation will be developed by 6/30/08.
CITY OF LODI, CALIFORNIA
Report to Management
Status of Prior Year Recommendations (Continued)
For the Year Ended June 30,2007
Packaged Accounting Software and Systems Software — Test Environment
Current Year Status
Not implemented. Even though patches and updates are performed according to manufacturer
specifications, or they are done by company certified engineers, the procedures are not documented
within formal policy. 2006 recommendation remains.
Current YearManaZement Response
Management agrees. Documentation will be developed by 6/30/08.
Computer Operations — Computer Room
Current Year Status
Not implemented. Condition remains unchanged.
Current Year Recommendation
At a minimum, the City should ensure the water-based system is a "dry pipe" system with high
temperature activation heads. This would minimize the risk associated with the possibility of the system
activation or break in the pipes.
Current YearManaQement Response
Management agrees. The City had contracted with its IBM Business Partner in November 2007 to
provide disaster recovery services, including recovery equipment hosting and priority equipment
replacement. Replacing the current water-based fire suppression system is cost prohibitive.
Computer Operations — Disaster Preparedness/Business Continuity Plans
Current Year Status
In process of being implemented. The City has developed an Information Systems Disaster Preparedness
Plan in July 2007 and has also contracted with an IBM Partner for disaster recovery services including
recovery equipment hosting and priority equipment replacement. The Plan, however, has not yet been
tested. The City IS Division plans to test the Plan in the spring of 2008 as time permits.
Current Year Recommendation
The City should test the Information System Disaster Preparedness Plan as soon as possible and the Plan
should be updated with any findings from the testing.
Current Year Management Response
Management agrees. Staff will schedule a test during fiscal year 2008-09.
Computer Operations — Service Level Agreements
Current Year Status
In process of being implemented. No change from 2006 status.
Current YearManagement Response
Management agrees. Implementation should occur in fiscal year 2008-09.
CITY OF LODI, CALIFORNIA
Report to Management
Status of Prior Year Recommendations (Continued)
For the Year Ended June 30,2007
Computer Operations — Unauthorized Use of Software
Current Year Status
In process of being implemented. Computers are scanned when there is suspicion that unauthorized
software may exist. This is not done on a routine basis. The original recommendation remains to be fully
implemented.
Current YearManagement Response
Management agrees. Currently, only persons with administrator privileges are able to install or uninstall
software or change unit configurations. It is the current ISD policy to deliver all new and replacement
PCs with non -admin privileges. The Information Systems Division has embarked on a program to revoke
local admin rights on city PCs, a change that will prevent users from installing software or making
configuration changes. About half or more of the city's current PC inventory now have non -admin user
privileges. It is anticipated that all city PCs will have undergone this change by 12/31/08.
Computer Operations — Read -Write Access to the JDE Application
Current Year Status
In process of being implemented. The purchasing function is now under a new Budget Manager position
as of October 2006. Copies of all purchase orders are sent to this new Budget Manager. In addition,
there is a quarterly review of all purchases between $5,000 and $20,000 that are reported to the City
Council. Approximately 2/3rds of all purchasing transactions are now being processed through the JDE
application. As time and training allows, other departments are being trained in the use of the JDE
application.
Current Year ManaQemen f Response
Management agrees. Departments continue to be trained in the use of the JDE application for
purchasing.
Other Matters
Since 2005, the City has been in various stages of addressing our prior year recommendations. Efforts to
implement several have been hampered by budgetary constraints and other higher priority undertakings.
Overall, of the 12 EDP Review findings and recommendations from our 2005 review, one has been
implemented, three have not been implemented, and eight are in the process of being implemented.
CITY OF LODI, CALIFORNIA
Report to Management
Status of Prior Year Recommendations (Continued)
For the Year Ended June 30,2007
FROM YEAR ENDED JUNE 30,2004 -
CAPITAL ASSETS
Current Year Status
Status unchanged. Prior year recommendation remains.
Current YearManaQemen.t Response
Finance is currently in the initial stage of assessing the magnitude of this project and coordinating with
Information Systems Division to evaluate and establish a project plan. The timeline for implementation
is expected to be FY08-09, if not earlier.
FTA INDIRECT COSTS
Current Year Status
Condition unchanged. Prior year recommendation remains.
Current YearManazement Response
Management had a review of the city-wide cost allocation plan in September2007. The review included
analysis of all direct and indirect costs and recommendations related to the in -lieu of transfers made to
the General Fund. The review of the cost allocation plan will be expanded during 2007-08 to incorporate
all charges that may be feasible for recovery from the Federal Transit Authority..
10
Am � � � � E � � � �" ill Ali '-m AR -Am mo 'MR � MR
�AI NANJ
CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2007
CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Year Ended June 30,2007
JOANNE MOUNCE, MAYOR
LARRY HANSEN, MAYOR PRO TEMP
SUSAN HITCHCOCK, COUNCILMEMBER
BOB JOHNSON, COUNCILMEMBER
PHIL KATZAKIAN, COUNCILMEMBER
BLAIR KING, CITY MANAGER
Prepared by the Finance Department
James Krueger, Deputy City Manager/Internal Services Director/Treasurer
Ruby Paiste, Financial Services Manager
Coriene Wadlow, Sr. Accountant
Odette Bondoc, Accountant II
INTRODUCTORY SECTION
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30,2007
TABLE OF CONTENTS
INTRODUCTORYSECTION
Table of Contents
i
Letter of Transmittal
v
Certificate cf Achievement for Excellence in Financial Reporting
xiii
Organization Chart of the City of Lodi
xlv
Directory of Officials and Advisory Bodies
xv
FINANCIAL SECTION
IndependentAuditors' Report
1
MANAGEMENT DISCUSSION AND ANALYSIS
BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements:
Statement of Net Assets 15
Statement of Activities 16
Fund Financial Statements: 17
Balance Sheet — Governmental Funds 19
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 20
Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 21
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances
of Governmental Funds to the Statement of Activities 22
Statement of Net Assets — Proprietary Funds 23
Statement of Revenues, Expenses and Changes in Net Assets — Proprietary Funds 24
Statement of Cash Flows — Proprietary Funds 25
Statement of Fiduciary Net Assets —Fiduciary Funds 26
Statement of Changes in Fiduciary Net Assets - Fiduciary Funds 27
Notesto Basic Financial Statements 29
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress— Pension Plan 69
Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — General Fund 70
Notes to the Required Supplementary Information 71
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Combining Balance Sheet — Nonmajor Governmental Funds 73
Combining Statement of Revenues, Expenditures and Changes in Fund Balances— Nonmajor Governmental Funds 74
Nonmajor Governmental Funds- Special Revenue Funds 75
Combining Balance Sheet—Nonmajor Governmental Funds — Special Revenue Funds 77
Combining Statement of Revenues, Expenditures and Changes in Fund Balances— Nonmajor Governmental Funds — Special Revenue Funds 78
CITY OF LODI
COMPREHENSIVEANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30,2007
TABLE OF CONTENTS -continued
Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — Nonmajor Governmental Funds — Special Revenue Funds 79
Nonmajor Governmental Funds - Capital Project Funds 85
Combining Balance Sheet—Nonmajor Governmental Funds — Capital Project Funds 86
Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds — Capital Project Funds 87
Combining Statement of Net Assets - Internal Service Funds 89
Combining Statement of Revenues, Expenses and Changes in Fund Net Assets — Internal Service Funds 90
Combining Statement of Cash Flows Internal Service Funds 91
Combining Statement of Fiduciary Net Assets - Private-PurposeTrust Funds 93
Combining Statement of Changes in Fiduciary Net Assets - Fiduciary Funds 94
Statement of Changes in Assets and Liabilities - Agency Fund 95
STATISTICAL TABLES (UNAUDITED)
Government -wide information:
97
Net Assets by Component- Last Four Fiscal Years
98
Changes in Net Assets - Last Four Fiscal Years
99
Fund information:
Fund Balances, Governmental Funds- Last Ten Fiscal Years
101
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years
102
Tax Revenues by Source, Governmental Funds - Last Ten Fiscal Years
104
Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years
105
Direct& Overlapping Property Tax Rates- Last Ten Fiscal Years
106
Principal Property Taxpayers -Current Year and NineYears Ago
107
Property Tax Levies and Collections- Last ten Fiscal Years
108
Electric Sold by Type of Customer- Last Two Fiscal years
109
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years
110
Ratios of General Bonded Debt Outstanding- Last Ten Fiscal Years
111
Legal Debt Margin Information- Last Ten Fiscal Years
112
Direct & Overlapping Governmental Activities Debt
113
Pledged Revenue Coverage - Last Ten Fiscal Years
114
Demographic and Economic Statistics- Last Ten Fiscal Years
116
Principal Private Employers- Current Year and NineYears Ago
117
Full -Time Equivalent City Government Employees By Department - Last Ten Years
118
Operating Indicators by Function/Program/Department - Last Two Fiscal Years
119
Capital Asset Statistics by Function/Program/Department - Last Three Fiscal Years
121
SINGLE AUDIT
Schedule of Expenditures of Federal Awards 125
Notes to the Schedule of Expenditures of Federal Awards 126
11
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30,2007
TABLE OF CONTENTS -continued
IndependentAuditor's Reporton Compliance and on InternalControl Over Financial Reporting Based on an Audit of Basic
Financial Statements Performed in Accordance with Government Auditing Standards 127
IndependentAuditor's Report on Compliance with Requirements Applicable to Each Major Program, Internal Control over
Compliance and Schedule of Expenditures d Federal Awards in Accordance with Circular A -I 33 129
Schedule of Findings and Questioned Costs 132
Schedule of Prior Findings and Questioned Costs 134
iii
(This page intentionally left blank.)
CITY COUNCIL
JOANNE MOUNCE, Mayor
LARRY HANSEN, Mayor Pro
Tempore
COUNCILMEMBERS:
SUSAN HITCHCOCK
BOB JOHNSON
P H I L KATZAKIAN
December 7,2007
CITY OF LODI
CITY HALL, 221 WEST PINE STREET
P.O. BOX 3006
LODI, CALIFORNIA 95241-1910
(209) 333-6706
FAX (209) 333-6795
To the Honorable Mayor, Members of the City Council
and Managerof the City of Lodi:
BLAIR KING
City Manager
RANDI JOHL
City Clerk
STEVE SCHWABAUER
City Attorney
The Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2007, is hereby submitted. This report is provided to
presentthe financial position, results of operations and cash flows of the City's proprietary funds as of June 30, 2007, in conformitywith generally
accepted accounting principles. The report conforms to the highest standards of financial reporting as established by the Governmental Accounting
Standards Board (GASB), for reporting by State and local governments. The responsibility for the accuracy, fairness and completeness of the
report rests with the City.
This report consists of management's representations concerning the finances of the City of Lodi. Consequently, management assumes full
responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these
representations, management of the City of Lodi has established a comprehensive internal control framework that is designed to protect the City's
assets from loss, theft, or misuse and to compile sufficient reliable informationfor the preparation of the City's financial statements in conformitywith
GAAP. We believe that the information is accurate in all material respects and that it is presented in a manner designed to fairly present the
financial position of the City. In addition, we believe that all disclosures necessary to enable the reader to gain full understanding of the City's
financial activities have been included.
The CAFR is presented in four sections: introductory, financial, statistical and single audit. The introductory section includes the transmittal letter,
the City's organization chart and a list of principal officials. The financial section includes the independent auditors' report, management discussion
and analysis (MD&A), the basic financial statements, notes to the financial statements, required supplementary schedules, and the combining and
individual statements. The single audit section includes the schedule of expenditures of federal awards, notes to the schedule, and reports on
compliance and internal control based on the audit of the basic financial statements and on compliance and internal control with requirements
applicable to each major program in accordance with OMB Circular A-133. The statistical section includes selected financial and demographic
information presented on a multi-year basis.
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 independent auditors' report.
v
THE REPORTING ENTITYAND SERVICES PROVIDED
The funds included in the CAFR are those deemed dependent upon the City and controlled by the City Council and reflect the City's financial
reporting entity in accordance with GASB Statement 14.
The City of Lodi (City) was incorporated December 6, 1906, as a municipal corporation under the general laws of the State of California. The City
operates under a Council -Manager form of government. Underthe Council -Manager form of government, policy making and legislative authority are
entrusted to the City Council. The City Council consists of five members elected at -large by its voters for four-year terms, with no term limits.
Elections are held in November of even -numbered years. Each year the Mayor and Mayor Pro -Tempore are chosen by the members of the City
Council. The Mayor presides at Council meetings and acts as the ceremonial head of the City, the Mayor Pro Tempore serves as Mayor in his or
her absence. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for appointing department heads, and
overseeing the operations of the City. The City Manager, City Attorney and the City Clerk are appointed by the City Council.
The City provides a wide range of municipal services including public safety (police, fire and graffiti abatement), public utilities services (electric,
water and wastewater), transportation services (streets, flood control and transit) leisure, cultural and social services (parks and recreation, library
and community center), and general government services (management, human resources administration, financial administration, building
maintenance and equipment maintenance).
Several municipal services are provided through other government agencies, private companies or public utility companies, including:
Numberof
Facilities
Elementary and Secondary Schools 18
Sanitation (solid waste) and Cable Television 2
Ambulance 1
Gas and Telephone 2
ECONOMIC CONDITION AND OUTLOOK
The City is located in the San Joaquin Valley between Stockton 10 miles to the south, and Sacramento 35 miles to the north, and adjacent to U.S.
Highway 99. The City population is 63,395 and is contained in an area of 13.92 square miles. The City has grown steadily since incorporation in
1906 and is projected to grow to 70,500 people by the year 2012. The City's growth is provided for in both the General Plan and the City's growth
control ordinance that allows an increase in population of 2% per year until the growth limits are reached.
Lodi is built on a strong and broad based agricultural industry with national and industrial markets for its commodities and products. Wines,
processed foods, nuts, fruit and milk are major commodities of the Lodi area and provide the basic material for food processing and packaging.
These commodities support the operations of General Mills, Guild Winery and Pacific Coast Producers in the business of processing local
agricultural commodities.
vi
In addition, Lodi has a wide range of small, financially sound businesses that add to the economic strength of the City. These companies range in
size from 10 to 150 employees and produce a wide variety of products, services and commodities.
Over the past several years, there has been an increase in industrial and residential development that has been unprecedented since the early
1980s. This new development combined with the growing strength of the wine/grape industry is a positive indicator for Lodi. The City's focus on
economic development has encouraged numerous big industries to move to Lodi that collectively created hundreds of newjobs.
Economic Development
Lodi continues to be committed to promoting economic development (business retention and attraction) and expanding the tax base to fund city
services rather than increase taxes to pay for these services. The City developed long and short-term economic development goals in conjunction
with the Chamber of Commerce that resulted in the revitalization projects for the downtown and Cherokee Lane areas. In addition to revitalization
efforts, the City has adopted a number of incentives to retain and attract new businesses. These incentives included infrastructure improvements,
regulatory flexibility and utility rate incentives.
MAJOR GOALS, OBJECTIVES AND PROJECTS
To assist the citizens of Lodi in understanding where the City intends to allocate available resources, the City Council, the City Manager and
Department Heads established in 2004 a hierarchy of major goals, objectives and major projects that support and re -enforce the City's mission
statement.
Four major City goals were established as policy direction and focal points for the efforts of City staff. These goals include:
Ensure a High Quality of Life and a Safe Environmentfor Citizens
Ensure Efficient and Productive City Organization
Ensure Public Trust, and
Ensurethe Developmentof the Lodi Economyfor a Fiscally Sound City Organization
City Council, the City Manager and Department Heads established nineteen major City objectives:
Maintain City's Sense of Community Provide EmployeeTraining and Education
Providefor a Balanced Community Evaluate Telecommunications Opportunities
EnhanceAccess through Implementation of Information Systems Strategic Plan Provide Resourcesto Maintain City's Infrastructure
Promote Urban Forestry Promote Public Relations and Marketing Efforts
Attract, Retain and Invest in a Quality CityWork Force Ensure Open and Accessible Public Meetings
Encourage PublicArts, Cultural and Recreational Opportunities Pursue Effortsto be Entrepreneurial
Provide Appropriate and Sufficient City Facilities Improve Customer Service
Develop Short and Long Range Operational Plans Continue to use Partnerships to Advance City's Objectives
Develop Effective Records Management Program Provide a Balanced Budget& Adhere to Adopted Policies
Promote Commercial/Industrial Base
Projects represent the foundation of the planning statements for the Cityof Lodi. These projects are designed to accomplish specific objectives and
become the focus for organization wide effort.
vii
As discussed above, economic revitalization continued to be an active focal point of the City in 2006-07. The following projects are underway and
will be completed in 2008.
Court Space Remodel
The court facility is being remodeled to provide additional workspace for the Finance and Budget divisions. Both divisions are currently housed in
space that is leased. The court space is currently used by Superior Court#1 which is moving across the street to the new police building. The use
of this space by city departmentswill save more than $140,000 in annual lease payments.
Police Building Improvements for Housing San Joaquin Court Facilities
The new police facilities building was opened in 2002. The new building included space that was built to house Superior Court#1. The facility
improvements will be completed in 2008 and Court#1 will move into the police facilities and will be leasing the space from the City. This will result
in additional revenues at approximately $194,000.
FINANCIAL INFORMATION, MANAGEMENTAND CONTROL
A detailed understanding of the financial position and operating results of the City is provided in the following sections of this report. The following is
a brief description of the City's financial condition, management practices and control techniques.
Basis of Accounting
Basis of accounting refers to the policy as to when revenues, expenditures or expenses are recognized in the financial accounts and reported in the
financial statements. The City's accounting records for general government operations are maintained on a modified accrual basis. Revenues are
recorded when available and measurable. Expenditures are recorded when the services or goods are received and the liability incurred. For
proprietary fund types, the City uses the accrual basis of accounting. As such, the measurement focus is on net income in addition to financial
position and changes in financial position. Revenues are recognized when earned and expenses are recognized as the liability is incurred. We
believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial
transactions.
Accounting System and Budgetary Control
In developing the City's accounting system, consideration is given to the adequacy of the internal controls. The objective of the City's internal
accounting controls is to provide reasonable, but not absolute, assurance that the assets are safeguarded against loss from unauthorized use or
disposition; and to ensure that transactions are properly recorded to permit the preparation of financial statements in accordance with generally
accepted accounting principles. The concept of reasonable assurance recognizes that the cost of control should not exceed the benefits likely to
be derived and that estimates and judgments are required to be made by management in evaluating these costs and benefits.
In addition, the City maintains budgetary controls. The objective of these controls is to ensure compliance with legal provisions embodied in the
annual appropriated budget approved by the City Council. The City Manager is responsible for the preparation of the budget and its implementation
after adoption. The City Council has the authority to amend the budget at any time during the year. The City Manager has the authority to make
adjustments to the budget as long as those changes will not have a significant policy impact nor affect budgeted year-end balances. During fiscal
year 2006-07, the City Council and City Manager made several supplemental budget appropriations, the majority of which relate to operating
budgets and capital projects.
LTM
Fund Balance
It is the City's goal to target and maintain an unreserved, undesignated fund balance in the General Fund and working capital balances in the Water
and Wastewater enterprise funds of at least 15% of operating expenditures. Based on a study completed during the last year, the target for the
Electric enterprise fund working capital is $12.1 million. The goals allow for variations from year-to-year to account for economic and fiscal changes.
The General Fund maintained an unreserved undesignated fund balance of $5,175,522 or 12.93%, of operating expenditures at the end of fiscal
year 2006-07.
Cash Management
The City has written investment policies that address a wide range of investments. These policies describe the City's investment objectives,
investment authority, allowable investment vehicles, maturity terms and eligible financial institutions. They also describe the City's capital
preservation and cash management objectives. As provided in the policy, investments are intended to be held until maturity and investment terms
are to be consistent with the City's cash flow needs. Investment reports are issued quarterly to the City Manager and City Council to provide
detailed information regarding the City's investments and compliance with City policy and as required by state law. An important objective of the
City's investment policy is to achieve a reasonable rate of return on public funds while minimizing risks and preserving capital. In evaluating the
performance of the City's investment portfolio, investments are expected to yield a rate of return that regularly meets or exceeds an average rate of
return on a three-month U.S. Treasury Bill.
Appropriation Limitation
Article XIII B of the Constitution of the State of California (Proposition 4) provides for the limitation of expenditures by state and local governments.
Under the provisions of this article, City appropriations funded through tax sources may not exceed Fiscal Year 1979 appropriation levels except as
adjusted for increases in population and the growth in the California per capita income or non-residential assessed valuation due to new
construction within the city.
Excluded from the limitation are appropriations funded through charges for services, fines and forfeitures, grants, transfers of service responsibilities
between government agencies and indebtedness incurred prior to Fiscal Year 1979. Pursuantto subsequent legislation adopted after Article XIII B,
the City is required to annually establish and adopt its appropriations limit by resolution. For 2006-07, the City's appropriations subject to limit were
$34,165,830 and the appropriation limitwas $68,905,066 leaving appropriations at $34,739,236 belowthe limit.
Debt Administration
At June 30, 2007, the City had outstanding Certificates of Participation of $139,502,922. These liabilities are discussed in Note 8 of the Basic
Financial Statements and summarized below.
The City issued $5.0 million of Certificates of Participation (1995 COP) to fund its share of capital improvements in the downtown and Cherokee
Lane areas. These bonds were refunded by the issuance of the 2002 Certificates of Participation. The City also issued $1.97 million limited
obligation improvement bonds for the Central City Revitalization Assessment District on July 22, 1996. The improvement bonds of the assessment
district are not general obligations of the City.
The City also issued $10.12 million for the renovation of the Performing Arts Center on August 1, 1996; the 2002 Certificates of Participation also
refunded these bonds.
ix
On December 1991, the Wastewater Utility issued $11.17 million Certificates of Participation to repay the 1988 Wastewater Certificates of
Participation previously issued for the Wastewater Treatment Plant Expansion Project, at a lower rate.
In 1999, the Electric Utility issued $43.96 million Certificates of Participation to finance the costs of certain improvements to the distribution and
transmission facilities of the City's electric system. These bonds were refunded by the issuance of the 2002 Electric Systems Revenue Certificates
of Participation.
On November 2002, the City issued the 2002 Revenue Certificates of Participation Series C for $21,225,000 and 2002 Series D for $22,740,000, to
buy out the energy purchase agreement entered into by the City in January 2002 with Calpine.
On October 21, 2003, the City of Lodi and the City of Fort Bragg issued Water and Wastewater revenue bonds (2003B) through the California
Statewide Communities Development Authority ("the Authority") under its pooled financing program. Total bonds issued were $9,855,000 of which
$5,000,OOOwas for the upgrade of the City of Lodi's wastewater facilities.
The City issued $27,360,000 in Wastewater Certificates of Participation (2004A) to finance the costs of improvements to the wastewater collection,
treatment and disposal system.
The City's debt management policy includes a commitment to monitor all forms of debt annually during the preparation of the City's Financial Plan
and Budget to ensure compliance. Also, the City will generally conduct financing on a competitive basis, will seek an investmentgrade rating on any
direct debt and will obtain credit enhancements such as letters of creditor insurance when necessary for marketing purposes, availability and cost
effectiveness.
Interim Financial Reporting
Monthly financial reports are prepared to present the City's financial condition and results of operations. These executive reports are organized
using the "pyramid" approach. As such, the highest level of summary data is presented first, followed by progressively greater levels of detail. The
reports provide current period and year to date revenues, expenditures and encumbrances for all activities and funds, including year to date
estimates and variances. The reports are available to all departmentsand to the public on the City'swebsite.
Single Audit
The City is subject to financial and compliance reporting required by the Single Audit Act Amendments of 1996 and OMB CircularA-133, which is a
requirement of all local and state governments receiving federal financial awards. As part of the Single Audit, tests are made to determine the
adequacy of internal controls, including that portion related to federal financial awards, as well as to determine that the City has complied with
certain applicable laws and regulations governing federal funds. The Single Audit report is published as part of the annual financial statements for
easy reference.
Competitive Bidding Policy
All required purchases for materials, equipment and services during 2006-07 were made pursuant to competitive bidding procedures as established
under the City's purchasing ordinance. Contracts for construction projects were awarded pursuant to competitive bidding procedures established by
the State of Californiafor projects in excess of $5,000.
Risk Management
The City is self-insured for dental care, workers' compensation, general liability and unemployment insurance. General liability and workers'
compensation are administered by outside agencies. The City administers unemployment insurance. Self-insurance transactions are accounted for
under the City's Claims and Benefits Fund. At June 30, 2007, the Claims and Benefits Fund had a deficit of 813,142. It is the City's goal to
gradually eliminate the deficit in the Internal Service Funds.
INDEPENDENTAUDIT
The City Council requires an annual audit of the records and accounts of the City by an independent certified public accountant. To ensure internal
control periodically the City conducts a request for proposal (RFP) process for auditing services. The accounting firm of Macias Gini & O'Connell
LLP was selected to perform this audit. The independent auditors' report precedes the basic financial statements and concludes that the City's
basic financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United
States of America.
CERTIFICATES OF ACHIEVEMENT
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in
Financial Reporting to the City for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2006. The City did not
submit for the California Society of Municipal Finance Officers (CSMFO) award program last year. These Certificates of Achievement are
prestigious national and state awards recognizing conformance with the highest standards for preparation of state and local government financial
reports. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized CAFR,
whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles and applicable legal
requirements.
A Certificate of Achievement is valid for a period of one year only. The City has received a Certificate of Achievement for the last fourteen
consecutive years. We believe our current report continues to conform to the Certificate of Achievement program requirements and we are
submitting it to GFOA this year.
ACKNOWLEDGMENTS
As always the professionalism, dedication and efficiency of the Finance Department Accounting staff made it possible for the timely preparation of
this report and are to be commended. I would also like to personally thank Ruby Paiste, Financial Services Manager, and Cory Wadlow, Senior
Accountant, Odette Bondoc, Accountant II and Tyson Mordhorst, Senior Programmer Analyst. Their work in preparing this year's CAFR is greatly
appreciated.
would also like to thank you for your continued interest and support in planning and conducting the financial operations of the City in a responsible
and progressive manner.
Id
Respectfully submitted,
imes=Krueger
Deputy City Managerlinternal Services Director/Treasurer
xii
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Lodi
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30,2006
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 coniprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
PNCE OFpj�, ti
I, F
E
WDSTATESAND
'CAMCORPHATION President
`E roti
Executive Director
City of Lodi
Citizens
City Council
Library II II II II II IIBoards and
Board
II IICitY Attorney City Manager City Clerk
Commissions
Library
Library
Deputy City
Manager/Internal
services Director
Community Parks and Community Electric Utility Public Works Fire Police
Center Recreation Development
Financial
Services
Division Treasury Div
xiv
Human Information
Resources Systems
Division I I Division
DIRECTORY OF OFFICIALS AND ADVISORY BODIES
CITY COUNCIL
Joanne Mounce
Larry Hansen
Susan Hitchcock
Bob Johnson
Phil Katzakian
ADVISORY BODIES
Planning Commission
Library Board
Recreation Commission
Site Plan and Architectural Review Committee
Budget and Finance Committee
PRINCIPAL ADMINISTRATIVE OFFICERS
Blair King
Steve Schwabauer
Randi Johl
Nancy Martinez
James Krueger
Mike Pretz
James Rodems
Richard Prima
George Morrow
Randy Hatch
Jerry Adams
Steve Dutra
xv
Mayor
Mayor Pro Temp
Council Member
Council Member
Council Member
Eastside ImprovementCommittee
Lodi Arts Commission
Youth Commission
Lodi Senior Citizens' Commission
City Manager
City Attorney
City Clerk
Library Services Director
Dep.City Mgr/Internal Services Dir/Treasurer
Fire Chief
Community Center Director
PublicWorks Director
Electric Utility Director
Community Development Director
Police Chief
Interim Parks& Recreation Director
(This page intentionally left blank.)
FINANCIAL SECTION
The Financial Section is comprised of the Independent Auditors' Report, Management Discussion and Analysis,
Basic Financial Statements, including the notes, required Supplementary Information, and Supplementary
Information which includes Combining and Individual Fund Statements and Schedules.
The Honorable Members of City Council
City of Lodi, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining
fund information of the City of Lodi, California (City), as of and for the year ended June 30, 2007, which collectively comprise the City's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions
on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits
contained in Governnient Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control
over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes 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, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities,
the business -type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2007, and the respective changes in
financial position, and where applicable, cash flows, thereof for the year then ended in conformity with accounting principles generally accepted in the United
States of America.
