HomeMy WebLinkAboutAgenda Report - December 19, 2012 I-01AGENDA ITEM
A% CITY OF LODI
COUNCIL COMMUNICATION
AGENDA TITLE: Review of City's Annual Financial Report (Fiscal Year 2011/12) by Macias, Gini &
O'Connell, LLP
MEETING DATE: December 19, 2012
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 department for
Fiscal Year 2011/12:
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 presentto 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.
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 19th year and
the California Society of Municipal Finance Officers (CSMFO) for the 13th year in a row. A copy of the
GFOA certificate is included in the 2011/12 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
fiduciary responsibilitiesto the public.
Jordan Ayers
Deputy City Manager
APPROVED:
Bartlam, City Manager
2011/12 Comprehensive
Annual Financial Report
City Council
December 19, 2012
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 $6,,232,,459
❑ About $2.5 million higher than projected for
budget purposes
❑ 14.9% 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 $684,,000 higher than budget
■ Sales taxes up about $390,000
■ Property taxes down about $300,000
■ Business license taxes up about $231,000
■ Card room fees up about $146,000
■ Motor Vehicle In Lieu fees down about $102,000
■ Strike team reimbursements down about $100,000
El
Status of City's Financial Position
Highlights of Financial Records
❑ General Fund (cont.)
■ Budget to Actual Variances (cont.)
❑ Expenditures about $1.4 million under budget
■ Salary and Benefits savings of about $1 million
■ Service and Supply savings of about $400,000
5
Single Audit
❑ 'Clean" opinion
❑ No questioned costs
❑ Findings related to reporting
requirements
■ Certain reports not filed timely or
correctly
■ City will comply in future
A
Management Letter
❑ Review of City's Internal controls
■ No new findings
❑ Prior year findings
■ 2 closed; 3 remain open
❑ Closed - Health Care cost reconciliation
❑ Closed - Indirect rate calculation
❑ Open - Deficit balance in Benefits Internal Services
Fund
❑ Open - IT disaster preparedness plan needs to be
fully tested
❑ Open - Fixed asset module implementation
FN
Questions?
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CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 3092012
CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Year Ended June 30,2012
JOANNE MOUNCE, MAYOR
ALAN NAKANISHI, MAYOR PRO TEMP
LARRY HANSEN, COUNCILMEMBER
BOB JOHNSON, COUNCILMEMBER
PHIL KATZAKIAN, 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 30,2012
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents
Letter of Transmittal v
Certificate of Achievement for Excellence in Financial Reporting xiii
Organization Chart of the City of Lodi xiv
Directory of Officials and Advisory Bodies xv
FINANCIAL SECTION
IndependentAuditor's Report 1
MANAGEMENTS DISCUSSION AND ANALYSIS
BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements:
Statementof NetAssets 17
Statementof Activities 18
Fund Financial Statements: 19
Balance Sheet — Governmental Funds 21
Reconciliation of the Balance Sheet of Governmental Funds to the Statementof NetAssets 22
Statementof Revenues, Expenditures and Changes in Fund Balances—Governmental Funds 23
Reconciliation of the Statementof Revenues, Expendituresand Changes in Fund Balances
of Governmental Funds to the Statement of Activities 24
Statement of NetAssets — Proprietary Funds 25
Statementof Revenues, Expenses and Changes in NetAssets — Proprietary Funds 26
Statementof Cash Flows — Proprietary Funds 27
Statement of Fiduciary NetAssets — Fiduciary Funds 28
Statementof Changes in Fiduciary NetAssets - Fiduciary Funds 29
Notes to Basic Financial Statements 31
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress— Pension Plan 75
Schedule of Funding Progress— OPEB Plan 76
Schedule of Revenues, Expendituresand Changes in Fund Balance — Budget and Actual — General Fund 77
Note to the Required Supplementary Information 78
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Combining Balance Sheet— Nonmajor Governmental Funds 80
Combining Statementof Revenues, Expendituresand Changes in Fund Balances— Nonmajor Governmental funds 81
Nonmajor Governmental Funds - Special Revenue Funds 82
Combining Balance Sheet—Nonmajor Governmental Funds — Special Revenue Funds 84
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30,2012
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 Statementof Net Assets - Internal Service Funds
96
Combining Statementof Revenues, Expenses and Changes in Fund Net Assets — Internal Service Funds
97
Combining Statementof Cash Flows- Internal Service Funds
98
Combining Statement of Fiduciary Net Assets - Private-PurposeTrust Funds
100
Combining Statement of Changes in Fiduciary Net Assets - Private-PurposeTrust Funds
101
Statementcf Changes in Assets and Liabilities - Agency Fund
102
STATISTICALTABLES (UNAUDITED)
Government -wide information:
104
Net Assets by Component- Last Ten FiscalYears
105
Changes in Net Assets - Last Ten FiscalYears
106
Fund information:
Fund Balances, Governmental Funds - Last Ten FiscalYears
108
Changes in Fund Balances of Governmental Funds - Last Ten FiscalYears
109
Tax Revenues by Source, Governmental Funds - Last Ten Fiscal Years
111
Assessed Value and Estimated Actual Value cf Taxable Property- Last Ten FiscalYears
112
Direct and Overlapping Property Tax Rates- Last Ten FiscalYears
113
Principal Property Taxpayers -Current Year and NineYears Ago
114
Property Tax Levies and Collections- Last Ten FiscalYears
115
Electricity Sold by Type of Customer- Last Seven FiscalYears
116
Ratios cf Outstanding Debt by Type - Last Ten FiscalYears
117
Ratios of General Bonded Debt Outstanding- Last Ten FiscalYears
118
Legal Debt Margin Information- Last Ten FiscalYears
119
Direct and Overlapping Governmental Activities Debt
120
Pledged -Revenue Coverage- Last Ten FiscalYears
121
Demographicand Economic Statistics- Last Ten FiscalYears
124
Principal Employers - CurrentYear and NineYears Ago
125
Full -Time Equivalent City Government Employees By Department- Last Ten FiscalYears
126
Operating Indicators by Function/Program/Department - Last Seven FiscalYears
127
Capital Asset Statistics by FunctionlProgramlDepartment Last Eight FiscalYears
129
SINGLE AUDIT REPORTS
Schedulecf Expenditurescf FederalAwards 132
Notes to the Schedulecf Expenditurescf FederalAwards 134
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30,2012
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 145
CONTINUING DISCLOSURES (UNAUDITED)
Annual Report for Electric Utility 151
Annual Report for Wastewater Utility 157
Annual Report for the Lodi Public Improvement Corporation and the Lodi Public Financing Authority 164
Annual Report for Water Utility 167
(This page intentionally left blank.)
CITY COUNCIL
JOANNE MOUNCE, Mayor
ALAN NAKANISHI, Mayor Pro
Tempore
COUNCILMEMBERS:
LARRY HANSEN
BOBJOHNSON
PHIL KATZAKIAN
December 6,2012
CITY OF LODI
CITY HALL, 221 WEST PINE STREET
P.O. BOX 3006
LODI, CALIFORNIA 95241-1910
(209) 333-6706
FAX (209) 333-6795
To the Honorable Mayor, Members of the City Council and the Manager
cf the City of Lodi:
KONRADT BARTLAM
City Manager
RANDIJOHL
City Clerk
STEVE SCHWABAUER
City Attorney
The Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2012, 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, 2012, 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 necessaryto 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 ENTITYAND SERVICES PROVIDED
The funds included in the CAFR are those deemed dependent upon the City and controlled by the City Council and reflect the City's financial
reporting entity in accordancewith 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:
Numbercf
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 62,825 and is contained in an area of 13.98 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 cf 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 80
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 newjobs.
A
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 EnterpriseZone with San Joaquin County.
MAJORGOALS, OBJECTIVESAND 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 Environmentfor Citizens
Ensure Efficient and Productive City Organization
Ensure PublicTrust, 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 PublicArts, Cultural and Recreational Opportunities Pursue Effortsto be Entrepreneurial
Provide Appropriate and Sufficient City Facilities Improve Customer Service
Develop Short and Long Range Operational Plans Continue to use Partnershipsto 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 2011-12. The following projects are underway and
will see significant progress or be completed in 2012.
Surface 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
Vii
and closed on a revenue bond issue to finance the construction. Construction began in March 2011 and the plant is estimated to begin delivering
treated water to customers in December 2012. Total cost for the plant is estimated to be $36.5 million.
Grape Bowl Improvements
The Grape Bowl is a stadium that was originally constructed using Work Project Administration Funding during the 1940's. The City continues to
improve and update the facility. Significant improvements to lighting, disability access and installation of an all-weather surface were completed in
prior years. Additional disability access improvements are scheduled for construction between November 2012 and June 2013. This $2.0 million
projectwill use a combination of Community Development Block Grant and local funds to construct a concession and restroom building, plaza area,
and disability access and seating on the south concourse.
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 and a Home Depot opened in March 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 a seven year period. 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. To date, approximately 6,000 meters have been installed.
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 cost approximately $4.6 million and was completed in December 2011.
FINANCIAL INFORMATION, MANAGEMENTAND CONTROL
A detailed understandingof the financial position and operating results of the City is provided in the following sections of this report. The following is
a brief description ofthe 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 responsiblefor 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 2011-12, 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 16% of revenues and working capital balances
in the Water and Wastewater enterprise funds of at least 25% of operating expenses. Based on a reserve policy adopted in March 2011, the target
for the Electricenterprisefund working capital is $28.7 million for fiscal year 2011-12. The goals allow for variationsfrom year-to-yearto accountfor
economic and fiscal changes. The General Fund maintained an unassigned fund balance of $6,232,459 or 17.03%, of operating revenues at the
end of fiscal year 2011-12.
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 investmentterms
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 Citys investments and compliance with City policy and state law. An important objective of the City's investment
policy is to achieve a reasonable rate of return on public funds while minimizing risks and preserving capital. In evaluating the performance of the
City's investment portfolio, investments are expected to yield a rate of return that regularly meets or exceeds an average rate of return on a three-
month U.S. Treasury Bill.
Appropriation Limitation
Article XIII B of the Constitution of the State of California (Proposition 4) provides for the limitation of expenditures by state and local governments.
Under the provisions of this article, City appropriations funded through tax sources may not exceed Fiscal Year 1979 appropriation levels except as
adjusted for increases in population and the growth in the California per capita income or non-residential assessed valuation due to new
construction within the City.
Excluded from the limitation are appropriationsfunded through charges for services, fines and forfeitures, grants, transfers of service responsibilities
between government agencies and indebtedness incurred prior to Fiscal Year 1979. Pursuantto subsequent legislation adopted after Article XIII B,
ix
the City is required to annually establish and adopt its appropriations limit by resolution. For 2011-12,the City's appropriations subject to limit were
$31,857,150nd the appropriation limitwas $77,891,7212baving appropriations at $46,034,572)elowthe limit.
Debt Administration
At June 30, 2012, the City had outstanding Certificates of Participation of $187,598,430.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 (1995COP) 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 $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 $21,225,00%nd 2002 Series D for $22,740,000tp
buy out the energy purchase agreement entered into by the City in January 2002 with Calpine.
On October 7,2003,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, 000f which $5,000,000
was for the upgrade of the City's wastewater facilities.
In 2004,the City issued $27,360,OO1n 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, 0001 Wastewater Certificates of Participation (2007A) to finance Phase III of the wastewater improvementsand to
refund the 1991 Certificates of Participation.
On July 24,2008,the City issued the 2008 Electric System Revenue Certificates of Participationto provide funds to currently refund the outstanding
$46,760, 00principal 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 $9,015,00ONater Revenue Certificates of Participation, 2010 Series A and $29,650,006vater 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 conductfinancing on a competitive basis, will seek an investmentgrade 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 availableto 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 2011-12 were made pursuantto 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
underthe Insurance Funds. At June30,20121he Insurance Fund had a net asset of $1,498,096.
INDEPENDENTAUDIT
The City Council requires an annual audit of the records and accounts of the City by an independent certified public accountant. To ensure internal
control, periodically the City conducts a request for proposal (RFP) process for auditing services. The accounting firm of Macias Gini & O'Connell
LLP was selected to perform this audit. The independent auditors' report precedes the basic financial statements and concludes that the City's
basic financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United
States of America.
Xi
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, 2011. 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 cf one year only. The City has received a Certificate of Achievement for the last nineteen
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 ProgrammerAnalyst and 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
%11
Certificate of
Achievement
for Excellence
in IFinanclal
Reporting
Presented to
City of Lodi
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30,201 1
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
4%�
President
W=
Executive Director
Library
Board City Attorney
Library
Parks, Rec. & Community
Cultural Development
Services
i Numberof Positions
Authorized: 410
Budgeted: 381
City of Lodi
Citizens
City Council
City Manager
Electric Utility I I Public Works
Financial
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Division
xiv
City Clerk Boards and
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Deputy City
Managerllnternal
Services Director
I Fire I I Police
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DIRECTORY OF OFFICIALS AND ADVISORY BODIES
CITY COUNCIL
Joanne Mounce
Alan Nakanishi
Lary Hansen
Bob Johnson
Phil Katzakian
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
Lary Rooney
Jeff Hood
Wally Sandelin
Elizabeth Kirkley
Konradt Bartlam
Mark Helms
xv
Mayor
Mayor Pro Temp
Council Member
Council Member
Council Member
Loci Improvement Committee
Lodi Arts Commission
Youth Commission
Lodi Senior Citizens' Commission
City Manager
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City Attorney
City Clerk
Library Services Director
Fire Chief
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Cultural Services Director
Public Works Director
Electric Utility Director
Community Development Director
Police Chief
(This page intentionally left blank.)
FINANCIAL SECTION
The Financial Section is comprised of the Independent Auditors' Report, Management Discussion and Analysis,
Basic Financial Statements, including the notes, required Supplementary Information, and Supplementary
Information which includes Combining and Individual Fund Statements and Schedules.
Certified Public Accountants.
Sacramento
3000 S Street, Suite 300
Sacramento, CA 95816
916.928.4600
Walnut Creek
Oakland
LA/Century City
The Honorable Members of City Council Newport Beach
City of Lodi, California San Diego
INDEPENDENT AUDITOR'S REPORT Seattle
We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining
fiind inforniation of the City of Lodi, California (City), as of and for the year ended Jane 30, 2012, 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 Atidifing 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 fiend information of the City, as of June 30, 2012, and the respective changes in
financial position, and where applicable, cash flows, thereof for the year then ended in conformity with accounting principles generally accepted in the United
States of America.
In accordance with Government Auditing Standards, we have also issued our report dated December 6, 2012 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 AuditLV Standard's and should be considered in assessing the results of our audit.
www.mgocpa.com
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 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
inforniation 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 Oigani=ations, 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. I n our opinion, the inforniation 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, 2012
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, 2012,
FINANCIAL HIGHLIGHTS
• The assets of the City exceeded its liabilities at the close of the 2012 fiscal year by $201,709,559 (net assets). Of this amount,
$38,168,914 is unrestricted net assets deficit.
• The City's total net assets increased by $1,766,184 in fiscal year 2012.
• As of June 30, 2012, the City's governmental funds reported combined ending fund balances of $20,443,592, an increase of $1,357,090 in
comparison with the prior year. Of this amount, $5,369,566 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 $6,288,953, of which $6,232,459 is unassigned or 17.03 % of total
general fund revenues of $36,588,199.
• The City's total long-term liabilities decreased by $6,081,673 (2.2%) 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.
3
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, recreation and cultural services. 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 Fiduciaryfunds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the
government -wide financial statements. Most of the City's basic services are reported in governmental funds. These statements, however, focus
on C Ih)ow cash and other financial assets can readily be converted to available resources and (2) the balances left at year-end that are available
for spending. Such information may be useful in determining financial resources available in the near future to finance City programs.
Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the
information presented for governmental funds with similar information presented for governmental activities in the government -wide financial
statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the
governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a
reconciliation to facilitate this comparison between governmental funds and governmental activities.
The City maintains several individual governmental funds organized according to their type (special revenue, capital projects and debt service).
Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures,
and changes in fund balances for the general fund which is considered to be a major fund. Data from the remaining governmental funds are
combined into a single, aggregated presentation. Individual fund data for each of the non -major governmental funds is provided in the form of
combining statements elsewhere in this report.
The City adopts an annual budget for its general fund and special revenue funds. Budgetary comparison statements have been provided for the
general fund and the special 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.
4
• Internal Service funds are used to report activities that account for various employee benefits and self-insurance, and fleet activities of
the City. Because these activities predominantly benefit governmental rather than business -type functions, they have been included
within the governmental activities in the govern ment-widefi nancial 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 other post employment benefits (OPEB) to its employees, and schedules
comparing budget to actual amounts in the General Fund.
Combining Statements
The combining statements in connection with non -major governmental funds and fiduciary funds are presented immediately following the required
supplementary information on pensions.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The City assets exceeded liabilities by
$201,709,559 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
City cf Lodi's Net Assets
Governmental
Activities
2012 2011
Business -type
Activities
2012 20-U
Total
2012 2011
$ 35,198,588
33,913,523
103.092.730
130,456,950
$ 138,291,318
164,370,473
128,857,069
136,064,911
225,752,808
197,586,365
354,609,877
333,651,276
164,055,657
169,978,434
328,845,538
328,043,315
492,901,195
498,021,749
40,168,249
40,399,841
233,741,227
239,591,308
273,909,476
279,991,149
3,729,658
5,667,115
13,552,502
12,420,110
17,282,160
18,087,225
43,897,907
46,066,956
247,293,729
252,011,418
291,191,636
298,078,374
107,587,069
16,176,191
(3,605,510)
$ 120,157,750
114,164,912 109,582,092 104,858,175 217,169,161 219,023,087
14,894,802 6,533,121 5,302,731 22,709,312 20,197,533
(5,148,236)
123,911,478
(34,563,404) (34,129,009) (38,168,914) (39,277,245)
81,551,809 76,031,897 $ 201,709,559 199,943,375
Assets. The City's total assets decreased by $5,120,554 or 1.03%. The increase is primarily due to the following:
Governmental activities. Total assets for the governmental activities had a decrease of $5,922,777 resulting largely from the transfer of storm
drain activities from the Street Fund ($2,229,572) and the related capital assets ($1,877,191) to the Wastewater Fund. Other insignificant
activities offset the difference.
Business -type activities. Total assets for the business -type activities had an increase of $802,223 or .24%. Capital assets increased by
$28,166,443 primarily from buildings and improvements and machinery and equipment offset by the decrease in current and other assets of
71
$27,364,220, mainly from the decrease of restricted assets held by fiscal agent from the proceeds of the 2010 Water Certificates of Participation
($21,358,322) for the construction of the Surface Water Treatment Facility; decrease in cash and restricted cash due to other major projects, i.e.;
construction of a biosolids facility ($3,688,071); water meter program ($6,328,558); the decrease in development impact fees ($2,530,871); offset
by the transfer of storm drain activities from the Street Fund ($2,229,572)and related capital assets ($1,877,191)to the Wastewater Fund; and the
increase in charges for services of $2,219,625. Other insignificant activities offset the difference.
Liabilities. The City's total liabilities decreased by $6,886,738 or 2.31 %. The decrease is primarily due to the following:
Governmental activities. Total liabilities for the governmental activities decreased by $2,169,049. This is attributed to decrease in self-insurance
liabilities of $336,429; decrease in unearned revenues from Prop 1 B of $807,447, in Energy Efficiency Block grant $8,195, and in Local Law
Enforcement Block grant, $59,267; decrease in compensated absences, $329,890; and decrease in accrued payments for various street projects,
$637,315. Other insignificant activities offset the difference.
Business -type activities. Total liabilities for the business -type activities decreased by $4,717,689 or 1.87%. The decrease is primarily attributable
to the principal payments towards the various certificates of participations, $5,475,000. 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 $1,766,184 or 0.88%.
The largest portion ($217,169,161) 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, $22,709,312 (11.26%) represents resources that are subject to external restrictions on how they may
be used. The remaining balance of unrestricted deficit amounts to $38,168,914. 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.
Referto page 10 for analysis of the business -type activities unrestricted net assets.
7
Revenues
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Propertytaxes
Othertaxes
Grants and contributions not restrictedto
specific programs
Other
Total revenues
Expenses
General government
Public protection
Publicworks
Community development
Library
Parks and recreation
Intereston long-termdebt
Electric
Wastewater
Water
Transit
Total expenses
Changes in net assets before special item and
transfers
City of Lodi's Change in NetAssets
8,953,983
Governmental
8,953,983
Business -type
1,689,440
1,810,063
1,928,824
Activities
3,618,264
Activities
48,363,055
Total
98,453,515
2012
2011
2012
2=
2012
2011
$ 4,661,080
5,685,056
89,800,503
87,391,833 $
94,461,583
93,076,889
2,299,800
2,235,980
4,213,932
3,982,740
6,513,732
6,218,720
5,024,837
6,737,432
3,206,279
5,150,118
8,23],116
11,887,550
12,102,780 12,697,676
10,825,658 10,363,488
12,102,780 12,697,676
10,825,658 10,363,488
9,277,277
8,953,983
9,277,277
8,953,983
2,184,288
1,689,440
1,810,063
1,928,824
3,994,351
3,618,264
46,375,720
48,363,055
99,030,777
98,453,515
145,406,497
146,816,570
9,380,968
8,261,967
9,380,968
8,261,967
25,432,210
25,112,684
25,432,210
25,112,684
10,247,617
9,305,242
10,247,617
9,305,242
1,003,008
972,855
1,003,008
972,855
1,381,524
1,354,904
1,381,524
1,354,904
2,912,632
5,778,165
2,912,632
5,778,165
1,032,716
1,075,064
1,032,716
1,075,064
62,599,298
63,399,665
62,599,298
63,399,665
17,440,897
11,686,782
17,440897
11,686,782
7,953,480
8,187,613
7,953,480
8,187,613
4,255,963
4,132,004
4,255,963
4,132,004
51,390,675
51,860,881
92,249,638
87,406,064
143,640,313
139,266,945
(5,014,955)
(3,497,826)
6,781,139
11,047,451
1,766,184
7,549,625
8
Special item- gain on sale of parkland
Transfers
Changes in net assets
Net assets at beginning of year
Net assets at end of year
Analvsis of Changes in Net Assets
320,739
1,261,227 6,657,202 (1,261,227) (6,657,202)
320,739
(3,753,728) 3,480,115 5,519,912 4,390,249 1,766,184 7,870,364
123,911,478 120,431,363 76,031,897 71,641,648 199,943,375 192,073,011
120,157,750 123,911,478 81,551,809 76,031,897 $ 201,709,559 199,943,375
Governmental activities.
Net assets for the governmental activities decreased by $3,753,728 in the current fiscal year.
The key factors impacting the change in net assets are:
• Decreased development activity.
• Decrease in personnel costs.
• Charges for services decreased by 18%, a net amount of $1,023,976 from the prior fiscal year largely from decreased development
activity resulting in decreased building permit fees ($263,807), engineering and inspection fees ($226,905), plan check fees ($136,757),
planning fees ($137,649), fire permit review and inspection fees ($68,823); decrease in revenues from vehicle code -moving violation,
$114,919; decrease in revenue received from the Hutchins Street Square at the box office, $54,784 and specialty classes, $16,804.
• Capital grants and contributions decreased by $1,712,595 or 25% from prior fiscal year. Decrease in capital contributions was mainly
attributable to a reduction in receipt of Prop 1B funds used for various street overlays and improvements ($1,033,006), and funds from the
American Recovery and ReinvestmentAct (ARRA) used for the Lodi Avenue reconstruction project ($776,336) received in the prior year.
• Property taxes — decreased by $594,896 or 5% 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.
• Other taxes increased by $462,170 primarily from the increase in business license tax ($223,594), increase in card room tax ($158,315)
and transient occupancy tax ($60,286).
• Grants and contributions not restricted to specific programs increased by $323,294 or 4%. Sales tax revenues increased by $582,538
offset by a decrease in State motor vehicle license fees by $259,244. The overall increase in sales tax is attributed to a general increase
in consumer spending and steady increase in auto sales spurred by low interest rates, easy credit and manufacturer's incentives. The
State motor vehicles license fee revenue was eliminated by SB89 effective July 1, 2011, as part of the state's effort to solve its budget
problems.
• Other revenues increased by $494,848 or 29% from prior fiscal year. This increase was attributable to the increase in agricultural lease
revenue from Lima Ranch and Kirschenman Farms, ($137,578); increase in rent in Parks, Recreation and Cultural Services ($103,936);
increase in late fees collected ($99,563); and increase in donations ($76,285). The difference is offset by various small decreases in other
revenues.
Expenses for governmental functions totaled $51,390,675 a decrease of $470,206 or 1 %from the prior fiscal year.
E
Business -type activities.
Business -type activities increased the City's net assets by $5,519,912 in the current year. The key elements of this increase are:
• Transfer of storm drain activity from the Streets Fund to the Wastewater Fund ($2,229,572) and related capital assets ($1,877,191).
• 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 increased in the current year and by way of the ECA charge, operating
revenue increased by $2,084,018.
• Wastewater and water rates were increased during the year resulting in increased operating revenues of $190,537 and $143,204,
respectively.
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 projectsfunds.
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $20,443,592, an increase of
$1,357,090 in comparison to the prior year resulting from the decrease in capital outlay and overall decrease in operating expenditures offset by
the decrease in total revenues.
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
$6,232,459 while total fund balance was $6,288,953. 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 18.65% of total general fund expenditures.
The fund balance of the General Fund increased by $142,548 during the current fiscal year. Key factors in this growth areas follows:
• Total expenditures decreased by $2,263,424, as a result of an overall decrease in spending, the transfer of parks activities to the Parks,
Recreation and Community Services Special Revenue Fund and the decrease in personnel costs due to early retirement incentives.
• Transfers out to the Capital Outlay Reserve Fund in the amount of $ 2,269,821 for various capital projects and the elimination of the start
up costs associated with the RedevelopmentAgency.
10
Proprietary Funds
The City's proprietary funds providethe same type of information found in the govern ment-wide financial statements, but in more detail.
