HomeMy WebLinkAboutAgenda Report - January 7, 2015 I-01AGENDA ITEM �►
CITY OF LODI
,. COUNCIL COMMUNICATION
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AGENDA TITLE: Review of City's Annual Financial Report (Fiscal Year 2013/14) by Macias, Gini &
O'Connell, LLP
MEETING DATE: January 7, 2015
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 2013/14:
The Combined Annual Financial and Single Audit Report
Management Report
Report on Applying Agreed-upon Procedures
BACKGROUND INFORMATION: The annual audit was conducted to assure the City Council and
other interested parties -that the City's financial records and reports
are prepared in accordance with generally accepted accounting
principles (GAAP), that internal controls are adequate to safeguard the City against loss from
unauthorized use or disposition of assets and that the City has complied with all agreements and
covenants to obtain grant funds and debt financing. Macias, Gini & O'Connell, LLP (MGO) issued an
"unqualified opinion." Scott Brunner, Director of MGO, will be present to answer questions during the
meeting.
The reports will be provided to federal and State oversight agencies, bond trustees and insurance
companies for their review and evaluation. Copies of the reports are provided to the City Council and are
also available to the public by contacting the Financial Services Division or through the City web site at
www.lodi.gov and at the Lodi Public Library.
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 21St year and
the California Society of Municipal Finance Officers (CSMFO) for the 15th year in a row. A copy of the
GFOA certificate is included in the 2013/14 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 responsibilities to the public.
C�4
Jordan Ayers
Deputy City Manager
APPROVED:
Stephen Schwabauer, C y Manager
CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE.YEAR ENDED JUNE 309 2014
CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Year Ended June 30, 2014
PHIL KATZAKIAN, MAYOR
LARRY HANSEN, MAYOR PRO TEM
BOB JOHNSON, COUNCILMEMBER
JOANNE MOUNCE, COUNCILMEMBER
ALAN NAKANISHI, COUNCILMEMBER
STEVE SCHWABAUER, 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, 2014
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents
Letter of Transmittal
Certificate of Achievement for Excellence in Financial Reporting
Organization Chart of the City of Lodi
Directory of Officials and Advisory Bodies
FINANCIAL SECTION
Independent Auditor's Report
MANAGEMENT'S DISCUSSION AND ANALYSIS
BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements:
Statement of Net Position
Statement of Activities
Fund Financial Statements:
Balance Sheet — Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances
of Governmental Funds to the Statement of Activities
Statement of Net Position — Proprietary Funds
Statement of Revenues, Expenses and Changes in Net Position — Proprietary Funds
Statement of Cash Flows — Proprietary Funds
Statement of Fiduciary Net Position — Fiduciary Funds
Statement of Changes in Fiduciary Net Position - Fiduciary Funds
Notes to Basic Financial Statements
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress — Pension Plan
Schedule of Funding Progress — OPEB Plan
Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — General Fund
Note to the Required Supplementary Information
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Combining Balance Sheet — Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds
Nonmajor Governmental Funds - Special Revenue Funds
Combining Balance Sheet —Nonmajor Governmental Funds — Special Revenue Funds
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18
19
21
22
23
24
25
26
27
29
30
31
77
78
79
80
83
84
85
87
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2014
TABLE OF CONTENTS - continued
Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds — Special Revenue Funds 88
Schedules of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — Nonmajor Governmental Funds — Special Revenue Funds 89
Nonmajor Governmental Funds - Capital Project Funds 95
Combining Balance Sheet — Nonmajor Governmental Funds — Capital Project Funds 96
Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds — Capital Project Funds 97
Internal Service Funds 99
Combining Statement of Net Position - Internal Service Funds 100
Combining Statement of Revenues, Expenses and Changes in Fund Net Position — Internal Service Funds 101
Combining Statement of Cash Flows - Internal Service Funds 102
Combining Statement of Fiduciary Net Position - Private -Purpose Trust Funds 103
Combining Statement of Changes in Fiduciary Net Position - Private -Purpose Trust Funds 104
Statement of Changes in Assets and Liabilities - Agency Fund 105
STATISTICAL SECTION (UNAUDITED)
Government -wide information:
107
Net Position by Component - Last Ten Fiscal Years
108
Changes in Net Position - Last Ten Fiscal Years
109
Fund information:
Fund Balances, Governmental Funds - Last Ten Fiscal Years
111
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years
112
Tax Revenues by Source, Governmental Funds - Last Ten Fiscal Years
114
Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years
115
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years
116
Principal Property Taxpayers -Current Year and Eight Years Ago
117
Property Tax Levies and Collections - Last Ten Fiscal Years
118
Electricity Sold by Type of Customer - Last Nine Fiscal Years
119
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years
120
Ratios of General Bonded Debt Outstanding- Last Ten Fiscal Years
121
Legal Debt Margin Information - Last Ten Fiscal Years
122
Direct and Overlapping Governmental Activities Debt
123
Pledged -Revenue Coverage - Last Ten Fiscal Years
124
Demographic and Economic Statistics - Last Ten Fiscal Years
127
Principal Employers - Current Year and Nine Years Ago
128
Full -Time Equivalent City Government Employees By Department - Last Ten Fiscal Years
129
Operating Indicators by Function/Program/Department - Last Nine Fiscal Years
130
Capital Asset Statistics by Function/Program/Department - Last Ten Fiscal Years
132
SINGLE AUDIT REPORTS
Schedule of Expenditures of Federal Awards 135
Notes to the Schedule of Expenditures of Federal Awards 137
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2014
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 138
Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control over Compliance Required by OMB Circular A-133 140
Schedule of Findings and Questioned Costs 142
Schedule of Prior Year Findings and Questioned Costs 145
CONTINUING DISCLOSURES (UNAUDITED)
Annual Report for Electric Utility 147
Annual Report for Wastewater Utility 153
Annual Report for the Lodi Public Improvement Corporation and the Lodi Public Financing Authority 160
Annual Report for Water Utility 163
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CITY COUNCIL
PHIL KATZAKIAN, Mayor
LARRY HANSEN, Mayor Pro
Tempore
COUNCILMEMBERS:
BOBJOHNSON
JOANNE MOUNCE
ALAN NAKANISHI
December 23, 2014
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 City Manager
of the City of Lodi:
STEVE SCHWABAUER
City Manager
JENNIFER ROBISON
City Clerk
JANICE MAGDICH
City Attorney
The Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 2014, 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,
2014, in conformity with generally accepted accounting principles (GAAP). 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 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 and changes
in financial position of the City. In addition, we believe that all disclosures necessary to enable the reader to gain a full understanding of the City's
financial activities have been included.
This letter of transmittal is designed to complement the Management's Discussion and Analysis (MD&A) and should be read in conjunction with it.
The MD&A can be found immediately following the independent auditors' report.
THE REPORTING ENTITY AND SERVICES PROVIDED
The funds included in the CAFR are those deemed dependent upon the City and controlled by the City Council and reflect the City's financial
reporting entity in accordance with GASB Statement No. 14, as amended by GASB Statement No. 61.
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.
MA
Elections are held in November of even -numbered years. Each year the Mayor and Mayor Pro -Tempore are chosen by the members of the City
Council. The Mayor presides at Council meetings and acts as the ceremonial head of the City, the Mayor Pro Tempore serves as Mayor in his or
her absence. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for appointing department heads,
and overseeing the operations of the City. The City Manager, City Attorney and the City Clerk are appointed by the City Council.
The City provides a wide range of municipal services including public safety (police, fire and graffiti abatement), public utilities services (electric,
water and wastewater), transportation services (streets, flood control and transit) leisure, cultural and social services (parks and recreation, library
and community center), and general government services (management, community development, human resources administration, financial
administration, building maintenance and equipment maintenance).
Several municipal services are provided through other government agencies, private companies or public utility companies, including:
Number of
Facilities
Elementary and Secondary Schools 18
Sanitation (solid waste) and Cable Television 3
Ambulance 1
Gas and Telephone 2
ECONOMIC CONDITION AND OUTLOOK
The City is located in the San Joaquin Valley between Stockton, 10 miles to the south, and Sacramento, 35 miles to the north, and adjacent to U.S.
Highway 99. The City population is 63,651 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 of
2% per year until the growth limits are reached.
The City is built on a strong and broad based local economy. The City is known for its Zinfandel wine. It is an authentic dynamic wine region with
over 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 new jobs.
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Economic Development
The City continues to be committed to promoting economic development (business retention and attraction) and expanding the tax base to fund
City services rather than increase taxes to pay for these services. The City has provided for additional retail sales and commercial activity with
approval of new retail developments adjacent to Highway 99 and Harney Lane in the southeast corner of the City, and with a large retail
development in the southwest corner of the City. The City is also committed to an Enterprise Zone with San Joaquin County.
MAJOR GOALS, OBJECTIVES AND PROJECTS
To assist the citizens of the City in understanding where the City intends to allocate available resources, the City Council, the City Manager and
Department Heads established in 2004 a hierarchy of major goals, objectives and major projects that support and re -enforce the City's mission
statement. These goals and objectives will be revisited by the Council in a workshop in early 2015.
Four major City goals were established as policy direction and focal points for the efforts of City staff. These goals include:
Ensure a High Quality of Life and a Safe Environment for Citizens
Ensure Efficient and Productive City Organization
Ensure Public Trust, and
Ensure the Development of the Lodi Economy for a Fiscally Sound City Organization
City Council, the City Manager and Department Heads established nineteen major City objectives:
Maintain City's Sense of Community Provide Employee Training and Education
Provide for a Balanced Community Evaluate Telecommunications Opportunities
Enhance Access through Implementation of Information Systems Strategic Plan Provide Resources to Maintain City's Infrastructure
Promote Urban Forestry Promote Public Relations and Marketing Efforts
Attract, Retain and Invest in a Quality City Work Force Ensure Open and Accessible Public Meetings
Encourage Public Arts, Cultural and Recreational Opportunities Pursue Efforts to be Entrepreneurial
Provide Appropriate and Sufficient City Facilities Improve Customer Service
Develop Short and Long Range Operational Plans Continue to use Partnerships to Advance City's Objectives
Develop Effective Records Management Program Provide a Balanced Budget and 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 2013-14. The following projects are underway and
will see significant progress or be completed in 2014 or 2015.
Fire Station #2
The City awarded a $4.2 million construction contract in August 2014 for building a replacement for the existing Fire Station #2. Construction is
underway with an estimated completion date in late 2015.
Mill
Lodi Shopping Center
The Lodi Shopping Center development in the southwestern corner of the City has cleared all legal hurdles and is currently under construction.
Anchored by a WalMart supercenter, the site will encompass 12 building pads and approximately 340,000 square feet of retail space.
Reynolds Ranch
Reynolds Ranch is a planned development on the south eastern edge of the city that will eventually incorporate residential and commercial
development. Development continues with additional retail space completed in 2014 and 2015. Build -out of the commercial space will occur over
the next 10 years.
Residential Development
The City has five residential development projects that have been approved and total about 1,100 dwelling units. Dwelling units are fairly evenly
divided among low, medium and high density units. Sales in four of the five projects are expected in 2015.
Water Meters and Water Infrastructure
Under 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 10,300 meters have been installed.
Estimated cost for the complete program is $42.5 million.
FINANCIAL INFORMATION, MANAGEMENT AND CONTROL
A detailed understanding of the financial position and change in financial position of the City is provided in the following sections of this report. The
following is a brief description of the City's financial condition, management practices and control techniques.
Basis of Accounting
Basis of accounting refers to the policy as to when revenues, expenditures or expenses are recognized in the financial accounts and reported in
the financial statements. The City's accounting records for general government operations are maintained on a modified accrual basis. Revenues
are recorded when available and measurable. Expenditures are recorded when the services or goods are received and the liability incurred. For
proprietary fund types, the City uses the accrual basis of accounting. As such, the measurement focus is on net income in addition to financial
position and changes in financial position. Revenues are recognized when earned and expenses are recognized as the liability is incurred. We
believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial
transactions.
Accounting System and Budgetary Control
In developing the City's accounting system, consideration is given to the adequacy of the internal controls. The objective of the City's internal
accounting controls is to provide reasonable, but not absolute, assurance that the assets are safeguarded against loss from unauthorized use or
disposition; and to ensure that transactions are properly recorded to permit the preparation of financial statements in accordance with GAAP. The
concept of reasonable assurance recognizes that the cost of the controls should not exceed the benefits likely to be derived and that estimates and
judgments are required to be made by management in evaluating these costs and benefits.
In addition, the City maintains budgetary controls. The objective of these controls is to ensure compliance with legal provisions embodied in the
annual appropriated budget approved by the City Council. The City Manager is responsible for the preparation of the budget and its
implementation after adoption. The City Council has the authority to amend the budget at any time during the year. The City Manager has the
authority to make adjustments to the budget as long as those changes will not have a significant policy impact nor affect budgeted year-end fund
balances. During fiscal year 2013-14, the City Council and City Manager made several supplemental appropriations for 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, and at least 25% of operating expenses. Based on a reserve policy adopted in March
2011, the target for the Electric enterprise fund working capital is $28.7 million for fiscal year 2013-14. The goals allow for variations from year-to-
year to account for economic and fiscal changes. The General Fund maintained an unassigned fund balance of $9,133,366 or 23.06%, of revenues
at the end of fiscal year 2013-14.
Cash Management
The City has written investment policies that address a wide range of investments. These policies describe the City's investment objectives,
investment authority, allowable investment vehicles, maturity terms and eligible financial institutions. They also describe the City's capital
preservation and cash management objectives. As provided in the policy, investments are intended to be held until maturity and investment terms
are to be consistent with the City's cash flow needs. Investment reports are issued quarterly to the City Manager and City Council to provide
detailed information regarding the City's investments and compliance with City policy and state law. An important objective of the City's investment
policy is to achieve a reasonable rate of return on public funds while minimizing risks and preserving capital. In evaluating the performance of the
City's investment portfolio, investments are expected to yield a rate of return that regularly meets or exceeds an average rate of return on a three-
month U.S. Treasury Bill.
Appropriation Limitation
Article XIII B of the Constitution of the State of California (Proposition 4) provides for the limitation of expenditures by state and local governments.
Under the provisions of this article, City appropriations funded through tax sources may not exceed Fiscal Year 1979 appropriation levels except as
adjusted for increases in population and the growth in the California per capita income or non-residential assessed valuation due to new
construction within the City.
Excluded from the limitation are appropriations funded through charges for services, fines and forfeitures, grants, transfers of service
responsibilities between government agencies and indebtedness incurred prior to Fiscal Year 1979. Pursuant to subsequent legislation adopted
after Article XIII B, the City is required to annually establish and adopt its appropriations limit by resolution. For 2013-14, the City's appropriations
subject to limit were $32,857,542 and the appropriation limit was $86,108,936 leaving appropriations at $53,251,393 below the limit.
Debt Administration
At June 30, 2014, the City had outstanding Certificates of Participation and Revenue Bonds of $177,300,622. These liabilities are discussed in
Note 8 of the Basic Financial Statements and summarized below.
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The City issued $5.0 million of Certificates of Participation (1995 COP) to fund its share of capital improvements in the downtown and Cherokee
Lane areas. These bonds were refunded by the issuance of the 2002 Certificates of Participation. The 2002 bonds were refunded by the issuance
of the 2012 Lease revenue Bonds.
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. The 2002 bonds were refunded by the issuance of the 2012 Lease Revenue Bonds.
In 1999, the Electric Utility issued $43.96 million Certificates of Participation to finance the costs of certain improvements to the distribution and
transmission facilities of the City's electric system. These bonds were refunded by the issuance of the 2002 Electric Systems Revenue Certificates
of Participation. The 2002 bonds were refunded with the 2008 Electric Systems Revenue Certificates of Participation thereby eliminating a variable
rate obligation.
In November 2002, the City issued the 2002 Revenue Certificates of Participation Series C for $21,225,000 and 2002 Series D for $22,740,000, to
buy out the energy purchase agreement entered into by the City in January 2002 with Calpine. The Series C debt was paid in fiscal year 2012-13.
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 $9,855,000 of which
$5,000,000 was for the upgrade of the City's wastewater facilities. These bonds were paid during the fiscal year.
In 2004, the City issued $27,360,000 in Wastewater Certificates of Participation (2004A) to finance the costs of improvements to the wastewater
collection, treatment and disposal system. These bonds were partially refunded with the 2012 Refunding Wastewater Revenue Bonds, Series A.
In 2007, the City issued $30,320,000 in Wastewater Certificates of Participation (2007A) to finance Phase III of the wastewater improvements and
to refund the 1991 Certificates of Participation.
On July 24, 2008, the City issued the 2008 Electric System Revenue Certificates of Participation to provide funds to currently refund the
outstanding $46,760,000 principal amount of the Electric System Revenue Certificates of Participation 2002 Series A Variable Rates Certificates
(the "Refunded 2002 Certificates"); and to pay certain costs relating to the termination of a swap agreement relating to the Refunded 2002
Certificates.
On October 1, 2010, the City issued $9,015,000 Water Revenue Certificates of Participation, 2010 Series A and $29,650,000 Water Revenue
Bonds, 2010 Series B (Federally taxable - Build America Bonds) to finance the construction of the Surface Water Treatment Facility which is
designed to pump water from the Mokelumne River, treat and deliver it to the City's water distribution system.
The City's debt management policy includes a commitment to monitor all forms of debt annually during the preparation of the City's Financial Plan
and Budget to ensure compliance. Also, the City will generally conduct financing on a competitive basis, will seek an investment grade rating on
any direct debt and will obtain credit enhancements such as letters of credit or insurance when necessary for marketing purposes, availability and
cost effectiveness.
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Interim Financial Reporting
Monthly financial reports are prepared to present the City's financial condition and changes in financial position. These executive reports are
organized using the "pyramid" approach. As such, the highest level of summary data is presented first, followed by progressively greater levels of
detail. The reports provide current period and year to date revenues, expenditures and encumbrances for all activities and funds, including year-
to- date estimates and variances. The reports are available to all departments.
Single Audit
The City is subject to financial and compliance reporting required by the Single Audit Act Amendments of 1996 and OMB Circular A-133, which is a
requirement of all local and state governments receiving and expending in excess of $500,000 of federal financial awards annually. 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 2013-14 were made pursuant to competitive bidding procedures as
established under the City's purchasing ordinance. Contracts for construction projects were awarded pursuant to competitive bidding procedures
established by the State of California for projects in excess of $5,000.
Risk Management
The City is self-insured for dental care, workers' compensation, general liability and unemployment insurance. General liability and workers'
compensation are administered by outside agencies. The City administers unemployment insurance. Self-insurance transactions are accounted
for under the Insurance Funds. At June 30, 2014, the Insurance Fund had a net position of $3,199,155.
INDEPENDENT AUDIT
The City Council requires an annual audit of the records and accounts of the City by an independent certified public accountant. To ensure proper
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 auditor's report precedes the basic financial statements and concludes that the
City's basic financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the
United States of America.
CERTIFICATES OF ACHIEVEMENT
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in
Financial Reporting to the City for its Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 2013. 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.
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A Certificate of Achievement is valid for a period of one year only. The City has received a Certificate of Achievement for the last twenty-one
consecutive years. We believe our current report continues to conform to the Certificate of Achievement program requirements and we are
submitting. it to GFQA this year..
ACKNOWLEDGMENTS
As always the professionalism, dedication and efficiency of the Financial Services Division Accounting staff made it possible for the timely
preparation of this report and are to be commended. I would also like to personally thank Ruby Paiste, Financial Services Manager, Wendy
Dowhower, Supervising Accountant, Tyson Mordhorst, Senior Programmer Analyst and Nancy Spinelli, Finance Technician, Their work in preparing
this year's CAFR is greatly appreciated.
I would also like to thank you for your continued interest and support in planning and conducting the financial operations of the City in a responsible
and progressive manner.
Respectfully submitted,
Jordan Ayers
Deputy City Manager/internal Services Director
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Library
Board 11 11 City Attorney
Library
Parks, Rec. & Community
Cultural Development
Services
City of Lodi
Citizens
City Council
City Manager II II City Clerk II II Boards and
Commissions
Electric Utility
Budget)
Treasury
Division
Deputy City
ManagerAnternai
Services Director
Public Works Fire Police
Financial Human information
Services Resources Systems
Division Division Division
xi v
FY 2013-2014
DIRECTORY OF OFFICIALS AND ADVISORY BODIES
CITY COUNCIL
Phil Katzakian
Larry Hansen
Bob Johnson
JoAnne Mounce
Alan Nakanishi
ADVISORY BODIES
Planning Commission
Library Board
Recreation Commission
Site Plan and Architectural Review Committee
PRINCIPAL ADMINISTRATIVE OFFICERS
Steve Schwabauer
Jordan Ayers
Janice Magdich
Jennifer Robison
Dean Gualco
Larry Rooney
Jeff Hood
Wally Sandelin
Elizabeth Kirkley
Steve Schwabauer
Mark Helms
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Mayor
Mayor Pro Tem
Council Member
Council Member
Council Member
Lodi Improvement Committee
Lodi Arts Commission
Youth Commission
Lodi Senior Citizens' Commission
City Manager
Deputy City Manager
City Attorney
City Clerk
Library Services Director
Fire Chief
Parks, Recreation &
Cultural Services Director
Public Works Director
Electric Utility Director
Community Development Director
Police Chief
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FINANCIAL SECTION
The Financial Section is comprised of the Independent Auditor's Report, Management's Discussion and Analysis,
Basic Financial Statements, including the notes, Required Supplementary Information, and Supplementary
Information which includes Combining and Individual Fund Statements and Schedules.
Sacramento
3000 S Street, Suite 300
Sacramento, CA 95816
916.928.4604
INDEPENDENT AUDITOR'S REPORT Walnut Creek
Oakland
The Honorable Members of City Council
City of Lodi, California LA/Century City
Report on the Financial Statements Newport Beach
We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining San Diego
fund information of the City of Lodi, California (City), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which s�grtl�
collectively comprise the City's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in
the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend
on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.
Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities,
the business -type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2014, and the respective changes in
financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United
States of America.
Emphasis of Matter
As described in Note 1 to the financial statements, during the year ended June 30, 2014, the City adopted the provisions of Governmental Accounting Standards
Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Information
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 schedule of revenues, expenditures and change 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
information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The
accompanying introductory section, combining and individual nonmajor fund financial statements and schedules, statistical section, schedule of expenditures of
federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the
continuing disclosure section are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The combining and individual nonmajor fund 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 basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic
financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In
our opinion, the combining and individual nonmajor fund financial statements and schedules and the schedule of expenditures of federal awards are fairly stated,
in all material respects, in relation to the basic 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December 23, 2014 on our consideration of 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering City's internal control over financial reporting and compliance.
r�
Sacramento, California
December 23, 2014
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 year ended June 30, 2014.
FINANCIAL HIGHLIGHTS
• The assets and the deferred outflows of resources of the City exceeded its liabilities at the close of the 2014 fiscal year by $259,215,945
(net position). Of this amount, $19,086,401 is unrestricted.
• The City's total net position increased by $8,693,996 in fiscal year 2014.
• As of June 30, 2014, the City's governmental funds reported combined ending fund balances of $21,142,969, an increase of $1,130,468 in
comparison with the prior year. Of this amount, $9,034,833 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 $9,473,760, of which $9,133,366 is unassigned or 23.06% of total
general fund revenues of $39,601,024.
• The City's total long-term liabilities decreased by $1,806,010 (0.8%) during the current fiscal year.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements
are comprised of three components: (1) Government -wide financial statements, (2) Fund financial statements, and (3) Notes to the Basic
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 position presents information on all of the City's assets, deferred outflows of resources, and liabilities, with the difference
reported as net position. Over time, increases or decreases in net position 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 position changed during the most recent fiscal year. All changes in
net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus,
revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods, such as revenues
pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave.
Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental
revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through users fees and
charges (business -type activities). The governmental activities of the City include general government, public protection, public works, community
development, library, parks and recreation. The business -type activities of the City include electric operations, wastewater operations, water
operations and public transit operations.
Fund Financial Statements
The fund financial statements are designed to report information about groupings of related accounts, which are used to maintain control over
resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to
ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into the following three
categories: Governmental funds, Proprietary funds, and Fiduciary funds.
Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the
government -wide financial statements. Most of the City's basic services are reported in governmental funds. These statements, however, focus
on (1) how cash and other financial assets can readily be converted to available resources and (2) the balances left at year-end that are available
for spending. Such information may be useful in determining financial resources available in the near future to finance City programs.
Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the
information presented for governmental funds with similar information presented for governmental activities in the government -wide financial
statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the
governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a
reconciliation to facilitate this comparison between governmental funds and governmental activities.
The City maintains several individual governmental funds organized according to their type (special revenue, capital projects and debt service).
Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures,
and changes in fund balances for the general fund 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 and schedules 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 non -major proprietary fund.
0
• Internal Service funds are used to report activities that account for various employee benefits, 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 government -wide financial statements.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. The activities of the 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 -Purpose Trust and the Hutchins Street Square 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 Basic Financial Statements
The notes to the basic 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 postemployment 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 position may serve over time as a useful indicator of a government's financial position. The City's assets and deferred
outflows of resources exceeded liabilities by $259,215,945 at the close of the current fiscal year.