In accordance with Government. Auditing Standards, we have also issued our report dated December 5, 2007 on our consideration of the City's internal control
over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The
purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be considered in assessing the results of our audit.
The management's discussion and analysis, the schedule of funding progress — pension plan, and schedule of revenues, expenditures and changes in fund balance
— budget and actual — for the General Fund are not a required part of the basic financial statements but are supplementary information required by accounting
principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and
express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The
introductory section, combining and individual nonmajor fiord statements and schedules, and the statistical section are presented for purposes of additional
analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund statements and schedules have been subjected
to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects in relation to the basic
financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of
the basic financial statements and, accordingly, we express no opinion on them.
aC vis �'t�t r �CotttiV
Certified Public Accountants
Sacramento, California
December 5,2007
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the Comprehensive Annual Financial Report is presented as discussion and analysis of the financial performance of the City of
Lodi (the City) for the fiscal year ended June 30, 2007.
FINANCIAL HIGHLIGHTS
• The assets of the City of Lodi exceeded its liabilities at the close of the 2007 fiscal year by $234,980,025 (net assets). Of this amount,
$2,449,223 is unrestricted net assets, needed to meet the City's ongoing obligationsto citizens and creditors.
• The City's total net assets increased by $27,376,642 in fiscal year 2007
• As of June 30, 2007, the City's governmental funds reported combined ending fund balances of $21,044,025, an increase of
$3,603,397 in comparison with the prior year. Of this amount, $18,026,704 is available for spending at the City's discretion
(unreserved fund balance).
• At the close of the fiscal year, fund balance for the general fund was $6,319,402 (of which $5,175,522 is unreserved and
undesignated) or 15.8 % of total general fund expenditures of $40,041,238.
• The City's total long-term debt decreased by $3,989,852(2.8%) during the current fiscal year
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial
statements are comprised of three components: (1) Government -wide financial statements, (2) Fund financial statements, and (3) Notes to
the Financial Statements. This report also includes other supplementary information in addition to the basic financial statements.
Government -wide Financial Statements
The govern ment-widefinancial statements are designed to provide readerswith 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. Overtime, increases or decreases in net assets may serve as a useful indicator of whether or not the financial position of the City
is improving or deteriorating.
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.
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 users fees and charges (business -type activities). The governmental activities of the City include general government, public
protection, public works, community development, library, and parks and recreation. The business -type activities of the City include electric
operations, wastewater operations, water operations and public transit operations.
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. AD of the funds of the City can be divided into the
following three categories: Governmental funds, Proprietary funds, and Fiduciaryfunds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the
government -wide financial statements. Most of the City's basic services are reported in governmental funds. These statements, however,
focus on (1) how cash and other financial assets can readily be converted to available resources and (2) the balances left at year-end that are
available for spending. Such information may be useful in determining financial resources available in the near future to finance City
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 funds balance sheet and the governmental funds 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, capital projects and debt
service). Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues,
expenditures, and changes in fund balances for the general fund, which is considered to be a major fund. Data from the remaining
governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non -major governmental funds
is provided in the form of combining statements elsewhere in this report.
The City adopts an annual budget for its general fund and special revenue funds. Budgetary comparison statements have been provided for
the general fund and the special revenuefunds to demonstrate compliancewith this budget.
Proprietary Funds. Proprietary funds are generally used to account for services for which the City charges customers -either outside
customers, or internal units 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 maintainsthe following two types of proprietary funds:
• Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial
statements. The City uses enterprise funds to account for the operations of the Electric, Wastewater, Water, all of which are
considered to be major funds and the Transit system, which is considered to be a nonmajor proprietary fund.
4
• Internal Service funds are used to report activities that account for various employee benefits and self-insurance activities and fleet
activities of the City. Because these activities predominantly benefit governmental rather than business -type functions, they have
been included within the governmental activities in the government -wide financial statements.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. The activities of the
Downtown and Cherokee Lane special assessments, the Industrial Way -Beckman special assessment and various landscape and lighting
districts are accounted for and reported under the fiduciary funds. The activities of the Private Sector trust and the Holz bequest are also
accounted for under the fiduciary funds. Since the resources of this fund are not available to support the City's own programs, it is 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
The notes to the financial statements 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, and a schedule comparing budget to
actual amounts in the General Fund.
Combining Statements
The combining statements in connection with non -major governmental funds and fiduciary funds are presented immediately following the
required supplementary information on pensions.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The City of Lodi assets exceeded
liabilities by $234,980,025 at the close of the current fiscal year.
The largest portion ($208,775,405) of the City's net assets reflects its investment in capital assets net of any associated depreciation (e.g.,
land, buildings and improvements, machinery and equipment); less any related debt used to acquire those assets that is still outstanding. The
City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the
City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be
provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
5
City of Lodi's Net Assets
Liabilities:
Long-term liabilities
outstanding 41,842,787 42,911,609 119,527,995 123,232,209 161,370,782 166,143,818
Other liabilities 4,794,355 3,670,776 7,882,992 8,828,157 12,677,347 12,498,933
Total liabilities 46,637,142 46,582,385 127,410,987 132,060,366 174,048,129 178,642,751
Net assets:
Invested in capital assets,
net of related debt 110,814,721 111,572,441 97,960,684 77,493,888 208,775,405 189,066,329
Restricted 15,044,403 14,525,637 8,710,994 10,969,285 23,755,397 25,494,922
Unrestricted (3,968,367) (8,837,997) 6,417,590 1,880,129 2,449,223 (6,957,868)
Total net assets $ 121,890,757 117,260,081 113,089,268 90,343,302 $ 234,980,025 207,603,383
An additional portion of the City's net assets, $23,755,397 (10.11 %) represents resources that are subject to external restrictions on how they
may be used. The remaining balance of unrestricted assets amounts to $2,449,223. At the end of the current fiscal year, the City is able to
report positive balances in the three categories of net assets for the government as a whole. Unrestricted net assets are negative for the
governmental activities. The deficit in unrestricted net assets in the governmental activities at the end of the year was $3,968,367 primarily
due to the accrual of compensated absences for $10,210,966 and the inclusion of the internal service funds in the governmental activities that
had negative net assets of $878,768.
Referto pages 8-9 for analysis of the business -type activities and internal service fund negative unrestricted net assets.
6
Governmental
Business -type
Activities
Activities
Total
2007 2006
2007 2006
2007
2006
Assets:
Current and other assets
$ 32,649,784 26,306,575
82,844,456 85,587,439 $
115,494,240
111,894,014
Capital assets
135,878,115 137,535,891
157,655,799 136,816,229
293,533,914
274,352,120
Total assets
168,527,899 163,842,466
240,500,255 222,403,668
409,028,154
386,246,134
Liabilities:
Long-term liabilities
outstanding 41,842,787 42,911,609 119,527,995 123,232,209 161,370,782 166,143,818
Other liabilities 4,794,355 3,670,776 7,882,992 8,828,157 12,677,347 12,498,933
Total liabilities 46,637,142 46,582,385 127,410,987 132,060,366 174,048,129 178,642,751
Net assets:
Invested in capital assets,
net of related debt 110,814,721 111,572,441 97,960,684 77,493,888 208,775,405 189,066,329
Restricted 15,044,403 14,525,637 8,710,994 10,969,285 23,755,397 25,494,922
Unrestricted (3,968,367) (8,837,997) 6,417,590 1,880,129 2,449,223 (6,957,868)
Total net assets $ 121,890,757 117,260,081 113,089,268 90,343,302 $ 234,980,025 207,603,383
An additional portion of the City's net assets, $23,755,397 (10.11 %) represents resources that are subject to external restrictions on how they
may be used. The remaining balance of unrestricted assets amounts to $2,449,223. At the end of the current fiscal year, the City is able to
report positive balances in the three categories of net assets for the government as a whole. Unrestricted net assets are negative for the
governmental activities. The deficit in unrestricted net assets in the governmental activities at the end of the year was $3,968,367 primarily
due to the accrual of compensated absences for $10,210,966 and the inclusion of the internal service funds in the governmental activities that
had negative net assets of $878,768.
Referto pages 8-9 for analysis of the business -type activities and internal service fund negative unrestricted net assets.
6
Revenues
Program revenues:
Charges for services
Operatinggrants and contributions
Capital grants and contributions
General revenues:
Property taxes
Othertaxes
Grants and contributions not restricted to
specific programs
Litigation- environmental lawsuits proceeds
Other
Total revenues
Expenses
General government
Public protection
Publicworks
Community development
Library
Parks and recreation
Intereston long-term debt
Electric
Wastewater
Water
Transit
Total expenses
Changes in net assets before transfers
Transfers
Changes in net assets
Net assets at beginning of year
Net assets at end of year
City of Lodi's Change in Net Assets
Governmental
63,779,870
Business -type
8,574,212
Activities
8,256,175
Activities
3,643,035
2007
2006
2007
2006
$ 4,392,225
4,717,215
84,772,926
76,768,433
2,588,592
2,586,677
2,621,063
3,376,995
6,974,545
14,630,848
19,983,761
11,145,804
9,523,684
8,030,641
11,070,609
10,063,090
14,771,547
14,214,678
6,222,568
6,700,399
1,495,383
1,340,239
4,128,972
4,063,465
50,816,585
55,583,388
117,729,290
102,055,096
7,852,819
23,327,792
10,599,292
2,130,349
1,630,145
4,171,750
1,201,086
50,913,233
(96,648)
4,727,324
4,630,676
117,260,081
$ 121,890,757
9,746,613
22,104,641
13,228,998
2,290,412
1,484,793
4,1 13,772
1,233,982
54,203,211
1,380,177
4,922,835
6,303,012
110,957,069
117,260,081
67,533,822
63,779,870
9,270,669
8,574,212
9,874,702
8,256,175
3,576,807
3,643,035
90,256,000
84,253,292
27,473,290
17,801,804
(4,727,324)
(4,922,835)
22,745,966
12,878,969
90,3437302
77,4647333
113,089,268
90,3437302
Total
2007
$ 89,165,151
5,209,655
26,958,306
9,523,684
11,070,609
14,771,547
6,222,568
5,624,355
168,545,875
7,852,819
23,327,792
10,599,292
2,130,349
1,630,145
4,171,750
1,201,086
67,533,822
9,270,669
9,874,702
3,576,807
141,169,233
27,376,642
27,376,642
207,603,383
$ 234,980,025
2006
81,485,648
5,963,672
25,776,652
8,030,641
10,063,090
14,214,678
6,700,399
5,403,704
157,638,484
9,746,613
22,104,641
13,228,998
2,290,412
1,484,793
4,113,772
1,233,982
63,779,870
8,574,212
8,256,175
3,643,035
138,456,503
19,181,981
19,181,981
188,421,402
207,603,383
Analysis of Channes in Net Assets
Governmental activities.
Governmental activities increased the City's net assets by $4,630,676 or 17% of the total increase in the City's net assets.
The key factors impacting the change in net assets are:
• Moderate revenue growth
•
Slowdown on new residential developments
• Increased assessed valuations due to growth in new homes in prior year
• Significant restraint in spending.
Charges for services decreased by 7%, a net amount of $324,990 from the prior fiscal year largely from development related fees essentially
from the continuing slow down of new residential developments.
• Construction permits decreased by $315,900 or 33%
• Planning and plan check fees decreased by $167,854 or 30%
Capital grants and contributions decreased by $7,656,303 or 52% from prior fiscal year. This was substantially the effect of the slow down in
new developments resulting in a decrease of $2,687,586 in the contribution of capital assets from developers. Street projects funded by
Measure K also decreased by $4,765,517. Commercial developments remained steady resulting in an increase in development impact
mitigation fees collected by $932,772.
The City's governmental activities also realized the following revenue increases:
• Propertytaxes - $1,493,043 — 19%
• Sales and use taxes - $325,015 — 3.31 %
• Motor Vehicle license fees - $231,855 — 5.27%
•
In -lieu franchise taxes - $848,914 — 10.84%
Expenses for governmental functions totaled $50,913,233 a decrease of $3,289,978 from the prior fiscal year. This largely reflects the net
decrease in the actuarial estimates for the reserves required for general liability and workers compensation included in general government
and the net effect of the continued effort to cut back on spending.
Business -type activities.
Business -type activities increased the City's net assets by $22,745,966 or 25% of the total increase in the City's net assets. The key elements
of this increase are:
8
• Capital Contributions:
Electric Fund - $69,000
Wastewater Fund - $11,475,030
Water Fund - $7,296,968
• Proceeds from litigation settlements -$6,222,568.
The City also implemented a rate increase for Electric Utility effective June 1, 2006, to offset the increase of purchased power expenses
resulting in increased operating revenue of $6,696,277 or 11% from priorfiscal year. An Energy Cost Adjustment (ECA) was adopted in June
2007 to replace the Market Cost Adjustment (MCA) that was adopted in 2002. The ECA is intended to automatically adjust the electric rates
for monthly fluctuations in the City's purchased power expenses.
Wastewater and water rates were also increased during the year resulting in increased operating revenues of $317,514 or 4% in Wastewater
Utility; and $1,696,716 or 20% in Water Utility. Sewer connection fees were accounted for as operating revenues in prior years and as a
capital contribution in the current year therefore showing a net decrease in wastewater operating revenues of $403,074.
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
Governmental Funds.
The focus of the City of Lodi's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable
resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a
useful measure of a government's net resources available for spending at the end of the fiscal year. Types of governmental funds reported
by the City include the General Fund, special revenue funds, debt service funds and capital projects funds.
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $21,044,025, an increase of
$3,603,397 in comparison to the prior year.
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund balance of the general fund
was $5,175,522 while total fund balance was $6,319,402, an increase of $1,950,461 from prior year. 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 12.93% of total general fund expenditures.
Governmental fund balances have increased for the last two years as a result of continued spending restraint and the receipt of unexpected
revenues from the State of California which includes reimbursements for mandated costs and receipts of more than expected vehicle license
fees.
Proprietary Funds
The City's proprietaryfunds providethe same type of information found in the government -wide financial statements, but in more detail.
Unrestricted net assets at the end of the year for the Electric Fund were ($2,514,064), Wastewater Fund $3,022,494, Water Fund $4,463,762
and Transit Fund $1,445,398.
z
The Internal Service Funds are reporting a deficit in unrestricted net assets as a result of the City not fully funding its self-insurance activities.
The City continues its efforts to gradually eliminate the deficit in the Internal Service Funds by funding the deficit over the next three fiscal
years.
Other factors concerning the finances of these funds are discussed in the City of Lodi's business -type activities.
GENERAL FUND BUDGETARY HIGHLIGHTS
Significant differences between the original operating budget and the final amended operating budget in the General Fund were a net increase
in appropriation of $2,040,975. The increase in appropriations can be briefly summarized as follows:
• $133,804 increase in general government
• $5,074 increase in public protection
• $1,998,807 increase in publicworks
• $11,225 increase in library
• $107,935 decrease in parks and recreation
Significant differences between the final budget and the actual revenues and expenditures can be briefly summarized as follows:
• Taxes — a favorable variance of $952,685 was attributed to underestimated increases in assessed values, which resulted in additional
propertytax revenues in the amount of $906,054.
• Intergovernmental revenues — a favorable variance of $885,811 was largely due to the increased Vehicle License Fees received in the
amount of $764,786 and the reimbursement of state mandated costs not previously funded by the State in the amount of $224,638.
• Fines, forfeits and penalties — an unfavorable variance of $139,858 resulting from revenues that did not come in as expected.
• For expenditures, a favorable variance between the final budget and actual expenditures of $1,921,520 was due to savings from
several vacancies and the continued overall effort to reduce spending and costs.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital assets.
The City of Lodi's investment in capital assets for its governmental and business -type activities as of June 30, 2007, amounts to $293,533,914
(net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, machinery and equipment,
vehicles, infrastructure and construction in progress. The total increase in the City of Lodi's investment in capital assets for the current fiscal
year was 6.99% (a 1.21 % decrease in governmental activities and 15.23% increase in business -type activities) as shown in the table below.
10
Land
Buildingsand Improvements
Machinery and Equipment
Vehicles
Infrastructure
Work of Art
Construction in Progress
Total
Changes in Capital Assets, Net of Depreciation
Governmental Activities Business-typeActivities Total
2007 2006 2007 2006 2007 2006
$ 24,016,374 $
24,016,374 $
5,247,806$
5,247,806 $
29,264,180 $
29,264,180
37,792,666
39,284,078
25,529,753
26,390,168
63,322,419
65,674,246
1,331,961
1,080,497
98,359,132
83,489,707
99,691,093
84,570,204
1,474,697
1,741,279
2,150,827
1,988,516
3,625,524
3,729,795
68,454,801
68,151,049
68,454,801
68,151,049
62,024
62,024
62,024
62,024
2,745,592
3,200,590
26,368,281
19,700,032
29,113,873
22,900,622
$ 135,878,115 $
137,535,891 $
157,655,799 $
136,816,229 $
293,533,914 $
274,352,120
A significant increase in machinery and equipment and construction in progress compared to prior year was primarily due to the Phase III
improvements to the White Slough Pollution Control Facility.
Additional information on the City of Lodi's capital assets can be found in note 6 on pages 42-44 of this report.
Long-term debt.
At the end of the current fiscal year, the City of Lodi had total bonded debt outstanding of $139,502,922. Of this amount, $23,975,000 is the
outstanding balance of the bonds issued to fund the new public safety building, refinancing of the performing arts center and the downtown
and Cherokee Lane improvements. The total of $115,527,922 from the business -type activities consists of $38,771,408 for the Wastewater
Fund; and $76,756,514 for the Electric Fund.
City of Lodi's Outstanding Debt
Governmental Business -type
Activities activities Total
Certificates of Participation $ 23,975,000 115,527,922 139,502,922
The City of Lodi's total bonded debt decreased by $3,989,852 (2.8%) during the current fiscal year.
11
Bond Rating.
In response to a review of interim financial results, Fitch Rating Services changed the rating on outstanding electric utility debt instruments
from BBB- to BBB. In light of more favorable financial results as reflected in the full year financial results as compared to the interim results,
Fitch Ratings Services also removed the negative outlook to positive.
Standard and Poor's also reviewed the rating on the outstanding electric utility debt instruments and retained a BBB+ rating and changed the
outlook to stable.
Additional information on the City of Lodi's long-term debt can be found in note 8 on pages 45-53 of this report.
ECONOMIC FACTORS AND NEXTYEAR'S BUDGET
The General Fund budget for fiscal year 2007-08 incorporates expenditure levels for Police and Fire Departments, which have filled positions
that were left vacant in prior fiscal year budgets. The primary growth in expenditures in the fiscal year 2007-08 budget results from filling these
public safety positions. General tax revenues are estimated to increase sufficiently to offset the impact on the budget of filling these positions.
The Electric Utility budget for 2007-08 was adopted with revenues exceeding expenditures by approximately $1.5 million. Most of these
results from the implementation of an energy cost adjustment that adjusts revenues to reflect increasing cost of purchased energy since the
last rate increase in November 2005. There are some vacancies and reductions in operational expenditures that are also helping to create the
difference. The rate increases in 2005 and other cost cutting measures will be used to increase the cash balances to approximately $7.1
million by the end of fiscal year 2007-08.
Economic Development
There are two major developments in process in Lodi at the time of this report. The Reynolds Ranch development on the southern end of the
city will provide approximately 500 jobs to the community within the next two years. Blue Shield of California will be located in this
development and other businesses will be located around the Blue shield facilities. The additional jobs and the expanded economic activity
from the commercial development in this project will provide needed additional property and sales tax revenues to the City's revenue base.
Additionally, the development plans include approximately 1,000 new residences to be built. This will add significantly to the City's property tax
base.
On the west end of town the Southwest Gateway and West End development projects are in the planning stages of development. Frontier
Community Builders (FCB) is the developer in these projects and has been involved in building many new neighborhoods in the City of Lodi.
Both of these projects could add as many as 2,000 new residences to the city.
Both of these projects include development agreements that will provide for public facilities to be contributed as the development proceeds.
This as well as Impact Development Fees will allow for the provision of public facilities that would otherwise need to be funded with General
Fund revenue sources. Development agreements have not been used by the City to provide for public improvements in the past.
12
Housing market factors will affect the timing of when the residences will be built, but it is anticipated that both projects will proceed over the
course of the next 15-20 years.
REQUEST FOR INFORMATION
This financial report is designed to provide citizens, taxpayers, customers, investors and creditors with a general overview of the City's
finances and to demonstrate the City' accountability for the money it receives. If you have any questions about this report or need additional
information, contact the Financial Services Division of the City of Lodi at 300 W. Pine Street, Lodi, California, 95240.
13
(This page intentionally left blank.)
BASIC FINANCIAL STATEMENTS
The Government -wide Financial Statements provide a broad overview of the City's financial position and operating results. Information is
grouped by governmental activities or business -type activities.
The Fund Financial Statements report information about the City's Governmental Funds, Proprietary Funds, and the Fiduciary Fund.
The notes have an integral role in disclosing information essential to the fair presentation of the Basic Financial Statements.
GOVERNMENT -WIDE FINANCIAL STATEMENTS
ASSETS
Cash and investments
Restricted assets
Accounts receivable,net
Property tax receivable
Interest receivable
Internal balances
Due from other governmental agencies
Loan receivable
Advance receivable
Inventory
Other assets
Deferred charges
Capital assets, net:
Nondepreciable
Depreciable, net
TOTALASSETS
LIABILITIES
Accounts payable and accrued liabilities
Accrued salaries and wages
Accrued interest
Unearned revenue
Long-term liabilities:
Due within one year
Due in more than one year
TOTAL LIABILITIES
NET ASSETS
Invested in capital assets, net of related debt
Restricted for:
Capital projects
Debt service
Other purposes
Unrestricted (deficit)
TOTAL NET ASSETS
The notes to the financial statements are an integral part of this statement.
C MY OF LODI
STATEMENT OF NET ASSETS
June 30,2007
Governmental Business -type
Activities Activities
Total
$ 22,744,481
8,375,941 $
31,120,422
1,750,204
29,871,849
31,622,053
3,606,321
13,842,494
17,448,815
1,901,316
1,901,316
201,303
65,597
266,900
(749,911)
749,911
1,911,215
970,061
2,881,276
1,084,000
1,084,000
4,790,663
4,790,663
137,931
1,701,197
1,839,128
62,924
5,627
68,551
22,471,1 16
22,471,116
26,823,990
31,616,087
58,440,077
109,054,125
126,039,712
235,093,837
168,527,899
240,500,255
409,028,154
3,146,437
4,295,437
7,441,874
1,364,788
1,364,788
283,130
2,348,162
2,631,292
1,239,393
1,239,393
5,854,889
4,133,452
9,988,341
35,987,898
115,394,543
151,382,441
46,637,142
127,410,987
174.048.129
110,814,721
97,960,684
208,775,405
13,011,928
13,011,928
1,749,214
1,749,214
283,261
8,710,994
8,994,255
(3,968,367)
6,417,590
2,449,223
121,890,757
113,089,268 $
234,980,025
15
Functions/Programs
PRIMARY GOVERNMENT:
Governmental activities:
General government
Public protection
Publicworks
Communitydevelopment
Library
Parks & recreation
Intereston long-termdebt
Total governmental activities
Business -type activities
CITY OF LODI
STATEMENT OF ACTIVITIES
Year ended June 30,2007
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
Net (Expense) Revenue and
Changes in Net Assets
Governmental Business -type
Activities Activities Total
7,852,819
1,280,338
272.138
233,876
(6,066,467)
23,327,792
581,835
801,209
475,108
(21,469,640)
10,599,292
295,098
1,146,428
5,743,572
(3,414,194)
2,130,349
1,174,470
1,081,691
23,905
(931,974)
1,630,145
53,207
97,657
380,337
(1,479,281)
4,171,750
1,007,277
271,160
498,084
(2,395,229)
1,201,086
3,253,660
Litigation- environmental lawsuits proceeds
(1,201,0861
50,913,233
4,392,225
2,588,592
6,974,545
(36,957,871)
Electric
67,533,822
65,808,864
69,000
Wastewater
9,270,669
8,523,530
11,475,030
Water
9,874,702
10,039,706
7,296,968
Transit
3,576,807
400,826 2,621,063
1,142,763
90,256,000 84,772,926 2,621,063 19,983,761
Total primary government $ 141,169,233 89,165,151 5,209,655 26,958,306 (36,957,871)
(6,066,467)
(21,469,640)
(3,414,194)
(931,974)
(1,479,281)
(2,395.229)
(1,201,086)
(36,957,871)
(1,655,958)
(1,655,958)
10,727,891
10,727,891
7,461:972
7,461,972
587,845
587,845
17,121.750
17,121, 750
17.121.750 $
(19.836.121)
General revenues:
Taxes:
Propertytaxes
9,523,684
9,523,684
Franchise taxes
9,608,581
9,608,581
Business license tax
1,081,691
1,081,691
Transient occupancytax
380,337
380,337
Grants and contributions not restricted to specific programs
14,771,547
14,771,547
Investment earnings
873,925
2,379,735
3,253,660
Litigation- environmental lawsuits proceeds
6,222,568
6,222,568
Other
621,458
1,749,237
2,370,695
Transfers
4,727,324
(4,727,324)
Total general revenues and transfers
41,588,547
5,624,216
47,212,763
Change in net assets
4,630,676
22,745,966
27,376,642
Net assets, beginning of year
117,260,081
90,343,302
207,603,383
Net assets, end of year $
121,890,757
113,089,268 $
234,980,025
The notes to the financial slat mems are an integral part of this statement
16
FUND FINANCIAL STATEMENTS
FUND FINANCIAL STATEMENTS
Governmental Fund Types
Governmental funds consist of the General Fund, special revenue funds, debt service fund and capital projects
funds.
Major Governmental Fund:
General Fund
This fund is maintained to account for all financial resources that are not restricted as to their use. This includes
property and sales taxes, business tax receipts, franchise taxes and various subventions such as Motor Vehicle In -
Lieu fees received from the State of California. With the exception of grant programs, General Fund resources
can be utilized for any legitimate governmental purpose.
Proprietary Fund Types
Proprietary funds consist of the enterprisefunds and the internal service funds.
Major Enterprise Funds include:
Electric Fund
The City established this fund in order to account for the provision of electric services to the residents of the
City. All activities necessaryto provide such services are accounted for in this fund, including but not limited to,
source of supply, overhead, systems maintenance, customer service, engineering, administration, capital
improvements maintenance and debt service.
17
Sewer Fund
This fund was established by the City in order to account for the provision of waste water collection and
treatment services to the residents of the City. All activities necessary to provide such services are accounted
for in this fund, including, but not limited to, administration, operations, maintenance, improvements and debt
service.
Water Fund
This fund was established by the City in order to account for the provision of water to the residents of the City
as well as some customers in the County. All activities to provide such services are accounted for in this fund,
including, but not limited to administration, operations, distribution, maintenance, capital improvements and
debt service.
Nonmajor Enterprise Fund:
Transit Fund
This fund is used to account for the operations of the Dial -A -Ride and the Grapeline bus system.
Fiduciary Fund Type
Private -purpose Trust Funds
These funds are used to account for assets held by the Library Board as trustee of the Lodi Public Library and for
assets held by the City in accordance with the trust agreement on behalf of the Hutchins Street Square.
Agency Fund
This fund was established to account for special assessments collected on the property tax roll by the City on behalf
of the property owners within the Industrial Way Beckman Districts and the Downtown and Cherokee Lane Districts
and various landscape and lighting districts around the City.