Unrestricted net assets at the end of the year for the Wastewater Fund were $12,274,135 and for the Transit Fund, $3,203,015. The Electric Fund
unrestricted net assets deficit was $8,750,916, the Water Fund was $41,289,638 and the Internal Services Funds unrestricted net assets deficit
was $2,078,003.
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
appropriationsaf $619,050. The increase in appropriations can be briefly summarized as follows:
• $600,000 increase in public protection
• $19,050 increase in library
Significant differences between the final budget and the actual revenues and expenditures can be briefly summarized as follows:
• Taxes — a favorable variance of $97,598 was largely due to the increased receipts from the card room ($146,275), increase in business
license tax ($231,655), increase in cable TV franchise fees ($19,010), increase in transient occupancy tax ($86,185) and increase in
waste removal franchise fees ($21,168) offset by a decrease in property taxes ($300,215), decrease in in -lieu of vehicle license fees
($79,598), and decrease in real property transfer tax ($23,157).
• Intergovernmental revenues — a favorable variance of $289,064 was mainly due to an increase in sales tax ($389,598) offset by the
decrease in state motor vehicle in -lieu revenue ($102,061).
• Charges for services — an unfavorable variance of $134,354 resulting from a decrease in engineering inspection fees ($37,036) and the
$100,000 budgeted annually for strike team reimbursement. These funds are contingent upon the occurrence of a significant fire event
within the state.
• Investment and rental income — a favorable variance of $355,900 resulted from the increase in interest earnings ($21,638) and rental
revenue from the reallocation of rental income from water and wastewater to the General Fund ($199,495) and revenue from Lima Ranch
and Kirschenman Farms, ($137,578).
• For expenditures, a favorable variance between the final budget and actual expenditures of $1,352,347 was due to savings from several
vacancies and the continued overall effort to reduce spending and costs.
11
CAPITALASSETS AND DEBT ADMINISTRATION
Capital assets
The City's investment in capital assets for its governmental and business -type activities as of June 30, 2012, amounts to $354,609,877 (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
$20,958,601, a 6.28% increase(a 5% decrease in governmental activities and 14% increase in business -type activities) as shown in the table
below.
Changes in Capital Assets, Net of Depreciation
Governmental Activities Business-typeActivities Total
2012 2011 2012 2011 2012 2011
Land
$ 23,693,292 $
23,693,292 $
5,535,718 $
5,535,718 $
29,229,010 $
29,229,010
Buildingsand Improvements
37,729,107
37,460,196
32,016,153
25,069,129
69,745,260
62,529,325
Machinery and Equipment
1,495,080
1,633,494
148,320,501
98,016,026
149,815,581
99,649,520
Vehicles
872,518
839,298
1,179,412
1,668,994
2,051,930
2,508,292
infrastructure
61,364,827
60,880,644
61,364,827
60,880,644
Work of Art
304,907
304,907
304,907
304,907
Construction in Progress
3,397,338
11,253,080
38,701,024
67,296,498
42,098,362
78,549,578
Total
$ 128,857,069 $
136,064,911 $
225,752,808 $
197,586,365 $
354,609,877 $
333,651,276
A significant increase in machinery and equipment 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; and the water meter installation project. The increase in buildings
and improvements is due to the completion of various renovations.
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 $187,598,430. Of this amount, $21,025,000 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 $166,573,430 from the business -type activities consists of $38,441,606 for the Water Fund; $53,501,762 for the
Wastewater Fund; and $74,630,062 for the Electric Fund.
City of Lodi's Outstanding Debt
Governmental Business -type
Activities activities Total
Certificates of Participation $ 21,025,000 166,573,430 187,598,430
The City's total bonded debt decreased by $5,869,904 during the currentfiscal year.
Bond Rating
In June 2010, Standard & Poor's Rating Services affirmed the rating on outstanding electric utility debt instruments of 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 $38,665 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 improvementof 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 51-56 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 cf purchasing and implementation of a single answer point for development permits. The City also reduced its
workforce by 19% over the past eight years, from 470 full-time budgeted employees in 2004-05 to 381 full-time budgeted employees in 2012-13.
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 completion of a Surface Water Treatment Plant, various electrical system maintenance projects, water meter installation and street
resurfacing. The 2012-13 budget proposes as many projects as possible focusing on maintenance and replacement of existing facilities and
projectsthat reduce the City's recurring operational costs.
The City Council has 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 2012-13 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 City has negotiated new agreements with
all eight bargaining units whose contracts expired during the fiscal year, along with modifying the benefits for Executive, Council Appointees and
Confidential employees. The only bargaining unit whose agreement did not expire during the fiscal year was the International Brotherhood of
Electrical Workers (IBEW). Their current agreementwill expire on December 31, 2013. Key elements of the new agreements include employees
paying their full share of retirement costs by the end of the agreement, capping City -paid medical costs at the January 2012 levels and creating a
lower second-tier retirementformula.
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 temporary 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 $3.0 million for FY 2011-12. Consequently, the City has largely avoided employee layoffs and drastic
service cuts so common in other cities.
As the City renegotiated with its bargaining units, three principal issues were addressed: fiscal sustainability, transparency and operational
discretion.
Historically, the City has paid for 100 percent of pension costs on behalf of the employees. Under concessions, each bargaining group paid
various portions of employee pension costs. The City sought to have all employees paying their full share of pension costs by the end of the term
of their agreement. All bargaining units with signed successor agreements have approved this term.
The City also sought to establish a second-tier retirement benefit for newly -hired employees. The second tier approved by the bargaining units for
Public Safety employees was 3% @ 55 formula with final compensation based upon a 36 -month average. Miscellaneous employee bargaining
units approved a second-tier retirement based upon a 2% @ 60 formula.
The City has also used early retirement to reduce work force. Over the course of the last four years, the City has offered a retirement incentive
multiple times to selected employee classifications. As employees have accepted the incentive, the City has left the positions vacant. A total of
38 employees have taken advantage of the retirement incentive.
14
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 roof and gutter replacement projects in City Hall and the jail, a retrofit of a portion of the unused
space in the former public safety building and resurfacing of the parking lot at City Hall. Additionally, the FY 2012-13 budget allocates $245,000
toward the replacementof the financial and billing systems. The above projects total just over'$700.000.
Costs beyond the Citv's control —While the revenues have increased slightly, the cost of retirement and insurance continue to rise. CaIPERS has
recently revised its estimated investment return rate from 7.75% to 7.5%. The impact of this revision will increase the costs for the City. CalPERS
has stated it will phase in this increase over a two-year period, beginning in FY 2013/14, and build it into the base rates for years beyond that. The
City expects its employer costs to increase between $500,000 and $750,000 as a result of this rate change.
A second cost increasethat is a cause of concern is medical insurance. While the City has negotiated a medical insurance cap with its bargaining
units, costs are expected to increase and impact the net pay of the workforce.
A third cost increase that is a cause of concern is worker's compensation. The City is self-insured for worker's compensation costs. There has
been a gradual increase in the cost and severity of claims and the City expects that the actuarial liability will also increase. For budgetary
purposes, $500,000 was added to the current budget.
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.
The City's unemployment rate continues to track roughly 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,
contactthe Financial Services Division of the City of Lodi at 310 W. Elm Street, Lodi, California, 95240.
WC
(This page intentionally left blank.)
BASIC FINANCIAL STATEMENTS
The Government -wide Financial Statements provide a broad overview cf the City's financial position and operating results. Information is
grouped by governmental activities or business -type activities.
The Fund Financial Statements report information about the City's Governmental Funds, Proprietary Funds, and the Fiduciary Fund.
The notes have an integral role in disclosing information essential to the fair presentation of the Basic Financial Statements.
GOVERNMENT -WIDE FINANCIAL STATEMENTS
ASSETS
Cash and investments
Accounts receivable, net
Propertytax 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
TOTALASSETS
LIABILITIES
Accounts payable and accrued liabilities
Accrued salaries and wages
Accrued interest
Unearned revenue
Long-term liabilities:
Due within one year
Due in more than one year
TOTAL LIABILITIES
NET ASSETS
Invested in capital assets, net of related debt
Restricted for:
Capital projects
Debt service
Other purposes
Unrestricted (deficit)
TOTAL NETASSETS
C r1.Y OF LODI
STATEMENT OF NET ASSETS
June 30,2012
Governmental
Business -type
Activities
Activities
Total
$ 29,643,464
31,006,529 $
60,649,993
3,226,290
6,702,582
9,928,872
10,447
10,447
35,305
44,028
79,333
(1,264,025)
1,264,025
557,149
1,640,335
2,197,484
1,691,898
43,674,755
45,366,653
1,159,709
245,388
1,405,097
11,576,432
11,576,432
130,219
3,381,492
3,511,711
8,132
4,875
13,007
3,552,289
3,552,289
27,395,537
44,236,742
71,632,279
101,461,532
181,516,066
282,977,598
164.055.657
328.845.538
492,901,195
2,813,951
630,948
255,889
28,870
4,081,067
36,087,182
43,897,907
107,587,069
13,957,147
1,691,898
527,146
(3,605,510)
$ 12Q.157,750
The notes to the financial statements are an integral part o fthis statement. 17
8,253,467
2,820,768
2,478,267
7,089,270
226,651,957
247,293,729
109,582,092
6,533,121
(34,563,404)
81,551,809
11,067,418
630,948
3,076,657
2,507,137
11,170,337
262,739,139
291,191,636
217,169,161
13,957,147
8,225,019
527,146
(38,168,914)
$ 201,709,559
Functions/Programs
PRIMARY GOVERNMENT:
Governmental activities:
General government
Public protection
Publicworks
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 30,2012
Net (Expense) Revenue and
Program Revenues Changes in Net Assets
Operating Capital
Charges for Giants and Grants and Governmental Business -type
Expenses Services Contributions Contributions Activities Activities Total
9,380,968
I,718.073
32,022
56,500
(7,574,373)
$ (7,574,373)
25,432,210
500,420
I,261,428
321,882
(23,348,480)
(23,348,480)
10,247,617
165,975
975,762
4,617,556
(4,488,324)
(4,488,324)
I'003,008
992,809
3,536,287
81I,376
a0, 199)
(10,199)
1,381,524
42,720
30,588
3,206,279
(1,308,216)
(1,308,216)
2,912,632
1,241,083
6,513,732
28,899
(1,642,650)
(1,642,650)
1,032,716
(1,032,716)
(1,032,716)
51,390,675
4,661,080
2,299,800
(39,404,958)
(39,404,95
62,599,298
64,251,368
15,600
I,285,434
2,953,104
2,953,104
17,440,897
13,280,216
1,627,930
220,978
(3,939,703)
(3,939,703)
7,953,480
12,083,226
662,045
888,491
5,680,282
5,680,282
4,255,963
I85,693
3,536,287
81I,376
277,393
277,393
92,249,6384,213,932
548,836
36,200,066
3,206,279
4,971,076
4,971,076
$ 143,640,313
94,461,583
6,513,732
8,231,116 (39,404,958)
4,971,076 $
4,4
General revenues:
Taxes:
Property taxes
Franchisetaxes
Business license tax
Transient occupancy tax
Grants and contributions not restricted to specific programs
Investmentearnings
Other
Transfers
Total general revenues and transfers
Change in net assets
Net assets, beginningof year
Net assets, end of year
The notes to the financial statements are an integral part of this statement
18
12,102,780
12,102,780
8,71 I ,543
8,71 I ,543
1,627,930
1,627,930
486,185
486,185
9,277,277
9,277,277
132,043
565,919
697,962
22052,245
1,244,144
.3,296,389
1,261,227
(1,261,227)
35,651,230
548,836
36,200,066
(3,753,728)
5,519,912
I,766;84
123,911,478
76,031,897
199,943,375
120,157,750
81,551,809 $
201,709,559
FUND FINANCIAL STATEMENTS
FUND FINANCIAL STATEMENTS
Governmental Fund Types
Governmental funds consist of the General Fund, special revenue funds, debt service fund and capital projects
funds.
Major Governmental Fund:
General Fund
This fund is maintained to account for all financial resources that are not restricted as to their use. This includes
property and sales taxes, business tax receipts, franchise taxes and various subventions such as Motor Vehicle In -
Lieu fees received from the State of California. With the exception of grant programs, General Fund resources
can be utilized for any legitimate governmental purpose.
Proprietary Fund Types
Proprietary funds consist of the enterprisefunds and the internal service funds.
Major Enterprise Funds include:
Electric Fund
The City established this fund in order to account for the provision of electric services to the residents of the
City. All activities 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.
19
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.
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.
20
ASSETS
Cash and investments
Restricted assets
Receivables:
Accounts, net
Propertytaxes
Interest
Due from other funds
Due from other governmental agencies
Loans receivable
Inventory
Other assets
Total assets
LIABILITIESAND FUND BALANCES
Liabilities:
Accounts payable and other liabilities
Accrued salaries and wages
Due to other funds
Advances from other funds
Deferred revenue
Total liabilities
Fund balances:
Nonspendable
Inventory
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 30,2012
Other Total
General Governmental Governmental
Fund Funds Funds
$ 5,253,099 14,278,256$ 19,531,355
1,691,898 1,691,898
2,971,718
245,967
3,217,685
10,447
6,288,953
10,447
10,575
13,031
23,606
827,178
364,994
1,192,172
128,492
428,657
557,149
2,918,866
1,159, 709
1,159, 709
1,050
1,050
6,310
1,822
8,132
$ 9,207,819
18,185,384$
27,393,203
$ 2,266,412
407,475$
2,673,887
630,948
6,288,953
630,948
$ 9,207,819
1,192,172
1,192,172
1,264,025
1,264,025
21,506
1,167,073
1,188,579
2,918,866
4,030..745
6,949,611
1,050 1,050
6,310 6,310
12,797,438 12,797,438
1,691,898 1,691,898
527,146 527,146
50,184
50,184
6,232,459
(862,893) 5,369,566
6,288,953
14,154,639 20,443,592
$ 9,207,819
18,185,384$ 27,393,203
The notes to the financial statements are an integral part of this statement. 21
CITY OF LODI
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NETASSETS
June 30,2012
Amounts reported for governmental activities in the statement of net assets are
different because:
Fund balances - total governmental funds
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds
Nondepreciable capital assets
Depreciable capital assets, net
Long-term liabilities are not due and payable in the current period
and therefore are not reported in the governmental funds as follows:
Compensated absences
Long-term debt
Intereston long-term debt is not accrued in the funds, but rather is
recognized as an expenditurewhen 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 managementto charge the costs of general
liability insurance, workers' compensation insurance, health benefits insurance,
other insurance and the cost of operating and maintaining the City's fleet to
individual funds. The assets 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. 22
$ 20,443,592
27,395,537
101,429,694
(6,698,728)
(21,270,000)
(255,889)
1,159,709
(2,046,165)
120,157,750
CITY OF LODI
STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES
GOVERNMENTALFUNDS
Year ended June 30,2012
The notes to the financial statements are an integral part of this statement.
23
Other
Total
General
Governmental
Governmental
Fund
Funds
Funds
Revenues:
Taxes
$ 22,928,438
$
22,928,438
Licenses and permits
79,745
606,162
685,907
Intergovernmental revenues
10,449,364
4,840,100
15,289,464
Charges for services
682,156
2,744,373
3,426,529
Fines, forfeits and penalties
1,355,101
1,900
1,357,001
investment and rental income
807,270
456,536
1,263,806
Miscellaneous revenue
286,125
526,966
813,091
Total revenues
36,588,199
9,176,037
45,764,236
Expenditures:
Current:
General government
6,007,327
2,812,877
8,820,204
Public protection
24,923,155
326,333
25,249,488
Publicworks
1,112,569
3,061,438
4,174,007
Community development
1,036,610
1,036,610
Library
1,380,972
1,380,972
Parks and recreation
2,254,641
2,254,641
Capital outlay
2,960,626
2,960,626
Debt service:
interest and fiscal charges
1,039,016
1,039,016
Principal payments
630,000
630.000
Total expenditures
33,424,023
14,121,541
47,545,564
Excess (deficiency)of revenues over (under) expenditures
3,164,176
(4,945,504)
(1,781,328)
Other financing sources (uses):
Transfers in
5,370,230
9,115,777
14,486,007
Transfers out
(8,391,858)
(2,955,731)
(11,347,589)
Total other financing sources (uses)
3,021,628
6,160,046
3,138,418
Net change in fund balances
142,548
1,214,542
1,357,090
Fund balances, beginning of year
6.146.405
12,940,097
19,086,502
Fund balances, end of year
$ 6,288,953
14,154,639 $
20,443,592
The notes to the financial statements are an integral part of this statement.
23
CITY CIE' LODI
RECONCILIATION CIE' THE STATEMENT OF REVENUES,
EXPENDITURESAND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
Year ended June 30,2012
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 contributionsand depreciation expense are as follows:
Capitalized capital outlays
Capital asset contributions
Depreciation expense
Book value on transferred capital assets
Long-term debt proceeds, net of discounts, provide current financial resourcesto 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.
Repaymentsof principal are as follows:
Certificatesof participation principal
Internalservice funds are used by managementto charge the costs of certain activities, such as health benefits
and self-insurance, costs of operation and maintenanceof the City's fleet, to individualfunds.
The net revenue (expenses) of the internal servicefunds are reportedwith
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 previousyear.
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. 24
1,357,090
2,960,626
516,079
(8,805,908)
(1,877,191)
630,000
1,079,185
51,385
328,706
6,300
$ (3,753,728)
ASSETS
Currentassets:
Cash and investments
Restricted cash and investments
Restrictedassets with fiscal agents
Receivables:
Accounts. net
Interest
Duefrom other governmental agencies
Advance receivable
Loans receivable
Inventory
Otherassets
Total current assets
Noncurrentassets:
Restricted assets with fiscal agents
Advances to otherfunds
Deferred charges
Capitalassets,net:
Nondepreciable
Depreciable, net
Total capital assets
Total noncurrentassets
TOTAL ASSETS
LIABILITIES
Current liabilities:
Accounts payableand other liabilities
Accrued interest
Uneamed revenue
Self-insuranceI iabi lity
Accrued compensated absences
Certificatesof participation payable
Total current liabilities
Noncurrent liabilities:
Self-insurance liability
Accrued compensated absences
Certificatesof participation payable
Net OPEB obligation
Pollution remediation obligation
Total noncurrent liabilities
TOTAL LIABILITIES
NETASSETS (DEFICIT)
I nested i n capital assets. net of related debt
Restricted:
Debt service
Unrestricted (deficit)
TOTAL NETASSETS (DEFICIT)
$
C I NOF LODI
STATEMENT OF NETASSETS
PROPRIETARYFUNDS
June 30,2012
Governmental
Activities-
Business-typeActivities-Enterprise Funds Internal
NonmaiorFund Service
Electric Wastewater Water Transit Total Funds
2,143,190
12,085,917
4,883,369
2,209
11,576,432
245,388
3,138,291
34,074,796
12,513,936
872.978
822.049
13,670
12,465,350
15,197,920
13,348,090
823.846
23,546
55,170
11.974 231,227
3,600 1,275
14,238,207 42,146,424
3,884,053 $ 31.006.529 $ 10,112,109
15,197,920
26,306,985
173,318
6,702,582
8.605
4,603
44.028
11.699
1,585,165
1,640,335
1,209,025
11,576,432
2,316,801
245.388
394.080
3,381,492
129.169
763,785
4,875
38,529,926
5,647,139
96,106,566
10,261,582
The notes to the financial statementsare an integral pan of this statement. Y8
2,169,850
2,169,850
55,000
1,209,025
1,264,025
2,316,801
841,408
394.080
3,552,289
763,785
4,294,177
38,529,926
648.854
44,236.742
43,673,441
91,996,840
33,172,244
12,673,541
181,516,066
31,838
44,437,226
96,291,017
71,702,170
13,322,395
225,752,808
31,838
46,754,027
99,357,275
73,305,275
13,322,395
232,738.972
31,838
80,828,823
113,595,482
115,451,699
18,969,534
328,845,538
10,293,420
1,722,694
452.433
5,329,746
748.594
8,253,467
140,064
1,976,483
663,568
180.717
2,820,768
868,218
1,610,049
2,478,267
1,520,134
270,355
180.632
8.522
22,675
482,184
43,290
4,298,253
1,489,133
8191700
6,607,086
8,267,785
2,785,766
7,206,903
2,381,318
20,641,772
1,703,488
6,951,697
628.064
690.869
62.806
1,381,739
62,807
70,331,809
52,012,629
37,621,906
159,966,344
3,621,593
65,303,874
65,303,874
70,959,873
52,703,498
102,925,780
62.806
226,651,957
10,636,097
79,227,658
55,489.264
110,132,683
2,444,124
247,293,729
12,339,585
3,818,960
45,832,083
46,608,654
13,322,395
109,582,092
31.838
6,533,121
6,533,121
(8,750,916)
12,274,135
(41,289,638)
3,203,015
(34,5.63,4.04)
(2,078,003)
$ 1,601,165
58,106,218
5,319,016
16,525,410$
81,551,8093
2,04( 6,1651
The notes to the financial statementsare an integral pan of this statement. Y8
C I N OF LODI
STATEMENTOF REVENUES, EXPENSESAND
CHANGES IN NET ASSETS
PROPRIETARYFUNDS
Year ended June 30,2012
The notes to the financialstatements are an integral partofthis report.
26
Governmental
Activities -
Business -type Activities - Enterprise Funds
Internal
Nonmajor Fund
Service
Electric
Wastewater
Water
Transit
Total
Funds
OPERATING REVENUES
Charges for services
$ 64,251,368
13,280,216
12,083,226
185,693 $
89,800,503 3
11,948,810
OPERATING EXPENSES
Personnel services
5,098,744
3,130,012
1,856,131
291,495
9,684,310
1,051,644
Supplies, materialsand services
9,716,954
2,818,041
1,781,622
2,921,075
17,237,692
6,948,196
Utilities
39,468,262
710,622
693,657
61,893
40,934,434
1.575
Depreciationand amortization
4.050.718
4.322.270
1,432,152
981,500
10,796,640
1.448
Claims
3,025,843
TOTAL OPERATING EXPENSES
58,344,678
10,980,945
5,763,562
4,255,963
79,345,148
11,028,706
OPERATING INCOME (LOSS)
5,906,690
2,299,271
6,319,664
(4,070,270)
10,455,355
920.104
NONOPERATING REVENUES (EXPENSES)
Investmentincome
164.280
216,108
172.478
13,053
565,919
44,020
Interestexpense
(4,254,620)
(2,715,428
(2,189,918)
(9,159,959)
Rent
4,200
4,200
Operatinggrants
15,600
662,045
3,536,287
4,213,932
Losson disposal of capital assets
(3,744,531)
(3,744,531)
Other revenues
789,196
69,841
285,093
95,814
1,239,944
115,061
TOTAL NONOPERATING REVENUES (EXPENSES)
(3,285,544)
(6,174,003)
(1,070,302)
3,649,354
6,880,495
159,081
INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS
2,621,146
(3,874,732)
5,249,362
(420,916)
3,574,860
1,079,185
Capital contributions
1,285,434
2,098,169
888,491
811,376
9,089,870
Transfers in
2,229,572
Transfersout
(2,856,390)
(1,451,480)
(1,060,120)
(5,367,990)
Net capital contributionsand transfers
p,570,956)
2,876,261
(171,629)
111.1,376
1,945,052
Change in net assets
1,050,190
(998,471)
5,077,733
390,460
5,519,912
1,079,185
NETASSETS(DEFICIT)-BEGINNINGOFYEAR
550,975
59,104,689
241,283
16,134,950
76,031,897
(3,125,350)
NETASSETS(DEFICIT)- END OFYEAR
$ 1,601,165
58,106,218
5,319,016
16,525,410 $
81,551,809$
(2,046,165)
The notes to the financialstatements are an integral partofthis report.
