HomeMy WebLinkAboutAgenda Report - December 21, 2011 I-02AGENDA ITEM:r**Z
A% CITY OF LODI
,. COUNCIL COMMUNICATION
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AGENDA TITLE: Review of City's Annual Financial Report (Fiscal Year 2010/11) by Macias, Gini &
O'Connell. LLP
MEETING DATE: December21,201 1
PREPARED BY: Deputy City Manager
RECOMMENDED ACTION: Receive and file the following reports and financial statements submitted by
Macias, Gini & O'Connell, LLP and the Internal Services departmentfor
Fiscal Year 2010/11:
• The Combined Annual Financial and 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) issued an
"unqualified opinion." Scott Brunner, Director of MGO will be present to answer questions during the
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 are
also available to the public by contacting the Financial Services Division or through the City web site at
www.lodi.gov and at the Lodi Public Library.
Certificate of Achievement
The City received a Certificate of Achievement for Excellence in Financial Reporting from the
Government Finance Officers Association of the United States and Canada (GFOA) for the 18th year and
the California Society of Municipal Finance Officers (CSMFO) to the 12th year in a row. A copy of the
GFOA certificate is included in the 2010/11 Financial Reports.
FISCAL IMPACT: By law and good management practice, the City's financial records are audited by
independent auditors according to Generally Accepted Auditing Standards. Well
maintained financial records are the cornerstone by which the City fulfills its
Attachment
fiduciary responsibilifiesto t public. ,.
Jordan Ayers
Deputy City Manager
APPROVED:
Konradt Bartlam, City Manager
CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Year Ended June 30, 2011
BOB JOHNSON, MAYOR
JOANNE MOUNCE, MAYOR PRO TEMP
LARRY HANSEN, COUNCILMEMBER
PHIL KATZAKIAN, COUNCILMEMBER
ALAN NAKANISHI, COUNCILMEMBER
KONRADT BARTLAM, CITY MANAGER
Prepared by the Financial Services Division
Ruby Paiste, Financial Services Manager
Wendy Dowhower, Supervising Accountant
INTRODUCTORY SECTION
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2011
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents
Letter of Transmittal
Certificate of Achievement for Excellence in Financial Reporting
Organization Chart of the City of Lodi
Directory of Officials and Advisory Bodies
FINANCIAL SECTION
Independent Auditor's Report
MANAGEMENT'S DISCUSSION AND ANALYSIS
BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements:
Statement of Net Assets
Statement of Activities
Fund Financial Statements:
Balance Sheet — Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets
Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances
of Governmental Funds to the Statement of Activities
Statement of Net Assets — Proprietary Funds
Statement of Revenues, Expenses and Changes in Net Assets — Proprietary Funds
Statement of Cash Flows — Proprietary Funds
Statement of Fiduciary Net Assets — Fiduciary Funds
Statement of Changes in Fiduciary Net Assets - Fiduciary Funds
Notes to Basic Financial Statements
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress — Pension Plan
Schedule of Funding Progress — OPEB Plan
Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — General Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — Streets Fund
Note to the Required Supplementary Information
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Combining Balance Sheet — Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds
Nonmajor Governmental Funds - Special Revenue Funds
Combining Balance Sheet —Nonmajor Governmental Funds — Special Revenue Funds
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CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2011
TABLE OF CONTENTS - continued
Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds — Special Revenue Funds 85
Schedules of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — Nonmajor Governmental Funds — Special Revenue Funds 86
Nonmajor Governmental Funds - Capital Project Funds 92
Combining Balance Sheet — Nonmajor Governmental Funds — Capital Project Funds 93
Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds — Capital Project Funds 94
Combining Statement of Net Assets - Internal Service Funds 96
Combining Statement of Revenues, Expenses and Changes in Fund Net Assets — Internal Service Funds 97
Combining Statement of Cash Flows - Internal Service Funds 98
Combining Statement of Fiduciary Net Assets - Private -Purpose Trust Funds 100
Combining Statement of Changes in Fiduciary Net Assets - Private -Purpose Trust Funds 101
Statement of Changes in Assets and Liabilities - Agency Fund 102
STATISTICAL TABLES (UNAUDITED)
104
Government -wide information:
105
Net Assets by Component - Last Nine Fiscal Years
106
Changes in Net Assets - Last Nine Fiscal Years
Fund information:
Fund Balances, Governmental Funds - Last Ten Fiscal Years
108
109
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years
111
Tax Revenues by Source, Governmental Funds - Last Ten Fiscal Years
112
Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years
113
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years
114
Principal Property Taxpayers -Current Year and Nine Years Ago
115
Property Tax Levies and Collections - Last Ten Fiscal Years
116
Electricity Sold by Type of Customer - Last Six Fiscal Years
117
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years
118
Ratios of General Bonded Debt Outstanding- Last Ten Fiscal Years
119
Legal Debt Margin Information - Last Ten Fiscal Years
120
Direct and Overlapping Governmental Activities Debt
121
Pledged -Revenue Coverage - Last Ten Fiscal Years
124
Demographic and Economic Statistics - Last Ten Fiscal Years
125
Principal Employers - Current Year and Nine Years Ago
126
Full -Time Equivalent City Government Employees By Department - Last Ten Fiscal Years
127
Operating Indicators by Function/Program/Department - Last Six Fiscal Years
129
Capital Asset Statistics by Function/Program/Department - Last Seven Fiscal Years
SINGLE AUDIT REPORTS
132
Schedule of Expenditures of Federal Awards
134
Notes to the Schedule of Expenditures of Federal Awards
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2011
TABLE OF CONTENTS - continued
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 135
Independent Auditor's Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and
on Internal Control over Compliance in Accordance with OMB Circular A-133 137
Schedule of Findings and Questioned Costs 139
Schedule of Prior Year Findings and Questioned Costs 146
CONTINUING DISCLOSURES (UNAUDITED)
Annual Report for Electric Utility 15
Annual Report for Wastewater Utility 1566
Annual Report for the Lodi Public Improvement Corporation 163
Annual Report for Water Utility 166
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CITY COUNCIL KONRADT BARTLAM
CITY OF LODI City Manager
BOB JOHNSON, Mayor
JOANNE MOUNCE, Mayor Pro
Tempore
COUNCILMEMBERS:
LARRY HANSEN
PHIL KATZAKIAN
ALAN NAKANISHI
December 6, 2011
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 the Manager
of the City of Lodi:
RANDI JOHL
City Clerk
STEVE SCHWABAUER
City Attorney
The Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2011, is hereby submitted. This report is provided to
present the financial position, changes in financial position, and where applicable, cash flows of the City of Lodi (City) as of and for the year ended
June 30, 2011, in conformity with 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. 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 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 information for the preparation of the City's financial statements in conformity with generally accepted
accounting principles (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.
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.
THE REPORTING ENTITY AND 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 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. Under the 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, community development, 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:
Number of
Facilities
Elementary and Secondary Schools 18
Sanitation (solid waste) and Cable Television 3
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 62,473 and is contained in an area of 13.92 square miles. The City has grown steadily since incorporation in
1906. 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.
The City is built on a strong and broad based local economy. The City is known for its Zinfandel wine. It is an authentic dynamic wine region with 75
wineries within 10 miles of downtown. The employment base is diversified with food processing, packaging, plastic and service industries.
In addition, the City 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 the City. The City's focus on
economic development has encouraged numerous big industries to move to the City that collectively created hundreds of new jobs.
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Economic Development
The City 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 has provided for additional retail sales and commercial activity with approval
of new retail developments adjacent to Highway 99 and Harney Lane. The City is also committed to an Enterprise Zone with San Joaquin County.
MAJOR GOALS, OBJECTIVES AND PROJECTS
To assist the citizens of the City 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 Environment for Citizens
Ensure Efficient and Productive City Organization
Ensure Public Trust, and
Ensure the Development of the Lodi Economy for 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 Employee Training and Education
Provide for a Balanced Community Evaluate Telecommunications Opportunities
Enhance Access through Implementation of Information Systems Strategic Plan Provide Resources to Maintain City's Infrastructure
Promote Urban Forestry Promote Public Relations and Marketing Efforts
Attract, Retain and Invest in a Quality City Work Force Ensure Open and Accessible Public Meetings
Encourage Public Arts, Cultural and Recreational Opportunities Pursue Efforts to 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 City. These projects are designed to accomplish specific objectives and
become the focus for organization wide effort.
As discussed above, economic revitalization continued to be an active focal point of the City in 2010-11. The following projects are underway and
will see significant progress or be completed in 2012.
Water Treatment Plant
The City currently relies on groundwater for its drinking water supply. During FY 2009-10, the City requested bids for the construction of an 8 million
gallon a day water treatment plant, utilizing surface water from the Mokelumne River. In October 2010, the City awarded the construction contract
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and closed on a revenue bond issue to finance the construction. Construction began in March 2011 and is estimated to be completed in October
2012. Total cost for the plant is estimated to be $36.5 million.
DeBenedetti Park Improvements and G -Basin
DeBenedetti Park is approximately a 46 -acre parcel that will support parks and recreation programs and serve as a storm drainage basin. The
initial phase of this project consists of providing and installing storm drainage piping and pumping, water well and irrigation system and turf. New
turf areas will be used for soccer, flag football and softball programs. Estimated cost of this phase of the project is $1.3 million and will be
completed by the end of 2011.
Grape Bowl Improvements
The Grape Bowl is a stadium that was originally constructed using Work Project Administration Funding during the 1940's. During FY 2009-10,
Energy Efficiency Conservation Block Grant funds under the ARRA were used to upgrade the lighting. Additionally, significant improvements related
to disability access were completed and significant progress was made toward installing an all-weather playing surface. These improvements were
completed in August 2010 with the first game played on the new surface in November 2010.
Reynolds Ranch
Reynolds Ranch is a planned development on the south eastern edge of the city that will eventually incorporate residential and commercial
development. A Costco store was completed with a grand opening in June 2011. Permits for a Home Depot have been approved and construction
is expected to be completed for a grand opening in mid 2012.
Water Meters and Water Infrastructure
Under the state law, all residential housing must be billed for water usage on a metered basis by 2025. The City has embarked on a program to
install meters on approximately 14,000 parcels over the next 6 years. A portion of this project will also include moving mains and service
connections from alleys and rear yards to streets and front yards. Additionally, the City will be appropriately sizing water mains as part of this
project. Construction began during FY 2009-10 and will continue through FY 2016-17. Estimated cost for the complete program is $42.5 million.
White Slough Wastewater Treatment Plant De -watering Facility
The City awarded a contract in FY 2010/11 to construct a de -watering facility at its White Slough Wastewater Treatment Plant to meet regulatory
requirements. The de -watering facility is estimated to cost approximately $4.6 million and be completed by the end of calendar year 2011.
FINANCIAL INFORMATION, MANAGEMENT AND 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 2010-11, the City Council and City Manager made several supplemental budget appropriations, the majority of which relate to operating
budgets and capital projects.
Fund Balance
It is the City's goal to target and maintain an unassigned fund balance in the General Fund of at least 15% of expenditures and working capital
balances in the Water and Wastewater enterprise funds of at least 25% of operating expenses. Based on a study completed in 2007, the target for
the Electric enterprise fund working capital is $12.9 million. The goals allow for variations from year-to-year to account for economic and fiscal
changes. The General Fund maintained an unassigned fund balance of $5,597,678 or 15.31 %, of operating revenues at the end of fiscal year 2010-
11.
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.
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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. Pursuant to subsequent legislation adopted after Article XIII B,
the City is required to annually establish and adopt its appropriations limit by resolution. For 2010-11, the City's appropriations subject to limit were
$31,809,427 and the appropriation limit was $75,523,822 leaving appropriations at $43,714,395 below the limit.
Debt Administration
At June 30, 2011, the City had outstanding Certificates of Participation of $193,468,334. 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.
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. The 2002 bonds were refunded with the 2008 Electric Systems Revenue Certificates of Participation thereby eliminating a variable
rate obligation.
In 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 and the City of Fort Bragg issued Water and Wastewater revenue bonds (20038) through the California Statewide
Communities Development Authority ("the Authority") under its pooled financing program. Total bonds issued were $9,855,000 of which $5,000,000
was for the upgrade of the City's wastewater facilities.
In 2004, 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.
In 2007, the City issued $30,320,000 in Wastewater Certificates of Participation (2007A) to finance Phase III of the wastewater improvements and to
refund the 1991 Certificates of Participation.
On July 24, 2008, the City issued the 2008 Electric System Revenue Certificates of Participation to provide funds to currently refund the outstanding
$46,760,000 principal amount of the Electric System Revenue Certificates of Participation 2002 Series A Variable Rates Certificates (the "Refunded
2002 Certificates"); and to pay certain costs relating to the termination of a swap agreement relating to the Refunded 2002 Certificates.
On October 1, 2010, the City issued $9,015,000 Water Revenue Certificates of Participation, 2010 Series A and $29,650,000 Water Revenue
Bonds, 2010 Series B (Federally taxable - Build America Bonds) to finance the construction of the Surface Water Treatment Facility which is
designed to pump water from the Mokelumne River, treat and deliver it to the City's water distribution 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 investment grade rating on any
direct debt and will obtain credit enhancements such as letters of credit or 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 departments.
Single Audit
The City is subject to financial and compliance reporting required by the Single Audit Act Amendments of 1996 and OMB Circular A-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 2010-11 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 California for 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 Insurance Funds. At June 30, 2011, the Insurance Fund had a net deficit of $286,387.
INDEPENDENT AUDIT
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, 2010. 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 eighteen
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 Financial Services Division 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, Wendy
Dowhower, Supervising Accountant, Tyson Mordhorst, Senior Programmer Analyst, Nancy Spinelli, Accounting Clerk. Their work in preparing this
year's CAFR is greatly appreciated.
I 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.
Respectfully submitted,
Jordan Ayers
Deputy City Manager/Internal Services Director
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CD
CD
Library
Board
Library
City of Lodi
Citizens
City Council
City Attorney 11 11 City Manager 11 11 City Clerk
Parks, Rec. & Community
Cultural Development Electric Utility Public Works Fire
Services
Boards and 11
Commissions
Deputy City
Managerlinternal
services Director
Police
Financial Budget/ Human Information
Services Treasury Resources Systems
Division Division Division Division
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DIRECTORY OF OFFICIALS AND ADVISORY BODIES
CITY COUNCIL
Bob Johnson
Joanne Mounce
Larry Hansen
Phil Katzakian
Alan Nakanishi
ADVISORY BODIES
Planning Commission
Library Board
Recreation Commission
Site Plan and Architectural Review Committee
PRINCIPAL ADMINISTRATIVE OFFICERS
Konradt Bartlam
Jordan Ayers
Steve Schwabauer
Randi Johl
Nancy Martinez
Dan Haverty
James Rodems
Director
Wally Sandelin
Elizabeth Kirkley
Konradt Bartlam
Mark Helms
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Mayor
Mayor Pro Temp
Council Member
Council Member
Council Member
Lodi Improvement Committee
Lodi Arts Commission
Youth Commission
Lodi Senior Citizens' Commission
City Manager
Deputy City Manager
City Attorney
City Clerk
Library Services Director
Interim Fire Chief
Parks, Recreation & Cultural Services
Public Works Director
Electric Utility Director
Community Development Director
Police Chief
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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.
g CerMedPublic Accountants.
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The Honorable Members of City Council
City of Lodi, California
INDEPENDENT AUDITOR'S REPORT
mgocpa.com
We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major Rind, and the aggregate remaining
fund information of the City of Lodi, California (City), as of and for the year ended June 30, 2011, which collectively comprise the City's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express 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 Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 statement presentation. 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, 2011, 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.
As described in Note 1, the City adopted the provisions of Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions during the year ended June 30, 2011.
In accordance with Government Auditing Standards, we have also issued our report dated December 6, 2011 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.
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Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, the schedules of funding
progress for the pension plan and OPEB plan, and the schedules of revenues, expenditures and changes in fund balance — budget and actual — for the General
Fund and Streets Fund as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the
basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole.
The introductory section, the combining and individual nonmajor fund financial statements and schedules, and the statistical and continuing disclosure sections
are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal
awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Non -Profit Organizations, and is also not a required part of the financial statements. The combining and individual nonmajor fund financial
statements and schedules and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to
the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in
the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance
with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to
the financial statements as a whole. The introductory, statistical and continuing disclosure sections have not been subjected to the auditing procedures applied in
the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
Sacramento, California
December 6, 2011
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 (City) for the fiscal year ended June 30, 2011.
FINANCIAL HIGHLIGHTS
• The assets of the City exceeded its liabilities at the close of the 2011 fiscal year by $199,943,375 (net assets). Of this amount,
$39,277,245 is unrestricted net assets deficit.
• The City's total net assets increased by $7,870,364 in fiscal year 2011.
• As of June 30, 2011, the City's governmental funds reported combined ending fund balances of $19,086,502, an increase of $2,388,031 in
comparison with the prior year. Of this amount, $4,807,755 is available for spending at the City's discretion (unassigned fund balance).
• At the close of the fiscal year, fund balance for the general fund was $6,146,405 (of which $5,654,136 is unassigned) or 15.47 % of total
general fund revenues of $36,552,560.
• The City's total long-term liabilities increased by $28,859,846 (11.5%) 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 government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a
private -sector business.
The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net
assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether 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. All of the funds of the City can be divided into the following three
categories: Governmental funds, Proprietary funds, and Fiduciary funds.
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 and the streets fund, which are considered to be major funds. Data from the remaining
governmental funds are combined into a single, aggregated presentation. Individual fund data for each of 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 revenue funds to demonstrate compliance with 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 maintains the 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.
El
• Internal Service funds are used to report activities that account for various employee benefits and self-insurance activities and fleel
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 these funds are not available to support the City's own programs, they are not reflected in the
government -wide financial statements. The accounting used for fiduciary funds is much like that used for proprietary funds.
Notes to the Financial Statements
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 and OPEB benefits to its employees, and schedules comparing budget to actual
amounts in the General Fund and Streets 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.
5
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 assets exceeded liabilities by
$199,943,375 at the close of the current fiscal year.
Assets:
Current and other assets
Capital assets
Total assets
Liabilities:
Long-term liabilities outstanding
Other liabilities
Total liabilities
Net assets:
Invested in capital assets,
net of related debt
Restricted
Unrestricted (deficit)
Total net assets
Governmental
Activities
2011
$ 33,913,523
136,064,911
169,978,434
40,399,841
5,667,115
46,066,956
114,164,912
14, 894, 802
City of Lodi's Net Assets
2010
34, 024,118
135,959,897
169,984,015
41, 302,643
8,250,009
49,552,652
113,308,321
13,233,037
Business -type
Activities
2011
130,456,950
197,586,365
328, 043, 315
239,591,308
12,420,110
252, 011,418
104,858,175
5,302,731
2010
100,098,973
190,452,081
290, 551, 054
209,828,660
9,080,746
218,909,406
100,232,601
2011
$ 164,370,473
333,651,276
498,021,749
279, 991,149
18,087,225
298, 078, 374
219, 023, 087
20,197, 533
Total
2010
134,123, 091
326,411,978
460,535,069
251,131, 303
17,330,755
268,462,058
213,540,922
13,233,037
(5,148,236) (6,109,995) (34,129,009) (28,590,953) (39,277,245) (34,700,948)
$ 123,911,478 120,431,363 76,031,897 71,641,648 $ 199,943,375 192,073,011
Assets. The City's total net assets increased by $7,870,364 or 4.1 %. The increase is primarily due to the following:
Governmental activities. Total assets for the governmental activities had an insignificant decrease of $5,581 resulting from offsetting increases
and decreases in current and capital assets.
Business -type activities. Total assets for the business -type activities increased by $37,492,261 or 12.90%. The increase is mainly attributed to
the increase in restricted assets held by fiscal agent from the proceeds of the 2010 Water certificates of participation of $34,705,596, offset by the
decrease in wastewater bond proceeds of $512,554; increase in capital assets of $7,134,284, primarily from construction in progress, buildings
and improvements and machinery and equipment; decrease in cash and restricted cash due to the decrease in pollution remediation costs
$3,848,939. Other insignificant activities offset the difference.
Liabilities. The City's total liabilities increased by $29,616,316 or 11 %. The increase is primarily due to the following:
Governmental activities. Total liabilities for the governmental activities decreased by $3,485,696. This decrease is attributed to the reduction in
self-insurance liabilities of $579,629; decrease in unearned revenues from Prop 1B of $1,093,838, Energy Efficiency Block grant $26,524, Local
Law Enforcement Block grant, $70,972; decrease in accrued salaries of $1,414,190; decrease in compensated absences, $516,186;
decrease in accrued payments for the Lodi Avenue Reconstruction project, $608,279 and the final payment for capital lease, $141,576; offset by
the increase in OPEB obligations, $944,589. Other insignificant activities offset the difference.
Business -type activities. Total liabilities for the business -type activities increased by $33,102,012 or 15%. The increase is primarily attributable to
the issuance of the Water Certificates of participation, $39,256,006; increase in unearned revenue from Prop 1B, $412,740; accrued progress
payments for the Water Surface Treatment plant, $3,003,561; offset by principal payments towards the various certificates of participations,
$4,450,000; decrease in the pollution remediation obligation, $3,848,939, and the full payment of the water loan from the Department of Water
Resources, $1,409,301. Other insignificant activities offset the difference.
Net Assets. The City's overall financial position has increased during the fiscal year. The net assets have increased by $7,870,364 or 4%.
The largest portion ($219,023,087) 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.
An additional portion of the City's net assets, $20,197,533 (10.1%) represents resources that are subject to external restrictions on how they may
be used. The remaining balance of unrestricted deficit amounts to $39,277,245. At the end of the current fiscal year, the City is able to report
positive balances in two categories of net assets for the government as a whole. Unrestricted net assets are negative for both the governmental
and business -type activities.
Refer to page 10 for analysis of the business -type activities unrestricted net assets.
7
City of Lodi's Change in Net Assets
g
Governmental
Business -type
Activities
Activities
Total
2011
2010
2011
2010
2011
2010
Revenues
Program revenues:
Charges for services $
5,685,056
5,326,042
87,391,833
93,110,030 $
93,076,889
98,436,072
Operating grants and contributions
2,235,980
1,927,495
3,982,740
3,448,814
6,218,720
5,376,309
Capital grants and contributions
6,737,432
5,122,484
5,150,118
1,408,089
11,887,550
6,530,573
General revenues:
Property taxes
12,697,676
12,836,162
12,697,676
12,836,162
Other taxes
10,363,488
10,282,299
10,363,488
10,282,299
Grants and contributions not restricted to
specific programs
8,953,983
7,063,762
8,953,983
7,063,762
Litigation - environmental lawsuits proceeds
300,000
300,000
Other
1,689,440
2,072,580
1,928,824
1,654,051
3,618,264
3,276,631
Total revenues
48,363,055
44,630,824
98,453,515
99,920,984
146,816,570
144,551,808
Expenses
General government
8,261,967
8,749,457
8,261,967
8,749,457
Public protection
25,112,684
27,185,808
25,112,684
27,185,808
Public works
9,305,242
10,461,684
9,305,242
10,461,684
Community development
972,855
1,114,262
972,855
1,114,262
Library
1,354,904
1,440,342
1,354,904
1,440,342
Parks and recreation
5,778,165
5,076,874
5,778,165
5,076,874
Interest on long-term debt
1,075,064
1,104,971
1,075,064
1,104,971
Electric
63,399,665
64,364,204
63,399,665
64,364,204
Wastewater
11,686,782
11,289,458
11,686,782
11,289,458
Water
8,187,613
6,147,745
8,187,613
6,147,745
Transit
4,132,004
4,785,127
4,132,004
4,785,127
Total expenses
51,860,881
55,133,398
87,406,064
86,586,534
139,266,945
141,719,932
g
Changes in net assets before special item and
transfers
Special item- gain on sale of parkland
Transfers
Changes in net assets
Net assets at beginning of year, as previously
reported
(3,497,826) (10,502,574) 11,047,451 13,334,450 7,549,625 2,831,876
320,739 320,739
6,657,202 5,867,983 (6,657,202) (5,867,983)
3,480,115 (4,634,591) 4,390,249 7,466,467 7,870,364 2,831,876
120,431,363 125,065,954 71,641,648 60,085,595 192,073,011 185,151,549
Restatement of capital assets 4,089,586 4,089,586
Net assets at beginning of year, as restated 120,431,363 125,065,954 71,641,648 64,175,181 192,073,011 189,241,135
Net assets at end of year $ 123,911,478 120,431,363 76,031,897 71,641,648 $ 199,943,375 192,073,011
Analysis of Changes in Net Assets
Governmental activities.
Net assets for the governmental activities increased by $3,480,115 in the current fiscal year.
The key factors impacting the change in net assets are:
• Positive revenue growth
• Increased development activity
• Decrease in personnel costs
• Charges for services increased by 7%, a net amount of $359,014 from the prior fiscal year largely from increased development activity
resulting in increase in building permit fees ($392,461), engineering inspection ($155,839), plan check fees ($159,335), planning fees
($110,437), code permit inspection fees ($90,928); offset by the one-time revenue received from NCPA for the conservation easement
rights related to the Lodi Energy Center from prior year ($504,000).
• Operating grants and contributions increased by 16%, a net amount of $308,485 from the prior fiscal year primarily from the COPS Hiring
Recovery grant, $336,683.
• Capital grants and contributions increased by $1,614,948 or 32% from prior fiscal year. Increase in capital contributions was mainly
attributable to the receipt of Prop 1 B funds used for various street overlays and improvements ($1,033,006), and funds from the American
Recovery and Reinvestment Act (ARRA) used for the Lodi Avenue reconstruction project ($776,336).
• Property taxes — decreased by $138,486 or 1 % compared to prior year. Continuing decline in market values falling below the assessed
values caused homes to be reassessed and affected property tax revenues in the current year.
• Grants and contributions not restricted to specific programs increased by $1,890,221 or 27%. Sales tax revenues increased by
$1,790,604 which include a one-time sales tax of $1,184,900 related to the development of the Lodi Energy Center and $605,704 increase
due to a boost in consumer spending and higher fuel prices; and State motor vehicle license fees increased by $99,617.
• Other revenues decreased by $383,140 or 18% from prior fiscal year. This decrease was attributable to the decrease in donations for the
Library renovation and HVAC projects ($134,000) in prior year, decrease in investment earnings ($21,866), decrease in reimbursable
charges ($223,131).
z
Expenses for governmental functions totaled $51,860,881 a decrease of $3,272,517 or 6% from the prior fiscal year.
Business -type activities.
Business -type activities increased the City's net assets by $4,390,249 in the current year. The key elements of this increase are:
• Capital Contributions: Net increase of $3,742,029.
Wastewater Fund - $3,025,135 — an increase of $2,645,039 attributed to the impact fees collected from the development of the new
surface water treatment plant.
Water Fund - $1,668,202 — an increase of $1,697,339 primarily from the water meter installation charges collected from property owners.
Transit Fund - $456,781— a decrease of $232,027 attributed to the purchase of fare boxes in the prior year with ARRA funds.
The City's Energy Cost Adjustment (ECA) was established with the intent to automatically adjust the electric rates for monthly fluctuations in the
City's purchased power expenses. Bulk power costs decreased in the current year and by way of the ECA charge, operating revenue decreased
by $4,559,346. Lower power sales also contributed to the decline in operating revenue by $2,936,993 due to a milder than normal summer and
the impact of the current economic conditions.
Wastewater rates were increased during the year resulting in increased operating revenues of $1,576,290 or 13% in Wastewater Utility.
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
Governmental Funds.
The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such
information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a
government's net resources available for spending at the end of the fiscal year. Types of governmental funds reported by the City include the
General Fund, special revenue funds, debt service fund and capital projects funds.
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $19,086,502, an increase of
$2,388,031 in comparison to the prior year resulting from the increase in sales tax, increase in capital contributions and overall decrease in
operating expenditures.
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the general fund was
$5,654,136 while total fund balance was $6,146,405, an increase of $1,861,189 from prior year primarily from increased sales tax revenues and
reduced operating expenses. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total
fund balance to total fund expenditures. Unassigned fund balance represents 15.84% of total general fund expenditures.
Proprietary Funds
The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail.
10
Unrestricted net assets at the end of the year for the Wastewater Fund were $10,219,159 and for the Transit Fund $2,509,652. The Electric Fund
unrestricted net assets deficit was $6,880,954, the Water Fund was $39,976,866 and the Internal Services Funds unrestricted net assets deficit
was $3,158,636.
Other factors concerning the finances of these funds are discussed in the City's business -type activities.
GENERAL FUND BUDGETARY HIGHLIGHTS
Differences between the original operating budget and the final amended operating budget in the General Fund were a net increase in
appropriations of $50,000. The increase in appropriations can be briefly summarized as follows:
• $18,900 decrease in general government
• $33,600 increase in public protection
• $35,300 increase in public works
Significant differences between the final budget and the actual revenues and expenditures can be briefly summarized as follows:
• Taxes — a favorable variance of $175,804 was largely due to the increased receipts from the card room ($57,960), increase in property tax
in -lieu of vehicle license fees ($66,785), increase in cable TV franchise fees ($80,219), increase in transient occupancy tax ($25,899) and
increase in industrial waste franchise fees ($15,056) offset by a decrease in property taxes ($22,891) and decrease in gas franchise fees
($44,893).
• Miscellaneous revenues — a favorable variance of $219,328 is attributable to lease revenue from farmland adjacent to White Slough
($186,621), work for others ($20,380), and other revenues ($12,327).
• For expenditures, a favorable variance between the final budget and actual expenditures of $1,323,163 was due to savings from several
vacancies and the continued overall effort to reduce spending and costs.
11
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital assets
The City's investment in capital assets for its governmental and business -type activities as of June 30, 2011, amounts to $333,651,276 (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's investment in capital assets for the current fiscal year was $7,239,298,
a 2.22% (a 0.08% decrease in governmental activities and 3.75% increase in business -type activities) as shown in the table below.
A significant increase in construction in progress compared to prior year was primarily due to the ongoing improvements to the White Slough
Pollution Control Facility; the Surface Water Treatment Plant construction costs; the water meter installation project; the construction of
DeBenedetti Park and G -Basin; Highway 99 and Harney lane improvements; and improvements at the Grape Bowl. The increase in buildings and
improvements is due to the completion of various renovations. The decrease in land represents the sale of parkland to a developer to build a
senior housing project.
Additional information on the City's capital assets can be found in Note 6 on pages 48-50 of this report.