18
ASSETS
Cash and investments
Restricted assets
Receivables:
Accounts, net
Property taxes
Interest
Due from other funds
Due from other governmental agencies
Loan receivable
Inventory
Advances to other funds
Other assets
Total assets
LIABILITIESAND FUND BALANCES
Liabilities:
Accounts payable and other liabilities
Accrued salaries and wages
Due to other funds
Advances from other funds
Deferred revenue
Total liabilities
Fund balances
Reserved
Unreserved reported in:
General Fund
Special revenue funds
Capital projects funds
Total fund balances
Total liabilities and fund balances
CITY OF LODI
BALANCESHEET
GOVERNMENTALFUNDS
June 30,2007
Other Total
General Governmental Governmental
Fund Funds Funds
$ 3,981,991
3,355,991
1,901,316
47,401
149,568
5,300
29,407
272,800
59,695
13,316,450 $
1,750,204
46,695
108,660
978,064
1,905,915
1,084,000
646,770
508
17,298,441
1,750,204
3,402,686
1,901,316
156,061
1,127,632
1,911,215
1,084,000
29,407
919,570
60,203
9,803,469 19,837,266 $ 29,640,735
$ 2,119,279 871,580 $
2,990,859
1,364,788
1,364,788
652,370
652,370
2,144,743
2,144,743
1,443,950
1,443,950
3,484,067 5,112,643
8,596,710
1,143,880
1,873,441
3,017,321
5,175,522
5,175,522
6,651,315
6,651,315
6,199,867
6,199,867
6,319,402
14,724,623
21,044,025
$ 9,803,469
19,837,266 $
29,640,735
The notes to the financial statements are an integral part of this statement. 19
CITY OF LODI
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
June 30,2007
Amounts reported for governmental activities in the statement of net assets are
different because:
Fund balances - total governmental funds
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds
Nondepreciable capital assets
Depreciable capital assets, net
Long-term liabilities are not due and payable in the current period
and therefore are not reported in the governmental funds as follows:
Compensated absences
Long-term debt
Intereston long-term debt is not accrued in the funds, but rather is
recognized as an expenditure when due
Other long-term assets are not availableto pay for current period expenditures and,
therefore, are deferred in the funds
Internal service funds are used by managementto charge the costs of general
liability insurance, workers' compensation insurance, health benefits
insurance, other insurance and the cost of operating and maintaining
the City's fleet to individual funds. The assets of the internal
service fund is included in governmental activities in the statement of net assets
Net assets of governmental activities
The notes to the financial statements are an integral part of this statement. 20
$ 21,044,025
26,823,990
109,015,050
(10,210,966)
(25,063,394)
(283,130)
1,443,950
(878,768)
$ 121,890,757
CITY OF LODI
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
Year ended June 30,2007
The notes to the financial statements are an integral part of this statement
21
Other
Total
General
Governmental
Governmental
Fund
Funds
Funds
Revenues:
Taxes
$ 20,594,293
$
20,594,293
Licenses and permits
83,964
632,820
716,784
Intergovernmental revenues
16,091,446
3,800,342
19,891,788
Charges for services
1,854,575
2,841,633
4,696,208
Fines, forfeits and penalties
1,241,051
4,225
1,245,276
Investmentand rental income
380,375
617,703
998,078
Miscellaneous revenue
210,495
93,576
304,071
Total revenues
40,456,199
7,990,299
48,446,498
Expenditures:
Current:
General government
8,893,677
8,893,677
Public protection
21,775,531
435,792
22,211,323
Publicworks
3,871,311
1,715,482
5,586,793
Community development
2,061,706
2,061,706
Library
1,587,714
1,587,714
Parks and recreation
3,597,718
3,597,718
Capital outlay
3,526,339
3,526,339
Debt service:
Interest and fiscal charges
41,464
1,163,635
1,205,099
Principal payments
273,823
626,233
900,056
Total expenditures
40,041,238
9,529,187
49,570,425
Excess (deficiency)of expenditures over (under) revenues
414,961
(1,538,888)
(1,123,927)
Other financing sources (uses):
Transfers in
4,937,314
3,926,356
8,863,670
Transfers out
(3,401,814)
(734,532)
(4,136,346)
Total other financing sources(uses)
1,535,500
3,191,824
4,727,324
Net change in fund balances
1,950,461
1,652,936
3,603,397
Fund balances, beginning of year
4,368,941
13,071,687
17,440,628
Fund balances, end of year
$ 6,319,402
14,724,623 $
21,044,025
The notes to the financial statements are an integral part of this statement
21
CITY OF LODI
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURESAND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
Year ended June 30,2007
Amounts reported for governmental activities are different because:
Net change in fund balances -total governmental funds $ 3,603,397
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense.
Capital outlays, capital contributionsand depreciation expense are as follows:
Capitalized capital outlays 3,526,339
Capital contributions 2,136, 331
Depreciationexpense (7,359,521)
Long-term debt proceeds, net of discounts. provide current financial resourcesto governmental funds,
but issuing debt proceeds increases long-term liabilities in the statementof net assets. Repayments
of the principalare expendituresin the governmental funds, butthe repayments
reduce long-term liabilities in the statementof netassets.
Repayments of principal are as follows:
Capital leases 273,823
Certificatesof participation principal 535,000
Loan principal 91,233
Internalservice funds are used by managementto charge the costs of certain activities, such as health benefits
and self-insurance, costs of operation and maintenanceof the City's fleet, to individualfunds.
The net revenue (expenses) of the internal service funds are reportedwith 2,175, 868
governmental activities.
Deferred revenues recognized in the funds that were previously recognized in the statementof activities (10,000)
Otherexpenses in the statementof activitiesthat do not use current financial resourcesare not reportedas
expenditures in the governmental funds.
Change in compensated absences (345,807)
Change in accrued interest 4.013
Change in net assets of governmental activities
The notes to the financial statements are an integral part of this statement. 22
4,630,676
ASSETS
Currentassets:
Cash and Investments
Restricted cash and investments
Restrictedassetswith fiscal agents
Receivables:
Accounts. net
Interest
Duefrom othergovemmental agencies
Advance receivable
Inventory
Other assets
Total current assets
Noncurrent assets:
Advances to otherfunds
Deferred charges and other assets
Capitalassets,net:
Nondepreciable
Depreciable, net
Total capital assets
Total noncurrent assets
TOTALASSETS
LIABILITIES
Current liabilities:
Accounts payable and other liabilities
Accrued interest
Due to otherfunds
Unearned revenue
Self-insurance liability
Accrued compensated absences
Certificates of participationpayable
Water note payable
Total current liabilities
Noncurrent liabilities:
Self-insurance liability
Accrued compensated absences
Certificatesofpartidpation payable
Water note payable
Total noncurrent liabilities
TOTAL LIABILITIES
NETASSETS (DEFICIT)
Invested i n capital assets. net of related debt
Restricted:
Other purposes
U n restricted(deficit)
TOTAL NETASSETS (DEFICIT)
CITY OF LODI
STATEMENTOF NETASSETS
PROPRIETARY FUNDS
June 30,2007
Thenotes tDthe financial statements are an integralpan ofthis statement 23
Governmental
Activities-
Business-typeActivities-EnterpriseFunds
Internal
NonmajorFund
Service
Electric
Wastewater
Water
Transit
Total
Funds
$ 5.162.284
3,000,445
213,212 $
8,375,941 $
5,446,040
8,410,994
8,410,994
10,131,013
11.029.071
300.771
21,460,855
4,335,315
2,620,025
6,275,419
611.735
13,842,494
203,635
37.748
5.261
20,773
1,815
65.597
45,242
85.182
884.879
970,061
4,790,663
4,790,663
1,501,423
13,022
186.752
1,701,197
108,524
82
4.188
1,357
5.627
2,721
25,958,528
16,757,194
15,196,066
1,711,641
59,623,429
5,806,162
1,225,173
1,225,173
21.730.962
740,154
22,471,116
4,043,564
24,146,041
1,904,656
1,521,826
31,616,087
34,000,593
52,083,087
28,736,192
11,219,840
126,039,712
39.075
38,044,157
76,229,128
30,340,848
12,741,666
157,655,799
39.075
59,775,119
76,969,282
31,866,021
12,741,666
181,352,088
39,075
85,733,647
93,726,476
47,062,087
14,453,307
240,975,517
5,845,237
696.877
1,776,967
1,556,326
265,267
4,295,437
155.578
1,731,278
600,485
16,399
2,348,162
475262
475,262
71,175
1,168,218
1,239,393
2,265,383
280.616
231,799
6.399
976
519,790
67,293
2,083,948
1,365,904
3449,852
163.810
163.810
4,792,719
4,046,330
3,386,414
266.243
12,491,706
2,488,254
4,130.617
773.402
765,357
23.108
1,561,867
105.134
74,672,566
37,405,504
112.078.070
1,754,606
1,754,606
75,445,968
38,170,861
1,777,714
115,394,543
4,235,751
80,238,687
42,217,191
5,164,128
266,243
127.886249
6,724,005
8,009,024
48,486.791
28,723,203
12,741666
97,960,684
39.075
81710,994
8,710.994
(2,514,064)
3,022,494
4,463,762
1,445,398
6,417,590
(917.843)
$ 5,494,960
51,509,285
41,897,959
14.187.064 $
113,089,268 $ -
(878,768)
Thenotes tDthe financial statements are an integralpan ofthis statement 23
OPERATING REVENUES
Charges for services
OPERATING EXPENSES
Personnel services
Supplies, materials and services
Utilities
Depreciation and amortization
Claims
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NONOPERATI NG REVENUES (EXPENSES)
Investment income
Interest expense
Rent
Operating grants
Litigation -environmental lawsuits proceeds
Other revenues
TOTAL NONOPERATI NG REVENUES (EXPENSES)
INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONSAND TRANSFERS
Capital contributions
Transfers in
Transfers out
Net capital contributions and transfers
Change in net assets
NETASSETS (DEFICIT)- BEGINNINGOF YEAR
NETASSETS (DEFICIT)- END OF YEAR
CITY OF LODI
STATEMENTOF REVENUES, EXPENSESAND
CHANGES IN NETASSETS
PROPRIETARY FUNDS
Year ended June 30,2007
2.252.324 1,269,558 233.136 (3,175,981)
579.037 1246.700
1,206,412
922.153
235.742
15.428
2,379,735
Governmental
(3,977,282)
(2,016,697)
(68.132)
(6,062,111)
Activities -
Business -type Activities- Enterprise Funds
12.049
4,000
Internal
Nonmajor Fund
2,621,063
Service
Electric
Wastewater
Water
Transit
Total
Funds
$ 65,808,864
8,523,530
10,039,706
400.826 $
84,772,926 $
10,100,165
685,412
(1,921,073)
(658,724)
6,755,255
2,735,034
6,910,492
4,597,337
2,289,035
1,077,002
115,746
8,079,120
1,255,538
8,904,769
2,314,233
6,924,896
2,810,889
20.954.787
6,003,510
43,429,227
683.669
698.063
47,369
44,858,328
14.587
6,625,207
1,967,035
1,106,609
602.803
10,301,654
1,447
(7,105,048)
(2,633,7361
12,790,221
3,957,189
1,578,383
63,556,540
7.253.972
9,806,570
3,576,807
84.193,889
8,853,465
2.252.324 1,269,558 233.136 (3,175,981)
579.037 1246.700
1,206,412
922.153
235.742
15.428
2,379,735
203.234
(3,977,282)
(2,016,697)
(68.132)
(6,062,111)
176,202
12.049
4,000
192.251
2,621,063
2,621,063
6.222,568
5,222,558
849,797
259.618
353.028
94,543
1,556,986
685,412
(1,921,073)
(658,724)
6,755,255
2,735,034
6,910,492
888.646
331,251
610.834
6,988,391
(440,947)
7,489,529
2,135,346
69.000
11,475,030
7,296,968
1,142,763
19,983,761
40.522
2.377.724
2,377,724
(2,702,736)
(1,062,533)
(3,339,779)
(7,105,048)
(2,633,7361
12,790,221
3,957,189
1,142, 763
15,256,437
40,522
(2,302,485)
13,401,055
10,945,580
701.816
22,745,966
2.175.868
7,797,445
38,108,230
30,952,379
13,485,248
90,343,302
(3,054,636)
$ 5,494,960
51,509,285
41,897,959
14,187,064 $
113,089,268 $
(878.768)
The notesto the financial staternentsare an integral part of this report.
24
Cash flowsfrom operating activities.
Receipts from customers and users
Receiptsfrom interfundservices provided
Cash paid to suppliers for goods & services
Payments Io employees
Paymentsfor interfundservices provided
Proceedsfrom litigation settlements
Net cash provided by (used in) operating activities
Cash flows from noncapita[ financingachAties.
Loaned from otherfunds
Operating grants
Transfers in
Transfers out
Net cash provided by (used in) noncapitalfinancing activities
Cash flows from capital and relatedfinancing activities:
Acquisition and construction of capital assets
Fees received from developers
Capitalgrants received
Principalpaymentson debt
Interestpaymentson debt
Net cash providedby (used in) capital and relatedfinancing activities
Cashflows from investing activities
RentofCity property
Proceedsfrom sales and maturities of inveslments
Intereston investments
Net cash provided by investing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents. beginning of year, restated
Cash and cash equivalents. end of year
Recenciliationto the statement of net assets:
Cash and investments
Restricted cash and investments
Restricted assets with fiscal agents
Less long-term investments
Total cash and cash equivalents
Reconciliation of operating inwme (loss)to net cash provided by
(used in) operating activities:
Operating Income (loss)
Adjustmentsto rewncile operating income(loss)to
net cash provided by (used in) operating activities:
Depreciation and amortization
Proceedsfrom litigationsettlements
Other revenues
Change in assetsand liabiliies:
Decrease (increase) in accounts receivable
Increase in advance receivables
Increasein interest receivables
Increasein due from othergovemmental agencies
Decrease (increase) in inventory
Decrease (increase) in other assets
Increase(decrease) in accounts payable and other liabilities
Increase (decrease) in compensated absences
Decrease in unearned revenue
Decrease in self-insurance liability
Net cash provided by (used in) operating activities
Noncash Investina.Caoital and Financing Activities
Capital contributions
The notes tithe financial statements man integral pan oft his statement.
CITY OF LORI
(6,511,739)
(699.421) (1,105,264)
(8,929,435)
192.251
STATEMENTOF CASH FLOWS
119.837
1.574.752
6,222,568
74.941
PROPRIETARYFUNDS
1,194,429
(2,350,000)
(1.315.000)
(158.489)
Year ended June 30,2007
(4,134,214)
(2,054,520)
(69.487)
(6,258,221)
(7,097,225)
(8,351,403)
(807.560) 14.224
(16,241,964)
Governmental
Business
-type Activities- EnterpnseFunds
Activities-
Nonmajor Fund
Internal Service
Electric Wastewater
Water
Transit
Total
Funds
65,381,498 7,393,356
4,749,095
(404.057) 3
77,119,892 3
490.763
380.769
(37,537)
380.769
10.100.165
(54,630,021) (1,068,931)
(6,885,359)
(2,739,294)
(65,323,615)
(8,291,928)
(4,739,525) (2,225,027)
(1,087,695)
(117.746)
(8,169,993)
(1,083,111)
(2.385) (630.045)
(671.117)
(31.833)
(1,335.380)
(2,000)
(90.873)
6,222,568
6,222,568
6,390,336 3,469,353
2,327,482
(3,292,930)
8,894,241
1,215,889
475.262 475.262
2,621,063 2,621,063
2,377,724 2,377,724
(2,702,736) (1,062,533) (3,339,779) (71_05
(2,702,736) 1,315,191 (2,864,517) 2,621,063 (1.630.999)
(613.011)
(6,511,739)
(699.421) (1,105,264)
(8,929,435)
192.251
1,454,915
119.837
1.574.752
6,222,568
74.941
1.119.488
1,194,429
(2,350,000)
(1.315.000)
(158.489)
(3,823,489)
(4,134,214)
(2,054,520)
(69.487)
(6,258,221)
(7,097,225)
(8,351,403)
(807.560) 14.224
(16,241,964)
17,511,335 1,916,096 9,790,543 851,427 30,069,402 4,060,416
3 15,293,297 11,859,666 8,711,765 213.212 3 36,077,940 3 5,446,040
3 5,162,284 3,000,445 213,212 3 8,375,941 3 5,446,040
8,410,994 8,410.994
10.131.013 11.029.071 300 771 21.460.855
(2,169,850) (2,169,850)
3 15,293,297 11,859,666 8,711,765 213.212 8 36.077,940 3 5,446,040
2,252,324 1,269,558 233,136 (3,175,981) 5 579,037 3 1,246,700
6,625,207
176.202
12.049
4.000
192.251
1.447
12.408.768
6,222,568
12,408,768
1,191,586
925.459
253.768
15.428
2,386,241 169.735
1,191,586
13,510,429
265,817
19.428
14,987,260 169.735
(2,218,039)
9,943,570
(1,078,778)
(638.215)
6,008,538 1,385,624
17,511,335 1,916,096 9,790,543 851,427 30,069,402 4,060,416
3 15,293,297 11,859,666 8,711,765 213.212 3 36,077,940 3 5,446,040
3 5,162,284 3,000,445 213,212 3 8,375,941 3 5,446,040
8,410,994 8,410.994
10.131.013 11.029.071 300 771 21.460.855
(2,169,850) (2,169,850)
3 15,293,297 11,859,666 8,711,765 213.212 8 36.077,940 3 5,446,040
2,252,324 1,269,558 233,136 (3,175,981) 5 579,037 3 1,246,700
6,625,207
1,967,035
1,106,609
602.803
10,301,654
1.447
6,222,568
6,222,568
849.797
259.618
353.028
94,543
1,556,986
685.412
727.412
(1,290,572)
(5,643,557)
(12.732)
(6,219,449)
(203.635)
(1,625.082)
(1,625,082)
(1,815)
(1,815)
(67.280)
(884.879)
(952,159)
(34,819)
692
(3.410)
(37,537)
(108.524)
1,276
(213)
(82)
981
8.986
(2,263,591)
1,298,234
69.883
87.131
(808,343)
1.()0.076
(142.188)
64.008
(10.693)
(2,000)
(90.873)
172.427
131.727)
(31,727)
(687.000)
3 6,390,336 3,469,353 2,327,482 (3,292,930)3 8,894,241 $ 1,215,889
69.000 9.945,174 7,177,131 23.275 3 17,214,580 3 40.522
CITY OF LODI
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
June 30,2007
ASSETS
Cash and Investments
Receivables:
Special assessments
Interest
TOTALASSETS
LIABILITIES
Agency obligations
TOTAL LIABILITIES
NETASSETS
The notes to the financial statements are an integral part of this statement. 26
Private -Purpose
Trust Funds
$ 848,151 $
848.151
R
848.151 $
Agency Fund
589,683
79,508
5,495
674,686
674.686
674,686
CITY OF LODI
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
Year ended June 30,2007
ADDITIONS
Investmentand rental income
Total additions
DEDUCTIONS
Current
Library
Total deductions
CHANGE IN NET ASSETS
NETASSETS, BEGINNING OF YEAR
NET ASSETS, END OF YEAR
The notes to the financial statements are an integral part of this statement. 27
Private -Purpose
Trust Funds
$ 100,627
100,627
11.866
88,761
759,390
$ 848,151
(This page intentionally left blank.)
NOTES TO THE FINANCIAL STATEMENTS
CITY OF LODI
Notes to Basic Financial Statements
June 30,2007
(�) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) The Financial Reporting Entity
The City of Lodi (City) was incorporated on December 6, 1906, as a municipal corporation under the General Laws of the State of California.
The City operates under a Council -Manager form of government and provides the following services: general government, public works,
community development, public protection (police and fire), public utilities, library, parks and recreation.
The accounting policies of the City conform to generally accepted accounting principles (GAAP) as applicable to governments in the United
States of America. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting
and financial reporting principles.
An elected five -member council governs the City of Lodi. As required by GAAP, these financial statements present the City and its component
units, entities for which the City is considered to be financially accountable. The component units, although legally separate entities, are, in
substance, part of the City's operations and therefore, their activities are blended with data of the City.
Blended Component Units
The blended component units of the City are as follows:
The Lodi Public Improvement Corporation (LPIC) was formed on April 26, 1988, for the purpose of rendering financial assistance to the City in
the issuance of the 1988 Certificates of Participation (refunded by the issuance of the 1991 Certificates of Participation)to finance the expansion
of the City's White Slough Pollution Control Facility, the 1995 and 1996 Certificates of Participation to finance the Central City Revitalization
Projects and the Performing Arts/ Conference Center, (refunded by the issuance of the 2002 Certificates of Participation), the issuance of the
1999 Certificates of Participation to finance the Electric Systems improvements (refunded by the 2002 Certificates of Participation Series A and
B), the 2002 Certificates of Participation Series C and D to fund the buy-out of the CalPine Energy Purchase Commitment, and the issuance of
the 2004 Wastewater System Revenue Certificates of Participation Series A to provide funds to finance the costs of certain improvements to the
wastewater collection, treatment and disposal system of the City.
The City Council constitutes the Board of Directors of LPIC. The funds of LPIC have been included in the Enterprise (Electric and Wastewater)
Funds and in the other governmental funds in the accompanying basic financial statements.
The Lodi Financing Corporation (LFC) was formed on October 12, 1999, for the purpose of assisting the City with the financing of the costs of its
environmental abatement program and enhancing the water supply of the City for the use, benefit and enjoyment of the citizens served by the
City. The City Council is the Board of Directors of LFC. The funds of LFC are included in the Water Fund in the accompanying basic financial
statements.
29
CITY CF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
(b) Govern ment-wideand fund financial statements
The govemment-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the non -
fiduciary activities of the primary government and its component units. For the most part the effect of interfund activity has been removed from
these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately
from business -type activities that rely, to a significant extent, on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct
expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or
applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and
contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly
included among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded
from the govemment-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as
separate columns in the fund financial statements.
(c) Meas u rement focus, basis of accounting, and financial statement presentation
The govemment-wide financial statements are reported using the economic resources measurement focus and accrual basis of accounting, as
are the proprietary fund and private -purpose trust fund financial statements. Revenues are recorded when earned and expenses are recorded
when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they
are levied. Grant and similar items are recognized as revenue as soon as all eligibility requirements have been met. Agency funds use the
accrual basis of accounting, but they do not have a measurementfocus.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of
accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they
are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers property tax revenues
to be available if they are collected within 60 days of the end of the current fiscal year. All other revenues are considered to be available if they
are generally collected within 120 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as
under accrual accounting. However, debt service expenditures, as well as expenditures related to vacation, sick leave, claims and judgments,
are recorded only when payment is due.
Property taxes, other local taxes, licenses, intergovernmental revenues, and interest associated with the current fiscal period are all considered
susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenues are considered to be
measurable and available when the City receives cash.
30
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30.2007
The City reports the following major governmental fund:
The General Fund is the City's primary operating fund. It accounts for all financial resources of the City except those required to be
accounted for in another fund.
The City reports the following major proprietary(enterprise)funds:
The Electric Fund accounts for the provision of electric services to the residents of the City. All activities necessary to provide such
services are accounted for in this fund, including but not limited to, source of supply, overhead, systems maintenance, customer service,
engineering, administration, capital improvements, and maintenanceand debt service.
The Wastewater Fund accounts for the provision of wastewater collection and treatment services to the residents of the City.
All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations,
maintenance, improvementsand debt service.
The Water Fund accounts for the provision of water to the residents of the City as well as some customers in the County. All activities
to provide such services are accounted for in this fund, including, but not limited to administration, operations, distribution, maintenance,
capital improvements and debt service.
Additionally, the City reports the following fund types:
The Internal Service Funds accountfor the City's claims and benefits and fleet services.
The fiduciary funds accountfor assets held in trust for other agencies.
Private -Purpose Trust Funds are used to accountfor trust agreements underwhich the principal and income benefit
individuals, private organizations or other governments. They were established to account for assets held and invested by the
Library Board as trustee; and to account for assets held by the City in accordance with a trust agreement on behalf of the
Hutchins Square. These funds can only be spent in accordancewith the trust agreements.
Agency Fund accounts for assets held by the City as a trustee or as an agent for individuals, private organizations, related
organizations and/or other governmental units. This fund was established to account for special assessments collected on the
property tax roll by the City on behalf of the property owners within the Industrial Way/Beckman Districts, the
Downtown/Cherokee Lane Districts and various landscape and lighting districts around the City.
31
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Private—sector standards of accounting and financial reporting issued prior to December 1, 1989, are followed in both the business -type activities
in the government -wide and the proprietary fund financial statements to the extent that those standards do not conflict with or contradict
guidance of the GASB. The City also has the option of the following subsequent private -sector guidance for their business -type activities and
enterprise funds, subjectto this same limitation. The City has elected not to follow subsequent private -sector guidance.
The effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this rule are charges to other
City departments from the Electric, Wastewater, Water and Transit Funds. These charges have not been eliminated because elimination would
distort the direct costs and program revenues reported in the statement of activities.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result
from providing services in connection with the fund's principal ongoing operations. The principal operating revenues of the City's enterprise
funds and internal service funds are charges for customer services including: electric, wastewater, water and public transportation fees.
Operating expenses for enterprise funds and internal service funds include the cost of services, administrative expenses, and depreciation on
capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resourcesfirst, and then unrestricted
resources as they are needed.
(d) Cash and Investments
The City maintains a cash and investment pool that is available for all funds of the City for the purpose of increasing interest earnings through
investment activities. Investments are generally stated at fair value with the exception of guaranteed investment contracts, which are stated at
cost. Income earned or losses arising from the investment of pooled cash are allocated to various funds based on month-end cash balances in
accordance with California Government Code Section 53647. Changes in fair value of investments are recognized as a component of
investment income.
Cash and cash equivalents were increased at June 30, 2006 by $10,529,239, $49,291, and $300,739 from the amount previously reported in the
Electric, Wastewater, and Water funds, respectively. These increases represent the proceeds from debt and other cash and investments held
by fiscal agents by agreement classified as restricted assets that meet the definition of cash and cash equivalents.
(e) Restricted Cash and Investments
The City established an escrow account (the "Central Plume Fund") into which certain settlement payments were deposited with the mutual
agreement between the City and the other parties that these funds will be used exclusively for environmental clean up, investigation or
remediation expenses incurred by the City in the Central Plume Area and that it will not be used for the payment of legal or technical fees. These
funds are accounted for in the Water Fund.
32
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
(f) Restricted Assets with Fiscal Agents
In the Enterprise (Electric) Fund, restricted assets represent the proceeds of the 1999 Certificates of Participation held by the trustee for the
planned improvements of the City electric systems. In the Capital Outlay Reserve Fund, the restricted assets represent the proceeds of the 2002
Improvement bonds reserved for debt service. In the Wastewater fund, the restricted assets represent the proceeds of the 2003B and the
2004A Certificates of Participation issued for improvements to the City's wastewater collection, treatment and disposal system. In the Water
Fund, the restricted assets representfunds held by the attorneys in connection with the PCE/TCE litigation.
(g) Property Taxes
San Joaquin County is responsible for assessing, collecting and distributing property taxes in accordance with enabling legislation. Revenue
received is based on an allocation factor calculated by the County under the provisions of Proposition 13 plus a percentage of the increase in
market value in specific areas. The City's property tax is liened based on the assessed value listed as of the prior January 1 st for all real and
personal property located in the City. Property sold after the assessment date (January 1st) is reassessed and the amount of property tax
assessed is prorated. The assessed value at January 1,2005, upon which the 2006 levy was based, was $5,043,996,000.
Secured property taxes are levied on October 1 and are due in two installments on November 1 and February 1. The tax becomes delinquent
after December 10 and April 10, respectively. Unsecured property tax is levied on July 1, due on July 31 and becomes delinquent after August
31.
Property taxes levied for the year ended June 30, 2007, are recorded as receivables, net of estimated uncollectible amounts. Property taxes
paid to the City by the County within 60 days of the fiscal year end are considered "available" and are, therefore, recognized as revenue.
In 1993, the City made an agreement with the San Joaquin County to participate in the Teeter Plan. The Teeter plan is an alternative method of
apportioning property tax money. The cities receive 95% of the property taxes in advance from the County and the 5% remaining after
reconciling the cities' balances at June 30. As part of the agreement, the County keeps the penalties and interest on the delinquenttaxes.
(h) Due From/Due To Other Funds, Advances To/Advances From Other Funds, and Internal Balances
During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. In the fund
financial statements, these receivables and payables are classified as "due from other funds" or "due to other funds." Long-term interfund loans
receivable are reported as "advances to other funds." The corresponding long-term interfund loans payable are reported as "advances from
other funds." In the government -wide financial statements, these receivables and payables are eliminated within the governmental activities and
business -type activities columns. Receivables and payables between the governmental activities and the business -type activities are classified
as internal balances.
33
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
(i) Transfers
In the fund financial statements, interfund transfers are recorded as transfers in (out) except for transactions that are described below:
Charges for services are recorded as revenues of the performing fund and expenditures of the requesting fund. Unbilled costs are
recognized as an asset of the performing fund at the end of fiscal year.
Reimbursements for expenditures, initially made by one fund that is properly applicable to another fund, are recorded as expenditures in
the reimbursing fund and as other revenue in the fund that is reimbursed. Reimbursements are eliminated for purposes of government -
wide reporting.