26
Cash flows from operating activities:
Receiptsfrom customers and users
Receiptsfrom interfund services provided
Cash paid to suppliersfor goods & Services
Payments to employees
Paymentsfor interfund services provided
Net cash provided by (used in) operating activities
Cash flows from noncapitalfinancing activities:
Operatinggrants
Repaidto other funds
Receivedfrom otherfunds
Rent of City property
Transfers in
Transfers out
Netcash provided by (used in) noncapitalfinancing activities
Cash flows from capital and related financing activities:
Fees receivedfor water meter installations
Acquisition and construction of capital assets
Fees receivedfrom developers
Capital grants received
Principal payments on debt
Interest payments on debt
Netcash provided by (used in) capital and relatedfinancing 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
Reconciliationto 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)
Adjustmentsto reconcileoperating income(loss)to
net cash provided by (used in) operating activities:
Depredation and amotiiation
Otherrevenues
Change in assets and liabilities:
Increase in loans receivable
(Increase)decrease in accounts receivable
Decrease in advance receivables
Decreasein due from other govemmentalagencies
Increase in inventory
Decrease in other assets
Increase (decrease) in accounts payableand other liabilities
Increase (decrease)incompensatedabsences
Increase in self-insurance liability
Decreasein pollution remediationobligation
Increase in net OPEB obligation
Net cash provided by (used in) operating activities
Noncash Investina.Capital and Financino Activities
Capital asset contributions
Book value of disposed capital assets
Capital assets transferred in from govemmentalactivities
The notes to the financial statements are an integral pan of this statement
CITY OF LODI
2,299,271
675,816
675.816
(2,436,698)
STATEMENT OF CASH FLOWS
(28,268,956) (678.597)
(37,130,533)
176.660
220,978
PROPRIETARY FUNDS
509.067
789.196
69,641
RZ99,146
Year ended J une 30,2012
(3,270,000)
(1,430,000)
(775,000)
(5,475,000)
(4,021.114)
(2,687,571)
(2,191,856)
(8,900,541)
Governmental
Business-typeActivities-
Enterprise Funds
(49,0 2,045)
Activities-
9,337
1,289,640
Nonmajor Fund
Internal Service
Electric wastewater
Water
Transit
Total
Funds
$ 65,053,947 13,317,083
12,538,701
281.507 $
91,191,238 $
124.398
300,000
(623.256)
300,000
11,948,810
(49,556,415) (2,929,737)
(1,883,635)
(2,973,649)
(57,343,436)
(9,747,114)
Is 10.1 1941 (3176,066)
(3.410; (644,653)
(1.847.609)
(665,706)
(291.414)
(46,463)
(10,418,283)
(1,360,232)
(1,052,828)
(495,445)
(2,450)
(46,054)
8.522
81
662,045 5,308,060 5,970,105
(55,000) (55,000)
16.148 16,148
4,200 4,200
2,229,572 2,229,572
(2,856,3 (1,451,480) (1,060,120) (5,367,990)
5,312,260
115.508 180.250 150.325 9.532 455.615 41,587
(1,599,106) (2,172,906) (22,538,418) 2,912,322 (23,396,108) 1,314,853
15,828,213 15,559,820 63,549,778 97173195,909,542 8,797,256
$ 2,143,190 12,513,936 12,465,350 3,884,053 $ 31,006,529 $ 10,112,109
15,197,920 15,197,920
12,085,917 872,970 13,348,090 26,306,985
$ 14.229.107 13,386,914 41,011,360 3,684,053 $ 72311.434 $ 10,112,109
5,906,690
2,299,271
675,816
675.816
(2,436,698)
(5,746,282)
(28,268,956) (678.597)
(37,130,533)
176.660
220,978
111,429
509.067
789.196
69,641
RZ99,146
1.299,146
(3,270,000)
(1,430,000)
(775,000)
(5,475,000)
(4,021.114)
(2,687,571)
(2,191,856)
(8,900,541)
(9,551,152)
(9,642-875)
(30,448,587) 620.549
(49,0 2,045)
115.508 180.250 150.325 9.532 455.615 41,587
(1,599,106) (2,172,906) (22,538,418) 2,912,322 (23,396,108) 1,314,853
15,828,213 15,559,820 63,549,778 97173195,909,542 8,797,256
$ 2,143,190 12,513,936 12,465,350 3,884,053 $ 31,006,529 $ 10,112,109
15,197,920 15,197,920
12,085,917 872,970 13,348,090 26,306,985
$ 14.229.107 13,386,914 41,011,360 3,684,053 $ 72311.434 $ 10,112,109
5,906,690
2,299,271
6,319,664
(4,070,270) $
10,455,355 $
920,104
4,060,718
4,322,270
1,432,152
981,500
10,796,640
1,448
789.196
69,641
285.093
95.814
1,239,944
115,061
(84,969)
(84,969)
(976,457)
(99,303)
(142,068)
(1,217,828)
9,337
1,289,640
1,289,840
65,399
65,399
(586.393)
(308)
(36,555)
(623.256)
(4,353)
930
312.450
313,380
296.753
(45.419)
532,769
(37,144)
746,959
(495,445)
(2,450)
(46,054)
8.522
81
(39.901)
(1,184)
121,493
(570.276)
(570,278)
606.805
$ 10,692,928
6,666,627
8,141,751
(3,030,019) $
22,371,287 $
1,273,266
$ 1,108,774
101,246
$
1,210,020
3,744.531
3,744,531
1,877,191
1,877,191
CITY OF LODI
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
June 30,2012
ASSETS
Cash and investments
Receivables:
Interest
TOTALASSETS
LIABILITIES
Agency obligations
TOTAL LIABILITIES
NET ASSETS
The notes to the financial statements are an integral part of this statement. 28
Private -Purpose
Trust Funds
$ 258,724 $
258,724
258,724$
Agency Fund
366,130
535
366,665
366,665
366,665
$
CITY OF LODI
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
Year ended June 30,2012
ADDITIONS
Investmentand rental income
DEDUCTIONS
Current
Library
CHANGE IN NETASSETS
NET ASSETS, BEGINNING OF YEAR
NETASSETS, END OF YEAR
The notes to the financial statements are an integral part of this statement. 29
Private -Purpose
Trust Funds
$ 5,813
9,534
(3,721)
262,445
$ 258,724
(This page intentionally left blank.)
NOTES TO THE FINANCIAL STATEMENTS
CITY OF LODI
Notes to Basic Financial Statements
June 30,2012
(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 30,2012
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-Wideand 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 <Ic}arges 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 cf 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 measurementfocus.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of
accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they
are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers property tax revenues
to be available if they are collected within 60 days of the end of the current fiscal year. All other revenues are considered to be available if they
are generally collected within 120 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as
under accrual accounting. However, debt service expenditures, as well as expenditures related to vacation, sick leave, claims and judgments,
are recorded only when payment is due.
32
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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 fund:
The General Fund is the City's primary operating fund. It accounts for all financial resources of the City except those required to be
accounted for in another fund.
The City reports the following major proprietary (enterprise) funds:
The Electric Fund accounts for the provision of electric services to the residents of the City. All activities necessary to provide such
services are accounted for in this fund, including but not limited to, source of supply, overhead, systems maintenance, customer service,
engineering, administration, capital improvements, and maintenanceand debt service.
The Wastewater Fund accounts for the provision of wastewater collection and treatment services to the residents of the City. All
activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations,
maintenance, 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 accountfor the City's claims, benefits and fleet services.
The Fiduciary Funds accountfor 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
Library Board as trustee; and to account for assets held by the City in accordance with a trust agreement on behalf of the
Hutchins Square. These funds can only be spent in accordancewith the trust agreements.
33
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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 following subsequent private -sector guidance for their business -type activities and
enterprise funds, subjectto this same limitation. The City has elected notto 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) 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.
(e) 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.
34
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
(t) Restricted Assets with FiscalAgents
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, 85tuaranteed investment contract held in the Wastewater Fund which is a long-
term investment.
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 representthe proceeds of the 2002 Improvement bonds restricted for debt service. I n the
Wastewater fund, the restricted assets represent the proceeds of the 20036, 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 representthe proceeds of
the 20104 and 201 CB Certificates of Participation issued for the purpose of providing funds to pay the cost of a new Water Treatment Facility.
(g) Property Taxes
San Joaquin County is responsible for assessing, collecting and distributing property taxes in accordance with enabling legislation. Revenue
received is based on an allocation factor calculated by the County under the provisions of Proposition 13 plus a percentage of the increase in
market value in specific areas. The City's property tax is liened based on the assessed value listed as of the prior January 1st for all real and
personal property located in the City. Property sold after the assessment date (January 1 st) is reassessed and the amount of property tax
assessed is prorated. The assessed value at January 1, 2010 ppon which the 2011 levy was based, was $4,967,856, 000.
Secured property taxes are levied on October 1 and are due in two installments on November 1 and February 1. The tax becomes delinquent
after December 10 and April 10, respectively. Unsecured property tax is levied on July 1, due on July 31 and becomes delinquent after August
31.
Property taxes levied for the year ended June 30, 2012, are recorded as receivables, net cf 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 agreementwith 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
reconcilingthe cities' balances at June 30. As part of the agreement, the County keeps the penalties and interest on the delinquenttaxes.
(h) Due From/Due To Other Funds, Advances To/Advances From Other Funds, and Internal Balances
During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. In the fund
financial statements, these receivables and payables are classified as "due from other funds" or "due to other funds." Long-term interfund loans
35
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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.
(i) Transfers
In the fund financial statements, interfund transfers are recorded as transfers in (out) except for transactions that are described below:
Charges for services are recorded as revenues of the performing fund and expenditures of the requesting fund. Unbilled costs are
recognized as an asset of the performing fund at the end of fiscal year.
Reimbursementsfor 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.
G) Long-term Obligations
In the government -wide financial statements and in the proprietaryfund type financial statements, long-term debt and other long-term obligations
are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund statement of net assets. Bond
premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of
the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related
debt. Gains or losses occurring from advance refunding are deferred and amortized as an expense for both governmental and business -type
activities.
(k) 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.
36
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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 30,2012, a total of twelve loans to industrial and commercial customers have been approved.
(I) 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).
(m) Inventory
Other governmental funds inventories are recorded at cost and are recognized as expenditures when consumed rather than when purchased.
For the proprietary fund types, inventories are recorded at cost using the weighted average cost method, which approximates market, and
expense is recognized when inventories are consumed in operations.
(n) Deferred Charges
Deferred charges reported in the Electric Enterprise Fund include costs incurred in connection with the issuance of the 2008 Certificates of
Participation Series amortized over 24 years. The deferred charges reported in the Wastewater Enterprise Fund include costs incurred on the
issuance of the 20036 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 and B amortized over 30 years.
(o) Capital Assets
Capital assets, which include land, buildings and improvements, machinery and equipment, vehicles, infrastructure (e.g., streets, streetlights,
traffic signals, sidewalks, and bridges), and electric lines, wastewater lines and storm drains are reported in the applicable governmental or
business -type activities columns in the government -wide financial statements and in the proprietary funds financial statements. Capital assets
are defined by the City as assets with individual cost of $3, 000or more and have an estimated useful life in excess of two years. Such assets
37
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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 cf capital assets is provided on the straight-line basis over the following estimated useful lives:
Years
Buildingsand improvements 3-40
Machinery and equipment 2-40
Vehicles 5-15
Infrastructure 10-50
(p) CompensatedAbsencesNacation 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.
(q) Self -Insurance
The City is self-insured for general liability, workers' compensation, dental benefits, unemployment and long-term disability. Various City funds
are charged premiums for the City's self-insurance liability, which is accounted for 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.
(r) 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 improvementof the assets.
38
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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.
(s) 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. 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, 2012
and classified fund balances into the following five categories:
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 cf decision-making authority'; which the City considers to be an ordinance passed by the Lodi City Council.
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.
The City does not have a policy on the order of spending of unrestricted amounts when an expenditure is incurred for which amounts in any of
the unrestricted fund balance classifications could be used. Therefore, by default under GASB Statement No. 54, the City uses committed
resourcesfirst, then assigned resources and unassigned resources last as they are needed.
39
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
It is the City's policy to maintain an unassigned fund balance in the General Fund of at least 16% of revenues 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
$28.7 million. The policy allows for variations from year-to-year to accountfor 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 designate General Fund balance of a minimum of 8% of annual General Fund revenues. This reserve may only be drawn upon
pursuant to an emergency as declared underthe Municipal Code.
Economic reserve - To maintain the City's economic viability and to meet seasonal cashflow shortfalls, the City shall designate General Fund
economic reserve balance cf 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. Funding may only be disbursed upon a resolution of the City Council.
Once fully funded, ff these reserves fall below 5% of annual revenues, the City Manager shall prepare a plan within three months of approval of
the City's Financial Statements. This plan will restore the 5% within 12 months and the 8% within 24 months.
(t) Statement of Cash Flows
A statement of cash flows is presented for proprietary fund types. For purposes of reporting cash flows, the City considers all highly liquid
investmentswith maturities of three months or less when purchased and investments maintained in the pool to be cash equivalents.
(u) 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.
40
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
(2) CASH AND INVESTMENTS
Cash and investmentsas of June 30, 2012 are classified in the accompanying financial statements as follows:
Statement of net assets:
Cash and investments
Restricted assets
Fiduciary funds cash and investments:
Private-purposetrust funds
Agency fund
Total cash and investments
Cash and investments as cf June 30, 2012 consist of the following:
Cash on hand
Depositswith financial institutions
Investments
Total cash and investments
(a) Authorized investments
$ 60,649,993
45,366,653
258,724
366,130
$ 106,641,500
$ 2,471
8,120,334
98,518,695
$ 106,641,500
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, State cf California Local Agency Investment Fund (LAIF), InvestmentTrust of California (CALTRUST), 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 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 and concentration of credit risk.
41
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
Maximum Maximum% of
Permitted Investments/Deposits Maturity Portfolio
U.S. Treasury Obligations
5 years
100%
U.S. Agency Securities
5 years
100%
Banker's Acceptances
180 days
40%
Negotiable Certificates of Deposit
5 years
30%
Commercial Paper
270 days
40%
California State LocalAgency Investment Fund (LAIF)
indefinite
100%
Money Market Mutual Funds
Indefinite
20%
Guaranteed investment contracts (GICs)
5 years
100%
Medium term Notes
5 years
30%
InvestmentTrust of California (CALTRUST)
Indefinite
100%
(b) Investments Authorized by Debt Agreements
Maximum Investment
in One issuer
25%
$50m peraccount
Investments of debt proceeds held by bond trustee are governed by the provisions of the debt agreements as 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 30,2012
Investment as of June 30,2012
LAI F
CALTRUST
Money Market Mutual Funds
Held by bond trustee:
LAI F
Money Market Mutual Funds
Medium Term Notes
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
$ 46,782,586
8,000,000
138,052
2,652,097
17,641,738
1,309,836
$ 76,524,309
Maturity
One to Five Years
16,000,000
754,762
1,819,455
1,135,994
2,169,850
21,880,061
Investments in equities are shares of stock received by the Library as an endowment from a private citizen.
(d) Credit Risk
Total
$ 46,782,586
24,000,000
138,052
2,652,097
17,641,738
754,762
1,819,455
2,445,830
2.169.850
98,404,370
114,325
$ 98,518,695
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. The U.S. Treasury obligations are not considered to have credit risk under GASB Statement No. 40,
however, the U.S. treasury obligations and U.S. Agency securities are rated AA+ by S&P. The medium term notes are rated Aaa by Moody's
and AA+ by S&P. The CALTRUST Short term fund is rated "AA/S1+" by S&P while the CALTRUST Medium term fund is rated "A or better."
In accordance with the City's investment policy in selecting authorized investments, consideration must be given to credit ratings and
collateralization of applicable instruments, however, the City does not have a minimum credit rating limitations policy.
43
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
(e) Concentration cf 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.
(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 provisionfor 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. $4,797,116 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 LAI F.
(g) Investments in Investment Pools
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, 2012 was $21.9 billion. LAIF is part of the California Pooled investment
Account (PMIA), which at June 30, 2012 had a balance of $60.5 billion. Of this amount, 3.47% 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 investmentswas 270 days as of June 30,2012.
44
(3)
(4)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
The Local InvestmentAdvisory Board has oversight responsibility for LAIF. The Board consists of five members as designated by state statute.
The value of the pool of shares in LAIF, which maybe withdrawn, is determined on an amortized cost basis, which is different than the fair value
of the City's portion of the pool. Withdrawals from LAIF are done on a dollar for dollar basis.
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.
The City is also a participant in the Investment Trust of California Joint Powers Authority Pool (CALTRUST). At June 30, 2012, the City's
investment in CALTRUST is $24 million. CALTRUST is an innovative partnership between the CSAC Finance Corporation and the League of
California Cities to provide a convenient method for local agencies to pool their assets for investment. The weighted average to maturity of
CALTRUST investments was as follows: CALTRUST Short Term, one year or less and CALTRUST Medium, 21 months. The Board of
Trustees, which is made up of experienced local treasurers and Investment Officers has oversight responsibility for CALTRUST. The value of
the pool shares in CALTRUST, which may be withdrawn, is determined on a fair value basis, which may be different than the amortized cost of
the City's portion of the pool. The total amount invested in CALTRUST by California public agencies, as of June 30, 2012 was divided among
the following asset classes: CALTRUST Medium Term was $439 million and CALTRUST Short term was $623 million.
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
Receivables of the General Fund, Electric, Wastewater and Water funds are reported net of uncollectible amounts. Total allowance provided for
u ncol lectible amounts related to receivables of the current period are as follows:
Uncollectibles related to late charges and services
Uncollectibles related to electric sales and services
Uncollectibles related to wastewater services
Uncollectibles related to water sales and services
Total uncollectibles of the current fiscal year
INTERFUND RECEIVABLES/PAYABLES
Interfund receivables and payables at June 30, 2012 are as follows:
Due from Due to
Other governmental General
Other governmental Other governmental
45
$ 17,500
170,000
41,700
79,200
$ 308,400
Amount
$ 827,178
364,994
$ 1,192,172
(5)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
"Due to" and "due from" balances are recorded primarily when funds overdraw their share of pooled cash or when there are short-term loans
betweenfunds. The $827,178 and $364,994 represent cash deficits in other governmental funds.
Advances from
Wastewater
Water
Advances to
Other governmental
Other governmental
Amount
$ 55,000
1,209,025
$ 1,264,025
The $55,000 advance from other governmentalwas used for the Impact Mitigation Fees update. The $1,209,025 advance from the Water Fund
was used for the construction of Fire Station #4.
TRANSFERS
Transfers for the year ended June 30, 2012, are summarized as follows:
Transfers out:
General $
Other governmental
Electric
Wastewater
Water
Transfers in
Other
General Governmental Wastewater
2,240
2,856,390
1,451,480
1,060,120
8,391,858
723,919 2,229,572
Total
$ 8,391,858
2,955,731
2,856,390
1,451,480
1.060.120
Total $ 5,370,230 9,115,777 2,229,572 $ 16,715,579
During the year, various interfund transfers were made to finance expenditures, subsidize operating losses and service debt.
The transfer out of $2,240 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 representthe cost of
services reimbursementto the General Fund.
46
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
The transfer of $8,391,858 from the General Fund to other governmental represents transfer of $1,008,817 to the Debt Service Fund for the
principal, interest and fiscal charges required to pay the 2002 Certificates of Participation; $3,881,520 to Parks, Recreation and Community
Services for operating costs; $150,200 to Community Developmentfor operating costs; $526,900 to the Vehicle and Equipment Fund for vehicle
replacements and computer replacements; and $2,269,821 to the Capital Outlay Reserve Fund which includes $988,750 for various capital
projects, $500,000 set aside for Fire Station #2, $643,071 in incurred start up costs for a Redevelopment Agency, and $138,000 to provide
additional funds for the purchase of the Dean property; and $554,600 to the Street Fund for various streets projects
The transfer out of $723,919 from other governmental to other governmental includes $660,199 transferred from Parks, Recreation and
Community Services to Debt Service Fund for the principal, interest and fiscal charges required to pay the 2002 Certificates of Participation;
transfer of $2,510 from the Community Development and $61,210 from the Parks, Recreation and Community Services to the Vehicle and
Equipment Fund for fleet replacement.
The transfer from other governmental to the Wastewater Fund of $2,229,572 represents the transfer of the Storm Drains from the Streets Fund
to the Wastewater Fund.
47
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
(6) CAPITAL ASSETS
Capital assets activity of the primary government for the year -ended June 30, 2012, 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
Balance Balance
June 30,2011 Increases Decreases June 30,2012
23,693,292
304,907
11.253.080 1.663.085
35,251,279 1,663,085
62,325,005
10,577,307
9,372,495
127.224.357
209,499,164
24,864,809
8,943,813
8,533,197
66,343,713
108,685,532
100,813,632
1,987,461
486,846
421,513
6,559,436
9,455,256
1,718,550
625,260
388,293
6,075,253
8,807,356
647,900
(9,518,827)
(9,518,827)
(97,049)
(97,049)
(97,049)
(97,049)
$ 23,693,292
304,907
3,397,338
27,395,537
64,312,466
11,064,153
9,696,959
133,783,793
218,857,371
26,583,359
9,569,073
8,824,441
72,418,966
117,395,839
101,461,532
Governmental activities capital assets, net $ 136,064,911 2,310,985 (9,518,827) $ 128,857,069
48
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
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
Balance
June 30,2011
$ 5,535,718
67,296,498
72,832,216
37,666,200
150,807,915
8,663,418
197.137.533
12,597,071
52,791,889
6,994,424
72, 383, 384
124,754,149
Increases
Decreases
34,888,962 (63,484,436)
34,888,962 (63,484,436)
8,055,598
60,517,900
239,720
68,813,218
1,108,574
6,468,894
729,302
8,306,770
60,506,448
(3,840,544)
(81,056)
(3,921,600)
(96,013)
(81,056)
(177,069)
(3,744,531)
Balance
June 30.2012
$ 5,535,718
38,701,024
44,236,742
45,721,798
207,485,271
8,822,082
262,029,151
13,705,645
59,164,770
7,642,670
80,513,085
181,516,066
Business -type activities capital assets, net $ 197,586,365 95,395,410 (67,228,967) $ 225,752,808
49
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
Depreciation expense was charged to function/programs of the primary government as follows:
Governmental activities:
General government
$
736,363
Public protection
1,042,911
Publicworks
6,206,763
Community development
6,084
Library
40,837
Parks and recreation
772,950
Internal service funds
1.448
Total depreciation expense - governmental activities
$
8,807,356
Business -type activities:
Electric
$
1,638,451
Wastewater
4,270,745
Water
1,416,074
Transit
981,500
Total depreciation expense - business -type activities
$
8,306,770
(7) OPERATING LEASES
The City is obligated under an operating lease for the use of facilities. Total costs for such lease was $21,000 for the year ended June 30, 2012.
Future minimum lease payments required by this lease agreement that has a remaining noncancellable lease terms of one year or more as of
June 30, 2012, are as follows:
Fiscal Years Ending
2013
Total minimum lease payments required
under operating leases
50
21,000
21,000
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
(8) LONG-TERM OBLIGATIONS
The followings a summary of debt transactions of the City for the year ended June 30, 2012:
Governmental activities:
Compensated absences
2002 Certificates of Participation
Note payable
Self-insurance liability
Net OPEB obligation
Governmental activity long-term liabilities
Business -type activities:
Compensated absences
Pollution remediation obligation
Certificates of Participation:
2010 Certificates of ParticipationA & B
Add deferred amounts:
For issuance premium
Total
2008 Certificates of ParticipationA
Add deferred amounts:
For issuance premium
Less deferred amounts:
From refunding
Net
Amounts
Due Within
Interest Rates June 30,2011 Additions Reductions June 30,2012 One Year
$ 1,903,824
482,184 (522,085)
1,863,923 $
482,184
Amounts
(570,276)
65,303,874
Due Within
Interest Rates June 30,2011
Additions
Reductions
June 30,2012
One Year
$ 7,134,715
1,905,933
(2,235,823)
$ 6,804,825 $
1,905,933
3.0-5.0% 21,655,000
819,700
(630,000)
21,025,000
655,000
6.0% 245,000
60,685,000
245,000
(24,904)
8,350,338
1,520,134
(1,398,641)
8,471,831
1,520,134
3,014,788
1,221,126
(614,321)
3,621,593
(276,747)
$ 40,399,841
4,647,193
__(i,878,785L
$ 40,168,249 $
4,081,067
Amounts
Due Within
Interest Rates June 30,2011 Additions Reductions June 30,2012 One Year
$ 1,903,824
482,184 (522,085)
1,863,923 $
482,184
65,874,150
(570,276)
65,303,874
2.50-6.637% 38,665,000
(775,000)
37,890,000
800,000
571,306
(19,700)
551,606
19,700
39,236,306
(794,700)
38,441,606
819,700
3.8-5.05% 60,685,000
60,685,000
523,078
(24,904)
498,174
24,909
(6,334,766)
301,654
(6,033,112)
(301,656)
54,873,312
276,750
55,150,062
(276,747)
51
2002 Certificates of Participation C & D
Add deferred amounts:
For issuance premium
Total
2003 Certificates of Participation B
Add deferred amounts:
For issuance premium
Total
2004 Certificates of ParticipationA
Add deferred amounts:
For issuance premium
Total
2007 Certificates of ParticipationA
Add deferred amounts:
For issuance premium
Less deferred amounts:
From refunding
Net
Total Certificates of Participation
Business -type activity long-term liabilities
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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 $8,471,831,$106,097 for compensated absences,
and $3,621,593for 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 30,2011 Additions
Reductions
June 30,2012
One Year
1.54-5.25%
22,750,000
(3,270,000)
19,480,000
4,575,000
32,821
(32,821)
22,782,821
(3,302,821)
19,480,000
4,575,000
2.0-5.0%
3,630,000
(215,000)
3,415,000
225,000
50,249
(4,102)
46,147
4,102
3,680,249
(219,102)
3,461,147
229,102
2.0-5.5%
21,420,000
(1,090,000)
20,330,000
I,145,000
281,921
(21,277)
260,644
21,277
21,701,921
(1,111,277)
20,590,644
1,166,277
4.0-5.0%
30,000,000
(125,000)
29,875,000
130,000
217,343
(8,253)
209,090
8,253
(678,618)
44,499
(634,119)
(44,499)
29,538,725
(88,754)
29,449,971
93,754
171,813,334
(5,239,904)
166,573,430
6,607,086
$ 239,591,308 482,184
(6,332,265)
$ 233,741,227
$ 7,089,270
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 $8,471,831,$106,097 for compensated absences,
and $3,621,593for 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 30,2012
Long-term debt payable at June 30, 2012, 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 requirementsto maturity of the note payable are as follows:
Fiscal
Year
Ending
GovernmentalActivities
June 30,
Principal Interest
2013
$ $ 14,700
2014
14,700
2015
14,700
2016
14,700
2017
245,000 11,025
Total
$ 245,000 $ 69,825
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
$4,526,388. Principal and interest paid for the current year and total net revenues were $379,170 and $7,128,468, 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 30,2012
wastewater enterprises. The Authority is authorized pursuant to Chapter 5 of Division 7 of Title 1 of the California Government Code to issue
bonds to finance and refinancewater and wastewater public capital improvements of local agencies located throughout California.
$27,360,000 Certificates of Participation (2004A COP) were issued on May 12, 2004 to provide funds to finance the costs of certain
improvements to the wastewater collection, treatment and disposal system of the City. Principal is payable annually on October 1 in amounts
from $170,000 to $2,070,000 with final payment due October 1, 2024. 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 $27,665,662. Principal
and interest paid for the current year and total net revenues were $2,139,350 and $7,128,468, 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 $57,234,938. Principal
and interest paid for the current year and total net revenueswere $1,599,050 and $7,128,468, 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, 2012, 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 agreementwith Calpine.