12
Changes in Capital Assets, Net of Depreciation
Governmental Activities
Business -type Activities
Total
2011
2010
2011
2010
2011
2010
Land
$ 23,693,292 $
24,099,912 $
5,535,718 $
5,438,359 $
29,229,010 $
29,538,271
Buildings and Improvements
37,460,196
35,046,023
25,069,129
26,009,669
62,529,325
61,055,692
Machinery and Equipment
1,633,494
1,903,301
98,016,026
101,619,201
99,649,520
103,522,502
Vehicles
839,298
1,004,591
1,668,994
1,975,641
2,508,292
2,980,232
Infrastructure
60,880,644
65,149,159
60,880,644
65,149,159
Work of Art
304,907
304,907
304,907
304,907
Construction in Progress
11,253,080
8,452,004
67,296,498
55,409,211
78,549,578
63,861,215
Total
$ 136,064,911 $
135,959,897 $
197,586,365 $
190,452,081 $
333,651,276 $
326,411,978
A significant increase in construction in progress compared to prior year was primarily due to the ongoing improvements to the White Slough
Pollution Control Facility; the Surface Water Treatment Plant construction costs; the water meter installation project; the construction of
DeBenedetti Park and G -Basin; Highway 99 and Harney lane improvements; and improvements at the Grape Bowl. The increase in buildings and
improvements is due to the completion of various renovations. The decrease in land represents the sale of parkland to a developer to build a
senior housing project.
Additional information on the City's capital assets can be found in Note 6 on pages 48-50 of this report.
12
Long-term debt
At the end of the current fiscal year, the City had total bonded debt outstanding of $193,468,334. Of this amount, $21,655,000 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 $171,813,334 from the business -type activities consists of $39,236,306 for the Water Fund; $54,920,895 for the
Wastewater Fund; and $77,656,133 for the Electric Fund.
City of Lodi's Outstanding Debt
Governmental Business -type
Activities activities Total
Certificates of Participation $ 21,655,000 171,813,334 193,468,334
The City's total bonded debt increased by $34,398,284 during the current fiscal year.
Bond Rating
In June 2010, Standard & Poor's Rating Services affirmed the rating on outstanding electric utility debt instruments an A- with a stable outlook as a
result of improved financial performance due to the implementation of various policies instituted by management. Fitch Rating Services upgraded
the rating on outstanding wastewater utility debt instruments to A+ with a stable outlook in May 2011, as part of its global ratings recalibration.
In October 2010, Standard & Poor's Rating services issued a rating of AA- with a stable outlook in regards to the $39.475 million Water Revenue
bonds. Moody's Investor Services assigned a rating of Aa3 to this new issue.
On August 1, 2011, Fitch Rating Services affirmed the rating on outstanding public improvement bonds at AA- and assigned an implied general
obligation bond rating of AA. The rating outlook was revised to stable from negative as a result of the City's successful improvement of its general
fund position and maintaining its low debt profile.
Additional information on the City's long-term debt can be found in Note 8 on pages 51-57 of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The impacts of the global economic recession continue to affect Lodi's families, businesses, institutions and the City but the case can be made
that the City is not only surviving the recession, but thriving. The City of Lodi continues to take actions necessary to maintain a more sustainable
city. The tax base is now more diverse and less dependent upon a single source of retail sales tax, permanent reductions have been made to the
municipal work force and greater efficiency in the delivery of city services has been established. Management has evaluated ways to make every
City service more efficient, streamlining and consolidating services where possible. Other efficiencies include consolidation of multiple recreational
programs, decentralization of purchasing and implementation of a single answer point for development permits. The City also reduced its
workforce by 19% over the past seven years, from 470 full-time budgeted employees in 2004-05 to 383 full-time budgeted employees in 2011-12.
Monthly work hours for many employees have been reduced through furloughs although the City continues to offer the same basic range of
municipal services.
13
The recession is creating an opportunity for the City to take advantage of low construction costs to proceed with major capital projects. They
include the construction of a Surface Water Treatment Plant, wastewater main replacement and underground electric cable maintenance. The
2011-12 budget proposes as many projects as possible focusing on maintenance and replacement of existing facilities and projects that reduce
the City's recurring operational costs.
The City Council adopted a new Comprehensive General Plan that maintains Lodi's compact urban character yet provides for jobs and economic
growth. In the future, Lodi will be a city accommodating a population of 99,000 and 51,000 jobs.
The 2011-12 budget has several issues that were taken into consideration: employee costs and contributions; capital programs; and cost
increases beyond the City's control.
The City has been operating under annual concession agreements with all of its bargaining units. The combination of expiring concessions, cost
increases beyond the City's control and scheduled cost increases results in approximately a $6.6 million increase in costs over the prior year
budget. The City has closed this gap through a combination of concession agreements with bargaining units that will carry the City through FY
2011-2012, management actions to reduce costs and early retirements.
Employee costs and contributions — Prior to the economic downturn, Lodi aggressively moved to manage employee expenses. Positions not
deemed vital to City operations were held vacant, and other departmental expenses were closely monitored. Importantly, as the economy
plummeted, in March 2009, City employees made a number of salary and benefit concessions to reduce salary costs, including salary reductions,
furloughs, and waiving of the City's deferred compensation match. These concessions alone were valued at over $2.3 million for FY 2009-10,
$2.7 million for FY 2010-11, and $3.8 million for FY 2011-12. Consequently, the City has largely avoided employee layoffs and drastic service
cuts so common in other cities.
Capital programs — The City continues to utilize one-time funds for capital maintenance, rather than ongoing operations. In prior years, the City
assessed its physical plant and is using one-time funds generated by the Lodi Energy Center, to address deferred maintenance projects on its
buildings. Scheduled to be completed this year are improvements to the heating and cooling systems in City Hall, various roof and gutter
replacement projects and a retrofit of a portion of the unused space in the former public safety building. Additionally, the FY 2011-12 budget
allocates $300,000 toward the replacement of Fire Station #2. The above projects total just over $1 million.
Costs beyond the City's control — While the revenues have stabilized, the cost of retirement and medical insurance continue to rise. CalPERS has
provided estimates for the City's contribution to the pension plan that are significantly higher than the past years. Medical insurance costs are
estimated to increase by 12 percent. The estimated General Fund increase is $400,000 with a total city-wide medical premium cost of nearly $5.8
million. It is also anticipated that health insurance costs will also continue to climb every year for the next several years. Additionally, the City is
self-funded for worker's compensation and a significant increase in cost and the severity of claims translated into higher projected future liabilities
for this program. The City is working aggressively to contain the worker's compensation costs increases.
Economic Development
During this difficult economic time, the City has fared better than the surrounding area, as a whole. While not immune to the current foreclosure
crisis, the City housing stock has seen fewer foreclosures and has maintained housing values better than the surrounding communities.
14
The City's unemployment rate continues to track roughly 4 percent lower than that of San Joaquin County. The City's diversified economic base
continues to help the City maintain its revenue base.
Although agriculture is an important part of the City's past, present and future by providing residents with employment on farms and in processing
plants, there are even more jobs in food and plastics manufacturing and in health-related businesses.
Lodi Memorial Hospital, Blue Shield and Cottage Bakery have the highest year-round employment in the City, and large national and international
manufacturers such as General Mills and CertainTeed find the City an attractive base for their West Coast operations.
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 310 W. Elm Street, Lodi, California, 95240.
15
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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.
ASSETS
Cash and investments
Accounts receivable, net
Property tax receivable
Interest receivable
Internal balances
Due from other governmental agencies
Restricted assets
Loans receivable
Advance receivable
Inventory
Other assets
Deferred charges
Capital assets, net:
Nondepreciable
Depreciable, net
TOTAL ASSETS
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.
CITY OF LODI
STATEMENT OF NET ASSETS
June 30, 2011
Governmental
Activities
$ 26,736,969
3,329,441
1,537,758
29,606
(1,225,173)
535,544
1,692,841
1,108,324
125,706
42,507
35,251,279
100,813,632
169,978,434
3,784,579
666,790
262,189
953,557
4,099,257
36,300,584
46,066,956
114,164,912
12,900,979
1,692,841
300,982
(5,148,236)
$ 123, 911,478
17
Business -type
Activities
29,417,385
7,162,385
44,783
1,225,173
1,799,876
68,662,007
160,419
12,866,272
2,758,236
318,255
6,042,159
72,832,216
124,754,149
328,043,315
7,506,508
2,907,505
2,006,097
5,748,178
233,843,130
252,011,418
Total
$ 56,154,354
10,491,826
1,537,758
74,389
2,335,420
70,354,848
1,268,743
12,866,272
2,883,942
360,762
6,042,159
108,083,495
225,567,781
498,021,749
11,291,087
666,790
3,169,694
2,959,654
9,847,435
270,143,714
298,078,374
104,858,175
219,023,087
12,900,979
5,302,731
6,995,572
300,982
(34,129,009)
(39,277,245)
76,031,897 $
199,943,375
Functions/Programs
PRIMARY GOVERNMENT:
Governmental activities:
General government
Public protection
Public works
Community development
Library
Parks & recreation
Interest on long-term debt
Total governmental activities
Business -type activities:
Electric
Wastewater
Water
Transit
Total primary government
CITY OF LODI
STATEMENT OF ACTIVITIES
Year ended June 30, 2011
General revenues:
Taxes:
Property taxes
Franchise taxes
Business license tax
Transient occupancy tax
Grants and contributions not restricted to specific programs
Investment earnings
Other
Special item - gain on sale of parkland
Transfers
Total general revenues, special item and transfers
Change in net assets
Net assets, beginning of year
Net assets, end of year
The notes to the financial statements are an integral part of this statement.
18
12,697,676
12,697,676
8,691,568
8,691,568
Net (Expense) Revenue and
1,246,021
425,899
Program Revenues
8,953,983
Changes in Net Assets
133,404
575,553 708,957
Operating
Capital
320,739
320,739
Charges for
Grants and
Grants and
Governmental
Business -type
Expenses
Services
Contributions
Contributions
Activities
Activities
Total
$ 8,261,967
1,792,934
114,286
29,114
(6,325,633)
$
(6,325,633)
25,112,684
643,294
1,087,327
249,527
(23,132,536)
(23,132,536)
9,305,242
355,894
984,291
6,423,027
(1,542,030)
(1,542,030)
972,855
1,600,566
627,711
627,711
1,354,904
47,208
50,076
(1,257,620)
(1,257,620)
5,778,165
1,245,160
35,764
(4,497,241)
(4,497,241)
1,075,064
(1,075,064)
(1,075,064)
51,860,881
5,685,056
2,235,980
6,737,432
(37,202,413)
(37,202,413)
63,399,665
62,167,350
100,892
(1,131,423)
(1,131,423)
11,686,782
13,089,679
59,075
3,025,135
4,487,107
4,487,107
8,187,613
11,940,022
446,880
1,668,202
5,867,491
5,867,491
4,132,004
194,782
3,375,893
456,781
(104,548)
(104,548)
87,406,064
87,391,833
3,982,740
5,150,118
9,118,627
9,118,627
$ 139,266,945
93,076,889
6,218,720
11,887,550
(37,202,413)
9,118,627 $
(28,083,786)
General revenues:
Taxes:
Property taxes
Franchise taxes
Business license tax
Transient occupancy tax
Grants and contributions not restricted to specific programs
Investment earnings
Other
Special item - gain on sale of parkland
Transfers
Total general revenues, special item and transfers
Change in net assets
Net assets, beginning of year
Net assets, end of year
The notes to the financial statements are an integral part of this statement.
18
12,697,676
12,697,676
8,691,568
8,691,568
1,246,021
1,246,021
425,899
425,899
8,953,983
8,953,983
133,404
575,553 708,957
1,556,036
1,353,271 2,909,307
320,739
320,739
6,657,202 (6,657,202)
40,682,528 (4,728,378) 35,954,150
3,480,115 4,390,249 7,870,364
120,431,363 71,641,648 192,073,011
$ 123,911,478 76,031,897 $ 199,943,375
GOVERNMENT -WIDE FINANCIAL STATEMENTS
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.
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.
19
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.
Proprietary Fund Types
Proprietary funds consist of the enterprise funds 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 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 maintenance and debt service.
Wastewater 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.
20
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.
21
ASSETS
Cash and investments
Restricted assets
Receivables:
Accounts, net
Property taxes
Interest
Due from other funds
Due from other governmental agencies
Loans receivable
Inventory
Advances to other funds
Other assets
Total assets
LIABILITIES AND 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:
Nonspendable
Inventory
Advance to other funds
Other assets
Restricted
Capital projects
Debt service
Other purposes
Assigned
Encumbrances
Unassigned
Total fund balances
Total liabilities and fund balances
CITY OF LODI
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2011
General Streets
Fund Fund
$ 2,983,745 8,825,588
Other
Governmental
Funds
6,130,380 $
1,692,841
Total
Governmental
Funds
17,939,713
1,692,841
3,009,980
210,899
90,620
3,311,499
1,537,758
666,790
$ 9,106,770 9,203,423
1,537,758
6,778
9,449
4,113
20,340
1,106,068
1,183,151
2,468
1,108,536
105,841
102,487
327,216
535,544
1,108,324
1,108,324
890
890
316,480
55,000
371,480
39,230
3,277
42,507
$ 9,106,770
9,203,423
9,359,239 $
27,669,432
$ 2,222,292 806,950
119,828 $
3,149,070
666,790
6,146,405 7,589,026
666,790
$ 9,106,770 9,203,423
1,108,536
1,108,536
1,596,653
1,596,653
71,283 807,447
1,183,151
2,061,881
2,960,365 1,614,397
4,008,168
8,582,930
890 890
316,480 316,480
39,230 39,230
7,589,026 4,203,629 11,792,655
1,692,841 1,692,841
300,982 300,982
135,669
135,669
5,654,136
(846,381) 4,807,755
6,146,405 7,589,026
5,351,071 19,086,502
$ 9,106,770 9,203,423
9,359,239 $ 27,669,432
The notes to the financial statements are an integral part of this statement. 22
CITY OF LODI
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
June 30, 2011
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
Interest on long-term debt is not accrued in the funds, but rather is
recognized as an expenditure when due
Other long-term assets are not available to pay for current period expenditures and,
therefore, are deferred in the funds
Internal service funds are used by management to 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 and liabilities of the internal service funds are
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. 23
$ 19,086,502
35,251,279
100,780,346
(7,027,434)
(21,900,000)
(262,189)
1,108, 324
(3,125, 350)
$ 123,911,478
CITY OF LODI
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTALFUNDS
Year ended June 30, 2011
Other
Total
General
Streets
Governmental
Governmental
Fund
Fund
Funds
Funds
Revenues:
Taxes
$ 23,061,164
$
23,061,164
Licenses and permits
83,395
870,690
954,085
Intergovernmental revenues
10,032,523
5,533,846
1,298,670
16,865,039
Charges for services
1,035,220
555,440
2,355,511
3,946,171
Fines, forfeits and penalties
1,404,307
2,600
1,406,907
Investment and rental income
455,923
53,429
307,433
816,785
Contributions and donations
688,565
688,565
Miscellaneous revenue
480,028
88,689
230,503
799,220
Total revenues
36,552,560
6,919,969
5,065,407
48,537,936
Expenditures:
Current:
General government
6,478,159
1,188,951
7,667,110
Public protection
24,091,472
397,883
24,489,355
Public works
1,421,238
1,817,928
475,441
3,714,607
Community development
969,409
969,409
Library
1,357,473
1,357,473
Parks and recreation
2,191,102
1,936,165
4,127,267
Capital outlay
6,744,515
2,631,990
9,376,505
Debt service:
Interest and fiscal charges
6,427
1,074,737
1,081,164
Principal payments
141,576
610,000
751,576
Total expenditures
35,687,447
8,562,443
9,284,576
53,534,466
Excess (deficiency) of revenues over (under) expenditures
865,113
(1,642,474)
(4,219,169)
(4,996,530)
Other financing sources (uses):
Transfers in
5,379,186
661,270
5,840,531
11,880,987
Transfers out
(4,383,110)
(93,279)
(747,396)
(5,223,785)
Proceeds from the sale of land
97,359
97,359
Total other financing sources (uses)
996,076
567,991
5,190,494
6,754,561
Special item - sale of parkland
630,000
630,000
Net change in fund balances
1,861,189
(1,074,483)
1,601,325
2,388,031
Fund balances, beginning of year
4,285,216
8,663,509
3,749,746
16,698,471
Fund balances, end of year
$ 6,146,405
7,589,026
5,351,071 $
19,086,502
The notes to the financial statements are an integral part of this statement.
24
CITY OF LODI
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
Year ended June 30, 2011
Amounts reported for governmental activities are different because:
Net change in fund balances - total governmental funds
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 contributions and depreciation expense are as follows:
Capitalized capital outlays
Capital asset contributions
Depreciation expense
Book value on disposed capital assets
Long-term debt proceeds, net of discounts, provide current financial resources to governmental funds,
but issuing debt proceeds increases long-term liabilities in the statement of net assets. Repayments
of the principal are expenditures in the governmental funds, but the repayments
reduce long-term liabilities in the statement of net assets.
Repayments of principal are as follows:
Capital leases
Certificates of participation principal
Internal service funds are used by management to charge the costs of certain activities, such as health benefits
and self-insurance, costs of operation and maintenance of the City's fleet, to individual funds.
The net revenue (expenses) of the internal service funds are reported with
governmental activities.
Revenues reported in the funds since they provide current financial resources are not reported
as revenues in the statement of activities this year since they were reported in the previous year.
Other expenses in the statement of activities that do not use current financial resources are not reported as
expenditures in the governmental funds.
Change in compensated absences
Change in accrued interest
Change in net assets of governmental activities
The notes to the financial statements are an integral part of this statement. 25
$ 2,388,031
9,376,505
136,850
(8,020,531)
(1,386,362)
141,576
610,000
84,489
(354,483)
497,940
6,100
$ 3,480,115
CITY OF LODI
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
June 30, 2011
Governmental
Activities -
Business -type Activities -Enterprise Funds
Internal
Nonmalor Fund
Service
Electric
Wastewater
Water
Transit
Total
Funds
ASSETS
Current assets:
Cash and investments
$ 5,032,177
10,606,065
12,807,412
971,731 $
29,417,385 $
8,797,256
Restricted cash and investments
16,035,953
16,035,953
Restricted assets with fiscal agents
10,796,036
4,953,755
34,706,413
50,456,204
Receivables:
Accounts, net
3,906,912
722,746
681,778
1,850,949
7,162,385
17,942
Interest
11,164
11,444
21,093
1 1,082
44,783
9,266
Due from other governmental agencies
65,399
55,170
1,679,307
1,799,876
Advance receivable
12,866,272
12,866,272
Loans receivable
160,419
160,419
Inventory
2,551,898
11,666
194,672
2,758,236
124,816
Other assets
4,530
313,725
318,255
Total current assets
35,324,878
16,375,605
64,816,216
4,503,069
121,019,768
8,949,280
Noncurrent assets:
Restricted assets with fiscal agents
2,169,850
2,169,850
Advances to other funds
1,225,173
1,225,173
Deferred charges
4,739,068
892,933
410,158
6,042,159
Capital assets,net:
Nondepreciable
6,463,554
49,214,126
15,463,619
1,690,917
72,832,216
Depreciable, net
36,066,651
47,468,694
29,284,423
11,934,381
124,754,149
33,286
Total capital assets
42,530,205
96,682,820
44,748,042
13,625,298
197,586,365
33,286
Total noncurrent assets
47,269,273
99,745,603
46,383,373
13,625,298
207,023,547
33,286
TOTALASSETS
82,594,151
116,121,208
111,199,589
18,128,367
328,043,315
8,982,566
LIABILITIES
Current liabilities:
Accounts payable and other liabilities
1,425,941
497,852
4,796,977
785,738
7,506,508
635,509
Accrued interest
2,044,633
680,217
182,655
2,907,505
Unearned revenue
15,600
868,218
1,122,279
2,006,097
1,445,428
Self-insurance liability
Accrued compensated absences
251,611
203,371
20,474
475,456
42,354
Certificates of participation payable
3,058,889
1,419,133
794,700
5,272,722
Total current liabilities
6,796,674
2,800,573
6,642,550
1,928,491
18,168,288
2,123,291
Noncurrent liabilities:
6,9,910
Self-insurance liability
Accrued compensated absences
649,258
714,184
64,926
1,428,368
64
64,927
Certificates of participation payable
74,597,244
53,501,762
38,441,606
166,540,612
3,014,788
Net OPEB obligation
65,874,150
65,874,150
Pollution remediation obligation
Total noncurrent liabilities
75,246,502
54,215,946
104,315,756
64,926
233,843,130
9,984,625
TOTAL LIABILITIES
82,043,176
57,016,519
110,958,306
1,993,417
252,011,418
12,107,916
NET ASSETS (DEFICIT)
Invested in capital assets, net of related debt
2,129,198
48,885,530
40,218,149
13,625,298
104,858,175
33,286
Restricted:
Debt service
5,302,731
5,302,731
Unrestricted (deficit)
(6,880,954)
10,219,159
(39,976,866)
2,509,652
(34,129,009)
(3,158,636)
TOTAL NET ASSETS (DEFICIT)
$ 550,975
59,104,689
241,283
16,134,950 $
76,031,897 $
(3,125,350)
The notes to the financial statements are an integral part of this statement.
26
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 (EXPENSES)
Investment income
Interest expense
Rent
Operating grants
Loss on disposal of capital assets
Other revenues
TOTAL NONOPERATING REVENUES (EXPENSES)
INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions
Transfers out
Net capital contributions and transfers
Change in net assets
NET ASSETS (DEFICIT) - BEGINNING OF YEAR
NET ASSETS (DEFICIT) - END OF YEAR
CITY OF LODI
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET ASSETS
PROPRIETARY FUNDS
Year ended June 30, 2011
The notes to the financial statements are an integral part of this report.
27
Govemmental
Activities -
Business -type Activities -
Enterprise Funds
Internal
Nonmalor Fund
Service
Electric
Wastewater
Water
Transit
Total
Funds
$ 62,167,350
13,089,679
11,940,022
194,782 $
87,391,833 $
10,826,603
5,880,798
3,257,618
1,359,227
272,599
10,770,242
1,322,424
11,292,763
1,955,464
2,590,222
2,927,039
18,765,488
7,051,965
35,344,028
758,934
652,296
59,602
36,814,860
2,215
6,285,968
2,311,682
1,304,519
872,764
10,774,933
1,448
2,443,158
58,803,557
8,283,698
5,906,264
4,132,004
77,125,523
10,821,210
3,363,793
4,805,981
6,033,758
(3,937,222)
10,266,310
5,393
190,470
220,600
154,836
9,647
575,553
42,752
(4,390,921)
(2,778,805)
(1,491,550)
(8,661,276)
4,200
4,200
100,892
59,075
446,880
3,375,893
3,982,740
(205,187)
(624,279)
(789,799)
(1,619,265)
848,030
113,985
359,979
27,077
1,349,071
36,344
(3,456,716)
(3,009,424)
(1,319,654)
3,416,817
4,368,977
79,096
(92,923)
1,796,557
4,714,104
(520,405)
5,897,333
84,489
3,025,135
1,668,202
456,781
5,150,118
(2,906,029)
(1,519,946)
(2,231,227)
(6,657,202)
(2,906,029)
1,505,189
(563,025)
456,781
(1,507,084)
(2,998,952)
3,301,746
4,151,079
(63,624)
4,390,249
84,489
3,549,927
55,802,943
(3,909,796)
16,198,574
71,641,648
(3,209,839)
$ 550,975
59,104,689
241,283
16,134,950 $
76,031,897 $
(3,125,350)
The notes to the financial statements are an integral part of this report.
27
Cash flows from operating activities:
Receipts from customers and users
Receipts from interfund services provided
Cash paid to suppliers for goods & services
Payments to employees
Payments for interfund services provided
Net cash provided by (used in) operating activities
Cash flows from noncapital financing activities:
Operating grants
Transfers out
Net cash provided by (used in) noncapital financing activities
Cash flows from capital and related financing activities:
Proceeds from Certificates of Participation
Fees received for water meter installations
Issuance costs - Certificates of Participation
Acquisition and construction of capital assets
Fees received from developers
Capital grants received
Principal payments on debt
Interest payments on debt
Net rash provided by (used in) capital and related financing activities
Cash flows from investing activities:
Rent of City property
Interest on investments
Net cash provided by investing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Reconciliation to the statement of net assets:
Cash and investments
Restricted cash and investments
Restricted assets with fiscal agents - current
Total cash and cash equivalents
Reconciliation of operating income (loss) to net cash provided by
(used in) operating activities:
Operating Income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization
Other revenues
Change in assets and liabilities:
Increase in loans receivable
(Increase) decrease in accounts receivable
Increase in advance receivables
Increase in due from other governmental agencies
Increase in inventory
(Increase) decrease 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
Decrease in pollution remediation obligation
Increase in net OPEB obligation
Net cash provided by (used in) operating activities
Noncash Investing Capital and Financing Activities
Capital asset contributions
Book value of disposed capital assets
CITY OF LODI
2,311,682
1,304,519
4,200
4,200
STATEMENT OF CASH FLOWS
192,995
216,881
158,618
9,397
PROPRIETARY FUNDS
43,372
192,995
216,881
158,618
Year ended June 30, 2011
582,091
43,372
(1,748,369)
3,261,388
31,387,333
(428,318)
32,472,034
529,096
Governmental
Business -type
Activities - Enterprise Funds
1,400,049
Activities-
8,268,160
$ 15,828,213
Nonmajor Fund
63,549,778
Internal Service
Electric Wastewater
Water
Transit
Total
Funds
$ 62,309,276 13,345,074
12,280,688
221,859 $
88,156,897 $
34,735
381,700
(313,380)
381,700
10,826,603
(47,580,571) (1,766,998)
(3,655,165)
(3,365,884)
(56,368,618)
(9,034,944)
(5,885,365) (3,237,828)
(1,359,227)
(275,218)
(10,757,638)
(1,340,670)
(3,395) (691,472)
(622,927)
(43,914)
(1,361,708)
9,221,645 7,648,776
6,643,369
(3,463,157)
20,050,633
485,724
100,892 59,075
446,880
2,453,314
3,060,161
(2,906,029) (1,519,946)
(2,231,227)
(6,657,202)
(2,805,137) (1,460,871)
(1,784,347)
2,453,314
(3,597,041)
7,648,776
6,643.369
39,256,006
20,050,633 $
39,256,006
1,653,399
1,653,399
(426,236)
(426,236)
(1,035,098) (2,017,158)
(11,378,336)
(254,956)
(14,685,548)
3,025,135
14,803
3,039,938
822,884
822,884
(3,080,000) (1,370,000)
(1,409,301)
(5,859,301)
(4,242,774) (2,781,375)
(1,340,642)
(8,364,791)
(8,357,872) (3,143,398)
26,369,693
567,928
15,436,351
$ 5,032,177 10,606,065 12,807,412 971,731 $ 29,417,385 $ 8,797,256
16,035,953 16,035,953
10,796,036 4,953,755 34,706,413 50,456,204
$ 15,828,213 15,559,820 63,549,778 971,731 $ 95,909,542 $ 8,797,256
$ 3,363,793 4,805,981 6,033,758 (3,937,222) $ 10,266,310 $ 5,393
6,285,968
2,311,682
1,304,519
4,200
4,200
1,448
192,995
216,881
158,618
9,397
577,891
43,372
192,995
216,881
158,618
13,597
582,091
43,372
(1,748,369)
3,261,388
31,387,333
(428,318)
32,472,034
529,096
17,576,582
12,298,432
32,162,445
1,400,049
63,437,508
8,268,160
$ 15,828,213
15,559,820
63,549,778
971,731 $
95,909.542 $
8,797,256
$ 5,032,177 10,606,065 12,807,412 971,731 $ 29,417,385 $ 8,797,256
16,035,953 16,035,953
10,796,036 4,953,755 34,706,413 50,456,204
$ 15,828,213 15,559,820 63,549,778 971,731 $ 95,909,542 $ 8,797,256
$ 3,363,793 4,805,981 6,033,758 (3,937,222) $ 10,266,310 $ 5,393
6,285,968
2,311,682
1,304,519
872,764
10,774,933
1,448
848,030
113,985
359,979
27,077
1,349,071
36,344
(160,419)
(160,419)
1,631.092
199,312
348,307
2,178,711
(15,902)
(1,854,604)
(1,854,604)
(56,972)
(55,170)
(112,142)
(1,067,186)
(97)
(6,646)
(1,073,929)
(2,869)
(930)
(312,450)
(313,380)
14,293
280,430
256,025
2,820,011
(423,157)
2,933,309
100,303
(4,567)
19,790
(2,619)
12,604
(18,246)
(100,892)
(100,892)
(579,629)
(3,848,939)
(3,848,939)
944,589
$ 9,221,645
7,648,776
6,643.369
(3,463,157) $
20,050,633 $
485,724
$ 46,637 $ 46,637
205,187 624,279 789,799 1,619,265
The notes to the financial statements are an integral pan of this statement. 28
CITY OF NODI
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
June 30, 2011
ASSETS
Cash and investments
Receivables:
Special assessments
Interest
TOTAL ASSETS
LIABILITIES
Agency obligations
TOTAL LIABILITIES
NET ASSETS
The notes to the financial statements are an integral part of this statement. 29
Private -Purpose
Trust Funds
$ 262,445 $
262,445
262,445$
Agency Fund
469,120
35,846
478
505,444
505,444
505,444
$
CITY OF LODI
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
Year ended June 30, 2011
ADDITIONS
Investment and rental income
Total additions
DEDUCTIONS
Current
Library
Total deductions
CHANGE IN NET ASSETS
NET ASSETS, BEGINNING OF YEAR
NET ASSETS, END OF YEAR
The notes to the financial statements are an integral part of this statement. 30
Private -Purpose
Trust Funds
$ 39,536
39,536
1,975
1,975
37,561
224,884
$ 262,445
NOTES TO THE FINANCIAL STATEMENTS
CITY OF LODI
Notes to Basic Financial Statements
June 30, 2011
(1) 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. Since then, several Certificates of Participation were issued to finance various major
projects (See Note 8).
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.
The Lodi Public Financing Authority (LPFA) was created by a Joint Exercise of Powers Agreement between the City and the Industrial
Development Authority (IDA) on July 21, 2010, for the purpose of assisting the City in the financings of public capital improvements. The 2010
Water Revenue Certificates of Participation Series A and B were issued in October 2010 to provide funds for a new water treatment facility.
31
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
The City Council constitutes the Board of Directors of LPFA. The funds of LPFA have been included in the Enterprise (Water) Fund in the
accompanying basic financial statements.
(b) Government -Wide and Fund Financial Statements
The government -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 government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as
separate columns in the fund financial statements.
(c) Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government -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 measurement focus.
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.
32
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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.
The City reports the following major governmental funds:
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 Street Fund accounts for Gas Tax revenues apportioned to the City under the Streets and Highway Code, impact fees charged to
provide for the building of various storm drains and street improvements needed to serve new developments, and to account for funds
apportioned to the City for sales tax collections under Measure K.
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 maintenance and 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, improvements and 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 account for the City's claims, benefits and fleet services.
The fiduciary funds account for assets held in trust for other agencies.