0) Long-term obligations
In the government -wide financial statements and in the proprietaryfund type financial statements, long-term debt and other long-term obligations
are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund statement of net assets. Bond
premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of
the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related
debt. Gains or losses occurring from advance refunding are deferred and amortized into expense for both governmental and business -type
activities.
(k) Loan receivable
Loan receivable reported in the HOME Program & Community Development Block Grants Special Revenue Fund represent funds the City
loaned to a developer on November 15, 1995 for a low-income housing project. The City will receive principal and interest from the original loan
in 2025 and can use it for allowable projects or to make new loans.
iil Advance receivable
Advance receivable reported in the Enterprise Fund (Electric) represents the City's portion of the Northern California Power Agency's (NCPA)
General Operating reserve that is refundable upon demand by the City. (See Note 13.)
(m) Inventory
General fund inventories are recorded at cost and are recognized as expenditures when consumed rather than when purchased. For the
proprietary fund types, inventories are recorded at cost using the weighted average cost method, which approximates market, and expense is
recognized when inventories are consumed in operations.
34
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
(n) Deferred Charges
Deferred charges reported in the Electric Fund include costs incurred in connection with the issuance of the 2002 Certificates of Participation
Series A and B amortized over 30 years. It also includes the buyout cost of the Calpine energy purchase contract amortized over 9.5 years. The
deferred charges reported in the Wastewater Fund include costs incurred on the issuance of the 1991 Certificates of Participation amortized over
32.5 years and the costs incurred on the issuance of the 2003B and 2004A Certificates of Participation amortized over 20 years.
(o) Capital Assets
Capital assets, which include land, buildings and improvements, machinery and equipment, vehicles, infrastructure (e.g., streets, streetlights,
traffic signals, sidewalks, and bridges), and electric lines, wastewater lines and storm drains are reported in the applicable governmental or
business -type activities columns in the government -wide financial statements and in the proprietary funds financial statements. Capital assets
are defined by the City as assets with individual cost of $3,000 or more and have an estimated useful life in excess of two years. Such assets
are recorded at historical cost. Donated capital assets are recorded at estimated fair market value at the date of donation. Capital outlay is
recorded as expenditures in the General and other governmental funds and as assets in the government -wide financial statements to the extent
the City's capitalization threshold is met.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset useful lives are not capitalized.
As required by the Governmental Accounting Standards Board Statement No. 34, beginning July 1, 2002, the City has capitalized infrastructure,
primarily its network of streets, as part of the capital assets shown in the governmental activities column on the government -wide statement of
net assets. This capitalization included infrastructure that could be identified and has been acquired since July 1, 1980.
Depreciation of capital assets is provided on the straight-line basis over the following estimated useful lives:
Years
Buildings and improvements 3-40
Machinery and equipment 2-40
Vehicles 5-15
Infrastructure 10-50
(p) Compensated Absences/Vacation and Sick Leave
Accumulated vacation and vested sick leave benefits are accrued when incurred in the government -wide financial statements and the proprietary
funds financial statements. A liabilityfor these amounts is reported in the governmental funds only if they have matured.
35
(2)
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
(q) Self -Insurance
The City is self-insured for general liability, workers' compensation, dental benefits, unemployment and long-term disability. Various City funds
are charged premiums for the City's self-insurance liability, which is accounted for as an internal service fund. The accrued liabilityfor estimated
self-insured claims represents an estimate of the eventual loss on claims arising priorto year-end including claims incurred but not reported.
(r) Fund Equity
In the fund financial statements, governmental funds report reservations of fund balances for amounts that are not available for appropriation or
are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that
are subject to change.
(s) Statement of Cash Flows
A statement of cash flows is presented for proprietary fund types. For purposes of reporting cash flows, the City considers all highly liquid
investmentswith maturities of three months or less when purchased and investments maintained in the pool to be cash equivalents.
(t) Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Actual results could differ from those estimates.
CASH AND INVESTMENTS
Cash and investments as of June 30, 2007 are classified in the accompanying financial statements as follows:
Statement of net assets:
Cash and investments
Restricted assets
Fiduciary funds cash and investments:
Private -purpose trust funds
Agency fund
Total cash and investments
36
$ 31,120,422
31,622,053
848,151
589,683
$ 64,180,309
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30.2007
Cash and investments as of June 30, 2007 consist of the following:
Cash on hand $ 2,071
Depositswith financial institutions 17,140,453
Restricted cash with fiscal agent 300,000
Investments 46.737.785
Total cash and investments $ 64,180,309
a) Authorized Investments
The City has adopted an investment policy pursuant to Government Code Section 53601 which authorizes the City to invest in obligations of the
U.S. Treasury, U.S Government agency securities and instruments, commercial paper rated A-1 by Standard & Poor's or P-1 by Moody's
Commercial Paper Record, bankers' acceptances, certificates of deposit, mutual funds, government investment contracts, medium term notes
as permitted by the Government Code, and the State of California Local Agency Investment Fund (LAIF). The City is not authorized to enter into
reverse repurchase agreements. The City selects its investments based on safety, liquidity and yield.
b) Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by the provisions of the debt agreements and to the extent that they are
permissible investments of funds of the City. The following table below identifies the permitted investment types authorized per the City's
investment policy. The table also identifies certain provisionsthat address interest rate risk, credit risk, and concentration of credit risk.
[cel
Maximum
Maximum%a of
Maximum Investment
Minimum Credit
Permitted Investments/Deposits
Maturity
Portfolio
in One issuer
Quality
U.S. Treasury Obligations
5 years
100%
AAA
U.S. Agency Securities
5 years
100%
AAA
Banker's Acceptances
180 days
40%
25%
AAA
Certificates of Deposit
5 years
100%
33%
Negotiable Certificates of Deposit
5 years
30%
Commercial Paper
270 days
40%
AAA
California State Local Agency Investment Fund (LAIF)
Indefinite
100%
$40m per account
unrated
Money Market Mutual Funds
Indefinite
20%
AAA
Guaranteed investment contracts (GICs)
5 years
100%
AA -
Medium term Notes
5 years
30%
AAA
[cel
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
c) Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the
maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. Information about the sensitivity of the
fair values of the City's investments to market interest rate fluctuations is provided by the following table that shows the maturity date of each
investment:
Investment as of June 30,2007
LAI F
Money Market Mutual Funds
Equities and options
Held by bond trustee:
Money Market Mutual Funds
Guaranteed investment contracts (GICs)
Total
Maturity
Less than One Year
$ 23,088,384
585,820
152,511
20,741,220
Maturity
One to Five Years
Total
$ 23,088,384
585,820
152,511
20,741,220
2,169,850 2,169,850
$ 44,567,935 2,169,850 $ 46,737,785
Investments in equities are shares of stocks received by the Library as an endowment from a private citizen.
d) Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by
the assignment of a rating by a nationally recognized statistical rating organization. The money market funds are registered under the Federal
Investment Company Act of 1940, whose shares are registered underthe Federal Securities Act of 1933, and have a rating by S &P of "AAAm-
G," "AAA -m" or "AA -m" and rated by Moody's "Aaa," "Aa1" or "Aa2." The GICs and LAIF do not have a rating provided by a nationally
recognized statistical rating organization.
e) Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the
California Government Code. Investments in LAIF and money market mutual funds are not subjectto the concentration of credit risk disclosure.
38
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
f) Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to
recover collateral securities that are in the possession of an outside parry. The California Government Code and the City's investment policy do
not contain legal or policy requirementsthat would limit the exposure to custodial risk for deposits, other than the following provision for deposits:
The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging
securities in an undivided collateral pool held by a depository regulated under state law. The market value of the pledged securities in the
collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to
secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured deposits. $17,441,229 of the City's
deposits with financial institutions, which exceeded federal depository insurance limits, was collateralized in this fashion.
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a
government will not be able to recover the value of the investment or collateral securities that are in the possession of another party. The
California Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk
for investments. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities.
Custodial credit risk does not apply to a local government's indirect investment in securities through the use of mutual funds or government
investment pools such as LAIF.
g) Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the
oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial
statements at amounts based upon the City's pro -rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the
amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are
recorded on an amortized cost basis.
The total amount invested by all public agencies in LAIF at June 30, 2007 was $19.7 billion. LAIF is part of the California Pooled Investment
Account (PMIA), which at June 30, 2007 had a balance of $65.6 billion. Of this amount, 3.466% were invested in structured notes and asset-
backed securities. PMIA is not SEC -registered, but is required to invest according to California State Code. The average maturity of PMIA
investmentswas 176 days as of June 30,2007.
The Local InvestmentAdvisory Board has oversight responsibility for LAIF. The Board consists of five members as designated by state statute.
The value of the pool of shares in LAIF, which maybe withdrawn, is determined on an amortized cost basis, which is different than the fair value
of the pooled treasury's portion in the pool. Withdrawals from LAIF are done on a dollar for dollar basis.
39
(3)
(4)
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
In accordance with GASB 31, investments are marked to fair values annually and an adjustment is made to each fund accordingly. However,
actual daily activity is done on a dollarto dollar basis and only a withdrawal from the pool size that jeopardizes pool participants would cause the
withdrawal to be done at market value.
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
Receivables of the General Fund, Electric, Wastewater and Water funds are reported net of u ncol lectible amounts. Total allowance provided for
uncollectible amounts related to receivables of the current period are as follows:
Uncollectibles related to late charges and services
Uncollectibles related to electric sales and services
Uncollectibles related to wastewater services
Uncollectibles related to water sales and services
Total uncollectiblesof the currentfiscal year
INTERFUND RECEIVABLES/PAYABLES
Interfund receivables and payables at June 30, 2007 are as follows:
Due from
Other governmental
Water Fund
Other governmental
Due to
General Fund
Other governmental
Other governmental
$ 22,300
213,000
56,700
68,800
$ 360,800
Amount
$ 149,568
475,262
502,802
$ 1,127,632
"Due to" and "due from" balances are recorded primarily when funds overdraw their share of pooled cash or when there are short-term loans
between funds. The $ 149,568 and $502,802 represent cash deficits in other governmental funds. The Water Fund had a cash deficit of
$475,262.
Advances from
General
Other governmental
Water
Advancesto
Other governmental
Other governmental
Other governmental
40
Amount
$ 272,800
646,770
1,225,173
$ 2,144,743
(5)
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
The $272,800 from the General Fund to the Other governmental is an advance used for the start up costs of a redevelopment agency. The
$646,770 advance from Other governmental was used for the Lower Sacramento Road expansion project and other street projects. The
$1,225,173 advanced from the Water Fund was used for the construction of Fire Station #4.
TRANSFERS
Transfers for the year ended June 30, 2007, are summarized as follows:
Transfers in
Other
Transfers out:
General
Governmental Wastewater
Total
General $
3,401,814 $
3,401,814
Other governmental
332,990
401,542
734,532
Electric
2,702,736
2,702,736
Wastewater
939,533
123,000
1,062,533
Water
962,055
2,377,724
3,339,779
Total $
4,937,314
3,926,356 2,377,724$
11,241,394
During the year, various interfund transfers were made to finance expenditures, subsidize operating losses and service debt.
Transfers out from Other Governmental to the General Fund of $332,990 include transfers of $115,130 from Fire Facilities Impact fees to cover
lease payment of the new fire truck; $50,000 to reimburse the General Fund for the costs associated with the administration of the IMF program;
$164,760 for engineering costs of services; and $3,100 for the Arts in Public Places program.
The $2,702,736 transfer out from the Electric Fund is for cost of services reimbursement to the General Fund, $939,533 from Wastewater
includes cost of services of $908,793 and engineering cost of $30,740. The $962,055 from Water includes $909,259 for cost of services and
$52,796 for engineering costs.
The $3,401,814 transfers out from the General Fund to Other Governmental represent transfers of $1,682,842 to the Debt Service Fund for the
principal, interest and fiscal charges required to pay the 2002 Certificates of Participation; $300,000 to the Community Development Fund;
$1,337,271 to the Vehicle and Equipment Replacement Fund which include $1,012,010 for vehicles, $50,000 for equipment, $165,000 for
information systems replacements and $110,261 for photocopiers; $54,789 for the Blakely Pool maintenance work; $16,000 for benches and
tables at Lodi Lake; $8,680 for fire prevention tools and $2,232 for sidewalk repairs.
41
(6)
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
The transfer out of $401,542 from Other Governmental to Other Governmental includes $300,000 transferred from the Capital Outlay Reserve
Fund to the Community Development Fund; and the annual transfer of $96,106 to the Debt Service Fund for the principal and interest payment
of the City's Measure K loan from San Joaquin Council of Governments for the construction costs incurred for the Highway 12/Kettleman
Lane/Highway 99 Interchange Improvements project and transfer of $5,436 for Fleet replacement.
The $123,000 transfer out from Wastewater Fund to the Other Governmental is for the reimbursementof additional cost of street sweeping. The
transfer of $2,377,724 from the Water Fund to the Wastewater Fund is for the reimbursementof PCE/TCE charges.
CAPITAL ASSETS
Capital assets activity of the primary governmentfor the year -ended June 30, 2007, was as follows:
Governmental activities
Capital assets, not being depreciated:
Land
Work of art
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings and improvements
Machinery and equipment
Vehicles
Infrastructure
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings and improvements
Machinery and equipment
Vehicles
Infrastructure
Total accumulated depreciation
Total capital assets, being depreciated, net
Governmental activities capital assets, net
Balance
Balance
June 30,2006 Increases Decreases June 30,2007
24,016,374
62,024
24,016,374
62,024
3,200,590 843,916 (1,298,914) 2,745,592
27,278,988 843,916 (1,298,914) 26,823,990
56,812,827
7,772,000 613,192
8,847,785 216,353
56,812,827
8,385,192
9,064,138
107,501,719 5,328,645 112,830,364
180,934,331 6,158,190 187,092,521
17,528,749 1,491,412
6,691,503 361,728
7,106,506 482,935
19,020,161
7,053,231
7,589,441
39,350,670
5,024,893
44,375,563
70,677,428
7,360,968
78,038,396
110,256,903
(1,202,778)
109,054,125
$ 137,535,891
(358,862)
(1,298,914)$ 135,878,115
42
Business -type activities
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings and improvements
Machinery and equipment
Vehicles
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings and improvements
Machinery and equipment
Vehicles
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Balance Balance
June 30,2006 Increases Decreases June 30,2007
$ 5,247,806
$ 5,247,806
19,700,032 7,748,007 (1,079,758) 26,368,281
24,947,838 7,748,007 (1,079,758) 31,616,087
34,461,202
116,178,355 18,841,846
34,461,202
135,020,201
6,931,878 633,920 7,565,798
157,571,435 19,475,766 177,047,201
8,071,034
860,415
8,931,449
32,688,648
3,972,421
36,661,069
4,943,362
471,609
5,414,971
Total accumulated depreciation
45,703,044
5,304,445
51,007,489
Total capital assets, being depreciated, net
111,868,391
14,171,321
126,039,712
Business -type activities capital assets, net $
136,816,229
21,919,328
(1,079,758)$ 157,655,799
43
(7)
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Depreciation expense was charged to functiontprograms of the primary government as follows:
Governmental activities:
General government $ 646,129
Public protection 941,514
Publicworks 5,135,138
Community development 3,190
Library 31,949
Parks and recreation 601,601
Internal service funds 1,447
Total depreciation expense - governmental activities $ 7,360,968
Business -type activities:
Electric $ 1,685,118
Wastewater 1,909,915
Water 1,106,609
Transit 602,803
Total depreciation expense - business -type activities $ 5,304,445
OPERATING LEASES
The City is obligated under various operating leases for the use of buildings and office space. Total costs for such leases were $151,995 for the
year ended June 30,2007.
Future minimum lease payments required by lease agreementsthat have initial or remaining noncancellable lease terms of one year or more as
of June 30, 2007, are as follows:
FiscalYears Ending
2008 $ 152,036
Total minimum lease payments required
under operating leases $ 152,036
44
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
8) LONG-TERM OBLIGATIONS
The following is a summary of debt transactions of the City for the year ended June 30, 2007:
Governmental activities:
Compensated absences
2002 Certificates of Participation
Note payable
Loan payable
Capital leases
Self-insurance liability
Governmental activity long-term liabilities
Business -type activities:
Compensated absences
California Safe Drinking Water Note Payable
Certificates of Participation:
1991 Certificatesof Participation
Less deferred amounts:
For issuance discounts
Net
4.5-6.6% 9,010,000
(296,753)
8,713,247
45
(210,000) 8,800,000 225,000
14,475 (282,278) (14,475)
(195,525) 8,517,722 210,525
Amounts
Due Within
Interest Rates
June 30,2006
Additions
Reductions
June 30,2007
One Year
$
9,865,159
3,596,531
(3,078,297)
$ 10,383,393 $
2,692,054
3.0-5.0%
24,510,000
(535,000)
23,975,000
555,000
5.0%
245,000
245,000
4.0%
278,513
(91,233)
187,280
92,828
5.3-5.39%
929,937
(273,823)
656,114
249,624
7,083,000
1,578,383
(2,265,383)
6,396,000
2,265,383
$
42,911,609
5,174,914
(6,243,736)
$ 41,842,787 $
5,854,889
Amounts
Due Within
Interest Rates
June 30,2006
Additions
Reductions
June 30,2007
One Year
$
2,172,530
519,790
(610,663)
$ 2,081,657 $
519,790
3.41%
2,076,905
(158,489)
1,918,416
163,810
4.5-6.6% 9,010,000
(296,753)
8,713,247
45
(210,000) 8,800,000 225,000
14,475 (282,278) (14,475)
(195,525) 8,517,722 210,525
2002 Certificates of Participation A & B
Less deferred amounts:
From refunding
Net
2002 Certificates of Participation C & D
Add deferred amounts:
For issuance premium
Total
2003 Certificates of Participation B
Add deferred amounts:
For issuance premium
Total
2004 Certificates of Participation
Add deferred amounts:
For issuance premium
Total
Total Certificates of Participation
Business -type activity long-term liabilities
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Interest Rates 'June 30,2006
Variable 46, 760, 000
(6,880,542)
39,879,458
1.54-5.25% 38,645,000
361,004
39,006,004
2.0-5.0% 4,630,000
70,759
4,700,759
2.0-5.5% 26,295,000
Amounts
Due Within
Additions Reductions June 30,2007 One Year
46,760,000
286,688 (6,593,854) (286,688)
286,688 40,166,146 (286,688)
(2,350,000) 36,295,000 2,305,000
(65,636) 295,368 65,636
(2,415,636) 36,590,368 2,370,636
(190,000) 4,440,000 195,000
(4,102) 66,657 4,102
x94,102) 4,506,657 199,102
(915,000) 25,380,000 935,000
388,306 (21,277) 367,029 21,277
26,683,306 (936,277) 25,747,029 956,277
118,982,774 (3,454,852) 115,527,922 3,449,852
$ 123,232,209 519,790 (4,224,004)$ 119,527,995 $ 4,133,452
Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above
totals for governmental activities. At year-end $6,396,000 of internal service funds self-insurance liability and $172,427 of compensated
absences were included in the above amounts. Also, for the governmental activities, compensated absences are generally liquidated by the
General Fund and the internal service funds.
C11
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Long-term debt payable at June 30, 2007, comprised of the following individual issues:
California Safe Drinking Water Note Payable
The City entered into a contract on October 16, 1991, with the State of California Department of Water Resources to assist the City in financing
the construction of water wells enabling the City to meet safe drinking water standards established by the State. The original amount of the note
was $3,129,828 and is secured by the project and a pledge of user fees collected by the Water Enterprise Fund. Semiannual payments of
$113,988, are payable each October 1 and April 1 through 2017.
Annual debt service requirementsto maturity of water note payable are as follows:
Fiscal
Year
Ending
Business -type
Activities
June 30,
Principal
Interest
2008
$ 163,810
$ 64,166
2009
169,695
58,281
2010
175,409
52,567
2011
181,442
46,534
2012
187,602
40,374
2013-2017
1,040,458
99,422
Total
$ 1,918,416
$ 361,344
47
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Note Payable
The City issued a $245,000 promissory note to James E. Dean and Carol Dean, as trustees of the James E. Dean Family Trust, for the purchase
of 307 W. Elm Street property, which is the site of the new Public Safety Building. Interest is payable quarterly and principal is due on April 1,
2012.
Annual debt service requirementsto maturity of the note payable are as follows:
Fiscal
Year
Ending
June 30,
2008
2009
2010
2011
2012
Total
Governmental Activities
Principal
245,000
$ 245,000
Interest
$ 14,700
14,700
14,700
14,700
11,025
$ 69,825
Loan Payable
The City entered into an agreement and issued a promissory note to San Joaquin County Council of Governments, a joint powers agency acting
as the San Joaquin County Transportation Authority, in the amount of $840,000 on February 5, 1999 for the purpose of funding the Kettleman
Lane/SR 99 Interchange project. The balance remaining as of June 30, 2007, is $187,280. Interest and principal is due and payable annually
and matures on July 1, 2009.
Annual debt service requirementsto maturity of loan payable are as follows:
Fiscal
Year
Ending
June 30,
2008 $
2009
Total $
GovernmentalActivities
Principal
92,828
94,452
187,280
48
Interest
3,277
1,653
$ 4,930
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Certificates of Participation
$11,170,000 Certificates of Participation (1991 Wastewater Treatment Plant Expansion Refunding Project) were sold in December 1991 for the
repayment of the 1988 Wastewater Treatment Plant Expansion Project at a lower interest rate with approximately $1,400,000 of additional
proceeds. Principal is payable annually on August 1 in amounts from $100,000 to $760,000 with final payment due August 1, 2026.
$5,000,000 California Statewide Communities Development Authority Water and Wastewater Revenue Bonds were issued on October 7, 2003.
The City of Lodi along with the City of Fort Bragg issued $9.855 million 2003 Series B revenue bonds through the California Statewide
Communities Development Authority (the "Authority") pooled financing program. The City of Lodi's portion is $5.0 million for the upgrade of its
wastewater facilities. Principal is payable annually on October 1 in amounts from $185,000 to $365,000 with final payment due October 1, 2023.
The Authority's Water and Wastewater Pooled Financing Program is available to California water and wastewater agencies to facilitate the
financing or refinancing of capital improvements. The program is available to California cities and special districts that operate water or
wastewater enterprises. The Authority is authorized pursuant to Chapter 5 of Division 7 of Title 1 of the California Government Code to issue
bonds to finance and refinancewater and wastewater public capital improvements of local agencies located throughout California.
$27,360,000 Certificates of Participation (2004A COP) were issued on May 12, 2004 to provide funds to finance the costs of certain
improvements to the wastewater collection, treatment and disposal system of the City. Principal is payable annually on October 1 in amounts
from $170,000 to $2,070,000 with final payment due October 1, 2024.
$26,745,000 Certificates of Participation (2002 COP) were issued in January 2002 to provide funds to finance the costs of constructing,
furnishing and equipping a new police building and jail for the City; to finance portions of certain other projects and to refund the outstanding
1995 and 1996 Certificates of Participation. As of June 30, 2007, there are no outstanding balances of these refunded Certificates. The 1995
Certificates of Participation (1995 COP) were sold in October 1995 to finance the City Downtown Revitalization and the Cherokee Lane
Beautification projects. The 1996 Certificates of Participation (1996 COP) were sold in August 1996 to finance the construction of the Hutchins
Street Square Conference and Performing Arts Center. Principal is payable annually on October 1 in amounts from $730,000 to $1,600,000 with
final payment due October 1, 2031.
$46,760,000 2002 Variable Rate Demand Series A and $8,400,000 2002 Taxable Series B Electric System Revenue Certificates of Participation
were sold in January 2002. The proceeds of the 2002A Certificates of Participation were used to advance refund the 1999 Electric System
Certificates of Participation Series A and the 1999 Series B Capital Appreciation certificates, The 1999 Series A and Series B Revenue
Certificates of Participation were sold on August 18, 1999, to provide funds to finance the costs of certain improvements to the distribution and
transmission facilities of the City's Electric System. As of June 30, 2007, the outstanding balance of the advanced refunded certificates is
$43,957,682 and will be called in full on January 15, 2009. The proceeds of the 2002B Certificates were deposited in the Rate Stabilization Fund
and applied to certain power purchase costs of the City. Principal for Series A is payable annually beginning 2011 to 2032 in amounts ranging
from $1,175,000 to $3,460,000. Series B was fully paid as of June 30, 2005.
49
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
The interest rate on the 2002A Certificates is determined based on the "Weekly Rate Index" for weekly interest rate periods. "Weekly Rate
Index" is defined as The Bond Market Association Municipal Index as of the most recent date for which such index is published.
$21,225,000 Revenue Certificates of Participation 2002 Series C and $22,740,000 Revenue Certificates of Participation Series D were issued to
buyout the energy purchase agreementwith Calpine.
In February 2001, the City entered into an energy purchase agreement (the Original Agreement) with Calpine Energy Services L.P. (Calpine) to
purchase 25 MW of energy at $65/mwh for a ten-year period beginning January 1, 2002. Since the execution of the Original Agreement, actions
of the State in connection with the energy market conditions, including the initiation of conservation programs, and other factors, have resulted in
lower electric load requirements and reduced energy costs throughoutthe State. Asa result, the City's need for the energy purchased under the
Original Agreement to serve its load has been reduced. The Original Agreement was amended on September 4, 2002, and was divided into
three parts. The City sold its interests in the energy purchased under the Original Agreement to Calpine and nets the payments due from the
City with respect to its purchase of such energy against the payments due from Calpine with respect to its purchase of the City's rights to such
energy. On November 21, 2002, the City issued $21,225,000 Revenue Certificates of Participation 2002 Series C and $22,740,000 Revenue
Certificates of Participation 2002 Taxable Series D to buy out the amended contract in the amount of $42,406,175.
The various indentures contain significant limitations and restrictions on annual debt service requirements, maintenance of and flow of moneys
through various restricted accounts and minimum revenue bond coverage. The City is in compliance with all such significant limitations and
restrictions.
Interest Rate Swaps
1999 $42 Million Forward Basis Swap Termination
2003 $42 Million Fixed -to -Floating Swap Termination
As a means to lower its borrowing costs, the City executed a forward floating -to -floating ("Basis") swap in connection with its existing
$42,000,000 Electric System Revenue Certificates of Participation, 1999 Series A and B. The intention of the swap was to provide protection
against rising short-term interest rates since the City's net payment increases as rates rise. On July 15, 2003, the City entered into a
$42,000 000 basis swap with Citigroup Financial Products Inc. The City pays interest based on The Bond Market Association Municipal Swap
Index TU (BMA) in return for a 74.25% I -Month London Interbank Offered Rate (LIBOR) starting January 15, 2004 with semi-annual payments
thereafter until termination date of September 29, 2014.
On April, 16, 2003, the City entered into a $42,000,000 Fixed -to -Floating swap with Citigroup Financial Products Inc. The City pays BMA plus
100 basis points in return for a fixed receiptof 4% starting July 15, 2003 with payments semi-annually thereafter until termination date of January
15, 2009.
50
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
The City terminated both swaps effective February 7, 2007, to manage risk exposure. On June 6, 2006, Fitch Ratings downgraded the rating on
the City's Electric system's certificates of participation to BBB minus that had an impact on the existing interest rate swap agreements. The
decline in the City's rating triggered a collateral posting requirement of $450,000. Although the City is not expecting another downgrade, any
further decline in rating would require termination of the swaps that could cause a financial penalty to the City contingent on market conditions.
In full consideration of all obligations with respect to the 1999 Forward Basis Swap termination the City paid Citigroup Financial Products Inc.
$426,785 and the City received from Citigroup Financial Group Inc. $429,312 with respect to the 2003 Fixed -to Floating Swap termination, a net
amount of $2,527 for both transactions.
2002 $46.8 Million Step -Up Coupon Swap
Objective:
In connection with its issuance of $46,760,000 of Electric System Revenue Certificates of Participation 2002 Variable Rate Demand Series A, the
City entered into a swap transaction with Salomon Smith Barney in January 2002. The intention of the swap was to change the City's variable
interest rate on the Certificates to a synthetic fixed rate that steps up over time. The swap was structured with step-up coupons in order to
provide the City with lower debt service in the earlier years of the transaction.