Assets:
Current and other assets
Capital assets
Total assets
Deferred outflows of resources
Liabilities:
Long-term liabilities
Other liabilities
Total liabilities
Net position:
Net investment in capital assets
Restricted
Unrestricted
Total net position
City of Lodi's Net Position
Governmental
Activities
2014 2013
$ 39,219,664
125,248,452
164,468,116
462,397
40,429,163
4,679,095
45,108,258
105,461,769
11,808,701
2,551,785
$ 119,822,255
38,750,736
126,641,197
165,391,933
38,871,505
5,934,472
44,805,977
106,827,620
12,600,862
1,157,474
120,585,956
Business -type
Activities
2014
86,449,184
234,608,951
321,058,135
7,371,560
178,254,118
10,781,887
189,036,005
116,156,098
6,702,976
16,534,616
139,393,690
2013
91,178,980
235,205,934
326,384,914
181,617,786
10,331,986
191.949.772
113,008,124
6,599,612
14,827,406
134,435,142
Assets. The City's total assets decreased by $6,250,596. The decrease is primarily due to the following:
2014
$ 125,668,848
359,857,403
485,526,251
7,833,957
218,683,281
15,460,982
234,144,263
221,617,867
18,511,677
19,086,401
$ 259,215,945
Total
2013
129,929,716
361,847,131
491,776,847
220,489,291
16,266,458
236.755.749
219,835,744
19,200,474
15,984,880
255,021,098
Governmental activities. Total assets for the governmental activities had a decrease of $923,817 or 0.56% resulting largely from the decrease in
capital assets of $ 1,392,745; offset by the increase in rent from Northern California Power Agency (NCPA), $503,987. Other insignificant
activities offset the difference.
Business -type activities. Total assets for the business -type activities had a decrease of $5,326,779 or 1.63%. Current and other assets
decreased by $4,729,796 primarily from the early pay off of the 2003 Series B Wastewater Revenue Bonds in the amount of $2,974,300; decrease
in restricted assets of $1,200,447; decrease in Greenhouse gas allowance compared to prior year of $1,565,000; offset by the increase in impact
fees of $287,690; and the increase in charges for services revenue due to increased rates in Wastewater of $557,877 and in Water of $315,037.
3
Charges for services in the Electric fund increased by $1,463,163 due to the overall increase in usage by customers. Capital assets decreased by
$596,983 primarily from depreciation of buildings and improvements, machinery and equipment, and vehicles. Other insignificant activities
contributed to the difference.
Liabilities. The City's total liabilities decreased by $2,611,486 or 1.10%. The decrease is primarily due to the following:
Governmental activities. Total liabilities for the governmental activities had an insignificant increase of $302,281 or 0.67%.
Business -type activities. Total liabilities for the business -type activities decreased by $2,913,767 or 1.52%. The decrease is primarily attributable
to the principal payments towards the various certificates of participation of $10,185,000; and the reduction of the pollution remediation obligation
of $742,038, offset by the reclassification of the deferred amount from various debts refunding due to GASB Statement No. 65 of $7,371,560.
Other insignificant activities offset the difference.
Net position. The City's overall financial position has increased during the fiscal year. The net position has increased by $8,693,996, excluding
the restatement of $4,499,149, or 3.47%.
The largest portion ($221,617,867) of the City's net position 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 position, $18,511,677 (7.14%) represents resources that are subject to external restrictions on how they may
be used. The remaining balance of unrestricted net position amounts to $19,086,401. At the end of the current fiscal year, the City is able to
report positive balances in all categories of net position for the City as a whole. Unrestricted net position is positive for both the governmental and
business -type activities.
7
Revenues
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Property taxes
Other taxes
Grants and contributions not restricted to specific programs
Litigation -environmental lawsuits proceeds
Rent
Other
Total revenues
Expenses
General government
Public protection
Public works
Community development
Library
Parks and recreation
Interest on long-term debt
Electric
Wastewater
Water
Transit
Total expenses
Changes in net position before transfers
Transfers
Changes in net position
Net position at beginning of year, as previously reported
Adjustment to loans receivable
Adjustment for OPEB and deferred costs
Net position at beginning of year, as restated
Net position at end of year
Analysis of Changes in Net Position
City of Lodi's Change in Net Position
Governmental Business -type
Activities
Activities
Total
2014
2013
2014
2013
2014
2013
$ 5,692,708
6,004,957
91,956,874
89,602,626 $
97,649,582
95,607,583
2,685,911
2,341,326
4,431,258
5,178,459
7,117,169
7,519,785
5,359,070
4,215,635
2,846,263
4,714,744
8,205,333
8,930,379
12,758,079
12,217,633
12,758,079
12,217,633
10,960,317
10,804,737
10,960,317
10,804,737
10,138,096
9,382,422
10,138,096
9,382,422
1,106,400
1,106,400
1,905,709
1,369,562
4,200
4,200
1,909,909
1,373,762
730,690
654,582
3,126,882
1,751,200
3,857,572
2,405,782
50,230,580
46,990,854
102,365,477
102,357,629
152,596,057
149,348,483
9,580,379
8,943,223
9,580,379
8,943,223
27,883,875
25,929,936
27,883,875
25,929,936
10,644,153
10,546,173
10,644,153
10,546,173
1,174,428
1,049,897
1,174,428
1,049,897
1,282,257
1,341,845
1,282,257
1,341,845
3,163,506
2,932,819
3,163,506
2,932,819
824,517
416,322
824,517
416,322
61,974,538
61,106,066
61,974,538
61,106,066
12, 526, 711
13,422,950
12,526, 711
13,422, 950
11,013,911
(34,876,879)
11,013,911
(34,876,879)
3,833,786
4,140,592
3,833,786
4,140,592
54,553,115
51,160,215
89,348,946
43,792,729
143,902,061
94,952,944
(4,322,535)
(4,169,360)
13,016,531
58,564,900
8,693,996
54,395,539
4,792,000
5,681,567
(4,792,000)
(5,681,567)
469,465
1,512,206
8,224,531
52,883,333
8,693,996
54,395,539
120,585,956
120,157,750
134,435,142
81,551,809
255,021,098
201,709,559
(1,084,000)
(1,084,000)
(1,233,166)
(3,265,983)
(4,499,149)
119,352,790
119,073,750
131,169,159
81,551,809
250,521,949
200,625,559
$ 119,822,255
120,585,956
139,393,690
134,435,142 $
259,215,945
255,021,098
Governmental activities
Net position for the governmental activities increased by $469,465 in the current fiscal year.
The key factors impacting the change in net position are:
• Charges for services decreased by 5.2%, a net amount of $310,249 from the prior fiscal year, mainly from the decrease from recycled
water revenue of $320,000.
• Operating grants and contributions increased by $344,585 or 14.72% compared to the prior year from the increase in police special grants
of $272,091 and increase in gas tax allocations of $138,362.
• Capital grants and contributions increased by $1,143,435 or 27.12% from the prior fiscal year. The increase in capital contributions was
mainly attributable to federal funds used for the Harney Lane Grade Separation project and the Sacramento Street Pedestrian
Beautification project totaling $1,761,762, offset by the decrease of impact fees of $284,137 and decrease in CDBG allocation of
$153,017.
• Property taxes increased by $540,446 or 4.42% compared to prior year. The economy continues to show evidence of positive movement
particularly in the housing market. Rising home prices coupled with record lows in mortgage rates are helping the process to generate
sales, resulting in an increase in property tax revenues in the current year.
• Grants and contributions not restricted to specific programs increased by $755,674 or 8.05% basically from sales tax revenues which
increased by $761,289. 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.
• Rent increased by $536,147 or 39.15% from prior fiscal year. This increase is primarily from the increase in NCPA rent of $503,987,
which includes the recycled water revenue received in prior year. The difference is offset by various small increases in other revenues.
Expenses for governmental functions totaled $54,553,115, an increase of $3,392,900 from the prior fiscal year. The key elements of this increase
are:
• General government — the increase in general government of $637,156 is primarily due to increase in utilities of $154,973; increase in
salaries and benefits including the Council approved one-time payment given to employees, the increase of cap for medical premiums and
the termination of furloughs for the General Services and Maintenance and Operators bargaining units of $208,740; repairs to
communication equipment and buildings of $102,865. Other insignificant increases offset the difference.
• Public protection — a significant increase of $1,953,939 in public protection is primarily due to increase in salary and benefits which include
increase in CaIPERS contributions of $252,000, increase due to the one-time payment approved by Council of $351,321, increase in part
time pay of $130,554, overtime of $60,974, increase in uniform allowance of $110,100, increase in medical insurance of $71,545, increase
in other benefits of $204,100, increase in professional services related to the CalGrip grant of $117,438, purchase of grant equipment of
$196,920, increase in training and education including Peace Officer Standards and Training (POST) reimbursements of $69,130. Other
insignificant increases offset the difference.
• Parks and recreation — the increase of $230,687 is primarily due to increase in salaries and other benefits and repairs that were previously
deferred.
• Interest on long-term debt — the increase of $408,195 represents the full year interest of the 2012 Refunding bonds; prior year was only for
six months.
Business -type activities
Business -type activities increased the City's net position by $8,224,531 in the current year. The key elements of this increase are:
• Cost of services paid to the General Fund decreased by $752,390 in Electric, $383,480 in Wastewater, and $280,120 in Water.
• Decrease in interest expense in the current year of $467,147.
• Increase in reimbursement for the installation of granular activated carbon filters (GAC) at City Well No.6R of $521,202.
E
Wastewater and water rates were increased during the year resulting in increased charges for services revenues of $557,877 and
$315,037, respectively. Charges for services in the Electric fund increased by $1,463,163 primarily from sales due to growth and
increased usage by commercial customers.
The receipt of Greenhouse gas allowance (GHG) of $453,104 in the Electric fund related to Assembly Bill 32: Global Warming Act, which
set the 2020 greenhouse gas emissions reduction into law and also adopted a regulation that established a system of market-based
declining annual aggregate emission limits for sources or categories of sources that emit greenhouse gases. In 2011, the California Air
Resources Board (ARB) adopted the cap -and -trade regulation. This program covers major sources of GHG emissions in the State such
as refineries, power plants, industrial facilities, and transportation fuels. The cap -and -trade program includes an enforceable emissions
cap that will decline over time. The State distributes allowances which are tradable permits, equal to emissions allowed under the cap.
• Bulk power cost decreased by $1,887,547 compared to the prior year primarily due to a decrease in transmission costs and an increase in
credits to the General Operating reserves at NCPA from budget settlements including interest earnings.
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, unassigned fund balance may serve as a useful measure of a
government's net resources available for spending at the end of the fiscal year. Types of governmental funds reported by the City include the
General Fund, special revenue funds, debt service fund and capital projects funds.
At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $21,142,969. This represents an
increase of $1,130,468 in comparison to the prior year resulting from the increase in total revenues offset by the decrease in transfers in, and the
increase in capital outlay.
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
$9,133,366 while total fund balance was $9,473,760. 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 and total fund balance represent 25.53% and 26.48% of
total General Fund expenditures, respectively.
The fund balance of the General Fund increased by $1,508,548 during the current fiscal year. Key factors in this growth are as follows:
Total revenues increased by $1,877,753, primarily from increase in rent of $519,876; increase in sales tax of $761,289; increase in
property tax of $359,840, real property transfer tax of $35,165, and property tax in -lieu of $145,440. Other insignificant increases and
decreases offset the difference.
• Total expenditures increased by $944,788, primarily from increase in salaries of $608,820; increase in uniform allowance of $110,100,
increase in CaIPERS contribution of $252,000, and increase in other benefits of $126,400. Other insignificant increase and decreases
offset the difference.
10
• Transfers in for cost of services decreased by $752,390 from Electric fund and $280,120 from Water fund.
• Transfers out for debt service increased by $224,955 for the 2012 refunding certificates of participation and transfer out to Parks,
Recreation and Community Services fund increased by $177,405; offset by the decrease in transfers to the Capital Outlay Reserve fund of
$355,430.
Proprietary Funds
The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail.
Unrestricted net position at the end of the year for the Wastewater Fund was $14,256,536, Water Fund was $1,878,877 and for the Transit Fund,
$3,978,931. The Electric Fund unrestricted net position was ($3,579,728) and the Internal Services Funds unrestricted net position was
($320,141).
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 budget and the final budget in the General Fund were a net increase in appropriations of $928,892. The increase
in appropriations can be briefly summarized as follows:
• $175,273 increase in general government
• $709,363 increase in public protection
• $44,256 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 $546,296 was due to positive variances in property tax ($157,828), real property transfer tax ($51,114),
transient occupancy tax ($83,783), in -lieu of vehicle license fees ($62,507), business license tax ($97,784), cable TV franchise fees
($22,479), waste removal franchise fees ($49,702), electric, gas and industrial waste franchise ($42,718), offset by a negative variance in
card room tax ($21,619).
• Intergovernmental revenues — a favorable variance of $351,298 was mainly due to a positive variance in sales tax ($454,135) offset by a
negative variance in Police Hiring grant ($125,016).
• Fines, forfeits and penalties — a favorable variance of $301,931 resulted largely from a positive variance in late payment fees ($346,439),
offset by a negative variance in vehicle code and moving violation ($49,033).
• For expenditures, a favorable variance between the final budget and actual expenditures of $1,109,507 was due to savings from
vacancies and the continued overall effort to reduce spending and costs.
11
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital assets
The City's investment in capital assets for its governmental and business -type activities as of June 30, 2014, amounts to $359,857,403 (net of
accumulated depreciation). This investment in capital assets includes land, buildings and improvements, machinery and equipment, vehicles,
infrastructure, works of art, and construction in progress. The total decrease in the City's investment in capital assets for the current fiscal year
was $1,989,728, a 0.55% decrease (a 1.10% decrease in governmental activities and 0.25% decrease in business -type activities) as shown in the
table below.
An increase in land compared to prior year was primarily due to land improvements at the DeBenedetti Park and Century Meadows Park. The
increase in vehicles resulted from the purchase of a fire truck from the City of Lincoln.
Additional information on the City's capital assets can be found in Note 6 on pages 49-51 of this report.
12
Changes in Capital Assets, Net of Depreciation
Governmental Activities
Business -type
Activities
Total
2014
2013
2014
2013
2014
2013
Land
$ 24,933,134 $
24,094,424 $
5,535,718 $
5,535,718 $
30,468,852 $
29,630,142
Construction in Progress
4,407,042
6,074,289
4,029,855
3,901,025
8,436,897
9,975,314
Buildings and Improvements
38,288,041
37,263,520
31,130,846
31,368,774
69,418,887
68,632,294
Machinery and Equipment
726,413
1,064,146
191,198,079
191,367,138
191,924,492
192,431,284
Vehicles
1,318,240
816,472
2,714,453
3,033,279
4,032,693
3,849,751
Infrastructure
55,270,675
57,023,439
55,270,675
57,023,439
Work of Art
304,907
304,907
304,907
304,907
Total
$ 125,248,452 $
126,641,197 $
234,608,951 $
235,205,934 $
359,857,403 $
361,847,131
An increase in land compared to prior year was primarily due to land improvements at the DeBenedetti Park and Century Meadows Park. The
increase in vehicles resulted from the purchase of a fire truck from the City of Lincoln.
Additional information on the City's capital assets can be found in Note 6 on pages 49-51 of this report.
12
Long-term debt
At the end of the current fiscal year, the City had total bonded debt outstanding of $177,300,622. Of this amount, $20,004,080 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 $157,296,542 from the business -type activities consists of $36,777,205 for the Water Fund; $49,230,981 for the
Wastewater Fund; and $71,288,356 for the Electric Fund.
City of Lodi's Outstanding Debt
Governmental Business -type
Activities activities Total
Certificates of Participation and
Revenue Bonds $ 20,004,080 157,296,542 177,300,622
The City's total bonded debt decreased by $10,500,054 during the current fiscal year.
Bond Rating
In September 2014, Standard & Poor's Rating Services affirmed the rating on outstanding electric utility debt instruments of A- with a stable
outlook. In November 2014, Fitch Rating Services affirmed it's a- rating with a stable outlook but noted the closure of General Mills and the utility's
declining cash levels, saying its rating hinged on the City approving a 5 -percent rate increase and subsequent 2 -percent increases.
In February 2014, Standard & Poor's Rating Services affirmed its rating of AA- with a stable outlook in regards to the $38,665,000 Water Revenue
bonds. Moody's Investor Services affirmed its rating of Aa3 to this issue in October 2014.
In July 2014, Fitch Rating Services affirmed the rating on outstanding public improvement bonds at AA- with a stable outlook and assigned an
implied general obligation bond rating of AA.
In July 2014, Fitch Rating Services upgraded its rating to AA- with a stable outlook in regards to the outstanding Wastewater Revenue bonds.
Additional information on the City's long-term debt can be found in Note 8 on pages 52-58 of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The City continues to see a number of positive economic indicators and is slowly returning to revenue levels seen before the Great Recession.
General Fund revenues including transfers from other funds are projected to increase for the third consecutive year from $42,198,820 in 2013/14
to a conservatively projected $43,591,060 in 2014/15.
This past year has seen the continued growth for Costco and Home Depot stores. Moreover, plans are now on file for construction of several
businesses and additional retailers are moving forward with plans to complete other sections of the development at Reynolds Ranch. Additionally,
the Lodi Shopping Center is moving forward and is under construction.
13
The General Fund continues to be of greatest focus. It funds all of the core municipal services including police, fire, administration, economic
development, transfers to the parks and library funds and other essential public services. The General Fund houses the large majority of City
employees.
The City has reduced its workforce by 20% over the past ten years, from 470 full-time budgeted employees in 2004/05 to 382 full-time budgeted
employees in 2014/15. Employees agreed to historic salary and benefit changes that permanently reduced salary and benefits for all employee
groups (except IBEW) as of January 1, 2014. As of January 2015, IBEW members will also begin paying the full employee cost of retirement.
Balancing the 2014/15 budget involves balancing several critical issues: employee costs and retirement contributions; capital programs; and cost
increases beyond the City's control that were either imposed by external entities or negotiated by the City with its bargaining groups.
The City had been operating under annual concession agreements with all of its bargaining units. While concession agreements have allowed the
City to meet its budgetary requirements, such concession agreements are not conducive to long-term planning. Of the City's nine bargaining
units, eight have agreements that expired during FY 2011/12. The City negotiated successor agreements which contained structural changes in
salary and benefits with all of these units, along with modifying the benefits for Executive, Council Appointees and Confidential employees. Similar
structural changes were negotiated with IBEW in a successor agreement that is set to expire on December 31, 2017. The City is currently
negotiating with the eight bargaining units whose agreements expire in 2014/2015.
Employee costs and contributions — Prior to the economic downturn, Lodi and its employees aggressively moved to manage employment costs.
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 largely avoided employee layoffs and
drastic service cuts so common in other cities. In 2013, the majority of employees agreed to a historic restructuring of their salary and benefits,
permanently reducing employee expenses. Employees agreed to paying their full seven or nine percent retirement contribution and capping the
City's medical costs. The effect of these agreements was to reduce employment costs seven to nine percent below the 2007/08 levels.
Coming to 2014/15, the City negotiated an additional one-year agreement with all of its bargaining units (except IBEW). For the first time since
2007/08, the City returned a portion of the concessions agreed to by employees, issuing a one-time payment of $2,300 per employee to all
employees, and increasing the medical cap to January 2014 rates. In addition, the City increased safety uniform allowances by 1 percent on a
one-year non-PERSable basis. As noted earlier, the City has negotiated an agreement with IBEW that includes the employees in that bargaining
unit paying their seven percent share of retirement costs.
The City has also used early retirement to reduce its work force. Over the course of the last five 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
40 employees have taken advantage of the retirement incentive. Cumulative annual salary savings from the position reductions is $2.7 million.
More importantly, the position reductions will mitigate the impact of the CalPERS crisis as the City rolls into increased rates over the next five
years.
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
14
buildings. Scheduled to be completed this year are parking lot, carpet and roof improvements to various facilities. Additionally, the FY 2014/15
budget allocates funding for the replacement of the City's financial and billing systems. The above projects total about $1.0 million.
Imposed Costs — While revenues have increased nearly $1.4 million, the cost of retirement and insurance continue to rise. In the last few years,
CalPERS has revised a number of its actuarial assumptions and policies. Rates for 2014/15 incorporate the impact of changes to the discount
rate approved in prior years. Rates for Miscellaneous plan employees rose 11.1 percent while Safety plan rates increased 7.9 percent. Total
additional cost to the City is about $500,000. In December of 2013, CalPERS released its long awaited five-year rate projections resulting from its
major policy shift regarding the time frame within which it recovers market losses. In years past, CalPERS recovered these losses over a 30 -year
rolling period. In 2013, CalPERS reduced that time frame to ten years. The increase is phased in on a bell curve over five years and decreasing
for the last five. The bell curve structure means Lodi will see its greatest impact in the 2019/20 budget year. Projected contribution rates ranges
from 18% to 26.1 % for the Miscellaneous group, and 38.49% to 48.1 % for the Safety group, in the next five years.
A second cost increase that is a cause of concern is rapidly increasing health care costs. 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. Staff is evaluating the impact of the Affordable
Care Act and believes that prudent management of part-time hours will allow the City to avoid an economic impact.
A third cost increase that is a cause of concern is worker's compensation. The City is self-funded for worker's compensation costs. There has
been a moderation in the cost and severity of claims and the City has funded its actuarial liability at slightly more than the 80% percent confidence
level. Staff continues to manage the program and provide education to employees to minimize injuries and work time losses.
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 3 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, even more jobs can be found 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 CertainTeed find the City an attractive base for their West Coast operations. The City was disappointed with the
announcement that the General Mills plant would be closing by the end of 2016. City staff, including the newly hired Business Development
Manager, is in discussions with General Mills staff regarding the marketing and re -use of the site as General Mills closes the plant. While a major
employer, staff is optimistic that a suitable replacement will be found timely and not significantly impact City operations.
REQUEST FOR INFORMATION
This financial report is designed to provide citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances
and to demonstrate the City' accountability for the money it receives. If you have any questions about this report or need additional information,
contact the Financial Services Division of the City of Lodi at 310 W. Elm Street, Lodi, California, 95240.
15
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BASIC FINANCIAL STATEMENTS
The Government -wide Financial Statements provide a broad overview of the City's financial position and operating results. Information is
grouped by governmental activities or business -type activities.
The Fund Financial Statements report information about the City's Governmental Funds, Proprietary Funds, and the Fiduciary Funds.
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
Property tax receivable
Interest receivable
Internal balances
Due from other governmental agencies
Restricted assets
Loans receivable
Advance receivable
Inventory
Other assets
Capital assets, net:
Nondepreciable
Depreciable, net
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES
Unamortized losses on defeasance
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 POSITION
Net investment in capital assets
Restricted for:
Road -related projects
Capital projects
Debt service
Public safety
Community development
Unrestricted
TOTAL NET POSITION
CITY OF LODI
STATEMENT OF NET POSITION
June 30, 2014
Governmental
Activities
$ 35,131,234
4,090,347
10,654
9,111
(1,679,025)
1,504,037
142,534
10,772
29,645,083
95,603,369
164,468,116
Business -type
Activities
28,946,846
10,460,766
10,574
1,679,025
1,282,320
34,412,585
34,067
6,212,109
3,410,424
468
9,565,573
225,043,378
321,058,135
Total
$ 64,078,080
14,551,113
10,654
19,685
2,786,357
34,412,585
34,067
6,212,109
3,552,958
11,240
39,210,656
320,646,747
485,526,251
462,397 7,371,560 7,833,957
3,499,532
910,374
211,203
57,986
2,799,438
37,629,725
45,108,258
105,461,769
3,987,407
6,442,038
271,213
1,108,043
2,551,785
$ 119,822,255
The notes to the financial statements are an integral part of this statement. 17
6,787,631
2,466,625
1,527,631
8,049,259
170,204,859
189,036,005
116,156,098
6,702,976
16,534,616
139,393,690
10,287,163
910,374
2,677,828
1,585,617
10,848,697
207,834,584
234,144,263
221,617,867
3,987,407
6,442,038
6,702,976
271,213
1,108,043
19,086,401
$ 259,215,945
Functions/Programs
PRIMARY GOVERNMENT:
Governmental activities:
General government
Public protection
Public works
Community development
Library
Parks and recreation
Interest on long-term debt
Total governmental activities
Business -type activities:
Electric
Wastewater
Water
Transit
Total business -type activities
Total primary government
Expenses
CITY OF LODI
STATEMENT OF ACTIVITIES
Year ended June 30, 2014
Program Revenues
Operating Capital
Charges for Grants and Grants and
Services Contributions Contributions
Net (Expense) Revenue and
Changes in Net Position
Governmental Business -type
Activities Activities Total
$ 9,580,379
1,955,082
54,826
79,286
(7,491,185)
$
(7,491,185)
27,883,875
581,620
1,506,712
246,041
(25,549,502)
10,138,096
(25,549,502)
10,644,153
415,345
1,100,079
4,513,129
(4,615,600)
4,200
(4,615,600)
1,174,428
1,218,805
2,897,459
4,792,000
44,377
44,377
1,282,257
42,902
24,294
350,000
(865,061)
119,352,790
(865,061)
3,163,506
1,478,954
170,614
(1,513,938)
(1,513,938)
824,517
(824,517)
(824,517)
54,553,115
5,692,708
2,685,911
5,359,070
(40,815,426)
(40,815,426)
61,974,538
64,692,808
1,564,736
89,641
4,372,647
4,372,647
12,526,711
14,305,093
593,359
2,371,741
2,371,741
11,013,911
12,756,076
614,377
682,289
3,038,831
3,038,831
3,833,786
202,897
2,252,145
1,480,974
102,230
102,230
89,348,946
91,956,874
4,431,258
2,846,263
9,885,449
9,885,449
$ 143,902,061
97,649,582
7,117,169
8,205,333
(40,815,426)
9,885,449 $
(30,929,977)
General revenues:
Taxes:
Property taxes
Franchise taxes
Business license tax
Transient occupancy tax
Grants and contributions not restricted to specific programs
Investment earnings
Rent
Other
Transfers
Total general revenues and transfers
Change in net position
Net position, beginning of year, restated
Net position, end of year
The notes to the financial statements are an integral part of this statement.
18
12,758,079
12,758,079
8,838,369
8,838,369
1,528,165
1,528,165
593,783
593,783
10,138,096
10,138,096
202,819
757,294
960,113
1,905,709
4,200
1,909,909
527,871
2,369,588
2,897,459
4,792,000
(4,792,000)
41,284,891
(1,660,918)
39,623,973
469,465
8,224,531
8,693,996
119,352,790
131,169,159
250,521,949
$ 119,822,255 139,393,690 $ 259,215,945
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 enterprise funds and the internal service funds.