Private -Purpose Trust Funds are used to account for trust agreements under which the principal and income benefit
individuals, private organizations or other governments. They were established to account for assets held and invested by the
33
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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 accordance with 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.
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, subject to 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 resources first, and then unrestricted
resources as they are needed.
(d) Adoption of New GASB Pronouncement
The City adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This statement
establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which government is bound to observe
constraints imposed upon the use of the resources reported in governmental funds. GASB Statement No. 54 improves the financial reporting by
providing fund balance categories and classifications that are more easily understood. The reserved components of fund balance are eliminated
and replaced with restricted, committed, assigned, or unassigned classifications to enhance consistency between the information reported in the
government -wide and the governmental fund financial statements to avoid confusion about the relationship between reserved fund balance and
restricted net assets. The fund balance disclosures seek to give users information necessary to understand the processes under which
constraints may be modified or eliminated.
34
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
(e) 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.
Restricted assets represent the proceeds from debt and other cash and investments held by fiscal agents by agreement that meet the definition
of cash and cash equivalents, with the exception of a $2,169,850 guaranteed investment contract held in the Wastewater Fund which is a long-
term investment.
(f) Restricted Cash and Investments
The City accounts for certain settlement payments for environmental remediation as restricted with the understanding that these funds will be
used exclusively for environmental clean up, investigation or remediation expenses incurred by the City in the specified areas and that they will
not be used for the payment of legal or technical fees. These funds are accounted for in the Water Fund.
(g) Restricted Assets with Fiscal Agents
In the Electric Enterprise Fund, restricted assets represent the proceeds of the 2008 Certificates of Participation restricted for debt service. In
the Capital Outlay Reserve Fund, the restricted assets represent the proceeds of the 2002 Improvement bonds restricted for debt service. In the
Wastewater fund, the restricted assets represent the proceeds of the 20038, the 2004A and 2007A Certificates of Participation issued for
improvements to the City's wastewater collection, treatment and disposal system. In the Water Fund, restricted assets represent the proceeds of
the 2010A and 2010B Certificates of Participation issued for the purpose of providing funds to pay the cost of a new Water Treatment Facility.
(h) 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 1st 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, 2009, upon which the 2010 levy was based, was $5,178,188,000.
35
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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, 2011, 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 delinquent taxes.
(i) 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.
0) 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 a reduction of expenditures in the fund that is reimbursed. Reimbursements are eliminated for purposes of
government -wide reporting.
(k) Long-term Obligations
In the government -wide financial statements and in the proprietary fund 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
36
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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 as an expense for both governmental and business -type
activities.
(1) Loans Receivable
Loans receivable reported in the HOME Program & Community Development Block Grants Special Revenue Fund represent funds loaned to a
developer for a low-income housing project and funds loaned to first-time homebuyers. Loans receivable in the Electric Enterprise Fund
represent loans to eligible Industrial and Commercial customers participating in the Lodi Energy Efficiency Financing Pilot Project.
On November 15, 1995, the City loaned to a developer funds for a low-income housing project of which 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.
In December 2009, the City entered into a contractual relationship with the California Department of Housing and Community Development
(HCD) to administer a First-time Homebuyers Program. The loan program is intended to provide deferred down -payment assistance to first-time
homebuyers who are at or below 80% of the median income, for the purchase of homes within Lodi. The loan bears 2% interest and is due and
payable 30 years from close of escrow, upon transfer of the property or when the home is no longer owner -occupied, whichever comes first. The
City approved one loan during the fiscal year.
In October 2010, the City established a loan fund in its public benefits program from which G2 electric utility rate commercial and industrial
customers may borrow money to implement energy conservation projects in their facilities. The loan is at zero interest rate payable in two years
capped at $50,000 per customer. As of June 30, 2011, five loans to industrial and commercial customers were approved.
(m) Advance Receivable
Advance receivable reported in the Electric Enterprise Fund 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 12).
(n) Inventory
General fund inventories are recorded at cosf 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.
37
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
(o) Deferred Charges
Deferred charges reported in the Electric Enterprise Fund include costs incurred in connection with the issuance of the 2002 Certificates of
Participation Series C & D amortized over 9.5 years and the 2008 Certificates of Participation Series A amortized over 24 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 Enterprise
Fund include costs incurred on the issuance of the 2003B and 2004A Certificates of Participation amortized over 20 years and the 2007A
Certificates of Participation amortized over 30 years. Deferred charges reported in the Water Enterprise Fund include costs incurred in the
issuance of the 2010 Certificates of Participation Series A and B amortized over 30 years.
(p) 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
38
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
(q) Compensated Absences/Vacation and Sick Leave
The City accrues for compensated absences, in the government -wide financial statements and the proprietary funds financial statements, to pay
its employees for the unused vacation, compensatory time, and miscellaneous leave. The City is not obligated to pay for unused sick leave if
employees terminate prior to retirement.
(r) 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 in an internal service fund. The accrued liability for estimated
self-insured claims represents an estimate of the eventual loss on claims arising prior to year-end including claims incurred but not reported.
(s) Net Assets
In the government -wide and proprietary funds financial statements, net assets are reported in one of three categories:
Invested in Capital Assets, Net of Related Debt — This category consists of capital assets net of accumulated depreciation and
reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets.
Restricted Net Assets — External creditors, grantors, contributors, or laws or regulations of other governments restrict this amount.
Unrestricted Net Assets — This category consists of all net assets that do not meet the definition of invested in capital assets, net of
related debt or restricted net assets.
(t) Fund Balance
Fund balances presented in the governmental fund financial statements represent the difference between assets and liabilities. GASB
Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, establishes the criteria for classifying fund balances into
specifically defined classifications and clarifies definitions for governmental funds. This new standard has substantially changed the categories
and terminology used to describe the components of fund balance. GASB Statement No. 54 requires that the fund balances be classified in
categories based upon the type of restrictions imposed on the use of funds. The City evaluated each of its funds at June 30, 2011 and classified
fund balances into the following five categories:
39
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Nonspendable — Amounts that cannot be spent because they are (1) not in spendable form, such as prepaid items, inventories and
long-term receivables for which the payment of proceeds are not restricted or committed with respect to the nature of the specific
expenditures of that fund or (2) legally or contractually required to remain intact.
Restricted — Amounts that are restricted by external parties such as creditors or imposed by grants, laws or regulations of other
governments or imposed by law through constitutional provisions or enabling legislation. The City has legislative restrictions on amounts
collected and reported in the City's various governmental funds.
Committed — Amounts that can only be used for specific purposes pursuant to constraints imposed by a formal action by the entity's
"highest level of decision-making authority"; which the City considers to be the Lodi City Council governing body legislative actions.
Assigned — Amounts that have been allocated by action of the Lodi City Council in which the City's intent is to use the funds for a
specific purpose. Once assigned, funds may only be released by resolution of the City Council.
Unassigned — Amounts that constitute the residual balances that have no restrictions placed upon them are reported in the General
Fund. For other governmental funds, as restrictions exceed available resources only deficit amounts are reported in the unassigned
category.
It is the City's goal to attain an unassigned fund balance in the General Fund of at least 15% of expenditures and working capital balances in the
Water and Wastewater enterprise funds of at least 25% of operating expenses and the target for the Electric enterprise fund working capital is
$12.9 million. The goals allow for variations from year-to-year to account for economic and fiscal changes.
The City Council also adopted a policy to establish the following reserves:
Catastrophic reserve - To maintain the ability of the City to meet operational costs during times of declared emergency or major catastrophe,
the City shall maintain committed General Fund balance of a minimum of 8% of annual General Fund expenditures.
Economic reserve - To maintain the City's economic viability and to meet seasonal cashflow shortfalls, the City shall maintain a committed
General Fund economic reserve balance of a minimum of 8% of annual General Fund revenues. Funding the economic reserve will begin in the
fiscal year following full funding of the catastrophic reserve.
(u) 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
investments with maturities of three months or less when purchased and investments maintained in the pool to be cash equivalents.
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
(v) 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.
(2) CASH AND INVESTMENTS
Cash and investments as of June 30, 2011 are classified in the accompanying financial statements as follows:
Statement of net assets:
Cash and investments
$
56,154,354
Restricted assets
70,354,848
Fiduciary funds cash and investments:
Private -purpose trust funds
262,445
Agency fund
469,120
Total cash and investments
$
127,240,767
Cash and investments as of June 30, 2011 consist of the following:
Cash on hand
$
2,471
Deposits with financial institutions
10,626,632
Investments
116,611,664
Total cash and investments
$
127,240,767
(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, bankers' acceptances, certificates of deposit, negotiable certificates of
deposit, commercial paper rated A-1 by Standard & Poor's or P-1 by Moody's Commercial Paper Record, State of California Local Agency
Investment Fund (LAIF), mutual funds that invest in eligible securities, guaranteed investment contracts and medium term notes as permitted by
the Government Code. The City is not authorized to enter into reverse repurchase agreements. The City selects its investments based on
41
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
safety, liquidity and yield. The following table identifies the permitted investment types authorized per the City's investment policy. The table also
identifies certain provisions that address interest rate risk, credit risk, and concentration of credit risk.
(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.
(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:
42
Maximum
Maximum % of
Maximum Investment
Permitted Investments/Deposits
Maturity
Portfolio
in One issuer
U.S. Treasury Obligations
5 years
100%
U.S. Agency Securities
5 years
100%
Banker's Acceptances
180 days
40%
25%
Certificates of Deposit
5 years
100%
33%
Negotiable Certificates of Deposit
5 years
30%
Commercial Paper
270 days
40%
California State Local Agency Investment Fund (LAIF)
Indefinite
100%
$50m per account
Money Market Mutual Funds
Indefinite
20%
Guaranteed investment contracts (GICs)
5 years
100%
Medium term Notes
5 years
30%
(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.
(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:
42
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Investment as of June 30, 2011
LAI F
Money Market Mutual Funds
Held by bond trustee:
LAIF
Money Market Mutual Funds
US Agency Securities
US Treasury Obligations
Guaranteed investment contracts (GICs)
Total investments subject to interest rate risk
Equities and options
Total investments
Maturity
Less than One Year
$ 62, 031, 921
153,708
6,724,558
38,358,051
765,046
$ 108,033,284
Maturity
One to Five Years
4,780,739
1,520,651
2,169,850
8,471,240
Investments in equities are shares of stock received by the Library as an endowment from a private citizen.
(d) Credit Risk
Total
$ 62,031,921
153,708
6,724,558
38,358,051
4,780,739
1,527,568
2,169,850
116, 504, 524
107,140
$ 116,611,664
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 under the 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.
In August 2011, Standard & Poor's lowered its long-term credit rating from AAA to AA+ on debt of the U.S. government, U.S. government-
sponsored enterprises, and public debt issues that have credit enhancement guarantees by U.S. government sponsored enterprises. These
downgrades relate to the credit risk associated with the City of Lodi's investments in U.S. Treasury obligations and U.S. Agency securities.
(e) Concentration of Credit Risk
The investment policy of the City contains certain 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 subject to the concentration of credit risk disclosure.
There are no investments with any one issuer greater than 5% of total investments.
43
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
(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 party. The California Government Code and the City's investment policy do
not contain legal or policy requirements that 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. $10,513,450 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, 2011 was $24.0 billion. LAIF is part of the California Pooled Investment
Account (PMIA), which at June 30, 2011 had a balance of $66.4 billion. Of this amount, 5.01% were invested in medium-term and short-term
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 investments was 237 days as of June 30, 2011.
The Local Investment Advisory 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 City's portion of the pool. Withdrawals from LAIF are done on a dollar for dollar basis.
44
(3)
(4)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
In accordance with GASB Statement 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 dollar to 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 uncollectible amounts. Total allowance provided for
uncollectible amounts related to receivables of the current period are as follows:
Uncollectibles related to late charges and services $
17,000
Uncollectibles related to electric sales and services
131,200
Uncollectibles related to wastewater services
52,800
Uncollectibles related to water sales and services
157,300
Total uncollectibles of the current fiscal year $
358,300
INTERFUND RECEIVABLES/PAYABLES
Interfund receivables and payables at June 30, 2011 are as follows:
Due from Due to Amount
Other governmental General $ 1,106,068
Other governmental Other governmental 2,468
$ 1,108,536
"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 $1,106,068 and $2,468 represent cash deficits in other governmental funds.
Advances from Advances to Amount
General Other governmental $ 316,480
Streets Other governmental 55,000
Water Other governmental 1,225,173
$ 1,596,653
45
(5)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
The $316,480 from the General Fund to the other governmental is an advance used for the start up costs of a redevelopment agency. The
$55,000 advance from other governmental was used for the Impact Mitigation Fees update. The $1,225,173 advance from the Water Fund was
used for the construction of Fire Station #4.
TRANSFERS
Transfers for the year ended June 30, 2011, are summarized as follows:
Transfers out:
General
Streets
Other governmental
Electric
Wastewater
Water
Total
Transfers in
Other
General Streets Governmental Total
$ 661,270
3,721,840
$ 4,383,110
93,279
93,279
11,196
736,200
747,396
2,856,390
49,639
2,906,029
1,451,480
68,466
1,519,946
1,060,120
1,171,107
2,231,227
$ 5,379,186 661,270
5,840,531
$ 11,880,987
During the year, various interfund transfers were made to finance expenditures, subsidize operating losses and service debt.
The transfer out of $11,196 from other governmental to the General Fund represents the return of unused funds intended as city match for a
capital project in prior years.
Transfers out of $2,856,390 from the Electric Fund, $1,451,480 from Wastewater Fund, and $1,060,120 from Water Fund represent the cost of
services reimbursement to the General Fund.
The transfer of $661,270 from the General Fund to Streets Fund constitutes funding for various street projects and the $3,721,840 transfers out
from the General Fund to other governmental represent transfers of $1,011,717 to the Debt Service Fund for the principal, interest and fiscal
charges required to pay the 2002 Certificates of Participation; $1,162,570 to the Community Center and $493,180 to the Recreation Fund for
operating costs; $8,223 to the Library Fund for computers; $150,200 to Community Development for operating costs; $303,050 to the Vehicle
and Equipment Fund for vehicle replacements; and $592,900 to the Capital Outlay Reserve Fund for capital projects.
46
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
The transfer out of $93,279 from Streets to other governmental was for its share of the cost of the General Plan update. The transfer out of
$736,200 from other governmental to other governmental includes $662,100 transferred from Community Center to Debt Service Fund for the
principal, interest and fiscal charges required to pay the 2002 Certificates of Participation; $65,000 from Capital Outlay for information systems
replacements; and transfer of $2,510 from the Community Development, $3,400 from Recreation Fund, and $3,190 from the Community Center
to the Vehicle and Equipment Fund for fleet replacement.
The transfers from Electric Fund of $49,639 and $68,466 from the Wastewater Fund to the other governmental funds was for the cost of the
General Plan update. The transfer of $1,171,107 from the Water Fund to the other governmental includes $1,102,641 which represents the
difference of the carrying value of land purchased from the Lodi Lake Fund for the new site of the Surface Water Treatment Plant and the $1.2
million paid by the Water Fund for that land; and $68,466 for the cost of the General Plan update.
47
(6)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
CAPITAL ASSETS
Capital assets activity of the primary government for the year -ended June 30, 2011, 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
June 30, 2010
Increases
Decreases
Balance
June 30, 2011
$ 24,099,912
(406,620) $
23,693,292
304,907
304,907
8,452,004
7,704,216
(4,903,140)
11,253,080
32,856,823
7,704,216
(5,309,760)
35,251,279
58,401,607
3,923,398
62,325,005
10,255,726
321,581
10,577,307
9,334,696
181,680
(143,881)
9,372,495
125,918,479
1,305,878
127,224,357
203,910,508
5,732,537
(143,881)
209,499,164
23,355,584
1,509,225
24,864,809
8,352,425
591,388
8,943,813
8,330,105
346,973
(143,881)
8,533,197
60,769,320
5,574,393
66,343,713
100,807,434
8,021,979
(143,881)
108,685,532
103,103,074
(2,2891442)
100,813,632
$ 135,959,897
5,414,774
(5,309,760) $
136,064,911
48
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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
Total accumulated depreciation
Total capital assets, being depreciated, net
Business -type activities capital assets, net
Balance
June 30, 2010
Balance
Increases Decreases June 30, 2011
$ 5,438,359
97,359
$
5.535,718
55,409,211
11,887,287
67,296,498
60,847,570
11,984,646
72,832,216
37,666,200
37,666,200
150,134,860
2,333,839
(1,660,784)
150,807,915
8,249,718
413,700
8,663,418
196,050,778
2,747,539
(1,660,784)
197,137,533
11,656,531
940,540
12,597,071
48,515,659
4,317,749
(41,519)
52,791,889
6,274,077
720,347
6,994,424
66,446,267
5,978,636
(41,519)
72,383,384
129,604,511
(3,231,097)
(1,619,265)
124,754,149
$ 190,452,081
8,753,549
(1,619,265) $
197,586,365
49
(7)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Depreciation expense was charged to function/programs of the primary government as follows:
Governmental activities:
General government
Public protection
Public works
Community development
Library
Parks and recreation
Internal service funds
Total depreciation expense - governmental activities
Business -type activities:
Electric
Wastewater
Water
Transit
Total depreciation expense - business -type activities
OPERATING LEASES
$ 684,640
930,100
5,719,496
6,084
- 10,458
669,753
1,448
$ 8,021,979
$ 1,557,274
2,260,157
1,288,441
872,764
$ 5,978,636
The City is obligated under various operating leases for the use of buildings and office space. Total costs for such leases were $21,000 for the
year ended June 30, 2011.
Future minimum lease payments required by lease agreements that have initial or remaining noncancellable lease terms of one year or more as
of June 30, 2011, are as follows:
Fiscal Years Ending
2012 $ 21,000
Total minimum lease payments required
under operating leases $ 21,000
50
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
(8) LONG-TERM OBLIGATIONS
The following is a summary of debt transactions of the City for the year ended June 30, 2011:
Governmental activities:
Compensated absences
2002 Certificates of Participation
Note payable
Capital leases
Self-insurance liability
Net OPEB obligation
Governmental activity long-term liabilities
Business -type activities:
Compensated absences
Pollution remediation obligation
California Safe Drinking Water Note Payable
Certificates of Participation:
2010 Certificates of Participation
Add deferred amounts:
For issuance premium
Total
2008 Certificates of Participation
Add deferred amounts:
For issuance premium
Less deferred amounts:
From refunding
Net
51
Amounts
Due Within
Interest Rates
June 30, 2010
Additions
Reductions
June 30, 2011
One Year
$
7,650,901
2,070,500
(2,586,686)
$ 7,134,715 $
2,070,500
3.0-5.0%
22,265,000
(610,000)
21,655,000
630,000
5.0%
245,000
245,000
5.3-5.39%
141,576
(141,576)
8,929,967
819,128
(1,398,757)
8,350,338
1,398,757
2,070,199
1,414,182
(469,593)
3,014,788
$
41,302,643
4,303,810
(5,206,612)
$ 40,399,841 $
4,099,257
Amounts
Due Within
Interest Rates
June 30, 2010
Additions
Reductions
June 30, 2011
One Year
$
1,891,220
475,456
(462,852)
1,903,824 $
475,456
69,723,089
(3,848,939)
65,874,150
3.41%
1,409,301
(1,409,301)
2.50-6.637%
38,665,000
38,665,000
775,000
591,006
(19,700)
571,306
19,700
39,256,006
(19,700)
39,236,306
794,700
3.8-5.05%
60,685,000
60,685,000
547,987
(24,909)
523,078
24,909
(6,636,422)
301,656
(6,334,766)
(301,656)
54,596,565
276,747
54,873,312
(276,747)
51
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
From refunding (723,117) 44,499 (678,618) (44,499)
Net 29,612,479 (73,754) 29,538,725 88,754
Total Certificates of Participation 136,805,050 39,256,006 (4,247,722) 171,813,334 5,272,722
Business -type activity long-term liabilities $ 209,828,660 39,731,462 (9,968,814) $ 239,591,308 $ 5,748,178
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, internal service funds self-insurance liability for $8,350,338, $107,281 for compensated absences,
and $3,014,788 for net OPEB obligation 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.
52
Amounts
Due Within
Interest Rates
June 30, 2010
Additions Reductions
June 30, 2011
One Year
2002 Certificates of Participation C & D
1.54-5.25%
25,830,000
(3,080,000)
22,750,000
3,270,000
Add deferred amounts:
For issuance premium
98,457
(65,636)
32,821
65,636
Total
25,928,457
(3,145,636)
22,782,821
3,335,636
2003 Certificates of Participation B
2.0-5.0%
3,840,000
(210,000)
3,630,000
215,000
Add deferred amounts:
For issuance premium
54,351
(4,102)
50,249
4,102
Total
3,894,351
(214,102)
3,680,249
219,102
2004 Certificates of Participation A
2.0-5.5%
22,470,000
(1,050,000)
21,420,000
1,090,000
Add deferred amounts:
For issuance premium
303,198
(21,277)
281,921
21,277
Total
22,773,198
(1,071,277)
21,701,921
1,111,277
2007 Certificates of Participation A
4.0-5.0%
30,110,000
(110,000)
30,000,000
125,000
Add deferred amounts:
225,596
(8,253)
217,343
8,253
For issuance premium
Less deferred amounts:
From refunding (723,117) 44,499 (678,618) (44,499)
Net 29,612,479 (73,754) 29,538,725 88,754
Total Certificates of Participation 136,805,050 39,256,006 (4,247,722) 171,813,334 5,272,722
Business -type activity long-term liabilities $ 209,828,660 39,731,462 (9,968,814) $ 239,591,308 $ 5,748,178
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, internal service funds self-insurance liability for $8,350,338, $107,281 for compensated absences,
and $3,014,788 for net OPEB obligation 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.
52
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Long-term debt payable at June 30, 2011, comprised of the following individual issues:
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,
2017.
Annual debt service requirements to maturity of the note payable are as follows:
Fiscal
Year
Ending
Governmental Activities
June 30,
Principal
Interest
2012
$
$ 14,700
2013
14,700
2014
14,700
2015
14,700
2016
14,700
2017
245,000
11,025
Total
$ 245,000
$ 84,525
Certificates of Participation
$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 City has pledged future wastewater revenues, net of specified operating expenses, to repay $5.0 million in wastewater revenue bonds. The
bonds are payable solely from wastewater customer net revenues. The total principal and interest remaining to be paid on the bonds is
$4,905,558. Principal and interest paid for the current year and total net revenues were $381,393 and $10,536,457, respectively.
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
53
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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 refinance water 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. The City has pledged future wastewater revenues, net of specified
operating expenses, to repay these certificates. The total principal and interest remaining to be paid on the certficates is $29,805,012. Principal
and interest paid for the current year and total net revenues were $2,147,600 and $10,536,457 respectively.
$30,320,000 Certificates of Participation (2007A COP) were issued on November 16, 2007 to provide funds to finance the costs of certain
improvements to the wastewater collection, treatment and disposal system of the City and to provide resources for the repayment of the 1991
Certificates of Participation (Wastewater Treatment Plant Expansion Refunding Project). Principal is payable annually on October 1 in amounts
from $105,000 to $2,980,000 with final payment due October 1, 2037. The City has pledged future wastewater revenues, net of specified
operating expenses, to repay these certificates. The total principal and interest remaining to be paid on the certificates is $58,833,988. Principal
and interest paid for the current year and total net revenues were $1,588,750 and $10,536,457, respectively.
$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, 2011, 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.
$21,225,000 Revenue Certificates of Participation 2002 Series C and $22,740,000 Revenue Certificates of Participation Series D were issued to
buy out the energy purchase agreement with 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 throughout the State. As a 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
54
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Certificates of Participation 2002 Taxable Series D to buy out the amended contract in the amount of $42,406,175. Principal is payable annually
on July 1 in amounts from $110,000 to $5,195,000 with final payment due July 1, 2015.
The City has pledged future electric revenues, net of specified operating expenses, to repay these certificates. The total principal and interest
remaining to be paid on the certificates is $25,879,903. Principal and interest paid for the current year and total net revenues were $4,274,454
and $14,909,432, respectively.
The City issued $60,685,000 Certificates of Participation (2008A COP) on July 24, 2008 to allow the City to prepay and cause the immediate
defeasance of the outstanding $46,760,000 Certificates of Participation (Electric System Revenue Certificates of Participation 2002 Series A
Variable Rate Certificates) and to pay $8,979,000 for the termination of a swap agreement related to the refunded 2002 certificates. Principal is
payable annually on July 1 in amounts from $2,390,000 to $5,090,000 with final payment due July 1, 2032. The City has pledged future electric
revenues, net of specified operating expenses, to repay these certificates. The total principal and interest remaining to be paid on the certificates
is $102,731,500. Interest paid for the current year and total net revenues were $2,957,775 and $14,909,432, respectively.
On October 1, 2010, the City issued $9,015,000 Water Revenue Certificates of Participation, 2010 Series A and $29,650,000 Water Revenue
Bonds, 2010 Series B (Federally taxable - Build America Bonds) to finance the construction of the Surface Water Treatment Facility which is
designed to pump water from the Mokelumne River, treat and deliver it to the City's water distribution system. Principal is payable annually on
June 1 in amounts from $775,000 to $2,210,000 with final payment due June 1, 2040. The City has pledged future water revenues, net of
operation and maintenance costs, to repay these certificates. The total principal and interest remaining to be paid on the certificates is
$81,142,121. Interest paid for the current year and total net revenues were $1,296,849 and $8,836,592, respectively.
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.
55
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Annual debt service requirements to maturity for certificates of participation are as follows:
Fiscal Year Ending
June 30,
2012
2013
2014
2015
2016
2017-2021
2022-2026
2027-2031
2032-2036
2037-2040
Governmental Activities
Business -type
Activities
Principal
Interest
Principal
Interest
630,000
1,036,156
5,475,000
8,900,541
655,000
1,010,047
6,875,000
8,626,550
690,000
981,013
7,150,000
8,296,081
715,000
949,400
7,460,000
7,948,813
745,000
916,550
10,185,000
7,582,344
4,275,000
4,001,564
28,680,000
33,489,093
5,425,000
2,833,144
36,030,000
25,939,141
6,920,000
1,298,250
38,455,000
16,439,879
1,600,000
40,000
23,750,000
7,275,931
Total $ 21,655,000
Special Assessment District Debt
13,090,000 1,649,708
$ 13,066,124 $ 177,150,000 $ 126,148,081
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, 2011, is $165,000.
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.
56
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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"). Under the agreement, the City will purchase 6,000 acre feet
of water per annum from the District for 40 years.
(9) DEFINED BENEFIT PENSION PLAN
(a) Plan Description
The City of Lodi contributes to the California Public Employees' Retirement System (PERS); an agent multiple -employer public 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 Q Street, Sacramento, CA 95811.
(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
12.081% for miscellaneous employees, 25.016% for fire and police employees, of annual covered payroll. The contribution requirements of plan
members and the City are established and may be amended by PERS.
(c) Annual Pension Cost
For the year ended June 30, 2011, the City's annual pension cost of $2,726,074 for the Safety Plan and $2,080,303 for the Miscellaneous Plan
were equal to the City's required contributions. The required contribution was determined as part of the June 30, 2008, actuarial valuation using
the entry age normal actuarial cost method. The actuarial assumptions included (a) 7.75% investment rate of return (net of administrative
expenses) (b) projected annual salary increases that vary by age, length of service, and type of employment (c) 3.25% payroll growth, and (d)
3.00% inflation. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the
market value of investments over a fifteen -year period (smoothed market value). PERS unfunded actuarial liability is being amortized as a level
57
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
percentage of projected payroll on a closed basis. Amortization of the remaining period for the Safety Plan was 30 years and for the
Miscellaneous Plan was 21 years as of June 30, 2010.
(d) Trend Information
Three -Year Trend information ($ Amounts in Thousands):
SAFETY PLAN
Fiscal Year
Ended
6/30/09
6/30/10
6/30/11
(e) Funded Status and Funding Progress
Percentage
Annual
Fiscal Year
Pension
Ended
Cost (APC)
6/30/09
$ 2,761
6/30/10
2,674
6/30/11
2,726
Fiscal Year
Ended
6/30/09
6/30/10
6/30/11
(e) Funded Status and Funding Progress
Percentage
Net
of APC
Pension
Contributed
Obligation
100%
$0
100%
$0
100%
$0
MISCELLANEOUS PLAN
Annual
Percentage
Net
Pension
of APC
Pension
Cost (APC)
Contributed
Obligation
$ 2,184
100%
$0
2,018
100%
$0
2,080
100%
$0
As of June 30, 2009, the most recent actuarial valuation date, the Safety Plan was 76.9% funded and the Miscellaneous Plan was 86.5% funded.
The actuarial accrued liability for benefits was $116 million for the Safety Plan and $128 million for the Miscellaneous Plan, and the actuarial
value of assets were $89 million for the Safety Plan and $110 million for the Miscellaneous Plan; resulting in an unfunded actuarial accrued
liability (UAAL) of $27 million for the Safety Plan and $17 million for the Miscellaneous Plan. The covered payroll (annual payroll of active
employees covered by the plans) were $11 million for the Safety Plan and $19 million for the Miscellaneous Plan, and the ratio of the UAAL to
the covered payroll was 234.6% and 92.1 % for the Safety and Miscellaneous plans, respectively.
58
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
The schedule of funding progress, presented as RSI following the notes to the financial statements, presents multi-year trend information about
whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
(10) POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
(a) Plan Description
The City sponsors a single -employer defined -benefit postemployment healthcare plan (Plan) to provide medical insurance benefits to eligible
retired employees and their spouses. The Plan does not issue a publicly available financial report. Medical coverage is provided through PERS
healthcare program. Employees who retire from the City and receive a PERS pension are eligible for postemployment medical benefits. The
City contributes the minimum amount provided under Government Code Section 22825 of the Public Employees Medical and Hospital Care Act.
In general, retirees must contribute any premium amounts in excess of the City contribution. However, as described below, a closed group of
active employees and retirees receive additional postemployment benefits.
Employees hired prior to the dates shown in the following table are allowed to convert their accumulated sick leave into postemployment medical
benefits at retirement as long as they have ten or more years of service with the City.
Group Hired prior to:
Executive Management
July 1, 1994
Mid -Management
July 1, 1994
Fire Mid -Management
July 1, 1994
Police Mid -Management
July 1, 1994
General Services
July 1, 1995
IBEW
July 1, 1995
Maintenance and Operators
July 1, 1995
Dispatchers
July 9, 1994
Police
October 10, 1994
Fire
December 6, 1995
The most widely elected options are the "Bank" option and the "Conversion" option. Under the "Bank" option, accumulated sick leave amounts
are translated by specified formulas into a bank amount that is then used to pay postemployment healthcare premiums until the "Bank" is
101
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
exhausted. Under the„ Conversion option, the accumulated sick leave hours are converted by specified formulas into a period of time during
which the retiree will receive postemployment benefits. The number of hours is multiplied by 50% and converted to days. The City pays one
month's premium for employee and dependents for each day after conversion. For each year of employment in excess of ten years, 2.5% is
added to the 50% before conversion. The amount of premium paid will be the same as the premium paid by the City at the time of retirement. In
the event that the premium increases, the retiree pays the difference.