Terms:
Under the swap, the City pays Citigroup (previously Salomon) a fixed rate with an initial coupon of 2.503%. Beginning July 1, 2005, the swap
coupon stepped up to 3.749% and then steps up to 4.945% on July 1, 2010 until maturity. In exchange, the City receives an initial variable rate
equal to 59.65% of the I -month London Interbank Offered Rate (LIBOR). Beginning January 1, 2004, the percent of LIBOR received by the City
stepped up to 60.56% and then steps up to 62.92% of LIBOR on January 1, 2007 until maturity. The 4.945% coupon in the final period reflects
the above -market fixed rate required to offset the first two periods' below-market fixed rates of 2.503% and 3.749% respectively. The effective
at -market fixed rate for the entire swap term equals 3.85% or approximately 61.71 % of LIBOR. The notional amount of the swap matches the
notional amount of the Certificates outstanding in each year. The Certificates' variable-rate coupons are assumed to be based on The Bond
Market Association Municipal Swap Index TM (BMA).
The Certificates and related swap mature on July 1, 2032. As of June 30, 2007, rates were as follows:
51
Terms
Rates
Interest rate swap:
Fixed paymentto counterparty
Fixed
3.74900%
Variable payment from counterparty
62.92% of LIBOR
(3.34793%)
Net interest rate swap payments
0.40107%
Variable rate bond payments
BMA
3.54104%
Synthetic interest rate on bonds
3.94211%
51
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
FairValue:
As of June 30, 2007, the swap had a fair value of ($4,840,055). The negative fair value of the swap is a result of the decline in interest rates
since the inception date of the swap. The fair value was estimated using the zero-coupon method. This method calculates the future payments
required by the swap, assuming that the current forward rates by the yield curve correctly anticipate future spot rates. These payments are then
discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon rate bonds due on the date of each future net
settlement on the swap.
Credit Risk:
As of June 30, 2007, the City was not exposed to credit risk because the swap had a negative fair market value. However, should interest rates
change and the fair value of the swap becomes positive, the City would be exposed to credit risk in the amount of the swap's fair value. The
counterparty was rated Aa I by Moody's Investors Service, AA- by Standard & Poor's, and AA+ by Fitch Ratings. To mitigate the potential for
credit risk, the counterparty is required to post collateral should the fair value exceed certain thresholds. In the event of a downgrade of the
counterparty below AAA by Standard & Poor's, the threshold amount is $10 million.
Basis Risk:
The swap exposes the City to basis risk should the relationship between LIBOR and BMA converge, changing the synthetic rate on the
Certificates. If a change occurs that results in the rates' moving to convergence, the expected cost savings of the swap may not be realized.
Termination Risk:
The swap contract uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as
failure to pay and bankruptcy. The swap contract is insured by MBIA Insurance Corporation. The Schedule to the MasterAgreement includes
an "additional termination event." That is, the swap maybe terminated by the City if both the insurer and the City's credit rating are downgraded
below AA-,Aa3 and the City's credit rating falls below Baa3 as determined by Moody's Investor Service or BBB- as determined by Standard &
Poor's. If the swap is terminated, the Certificates would no longer carry a synthetic fixed interest rate. Also, if at the time of an early termination
of the swap, if the swap has a negative fair value, the City would be liable to the counterparty for a payment equal to the swap's fair value.
Swap payments and associated debt.
Using rates as of June 30, 2007, debt service requirements of the variable-rate debt and net swap payments, assuming current interest rates
remain the same, for their term were as follows. As rates vary, variable rate bond interest payments and net swap payments will vary.
52
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
2002 Electric Certificates of Participation Series
Fiscal Year
Variable -Rate Bonds
Interest Rate
June 30,
Ending June 30
Principal
Interest
Swaps, Net
Total
2008
$
1,655,790
187,540
$ 1,843,330
2009
610,000
1,655,790
187,540
1,843,330
2010
2013-2017
1,655,790
187,540
1,843,330
2011
3,792,545
1,655,790
467,165
2,122,955
2012
1,175,000
1,634,988
737,407
3,547,395
2013-2017
6,885,000
7,486,200
3,376,406
17,747,606
2018-2022
8,890,000
6,097,847
2,750,234
17,738,081
2023-2027
11,495,000
4,301,566
1,940,081
17,736,647
2028-2032
14,855,000
1,982,008
893,920
17,730,928
2033
3,460,000
61,260
27,629
3,548,889
$ 46,760,000
28,187,029
10,755,462
$ 85,702,491
Annual debt service requirementsto maturity for certificates of participation are as follows:
Fiscal Year Ending
Governmental Activities
Principal
June 30,
Principal Interest
2008 $
555,000 $
1,123,642 $
2009
565,000
1,104,874
2010
590,000
1,084,071
2011
610,000
1,060,956
2012
630,000
1,036,156
2013-2017
3,580,000
4,737,423
2018-2022
4,485,000
3,792,545
2023-2027
5,695,000
2,556,375
2028-2032
7,265,000
943„625
2033
Total $
23,975,000 $
17,439,667 $
53
Business -type
Activities
Principal
Interest
3,660,000
$ 5,194,335
6,640,000
4,955,681
4,390,000
4,774,101
4,610,000
4,583,553
6,040,000
4,351,419
35,655,000
16,305,796
20,900,000
10,527,198
21,465,000
5,275,815
14,855,000
1,982,008
3,460,000
61,260
121,675,000
$ 58,011,166
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Capital Leases
The City has entered into lease agreements for financing the acquisition of two fire trucks and the improvements to the leased Finance Building.
These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the presentvalue of their future
minimum lease payments as of inception date. The assets acquired through capital leases are as follows:
Governmental
Activities
Asset:
Vehicles $2,307,123
Leasehold improvements 124,478
Less accumulated depreciation (1,347,745)
Total $ 1.083.856
The presentvalues of future minimum capital lease payments as of June 30, 2007, are as follows:
Fiscal Years
Ending
2008
2009
2010
2011
Total minimum lease payments
Less amounts representing interest
Presentvalue of minimum capital lease payments
$ 279,348
148,003
148,003
148,003
723,357
(67,243)
656,114
Special Assessment District Debt
The City issued limited obligation improvement bonds on July 22, 1996, for the "Lodi Central City Revitalization Assessment District." These
bonds have no governmental commitment and debt service is recorded in an Agency Fund. These bonds were issued under the Improvement
Act of 1915 and will mature in the year 2011. The City's liability in the event of delinquent assessment shall not exceed the balance of the
established Reserve Fund. The amount outstanding as of June 30, 2007, is $735,000.
54
(9)
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Industrial Development Bonds
The City of Lodi has lent its name to the City of Lodi Industrial Development Authority for the purpose of issuing the following industrial
development bonds: Minton Corporation $5,000,000; Dart Corporation $8,000,000; Wallace Computer Services $3,000,000; and Luster -Cal
Nameplate Corporation $3,000,000. These bonds are special obligation bonds only, payable solely out of the bond revenues or other sources of
the above companies and are not a pledge of the general credit of the City. The City is not obligated for the redemption or administration of
these industrial development bonds.
Woodbridge Irrigation District Bonds
On October 8, 2003, the City lent its name to the Woodbridge Irrigation District (the "District") in the procurement of $11.745 million 2003
Revenue Certificates of Participation, to provide funds to finance the costs of construction of a new diversion dam on the Mokelumne River and
related facilities of the water district. A significant portion of the District's sources of payment for the 2003 Certificates are expected to be derived
from amounts to be received by the District from the City of Lodi pursuant to an Agreement for purchase of water from the Woodbridge Irrigation
District by the City of Lodi, dated May 13, 2003 (the "Lodi Water Sales Agreement"). Underthe agreement, the City will purchase 6,000 acre feet
of water per annum from the District for 40 years.
NATUREAND PURPOSE OF REPORTED FUND EQUITY
The following is a summary of reserved, unreserved -designated and unreserved -undesignated fund balances at June 30, 2007:
Reserved for:
Library
Encumbrances
Advances to other funds
Inventory
Total Reserved
U n reserved-designatedfor:
Specific projects and programs
Total Designated
Unreserved - undesignated
Total Fund Balances
Other
General Governmental
$ 659,572
182,101
272,800
29,407
1,143, 880
1,226,671
646,770
1,873,441
12, 851,182
Total
659,572
1,408,772
919,570
29,407
3,017,321
12, 851,182
12, 851,182 12, 851,182
5,175,522 5,175,522
$ 6,319,402 14,724,623 $ 21,044,025
55
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Reserved Fund Balance
Reserved representsthat portion that is legally segregated for specific purposes and is not available for discretionary appropriation.
Unreserved -Designated Fund Balance
Designated represents that portion for which the City has made tentative plans.
Unreserved-UndesignatedFund Balance
Undesignated representsthat portion which is availablefor budgeting in future periods.
(10) DEFINED BENEFIT PENSION PLAN
(a) Plan Description
The City of Lodi contributes to the California Public Employees' Retirement System (PERS); an agent multiple-employerpublic employee defined
benefit pension plan. PERS provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members
and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California.
Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may
be obtained from their Executive Office- 400 P Street, Sacramento, CA 95814.
(b) Funding policy
Participants are required to contribute 7% (9% for safety employees) of their annual covered salary. The City makes the contributions required
of City employees on their behalf and for their account. The City is required to contribute at an actuarially determined rate; the current rate is
12.221 %for miscellaneousemployees, 24.108% for fire and police employees, of annual covered payroll. The contribution requirementsof plan
members and the City are established and may be amended by PERS.
(c) Annual Pension Cost
For fiscal 2007, the City's annual pension cost of $4,437,303 for PERS was equal to the City's required and actual contributions. The required
contribution was determined as part of the June 30, 2004, actuarial valuation using the entry age normal actuarial cost method. The actuarial
assumptions included (a) 7.75% investment rate of return (net of administrative expenses) (b) projected annual salary increases that vary by
age, length of service, and type of employment (c) 3.25% payroll growth, and (d) 3.00% inflation. The actuarial value of PERS assets was
determined using techniques that smooth the effects of short-term volatility in the market value of investments over a fifteen -year period
(smoothed market value). PERS unfunded actuarial liability is being amortized as a level percentage of projected payroll on a closed basis.
Amortization of the remaining period varies: (a) safety police plan over 30 years (b) safety fire plan over 30 years, and (c) miscellaneous plan
over 24 years as of June 30,2006.
56
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
(d) Trend Information
Three -Year Trend information($ Amounts in Thousands
(11) POST-RETIREMENT HEALTHCARE BENEFITS
The City provides no post -employment benefits for its employees other than the minimum employer contribution required by statute if the City
remains with CalPers health plan. There are currently 129 retirees of which the City contributed approximately $125,000 towards health care
during the current fiscal year. The City's contributions are financed on a pay-as-you-go basis.
Employees hired prior to July 1, 1994, who retire after ten years of service, however, may elect to convert accumulated sick leave time to
establish an individual medical insurance account. Depending on the bargaining unit of the employee, the value of the insurance account shall
be determined by the following options:
a) Option I- "Bank"
The number of accumulated hours shall be reduced by 16-2/3% and the remaining balance converted into days. The days are then multiplied by
the current monthly premium being paid for the employee and, if applicable, his/her dependents. Fifty percent of that amount will be placed into
an accountto be used by the City to pay medical insurance premiums for the employee and, if applicable, his/her dependents. For each year of
employment over ten years, 2.5% will be added to the 50% used in determining the account amount. Total premiums shall be paid from the
account until its depletion, at which time the benefit ceases.
b) Option II — "Conversion"
The number of accumulated hours is multiplied by 50% and converted into days. The City pays one month's premium for employee and
dependents for each day. For each year of employment in excess often years, 2.5% is added to the 50%. The employee must pay any increase
in premiums.
c) Option III — "Cash -Out"
A retiring employee will be able to choose a cash pay-off of accumulated sick leave at the rate of 30% of base pay per hour.
57
Annual
Percentage
Net
Fiscal Year
Pension
of APC
Pension
Ended
Cost (APC)
Contributed
Obligation
6/30/05
$ 3,614
100%
$0
6/30/06
4,814
100%
$0
6/30/07
4,437
100%
$0
(11) POST-RETIREMENT HEALTHCARE BENEFITS
The City provides no post -employment benefits for its employees other than the minimum employer contribution required by statute if the City
remains with CalPers health plan. There are currently 129 retirees of which the City contributed approximately $125,000 towards health care
during the current fiscal year. The City's contributions are financed on a pay-as-you-go basis.
Employees hired prior to July 1, 1994, who retire after ten years of service, however, may elect to convert accumulated sick leave time to
establish an individual medical insurance account. Depending on the bargaining unit of the employee, the value of the insurance account shall
be determined by the following options:
a) Option I- "Bank"
The number of accumulated hours shall be reduced by 16-2/3% and the remaining balance converted into days. The days are then multiplied by
the current monthly premium being paid for the employee and, if applicable, his/her dependents. Fifty percent of that amount will be placed into
an accountto be used by the City to pay medical insurance premiums for the employee and, if applicable, his/her dependents. For each year of
employment over ten years, 2.5% will be added to the 50% used in determining the account amount. Total premiums shall be paid from the
account until its depletion, at which time the benefit ceases.
b) Option II — "Conversion"
The number of accumulated hours is multiplied by 50% and converted into days. The City pays one month's premium for employee and
dependents for each day. For each year of employment in excess often years, 2.5% is added to the 50%. The employee must pay any increase
in premiums.
c) Option III — "Cash -Out"
A retiring employee will be able to choose a cash pay-off of accumulated sick leave at the rate of 30% of base pay per hour.
57
(12)
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
d) Option IV — "Service Credit"
A retiring employee will be able to convert unused sick leave to service credit for CALPERS retirement purposes.
CLAIMS AND BENEFITS
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to
employees; and natural disasters. The City is self-insured as discussed in the following paragraphs for which liabilities are recorded in the
Internal Service Fund -Claims and Benefits.
The City is self-insured for general liability up to the first $500,000 per occurrencewith claims from $500,000 to $40,000,000 per occurrence and
in the aggregate insured through the California Joint Powers Risk Management Authority. The City never had any settlements that exceeded its
general liability insurance coverage. (See note 14)
The City is self-insured for workers' compensation up to the first $250,000 per claim. Any claims of $250,000 up to California statutory limits are
covered under a purchased policy through the membership with the Local Agency Workers' Compensation Excess Joint Powers Authority.
Workers' compensation coverage increased from $150,000,000 in prior year to $200,000,000 in the current year. The City never had any
settlementsthat exceeded its workers' compensation insurance coverage. (See note 14).
The City is fully self-insured for dental and unemploymentfor its employees.
General liability and workers' compensation claims are administered by an outside agency and all other claims are administered by the City. The
City has accrued a liability of $6,396,000 at June 30, 2007, for all self-insured claims in the Internal Service Fund -Claims and Benefits that
includes an amount for incurred but not reported claims. The liability amount is based on the requirements of Governmental Accounting
Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial
statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be
reasonably estimated. In the opinion of the City, the amounts accrued are adequate to cover claims incurred but not reported in addition to
known claims.
Changes in the self-insurance liabilityfor fiscal years ended June 30, 2007 and 2006 are as follows:
Current -Year
Claims and Changes Claim
Bea inning in Estimates Payments a"
in
05-06 $ 5,140,000 3,455,368 (1,512,368) $ 7,083,000
FY 06-07 $ 7,083,000 1,578,383 (2,265,383) $ 6,396,000
58
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
(13) PARTICIPATION IN JOINT VENTURES
Northern California PowerAgency
The City, along with fourteen other public agencies, is a member of the Northern California Power Agency (NCPA) that was formed in 1968 as a
joint powers agency. Its membership consists of eleven cities with publicly owned electric utility distribution systems, one irrigation district, one
public utility district, one port authority and four other associate member entities. NCPA is generally empowered to purchase, generate, transmit,
distribute and sell electrical energy. Members participate in the projects of NCPA on an elective basis. A commission comprising of one
representative from each member organization governs NCPA. The commission is responsible for the general management of the affairs,
property and business of NCPA. Under the direction of the general manager, the staff of NCPA is responsible for providing various
administrative, operating and planning services for NCPA and its associated power corporations.
Project Financing and Construction
NCPAs project construction and development programs have been individually financed by project revenue bonds collateralized by NCPAs
assignment of all payments, revenues and proceeds associated with its interest in each project. Each Project Participant has agreed to pay its
proportionate share of debt service and other costs of the related project, notwithstanding the suspension, interruption, interference, reduction or
curtailment of output from the project for any reason. Certain of the revenue bonds are additionally supported by municipal bond insurance credit
enhancements.
Increase in Non-defaultinq Proiect Participant's Oriqinal Project Entitlement Percentage
Upon the failure of any Project Participant to make any payment, which failure constitutes a default under the Member Agreement for the
projects, and except as sales and transfers are made pursuant thereto, the Member Agreements provide that Project Entitlementfor each non -
defaulting Project Participant shall be automatically increased for the remaining term of the Member Agreement; pro rata with those of the non -
defaulting Project Participant thereunder; provided, however, that the sum of such increase for any non -defaulting Project Participant shall not
exceed, without written consent of such non -defaulting Project Participant, an accumulated maximum of 25% of the non -defaulting Project
Participant's original Project Entitlement Percentage Share.
General Operatinq Reserve with NCPA
Members of NCPA established a general operating reserve in 1992 for the purposes of providing a vehicle to fund reasonably foreseeable
contingent liabilities. It was setup primarily to provide the following advantages: minimizes the number and dollar amount of reserve that might
otherwise be funded separately in connection with NCPA's individually financed operating plants, projects and programs; provides each member
with flexibility and unilateral control over the determination of what they will fund, how they will fund it and what expenditures from the reservewill
be made on their individual behalf. It provides funding for contingent liabilities that are not budgeted but that may require significant future
expenditures. The reserve is segregated by participant and is refundable on demand by the participant.
59
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
As of June 30, 2007, the City's balance in the NCPA General Operating Reserve, which has been credited with annual interest earnings and
settlements, is $4,790,663.
Proiect Particioation
The NCPA members and their percentage share at June 30,2007,which is the most recent available data, are as follows:
Hydro Combustion Multiple
Geothermal Electric Turbine Capital Transmission
Project Project Project#1 Facilities Project
Alameda
16.8825%
10.00%
13.092%
19.00%
31.8707%
Biggs
0.2270
.120
0.4015
Gridley
0.3360
.213
0.6390
Healdsburg
3.6740
1.66
3.500
6.9343
Lodi
10.2800
10.37
34.780
39.50
20.1330
Lompoc
3.6810
2.30
3.500
5.00
6.9485
Palo Alto
19.66
Plumas-Sierra Rural Electric Coop
.7010
1.69
1.090
1.3363
Roseville
7.8830
15.26
13.251
36.50
14.3798
Santa Clara
44.3905
37.02
25.000
5.9649
Turlock Irrigation District
6.3305
.7950
Ukiah
5.6145
2.04
5.454
10.5970
Bulk power purchased by the City through NCPA amounted to $43,362,499luring the year ended June 30,2007 and is reflected in utilities
expense in the Electric Enterprise Fund.
NCPA Geothermal Proiect
A purchase power agreement with NCPA obligates the City for a 10.28% share of the operating costs and debt service of two of NCPA's 110 -
megawatt steam powered plants, Project Number 2 and Project Number 3. Outstanding long-term debt related to this project was approximately
$127 million at June 30,2006.
60
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30.2007
In addition to federal geothermal leasehold, steam wells, gathering system and related facilities, the project consists of two electric generating
stations (Plant 1 and Plant 2). Each plant has two 55MW turbine generator units utilizing low temperature geothermal steam; associated
electrical, mechanical and control facilities; a heat dissipation system; a steam gathering system; a transmission tapline; and, other related
facilities. Geothermal steam for the project is derived from the geothermal property, which includes wellpads, access roads, steam wells and
reinjection wells.
Calaveras Hydroelectric Proiect
NCPA contracted to finance, manage, construct and operate Hydroelectric Project Number One for the licensed owner, Calaveras County Water
District. In exchange, NCPA has the right to the electric output of the project for 50 years from February 1982. NCPA has also the option to
purchase power from the project in excess of the District's requirementsfor the subsequent 50 years, subject to regulatory approval.
Under a power purchase agreement the City is obligated to pay 10.37% of the debt service and operating costs. At June 30, 2006,
approximately $490 million in long-term debt used to finance this projectwas outstanding.
NCPA Combustion Turbine Proiect
The project consists of five combustion turbine units, each nominally rated at 25 megawatts. Two such units are located in Roseville, two in
Alameda and one in Lodi. The project provides capacity during peak load periods and emergency capacity reserves. Excess capacity and
energy from the project are also sold to other entities from time to time. Under the NCPA power agreement, the City is obligated to pay 34.78%
of the debt service and operating costs. At June 30, 2006 approximately $18 million in long-term debt was outstanding.
Transmission Proiect
The projectwas undertaken to meet certain obligations of NCPA under the NCPA/PG & E InterconnectionAgreement. The project includes an
ownership interest in PG & E's 230kv Castle Rock to Lakeville Substation Transmission Line in Sonoma County, additional firm transmission
rights in that Transmission Line, and a central scheduling and dispatch facility in service at the NCPA headquarters in Roseville, California.
Under a power purchase agreement, the City is obligated to pay 20.13% of the debt service and operating costs. At June 30, 2006,
approximately $4.0 million in long-term debt was outstanding.
Capital Facilities Proiect
The Project consists of one 49.9 megawatt natural gas-fired steam injected combustion turbine generator unit located in Lodi, California.
Wastewater is reclaimed from the City of Lodi's White Slough water pollution control facility, processed to eliminate contaminants, and used in
the turbine to produce steam for power enhancementand emissions control.
61
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Under a power purchase agreement, the City is obligated to pay 39.5% of the debt service and operating costs. At June 30, 2006, approximately
$65.8 million in long-term debt was outstanding.
The following are the most recent available audited condensed financial statements of NCPA:
Combined Balance Sheet
June 30,2006
Assets Liabilitiesand Capitalization
Current assets $ 81,720,000 Current portion of long-term debt $ 36,095,000
Restricted assets 183,347,000 Other current liabilities 42,795,000
Electric plant, net 407,576,000 Other liabilities and deferred credits 150,578,000
Other assets and deferred charges 251,494,000 Long-term debt 664,904,000
Accumulated net revenues 29,765,000
Total assets $ 924,137,000 Total liabilities and capitalization $ 924,137,000
Combined Statementof Revenue and Expenses
Year ended June 30,2006
Sales to participants for resale $ 312,564,000
Operating expenses
Other revenues (expenses)
Future recoverable costs
Net revenues before refunds
Refunds to participants
Net revenues
Accumulated net revenues,
beginning of year
Accumulated net revenues,
end of year
(258,997,000)
(32,747,000)
416.000
Combined Statement of Cash Flow
Year ended June 30,2006
Net cash provided by operating activities $ 108,839,000
Net cash used in investing activities (35,134,000)
Net cash used in capital and related
financing activities (97,504,000)
21,236,000 Net cash used in noncapital
(10,379,000) and related financing activities (24,382,000)
10,857,000 Decrease in cash and cash equivalents (48,181,000)
18,908,000 Cash and cash equivalents, beginning
of year 116,577,000
$ 29,765,000 Cash and cash equivalents end of year $ 68,396,000
At June 30, 2006, NCPA's total outstanding long-term debt was $700,999,000 at an average interest rate of 5%. The current portion of long-term
debt at June 30,2006, was $36,095,000.
62
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Complete financial information for NCPA may be obtained at the following administration office:
Northern California PowerAgency
180 Cirby Way
Roseville, CA 95678
Transmission Agency of Northern California
The Transmission Agency of Northern California (TANC) was organized under the California Government Code pursuant to a joint powers
agreement entered into by fifteen Northern California utilities including the City of Lodi. The purpose of TANC is to provide electric transmission
or other facilities for the use of its members through its authority to acquire, construct, finance, operate and maintain facilities for electric power
transmission. The joint powers agreement provides that the costs of TANC's activities can be financed or recovered through assessment of its
members or user charges through transmission contracts with its members. Each TANC member has agreed to pay a pro rata share of the
costs to operate TANC and has the right to participate in future project agreements. The joint power agreement remains in effect until debt
obligations and interest thereon have been paid, unless otherwise extended by the members.
Increase in Non-defaultina Proiect Particioant'sOriainal Proiect Entitlement Percentaae
Upon the failure of any Project Participant to make any payment, which failure constitutes a default under the Member Agreement for the
projects, and except as sales and transfers are made pursuant thereto, the Member Agreements provide that Project Entitlementfor each non -
defaulting Project Participant shall be automatically increased for the remaining term of the Member Agreement; pro rata with those of the non -
defaulting Project Participant thereunder; provided, however, that the sum of such increase for any non -defaulting Project Participant shall not
exceed, without written consent of such non -defaulting Project Participant, an accumulated maximum of 25% of the non -defaulting Project
Participant's original Project Entitlement Percentage Share.
California -Oregon Transmission Proiect
The project is a 339 -mile long, 500 -kilovolt alternating current transmission project between Southern Oregon and Central California. The project
is operated in coordination with the Pacific AC Intertie as a part of the California -Oregon Intertie (COI) within the Western System Coordinating
Council (WSCC) region. The WSCC approved rating of the COI is 4,800 MW and the Pacific Direct Current Intertie (PDCI) is 3,100 MW for a
combined total of 7,900 MW of transfer capability. Depending on the time of year, operational transfer capability of the combined COI and PDCI
is between 6,900 MW and 7,900 MW.
TANC, California Department of Water Resources (CDWR), Western Area Power Authority (WAPA), and five other parties have agreed to an
Interim Participation Agreement (IPA) under which project participant is granted a percentage entitlement in project transfer capability and is
required to pay a percentage of the costs. Pursuantto the IPA and a subsequent agreement with WAPA, TANC is entitled to use approximately
1,242 MW, and is obligated to pay an average of approximately 73 percent of the operating costs associated with the project.
63
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Under the TANC joint powers agreement, the City is obligated to pay 1.89% of its debt service and operating costs. At June 30, 2006,
approximately $374 million in long-term debt was outstanding of which $14 million is considered current.
Complete financial information for TANC may be obtained at the following administration office:
Transmission Agency of Northern California
3100 Zinfandel Drive, Suite 600
Sacramento, CA 95670
(14) MEMBERSHIP IN INSURANCE POOLS
CaliforniaJoint Powers Risk Management Authority
The City is a member, along with twenty-five other public agencies, of California Joint Powers Risk Management Authority (CJPRMA) organized
under a Joint Powers Agreement pursuant to the California Government Code for the purpose of sharing the risk of catastrophic general liability,
automobile liability and public officials' errors and omissions losses because adequate insurance is not available in the commercial insurance
market. CJPRMA has a twenty-six member Board of Directors, including a director from the City of Lodi. The Board members elect officers of
CJPRMA every two years.
The ultimate cost of the program to the City depends on the catastrophic losses of all members, as well as the City's own loss experience and
will be determined retrospectively five years after the end of the current program year. The City periodically pays deposits to the CJPRMA.
These deposits are recorded as expenditures in the year paid, as they are a reasonable estimate of the actual cost of the program. During the
year ended June 30,2007, deposits of $462,680 were paid to CJPRMA.
The participants at June 30, 2007, are as follows: City of Alameda, MPANC , Chico, Central San Joaquin Valley Risk Management Authority,
Fairfield, Fremont, Livermore, Lodi, Manteca, NCCSIF, Petaluma, Pomona, PERMA, Redding, Redwood Empire Municipal Insurance Fund,
Roseville, San Leandro, San Rafael, Santa Rosa, Santa Barbara Area Joint Powers Insurance Authority, Small Cities Organized Risk Effort,
Stockton, Sunnyvale, Vacaville, Vallejo, and Yolo County Public Agencies Risk Management Insurance Authority.
Complete financial information for CJPRMA maybe obtained at the following administration office:
California Joint Powers Risk ManagementAuthority
2333 San Ramon Valley Boulevard Suite 250
San Ramon, CA 94583-4456
64
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
Local Agency Workers' Compensation Excess Joint Powers Authority
The City, along with thirty-five other public agencies, is a member of the Local Agency Workers' Compensation Excess Joint Powers Authority
(LAWCX), which was formed July 1992, for the purpose of sharing the risk of workers' compensation losses. LAWCX offers $150,000, 250,000,
$350,000, $500,000 and $1 million self-insured retentions (SIR) or a member can attach directly to the purchased excess insurance. LAWCX
coves the layer above the member SIR up to $5 million. The City of Lodi's self-insured retention is $250,000. LAWCX participates in the
California State Association of Counties Excess Insurance Authority (CSAC-EIA) to obtain coverage up to $200 million. The City paid $298,438
in deposits to LAWCX during the fiscal year ended June 30,2007.