Major Enterprise Funds include:
Electric Fund
The City established this fund in order to account for the provision of electric services to the residents of the
City. All activities necessary to provide such services are accounted for in this fund, including but not limited to,
source of supply, overhead, systems maintenance, customer service, engineering, administration, capital
improvements maintenance and debt service.
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 Types
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
CITY OF LODI
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2014
ASSETS
Cash and investments
Receivables:
Accounts, net
Property taxes
Interest
Due from other funds
Due from other governmental agencies
Inventory
Other assets
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable and other liabilities
Accrued salaries and wages
Due to other funds
Advances from other funds
Unearned revenue
Total liabilities
Deferred inflows of resources:
Unavailable revenue
Fund balances:
Nonspendable
Inventory
Other assets
Restricted
Road -related projects
Capital projects
Public safety
Community development
Committed
Video- related capital projects
Assigned
Encumbrances - supplies, materials and services
Unassigned
Total fund balances
Total liabilities, deferred inflows of resources, and fund balances
The notes to the financial statements are an integral part of this statement. 21
3,748
10,310
3,987,407
6,397,331
271,213
1,108,043
300,758
29,326
9,133,366 (98,533)
9,473,760 11,669,209
$ 12,713,310 14,579,191 $
3,748
10,310
3,987,407
6,397,331
271,213
1,108,043
300,758
29,326
9,034,833
21,142,969
27,292,501
Other
Total
General
Governmental
Governmental
Fund
Funds
Funds
$ 8,866,528
12,689,783 $
21,556,311
3,806,340
284,007
4,090,347
10,654
10,654
2,776
2,844
5,620
111,112
111,112
16,702
1,487,335
1,504,037
3,748
3,748
10,310
362
10,672
$ 12,713,310
14,579,191 $
27,292,501
$ 2,302,192
1,044,136 $
3,346,328
910,374
910,374
111,112
111,112
1,679,025
1,679,025
26,984
31,002
57,986
3,239,550
2,865,275
6,104,825
44,707
44,707
3,748
10,310
3,987,407
6,397,331
271,213
1,108,043
300,758
29,326
9,133,366 (98,533)
9,473,760 11,669,209
$ 12,713,310 14,579,191 $
3,748
10,310
3,987,407
6,397,331
271,213
1,108,043
300,758
29,326
9,034,833
21,142,969
27,292,501
CITY OF LODI
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
June 30, 2014
Amounts reported for governmental activities in the statement of net position 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
Issuance premium (to be amortized as interest expense)
Unamortized losses on defeasance (to be amortized as interest expense)
Accrued interest
Other long-term assets are not available to pay for current period expenditures and,
therefore, are deferred in the funds
Internal service funds are used by management to charge the costs of general
liability insurance, workers' compensation insurance, health benefits insurance,
other insurance, employee benefits 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 position
Net position of governmental activities
The notes to the financial statements are an integral part of this statement. 22
$ 21,142,969
29,645,083
95,574,427
(6,295,846)
(19,325,000)
(924,080)
462,397
(211,203)
44,707
(291,199)
$ 119,822,255
CITY OF LODI
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
Year ended June 30, 2014
Other financing sources (uses)
Transfers in
3,952,000
Other
Total
Transfers out
General
Governmental
Governmental
Total other financing sources (uses)
Fund
Funds
Funds
Revenues:
Net change in fund balances
1,508,548
Taxes
$ 23,718,396
$
23,718,396
Licenses and permits
83,420
768,586
852,006
Intergovernmental revenues
11,319,708
6,072,465
17,392,173
Charges for services
1,025,851
2,532,373
3,558,224
Fines, forfeits and penalties
1,552,531
3,900
1,556,431
Investment and rental income
1,548,787
475,971
2,024,758
Miscellaneous revenue
352,331
651,043
1,003,374
Total revenues
39,601,024
10,504,338
50,105,362
Expenditures:
Current:
General government
6,482,226
2,536,519
9,018,745
Public protection
26,470,110
622,447
27,092,557
Public works
1,554,939
2,838,150
4,393,089
Community development
1,191,901
1,191,901
Library
1,267,850
1,267,850
Parks and recreation
2,299,213
2,299,213
Capital outlay
7,652,128
7,652,128
Debt service:
Interest and fiscal charges
851,411
851,411
Total expenditures
35,775,125
17,991,769
53,766,894
Excess (deficiency) of revenues over (under) expenditures
3,825,899
(7,487,431)
(3,661,532)
Other financing sources (uses)
Transfers in
3,952,000
7,643,681
11,595,681
Transfers out
(6,269,351)
(534,330)
(6,803,681)
Total other financing sources (uses)
(2,317,351)
7,109,351
4,792,000
Net change in fund balances
1,508,548
(378,080)
1,130,468
Fund balances, beginning of year
7,965,212
12,047,289
20,012,501
Fund balances, end of year
$ 9,473,760
11,669,209 $
21,142,969
The notes to the financial statements are an integral part of this statement.
23
CITY OF LODI
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
Year ended June 30, 2014
Amounts reported for governmental activities are different because:
Net change in fund balances - total governmental funds
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense.
Capital outlays, capital contributions and depreciation expense are as follows:
Capitalized capital outlays
Capital asset contributions
Depreciation expense
Internal service funds are used by management to charge the costs of general
liability insurance, workers' compensation insurance, health benefits insurance,
other insurance, employee benefits and the cost of operating and maintaining the
City's fleet to individual funds. The net revenue (expenses) of the internal service
funds are reported with governmental activities.
$ 1,130,468
7,652,128
41,315
(9,084,740)
415,169
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 288,231
Amortization of loss on defeasance (26,936)
Amortization of bond premium 53,830
Change in net position of governmental activities $ 469,465
The notes to the financial statements are an integral part of this statement. 24
ASSETS
Current assets
Cash and investments
Restricted cash and investments
Restricted assets with fiscal agents
Receivables:
Accounts, net
Interest
Due from other governmental agencies
Advance receivable
Loans receivable
Inventory
Other assets
Total current assets
Noncurrent assets:
Restricted assets with fiscal agents
Advances to other funds
Capital assets, net:
Nondepreciable
Depreciable, net
Total capital assets
Total noncurrent assets
TOTALASSETS
DEFERRED OUTFLOWS OF RESOURCES
Unamortized losses on defeasance
LIABILITIES
Current liabilities:
Accounts payable and other liabilities
Accrued interest
Unearned revenue
Self-insurance liability
Accrued compensated absences
Certificates of participation and revenue bonds payable
Total current liabilities
Noncurrent liabilities:
Self-insurance liability
Accrued compensated absences
Certificates of participation and revenue bonds payable
Net OPEB obligation
Pollution remediation obligation
Total noncurrent liabilities
TOTAL LIABILITIES
NET POSITION
Net investment in capital assets
Restricted:
Debt service
Unrestricted
TOTAL NET POSITION
CITY OF LODI
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
June 30, 2014
The notes to the financial statements are an integral part of this statement. 25
Governmental
Activities -
Business -type Activities -Enterprise Funds
Internal
Nonmajor Fund
Service
Electric
Wastewater
Water
Transit
Total
Funds
$ 5,929,528
14,249,392
7,027,567
1,740,359 $
28,946,846 $
13,574,923
15,371,480
15,371,480
12,065,079
88,927
4,717,249
16,871,255
6,597,596
1,006,226
894,707
1,962,237
10,460,766
1,538
3,696
4,889
451
10,574
3,491
7,150
55,170
1,220,000
1,282,320
6,212,109
6,212,109
34,067
34,067
3,022,265
24,100
364,059
3,410,424
138,786
432
36
468
100
33,862,182
15,379,923
28,435,157
4,923,047
82,600,309
13,717,300
2,169,850
2,169,850
505,000
1,174,025
1,679,025
763,785
4,262,926
3,956,155
582,707
9,565,573
42,035,850
85,119,887
83,311,202
14,576,439
225,043,378
28,942
42,799,635
89,382,813
87,267,357
15,159,146
234,608,951
28,942
42,799,635
92,057,663
88,441,382
15,159,146
238,457,826
28,942
76,661,817
107,437,586
116,876,539
20,082,193
321,058,135
13,746,242
5,429,800
1,941,760
7,371,560
3,616,624
138,262
2,833,020
199,725
6,787,631
153,204
1,742,976
546,994
176,655
2,466,625
868,218
659,413
1,527,631
1,050,613
281,172
191,939
22,201
24,772
520,084
34,998
4,984,909
1,674,566
869,700
7,529,175
10,625,681
2,551,761
4,769,794
883,910
18,831,146
1,238,815
7,971,146
602,059
662,265
60,206
1,324,530
60,206
66,303,447
47,556,415
35,907,505
149,767,367
4,767,274
19,112,962
19,112,962
66,905,506
48,218,680
55,020,467
60,206
170,204,859
12,798,626
77,531,187
50,770,441
59,790,261
944,116
189,036,005
14,037,441
1,437,182
44,352,369
55,207,401
15,159,146
116,156,098
28,942
6,702,976
6,702,976
(3,579,728)
14,256,536
1,878,877
3,978,931
16,534,616
(320,141)
$ 4,560,430
58,608,905
57,086,278
19,138,077 $
139,393,690 $
(291,199)
The notes to the financial statements are an integral part of this statement. 25
OPERATING REVENUES
Charges for services
OPERATING EXPENSES
Personnel services
Supplies, materials and services
Utilities
Depreciation
Claims
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Investment income
Interest expense
Operating grants
Greenhouse gas allowance
Loss on disposal of capital assets
Other revenues
TOTAL NONOPERATING REVENUES (EXPENSES)
INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions
Transfers out
Net capital contributions and transfers
Change in net position
NET POSITION - BEGINNING OF YEAR, restated
NET POSITION - END OF YEAR
CITY OF LODI
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION
PROPRIETARY FUNDS
Year ended June 30, 2014
The notes to the financial statements are an integral part of this statement.
26
Governmental
Activities -
Business -type Activities - Enterprise Funds
Internal
Nonmajor Fund
Service
Electric
Wastewater
Water
Transit
Total
Funds
$ 64,692,808
14,305,093
12,756,076
202,897 $
91,956,874 $
11,683,362
5,923,471
3,215,190
2,392,611
322,972
11,854,244
1,079,863
11,943,754
2,145,745
3,014,227
2,489,192
19,592,918
7,682,515
37,354,466
642,508
648,233
69,505
38,714,712
16,025
1,780,427
4,079,800
2,816,296
952,117
9,628,640
1,448
2,641,915
57,002,118
10,083,243
8,871,367
3,833,786
79,790,514
11,421,766
7,690,690
4,221,850
3,884,709
(3,630,889)
12,166,360
261,596
136,524
427,308
179,734
13,728
757,294
83,903
(3,787,607)
(2,443,468)
(2,142,544)
(8,373,619)
1,111,632
614,377
2,252,145
3,978,154
453,104
453,104
(1,184,813)
(1,184,813)
1,113,884
277,657
825,314
156,933
2,373,788
69,670
(2,157,276)
(1,738,503)
(523,119)
2,422,806
(1,996,092)
153,573
5,533,414
2,483,347
3,361,590
(1,208,083)
10,170,268
415,169
89,641
593,359
682,289
1,480,974
2,846,263
(2,444,000)
(1,318,000)
(1,030,000)
(4,792,000)
(2,354,359)
(724,641)
(347,711)
1,480,974
(1,945,737)
3,179,055
1,758,706
3,013,879
272,891
8,224,531
415,169
1,381,375
56,850,199
54,072,399
18,865,186
131,169,159
(706,368)
$ 4,560,430
58,608,905
57,086,278
19,138,077 $
139,393,690 $
(291,199)
The notes to the financial statements are an integral part of this statement.
26
Cash flows from operating activities:
Receipts from customers and users
Receipts from interfund services provided
Cash paid to suppliers for goods & services
Payments to employees
Payments for interfund services provided
Net cash provided by (used in) operating activities
Cash flows from noncapital financing activities:
Operating grants
Repaid from other funds
Received -greenhouse gas allowance
Transfers out
Net cash provided by (used in) noncapital financing activities
Cash flows from capital and related financing activities:
Fees received for water meter installations
Acquisition and construction of capital assets
Fees received from developers
Capital grants received
Principal payments on debt
Interest payments on debt
Net cash provided by (used in) capital and related financing activities
Cash flows from investing activities:
Interest on investments
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
CITY OF LODI
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
Year ended June 30, 2014
(continued)
27
Governmental
Business -type
Activities - Enterprise Funds
Activities-
Nonmajor Fund
Internal Service
Electric
Wastewater
Water
Transit
Total
Funds
$ 63,530,313
14,471,272
13,655,473
359,830 $
92,016,888 $
92,195
219,645
219,645
11,683,362
(48,573,418)
(2,258,946)
(3,841,219)
(2,923,236)
(57,596,819)
(9,934,619)
(5,923,128)
(3,255,491)
(2,395,895)
(323,843)
(11,898,357)
(1,090,922)
(3,658)
(595,679)
(629,290)
(55,026)
(1,283,653)
9,249,754
8,361,156
6,789,069
(2,942,275)
21,457,704
750,016
1,111,632
614,377
2,008,693
3,734,702
128,571
35,000
163,571
453,104
453,104
(2,444,000)
(1,318,000)
(1,030,000)
(4,792,000)
(879,264)
(1,189,429)
(380,623)
2,008,693
(440,623)
405,677
405,677
(1,024,584)
(763,054)
(7,293,029)
(501,973)
(9,582,640)
89,641
176,141
60,000
325,782
1,607,923
1,607,923
(4,750,000)
(4,610,000)
(825,000)
(10,185,000)
(3,605,889)
(2,293,682)
(2,144,607)
(8,044,178)
(9,290,832)
(7,490,595)
(9,796,959)
1,105,950
(25,472,436)
113,760
214,600
166,938
14,139
509,437
87,460
(806,582)
(104,268)
(3,221,575)
186,507
(3,945,918)
837,476
18,801,189
14,442,587
30,337,871
1,553,852
65,135,499
12,737,447
$ 17,994,607
14,338,319
27,116,296
1,740,359 $
61,189,581 $
13,574,923
(continued)
27
Reconciliation to the statement of net position:
Cash and investments
Restricted cash and investments
Restricted assets with fiscal agents - current
Total cash and cash equivalents
Reconciliation of operating income (loss) to net cash provided by
(used in) operating activities:
Operating Income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation
Other revenues
Change in assets and liabilities:
Decrease in loans receivable
Decrease (increase) in accounts receivable
Increase in advance receivables
Increase in due from other governmental agencies
Decrease (increase) in inventory
Decrease(increase)in other assets
Increase (decrease) in accounts payable and other liabilities
Increase (decrease) in compensated absences
Decrease in self-insurance liability
Decrease in pollution remediation obligation
Increase in net OPEB obligation
Net cash provided by (used in) operating activities
Noncash Investing. Capital and Financing Activities
Capital asset contributions
Book value of disposed capital assets
CITY OF LODI
STATEMENT OF CASH FLOWS - continued
PROPRIETARY FUNDS
Year ended June 30, 2014
1,184,813
The notes to the financial statements are an integral part of this statement. 28
417,218 216,612
$ 633,830
1,184,813
Governmental
Business -type Activities - Enterprise Funds
Activities-
Nonmajor Fund
Internal Service
Electric
Wastewater
Water
Transit
Total
Funds
$ 5,929,528
14,249,392
7,027,567
1,740,359 $
28,946,846
$ 13,574,923
15,371,480
15, 371,480
12,065,079
88,927
4,717,249
16,871,255
$ 17,994,607
14,338,319
27,116,296
1,740,359 $
61,189,581
$ 13,574,923
$ 7,690,690
4,221,850
3,884,709
(3,630,889) $
12,166,360
$ 261,596
1,780,427
4,079,800
2,816,296
952,117
9,628,640
1,448
1,113,884
277,657
825,314
156,933
2,373,788
69,670
98,334
98,334
(1,114,755)
(116,947)
72,844
(1,158,858)
22,625
(941,979)
(941,979)
(2,313)
(2,313)
(350,143)
(1,874)
(67,779)
(419,796)
2
7,782
1,239
9,021
(100)
972,953
(64,498)
1,768
(419,565)
490,658
(16,611)
343
(40,301)
(3,284)
(871)
(44,113)
(11,059)
(95,303)
(742,038)
(742,038)
517,748
$ 9,249,754
8,361,156
6,789,0 69(2,942,275)
$
21,457,704
$ 750,016
1,184,813
The notes to the financial statements are an integral part of this statement. 28
417,218 216,612
$ 633,830
1,184,813
CITY OF LODI
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
June 30, 2014
ASSETS
Cash and investments
Receivables:
Interest
TOTAL ASSETS
LIABILITIES
Agency obligations
NET POSITION - EXPENDABLE
The notes to the financial statements are an integral part of this statement. 29
Private -Purpose
Trust Funds
$ 272,711 $
272,711
$ 272,711 $
Aaencv Fund
425,592
113
425,705
425,705
CITY OF LODI
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
Year ended June 30, 2014
UVITIJWOJMF
Investment and rental income
DEDUCTIONS
Current
Library
CHANGE IN NET POSITION
NET POSITION, BEGINNING OF YEAR
NET POSITION, END OF YEAR
The notes to the financial statements are an integral part of this statement. 30
Private -Purpose
Trust Funds
$ 26,554
28,760
(2,206)
274,917
$ 272,711
NOTES TO BASIC FINANCIAL STATEMENTS
(This page intentionally left blank.)
CITY OF LODI
Notes to Basic Financial Statements
June 30, 2014
(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.
32
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
The City Council constitutes the Board of Directors of LPFA. The funds of LPFA have been included in the Enterprise (Water) Fund in the
accompanying basic financial statements.
(b) Government -Wide and Fund Financial Statements
The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non -
fiduciary activities of the primary government and its component units. For the most part the effect of interfund activity has been removed from
these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately
from business -type activities that rely, to a significant extent, on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct
expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or
applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and
contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly
included among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded
from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as
separate columns in the fund financial statements.
(c) Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government -wide financial statements are reported using the economic resources measurement focus and accrual basis of accounting, as
are the proprietary fund and private -purpose trust fund financial statements. Revenues are recorded when earned and expenses are recorded
when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they
are levied. Grant and similar items are recognized as revenue as soon as all eligibility requirements have been met. Agency funds use the
accrual basis of accounting, but they do not have a measurement focus.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of
accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers property tax
revenues to be available if they are collected within 60 days of the end of the current fiscal year. All other revenues are considered to be
available if they are generally collected within 120 days of the end of the current fiscal period. Expenditures generally are recorded when a
liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to vacation, sick leave,
claims and judgments, are recorded only when payment is due.
33
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
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 maintenance and debt service.
The Wastewater Fund accounts for the provision of wastewater collection and treatment services to the residents of the City. All
activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations,
maintenance, improvements and debt service.
The Water Fund accounts for the provision of water to the residents of the City as well as some customers in the County. All activities
to provide such services are accounted for in this fund, including, but not limited to administration, operations, distribution, maintenance,
capital improvements and debt service.
Additionally, the City reports the following fund types:
The Internal Service Funds account for the City's claims, benefits and fleet services.
The Fiduciary Funds account for assets held in trust for other agencies.
Private -Purpose Trust Funds are used to account for trust agreements under which the principal and income benefit
individuals, private organizations or other governments. They were established to account for assets held and invested by the
Library Board as trustee; and to account for assets held by the City in accordance with a trust agreement on behalf of the
Hutchins Square. These funds can only be spent in accordance with the trust agreements.
Agency Funds account 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
34
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
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.
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.
(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.
(f) Restricted Assets with Fiscal Agents
Restricted assets represent the proceeds from debt and other cash and investments held by fiscal agents by agreement that meet the definition
of cash and cash equivalents, with the exception of a $2,169,850 guaranteed investment contract held in the Wastewater Fund which is a long-
term investment.
In the Electric Fund, restricted assets represent the proceeds of the 2002D and the 2008 Certificates of Participation restricted for debt service.
In the Wastewater Fund, the restricted assets represent the proceeds of the 2004A and the 2007A Certificates of Participation issued for
35
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
improvements to the City's wastewater collection, treatment and disposal system. In the Water Fund, restricted assets represent the proceeds
of the 2010A and 2010B Revenue Bonds issued for the purpose of providing funds to pay the cost of a new Water Treatment Facility.
(g) Property Taxes
San Joaquin County (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 lien is based on the assessed value listed as of the prior January 1 st for all
real and personal property located in the City. Property sold after the assessment date (January 1st) is reassessed and the amount of property
tax assessed is prorated. The assessed value at January 1, 2013, upon which the 2013-14 levy was based, was $5,129,408,000.
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, 2014, are recorded as receivables, net of estimated uncollectible amounts. Property taxes
paid to the City by the County within 60 days of the fiscal year end are considered "available" and are, therefore, recognized as revenue in
governmental funds.
In 1993, the City made an agreement with the San Joaquin County to participate in the Teeter Plan. The Teeter plan is an alternative method of
apportioning property tax money. The City receives 95% of the property taxes in advance from the County and the 5% remaining after
reconciling the City's balance at June 30. As part of the agreement, the County keeps the penalties and interest on the delinquent taxes.
(h) Due From/Due To Other Funds, Advances To/Advances From Other Funds, and Internal Balances
During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. In the fund
financial statements, these receivables and payables are classified as "due from other funds" or "due to other funds." Long-term interfund loans
receivable are reported as "advances to other funds." The corresponding long-term interfund loans payable are reported as "advances from
other funds." In the government -wide financial statements, these receivables and payables are eliminated within the governmental activities
and business -type activities columns. Receivables and payables between the governmental activities and the business -type activities are
classified as internal balances.
(i) Transfers
In the fund financial statements, interfund transfers are recorded as transfers in (out) except for transactions that are described below:
36
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Charges for services are recorded as revenues of the performing fund and expenditures/expenses of the requesting fund. Unbilled
costs are recognized as an asset of the performing fund at the end of fiscal year.
Reimbursements for expenditures/expenses, initially made by one fund that is properly applicable to another fund, are recorded as
expenditures/expenses in the reimbursing fund and as a reduction of expenditures/expenses in the fund that is reimbursed.
Reimbursements are eliminated for purposes of government -wide reporting.
(j) Long-term Obligations
In the government -wide financial statements and in the proprietary fund 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 position. Bond
premiums and discounts are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium
or discount. Gains or losses occurring from advance refunding are reported as deferred inflows and outflows of resources and amortized as an
expense for both governmental and business -type activities.
(k) Loans Receivable
Loans receivable reported in the HOME Program and Community Development Block Grants Special Revenue Fund represent 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.
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.
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, 2014, a total of eighteen loans to industrial and commercial customers have been approved.
(1) 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).
37
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
(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 Outflows of Resources
Deferred outflows of resources reported in the Electric Enterprise Fund and business -type activities include refunding loss incurred in
connection with the issuance of the 2008 Certificates of Participation Series A amortized over 24 years. The deferred outflows of resources
reported in the Wastewater Enterprise Fund and business -type activities include refunding loss incurred on the issuance of the 2007A
Certificates of Participation amortized over 20 years and the 2012 Refunding Revenue Bonds amortized over 11 years. Deferred outflows of
resources reported in the governmental activities represent refunding loss incurred in the issuance of the 2012 Refunding Lease Revenue
Bonds.
(o) Capital Assets
Capital assets, which include land, buildings and improvements, machinery and equipment, vehicles, infrastructure (e.g., streets, streetlights,
traffic signals, sidewalks, and bridges), and electric lines, wastewater lines and storm drains are reported in the applicable governmental or
business -type activities columns in the government -wide financial statements and in the proprietary funds financial statements. Capital assets
are defined by the City as assets with individual cost of $3,000 or more and have an estimated useful life in excess of two years. Such assets
are recorded at historical cost. Donated capital assets are recorded at estimated fair market value at the date of donation. Capital outlay is
recorded as expenditures in the General and other governmental funds and as assets in the government -wide financial statements to the extent
the City's capitalization threshold is met.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset useful lives are not capitalized.
As required by the Governmental Accounting Standards Board Statement No. 34, beginning July 1, 2002, the City has capitalized infrastructure,
primarily its network of streets, as part of the capital assets shown in the governmental activities column on the government -wide statement of
net position. This capitalization included infrastructure that could be identified and has been acquired since July 1, 1980.
38
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Depreciation of capital assets is provided on the straight-line basis over the following estimated useful lives:
Years
Buildings and improvements 3-40
Machinery and equipment 2-40
Vehicles 5-15
Infrastructure 10-50
(p) Compensated Absences/Vacation and Sick Leave
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 Position
In the government -wide and proprietary funds financial statements, net position is reported in one of three categories:
Net Investment in Capital Assets — This category consists of capital assets net of accumulated depreciation and reduced by deferred
outflows of resources and outstanding debt that is attributed to the acquisition, construction, or improvement of the assets.
Restricted Net Position — Assets restricted by external creditors, grantors, contributors, or laws or regulations of other governments
reduced by liabilities related to those assets.
Unrestricted Net Position — This category consists of all net position that does not meet the definition of net investment in capital
assets or restricted net position.
39
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
(s) Fund Balance
Fund balances presented in the governmental fund financial statements represent the difference between assets, liabilities and deferred inflows
of resources. 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, 2014 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 City's
"highest level of 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 and are reported in the
General Fund. For other governmental funds, as restrictions exceed available resources only deficit amounts are reported in the
unassigned category.
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.
The City does not have a policy on the order of spending 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
resources first, then assigned resources and unassigned resources last as they are needed.
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
40
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
capital is $28.7 million. The policy allows for variations from year-to-year to account for economic and fiscal changes. The City Council also
adopted a policy to establish the following reserves:
Catastrophic reserve - To maintain the ability of the City to meet operational costs during times of declared emergency or major catastrophe,
the City shall 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 under the 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 of a minimum of 8% of annual General Fund revenues. Funding the economic reserve will begin in the fiscal year
following full funding of the catastrophic reserve. Funding may only be disbursed upon a resolution of the City Council.