The City also allows a surviving dependent of a retiree to enroll in the Sick Leave Conversion program to purchase medical insurance at the
employee only premium for the same period as if the retiree had not died. Retirees are allowed to enroll in any of the available PERS medical
plans. The PERS minimum amount will continue for the life of the retiree and surviving spouse. The "Conversion” benefit will continue until the
end of a period that is based on accumulated sick leave at retirement.
(b) Funding Policy
Contribution requirements of the postemployment benefit are based on pay-as-you-go financing. For fiscal year 2010-11, the City contributed
$469,593, or 33.16%, of the actuarially required contributions.
(c) Annual OPEB Cost and Net OPEB Obligation
The City's annual other postemployment benefits (OPEB) cost is calculated based on the annual required contribution (ARC), an amount
actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an
ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not
to exceed thirty years.
The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes
in the City's net OPEB obligation:
Annual required contribution
Interest on net OPEB obligation
Adjustment to annual required contribution
Annual OPEB cost (expense)
Contribution made
Increase in net OPEB obligation
Net OPEB obligation - beginning of year
Net OPEB obligation - end of year
60
$ 1,415,969
80,763
(82,550)
1,414,182
(469,593)
944,589
2,070,199
$ 3,014,788
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation, are as follows:
Fiscal year
ended
06/30/2009
06/30/2010
06/30/2011
(d) Funding Status and Funding Progress
Annual
OPEB Cost
$ 1,785,173
1,333,881
1,414,182
Percentage of
Net
Annual OPEB
OPEB
Cost Contributed
Obligation
33.03%
$1,195,521
34.43%
2,070,199
33.21%
3,014,788
As of January 1, 2010, the most recent actuarial valuation date, the funded status of the Retiree Health Plan was as follows:
Actuarial accrued liability (AAL)
Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL)
Funded ratio (actuarial value of plan assets/AAL)
Annual covered payroll (active plan members)
UAAL as percentage of annual covered payroll
(e) Actuarial Methods and Assumptions
$ 17,710,456
0
$ 17,710,456
0.0%
$ 9,409,782
188.21%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence
of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts
determined regarding the funded status of the plan and the annual required contribution of the employer are subject to continual revision as
actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented
as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Projections of benefits for financial purposes are based on the substantive plan (the plan as understood by the employer and plan members) and
include types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and
the plan members to that point. The actuarial methods and the assumptions used include techniques that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
In the January 1, 2010 actuarial valuation, the entry age normal cost method was used. The actuarial assumptions included a 4% discount rate
to calculate the present value of future benefit payments; an annual healthcare cost trend rate of 8.5% initially, reduced by .3 percent increments
to an ultimate rate of 5.5% in the eleventh year and beyond; the PERS minimum benefit will increase 5% per year; a 3.25% annual rate of
increase in payroll; assumed that 100% of future eligible retirees will elect to maintain their enrollment in a PERS medical plan and qualify for the
City's minimum contribution; 75% of future retirees will enroll a spouse; and also assumed that 100% of General Services, Maintenance and
Operators and Dispatchers will elect the conversion option and 50% of Executive Management, Mid Management and Police will elect the option.
The conversion option is not available to IBEW and Fire retirees. The unfunded actuarial accrued liability is amortized as a level of percentage of
expected payroll over a closed thirty year period.
Since the prior valuation in 2008, there have been several factors which decreased the City's GASB 45 Actuarial Accrued Liability. These
include (1) fewer participants covered under the Conversion option due to pre -retirement termination of employment or cessation of medical
coverage with the City; (2) updated actuarial assumptions and methods regarding coordination of the PERS minimum benefit and the Conversion
benefit, effect of Medicare premiums on the Conversion benefit, and assumed duration of the PERS minimum benefit for widows; and (3) health
premium increases which were lower than expected.
(11) 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 -Insurance Funds.
The City is self-insured for general liability up to the first $500,000 per occurrence with 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 13).
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 with
coverage up to $300,000,000 in the current year. The City never had any settlements that exceeded its workers' compensation insurance
coverage (See Note 13).
62
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
The City is fully self-insured for dental and unemployment for 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 $8,350,338 at June 30, 2011, for all self-insured claims in the Internal Service Fund -Insurance Funds 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 liability for fiscal years ended June 30, 2011 and 2010 are as follows:
Beginning
FY 09-10 $ 6,531,336
FY 10-11 $ 8,929,967
(12) PARTICIPATION IN JOINT VENTURES
Northern California Power Agency
Current -Year
Claims and Changes
Claim
in Estimates
Payments
4,064,109
(1,665,478)
819,128
(1,398,757)
Ending
$ 8,929,967
$ 8,350,338
The City, along with thirteen 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
NCPA's project construction and development programs have been individually financed by project revenue bonds collateralized by NCPA's
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
63
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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 -defaulting Proiect Participant's Original 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 Entitlement for 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 Operating 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 set up 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 reserve will
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.
As of June 30, 2011, the City's balance in the NCPA General Operating Reserve, which has been credited with annual interest earnings and
settlements, is $12,866,272.
64
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Project Participation
The NCPA members and their percentage share at June 30, 2011, which is the most recent available data, are as follows:
NON-MEMBERS
Azusa 2.745
CDWR 23.529
Modesto Irrigation District 23.529
PWRPA 1.961
65
Hydro
Combustion
Multiple
Lodi
Geothermal
Electric
Turbine
Capital
Transmission
Energy
NCPA MEMBERS
Project
Project
Project #1
Facilities
Project
Center
Alameda
16.8825% 10.00%
21.820%
19.00%
30.7803%
%
BART
5.882
Biggs
0.2270
.197
0.3446
0.392
Gridley
0.3360
.350
0.6248
1.961
Healdsburg
3.6740
1.66
5.833
6.6947
1.569
Lodi
10.2800
10.37
13.393
39.50
20.6077
11.765
Lompoc
3.6810
2.30
5.833
5.00
6.7101
1.961
Palo Alto
22.92
Plumas-Sierra Rural Electric Coop
.7010
1.69
1.817
1.3112
0.784
Port of Oakland
1.176
Roseville
7.8830
12.00
36.50
13.0846
Santa Clara
44.3905
37.02
41.667
Silicon Valley Power
19.608
Turlock Irrigation District
6.3305
9.6106
Ukiah
5.6145
2.04
9.090
10.2315
3.137
NON-MEMBERS
Azusa 2.745
CDWR 23.529
Modesto Irrigation District 23.529
PWRPA 1.961
65
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Bulk power purchased by the City through NCPA amounted to $35,282,422 during the year ended June 30, 2011 and is reflected in utilities
expense in the Electric Enterprise Fund. This amount is net of the proceeds received from Roseville electric for the sale of the combustion
turbine one (CTI Phase II) rights in the amount of $650,000.
NCPA Geothermal Project
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
$63 million at June 30, 2010.
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 requirements for 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, 2010,
approximately $458 million in long-term debt used to finance this project was 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 13.393%
of the debt service and operating costs. At June 30, 2010 approximately $4 million in long-term debt was outstanding.
Transmission Project
The project was undertaken to meet certain obligations of NCPA under the NCPA/PG & E Interconnection Agreement. The project includes an
ownership interest in PG & E's 230kv Castle Rock to Lakeville Substation Transmission Line in Sonoma County, additional firm transmission
66
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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 18.4861% of the debt service and operating costs. At June 30, 2010,
approximately $0.9 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 enhancement and emissions control.
Under a power purchase agreement, the City is obligated to pay 39.5% of the debt service and operating costs. At June 30, 2010, approximately
$55 million in long-term debt was outstanding.
Lodi Energy Center
The Lodi Energy Center project is a 280 MW base load, combined cycle, natural gas-fired, combustion turbine generating station (one gas
turbine and one steam turbine) currently being built in Lodi on city property. Total project cost is estimated at about $375 million and expected to
start producing electricity in June 2012.
Under a power purchase agreement, the City is obligated to pay 11.765% of the debt service and operating costs. At June 30, 2010,
approximately $396 million in long-term debt was outstanding.
67
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
The following are the most recent available audited condensed financial statements of NCPA:
Assets
Current assets
Restricted assets
Electric plant, net
Other assets and deferred charges
Total assets
Combined Balance Sheet
June 30, 2010
(in thousands)
$ 66,022
508,400
410,304
186,839
$ 1,171,565
Combined Statement of Revenues and Expenses
and Changes in net Assets
Year ended June 30, 2010
(in thousands)
Sales for resale
Operating expenses
Other expenses
Future recoverable costs
Net revenues before refunds
Refunds to participants
Increase in net assets
Net assets, beginning of year
Net assets, end of year
$ 304,345
(257,851)
(29,903)
(5,251)
11,340
(9,573)
1,767
32.014
$ 33,781
Liabilities and Capitalization
Current portion of long-term debt $ 41,475
Other current liabilities 43,179
Other liabilities and deferred credits 186,256
Long-term debt, net 866,874
Net assets 33,781
Total liabilities and net assets $ 1,171,565
Combined Statement of Cash Flow
Year ended June 30, 2010
(in thousands)
Net cash from operating activities $ 97,890
Net from investing activities 28,554
Net cash from capital and related
financing activities 252,751
Net cash from noncapital
and related financing activities (49,485)
Increase in cash and cash equivalents 329,710
Cash and cash equivalents, beginning
of year 110,269
Cash and cash equivalents end of year $ 439,979
At June 30, 2010, NCPA's total outstanding long-term debt was $977,440,000 at an average interest rate of 5%. The current portion of long-term
debt at June 30, 2010, was $41,475,000.
68
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Complete financial information for NCPA may be obtained at the following administration office:
Northern California Power Agency
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 -defaulting Proiect Participant's Original 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 Entitlement for 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 340 -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 Electricity Coordinating
Council (WECC) region. The WECC approved rating of the COI is 4,800 MW.
TANC, 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. Pursuant to
the IPA and a subsequent agreement with WAPA, and the purchase of entitlement, rights and title, and interest in the City of Vernon's share of
the project transmission assets, TANC is entitled to use approximately 1,362 MW, and is obligated to pay an average of approximately 80
percent of the operating costs associated with the project.
69
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Under the TANC joint powers agreement, the City is obligated to pay 1.89% of its debt service and operating costs. At June 30, 2010,
approximately $417 million in long-term debt was outstanding of which $25 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
(13) MEMBERSHIP IN INSURANCE POOLS
California Joint Powers Risk Management Authority
The City is a member, along with 16 other individual cities and 4 joint powers authorities, 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-one 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 through an actuarial analysis of loss history during the ten-year period preceding the three years prior to the end of the current
program year. The City periodically pays deposits to the CJPRMA. These deposits are recorded as expenses in the year paid, as they are a
reasonable estimate of the actual cost of the program. During the year ended June 30, 2011, deposits of $46,671 were paid to CJPRMA for the
liability program.
The participants at June 30, 2011, are as follows: City of Alameda, Chico, Fairfield, Fremont, Livermore, Lodi, NCCSIF, Petaluma, Redding,
Redwood Empire Municipal Insurance Fund, Richmond, Roseville, San Leandro, San Rafael, Santa Rosa, Small Cities Organized Risk Effort,
Stockton, Sunnyvale, Vacaville, Vallejo, and Yolo County Public Agencies Risk Management Insurance Authority.
Complete financial information for CJPRMA may be obtained at the following administration office:
California Joint Powers Risk Management Authority
3252 Constitution Dr.
Livermore, CA 94551
70
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Local Agency Workers' Compensation Excess Joint Powers Authority
The City, along with thirty-two 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
covers 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 statutory limits. The City paid
$302,391 in deposits to LAWCX during the fiscal year ended June 30, 2011.
The participants at June 30, 2011, are as follows: Alameda, ABAG, BCJPIA, City of Benicia, CCCTA, Central San Joaquin Valley Risk Mgmt
Authority (CSJVRMA), City of Clovis, City of Coronado, City of Encinitas, FASTS, City of Gilroy, City of Livermore, City of Lodi, Town of Los
Gatos, City of Merced, MCLAIA, City of Morgan Hill, City of Newark, PARSAC, City of Placentia, PERMA, City of Pleasanton, 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 may be obtained at the following administration office:
Local Agency Workers' Compensation Excess Joint Powers Authority
1750 Creekside Oaks Drive, Suite 200
Sacramento, California 95833
California Transit Insurance Pool
The City, along with thirty-four other public agencies is a member of California Transit Insurance Pool (CaITIP), a joint 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 claims administrator services.
Program II applies to members with self-insured retentions who choose to provide their own claims administrator services.
CaITIP purchases excess insurance over its $1,000,000 retention up to $20 million per occurrence. Each member is provided with $4 million in
excess of the pooled retention for a total of $5 million in coverage and has the option to choose one or both of two additional layers for the full
$20 million.
71
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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 $90,052 in deposits to CaITIP during the fiscal year ended June 30, 2011. 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 20 Yes
Complete financial information for CalTip may be obtained at the following administration office:
California Transit Insurance Pool
1750 Creekside Oaks Drive, Suite 200
Sacramento, California 95833
(14) DEFICIT IN FUND EQUITY
Nonmaior Governmental Fund — Community Center — A deficit in fund equity in the amount of $473,194 at June 30, 2011, is attributed to
operations not meeting revenue projections due to a reduction in Arts Specialty class attendance and a reduction in facility rentals.
Nonmajor Governmental Fund — Recreation Fund - A deficit in fund equity in the amount of $373,187 at June 30, 2011, is attributed to the
department not meeting revenue projections due to a reduction in user fee revenues.
Revenue reductions are a direct result of current economic conditions and mirror similar shortfalls seen in surrounding communities.
Internal Service Funds - Benefits Fund — A deficit in fund equity in the amount of $2,934,664 at June 30, 2011, is attributed to the net OPEB
obligation set up in accordance with the requirements of GASB Statement No. 45. Net OPEB obligation as of June 30, 2011, was $3,014,788.
The City is still weighing its options whether to pre -fund the OPEB obligation or continue on a pay-as-you-go basis. It will be addressed during
the budget process.
72
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
Internal Service Funds - Insurance Fund — The deficit in fund equity in the amount of $286,387 at June 30, 2011, represents a decrease of
$1,081,963 from prior year and was attributed to the decrease in required workers' compensation reserves; and decrease in claims payments.
This deficit will be addressed during the budget process.
(15) EXCESS OF EXPENDITURES OVER APPROPRIATIONS
For the year ended June 30, 2011, expenditures exceeded appropriations in the Recreation special revenue fund by $20,539. This
overexpenditure was funded by an interfund loan from the General Fund.
(16) POLLUTION REMEDIATION OBLIGATION
Lodi relies on groundwater for its drinking water and in the late 1980's, PCE and TCE pollution was discovered in several municipal water supply
wells. Investigations conducted by the California Regional Water Quality Control Board in the early 1990's under the Well Investigation program
revealed numerous areas where TCE was discharged, or where PCE from dry cleaning operations were discharged to the sewer system. In
1997, the Department of Toxic Substances Control and the City entered into a cooperative agreement whereby the City assumed a lead role in
the cleanup and agreed to pursue legal action against potentially responsible parties (PRPs). The City has settled with all the involved parties.
The City received a draft cleanup and abatement order to investigate the discharges of waste, clean up the waste and abate the effects of the
discharges of waste in conformance with the State Board's Resolution No. 92-49 Policies and Procedures for Investigation and Cleanup and
Abatement of Discharges Under the Water Code Section 13304 and with the Regional Boards' Water Quality Control Plan for the Sacramento
River and San Joaquin River. The City then engaged the services of Treadwell and Rollo to advise the City on courses of action in the
preparation of feasibility studies, remedial design, and remedial action plan to comply with the technical and reporting requirements of the State
Board. The City's total pollution remediation obligation as of June 30, 2011, is $65,874,150. This amount is an estimate and subject to changes
resulting from price increases or reductions, technology, or changes in applicable laws or regulations.
(17) COMMITMENTS AND CONTINGENCIES
Litigation and claims — The City has fully resolved all the litigation arising out of its groundwater contamination. Settlement and rate revenues
have amassed $16 million dollar reserve which is expected to cover all costs through the next 10 years. Costs thereafter can be effectively
managed with new rate revenues. As such, the City Attorney does not anticipate a material effect on the City's financial condition.
The City owns a 1,000 acre wastewater treatment facility known as "White Slough" approximately 5 miles west of the contiguous city limit.
Neighboring farming and dairy operations are in litigation over elevated nitrate levels in the area. Efforts to join the City in the litigation have been
so far unsuccessful but are expected to continue. It is too early at this stage to estimate liability or damages if the City is joined in the action.
However, the City Attorney does not currently expect the matter to have a material effect on the City's financial condition.
73
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2011
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.
Water Purchase Agreement with Woodbridge Irrigation District — The City obtains its municipal water supply from wells located within the
City, extracting water from the underground aquifer, which is replenished in part by flows of the Mokelumne River. To avoid being wholly
dependent upon wells and the possible impacts of eventual overdraft of the groundwater supply, the City made a commitment in 2003 to
purchase surface water supply from Woodbridge Irrigation District for 40 years beginning in 2003. The agreement provides for the purchase of
6,000 acre feet per year and the City pays the District $1.2 million annually. Commencing on January 1 of the seventh year, the amount payable
to the District shall be increased by two percent (2%) per year or by the change in the Consumer Price Index whichever is higher but shall not
exceed five percent (5%).
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. There is no cumulative arbitrage liability as of June
30, 2011, for any of the City's outstanding Certificates of Participation.
(18) SPECIAL ITEM
The City sold a parcel of parkland to a developer for $630,000 to build a senior housing project. The parcel is adjacent to land that had been
given to the City to develop a park. Through the sale of the adjacent parcel to the developer, the City is able to develop the park and have a
senior housing development. This sale resulted in a net gain to the City of $320,739.
74
REQUIRED SUPPLEMENTARY INFORMATION
City of Lodi
Required Supplementary Information
Schedule of Funding Progress - Pension Plan
June 30, 2011
(in thousands of dollars)
Unfunded
Actuarial
Accrued
Funded
Entry Age
Liability
Ratio
Actuarial
Actuarial
Actuarial
Accrued
Valuation
Asset Value
Liability
Plan Date
(A)
(B)
26,765
76.9%
Safety 6/30/07
$ 79,126 $
94,644
6/30/08
84,853
103,447
6130/09
88,892
115,657
Miscellaneous 6/30/07
98,377
108,528
6/30/08
105,760
117,537
6/30/09
110,318
127,535
Unfunded
Actuarial
Accrued
Funded
Covered
Liability
Ratio
Payroll
[(B) - (A)]
[(A) / (B)]
(C)
$ 15,518
83.6%
$ 9,900
18,594
82.0%
10,422
26,765
76.9%
11,409
10,151
90.6%
17,421
11,777
90.0%
18,486
17,217
86.5%
18,696
75
Unfunded
Actuarial
Liability as
Percentage of
Covered Payroll
{[(B) — (A)]/(C)}
156.7%
178.4%
234.6%
58.3%
63.7%
92.1%
Actuarial
Valuation
Date
Actuarial
Value
of Assets
(A)
City of Lodi
Required Supplementary Information
Schedule of Funding Progress — OPEB Plan
June 30, 2011
(in thousands of dollars)
Normal
Accrued
Liability
-.
1/1/08 $ 0 $ 23,323
1/1/10 0 17,710
Unfunded
Funded
Liability
Ratio
[(B) - (A)]
[(A) / (B)l
(C)
{[(B) — (A)]/(C)}
$ 23,323
0%
17,710
0%
Annual
UAAL As a
Covered
Percentage of
Payroll
Covered Payroll
(C)
{[(B) — (A)]/(C)}
$ 9,846
237%
9,410
188%
As, required by GASB Statement No. 45, the City will report three years of data in the above table, as the information becomes available in
subsequent years.
76
EXPENDITURES
CITY OF LODI
15,860,850
15,512,775
348,075
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
8,846,587
8,882,587
GENERALFUND
303,890
General government:
City Council
136,500
136,500
Year ended June 30, 2011
10,220
City Manager
1,147,650
1,160,850
Budget
10,222
Variance with
469,600
Original
Final
Actual Final Budget
REVENUES
Taxes
$ 22,885,360
22,885,360
23,061,164 $
175,804
Licenses and permits
94,700
94,700
83,395
(11,305)
Intergovernmental revenues
10,052,630
10,052,630
10,032,523
(20,107)
Charges for services
969,370
969,370
1,035,220
65,850
Fines, forfeits and penalties
1,316,000
1,316,000
1,404,307
88,307
Investment and rental income
413,520
413,520
455,923
42,403
Miscellaneous revenue
260,700
260,700
480,028
219,328
Total revenues
35,992,280
35,992,280
36,552,560
560,280
EXPENDITURES
15,863,250
15,860,850
15,512,775
348,075
Current:
8,846,587
8,882,587
8,578,697
303,890
General government:
City Council
136,500
136,500
126,280
10,220
City Manager
1,147,650
1,160,850
1,150,628
10,222
City Clerk
469,600
473,600
433,716
39,884
City Attorney
468,150
480,467
480,467
43,648-
3,648Debt
Human Resources
523,650
523,650
509,415
14,235
Information Systems
944,950
944,950
926,850
18,100
Financial Services
1,605,070
1,647,366
1,647,366
Budget and Treasury
337,930
350,083
350,083
1,323,163
Non Departmental
1,169,010
1,066,144
853,354
212,790
Total general government
6,802,510
6,783,610
6,478,159
305,451
Public protection:
Police
15,863,250
15,860,850
15,512,775
348,075
Fire
8,846,587
8,882,587
8,578,697
303,890
Total public protection
24,709,837
24,743,437
24,091,472
651,965
Public Works
1,702,580
1,737,880
1,421,238
316,642
Library
1,362,930
1,362,930
1,357,473
5,457
Parks
2,234,750
2,234,750
2,191,102
43,648-
3,648Debt
Debtservice:
Interest and fiscal charges
6,427
6,427
6,427
Principal payments
141,576
141,576
141,576
Total debt service
148,003
148,003
148,003
Total expenditures
36,960,610
37,010,610
35,687,447
1,323,163
EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES
(968,330)
(1,018,330)
865,113 1,883,443
1,894,642
FUND BALANCE, beginning of year
OTHER FINANCING SOURCES (USES)
5,367,987
5,367,987
5,379,186 11,199
Transfers in
Transfers out
(4,383,110)
(4,383,110)
(4,383,110)
Total other financing sources (uses)
984,877
984,677
996,076 11,199
NET CHANGE IN FUND BALANCE
16,547
(33,453)
1,861,189
1,894,642
FUND BALANCE, beginning of year
3,841,936
3,841,936
4,285,216
443,280
FUND BALANCE, end of year
$ _ 3,858,483
3,808,483
6,146,405 $
2,337,922
The note to the required supplementary information is an integral part of this schedule
77
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
STREETS FUND
Year ended June 30, 2011
REVENUES
Intergovernmental revenues
Charges for services
Investment and rental income
Contributions and donations
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Public works
Capital outlay
Total Expenditures
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, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
Budget
2,186,399
1,817,928
Variance with
Original
Final
Actual
Final Budget
$ 3,633,920
3,633,920
5,533,846 $
1,899,926
535,350
565,350
555,440
(9,910)
49,610
49,610
53,429
3,819
661,270
750,000
688,565
(61,435)
60,000
60,000
88,689
28,689
4,278,880
5,058,880
6,919,969
1,861,089
2,176,560
2,186,399
1,817,928
368,471
3,726,800
11,541,054
6,744,515
4,796,539
5,903,360
13,727,453
8,562,443
5,165,010
(1,624,480)
(8,668,573)
(1,642,474)
7,026,099
661,270
661,270
661,270
(93,279)
(93,279)
(93,279)
567,991
567,991
567,991
(1,056,489)
(8,100,582)
(1,074,483)
7,026,099
8,663,509
8,663,509
8,663,509
$ 7,607,020
562,927
7,589,026 $
7,026,099
78
CITY OF LODI
Note to the Required Supplementary Information
June 30, 2011
Budgetary Data
The City adopts an annual budget for the general and special revenue funds. These budgets are prepared in accordance with 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 compliance with 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 prior to the first regular Council meeting in June of each year, the City Manager submits to the City Council a proposed
Financial Plan and Budget for 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. Prior to 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 budget transfers and appropriation amendments.
The legal level of budgetary control (that is, the level at which expenditures can not legally exceed the appropriated
79
amount) is at the department level. The operating budget is 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 another within a department without approval from the
City Council. All other appropriation adjustments during the year, whether transfers, increases or decreases, require City
Council approval.
M
COMBINING AND INDIVIDUAL FUND STATEMENTS
AND SCHEDULES
NONMAJOR GOVERNMENTAL FUNDS
Nonmajor Governmental Funds include:
Special Revenue Funds account for 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 accounts 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 proprietary funds.
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
June 30, 2011
Assets
Cash and investments
Restricted assets
Receivables:
Accounts, net
Interest
Due from other funds
Due from other governmental agencies
Loans receivable
Other assets
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable and other liabilities
Due to other funds
Advances from other funds
Deferred revenue
Total liabilities
Fund Balances (Deficit)
Restricted for:
Capital projects
Debt service
Other purposes
Unassigned
Total fund balances (deficit)
Total liabilities and fund balances (deficit)
81
Special Capital
Revenue Projects Total
$ 260,897
5,869,483 $
6,130,380
1,108,536
1,692,841
1,692,841
90,620
1,596,653
90,620
250
3,863
4,113
2,468
1,669,717
2,468
327,216
327,216
1,108,324
9,359,239
1,108,324
3,277
3,277
$ 1,793,052
7,566,187 $
9,359,239
$ 54,960
64,868 $
119,828
1,108,536
1,692,841
1,108,536
300,982
1,596,653
1,596,653
1,174,955
8,196
1,183,151
2,338,451
1,669,717
4,008,168
4,203,629
4,203,629
1,692,841
1,692,841
300,982
300,982
(846,381)
(846,381)
(545,399)
5,896,470
5,351,071
$ 1,793,052
7,566,187 $
9,359,239
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
Year ended June 30, 2011
82
Special
Debt
Capital
Revenue
Service
Projects
Total
Revenues:
Licenses and permits
$ 870,690
$
870,690
Intergovernmental revenues
1,272,136
26,534
1,298,670
Charges for services
2,240,650
114,861
2,355,511
Fines, forfeits and penalties
2,600
2,600
Investment and rental income
286,867
20,566
307,433
Miscellaneous revenue
129,753
100,750
230,503
Total revenues
4,802,696
262,711
5,065,407
Expenditures:
Current:
General government
1,188,951
1,188,951
Public protection
397,883
397,883
Public works
475,441
475,441
Community development
969,409
969,409
Parks and recreation
1,936,165
1,936,165
Capital outlay
49,550
2,582,440
2,631,990
Debt service:
Interest and fiscal charges
1,063,817
10,920
1,074,737
Principal payments
610,000
610,000
Total expenditures
5,017,399
1,673,817
2,593,360
9,284,576
Deficiency of revenues under expenditures
(214,703)
(1,673,817)
(2,330,649)
(4,219,169)
Other financing sources (uses):
Transfers in
1,805,950
1,673,817
2,360,764
5,840,531
Transfers out
(682,396)
(65,000)
(747,396)
Proceeds from the sale of land
97,359
97,359
Total other financing sources (uses)
1,123,554
1,673,817
2,393,123
5,190,494
Special item - sale of parkland
630,000
630,000
Net change in fund balances
908,851
692,474
1,601,325
Fund balances (deficit), beginning of year
(1,454,250)
5,203,996
3,749,746
Fund balances (deficit), end of year
$ (545,399)
5,896,470 $
5,351,071
82
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
SPECIAL REVENUE FUNDS
Community Center
This fund was established to account for the revenues and expenditures related to the activities of the Hutchins Street Square and Performing Arts
Theater.
Recreation
This fund was established to account for the revenues and expenditures related to the wide -range of recreation activities and programs offered to
the public.
Public Safety
This fund was established to account for 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 monies.
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.
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 Development Act, 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
improvement and 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 principally for low and moderate income residents to develop a suitable
living environment and expand economic opportunities.