The participantsat June 30, 2007, are as follows: Alameda, ABAG, BCJPIA, City of Benicia, CCCTA, CHWCA, Central San Joaquin Valley Risk
Mgmt Authority (CSJVRMA), City of Clovis, City of Coronado, East Bay Regional Park District, City of Encinitas, FASIS, City of Fremont, City of
Gilroy, City of Livermore, City of Lodi, City of Los Gatos, City of Merced, MBASIA, MCLAIA, City of Morgan Hill, City of Newark, PARSAC, City of
Placentia, PERMA, City of Roseville, City of San Leandro, City of Santa Maria, City of Santee, Small Cities Org. Risk Effort (SCORE), City of
South Lake Tahoe, City of Suisun City, City of Vacaville, City of Vallejo, Vector Control JPA and City of Vista.
Complete financial information for LAWCX maybe obtained at the following administration office:
Local Agency Workers' Compensation Excess Joint Powers Authority
1831 K Street
Sacramento, CA 95814
California Transit Insurance Pool
The City, along with thirty-six other public agencies is a member of California Transit Insurance Pool (CaITIP), ajoint powers insurance authority
which was formed for the purpose of sharing the risk of property damage, bodily injury, personal injury and public officials errors and omissions
losses for public transit systems.
Liability protection coverage is provided under two programs:
Program I applies to members who choose to utilize CaITIP's adjuster and /or those with a $0 deductible.
Proaram II applies to members with self-insured retentionswho choose to provide their own adjusting services.
CaITIP purchases excess insurance over its $500,000 retention up to $20 million per occurrence. Each member is provided with $5 million in
excess of the pooled retention and has the option to choose one or both of two additional layers for the full $20 million.
65
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
CaITIP also provides physical damage coverage to its members. This coverage program is optional for all members and offers damage or loss
protection for transit, staff and maintenance vehicles to transit operators. CaITIP self -insures to $100,000, under which members have the
option of five levels of deductible ranging from $500 to $10,000 per vehicle. Claims are administered by the CaITIP's adjuster.
The City paid $107,578 in deposits to CaITIP during the fiscal year ended June 30, 2007. There have been no reductions in insurance coverage
from the prior year and there were no insurance settlements in excess of insurance coverage in any of the last three years
Self -
Insured Limit Physical
Program Retention (in millions) Damage
City of Lodi Transit System I Prefunded 5 X
Complete financial information for CaiTip maybe obtained at the following administration office:
California Transit Insurance Pool
1415 L Street, Suite 200
Sacramento, CA 95814
(15) DEFICIT IN FUND EQUITY
Internal Service Fund - Claims and Benefits - A deficit in fund equity at June 30, 2007, in the amount of $813,142 in the Claims and Benefits
Fund is due primarily to the self-insurance liability accrued to cover both incurred and incurred -but -not -reported (IBNR) claims. The City
continues its effortto reach the reserves recommended by an actuary and gradually eliminatethe deficit in the Internal Service Fund.
Internal Service Fund — Fleet Services — Adeficit in fund equity in the amount of $65,626 at June 30, 2007, in the Fleet Services Fund is due to
the lack of seed money transferred to this fund when it was set up. This will be rectified in the future.
Nonmaior Governmental Fund — Community Development — A deficit in fund equity in the amount of $167,024 at June 30, 2007, is attributed to
the unprecedented decrease in residential developments due to the slowing housing market. Building and construction permits decreased by
$315,900 compared to prior year.
66
CITY OF LODI
Notes to Basic Financial Statements (Continued)
June 30,2007
(16) COMMITMENTSAND CONTINGENCIES
Litigation and claims- The City is engaged in litigation over its groundwater contamination as a potential responsible parry and in litigation with
its former outside counsel regarding malpractice and fee claims. The City estimates that it will need to raise $45 million to cover past costs, past
settlements and future obligations and have increased its water rates in an amount sufficient to cover these estimated expenses. Citizen efforts
to reduce these rates via initiative failed in November 2006 election by a vote of 64% to 36%. As such, the City Attorney does not anticipate a
material effect on the City's financial condition.
All other actions against the City are under $75,000 or have no arguable cost and will therefore not have a material financial effect on the City.
Arbitrage Earnings Rebate Liability - Arbitrage earnings are defined as income earned on the unexpended tax-exempt certificate proceeds in
excess of that which would have been earned had the moneys been invested in securities with a yield of the effective rate of the certificates.
Currently, arbitrage earnings must be rebated to the United States Treasury every five years from the date of August 18, 1999, for the Electric
System Certificates of Participation. The there is no cumulative arbitrage liability as of June 30, 2007.
(17) FUTURE GASB PRONOUNCEMENTS
In June 2004, the Governmental Accounting Standards Board (GASB) issued Statement No. 45, Accounting and Financial Reporting by
Employers of Post -employment Benefits Other Than Pensions. GASB Statement No. 45 establishes standards for the measurement,
recognition and display of other post -employment benefits (OPEBs) expenses/expenditures, related assets and liabilities, note disclosures and, if
applicable, required supplementary information in the financial reports of state and local government employers. GASB No. 45 will be effective
for the fiscal year ending June 30, 2009.
The City does not provide post -employment benefits for its employees other than as described in Note 11. The City is currently working with an
actuary to determine the unfunded actuarial liability. In addition, the City will be evaluating alternativesto funding and reducing the liability.
The GASB has issued Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, which provides guidance on
how to calculate and report costs and obligations associated with pollution clean up efforts. The requirements of the new statement become
effective for fiscal periods beginning after December 15, 2007.
67
(This page intentionally left blank.)
REQUIRED SUPPLEMENTARY INFORMATION
City of Lodi
Required Supplementary Information
Schedule of Funding Progress- Pension Plan
June 30,2007
(in thousands of dollars)
69
Unfunded
EntryAge
Unfunded
Actuarial
Actuarial
Actuarial
Liability as
Actuarial
Actuarial
Accrued
Accrued
Funded
Covered
Percentage of
Valuation
Asset Value
Liability
Liability
Ratio
Payroll
Covered Payroll
Date
(A)
(B)
[(B) - (A)]
[(A) / (B)l
(C)
{[(B) — (A)]/(C)}
6/30/04
$ 139,694 $
165,273
$ 25,579
85%
26,334
97.13%
6/30/05
150,967
177,150
26,183
85%
26,992
97.00%
6/30/06
163,888
190,366
26,478
86%
26,836
98.67%
69
amount) is at the department level. The operating budget S prepared and controlled at the department level (e.g., city
clerk, city manager, etc.) for the General Fund. Special revenue fund expenditures, including transfers out, are approved
by Council at the fund level.
• The City Manager may transfer appropriations from one activity to anotherwithin a department without approval from the
City Council. All other appropriation adjustments during the year, whether transfers, increases or decreases, require City
Council approval.
72
CITY OFLODI
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
GENERALFUND
Year ended June 30,2007
Variance with
Original
Final
Actual
Final Budget
REVENUES
Taxes $
19,641,608
19,641,508
20,594,293 $
952.685
Licensesand permits
80.717
80,717
83.964
3.247
Intergovemmentalrevenues
15,205,635
15,205,635
16.091.446
885.811
Chargesfor services
1,933,921
1,814,886
1,854,575
39.689
Fines,forfeits and penalties
1,380,909
1,380,909
1,241,051
(139,858)
Investmentand rentalinoome
379.863
379,863
380.375
512
Miscellaneousrevenue
254,395
254,395
210,495
(43,900)
Total revenues
38,877,048
38,758,013
40,456,199
1,698,186
EXPENDITURES
Current
Generalgovemment:
City Council
107,719
107,719
83.248
24,471
City Manager
835.842
835.842
788,492
47,350
City Clerk
499,846
499.846
381,870
117,976
City Attomey
465,572
514,372
495.071
19,301
Human Resources
587,333
570,636
438,1x5
132,451
Information Systems
1,078,143
1,092,482
1,072,088
20,394
Community Center
1,433,543
1,487,678
1,487,415
283
Finance
1,998,617
2,062,768
1,877,546
185222
Non Departmental
2,327,951
2,297,027
2,269,762
27.265
Total general government
9,334,566
9,458,370
8,893,677
574.693
Publicprotection:
Police
14.240.003
14,240,741
13.439,760
800,981
Fire
8,422,164
8,426,500
8,335,771
90,729
Total public protection
22,662,167
22,667,241
21,775,531
891,710
PublicWorks
1,999,710
3,998,517
3,871,311
127,206
Library
1,646,336
1,657,561
1,587,714
69.847
Parks and recreation
3,963,717
3,855,782
3,597,718
258,064
Debtservice:
Interestandfiscatcharges
41.464
41,464
41.464
Principal payments
273,823
273,823
273,823
Totaldebtservice
315.287
315,287
315,287
Total expenditures
39,921,783
41,952,758
40,041,238
1,921,520
EXCESS(DEFICIENCY)OF REVENUES OVER
(UNDER) EXPENDITURES
(1,044,735)
(3,204,745)
414,961
3,619,706
OTHER FINANCING SOURCES (USES)
Transfersin
4,937,314
4,937,314
4,937,314
Transfers out
(3,401,814)
(3,401,814)
(3,401,814)
Total otherfinancing sources (uses)
1,535,500
1,535,500
1,535,500
NET CHANGE IN FUND BALANCE
490,765
(1,669,245)
1,950,461
3,619,706
FUND BALANCE, beginningof year
2,802,660
4,358,941
4,368,941
FUND BALANCE. end of year
3,293,425
2,699,696
6,319,402
3,619,706
The note to the required supplementaryinformationis an integral part of this schedule
CITY OF LODI
Notes to the Required Supplementary Information
June 30,2007
Budgetary Data
The City adopts an annual budget for the general and special revenue funds. These budgets are prepared in accordancewith generally
accepted accounting principles. As part of the City's internal controls, the City maintains budgetary controls. The objective of these
budgetary controls is to ensure compliancewith the legal provisions embodied in the annual appropriated budget approved by the City
Council. The accompanying financial statements present budget and actual data only of funds for which an annual budget was adopted.
The budgets of capital projects are primarily "long-term" budgets that emphasize the major programs and capital project plans extending
over a number of years. Due to the long-term nature of these projects, "annual" budget and actual comparisons are not considered
meaningful. Formal budgetary integration is not employed for Debt Service Funds since effective budgetary control is alternatively
achieved through the bond indenture provisions. Accordingly, no budgetary information is included in the accompanying basic financial
statements for capital projects and debt service funds.
The City Council follows the following procedures in establishing the budgetary data reflected in the accompanying basic financial
statements:
Original Budget
On or priorto the first regular Council meeting in June of each year, the City Manager submits to the City Council a proposed
Financial Plan and Budgetfor the fiscal year commencing July 1. The budget includes proposed expenditures and the means of
financing them.
Budgeted revenues are adopted by the City Council at the time the budget is approved. Budgeted revenues are modified when
the tax base changes, when fees are modified or when new revenue sources are identified.
Public hearings are conducted during meetings of the City Council to obtain citizens' comments. Priorto July 1, the budget is
legally enacted through passage of a resolution.
Final Budget
The final budgetary data presented in the basic financial statements reflects the following changes to the original budget:
• Budgeted expenditures represent original appropriations adjusted by budgettransfers and appropriation amendments.
The legal level of budgetary control (that is, the level at which expenditurescan not legally exceed the appropriated
71
COMBINING AND INDIVIDUAL FUND STATEMENTS
AND SCHEDULES
NONMAJOR GOVERNMENTAL FUNDS
Nonmajor Governmental Funds include:
Special Revenue Funds accountfor the proceeds of specific revenue sources that are restricted by law or administrative action to
expenditures for specified purposes, other than those for major capital projects;
Debt Service Fund account for the accumulation of resources for the repayment of principal and interest on general long-term debt;
Capital Project Funds account for the financial resources to be used for the acquisition or construction of major capital facilities, other than
those financed by proprietaryfunds.
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
June 30,2007
Assets
Cash and investments
Restricted assets
Receivables:
Accounts, net
Interest
Due from other funds
Due from other governmental agencies
Loan receivable
Other assets
Advances to other funds
Total assets
Liabilitiesand Fund Balances
Liabilities:
Accounts payable and other liabilities
Due to other funds
Advances from other funds
Deferred revenue
Total liabilities
Fund Balances:
Special Capital
Revenue Projects Total
7,575,610 5,740,840$ 13,316,450
1,750,204 1,750,204
46,695
92,475$
46,695
66,103
42,557
108,660
471,844
506,220
978,064
1,399,037
506,878
1,905,915
1,084,000
1,981,356
1,084,000
508
508
646,770
646,770
10,643,797
9,193,46%
19,837,266
$ 779,105
92,475$
871,580
621,412
30,958
652,370
646,770
1,497,973
2,144,743
1,084,000
359,950
1,443,950
3,131,287
1,981,356
5,112,643
Reserved for encumbrances 861,195 365,476 1,226,671
Reserved for advances to other funds 646,770 646,770
Unreserved-designatedfor specific projects and programs 6,651,315 6,199,867 12,851,182
Total fund balances 7,512,510 7,212,113 14,724,623
Total liabilities and fund balances $ 10,643,797 9,193,46S$ 19,837,266
73
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
Year ended June 30,2007
74
Special
Debt
Capital
Revenue
Service
Projects
Total
Revenues:
Licenses and permits
$ 632,820
$
632,820
Intergovernmental revenues
3,565,416
234,926
3,800,342
Charges for services
2,180,863
660,770
2,841,633
Fines, forfeits and penalties
4,225
4,225
Investmentand rental income
301,225
316,478
617,703
Miscellaneous revenue
83,576
10,000
93,576
Total revenues
6,768,125
1,222,174
7,990,299
Expenditures:
Current:
Public protection
435,792
435,792
Publicworks
1,715,482
1,715,482
Community development
2,061,706
2,061,706
Parks and recreation
Capital outlay
2,280,375
1,245,964
3,526,339
Debt service:
Interest and fiscal charges
1,152,715
10,920
1,163,635
Principal payments
626,233
626,233
Total expenditures
6,493,355
1,778,948
1,256,884
9,529,187
Excess (deficiency)of revenues over (under) expenditures
274.770
(1,778,948)
(34,710)
(1,538,888)
Other financing sources (uses):
Transfers in
733,912
1,778,948
1,413,496
3,926,356
Transfers out
(101,542)
(632,990)
(734,532)
Total other financing sources (uses)
632,370
1,778,948
780.506
3.191.824
Net change in fund balances
907,140
745,796
1,652,936
Fund balances, beginning of year
6,605,370
6,466,317
13,071,687
Fund balances, end of year
$ 7,512,510
7.212,113 $
14,724,623
74
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
SPECIAL REVENUE FUNDS
Public Safety
This fund was established to accountfor the revenues and expenditures related to the City's share of property forfeited by persons convicted of
possession and selling illegal drugs and the State of California auto theft prosecution moneys.
Community Development
This fund was established to account for development planning and project review services including land use entitlements, permit processing and
review/inspection of public improvements to ensure orderly physical growth and development of the City.
Streets Fund
This fund was established to account for the following:
Gas Tax
To account for revenues and expenditures apportioned to the City under the Streets and Highway Code. Portions of the tax rate
levied by the State of California on all gasoline purchases are allocated to cities throughout the State on a population basis.
These funds are restricted for expenditure by the State of California for street related purposes only.
Development Impact Mitigation Fees
To account for impact fees charged to provide for the building of various storm drains and street improvements needed to serve
new development. The fees are calculated on a per acre basis and are collected at subdivision final map approval or with building
permit stage effective November 4, 1991.
Measure K Sales Tax
To account for revenues and expenditures apportioned to the City for sales tax collections under Measure K. Expenditures for
administration, maintenance and construction must be for street -related projects.
Intermodal Surface Transportation Efficiency Act (ISTEA)
To account for revenues from the federal highway administration for programs including surface transportation program (STP) for
streets and roads, congestion mitigation and air quality program (CMAQ) and hazard elimination safety (HES) for street lighting
projects.
75
Transportation
This fund was established to account for the receipt of moneys from the State of California apportioned to the City for transportation purposes. The
State has designated 1/4% of the 6% sales tax levied statewide for local transportation purposes. Funding for this program was provided during
the 1971 legislative session with the enactment of the Transportation DevelopmentAct, which extended the 6% sales tax to include purchases of
gasoline. Revenues allocated to the City of Lodi under this program are divided into two categories: Article 8 funds, which are restricted for the
improvementand maintenance of street systems; and Article 4 funds, which are restricted for public transit systems.
HOME Program and Community Development Block Grants
This fund was established to account for the City's HOME Program that provides adequate and affordable housing for low and very low-income
residents, and Community Development Block Grants provided to the City principallyfor low and moderate income residents to develop a suitable
living environment and expand economic opportunities.
76
ASSETS
Cash and Investments
Receivables:
Accounts, net
Interest
Due from other funds
Due from other governmental agencies
Other assets
Loan receivable
TOTALASSETS
LIABILITIESAND FUND BALANCES
LIABILITIES
Accounts payable and other liabilities
Due to other funds
Advances from other funds
Deferred revenue
TOTAL LIABILITIES
FUND BALANCES (DEFICIT)
Fund balances:
Reservedfor encumbrances
Unreserved-designatedfor specific projects and programs
TOTAL FUND BALANCES (DEFICIT)
TOTAL LIABILITIESAND FUND BALANCES (DEFICIT)
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
June 30,2007
$ 6,486 37,417 734,202
149,568
646,770
6,486 186,985 1,380,972
1,000
1 000
$ 779,105
471,844 621,412
646,770
1,084,000 1,084,000
1,555,844 3,131,287
1,869
6,434
850.042
2,850
HOME Program &
188,675
(173,458)
6,546,231
89,867
6,651,315
Community
(167,024)
Public
Community
7,512,510
Development
19,961
Safety
Development
Streets
Transportation
Block Grants
Total
$ 125,584
7,357,087
92,939
$
7,575,610
19,961
26,734
46,695
1,433
63,892
778
66,103
471,844
471,844
70.013
857,180
471,844
1,399,037
508
508
1,084,000
1,084,000
$ 197,030
19,961
8,777,245
93,717
1,555,844 $
10,643,797
$ 6,486 37,417 734,202
149,568
646,770
6,486 186,985 1,380,972
1,000
1 000
$ 779,105
471,844 621,412
646,770
1,084,000 1,084,000
1,555,844 3,131,287
1,869
6,434
850.042
2,850
861,195
188,675
(173,458)
6,546,231
89,867
6,651,315
190,544
(167,024)
7,396,273
92,717
7,512,510
$ 197,030
19,961
8,777,245
93,717
1,555,844 $ 10,643,797
77
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30,2007
78
HOME Program&
Community
Public
Community
Development
Safety
Development
Streets
Transportation
Block Grants
Total
REVENUES
Licenses and permits
$
632,820
$ 632,820
Intergovernmental revenues
221,757
23,905
3,181,427
50,350
87,977
3,565,416
Charges for services
540,525
1,640,338
2,180,863
Fines, forfeits and penalties
3,100
1,125
4,225
Investment and rental income
9,759
288,368
3,098
301,225
Miscellaneous revenue
23,051
60,525
83,576
Total revenues
234,616
1,221,426
5,170,658
53,448
87,977
6,768,125
EXPENDITURES
Current
Public protection
435,792
435,792
Publicworks
1,627,505
87.977
1,715,482
Community development
2,061,706
2,061,706
Capitaloutlay
2,213,916
66,459
2,280,375
Total expenditures
435,792
2,061,706
3,841,421
66,459
87,977
6,493,355
EXCESS(DEFICIENCY)OF REVENUES OVER
(UNDER) EXPENDITURES
(201,176)
(840,280)
1,329,237
(13,011)
274,770
OTHER FINANCING SOURCES (USES)
Transfers in
8,680
600,000
125,232
733.912
Transfers out
(5,436)
(96,106)
(101,542)
Total other financing sources(uses)
8,680
594,564
29,126
632,370
NET CHANGE IN FUND BALANCES
(192,496)
(245,716)
1,358,363
(13,011)
907,140
FUND BALANCES, beginning of year
383,040
78,692
6,037,910
105,728
6,605,370
FUND BALANCES (DEFICIT), end of year
$ 190,544
(167,024)
7,396,273
92,717
$ 7,512,510
78
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGETANDACTUAL
NONMAJORGOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30,2007
PUBLIC SAFETY
79
FINAL
BUDGET
ACTUAL
VARIANCE
REVENUES
Intergovernmental revenues
$ 221,757
221,757
Fines, forfeits and penalties
3,100
3,100
Investmentand rental income
9,759
9,759
Total Revenue
221,757
234,616
12,859
EXPENDITURES
Current
Public protection
435,792
435,792
DEFICIENCY OF REVENUES
UNDER EXPENDITURES
(214,035)
(201,176)
12,859
OTHER FINANCING SOURCES
Transfers in
8,680
8,680
NET CHANGE IN FUND BALANCE
(205,355)
(192,496)
12,859
FUND BALANCE, BEGINNINGOF YEAR
383,040
383,040
FUND BALANCE, END OF YEAR
$ 177,685
190,544
12,859
79
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NON MAJOR GOVERNMENTAL FUNDS- SPECIAL REVENUE FUNDS
Year ended June 30,2007
REVENUES
Licenses and permits
Intergovernmental revenues
Charges for services
Fines, forfeits and penalties
Investment and rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Community development
DEFICIENCY OF REVENUES UNDER
EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNINGOF YEAR
FUND BALANCE (DEFICIT), END OF YEAR
80
COMMUNITY DEVELOPMENT
FINAL
BUDGET ACTUAL VARIANCE
$ 939,470
632,820
23,905
735,881
540,525
8,875
1,125
9,452
1,008
23,051
1,694,686
1,221,426
A 1— eQ0 A AL1 �Ae
(306,650)
23,905
(195,356)
(7,750)
(9,452)
22,043
(473,260)
113,917
(480,937) (840,280) (359,343)
600,000
(5,436)
594,564
113,627
78,692
192,319
600,000
(5,436)
594,564
(245, 716)
78,692
x67,024)
(359,343)
(359,343)
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGETAND ACTUAL
STREETS FUND
Year ended June 30,2007
REVENUES
Intergovernmental revenues
Charges for services
Investmentand rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Publicworks
Capital outlay
Total Expenditures
EXCESS(DEFICIENCY)OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
STREETS
FINAL
BUDGET
ACTUAL
VARIANCE
$ 7,736,000
3,181,427
(4,554,573)
1,520,000
1,640,338
120,338
3,800
288,368
284,568
(973,204)
60,525
60,525
9,259,800
5,170,658
(4,089,142)
3,227,874
1,627,505
1,600,369
6,571,795
2.213.916
4.357.879
9,799,669
3,841,421
5,958,248
(539,869)
1,329,237
1,869,106
1,139,314
125,232
(1,014,082)
(136,984)
(96.106)
40,878
1,002,330
29,126
(973,204)
462,461
1,358,363
895,902
6,037,910
6.037.910
$ 6,500,371
7,396,273
895.902
81
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGETAND ACTUAL
NON MAJOR GOVERNMENTAL FUNDS- SPECIAL REVENUE FUNDS
Year ended June 30,2007
REVENUES
Intergovernmental revenues
Investmentand rental income
Total Revenue
EXPENDITURES
Capital outlay
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNINGOF YEAR
FUND BALANCE, END OF YEAR
TRANSPORTATION
FINAL
BUDGET ACTUAL VARIANCE
$ 174,249 50,350 (123,899)
3,000 3,098 98
177,249 53,448 (123,801)
282,977 66,459 216,518
(105,728) (13,011) 92,717
105,728 105,728
$ 92,717 92,717
82
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGETAND ACTUAL
NON MAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30,2007
HOME PROGRAM and COMMUNITY DEVELOPMENT
BLOCK GRANTS
FINAL
BUDGET ACTUAL VARIANCE
REVENUES
I ntergovern mental revenues $ 3,347644 87,977 (3,259,667)
EXPENDITURES
Current
Pu bl icworks 3,.347.644 87.977 3,259,667
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR $
83
(This page intentionally left blank.)
NONMAJOR GOVERNMENTAL FUNDS
CAPITAL PROJECT FUNDS
CAPITAL PROJECT FUNDS
Vehicle and Equipment
This fund was established to accountfor the financing and replacementof vehicles and equipmentfor all funds of the City with the exception of the
Enterprise Funds. Financing is primarily provided through transfers from other funds, interest earnings and sales of surplus property.
Library
This fund is used to accountfor the acquisition, construction and installation of capital facilities for the Library.
Subdivision
This fund is used to account for construction and installation projects dealing with subdivision work for others.
Hutchins Street Square
When the old Lodi High School burned down, the City purchased the property and renamed it Hutchins Street Square. The Old Lodi High Site
Foundation was established and this organization organizes events to raise money for the capital restoration of Hutchins Street Square.
Capital Outlay Reserve
This fund was established to account for the entire City's construction projects and capital purchases in excess of $10,000 with the exception of
those funded through Enterprise Funds. Financing is provided primarily by operating transfers from other funds and from State and Federal grants.
Lodi Lake
This fund was established to accountfor moneys charged for activities held at Lodi Lake. The Council designated the moneys to be used for Lodi
Lake capital projects.
85
ASSETS
Cash and investments
Restricted assets
Receivables:
Interest
Due from other funds
Due from other governmental agencies
Advances to other funds
TOTALASSETS
LIABILITIES
Accounts payable and other liabilities
Due to other funds
Advances from other funds
Deferred revenue
TOTAL LIABILITIES
FUND BALANCES
Fund balances:
Reserved for encumbrances
Reserved for advancesto other funds
Unreserved -designated for specific projects and programs
TOTALFUNDBALANCES
TOTAL LIABILITIESAND FUND BALANCES
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS -CAPITAL PROJECT FUNDS
June 30,2007
Vehicle and Hutchins
Equipment Library Subdivision Street Square
$ 1,307,968 12,677 300,339 2,181
Capital
Outlay Lodi
Reserve Lake
4,117,675
1,750,204
Total
$ 5,740,840
1,750,204
42,557 42,557
506,220 506,220
359,950 146,928 506,878
646,770 646,770
$ 1,307,968 12,677 300,339 2,181 7,423,376 146,928 $ 9,193,469
$ 16,774
62.577
13,124 $ 92.475
30,958 30,958
1,497,973
1,497,973
359,950
359,950
1,920,500
44,082 1,981,356
308,917 56,559 365,476
646,770 646,770
1,291,194 12,677 300,339 2,181 4,547,189 46,287 6,199,867
1,ZU1,194 12,677 3UU,339 2,181 5,5U2,876 1 U2,846 7,2T =,
$ 1,307,968 12,677 300,339
86
2,181 7,423,376 146,928 $ 9,193,469
CITY of LORI
COMBINING STATEMENTOF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES
NONMAJORGOVERNMENTAL FUNDS -CAPITAL PROJECT FUNDS
Year ended June 30,2007
REVENUES
Intergovernmentalrevenues
Charges for services
Investmentand rental income
Miscellaneousrevenue
Total revenues
EXPENDITURES
Capital outlay
Debt service:
Interest and fiscal charges
Totalexpendltures
EXCESS (DEFICIENCY)OF REVENUE OVER (UNDER) EXPENDITURES
OTHER FINANCINGSOURCES(USES)
Transfers in
Transfers out
Total otherfinancing sources (uses)
NET CHANGE IN FUND BALANCES
FUND BALANCES, BEGINNING OF YEAR
FUND BALANCES, END OF YEAR
Hutchins Capital
Vehicle and Street Outlay Lodi
Equipment Library Subdivision Square Reserve Lake Total
234,926 $ 234,926
660,770 660,770
316,478 316,478
10,000 10,000
987.248 234.926 1.222.174
342.238 665,874 237,852 1,245,964
10,920 10,920
342,238 676,794 237.852 1,256,884
(342,238) 310,454 (2,926) (34,710)
1.342.707 70,789 1,413,496
(632,990) (632,990)
1,342,707 (632,990) 70,789 780,506
1,000,469
(322,536) 67,863 745,796
290,725 12,677 300,339 2,181 5,825,412 34,983 6,466,317
$ 1,291,194 12.677 300,339 2,181 5,502,876 102,846 $ 7,212,113
87
(This page intentionally left blank.)
INTERNAL SERVICE FUNDS
Internal Service Funds are maintained to account for the internal transfer of services between operating units of the City and to achieve a
level of operating efficiency that may not be available if the same activities were performed by multiple organizations.