Once fully funded, if 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
investments with 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.
(v) Implementation of New Governmental Accounting Standards
During the fiscal year ended June 30, 2014, the City implemented GASB Statement No. 65, Items Previously Reported as Assets and Liabilities.
This statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of
resources, certain items that were reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain
items that were reported as assets and liabilities. See Note 17 for the impact of implementing this statement.
(w) Future Implementation of New Governmental Accounting Standards
In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions — An Amendment of GASB Statement No. 27.
The primary objective of this statement is to improve accounting and financial reporting by state and local governments for pensions. It also
41
(2)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities.
This statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions
with regard to providing decision -useful information, supporting assessments of accountability and interperiod equity, and creating additional
transparency. This statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental
Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension
plans administered as trusts or equivalent arrangements that meet certain criteria. This statement will require the City to record a net pension
liability related to its defined benefit pension plans, as defined by the standard. This statement is effective for the City's fiscal year ending June
30, 2015.
CASH AND INVESTMENTS
Cash and investments as of June 30, 2014 are classified in the accompanying financial statements as follows:
Government -wide statement of net position:
Cash and investments
Restricted assets
Fiduciary funds cash and investments:
Private -purpose trust funds
Agency fund
Total cash and investments
Cash and investments as of June 30, 2014 consist of the following:
Cash on hand
Deposits with financial institutions
Investments
Total cash and investments
(a) Authorized Investments
$ 64,078,080
34,412,585
272,711
425,592
$ 99,188,968
$ 2,861
8,361,039
90,825,068
$ 99,188,968
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 of California Local Agency Investment Fund (LAIF), Investment Trust of California (CALTRUST),Certificate of
Deposit Account Registry Service (CDARS), mutual funds that invest in eligible securities, guaranteed investment contracts and medium term
42
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
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.
Maximum Maximum % of Maximum Investment
Permitted Investments/De osits Maturit Portfolio in One issuer
p Y
U.S. Treasury Obligations 5 years 100%
U.S. Agency Securities 5 years 100%
Banker's Acceptances 180 days 40%
Certificates of Deposit 5 years 100%
Negotiable Certificates of Deposit 5 years 30%
Commercial Paper 270 days 40%
California State Local Agency Investment Fund (LAIF) Indefinite 100%
Passbook Deposits Indefinite 100%
Money Market Mutual Funds Indefinite 20%
Guaranteed Investment Contracts (GICs) 5 years 100%
Medium term Notes 5 years 30%
Investment Trust of California (CALTRUST) Indefinite 100%
Certificate of Deposit Account Registry Service (CDARS) 5 years 30%
(b) Investments Authorized by Debt Agreements
25%
$50m per account
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:
43
(b) Investments Authorized by Debt Agreements
25%
$50m per account
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:
43
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Investment as of June 30. 2014
LAI F
CALTRUST
Money Market Mutual Funds
Held by bond trustee:
Negotiable Certificates of Deposit
LAI F
Money Market Mutual Funds
Guaranteed investment contracts (GICs)
Total investments subject to interest rate risk
Equities and options
Total investments
Maturity
Less than One Year
$ 32,114,518
126,837
2,762,076
1,732,912
9,178,458
$ 45,914,801
Maturity
One to Five Years
39,413,267
3,197,809
2,169,850
44,780,926
Investments in equities are shares of stock received by the Library as an endowment from a private citizen.
(d) Credit Risk
Total
$ 32,114,518
39,413,267
126,837
5,959,885
1,732,912
9,178,458
2,169,850
90,695,727
129,341
$ 90,825,068
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 mutual 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 CALTRUST Short term fund is rated "AA/S1+" by S&P while the CALTRUST Medium term fund
is rated "A or better." The negotiable certificates of deposit are all rated AAA.
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.
44
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
(e) Concentration of Credit Risk
The investment policy of the City contains certain limitations on the amount that can be invested in any one issuer beyond that stipulated by the
California Government Code. Investments in LAIF, CALTRUST, 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 provision for
deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by
pledging securities in an undivided collateral pool held by a depository regulated under state law. The market value of the pledged securities in
the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions
to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured deposits. $8,540,331 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 Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to
custodial credit risk for investments. With respect to investments, custodial credit risk generally applies only to direct investments in marketable
securities. Custodial credit risk does not apply to a local government's indirect investment in securities through the use of mutual funds or
government investment pools such as LAIF.
(g) 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, 2014 was $21.1 billion. LAIF is part of the California Pooled Investment
Account (PMIA), which at June 30, 2014 had a balance of $64.8 billion. Of this amount, 1.86% was invested in medium-term and short-term
45
(3)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
structured notes and asset-backed securities. PMIA is not SEC -registered, but is required to invest according to California State Code. The
average maturity of PMIA investments was 232 days as of June 30, 2014.
The Local Investment Advisory Board has oversight responsibility for LAIF. The Board consists of five members as designated by state statute.
The value of the pool of shares in LAIF, which may be 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, 2014, the City's
investment in CALTRUST is $39.4 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, 16 months and CALTRUST Medium, 24 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, 2014 was divided among the
following asset classes: CALTRUST Medium Term was $643 million and CALTRUST Short term was $764 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
uncollectible amounts related to receivables of the current period are as follows:
Uncollectibles related to late charges and services
Uncollectibles related to electric sales and services
Uncollectibles related to wastewater services
Uncollectibles related to water sales and services
Total uncollectibles of the current fiscal year
46
$ 22,500
193,100
47,500
128,110
$ 391,210
(4)
(5)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
INTERFUND RECEIVABLES/PAYABLES
Interfund receivables and payables at June 30, 2014 are as follows:
Due from Due to Amount
Other governmental Other governmental $ 111,112
"Due to" and "due from" balances are recorded primarily when funds overdraw their share of pooled cash or when there are short-term loans
between funds. The $111,112 represents cash deficits in other governmental funds.
Advances from
Wastewater
Water
Advances to
Other governmental
Other governmental
Amount
$ 505,000
1,174, 025
$ 1,679,025
The $505,000 advance from the Wastewater Fund was used for the Impact Mitigation Fees update, $55,000; and $450,000 was used for the
Grape Bowl Improvements - Phase 3. The $1,174,025 advance from the Water Fund was used for the construction of Fire Station #4.
TRANSFERS
Transfers for the year ended June 30, 2014, are summarized as follows:
Transfers out:
General
Other governmental
Electric
Wastewater
Water
Total
Transfers in
Other
General Governmental Total
$
6,269,351
$ 6,269,351
534,330
534,330
2,104,000
340,000
2,444,000
1,068,000
250,000
1,318,000
780,000
250,000
1,030,000
$ 3,952,000
7,643,681
$ 11,595,681
47
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
During the year, various interfund transfers were made to finance expenditures, subsidize operating losses and service debt.
Transfers out of $2,104,000 from the Electric Fund, $1,068,000 from the Wastewater Fund, and $780,000 from the Water Fund represent the
cost of services reimbursement to the General Fund.
The transfer of $6,269,351 from the General Fund to other governmental represents transfer of $516,001 to the Debt Service Fund for the
interest required to pay the 2012 Refunding Lease Revenue Bonds; $3,591,100 to Parks, Recreation and Community Services for operating
costs; $100,000 to Community Development for operating costs; $219,670 to the Vehicle and Equipment Fund for vehicle replacements and
computer replacements; and $1,261,200 to the Capital Outlay Reserve Fund for various capital projects; and $581,380 to the Streets Fund for
various streets projects.
The transfer out of $534,330 from other governmental to other governmental includes $335,410 transferred from Parks, Recreation and
Community Services to the Debt Service Fund for the interest required to pay the 2012 Refunding Lease Revenue Bonds, transfer of $110,720
from Parks, Recreation and Community Services to Parks Capital Fund for park -related capital projects, and transfer of $2,510 from the
Community Development and $85,690 from the Parks, Recreation and Community Services to the Vehicle and Equipment Fund for fleet
replacement.
The transfer out from the Electric Fund of $340,000, transfer out from Wastewater Fund for $250,000, and Water Fund for $250,000 to other
governmental represent transfers to the Capital Outlay Reserve Fund for various capital projects.
48
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
(6) CAPITAL ASSETS
Capital assets activity of the primary government for the year -ended June 30, 2014, was as follows:
Governmental activities
Capital assets, not being depreciated:
Land
Work of Art
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings and improvements
Machinery and equipment
Vehicles
Infrastructure
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings and improvements
Machinery and equipment
Vehicles
Infrastructure
Total accumulated depreciation
Total capital assets, being depreciated, net
Governmental activities capital assets, net
Balance
June 30, 2013
$ 24,094,424
304,907
6,074,289
30,473,620
65,595,657
11,173,251
9,882,437
135,655,322
222,306,667
28,332,137
10,109,105
9,065,965
78,631,883
126,139,090
96,167,577
$ 126,641,197
49
Increases
838,710
6,822,758
7,661,468
2,943,232
161,787
907,611
4,509,350
8,521,980
1,918,711
499,520
405,843
6,262,114
9,086,188
(564,208)
7,097,260
Decreases
(8,490,005)
(8,490,005)
(443,654)
(443,654)
(443,654)
(443,654)
Balance
June 30, 2014
$ 24,933,134
304,907
4,407,042
29,645,083
68,538,889
11,335,038
10,346,394
140,164,672
230,384,993
30,250,848
10,608,625
9,028,154
84,893,997
134,781,624
95,603,369
8,490,005 $ 125,248,452
Business -type activities
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings and improvements
Machinery and equipment
Vehicles
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings and improvements
Machinery and equipment
Vehicles
Total accumulated depreciation
Total capital assets, being depreciated, net
Business -type activities capital assets, net
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Balance
June 30, 2013
$ 5,535,718
3,901,025
9,436,743
46,318,297
257,958,161
9,464,682
313,741,140
14,949,523
66,591,023
6,431,403
87.971.949
225,769,191
Increases
7,981,353
7,981,353
1,077,090
8,686,596
323,954
10,087,640
1,315,018
7,670,842
642,780
9,628,640
459,000
Decreases
(7,852,523)
(7,852,523)
(1,215,193)
(14,912)
(1,230,105)
(30,380)
(14,912)
(45,292)
(1,184,813)
Balance
June 30, 2014
$ 5,535,718
4,029,855
9,565,573
47,395,387
265,429,564
9,773,724
322,598,675
16,264,541
74,231,485
7,059,271
97,555,297
225,043,378
$ 235,205,934 8,440,353 (9,037,336) $ 234,608,951
50
(7)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Depreciation expense was charged to function/programs of the primary government as follows:
Governmental activities:
General government
$
700,346
Public protection
1,073,405
Public works
6,330,287
Community development
2,067
Library
52,667
Parks and recreation
925,968
Internal service funds
1,448
Total depreciation expense - governmental activities
$
9,086,188
Business -type activities:
Electric
$
1,780,427
Wastewater
4,079,800
Water
2,816,296
Transit
952,117
Total depreciation expense - business -type activities
$
9,628,640
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,
2014.
Future minimum lease payments required by this lease agreement that has a remaining noncancellable lease term of one year or more as of
June 30, 2014, are as follows:
Fiscal Years Ending
2015
Total minimum lease payments required
under operating leases
51
21,000
$ 21,000
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
(8) LONG-TERM OBLIGATIONS
The following is a summary of debt transactions of the City for the year ended June 30, 2014:
Amounts
Due Within
Interest Rates June 30, 2013" Additions Reductions June 30, 2014 One Year
Governmental activities:
Compensated absences
$ 6,690,340
1,694,995
(1,994,285) $
6,391,050 $
1,694,995
2012 Lease Revenue Bonds
2.0-5.0% 19,080,000
19,080,000
Issuance premium
977,910
(53,830)
924,080
53,830
Total
20,057,910
(53,830)
20,004,080
53,830
Note payable
6.0% 245,000
245,000
Self-insurance liability
9,117,062
1,050,613
(1,145,916)
9,021,759
1,050,613
Net OPEB obligation
4,249,526
1,223,236
(705,488)
4,767,274
Governmental activity long-term liabilities
$ 40,359,838
3,968,844
(3,899,519) $
40,429,163 $
2,799,438
*Net OPEB obligation changed by $999,000.
52
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
53
Amounts
Due Within
Interest Rates
June 30, 2013
Additions Reductions
June 30, 2014
One Year
Business -type activities:
Compensated absences
$ 1,888,727
520,084 (564,197)
1,844,614 $
520,084
Pollution remediation obligation
19,855,000
(742,038)
19,112,962
Certificates of Participation and Revenue Bonds:
2010 Water Revenue Bonds A& B
2.50-6.637%
37,090,000
(825,000)
36,265,000
850,000
Issuance premium
531,906
(19,701)
512,205
19,700
Total
37,621,906
(844,701)
36,777,205
869,700
2008 Certificates of Participation A
3.8-5.05%
60,685,000
60,685,000
Issuance premium
473,265
(24,909)
448,356
24,909
Total
61,158,265
(24,909)
61,133,356
24,909
2002 Certificates of Participation D
1.54-5.25%
14,905,000
(4,750,000)
10,155,000
4,960,000
2003 Water and Wastewater Revenue Bonds B
2.0-5.0%
3,190,000
(3,190,000)
Issuance premium
42,045
(42,045)
Total
3,232,045
(3,232,045)
2004 Certificates of Participation A
2.0-5.5%
2,070,000
2,070,000
53
2007 Certificates of Participation A
Issuance premium
Total
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Interest Rates June 30, 2013 Additions
4.0-5.0% 29,745,000
200,837
29,945,837
Reductions
(140,000)
(8,255)
(148,255)
June 30, 2014
29,605,000
192,582
29,797,582
Amounts
Due Within
One Year
145,000
8,253
153,253
2012 Wastewater Revenue Bonds 2.0-5.0% 17,105,000 (1,280,000) 15,825,000 1,355,000
Issuance premium 1,704,713 (166,314) 1,538,399 166,313
Total 18,809,713 (1,446,314) 17,363,399 1,521,313
Total Certificates of Participation and Revenue Bonds 167,742,766 (10,446,224) 157,296,542 7,529,175
Business -type activity long-term liabilities $ 189,486,493 520,084 (11,752,459) $ 178,254,118 $ 8,049,259
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 $9,021,759 and $4,767,274 for net OPEB
obligation were included in the above amounts. Also, for the governmental activities, compensated absences are generally liquidated by the
General Fund and the internal service funds.
Long-term debt payable at June 30, 2014, 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 Public Safety Building. Interest is payable quarterly and principal is due on April
1, 2017.
54
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Annual debt service requirements to maturity of the note payable are as follows:
Fiscal
Year
Ending
June 30,
2015
2016
2017
Total
Certificates of Participation and Revenue Bonds
Governmental Activities
Principal
245,000
$ 245,000
Interest
$ 14,700
14,700
11,025
$ 40,425
$5,000,000 California Statewide Communities Development Authority Water and Wastewater Revenue Bonds (2003 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. These bonds were redeemed during the fiscal year. Principal and interest
paid for the current year and total net revenues were $3,280,111 and $9,182,756, 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
wastewater enterprises. The Authority is authorized pursuant to Chapter 5 of Division 7 of Title 1 of the California Government Code to issue
bonds to finance and refinance water and wastewater public capital improvements of local agencies located throughout California.
$27,360,000 Certificates of Participation (2004A COP) were issued on May 12, 2004 to provide funds to finance the costs of certain
improvements to the wastewater collection, treatment and disposal system of the City. Principal is payable annually on October 1 in amounts
from $170,000 to $2,070,000 with final payment due October 1, 2024. The City has pledged future wastewater revenues, net of specified
operating expenses, to repay these certificates. The total principal and interest remaining to be paid on the certificates is $3,053,250. Interest
paid for the current year and total net revenues were $98,321 and $9,182,756, respectively.
55
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
$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
ranging 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
$54,032,438. Principal and interest paid for the current year and total net revenues were $1,603,550 and $9,182,756, respectively.
$22,740,000 Revenue Certificates of Participation Series D (2002 COP) were issued to buy out the energy purchase agreement with Calpine.
In February 2001, the City entered into an energy purchase agreement (the Original Agreement) with Calpine Energy Services L.P. (Calpine) to
purchase 25 MW of energy at $65/mwh for a ten-year period beginning January 1, 2002. Since the execution of the Original Agreement,
actions of the State in connection with the energy market conditions, including the initiation of conservation programs, and other factors, have
resulted in lower electric load requirements and reduced energy costs throughout the State. As a result, the City's need for the energy
purchased under the Original Agreement to serve its load has been reduced. The Original Agreement was amended on September 4, 2002,
and was divided into three parts. The City sold its interests in the energy purchased under the Original Agreement to Calpine and nets the
payments due from the City with respect to its purchase of such energy against the payments due from Calpine with respect to its purchase of
the City's rights to such energy. Principal is payable annually on July 1 in amounts ranging 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 $10,691,827. Principal and interest paid for the current year and total net revenues were $5,398,115
and $16,795,468, 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 ranging from $2,390,000 to $5,090,000 beginning in 2016 with final payment due in 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 $93,858,175. Interest paid for the current year and total net revenues were $2,957,774 and $16,795,468,
respectively.
On October 1, 2010, the City issued $9,015,000 Water Revenue Bonds, 2010 Series A and $29,650,000 Water Revenue Bonds, 2010 Series B
(Federally taxable - Build America Bonds) (2010 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 ranging from $775,000 to $2,210,000 with final payment due June 1, 2040. The City has pledged future water revenues, net of
56
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
operation and maintenance costs, to repay these certificates. The total principal and interest remaining to be paid on the certificates is
$72,237,052. Principal and interest paid for the current year and total net revenues were $2,355,230 and $7,330,795, respectively.
The City issued $19,080,000 Refunding Lease Revenue Bonds (2012 LRB) on September 1, 2012 to allow the City to prepay and cause the
immediate defeasance of the outstanding $21,025,000 Certificates of Participation (2002 COP). The 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, 2014, 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 Square Conference and Performing Arts Center. The total principal and interest remaining to be
paid on the 2012 LRB is $28,300,769. Principal is payable annually on October 1 in amounts ranging from $260,000 to $1,605,000 beginning in
2016 with final payment due in 2031. Interest paid for the current year was $844,813.
The City issued $17,105,000 2012 Refunding Wastewater Revenue Bonds (2012 Bonds) to advance refund the $17,115,000 principal amount
of the 2004 Wastewater Revenue Certificates of Participation. The City pledged future wastewater revenues, net of specified operating
expenses, to repay these certificates. The total principal and interest remaining to be paid on the 2012 Bonds is $19,484,300. Principal is
payable annually on October 1 in amounts ranging from $1,280,000 to $1,885,000 beginning in 2013 with final payment due in 2023. Principal
and interest paid for the current year and total net revenues were $1,921,700 and $9,182,756 respectively. At June 30, 2014, the remaining
balance of the refunded debt is $15,910,000.
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.
57
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Annual debt service requirements to maturity for certificates of participation and bonds are as follows:
Fiscal Year Ending
Governmental Activities
Business -type
Activities
June 30,
Principal
Interest
Principal
Interest
2015 $
$ 844,813
$ 7,310,000
$ 7,649,614
2016
260,000
840,913
9,990,000
7,324,025
2017
830,000
824,563
5,000,000
6,969,356
2018
860,000
794,912
5,210,000
6,767,006
2019
900,000
755,212
5,440,000
6,540,606
2020-2024
5,100,000
3,154,685
30,945,000
28,876,381
2025-2029
6,505,000
1,714,342
38,065,000
20,282,021
2030-2034
4,625,000
291,329
31,565,000
10,525,979
2035-2039
18,870,000
3,670,376
2040
2,210,000
146,678
Total $
19,080,000
$ 9,220,769
$ 154,605,000
$ 98,752,042
Industrial Development Bonds
The City of Lodi has lent its name to the City of Lodi Industrial Development Authority for the purpose of issuing the following industrial
development bonds: Minton Corporation $5,000,000; Dart Corporation $8,000,000; Wallace Computer Services $3,000,000; and Luster -Cal
Nameplate Corporation $3,000,000. These bonds are special obligation bonds only, payable solely out of the bond revenues or other sources
of the above companies and are not a pledge of the general credit of the City. The City is not obligated for the redemption or administration of
these industrial development bonds.
Woodbridge Irrigation District Bonds
On October 8, 2003, the City lent its name to the Woodbridge Irrigation District (the "District") in the procurement of $11.745 million 2003
Revenue Certificates of Participation, to provide funds to finance the costs of construction of a new diversion dam on the Mokelumne River and
related facilities of the water district. A significant portion of the District's sources of payment for the 2003 Certificates are expected to be
derived from amounts to be received by the District from the City of Lodi pursuant to an Agreement for the purchase of water from the District by
the City of Lodi, dated May 13, 2003 (the "Lodi Water Sales Agreement"). Under the agreement, the City will purchase 6,000 acre feet of water
per annum from the District for 40 years.
58
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
(9) DEFINED BENEFIT PENSION PLAN
(a) Plan Description
The City of Lodi contributes to the California Public Employees' Retirement System (CaIPERS); an agent multiple -employer public employee
defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan
members and beneficiaries. CalPERS 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 the CaIPERS' 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. New participants covered under the Public
Employees' Pension Reform Act of 2013 (PEPRA) are required to contribute 6.75% for miscellaneous employees and 11.25% for safety
employees. The City makes the contributions required of City employees on their behalf and for their account. The City is required to
contribute at an actuarially determined rate; the current rate is 16.203% for miscellaneous employees and 35.657% for fire and police
employees, of annual covered payroll. The contribution requirements of plan members and the City are established and may be amended by
CalPERS.
(c) Annual Pension Cost
For the year ended June 30, 2014, the City's annual pension cost of $3,996,087 for the Safety Plan and $2,639,709 for the Miscellaneous Plan
were equal to the City's required contributions. The required contribution was determined as part of the June 30, 2011 actuarial valuations
using the entry age normal actuarial cost method. The actuarial assumptions included (a) 7.50% discount rate (net of administrative
expenses), a decrease from the 2010 valuation of 7.75%, (b) projected annual salary increases that vary by age, length of service, and type of
employment (c) 3.00% payroll growth, a decrease from the 2010 valuation of 3.25%, and (d) 2.75% inflation, a decrease from the 2010
valuation of 3.00%. The actuarial value of CalPERS assets was determined using techniques that smooth the effects of short-term volatility in
the market value of investments over a fifteen -year period (smoothed market value). CalPERS unfunded actuarial liability is being amortized as
a level percentage of projected payroll on a closed basis. Amortization of the remaining period for the Safety Plan was 30 years and for the
Miscellaneous Plan was 24 years as of June 30, 2013.
59
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
(d) Trend Information
Three -Year Trend information ($ Amounts in Thousands):
(e) Funded Status and Funding Progress
As of June 30, 2013, the most recent actuarial valuations to date, the Safety Plan was 63.4% funded and the Miscellaneous Plan was 73.5%
funded. The actuarial accrued liability for benefits was $147 million for the Safety Plan and $152 million for the Miscellaneous Plan, and the
actuarial value of assets was $93 million for the Safety Plan and $112 million for the Miscellaneous Plan; resulting in an unfunded actuarial
accrued liability (UAAL) of $54 million for the Safety Plan and $40 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 $16 million for the Miscellaneous Plan, and the ratio of the
UAAL to the covered payroll was 492.6% and 249.4% for the Safety and Miscellaneous plans, respectively. The actuarial assumptions used for
the June 30, 2013 valuations are the same as previously disclosed for the June 30, 2011 valuations.
The schedule of funding progress, presented as RSI following the notes to the financial statements, presents multi-year trend information about
whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
60
SAFETY PLAN
Annual
Percentage
Net
Fiscal Year
Pension
of APC
Pension
Ended
Cost (APC)
Contributed
Obligation
6/30/12
$ 3,239
100%
$0
6/30/13
3,501
100%
$0
6/30/14
3,996
100%
$0
MISCELLANEOUS PLAN
Annual
Percentage
Net
Fiscal Year
Pension
of APC
Pension
Ended
Cost (APC)
Contributed
Obligation
6/30/12
$ 2,110
100%
$0
6/30/13
2,254
100%
$0
6/30/14
2,640
100%
$0
(e) Funded Status and Funding Progress
As of June 30, 2013, the most recent actuarial valuations to date, the Safety Plan was 63.4% funded and the Miscellaneous Plan was 73.5%
funded. The actuarial accrued liability for benefits was $147 million for the Safety Plan and $152 million for the Miscellaneous Plan, and the
actuarial value of assets was $93 million for the Safety Plan and $112 million for the Miscellaneous Plan; resulting in an unfunded actuarial
accrued liability (UAAL) of $54 million for the Safety Plan and $40 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 $16 million for the Miscellaneous Plan, and the ratio of the
UAAL to the covered payroll was 492.6% and 249.4% for the Safety and Miscellaneous plans, respectively. The actuarial assumptions used for
the June 30, 2013 valuations are the same as previously disclosed for the June 30, 2011 valuations.
The schedule of funding progress, presented as RSI following the notes to the financial statements, presents multi-year trend information about
whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
60
(10)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
(a) Plan Description
The City sponsors a single -employer defined -benefit postemployment healthcare plan (Retiree Health 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 CalPERS healthcare program. Employees who retire from the City and receive a CalPERS pension are eligible for
postemployment medical benefits. The City contributes the minimum amount provided under Government Code Section 22825 of the Public
Employees Medical and Hospital Care Act. In general, retirees must contribute any premium amounts in excess of the City contribution.
However, as described below, a closed group of active employees and retirees receive additional postemployment benefits.
Employees hired prior to the dates shown in the following table are allowed to convert their accumulated sick leave into postemployment
medical benefits at retirement as long as they have ten or more years of service with the City.
Group Hired prior to:
Executive Management
July 1, 1994
Mid -Management
July 1, 1994
Fire Mid -Management
December 6, 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
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.