83
ASSETS
Cash and Investments
Receivables:
Accounts, net
Interest
Due from other funds
Due from other governmental agencies
Loans receivable
Other assets
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable and other liabilities
Due to other funds
Deferred revenue
TOTAL LIABILITIES
FUND BALANCES (DEFICIT)
Restricted for other purposes
Unassigned
TOTAL FUND BALANCES (DEFICIT)
TOTAL LIABILITIES AND FUND BALANCES (DEFICIT)
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
June 30, 2011
Community Public Community
Center Recreation Safety Development Transportation
$ 202,497 58,400
HOME Program &
Community
Development
Block Grants Total
$ 260,897
5,078
18,754
25,000
8,179
33,609
90,620
237
13
250
2,468
2,468
45,776
281,440
327,216
1,108,324
1,108,324
1,766
1,511
3,277
$ 6,844
20,265
273,510
69,060
33,609
1,389,764 $
1,793,052
$ 20,847
3,634
3,845
2,250
3
24,381 $
54,960
459,191
389,818
2,468
257,059
1,108,536
66,631
1,108,324
1,174,955
480,038
393,452
70,476
2,250
2,471
1,389,764
2,338,451
203,034
66,810
31,138
300,982
(473,194)
(373,187)
(846,381)
(473,194)
(373,187)
203,034
66,810
31,138
(545,399)
$ 6,844
20,265
273,510
69,060
33,609
1,389,764 $
1,793,052
84
REVENUES
Licenses and permits
Intergovernmental revenues
Charges for services
Fines, forfeits and penalties
Investment and rental income
Miscellaneous revenue
Total revenues
EXPENDITURES
Current
General government
Public protection
Public works
Community development
Parks and recreation
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 BALANCES
FUND BALANCES (DEFICIT), beginning of year
FUND BALANCES (DEFICIT), end of year
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2011
1,162,570 493,180 150,200
(665,290) (3,400) (11,196) (2,510)
497,280 489,780 (11,196) 147,690
(120,995) (218,405) 358,270 905,467 (15,486)
1,805,950
(682,396)
1,123,554
908,851
(352,199) (154,782) (155,236) (838,657) 46,624 (1,454,250)
$ (473,194) (373,187) 203,034 66,810 31,138 $ (545,399)
85
HOME Program &
Community
Community
Public
Community
Development
Center
Recreation
Safety
Development
Transportation
Block Grants
Total
$
870,690
$
870,690
763,086
33,609
475,441
1,272,136
351,513
1,159,261
729,876
2,240,650
2,600
2,600
216,030
68,719
1,663
455
286,867
3,133
126,620
129,753
570,676
1,227,980
767,349
1,727,186
34,064
475,441
4,802,696
1,188,951
1,188,951
397,883
397,883
475,441
475,441
969,409
969,409
1,936,165
1,936,165
49,550
49,550
1,188,951
1,936,165
397,883
969,409
49,550
475,441
5,017,399
(618,275)
(708,185)
369,466
757,777
(15,486)
(214,703)
1,162,570 493,180 150,200
(665,290) (3,400) (11,196) (2,510)
497,280 489,780 (11,196) 147,690
(120,995) (218,405) 358,270 905,467 (15,486)
1,805,950
(682,396)
1,123,554
908,851
(352,199) (154,782) (155,236) (838,657) 46,624 (1,454,250)
$ (473,194) (373,187) 203,034 66,810 31,138 $ (545,399)
85
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2011
REVENUES
Charges for services
Investment and rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
General government
DEFICIENCY OF REVENUES UNDER
EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE
FUND DEFICIT, BEGINNING OF YEAR
FUND DEFICIT, END OF YEAR
86
COMMUNITY CENTER
FINAL
BUDGET
ACTUAL
VARIANCE
$ 428,000
351,513 $
(76,487)
260,000
216,030
(43,970)
3,133
3,133
688,000
570,676
(117,324)
1,189,892
1,188,951
941
(501,892)
(618,275)
(116,383)
1,162,570
1,162,570
(665,290)
(665,290)
497,280
497,280
(4,612)
(120,995)
(116,383)
(352,199)
(352,199)
$ (356,811)
(473,194) $
(116,383)
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2011
FINAL
BUDGET
REVENUES
Charges for services $ 1,293,620
Investment and rental income 120,000
Total Revenue 1,413,620
EXPENDITURES
Current
Parks and recreation 1,915,626
DEFICIENCY OF REVENUES UNDER
EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE
FUND DEFICIT, BEGINNING OF YEAR
FUND DEFICIT, END OF YEAR
87
RECREATION
ACTUAL VARIANCE
1,159,261 $ (134,359)
68,719 (51,281)
1,227,980 (185,640)
1,936,165 (20,539)
(502,006)
(708,185) (206,179)
493,180
493,180
(3,400)
(3,400)
489,780
489,780
(12,226)
(218,405) (206,179)
(154,782)
(154,782)
$ (167,008)
(373,187) $ (206,179)
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2011
REVENUES
Intergovernmental revenues
Fines, forfeits and penalties
Investment and rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Public protection
EXCESS OF REVENUES
OVER EXPENDITURES
OTHER FINANCING USES
Transfers out
NET CHANGE IN FUND BALANCE
FUND DEFICIT, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
88
PUBLIC SAFETY
FINAL
BUDGET ACTUAL VARIANCE
$ 786,483
763,086 $
(23,397)
2,600
2,600
1,350
1,663
313
1,500
(11,196)
(1,500)
789,333
767,349
(21,984)
487,082
397,883
89,199
302,251
369,466
67,215
(11,196)
(11,196)
291,055
358,270
67,215
(155,236)
(155,236)
$ 135,819
203,034 $
67,215
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2011
REVENUES
Licenses and permits
Charges for services
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Community development
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 DEFICIT, BEGINNING OF YEAR
FUND BALANCE (DEFICIT), END OF YEAR
89
COMMUNITY DEVELOPMENT
FINAL
BUDGET ACTUAL VARIANCE
$ 461,850 870,690 $ 408,840
193,820 729,876 536,056
162,120 126,620 (35,500)
817,790 1,727,186 909,396
1,062,990 969,409 93,581
(245,200) 757,777 1,002,977
150,200 150,200
(2,510) (2,510)
(97,510) 905,467 1,002,977
(838,657) (838,657)
$ (936,167) 66,810 $ 1,002,977
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2011
REVENUES
Intergovernmental revenues
Investment and rental income
Total Revenue
EXPENDITURES
Capital outlay
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
FINAL
BUDGET
$ 33,600
TRANSPORTATION
33,609 $ 9
455 255
34,064 264
76,304
49,550 26,754
(42,504)
(15,486) 27,018
46,624
46,624
$ 4,120
31,138 $ 27,018
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2011
REVENUES
Intergovernmental revenues $
EXPENDITURES
Current
Public works $
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
HOME PROGRAM and COMMUNITY DEVELOPMENT
BLOCK GRANTS
FINAL
BUDGET
91
ACTUAL
1,162,860 475,441 $
1,162,860 475,441 $
VARIANCE
(687,419)
687,419
(This page intentionally left blank.)
NONMAJOR GOVERNMENTAL FUNDS
CAPITAL PROJECT FUNDS
CAPITAL PROJECT' FUNDS
Vehicle and Equipment
This fund was established to account for the financing and replacement of vehicles and equipment for 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 account for the acquisition, construction and installation of capital facilities for the Library.
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 account for moneys charged for activities held at Lodi Lake. The Council designated the monies to be used for Lodi
Lake capital projects.
92
93
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS - CAPITAL PROJECT FUNDS
June 30, 2011
Capital
Vehicle and
Hutchins
Outlay
Lodi
Equipment Library
Street Square
Reserve
Lake
Total
ASSETS
Cash and investments
$ 2,326,812
2,181
2,224,213
1,316,277
$
5,869,483
Restricted assets
1,692,841
1,692,841
Receivables:
2,451
1,412
3,863
Interest
TOTAL ASSETS
$ 2,326,812
2,181
3,919,505
1,317,689
$
7,566,187
LIABILITIES
Accounts payable and other liabilities
$ 452
61,966
2,450
$
64,868
Advances from other funds
1,596,653
1,596,653
Deferred revenue
8,196
8,196
TOTAL LIABILITIES
452
1,666,815
2,450
1,669,717
FUND BALANCES
Restricted for:
Capital projects
2,326,360
2,181
559,849
1,315,239
4,203,629
1,692,841
1,692,841
Debt service
TOTAL FUND BALANCES
2,326,360
2,181
2,252,690
1,315,239
5,896,470
TOTAL LIABILITIES AND FUND BALANCES
$ 2,326,812
2,181
3,919,505
1,317,689
$
7,566,187
93
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS - CAPITAL PROJECT FUNDS
Year ended June 30, 2011
REVENUES
Intergovernmental revenues
Charges for services
Investment and rental income
Miscellaneous revenue
Total revenues
EXPENDITURES
Capital outlay
Debt service:
Interest and fiscal charges
Total expenditures
EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Proceeds from sale of land
Total other financing sources (uses)
SPECIAL ITEM
Sale of parkland
NET CHANGE IN FUND BALANCES
FUND BALANCES, BEGINNING OF YEAR
FUND BALANCES, END OF YEAR
94
Hutchins
Capital
Vehicle and
Street
Outlay
Lodi
Equipment
Library
Square
Reserve
Lake
Total
$
26,534
$ 26,534
108,405
6,456
114,861
17,179
3,387
20,566
36,464
64,286
100,750
36,464
152,118
74,129
262,711
231,153
24,839
2,294,608
31,840
2,582,440
10,920
10,920
231,153
24,839
2,305,528
31,840
2,593,360
(194,689)
(24,839)
(2,153,410)
42,289
(2,330,649)
377,150
8,223
872,750
1,102,641
2,360,764
(65,000)
(65,000)
97,359
97,359
377,150
8,223
807,750
1,200,000
2,393,123
630,000
630,000
182,461
(16,616)
(715,660)
1,242,289
692,474
2,143,899
16,616
2,181
2,968,350
72,950
5,203,996
$ 2,326,360
2,181
2,252,690
1,315,239
$ 5,896,470
94
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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.
Fleet Services
This fund is used to account for the operation, maintenance and timely replacement of the City's fleet of vehicles which serve the
transportation needs of all city departments.
Benefits
These funds are used to account for the following employee benefits:
Dental
Chiropractic
Life/accidental insurance
Medical
Vision
Employee assistance program
Employee recognition program
Unemployment insurance
Flexible spending program
Long Term Disability
Insurance
These funds are used to account for the following insurances:
General Liability
Workers' Compensation
Other Insurance
CITY OF LODI
COMBINING STATEMENT OF NET ASSETS
INTERNAL SERVICE FUNDS
June 30, 2011
ASSETS
Current assets:
Cash and investments
Receivables:
Accounts, net
Interest
Inventory
Noncurrent assets:
Capital assets (net)
Total current assets
LIABILITIES
Current liabilities:
Accounts payable and other liabilities
Self-insurance liability
Accrued compensated absences
Noncurrent liabilities:
Self-insurance liability
Accrued compensated absences
Net OPEB obligation
Total liabilities
NET ASSETS (DEFICIT)
Invested in capital assets, net of related debt
Unrestricted (deficit)
Total net assets (deficit)
Fleet
Services Benefits
Insurance Total
$ 115,724
151,351 8,530,181
$ 8,797,256
635,509
17,942
17,942
1,445,428
159 9,107
9,266
124,816
124,816
33,286
33,286
273,826
151,510 8,557,230
8,982,566
70,844
71,386
493,279
635,509
1,445,428
1,445,428
42,354
42,354
6,904,910
6,904,910
64,927
64,927
3,014,788
3,014,788
178,125
3,086,174
8,843,617
12,107,916
33,286
33,286
62,415
(2,934,664)
(286,387)
(3,158,636)
$ 95,701
(2,934,664)
(286,387)
$ (3,125,350)
96
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
Change in net assets
NET ASSETS (DEFICIT) - BEGINNING OF YEAR
NET ASSETS (DEFICIT) - END OF YEAR
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND NET ASSETS
INTERNAL SERVICE FUNDS
Year ended June 30, 2011
Fleet
Services
Benefits Insurance
Total
$ 1,802,711 6,800,581 2,223,311 $ 10,826,603
910,663
862,429
2,215
1,448
19,640
1,796, 395
6,316
6,316
89,385
$ 95,701
97
411,761
5,804,784
1,604,390
7,820,935
(1,020,354)
940
15,624
16,564
(1,003,790)
(1,930,874)
(2,934,664)
384,752
819,128
1,203,880
1,019,431
41,812
20,720
62,532
1,081,963
(1,368,350)
(286,387)
1,322,424
7,051,965
2,215
1,448
2,443,158
10,821,210
5,393
42,752
36,344
79,096
84,489
(3,209,839)
$ (3,125,350)
Cash flows from operating activities:
Receipts from customers and users
Receipts from interfund services provided
Cash paid to suppliers for goods & services
Payments to employees
Net cash provided by (used for) operating activities
Cash flows from investing activities:
Interest on investments
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
CITY OF LODI
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
Year ended June 30, 2011
Fleet
Services
Benefits
$ 29,917
1,802,711 6,800,581
(890,911) (6,427,696)
(928,909) (411,761)
(17,109) (8,959)
surance
Total
4,818 $
34,735
2,223,311
10,826,603
(1,716,337)
(9,034,944)
132,679
(1,340,670)
511,792
485,724
154
1,036
42,182
43,372
(16,955)
(7,923)
553,974
529,096
132,679
159,274
7,976,207
8,268,160
$ 115,724
151,351
8,530,181 $
8,797,256
Reconciliation of operating income (loss) to net cash provided by (used for) operating activities:
Operating Income (loss) $ 6,316 (1,020,354) 1,019,431 $ 5,393
Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities:
Depreciation and amortization 1,448 1,448
15,624 20,720 36,344
Other revenues
Chan a in assets and liabilities:
9
Increase in accounts receivable
(15,902)
( ,902)
Increase in inventory
(2,869)
(2,869)
(2
Decrease in other assets
14,293
14,293
Increase (decrease) in accounts payable and other liabilities
(3,758)
36,889
67,172
100,303
Decrease in compensated absences
(18,246)
(18,246)
Decrease in self-insurance liability
(579,629)
(579,629)
Increase in net OPEB obligation
944,589
944,589
Net cash provided by (used for) operating activities
$ (17,109)
(8,959)
511,792 $
485,724
98
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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 Industrial Way Beckman Districts and the Downtown and Cherokee Lane Districts.
CITY OF LODI
COMBINING STATEMENT OF FIDUCIARY NET ASSETS
PRIVATE -PURPOSE TRUST FUNDS
June 30, 2011
100
Hutchins Street
Library
Square Bequest
Total
ASSETS
Cash and Investments
$ 260,947
1,498 $
262,445
TOTAL ASSETS
260,947
1,498
262,445
NET ASSETS
$ 260,947
1,498 $
262,445
100
CITY OF LODI
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
PRIVATE -PURPOSE TRUST FUNDS
Year ended June 30, 2011
101
Hutchins Street
Library
Square Bequest
Total
ADDITIONS
Investment income and donations
$ 39,526
10 $
39,536
Total additions
39,526
10
39,536
DEDUCTIONS
Current
Library
1,975
1,975
Total deductions
1,975
1,975
CHANGE IN NET ASSETS
37,551
10
37,561
NET ASSETS, BEGINNING OF YEAR
223,396
1,488
224,884
NET ASSETS, END OF YEAR
$ 260,947
1,498$
262,445
101
ASSETS
Cash and investments
Special assessment receivable
Interest receivable
TOTAL ASSETS
LIABILITIES
Agency obligations
TOTAL LIABILITIES
CITY OF LODI
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCYFUND
Year ended June 30, 2011
Special Assessments
Balance Balance
7/1/10 Additions Deductions 6/30/11
$ 585,172 489,367
13,850 35,846
478
605,419 $ 469,120
13,850 35,846
478
$ 599,022 525,691 619,269 $ 505,444
$ 599,022
$ 599,022
102
93,578 $ 505,444
93,578 $ 505,444
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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 reader with valuable insight
regarding the demographics and the overall health of the City.
Contents
Pages
Financial Trends
These schedules contain trend information to help the reader understand how the City's financial performance
and well-being has changed over time. 105-110
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. 111-116
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. 117-123
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. 124-126
Operating Information
These schedules contain information about the City's operations and resources to help the reader understand
how the City's financial information relates to the services the city provides and the activities it performs. 127-131
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.
104
CITY OF LODI
NET ASSETS BY COMPONENT
LAST NINE FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2011 2010 2009 2008 2007 2006 2005 2004 2003
Governmental activities:
$ 104,858 $ 100,233 $
95,533 $ 98,109
$ 97,961 $
77,494 $
67,668 $
64,214 $
62,752
Restricted
5,303
Invested in capital assets, net of related debt
$ 114,165 $
113,308 $
115,036 $
107,874 $
110,815 $
111,572 $
106,293 $
100,749 $
94,681
Restricted
14,894
13,233
13,492
15,043
15,044
14,526
13,465
11,205
12,811
Unrestricted
(5,148)
(6,110)
(3,462)
(4,162)
(3,968)
(8,838)
(8,801)
(9,437)
(7,334)
Total governmental activities net assets
$ 123,911 $
120,431 $
125,066 $
118,755 $
121,891 $
117,260 $
110,957 $
102,517 $
100,158
Business -type activities:
Invested in capital assets, net of related debt
$ 104,858 $ 100,233 $
95,533 $ 98,109
$ 97,961 $
77,494 $
67,668 $
64,214 $
62,752
Restricted
5,303
8,657
8,711
10,969
2,351
2,578
240
Unrestricted
(34,129) (28,591)
(35,448) 26,460
6,417
1,880
7,445
(7,511)
(10,270)
Total business -type activities net assets
$ 76,032 $ 71,642 $
60,085 $ 133,226
$ 113,089 $
90,343 $
77,464 $
59,281 $
52,722
Primary government:
Invested in capital assets, net of related debt
$ 219,023 $
213,541 $
210,569 $
205,983
$ 208,776
$ 189,066 $
173,961
$ 164,963 $
157,433
Restricted
20,197
13,233
13,492
23,700
23,755
25,495
15,816
13,783
13,051
Unrestricted
(39,277)
(34,701)
(38,910)
22,298
2,449
(6,958)
(1,356)
(16,948)
(17,604)
Total primary government net assets
$ 199,943 $
192,073 $
185,151 $
251,981
$ 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
105
CITY OF LODI
CHANGES IN NET ASSETS
LAST NINE FISCAL YEARS
(Dollar amounts in thousands)
Program Revenues
Fiscal Year
Governmental activities:
2011
2010
2009
2008
2007
2006
2005
2004
2003
Expenses
62,167
69,664
74,000
69,284
65,809
59,112
53,908
52,899
48,873
Governmental activities:
$ 1,793 $
2,184 $
1,631 $
1,544 $
1,280 $
1,232 $
3,639 $
3,144 $
2,355
General government
$ 8,262
$ 8,749
$ 9,451
$ 8,307
$ 7,853
$ 9,746
$ 9,958
$ 13,167
$ 12,238
Public protection
25,113
27,186
27,110
25,531
23,328
22,105
22,253
19,162
16,632
Public works
9,305
10,462
10,464
12,224
10,599
13,229
12,377
11,868
10,946
Community development
973
1,114
1,323
2,027
2,130
2,290
49
50
57
Library
1,355
1,440
1,495
1,696
1,630
1,485
1,484
1,409
1,454
Parks and recreation
5,778
5,077
4,609
4,414
4,172
4,114
4,565
4,095
3,989
Interest and fiscal charges
1,075
1,105
1,134
1,166
1,201
1,234
1,617
1,267
1,214
Total governmental activities expenses
51,861
55,133
55,586
55,365
50,913
54,203
52,254
50,968
46,473
Business -type activities:
9,119
11,381
6,007
10,192
17,122
7,038
(6,548)
3,732
(6,001)
Electric
63,399
64,364
73,358
65,201
67,534
63,780
57,308
55,943
51,388
Wastewater
11,687
11,289
10,940
12,227
9,271
8,574
10,653
6,297
6,141
Water
8,188
6,148
9,604
9,920
9,875
8,256
11,748
7,489
12,879
Transit
4,132
4,785
4,832
3,908
3,577
3,643
3,018
3,064
5,389
Total business -type activities expenses
87,406
86,586
98,734
91,256
90,257
84,253
82,727
72,793
75,797
Total primary government expenses
$ 139,267
$ 141,719
$ 154,320
$ 146,621
$ 141,170
$ 138,456
$ 134,981
$ 123,761
$ 122,270
Program Revenues
Governmental activities:
Charges for services:
62,167
69,664
74,000
69,284
65,809
59,112
53,908
52,899
48,873
General government
$ 1,793 $
2,184 $
1,631 $
1,544 $
1,280 $
1,232 $
3,639 $
3,144 $
2,355
Public protection
643
714
844
837
582
563
623
525
541
Publicworks
356
326
358
755
295
320
461
430
335
Community development
1,601
786
749
1,085
1,174
1,630
2,731
2,547
1,772
Library
47
48
44
53
53
54
49
50
57
Parks and recreation
1,245
1,269
1,158
851
1,007
918
833
679
586
Operating grants and contributions
2,236
1,927
1,951
2,305
2,589
2,587
2,195
2,321
3,315
Capital grants and contributions
6,737
5,122
10,822
4,717
6,975
14,631
17,559
13,894
6,814
Total governmental activities program revenues
14,658
12,376
17,557
12,147
13,955
21,935
25,359
21,043
14,003
Business -type activities:
Charges for services:
Electric
62,167
69,664
74,000
69,284
65,809
59,112
53,908
52,899
48,873
Wastewater
13,090
11,513
9,276
9,091
8,524
8,927
8,086
6,560
6,760
Water
11,940
11,716
11,787
11,350
10,040
8,343
7,713
6,007
5,532
Transit
195
217
251
278
401
386
340
244
293
Operating grants and contributions
3,983
3,449
3,653
3,381
2,621
3,377
2,731
2,547
1,772
Capital grants and contributions
5,150
1,408
5,774
8,064
19,984
11,146
3,401
8,268
6,566
Total business -type activities program revenues
96,525
97,967
104,741
101,448
107,379
91,291
76,179
76,525
69,796
Total primary government program revenues
$ 111,183
$ 110,343
$ 122,298
$ 113,595
$ 121,334
$ 113,226
$ 101,538
$ 97,568 $
83,799
Net
Governmental activities
$ (37,203)
$ (42,757)
$ (38,029)
$ (43,218)
$ (36,958)
$ (32,268)
$ (26,895)
$ (29,925) $
(32,470)
Business -type activities
9,119
11,381
6,007
10,192
17,122
7,038
(6,548)
3,732
(6,001)
Total primary government net expense
$ (28,084) $ (31,376) $ (32,022) $ (33,026) $ (19,836) $ (25,230) $ (33,443) $ (26,193) $
(38,471)
(Continued)
General Revenues and Other Changes in Net Assets:
Governmental activities:
Taxes:
Property
Franchise taxes
Business license tax
Transient occupancy tax
Grants and contributions not restricted to specific programs
Investment earnings
Other
Special item -gain on sale of parkland
Transfers
Total governmental activities
Business -type activities:
Investment earnings
Litigation- environmental lawsuits proceeds
Other
Special item -forgiveness of debt
Special item -swap termination
Transfers
Total business -type activities
Total primary government
Change in Net Assets
Governmental activities
Business -type activities
Total primary government
CITY OF LODI
CHANGES IN NET ASSETS (Continued)
LAST NINE FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2011 2010 2009 2008 2007 2006 2005 2004 2003
$ 12,698 $
12,836 $
13,564
$ 13,838 $
9,524 $
8,031 3
7,124 $
7,188 $
6,398
8,692
8,658
8,357
9,338
9,609
6,721
8,918
8,381
7,624
1,246
1,242
1,190
1,140
1,082
973
982
874
822
426
382
405
396
380
368
352
317
400
8,954
7,064
8,249
9,593
14,772
14,215
13,193
11,895
12,069
133
155
467
1,008
874
328
150
125
269
1,556
1,917
2,382
1,077
621
1,012
608
590
137
321
34.208 $
30.921
$ 50.027
$ 47.213
$ 44.412
$ 60,066
$ 35,112 $
38,498
6,657
5,868
5,368
3,693
4,727
4,923
4,008
2,915
2,981
40,683
38,122
39,982
40,083
41,589
38,571
35,335
32,285
30,700
575
731
1,385
2,028
2,360
2,008
1,880
2,242
6,457
-
300
2,010
8,892
6,222
6,700
9,150
865
2,728
1,353
923
1,891
2,717
1,749
2,056
2,432
2,635
1,594
15,277
(8,979)
(6,657)
(5,868)
(5,368)
(3,693)
(4,727)
(4,923)
(4,008)
(2,915)
(2,981)
(4,729)
(3,914)
(9,061)
9,944
5,624
5,841
24,731
2,827
7,798
$ 35.954 $
34.208 $
30.921
$ 50.027
$ 47.213
$ 44.412
$ 60,066
$ 35,112 $
38,498
$ 3,480 $ (4,635) $ 1,953 $ (3,135) $ 4,631 $ 6,303 $ 8,440 $ 2,360 $ (1,770)
4,390 7,467 (3,054) 20,136 22,746 12,879 18,183 6,559 1,797
$ 7,870 $ 2,832 $ (1,101) $ 17,001 $ 27,377 $ 19,182 $ 26,623 $ 8,919 $ 27
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
107
CITY OF LODI
FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
General Fund
Reserved $ $ 389 $ 383 $ 1,150 $ 1,144 $ 1,321 $ 1,185 $ 1,296 $ 927 $ 856
Unreserved 3,896 3,383 4,159 5,175 3,048 1,507 157 640 2,507
Nonspendable 357
Assigned 136
Unassigned 5,654
Total General Fund $ 6,147 $ 4,285 $ 3,766 $ 5,309 $ 6,319 $ 4,369 $ 2,692 $ 1,453 $ 1,567 $ 3,363
All other governmental funds
Reserved $ $
7,801 $
1,487 $
1,932 $
1,874 $
1,138 $
4,942 $
3,778 $
6,405 $
3,363
Unreserved, reported in:
Special revenue funds
963
6,540
7,433
6,651
6,271
1,400
534
2,322
1,814
Capital projects funds
3,649
5,217
5,504
6,200
5,663
5,650
5,720
7,655
17,905
Nonspendable
Restricted 13,786
Unassigned (846)
Total all other governmental funds $ 12,940 $
12,413 $
13,244 $
14,869 $
14,725 $
13,072 $
11,992 $
10,032 $
16,382 $
23,082
$ 19,087 $ 16,698 $ 17,010 $ 20,178 $ 21,044 $ 17,441 $ 14,684 $ 11,485 $ 17,949 $ 26,445
Implemented GASB 54 during the 2011 fiscal year changing the presentation of fund balance.
Source: City of Lodi Financial Services Division
108
Revenues:
Taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeitures
Investment and rental income
Contributions and donations
Miscellaneous revenue
Total revenues
Expenditures:
Current:
General government
Public protection
Public works
Community development
Library
Parks and 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
(Dollar amounts in thousands)
Fiscal Year
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
$ 23,061
$ 23,118
$ 23,516
$ 24,712 $
20,594
$ 18,094
$ 17,606
$ 16,908
$ 24,100
$ 23,043
954
520
431
683
717
1,020
2,511
2,021
1,669
1,464
16,865
12,579
13,229
14,980
19,892
25,491
22,834
16,657
7,385
22,000
3,946
4,116
3,329
4,757
4,696
3,848
9,404
4,479
6,272
3,888
1,407
1,444
1,416
1,321
1,245
1,173
1,190
1,085
803
806
817
923
922
1,312
998
707
753
537
832
1,234
689
1,110
1,139
1,170
1,205
1,238
1,645
1,245
1,220
679
799
1,093
1,762
822
304
653
458
473
453
1,349
48,538
43,793
44,605
48,587
48,446
50,986
54,756
42,160
41,514
53,784
7,667
7,666
8,431
9,545
8,893
8,345
10,858
10,815
10,874
8,987
24,489
24,466
24,716
23,979
22,211
20,863
20,351
17,491
15,597
13,562
3,715
4,383
4,657
5,842
5,587
7,827
7,361
7,303
6,926
5,741
969
1,013
1,341
2,006
2,062
1,847
1,357
1,322
1,500
1,673
1,588
1,468
1,420
1,356
1,316
1,158
4,127
4,180
3,776
3,826
3,598
3,440
3,691
3,412
3,385
2,860
9,377
5,108
6,791
4,207
3,526
7,232
9,508
10,041
12,943
17,948
1,081
1,110
1,139
1,170
1,205
1,238
1,645
1,245
1,220
679
752
725
789
898
900
892
855
759
730
555
53,534
49,973
53,140
53,146
49,570
53,152
55,689
52,422
52,991
51,490
(4,996)
(6,180)
(8,535)
(4,559)
(1,124)
(2,166)
(933)
(10,262)
(11,477)
2,294
(Continued)
109
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS (continued)
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
Other financing sources (uses):
Transfers in
Transfers out
Proceeds from sale of land
Capital lease proceeds
Proceeds from bond refunding
Payment to refunded bond escrow
Proceeds of certificates of participation
Total other financing sources (uses)
Special item- sale of parkland
Net change in fund balances
Fund balances, beginning of year
Adjustment to fund balance as previously reported
Fund balances, end of year
Debt service as a percentage of noncapital expenditures
Source: City of Lodi Finance Services Division
2011 2010 2009 2008 2007 2006 2005
2004 2003
2002
11,881 11,173 10,609 7,058 8,863 9,142 8,017
9,774 11,209
12,500
(5,224) (5,305) (5,242) (3,365) (4,136) (4,219) (4,009)
(6,859) (8,228)
(13,052)
98
124
883
148
13,269
(13,269)
13,396
6,755 5,868 5,367 3,693 4,727 4,923 4,132 3,798 2,981 12,992
630
2,389 (312) (3,168) (866) 3,603 2,757 3,199 (6,464) (8,496) 15,286
16,698 17,010 20,178 21,044 17,441 14,684 11,485 17,949 26,445 10,859
300
$ 19,087 $ 16,698 $ 17,010 $ 20,178 $ 21,044 $ 17,441 $ 14,684 $ 11,485 $ 17,949 $ 26,445
4.3% 4.3% 4.3% 4.4% 4.8% 4.9% 5.7% 5.0% 5.1% 3.8%
Me
City of Lodi
TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
Note: General governmental tax revenues are included in taxes, licenses and permits, intergovernmental revenues and miscellaneous revenues.
Source: City of Lodi Financial Services Division
111
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
% Change
2002 to 2011
Property
$ 8,285
$ 8,342
$ 8,887
$ 9,210
$ 9,289
$ 7,676
$ 6,771
$ 6,948
$ 6,191
$ 5,641
47%
Sales & Use
8,663
6,873
8,028
9,296
10,137
9,812
9,183
8,533
8,709
8,300
4%
Transient Occupancy
426
382
405
396
380
368
352
317
400
439
-3%
Franchise
1,715
1,681
1,415
976
929
890
821
800
730
931
84%
Documentary Transfer
95
117
114
125
235
355
353
240
207
172
-45%
Motor Vehicle in Lieu
4,317
4,377
4,784
4,797
4,635
4,402
4,606
2,767
3,430
3,276
32%
Public Protection
250
267
296
338
390
310
304
264
247
231
8%
Business License
958
962
1,038
1,140
1,082
973
982
874
822
787
22%
In Lieu Franchise
6,977
6,977
6,942
8,362
8,680
7,831
8,097
7,581
6,894
6,569
6%
Totals
$ 31,686
$ 29,978
$ 31,909
$ 34,640
$ 35,757
$ 32,617
$ 31,469
$ 28,324
$ 27,630
$ 26,346
20%
Note: General governmental tax revenues are included in taxes, licenses and permits, intergovernmental revenues and miscellaneous revenues.
Source: City of Lodi Financial Services Division
111
CITY OF LODI
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Land
1,322,830
1,345,815
1,562,729
1,537,554
Fiscal Year
1,226,293
1,107,776
1,027,462
960,166
889,262
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
Secured roll
$ 4,907,588
$ 4,986,693
$ 5,156,706
$ 5,069,788
$ 4,799,141
$ 4,254,184
$ 3,877,398
$ 3,619,116
$ 3,381,945
$ 3,096,937
Utility roll
2,423
2,423
2,031
2,035
2,773
3,654
3,782
3,893
3,352
3,379
Unsecured roll
270,600
270,315
263,648
258,687
242,082
216,065
215,469
202,785
207,095
198,678
Gross assessed value
5,180,611
5,259,431
5,422,385
5,330,510
5,043,996
4,473,903
4,096,649
3,825,794
3,592,392
3,298,994
Less exemptions (1)
321,138
332,701
265,154
243,259
229,049
220,590
217,077
212,102
200,957
190,252
Net assessed value
4,859,473
4,926,730
5,157,231
5,087,251
4,814,947
4,253,313
3,879,572
3,613,692
3,391,435
3,108,742
Land
1,322,830
1,345,815
1,562,729
1,537,554
1,431,203
1,226,293
1,107,776
1,027,462
960,166
889,262
Improvements
3,534,778
3,600,824
3,577,741
3,503,186
3,327,453
2,989,575
2,739,061
2,549,860
2,366,887
2,164,121
Personal property
323,003
312,792
281,915
289,770
285,340
258,035
249,812
248,472
265,339
245,611
Gross assessed value
5,180,611
5,259,431
5,422,385
5,330,510
5,043,996
4,473,903
4,096,649
3,825,794
3,592,392
3,298,994
Less exemptions (1)
321,138
332,701
265,154
243,259
229,049
220,590
217,077
212,102
200,957
190,252
Net assessed value
$ 4,859,473
$ 4,926,730
$ 5,157,231
$ 5,087,251
$ 4,814,947
$ 4,253,313
$ 3,879,572
$ 3,613,692
$ 3,391,435
$ 3,108,742
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 - $66,657 and other - $254,481 =$321,138
Note: In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed.
Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only assessed at the time that it is
sold to a new owner. At that point, the property being sold is reassessed at the purchase price. The assessed valuation data shown above represents the only data currently available with respect
to the the actual market value of taxable property and is subject to the limitations described above.
Source: San Joaquin County Auditor -Controller's Office
112
CITY OF LODI
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN FISCAL YEARS
(Rate per $100 of assessed value)
Source: San Joaquin County Tax Collector
113
Basic
Fiscal
Countywide
Year
Levy
School
All Other
Total
2011
1.0000
0.0626
0.0000
1.0626
2010
1.0000
0.0575
0.0000
1.0575
2009
1.0000
0.0517
0.0000
1.0517
2008
1.0000
0.0478
0.0000
1.0478
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
Source: San Joaquin County Tax Collector
113
CITY OF LODI
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
(Dollar amounts in thousands)
Fiscal Year
2011 2002
Source: San Joaquin County Assessor's Office 114
Percent of
Percent of
Total City
Total City
Taxable
Taxable
Taxable
Taxable
Assessed
Assessed
Assessed
Assessed
Taxpayer
Value
Rank
Value
Value
Rank
Value
Lodi Memorial Hospital Assn
$ 150,937
1
3.291 %
General Mills
137,873
2
3.006
$ 171,116
1
5.887 %
Pacific Coast Producers
83,481
3
1.820
59,325
2
2.041
Calif Physicians Service Corp
55,304
4
1.206
Cottage Bakery Inc
40,769
5
0.889
Westcore Vine LP
23,173
6
0.505
Dart Container Corp
18,379
7
0.401
13,486
4
0.464
Certainteed Corp
17,519
8
0.382
15,532
3
0.534
Archer Daniels Midland Co Corp
16,843
9
0.367
Wine & Roses LLC
15,581
10
0.340
King Video Cable Company
12,363
5
0.425
Edmund N. Richmond
11,852
6
0.408
Wal Mart Stores
10,894
7
0.375
Wallace Computer Service
10,855
8
0.373
Interlake Material Handling Inc
10,837
9
0.373
Dayton Hudson Corp
10,504
10
0.361
Principal Secured Property valuation
559,859
12.207
326,764
11.241
Other Secured Taxpayers
4,347,729
94.795
2,770,173
95.304
Exemptions relative to secured tax roll
321,138
7.002
190,252
6.545
Total Secured Property Valuation
$ 4,586,450
100.000 %
$2,906, —
100.000 %
Source: San Joaquin County Assessor's Office 114
CITY OF LODI
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
1) Per agreement with San Joaquin County, the County provides the City of Lodi with 100% of the
amount owed to the City for secured properties, regardless of 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
115
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
2011
$ 8,143
$ 8,143
100.0%
$ 8,143
100.0%
2010
8,291
8,291
100.0%
8,291
100.0%
2009
7,966
7,966
100.0%
7,966
100.0%
2008
8,167
8,167
100.0%
8,167
100.0%
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%
1) Per agreement with San Joaquin County, the County provides the City of Lodi with 100% of the
amount owed to the City for secured properties, regardless of 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
115
Type of Customer
City Accounts
Contract Large Industrial
Contract Medium Industrial
Contract Small Industrial
Domestic Residential
Domestic Mobile Home Park
Dusk to Dawn
Large Commercial
Large Industrial
Medium Industrial
Residental Low Income
Small Commerical
Small Industrial
Total
CITY OF LODI
ELECTRICITY SOLD BY TYPE OF CUSTOMER
LAST SIX FISCAL YEARS
Billed Accounts
2011
2010
2009
2008
2007
2006
197
189
189
187
186
184
5
5
6
1
1
2
1
0
1
22,360
22,525
22,506
22,510
22,938
22,860
13
13
13
13
13
13
89
89
92
92
95
95
350
357
377
380
375
359
40
39
37
32
33
33
9
9
8
8
10
13
2,258
2,193
1,847
1,943
2,003
1,910
3,324
3,280
3,249
3,199
3,241
3,279
11
10
10
9
9
9
28,651
28,704
28,328
28,380
28,909
28,764
Information prior to the implementation of GASB 44 is not available.
Source: City of Lodi Financial Services Division
116
CITY OF LODI
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
Governmental Activities Business -type Activities
Details regarding the City's outstanding debt can be found in the Note 8 of these financial statements.
(1) See Demographic and Economic Statistics table for personal income and population.
Source: City of Lodi Financial Services Division
117
Percent of Personal Per
Income (1) Capita (1)
nla
8.43
8.74
8.94
8.12
8.90
9.43
11.43
9.85
7.36
2,607
2,626
2,714
2,608
2,335
2,427
2,473
2,917
2,427
1,776
Certificates
Total
Certificates
Total
Total
Fiscal
of
Loan
Notes
Governmental
of
Notes
Business -type
Primary
Year
Participation
Payable
Payable
Activities
Participation
Payable
Activities
Government
2011
$ 21,655
$ 245
$ 21,900
$ 177,150
177,150
$ 199,050
2010
22,265
245
22,510
142,935
1,409
144,344
166,854
2009
22,855
-
245
23,100
147,175
1,585
148,760
171,860
2008
23,420
94
245
23,759
139,760
1,755
141,515
165,274
2007
23,975
187
245
24,407
121,675
1,918
123,593
148,000
2006
24,510
279
245
25,034
125,340
2,077
127,417
152,451
2005
25,030
368
245
25,643
126,615
2,230
128,845
154,488
2004
25,530
456
245
26,231
148,675
2,378
151,053
177,284
2003
26,015
543
245
26,803
117,515
2,521
120,036
146,839
2002
26,745
622
245
27,612
75,285
2,660
77,945
105,557
Details regarding the City's outstanding debt can be found in the Note 8 of these financial statements.
(1) See Demographic and Economic Statistics table for personal income and population.
Source: City of Lodi Financial Services Division
117
Percent of Personal Per
Income (1) Capita (1)
nla
8.43
8.74
8.94
8.12
8.90
9.43
11.43
9.85
7.36
2,607
2,626
2,714
2,608
2,335
2,427
2,473
2,917
2,427
1,776
A-Weysto191
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
Fiscal
Year
Certificates
of
Participation
Total
Percent of
Assessed
Value (1) of
Property
Per
Capita
2011
$ 21,655
$ 21,655
0.4 %
$ 346.63
2010
22,265
22,265
0.4
350.36
2009
22,855
22,855
0.4
360.98
2008
23,420
23,420
0.4
369.62
2007
23,975
23,975
0.5
378.18
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
General bonded debt is debt payable with governmental fund resources and general obligation
bonds recorded in enterprise funds (of which, the City has none).
(1) Assessed value has been used because the actual value of taxable property is not readily
available in the State of California.
Source: City of Lodi Financial Services Division
118
Assessed valuation (1)
Conversion percentage
Adjusted assessed valuation
Debt limit percentage
Debt Limit
Total net debt applicable to limit
Legal debt margin
Total net debt applicable to the limit
as a percent of debt limit
CITY OF LODI
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
FISCAL YEAR
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
$ 4,926,130
3 4,995,362
$ 5,227,580
$ 5,159,269
$ 4,887,074
$ 4,325,000
$ 3,951,862
$ 3,686,227
$ 3,464,195
$ 3,177,319
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
1,231,533
1,248,841
1,306,895
1,289,817
1,221,769
1,081,250
987,966
921,557
866,049
794,330
15%
15%
15%
15%
15%
15%
15%
15%
15%
15%
184,730
187,326
196,034
193,473
183,265
162,188
148,195
138,234
129,907
119,149
$ 184,730
$ 187,326
$ 196,034
$ 193,473
$ 183,265
$ 162,188
$ 148,195
$ 138,234
$ 129,907
$ 119,149
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market
value. Effective with the 1982 fiscal year, each parcel is now assessed at 100% 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 year from the current full valuation perspective to the 25% level that was in effect at the time the legal debt margin was enacted by the State of California for local govemements
located within the state.
(1) Reflects City assessed valuation with other exemptions of $254,482 deducted for 2011
Source: San Joaquin County Auditor-Controllefs Office
119
CITY OF LODI
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
June 30, 2011
OVERLAPPING DEBT:
San Joaquin Community College District
Lodi Unified School District
City of Lodi 1915 Act Bonds
San Joaquin County Certificates of Participation
Lodi Unified School District Certificates of Participation
SUBTOTAL OVERLAPPING DEBT
DIRECT DEBT:
City of Lodi Certificates of Participation
TOTAL DIRECT AND OVERLAPPING DEBT(2)
2010-11 Assessed Valuation
2010-11 Population
DEBT RATIOS
Percentage
Total Debt (3) Applicable (1)
$ 143,540,616
101,265,000
165,000
$ 183,520,000
41,665,000
21,655,000
$ 5,259,431,000
City's Share
of Debt
8.664 % $ 12,436,359
37.03 37,498,430
100.00 165,000
9.703 % 17,806,946
37.03 15,428,550
83,335,285
100.00
63,549
Per Capita
Total Gross Debt $ 104,990,285 $ 1,652
21,655,000
$ 104,990,285
Value
2.00%
(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.
(3) The June 30, 2010 information is not available so data as of September 1, 2010 was used to approximate the June 30, 2010 information.
SOURCE: California Municipal Statistics, San Francisco, CA
San Joaquin County Auditors -Controller Office
State of California, Department of Finance, Demographic Research Unit
120
CITY OF NODI
PLEDGED -REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Dollars amounts in thousands)
Less:
Adjusted Adjusted Net
Fiscal Annual Operating Available Debt Service
Year Revenues (1) Expenses (2) Revenue Principal Interest Total Coverage
Electric Revenue Certificates of Participation
2011 $
63,307
$ 48,397
$ 14,910
$ 3,080
$ 4,152
$ 7,232
2.06
2010
70,288
49,949
20,339
2,920
4,274
7,194
2.83
2009
75,195
58,370
16,825
5,240
4,720
9,960
1.69
2008
74,923
54,437
20,486
2,305
3,961
6,266
3.27
2007
67,865
52,984
14,881
2,350
3,977
6,327
2.35
2006
61,066
51,131
9,935
-
3,613
3,613
2.75
2005
60,793
44,252
16,541
5,895
3,146
9,041
1.83
2004
56,347
45,045
11,302
2,150
3,261
5,411
2.09
2003
55,847
39,584
16,263
4,575
2,836
7,411
2.19
2002
49,858
61,039
(11,181)
1,100
1,646
2,746
(4.07)
continued
121
CITY OF LODI
PLEDGED -REVENUE COVERAGE (continued)
LAST TEN FISCAL YEARS
(Dollars amounts in thousands)
Less:
Adjusted Adjusted Net
Fiscal Annual Operating Available Debt Service
Year Revenues (1) Expenses (2) Revenue Principal Interest Total Coverage
Wastewater Certificates of Participation
2011 $
16,508 $
5,972
$ 10,536
$ 1,370
$ 2,748
$ 4,118
2.56
2010
12,284
6,180
6,104
1,320
2,832
4,152
1.47
2009
10,764
5,921
4,843
1,270
2,882
4,152
1.17
2008
10,530
6,189
4,341
1,355
2,334
3,689
1.18
2007
9,881
5,287
4,594
1,315
2,017
3,332
1.38
2006
9,865
4,886
4,979
1,275
2,056
3,331
1.49
2005
9,232
4,781
4,451
540
2,210
2,750
1.62
2004
7,211
4,385
2,826
175
715
890
3.18
2003
7,428
4,380
3,048
160
639
799
3.81
2002
5,277
4,808
469
150
649
799
0.59
continued
122
CITY OF LODI
PLEDGED -REVENUE COVERAGE (continued)
LAST TEN FISCAL YEARS
(Dollars amounts in thousands)
Less:
Adjusted Adjusted Net
Fiscal Annual Operating Available Debt Service
Year Revenues (1) Expenses (2) Revenue Principal Interest Total Coverage
Water Certificates of Participation
2011 $ 14,498 $ 5,662 $ 8,836 $ 1,409 $ 1,321 $ 2,730 3.24
Includes all nongeneral obligation long term debt backed by pledged revenues
Details regarding the City's outstanding debt can be found in the Note 8 of these financial statements.
(1) Total operating revenues including investment earnings, operating grants, capital contributions
and other revenue.
(2) Total operating expenses including cost of services paid to the General Fund and excluding in -lieu fees,
depreciation and amortization.
Source: City of Lodi Financial Services Division
123
CITY OF LODI
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Personal income is the income received by all persons from all sources. Personal income is the sum 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, Department of Finance, Demographic Reseach Unit and Department of Labor.
124
Personal
Per
Population
San Joaquin
Population
Rank in Size
Income
Capita
Fiscal
Square
City
Percent
County
Percent
of California
(millions of
Personal
Unemployment
Year
Miles
Population
Change
Population
of County
Cities
dollars)
Income
Rate
2011
13.92
62,473
0.6%
690,899
9.0%
135
n/a
n/a
13.4%
2010
13.92
63,549
0.6%
694,293
9.2%
136 $
1,980
31,166
13.3%
2009
13.92
63,313
-0.1%
689,480
9.2%
135
1,967
31,071
12.2%
2008
13.92
63,362
-0.1%
685,600
9.2%
133
1,849
29,178
7.1%
2007
13.17
63,395
0.9%
679,687
9.3%
129
1,822
28,743
6.1%
2006
12.81
62,817
0.6%
668,265
9.4%
131
1,713
27,272
5.5%
2005
12.81
62,467
2.8%
653,333
9.6%
131
1,639
26,239
5.9%
2004
12.79
60,769
0.4%
630,600
9.6%
130
1,551
25,527
6.5%
2003
12.69
60,500
1.8%
613,500
9.9%
179
1,490
24,620
6.9%
2002
12.62
59,431
1.4%
596,000
10.0%
129
1,435
24,150
6.6%
Personal income is the income received by all persons from all sources. Personal income is the sum 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, Department of Finance, Demographic Reseach Unit and Department of Labor.
124
CITY OF LODI
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
Note: The City of Lodi implemented GASB 44 for the fiscal year ended June 30, 2006.
125
Current
Nine Years Ago
Percent
Percent
of Total City
of Total City
Employer
Employees
Rank
Employment
Employees
Rank
Employment
Lodi Unified School District
2,762
1
10.57 %
2,247
1
8.60
Lodi Memorial Hospital
1,329
2
5.09
650
2
2.49
Pacific Coast Producers
1,000
3
3.83
530
4
2.03
Blue Shield
850
4
3.25
Cottage Bakery
540
5
2.07
General Mills
480
6
1.84
575
3
2.20
City of Lodi
440
7
1.68
429
5
1.64
Farmers & Merchants Bank
353
8
1.35
183
10
0.70
Walmart
245
9
0.94
226
6
0.86
Target
209
10
0.80
200
7
0.77
Lodi Fab Industries, Inc
200
8
0.77
Valley Industries
191
9
0.73
Total
8,208
31.42
5,431
20.79
Note: The City of Lodi implemented GASB 44 for the fiscal year ended June 30, 2006.
125
CITY OF LODI
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY DEPARTMENT LAST TEN FISCAL YEARS
Fiscal Year
2011" 2010 2009 2008 2007 2006 2005 2004 2003 2002
Department:
Administration
13
31
32
19
35
33
37
36
37
34
Community Development
13
13
13
14
18
17
17
17
18
17
Electric
41
51
50
48
64
65
52
52
52
50
Financial Services
24
26
39
30
28
38
38
38
35
Fire
64
64
64
64
64
61
68
61
68
55
Internal Services
35
Library
14
14
14
14
16
14
15
15
15
14
Parks & Recreation
31
31
30
34
31
34
34
34
29
Parks, Recreation and Cultural services
37
Police
125
125
125
125
116
117
117
116
117
115
Public Works
98
102
102
107
114
99
111
110
110
108
Total
440
455
457
460
491
465
489
479
489
457
Community Center, Human Resources and Information Systems were previously
included in Administration.
Budget, Financial Services,
Human Resources
and Information Services are now Internal Services.
Community Center, Parks & Recreation are
now Parks,
Recreation and Cultural Services.
Source: City of Lodi Budget Document
126
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAMIDEPARTMENT
LAST SIX FISCAL YEARS
General government:
Building permits issued
Business tax certificates:
Retail sales and service
Manufacturers and processors
Professions
Miscellaneous contractors, peddlers, delivery vehicles, etc.
Utility billing/customer service:
Number of customers
Energy sales (KWH)
Peak demand (MW)
Public safety:
Police:
Major reported crimes
Total arrests
Dispatched calls for service
Fire:
Interior structure fire calls
Non-structural fire calls
Hazardous materials calls
Emergency medical calls
Total emergency calls
Total number of units dispatched
Public works:
Miles of streets resurfaced
Fleet job orders completed
Trees planted
Water utility:
New connections
Water main breaks
Wastewater utility:
Average daily treatment (million gal/day)
Library:
Registered borrowers
Circulation of library materials
Reference, research and informational questions answered
Annual attendance at libraries
Number of programs offered
Annual attendance at programs
Public access computer usage
Fiscal Year
2011
2010
2009
2008
2007
2006
2,022
1,709
1,754
1,851
2,317
2,699
2,530
2,406
2,496
2,442
2,632
2,565
76
80
82
78
78
125
371
373
380
398
404
322
1,357
1,312
1,411
1,063
1,127
533
23,575
25,573
25,555
25,555
25,712
25,655
421,130,329
434,200,987
452,075,554
450,407,709
458,740,745
459,637,092
116
120
134
134
144
127
2,885
2,377
2,454
2,993
3,096
3,234
4,410
4,238
4,646
5,590
5,463
5,162
52,061
51,870
56,391
55,911
53,686
55,937
56
47
69
88
79
66
121
123
123
160
163
158
69
70
70
35
27
26
3,752
3,494
3,364
3,420
3,213
2,912
5,753
5,385
5,392
5,346
5,000
4,447
7,835
7,390
7, 38
7,841
7,005
6,055
6
3
I 6
5
4
33
2,810
3,303
3,921
3,520
6,938
5,608
-
-
96
130
95
-
8
17
17
35
110
266
8
6
4
4
10
8
6.5MG
6.5MG
6.5MG
6.5MG
6.9MG
6.7MG
43,927
39,199
53,530
48,969
44,558
52,779
248,250
251,967
219,711
280,466
273,270
281,216
16,234
16,501
15,379
19,257
18,854
17,342
210,279
207,123
n/a
296,793
288,070
287,986
388
344
316
348
339
320
13,133
10,676
8,765
11,242
10,700
10,872
58,990
52,124
38,388
38,999
35,260
29,896
(Continued)
127
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT (continued)
LAST SIX FISCAL YEARS
Community center:
Community center bookings
Instructional classes
Registered students
Yearly attendance
Parks and recreation:
After school program registration (number of participants/sites)
Adult sports
Program/Participation
Programs offered
Partnerships
Tournaments
Youth/Teen sports
Program attendance
Programs offered
Aquatics
Program attendance
Number of programs
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.
Source: City of Lodi
Fiscal Year
2011
2010
2009
2008
2007
2006
926
789
475
494
302
220
536
583
507
530
478
509
3,438
3,525
3,316
5,550
3,548
4,369
14,217
13,355
14,050
14,410
14,429
15,369
1,920/4
1,920/4
1,920/4
3,014/4
145000/12
135,000/12
2,528
2,528
2,284
28,000
36,000
36,000
16
16
13
11
11
11
5
5
1
3
3
5
7
7
10
10
20
20
4,251
4,251
215,000
195,000
200,000
200,000
16
16
24
14
14
20
32,566
32,566
2,433
50,000
59,000
59,000
13
13
6
3
8
6
128
CITY OF NODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT
LAST SEVEN FISCAL YEARS
(Continued)
M
Fiscal Year
2011
2010
2009
2008
2007
2006
2005
General government:
Total square miles
13.92
13.92
13.92
13.92
13.17
12.81
12.81
Public safety:
Police:
Facilities:
Stations
1
1
1
1
1
1
1
Animal control facility
1
1
1
1
1
1
1
Police training facility (pistol range)
1
1
1
1
1
1
1
Vehicles:
Marked patrol cars
23
23
25
25
25
28
28
Motorcycles and scooters
5
5
5
5
5
4
1
Animal control vehicles
2
2
2
2
2
3
3
Other automobiles
37
37
38
40
41
41
41
Fire:
Facilities:
Fire stations
4
4
4
4
4
4
4
Vehicles:
Fire engines
7
7
7
6
6
5
5
Trucks/Trailers
5
6
6
9
8
7
7
Other automobiles
8
10
12
7
10
11
11
Public works:
Miles of streets
202
202
202
200
184
198
100
Miles of alley ways
16
16
16
16
16
16
14
Traffic signals
67
62
62
64
66
64
60
Street lights
7,270
7,270
7,270
7,270
7,270
7,203
6,995
(Continued)
M
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT (continued)
LAST SEVEN FISCAL YEARS
Parks and recreation:
Parks and squares
Park acreage
Boating facilities - launch lanes
Senior center
Community Centers
Swimming pools
Baseball/softball diamonds
Tennis courts
Skateboard park
Playgrounds
Ballpark
Soccer Field
Football Field
Handball/Basketball/Volleyball Courts
Horseshoe Pits
Library:
Central library
Total items in collection
Integrated library system
Microfilm readers
Microfilm readers/printers
Self check out machines
Electric utility:
Overhead lines 12kv (miles)
Overhead lines 60kv (miles)
Underground lines (miles)
Fiscal Year
2011
2010
2009
2008
2007
2006
2005
26
26
26
23
23
23
23
373
373
371
275
275
275
275
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
4
4
4
3
3
3
3
24
24
24
26
26
26
26
11
11
11
11
11
11
11
1
1
1
1
1
1
1
25
25
25
22
22
22
22
24
24
24
26
26
26
26
22
22
22
22
22
22
22
1
1
1
3
3
3
3
10
10
10
8
8
8
8
6
6
6
7
10
10
10
1
1
1
1
1
1
1
134,804
130,530
135,197
142,885
142,098
134,129
137,673
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
2
2
0
1
1
1
133
130
130
130
129
129
129
13
13
13
13
13
13
13
157
155
154
153
151
151
151
(Continued)
130
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT (continued)
LAST SEVEN 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
2011
2010
2009
2008
2007
2006
2005
236
237
233
233
238
235
230
1,100, 000
1,100, 000
1,100, 000
1,100, 000
1,100, 000
1,100,000
1,100,000
27
26
26
26
26
26
25
2
2
2
2
2
2
2
196
191
194
194
189
182
182
8.5 MG
8.5 MG
8.5 MG
8.5 MG
8.5 MG
8.5 MG
8.5 MG
1
1
1
1
1
1
1
124
124
161
119
161
115
114
14
14
14
14
14
13
14
1
1
1
1
1
1
1
2,453
2,453
2,453
2,453
2,453
2,453
2,453
25
25
25
25
25
25
25
Note: The City of Lodi implemented GASB 44 for the fiscal year ended June 30, 2006. Information prior to 2005 is
not readily available.
Source: City of Lodi Departments
131
SINGLE AUDIT REPORTS
CITY OF LODI
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED NNE 30, 2011
Federal Grantor
Pass-through Grantor or Direct
Program Title
U.S. Department of Housing and Urban Development
Direct:
Community Development Block Grants/Entitlement Grants
Community Development Block Grants/Entitlement Grants
Total Community Development Block Grants/Entitlement Grants
CFDA
Number
Grant/Project
Number
Expenditures
14.218 B -09 -MC -06-0038 115,201
14.218 B -10 -MC -06-0038 330,541
445,742
Passed through State of California Department of Housing and Community Development:
Home Investment Partnerships Program 14.239
Total U.S. Department of Housing and Urban Development
U.S. Department of Justice
Direct:
ARRA - Public Safety Partnership and Community Policing Grants
Edward Byrne Memorial Justice Assistance Grant Program
Passed through City of Stockton:
Edward Byrne Memorial Justice Assistance Grant Program
Total Edward Byrne Memorial Justice Assistance Grant Program
Passed through San Joaquin County:
ARRA - Recovery Act - Edward Byrne Memorial Justice Assistance Grant (JAG)
Program / Grants to Units of Local Government
Total JAG Program Cluster
Total U.S. Department of Justice
U.S. Department of Transportation
Direct:
Federal Transit - Formula Grants
ARRA - Federal Transit - Formula Grants
Total Federal Transit - Formula Grants
09 -HOME -6271
16.710 2009-RK-WX-0151
16.738 2007 -DJ -BX -0138
16.738 2009 -DJ -BX -0574
16.804 2009 -SB -B9-0539
20.507 CA -90-Y906-00
20.507 CA -96-X052-00
State and Community Highway Safety 20.600 AL1112
See accompanying notes to the schedule of expenditures of federal awards.
132
29,699
475,441
409,795
2,178
4,563
6,741
66,408
73,149
482,944
1,698,022
147,715
1,845,737
22,307
CITY OF LODI
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
Federal Grantor
1,622
Pass-through Grantor or Direct
CFDA
Program Title
Number
U.S. Department of Transportation (Continued)
913
Passed through University of Berkekey:
620
State and Community Highway Safety
20.600
State and Community Highway Safety
20.600
Total State and Community Highway Safety
12,411
Occupant Protection Incentive Grants
20.602
Occupant Protection Incentive Grants
20.602
Total Occupant Protection Incentive Grants
Total Highway Safety Cluster
Minimum Penalties for Repeat Offenders for Driving While Intoxicated
20.608
Minimum Penalties for Repeat Offenders for Driving While Intoxicated
20.608
Direct:
Minimum Penalties for Repeat Offenders for Driving While Intoxicated
20.608
Passed through City of Stockton:
Minimum Penalties for Repeat Offenders for Driving While Intoxicated
20.608
Total Minimum Penalties for Repeat Offenders for Driving While Intoxicated
Passed through California Department of Transportation:
ARRA - Highway Planning and Construction
20.205
Total U.S. Department of Transportation
Grant/Project
Number Expenditures
CTI 1230
1,622
CT 10230
1,101
25,030
CTI 1230
913
CT10230
620
1,533
26,563
SC 10230
12,411
SC 11230
11,038
AL1112 68,530
ALI 160 21,218
113,197
ESPLE-5154(036) 1,490,018
3,475,515
U.S. Department of Energy
Direct:
ARRA - Energy Efficiency and Conservation Block Grant Program (EECBG) 81.128 DE-SC0002707 127,426
U.S. Department of Homeland Security
Passed through San Joaquin County:
Homeland Security Grant Program 97.067 2008-0006 64,527
Total Federal Awards $ 4,625,853
See accompanying notes to the schedule of expenditures of federal awards.
133
CITY OF LODI
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1— GENERAL
The accompanying Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2011, 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
Community Development Block Grants/
Entitlement Grants 14.218 $ 86,075
134
Me!
Certined Public Accotultaants.
Sacramento • Walnut Creek • Oakland • Los Angeles/Century City • Newport Beach • San Diego
The Honorable Members of City Council
City of Lodi, California
mgocpa.com
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 year ended June 30, 2011, which collectively comprise the City's basic financial statements
and have issued our report thereon dated December 6, 2011. Our report contained an explanatory paragraph discussing the City's adoption of the provisions of
Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions during the year ended June 30,
2011. 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 Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
Management of the City is responsible for establishing and maintaining effective 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 deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and
corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to
identify all deficiencies in internal control over financial reporting that might be deficiencies, 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. However, we identified a certain
deficiency in internal control over financial reporting, described in the accompanying schedule of findings and questioned costs that we consider to be a
significant deficiency in internal control over financial reporting as item 2011-1. A significant deficiency is a deficiency, or a combination of deficiencies, in
internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
3000 S Street 2121 N. California Blvd, 50514th Street 135 2029 Century Park East 1201 Dove Street 225 Broadway
Suite 300 Suite 750 Sth Floor Suite 500 Suite 680 Suite 1750
Sacramento Walnut Creek Oakland Los Angeles Newport Beach San Diego
CA 95616 CA 94596 CA 94612 CA 90067 CA 92660 CA 92101
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 Government Auditing Standards.
We noted certain matters that we reported to the City Council and others that we reported to management of the City of Lodi, in separate letters dated December
6, 2011.
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.
Sacramento, California
December 6, 2011
136
Me!
Certif led Public Accouuta>nts.
Sacramento - Walnut Creek - Oakland - Los Angeles/Century City - Newport Reach - San Diego
The Honorable Members of City Council
City of Lodi, California
msacpa.com
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL
EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH
OMB CIRCULAR A-133
Compliance
We have audited the compliance of the City of Lodi, California (City), with the types of compliance requirements described in the OMB Circular A-133
Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2011. The City's
major federal programs are 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 each of its major federal programs 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 of 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 of the City's compliance with those requirements.
In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each
of its major federal programs for the year ended June 30, 2011. However, the results of our auditing procedures disclosed instances of noncompliance with those
requirements, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and
questioned costs as items 2011-2 and 2011-3.
3000 S Street 2121 N. California Blvd, 50514th Street 137 2029 Century Park East 1201 Dove Street 225 Broadway
Suite 300 Suite 750 5th Floor Suite 500 Suite 680 Suite 1750
Sacminento Walnut Creek Oakland Los Angeles Newport Beach San Diego
CA 95816 CA 94596 CA 94612 CA 90067 CA 92660 CA 92101
liaernal Control Over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over compliance with the requirements of Jaws, regulations,
contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with the
requirements that could have a direct and material effect on a major federal program to determine the 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, 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 deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in
the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal
program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be
prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify
all deficiencies in internal control over compliance that might be deficiencies, 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. However, we identified certain deficiencies in
internal control over compliance that we consider to be significant deficiencies as described in the accompanying schedule of findings and questioned costs as
items 2011-1, 2011-2, and 2011-3. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal
control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over
compliance, yet important enough to merit attention by those charged with governance.
The City's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the
City's responses and, accordingly, we express no opinion on the responses.
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.
Sacramento, California
December 6, 2011
138
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2011
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? Yes
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? Yes
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? Yes
139
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
Identification of major programs:
Federal Program Title
CFDA No.