Claims and Benefits Funds
This fund is used to account for the following insurance and certain employee benefits:
General Liability
Workers' Compensation
Dental
Chiropractic
Life/accidental insurance
Medical
Employee assistance program
Employee recognition program
Unemployment insurance
Flexible spending program
Long Term Disability
Vision
Fleet Services
This fund is used to accountfor the operation, maintenanceand timely replacementof the City'sfleet of vehicleswhich serve the
transportation needs of all city departments.
ASSETS
Current assets:
Cash and investments
Receivables:
Accounts, net
Interest
Inventory
Other assets
Noncurrent assets:
Capital assets (net)
Total current assets
LIABILITIES
Current liabilities:
Accounts payable and other liabilities
Self-insurance liability
Accrued compensated absences
Noncurrent liabilities:
Accrued compensated absences
Self-insurance liability
Total liabilities
NETASSETS (DEFICIT)
Invested in capital assets, net of related debt
Unrestricted (deficit)
Total net assets (deficit)
CITY OF LODI
COMBINING STATEMENT OF NET ASSETS
INTERNAL SERVICE FUNDS
June 30,2007
89
Fleet
Services Fund
108,524
1,886
Claims and
Benefits Funds Total
5,446,040 $ 5,446,040
203,635 203,635
45,242 45,242
108,524
835 2,721
39,075 39,075
149,485 5,695,752 5,845,237
42,684 112,894 155,578
2,265,383 2,265,383
67,293 67,293
105,134 105,134
4,130,617 4,130,617
215,111 6,508,894 6,724,005
39,075 39,075
(104,701) (813,142) (917,843)
$ (65,626) (813,142) $ (878,768)
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND NETASSETS
INTERNAL SERVICE FUNDS
Year ended June 30,2007
OPERATING REVENUES
Charges for services
OPERATING EXPENSES
Personnel services
Supplies, materials and services
Utilities
Depreciation and amortization
Claims
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NONOPERATING REVENUES
Investment income
Other revenues
TOTAL NONOPERATING REVENUES
LOSS (INCOME) BEFORE CAPITAL CONTRIBUTION
Capital contribution
Change in net assets
NETASSETS (DEFICIT)- BEGINNINGOFYEAR
NET ASSETS (DEFICIT)- END OF YEAR
Fleet Claims and
Services Fund Benefits Funds
Total
1,567,016 8,533,149 $ 10, 100,165
929,589
727,541
14,587
1,447
1,673,164
(106,148)
(106,148)
40.522
(65,626)
$ (65,626)
90
325,949
5,275,969
1,578,383
7,180,301
1,352,848
203,234
685,412
888.646
2,241,494
2,241,494
(3.054.636)
(813.142)
1,255,538
6,003,510
14,587
1,447
1,578,383
8,853,465
1,246,700
203,234
685,412
888.646
2,135,346
40,522
2,175,868
(3,054,636)
(878,768)
CITY OF LODI
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
Year ended June 30,2007
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning cf year
Cash and cash equivalents, end of year
Reconciliation of operating income (loss) to net cash provided by operating activities:
Operating Income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation and amortization
Other revenues
Change in assets and liabilities:
Increase in accounts receivable
Increase in inventory
Decrease (increase) in other assets
Increase in accounts payable and other liabilities
Increase in compensated absences
Decrease in self-insurance liability
Net cash provided by operating activities
Noncash Investinq. Capital and Financing Activities
Capital contributions
91
$ 4C(16,148)
1,447
(108,524)
(1,886)
42,684
172,427
$ 40,522
1,385,624 1,385,624
4,060,416 4,060,416
5,446,040 $ 5,446,040
1,352,848 $ 1,246,700
685,412
(203,635)
10,872
57,392
1,447
685,412
(203,635)
(108,524)
8,986
100,076
172,427
(687,000) (687,000)
1,215,889 $ 1,215,889
$ 40,522
Fleet
Claims and
Services Fund
Benefits Funds
Total
Cash flows from operating activities:
Receiptsfrom customers and users
$ (1,886)
492,649 $
490,763
Receiptsfrom interfund services provided
1,567,016
8,533,149
10,100,165
Cash paid to suppliers for goods & services
(807,968)
(7,483,960)
(8,291,928)
Payments to employees
(757,162)
(325,949)
(1,083,111)
Net cash provided by operating activities
1,215,889
1,215,889
Cash flows from investing activities:
Intereston investments
169,735
169,735
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning cf year
Cash and cash equivalents, end of year
Reconciliation of operating income (loss) to net cash provided by operating activities:
Operating Income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation and amortization
Other revenues
Change in assets and liabilities:
Increase in accounts receivable
Increase in inventory
Decrease (increase) in other assets
Increase in accounts payable and other liabilities
Increase in compensated absences
Decrease in self-insurance liability
Net cash provided by operating activities
Noncash Investinq. Capital and Financing Activities
Capital contributions
91
$ 4C(16,148)
1,447
(108,524)
(1,886)
42,684
172,427
$ 40,522
1,385,624 1,385,624
4,060,416 4,060,416
5,446,040 $ 5,446,040
1,352,848 $ 1,246,700
685,412
(203,635)
10,872
57,392
1,447
685,412
(203,635)
(108,524)
8,986
100,076
172,427
(687,000) (687,000)
1,215,889 $ 1,215,889
$ 40,522
(This page intentionally left blank.)
FIDUCIARY FUNDS
Private -purpose Trust Funds
These funds are used to account for trust agreements under which the principal and income benefit individuals, private
organizations or other governments.
Agency Fund
This fund was established to account for special assessments collected on the property tax roll by the City on behalf of the
property owners within the IndustrialWay Beckman Districtsand the Downtown and Cherokee Lane Districts.
CITY OF LODI
COMBINING STATEMENT OF FIDUCIARY NETASSETS
PRIVATE -PURPOSE TRUST FUNDS
June 30,2007
Private-PurposeTrust Funds
Hutchins Street
Library Square Bequest Total
ASSETS
Cash and investments $ 846,765 1,386 $ 848,151
TOTAL ASSETS 846,765 1,386 848,151
NETASSETS 846,765 1,386 $ 848,151
93
CITY OF LODI
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
Year ended June 30,2007
ADDITIONS
Investment income and donations
Total additions
DEDUCTIONS
Current
Library
Total deductions
CHANGE IN NETASSETS
NETASSETS, BEGINNINGWYEAR
NETASSETS, END OF YEAR
Private -Purpose Trust Funds
Hutchins Street
Library Square Bequest
$ 100,575
100,575
11,866
11,866
88,709
758,056
$ 846,765
Total
52 $ 100,627
52 100.627
11,866
11,866
52 88,761
1,334 759,390
1,386$ 848,151
CITY OF LODI
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUND
Year ended June 30,2007
LIABILITIES
Agency obligations $ 527,418 147,268 $ 674,686
TOTAL LIABILITIES $ 527,418 147,268 $ 674,686
95
Special Assessments
Balance
Balance
7/1/06
Additions
Deductions
6/30/07
ASSETS
Cash and investments
$ 453,628
739,870
603,815 $
589,683
Special assessment receivable
71,594
79,508
71,594
79,508
I nterest receivable
2,196
5,495
2,196
5,495
TOTAL ASSETS
$ 527,418
824,873
677,605 $
674,686
LIABILITIES
Agency obligations $ 527,418 147,268 $ 674,686
TOTAL LIABILITIES $ 527,418 147,268 $ 674,686
95
(This page intentionally left blank.)
STATISTICAL TABLES
UNAUDITED
STATISTICAL SECTION
The Statistical Section provides detailed information as a framework for understanding the information in the financial statements, notes and
required supplementary information. This section presents additional data and analysis that may provide the readerwith valuable insight
regarding the demographics and the overall health of the City.
Contents
Panes
FinancialTrends
These schedules contain trend information to help the reader understand howthe City'sfinancial performance
and well-being has changed overtime. 98-104
Revenue Capacity
These schedules contain information to help the reader assess the factors affecting the City's most significant
local revenue source, the property tax. 105-109
Debt Capacity
These schedules present information to help the reader assess the affordability of the City's current levels of
outstanding debt and the City's ability to issue additional debt in the future. 110-115
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment
within which the City's financial activities take place and to help make comparisons over time and with other
governments. 116-118
Operating Information
These schedules contain information about the City's operations and resourcesto help the reader understand
how the City's financial information relates to the services the city provides and the activities it performs. 119-123
Sources
Unless otherwise noted, the information in these schedules are derived from the comprehensive annual financial
reports for the current year. The City implemented GASB Statement 34 for the fiscal year ended June 30, 2003,
schedules presenting government -wide information include information beginning that year.
97
CITY OF LODI
NETASSETS BY COMPONENT
LAST FIVE FISCAL YEARS
(Dollar amounts in thousands)
Governmental activities:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total governmental activities net assets
Business -type activities:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total business -type activities net assets
Fiscal Year
2007 2006 2005 2004 2003
$ 110,815 $
111,572 $
106,293
$ 100,749
$ 94,681
15,044
14,526
13,465
11,205
12,811
(3,968)
(8,838)
(8,801)
(9,437)
(7,334)
$ 121,891 $
117,260 $
110,957
$ 102,517
$ 100,158
$ 97,961 $
77,494 $
67,668 $
64,214
$ 62,752
8,711
10,969
2,351
2,578
240
6,417
1,880
7,445
(7,511)
(10,270)
$ 113,089 $
90,343 $
77,464 $
59,281
$ 52,722
Primary government:
Invested in capital assets, net of related debt
$ 208,776
$ 189,066 $
173,961
$ 164,963
$ 157,433
Restricted
23,755
25,495
15,816
13,783
13,051
Unrestricted
2,449
(6,958)
(1,356)
(16,948)
(17,604)
Total primary government net assets
$ 234,980
$ 207,603 $
188,421
$ 161,798
$ 152,880
Note: The City of Lodi implemented GASB 34 for the fiscal year ended June
30, 2003.
Information
prior to the
implementation of GASB 34 is not available.
Source: City of Lodi Financial Services Division
CITY OF LODI
CHANGES IN NETASSETS
LAST FIVE FISCALYEARS
(Dollar amounts in thousands)
Program Revenues
Fiscal Year
Govem mentalactivities:
2007
2006
2005
2004
2003
Expenses
65,809
59,112
53,908
52.899
48.873
Govem mentalactivities:
$ 1,280 $
1,232 $
3,639 5
3,144 $
2,355
General government
$ 7,853 $
9,746
$ 9.958 $
13.167 $
12,238
Public protection
23.328
22,105
22,253
19,162
16,632
Publicworks
10,599
13,229
12,377
11.868
10,946
Community development
2,130
2,290
49
50
57
Library
1,630
1.485
1.484
1,409
1,454
Parks and recreation
4,172
4,114
4,565
4,095
3,989
Interestand fiscal charges
1,201
1,234
1,617
1,267
1,214
Total govemmentalactivitiesexpenses
50,913
54.203
52,254
50,968
46,473
Business -type activities:
$ (19.836) $ (25,230)$ (33,443) 3 (26,193)$ (38,471)
Electric
67,534
63,780
57,308
55,943
51.388
Wastewater
9,271
8,574
10,653
6,297
6,141
Water
9,875
8.256
11,748
7,489
12.879
Transit
3,577
3,643
3,018
3,064
5,389
Total business-typeactivitiesexpenses
90,257
84,253
82,727
72,793
75,797
Total primarygovemmentexpenses
$ 141,170 $
138.456
$ 134.981 $
123,761 $
122,270
Program Revenues
Govem mentalactivities:
Chargesfor services:
65,809
59,112
53,908
52.899
48.873
General government
$ 1,280 $
1,232 $
3,639 5
3,144 $
2,355
Public protection
582
563
623
525
541
Publicworks
295
320
461
430
335
Community development
1,174
1,630
2.731
2,547
1,772
Library
53
54
49
50
57
Parks and recreation
1,007
918
833
679
586
Operating grants and contributions
2,589
2,587
2,195
2,321
3,315
Capital grants and contributions
6,975
14,631
17,559
13,894
6,814
Total govemmentalactivities program revenues
13,955
21,935
25,359
21,043
14,003
Business -type activities:
Chargesfor services:
Electric
65,809
59,112
53,908
52.899
48.873
Wastewater
8,524
8,927
8,086
6,560
6,760
Water
10.040
8,343
7,713
6,007
5,532
Transit
401
386
340
244
293
Ogeratinggrants and contributions
2.621
3,377
2.731
2,547
1,772
Capital grants and contributions
19,984
11,146
3,401
8,268
6,566
Total business-typeactivities program revenues
107,379
91.291
76,179
76,525
69,796
Total primary government program revenues
$ 121,334 $ 113,226 $ 101,538 $ 97,568 5
83,799
Net(Expense)IRevenue
Govemmentalactivities
$ (36,958)$ (32,268)$ (26,895)$
(29,925)$ (32,470)
Business-typeactivities
17,122
7,038
(6,548)
3,732
(6,001)
Total primary government net expense
$ (19.836) $ (25,230)$ (33,443) 3 (26,193)$ (38,471)
(Continued)
99
.CITY OF LODI
CHANGES IN NET ASSETS (Continued)
LAST FIVE FISCAL YEARS
(Dollar amounts in thousands)
General Revenues and Other Changes in Net Assets:
Governmental activities.
Taxes:
Property
Franchisetaxes
Business licensetax
Transientoccupancy tax
Grants and contributionsnot restrictedto
Investmentearnings
Other
Transfers
Total governmental activities
Business -type activities:
Investmentearnings
Litigation -environmental lawsuits
Gain on sale of capital assets
Other
Special item -forgiveness of debt
Transfers
Total business -type activities
Total primary government
Change in Net Assets
Governmental activities
Business -type activities
Total primary government
Fiscal Year
2007 2006 2005 2004 2003
$ 9,524 3 8.031 $ 7,124 $ 7.188 $ 6.398
9,609
8,721
8.918
8,381
7,624
1.082
973
982
874
822
380
368
352
317
400
14,772
14,215
13,193
11,895
12,069
874
328
150
125
269
621
1,012
608
590
137
4,727
4,923
4,008
2,915
2,981
41,589
38.571
35,335
32,285
30,700
2.380 2.008 1,880 2,242 6,457
6,222 6,700 9,150 865 2.728
1,749
2,056 2,432 2,635 1,594
15,277
(4,727)
(4,923) (4,008) (2,915) (2,981)
5,624
5,841 24,731 2,827 7,798
$ 47.213 3
44.412 $ 60,066 $ 35,112 $ 38,498
$ 4.631 $ 6,303 $ 8,440 $ 2,360 $ (1,770)
22,746 12.879 18.183 6,559 1,797
$ 27,377 111 19,182 T-26,623 3 8,919 $ 27
The City of Lodi implemented GASB 34for the fiscal year ended June 30,2003. Information priorto the implementation
of GASB 34 is not available.
Source: City of Lodi Financial Services Division
100
CITY OF LODI
FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCALYEARS
(Dollaramounts inthousands)
All other govemmentalfunds
Reserved $ 1,874 $ 1,138 $ 4,942 $ 3,778 $ 6,405 $ 3,363 $ 2,779 $ 555 $ 2,167 $ 943
Unreserved, reported in:
Special revenue funds 6,651 6,271 1,400 534 2,322 1,814 2,439 5,774 2,298 3,042
Capital projects funds 61,200 5,663 5,650 5,720 7,655 17,905 1,695 3,511 2,230 1,859
Total all othergovemmentalfunds $ 141,725 $ 13,072 $ 11,992 $ 10,032 $ 16,382 $ 23,082 $ 6,913 $ 9,840 $ 6,695 $ 5,844
Source: City of Lodi Financial Services Division
101
Fiscal Year
2007 2006
2005
2004 2003 2002
2001
2000
1999 1998
General Fund
Reserved
$ 1.144 $ 1,321 $
1,185 $
1,296 $ 927 $ 856 $
532 $
473 $
149 $ 231
Unreserved
5,175 3,048
1,507
157 640 2,208
3,414
3,315
2,562 2,030
Total General Fund
$ 6,119 S 4,369 $
2,692 $
1,453 $ 1,567 $ 3,064 $
3,946 $
3,788
2,261
All other govemmentalfunds
Reserved $ 1,874 $ 1,138 $ 4,942 $ 3,778 $ 6,405 $ 3,363 $ 2,779 $ 555 $ 2,167 $ 943
Unreserved, reported in:
Special revenue funds 6,651 6,271 1,400 534 2,322 1,814 2,439 5,774 2,298 3,042
Capital projects funds 61,200 5,663 5,650 5,720 7,655 17,905 1,695 3,511 2,230 1,859
Total all othergovemmentalfunds $ 141,725 $ 13,072 $ 11,992 $ 10,032 $ 16,382 $ 23,082 $ 6,913 $ 9,840 $ 6,695 $ 5,844
Source: City of Lodi Financial Services Division
101
Revenues:
Taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeitures
Investment and rental income
Miscellaneous revenue
Total revenues
Expenditures:
Current:
General government
Public protection
Publicworks
Community development
Library
Parksand recreation
Capital outlay
Debt service:
Interest and fiscal charges
Principal payments
Total expenditures
Excess (deficiency) of revenues
Over (under) expenditures
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollaramounts in thousands)
Fiscal Year
2007 2006 2005 2004 2003 2002 2001 2000 1999 1998
$ 20.594 $ 18,094 $ 17,606 $ 16,908 $ 24,100 $ 23,043 $ 21,909 $ 19,801 $ 18,594 $ 17,790
717
1,020
2,511
2,021
1,669
1,464
1,592
1,406
1,267
1,183
19,892
25,491
22,834
16,657
7,385
22,000
11,641
9,054
8,370
6,291
4,696
3.848
9,404
4,479
6,272
3,888
4,249
4,611
3,874
2,871
1,245
1,173
1,190
1,085
803
806
765
714
878
662
998
707
753
537
832
1,234
1,509
982
982
1,060
304
653
458
473
453
1,349
383
764
242
524
48,446
50,986
54,756
42,160
41,514
53.784
42,048
37,332
34,207
30,381
8.893
8,345
10,858
10,815
10,874
8,987
8,862
7,813
7,239
7,068
22,211
20,863
20,351
17,491
15,597
13,562
13,190
11,430
11,225
10,896
5.587
7,827
7,361
7,303
6,926
5,741
6,312
5,039
5,151
4,810
2,062
1,847
1.588
1,468
1,420
1,356
1,316
1,158
1,184
1,040
1,030
966
3,598
3,440
3,691
3,412
3,385
2,860
2,999
2,670
2,230
2,174
3,526
7,232
9,508
10,041
12,943
17,948
12,044
6,420
6,640
18,383
1,205 1.238 1,645 1,245 1,220 679 755 777 797 818
900 892 855 759 730 555 530 505 485 470
49,570 53,152 55,689 52,422 52,991 51,490 45,876 35,694 34.797 45.585
(1,124) (2,166) (933) (10,262) (11,477) 2,294 (3,828) 1,638 (590) (15,204)
(Continued)
102
Otherfinancing sources (uses):
Transfers in
Transfersout
Capital lease proceeds
Proceedsfrom bond refunding
Paymentto refunded bond escrow
Proceeds of certificatesof participation
Residualequity transfer
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Adjustment to fund balance as previously reported
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS (Continued)
LAST TEN FISCAL YEARS
(Dollaramounts in thousands)
Fiscal Year
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
8,863
9,142
8,017
9,774
11,209
12,500
9,355
9,715
16,486
24,883
(4,136)
(4,219)
(4,009)
(6,859)
(8,228)
(13,052)
(10,090)
(7,130)
(14,410)
(23,392)
124
883
148
670
695
13,269
(13,269)
13,396
(187)
4.727
4,923
4,132
3,798
2,981
12,992
(65)
2,585
1,889
2,186
3,603
2,757
3,199
(6,464)
(8,496)
15,286
(3,893)
4,223
1,299
(13,018)
$ 17,441
14,684
11,485
17,949
26,445
10,859
13,628
9,405
8,106
21,124
300
1.124
Fund balances, end of year $ 21,044 $ 17,441 $ 14,684 $ 11,485 $ 17,949 $ 26,445 $ 10,859 $ 13,628 $ 9,405 $ 8,106
Debt service as a percentage of noncapital expenditures 4.8% 4.9% 5.7% 5.0% 5.1% 3.8% 3.9% 4.6% 4.8% 5.0%
Source: City of Lodi Finance Services Division
103
City of Lodi
TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 % Change
1998 to 2007
Property $
9,289 $
7,675 $
6,771 •$
6,948 $
6,191 $
5,641 $
5,322 $
4,932 $
4,517 $
4,374
112%
Sales& Use
10,137
9,812
9,183
8,533
8,709
8,300
8,028
7,095
6,523
6,205
63%
Transient Occupancy
380
368
352
317
400
439
390
318
305
278
37%
Franchise
929
890
821
800
730
931
820
675
618
586
59%
Documentary Transfer
235
355
353
240
207
172
158
116
119
77
205%
Motor Vehicle in Lieu
4,635
4,402
4,606
2,767
3,430
3,276
3,051
3,008
2,221
2,478
87%
Public Protection
390
310
304
264
247
231
242
196
180
180
117%
Business License
1,082
973
982
874
822
787
736
658
612
593
82%
In Lieu Franchise
8,679
7,831
8,097
71580
6,895
6,569
6,015
5,721
5,627
5,546
56%
Totals $ 35,756 $ 32,616 $ 31,469 $ 28,323 $ 27,631 $ 26,346 $ 24,762 $ 22,719 $ 20,722 $ 20,317 76%
Note: General governmental tax revenues are included in taxes, licenses and permits, intergovernmental revenues and miscellaneous revenues.
Source: City cf Lodi Financial Services Division
104
CITY OF LODI
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LASTTEN FISCAL YEARS
(Dollar amounts in thousands)
Total Direct Tax Rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
(1) All exemptions (secured, utility, and unsecured rolls) are homeowners- $72,127 and other- $156,922 = 229,049
Note: In 1978. the voters of the State of Califomia passed Proposition 13 which limited properly taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed.
Eachyear, the assessed value of property maybe increasedby an "inflation factor" (limited to a maximum increaseof 2%). With few exceptions, properly is only assessed at the time that it is
sold to a newowner. At that point, the propertybeing sold is reassessedat the purchase price. The assessed valuation data shown above representsthe only data currently available with respect
to the the actual market value of taxable propertyand is subjectto the limitationsdescribed above.
Source: San Joaquin County Auditor-Controller'sOffice
105
FiscalYear
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
Secured roll
$ 4,799,141
$ 4,254,184
$ 3,877,398 $
3,619,116
$ 3,381,945
$ 3,096,937
$ 2,880,201
$ 2,707,343
$ 2,574,622
$ 2,515,478
Utility roll
2,773
3,654
3,782
3,893
3,352
3,379
3,484
3,525
3,826
3,699
Unsecured roll
242,082
216,065
215,469
202,785
207,095
198,678
177,040
163,299
146,345
129,396
Grossassessedvalue
5,043,996
4,473,903
4,096,649
3,825,794
3,592,392
3,298,994
3,060,725
2,874,167
2,724,793
2,648,573
Less exemptions (1)
229,049
220,590
217,077
212,102
200,957
190,252
185,473
183,294
179,835
176,500
Net assessed value
4,814,947
4,253,313
3,879,572
3,613,692
3,391,435
3,108,742
2,875,252
2,690,873
2,544,958
2,472,073
Land
1,431,203
1,226,293
1,107,776
1,027,462
960,166
889,262
832,788
787,249
756,166
728,900
Improvements
3,327,453
2,989,575
2,739,061
2,549,860
2,366,887
2,164,121
1,982,668
1,847,800
1,748,387
1,705,635
Personal property
285,340
258,035
249,812
248,472
265,339
245,611
245,269
239,118
220,240
214,038
Gross assessed value
5,043,996
4,473,903
4,096,649
3,825,794
3,592,392
3,298,994
3,060,725
2,874,167
2,724,793
2,648,573
Less exemptions (1)
229,049
220,590
217,077
212,102
200,957
190,252
185,473
183,294
179,835
176,500
Net assessed value
$ 4,814,947
$ 4,253,313
$ 3,879,572 $
3,613,692
$ 3,391,435
$ 3,108,742
$ 2,875,252
$ 2,690,873
$ 2,544,958
$ 2,472,073
Total Direct Tax Rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
(1) All exemptions (secured, utility, and unsecured rolls) are homeowners- $72,127 and other- $156,922 = 229,049
Note: In 1978. the voters of the State of Califomia passed Proposition 13 which limited properly taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed.
Eachyear, the assessed value of property maybe increasedby an "inflation factor" (limited to a maximum increaseof 2%). With few exceptions, properly is only assessed at the time that it is
sold to a newowner. At that point, the propertybeing sold is reassessedat the purchase price. The assessed valuation data shown above representsthe only data currently available with respect
to the the actual market value of taxable propertyand is subjectto the limitationsdescribed above.
Source: San Joaquin County Auditor-Controller'sOffice
105
CITY OF LODI
DIRECTAND OVERLAPPING PROPERTYTAX RATES
LAST TEN FISCAL YEARS
(Rate per $100 of assessed value)
Basic
Fiscal Countywide
Year Levy School All Other Total
2007 1.0000 0.0478 0.0000 1.0478
2006
1.0000
0.0570
0.0000
1.0570
2005
1.0000
0.0311
0.0000
1.0311
2004
1.0000
0.0475
0.0000
1.0475
2003
1.0000
0.0487
0.0000
1.0487
2002
1.0000
0.0002
0.0000
1.0002
2001
1.0000
0.0002
0.0000
1.0002
2000
1.0000
0.0002
0.0034
1.0036
1999
1.0000
0.0001
0.0034
1.0035
1998
1.0000
0.0019
0.0034
1.0053
Source: San Joaquin CountyAuditor/Controller's Office
W.
CITY OF LODI
PRINCIPAL PROPERTYTAX PAYERS
CURRENT YEAR AND NINE YEARS AGO
(Dollar amounts in thousands)
Fiscal Year
Taxpayer
General Mills, Inc
Pacific Coast Producers
Pacific Coast Producers Corp.
Cottage Bakery Inc.
KristmontWest
Certainteed Corp.
Parinehs Exchange2004 LLC
Dart Container Corp.
Panattoni, Carl D ETAL
Ford ConstructionCo Inc
Dayton Hudson Corp
California Waste Removal System
GFLIP Limited Partners
Wells Fargo Bank
First Lodi Associates
Wallace Computer Service
Edmund N. Richmond
Principal Secured PropertyValuation
Other Secured Taxpayers
Exemptions relativeto secured tax roll
Total Secured PropertyValuation
* 1998 information is not readily available.
2007
Percent of
Total City
Taxable Taxable
Assessed Assessed
Value Rank Value (1)
1999*
Percent of
Total City
Taxable Taxable
Assessed Assessed
Value Rank Value
$ 145,809
1
3.188 % $ 175,049 1 7.310%
34,451
2
0.753 44,686 2 1.866
27,719
3
0.606
24,966
4
0.546
21,961
5
0.480
19,455
6
0.425
19,318
7
0.422
17,980
8
0.393 12,885 5 0.538
13,243
9
0.290
13,031
10
0.285
15,623 3
14,354 4
12,941 6
11,775 7
11,620 8
10,738 9
10.455 10
337,933
7.390
320,126
13.368
4,461,208
97.553
2,254,496
94.142
226,041
4.943
179,835
7.509
$ 4,573,100
100.000 %
$ 2,394,787
100.000%
Source: San Joaquin County Assessor's Office 107
CITY OF LODI
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Dollaramounts in thousands)
1) Per agreement with San Joaquin County, the County providesthe City of Lodi with 100% of the
amount owed to the City for secured properties, regardlessof collection status. In exchange, the
County is entitled to 100% of revenues collected for interest and penalties. This agreement is
commonly referred to as the Teeter Plan.
Source: San Joaquin County Auditor/Controller's Office
108
Collected Within the
Total Collections
Fiscal Year of the Levy
to Date
Taxes
Levied for
Percent
Percent
Fiscal
the Fiscal
of
of
Year
Year
Amount
Levy (1)
Amount
Levy
2007
$ 8,170
$ 8,170
100.0%
$ 8,170
100.0%
2006
7,815
7,815
100.0%
7,815
100.0%
2005
7,057
7,057
100.0%
7,057
100.0%
2004
6,570
6,570
100.0%
6,570
100.0%
2003
5,832
5,832
100.0%
5,832
100.0%
2002
5,757
5,757
100.0%
5,757
100.0%
2001
5,182
5,182
100.0%
5,182
100.0%
2000
5,056
5,056
100.0%
5,056
100.0%
1999
4,653
4,653
100.0%
4,653
100.0%
1998
4,444
4,444
100.0%
4,444
100.0%
1) Per agreement with San Joaquin County, the County providesthe City of Lodi with 100% of the
amount owed to the City for secured properties, regardlessof collection status. In exchange, the
County is entitled to 100% of revenues collected for interest and penalties. This agreement is
commonly referred to as the Teeter Plan.