In February 2001, the City entered into an energy purchase agreement (the Original Agreement) with Calpine Energy Services L.P. (Calpine)to
purchase 25 MW of energy at $65/mwh for a ten-year period beginning January 1, 2002. Since the execution of the Original Agreement, actions
of the State in connection with the energy market conditions, including the initiation of conservation programs, and other factors, have resulted in
lower electric load requirements and reduced energy costs 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 30,2012
Certificates of Participation 2002 Taxable Series D to buyout 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 $21,546,563. Principal and interest paid for the current year and total net revenues were $4,333,340
and $15,056,763, 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 $99,773,725. Principal and interest paid for the current year and total net revenues were $2,957,775 and $15,056,763, 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
$78,175,264. Principal and interest paid for the current year and total net revenues were $2,304,811 and $7,883,559, 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 30,2012
Annual debt service requirementsto maturity for certificates of participation are as follows:
Fiscal Year Ending
June 30,
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2032
2033-2037
2038-2040
Total
GovernmentalActivities
Principal
Interest
$ 655,000 $
1,010,047
690,000
981,013
715,000
949,400
745,000
916,550
775,000
880,413
4,485,000
3,792,545
5,695,000
2,556,375
7,265,000
943,625
$
$ 21,025,000 $ 12,029,968 $
Industrial Development Bonds
Business-tvoe Activities
Principal
Interest
6,875,000 $
8,626,550
7,150,000
8,296,081
7,460,000
7,948,813
10,185,000
7,582,344
5,235,000
7,199,664
29,995,000
32,171,342
37,745,000
24,114,300
38,670,000
14,456,167
19,550,000
5,934,856
8,810,000
917,423
171,675,000 $
117,247,540
The City of Lodi has lent its name to the City of Lodi Industrial Development Authority for the purpose of issuing the following industrial
development bonds: Minton Corporation $5,000,000; Dart Corporation $8,000,000; Wallace Computer Services $3,000,000; and Luster -Cal
Nameplate Corporation $3,000,000. These bonds are special obligation bonds only, payable solely out of the bond revenues or other sources of
the above companies and are not a pledge of the general credit of the City. The City is not obligated for the redemption or administration of
these industrial development bonds.
Woodbridge Irrigation District Bonds
On October 8, 2003, the City lent its name to the Woodbridge Irrigation District (the "District") in the procurement of $11.745 million 2003
Revenue Certificates of Participation, to provide funds to finance the costs of construction of a new diversion dam on the Mokelumne River and
related facilities of the water district. A significant portion of the District's sources of paymentfor the 2003 Certificates are expected to be derived
from amounts to be received by the Districtfrom the City of Lodi pursuantto an Agreement for purchase of water from the Woodbridge Irrigation
District by the City of Lodi, dated May 13, 2003 (the "Lodi Water Sales Agreement"). Underthe agreement, the City will purchase6,000 acre feet
of water per annum from the District for 40 years.
56
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
(9) DEFINED BENEFIT PENSION PLAN
(a) Plan Description
The City of Lodi contributes to the California Public Employees' Retirement System (PERS); an agent multiple-employerpublic employee defined
benefit pension plan. PERS provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members
and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California.
Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may
be obtained from their Executive Office- 400 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. Beginning this fiscal year, the employees started to pay a portion of the contributions
required of City employees at a range of 1 % to 9%. The City is required to contribute at an actuarially determined rate; the current rate is
13.680%for miscellaneous employees, 30.380% for fire and police employees, of annual covered payroll. The contribution requirementsof plan
members and the City are established and may be amended by PERS.
(c) Annual Pension Cost
For the year ended June 30, 2012, the City's annual pension cost of $3,238,866 for the Safety Plan and $2,110,328 for the Miscellaneous Plan
were equal to the City's required contributions. The required contribution was determined as part of the June 30, 2009, actuarial valuation using
the entry age normal actuarial cost method. The actuarial assumptions included (a) 7.75% investment rate of return (net of administrative
expenses) (b) projected annual salary increases that vary by age, length of service, and type of employment (c) 3.25% payroll growth, and (d)
3.00% inflation. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the
market value of investments over a fifteen -year period (smoothed market value). PERS unfunded actuarial liability is being amortized as a level
percentage of projected payroll on a closed basis. The actuarial assumption used to determine the required contributions are the same as those
used to determine the funded status. Amortization of the remaining period for the Safety Plan was 28 years and for the Miscellaneous Plan was
22 years as of June 30, 2011.
57
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
(d) Trend Information
Three -Year Trend information ($ Amounts in Thousands):
SAFETY PLAN
MISCELLANEOUS PLAN
Annual
Percentage
Net
Fiscal Year
Pension
of APC
Pension
Ended
Cost (APC)
Contributed
Obligation
6/30/10
$2,674
100%
$0
6/30/11
2,726
100%
$0
6/30/12
3,239
100%
$0
MISCELLANEOUS PLAN
(e) Funded Status and Funding Progress
As of June 30, 2010, the most recent actuarial valuation date, the Safety Plan was 76.0% funded and the Miscellaneous Plan was 86.1 % funded.
The actuarial accrued liability for benefits was $122 million for the Safety Plan and $134 million for the Miscellaneous Plan, and the actuarial
value of assets was $93 million for the Safety Plan and $115 million for the Miscellaneous Plan; resulting in an unfunded actuarial accrued
liability (UAAL) of $29 million for the Safety Plan and $19 million for the Miscellaneous Plan. The covered payroll (annual payroll of active
employees covered by the plans) was $11 million for the Safety Plan and $18 million for the Miscellaneous Plan, and the ratio of the UAAL to the
covered payroll was 258.2% and 104.3% for the Safety and Miscellaneous plans, respectively.
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 cf plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
58
Annual
Percentage
Net
Fiscal Year
Pension
of APC
Pension
Ended
Cost (APC)
Contributed
Obligation
6/30/10
$2,018
100%
$0
6/30/11
2,080
100%
$0
6/30/12
2,110
100%
$0
(e) Funded Status and Funding Progress
As of June 30, 2010, the most recent actuarial valuation date, the Safety Plan was 76.0% funded and the Miscellaneous Plan was 86.1 % funded.
The actuarial accrued liability for benefits was $122 million for the Safety Plan and $134 million for the Miscellaneous Plan, and the actuarial
value of assets was $93 million for the Safety Plan and $115 million for the Miscellaneous Plan; resulting in an unfunded actuarial accrued
liability (UAAL) of $29 million for the Safety Plan and $19 million for the Miscellaneous Plan. The covered payroll (annual payroll of active
employees covered by the plans) was $11 million for the Safety Plan and $18 million for the Miscellaneous Plan, and the ratio of the UAAL to the
covered payroll was 258.2% and 104.3% for the Safety and Miscellaneous plans, respectively.
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 cf plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
58
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
(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 retirementas long as they have ten or more years of service with the City.
Group Hired priorto:
Executive Management
July 1, 1994
Mid -Management
July 1, 1994
Fire Mid -Management
December6,1995
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
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
59
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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" benefitwill 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 2011-12, the City contributed
$614,321, or 50.31 %, 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
$ 1,227,913
Interest on net OPEB obligation
120,592
Adjustment to annual required contribution
(127,379)
Annual OPEB cost (expense)
1,221,126
Contribution made
(614,321)
Increase in net OPEB obligation
606,805
Net OPEB obligation - beginning of year
3,014,788
Net OPEB obligation - end of year
$ 3,621,593
60
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation, are as follows:
(d) Funding Status and Funding Progress
As of January 1, 2012, the most recent actuarial valuation date, the funded status of the Retiree Health Plan was as follows:
Actuarial accrued liability (AAL) $ 17,011,467
Actuarial value of plan assets 0
Unfunded actuarial accrued liability(UAAL) $ 17,011,467
Funded ratio (actuarial value of plan assets/AAL) 0.0%
Annual covered payroll (active plan members) $ 7,304,558
UAAL as percentage of annual covered payroll 232.9%
(e) Actuarial Methods and Assumptions
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.
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
61
Percentage of
Net
Fiscal year
Annual
Annual OPEB
OPEB
ended
OPEB Cost
Cost Contributed
Obligation
06/30/2010
$ 1,333,881
34.43%
$2,070,199
06/30/2011
1,414,182
33.21%
3,014,788
06/30/2012
1,221,126
50.31%
3,621,593
(d) Funding Status and Funding Progress
As of January 1, 2012, the most recent actuarial valuation date, the funded status of the Retiree Health Plan was as follows:
Actuarial accrued liability (AAL) $ 17,011,467
Actuarial value of plan assets 0
Unfunded actuarial accrued liability(UAAL) $ 17,011,467
Funded ratio (actuarial value of plan assets/AAL) 0.0%
Annual covered payroll (active plan members) $ 7,304,558
UAAL as percentage of annual covered payroll 232.9%
(e) Actuarial Methods and Assumptions
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.
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
61
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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, consistentwith the long-term perspectiveof the calculations.
In the January 1, 2012 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; a 3.0% inflation rate; an annual healthcare cost trend rate of 9.0% initially, reduced by
.5 percent increments to an ultimate rate of 4.5% in the eleventh year and beyond; the PERS minimum benefit will increase 4% 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. As of January 1, 2012, the remaining amortization period
is 27 years.
Since the prior valuation in 2010, 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 demographic assumptions; and (3) the reduction in the assumed PEMHCA benefit increase rate. These
decreases were partiallyoffset by the updated healthcaretrend rate assumption.
(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 occurrencewith claims from $500,000 to $40,000,000 per occurrence and
in the aggregate insured through the California Joint Powers Risk Management Authority. The City never had any settlementsthat 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).
The City is fully self-insured for dental and unemployment for its employees.
62
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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 $8,471,831 at June 30, 2012, 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 liabilityfor fiscal years ended June 30, 2012 and 2011 are as follows:
Beginning
FY 10-11 $ 8,929,967
FY 11-12 $ 8,350,338
(12) PARTICIPATION IN JOINT VENTURES
Northern California Power Agency
Current -Year
Claims and Changes Claim
in Estimates Payments
819,128 (1,398,757)
1,520,134 (1,398,641)
Ending
$ 8,350,338
$ 8,471,831
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
NCPAs project construction and development programs have been individually financed by project revenue bonds collateralized by NCPAs
assignment of all payments, revenues and proceeds associated with its interest in each project. Each Project Participant has agreed to pay its
proportionate share of debt service and other costs of the related project, notwithstanding the suspension, interruption, interference, reduction or
curtailment of output from the project for any reason. Certain of the revenue bonds are additionally supported by municipal bond insurance credit
enhancements.
63
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
Increasein Non -defaulting Proiect Participant's Original Proiect EntitlementPercentaq-e
Upon the failure of any Project Participant to make any payment, which failure constitutes a default under the Member Agreement for the
projects, and except as sales and transfers are made pursuant thereto, the Member Agreements provide that Project Entitlementfor each non -
defaulting Project Participant shall be automatically increased for the remaining term of the Member Agreement; pro rata with those of the non -
defaulting Project Participant thereunder; provided, however, that the sum of such increase for any non -defaulting Project Participant shall not
exceed, without written consent of such non -defaulting Project Participant, an accumulated maximum of 25% of the non -defaulting Project
Participant's original Project Entitlement Percentage Share.
General 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 setup primarily to provide the following advantages: minimizes the number and dollar amount of reserve that might
otherwise be funded separately in connection with NCPA's individually financed operating plants, projects and programs; provides each member
with flexibility and unilateral control over the determination of what they will fund, how they will fund it and what expenditures from the 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, 2012, the City's balance in the NCPA General Operating Reserve, which has been credited with annual interest earnings and
settlements, is $11,576,432.
64
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
Proiect Participation
The NCPA members and their percentageshare at June 30, 2012, which is the most recent available data, are as follows:
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
6.6000
Biggs
0.2270
.197
0.3446
0.2679
Gridley
0.3360
.350
0.6248
1.9643
Healdsburg
3.6740
1.66
5.833
6.6947
1.6428
Lodi
10.2800
10.37
13.393
39.50
20.6077
9.5000
Lompoc
3.6810
2.30
5.833
5.00
6.7101
2.0357
Palo Alto
22.92
Plumas-Sierra Rural Electric Coop
.7010
1.69
1.817
1.3112
0.7857
Roseville
7.8830
12.00
36.50
13.0846
Santa Clara
44.3905
37.02
41.667
25.7500
Turlock Irrigation District
6.3305
9.6106
Ukiah
5.6145
2.04
9.090
10.2315
1.7857
NON-MEMBERS
Azusa 2.7857
CDWR 33.5000
Modesto irrigation District 10.7143
PWRPA 2.6679
Bulk power purchased by the City through NCPA amounted to $39,415,812 during the year ended June 30, 2012 and is reflected in utilities
expense in the Electric Enterprise Fund.
65
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
NCPA Geothermal Proiect
A purchase power agreement with NCPA obligates the City for a 10.28% share of the operating costs and debt service of two of NCPA's 110 -
megawatt steam powered plants, Project Number 2 and Project Number 3. Outstanding long-term debt related to this project was approximately
$36 million at June 30, 2011.
In addition to federal geothermal leasehold, steam wells, gathering system and related facilities, the project consists of two electric generating
stations (Plant 1 and Plant 2). Each plant has two 55MW turbine generator units utilizing low temperature geothermal steam; associated
electrical, mechanical and control facilities; a heat dissipation system; a steam gathering system; a transmission tapline; and, other related
facilities. Geothermal steam for the project is derived from the geothermal property, which includes wellpads, access roads, steam wells and
reinjection wells.
Calaveras Hydroelectric Proiect
NCPA contracted to finance, manage, construct and operate Hydroelectric Project Number One for the licensed owner, Calaveras County Water
District. In exchange, NCPA has the right to the electric output of the project for 50 years from February 1982. NCPA has also the option to
purchase power from the project in excess of the District's requirementsfor the subsequent 50 years, subject to regulatory approval.
Under a power purchase agreement the City is obligated to pay 10.37% of the debt service and operating costs. At June 30, 2011,
approximately $450 million in long-term debt used to finance this projectwas outstanding.
NCPA Combustion Turbine Proiect
The project consists of five combustion turbine units; each nominally rated at 25 megawatts. Two such units are located in Roseville, two in
Alameda and one in Lodi. The project provides capacity during peak load periods and emergency capacity reserves. Excess capacity and
energy from the project are also sold to other entities from time to time. Under the NCPA power agreement, the City is obligated to pay 13.393%
of the debt service and operating costs. At June 30, 2011, there was no outstanding long-term debt related to this project.
Transmission Proiect
The project was undertaken to meet certain obligations of NCPA under the NCPNPG & E InterconnectionAgreement. The project includes an
ownership interest in PG & E s 230kv Castle Rock to Lakeville Substation Transmission Line in Sonoma County, additional firm transmission
rights in that Transmission Line, and a central scheduling and dispatch facility in service at the NCPA headquarters in Roseville, California.
Under a power purchase agreement, the City is obligated to pay 20.6077% of the debt service and operating costs. At June 30, 2011, there was
no outstanding long-term debt related to this project.
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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, 2011, approximately
$55 million in long-term debt was outstanding.
Lodi Enersv 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 commercially in November 2012.
Under a power purchase agreement, the City is obligated to pay 17.03% of the debt service and 9.5% of operating costs. At June 30, 2011,
approximately $396 million in long-term debt was outstanding.
The following are the most recent available audited condensed financial statements of NCPA:
67
Combined Balance Sheet
June 30,2011
(in thousands)
Assets
Liabilities and Capitalization
Currentassets $
65,552 Current portion of long-term debt $
11,175
Restricted assets
312,148 Other current liabilities
66,895
Electric plant, net
584,928 Other liabilities and deferred credits
196,244
Other assets and deferred charges
197,328 Long-term debt, net
857,643
Net assets
27,999
Total assets $
1,159,956 Total liabilities and net assets $
1,159,956
67
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
Combined Statement of Revenues and Expenses
and Changes in net Assets
Combined Statement of Cash Flow
Year ended June 30,201 1
Year ended June 30,2011
(in thousands)
(in thousands)
Sales for resale $
268,469
Net cash from operating activities $
81,824
Operating expenses
(250,018)
Net from investing activities
(23,628)
Other expenses
(27,423)
Net cash from capital and related
Future recoverable costs
15,426
financing activities
(268,369)
Net revenues before refunds
6,454
Net cash from noncapital
Refunds to participants
(12,236)
and related financing activities
(10,936)
Increase in net assets
(5,782)
Increase in cash and cash equivalents
(221,109)
Net assets, beginning of year
33,781
Cash and cash equivalents, beginning
of year
439,979
Net assets, end of year $
27,999
Cash and cash equivalents end of year $
218,870
At June 30, 2011, NCPA's total net outstanding long-term debt was $868,818,000 at an average interest rate of 5%. The current portion of long-
term debt at June 30, 2011, was $11,175,000.
Complete financial information for NCPA may be obtained at the following administration office:
Northern California PowerAgency
180 Cirby Way
Roseville, CA 95678
Transmission Agency cf 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 ofTANC'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.
68
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
Increase in Non-defaultina Proiect Particioant'sOriainal Proiect Entitlement Percentaae
Upon the failure of any Project Participant to make any payment, which failure constitutes a default under the Member Agreement for the
projects, and except as sales and transfers are made pursuant thereto, the Member Agreements provide that Project Entitlementfor each non -
defaulting Project Participant shall be automatically increased for the remaining term of the Member Agreement; pro rata with those of the non -
defaulting Project Participant thereunder; provided, however, that the sum of such increase for any non -defaulting Project Participant shall not
exceed, without written consent of such non -defaulting Project Participant, an accumulated maximum of 25% of the non -defaulting Project
Participant's original Project Entitlement Percentage Share.
Cal ifornia-OreaonTransmission Proiect
The project is a 340 -mile long, 500 -kilovolt alternating current transmission project between Southern Oregon and Central California. The project
s operated in coordination with the PacificAC Intertie as a part of the California-Oregonlntertie (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. Pursuantto
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.
Under the TANC joint powers agreement, the City is obligated to pay 1.89% of its debt service and operating costs. At June 30, 2011,
approximately $393 million in long-term debt was outstanding of which $26 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
69
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
(13) MEMBERSHIP IN INSURANCE POOLS
California Joint Powers Risk Management Authority
The City is a member, along with 18 other individual cities and 8 joint powers authorities, of California Joint Powers Risk ManagementAuthority
(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. 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, 2012, deposits of $31,840 were paid to CJPRMA for the
liability program.
The participants at June 30, 2012, are as follows: Alameda, Chico, Central San Joaquin Valley Risk Management Authority, Fairfield, Fremont,
Livermore, Lodi, Manteca, Municipal Pooling Authority of Northern California, Northern California Cities Self Insurance Fund, Petaluma, Pomona,
Public Entity Risk ManagementAuthority, Redding, Redwood Empire Municipal Insurance Fund, Richmond, Roseville, San Leandro, San Rafael,
Santa Barbara Area Joint Powers Insurance Authority, Santa Rosa, Small Cities Organized Risk Effort, Stockton, Sunnyvale, Vacaville, Vallejo,
and Yolo County PublicAgencies Risk Management I nsu rance 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
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
$286,874 in deposits to LAWCX during the fiscal year ended June 30, 2012.
70
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
The participants at June 30, 2012, are as follows: City of Alameda, Association of Bay Area Governments Shared Risk Pool (ABAG SHARP),
Bay Cities Joint Powers Insurance Authority (BCJPIA), City of Benicia, Contra Costa County Transit Agency (CCCTA), Central San Joaquin
Valley Risk Management Authority (CSJVRMA), City of Clovis, City of Coronado, City of Encinitas, Fire Agencies Self Insurance System (FASTS),
City of Gilroy, City of Livermore, City of Lodi, Town of Los Gatos, City of Merced, Monterey County Local Agencies Insurance Authority
(MCLAIA), City of Morgan Hill, City of Newark, City of Placentia, City of Pleasanton, Public Agency Risk Sharing Authority of California
(PARSAC), City of Roseville, Public Entity Risk Management Authority (PERMA), City of San Leandro, City of Santa Maria, City of Santee, Small
Cities Organized Risk Effort (SCORE), City of South Lake Tahoe, City of Suisun City, City of Vacaville, City of Vallejo, Vector Control Joint
Powers Agency (VCJPA) 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-three 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 lappliesto memberswho chooseto utilizeCaITIP's claims administrator services.
Proaram II applies to members with self-insured retentionswho 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.
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.
71
(14)
(15)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
The City paid $78,877 in deposits to CaITIP during the fiscal year ended June 30, 2012. 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
Program Retention (in millions)
City of Lodi Transit System I Prefunded 20
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
DEFICIT IN FUND EQUITY
Physical
Damage
Yes
Nonmaior Governmental Fund — Parks. Recreation and Community Services — A deficit in fund equity in the amount of $861,843 at June 30,
2012, is attributed to operations not meeting revenue projections. Revenue reductions are a direct result of current economic conditions and
mirror similar shortfalls seen in surrounding communities. The City has raised fees and reduced expenditures in an effort to eliminate the deficit.
Internal Service Funds - Benefits Fund — A deficit in fund equity in the amount of $3,621,665 at June 30, 2012, is attributed to the net OPEB
obligation setup in accordance with the requirements of GASB Statement No. 45. Net OPEB obligation as of June 30, 2012, was $3,621,593.
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.
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. Investigationsconducted 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.
72
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
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, 2012, is $65,303,874. This amount is an estimate and subject to changes
resulting from price increases or reductions, technology, or changes in applicable laws or regulations.
(16) COMMITMENTSAND 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. Effortsto 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 matterto have a material effect on the City's financial condition.
All other actions against the City are under $75,000 or have no arguable cost and will therefore not have a material financial effect on the City.
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, 2012, for any of the City's outstanding Certificates of Participation.
73
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30,2012
(17) SUBSEQUENT EVENTS
On September 1, 2012, the City issued $19,080,000 2012 Revenue Bonds to refinancethe outstanding principal amount of the 2002 Certificates
of Participation (2002 COP); and $17,105,000 to refinance a portion of the principal amount of the Wastewater System Revenue Certificates of
Participation, 2004 SeriesA.
74
REQUIRED SUPPLEMENTARY INFORMATION
City of Lodi
Required Supplementary Information
Schedule of Funding Progress - Pension Plan
June 30,2012
(in thousands of dollars)
EntryAge
Actuarial
Actuarial Actuarial Accrued
Valuation Asset Value Liability
Plan Date (A) (B)
Unfunded
Actuarial
Accrued
Liability
[(B) - (A)]
Funded
Ratio
[(A) / (B)]
Unfunded
Actuarial
Liability as
Covered Percentage of
Payroll Covered Payroll
(C) {[(B) — (A)]/(C)}
Safety 6/30/08
84,853
103,447
18,594
82.0%
10,422
178.4%
6/30/09
88,892
115,657
26,765
76.9%
11,409
234.6%
6/30/10
93,058
122,477
29,419
76.0%
11,394
258.2%
Miscellaneous 6/30/08
105,760
117,537
11,777
90.0%
18,486
63.7%
6/30/09
110,318
127,535
17,217
86.5%
18,696
92.1%
6/30/10
114,994
133,618
18,624
86.1%
17,856
104.3%
75
City of Lodi
Required Supplementary Information
Schedule of Funding Progress —OPEB Plan
June 30,2012
(in thousands of dollars)
76
Actuarial
Normal
Annual
UAAL As a
Actuarial
Value
Accrued
Unfunded
Funded
Covered
Percentage of
Valuation
of Assets
Liability
Liability
Ratio
Payroll
Covered Payroll
Date
(A)
A
L(B) - (A))
[(A) / (B)]
(C)
(((B)—(A)U(C)}
1/1/08
$ 0 $
23,323
$ 23,323
0%
$ 9,846
237%
1/1/10
0
17,710
17,710
0%
9,410
188%
1/1/12
0
17,011
17,011
0%
7,305
233%
76
EXPENDITURES
C IN OF LODI
SCHEDULE OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCE-
BUDGETAND ACTUAL
GENERALFUND
Generalgovemment:
Year ended June 30,2012
City Council
155,540
155,540
Budget
27.559
City Manager
Variance with
979,400
Original
Final
Actual
Final Budget
REVENUES
347,405
9,025
CityAttomey
445,940
Taxes
$ 22,830,840
22,830,840
22,928,438$
97,598
Licenses and permits
73,800
73,800
79,745
5,945
Intergovernmentarevenues
10,130,400
10,160,300
10,449,364
289,064
Charges for services
816,510
816,510
682,156
(134,354)
Fines,forfeits and penalties
1,342,000
1,342,000
1,355,101
13,101
Investmentandrental income
451.370
451,370
807,270
355,900
Miscellaneous revenue
228,970
228,970
286,125
57,155
Total revenues
35,873,890
35,903,790
36,588,199
684,409
EXPENDITURES
Current:
Generalgovemment:
City Council
155,540
155,540
127,981
27.559
City Manager
979,400
979,400
969,885
9,515
City Clerk
356,430
356,430
347,405
9,025
CityAttomey
445,940
445,940
439,024
6,916
Human Resources
516,120
516,120
507.120
9,000
Information Systems
972.160
972.160
913,764
58,396
Financial Services
1,528,780
1,528,780
1,461,562
67,218
Budget and Treasury
352,580
352,580
343,167
9,413
Non Departmental
1,069,820
1,069,820
897,419
172,401
Total general government
6,376,770
6,376,770
6,007,327
369,443
Public protection:
Police
15,673,040
16.06.040
15..744.906
320.134
Fire
9,190,150
9,398,150
9.178,249
219,901
Total public protection
24,863,190
25,463,190
24,923,155
540,035
Public Works
1,555,410
1,555,410
1,112,569
442,841
Library
1,361,950
1,381,000
1,380,972
28
Total expenditures
34,157,320
34,776,370
33,424,023
1,352,347
EXCESSOFREVENUESOVER
EXPENDITURES
1,716,570
1,127,420
3,164,176
2,036,756
OTHER FINANCING SOURCES (USES)
Transfers in
5,370,230
5,370,230
5,370,230
Transfersout
(8,391,858)
(8,391,858)
(8,391,858)
Total other financing sources (uses)
3,021,628
3,021,628
3,021,628
NET CHANGE IN FUND BALANCE
(1,305,058)
(1,894,208)
142,548
2,036,756
FUND BALANCE, beginningofyear
3,841,936
3,841,936
6,146,405
2,304,469
FUND BALANCE, end ofyear $
2,536,878
1,947,728
6,288,95$
4,341,225
The note to the required supplementary information is an integralpart of this schedule
77
CITY OF LODI
Note to the Required Supplementary Information
June 30,2012
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 compliancewith the legal provisions embodied in the annual appropriated budget approved by the City
Council. The accompanying financial statements present budget and actual data only of funds for which an annual budget was adopted.