61
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
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 was still alive. Retirees are allowed to enroll in any of the available CaIPERS
medical plans. The CalPERS minimum amount will continue for the life of the retiree and surviving spouse. The "Conversion" benefit will
continue until the end of a period that is based on accumulated sick leave at retirement.
(b) Funding Policy
Contribution requirements of the postemployment benefit are based on pay-as-you-go financing. For fiscal year 2013-14, the City contributed
$705,488, or 57.67%, 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
$ 1,251,287
Interest on net OPEB obligation
169,981
Adjustment to annual required contribution
(198,032)
Annual OPEB cost (expense)
1,223,236
Contribution made
(705,488)
Increase in net OPEB obligation
517,748
Net OPEB obligation - beginning of year, restated
4,249,526
Net OPEB obligation - end of year
$ 4,767,274
62
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
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, 2014, the most recent actuarial valuation date, the funded status of the Retiree Health Plan was as follows:
Actuarial accrued liability (AAL)
Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL)
Funded ratio (actuarial value of plan assets/AAL)
Annual covered payroll (active plan members)
UAAL as percentage of annual covered payroll
$ 16,879,493
0
$ 16,879,493
0%
$ 5,697,043
296%
The schedule of funding progress, presented as RSI following the notes to the basic financial statements, presents multi-year trend information
about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
(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
63
Percentage of
Net
Fiscal year
Annual
Annual OPEB
OPEB
ended
OPEB Cost
Cost Contributed
Obligation
06/30/2012
$ 1,221,126
50.31% $
3,621,593
06/30/2013
1,283,605
51.08%
4,249,526
06/30/2014
1,223,236
57.67%
4,767,274
(d) Funding Status and Funding Progress
As of January 1, 2014, the most recent actuarial valuation date, the funded status of the Retiree Health Plan was as follows:
Actuarial accrued liability (AAL)
Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL)
Funded ratio (actuarial value of plan assets/AAL)
Annual covered payroll (active plan members)
UAAL as percentage of annual covered payroll
$ 16,879,493
0
$ 16,879,493
0%
$ 5,697,043
296%
The schedule of funding progress, presented as RSI following the notes to the basic financial statements, presents multi-year trend information
about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
(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
63
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
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 benefit costs between the employer and
the plan members to that point. The actuarial methods and the assumptions used include techniques that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
In the January 1, 2014 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 2.75% inflation rate; an annual healthcare cost trend rate of 7.5% for calendar year
2014, increasing to 8.5% for calendar year 2015, then gradually decreasing to 4.5% for calendar year 2021 and beyond; the CalPERS minimum
benefit will increase 4% per year; a 3.00% annual rate of increase in payroll; assumed that 100% of future eligible retirees will elect to maintain
their enrollment in a CalPERS 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 percentage of expected payroll over a closed thirty year period. As of June 30, 2014, the
remaining amortization period is 25 years.
(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 Fund.
The City is self-insured for general liability up to the first $500,000 per occurrence with claims from $500,000 to $40,000,000 per occurrence
and in the aggregate insured through the California Joint Powers Risk Management Authority. The City has not had any settlements that
exceeded its general liability insurance coverage (See Note 13).
The City is self-insured for workers' compensation up to the first $250,000 per claim. Any claims of $250,000 up to California statutory limits are
covered under a purchased policy through the membership with the Local Agency Workers' Compensation Excess Joint Powers Authority with
coverage up to $300,000,000 in the current year. The City has not 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.
64
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
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 $9,021,759 at June 30, 2014, 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 GASB Statement No. 62, which
requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a
liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. In the opinion of the
City, the amounts accrued are adequate to cover claims incurred but not reported in addition to known claims.
Changes in the self-insurance liability for the years ended June 30, 2014 and 2013 are as follows:
Current -Year
Claims and Changes Claim
Beginning in Estimates Payments Ending
FY 12-13 $ 8,471,831 $ 1,911,196 $ (1,265,965) $ 9,117,062
FY 13-14 9,117,062 1,050,613 (1,145,916) 9,021,759
(12) PARTICIPATION IN JOINT VENTURES
Northern California Power Agency
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 three other associate member entities. NCPA is generally empowered to purchase, generate,
transmit, distribute and sell electrical energy. Members participate in the projects of NCPA on an elective basis. A commission comprising of
one representative from each member organization governs NCPA. The commission is responsible for the general management of the affairs,
property and business of NCPA. Under the direction of the general manager, the staff of NCPA is responsible for providing various
administrative, operating and planning services for NCPA and its associated power corporations.
Project Financing and Construction
NCPA's project construction and development programs have been individually financed by project revenue bonds collateralized by NCPA's
assignment of all payments, revenues and proceeds associated with its interest in each project. Each Project Participant has agreed to pay its
proportionate share of debt service and other costs of the related project, notwithstanding the suspension, interruption, interference, reduction
or curtailment of output from the project for any reason. Certain of the revenue bonds are additionally supported by municipal bond insurance
credit enhancements.
65
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Increase in Non -defaulting Project Participant's Original Project Entitlement Percentage
Upon the failure of any Project Participant to make any payment, which failure constitutes a default under the Member Agreement for the
projects, and except as sales and transfers are made pursuant thereto, the Member Agreements provide that Project Entitlement for each non -
defaulting Project Participant shall be automatically increased for the remaining term of the Member Agreement; pro rata with those of the non -
defaulting Project Participant thereunder; provided, however, that the sum of such increase for any non -defaulting Project Participant shall not
exceed, without written consent of such non -defaulting Project Participant, an accumulated maximum of 25% of the non -defaulting Project
Participant's original Project Entitlement Percentage Share.
General Operating Reserve with NCPA
Members of NCPA established a general operating reserve in 1992 for the purposes of providing a vehicle to fund reasonably foreseeable
contingent liabilities. It was set up primarily to provide the following advantages: minimizes the number and dollar amount of reserve that might
otherwise be funded separately in connection with NCPA's individually financed operating plants, projects and programs; provides each
member with flexibility and unilateral control over the determination of what they will fund, how they will fund it and what expenditures from the
reserve will be made on their individual behalf. It provides funding for contingent liabilities that are not budgeted but that may require significant
future expenditures. The reserve is segregated by participant and is refundable on demand by the participant.
As of June 30, 2014, the City's balance in the NCPA General Operating Reserve, which has been credited with annual interest earnings and
settlements, is $6,212,109.
66
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Project Participation
The NCPA members and their percentage
share at June 30, 2014, 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%
30.7802%
BART
6.6000%
Biggs
0.2270
0.197
0.3446
0.2679
Gridley
0.3360
0.350
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
0.7010
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
Ukiah
5.6145
2.04
9.090
10.2315
1.7857
OTHER PARTICIPANTS
Azusa 2.7857
California Dept. of Water Resources 33.5000
Modesto Irrigation District 10.7143
Power & Water Resources Pooling
Agency 2.6679
Turlock Irrigation District 6.3305 9.6106
Bulk power purchased by the City through NCPA amounted to $37,303,007 during the year ended June 30, 2014 and is reflected in utilities
expense in the Electric Enterprise Fund.
67
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
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 (MW) steam powered plants, Project Number 2 and Project Number 3. Outstanding long-term debt related to this project was
approximately $44 million at June 30, 2013.
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 Project
NCPA contracted to finance, manage, construct and operate Hydroelectric Project Number One for the licensed owner, Calaveras County
Water District. In exchange, NCPA has the right to the electric output of the project for 50 years from February 1982. NCPA has also the option
to purchase power from the project in excess of the District's requirements for the subsequent 50 years, subject to regulatory approval.
Under a power purchase agreement the City is obligated to pay 10.37% of the debt service and operating costs. At June 30, 2013,
approximately $421 million in long-term debt used to finance this project was outstanding.
NCPA Combustion Turbine Project #1
The project consists of five combustion turbine units; each nominally rated at 25 MW. 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, 2013, there was no outstanding long-term debt related to this project.
Capital Facilities Project
The Project consists of one 49.9 MW 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.
68
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Under a power purchase agreement, the City is obligated to pay 39.5% of the debt service and operating costs. At June 30, 2013,
approximately $51 million in long-term debt was outstanding.
Transmission Project
The project was undertaken to meet certain obligations of NCPA under the NCPA/PG & E Interconnection Agreement. The project includes an
ownership interest in PG & E's 230kv Castle Rock to Lakeville Substation Transmission Line in Sonoma County, additional firm transmission
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, 2013, there
was no outstanding long-term debt related to this project.
Lodi Energy Center
The Lodi Energy Center project is a 280 MW base load, combined cycle, natural gas-fired, combustion turbine generating station (one gas
turbine and one steam turbine) built in Lodi on city property.
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, 2013,
approximately $387 million in long-term debt was outstanding.
The following are the most recent available audited condensed financial statements of NCPA:
69
Combined Statement of Net Position
June 30, 2013
(in thousands)
Assets
Liabilities and Net Position
Current assets $
78,502 Current portion of long-term debt $
34,365
Restricted assets
213,807 Other current liabilities
57,753
Electric plant, net
676,070 Other liabilities and deferred credits
235,275
Other assets and deferred charges
210,904 Long-term debt, net
816,485
Net position
35,405
Total assets $
1,179,283 Total liabilities and net position $
1,179,283
69
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Combined Statement of Revenues, Expenses
and Changes in Net Position Combined Statement of Cash Flow
Year ended June 30, 2013 Year ended June 30, 2013
(in thousands) (in thousands)
Sales for resale $ 340,968 Net cash from operating activities $ 92,010
Operating expenses
(286,262)
Net from investing activities
(18,181)
Other expenses
(25,226)
Net cash from capital and related
Future recoverable costs
(11,272)
financing activities
(75,392)
Net revenues before refunds
18,208
Net cash from noncapital
Refunds to participants
(11,200)
and related financing activities
(5,300)
Increase in net position
7,008
Increase in cash and cash equivalents
(6,863)
Net position, beginning of year
28,397
Cash and cash equivalents, beginning
of year
125,485
Net position, end of year $
35,405
Cash and cash equivalents end of year
$ 118,622
At June 30, 2013, NCPA's total net outstanding long-term
debt was $850,850,000 at an average interest rate of 5%.
The current portion of
long-term debt at June 30, 2013, was $34,365,000.
Complete financial information for NCPA may be obtained at the following administration office:
Northern California Power Agency
180 Cirby Way
Roseville, CA 95678
Transmission Agency of Northern California
The Transmission Agency of Northern California (TANC) was organized under the California Government Code pursuant to a joint powers
agreement entered into by fifteen Northern California utilities including the City of Lodi. The purpose of TANC is to provide electric transmission
or other facilities for the use of its members through its authority to acquire, construct, finance, operate and maintain facilities for electric power
70
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
transmission. The joint powers agreement provides that the costs of TANC's activities can be financed or recovered through assessment of its
members or user charges through transmission contracts with its members. Each TANC member has agreed to pay a pro rata share of the
costs to operate TANC and has the right to participate in future project agreements. The joint powers agreement remains in effect until debt
obligations and interest thereon have been paid, unless otherwise extended by the members.
Increase in Non -defaulting Project Participant's Original Project Entitlement Percentage
Upon the failure of any Project Participant to make any payment, which failure constitutes a default under the Member Agreement for the
projects, and except as sales and transfers are made pursuant thereto, the Member Agreements provide that Project Entitlement for each non -
defaulting Project Participant shall be automatically increased for the remaining term of the Member Agreement; pro rata with those of the non -
defaulting Project Participant thereunder; provided, however, that the sum of such increase for any non -defaulting Project Participant shall not
exceed, without written consent of such non -defaulting Project Participant, an accumulated maximum of 25% of the non -defaulting Project
Participant's original Project Entitlement Percentage Share.
California -Oregon Transmission Project
The project is a 340 -mile long, 500 -kilovolt alternating current transmission project between Southern Oregon and Central California. The
project is operated in coordination with the Pacific AC Intertie as a part of the California -Oregon Intertie (COI) within the Western Electricity
Coordinating Council (WECC) region. The WECC approved rating of the COI is 4,800 MW.
TANC, Western Area Power Authority (WAPA), and five other parties have agreed to an Interim Participation Agreement (IPA) under which
each project participant is granted a percentage entitlement in project transfer capability and is required to pay a percentage of the costs.
Pursuant to the IPA and a subsequent agreement with WAPA, and the purchase of entitlement, rights and title, and interest in the City of
Vernon's share of the project transmission assets, TANC is entitled to use approximately 1,362 MW, and is obligated to pay an average of
approximately 80 percent of the operating costs associated with the project.
Under the TANC joint powers agreement, the City is obligated to pay 1.89% of its debt service and operating costs. At June 30, 2013,
approximately $343 million in long-term debt was outstanding of which $29 million is considered current.
Effective July 1, 2014, the City has terminated its interest in the California -Oregon Transmission Project to other TANC members. As a result,
the City will not incur any costs after this date related to this Project.
71
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Complete financial information for TANC may be obtained at the following administration office:
Transmission Agency of Northern California
3100 Zinfandel Drive, Suite 600
Sacramento, CA 95670
(13) MEMBERSHIP IN INSURANCE POOLS
California Joint Powers Risk Management Authority
The City is a member, along with 16 other individual cities and 4 joint powers authorities, of California Joint Powers Risk Management Authority
(CJPRMA) organized under a Joint Powers Agreement pursuant to the California Government Code for the purpose of sharing the risk of
catastrophic general liability, automobile liability and public officials' errors and omissions losses. 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, 2014, premiums of $66,069 were paid to CJPRMA
for the liability program.
The participants at June 30, 2014, are as follows: Alameda, Chico, Fairfield, Fremont, Livermore, Lodi, Northern California Cities Self Insurance
Fund, Petaluma, Redding, Redwood Empire Municipal Insurance Fund, Richmond, Roseville, San Leandro, San Rafael, Santa Rosa, Small
Cities Organized Risk Effort, Stockton, Sunnyvale, Vacaville, Vallejo, and Yolo County Public Agencies Risk Management Insurance Authority.
Complete financial information for CJPRMA may be obtained at the following administration office:
California Joint Powers Risk Management Authority
3252 Constitution Dr.
Livermore, CA 94551
72
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
Local Agency Workers' Compensation Excess Joint Powers Authority
The City, along with thirty-three 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
$343,288 in premiums to LAWCX during the year ended June 30, 2014.
The participants at June 30, 2014, 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, Central Contra Costa County Transit Agency (CCCTA), California
Housing Workers' Compensation Authority (CHWCA), Central San Joaquin Valley Risk Management Authority (CSJVRMA), City of Clovis, City
of Coronado, City of Encinitas, Fire Agencies Self Insurance System (FASIS), 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-two other public agencies is a member of the California Transit Insurance Pool (CaITIP), a joint powers insurance
authority which was formed for the purpose of sharing the risk of property damage, bodily injury, personal injury and public officials errors and
omissions losses for public transit systems.
Liability protection coverage is provided under two programs:
Program I applies to members who choose to utilize CaITIP's claims administrator services.
Program II applies to members with self-insured retentions who choose to provide their own claims administrator services.
73
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
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 up to $100,000, under which members have the
option of five levels of deductible ranging from $500 to $10,000 per vehicle. Claims are administered by the CaITIP's adjuster.
The City paid $31,480 in premiums to CaITIP during the year ended June 30, 2014. There have been no reductions in insurance coverage from
the prior year and there were no insurance settlements in excess of insurance coverage in any of the last three years.
Self -
Insured Limit Physical
Retentio
Program n (in millions) Damage
City of Lodi Transit System I Prefunded 20 Yes
Complete financial information for CalTip may be obtained at the following administration office:
California Transit Insurance Pool
1750 Creekside Oaks Drive, Suite 200
Sacramento, California 95833
(14) DEFICIT IN FUND EQUITY
Nonmajor Governmental Fund — Parks, Recreation and Cultural Services — A deficit in fund equity in the amount of $94,785 at June 30, 2014,
(a reduction of $414,081 from prior year) is attributed to the City raising some fees and diligently pursuing collection of previously established
fees, reducing full-time staffing, contracting Senior Center operations to a local nonprofit organization and using donations to help offset the cost
of repairs and maintenance in a concerted effort to eliminate this deficit.
Internal Service Funds - Benefits Fund — A deficit in fund equity in the amount of $3,568,267 at June 30, 2014, is attributed to the net OPEB
obligation set up in accordance with the requirements of GASB Statement No. 45. Net OPEB obligation as of June 30, 2014, was $4,767,274.
The City will continue to address annual funding to eliminate the deficit during the budget process.
74
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
(15) POLLUTION REMEDIATION OBLIGATION
The City relies on groundwater for its drinking water and in the late 1980's, PCE and TCE pollution was discovered in several municipal water
supply wells. Investigations conducted by the California Regional Water Quality Control Board (RWQCB) in the early 1990's under the Well
Investigation program revealed numerous areas where TCE was discharged, or where PCE from dry cleaning operations was discharged to the
sewer system. In 1997, the Department of Toxic Substances Control (DTSC) 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's estimate of
the pollution remediation obligation was $70 million. The City has settled with all the involved parties.
The City received a draft cleanup and abatement order to investigate the discharges of waste, clean up the waste and abate the effects of the
discharges of waste in conformance with the State Water Resources Control Board's (SWRCB) Resolution No. 92-49 Policies and Procedures
for Investigation and Cleanup and Abatement of Discharges Under the Water Code Section 13304 and with the RWQCB's 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 SWRCB. The City's estimated total pollution remediation obligation as of June 30, 2014, is $19,112,962. This amount is an
estimate and subject to changes resulting from price increases or reductions, technology, or changes in applicable laws or regulations.
(16) COMMITMENTS AND CONTINGENCIES
Litigation and claims — The City has fully resolved all the litigation arising out of its groundwater contamination. Settlement and rate revenues
have amassed a $16 million dollar reserve which is expected to cover all costs through the next 10 years. Costs thereafter can be effectively
managed with new rate revenues. As such, the City Attorney does not anticipate a material effect on the City's financial condition.
The City owns a 1,000 acre wastewater treatment facility known as "White Slough" approximately 5 miles west of the contiguous city limit.
Neighboring farming and dairy operations are in litigation over elevated nitrate levels in the area. Efforts to join the City in the litigation have
been so far unsuccessful but are expected to continue. It is too early at this stage to estimate liability or damages if the City is joined in the
action.
However, the City Attorney does not currently expect the matter to have a material effect on the City's financial condition.
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
75
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2014
6,000 acre feet per year and the City pays the District $1.2 million annually. Effective January 1, 2010, 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, 2014, for any of the City's outstanding Certificates of Participation and Revenue Bonds.
(17) RESTATEMENT OF NET POSITION
During the fiscal year ending June 30, 2014, the City implemented GASB Statement No. 65, Items Previously Reported as Assets and
Liabilities. As a result of this implementation, the City restated the beginning net position to reflect the expensing of the unamortized bond
issuance costs in the current period in the amount of $234,166 and $3,265,983 previously reported as an asset in the Statement of Net Position,
for governmental and business -type activities, respectively. The $3,265,983 restatement of the business -type activities resulted from the
combined restatement of the Electric Enterprise Fund ($2,200,961), the Wastewater Enterprise Fund ($687,020), and the Water Enterprise
Fund ($378,002). Additionally, the governmental activities and internal service funds beginning net position have been restated by $999,000 for
an understatement of last year's net OPEB obligation.
76
(This page intentionally left blank.)
REQUIRED SUPPLEMENTARY INFORMATION
City of Lodi
Required Supplementary Information
Schedule of Funding Progress - Pension Plan
June 30, 2014
(in thousands of dollars)
* Based upon market value of assets.
77
Unfunded
Entry Age
Unfunded
Actuarial
Actuarial
Actuarial
Liability as
Actuarial
Actuarial
Accrued
Accrued
Funded
Covered
Percentage of
Valuation
Asset Value
Liability
Liability
Ratio
Payroll
Covered Payroll
Plan Date
(A)
(B)
[(B) - (A)]
[(A) / (B)]
(C)
{[(B) — (A)]/(C))
Safety 6/30/11
$ 97,287 $
132,267
$ 34,980
73.6%
$ 10,489
333.5%
6/30/12
101,078
138,186
37,108
73.1%
10,740
345.5%
6/30/13*
92,886
146,425
53,539
63.4%
10,868
492.6%
Miscellaneous 6/30/11
120,203
142,608
22,405
84.3%
16,970
132.0%
6/30/12
123,150
146,271
23,121
84.2%
15,651
147.7%
6/30/13*
111,768
152,123
40,355
73.5%
16,184
249.4%
* Based upon market value of assets.
77
Actuarial
Valuation
Date
City of Lodi
Required Supplementary Information
Schedule of Funding Progress — OPEB Plan
June 30, 2014
(in thousands of dollars)
Unfunded
Entry Age
Actuarial
Normal
Value
Accrued
of Assets
Liability
(A)
(B)
Unfunded
Funded
Liability
Ratio
[(B) - (A)]
[(A) / (B)]
Annual
UAAL As a
Covered
Percentage of
Payroll
Covered Payroll
(C)
{[(B) — (A)]/(C))
1/1/10
$ 0
$ 17,710
$ 17,710
0%
$ 9,410
188%
1/1/12
0
17,011
17,011
0%
7,305
233%
1/1/14
0
16,879
16,879
0%
5,697
296%
78
79
CITY OF LODI
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCE
- BUDGET AND ACTUAL
GENERALFUND
Year ended June 30, 2014
Budget
Variance with
Original
Final
Actual
Final Budget
REVENUES
Taxes
$ 23,172,100
23,172,100
23,718,396 $
546,296
Licenses and permits
101,650
101,650
83,420
(18,230)
Intergovernmental revenues
10,956,410
10,968,410
11,319,708
351,298
Charges for services
1,157,030
1,157,030
1,025,851
(131,179)
Fines, forfeits and penalties
1,250,600
1,250,600
1,552,531
301,931
Investment and rental income
1,413,650
1,413,650
1,548,787
135,137
Miscellaneous revenue
279,760
279,760
352,331
72,571
Total revenues
38,331,200
38,343,200
39,601,024
1,257,824
EXPENDITURES
Current:
General government:
City Council
138,290
138,290
130,738
7,552
City Manager
884,980
889,733
872,257
17,476
City Clerk
374,770
398,699
398,699
City Attorney
472,200
476,578
454,892
21,686
Human Resources
371,380
385,293
385,293
Information Systems
987,090
1,004,335
1,004,335
Financial Services
1,578,030
1,585,912
1,585,912
Budget and Treasury
300,980
245,980
244,074
1,906
Non Departmental
1,346,450
1,504,623
1,406,026
98,597
Total general government
6,454,170
6,629,443
6,482,226
147,217
Public protection:
Police
16,739,830
17,183,032
16,667,609
515,423
Fire
9,536,340
9,802,501
9,802,501
Total public protection
26,276,170
26,985,533
26,470,110
515,423
Public Works
1,890,310
1,890,310
1,554,939
335,371
Library
1,335,090
1,379,346
1,267,850
111,496
Total expenditures
35,955,740
36,884,632
35,775,125
1,109,507
EXCESS OF REVENUES OVER
EXPENDITURES
2,375,460
1,458,568
3,825,899
2,367,331
OTHER FINANCING SOURCES (USES)
Transfers in
3,952,000
3,952,000
3,952,000
Transfers out
(6,265,790)
(6,269,351)
(6,269,351)
Total other financing sources (uses)
(2,313,790)
(2,317,351)
(2,317,351)
NET CHANGE IN FUND BALANCE
61,670
(858,783)
1,508,548
2,367,331
FUND BALANCE, beginning of year
7,148,409
7,148,409
7,965,212
816,803
FUND BALANCE, end of year
$ 7,210,079
6,289,626
9,473,760$
3,184,134
The note to the required supplementary information is an integral part of this schedule.
79
CITY OF LODI
Note to the Required Supplementary Information
June 30, 2014
Budgetary Data
The City adopts an annual budget for the general and special revenue funds. These budgets are prepared in accordance with generally
accepted accounting principles. As part of the City's internal controls, the City maintains budgetary controls. The objective of these
budgetary controls is to ensure compliance with the legal provisions embodied in the annu al 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 for capital projects are primarily "long-term" budgets that emphasize the major programs and capital project plans extending
over a n umber of yea rs. Due to th a long-term nature of th ese projects, "annual" budget and a ctual 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 Co uncil follows the followin g procedures in establi shing the bu dgetary data re flected in th a accompanying basic financial
statements:
Original Budget
On or prior to the first re gular Council meeting in June of each year, the City Manager submits to the City Council a proposed
Financial Plan and Budget for the fiscal year commencing July 1. The budget includes proposed expenditures and the means of
financing them.
Budgeted revenues are adopted by the City Council at the time th a budget is a pproved. Budgeted reven ues are modified when
the tax base changes, when fees are modified or when new revenue sources are identified.
Public hearings are conducted during meetings of the City Council to obtain citizens' comments. Prior to July 1, the budget is
legally enacted through passage of a resolution.
Final Budget
The final budgetary data presented in the basic financial statements reflects the following changes to the original budget:
• Budgeted expenditures represent original appropriations adjusted by b udget transfers and appropriation amendments.
The legal level of budgetary control (that is, the lev el at which expenditures can not I egally exceed the appropriated
amount) is at the department level. T he operating budget is prepared and controlled at the department level (e.g., city
clerk, city manager, etc.) for the General Fund. Special revenue fund expenditures, including transfers out, are approved
by Council at the fund level.
• The City Manager may transfer appropriations from one activity to another within a department without approval from the
City Council. All other appropriation adjustments during the year, whether transfers, increases or decreases, require City
Council approval.
(This page intentionally left blank.)