Community Development Block Grants/Entitlement Grants
14.218
ARRA — Public Safety Partnership and Community Policing Grants
16.710
ARRA — Highway Planning and Construction
20.205
ARRA — Energy Efficiency and Conservation Block Grant
Program (EECBG)
81.128
Dollar threshold used to distinguish
between type A and type B programs: $300,000
Auditee qualified as low-risk auditee? Yes
Reference Number:
2011-1
Section II — Financial Statement Findings
Criteria:
Pursuant to Subpart C, section .310(b)(3) of Office of Management and Budget (OMB) Circular A-133, Audits, of States, Local Governments, and Non -Profit
Organisations, auditees must complete the schedule of expenditures of federal awards (SEFA) and include catalog of federal domestic assistance (CFDA)
numbers provided in federal awards/subawards and associated expenditures.
In addition, many Federal agencies began including requirements in their terms and conditions for American Recovery and Reinvestment Act (ARRA or
Recovery Act) awards to ensure separate identification of ARRA awards. For recipients covered by the Single Audit Act Amendments of 1996 and OMB
Circular A-133, recipients are to separately identify the expenditures for federal awards under the ARRA on the SEFA and the data collection form (SF -SAC)
required by OMB Circular A-133. This shall be accomplished by identifying expenditures for federal awards made under the ARRA separately on the SEFA,
and as separate rows under Item 9 of Part III on the SF -SAC by CFDA number, and inclusion of the prefix "ARRA-" in identifying the name of the federal
program on the SEFA and as the first characters in Item 9d of Part III on the SF -SAC.
140
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
Condition:
Several federal awards were noted as either omitted from or not accurately identified in the SEFA.
It was determined that the Public Safety Partnership and Community Policing Grants (CFDA no. 16.710) was a Recovery Act grant, but it was not identified in
either the City's draft of the 2011 SEFA or its 2010 SEFA or SF -SAC as such. It was also determined that the Home Investment Partnerships Program (CFDA
no 14.239), the State and Community Highway Safety (CFDA no. 20.600) program, the Occupant Protection Incentive Grants (CFDA no. 20.602), and the
Minimum Penalties for Repeat Offenders for Driving While Intoxicated (CFDA no. 20.608) program were omitted from the City's draft of the 2011 SEFA.
Questioned Costs:
There are no questioned costs.
Context:
The Public Safety Partnership and Community Policing Grants expenditures reported in the 2011 SEFA are $409,795, and the expenditures reported in the 2010
SEFA and SF -SAC were $73,112. The Home Investment Partnerships Program expenditures reported in the 2011 SEFA are $29,699. The State and Community
Highway Safety, Occupant Protection Incentive Grants, and Minimum Penalties for Repeat Offenders for Driving While Intoxicated combined expenditures
reported in the 2011 SEFA are $139,760.
Effect:
The City exposes itself to the risk of inaccurately preparing the SEFA in accordance with the requirements of OMB Circular A-133 by not properly reporting all
federal programs or identifying ARRA programs, which could result in the misidentification of major programs.
Cause:
It appears that there is not adequate communication between City departments concerning the identification and measuring of federal awards.
Recommendation:
While federal funds are a valuable source of revenue for the City, the receipt of federal funds imposes very specific and stringent reporting requirements that can
be complicated and consume considerable staff time related to administration and monitoring. It is recommend that the City develop written policies and
procedures that document the process for measuring and reporting federal expenditures as it pertains to the SEFA and SF -SAC pursuant to the requirements of
OMB Circular A-133. The new policies and procedures should provide current and new staff with the proper guidelines on the reporting requirements and
provide a framework for ensuring consistency and continuity in the identification and reporting of federal award expenditures.
Management Response and Corrective Action:
As staff was made aware that some small grants were federal programs, not state programs as previously reported, the draft SEFA was corrected immediately.
Management has since designated a point person to oversee all City grants to ensure that all grants are properly identified, monitored and reported.
141
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
Section III — Federal Award Findings and Questioned Costs
Reference Number: 2011-2
Federal Program Title: ARRA — Public Safety Partnership and Community Policing Grants
Federal Catalog Number: 16.710
Federal Award Number and Year: 2009-RK-WX-0151; 2009
Federal Agency: U.S. Department of Justice
Category of Finding: Reporting
Criteria:
OMB Circular A-102, the Common Rule — Subpart C — Post -Award Requirements; Section .41, Financial Reporting
(b) Financial Status Report—
(1) Fain. Grantees will use Standard Form 260 or 269A (SF -260 or SF -269A), Financial Status Report, to report the status of funds for all nonconstruction
grants and for construction grants when required in accordance with paragraph Section .41(e)(2)(iii) of this section.
(4) Due Date. When reports are required on a quarterly or semiannual basis, they will be due 30 days after the reporting period. When required on an
annual basis, they will be due 90 days after the grant year. Final reports will be due 90 days after the expiration or termination of grant support.
The Office of Community Oriented Policing Services within the U.S. Department of Justice requires the financial status report (SF -425) to be submitted on a
quarterly basis. The SF -425, Federal Financial Report, replaces SF -269 and SF -269A.
Per OMB memorandum M-09-21, Implementing Guidance for the Reports on Use of Funds Pursuant to the American Recovery and Reinvestment Act of 2009
dated June 22, 2009, Section 2. 1, Section 1512 of the Recovery Act requires reports on the use of Recovery Act funding by recipients no later than the 10`h day
after the end of each calendar quarter (beginning the quarter ending September 30, 2009) and for the Federal agency providing those funds to make the reports
publicly available no later than the 30`h day after the end of that quarter. Aimed at providing transparency into the use of these funds, the recipient reports are
required to include the following detailed information:
• Total amount of finds received; and of that, the amount spent on projects and activities;
• A list of those projects and activities funded by name to include:
o Description
o Completion status
o Estimates on jobs created or retained;
• Details on sub -awards and other payments.
142
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
Condition:
It was noted that expenditures reported in the Federal Financial Reports and Section 1512 reports were not for the periods reported. The reports covering the
period of October 2010 through December 2010 reported expenditures to date of $73,112, which were the cumulative expenditures through June 30, 2010 as
reported in the 2010 SEFA. The reports covering the period of January 2011 through March 2011 reported expenditures to date of $269,795, which were the
cumulative expenditures through December 2010 as reported in the 2010 SEFA ($73,112) plus requested in the Drawdown Report for the period of July 2010
through December 2010 ($196,683).
Questioned Costs:
There are no questioned costs.
Context:
The Federal Financial Reports and Section 1512 reports were submitted quarterly for the year ended June 30, 2011. The Drawdown Reports for the period of
July 2010 through December 2010 ($196,683) plus the period of January 2011 through March 2011 ($107,271) plus the period of April 2011 through June 2011
($105,841) equals the expenditures reported in the SEFA of $409,795.
Effect:
Reporting expenditures in arrears will provide for non-current data and could mislead readers of the reports and provide false annual -expenditure amounts.
Cause:
Per the Support Services Manager at the City of Lodi Police Department, the cause of the delay in the reporting of expenditures is due to the Federal Financial
Reports and Section 1512 reports being prepared and submitted at the end of a quarter before the Drawdown Reports are prepared and submitted.
Recommendation:
It is recommended that the City prepare the Drawdown Reports prior to preparing the Section 1512 reports and Federal Financial Reports to report current
expenditures for each quarter.
Management Response and Corrective Action:
The recommendation has been noted and the condition will be rectified in future reports.
143
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
Reference Number: 2011-3
Federal Program Title: ARRA — Energy Efficiency and Conservation Block Grants (EECBG)
Federal Catalog Number: 81.128
Federal Award Number and Year: DE-SC0002707; 2009
Federal Agency: U.S. Department of Energy
Category of Finding: Reporting
Criteria:
OMB Circular A-102, the Common Rule — Subpart C — Post -Award Requirements; Section .40, Performance Reporting
(b) Nonconstruction Performance Reports.
(1) Grantees shall submit annual performance reports unless the awarding agency requires quarterly or semi-annually reports. However, performance
reports will not be required more frequently than quarterly. Annual reports shall be due 90 days after the grant year, quarterly or semi-annual reports
shall be due 30 days after the reporting period. The final performance report will be due 90 days after the expiration or termination of grant support. If
a justified request is submitted by a grantee, the Federal agency may extend the due date for any performance report. Additionally, requirements for
unnecessary performance reports may be waived by the Federal agency.
The award agreement terms and conditions require quarterly reports.
OMB Circular A-102, the Common Rule — Subpart C — Post -Award Requirements; Section .41, Financial Reporting
(b) Financial Status Report —
(1) Form. Grantees will use Standard Form 260 or 269A (SF -260 or SF -269A), Financial Status Report, to report the status of funds for all nonconstruction
grants and for construction grants when required in accordance with paragraph Section .41(e)(2)(iii) of this section.
(4) Due Date. When reports are required on a quarterly or semiannual basis, they will be due 30 days after the reporting period. When required on an
annual basis, they will be due 90 days after the grant year. Final reports will be due 90 days after the expiration or termination of grant support.
The award agreement terms and conditions require Standard Form 425 (SF -425) on a quarterly basis. The SF -425, Federal Financial Report, replaces SF -269
and SF -269A.
Per OMB memorandum M-09-21, Implementing Guidance for the Reports on Use of Funds Pursuant to the American Recovery and Reinvestment Act of 2009
dated June 22, 2009, Section 2.1, Section 1512 of the Recovery Act requires reports on the use of Recovery Act funding by recipients no later than the 10`h day
after the end of each calendar quarter (beginning the quarter ending September 30, 2009).
144
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
Condition:
It was noted that the City submitted one Federal Financial Report for the entire year. This Federal Financial Report, four quarterly performance reports, and one
Section 1512 report were submitted after their respective due dates.
Questioned Costs:
There are no questioned costs.
Context:
The City was required to submit four quarterly performance reports, four Federal Financial Reports, and four Section 1512 reports during the year ended June 30,
2011.
Effect:
Continued noncompliance could result in fi►ture EECBG grants being funding on a reimbursement basis or the City losing out on future EECBG grants.
Cause:
Per management, the City is short-staffed and was unable to complete the tasks on a timely basis.
Recommendation:
The City should strengthen procedures to ensure compliance with the reporting requirements over the EECBG program set forth by OMB Circular A-133,
specifically procedures to submit quarterly performance reports and Federal Financial Reports no later than 30 days following the end of each quarter and Section
1512 reports no later than 10 days following the end of each quarter.
Management Response and Corrective Action:
The recommendation has been noted and the City will ensure that future reports will be submitted in a timely manner.
145
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2011
Reference Number: 2010-1
Federal Program Title: Community Development Block Grants/Entitlement Grants (CDBG)
Federal Catalog Number: 14.218
Federal Award Number and Year: B -09 -MC -06-0038; 2009
Federal Agency: U.S. Department of Housing and Urban Development (HUD)
Category of Finding: Reporting
Criteria:
OMB Circular A-102, the Common Rule — Subpart C — Post -Award Requirements; Section .41, Financial Reporting
(c) Federal Cash Transaction Report —
(1) Form.
(i) For grants paid by letter or credit, Treasury check advances or electronic transfer of funds, the grantee will submit the Standard Form 272, Federal
Cash Transactions Report, and when necessary, its continuation sheet, Standard Form 272a, unless the terms of the award exempt the grantee from
this requirement.
(ii) These reports will be used by the Federal agency to monitor cash advanced to grantees and to obtain disbursement or outlay information for each
grant from grantees. The format of the report may be adapted as appropriate when reporting is to be accomplished with the assistance of automatic
data processing equipment provided that the information to be submitted is not changed in substance.
(4) Frequency and due date. Grantees must submit the report no later than 15 working days following the end of each quarter.
Condition:
In gaining an understanding of the City's procedures to ensure compliance with the reporting requirements over the CDBG program set forth by OMB Circular
A-133, we noted that the City does not submit Standard Form 272 (SF -272 reports).
Questioned Costs:
There are no questioned costs.
Context:
The City should have submitted four SF -272 reports during the year ended June 30, 2010.
Effect:
Continued noncompliance could result in the City losing out on future CDBG grants.
146
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
Cause:
The City was under the impression that the Integrated Disbursement and Information System (IDIS) satisfies all financial reporting requirements for the CDBG
program. However, in an Information Bulletin issued on August 23, 2010, the HUD Office of Community Planning and Development reminded grantees that
have converted to the IDIS that the SF -272 reports are still required to be completed and submitted to HUD on a quarterly basis.
Recommendation:
The City should develop procedures that will ensure compliance with the reporting requirements over the CDBG program set forth by OMB Circular A-133,
specifically procedures to prepare and submit SF -272 reports no later than 15 working days following the end of each quarter.
Management Response:
Upon learning of this issue from the auditor, we immediately generated and submitted the required report to the local HUD office and are committed to submit
the report quarterly from that point forward.
Status:
The City prepared and submitted the SF -272 reports for the year ended June 30, 2011, therefore we consider our recommendation implemented.
147
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
Reference Number: 2010-2
Federal Program Title: ARRA — Energy Efficiency and Conservation Block Grants (EECBG)
Federal Catalog Number: 81.128
Federal Award Number and Year: DE-SC0002707; 2009
Federal Agency: U.S. Department of Energy
Category of Finding: Reporting
Criteria:
OMB Circular A-102, the Common Rule — Subpart C — Post -Award Requirements; Section .40, Performance Reporting
(b) Nonconstruction Performance Reports.
(2) Grantees shall submit annual performance reports unless the awarding agency requires quarterly or semi-annually reports. However, performance
reports will not be required more frequently than quarterly. Annual reports shall be due 90 days after the grant year, quarterly or semi-annual reports
shall be due 30 days after the reporting period. The final performance report will be due 90 days after the expiration or termination of grant support. If
a justified request is submitted by a grantee, the Federal agency may extend the due date for any performance report. Additionally, requirements for
unnecessary performance reports may be waived by the Federal agency.
The award agreement terms and conditions require quarterly reports.
OMB Circular A-102, the Common Rule — Subpart C — Post -Award Requirements; Section .41, Financial Reporting
(b) Financial Status Report —
(1) Form. Grantees will use Standard Form 260 or 269A (SF -260 or SF -269A), Financial Status Report, to report the status of funds for all nonconstruction
grants and for construction grants when required in accordance with paragraph Section .4 1 (e)(2)(iii) of this section.
(4) Due Date. When reports are required on a quarterly or semiannual basis, they will be due 30 days after the reporting period. When required on an
annual basis, they will be due 90 days after the grant year. Final reports will be due 90 days after the expiration or termination of grant support.
The award agreement terms and conditions require Standard Form 425 (SF -425) on a quarterly basis. The SF -425, Federal Financial Report, replaces SF -269
and SF -269A.
Per OMB memorandum M-09-21, Implementing Guidance for the Reports on Use of Funds Pursuant to the American Recovery and Reinvestment Act of 2009
dated June 22, 2009, Section 2.1, Section 1512 of the Recovery Act requires reports on the use of Recovery Act fimding by recipients no later than the 10`h day
after the end of each calendar quarter (beginning the quarter ending September 30, 2009).
148
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
Condition:
During our testing of the reporting requirements set forth by OMB Circular A-133, we noted two quarterly performance reports, one Federal Financial Report,
and three Section 1512 reports were submitted after their respective due dates.
Questioned Costs:
There are no questioned costs.
Context:
The City submitted three quarterly performance reports, four Federal Financial Reports, and four Section 1512 reports during the year ended June 30, 2010.
Effect:
Continued noncompliance could result in future EECBG grants being funding on a reimbursement basis or the City losing out on future EECBG grants.
Cause:
Per management, the City is short-staffed and was unable to complete the tasks on a timely basis.
Recommendation:
The City should strengthen procedures to ensure compliance with the reporting requirements over the EECBG program set forth by OMB Circular A-133,
specifically procedures to submit quarterly performance reports and Federal Financial Reports no later than 30 days following the end of each quarter and Section
1512 reports no later than 10 days following the end of each quarter.
Management Response:
Timelines are noted and the City will comply in future reporting periods.
Status:
For the year ended June 30, 2011, the City failed to submit three Federal Financial Reports and submitted late four quarterly performance reports, one Federal
Financial Report, and one Section 1512 report; therefore our recommendation continues (see finding 2011-3 in the schedule of findings and questioned costs).
149
CONTINUING DISCLOSURES
UNAUDITED
CONTINUING DISCLOSURE REQUIREMENTS FOR THE CITY OF LODI AND THE LODI PUBLIC IMPROVEMENT CORPORATION
Fiscal Year 2010-11
The City of Lodi has executed Continuing Disclosure Certificates associated with the various debt issues outstanding by the Electric Utility,
Wastewater Utility and the Lodi Public Improvement Corporation. These Certificates were executed to satisfy provisions of Securities and
Exchange Commission Rule 15c2 -12(b) (5). The material provided herein applies to the various debt issues as noted. Data for each utility is
shown separately.
This Bond Disclosure Section included within the City's Comprehensive Annual Financial Report (CAFR) provides the information required by the
Continuing Disclosure Certificates. The CAFR, in turn, will be filed with the Municipal Securities Rulemaking Board. The CAFR may also be found
on the City's website at www.lodi.gov.
ANNUAL REPORT FOR ELECTRIC UTILITY
The Lodi Electric Utility has Continuing Disclosure requirements associated with its 2008A Series A Certificates of Participation, 2002 Series C
Certificates of Participation and 2002 Taxable Series D Certificates of Participation. The annual report includes, by reference, the audited financial
statement of the City of Lodi (including the Electric Utility).
The annual report also contains the following five (5) tables as required in the Certificates:
1. A table setting forth the City's power supply resources for the most recently completed fiscal year.
2. A table showing the average number of customers, sales, revenues and demand for the past five fiscal years.
3. A table showing the outstanding debt of joint powers agencies in which Lodi participates and the City of Lodi share of that debt for the
most recent fiscal year.
4. A table showing a summary of Operating Results for the past five fiscal years.
5. A table showing Lodi Electric Utility Department Rate Changes since November 1996 (applicable only to the 2002 Series C and D issues).
Reporting of Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2011, none of the specified events have
occurred. Further, there is no knowledge on the part of the City Council, officers or employees of the City of any impending Significant Event that
would require disclosure under the provisions of the Certificates.
150
Table 1 A table setting forth the City's power supply resources.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
POWER SUPPLY RESOURCES
Source
Purchased Power (2)
Western
NCPA
Geothermal Project
Hydroelectric Project
Combustion Turbine Project No. 1
Capital Facilities, Unit One
Contracts, Exchanges and Bilaterals (3)
Total
Total Capacity and Energy Sold at Wholesale
City System Requirement for Retail Load
Capacity
Available
Actual Energy
% of Total
(MW)(1)(4)
(MWh)
Energy
4.7
16,270
3.04%
13.3
89,025
16.63
26.2
88,361
16.51
9.4
85
0.02
19.6
4,974
0.93
70.0
336,558
62.87
143.2
535,273(4) (5)
100.00%
N/A
91,794
143.2
443,479
(1) Non -coincident capacity available.
(2) Entitlements, firm allocations and contract amounts.
(3) Includes participation in NCPA/Seattle City Light exchange. See "OTHER NCPA PROJECTS—Power Purchase Contracts"
in the forepart of Official Statement.
(4) Units at Backbone Output.
(5) Includes supply from exchanges and line losses.
151
Table 2 A table showing the average number of customers, sales, revenues and demand for the past five fiscal years.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
CUSTOMER SALES, REVENUE AND DEMAND
Fiscal Years Ended June 30,
2007 2008 2009 2010 2011
Number of Customers:
Residential
22,928
22,523
22,465
21,981
22,251
Commercial
2,423
2,714
2,696
3,163
2,865
Industrial
33
32
37
31
39
Other
182
187
188
194
229
Total Customers
25,566
25,456
25,386
25,369
25,384
Kilowatt -Hour (kWh) Sales:
Residential
159,247,195
153,563,188
153,487,430
150,811, 587
144,256,683
Commercial
153,963,719
155,146,983
155,206,324
146,644,990
137,584,723
Industrial
133,816,956
129,429,938
131,059,764
125,000,860
128,072,575
Other
11,712,875
12,267,600
12,322,036
11,563,550
11,216,348
Total kWh sales
458,740,745
450,407,709
452,075,554
434,020,987
421,130,329
Revenues from Sale of Energy:
Residential
$ 27,013,494 $
27,127,049 $
29,016,776 $
27,642,200 $
24,513,202
Commercial
23,241,809
25,173,286
26,883,557
24,901,257
21,870,624
Industrial
13,470,620
14,591,885
15,875,038
15,015,036
13,914,539
Other
2,071,324
2,132,120
2,224,567
2,105,196
1,868,985
Total Revenues from
Sale of Energy:
$ 65,797,247 $
69,024,340 $
73,999,939 $
69,663,689 $
62,167,350
Peak Demand (kW)
140.4
132.4
117.4
119.6
123.9
Excludes revenues from California Energy Commission Tax.
Sources: City of Lodi, audited annual financial statements and
Customer Information System reports.
152
Table 3 A table showing the outstanding debt of joint powers agencies in which Lodi participates.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
OUTSTANDING DEBT OF JOINT POWERS AGENCIES
(Dollar Amounts in Millions)
TOTAL* $ 1,181.4 10.32% $ 122.0
Columns may not add to totals due to independent rounding.
(1) Participation obligation is subject to increase upon default of another project participant.
Such increase shall not exceed, without the written consent of a non -defaulting participant, an accumulated
maximum of 25% of such non -defaulting participant's original participation.
(2) Participant's project entitlement remains the same but share of debt has increased to 10.64% due to change in debt participation
(3) Lodi's actual obligation differs slightly from this percentage due to varying shares of certain series of TANC bonds relating to each TANC
member -participant's taxable portion and each TANC member -participant's participation or non -participation in acquisition of assets from
Vernon.
Source: City of Lodi.
153
Lodi's
Lodi's Share of
Outstanding Debt
Participation(')
Outstanding Debt
NCPA
Geothermal Project
$ 33.8
10.28%
$ 3.5
Hydroelectric Project
440.8
10.3712)
45.7
Capital Facilities Project Unit One
55.1
39.50
21.8
Lodi Energy Center Project
255.0
17.03
43.4
TANC
COTP
396.7
1.92(3)
7.6
TOTAL* $ 1,181.4 10.32% $ 122.0
Columns may not add to totals due to independent rounding.
(1) Participation obligation is subject to increase upon default of another project participant.
Such increase shall not exceed, without the written consent of a non -defaulting participant, an accumulated
maximum of 25% of such non -defaulting participant's original participation.
(2) Participant's project entitlement remains the same but share of debt has increased to 10.64% due to change in debt participation
(3) Lodi's actual obligation differs slightly from this percentage due to varying shares of certain series of TANC bonds relating to each TANC
member -participant's taxable portion and each TANC member -participant's participation or non -participation in acquisition of assets from
Vernon.
Source: City of Lodi.
153
Table 4 A table showing a summary of operating results for the past five fiscal years.
CITY OF LODI
Operating Revenues
Rate Revenue
ECA Revenue
Other Revenue (3)
Total Operating Revenue
Operating Expenses
Purchased Power
Non -Power Costs (4)
Total Operating Expenses
Net Revenue Available for Debt Service
Parity Debt Service
2002 C & D, 2008 A Bonds
Total Net Debt Service
Debt Service Coverage
Remaining Revenue Available for Other Purposes
Non -Operating Expenses
In -Lieu Transfer to General Fund
Other Changes in Working Capital (5)
Net Cash Flow Before Capital Expenditures
Beginning Operating Reserve
Changes in GOR
Net Deposit/Withdrawal from Reserves
Ending Operating Reserve
ELECTRIC SYSTEM
SUMMARY OF OPERATING RESULTS i'i
Ending Fiscal Year June 30 (Dollars in 000s)
Actual 2007 (21 Actual 2008
$ 65,809 65,110
- 4,174
2,056 5,639
67,865 74,923
43,362
9,622
52,984
14,881
6,327
6,327
2.35
8,554
42,862
11,575
54,437
20,486
6,266
6,266
3.27
14,220
Actual 2009
$ 65,229
8,771
1,195
75,195
46,405
11,965
58,370
16,825
9,960
9,960
1.69
6,865
Actual 2010
$ 62,613
7,050
625
70,288
37,943
12,006
49,949
20,339
7,194
7,194
2.83
13,145
(6,779) (6,873) (6,942) (6,977)
(1,562)
213 7,347 (77) 6,168
3,632
1,625
213
$ 5,470
5,470
1,696
7,347
$ 14,513
14,513
(582)
(77)
$ 13,854
13,854
5,877
6,168
$ 25,899
Actual 2011
$ 59,676
2,491
1,140
63,307
35,282
13,115
48,397
14,910
7,232
7,232
2.06
7,678
(6,977)
701
25,899
1,854
701
28,454
Source: City of Lodi
(1) As defined in the Installment Purchase Contract, which may or may not be on the same basis as Generally Accepted Accounting Principles.
(2) Certain amounts have been recast to reflect corrected coverage amounts.
(3) Other revenues for FY 08 include $3.25 million for the sale of the City's rights to the NCPA Combustion Turbine #1 to Roseville.
(4) Non -power costs include cost of services provided by other departments and does not include depreciation and amortization expense.
(5) Consists of non-cash accounting entries.
154
Table 5 A table showing Lodi Electric Utility Department Rate Changes since November 1996.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
RATE CHANGES
Effective Date Percent Change
December 2007 Established Solar Initiative Surcharge of $0.00125 per kilowatt-hour
August 2007 Implemented monthly Energy Cost Adjustment
December 2005 Average 17% increase across all rate classes
December 2002 4.5% average rate increase
August 2001 Increased MCA for all but contract customers: 10% to 12% rate change
June 2001 Implemented MCA for residential and small commercial: 8% to 10% rate change
December 1998 5.00% rate decrease for small commercial/industrial customers
May 1998 2.50% general rate increase to fund public benefit programs
September 1997 4.5 to 5.5 cents per kilowatt-hour, non -demand, non -time -use, contract rate available for new large
commercial/industrial loads
December 1996 10% to 40% economic development discount on new small to medium commercial/industrial electric loads
November 1996 Economic Stimulus Rate Credit increased to 1.262 cents per kilowatt-hour from 0.4 cents per
kilowatt-hour for largest primary service customers (estimated 19% reduction)
Source: City of Lodi.
155
ANNUAL REPORT FOR WASTEWATER UTILITY
The Lodi Wastewater Utility has Continuing Disclosure requirements associated with its 2007 Series A Certificates of Participation and 2004
Series A Certificates of Participation. The annual report includes, by reference, the audited financial statement of the City of Lodi (including the
Wastewater Utility).
The annual report also contains the following five (5) tables as required in the Certificates:
1. A table setting forth the City's number of connections by user type for the past five fiscal years.
2. A table showing the proportion of service charge revenue by class of user for the most recent fiscal year (applicable only to the 2004
Series A issue).
3. A table showing the largest users by service charge revenues for the most recent fiscal year.
4. A table showing a schedule of service charges.
5. A table showing a summary of historic operating results and debt service coverage for the past five fiscal years.
Additionally, the Certificate for the 2007 Series A issue requires a description of any additional indebtedness incurred during the prior fiscal year
which is payable from the system net revenues on a parity with the installment payments.
Reporting of Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2011, none of the specified events have
occurred. Further, there is no knowledge on the part of the City Council, officers or employees of the City of any impending Significant Event that
would require disclosure under the provisions of the Certificates.
156
Table 1 A table setting forth the City's number of connections by user type for the past five fiscal years.
User Type
Residential
Commercial/Industrial
Total All Users
Source: City of Lodi
City of Lodi
Wastewater System
Number of Connections by User Type
as of June 30
and Percentage of Fiscal Year 2010-11 Service Charge Revenue by User Type
2007 2008 2009 2010 2011
22,571 22,277 22,227 21,974 21,956
1,562 1,847 1,815 1,768 1.785
% of FY 10/11
Service Charge
Revenue
73.7%
26.3%
24,133 24,124 24,042 23,742 23,741 100.0%
157
Table 2 A table showing the proportion of service charge revenue by class of user for the most recent fiscal year.
Source: City of Lodi
City of Lodi
Wastewater System
Proportion of Service Charge Revenues by Class of User
Fiscal Year 2010-11
Percentage of Total Annual Service
User Type Charge Revenue
Single Family
Residential 60.3%
Multiple Family Residential 13.4%
Commercial/Industrial 26.3%
Total 100.0%
158
Table 3 A table showing the largest users by service charge revenue for the most recent fiscal year.
City of Lodi
Wastewater System
Largest Users by Service Charge Revenues
Fiscal Year 2010-11
159
Percentage of
Total
Service Charge
Annual Service
User
Type of Business
Revenue
Charge Revenue
Cottage Bakery
Specialty bakery, frozen dough $
372,844
2.85%
Lodi Unified School District
K-12, adult education
369,879
2.83
General Mills
Cereals, bread mixes, snack foods
346,212
2.64
City of Lodi
Government
61,999
.47
Pacific Coast Producers
Private label fruit canning
46,167
.35
Miller Packing Company
Hot dog producer
39,170
.30
Lodi Memorial Hospital
Health Care
36,768
.28
Blue shield of California
Health Insurance
34,095
.26
Armourstruxx
Armor producer
27,059
.21
Archer Daniels Midland
Agricultural processor
24,548
.19
Total top ten users
$
1,358,741
10.38%
Total System
$
13,089,679
100.00%
159
Table 4 A table showing the schedule of service charges.
For Residential Users (per month):
1 Bedroom ..............................
2 Bedrooms ............................
3 Bedrooms ............................
4 Bedrooms ............................
5 Bedrooms ............................
6 Bedrooms ............................
7 Bedrooms ............................
For Commercial/Industrial Users:
Moderate Strength (annual per Sewage Service Unit (SSU).......
High Strength:
Flow (annual per MG) ............................................
BOD (annual per 1,000 lbs.) ....................................
SS (annual per 1,000 lbs.) .....................................
Grease Interceptor/Septic Holding Tank Waste within
City Limits (per 1,000 gal.) .....................................
Septic Holding Tank Waste Outside City Limits (per
1,000 gal.)...........................................................
Disposal to Storm Drain System (per MG) .................
Disposal to Industrial System:
Flow (per MG, annual basis) ....................
BOD (per 1,000 lbs., annual basis)............
Winery Waste (per 1,000 gallons) ............................
Service Charge
(effective July
1 2007
$16.03
21.37
26.71
32.06
37.40
42.74
48.08
160
$256.33
2,164.00
357.12
223.29
189.09
401.41
198.61
1,309.48
22.82
191.47
City of Lodi
Wastewater System
Schedule of Wastewater Service Charges
Service
Service Charge
Charge
(effective July
(effective July
1, 2008
16 2009
$16.65
$20.81
22.19
27.74
27.74
34.68
33.29
41.61
33.84
48.55
44.38
55.48
49.93
62.42
$266.28
$332.88
2,247.10
2,808.88
370.83
463.54
231.86
289.83
196.35
245.44
416.82
521.03
206.24
257.80
2,218.78
2,218.78
20.34
20.34
198.82
248.53
Service
Charge
(effective July
1 2010
$23.30
31.07
38.84
46.61
54.37
62.14
69.91
$372.84
3,145.95
519.16
324.61
274.89
583.55
288.74
2,485.03
22.78
278.35
Table 5 A table showing historic operating results and debt service coverage for the past five fiscal years.