The budgets of capital projects are primarily "long-term" budgets that emphasize the major programs and capital project plans extending
over a number of years. Due to the long-term nature of these projects, "annual" budget and actual comparisons are not considered
meaningful. Formal budgetary integration is not employed for Debt Service Funds since effective budgetary control is alternatively
achieved through the bond indenture provisions. Accordingly, no budgetary information is included in the accompanying basic financial
statements for capital projects and debt service funds.
The City Council follows the following procedures in establishing the budgetary data reflected in the accompanying basic financial
statements:
Original Budget
On or priorto the first regular Council meeting in June of each year, the City Manager submits to the City Council a proposed
Financial Plan and Budgetfor the fiscal year commencing July 1 The budget includes proposed expenditures and the means of
financing them.
Budgeted revenues are adopted by the City Council at the time the budget is approved. Budgeted revenues are modified when
the tax base changes, when fees are modified or when new revenue sources are identified.
Public hearings are conducted during meetings of the City Council to obtain citizens' comments. Priorto July 1, the budget is
legally enacted through passage of a resolution.
Final Budget
The final budgetarydata presented in the basic financial statements reflectsthe following changes to the original budget:
• Budgeted expenditures represent original appropriations adjusted by budgettransfers and appropriation amendments.
The legal level of budgetary control (that is, the level at which expenditures can not legally exceed the appropriated
78
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 revenuefund expenditures, including transfers out, are approved
by Council at the fund level.
• The City Manager may transfer appropriations from one activity to anotherwithin a department without approval from the
City Council. All other appropriation adjustments during the year, whether transfers, increases or decreases, require City
Council approval.
79
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COMBININGAND 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 30,201 2
Assets
Cash and investments
Restricted assets
Receivables:
Accounts, net
Interest
Due from other funds
Due from other governmental agencies
Loans receivable
Inventory
Other assets
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable and other liabilities
Due to otherfunds
Advances from other funds
Deferred revenue
Total liabilities
Fund Balances:
Nonspendable:
inventory
Restricted for:
Capital projects
Debt service
Other purposes
Unassigned
Total fund balances
Special Capital
Revenue Projects Total
$ 6,584,293 7,693,90 14,278,256
1,691,898 1,691,898
245,967
245,967
6,911 6,120
13,031
364,994
364,994
428,657
428,657
1,159,709
1,159,709
1.050
1,050
1,822
1,822
8,793,403 9,391,981$
18,185,384
255,844 151,631$
407,475
1,192,172
1,192,172
1,264,025
1,264,025
1,167,073
1,167,073
2,615,089 1,415,656
4,030,745
1,050 1,050
6,513,011 6,284,427
12,797,438
1,691,898
1,691,898
527,146
527,146
(862,893)
(862,893)
6,178,314 7,976,325
14,154,639
Total liabilities and fund balances $ 8,793,403 9,391,981$ 18,185,384
80
CITY OF LODI
COMBINING STATEMENT CIF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
Year ended June 30,2012
Revenues:
Licenses and permits
I ntergovern mental revenues
Charges for services
Fines, forfeits and penalties
Investmentand rental income
Miscellaneous revenue
Total revenues
Expenditures:
Current:
General government
Public protection
Publicworks
Community development
Parks and recreation
Capital outlay
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
Special Debt
Revenue Service
606,162
4,831,904
2,462,084
1,900
414,904
329,775
1,646,729
2,812,877
326,333
3,061,438
1,036,610
2,254,641
1,650,732
Capital
Projects
8,196
282,289
41,632
197,191
529.308
1,309,894
1,039,016
630,000
11,142, 631 1,669,016 1,309,894
(2,495,902) (1,669,016) (780,586)
4,586,320
(2,955,71
1,630,589
(865,313)
7,043,627
$ 6,178,314
81
Total
$ 606,162
4,840,100
2,744,373
1,900
456,536
526,966
9,176,037
2,812,877
326,333
3,061,438
1,036,610
2,254,641
2,960,626
1,039,016
630,000
14,121,541
(4,945,504)
1,669,016 2,860,441
9,115,777
(2,955,731)
1,669,016 2,860,441
6.160.046
2,079,855
1,214,542
5,896,470
12,940,097
7,976,325 $
14,154,639
NONMAJOR GOVERNMENTAL FUN&S
SPECIAL REVENUE FUNDS
SPECIAL REVENUE FUNDS
Parks, Recreation and Community Services
This fund was established to account for the revenues and expenditures related to the activities of the Hutchins Street Square and Performing Arts
Theater and the wide -range of parks and 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 establishedto accountfor development planning and project review services including land use entitlements, permit processing and
review/inspection of public improvementsto ensure orderly physical growth and development of the City.
Streets Fund
This fund was establishedto accountfor the following:
Gas Tax
To accountfor revenues and expenditures apportioned to the City under the Streets and Highway Code. Portions of the tax rate levied
by the State of California on all gasoline purchases are allocated to cities throughout the State on a population basis. These funds are
restricted for expenditure by the State of California for street related purposes only.
Development Impact Mitigation Fees
To account for impact fees charged to provide for the building of various storm drains and street improvements needed to serve
new development. The fees are calculated on a per acre basis and are collected at subdivision final map approval or with building
permit stage effective November4, 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.
82
Intermodal Surface Transportation EfficiencyAct (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.
Transportation
This fund was established to accountfor 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
Inventory
Other assets
TOTALASSETS
LIABILITIESAND FUND BALANCES
LIABILITIES
Accounts payableand other liabilities
Due to other funds
Deferred revenue
TOTAL LIABILITIES
FUND BALANCES (DEFICIT)
Nonspendable
Inventory
Restricted for.
Capital projects
Other purposes
Unassigned
TOTAL FUND BALANCES (DEFICIT)
TOTAL LIABILITIESAND FUND BALANCES (DEFICIT)
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
June 30,2012
Parks,
HO&WRfftgW &
Recreation &
ommumty
Public
Community
Development
Services
Safety
Development
Streets
Transportation
Block Grants
Total
$
169,124
290,905
6,107,883
16,381
$
6,584,293
15,144
25,000
4,187
201,636
245,967
288
185
6,419
19
6,911
364,994
364,994
33,484
1,714
393,459
428,657
1,159,709
1,159,709
1,050
1,050
1,822
1,822
$ 18,016
227,896
295,277
6,682,646
16,400
1,553,168 $
8,793,403
$ 52,681 2,959 2,104 169,635 28,465 $ 255,844
827,178 364,994 1,192,172
7.364 1,159,709 1,167,073
879,859 169,635 1.553.168 2.615.089
1,050 1,050
65_13. 0.11 6,513,011
MAN x,175 9®,4®® R111$6
(862,893) 602,$0
(861,843) 21 f,bt3 293,173 6,513,011 16,400
$ 18,016 227,896 295,277 6,682,646 16,400 1,553,168 $ 8,793,403
84
REVENUES
Licensesand permits
Intergovernmental revenues
Charges for services
Fines, forfeits and penalties
Investmentand rental income
Miscellaneous revenue
Total revenues
EXPENDITURES
Current
General government
Public protection
Publicworks
Community development
Parks and recreation
Capital outlay
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCINGSOURCES(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, EXPENDITURESAND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS -SPECIAL REVENUE FUNDS
Year ended June 30,2012
Parks
HOME Program&
Recreation &
Community
Community
Public
Community
Development
Services
Safety
Development
Streets
Transportation
Block Grants
Total
$
606,162
$ 606,162
338,329
3,573,746
34,342
885,487
4,831,904
1,501,707
386,647
573.730
2,462,084
1,900
1,900
389.283
1,202
1,048
23,371
414,904
956
263
121,426
207,130
329,775
1,891,946
341,694
1,115,283
4,377,977
34,342
885,487
8,646,729
2,812,877
2,812,877
326,333
326,333
2.175,951
885,487
3,061,438
1,036,610
1,036,610
2,254,641
2,254,641
1,601,652
49,080
1,650,732
5,067,518
326,333
1,036,610
3,777,603
49,080
885.487
11,142,631
(3,175,572)
15,361
78,673
600,374
(14,738)
(2,495,902)
3,881,520
150,200
554,600
4,586,320
(721,410)
(822)
(2,510)
(2,230,989)
(2,955,731)
3,160,110
(822)
147,690
(1,676,389)
1,630,589
(15,462)
14,539
226,363
(1,076,015)
(14,738)
(865,313)
(846,381)
203,034
66,810
7,589,026
31,138
7,043,627
$ (861,843)
217,573
293,173
6,513,011
16,400
$ 6,178,314
85
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGETAND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS' SPECIAL REVENUE FUNDS
Year ended June 30,2012
REVENUES
Charges for services
Investmentand rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
General government
Parks and recreation
Total Expenditures
DEFICIENCYOF REVENUES UNDER
EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE
FUNDDEFICIT, BEGINNINGOFYEAR
FUND DEFICIT, END OF YEAR
86
PARKS, RECREATION &
COMMUNITY SERVICES
FINAL
BUDGET ACTUAL VARIANCE
$ 1,693,870 1,501,707$ (L92,163)
380,000 389,283 9,283
2,921,680
2,812,877
108,803
2,280,812
2,254,641
26,171
5,202,492
5,067,518
134,974
(3,128,622)
(3,175,572)
(46,950)
3,881,520 3,881,520
(721,410) (721,410)
3,160,110 3,160,110
31,488 a 5,462) (46,950)
(846,381) dF 481)
(814,893) (861,843)$ (46,950)
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30,2012
REVENUES
Intergovernmental revenues
Fines, forfeits and penalties
Investmentand rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Public protection
EXCESS (DEFICIENCY)OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING USES
Transfers out
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNINGOF YEAR
FUND BALANCE, END OF YEAR
87
PUBLIC SAFETY
FINAL
BUDGET
ACTUAL
VARIANCE
$ 337,555
338,329$
774
1,900
1,900
1,730
1,202
(528)
263
263
339,285
341,694
2,409
425,210 326,333 98,877
(85,925) 15,361 101,286
(822) (822)
(86,747) 14,539 101,286
203,034 203,034
$ 116,287 217,573 $ 101,286
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGETAND ACTUAL
NONMAJORGOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30,2012
REVENUES
Licenses and permits
Charges for services
Investmentand rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Community development
EXCESS OFREVENUESOVER
EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNING W YEAR
FUND BALANCE, END OF YEAR
88
COMMUNITY DEVELOPMENT
FINAL
BUDGET ACTUAL VARIANCE
$ 557,400
606,162 $
48,762
375,330
386,647
11,317
1,048
1,048
215,000
121,426
(93,574)
1,147,730
1,115,283
(32,447)
1,107,990 1,036,610 71,380
39,740 78,673 38,933
150,200 150,200
(2,510) (2,510)
147,690 147,690
187,430 226,363 38,933
66,810 66,810
$ 254,240 293,173 $ 38,933
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGETAND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30,2012
REVENUES
Intergovernmental revenues
Charges for services
Investmentand rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Publicworks
Capital outlay
Total Expenditures
EXCESS (DEFICIENCY)OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNINGOF YEAR
FUND BALANCE, END OF YEAR
89
FINAL
BUDGET
$ 2,559,280
546,210
56,740
An nnn
STREETS
3,202,230 4,377,977 1,175,747
2,200,674
Variance with
Actual
Final Budget
1,601,652
3,573,746 $
1,014,466
573,730
27,520
23,371
(33,369)
207,130
167,130
3,202,230 4,377,977 1,175,747
2,200,674
2,175,951
24,723
4,865,990
1,601,652
3,264,338
7,066,664
3,777,603
3,289,061
(3,864,434) 600,374 4,464,808
554,600 554,600
(1,417) (2,230,989) (2,229,572)
553,183 (1,676,389) (2,229,572)
(3,311,251) (1,076,015) 2,235,236
7,589,026 7,589,026
4,277,775 6,513,011 $ 2,235,236
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS- SPECIAL REVENUE FUNDS
Year ended June 30,2012
REVENUES
Intergovernmental revenues
EXPENDITURES
Capital outlay
NET CHANGE IN FUND BALANCE
TRANSPORTATION
FINAL
BUDGET
35,140
ACTUAL
34,342 $
50,000 49,080
(14,860) (14,738)
VARIANCE
(798)
920
122
FUND BALANCE, BEGINNINGOF YEAR 31,138 31,138
FUND BALANCE, END OF YEAR $ 16,278 16,400 $ 122
.f
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCE
BUDGETAND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30,2012
HOME PROGRAM and COMMUNITY DEVELOPMENT
BLOCK GRANTS
FINAL
BUDGET ACTUAL VARIANCE
REVENUES
Intergovernmental revenues $ 1,306,220 885,487 $ (420,733)
EXPENDITURES
Current
Public works 1,134,533 885,487 249,046
NET CHANGE IN FUND BALANCE 171,687 (171,687)
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR $ 171,687 (171,687)
91
NONMAJOR GOVERNMENTAL FUNDS
CAPITAL PROJECT FUNDS
CAPITAL PROJECT FUNDS
Vehicle and Equipment
This fund was establishedto accountfor the financing and replacementof vehicles and equipmentfor all funds of the City with the exception of the
Enterprise Funds. Financing is primarily provided through transfers from other funds, interest earnings and sales of surplus property.
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
ASSETS
Cash and investments
Restricted assets
Receivables:
Interest
TOTALASSETS
LIABILITIES
Accounts payable and other liabilities
Advances from other funds
TOTAL LIABILITIES
FUND BALANCES
Restrictedfor:
Capital projects
Debt service
TOTAL FUND BALANCES
TOTAL LIABILITIESAND FUND BALANCES
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS - CAPITAL PROJECT FUNDS
June 30,2012
Capital
Vehicle and Hutchins Outlay Lodi
Equipment Reserve Lake Total
$ •2,522,056 2,181 3,809,015 1,360,711 $ 7,693,963
1,691,898 1,691,898
4,519 1,601 6,120
$ $ 9,391,981
$ 27.163 114,979 9,489 $ 151,631
1,264,025 1,264,025
27,163 1,379,004 9,489 1,415,656
2,494,893 2,181 2,434,530 1,352,823 6,284,427
1,691,898 1,691,898
2 X494.?93 2.181 4,126,428 7,976,325
$ 2,522,056 2,181 5,505,432 1,362,312 $ 9,391,981
93
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS- CAPITAL PROJECT FUNDS
Year ended June 30,2012
REVENUES
Intergovernmental revenues
Charges for services
Investment and rental income
Miscellaneous revenue
Total revenues
EXPENDITURES
Capital outlay
EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES
Transfers in
NET CHANGE IN FUND BALANCES
FUND BALANCES, BEGINNING OF YEAR
FUND BALANCES, END OF YEAR
Hutchins
Capital
2,860,441
168,533
Vehicle and Street
Outlay
Lodi
2,181 2,252,690
Equipment Square
Reserve
Lake
Total
$
8,196
$
8,196
270,488
11,801
282,289
35,081
6,551
41,632
52,120
145,071
197,191
52,120
474,207
709,848
125,839
1,309,894
(422,087)
(396,083)
37,584
(780,586)
590,620
2,269,821
2,860,441
168,533
1,873,738
37,584 2,079,855
2,326,360
2,181 2,252,690
1,315,239 5,896,470
$ 2,494,893
2,181 4,126,428
1,352,823 $ 7,976,325
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 accountfor the operation, maintenance and timely replacementcf the City's fleet cf vehicles which serve the
transportation needs of all city departments.
Benefits
These funds are used to accountfor 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 30,2012
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
NETASSETS (DEFICIT)
Invested in capital assets, net of related debt
Unrestricted (deficit)
Total net assets (deficit)
Fleet
Services
Insurance Total
$ 86,340 40,789 9,984,980 $ 10,112,109
8,605 8,605
11,699 11,699
129,169 129,169
31,838 31,838
247,347 40,789 10,005,284 10,293,420
63,846 40,861
43,290
62,807
35,357
1,520,134
6,951,697
3,621,593
169,943 3,662,454 8,507,188
140,064
1,520,134
43,290
6,951,697
62,807
3,621,593
12,339,585
31,838 31,838
45,566 (3,621,665) 1,498,096 (2,078,003)
$ 77,404 (3,621,665) 1,498,096 $ (2,046,165)
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
NETASSETS (DEFICIT)- BEGINNINGOFYEAR
NETASSETS (DEFICIT)- END OF YEAR
CITY OF LODE
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND NET ASSETS
INTERNAL SERVICE FUNDS
Year ended June 30,2012
Fleet
Services
Benefits
Insurance
Total
$ 1,682,010 6,746,784 3,520,016 $ 11,948,810
722,105
950,828
1,575
1,448
31,000
1.706.956
306,720
5,683,907
1,474,709
7,465,336
(24,946) (718,552)
6.649
6.649
(18,297)
95,701
$ 77,404
97
31,551
31,551
(687,001)
(2,934,664)
(3,621,665)
22,819
313,461
1,520,134
1,856,414
1.663.602
F, F,
76,861
120,881
1,784,483
(286,387)
1,498,096
1,051,644
6,948,196
1,575
1,448
3,025,843
11,028,706
920,104
44,020
115,061
159,081
1,079,185
(3,125,350)
$ (2,046,165)
CITY OF LODI
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
Year ended June 30,2012
Cash flows from operating activities:
Receipts from customers and users
Receiptsfrom interfund services provided
Cash paid to suppliers for goods & services
Paymentsto employees
Net cash provided by (used for) operating activities
Cash flows from investing activities:
Intereston investments
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Reconciliation of operating income (loss) to net cash provided by (used for) operating activities:
Operating income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities:
Depreciation and amortization
Other revenues
Change in assets and liabilities:
Decrease in accounts receivable
Increase in inventory
Decrease in accounts payable and other liabilities
Decrease in compensated absences
Increase in self-insurance liability
Increasein netOPEB obligation
Net cash provided by (used for) operating activities
98
Fleet
Services Benefits Insurance Total
$ 6,649
31,551
86,198 $
124,398
1,682,010
6,746,784
3,520,016
11,948,810
(994,754)
(6,582,336)
(2,170,024)
(9,747,114)
(723,289)
(306,720)
(22,819)
(1,052,828)
(29,384)
(110,721)
1,413,371
1,273,266
159 41,428 41,587
(29,384)
(110,562)
1,454,799
1,314,853
115,724
151,351
8,530,181
8,797,256
$ 86,340
40,789
9,984.980 $
10,112.109
$ (24,946)
(718,552)
1,663,602 $
920,104
1,448
1,448
6,649
31,551
76,861
115,061
9,337
9,337
(4,353)
(4,353)
(6,998)
(30,525)
(457,922)
(495,445)
(1,184)
(1,184)
121,493
121,493
606,805
606,805
$ (29,384)
(110,721)
1,413,371 $
1,273,266
(•)Iuelq Ual Alleuoi;ua;ui abed siyl)
FIDUCIARY FUNDS
Private -purpose Trust Funds
These funds are used to account for trust agreements under which the principal and income benefit individuals, private
organizations or other governments.
Agency Fund
This fund was established to account for special assessments collected on the property tax roll by the City on behalf of the
property owners within the IndustrialWay Beckman Districts and the Downtown and Cherokee Lane Districts.
CITY OF LODI
COMBINING STATEMENT OF FIDUCIARY NET ASSETS
PRIVATE-PURPOSETRUST FUNDS
June 30,2012
Hutchins Street
Library Square Bequest
Total
ASSETS
Cash and Investments $ 257,221 1,503 $ 258,724
TOTAL ASSETS 257,221 1; 503 258.724
NETASSETS $ 257,221 1,503 $ 258,724
100
CITY OF LODI
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NETASSETS
PRIVATE-PURPOSETRUST FUNDS
Year ended June 30,2012
ADDITIONS
Investment income and donations
DEDUCTIONS
Current
Library
CHANGE IN NETASSETS
NETASSETS, BEGINNING OF YEAR
NETASSETS, END OF YEAR
Library
$ 5,808
9,534
(3,726)
260,947
$ 257,221
101
Hutchins Street
Square Bequest
5 $
Total
5,813
9,534
5 (3,721)
1.498 262.445
1,503$ 258,724
ASSETS
Cash and investments
Special assessment receivable
Interest receivable
TOTALASSETS
LIABILITIES
Agency obligations
TOTAL LIABILITIES
CITY OF LODI
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUND
Year ended June 30,2012
Saecial Assessments
Balance Balance
7/1/11 Additions Deductions 6/30/12
$ 469,120 401,317 504,307 $ 366,130
35,846 35,846
478 535 478 535
$ 505,444
$ 505,444
401,852 540,631 $ 366,665
138,779 $ 366,665
$ 505,444 138,779 $ 366,665
102
(This page intentionally left blank.)
STATISTICAL TABLES
UNAUDITED
STATISTICAL SECTION
The Statistical Section provides detailed information as a framework for understanding the information in the financial statements, notes and
required supplementary information. This section presents additional data and analysis that may provide the reader with valuable insight
regarding the demographics and the overall health of the City.
Contents
Pacles
Financial Trends
These schedules contain trend information to help the reader understand how the City's financial performance
and well-being has changed overtime. 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.