COMBINING AND INDIVIDUAL FUND STATEMENTS
AND SCHEDULES
NONMAJOR GOVERNMENTAL FUNDS
Nonmajor Governmental Funds include:
Special Revenue Funds account for the proceeds of specific revenue sources that are restricted by law or administrative action to
expenditures for specified purposes, other than those for major capital projects;
Debt Service Fund account for the accumulation of resources for the repayment of principal and interest on general long-term debt;
Capital Projects 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, 2014
Assets
Cash and investments
Receivables:
Accounts, net
Interest
Due from other funds
Due from other governmental agencies
Inventory
Other assets
Total assets
Liabilities, Deferred Inflows of Resources, and Fund Balances
Liabilities:
Accounts payable and other liabilities
Due to other funds
Advances from other funds
Unearned revenue
Total liabilities
Deferred Inflows of Resources:
Unavailable revenue
Fund Balances:
Nonspendable:
Inventory
Restricted for:
Road -related projects
Capital projects
Public safety
Community development
Unassigned
Total fund balances
Total liabilities, deferred inflows of resources, and fund balances
83
Special Capital
Revenue Projects Total
$ 4,418,930 8,270,853 $ 12,689,783
284,007
284,007
1,187 1,657
2,844
111,112
111,112
1,487,335
1,487,335
3,748
3,748
362
362
$ 6,306,681 8,272,515—$
14,579,191
$ 847,982 196,154 $
1,044,136
111,112
111,112
1,679,025
1,679,025
31,002
31,002
990,096 1,875,179
2,865,275
44,707 44,707
3,748 3,748
3,987,407 3,987,407
6,397,331 6,397,331
271,213 271,213
1,108,043 1,108,043
(98,533) (98,533)
5,271,878 6,397,331 11,669,209
$ 6,306,681 8,272,510 $ 14,579,191
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
Year ended June 30, 2014
Revenues:
Licenses and permits
Intergovernmental revenues
Charges for services
Fines, forfeits and penalties
Investment and rental income
Miscellaneous revenue
Total revenues
Expenditures:
Current:
General government
Public protection
Public works
Community development
Parks and recreation
Capital outlay
Debt service:
Interest and fiscal charges
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
Capital
Revenue
Service
Projects
Total
$ 768,586
$
768,586
6,022,465
50,000
6,072,465
2,385,244
147,129
2,532,373
3,900
3,900
435,094
40,877
475,971
158,972
492,071
651,043
9,774,261
730,077
10,504,338
2,536,519
2,536,519
622,447
622,447
2,838,150
2,838,150
1,191,901
1,191,901
2,299,213
2,299,213
4,373,739
3,278,389
7,652,128
851,411
851,411
13,861,969
851,411
3,278,389
17,991,769
(4,087,708)
(851,411)
(2,548,312)
(7,487,431)
4,272,480
(534,330)
3,738,150
(349,558)
5,621,436
$ 5,271,878
84
851,411
851,411
2,519,790
2,519,790
(28,522)
6,425,853
6,397,331
7,643,681
(534,330)
7,109, 351
(378,080)
12,047,289
$ 11,669,209
NONMAJOR GOVERNMENTAL FUNDS
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 along with State and Federal grants related to public
safety operations.
Community Development
This fund was established to account for development planning and project review services including land use entitlements, permit processing and
review/inspection of public improvements to ensure orderly physical growth and development of the City.
Streets Fund
This fund was established to account for the following:
Gas Tax
To account for revenues and expenditures apportioned to the City under the Streets and Highway Code. Portions of the tax rate
levied by the State of California on all gasoline purchases are allocated to cities throughout the State on a population basis. These
funds are restricted for expenditure by the State of California for street related purposes only.
Development Impact Mitigation Fees
To account for impact fees charged to provide for the building of various storm drains and street improvements needed to serve
new development. The fees are calculated on a per acre basis and are collected at subdivision final map approval or with building
permit stage effective November 4, 1991.
Measure K Sales Tax
To account for revenues and expenditures apportioned to the City for sales tax collections under Measure K. Expenditures for
administration, maintenance and construction must be for street -related projects.
85
Intermodal Surface Transportation Efficiency Act (ISTEA)
To account for revenues from the federal highway administration for programs including surface transportation program (STP) for
streets and roads, congestion mitigation and air quality program (CMAQ) and hazard elimination safety (HES) for street lighting
projects.
Transportation
This fund was established to account for the receipt of moneys from the State of California apportioned to the City for transportation purposes.
The State has designated 1/4% of the 6% sales tax levied statewide for local transportation purposes. Funding for this program was provided
during the 1971 legislative session with the enactment of the Transportation Development Act, which extended the 6% sales tax to include
purchases of gasoline. Revenues allocated to the City of Lodi under this program are divided into two categories: Article 8 funds, which are
restricted for the improvement and maintenance of street systems; and Article 4 funds, which are restricted for public transit systems.
HOME Program and Community Development Block Grants
This fund was established to account for the City's HOME Program that provides adequate and affordable housing for low and very low-income
residents, and Community Development Block Grants provided to the City principally for low and moderate income residents to develop a suitable
living environment and expand economic opportunities.
86
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
June 30, 2014
ASSETS
Cash and Investments
Receivables:
Accounts, net
Interest
Due from other funds
Due from other governmental agencies
Inventory
Other assets
TOTAL ASSETS
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES (DEFICIT)
LIABILITIES
Accounts payable and other liabilities
Due to other funds
Unearned revenue
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue
FUND BALANCES (DEFICIT)
Nonspendable
Inventory
Restricted for:
Road -related projects
Other purposes
Unassigned
TOTAL FUND BALANCES (DEFICIT)
TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES (DEFICIT)
Parks,
HOME Program and
Recreation and
Community
Community
Public
Community
Development
Services
Safety
Development
Streets
Transportation
Block Grants
Total
$
81,604
1,039,871
3,297,455
$
4,418,930
6,349
15,019
223,200
39,439
284,007
73
287
819
8
1,187
67,908
43,204
111,112
259,908
1,035,790
191,637
1,487,335
3,748
3,748
326
36
362
$ 10,423
341,585
1,123,085
4,600,504
39,439
191,645 $
6,306,681
$ 37,300
70,372
15,042
613,205
11,376
100,687 $
847,982
67,908
28,063
15,141
111,112
31,002
31,002
105,208
70,372
15,042
613,205
39,439
146,830
990,096
44,707 44,707
3,748 3,748
3,987,299 108 3,987,407
271,213 1,108,043 1,379,256
(98,533) (98,533)
(94,785) 271,213 1,108,043 3,987,299 108 5,271,878
$ 10,423 341,585 1,123,085 4,600,504 39,439 191,645 $ 6,306,681
87
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2014
88
Parks
HOME Program &
Recreation &
Community
Community
Public
Community
Development
Services
Safety
Development
Streets
Transportation
Block Grants
Total
REVENUES
Licenses and permits
$
768,586
$ 768,586
Intergovernmental revenues
598,266
4,569,419
39,197
815,583
6,022,465
Charges for services
1,766,981
450,219
168,044
2,385,244
Fines, forfeits and penalties
3,900
3,900
Investment and rental income
404,671
1,595
6,586
22,242
435,094
Miscellaneous revenue
18,881
78,537
61,554
158,972
Total revenues
2,190,533
603,761
1,303,928
4,821,259
39,197
815,583
9,774,261
EXPENDITURES
Current
General government
2,536,519
2,536,519
Public protection
622,447
622,447
Public works
2,045,400
792,750
2,838,150
Community development
1,169,176
22,725
1,191,901
Parks and recreation
2,299,213
2,299,213
Capital outlay
4,334,176
39,563
4,373,739
Total expenditures
4,835,732
622,447
1,169,176
6,379,576
39,563
815,475
13,861,969
EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES
(2,645,199)
(18,686)
134,752
(1,558,317)
(366)
108
(4,087,708)
OTHER FINANCING SOURCES (USES)
Transfers in
3,591,100
100,000
581,380
4,272,480
Transfers out
(531,820)
(2,510)
(534,330)
Total other financing sources (uses)
3,059,280
97,490
581,380
3,738,150
NET CHANGE IN FUND BALANCES
414,081
(18,686)
232,242
(976,937)
(366)
108
(349,558)
FUND BALANCES (DEFICIT), beginning of year
(508,866)
289,899
875,801
4,964,236
366
5,621,436
FUND BALANCES (DEFICIT), end of year
$ (94,785)
271,213
1,108,043
3,987,299
108
$ 5,271,878
88
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2014
REVENUES
Charges for services
Investment and rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
General government
Parks and recreation
Total Expenditures
DEFICIENCY OF REVENUES UNDER
EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE
FUND DEFICIT, BEGINNING OF YEAR
FUND DEFICIT, END OF YEAR
89
PARKS, RECREATION AND
COMMUNITY SERVICES
FINAL
BUDGET ACTUAL VARIANCE
$ 1,702,470
1,766,981 $
64,511
425,000
404,671
(20,329)
16,840
18,881
2,041
2,144,310
2,190,533
46,223
2,768,740 2,536,519 232,221
2,434,850 2,299,213 135,637
5,203,590 4,835,732 367,858
(3,059,280) (2,645,199) 414,081
3,591,100 3,591,100
(531,820) (531,820)
3,059,280 3,059,280
414,081 414,081
(508,866) (508,866)
$ (508,866) (94,785) $ 414,081
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2014
REVENUES
Intergovernmental revenues
Fines, forfeits and penalties
Investment and rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Public protection
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
90
PUBLIC SAFETY
FINAL
BUDGET ACTUAL VARIANCE
$ 843,378 598,266 $ (245,112)
5,070 3,900 (1,170)
820 1,595 775
600 (600)
849,868 603,761 (246,107)
804,934 622,447 182,487
44,934 (18,686) (63,620)
289,899 289,899
$ 334,833 271,213 $ (63,620)
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2014
REVENUES
Licenses and permits
Charges for services
Investment and rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Community development
EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER)
EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
91
COMMUNITY DEVELOPMENT
FINAL
BUDGET ACTUAL VARIANCE
$ 569,450
768,586 $
199,136
370,220
450,219
79,999
1,180
6,586
5,406
144,000
78,537
(65,463)
1,084,850
1,303,928
219,078
(114,550) 134,752 249,302
100,000 100,000
(2,510) (2,510)
(17,060) 232,242 249,302
875,801 875,801
$ 858,741 1,108,043 $ 249,302
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2014
REVENUES
Intergovernmental revenues
Charges for services
Investment and rental income
Miscellaneous revenue
Total Revenue
EXPENDITURES
Current
Public works
Capital outlay
Total Expenditures
DEFICIENCY OF REVENUES UNDER
EXPENDITURES
OTHER FINANCING SOURCES
Transfers in
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
92
STREETS
FINAL
Variance with
BUDGET
Actual
Final Budget
$ 5,084,682
4,569,419 $
(515,263)
316,070
168,044
(148,026)
20,400
22,242
1,842
35,000
61,554
26,554
5,456,152
4,821,259
(634,893)
2,045,400 2,045,400
7,399,042 4,334,176 3,064,866
9,444,442 6,379,576 3,064,866
(3,988,290)
581,380
(1,558,317)
581,380
2,429,973
(3,406,910) (976,937) 2,429,973
4,964,236 4,964,236
$ 1,557,326 3,987,299 $ 2,429,973
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2014
REVENUES
Intergovernmental revenues
EXPENDITURES
Capital outlay
NET CHANGE IN FUND BALANCE
FINAL
RI Ir1(,FT
$ 39,472
TRANSPORTATION
A(`TI IAI
39,197 $
39,614 39,563
(142) (366)
VARIANCE
(275)
51
(224)
FUND BALANCE, BEGINNING OF YEAR 366 366
FUND BALANCE, END OF YEAR $ 224 $ (224)
93
CITY OF LODI
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2014
REVENUES
Intergovernmental revenues
EXPENDITURES
Current
Public works
Community development
Total Expenditures
NET CHANGE IN FUND BALANCE
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
HOME PROGRAM and COMMUNITY DEVELOPMENT
BLOCK GRANTS
FINAL
BUDGET ACTUAL VARIANCE
$ 1,138,549 815,583 $ (322,966)
94
1,115,824
22,725
1,138,549
792,750
22,725
815,475
108
108 $
323,074
323,074
108
108
NONMAJOR GOVERNMENTAL FUNDS
CAPITAL PROJECT FUNDS
CAPITAL PROJECT FUNDS
Vehicle and Equipment
This fund was established to account for the financing and replacem ent of vehicles and equipment for all funds of the City with the exception of
the
Enterprise Funds. Financing is primarily provided through transfers from other funds, interest earnings and sales of surplus property.
Library
This fund is used to account for the acquisition, construction and installation of capital facilities for the Library.
Hutchins Street Square
When the old Lodi High School burned down, the City purchased the property and renamed it Hutchins Street Square. The Old Lodi High Site
Foundation was established which 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 cons truction projects and capital purchases in excess of $10,000 wit h the exception of
those funded through Enterprise Funds. Financing is provided primarily through transfers from other funds and from State and Federal grants.
Parks Capital
This fund was established to account for the acquisition, construction and installation of capital facilities for the various city parks.
95
ASSETS
Cash and investments
Receivables:
Interest
TOTAL ASSETS
LIABILITIES
Accounts payable and other liabilities
Advances from other funds
TOTAL LIABILITIES
FUND BALANCES
Restricted for:
Capital projects
TOTAL LIABILITIES AND FUND BALANCES
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS - CAPITAL PROJECT FUNDS
June 30, 2014
96
Capital
Vehicle and
Hutchins
Outlay
Parks
Equipment
Library
Street Square
Reserve
Capital
Total
$ 1,850,648
43,982
2,181
5,304,439
1,069,603
$
8,270,853
1,380
277
1,657
$ 1,850,648
43,982
2,181
5,305,819
1,069,880
$
8,272,510
$ 36,578
15,092
139,534
4,950
$
196,154
1,229,025
450,000
1,679,025
36,578
15,092
1,368,559
454,950
1,875,179
1,814,070
28,890
2,181
3,937,260
614,930
6,397,331
$ 1,850,648
43,982
2,181
5,305,819
1,069,880
$
8,272,510
96
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS - CAPITAL PROJECT FUNDS
Year ended June 30, 2014
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
Vehicle and Street
Equipment Library Square
$ 50,000
13,500 350,000
63,500 350,000
950,543 321,110
(887,043) 28,890
Capital
Outlay Parks
Reserve Capital Total
307,870
$
50,000
144,129
3,000
147,129
33,594
7,283
40,877
2,181 3,093,350
128,571
492,071
177,723
138,854
730,077
1,435,013
571,723
3,278,389
(1,257,290)
(432,869)
(2,548,312)
307,870
2,101,200
110,720
2,519,790
(579,173) 28,890
843,910
(322,149)
(28,522)
2,393,243
2,181 3,093,350
937,079
6,425,853
$ 1,814,070 28,890
2,181 3,937,260
614,930 $
6,397,331
97
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INTERNAL SERVICE FUNDS
Internal Service Funds are maintained to account for the internal transfer of services between operating units of the City and to achieve
a level of operating efficiency that may not be available if the same activities were performed by multiple organizations.
Fleet Services
This fund is used to account for the operation, maintenance and timely replacement of the City's fleet of vehicles which serve the
transportation needs of all city departments.
Benefits
This fund is used to account for the following employee benefits:
Dental
Employee assistance program
Chiropractic
Employee recognition program
Life/accidental insurance
Unemployment insurance
Medical
Flexible spending program
Vision
Long Term Disability
Insurance
This fund is used to account for the following insurances:
General Liability
Workers' Compensation
Other Insurance
99
ASSETS
Current assets:
Cash and investments
Receivables:
Interest
Inventory
Other assets
Noncurrent assets:
Capital assets (net)
Total assets
LIABILITIES
Current liabilities:
Accounts payable and other liabilities
Self-insurance liability
Accrued compensated absences
Noncurrent liabilities:
Self-insurance liability
Accrued compensated absences
Net OPEB obligation
Total liabilities
NET POSITION
Net investment in capital assets
Unrestricted (deficit)
Total net position
CITY OF LODI
COMBINING STATEMENT OF FUND NET POSITION
INTERNAL SERVICE FUNDS
June 30, 2014
Fleet
50,670
35,451
153,204
Services
Benefits
Insurance
Total
$ 72,372
1,249,353
12,253,198
$ 13,574,923
324
3,167
3,491
138,786
138,786
100
4,767,274
100
28,942
4,817,944
9,057,210
28,942
240,200
1,249,677
12,256,365
13,746,242
67,083
50,670
35,451
153,204
1,050,613
1,050,613
34,998
34,998
7,971,146
7,971,146
60,206
60,206
4,767,274
4,767,274
162,287
4,817,944
9,057,210
14,037,441
28,942
28,942
48,971
(3,568,267)
3,199,155
(320,141)
$ 77,913
(3,568,267)
3,199,155
$ (291,199)
100
OPERATING REVENUES
Charges for services
OPERATING EXPENSES
Personnel services
Supplies, materials and services
Utilities
Depreciation
Claims
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NONOPERATING REVENUES
Investment income
Other revenues
TOTAL NONOPERATING REVENUES
Change in net position
NET POSITION - BEGINNING OF YEAR, restated
NET POSITION - END OF YEAR
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDS
Year ended June 30, 2014
Fleet
Services
Benefits Insurance
Total
$ 1,774,308 7,560,518 2,348,536 $ 11,683,362
707,838
988,791
16,025
1,448
16,160
1,730,262
223,196
6,151,582
148,829
542,142
1,575,142 1,050,613
7,949,920 1,741,584
1,079,863
7,682,515
16,025
1,448
2,641,915
11,421,766
44,046 (389,402) 606,952 261,596
1,528
1,528
45,574
32,339
$ 77,913
101
7,842
16,809
24,651
(364,751)
(3,203,516)
(3,568,267)
76,061
51,333
127,394
734,346
2,464,809
3,199,155
83,903
69,670
153,573
415,169
(706,368)
$ (291,199)
CITY OF LODI
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
Year ended June 30, 2014
Cash flows from operating activities:
Receipts from customers and users
Receipts from interfund services provided
Cash paid to suppliers for goods and services
Payments to employees
Net cash provided by operating activities
Cash flows from investing activities:
Interest on investments
Net increase 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 operating activities:
Operating Income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation
Other revenues
Change in assets and liabilities:
Decrease in accounts receivable
Decrease in inventory
Increase in other assets
Increase (decrease) in accounts payable and other liabilities
Decrease in compensated absences
Decrease in self-insurance liability
Increase in net OPEB obligation
Net cash provided by operating activities
102
Fleet
Services Benefits Insurance Total
$ 1,428
39,434
51,333
$ 92,195
1,774,308
7,560,518
2,348,536
11,683,362
(1,040,477)
(7,223,629)
(1,670,513)
(9,934,619)
(718,897)
(223,196)
(148,829)
(1,090,922)
16,362
153,127
580,527
750,016
31
8,123
79,306
87,460
16,393
161,250
659,833
837,476
55,979
1,088,103
11,593,365
12,737,447
$ 72,372
1,249,353
12,253,198
$ 13,574,923
$ 44,046
(389,402)
606,952
$ 261,596
1,448
1,448
1,528
16,809
51,333
69,670
22,625
22,625
2
2
(100)
(100)
(19,503)
(14,653)
17,545
(16,611)
(11,059)
(11,059)
(95,303)
(95,303)
517,748
517,748
$ 16,362
153,127
580,527
$ 750,016
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FIDUCIARY FUNDS
Private -Purpose Trust Funds
These funds are used to account for trust agreements under which the principal and income benefit individuals, private
organizations or other governments.
Agency Fund
This fund was established to account for special assessments collected on the property tax roll by the City on behalf of the
property owners within the Industrial Way Beckman Districts and the Downtown and Cherokee Lane Districts.
CITY OF LODI
COMBINING STATEMENT OF FIDUCIARY NET POSITION
PRIVATE -PURPOSE TRUST FUNDS
June 30, 2014
Hutchins Street
Library Square Bequest Total
ASSETS
Cash and Investments $ 271,195 1,516 $ 272,711
NET POSITION -EXPENDABLE $ 271,195 1,516 $ 272,711
103
CITY OF LODI
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PRIVATE -PURPOSE TRUST FUNDS
Year ended June 30, 2014
ADDITIONS
Investment income and donations
DEDUCTIONS
Current
Library
CHANGE IN NET POSITION
NET POSITION, BEGINNING OF YEAR
NET POSITION, END OF YEAR
Library
$ 26,544
28,760
(2,216)
Hutchins Street
Square Bequest
10 $
Total
26,554
28,760
10 (2,206)
273,411 1,506 274,917
$ 271,195 1,516$ 272,711
104
ASSETS
Cash and investments
Interest receivable
TOTAL ASSETS
LIABILITIES
Agency obligations
CITY OF LODI
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCYFUND
Year ended June 30, 2014
Special Assessments
Balance Balance
July 1, 2013 Additions Deductions June 30, 2014
396,984 225,269 196,661 $ 425,592
223 113 223 113
$ 397,207 225,382 196,884 $ 425,705
$ 397,207 28,498
105
$ 425,705
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STATISTICAL SECTION
UNAUDITED
STATISTICAL SECTION
The Statistical Section provides detailed information as a framework for understanding the information in the financial statements, notes and
required supplementary information. This section presents additional data and analysis that may provide the reader with valuable insight
regarding the demographics and the overall health of the City.
Contents
Pages
Financial Trends
These schedules contain trend information to help the reader understand how the City's financial performance
and well-being has changed over time. 108-113
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. 114-119
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. 120-126
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. 127-129
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. 130-134
Sources
Unless otherwise noted, the information in these schedules are derived from the comprehensive annual financial
report for the current year.