Operating Revenues
Charges for Services
Non -Operating Revenues
Interest Income
Rent
Other
Total System Revenues
Operating Expenses
Personnel services
Supplies, Materials and services
Utilities
Total Operating Expenses
System Net Revenues
Parity Debt Service
1991 Installment Payments
2003 Installment Payments
2004 Installment Payments
2007 Installment Payments
Total Parity Debt Service
Debt Service Coverage
Non -Operating Expenses
Transfers (In)/Out
Total Non -Operating Expenses
Net Cashflow Before Capital Expenditures
Source: Financial Services Division
City of Lodi
Wastewater System
Historical Operating Results and Debt Service Coverage
Fiscal Years 2006-07 through 2010-11
2006-07 2007-08 2008-09 2009-10 2010-11
$8,523,530 $9,091,220 $9,276,217 $11,513,389
922,153
836,862
428,586
176,202
165,931
221,422
259,618
435,935
838,007
9,881,503
10,529,948
10,764,232
2,289,035
2,996,028
2,984,049
2,314,233
2,394,804
2,067,646
683,669
798,652
869,129
5,286,937
6,189,484
5,920,824
4,594,566
4,340,464
4,843,408
800,755
311,127
379,748
380,873
426,022
2,151,194
2,144,438
2,134,856
852,239
1,591,200
3,331,697
3,688,677
4,152,078
1.38
1.18
1.17
1,315,191
575,326
1,451,478
1,315,191
575,326
1,451,478
$(52,322)
$76,461
$(760,148)
161
298,337
472,578
12,284,304
2,800,891
2,532,246
847,167
6,180,304
6,104,000
381,400
2,138,700
1,631,500
4,151,600
1.47
1,451,478
1,451,478
$500,922
$13,089,679
220,600
3,198,194
16,508,473
3,257,618
1,955,464
758,934
5,972,016
10,536,457
381,393
2,147,600
1,588,750
4,117,743
2.56
1,451,480
1,451,480
4,967,234
Additional Indebtedness
The Wastewater Utility did not incur any additional indebtedness during the 2010-11 fiscal year which is payable from the system net revenues on
a parity with the installment payments.
162
ANNUAL REPORT FOR THE LODI PUBLIC IMPROVEMENT CORPORATION
The Lodi Public Improvement Corporation has Continuing Disclosure requirements associated with its 2002 Certificates of Participation. The
annual report includes, by reference, the audited financial statement of the City of Lodi.
The annual report also contains the following five (5) tables as required in the Certificates:
1. A table setting forth the approved budget and actual results for the most recent fiscal year.
2. A table showing the comparative statements of revenue, expenditures and changes in fund balance for the general fund for the past five
fiscal years.
3. A table showing the assessed valuations for the last five fiscal years.
4. A table showing the secured property tax collections for the past ten fiscal years.
5. A table showing the ten largest locally secured taxpayers for the last fiscal year.
Reporting of Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2011, none of the specified events have
occurred. Further, there is no knowledge on the part of the City Council, officers or employees of the City of any impending Significant Event that
would require disclosure under the provisions of the Certificates.
Table 1 A table setting forth the approved budget and actual results for the most recent fiscal year.
Please refer to the Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual on page 75 of this Comprehensive
Annual Financial Report.
163
Table 2 A table showing the comparative statements of revenue expenditures and changes in fund balance for the general fund for the
past five fiscal years.
Revenues:
Taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines, forfeits and penalties
Investment and rental income
Miscellaneous revenue
Total revenues
Expenditures:
Current:
General government
Public protection
Public works
Library
Parks and recreation
Debt service:
Interest and fiscal charges
Principal payments
Total expenditures
Deficiency of revenues under expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GENERAL FUND
LAST FIVE YEARS
2007
$ 20,594,293
83,964
16,091,446
1,854,575
1,241,051
380,375
210,495
40,456,199
2008
24,712,405
80,925
10,642,600
2,510,207
1,317,407
662,164
630,413
40,556,121
2009
23,516,164
61,783
8,967,410
1,055,137
1,415,174
231,181
446,404
35,693,253
2010
23,118,461
72,171
7,772,071
1,343,199
1,441,354
516,304
462,592
34,726,152
2011
23,061,164
83,395
10,032,523
1,035,220
1,404,307
455,923
480,028
36,552,560
8,893,677
9,545,370
6,922,096
6,411,741
6,478,159
21,775,531
23,771,574
24,463,771
23,854,905
24,091,472
3,871,311
3,935,366
2,967,402
1,471,779
1,421,238
1,587,714
1,672,910
1,499,720
1,322,052
1,357,473
3,597,718
3,826,450
2,160,035
2,234,349
2,191,102
41,464
273,823
40,041,238
414,961
4,937,314
(3,401,814)
1,535,500
1,950,461
4,368,941
$ 6,319,402
164
29,724
249,624
43,031,018
(2,474,897)
4,040,166
(2,575,809)
1,464,357
(1,010,540)
6,319,402
5,308,862
18,516
129,487
38,161,027
(2,467,774)
5,367,983
(4,442,883)
925,100
(1,542,674)
5,308,862
3,766,188
12,578
135,425
35,442,829
(716,677)
5,867,983
(4,632,278)
1,235,705
519,028
3,766,188
4,285,216
6,427
141,576
35,687,447
865,113
5,379,186
(4,383,110)
996,076
1,861,189
4,285,216
$ 6,146,405
Table 3 A table showing the assessed valuations for the last five fiscal years.
Please refer to the table shown in the Statistical Section on page 112.
Table 4 A table showing the secured property tax collections for the past ten fiscal years.
Please refer to the table shown in the Statistical Section on page 115.
Table 5 A table showing the ten largest locally secured taxpayers for the last fiscal year.
Please refer to the table shown in the Statistical Section on page 114.
ANNUAL REPORT FOR WATER UTILITY
The Lodi Water Utility has Continuing Disclosure requirements associated with its 2010 Series A and B Certificates of Participation. The annual
report includes, by reference, the audited financial statement of the City of Lodi (including the Water Utility).
The annual report also contains the following four (4) tables as required in the Certificates:
1. A table setting forth the City's number of accounts and revenues by user type for the past five fiscal years.
2. A table showing the largest users by service charge revenues for the most recent fiscal year.
3. A table showing a schedule of selected rates effective January 1, 2011.
4. A table showing a summary of historic operating results and debt service coverage for the past five fiscal years.
Additionally, the Certificate for the 2010 Series A issue requires a description of any additional indebtedness incurred during the prior fiscal year
which is payable from the system net revenues on a parity with the installment payments.
Reporting of Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2011, none of the specified events have
occurred. Further, there is no knowledge on the part of the City Council, officers or employees of the City of any impending Significant Event that
would require disclosure under the provisions of the Certificates.
166
Table 1 A table showing number of accounts and revenues by user type.
CITY OF LODI
WATER SYSTEM
Number of Accounts and revenues by User Type
Source: City of Lodi
167
Commercial/Industrial/
Municipal
Residential
Year Ending
Number of
Number of
December 31
Accounts
Revenue
Accounts
Revenue
2006
1,435
$1,806,309
21,588
$7,668,308
2007
1,445
2,043,731
21,533
8,715,928
2008
1,470
2,184,496
21,449
9,429, 594
2009
1,382
2,188,486
21,577
9,600,129
2010
1,383
2,097,001
21,622
9,604,412
Source: City of Lodi
167
Table 2 A table showing the largest users by service charge revenue for the most recent fiscal year.
City of Lodi
Water System
Largest Users by Service Charge Revenues
Fiscal Year 2010-11
168
Percentage of
Total
Service Charge
Annual Service
User
Type of Business
Revenue
Charge Revenue
Lodi Unified School District
K-12, adult education $
223,620
1.87%
City of Lodi
Government
153,419
1.29
Pacific Coast Producers
Private label fruit canning
118,037
0.99
General Mills
Cereals, bread mixes, snack foods
71,482
0.60
Cottage Bakery
Specialty bakery, frozen dough
43,417
0.36
Lodi Memorial Hospital
Health Care
40,857
0.34
Blue shield of California
Health Insurance
17,731
0.15
Temple Baptist Church
Church
15,110
0.13
CalTrans
Government
12,438
0.10
Miller Packing Company
Hot dog producer
12,184
0.10
Subtotal Top Ten Users
$
708,295
5.93%
TOTAL SYSTEM
$
11,940,022
100.00%
168
Table 3 A table showing selected rates effective January 1, 2011.
CITY OF LODI
WATER SYSTEM
Selected Rates Effective January 1, 2011
Percent Increase Current
Flat Rates ($/month)
Single Family Residential Unit ($/month)
1 Bedroom $28.54
2 Bedroom $34.28
3 Bedroom $41.09
Metered Water Rates
Service Charge ($/month)
Single Family Residential
Up to 3/4" Meter
$22.70
Multi -Family and Non -Residential
1" Meter
$36.85
1 1/2" Meter
$72.00
2" Meter
$114.35
Water Usage rates ($/CCF)
Single Family Residential
Tier 1 - 0 to 10 CCF/month
$0.88
Tier 2 -11 to 50 CCF/month
$1.32
Tier 3 - Over 50CCF/month
$1.74
Multi -Family and Non -Residential
All Water Usage
0.88
Source: City of Lodi.
169
Table 4 A table showing historic operating results and debt service coverage for the past five fiscal years.
CITY OF LODI
WATER SYSTEM
Historical Operating results and Debt Service Coverage
Fiscal Years 2006-07 through 2010-11
2006-07 2007-08 2008-09 2009-10 2010-11
Gross Revenues
Water Sales (1)
$10,039,706
$11,349,986
$11,787,140
$11,715,748
$11,940,022
Investment Earnings
83,347
72,823
258,552
103,640
83,374
Water Impact Mitigation Fees
119,837
30,783
13,086
270,863
14,803
Meter Retrofit Installation Charges
1,653,399
Other Revenues (2)
365,077
407,988
350,950
372,034
806,859
Total Gross Revenues
10,607,967
11,861,580
12,409,728
12,462,285
14,498,457
Operating and Maintenance Expenses
Personnel Services (3)
1,077,002
1,121,921
1,471,463
1,325,536
1,359,227
Supplies, Materials and Services (3)
3,128,256
2,905,860
2,490,875
1,981,880
2,590,222
New Treatment Plant Operations (net)
Utilities
698,063
779,845
804,767
733,653
652,296
Administrative Overhead
962,055
624,296
1,060,122
1,060,122
1,060,120
Total O & M Expenses
5,865,376
5,431,922
5,827,227
5,101,191
5,661,865
Net Revenue Available for Debt Service
4,742,591
6,429,658
6,582,501
7,361,094
8,836,592
Debt Service
1991 California DWR SRF loan (4)
228,012
228,012
228,012
228,025
1,433,395
2010 Bonds (5)
1,296,848
Total Net Debt Service
228,012
228,012
228,012
228,025
2,730,243
Debt Service Coverage (S)
Debt Service Coverage
20.80
28.20
28.87
32.28
3.24
Debt Service Coverage
(excluding impact mitigation fees)
20.27
28.06
28.81
31.09
3.23
Net Remaining Revenues Available for Capital
4,514,579
6,201,646
6,354,489
7,133,069
6,106,349
170
Capital Improvement Projects
Meter Retrofit Program (7)
-
-
582,000
919,555
Other Water System Improvements (8)
699,421
552,215
782,382
3,932,424
3,666,202
Total Capital Improvement Projects
699,421
552,215
1,364,382
3,932,424
4,585,757
Net Change in Reserve
3,815,158
5,649,431
4,990,107
3,200,645
1,520,592
Water Enterprise Fund (9)
Beginning Cash Balance
11,380,502
13,935,947
17,621,590
13,469,170
14,120,605
Ending Cash Balance
$ 13,935,947
17,621,590
13,469,170
14,120,605
12,807,412
(1) Water sales reflect Council -adopted rate increases of 2% effective January 1, 2011.
(2) Includes rent, sales of City property, discounts, water reimbursements, and damage to property, water tap fees, DBCP reimbursements,
and other miscellaneous revenues. DBCP reimbursements are expected to decline beginning in Fiscal Year 2012-13 as new plant
becomes operational and groundwater draws diminish. PCE/TCE litigation revenues are excluded from Fiscal year 2005-06 through
2009-10. Fiscal year 2009-10 reflects one-time adjustments from prior years.
(3) PCE/TCE litigation expenses are excluded from Fiscal Year 2006-07 through Fiscal year 2010-11.
(4) Debt service on 1991 Loan was paid off in full on October 1, 2010.
(5) Reflects total debt service for the 2010 Water Revenue Bonds net of the 35% interest rate subsidy for the Series 2010B bonds.
(6) Coverage calculated based on Net Revenues divided by net Debt Service and Net Revenues less mitigation fees divided by Net Debt
Service.
(7) Annual capital costs of transition to water meters. Program expected to be completed in Fiscal Year 2017-18.
(8) Excludes costs of the Project to be funded from proceeds of the Series 2010 Bonds.
(9) Water Enterprise Fund balance includes both operating and capital reserves and is presented on a cash basis. Cash position is expected
to increase substantially upon completion of the water meter installation program.
Source: City of Lodi
171
CITY OF LODI, CALIFORNIA
Report to City Council
For the Year Ended June 30, 2011
- CITY OF LODI, CALIFORNIA
Report to City Council
For the Year Ended June 30, 2011
Table of Contents
Page(s)
TransmittalLetter.......................................................................................................................................... l
RequiredCommunications.........................................................................................................................2-3
CurrentYear Recommendation.....................................................................................................................4
Status of Prior Year Recommendations.....................................................................................................5-8
=0
Certified Public Accountants.
Sacramento • Walnut Creek • Oakland • Los Angeles • Century City • Newport Beach • San Diego
City Council
City of Lodi, California
mgocpa.com
We have audited the financial statements of the governmental activities, the business -types
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, 2011, and have issued our report thereon
dated December 6, 2011. Professional standards require that we provide you with information about
our responsibilities under generally accepted auditing standards, Government Auditing Standards,
and OMB Circular A-133, as well as certain information related to the planned scope and timing of
our audit. We have communicated such information in our letter to you dated March 25, 2011.
Professional standards also require that we communicate to you the information related to our audit
that 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, 2011 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 year ended June 30, 2011, we identified a condition that we believe
warrants communication to the City Council. The Current Year Recommendation section of this
report summarizes that condition and our recommendation to address it. We also followed up on
our recommendations to address conditions we identified during previous years' audits. The status
of those recommendations is included in the Status of Prior Year Recommendations section of this
report. This report does not affect our report dated December 6, 2011, on the basic financial
statements of the City.
We also noted certain matters that we reported to management of the City of Lodi, in a separate
letter dated December 6, 2011.
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.
Sacramento, California
December 6, 2011
3000 S Street 2121 N. California Blvd. 505 14th Street 515 S. Figueroa Street 2029 Century Park East 1201 Dove Street 225 Broadway
Suite 300 Suite 750 5th Floor Suite 325 Suite 500 Suite 680 Suite 1750
Sacramento Walnut Creek Oakland Los Angeles Los Angeles Newport Beach San Diego
CA 95816 CA 95496 CA 94612 CA 90071 CA 90067 CA 92660 CA 92101
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications
For the Year Ended June 30, 2011
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. 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, 2011. We noted no transactions entered into by the City during the year for which there
is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the
financial statements in the proper period.
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 City's financial statements
were:
• The self-insurance liability is based on the development of amounts from various consultants'
actuarial studies.
• The pollution remediation obligation is based upon estimated cash flows determined by an
engineering consultant's remedial action plan.
• The actuarial pension data contained in Note 9 to the financial statements and required
supplementary information (unaudited) is based on actuarial calculations performed in
accordance with the parameters set forth in GASB Statement No. 50 and GASB Statement No.
27, Accounting for Pensions by State and Local Government Employers.
• The actuarial data for other postemployment benefits contained in Note 10 to the financial
statements and required supplementary information (unaudited) is based on actuarial calculations
performed in accordance with GASB Statement No. 45, Accounting and Financial Reporting by
Employers for Postemployment Benefits Other Than Pensions.
We evaluated the key factors and assumptions used to develop these estimates in determining that they
are reasonable in relation to the financial statements taken as a whole.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Management has corrected all such misstatements. In addition, none of the misstatements detected as a
result of audit procedures and corrected by management were material, either individually or in the
aggregate, to each opinion unit's financial statements taken as a whole.
2
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications (Continued)
For the Year Ended June 30, 2011
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be
significant to the financial statements or the auditor's report. We are pleased to report that no such
disagreements arose during the course of the audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated December 6, 2011.
Management 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.
Other Audit Findings or Issues
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.
Other Information in Documents Containing Audited Financial Statements
With respect to the supplementary information accompanying the financial statements, we made certain
inquiries of management and evaluated the form, content, and methods of preparing the. information to
determine that the information complies with accounting principles generally accepted in the United
States of America, the method of preparing it has not changed from the prior period, and the information
is appropriate and complete in relation to our audit of the financial statements. We compared and
reconciled the supplementary information to the underlying accounting records used to prepare the
financial statements or the financial statements themselves.
CITY OF LODI, CALIFORNIA
Report to City Council
Current Year Recommendation
For the Year Ended June 30, 2011
DEFICIT BENEFITS INTERNAL SERVICE FUND
Condition
For the year ended June 30, 2011, the revenue charged to user funds and/or departments by the City's
Benefits Internal Service Fund was $255,951 less than the CalPERS invoice billings of health insurance
premiums for active participants enrolled in the health care plans offered by CalPERS. Absent a
reconciliation of the enrolled participants in the CalPERS health care plans and the City's internal
payroll and Human Resources system, the costs related to the CalPERS invoice billings of health
insurance premiums could be permanently stranded in the internal service fund, and therefore, the user
funds and/or departments not being charged their proportionate share of the costs.
In addition, the City isn't recovering its annual OPEB costs of $944,589. from user funds and/or
departments.
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. This condition resulted in an increase in the net deficit of the Benefits Internal Service Fund of
$1,003,790 to $2,934,664.
Recommendation
Management and/or authorized employees should perform a monthly reconciliation of the enrolled
participants in the health care plans as reported by CalPERS in the monthly health insurance invoice
roster detail with the City's internal payroll system and Human Resources records to ensure accuracy and
completeness of the roster.
Furthermore, the City should develop a plan to begin charging funds and/or departments their share of
the annual OPEB costs as opposed to limiting the charges to their share of the contributions made.
Management Response
Procedures for an annual reconciliation and adjustment are in place. However, due to staff turnover at
year-end, the reconciliation and adjustment were not performed timely.
With regard to Other Post Employment Benefit (OPEB) costs, the City Council has chosen to operate on
a pay-as-you-go basis. The City understands and accepts that an impact of this choice is a deficit net
assets position in this internal services fund.
4
CITY OF LODI, CALIFORNIA
Report to City Council .
Status of Prior Year Recommendations
For the Year Ended June 30, 2011
The following is a summary of the status of prior years' recommendations.
FROM YEAR ENDED ,TUNE 30, 2005 -
INFORMATION TECHNOLOGY (IT)
Accounting System Development and Maintenance
Condition
While most procedures for the accounting system development and maintenance are in place, they are not
formally documented. Having the policies, procedures and standards formally documented should
address any ambiguity in implementation and reliance upon only a few key individuals.
Program changes are not always initiated, tested and approved by the functional users before being
applied to the production system.
The Information Systems (IS) Division Programmer is not restricted from making changes in the
production environment and is also responsible for transporting changes and updates from the test
environment to the production system.
Recommendation
Official policies, procedures and standards for the accounting system development and maintenance
should be documented and maintained. These policies, procedures and standards should ensure that:
o All new programs and changes are initiated and approved by the appropriate user management.
o The impact of new programs and updates are assessed in a test environment before
implementation in the production system.
o Programmers do not have update access to the production system, except for emergency fixes.
o Any emergency fix in the production system is properly logged.
o Program testing is reviewed and approved by someone other than the programmer.
o The process of moving programs into the production system is formal, well documented, and
performed by someone independent from programming.
Current Year Status
The IS Division drafted a formal change control and patch management policy that incorporates
procedures and standards as recommended, which was adopted by the City Council on December 15,
2010. Therefore, our recommendation is considered implemented.
Packaged Accounting Software and Systems Software — Selection Method
Condition
There is not currently a documented system and application software selection method outlined for the
City.
Recommendation
The City should document their system and application software selection processes and ensure that the
following areas are addressed:
o Business needs,
o Technical requirements,
o Analysis/comparison of several products
o Implementation issues, including conversion, and
o Cost/benefit analysis
CITY OF LODI, CALIFORNIA
Report to City Council
Status of Prior Year Recommendations (Continued)
For the Year Ended June 30, 2011
The City should pursue the needs assessment for the new financial and billing system as noted below, but
the procedures for system and application acquisition should be documented.
Current Year Status
The IS Division drafted a formal software selection and acquisition policy that incorporates procedures
and standards as recommended, which was adopted by the City Council on December 15, 2010.
Therefore, our recommendation is considered implemented.
Packaged Accounting Software and Systems Software — Test Environment
Condition
The IS Division has implemented a test environment for application software, but not for system
software. Update and patches are being applied directly to the production system.
Recommendation
Procedures to test updates to system software should be implemented, either on a separate machine or as
a partition with the current AS400, to ensure that updates and upgrades are not applied directly to the
production system without proper testing beforehand.
Current Year Status
The IS Division has drafted a formal change control and patch management policy that incorporates
procedures and standards as recommended, which was adopted by the City Council on December 15,
2010. Therefore, our recommendation is considered implemented.
Computer Operations — Disaster Preparedness/Business Continuity Plans
Condition
The City currently has no disaster preparedness or business continuity plans in place.
Recommendation
The City should work to develop a comprehensive disaster preparedness and business continuity plan.
The plan, upon completion, should be thoroughly tested and provisions made for periodic reviews of the
plan.
Current Year Status
The City performs its own disaster recovery by doing two nightly backups on tapes and one weekly full
backup. One copy of the nightly backup is stored in the IS Division and another copy in the Public Safety
Building. Although best practices recommend that the backup tapes be stored at least 20 miles from the
primary data center, the City has no plans to change the secondary storage site. This puts the City at
increased risk of losing financial information as the backup tapes are subject to many of the same
environmental risks as the primary data center, such as floods, large fires or earthquakes. The City has
developed a disaster preparedness plan, however the plan has not been fully tested. Therefore, our
recommendation is in the process of implementation.
Current Year Management Response
The City received grant money to update certain hardware and software that allows a high level of system
and data redundancy and has tested the redundancy of the systems. The City had planned to fully test the
disaster plan by December 31, 2010 but was unable to do so. The City explored options over the last
year to ensure that our systems can be recovered timely from the backup tapes. Unfortunately, the City
has been unable to identify a cost effective solution that provides the protections the City requires. The
City will continue to explore its options in this regard.
CITY OF LODI, CALIFORNIA
Report to City Council
Status of Prior Year Recommendations (Continued)
For the Year Ended June 30, 2011
Other Matters
Since 2005, the City has been in various stages of addressing our prior recommendations. Efforts to
implement several have been hampered by budgetary constraints and other higher priority undertakings.
Overall, of the four IT findings and recommendations from our 2005 review that remained last year, three
have been implemented and the remaining one is in the process of being implemented. The
recommendation in the process of implementation is expected to be completed before the end of fiscal
year 2011-2012.
FROM YEAR ENDED JUNE 30, 2004 -
CAPITAL ASSETS
Condition
During our audit of the City's financial statements for the year ended June 30, 2004, we noted that the
acquisition and construction of capital assets is maintained on a spreadsheet, outside of the City's
accounting system, which can lead to inaccurate recording and depreciation of capital assets.
Recommendation
We recommend, that the City place into operation the JDE fixed asset module that records the City's
capital assets and automatically calculates depreciation. The system would support the City's deprecation
method and automatically post accumulated depreciation expense to the General Ledger module for a
specified accounting period.
The system provides methods to track assets, their beginning cost, current value, and method of
depreciation. Some of the advantages include:
1. Flexible Asset Numbering System — an unlimited number of assets can be maintained. The
assets can be grouped by many types of categories for reporting purposes.
2. User Defined Asset Control - Accumulated depreciation, depreciation expense and asset
master accounts can be user specified for each asset.
3. Reports - variety of reports can be produced including a listing of all assets by type, category
and description, method of depreciation, and all other information maintained in the master
file. The module could be programmed to also print reports listing assets with original cost
and current book value plus calculated depreciation for a specified period.
To reduce operating overhead, the City should consider hiring temporary staff for data entry into the
capital assets module.
Current Year Status
Condition unchanged. Prior recommendation remains.
Current Year Management Response
While the City understands that its current practices are not optimal, the City lacks the resources to fully
implement the fixed asset module of its current financial system. Full implementation of fixed asset
accounting will be included in the future replacement of the existing financial system.
CITY OF LODI, CALIFORNIA
Report to City Council
Status of Prior Year Recommendations (Continued)
For the Year Ended June 30, 2011
FROM YEAR ENDED .TUNE 30,2010 -
FEDERAL TRANSIT ADMINISTRATION INDIRECT COSTS
Condition
We noted, during our review of the fiscal year 2003/2004 Federal Transit Administration (FTA)
apportionment that management had originally decided to use the apportionment to cover indirect costs.
Per our review of FTA guidelines, grantees who intend to seek FTA reimbursement for indirect costs
must prepare a cost allocation plan that has been approved by the FTA or another cognizant Federal
agency. Further inquiry determined that the cost allocation plan has not been approved in the prescribed
11—INT i1rlaf
Recommendation
We recommend that the City perform a review of all grants and make the determination if indirect costs
can be applied against grant funds.
Current Year Status
The City engaged a consultant for a five-year period to perform an A-87 compliant cost allocation plan
and indirect cost rate services and secure cognizant agency approval, therefore our recommendation is in
the process of implementation.
Current Year Management Response
The City and consultant.have not finalized the allocation bases for the A-87 compliant cost allocation
plan. Finalization is expected in fiscal year 2011/12.
CITY OF LODI
Agreed -Upon Procedures Report for
Gann Appropriations Limit
For the Fiscal Year Ended June 30, 2011
=0
Certified Public Accountants.
Sacramento • Walnut Creek • Oakland • Los Angeles • Century City • Newport Beach • San Diego mgocpa.com
City Council
Lodi, California
INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON
PROCEDURES RELATED TO THE ARTICLE XIII -B
APPROPRIATIONS 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, 2011. These
procedures, which were agreed to by City management and the League of California Cities (as presented
in its publication entitled Article XIII -B Appropriations Limitations Uniform Guidelines), were performed
solely to assist the City in meeting the requirements of Section 1.5 of Article XIII -B of the California
Constitution. The City's 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:
We obtained the completed worksheets setting forth the calculations necessary to establish
the City's appropriations limit and compared the limit and annual adjustment factors included
in those worksheets to the limit and annual adjustment factors that were adopted by resolution
of the City Council. We also compared the population and inflation options included in the
aforementioned worksheets to those that were selected by a recorded vote of the City
Council.
Finding: No exceptions were noted as a result of our procedures.
2. For the accompanying Appropriations Limit Worksheet, we added last year's appropriations
limit to the annual adjustment amount, and compared the resulting amount to this year's
appropriations limit.
Finding: No exceptions were noted as a result of our procedures.
3. We compared the current year information presented in the accompanying Appropriations
Limit Worksheet to the worksheets described in No. 1 above.
Finding: No exceptions were noted as a result of our procedures.
3000 S Street 2121 N. California Blvd. 505 14th Street 515 S. Figueroa Street 2029 Century Park East 1201 Dove Street 225 Broadway
Suite 300 Suite 750 5th Floor Suite 325 Suite 500 Suite 680 Suite 1750
Sacramento Walnut Creek Oakland Los Angeles Los Angeles Newport Beach San Diego
CA 95816 CA 95496 CA 94612 CA 90071 CA 90067 CA 92660 CA 92101
4. We agreed the prior year appropriations limit 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 of the City
and is not intended to be and should not be used by anyone other than these specified parties.
Sacramento, California
August 24, 2011
2
CITY OF LODI
APPROPRIATIONS LIMIT WORKSHEET
FOR THE FISCAL YEAR ENDED JUNE 30, 2011
Appropriation Limit, fiscal year ended June 30, 2010, as adopted $77,022,286
Adjustment factors:
Population factor, for fiscal year ended June 30, 2011, as adopted 1.0061
Inflation factor, for fiscal year ended June 30, 2011, as adopted 0.9746
Annual percentage increase 0.9805%
Annual adjustment (1,498,464)
Appropriation limit, fiscal year ended June 30, 2011 as adopted $75.523.822
2010/11 Comprehensive
Annual Financial Report
City Council
December 21, 2011
Auditor's Opinion
❑ City engaged an independent auditor
through a competitive process
❑ Macias, Gini, O'Connell, LLP has given
the City aclean' opinion for the year
■ Reviewed financial records and found
them to be in compliance will all rules
and regulations in all material respects
■ Financial statements fairly present the
balances and operations of the City
z
Status of City's Financial Position
Highlights of Financial Records
❑ General Fund
■ Unassigned Fund Balance of $5,,654,,136
❑ About $1.9 million higher than projected for
budget purposes
❑ 13.5% of General fund revenues
■ Sufficient to fund Catastrophic Reserve (8%)
■ Partially funds Economic Reserve
3
Status of City's Financial Position
Highlights of Financial Records
❑ General Fund (cont.)
■ Budget to Actual Variances
❑ Revenues $560,000 higher than budget
■ Sales taxes down about $130,000
■ Card room fees up about $58,000
■ Motor Vehicle In Lieu fees up about $205,000
■ Misc revenue up about $219,000
❑ Expenditure about $1.3 million under budget
■ About equally split between Salaries/Benefits and
Services/Supplies
■ Prudent management
El
Single Audit
❑ 'Clean" opinion
❑ No questioned costs
❑ Findings related to reporting
requirements
■ Certain reports not filed timely or
correctly
■ Some grants not properly classified
■ City will comply in future
5
Management Letter
❑ Review of City's Internal controls
■ New finding regarding Benefits Fund reconciliation
and deficit balance
❑ Reconciliation not timely due to staff turnover
❑ Deficit balance a result of accounting requirements
and Council policy
❑ 6 prior year findings
■ 3 closed with adoption of IT policies; 3 remain open
❑ IT disaster preparedness plan needs to be fully
tested
❑ Fixed asset module recommendation will not be
implemented as staffing is not available
❑ Indirect rates calculation in progress by consultant
A