104
Governmental activities:
Invested incapital assets, net of relateddebt
Restricted
Unrestricted
Total governmental activities net assets
Business -type activities:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total business -type activities net assets
Primary government
CITY OF LODI
NET ASSETS BY COMPONENT
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Invested in capital assets, net of related debt
$ 217,169 $
219,023 $
213,541 $
210,569 $
Fiscal Year
$ 208,776 $
189,066 $
173,961 $
164,963 $
157,433
Restricted
22,709
20,197
2012
2011
2010
2009
2008
15,816
2007
13,051
2006
(38,169)
2005
2004
(38,910)
2003
$
107,587
$ 114,165
$ 113,308
$ 115,036
$ 107,874
$
110,815
$
111,572
$
106,293
$ 100,749
$
94,681
152,880
16,176
14,894
13,233
13,492
15,043
15,044
14,526
13,465
11,205
12,811
(3,606)
(5,148)
(6,110)
(3,462)
(4,162)
(3,968)
(8,838)
(8,801)
(9,437)
(7,334)
$
120,157
$ 123,911
$ 120,431
$ 125,066
$ 118,755
$
121,891
$
117,260
$
110,957
$ 102,517
$
100,158
$
109,582
$ 104,858
$ 100,233
$ 95,533
$ 98,109
$
97,961
$
77,494
$
67,668
$ 64,214
$
62,752
6,533
5,303
8,657
8,711
10,969
2,351
2,578
240
(34,563)
(34,129)
(28,591)
(35,448)
26,460
6,417
1,880
7,445
(7,511)
(10,270)
$
81,552
$ 76,032
$ 71,642
$ 60,085
$ 133,226
$
113,089
$
90,343
$
77,464
$ 59,281
$
52,722
Invested in capital assets, net of related debt
$ 217,169 $
219,023 $
213,541 $
210,569 $
205,983
$ 208,776 $
189,066 $
173,961 $
164,963 $
157,433
Restricted
22,709
20,197
13,233
13,492
23,700
23,755
25,495
15,816
13,783
13,051
Unrestricted
(38,169)
(39,277)
(34,701)
(38,910)
22,298
2,449
(6,958)
(1,356)
(16,948)
(17,604)
Total primary government net assets
$ 201,709 $
199,943 $
192,073 $
185,151 $
251,981
$ 234,980 $
207,603 $
188,421 $
161,798 $
152,880
Source: City of Lodi Financial Services Division
105
CITY OF LODI
CHANGES IN NETASSETS
LAST TEN FISCAL YEARS
Dollar amounts i n thousands
Program Revenues
FiscalYear
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Expenses
Charges for services:
64,251
62,167
69,664
74,000
69,284
65.809
59,112
53,908
52.899
Governmental activities:
General government
$ 1,718 $
1,793 $
2,184 $
1,631 $
1.544 $
1,280 $
1,232 $
3,639 $
3,144 $
General government
$ 9,381 $
8.262
$ 8.749
$ 9,451 $
8,307
$ 7.853
$ 9,746
$ 9,958
$ 13,167
$ 12,238
Publicprotection
25,432
25,113
27,186
27,110
25,531
23,328
22,105
22,253
19,162
16,632
Publicworks
10,248
9,305
10,462
10,464
12,224
10,599
13,229
12,377
11,868
10,946
Community development
1,003
973
1,114
1,323
2,027
2,130
2,290
54
49
50
Library
1,381
1,355
1,440
1,495
1,696
1,630
1,485
1.484
1,409
1,454
Parks and recreation
2.913
5,778
5,077
4,609
4,414
4,172
4,114
4,565
4,095
3,989
Interestand fiscal charges
1,033
1,075
1,105
1,134
1,166
1,201
1,234
1,617
1,267
1,214
Total governmental activities expenses
51,391
51,861
55.133
55.586
55,365
50,913
54.203
52,254
50,968
46,473
Business-typeactivities:
3,732
(6,001)
Total primary government net expense
5 (34,434) 5 (28,084) 5 (31.376) 5 (32,022) $ (33,026) $ (19.836) $ (25,230) $ (33,443) $ (26,193) $
(38,471)
Electric
62,599
63,399
64,364
73,358
65,201
67.534
63,780
57.308
55,943
51,388
Wastewater
17,441
11,687
11.289
10,940
12,227
9,271
8.574
10,653
6,297
6,141
Water
7 953
8.188
6.148
9.604
91920
9,875
8,256
11.748
7,489
12.879
Transil
4,256
4,132
4,785
4.832
3,908
3.577
3,643
3,018
3,064
5,389_
Total business -type activities expenses
92,249
87,406
86,586
98,734
91,256
90,257
84,253
82,727
72,793
75,797_
Total primary govemmentexpenses
_
$ 143,640 $
139,267
$ 141,7]9
$ 954,324 $
]46,621
$ 141„1.M
$138-,456
$ 134,981
$123,761
$ 122„270
Program Revenues
Governmental activities:
Charges for services:
64,251
62,167
69,664
74,000
69,284
65.809
59,112
53,908
52.899
48.873
General government
$ 1,718 $
1,793 $
2,184 $
1,631 $
1.544 $
1,280 $
1,232 $
3,639 $
3,144 $
2,355
Public protection
500
643
714
844
837
582
563
623
525
541
Publicworks
166
356
326
358
755
295
320
461
430
335
Community development
993
1,601
786
749
1,085
1,174
1,630
2,731
2,547
1.772
Library
43
47
48
44
53
53
54
49
50
57
Parks and recreation
1.241
1.245
1.269
1.158
851
1.007
918
833
679
585
Operatinggrants and contributions
2,300
2,236
1,927
1,951
2,305
2,589
2,587
2,195
2,321
3,315
Capital grants and contributions
5,025
6.737
5,122
10,822
4,717
6,975
14.631
17,559
13,894
6,814
Total governmental activities program revenues
11.986
14,658
12,376
17,557
12,147
13,955
21,935
25,359
21,043
14,003
Business-typeactivities:
Chargesforservices:
Electric
64,251
62,167
69,664
74,000
69,284
65.809
59,112
53,908
52.899
48.873
Wastewater
13,280
13,090
11,513
9,276
9,091
8,524
8,927
8,086
6,560
6,760
Water
12.083
11,940
11,716
11,787
11,350
10,040
8,343
7,713
6,007
5,532
Transit
186
195
217
251
278
401
386
340
244
293
Operatinggrants and contributions
4,214
3.983
3,449
3,653
3,381
2,621
3,377
2,731
2,547
1.772
Capital grants and contributions
3,206
5,150
1.408
5,774
8,064
19,984
11,148
3,401
8,268
6,566
Total business -type activities program revenues
97.220
96,525
97,967
104.741
1D1.448
147,379
91,291
76,179
76,525
69,790
Total primary govemmentprogramrevenues
_
$ 909206
$ 111„183 $
114,343 $ 922298
$ 916,595 $ 121„334 $ 116226 $ 9D1„538 $ 97,568 $
83,799
Net (Expensaylkevenue
Govemmentalactivities
$ (39,405)
$ (37,203) $
(42,757) $
(38,029)
$ (43,218) $ (36,958) $ (32,268) $ (26,895) $ (29,925) $
(32,470)
Business-typeactivities
4,971
9,119
11,381
6,007
10,192
17,122
7,038
(6,548)
3,732
(6,001)
Total primary government net expense
5 (34,434) 5 (28,084) 5 (31.376) 5 (32,022) $ (33,026) $ (19.836) $ (25,230) $ (33,443) $ (26,193) $
(38,471)
(Continued)
106
General Revenuesand Other Changes in Net Assets:
Govem mentalactivities:
Taxes:
Properly
Franchisetaxes
Business license tax
Transient occupancy tax
Grants and contributions not restricted to specific programs
Investment earnings
Other
Special item-gainon sale of parkland
Transfers
Total govemmentalactivities
Business-typeactivities:
Investment earnings
Litigation -environmental lawsuits proceeds
Other
Special item-forgivenessof debt
Special item -swap termination
Transfers
Total business-typeactivities
Total primarygovemment
Change in NetAssets
Govem mentalactivities
B usi ness-typeactivities
Total primarygovemment
Source: City of Lodi Financial Services Division
CITY CF LODI
CHANGES IN NETASSETS (Continued)
LASTTEN FISCALYEARS
(Dollar amounts in thousands)
FiscalYear
2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
$ 12,103 5 12,698 $ 12,836 $ 13.564 $ 13,838 $ 9,524 $ 8,031 $ 7,124 $ 7,188 $ 6,398
8,712 8,692 8,658 8.357 9,338 9,609 8,721 8,918 8,381 7,624
1,628 1,246 1,242 1,190 1,140 1.082 973 982 874 822
486 426 382 405 396 380 368 352 317 400
9,277 8,954 7,064 8,249 9,593 14,772 14,215 13,193 11,895 12,069
132 133 155 467 1,008 874 328 150 125 269
2,052 1,556 1,917 2.382 1,077 621 1,012 608 590 137
321
1,261 6,657 5,868 5.368 3,693 4,727 4.99123 4,008 2,915 2.981
35,651 40.683 38.122 39,982 40,083 41.589 38,571 35,335 32,285 30,700
566
575
731
1.385
2,028
2.380
2.008
1,880
2,242
6,457
300
2,010
8,892
6,222
6,700
9.150
865
2.728
1,244
1,353
923
1,891
2,717
1,749
2,056
2,432
2,635
1,594
15,277
(8.979)
(1,261)
(6,657)
(5,868)
(5,368)
(3,693)
(4,727)
(4,923)
(4,008)
(2,915)
(2,981)
549
(4.729)
(3.914)
(9,061)
9,944
5,624
5,841
24,731
2,827
7,798
$ (3,754) S 3.480 S 14.6351 5 1,953 $ (3,135) 5 4,631 3 6,303 $ 8,440 $ 2.36) $ (1,770)
5.520 4,390 7.467 (3,054) 20,136 22,746 12,879 18.183 6,559 1,797
5 1,766 $ 7,870 $ 2,832 $ (1,101)$ 17,001 $ 27,377 $ 19,182 $ 26,623 $ 8,919 27
107
CITY OF LODI
FUND BALANCES, GOVERNMENTAL FUNDS
LASTTEN FISCALYEARS
(Dollar amounts in thousandsl
$ 20,444 $ 19,087 $ 16,698 $ 17,010 $ 20,178 $ 21,044 $ 17,441 $ 14,684 11 11,485 $ 17,949
Implemented GASB 54 during the 2011 fiscal year changing the presentationo`fund balance
Source: City of Lodi FinancialServices Division
108
Fiscal Year
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
General Fund
Reserved
$
$
$
389 $
383 $
1,150 $
1,144 $
1,321 $
1,185 $
1,296 $
927
Unreserved
3,896
3,383
4,159
5,175
3,048
1,507
157
640
Nonspendable
6
357
Assigned
50
136
Unassigned
6,233
'5,654
Total General Fund
$
6,289 $
6,147 $
4,285 $
3,766 $
5,309 $
6,319 $
4,369 $
2,692 $
1,453 $
1,567
All other governmental funds
Reserved
$
$
$
7,801 $
1,487 $
1,932 $
1,874 $
1,138 $
4,942 $
3,778 $
6,405
Unreserved, reported in:
Special revenue funds
963
6,540
7,433
6,651
6,271
1,400
534
2,322
Capital projectsfunds
3,649
5,217
5,504
6,200
5,663
5,650
5,720
7,655
Nonspendable
I
Restricted
15,017
13,786
Unassigned
(863)
(846)
Totalallothergovernmentalfunds
$
14,155 $
12,940 $
12,413 $
13,244 $
14,869 $
14,725 $
13,072 $
11,992 $
10,032 $
16,382
$ 20,444 $ 19,087 $ 16,698 $ 17,010 $ 20,178 $ 21,044 $ 17,441 $ 14,684 11 11,485 $ 17,949
Implemented GASB 54 during the 2011 fiscal year changing the presentationo`fund balance
Source: City of Lodi FinancialServices Division
108
Revenues:
Taxes
Licensesand 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
Publicworks
Community development
Library
Parks and recreation
Capital outlay
Debt service:
Interestand fiscal charges
Principal payments
Total expenditures
Excess (deficiency) cf revenues
Over (under) expenditures
CITY CF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LASTTEN FISCALYEARS
(Dollar amounts in thousands)
Fiscal Year
2012
$ 22,928 $ 23,061 $ 23,118 $ 23,516 $ 24,712 $ 20,594 $ 18,094 $ 17,606 $ 16,908 $ 24,100
686 954 520 431 683 717 1,020 2,511 2,021 1,669
15,289 16,865 12,579 13,229 14,980 19,892 25,491 22,834 16,657 7,385
3.427 3,946 4,116 3,329 4,757 4,696 3,848 9,404 4,479 6,272
1,357 1,407 1,444 1,416 1,321 1,245 1,173 1,190 1,085 803
1,264 817 923 922 1,312 998 707 753 537 832
689
813 799 1,093 1,762 822 304 653 458 473 453
45,764 48,538 43,793 44,605 48.587 48,446 50,986 54,756 42,160 41,514
8,820
7,667
7,666
8,431
9,545
8,893
8,345
10,858
10,815
10,874
25,249
24,489
24,466
24,716
23,979
22,211
20,863
20,351
17,491
15,597
4,174
3,715
4,383
4,657
5,842
5,587
7,827
7,361
7,303
6,926
1,037
969
1,013
1,341
2,006
2,062
1,847
1,381
1,357
1,322
1,500
1,673
1,588
1,468
1,420
3,856
3,386
2,254
4,127
4,180
3,776
3,826
3,598
3,440
3,691
2.961
9.377
5,108
6,791
4,207
3,526
7,232
9,508
10,041
12,943
1,039 1,081 1,110 1,139 1,170 1,205 1,238 1,645 1,245 1,220
630 752 725 789 898 900 892 855 759 730
47,545 53,534 49,973 53,140 53,146 49,570 53,152 55,689 52,422 52,991
(1,781) (4,996) (6,180) (8,535) (4,559) (1,124) (2,166) (933) (10,262) (11,477)
109
(Continued)
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS (continued)
LASTTEN FISCALYEARS
(Dollar amounts in thousands)
Fiscal Year
Other financing sources (uses):
Transfers in 14,486 11,881 11,173 10,609 7,058 8,863 9,142 8,017 9,774 11,209
Transfers out (11,348) (5,224) (5,305) (5,242) (3,365) (4,136) (4,219) (4,009) (6,859) (8,228)
Proceedsfrom sale of land 98
Capital lease proceeds 124 883
Proceedsfrom bond refunding
Payment to refunded bond escrow
Proceedsof certificates of participation
Total otherfinancing sources (uses)
Special item- sale of parkland
Net change in fund balances
Fund balances, beginningof year
Adjustmentto fund balance as previously reported
Fund balances, end of year
Debt service as a percentageof noncapital expenditures
Source: City of Lodi Finance Services Division
3,138 6,755 5,868 5,367 3,693 4,727 4,923 4,132 3,798 2,981
630
1,357 2,389 (312) (3,168) (866) 3,603 2,757 3,199 (6,464) (8,496)
19,087 16,698 17,010 20,178 21,044 17,441 14,684 11,485 17,949 26,445
$ 20,444 $ 19,087 $ 16,698 $ 17,010 $ 20,178 $ 21,044 $ 17.441 $ 14,684 $ 11,485 $ 17,949
3.9% 4.3% 4.3% 4.3% 4.4% 4.8% 4.9% 5.7% 5.0% 5.1%
110
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
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
% Change
2003 to 2012
Property
$ 7,861
$ 8,285
$ 8,342
$ 8,887
$ 9,210
$ 9,289
$ 7,676
$ 6,771
$ 6,948
$ 6,191
27%
Sales& Use
9,246
8,663
6,873
8,028
9,296
10,137
9,812
9,183
8,533
8,709
6%
Transient Occupancy
486
426
382
405
396
380
368
352
317
400
22%
Franchise
1,734
1,715
1,681
1,415
976
929
890
821
800
730
138%
Documentary Transfer
91
95
117
114
125
235
355
353
240
207
-56%
Motor Vehicle in Lieu
4,151
4,317
4,377
4,784
4,797
4,635
4,402
4,606
2,767
3,430
21%
Public Protection
295
250
267
296
338
390
310
304
264
247
19%
Business License
1,182
958
962
1,038
1,140
1,082
973
982
874
822
44%
In Lieu Franchise
6.977
6.977
6.977
6.942
8,362
8.680
7.831
8.097
7.581
6.894
1%
Totals
$ 32,023
$ 31,686
$ 29,978
$ 31,909
$ 34,640
$ 35,757
$ 32,617
$ 31,469
$ 28,324
$ 27,630
16%
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
Secured roll
Utility roll
Unsecured roll
Gross assessed value
Less exemptions (1)
Net assessed value
Land
Improvements
Personal property
CITY OF LODI
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LASTTEN FISCALYEARS
(Dollar amounts in thousands)
Fiscal Year
2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
$ 4,738,823 $ 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
2,382 2,423 2,423 2,031 2,035 2,773 3,654 3,782 3,893 3,352
226,651 270,600 270,315 263,648 258,687 242,082 216,065 215,469 202,785 207,095
4,967,856 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
314,448 321,138 332,701 265,154 243,259 229,049 220,590 217,077 212,102 200,957
4,653,408 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
1,264,884 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
3,401,792 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
301,180 323,003 312,792 281,915 289,770 285,340 258,035 249,812 248,472 265,339
Gross assessed value
4,967,856
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
Less exemptions (1)
314,448
321,138
332,701
265,154
243,259
229,049
220,590
217,077
212,102
200,957
Net assessed value
$ 4,653,408 $
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
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- $65,358and other- $249,090=$314,448
Note: In 1978. the voters of the State of California passed Proposition 13 which limited propertytaxes to a total maximum rate of 1% based upon the assessedvalue cE the property being taxed.
Each year, the assessed value of property maybe increased by an "inflation factor' (limited to a maximum increase of 29/6). With few exceptions, properlyis only assessed at the time that it is
sold to a new owner. At That point, the properly being sold is reassessed at the purchase price. The assessed valuation data shown above represents the only data curmntlY availablewith respect
to the the actual market value of taxable property and is subject to the limitations described above.
Source: San Joaquin County Auditor-ControlleesOffice
112
CITY OF LODI
DIRECTAND OVERLAPPING PROPERTYTAX RATES
LAST TEN FISCAL YEARS
(Rate per $100 of assessed value)
Basic
Fiscal
Countywide
Year
Levy
School
All Other
Total
2012
1.0000
0.0658
0.0000
1.0658
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
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
2012 2003
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 HospitalAssn
$ 163,270
1
3.291%
General Mills
135,846
2
3.006
$ 171,116
1
5.887 %
Pacific Coast Producers
87,000
3
1.820
59,325
2
2.041
Calif Physicians Service Corp
55,332
4
1.206
Cottage Bakery Inc
40,669
5
0.889
Westcore Vine LP
23,637
6
0.505
Costco
19,776
7
0.447
Dart Container Corp
18,480
8
0.382
13,486
4
0.464
Archer Daniels Midland Co Corp
16,844
9
0.367
Wine & Roses LLC
15,810
10
0.340
Certainteed Corp
15,532
3
0.534
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
10f837
9
0.373
Dayton Hudson Corp
10,504
10
0.361
Principal Secured Property Valuation
576,664
13.034
326,764
10.271
Other Secured Taxpayers
4 ,162 ,159
94.073
3,055,181
96.045
Exemptions relativeto secured tai roll
314,448
7.107
200f957
6.317
Total Secured Property Valuation
$ 4,424,375
100.000%
$3,180,988
100.000%
Source: San Joaquin County Assessor's Office 114
CITY OF LODI
PROPERTYTAX LEVIESAND COLLECTIONS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Taxes
Levied for
Fiscal the Fiscal
Year Year
2012 $
2011
2010
2009
2008
2007
2006
2005
2004
2003
7,754
8,143
8,291
7,966
8,167
8,170
7,815
7,057
6,570
5,832
Collected Within the
Total Collections
Fiscal Year of the Levy
to Date
Percent
Percent
Of
of
Amount
Levy (1)
Amount
Levy
$ 7,754
100.0%
$ 7,754
100.0%
8,143
100.0%
8,143
100.0%
8,291
100.0%
8,291
100.0%
7,966
100.0%
7,966
100.0%
8,167
100.0%
8,167
100.0%
8,170
100.0%
8,170
100.0%
7,815
100.0%
7,815
100.0%
7,057
100.0%
7,057
100.0%
6,570
100.0%
6,570
100.0%
5,832
100.0%
5,832
100.0%
1) Per agreementwith 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 CountyAuditor/Controller's Office
115
Type of Customer
City Accounts
Contract Large Industrial
Contract Medium Industrial
Contract Small Industrial
Domestic Residential
Domestic Mobile Home Park
Duskto Dawn
Large Commercial
Large Industrial
Medium Industrial
Residental Low Inwme
SmallCommerical
Small Industrial
Total
CINOFLODI
ELECTRICITY SOLD BY TYPE OF CUSTOMER
LAST SEVEN FISCAL YEARS
Information prior to the Implementatlonof GASB 44 Is not available
Soure City of Lodi Financial Services Division
116
Billed Accounts
2012
2011
2010
2009
2008
2007
2006
195
197
189
189
187
186
184
5
5
6
1
1
2
1
0
1
22,361
22,360
22,525
22.506
22,510
22,938
22,860
13
13
13
13
13
13
13
92
89
89
92
92
95
95
336
350
357
377
360
375
359
38
40
39
37
32
33
33
9
9
9
8
8
10
13
2,531
2,258
2,193
1.847
1,943
2,003
1,910
3,340
3,324
3,280
3.249
3,199
3,241
3,279
11
11
10
10
9
9
28,926
28,651
28,704
28,328
28,380
28,909
28,764
Information prior to the Implementatlonof GASB 44 Is not available
Soure 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
Certificates
certificates
Of
Notes
Total
Fiscal
of
Loan
Notes
Governmental
Year
Participation
Payable
Payable
Activities
2012
$ 21.025
$
$ 245
$ 21,270 $
2011
21,655
148,675
245
21,900
2010
22,265
245
22.510
2009
22,855
245
23.100
2008
23,420
94
245
23,759
2007
23.975
187
245
24,407
2006
24,510
279
245
25,034
2005
25,030
368
245
25,543
2004
25,530
456
245
26,231
2003
26,015
543
245
26,803
Certificates
192,945
Of
Notes
Participation
Payable
171,675
$
177,150
165,274
142,935
1,409
147,175
1,585
139,760
1,755
121,675
1,918
125,340
2,077
126,615
2,230
148,675
2,378
117,515
2,521
Details regarding the City's outstandingdebt can be found in the Note 8 of these financial statements.
(1) See Demographic and EconomicStatistics table for personal income and population.
Source: City of Lodi Financial Services Division
117
Total Total
Business -type Primary
Activities Government
$ 171,675 $
192,945
177,150
199,050
144,344
166,854
148,760
171,860
141,515
165,274
123,593
148,000
127,417
152.451
128,845
154,488
151,053
177.284
120,036
146,839
Percent of Personal Per
Income (1) Capita (1)
9.99 %
3,071
10.58
3.186
8.43
2,626
8.74
2,714
8.94
2,608
8.12
2,335
8.90
2,427
9.43
2,473
11.43
2,917
9.85
2,427
CITY OF LODI
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
General bonded debt is debt 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
Less Amounts
Percent of
Certificates
Available in
Assessed
Fiscal
of
Debt Service
Value (9) of
Per
Year
Participation
Fund
Net
Property
Capita
2012
21,025
$ 1,692 $
19,333
0.4 %
307.73
2011
21,655
1,692
19,963
0.4
319.55
2010
22,265
1,692
20,573
0.4
323.73
2009
22,855
1,692
21,163
0.4
334.26
2008
23,420
1,692
21,728
0.4
342.92
2007
23,975
1,692
22,283
0.4
351.49
2006
24,510
1,692
22,818
0.5
363.25
2005
25,030
1,692
23,338
0.6
373.61
2004
25,530
1,692
23,838
0.6
392.27
2003
26,015
1,692
24,323
0.7
402.03
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
LASTTEN FISCALYEARS
(Dollar amounts in thousands)
FISCAL YEAR
2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
$ 4,718,766
$ 4,926,130
$ 4,995,362
$ 5,227,580
$ 5,159,269
$ 4,887,074
$ 4,325,000
$ 3,951,862
$ 3,686,227
$ 3,464,195
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
1,179,692
1,231,533
1,248,841
1,306,895
1,289,817
1,221,769
1,081,250
987,966
921,557
866,049
15%
15%
15%
15%
15%
15%
15%
15%
15%
15%
176,954
184,730
187,326
196,034
193,473
183,265
162,188
148,195
138,234
129,907
$ 129,907
$ 176,954
$ 184,730
$ 187,326
$ 196,034
$ 193,473
$ 183,265
$ 162,188
$ 148,195
$ 138,234
0%
p%
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% C3 market
value. Effective with the 1982 fiscal year, each parcel is now assessed at 100% of market value (as ofthe 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 cf Califomiafor local govemements
located within the state.
(1) Reflects City assessed valuation with other exemptionsof $249,090 deducted for 2012
Source: San Joaquin CountyAuditor-Controlleesoffice
119
CITY OF LODI
DIRECTAND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
June 30,2012
OVERLAPPING DEBT:
San Joaquin Community College District
Lodi Unified School District
San Joaquin County Certificates of Participation
Lodi Unified School District Certificates of Participation
SUBTOTAL OVERLAPPING DEBT
DIRECT DEBT:
City of Lodi Certificates of Participation
City of Lodi - Note payable
TOTAL DIRECTAND OVERLAPPING DEBT(2)
2011-12 Assessed Valuation
2011-12 Population
DEBT RATIOS
Percentage
Total Debt Applicable(1)
City's Share
of Debt
$ 133,626,655 8.865 % $ 11,846,003
99,010,000 37.209 36,840,631
176,129,997 9.821 17,297,727
40,710,000 37.209 15,147,784
81,132,145
21,025,000 100.00 21,025,000
245,000 100.00 245,000
$ 102.402.145
$ 4,967,856,000
62,825
Per Capita Value
Total Gross Debt $ 102,402,145 $ 1,630 2.06%
(1) Percent of overlapping agency's assessed valuation located within the boundaries of the City.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded capital lease
obligations.
SOURCE: California Municipal Statistics, San Francisco, CA
San Joaquin County Aud itors-Control ler Office
State of California, Department of Finance, Demographic Research Unit
120
CITY OF LODI
PLEDGED-REVENUECOVERAGE
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
2012 $
65,220
$ 50,164
$ 15,056
$ 3,270
$ 4,021
$ 7,291
2.07
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
Source: City cf Lodi Financial Services Division 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
2012 $
13,787 $
6,659
2011
16,508
5,972
2010
12,284
6,180
2009
10,764
5,921
2008
10,530
6,189
2007
9,881
5,287
2006
9,865
4,886
2005
9,232
4,781
2004
7,211
4,385
2003
7,428
4,380
$ 7,128
$ 1,430
10,536
1,370
6,104
1,320
4,843
1,270
4,341
1,355
4,594
I,315
4,979
1,275
4,451
540
2,826
175
3,048
160
Source: City of Lodi Financial Services Division continued
122
$ 2,688
$ 4,118
2,748
4,118
2,832
4,152
2,882
4,152
2,334
3,689
2,017
3,332
2,056
3,331
2,210
2,750
715
890
639
799
1.73
2.56
1.47
1.17
1.18
1.38
1.49
1.62
3.18
3.81
CITY OF LODI
PLEDGED-REVENUECOVERAGE (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 (3) Total Coverage
Water Certificates of Participation
2012 $ 13,275 $ 5,392 $ 7,883 $ 775 $ 1,530 $ 2,305 3.42
2011 14,051 5,662 8,389 1,409 874 2,283 3.67
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 cf these financial statements.
(1) Total operating revenues including investment earnings, operating grants, capital contributions
and other revenue.
(2) Total operating expenses including cost ofservices paid to the General Fund and excluding in -lieu fees,
depreciation and amortization.
(3) Net cf Build America Bonds interest subsidy.
Source: City of Lodi Financial Services Division continued
123
CITY OF LODI
DEMOGRAPHICAND ECONOMIC STATISTICS
LASTTEN FISCALYEARS
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 cf persons, personal dividend income, personal interest income, and personal current transfer receipts.
Per capita personal income is calculated as the personal income cf residents of a given area divided by the resident population of the area.
In computing per capita personal income, Bureau of Economic analysis uses the Census Bureau's annual midyear population estimates.
Source: State of California, Departmentof Finance, Demographic Reseach Unitand Departmentcf 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
al! County
Cities
dollars)
Income
Rate
2012
13.92
62,825
0.8%
695,750
9.0%
136 $
1,931
30,732
11.3%
2011
13.92
62,473
0.6%
690,899
9.0%
135
1,882
30,132
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
-0.10/0
689,480
9.2%
135
1,967
31,071
12.2%
2008
13.92
63,362
-0.10/0
685,600
9.2%
1.33
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
6.596
2003
12.69
60,500
1.8%
613,500
9.9%
179
1,490
24,620
6.9%
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 cf persons, personal dividend income, personal interest income, and personal current transfer receipts.
Per capita personal income is calculated as the personal income cf residents of a given area divided by the resident population of the area.
In computing per capita personal income, Bureau of Economic analysis uses the Census Bureau's annual midyear population estimates.
Source: State of California, Departmentof Finance, Demographic Reseach Unitand Departmentcf Labor.
124
CITY OF LODI
PRINCIPAL EMPLOYERS
CURRENTYEAR 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
3,687
1
14.11 %
2,800
1
10.72 %
Lodi Memorial Hospital
1,340
2
5.13
1,045
2
4.00
Pacific Coast Producers
1,000
3
3.83
500
4
1.91
Blue Shield
915
4
3.50
Cottage Bakery
527
5
2.02
General Mills
478
6
1.83
550
3
2.11
City cf Lodi
383
7
1.47
457
5
1.75
Farmers & Merchants Bank
283
8
1.08
162
9
0.62
Walmart
240
9
0.92
330
7
1.26
Target
205
10
0.78
200
8
0.77
Valley Industries
335
6
1.28
CertainTeed
113
10
0.43
Total
9,058
34.67
6,492
24.85
Note: The City of Lodi implemented GASB 44 for the fiscal year ended June 30,2006
125
Department:
Administration
Community Development
Electric
Financial Services
Fire
Internal Services
Library
Parks& Recreation
Parks, Recreation and Cultural Services
Police
Public Works
Total
CITY OF LODI
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY DEPARTMENT LAST TEN FISCAL YEARS
Fiscal Year
2012 2011* 2010 2009 2008 2007 2006 2005 2004 2003
12
13
31
32
19
35
33
37
36
37
9
13
13
13
14
18
17
17
17
18
40
41
51
50
48
64
65
52
52
52
24
26
39
30
28
38
38
38
54
64
64
64
64
64
61
68
61
68
29
35
12
14
14
14
14
16
14
15
15
15
31
31
30
34
31
34
34
34
29
37
103
125
125
125
125
116
117
117
116
117
93
98
102
102
107
114
99
111
110
110
381
440
455
457
460
491
465
489
479
489
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 INDICATORSBY FUNCTION/PROGRAM/DEPARTMENT
LAST SEVEN FISCALYEARS
General government:
Building permits issued
Businesstax certificates:
Retail sales and service
Manufacturersand processors
Professions
Miscellaneouscontractors. peddlers, delivery vehicles, etc.