107
CITY OF LODI
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Business -type activities
Net investment in capital assets
$
116,156
$
113,008
Fiscal Year
$ 104,858
$ 100,233
$ 95,533
$
98,109
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Governmental activities:
8,657
8,711
10,969
2,351
Unrestricted
Net investment in capital assets
$ 105,462
$ 106,828 $
107,587 $
114,165 $
113,308 $
115,036 $
107,874 $
110,815 $
111,572 $
106,293
Restricted
11,809
12,601
16,176
14,894
13,233
13,492
15,043
15,044
14,526
13,465
Unrestricted
2,551
1,157
(3,606)
(5,148)
(6,110)
(3,462)
(4,162)
(3,968)
(8,838)
(8,801)
Total governmental activities net position
$ 119,822
$ 120,586 $
120,157 $
123,911 $
120,431 $
125,066 $
118,755 $
121,891 $
117,260 $
110,957
Business -type activities
Net investment in capital assets
$
116,156
$
113,008
$ 109,582
$ 104,858
$ 100,233
$ 95,533
$
98,109
$ 97,961
$
77,494
$ 67,668
Restricted
6,703
6,600
6,533
5,303
8,657
8,711
10,969
2,351
Unrestricted
16,535
14,827
(34,563)
(34,129)
(28,591)
(35,448)
26,460
6,417
1,880
7,445
Total business -type activities net position
$
139,394
$
134,435
$ 81,552
$ 76,032
$ 71,642
$ 60,085
$
133,226
$ 113,089
$
90,343
$ 77,464
Primary government:
Net investment in capital assets
$
221,618
$
219,836
$ 217,169
$ 219,023
$ 213,541
$ 210,569
$
205,983
$ 208,776
$
189,066
$ 173,961
Restricted
18,512
19,201
22,709
20,197
13,233
13,492
23,700
23,755
25,495
15,816
Unrestricted
19,086
15,984
(38,169)
(39,277)
(34,701)
(38,910)
22,298
2,449
(6,958)
(1,356)
Total primary government net position
$
259,216
$
255,021
$ 201,709
$ 199,943
$ 192,073
$ 185,151
$
251,981
$ 234,980
$
207,603
$ 188,421
Source: City of Lodi Financial Services Division
CITY OF LODI
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Program Revenues
Fiscal Year
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Expenses
Charges for services:
64,693
63,230
64,251
62,167
69,664
74,000
69,284
65,809
59,112
Governmental activities:
General government
$ 1,955 $
2,337 $
1,718 $
1,793 $
2,184 $
1,631 $
1,544 $
1,280 $
1,232 $
General government
$ 9,580 $
8,943 $
9,381 $
8,262 $
8,749 $
9,451
$ 8,307 $
7,853 $
9,746
$ 9,958
Public protection
27,884
25,930
25,432
25,113
27,186
27,110
25,531
23,328
22,105
22,253
Public works
10,644
10,546
10,248
9,305
10,462
10,464
12,224
10,599
13,229
12,377
Community development
1,174
1,050
1,003
973
1,114
1,323
2,027
2,130
2,290
54
Library
1,282
1,342
1,381
1,355
1,440
1,495
1,696
1,630
1,485
1,484
Parks and recreation
3,164
2,933
2,913
5,778
5,077
4,609
4,414
4,172
4,114
4,565
Interest and fiscal charges
825
416
1,033
1,075
1,105
1,134
1,166
1,201
1,234
1,617
Total governmental activities expenses
54,553
51,160
51,391
51,861
55,133
55,586
55,365
50,913
54,203
52,254
Business -type activities:
Business -type activities
9,885
55,703
4,971
9,119
11,381
6,007
10,192
17,122
7,038
Electric
61,974
61,106
62,599
63,399
64,364
73,358
65,201
67,534
63,780
57,308
Wastewater
12,527
13,423
17,441
11,687
11,289
10,940
12,227
9,271
8,574
10,653
Water
11,014
(34,877)
7,953
8,188
6,148
9,604
9,920
9,875
8,256
11,748
Transit
3,834
4,141
4,256
4,132
4,785
4,832
3,908
3,577
3,643
3,018
Total business -type activities expenses
89,349
43,793
92,249
87,406
86,586
98,734
91,256
90,257
84,253
82,727
Total primary government expenses
143,902
94,953
143,640
139,267
141,719
154,320
146,621
141,170
138,456
134,981
Program Revenues
Governmental activities:
Charges for services:
64,693
63,230
64,251
62,167
69,664
74,000
69,284
65,809
59,112
53,908
General government
$ 1,955 $
2,337 $
1,718 $
1,793 $
2,184 $
1,631 $
1,544 $
1,280 $
1,232 $
3,639
Public protection
582
538
500
643
714
844
837
582
563
623
Public works
415
224
166
356
326
358
755
295
320
461
Community development
1,219
1,458
993
1,601
786
749
1,085
1,174
1,630
2,731
Library
43
44
43
47
48
44
53
53
54
49
Parks and recreation
1,479
1,404
1,241
1,245
1,269
1,158
851
1,007
918
833
Operating grants and contributions
2,686
2,341
2,300
2,236
1,927
1,951
2,305
2,589
2,587
2,195
Capital grants and contributions
5,359
4,216
5,025
6,737
5,122
10,822
4,717
6,975
14,631
17,559
Total governmental activities program revenues
13,738
12,562
11,986
14,658
12,376
17,557
12,147
13,955
21,935
25,359
Business -type activities:
Charges for services:
Electric
64,693
63,230
64,251
62,167
69,664
74,000
69,284
65,809
59,112
53,908
Wastewater
14,305
13,747
13,280
13,090
11,513
9,276
9,091
8,524
8,927
8,086
Water
12,756
12,441
12,083
11,940
11,716
11,787
11,350
10,040
8,343
7,713
Transit
203
185
186
195
217
251
278
401
386
340
Operating grants and contributions
4,431
5,178
4,214
3,983
3,449
3,653
3,381
2,621
3,377
2,731
Capital grants and contributions
2,846
4,715
3,206
5,150
1,408
5,774
8,064
19,984
11,146
3,401
Total business -type activities program revenues
99,234
99,496
97,220
96,525
97,967
104,741
101,448
107,379
91,291
76,179
Total primary government program revenues
112,972
112,058
109,206
111,183
110,343
122,298
113,595
121,334
113,226
101,538
Not
Governmental activities
$ (40,815) $
(38,598) $
(39,405) $
(37,203) $
(42,757) $
(38,029)
$ (43,218) $
(36,958) $
(32,268)
$ (26,895)
Business -type activities
9,885
55,703
4,971
9,119
11,381
6,007
10,192
17,122
7,038
(6,548)
Total primary government net expense
$ (30,930) $
17,105 $
(34,434) $
(28,084) $
(31,376) $
(32,022)
$ (33,026) $
(19,836) $
(25,230)
$ (33,443)
(Continued)
109
General Revenues and Other Changes in Net Position:
Governmental activities:
Taxes:
Property
Franchise taxes
Business license tax
Transient occupancy tax
Grants and contributions not restricted to specific programs
Investment earnings
Rent
Other
Special item -gain on sale of parkland
Transfers
Total governmental activities
Business -type activities:
Investment earnings
Litigation- environmental lawsuits proceeds
Rent
Other
Special item -forgiveness of debt
Special item -swap termination
Transfers
Total business -type activities
Total primary government
Change in Net Position
Governmental activities
Business -type activities
Total primary government
Source: City of Lodi Financial Services Division
CITY OF LODI
CHANGES IN NET POSITION (Continued)
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
$ 12,758 $ 12,218 $ 12,103 $ 12,698 $ 12,836 $ 13,564 $ 13,838 $ 9,524 $ 8,031 $ 7,124
8,838 8,735 8,712 8,692 8,658 8,357 9,338 9,609 8,721 8,918
1,528 1,524 1,628 1,246 1,242 1,190 1,140 1,082 973 982
594 546 486 426 382 405 396 380 368 352
10,138 9,382 9,277 8,954 7,064 8,249 9,593 14,772 14,215 13,193
203 44 132 133 155 467 1,008 874 328 150
1,906 1,370
528 610 2,052 1,556 1,917 2,382 1,077 621 1,012 608
321
4,792 5,682 1,261 6,657 5,868 5,368 3,693 4,727 4,923 4,008
41,285 40,111 35,651 40,683 38,122 39,982 40,083 41,589 38,571 35,335
757 497 566 575 731 1,385 2,028 2,380 2,008 1,880
- 1,107 - 300 2,010 8,892 6,222 6,700 9,150
4
2,370 1,258 1,244 1,353 923 1,891 2,717 1,749 2,056 2,432
15,277
(8,979)
(4,792) (5,682) (1,261) (6,657) (5,868) (5,368) (3,693) (4,727) (4,923) (4,008)
(1,661) (2,820) 549 (4,729) (3,914) (9,061) 9,944 5,624 5,841 24,731
$ 39,624 $ 37,291 $ 36,200 $ 35,954 $ 34,208 $ 30,921 $ 50,027 $ 47,213 $ 44,412 $ 60,066
$ 470 $ 1,513 $ (3,754) $ 3,480 $ (4,635) $ 1,953 $ (3,135) $ 4,631 $ 6,303 $ 8,440
8,224 52,883 5,520 4,390 7,467 (3,054) 20,136 22,746 12,879 18,183
54,396,7 7,870 7, 7, 77
110
CITY OF LODI
FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Source: City of Lodi Financial Services Division
111
Fiscal Year
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
General Fund
Reserved
$
$
$
$
$ 389
$
383
$ 1,150
$ 1,144
$ 1,321
$ 1,185
Unreserved
3,896
3,383
4,159
5,175
3,048
1,507
Nonspendable
10
9
6
357
Committed
301
277
0
Assigned
29
65
50
136
Unassigned
9,134
7,614
6,233
5,654
Total General Fund
$
9,474
$ 7,965
$ 6,289
$ 6,147
$ 4,285
$
3,766
$ 5,309
$ 6,319
$ 4,369
$ 2,692
All other governmental funds
Reserved
$
$
$
$
$ 7,801
$
1,487
$ 1,932
$ 1,874
$ 1,138
$ 4,942
Unreserved, reported in:
Special revenue funds
963
6,540
7,433
6,651
6,271
1,400
Capital projects funds
3,649
5,217
5,504
6,200
5,663
5,650
Nonspendable
4
3
1
Restricted
11,764
12,556
15,017
13,786
Unassigned
(99)
(512)
(863)
(846)
Total all other governmental funds
$
11,669
$ 12,047
$ 14,155
$ 12,940
$ 12,413
$
13,244
$ 14,869
$ 14,725
$ 13,072
$ 11,992
$
21,143
$ 20,012
$ 20,444
$ 19,087
$ 16,698
$
17,010
$ 20,178
$ 21,044
$ 17,441
$ 14,684
Implemented GASB 54 during the 2011 fiscal year changing the presentation of fund balance.
Source: City of Lodi Financial Services Division
111
Revenues:
Taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeitures
Investment and rental income
Contributions and donations
Miscellaneous revenue
Total revenues
Expenditures:
Current:
General government
Public protection
Public works
Community development
Library
Parks and recreation
Capital outlay
Debt service:
Interest and fiscal charges
Principal payments
Advance refunding escrow
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
$ 23,719 $ 23,022 $ 22,928 $ 23,061 $ 23,118 $ 23,516 $ 24,712 $ 20,594 $ 18,094 $ 17,606
852
921
686
954
520
431
683
717
1,020
2,511
17,392
14,625
15,289
16,865
12,579
13,229
14,980
19,892
25,491
22,834
3,558
3,880
3,427
3,946
4,116
3,329
4,757
4,696
3,848
9,404
1,557
1,632
1,357
1,407
1,444
1,416
1,321
1,245
1,173
1,190
2,025
1,389
1,264
817
923
922
1,312
998
707
753
1,003
2,370
2,254
689
4,180
3,776
3,826
3,598
3,440
3,691
-
1,078
813
799
1,093
1,762
822
304
653
458
50,106
46,547
45,764
48,538
43,793
44,605
48,587
48,446
50,986
54,756
9,019
8,522
8,820
7,667
7,666
8,431
9,545
8,893
8,345
10,858
27,093
26,282
25,249
24,489
24,466
24,716
23,979
22,211
20,863
20,351
4,393
4,532
4,174
3,715
4,383
4,657
5,842
5,587
7,827
7,361
1,192
1,111
1,037
969
1,013
1,341
2,006
2,062
1,847
1,268
1,411
1,381
1,357
1,322
1,500
1,673
1,588
1,468
1,420
2,299
2,370
2,254
4,127
4,180
3,776
3,826
3,598
3,440
3,691
7,652
6,271
2,961
9,377
5,108
6,791
4,207
3,526
7,232
9,508
851 483 1,039 1,081 1,110 1,139 1,170 1,205 1,238 1,645
- 245 630 752 725 789 898 900 892 855
- 1,689
53,767 52,916 47,545 53,534 49,973 53,140 53,146 49,570 53,152 55,689
(3,661) (6,369) (1,781) (4,996) (6,180) (8,535) (4,559) (1,124) (2,166) (933)
112
(Continued)
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS (continued;
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
Other financing sources (uses):
Transfers in
Transfers out
Proceeds from sale of land
Capital lease proceeds
Refunding bonds issued
Payment to refunded bond escrow agent
Total other financing sources (uses)
Special item- sale of parkland
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
Debt service as a percentage of noncapital expenditures
Source: City of Lodi Finance Services Division
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
11,596 12,546 14,486 11,881 11,173 10,609 7,058 8,863 9,142 8,017
(6,804) (6,864) (11,348) (5,224) (5,305) (5,242) (3,365) (4,136) (4,219) (4,009)
98
124
20,103
(19,848)
4,792 5,937 3,138 6,755 5,868 5,367 3,693 4,727 4,923 4,132
- 630
1,131
(432)
1,357
2,389
(312)
(3,168)
(866)
3,603
2,757
3,199
20,012
20,444
19,087
16,698
17,010
20,178
21,044
17,441
14,684
11,485
$ 21,143
$ 20,012
$ 20,444
$ 19,087
$ 16,698
$ 17,010
$ 20,178
$ 21,044
$ 17,441
$ 14,684
1.9%
5.5%
3.9%
4.3%
4.3%
4.3%
4.4%
4.8%
4.9%
5.7%
113
Property
Sales and Use
Transient Occupancy
Franchise
Documentary Transfer
Motor Vehicle in Lieu
Public Protection
Business License
In Lieu Franchise
Totals
City of Lodi
TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
$ 33,863 $ 32,360 $ 32,023 $ 31,686 $ 29,978 $ 31,909 $ 34,640 $ 35,757 $ 32,617 $ 31,469 8%
Note: General governmental tax revenues are included in taxes, licenses and permits, intergovernmental revenues and miscellaneous revenues.
Source: City of Lodi Financial Services Division
114
Fiscal Year
Change
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2005 to
2014
$ 8,314
$ 7,955
$ 7,861
$ 8,285
$ 8,342
$ 8,887
$ 9,210
$ 9,289
$ 7,676
$ 6,771
23%
10,111
9,350
9,246
8,663
6,873
8,028
9,296
10,137
9,812
9,183
10%
594
545
486
426
382
405
396
380
368
352
69%
1,862
1,758
1,734
1,715
1,681
1,415
976
929
890
821
127%
155
120
91
95
117
114
125
235
355
353
-56%
4,289
4,143
4,151
4,317
4,377
4,784
4,797
4,635
4,402
4,606
-7%
341
325
295
250
267
296
338
390
310
304
12%
1,220
1,187
1,182
958
962
1,038
1,140
1,082
973
982
24%
6,977
6,977
6,977
6,977
6,977
6,942
8,362
8,680
7,831
8,097
-14%
$ 33,863 $ 32,360 $ 32,023 $ 31,686 $ 29,978 $ 31,909 $ 34,640 $ 35,757 $ 32,617 $ 31,469 8%
Note: General governmental tax revenues are included in taxes, licenses and permits, intergovernmental revenues and miscellaneous revenues.
Source: City of Lodi Financial Services Division
114
CITY OF LODI
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Total Direct Tax Rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
(1) All exemptions (secured, utility, and unsecured rolls) are homeowners - $62,762 and other - $261,677 =$324,439
Note: In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed.
Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only assessed at the time that it is
sold to a new owner. At that point, the property being sold is reassessed at the purchase price. The assessed valuation data shown above represents the only data currently available with respect
to the the actual market value of taxable property and is subject to the limitations described above.
Source: San Joaquin County Auditor -Controller's Office
115
Fiscal Year
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Secured roll
$ 4,895,091
$ 4,737,807
$ 4,738,823
$ 4,907,588
$ 4,986,693
$ 5,156,706
$ 5,069,788
$ 4,799,141
$ 4,254,184
$ 3,877,398
Utility roll
3,490
2,382
2,382
2,423
2,423
2,031
2,035
2,773
3,654
3,782
Unsecured roll
230,827
233,398
226,651
270,600
270,315
263,648
258,687
242,082
216,065
215,469
Gross assessed value
5,129,408
4,973,587
4,967,856
5,180,611
5,259,431
5,422,385
5,330,510
5,043,996
4,473,903
4,096,649
Less exemptions (1)
324,439
327,783
314,448
321,138
332,701
265,154
243,259
229,049
220,590
217,077
Net assessed value
4,804,969
4,645,804
4,653,408
4,859,473
4,926,730
5,157,231
5,087,251
4,814,947
4,253,313
3,879,572
Land
1,364,401
1,227,969
1,264,884
1,322,830
1,345,815
1,562,729
1,537,554
1,431,203
1,226,293
1,107,776
Improvements
3,443,266
3,445,328
3,401,792
3,534,778
3,600,824
3,577,741
3,503,186
3,327,453
2,989,575
2,739,061
Personal property
321,741
300,290
301,180
323,003
312,792
281,915
289,770
285,340
258,035
249,812
Gross assessed value
5,129,408
4,973,587
4,967,856
5,180,611
5,259,431
5,422,385
5,330,510
5,043,996
4,473,903
4,096,649
Less exemptions (1)
324,439
327,783
314,448
321,138
332,701
265,154
243,259
229,049
220,590
217,077
Net assessed value
$ 4,804,969
$ 4,645,804
$ 4,653,408
$ 4,859,473
$ 4,926,730
$ 5,157,231
$ 5,087,251
$ 4,814,947
$ 4,253,313
$ 3,879,572
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 - $62,762 and other - $261,677 =$324,439
Note: In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed.
Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only assessed at the time that it is
sold to a new owner. At that point, the property being sold is reassessed at the purchase price. The assessed valuation data shown above represents the only data currently available with respect
to the the actual market value of taxable property and is subject to the limitations described above.
Source: San Joaquin County Auditor -Controller's Office
115
CITY OF LODI
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN FISCAL YEARS
(Rate per $100 of assessed value)
Fiscal
Year
Basic
Countywide
Levy
School
All Other
Total
2014
1.0000
0.0574
0.0000
1.0574
2013
1.0000
0.0646
0.0000
1.0646
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
Source: San Joaquin County Tax Collector
116
CITY OF LODI
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND EIGHT YEARS AGO
(Dollar amounts in thousands)
Fiscal Year
2014 2006
Information for 2005 is not available.
Source: San Joaquin County Assessor's Office 117
Percent of
Percent of
Total City
Total City
Taxable
Taxable
Taxable
Taxable
Assessed
Assessed
Assessed
Assessed
Taxpayer
Value
Rank
Value
Value
Rank
Value
Lodi Memorial Hospital Assn
$ 150,786
1
3.294 %
General Mills
136,079
2
2.972
$ 152,102
1
3.768 %
Pacific Coast Producers
109,044
3
2.382
43,068
2
1.067
California Physicians Service Corp
58,928
4
1.287
Cottage Bakery Inc
41,339
5
0.903
25,341
4
0.628
Westcore Vine LP
25,900
6
0.566
Costco
19,700
7
0.430
Archer Daniels Midland Co Corp
18,781
8
0.410
Dart Container Corp
18,672
9
0.408
17,625
8
0.437
Wine & Roses LLC
15,986
10
0.349
Pacific Coast Producers Corp.
34,267
3
0.849
Kristmont West
21,961
5
0.544
Parinehs Exchange 2004 LLC
19,539
6
0.484
Certainteed Corp
18,842
7
0.467
Fountains At Lodi LLC
13,031
9
0.323
Panattoni, Carl D ETAL
12,984
10
0.322
Principal Secured Property Valuation
595,215
13.001
358,760
8.889
Other Secured Taxpayers
4,299,876
93.919
3,895,424
96.575
Exemptions relative to secured tax roll
316,830
6.920
220,590
5.464
Total Secured Property Valuation
$ 4,578,261
100.000 %
$ 4,033,594
100.000 %
Information for 2005 is not available.
Source: San Joaquin County Assessor's Office 117
CITY OF LODI
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal
Year
Taxes
Levied for
the Fiscal
Year
Collected Within the
Fiscal Year of the Levy
Percent
of
Amount Levy (1)
Total Collections
to Date
Percent
of
Amount Levy
2014
$ 8,353
$ 8,353
100.0%
$ 8,353
100.0%
2013
7,865
7,865
100.0%
7,865
100.0%
2012
7,754
7,754
100.0%
7,754
100.0%
2011
8,143
8,143
100.0%
8,143
100.0%
2010
8,291
8,291
100.0%
8,291
100.0%
2009
7,966
7,966
100.0%
7,966
100.0%
2008
8,167
8,167
100.0%
8,167
100.0%
2007
8,170
8,170
100.0%
8,170
100.0%
2006
7,815
7,815
100.0%
7,815
100.0%
2005
7,057
7,057
100.0%
7,057
100.0%
1) Per agreement with San Joaquin County, the County provides the City of Lodi with 100% of the
amount owed to the City for secured properties, regardless of collection status. In exchange, the
County is entitled to 100% of revenues collected for interest and penalties. This agreement is
commonly referred to as the Teeter Plan.
Source: San Joaquin County Auditor/Controller's Office
118
CITY OF LODI
ELECTRICITY SOLD BY TYPE OF CUSTOMER
LAST NINE FISCAL YEARS
Type of Customer
Billed Accounts
2014
2013
2012
2011
2010
2009
2008
2007
2006
City Accounts
207
204
195
197
189
189
187
186
184
Contract Large Industrial
5
5
6
Contract Medium Industrial
1
1
2
Contract Small Industrial
1
0
1
Domestic Residential
22,623
22,541
22,361
22,360
22,525
22,506
22,510
22,938
22,860
Domestic Mobile Home Park
13
13
13
13
13
13
13
13
13
Dusk to Dawn
89
88
92
89
89
92
92
95
95
Large Commercial
339
344
336
350
357
377
380
375
359
Large Industrial
39
40
38
40
39
37
32
33
33
Medium Industrial
11
11
9
9
9
8
8
10
13
Residental Low Income
2,788
2,582
2,531
2,258
2,193
1,847
1,943
2,003
1,910
Small Commerical
3,367
3,358
3,340
3,324
3,280
3,249
3,199
3,241
3,279
Small Industrial
8
9
11
11
10
10
9
9
9
Total
29,484
29,190
28,926
28,651
28,704
28,328
28,380
28,909
28,764
Information prior to the implementation of GASB 44 is not available.
Source: City of Lodi Financial Services Division
119
CITY OF LODI
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
Details regarding the City's outstanding debt can be found in Note 8 of these financial statements.
(i) jee uemograpmc ano tconomic Statistics tame Tor personal income ana popuiation.
Source: City of Lodi Financial Services Division
120
Governmental Activities
Business -type Activities
Total
Certificates of
Total
Total
Fiscal
Lease Revenue
Loan
Notes
Governmental
Participation and
Notes
Business -type
Primary
Percent of Personal
Per
Year
Bonds
Payable
Payable
Activities
Revenue Bonds
Payable
Activities
Government
Income (1)
Capita (1)
2014
$ 20,004
$ 245
$ 20,249
$ 157,297
$
$ 157,297
$ 177,546
8.45 %
2,789
2013
20,058
245
20,303
167,743
167,743
188,046
9.74
2,993
2012
21,025
245
21,270
173,241
173,241
194,511
10.34
3,096
2011
21,655
245
21,900
178,827
178,827
200,727
10.67
3,213
2010
22,265
245
22,510
144,165
1,409
145,574
168,084
8.49
2,645
2009
22,855
245
23,100
148,529
1,585
150,114
173,214
8.81
2,736
2008
23,420
94
245
23,759
140,640
1,755
142,395
166,154
8.99
2,622
2007
23,975
187
245
24,407
122,128
1,918
124,046
148,453
8.15
2,342
2006
24,510
279
245
25,034
125,863
2,077
127,940
152,974
8.93
2,435
2005
25,030
368
245
25,643
127,215
2,230
129,445
155,088
9.46
2,483
Details regarding the City's outstanding debt can be found in Note 8 of these financial statements.
(i) jee uemograpmc ano tconomic Statistics tame Tor personal income ana popuiation.
Source: City of Lodi Financial Services Division
120
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
121
Percent of
Less Amounts
Assessed
Fiscal
Lease Revenue
Available for
Value (1) of
Per
Year
Bonds
Debt Service
Net
Property
Capita
2014
$ 20,004
$ - $
20,004
0.4 %
314.28
2013
20,058
10
20,048
0.4
318.58
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
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
121
CITY OF LODI
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
FISCAL YEAR
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
Assessed valuation (1)
$ 4,867,731
$ 4,709,916
$ 4,718,766
$ 4,926,130
$ 4,995,362
$ 5,227,580
$ 5,159,269
$ 4,887,074
$ 4,325,000
$ 3,951,862
Conversion percentage
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
Adjusted assessed valuation
1,216,933
1,177,479
1,179,692
1,231,533
1,248,841
1,306,895
1,289,817
1,221,769
1,081,250
987,966
Debt limit percentage
15%
15%
15%
15%
15%
15%
15%
15%
15%
15%
Debt Limit
182,540
176,622
176,954
184,730
187,326
196,034
193,473
183,265
162,188
148,195
Total net debt applicable to limit
20,004
20,048
19,333
19,963
20,573
21,163
21,728
22,283
22,818
23,338
Legal debt margin
$ 162,536
$ 156,574
$ 157,621
$ 164,767
$ 166,753
$ 174,871
$ 171,745
$ 160,982
$ 139,370
$ 124,857
Total net debt applicable to the limit as
a percent of debt limit
11.0%
11.4%
10.9%
10.8%
11.0%
10.8%
11.2%
12.2%
14.1%
15.7%
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the
1982 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computation shown above reflect a conversion of assessed valuation data for each fiscal year from the
current full valuation perspective to the 25% level that was in effect at the time the legal debt margin was enacted by the State of California for local governments located within the state.
(1) Reflects City assessed valuation with other exemptions of $261,677 deducted for 2014
Source: San Joaquin County Auditor -Controller's Office
122
CITY OF LODI
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
June 30, 2014
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 Lease Revenue Bonds
City of Lodi - Note payable
SUBTOTAL DIRECT DEBT
TOTAL DIRECT AND OVERLAPPING DEBT(2)
2013-14 Gross Assessed Valuation
2013-14 Population
DEBT RATIOS
(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 Auditors -Controller Office
State of California, Department of Finance, Demographic Research Unit
123
Percentage
City's Share
Total Debt
Applicable (1)
of Debt
$ 153,118,000
8.865 %
$ 13,573,911
92,000,000
37.209
34,232,280
152,425,000
9.821
14,969,659
38,965,000
37.209
14,498,487
77,274,337
20,004,000
100.00
20,004,000
245,000
100.00
245,000
19,325,000
$ 97,523,337
$ 5,129,408,000
63,651
Per Capita
Value
Total Gross Debt $ 97,523,337
$ 1,532
1.90%
(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 Auditors -Controller Office
State of California, Department of Finance, Demographic Research Unit
123
CITY OF LODI
PLEDGED -REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Dollars amounts in thousands)
Less:
Adjusted Adjusted Net
Fiscal Annual Operating Available Debt Service
Year Revenues (1) Expenses (2) Revenue Principal Interest Total Coverage
Electric Revenue Certificates of Participation
2014 $
67,144
$ 50,349
$ 16,795
$ 4,750
$ 3,606
$ 8,356
2.01
2013
63,974
51,209
12,765
4,575
3,839
8,414
1.52
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
Source: City of Lodi Financial Services Division continued
124
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
Wastewater Certificates of Participation and Revenue Bonds
Total Coverage
2014 $
15,186 $
6,003
$ 9,183
$ 4,610
$ 2,294
$ 6,904
1.33
2013
14,305
5,674
8,631
1,500
2,560
4,060
2.13
2012
13,787
6,659
7,128
1,430
2,688
4,118
1.73
2011
16,508
5,972
10,536
1,370
2,748
4,118
2.56
2010
12,284
6,180
6,104
1,320
2,832
4,152
1.47
2009
10,764
5,921
4,843
1,270
2,882
4,152
1.17
2008
10,530
6,189
4,341
1,355
2,334
3,689
1.18
2007
9,881
5,287
4,594
1,315
2,017
3,332
1.38
2006
9,865
4,886
4,979
1,275
2,056
3,331
1.49
2005
9,232
4,781
4,451
540
2,210
2,750
1.62
Source: City of Lodi Financial Services Division continued
125
CITY OF LODI
PLEDGED -REVENUE COVERAGE (continued)
LAST TEN FISCAL YEARS
(Dollars amounts in thousands)
Includes all nongeneral obligation long-term debt backed by pledged revenues.
Details regarding the City's outstanding debt can be found in Note 8 of these financial statements.
(1) Total operating revenues including investment earnings, operating grants, capital contributions
and other revenue.
(2) Total operating expenses including cost of services paid to the General Fund and excluding in -lieu fees,
depreciation and amortization.
(3) Net of Build America Bonds interest subsidy.
Source: City of Lodi Financial Services Division
126
Less:
Adjusted
Adjusted
Net
Fiscal
Annual
Operating
Available
Debt Service
Year
Revenues (1)
Expenses (2)
Revenue
Principal
Interest (3)
Total
Coverage
Water Revenue Bonds
2014
$ 14,166
$ 6,835
$ 7,331
$ 825
$ 1,530
$ 2,355
3.11
2013
13,367
6,899
6,468
800
1,535
2,335
2.77
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 Note 8 of these financial statements.
(1) Total operating revenues including investment earnings, operating grants, capital contributions
and other revenue.
(2) Total operating expenses including cost of services paid to the General Fund and excluding in -lieu fees,
depreciation and amortization.
(3) Net of Build America Bonds interest subsidy.
Source: City of Lodi Financial Services Division
126
CITY OF LODI
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Personal income is the income received by all persons from all sources. Personal income is the sum of net earnings by place of
residence, rental income of persons, personal dividend income, personal interest income, and personal current transfer receipts.