Source: San Joaquin County Auditor/Controller's Office
108
CITY OF LODI
ELECTRICITYSOLD BY TYPE OF CUSTOMER
LASTTWO FISCALYEARS
Type of Customer
Billed Accounts
Billed Accounts
2007
2006
City Accounts
186
184
Contract Large Industrial
5
6
Contract Medium Industrial
1
2
Contract Small Industrial
0
1
Domestic Residential
22,938
22,860
Domestic Mobile Home Park
13
13
Dusk to Dawn
95
95
Large Commercial
375
359
Large Industrial
33
33
Medium Industrial
10
13
Residental Low Income
2,003
1,910
Small Commerical
3,241
3,279
Small Industrial
10
9
Total
28.910
28.764
Information prior to the implementation of GASB 44 is not available.
Source: City of Lodi Financial Services Division
109
CITY OF LODI
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
GovernmentalActivities Bus i ness-typeActivities
Details regarding the City's outstanding debt can be found in the Note 8 on pages
45-57 of these financial statements.
Source: City of Lodi Financial Services Division
110
Certificates
Total
Certificates
Total
Total
Fiscal
oe
Loan
Notes
Governmental
off
Notes
Business -type
Primary
Per
Year
Participation
Payable
Payable
Activities
Participation
Payable
Activities
Government
Population
Capita
2007
$ 23,975
$ 187
$ 245
24,407
$ 121,675
$ 1,918
123,593
$ 148,000
63
2,349
2006
24,510
279
245
25,034
125,340
2,077
127,417
152,451
63
2,420
2005
25,030
368
245
25,643
126.615
2,230
128,845
154,488
62
2,492
2004
25,530
456
245
26,231
148,675
2,378
151,053
177.284
61
2,906
2003
26,015
543
245
26,803
117,515
2.521
120,036
146,839
61
2,407
2002
26,745
622
245
27,612
75,285
2,660
77,945
105,557
59
1,789
2001
12,980
12,980
59,931
2,794
62,725
75,705
59
1,283
2000
13,510
13,510
55,544
2,923
58,467
71,977
58
1,241
1999
14,015
14,015
9,762
2,892
12,654
26,669
57
468
1998
14.500
14,500
9,872
3,013
12,885
27.385
56
489
Details regarding the City's outstanding debt can be found in the Note 8 on pages
45-57 of these financial statements.
Source: City of Lodi Financial Services Division
110
CITY OF LODI
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
General bonded debt is debt payablewith governmental fund resources and general obligation bonds
recorded in enterprise funds (of which, the City has none).
(1) Assessed value has been used because the actual value of taxable property is not readily available in
the State of California.
Source: City of Lodi Financial Services Division
111
Percent of
Certificates
Assessed
Fiscal
of
Value (1)of
Per
Year
Participation
Total
Property
Capita
2007
$ 23,975
$ 23,975
0.5 %
$ 381.66
2006
24,510
24,510
0.5
390.18
2005
25,030
25,030
0.6
400.69
2004
25,530
25,530
0.7
420.12
2003
26,015
26,015
0.7
430.00
2002
26,745
26,745
0.8
450.02
2001
12,980
12,980
0.4
221.50
2000
13,510
13,510
0.5
233.33
1999
14,015
14,015
0.5
246.31
1998
14,500
14,500
0.5
260.32
General bonded debt is debt payablewith governmental fund resources and general obligation bonds
recorded in enterprise funds (of which, the City has none).
(1) Assessed value has been used because the actual value of taxable property is not readily available in
the State of California.
Source: City of Lodi Financial Services Division
111
CITY OF LODI
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
The Government Code of the State of California provides for a legal debt limit of 15%of gross assessed valuation. However, this provision was
enacted when assessed valuation was based upon 25% of market value. Effectivewith the 1982fiscal year, each parcel is now assessed at 1001/6
of market value (as of the most recent Change in ownership for that parcel). The computation shown above reflect a conversion of assessed
valuation data for each fiscal yearfrom the currentfull valuation perspective to the 25% level that was in effect at the time the legal debt marginwas
enacted by the State of Califomiafor local govemements locatedwithin the state.
(1) Reflects City assessed valuation with other exemptionsof $156,922 deducted for 2007
Source: San Joaquin County Auditor-ControlletsOffice
112
FISCAL YEAR
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
Assessed valuation (1)
$ 4,887,074
$ 4,325,000
$ 3,951,862
$ 3,686.227
$ 3,464,195 $
3,177,319
$ 2,942,348
$2,757,557
$2.611.744
$ 2,538,593
Conversion percentage
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
Adjusted assessed valuation
1,221,769
1,081,250
987.966
921,557
866,049
794,330
735.587
689,389
652,936
634,648
Debt limit percentage
15%
15%
15%
15%
15%
15%
15%
15%
15%
15%
Debt Limit
183,265
162.188
148,195
138,234
129,907
119,149
110,338
103.408
97,940
95,197
Total net debt applicable to limit
Legal debt margin
$ 183.265
$ 162,188
$ 148.195
$ 138,234
$ 129,907 $
119,149
$ 110,338
$ 103,408
$ 97,940
$ 95,197
Total net debt applicable to the limit
as a percent of debt limit
0°/u
0%
0%
0%
0%
0%
0%
0%
0%
0°/u
The Government Code of the State of California provides for a legal debt limit of 15%of gross assessed valuation. However, this provision was
enacted when assessed valuation was based upon 25% of market value. Effectivewith the 1982fiscal year, each parcel is now assessed at 1001/6
of market value (as of the most recent Change in ownership for that parcel). The computation shown above reflect a conversion of assessed
valuation data for each fiscal yearfrom the currentfull valuation perspective to the 25% level that was in effect at the time the legal debt marginwas
enacted by the State of Califomiafor local govemements locatedwithin the state.
(1) Reflects City assessed valuation with other exemptionsof $156,922 deducted for 2007
Source: San Joaquin County Auditor-ControlletsOffice
112
CITY OF LODI
DIRECTAND OVERLAPPING GOVERN MENTALACTIVITIES DEBT
June 30,2007
OVERLAPPING TAX AND ASSESSMENT DEBT:
San Joaquin Community College District
Lodi Unified school District
City of Lodi 1915Act Bonds
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
DIRECTAND OVERLAPPING GENERAL FUND DEBT:
San Joaquin County Certificates of Participation
Lodi Unified School District Certificates of Participation
City of Lodi Certificates of Participation
TOTAL DIRECTAND OVERLAPPING GENERAL FUND DEBT
COMBINEDTOTAL DEBT(2)
2006-07 Assessed Valuation
2006-07 Population
DEBT RATIOS
Total Debt
06/30/07
$ 82,231,890
105,175,000
735,000
$
$ 5,043,996,000
121,090,000
36,275,000
23,975,000
Percentage City's Share
Applicable (1) of Debt
8.332 % $ 6,851,561
35.678 37,524,337
100.00 735,000
$ 45,110,898
9.178 % $ 11,113,640
35.678 12,942,195
100.00 23,975,000
$ 48,030,835
63,395
Per Capita
Total Gross Debt $ 93,141,732 $ 1,469
$ 93,141,732
Value
1.85%
(1) Percent of overlapping agency's assessed valuation located within the boundaries of the City.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded capital lease
obligations.
SOURCE: California Municipal Statistics., San Francisco, CA
San Joaquin CountyAuditors-Controller Office
State of California, Department of Finance, Demographic Research Unit
113
CITY OF LODI
PLEDGED-REVENUECOVERAGE
LAST TEN FISCALYEARS
(Dollars amounts in thousands)
Less: Net
it Gross Operating Available Debt Service
Year avenues (I)Expenses(2) Revenue Principal Interest Total Coverage
Electric Revenue Certificates of Participation
2007 $
67,015 $
56,932
$ 10,083
$ 2,350
$4,134
$6,484
1.56
2006
60,339
54,283
6,056
-
2,049
2,049
2.96
2005
55,183
48,278
6,905
5,895
3,541
9,436
0.73
2004
55,074
46,858
8,216
2,150
3,203
5,353
1.53
2003
55,304
42,739
12.565
4,575
2,836
7,411
1.70
2002
49,089
63,545
(14,456)
1,100
1,359
2,459
(5.88)
2001
44,594
46,253
(1,659)
1,391
1,391
(1.19)
2000
41.219
40,016
1,203
1,330
1,330
0.90
1999
37.847
38,141
(294)
1998
36,281
34,561
1,720
1997
36,236
32,992
3,244
continued
114
CITY OF LODI
PLEDGED-REVENUECOVERAGE (continued)
LAST TEN FISCALYEARS
(Dollars amounts in tnousanos)
Less: Net
Fiscal Gross Operating Available Debt Service
Year Revenues(1) Expenses(2) Revenue Principal Interest Total Coverage
Wastewater Certificatesof Participation
2007
9,446
5,287
4,159
1,315
2,055
3,370
1.23
2006
9,496
4,886
4,610
1,275
2,092
3,367
1.37
2005
8,650
7,028
1,622
540
1,909
2,449
0.66
2004
6,635
4,385
2,250
175
715
890
2.53
2003
6,824
4,380
2,444
160
639
799
3.06
2002
4,193
4,808
(615)
150
649
799
(0.77)
2001
4,868
4,336
532
145
658
803
0.66
2000
4,000
3,147
853
140
667
807
1.06
1999
4,196
2,957
1,239
125
675
800
1.55
1998
4,034
2,914
1,120
120
682
802
1.40
1997
3,719
2,863
856
115
689
804
1.06
Includes all nongeneral obligation long to rn debt backed by pledged revenues.
Details regarding the Citys outstanding debt can befou nd in the Note 8 on pages 4557 of these financial statements.
(1) Total operating revenues including investmenteamings.
(2) Total operating expenses exclusive of depreciation and amortization.
Source: City of Lodi Financial Services Division
115
CITY OF LODI
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCALYEARS
Personal
Per
Population San Joaquin Population Rank in Size Income
Capita
Fiscal Square City Percent County Percent of California (millions of
Personal
Year Miles Population Change Population of County Cities dollars)
Income
2007
13.17
63,395
0.9%
679,687
9.3%
129
nla
n/a
2006
12.81
62,817
0.6%
668,265
9.4%
131
$ 18,273 $
27,144
2005
12.81
62,467
2.8%
653,333
9.6%
131
17,387
26,181
2004
12.79
60,769
0.4%
630,600
9.6%
130
16,573
25,527
2003
12.69
60,500
1.8%
613,500
9.9%
179
15,543
24,620
2002
12.62
59,431
1.4%
596,000
10.0%
129
14,747
24,150
2001
12.60
58,600
1.2%
583,700
10.0%
126
14,281
24,086
2000
12.50
57,900
1.8%
566,600
10.2%
125
13,757
24,209
1999
12.32
56,900
2.2%
554,400
10.3%
124
12,632
22,867
1998
12.32
55,700
1.6%
545,200
10.2%
124
11,859
21,952
Personal income is the income received by all persons from all sources. Personal income is the some of net earnings by place of
residence, rental income of persons, personal dividend income, personal interest income, and personal current transfer receipts.
Per capita personal income is calculated as the personal income of residents of a given area divided by the resident population of the area.
In computing per capita personal income, Bureau of Economic analysis uses the Census Bureau's annual midyear population estimates.
Source: State of California, Departmentof Finance, Demographic Reseach Unit.
116
CITY OF LODI
PRINCIPAL PRIVATE EMPLOYERS
CURRENTYEARAND NINEYEARSAGO
Total
9.266
35.47 5,636
Note: The City of Lodi implemented GASB 44 for the fiscal year ended June 30,2006
Information prior to the implementation of GASB 44 is not available.
117
21.57
Current
Nine Years Ago
Percent
Percent
of Total City
of Total City
Emplover
Employees
Rank
Employment
Employees
Rank
Employment
Lodi Unified School District
3,301
1
12.64 %
2,247
1
8.60
Pacific Coast Producers
1,430
2
5.47
530
4
2.03
Lodi Memorial Hospital
1,342
3
5.14
650
3
2.49
Cottage Bakery
695
4
2.66
0.00
Blue Shield
650
5
2.49
0.00
City of Lodi
569
6
2.18
387
5
1.48
General Mills
438
7
1.68
852
2
3.26
Farmers & Merchants Bank
334
8
1.28
183
9
0.70
Walmart
3L7
9
1.21
226
6
0.87
Target
190
10
0.73
200
7
0.77
Valley Industries
191
8
0.73
Lodi Fab Industries, Inc
170
10
0.65
Total
9.266
35.47 5,636
Note: The City of Lodi implemented GASB 44 for the fiscal year ended June 30,2006
Information prior to the implementation of GASB 44 is not available.
117
21.57
CITY OF LODI
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY DEPARTMENT FOR LAST TEN YEARS
2007 2006 2005 2004 2003 2002 2001 2000 1999 1998
Department:
Administration
35
33
37
36
37
34
34
32
30
26
Community Development
18
17
17
17
18
17
17
15
15
14
Electric
64
65
52
52
52
50
47
46
44
44
Finance
30
28
38
38
38
35
34
34
32
34
Fire
64
61
68
61
68
55
52
50
49
48
Library
16
14
15
15
15
14
14
14
14
14
Parks & Recreation
34
31
34
34
34
29
29
26
26
27
Police
116
117
117
116
117
115
114
113
113
112
Public Works
114
99
111
110
110
108
103
99
95
94
Total
491
465
489
479
489
457
444
429
418
413
Source: City of Lodi Budget Document
118
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT
FOR LASTTWO FISCALYEARS
119
FiscalYear
FiscalYear
2007
2006
General government:
Building permits issued
2,317
2,699
Business tax certificates:
Retail sales and service
2632
2,565
Manufacturers and processors
78
125
Professions
404
322
Miscellaneous contractors, peddlers, delivery vehicles, etc.
1127
533
Utilitybilling/customer service:
Numberof customers
25,712
25,655
Energysales (KWH)
458,740,745
459,637,092
Peakdemand(MW)
144
127
Public safety:
Police:
Major reported crimes
3,096
3,234
Total arrests
5,463
5,162
Dispatched calls for service
53,686
55,937
Fire:
I nteriorstructu re fi re calls
79
66
Non-structuralfire ells
163
158
Hazardous materialscalls
27
26
Emergency medical calls
3,213
2,912
Total emergency calls
5,000
4.447
Total numberof units dispatched
7,005
6,055
Publicworks:
Miles of streets resurfaced
4
33
Fleetjob orders completed
6,938
5,608
Trees planted
95
300
Water utility:
Newconnections
110
266
Water main breaks
10
8
Wastewater utility:
Average daily treatment (million gal/day)
6.9MG
6.7MG
Library:
Registered borrowers
44,558
52,779
Circulationof librarymaterials
273,270
281,216
Reference, research and informational questions answered
18,854
17,342
Annual attendance at libraries
288,070
287,986
Numberof programs offered
339
320
Annual attendance at programs
10,700
10,872
Publicaccess computer usage
35.260
29,896
Community center:
Community center bookings
302
220
119
CITY OF LODI
OPERATING INDICATORS BY FUNCTIONIPROGRAM/DEPARTMENT
FOR LASTTWO FISCALYEARS
Note: The City of Lodi implementedGASB 44 for the fiscal year ended June 30,2006.
Information prior to the implementation of GASB 44 is not available.
Source: City of Lodi
120
Fiscal Year
Fiscal Year
2007
2006
Instructional classes
478
509
Registered students
3,548
4,369
Yearly attendance
14,429
15,369
Parks and recreation:
After school program registration (number ci participants/sites)
145,000/12
135,000/12
Adult sports
Program/Participation
36,000
36,000
Programs offered
11
11
Partnerships
3
5
Tournaments
20
20
Youth/Teen sports
Program attendance
200,000
200,000
Programs offered
14
20
Aquatics
Program attendance
59,000
59,000
Numberof programs
8
6
Note: The City of Lodi implementedGASB 44 for the fiscal year ended June 30,2006.
Information prior to the implementation of GASB 44 is not available.
Source: City of Lodi
120
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT
LAST THREE FISCAL YEARS
General government:
Total square miles
Public safety:
Police:
Facilities:
Stations
Animal control facility
Police training facility (pistol range)
Vehicles:
Marked patrol cars
Motorcycles and scooters
Animal control vehicles
Other automobiles
Fire:
Facilities:
Fire stations
Vehicles:
Fire engines
Trucks/Trailers
Other automobiles
Public works:
Miles of streets
Miles of alleyways
Traffic signals
Street lights
121
FiscalYear
2007 2006 2005
13.17 12.81 12.81
1
1
1
1
1
1
1
1
1
25
28
28
5
4
1
2
3
3
41
41
41
4
4
4
6
5
5
8
7
7
10
11
11
184
198
100
16
16
14
66
64
60
7,270
7,203
6,995
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAMIDEPARTMENT
LAST THREE FISCAL YEARS
122
Fiscal Year
2007
2006
2005
Parks and recreation:
Parks and squares
23
23
23
Park acreage
275
275
275
Boating facilities - launch lanes
1
1
1
Senior center
1
1
1
Community Centers
1
1
1
Swimming pools
3
3
3
Baseball/softball diamonds
26
26
26
Tennis courts
11
11
11
Skateboard park
1
1
1
Playgrounds
22
22
22
Ballpark
26
26
26
Soccer Field
22
22
22
Football Field
3
3
3
Hand ball/BasketballNolleybalI Coui [s
8
8
8
Horseshoe Pits
10
10
10
Library:
Central library
1
1
1
Total items in collection
142,098
134,129
137,673
Integrated library system
1
1
1
Microform readers
1
1
1
Microform readers/printers
1
1
1
Self check out machines
1
1
1
Electric utility:
Overhead lines 12kv (miles)
129
129
129
Overhead lines 60kv (miles)
13
13
13
Underground lines (miles)
151
151
151
122
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT
LAST THREE FISCAL YEARS
Water utility:
Water main lines
Water storage capacity (gallons)
Water wells
Water reservoirs
Wastewater utility:
Wastewater main lines (miles)
Treatment capacity
Wastewater treatment plant
Stormwater utility:
Stormwater main drain lines (miles)
Stormwater pump stations
Central parking district:
Parking structure
Parking spaces
Parking lots
Fiscal Year
2007 2006 2005
238 235 230
1,100,000 1,100,000 1,100,000
26 26 25
2 2 2
189
183
182
8.5
8.5 MG
8.5 MG
1
1
1
161
115
114
14
13
14
1
1
1
2453
2,453
2,453
25
25
25
Note: The City of Lodi implemented GASB 44 for the fiscal year ended June 30, 2006. Information priorto 2005 are
not readily available.
Source: City of Lodi Departments
123
(This page intentionally left blank.)
SINGLE AUDIT REPORTS
CITY OF LODI
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE FISCAL YEAR ENDED JUNE 30,2007
Federal Grantor
Pass-through Grantor or Direct
CFDA
Grant/Project
35,099
Program Title
Number
Number
Expenditures
Direct:
U.S. Department of Housing and Urban Development
Federal Transit Formula Grants:
Passed through San Joaquin County Department of Planning and Building Inspection
2006-2007 Program Year - Operating
Community Development Block Grants/Entitlement Grants:
CA -90-Y565-00
1,057,688
2006-2007 Program Year - Capital
2005-2006 Program Year
14.218
N/A
$ 1,538
2004-2005 Program Year
14.218
N/A
50,098
2003-2004 Program Year
14.218
N/A
36,024
2001-2002 Program Year
14.218
N/A
27
Total Community Development Block Grants/Entitlement Grants
87.687
U.S. Department of Justice
Direct:
Local Law Enforcement Block Grant Program 16.592 2004 -LB -BX -0133 14,959
Edward Byrne Memorial Justice Assistance Grant Program 16.738 2005 -DJ -BX -1492 20,140
Total U.S. Department of Justice
35,099
U.S. Department of Transportation
Direct:
Federal Transit Formula Grants:
2006-2007 Program Year - Operating
20.507
CA -90-Y565-00
1,057,688
2006-2007 Program Year - Capital
20.507
CA -90-Y565-00
97,911
2005-2006 Program Year - Capital
20.507
CA -90-Y413-00
300,000
2004-2005 Program Year - Capital
20.507
CA -90-Y432-00
41,616
Total Federal Transit Formula Grants
1,497,215
U.S. Department of Health and Human Services
Passed through San Joaquin County Department of Health Services Agency:
National Family Caregiver Support, Title III. Part E 93.052 A-06-371 7.500
Total federal awards $ 1,627,501
See accompanying notes to the schedule of expenditures of federal awards.
125
CITY OF LODI
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE FISCAL YEAR ENDED JUNE 30,2007
NOTE 1—GENERAL
The accompanying Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year ended June 30, 2007, presents the activity of all
federal award programs of the City of Lodi, California (City). The City reporting entity is defined in Note 1 of the City's basic financial
statements. All federal awards received directly from federal agencies, as well as federal awards passed through other government agencies,
are included in the SEFA.
NOTE 2 — BASIS OF ACCOUNTING
The accompanying SEFA is presented using the modified accrual basis of accounting for grants accounted for in governmental fund types and
the full accrual basis of accounting for grants accounted for in proprietary fund types, as described in Note 1 of the City's basic financial
statements.
NOTE 3 — CATALOG OF FEDERAL DOMESTIC ASSISTANCE
The CFDA numbers included in the accompanying SEFA were determined based on the program name, review of grant contract information
and Office of Management and Budget's Catalog of Federal Domestic Assistance.
NOTE 4 — SUBRECIPIENTS
Of the federal expenditures presented in the schedule, the City provided federal awards to subrecipients as follows:
Federal Program
Federal
CFDA Number
Amount Provided
to Subrecipients
Federal Transit Formula Grants 20.507 $ 296,076
126
The Honorable Members of City Council
City of Lodi, California
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the governmental activities, the business -type activities, each major fund and the aggregate
remaining fund information of the City of Lodi, California (City), as of and for the fiscal year ended June 30, 2007, which collectively
comprise the City's basic financial statements and have issued our report thereon dated December 5, 2007. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained
in GovernmentAuditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing
procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the
City's internal control over financial reporting.
A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or
combination of control deficiencies, that adversely affects the City's ability to initiate, authorize, record, process, or report financial data
reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the
City's financial statements that is more than inconsequential will not be prevented or detected by the City's internal control.
127
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a
material misstatement of the financial statements will not be prevented or detected by the City's internal control.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and
would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not
identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of
its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was
not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under GovernmentAuditing Standards.
We noted certain matters that we reported to management of City of Lodi, in a separate letter dated December S, 2007.
This report is intended solely for the information and use of the City Council, management, federal and state grantor agencies and pass-through
entities and is not intended to be and should not be used by anyone other than these specified parties.
a��c�s Gni',* 0 +cttvle`/ LLP
Certified Public Accountants
Sacramento, California
December S, 2007
128
The Honorable Members of City Council
City of Lodi, California
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR
PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE
IN ACCORDANCE WITH OMB CIRCULAR A-133
Coinpliance
We have audited the compliance of the City of Lodi, California (City), with the types of compliance requirements described in the U. S. Office
of Management and Budget (OMB) CircularA-133 Compliance Supplement that are applicable to its major federal program for the fiscal year
ended June 30, 2007. The City's major federal program is identified in the summary of auditor's results section of the accompanying schedule
of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal
program is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our
audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB
Circular A-133, Audits cf States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 require that
we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred
to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis,
evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the
City's compliance with those requirements.
In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable to its major federal
program for the year ended June 30, 2007.
129
Internal Control Over Compliance
The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of
laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal
control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our
auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the
effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control
over compliance.
A control deficiency in an entity's internal control over compliance exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance
requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that
adversely affects the entity's ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a
type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity's internal
control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that
material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's internal
control.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not
necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
Schedule of Expenditures of Federal Awards
We have audited the financial statements of the governmental activities, the business -type activities, each major fund and the aggregate
remaining fund information of the City, as of and for the fiscal year ended June 30, 2007, and have issued our report thereon dated December
5, 2007. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City's basic
financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis, as required
by OMB Circular A-133, and is not a required part of the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the
basic financial statements taken as a whole.
130
This report is intended solely for the information and use of the City Council, management, federal and state grantor agencies and pass-through
entities and is not intended to be and should not be used by anyone other than these specified parties.
actas 67� VI,l O 1Couue LUP
Certified Public Accountants
Sacramento, California
December 5, 2007
131
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
Section I — Summary of Auditor's Results
Financial Statements:
Type of auditor's report issued: Unqualified
Internal control over financial reporting:
• Material weaknesses identified? No
• Significant deficiencies identified that are
not considered to be material weaknesses? None reported
Noncompliance material to financial
statements noted? No
Federal Awards:
Internal control over major programs:
• Material weaknesses identified? No
• Significant deficiencies identified that are
not considered to be material weaknesses? No
Type of auditor's report issued on compliance
for major programs: Unqualified
Any audit findings disclosed that are required
to be reported in accordance with section
510(a) of Circular A-133? No
132
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE FISCAL YEAR ENDED JUNE 30,2007
Identification of major programs:
Federal Transit Formula Grant CFDA #20.507
Dollar threshold used to distinguish
between type A and type B programs: $300,000
Auditee qualified as low-risk auditee? No
None
None
Section II - Financial Statement Findings
Section III - Federal Award Findings and Questioned Costs
133
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
FOR THE FISCAL YEAR ENDED JUNE 30,2007
Prior Year Finding No. 05-03
Community Development Block Grants/Entitlement Grants
CFDA No. 14.218
Department d Hozising and Urban Development
Sub -recipient Monitoring
Criteria
Monitoring the sub -recipient's use of federal awards through site visits or other means is required to provide reasonable assurance that the sub -
recipient administers federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements and that
performance goals are achieved.
Condition
The City has a sub -recipient agreement dated November 1, 2004 with the Salvation Army that requires the Salvation Army to submit three
quarterly reports and one annual report. Per our testing, we noted that the Salvation Army has not submitted any of the required reports as
required by the sub -recipient agreement. Further inquiry established that the City Community Development Department does not have a
written sub -recipient monitoring procedures policy.
Questioned Costs
The amount passed -through to the Salvation Army during the year was $355,360.
Cause
The City Community Development Department does not have in place a sub -recipient monitoring policy that establishes written procedures for
effective monitoring of sub -recipients. In addition, per admission of the Community Development Director of the City, the Community
Development Department does not have sufficient staff to document timely management decisions for audit and monitoring findings, maintain a
system to track and following-up on reported deficiencies related to programs funded by the recipient, or maintaining regular contacts with sub -
recipients and appropriate inquiries concerning the federal programs.
Effect
The City could be subject to sanctions.
134
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE FISCAL YEAR ENDED JUNE 30,2007
Recommendation
We recommend that the City put into place a comprehensive monitoring policy that establishes clear guidelines for communication of federal
award requirements to sub -recipients, responsibilities for monitoring sub -recipients, process and procedures for monitoring, methodology for
resolving findings of sub -recipient noncompliance or weaknesses in internal control, and requirements for and processing of sub -recipient
audits, including appropriate adjustment of pass-through entity's accounts. In addition, we recommend that the City obtain sufficient staffing
resources in order to enhance monitoring of sub -recipients. Additional funding for staff can be obtained by using Community Development
Block Funds for administration. Currently, the Community Development Department can use 20% of Community Development Block Grant
Funds for administration; however, administration charges to these funds have been well below the allotted percentage.
Prior Year's Management's Response
The Community Development Director indicates that they will not receive any monitoring reports from the Salvation Army until after the City
delivers the funds and that any monitoring requirements can be handled in their day to day involvement with the Salvation Army.
Prior Year Status
In the current year, there is a new project allocated to the Salvation Army, but the contract has yet to be executed. As such, the City has not
disbursed any funds to the Salvation Army this year. Therefore, for the current year there are no progress reports or an annual report for
testing. However, the City has not received the required progress reports or an annual report from the prior year's project with the Salvation
Army. Although City staff has compiled information from the Salvation Army for reporting purposes, we considered the prior year finding to
be a continuing finding for the current year.
Current Year Status
The City has implemented a subrecipient monitoring plan for the CDBG program and obtained monitoring reports of it's subrecipients' grant
activity, therefore, we consider this finding resolved.
135