Utility billing/customer service:
Number of customers
Energy sales (KWH)
Peak demand (MW)
Publicsafety:
Police:
Major reported crimes
Total arrests
Dispatchedcalls for service
Fire:
Interiorstructurefire calls
Non-structuralfire calls
Hazardous materials cal Is
Emergency medical calls
Total emergencycalls
Total numberof units dispatched
Publicworks:
Milescf streets resurfaced
Fleetjob orders completed
Trees planted
Water utility:
Newconnections
Water main breaks
Wastewater utility:
Average daily treatment (milliongaVday)
Library:
Registered borrowers
Circulationof library materials
Reference. researchand informational questions answered
Annual attendanceat libraries
Number of programs offered
Annual attendance at programs
Publicaccess computer usage
Fiscal Year
2012
2011
2010
2009
2008
2007
2006
1,461
2,022
1,709
1,754
1,851
2,317
2,699
2,485
2,530
2,406
2,496
2,442
2,632
2,565
77
76
80
82
78
78
125
364
371
373
380
398
404
322
1,362
1,357
1,312
1,411
1,063
1,127
533
23,761
23,575
25,573
25,555
25,555
25,712
25,655
435,655,731
421,130,329
434,200,987
452,075,554
450,407,709
458,740,745
459,637,092
116
116
120
134
134
144
127
3,573
2.885
2,377
2,454
2,993
3,096
3,234
4,350
4.410
4.238
4,646
5,590
5,463
5,162
46,756
52,061
51.870
56,391
55,911
53,686
55,937
57
56
47
69
88
79
66
163
121
123
123
160
163
158
41
69
70
70
35
27
26
3.820
3,752
3,494
3,364
3,420
3,213
2,912
5,620
5,753
5,385
5,392
5,346
5,000
4,447
7.855
7.835
7,390
7,038
7,841
7,005
6,055
6
6
3
6
5
4
33
1953
2,810
3,303
3,921
3,520
6,938
5,608
96
130
95
7
8
17
17
35
110
266
10
8
6
4
4
10
8
6.5MG
6.5MG
6.5MG
6.5MG
6.5MG
6.9MG
6,7MG
47,147
43,927
39,199
53,530
48.969
44,558
52,779
217.742
248,250
251,967
219,711
280,466
273,270
281.216
14,463
16,234
16,501
15,379
19,257
18,854
17,342
222.148
210.279
207.123
nla
296,793
288.070
287,986
432
388
344
316
348
339
320
12,993
13,133
10,676
8,765
11,242
10,700
10,872
47.428
58,990
52,124
38,388
38,999
35,260
29,896
(Continued)
127
CITY OF LODI
OPERATING INDICATORS BY FUNCTIONIPROGRAMIDEPARTMENT
LAST SEVEN FISCALYEARS
Note: The Cily of Lodi implementedGASB 44 for the fiscal year ended June 30.2006
Information prior to the implementation of GASB 44 i4 not available.
Source. City of Lodi
128
Fiscal Year
2012
2011
2010
2009
2008
2007
2006
Community center:
Community center bookings
698
926
789
475
494
302
220
Instructional classes
307
536
583
507
530
478
509
Registered students
3,713
3,438
3,525
3,316
5,550
3,548
4,369
Yearly attendance
13,925
14,217
13,355
14,050
14,410
14,429
15,369
Parks and recreation:
After school program registration (number of participants/sites)
3,232/20
1,92014
1.92014
1,92014
3,014/4
145.000112
135,000/12
Adult sports
Program/Participation
2420
2,528
2.528
2.284
28,000
36,000
36,000
Programs offered
15
16
16
13
11
11
11
Partnerships
3
5
5
1
3
3
5
Tournaments
12
7
7
10
10
20
20
Youthrreen sports
Program attendance
3,889
4,251
4,251
215,000
195,000
200.000
200,000
Programsoffered
24
16
16
24
14
14
20
Aquatics
Program attendance
34,366
32,566
32,566
2,433
50,000
59,000
59,000
Number of programs
25
13
13
6
3
8
6
Note: The Cily of Lodi implementedGASB 44 for the fiscal year ended June 30.2006
Information prior to the implementation of GASB 44 i4 not available.
Source. City of Lodi
128
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT
LAST EIGHT FISCALYEARS
(Continued)
129
2012
Fiscal Year
2011
2oTU--
2009 2008
20U1
2UUb
2005
General government:
Total square miles
13.92
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
1
Animal control facility
1
1
1
1
1
1
1
1
Police training facility (pistol range)
1
1
1
1
1
1
1
1
Vehicles:
Marked patrol cars
23
23
23
25
25
25
28
28
Motorcycles and scooters
5
5
5
5
5
5
4
1
Animal control vehicles
2
2
2
2
2
2
3
3
Other automobiles
37
37
37
38
40
41
41
41
Fire:
Facilities:
Fire stations
4
4
4
4
4
4
4
4
Vehicles:
Fire engines
6
7
7
7
6
6
5
5
Trucks/Trailers
5
5
6
6
9
8
7
7
Other automobiles
9
8
10
12
7
10
11
11
Publicworks:
Miles cf streets
202
202
202
202
200
184
198
100
Miles of alley ways
16
16
16
16
16
16
16
14
Trafficsignals
67
67
62
62
64
66
64
60
Street lights
7,270
7,270
7,270
7,270
7,270
7,270
7,203
6,995
(Continued)
129
CITY CF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT
LAST EIGHT FISCALYEARS
(Continued)
130
Fiscal Year
2012
2011
2010
2009
2008
2007
2006
2005
Parks and recreation:
Parks and squares
26
26
26
26
23
23
23
23
Park acreage
373
373
373
371
275
275
275
275
Boating facilities - launch lanes
1
1
1
1
1
1
1
1
Senior center
1
1
1
1
1
1
1
1
Community Centers
1
1
1
1
1
1
1
1
Swimming pools
4
4
4
4
3
3
3
3
Baseballlsoftball diamonds
24
24
24
24
26
26
26
26
Tennis courts
11
11
11
11
11
11
11
11
Skateboard park
1
1
1
1
1
1
1
1
Playgrounds
22
25
25
25
22
22
22
22
Ballpark
24
24
24
24
26
26
26
26
Soccer Field
22
22
22
22
22
22
22
22
Football Field
1
1
1
1
3
3
3
3
Handball/Basketball/Volleyball Courts
10
10
10
10
8
8
8
8
Horseshoe Pits
8
6
6
6
7
10
10
10
Library:
Central library
1
1
1
1
1
1
1
1
Total items in collection
135,113
134,804
130,530
135,197
142,885
142,098
134,129
137,673
Integrated library system
1
1
1
1
1
1
1
1
Microfilm readers
1
1
1
1
1
1
1
1
Microfilm readerslprinters
1
I
1
1
1
1
1
1
Self check out machines
2
2
2
2
0
1
1
1
Electric utility:
Overhead lines 12kv (miles)
133
133
130
130
130
129
129
129
Overhead lines 60kv (miles)
14
13
13
13
13
13
13
13
Underground lines (miles)
159
157
155
154
153
151
151
1%
(Continued)
130
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:
Stormwatermain drain lines (miles)
Stormwater pump stations
Central parking district:
Parking structure
Parking spaces
Parking lots
CITY OF LODI
CAPITALASSET STATISTICS BY FUNCTION/PROGRAMMEPARTMENT
LAST EIGHT FISCAL YEARS
Fiscal Year
2012
2011
2010
2009
2008
2007
2006
2005
236
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
1,100,000
27
27
26
26
26
26
26
25
2
2
2
2
2
2
2
2
196
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
8.5 MG
1
1
1
1
1
1
1
1
124
124
124
161
119
161
115
114
14
14
14
14
14
14
13
14
1
1
1
1
1
1
1
1
2,453
2,453
2,453
2,453
2,453
2,453
2,453
2,453
25
25
25
25
25
25
25
25
Note: The City of Lodi implemented GASB 44 for thefiscal 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 JUNE 30, 2012
Federal Grantor
Pass-through Grantor or Direct
CFDA
GranUProject
Prop Title
Number
Number
Expenditures
U.S. Department of Housing and Urban Development
Direct:
Community Development Block Grants/Entitlement Grants
14.218
B -09 -MC -06-0038
$ 202,493
Community Development Block Grants/Entitlement Grants
14.218
B -10 -MC -06-0038
145,967
Community Development Block Grants/Entitlement Grants
14.218
B -I1 -MC -06-0038
457.238
'Total Comm unity Development Block Grants/Entitlement Grants
805,698
Passed through State of California Department of I lousing and Community Development:
Home Investment Partnerships Program
14.239
09 -HOME -6271
54,054
Passed through California State University of Fresno:
Sustainable Communities Planning Grant
Total U.S. Department of Housing and Urban Development
U.S. Department of Justice
Direct:
ARRA - Public Sal'ety Partnership and Community Policing Grants
Edward Byrne Memorial Justice Assistance Gant Program
Passed through City of Stockton:
Edward Byrne Memorial Justice Assistance Grant Program
Total Edward Byrne Memorial Justice Assislance Grant I'rogram
Passed through Sun Joaquin County:
ARRA - Recovery Act - Edward Byrne Memorial Justice Assislance Grant (JAG)
Program / Grants to Units of Local Government
Total JAG Program Cluster
Total U.S. Department of Justice
14.703 CAMP0004-10 25.735
885.487
16.710 2009-RK-WX-0151 450,877
16.738 2007 -DJ -BX -0138 10,126
16.738 2009 -DJ -BX -0574 36,743
46.869
16.804 2009 -SB -B9-0539 22,343
69,212
520.089
See accompanying notes to the schedule of expenditures of federal awards.
132
CITY OF LODI
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
FOR THE YEAR ENDED JUNE 30,2012
Federal Grantor
kiss -through Grantor or Direct
Program `Title
U.S. Department of Transportation
Direct:
Federal "Transit - Formula Grants
Federal Transit - FOrltnla Grants
ARRA - Federal Transit - Formula Grants
`Totalhederal Transit - Formula Grants
Passed through State of California 0ftice of Traffic Safety
Alcohol lmpairecl Driving Countermeasures Incentive Grants I
Mininuun Penalties for Repeat Offenders for Driving While Intoxicated
Passed through University of Berkeley:
Minimwn Penalties for Repeat Offenders for Driving While Intoxicated
Passed through City of Stockton:
Minimum PenaltieS for Repeat Offenders for Driving While Intoxicated
Total Minimum Penalties for Repeal OTtenders for Driving While Intoxicated
Total U.S. Department of Transportation
U.S. Department of Energy
Direct:
ARRA -Energy Efficiency and Conservation Block Grant Program (EECBG)
Total Federal A\vards
CFDA
Grant/Project
Number
Number
Expenditures
20.507
CA -90-Y983-00
$ 1,555,605
20.507
CA -90-Y565-00
42,584
20.507
CA -96-X052-01
498.737
2,096,926
20.601
20364
85,041
20.608
ALI112
18.194
20.608
SC:11230
10,432
20.608
ALI160
29,628
58,254
2,240,221
81.128
DE-SC0002707
23,796
$ 3,669,593
See accompanying notes to the schedule of expenditures of federal awards.
133
CITY OF LODI
NOTES TO THE SCHEDULE OF EXPENDITURE, S OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30,2012
NOTEI—GENERAL
The accompanying Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2012, presents the activity of all federal award programs of
the City of Lodi, California (City). The City reporting entity is defined in Note I 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 I of the City's basic financial statements.
NOTE 3—CATALOG OF FEDERAL DOMESTIC ASSISTANCE
The CFDA numbers inclucled 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 Amount Provided
Federal Program CFDA Number to Subrecipients
Community Development Block Grants/
Entitlement Grants 14.218 $ 5,000
Federal Transit —Formula Grants 20.507 333,840
ARRA — Federal Transit —Formula Grants 20.507 29,560
134
Certified Public Accountant=
Sacramento
3000 S Street, Suite 300
Sacramento, CA 95816
916.928.4600
Walnut Creak
Oakland
LA/Century City
The Honorable Members of City Council
City of Lodi, California Newport Beach
San Diego
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 Seattle
GO VERNMENTA UDITING 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, 2012, which collectively comprise the City's basic financial statements
and have issued our report thereon dated December 6, 2012. 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 Orem 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 defiled above. However, we identified a deficiency in
internal control over financial reporting, described in the accompanying schedule of findings and questioned costs as item 2012-A that we consider to be a
significant deficiency in internal control over financial reporting. A significant deficiency is a deficiency, or 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.
135
www.ingocpa.com
Compliance and Other iWatters
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 6,2012.
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, 2012
136
L Certified Public Accountants
The Honorable Members of City Council
City of Lodi, California
Sacramento
3000 S Street, Suite 300
Sacramento, CA 95816
916.928.4600
Walnut Creek
Oakland
LA/Century City
Newport Beach
San Diego
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL Seattle
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 .¢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, 2012. 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,Audils of States,
Local Governments, and Non -Profit OrganLations. 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.
1 n 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, 20 12. 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 2012-1 and 2012-2.
137
wv.mgocpa.com
Internal Control Over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations,
contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with 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 2012-I and 2012-2. 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.
f
Sacramento, California
December 6, 20 12
138
I�'ireurrc•ial Slalenrerris:
Type of auditor's report issued:
Internal control over financial reporting:
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30,2012
Section 1— Summary of Auditor's Results
Unqualified
Material weaknesses identified? No
Significant deficiencies identified that are
not considered to be material weaknesses? Yes
Noncompliance material to financial
statements noted? No
Federal A)i,ards
Internal control over n)ajor program:
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
5I0(a) of Circular A-133? Yes
139
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30,2012
Identification of major programs:
Federal Pro<rani Title CFDANo.
ARRA — Public Safety Partnership and Community Policing Grants 16.710
Federal Transit — Formula Grants (ARRAand non -ARRA) 20.507
Dollar threshold used to distinguish
between type A and type B programs:
Auclitee qualified as low-risk auditee?
Reference Number: 2012-A
$300,000
Yes
Section 11 —Financial Statement Findings
Criteria:
Under generally accepted accounting principles, internal service funds are expressly clesigned 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
benefitting funcls in the form of fees and charges.
Condition:
The City is not charging City funds their share ofthe City's Other Post Employment Benefits (OPEB) costs accumulating in its Benefits Internal Service Fund.
Contest:
The Benefits Internal Service Fund's net deficit balance was $1,078,724, $1,930,874, $2,934,664, and $3,621,665 as of June 30, 2009, 20 10, 201 1, and 2012,
respectively .
Effect:
This condition resulted in an increase of $687,001 in the net deficit of the Benefits Internal Service Fund during the year ended June 30, 2012.
Cause:
The City is only charging City funds their share of the City's OPEB costs that it has chosen to pay under a pay-as-you-go basis.
140
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30,2012
Recommendation:
Under generally accepted accounting principles, the City needs to charge City fiinds their share of the OPEB cost incurred in its Benefits Internal Service Fund as
opposed to limiting the charges to those costs actually paid.
Management Response and Corrective Action:
The City's practice of reflecting the total liability and expense of the Other Post Employment Benefits (OPEB) program in the Benefits Internal Services Fund
enhances transparency in reporting by showing the impact of this reporting requirement in one location. The deficit net assets will continue until the City fully
funds the actuarially calculated liability and expense that it is required to record. Staff will bring forward the deficit amount each budget cycle for Council
consideration.
Section Ill —Federal Award Findings and Questioned Costs
Refererice Number: 2012-1
Federal Program Title: ARRA — Public Safety Partnership and Community Policing Grants
Federal Catalog Number: 16.710
Federal Award Number and Year: 2009-12K-Wa-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) 1"7nancial Status Repoi7 —
(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 noneonstruction
grants and for construction grants when required in accordance with paragraph Section .41(e)(2)(iii) of this section.
(4) Dire 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.
141
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30,2012
Per ON/IB memorandum M-09-2 1, lInpleinenlino Guidance for lire Reports on Use of'Funds Pursuant to 1he .4incrican Recove,y and Reinvestmenl Acl Cf 2009
dated June 22, 2009, Section 2. 1, Section 15 12 of the Recovery Act requires reports on the use of Recovery Act funding by recipients no later than the 10°i 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'x' 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 funds 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 onj obs created or retained;
• Details on sub -awards and other payments.
Condition:
It was rioted 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 2011 through December 2011 reported expendittires to date of $585,296, which were the cumulative expenditures through September 2011 as
reported in the 2010 SEFA ($73,112), plus reported in the 2011 SEFA ($409,795), plus requested in the Drawdown Report for the period of July 2011 through
September 2011 ($102,389). The reports covering the period o f January 2012 through March 2012 reported expenditures to date of $697,431, which were the
cumulative expenditures through December 2011 as reported in the 2010 SEFA ($73,112), plus reported in the 2011 SEFA ($409,795), plus requested in the
Diawdown Report for the period of July 2011 through September 2011 ($102,389), plus requested in the Drawdown Report for the period of October 2011
through December 2011 ($112,135).
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, 2012. The Drawdown Reports for the period of
July 2011 through September 2011 ($1 02,389) plus the period October 2011 through December 2011 ($1 12,135)plus the period of January 2012 through March
2012 ($108,270) plus the period of April 2012 through June 2012 ($128,083) equals the expenditures reported in the SEFA of $450,877.
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:
I'er 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.
142
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30,2012
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:
Staff began implementing a corrective action as recommended, however, additional correction to rectify the reporting issue will be implemented in the immediate
reporting period.
Reference Number: 2012-2
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) Nonconstruclion Peiforinance Repows.
(1) Grantees shall submit annual perforinance reports unless the awarding agency requires quarterly or semi-annually reports. However, perforniance
reports will not be required more frequently than quarterly. Annual reports shall be due 90 clays 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 .4 I, Financial Reporting
(b) Financial Status ltepori —
(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.
143
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30,2012
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 J Line 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 10th day
after the end of each calendar quarter (beginning the quarter ending September 30, 2009).
Condition:
It was noted that the City submitted three Federal Financial Reports and two quarterly performance reports after their respective due dates. The City was also
unable to provide two Section 1512 reports.
Questioned Costs:
There are no questioned costs.
Context:
Three of the four Federal Financial Reports, three of the four quarterly performance reports, and two of the four Section 1512 reports were sampled for the year
ended Jctne 30, 2012.
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 aiid Federal Financial Reports no later than 30 days following the end of each quarter and Section
15 12 reports no later than 10 days following the end of each quarter.
Management Response and Corrective Action:
All grant funds have been spent and the City is awaiting final instructions to close out the grant.
144
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30,2012
Reference Number: 2011-1
Criteria:
Pti scant to Subpart C, section .310(b)(3) of Office of Management and Budget (OMB) Circular A- 133, .4udits, of'Stales, Local Goi)ernrnents, and Non -Profit
organi-zations, 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 171 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 111 on the SF -SAC.
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 Slate 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 fi-om 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 prograuns or identitying ARRA programs, which could result in the misidentification of major programs.
145
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2012
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 fi amework 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.
Status:
The City has developed a process for measuring and reporting federal expenditures and no such errors were noted in the 20 12 SEFA, therefore this
recommendation is considered implemented.
146
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30,2012
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-RI:-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 .4 1, Financial Reporting
(b) Fineencial.9alus Report —
(I) 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 nonconstructioll
grants and for construction grants when required in accordance with paragraph Section A 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 clays 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 -09-2I, Iniplememing Guidance for the Reports on Use of Funds Pursuant to the American Recovery and Reinvesuneni 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 I 01 day
after the end of each calendar quarter (beginning the quarter ending September 30, 2009) and for the Federal agency providing those fluids to make the reports
publicly available no later than the 30'x' day after the end of that quarter. Aimed at providing transparency into the use of these fiends, the recipient reports are
required to include the following detailed information:
• Total amount of funds 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 onjobs created or retained;
• Details on sub -awards and other payments.
147
CI'T'Y OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30,2012
Condition:
It was noted that expendittires 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
($105,811) 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 o f a quarter before the Drawdown Reports are prepared and submitted.
Reconunendation:
It is recommended that the City prepare the Drawdown Reports prior to preparing the Section 15I2 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.
Status:
For the year ended June 30, 2012, the City continued to report expenditures in the Federal Financial Reports and Section 15 12 reports that are not for the periods
reported, therefore our recommendation continues (see finding 2012-1 in the schedule of findings and questioned costs).
148
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30,2012
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 Perfoivnunce Reports.
(2) Grantees shall submit annual performaiice 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 clue 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) Financi it ShIMS 12e1.201-1 —
(I) 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 forconstruction grants when required in accordance with paragraph Section .41(e)(2)(iii) ofthis 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 J?eport, replaces SF -269
and SF -269A.
Per OMB memorandum M-09-2 I, /nzplenienting Guidance for the Reports on Use of Funds Pursuant to the American Reeoi ery and Rehn,estnrem Act of'3009
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'x' day
after the enol of each calendar quarter (beginning the quarter ending September 30,2009).
149
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2012
Condition:
It was rioted that the City submitted one Federal Financial Report for the entire year. This Federal Financial Report, four quarterly performance reports, and one
Section IS 12 report were submitted after their respective clue 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 I512 reports daring the year ended June 30,
2011.
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,
specitical ly procedures to submit quarterly performance reports and Federal Financial Reports no later than 30 days following the end of each quarter and Section
15 12 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.
Status:
For the year ended June 30, 2012, the City continued to submit reports after due dates, therefore our recommendation continues (see finding 2012-2 in the
schedule of findings and questioned costs).
150
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CONTINUING DISCLOSURES
UNAUDITED
CONTINUING DISCLOSURE REQUIREMENTS FORTHE CITY OF LODI, THE LODI PUBLIC IMPROVEMENT CORPORATION
AND THE LODI PUBLIC FINANCING AUTHORITY
Fiscal Year 2011-12
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'swebsite atwww.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 resourcesfor 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 recentfiscal 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, 2012, 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.
151
Table 1 A table setting forth the City's power supply resources.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
POWER SUPPLY RESOURCES
(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) Includessupply from exchanges and line losses.
152
Capacity
Available
Actual Energy
% of Total
Source
(MW)")(4)
(MWh)
Energy
Purchased PoweP-
Western
4.7
18,459
3.70%
NCPA
Geothermal Project
13.3
89,282
17.91
Hydroelectric Project
26.2
48,883
9.80
Combustion Turbine Project No. 1
9.4
122
0.02
Capital Facilities, Unit One
19.6
659
0.13
Contracts, Exchanges and Bilaterals (3)
70.0
341,228
68.44
Total
143.2
498,633(4)15)
100.00%
Total Capacity and Energy Sold at Wholesale
NIA
45,914
City System Requirementfor Retail Load
143.2
452,719
(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) Includessupply from exchanges and line losses.
152
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, REVENUEAND DEMAND
Fiscal Years Ended June 30,
2008 2009 2010 2011 2012
Number of Customers:
Residential
22,523
Commercial
2,714
Industrial
32
Other
187
Total Customers
25,456
Kilowatt-Hour(kWh) Sales:
37
22,465
21,981
22,251
22,244
2,696
3,163
2,865
2,834
37
31
39
37
188
194
229
235
25,386
25,369
25,384
25,350
Residential
153,563,188
153,487,430
Commercial
155,146,983
155,206,324
Industrial
129,429,938
131,059,764
Other
12,267,600
12,322,036
Total kWh sales
450,407,709
452,075,554
Revenues from Sale of Energy:
Residential
$ 27,127,049 $
29,016,776 $
Commercial
25,173,286
26,883,557
Industrial
14,591,885
15,875,038
Other
2,132,120
2,224,567
Total Revenues from
Sale of Energy:
$ 69,024,340 $
73,999,939 $
Peak Demand (kW)
132.4
117.4
Excludes revenues from California Energy CommissionTax.
Sources: City of Lodi, audited annual financial statements and Customer Information System reports.
153
150,811,587
146,644,990
125,000,860
11,563,550
434,020,987
27,642,200 $
24,901,257
15,015,036
2,105,196
144, 256, 683
137,584,723
128,072,575
11,216,348
421,130,329
149,814,375
138,735,487
135,620,441
11,485,428
435,655,731
24,513,202 $
25,606,368
21,870,624
21,814,073
13, 914, 539
14, 876, 828
1,868,985
1,954,099
69,663,689 $ 62,167,350 $ 64,251,368
119.6 123.9 116.0
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
(DollarAmounts in Millions)
TANC
COTP 370.6 1.92(3 7.1
TOTAL* $ 1,100.0 10.51% $ 115.7
*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 nondefaulting participant, an accumulated
maximum of 25% of such non -defaulting participant's original participation.
(2) Participant's project entitlement remainsthe same but share of debt has increasedto 10.649/o 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'staxable portion and each TANC member -partici pant's participation or non -participation in acquisition of assets from
Vernon.
Source: City of Lodi.
154
Lodi's
Lodi's Share of
Outstanding Debt
Participation
Outstanding Debt
NCPA
Hydroelectric Project
$ 419.5
10.37%(21
$ 43.5
Capital Facilities Project Unit One
54.9
39.50
21.7
Lodi Energy Center Project
255.0
17.03
43.4
TANC
COTP 370.6 1.92(3 7.1
TOTAL* $ 1,100.0 10.51% $ 115.7
*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 nondefaulting participant, an accumulated
maximum of 25% of such non -defaulting participant's original participation.
(2) Participant's project entitlement remainsthe same but share of debt has increasedto 10.649/o 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'staxable portion and each TANC member -partici pant's participation or non -participation in acquisition of assets from
Vernon.
Source: City of Lodi.
154
Table4 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 (2)
Total Operating Revenue
Operating Expenses
Purchased Power
Non -Power Costs c3�
Total Operating Expenses
Net Revenue Available fxr 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
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")
Ending FiscalYear June 30 (Dollars in 000s)
Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 2012
$ 65,110
$ 65,229
$ 62,613
$ 59,676
$ 61,658
4.174
8.771
7,050
2,491
2,593
5,639
1,195
625
1,140
969
74,923
75,195
70,288
63,307
65,220
42,862
46,405
37,943
35,282
39,416
11,575
11,965
12,006
13,115
10,748
54,437
58,370
49,949
48.397
50,164
20,486
16,825
20,339
14.910
15,056
6,266
9,960
7,194
7,232
7,291
6,266
9,960
7,194
7,232
7,291
3.27
1.69
2.83
2.06
2.07
14,220
6,865
13,145
7,678
7,765
(6,873)
(6,942)
(6,977)
(6,977)
(6,977)
7,347
(77)
6.168
701
788
5,470
14,513
13,854
25,899
28,455
1,696
(582)
5,877
1,854
1,141
7,347
(77)
6,168
701
788
$ 14,513
$ 13,854
$ 25,899
28,454
30,384
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) Other revenuesfor FY 08 include $3.25 million for the sale of the City's rights to the NCPA Combustion Turbine#1 to Roseville.
(3) Non -power costs include cost of services provided by other departments and does not include depreciation and amortization expense.
155
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 increaseto fund public benefit programs
September 1997 4.5 to 5.5 cents per kilowatt-hour, non -demand, non -time -use, contract rate availablefor 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-hourfor largest primary service customers (estimated 19% reduction)
Source: City of Lodi.
156
ANNUAL REPORT FOR WASTEWATER UTILITY
The Lodi Wastewater Utility has Continuing Disclosure requirements associated with its 2007 Series A Certificates of Participation, 2004 SeriesA
Certificates of Participation and the 2012 Refunding Lease Revenue Bonds. 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 userfor the most recent fiscal year (applicable only to the 2004
SeriesA issue).
3. A table showing the largest users by service charge revenues forthe 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 SeriesA issue requires a description of any additional indebtedness incurred during the priorfiscal year
which is payable from the system net revenues on a parity with the installment payments.
Reporting cf Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2012, 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.
157
Table 9 A table setting forth the City's number of connections by user type for the past five fiscal years.
City of Lodi
Wastewater System
Numberof Connections by User Type
as of June 30
and Percentage of Fiscal Year 2010-12 Service Charge Revenue by User Type
%of FY 11/12
Service Charge
User Type 2008 2009 2010 2011 2012 Revenue
Residential 22,277 22,227 21,974 21,956 21,864 72.3%
Commercial/Industrial 1.847 1.815 1.768 1.785 1.819 27.7%
Total All Users 24,124 24,042 23,742 23,741 23,683 100.0%
Source: City of Lodi
158
Table 2 A table showing the proportion of service charge revenue by class of userfor the most recent fiscal year.
City of Lodi
Wastewater System
Proportion of Service Charge Revenues by Class of User
Fiscal Year 2011-12
Percentage of Total Annual Service
User Type Charge Revenue
Single Family
Residential
Multiple Family Residential
Commercial/Industrial
Total
Source: City of Lodi
159
58.3%
14.0%
27.7%
100.0%
Table 3 A table showing the largest users by service charge revenue for the most recent fiscal year.
11QP
Cottage Bakery
General Mills
Lodi Unified School District
City of Lodi
Pacific Coast Producers
Archer Daniels Midland
Miller Packing Company
Lodi Memorial Hospital
Blue shield of California
Armourstruxx
Total top ten users
Total System
City of Lodi
Wastewater System
Largest Users by Service Charge Revenues
Fiscal Year 2011-12
Type of Business
Specialty bakery, frozen dough
Cereals, bread mixes, snack foods
K-12, adult education
Government
Private label fruit canning
Agricultural processor
Hot dog producer
Health Care
Health Insurance
Armor producer
160
$
Service Charge
Revenue
374,881
293,758
236,173
63,158
48,869
41,688
39,486
38,908
36,155
25,315
1,198,391
13,280,216
Percentage of
Total
Annual Service
Charge Revenue
2.82%
2.21
1.78
.47
.36
.31
.29
.29
.27
.19
8.99%
100.00%
Tab/e4 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 Commerciallindustrial 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) .................
Disposalto Industrial System:
Flow (per MG, annual basis) ....................
BOD (per 1,000 lbs., annual basis)............
Winery Waste (per 1,000 gallons) ............................
City of Lodi
Wastewater System
Schedule of Wastewater Service Charges
Service Charge Service Charge
(effectiveJuly [effective Julv
1.2008) 16.2009
161
Service
Service
Charge
Charge
(effective July
{effective July
16.2010)
1.2011)
$16.65
$20.81
$23.30
$24.47
22.19
27.74
31.07
32.62
27.74
34.68
38.84
40.78
33.29
41.61
46.61
48.93
33.84
48.55
54.37
57.09
44.38
55.48
62.14
65.24
49.93
62.42
69.91
73.40
$266.28
$332.88
$372.84
$391.44
2,247.10
2,808.88
3,145.95
3,303.25
370.83
463.54
519.16
545.12
231.86
289.83
324.61
340.84
196.35
245.44
274.89
288.63
416.82
521.03
583.55
612.73
206.24
257.80
288.74
303.18
2.218.78
2,218.78
2,485.03
2,609.28
20.34
20.34
22.78
23.92
198.82
248.53
278.35
292.27
Table 5 A table showing historic operating results and debt service coverage forth 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 2007-08 through 2011-12
2007-08 2008-09 2009-10 2010-11
$9,091,220 $9,276,217 $11,513,389 $13,089,679
836,862
428,586
298,337
165,931
221,422
435,935
838,007
472,578
10,529, 948
10,764,232
12,284, 304
2,996,028
2,984,049
2,800,891
2,394,804
2,067,646
2,532,246
798,652
869,129
847,167
6,189,484
5,920,824
6,180,304
4,340,464
4,843,408
6,104,000
311,127
380,873
426,022
381,400
2,144,438
2,134,856
2,138,700
852,239
1,591,200
1,631,500
3,688,677
4,152,078
4,151,600
1.18
1.17
1.47
575,326
1,451,478
1,451,478
575,326
1,451,478
1,451,478
$76,461
$(760,148)
$500,922
162
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
2011-12
$13,280,216
216,108
290,819
13,787,143
3,130,012
2,818,041
710,622
6.658.675
7,128,468
379,170
2,139,350
1,599,050
4,117,570
1.73
(778,092)
(778,092)
$3,788,990
Additional Indebtedness
The Wastewater Utilitydid not incurany additional indebtedness during the 2011-12fiscal yearwhich is payablefrom the system net revenues on
a paritywith the installment payments.
163
ANNUAL REPORT FORTHE LODI PUBLIC IMPROVEMENT CORPORATION AND THE LODI PUBLIC FINANCING AUTHORITY
The Lodi Public ImprovementCorporation and the Lodi Public Financing Authority have Continuing Disclosure requirements associated with its
2002 Certificates of Participation and the 2012 Refunding Lease Revenue Bonds. 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.
6. A table showing the Employee -paid and City -paid employee portion of the retirement plan.
Reporting of Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2012, 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 9 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 77 of this Comprehensive
Annual Financial Report.
164
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
I ntergovernmentalrevenues
Charges for services
Fines, forfeits and penalties
Investmentand rental income
Miscellaneous revenue
Total revenues
Expenditures:
Current:
General government
Public protection
Publicworks
Library
Parks and recreation
Debt service:
Interest and fiscal charges
Principal payments
Total expenditures
Deficiency of revenues under expenditures
Otherfinancing 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
GENERALFUND
LAST FIVE YEARS
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
2012
22,928,438
79,745
10,449,364
682,156
1,355,101
807,270
286,125
36,588,199
9,545,370
6,922,096
6,411,741
6,478,159
6,007,327
23,771,574
24,463,771
23,854,905
24,091,472
24,923,155
3,935,366
2,967,402
1,471,779
1,421,238
1,1 12,569
1,672,910
1,499,720
1,322,052
1,357,473
1,380,972
3,826,450
2,160,035
2,234,349
2,191,102
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
165
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
33,424,023
3,164,176
5,370,230
(8,391,858)
3,021,628
142,548
6,146,405
6,288,953
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.
Table 6 A table showing the Employee -paid and City -paid employee portion cf'the retirement plan.
Bargaining Units
Council appointees
Executive management
Confidential mid -management
Confidential
Fire mid -management
Fire
Mid -management
General services
Maintenance and operators
IBEW
Police mid -management
Police
Dispatchers
Pension Contributions
As of Fiscal Year Ended June 30,2012
Employee Paid
7.0%
7.0
1.0
3.3
3.0
5.3
3.3
1.0
I.0
9.0
3.0
3.0
166
City Paid
6.0
3.7
6.0
3.7
3.7
6.0
6.0
7.0
6.0
4.0
Total EmDlovee Share
7.0%
7.0
7.0
7.0
9.0
9.0
7.0
7.0
7.0
7.0
9.0
9.0
7.0
ANNUAL REPORT FOR WATER UTILITY
The Lodi Water Utility has Continuing Disclosure requirements associated with its 2010 Series 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, 2012.
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 priorfiscal year
which is payable from the system net revenues on a parity with the installment payments.
Reporting cf Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2012, 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 underthe provisions of the Certificates.
Tablet Atable showing number cf accounts and revenues by user type.
167
CITY OF LODI
WATER SYSTEM
Numberof Accounts and revenues by UserType
Source: City of Lodi
Residential
Numberof
Accounts
21,533
21,449
21,577
21,622
21,593
Table 2 A table showing the largest users by service charge revenue for the most recent fiscal year.
168
Revenue
$8,715,928
9,429,594
9,600,129
9,604,412
9,706,537
Commercial/Industrial/
Municipal
Year Ending
Number of
December31
Accounts
Revenue
2007
1,445
$2,043,731
2008
1,470
2,184,496
2009
1,382
2,188,486
2010
1,383
2,097,001
2011
1,396
2,169,967
Source: City of Lodi
Residential
Numberof
Accounts
21,533
21,449
21,577
21,622
21,593
Table 2 A table showing the largest users by service charge revenue for the most recent fiscal year.
168
Revenue
$8,715,928
9,429,594
9,600,129
9,604,412
9,706,537
I Icor
Lodi Unified School District
City of Lodi
Pacific Coast Producers
General Mills
Cottage Bakery
Lodi Memorial Hospital
Temple Baptist Church
CalTrans
Miller Packing Company
Wine Country Care Center
Subtotal Top Ten Users
TOTALSYSTEM
City cf Lodi
Water System
Largest Users by Service Charge Revenues
Fiscal Year 2071-12
Type of Business
K-12, adult education $
Government
Private label fruit canning
Cereals, bread mixes, snack foods
Specialty bakery, frozen dough
Health care
Church
Government
Hot dog producer
Nursing home
169
Service Charge
Revenue
246,189
169,617
143,262
74,536
59,934
41,635
17,309
15,971
13,367
12.406
$ 794,226
$ 12,083,226
Percentageof
Total
Annual Service
Charge Revenue
2.03%
1.40
1.18
0.61
0.49
0.34
0.14
0.13
0.11
0.10
6.53%
100.00%
Table 3 A table showing selected rates effective January 1,2011.
CITY OF LODI
WATER SYSTEM
Selected Rates Effective January 1,2012
Percent Increase Current
Flat Rates ($/month)
Single Family Residential Unit($/month)
1 Bedroom $29.17
2 Bedroom $35.03
3 Bedroom $41.99
Metered Water Rates
Service Charge ($/month)
Single Family Residential
Up to 3/4" Meter
$23.20
Multi -Family and Non -Residential
1" Meter
$37.66
11/2" Meter
$58.77
2" Meter
$73.43
Water Usage rates ($/CCF)
Single Family Residential
Tier 1- 0 to 10 CCF/month
$0.90
Tier 2 -11 to 50 CCF/month
$1.35
Tier 3 - Over 50CCF/month
$1.78
Multi -Family and Non -Residential
All Water Usage
0.90
Source: City of Lodi.
Table 4 A table showing historic operating results and debt service coverage for the past five fiscal years.
170
CITY OF LODI
WATER SYSTEM
Historical Operating results and Debt Service Coverage
Fiscal Years 2007-08 through 2011-12
171
2007-08
2008-09
2009-10
2010-11
2011-12
Gross Revenues
Water Sales(') $
11,349,986
11,787,140
11 ,715,748
11,940,022
12,083,226
Investment Earnings
72,823
258,552
103,640
83,374
119,526
Water Impact Mitigation Fees
30,783
13,086
270,863
14,803
111,429
Meter Retrofit Installation Charges
1,653,399
675,815
Other Revenues (2)
407.988
350,950
372,034
359,979
285,093
Total Gross Revenues
11,861,580
12,409,728
12,462,285
14,051,577
13,275,089
Operating and Maintenance Expenses
Personnel Services (3)
1,121,921
1,471,463
1,325,536
1,359,227
1,856,131
Supplies, Materials and Services (3)
2,905,860
2,490,875
1,981,880
2,590,222
1,781,622
New Treatment Plant Operations (net)
Utilities
779,845
804,767
733,653
652,296
693,657
Administrative Overhead
624,296
1,060,122
1.060.122
1,060,12
1,060,120
Total & M Expenses
5,431,922
5,827,227
5,101,191
5,661,865
5,391,530
Net Revenue Available for Debt Service
6.429.658
6.582.50
7,361,094
8,389,712
7,883,55
Debt Service
1991 California DWR SRF loan (4)
228,012
228,012
228,025
1,433,395
2010 Bonds (5)
849,968
2,304,811
Total Net Debt Service
228,012
228,012
228,025
2,283,363
2,304,811
Debt Service Coverage (6)
Debt Service Coverage
28.20
28.87
32.28
3.67
3.42
Debt Service Coverage
(excluding impact mitigation fees)
28.06
28.81
31.09
3.67
3.37
Net Remaining Revenues Available for Capital
6,201,646
6,354,489
7,133,069
6,106,349
5,578,748
Capital Improvement Projects
Meter Retrofit Program(')
582,000
919,555
6,325,558
Other Water System Improvements(8)
552,215
782,382
3,932,424
3,666,202
540,832
171
Total Capital Improvement Projects
552,215
1,364,382
3,932,424
4,585,757
6,866,390
Net Change in Reserve
5,649,431
4,990,107
3,200,645
1,520,592
(1,287,639)
Water Enterprise Fund (9)
Beginning Cash Balance
13,935,947
17,621,590
13,469,170
14,120,605
12,807,412
Ending Cash Balance
$ 17,621,590
13,469,170
14,120,605
12,807,412
12,465,350
(1) Water sales reflect Council -adopted rate increases of 2.2% effective January 1, 2012.
(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. PCEKCE 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) Reflectstotal debt service for the 2010 Water Revenue Bonds net of the 35% interest rate subsidy for the Series 201 CB 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
172
Sacromento
LOCATION MAP
No Scale
U
T
CITY OF LODI, CALIFORNIA
Report to City Council
For the Year Ended June 30,2012
Certified Public Accountants.
CITY OF LODI, CALIFORNIA
Report to City Council
For the Year Ended June 30,2012
Tableof Contents
Page(s)
TransmittalLetter..........................................................................................................................................
RequiredCommunications......................................................................................................................... 2-3
CurrentYear Comment.............................................................................................................................. 4-5
Status of Prior Year Recommendations..................................................................................................... 6-8
Sacramento
3000 S Street, Suite 300
CertifieditblicAccomtants. Sacramento, CA 95816
916.928.4600
Walnut Creek
Oakland
City Council LA/Century City
City of Lodi, California
Newport Beach
San Diego
We have audited the financial statements of the governmental activities, the business -types activities, Seattle
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, 2012, and have issued our report thereon dated December 6, 2012.
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 July 9, 2012. 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.
Recently, the Governmental Accounting Standards Board (GASB) issued a significant new standard that
we feel warrants communication to the City Council, which we have included in the Current Year
Comment section of this report.
Also, in planning and performing our audit of the financial statements of the City as of and for the year
ended June 30, 2012, in accordance with auditing standards generally accepted in the United States of
America, 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.
During our audit for the year ended June 30, 2012, we 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 6,2012, 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 6,2012.
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 6,2012
www.mgocpa.com
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications
For the Year Ended June 30,2012
Significant Audit Findings
QualitativeAspects ofAccountingPractices
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 30,2012. 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, Accountingfor Pensions by State and Local GovernmentEmployers.
• 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
Employersfor 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 theAudit
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
Corrected and UncorrectedMisstatements
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.
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications (Continued)
For the Year Ended June 30,2012
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 6,2012.
Management Consultations with OtherindependentAccountants
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.
OtherAudit 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 Comment
For the Year Ended June 30,2012
GASB STATEMENT NO.68,ACCOUNTINGAND FINANCL4L REPORTINGFOR PENSIONS
On June 25,2012, GASB approved Statement No. 68, Accounting and Financial Reportingfor Pensions.
Statement No. 68, which primarily relates to reporting by governments that provide pensions to their
employees, is effective for fiscal years beginning after June 15,2014.
Key changes include:
• Separating how the accounting and financial reporting is determined from how pensions are funded.
• Employers with defined benefit pension plans will recognize a net pension liability, as defined by the
standard, in their government -wide, proprietary and fiduciary fund financial statements.
• Incorporating ad hoe cost -of -living adjustments and other ad hoc postemployment benefit changes
into projections of benefit payments, if an employer's past practice and future expectations of
granting them indicate they are essentially automatic.
• Using a discount rate that applies (a) the expected long-term rate of return on pension plan
investments for which plan assets are expected to be available to make projected benefit payments,
and (b) the interest rate on a tax-exempt 20 -year AA- or higher rated municipal bond index to
projected benefit payments for which plan assets are not expected to be available for long-term
investment in a qualified trust.
• Adopting a single actuarial cost allocation method — entry age normal — rather than the current choice
among six actuarial cost methods.
• Requiring more extensive note disclosures and required supplementary information.
As an employer, the City will be subject to the provisions of Statement No. 68 beginning with the fiscal
year ending June 30, 2015. Statement No. 68 replaces the requirements of Statement No. 27, Accounting
fo r Pensions by State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as
they relate to governments that provide pensions through pension plans administered as trusts or similar
arrangements that meet certain criteria.
The Statement requires governments that participate in defined benefit pension plans to report in their
statement of net position a net pension liability. The net pension liability is the difference between the
total pension liability (the present value of projected benefit payments to employees based on their past
service) and the assets (mostly investments reported at fair value) set aside in a trust and restricted to
paying benefits to current employees, retirees, and their beneficiaries.
The Statement calls for immediate recognition of more pension expense than is currently required. This
includes immediate recognition of annual service cost and interest on the pension liability and immediate
recognition of the effect on the net pension liability of changes in benefit terms. Other components of
pension expense will be recognized over a closed period that is determined by the average remaining
service period of the plan members (both current and former employees, including retirees). These other
components include the effects on the net pension liability of (a) changes in economic and demographic
assumptions used to project benefits and (b) differences between those assumptions and actual
experience. Lastly, the effects on the net pension liability of differences between expected and actual
investment returns will be recognized in pension expense over a closed five-yearperiod.
Statement No. 68 also requires employers to present more extensive note disclosures and RSI, including
disclosing descriptive information about the types of benefits provided, how contributions to the pension
plan are determined, and assumptions and methods used to calculate the pension liability.
4
CITY OF LODI, CALIFORNIA
Report to City Council
Current Year Comment (Continued)
For the Year Ended June 30,2012
These changes, however, relate only to accounting and financial reporting, not to how governments
approach the funding of their pension plans. Pension funding is a policy decision made by government
officials.
CITY OF LODI, CALIFORNIA
Report to City Council
Status of Prior Year Recommendations
For the Year Ended June 30,2012
The following is a summary of the status of prior years' recommendations.
FROM YEAR ENDED iE 30, 2011 -
DEFICIT BENEFITS INTERNAL SERVICE FUND
Prior Year 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 Ca1PERS 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 Ca1PERS health care plans and the City's internal payroll
and Human Resources system, the costs related to the Ca1PERS invoice billings of health insurance
premiums could be permanently stranded in the internal service fund, and therefore, the user funds andor
departments not being charged their proportionate share of the costs.
In addition, the City isn't recovering the expenses of its Benefits Internal Service Fund from user funds
andor departments. Under generally accepted accounting principles, 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.
Prior Year Recommendation
Management and/or authorized employees should perform a monthly reconciliation of the enrolled
participants in the health care plans as reported by Ca1PERS in the monthly health insurance invoice
roster detail with the City's internal payroll system and 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
Benefits Internal Services Fund's expenses as opposed to limiting the charges to their share of expenses
paid.
Current YearStatus
For the year ended June 30, 2012, the City has implemented our recommendation to perform a
reconciliation of members' plans reported and charged by Ca1PERS to the City's records.
However, the City has not addressed our recommendation to develop a plan to begin charging funds
and/or departments their share of the Benefits Internal Service Fund's expenses, and as a result the net
deficit balance of the Benefits Internal Service Fund increased from $2,934,664 to $3,621,665. As this
deficit has grown for four consecutive years, we have reported this issue as a reportable condition in the
Government Auditing Standards report.
Manajzement Response
The City's practice of reflecting the total liability and expense of the Other Post Employment Benefits
(OPEB) program in the Benefits Internal Services Fund enhances transparency in reporting by showing
the impact of this reporting requirement in one location. The deficit net assets will continue until the City
fully funds the actuarially calculated liability and expense that it is required to record. Staff will bring
forward the deficit amount each budget cycle for Council consideration.
CITY OF LODI, CALIFORNIA
Report to City Council
Status of Prior Year Recommendations (Continued)
For the Year Ended June 30,2012
FROM YEAR ENDED JUNE 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
manner.
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, and the plan was finalized during
the year ended June 30,2012; therefore we consider our recommendation implemented.
FROM YEARENDED JUNE 30.2005 -
INFORMATION TECHNOLOGY (IT)
Computer Operations —Disaster Prep aredness/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 YearStattis
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 and has begun limited testing of the plan by
verifying that the backup tapes will restore correctly. The City has been testing one daily backup tape per
week. Although the City has begun limited testing, the plan has not been fully tested. Therefore our
recommendation remains in the process of implementation.
CITY OF LODI, CALIFORNIA
Report to City Council
Status of Prior Year Recommendations (Continued)
For the Year Ended June 30,2012
In order to fully implement the plan, the City should hire an outside firm to fully test the plan. The
system should be shut down completely as if it crashed or was lost in a fire, etc. Then the backup tapes
will be used to see if they can fully restore the system to where it used to be. Currently, the City is only
testing a small piece to see if the tapes work, but they aren't taking the whole system offline and trying to
start over from scratch.
Current YearManagementResvonse
The City will explore suitable options for testing its Disaster Recovery Plan, taking into consideration
financial constraints and impacts to users. In the meantime, the City will continue to test and validate the
daily and weekly backup tapes to ensure their viability and reliability in the event of a disaster.
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. Recommendation continues.
Current Year ManagementResponse
The City is in the process of procuring a replacement to the current financial system. The capital asset
module will be implemented in the new system.
Cert fieditblicAccountants.
To the Deputy City Manager/Internal Services Director
City of Lodi, California
Sacramento
3000 S Street, Suite 300
Sacramento, CA 95816
916.928.4600
Walnut Creek
Oakland
LA/Century City
Newport Beach
San Diego
Seattle
In planning and performing our audit of the financial statements of the City of Lodi, California (City), as
of and for the year ended June 30, 2012, in accordance with auditing standards generally accepted in the
United States of America, we considered the City's internal control over financial reporting (internal
control) as a basis for designing our auditing procedures for the purpose of expressing our opinions on the
financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's
internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal
control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or 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 was for the limited purpose described in the first paragraph and was
not designed to identify all deficiencies in internal control that might be material weaknesses. Given those
limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be
material weaknesses. However, material weaknesses may exist that have not been identified. Our audit
was not designed to identify deficiencies in internal control that might be significant deficiencies. A
significant deficiency is a deficiency, or 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. We
communicated a significant deficiency identified during our audit in a separate communication dated
December 6,2012.
In addition, we have followed up on the status of the following matters that we identified in the prior year
that we believed warrant communication to management.
This communication is intended solely for the information and use of management and is not intended to
be and should not be used by anyone other than these specified parties.
Sacramento, California
December 6,2012
www.mgocpa.com
OTHER AND MISCELLANEOUS REVENUES
Prior Year Condition
The other and miscellaneous revenues line items per the City's draft financial statements included
numerous significant revenue transactions. Financial statement line items identified as other and
miscellaneous should be used only for immaterial transactions. Significant transactions should be
included in more specific or appropriate financial statement line items, rather that means including them
in line items already presented or creating new line items. This condition resulted in a number of
reclassifying adjustmentsto correct.
Prior YearRecommendation
The City should present only immaterial revenue transactions in the other and miscellaneous revenue
financial statement line items.
Current Year Status
Through our review of the financial statements and audit procedures performed over the "Other and
Miscellaneous Revenues" financial statement line item, there were no correcting adjustments deemed
necessary; therefore we consider our recommendation implemented.
CITY OF LODI
Agreed -Upon Procedures Report for
Gann Appropriations Limit
For the Fiscal Year Ended June 30,2012
=49 Certified Public Accountants.
. Seattle
. 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, 2012. These
procedures, which were agreed to by City management and the League of California Cities (as presented
in its publication entitledArticle U11 --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 otherpurpose.
The procedures performed and our findings were as follows:
1. 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.
www.mgocpa.com
.
Sacramento
3000 S Street, Suite 300
Sacramento, CA 95816
416.928.46004600
Walnut Creek
•
Oakland
•
LA/Century City
®
City Council
Newport Beach
®
Lodi, California
San Diego
. Seattle
. 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, 2012. These
procedures, which were agreed to by City management and the League of California Cities (as presented
in its publication entitledArticle U11 --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 otherpurpose.
The procedures performed and our findings were as follows:
1. 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.
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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
October 1,2012
CITY OF LODI
APPROPRIATIONS LIMIT WORKSHEET
FOR THE FISCAL YEAR ENDED JUNE 30,2012
Appropriation Limit, fiscal year ended June 30,201 1, as adopted $75,523,822
Adjustment factors:
Population factor, for fiscal year ended June 30,2012, as adopted 1.0061
Inflation factor, for fiscal year ended June 30,2012, as adopted 1.0251
Annual percentage increase 1.0314%
Annual adjustment 2,367, 007
Appropriation limit, fiscal year ended June 30,2012 as adopted 577.891.729
3