Per capita personal income is calculated as the personal income of residents of a given area divided by the resident population of the area.
In computing per capita personal income, Bureau of Economic analysis uses the Census Bureau's annual midyear population estimates.
Source: State of California, Department of Finance, Demographic Reseach Unit and Department of Labor.
127
Personal
Per
Population
San Joaquin
Population
Rank in Size
Income
Capita
Fiscal
Square
City
Percent
County
Percent
of California
(millions of
Personal
Unemployment
Year
Miles
Population
Change
Population
of County
Cities
dollars)
Income
Rate
2014
13.92
63,651
0.2%
710,731
9.0%
135 $
2,102
33,024
8.8%
2013
13.92
62,930
0.2%
698,414
9.0%
137
1,952
31,013
9.0%
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
-0.1%
689,480
9.2%
135
1,967
31,071
12.2%
2008
13.92
63,362
-0.1%
685,600
9.2%
133
1,849
29,178
7.1%
2007
13.17
63,395
0.9%
679,687
9.3%
129
1,822
28,743
6.1%
2006
12.81
62,817
0.6%
668,265
9.4%
131
1,713
27,272
5.5%
2005
12.81
62,467
2.8%
653,333
9.6%
131
1,639
26,239
5.9%
Personal income is the income received by all persons from all sources. Personal income is the sum of net earnings by place of
residence, rental income of persons, personal dividend income, personal interest income, and personal current transfer receipts.
Per capita personal income is calculated as the personal income of residents of a given area divided by the resident population of the area.
In computing per capita personal income, Bureau of Economic analysis uses the Census Bureau's annual midyear population estimates.
Source: State of California, Department of Finance, Demographic Reseach Unit and Department of Labor.
127
CITY OF LODI
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
Current
Employer
Employees
Rank
Lodi Unified School District
3,060
1
Lodi Memorial Hospital
1,330
2
Pacific Coast Producers
1,000
3
Blue Shield
780
4
Cottage Bakery
458
5
General Mills
430
6
City of Lodi
382
7
Walmart
240
8
Farmers & Merchants Bank
187
9
Target
165
10
Valley Industries
CertainTeed
Total
8,032
128
Percent
of Total City
Employment
11.71 %
5.09
3.83
2.98
1.75
1.65
1.46
0.92
0.72
0.63
Employees
2,800
1,160
747
Nine Years Ago
In --1-
1
2
3
Percent
of Total City
Employment
10.72 %
4.44
2.86
457
4
1.75
429
5
1.64
317
6
1.21
314
7
1.20
186
9
0.71
295
8
1.13
99
10
0.38
30.74 6,804
26.04
CITY OF LODI
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY DEPARTMENT LAST TEN FISCAL YEARS
Fiscal Year
129
2014
2013
2012
2011*
2010
2009
2008
2007
2006
2005
Department:
Administration
10
10
12
13
31
32
19
35
33
37
Community Development
9
9
9
13
13
13
14
18
17
17
Electric
43
40
40
41
51
50
48
64
65
52
Financial Services
24
26
39
30
28
38
Fire
53
53
54
64
64
64
64
64
61
68
Internal Services
31
31
29
35
Library
10
11
12
14
14
14
14
16
14
15
Parks and Recreation
31
31
30
34
31
34
Parks, Recreation and Cultural Services
27
27
29
37
Police
104
104
103
125
125
125
125
116
117
117
Public Works
95
92
93
98
102
102
107
114
99
111
Total
382
377
381
440
455
457
460
491
465
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
129
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT
LAST NINE FISCAL YEARS
General government:
Building permits issued
Business tax certificates:
Retail sales and service
Manufacturers and processors
Professions
Miscellaneous contractors, peddlers, delivery vehicles, etc.
Utility billing/customer service:
Number of customers
Energy sales (KWH)
Peak demand (MW)
Public safety:
Police:
Major reported crimes
Total arrests
Dispatched calls for service
Fire:
Interior structure fire calls
Non-structural fire calls
Hazardous materials calls
Emergency medical calls
Total emergency calls
Total number of units dispatched
Public works:
Miles of streets resurfaced
Fleet job orders completed
Trees planted
Water utility:
New connections
Water main breaks
Wastewater utility:
Average daily treatment (million gal/day)
Library:
Registered borrowers
Circulation of library materials
Reference, research and informational questions answered
Annual attendance at libraries
Number of programs offered
Annual attendance at programs
Public access computer usage
2,519
2,643
3,573
2,885
Fiscal Year
2,454
2,993
3,096
3,234
2014
2013
2012
2011
2010
2009
2008
2007
2006
1,791
1,578
1,461
2,022
1,709
1,754
1,851
2,317
2,699
2,633
2,526
2,485
2,530
2,406
2,496
2,442
2,632
2,565
80
78
77
76
80
82
78
78
125
362
362
364
371
373
380
398
404
322
1,595
1,456
1,362
1,357
1,312
1,411
1,063
1,127
533
25,733
23,927
23,761
23,575
25,573
25,555
25,555
25,712
25,655
437,294,133
435,822,465
435,655,731
421,130,329
434,200,987
452,075,554
450,407,709
458,740,745
459,637,092
126
122
116
116
120
134
134
144
127
2,519
2,643
3,573
2,885
2,377
2,454
2,993
3,096
3,234
3,656
3,825
4,350
4,410
4,238
4,646
5,590
5,463
5,162
35,281
50,124
46,756
52,061
51,870
56,391
55,911
53,686
55,937
33
67
57
56
47
69
88
79
66
1,923
209
163
121
123
123
160
163
158
53
58
41
69
70
70
35
27
26
3,848
3,882
3,820
3,752
3,494
3,364
3,420
3,213
2,912
4,144
5,823
5,620
5,753
5,385
5,392
5,346
5,000
4,447
7,845
7,954
7,855
7,835
7,390
7,038
7,841
7,005
6,055
6
6
6
6
3
6
5
4
33
2,004
1,803
1,953
2,810
3,303
3,921
3,520
6,938
5,608
131
131
96
130
95
-
8
8
7
8
17
17
35
110
266
14
14
10
8
6
4
4
10
8
5.OMG
5.10MG
6.5MG
6.5MG
6.5MG
6.5MG
6.5MG
6.9MG
6.7MG
55,835
51,594
47,147
43,927
39,199
53,530
48,969
44,558
52,779
225,476
215,293
217,742
248,250
251,967
219,711
280,466
273,270
281,216
16,750
16,270
14,463
16,234
16,501
15,379
19,257
18,854
17,342
209,929
224,762
222,148
210,279
207,123
n/a
296,793
288,070
287,986
284
407
432
388
344
316
348
339
320
10,824
14,443
12,993
13,133
10,676
8,765
11,242
10,700
10,872
47,126
45,871
47,428
58,990
52,124
38,388
38,999
35,260
29,896
130
(Continued)
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT (continued)
LAST NINE FISCAL YEARS
Fiscal Year
2014 2013 2012 2011 2010 2009 2008 2007 2006
Community center:
Community center bookings
769
718
698
926
789
475
494
302
220
Instructional classes
553
580
307
536
583
507
530
478
509
Registered students
3,269
2,819
3,713
3,438
3,525
3,316
5,550
3,548
4,369
Yearly attendance
13,925
13,925
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)
254,096/20
1,715/20
3,232/20
1,920/4
1,920/4
1,920/4
3,014/4
145,000/12
135,000/12
Adult sports
Program/Participation
2,082
2,246
2,420
2,528
2,528
2,284
28,000
36,000
36,000
Programs offered
17
16
15
16
16
13
11
11
11
Partnerships
2
2
3
5
5
1
3
3
5
Tournaments
5
6
12
7
7
10
10
20
20
Youth/Teen sports
Program attendance
3,672
3,643
3,889
4,251
4,251
215,000
195,000
200,000
200,000
Programs offered
18
19
24
16
16
24
14
14
20
Aquatics
Program attendance
27,731
23,414
34,366
32,566
32,566
2,433
50,000
59,000
59,000
Number of programs
13
13
25
13
13
6
3
8
6
Note: The City of Lodi implemented GASB 44 for the fiscal year ended June 30, 2006.
Information prior to the implementation of GASB 44 is not available.
Soume: City of Lodi
131
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT
LAST TEN FISCAL YEARS
(Continued)
132
Fiscal Year
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
General government:
Total square miles
13.92
13.92
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
1
1
Animal control facility
1
1
1
1
1
1
1
1
1
1
Police training facility (pistol range)
1
1
1
1
1
1
1
1
1
1
Vehicles:
Marked patrol cars
23
23
23
23
23
25
25
25
28
28
Motorcycles and scooters
5
5
5
5
5
5
5
5
4
1
Animal control vehicles
2
2
2
2
2
2
2
2
3
3
Other automobiles
37
37
37
37
37
38
40
41
41
41
Fire:
Facilities:
Fire stations
4
4
4
4
4
4
4
4
4
4
Vehicles:
Fire engines
6
6
6
7
7
7
6
6
5
5
Trucks/Trailers
6
6
5
5
6
6
9
8
7
7
Other automobiles
11
11
9
8
10
12
7
10
11
11
Public works:
Miles of streets
202
202
202
202
202
202
200
184
198
100
Miles of alley ways
16
16
16
16
16
16
16
16
16
14
Traffic signals
67
67
67
67
62
62
64
66
64
60
Street lights
7,270
7,270
7,270
7,270
7,270
7,270
7,270
7,270
7,203
6,995
(Continued)
132
;dvikW0 21077
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT -continued
LAST TEN FISCAL YEARS
Fiscal Year
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Parks and recreation:
Parks and squares
26
26
26
26
26
26
23
23
23
23
Park acreage
361
361
373
373
373
371
275
275
275
275
Boating facilities - launch lanes
1
1
1
1
1
1
1
1
1
1
Senior center
1
1
1
1
1
1
1
1
1
1
Community Centers
1
1
1
1
1
1
1
1
1
1
Swimming pools
4
4
4
4
4
4
3
3
3
3
Baseball/softball diamonds
20
20
24
24
24
24
26
26
26
26
Tennis courts
11
11
11
11
11
11
11
11
11
11
Skateboard park
1
1
1
1
1
1
1
1
1
1
Playgrounds
20
20
22
25
25
25
22
22
22
22
Ballpark
24
24
24
24
24
24
26
26
26
26
Soccer Field
22
22
22
22
22
22
22
22
22
22
Football Field
1
1
1
1
1
1
3
3
3
3
Handball/BasketballNolleyball Courts/Bocce Courts
12
12
10
10
10
10
8
8
8
8
Horseshoe Pits
8
8
8
6
6
6
7
10
10
10
Library:
Central library
1
1
1
1
1
1
1
1
1
1
Total items in collection
148,287
149,243
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
1
1
Microfilm readers
1
1
1
1
1
1
1
1
1
1
Microfilm readers/printers
1
1
1
1
1
1
1
1
1
1
Self check out machines
2
2
2
2
2
2
0
1
1
1
Electric utility:
Overhead lines 12kv (miles)
117
133
133
133
130
130
130
129
129
129
Overhead lines 60kv (miles)
14
14
14
13
13
13
13
13
13
13
Underground lines (miles)
115
159
159
157
155
154
153
151
151
151
(Continued)
133
;dvikWO 21077
Source: City of Lodi Departments
134
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT-continued
LAST TEN FISCAL YEARS
Fiscal Year
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Water utility:
Water main lines
236
236
236
236
237
233
233
238
235
230
Water storage capacity (gallons)
4,100,000
4,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
Water wells
28
28
27
27
26
26
26
26
26
25
Water reservoirs
3
3
2
2
2
2
2
2
2
2
Wastewater utility:
Wastewater main lines (miles)
196
196
196
196
191
194
194
189
182
182
Treatment capacity
8.5 MG
8.5 MG
8.5 MG
8.5 MG
8.5 MG
8.5 MG
8.5 MG
8.5 MG
8.5 MG
8.5 MG
Wastewater treatment plant
1
1
1
1
1
1
1
1
1
1
Stormwater utility:
Stormwater main drain lines (miles)
124
124
124
124
124
161
119
161
115
114
Stormwater pump stations
14
14
14
14
14
14
14
14
13
14
Central parking district:
Parking structure
1
1
1
1
1
1
1
1
1
1
Parking spaces
2,450
2,453
2,453
2,453
2,453
2,453
2,453
2,453
2,453
2,453
Parking lots
25
25
25
25
25
25
25
25
25
25
Source: City of Lodi Departments
134
SINGLE AUDIT REPORTS
CITY OF LODI
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2014
Federal Grantor
Pass-through Grantor or Direct
Federal Program Title
U.S. Department of Housing and Urban Development
Direct:
Community Development Block Grants/Entitlement Grants - 2011-12 Program Year
Community Development Block Grants/Entitlement Grants - 2012-13 Program Year
Community Development Block Grants/Entitlement Grants - 2013-14 Program Year
Total Community Development Block Grants/Entitlement Grants
Passed through California State University of Fresno:
Sustainable Communities Regional Planning Grant Program
Total U.S. Department of Housing and Urban Development
U.S. Department of Justice
Direct:
ARRA - Public Safety Partnership and Community Policing Grants
Edward Byrne Memorial Justice Assistance Grant Program
Edward Byrne Memorial Justice Assistance Grant Program
Edward Byrne Memorial Justice Assistance Grant Program
Edward Byrne Memorial Justice Assistance Grant Program
Total Edward Byrne Memorial Justice Assistance Grant Program
Total U.S. Department of Justice
CFDA
Grant/Project
Federal
Number
Number
Expenditures
14.218
B -11 -MC -06-0038
$ 3,600
14.218
B -12 -MC -06-0038
463,717
14.218
B -13 -MC -06-0038
325,433
792,750
14.703
CARIP0004-10
22,725
815,475
16.710
2009-RK-WX-0151
194,984
16.738
2010 -DJ -BX -0941
11,900
16.738
2011 -DJ -BX -2703
22,655
16.738
2012 -DJ -BX -0876
19,483
16.738
2013 -DJ -BX -0877
8,957
62,995
See accompanying notes to the schedule of expenditures of federal awards.
135
$ 257,979
CITY OF LODI
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
FOR THE YEAR ENDED JUNE 30, 2014
Federal Grantor
Pass-through Grantor or Direct
Federal Program Title
U.S. Department of Transportation
Direct:
Federal Transit - Formula Grants
Federal Transit - Formula Grants
Federal Transit - Formula Grants
ARRA - Federal Transit - Formula Grants
Total Federal Transit - Formula Grants
Passed through California Department of Transportation:
Highway Planning and Construction
Highway Planning and Construction
Total Highway Planning and Construction
Passed through State of California Office of Traffic Safety
State and Community Highway Safety
State and Community Highway Safety
Passed through University of California, Berkeley:
State and Community Highway Safety
Total State and Community Highway Safety
Minimum Penalties for Repeat Offenders for Driving While Intoxicated
Minimum Penalties for Repeat Offenders for Driving While Intoxicated
Passed through University of California, Berkeley:
Minimum 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 Repeat Offenders for Driving While Intoxicated
Total U.S. Department of Transportation
Total Federal Expenditures
CFDA
Number
Grant/Project
Number
Federal
Expenditures
20.507
CA -90-Z171-00
$ 1,220,000
20.507
CA -90-Y736-00
48,819
20.507
CA-90-ZO94-00
57,660
20.507
CA -96-X052-01
102,879
1,429,358
20.205
STPL-5154(040)
653,943
20.205
RPSTPLE-5154(044)
1,107,819
1,761,762
20.600
PT1462
28,089
20.600
PT1357
1,449
20.600
SC14230
60,999
90,537
20.608
PT1357
31,742
20.608
PT1462
24,093
20.608
SC11230
17,296
20.608
AL 1160
11,457
84,588
3,366,245
$ 4,439,699
See accompanying notes to the schedule of expenditures of federal awards.
136
CITY OF LODI
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2014
NOTE 1— GENERAL
The accompanying Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2014, presents the activity of all federal award programs of
the City of Lodi, California (City). The City reporting entity is defined in Note 1 of the City's basic financial statements. All federal awards received directly
from federal agencies, as well as federal awards passed through other government agencies, are included in the SEFA.
NOTE 2 — BASIS OF ACCOUNTING
The accompanying SEFA is presented using the modified accrual basis of accounting for grants accounted for in governmental fund types and the full accrual
basis of accounting for grants accounted for in proprietary fund types, as described in Note 1 of the City's basic financial statements.
NOTE 3 — CATALOG OF FEDERAL DOMESTIC ASSISTANCE (CFDA)
The CFDA numbers included in the accompanying SEFA were determined based on the program name, review of grant contract information and Office of
Management and Budget's Catalog of Federal Domestic Assistance.
NOTE 4 — SUBRECIPIENTS
Of the federal expenditures presented in the SEFA, the City provided federal awards to subrecipients as follows:
Federal Program Title
Community Development Block Grants/
Entitlement Grants
Federal Amount Provided
CFDA Number to Subrecipients
137
14.218 $181,674
c
Sacramento
3000 S Street, Suite 300
Sacramento, CA 95816
916.928.4600
Walnut Creek
Oakland
L.AICentury City
Newport Beach
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER San Diego
MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH seatcle
GOVERNMENT AUDITING STANDARDS
The Honorable Members of City Council
City of Lodi, California
We have audited, in accordance with the 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, 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, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon
dated December 23, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine
the audit procedures that are appropriate in the circumstances 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 a 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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material
weakness, yet important enough to merit attention by those charged with governance.
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 material weaknesses or significant deficiencies and therefore, material
weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal
control over financial reporting that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the
accompanying Schedule of Findings and Questioned Costs as items 2014-001 and 2014-002 that we consider to be significant deficiencies.
138
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from 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.
City's Response to Findings
The City's responses to the findings identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs. The City's responses
were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.
Purpose of the Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an
opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
��d"Ls ocaffid Z�p
r
Sacramento, California
December 23, 2014
139
Sacramento
3000 S Street, Suite 300
�lic���
Sacramento, C94 06
"6.928.4600
Walnut Geek
Oak land
LA/Century City
Newport Beach
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER San Diego
COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Seattle
The Honorable Members of City Council
City of Lodi, California
Report on Compliance for Each Major Federal Program
We have audited the City of Lodi's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that
could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2014. 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.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit of the types of compliance
requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America;
the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB
Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform
the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and
material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements
and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal
determination of the City's compliance.
Opinion on Each Major Federal Program
In our opinion, the City complied, in all material respects, with the types of 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, 2014.
140
Report on Internal Control over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements
referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements
that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the
purpose of expressing an opinion on compliance for each major federal program 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. 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.
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 material weaknesses or significant deficiencies. We did not identify any deficiencies in internal
control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of
that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
��dvLs ocoml 1�p
Sacramento, California
December 23, 2014
141
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2014
Section I — Summary of Auditor's Results
Financial Statements:
Type of auditor's report issued: Unmodified
Internal control over financial reporting:
■ Material weaknesses identified? No
■ Significant deficiencies identified that are
not considered to be material weaknesses? Yes
Noncompliance material to financial
statements noted? No
Federal Awards:
Internal control over major federal programs:
■ Material weaknesses identified? No
■ Significant deficiencies identified that are
not considered to be material weaknesses? None reported
Type of auditor's report issued on compliance for major federal programs: Unmodified
Any audit findings disclosed that are required
to be reported in accordance with Section
510(a) of Circular A-133? No
142
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2014
Identification of major federal programs:
Federal Program Title CFDA No.
Community Development Block Grants/Entitlement Grants 14.218
Highway Planning and Construction 20.205
Dollar threshold used to distinguish
between Type A and Type B programs:
Auditee qualified as low-risk auditee?
Reference Number: 2014-001
$300,000
Yes
Section II — Financial Statement Findings
Criteria:
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
benefitting funds in the form of fees and charges.
Condition:
The City is not charging City funds their share of the City's Other Postemployment Benefits (OPEB) costs accumulating in its Benefits Internal Service Fund.
Context:
The Benefits Internal Service Fund's deficit net position balances were $1,078,724, $1,930,874, $2,934,664, $3,621,665, $3,203,516, and $3,568,267 as of June
30, 2009, 2010, 2011, 2012, 2013, and 2014, respectively.
Effect:
This condition resulted in an increase of $364,751 in the deficit net position of the Benefits Internal Service Fund during the year ended June 30, 2014.
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.
Recommendation:
Under generally accepted accounting principles, the City needs to charge City funds their share of the OPEB costs incurred in its Benefits Internal Service Fund
as opposed to limiting the charges to those costs actually paid.
143
CITY OF LODI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2014
Management Response and Corrective Action:
The City's practice of reflecting the total liability and expense of the OPEB program in the Benefits Internal Service Fund enhances transparency in reporting by
showing the impact of this reporting requirement in one location. The deficit net position 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 City Council consideration.
Reference Number: 2014-002
Criteria:
Under generally accepted accounting principles, costs directly related to the acquisition or construction of capital assets, should be capitalized and not expensed.
The City defines capital assets as assets with an initial individual cost of more than $3,000 and an estimated useful life in excess of two years.
Condition:
Transactions relating to the City's water meter capital asset project were expensed.
Cause:
The condition is a result of the timing of the City's year-end close process. The City runs a capital report identifying the City's capital asset activity and
reconciles the activity to general ledger activity to ensure all costs were captured. However, costs relating to a capital project were accrued and reported in the
general ledger subsequent to the previously mentioned reconciliation, thus project costs were improperly reported as an expense and not capitalized.
Effect:
As a result of this condition, a significant audit adjustment for the Water Fund debiting "capital assets" on the Statement of Net Position and crediting "services
and supplies" expense on the Statement of Revenues, Expenses and Changes in Net Position for $1,499,302 was recorded.
Recommendation:
The City should improve its year-end procedures for identifying capital projects to ensure proper financial reporting.
Management Response and Corrective Action:
The City is currently transitioning to a new financial system which includes capital assets and project management modules. These two modules will not only
streamline the year-end capitalization process, it will also ensure proper financial reporting of the City's capital assets.
None
Section III — Federal Award Findings and Questioned Costs
144
CITY OF LODI
SCHEDULE OF PRIOR YEAR FINDNGS AND QUESTONED COSTS
FOR THE YEAR ENDED JUNE 30, 2014
Financial Statement Findings
Reference Number: 2013-1
Criteria:
Pursuant to Subpart C, section .300(d) of Office of Management and Budget (OMB) Circular A-133, Audits, of States, Local Governments, and Non -Profit
Organizations, the auditee shall prepare appropriate financial statements, including the schedule of expenditures of federal awards in accordance with section
.310." Per Section 310(b)(3), "the schedule of expenditures of federal awards shall provide total Federal awards expended for each individual Federal program
and the Catalog of Federal Domestic Assistance (CFDA) number or other identifying number when the CFDA information is not available."
Condition:
The expenditures for the Public Safety Partnership and Community Policing Grants were not properly reported on the first draft of the schedule of expenditures
of federal award (SEFA). The City had included the matching expenditures as federal expenditures, thus overstating the federal expenditures by $238,922.
Questioned Costs:
There are no questioned costs.
Effect:
The City inaccurately prepared the SEFA by overstating federal expenditures, which required an audit adjustment to correct. In addition, the City exposed itself
to the risk of an incorrect assessment of major programs.
Cause:
It appears that there was no formal review of federal expenditures reported on the SEFA.
Recommendation:
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 Federal Audit Clearinghouse Data Collection Form (SF -SAC) pursuant to the requirements of OMB Circular A-133. The new policies and
procedures should provide staff with the proper guidelines on the reporting requirements and provide a framework for ensuring consistency and continuity in the
identification and reporting of federal expenditures.
Management Response and Corrective Action:
Staff will develop written policies and procedures as recommended. The City is also in the process of implementing a new ERP system that has a specialized
grant and project accounting system that will ensure proper reporting and tracking of all the grants received by the City.
Status:
The City's established policies and procedures to ensure an accurate SEFA is prepared. This recommendation is deemed to be implemented.
145
(This page intentionally left blank.)
CONTINUING DISCLOSURES
UNAUDITED
CONTINUING DISCLOSURE REQUIREMENTS FOR THE CITY OF LODI, THE LODI PUBLIC IMPROVEMENT CORPORATION
AND THE LODI PUBLIC FINANCING AUTHORITY
Fiscal Year 2013-14
The City of Lodi has executed Continuing Disclosure Certificates associated with the various debt issues outstanding by the Electric Utility,
Wastewater Utility, the Lodi Public Improvement Corporation and the Lodi Public Financing Authority. These Certificates were executed to satisfy
provisions of Securities and Exchange Commission Rule 15c2 -12(b) (5). The material provided herein applies to the various debt issues as
noted. Data for each utility is shown separately.
This Bond Disclosure Section included within the City's Comprehensive Annual Financial Report (CAFR) provides the information required by the
Continuing Disclosure Certificates. The CAFR, in turn, will be filed with the Municipal Securities Rulemaking Board. The CAFR may also be
found on the City's website at www.lodi.gov.
ANNUAL REPORT FOR ELECTRIC UTILITY
The Lodi Electric Utility has Continuing Disclosure requirements associated with its 2008 Series A Certificates of Participation, and 2002 Taxable
Series D Certificates of P articipation. The annual report includes, by reference, the audited financial statement of the City of Lodi (including the
Electric Utility).
The annual report also contains the following five (5) tables as required in the Certificates:
1. A table setting forth the City's power supply resources for the most recently completed fiscal year.
2. A table showing the average number of customers, sales, revenues and demand for the past five fiscal years.
3. A table showing the outstanding debt of joint powers agencies in which Lodi participates and the City of Lodi share of that debt for the most
recent fiscal year.
4. A table showing a summary of Operating Results for the past five fiscal years.
5. A table showing Lodi Electric Utility Department Rate Changes since November 1996 (applicable only to the 2002 Series C and D issues).
Reporting of Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2014, 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 impendi ng Significant Event that would
require disclosure under the provisions of the Certificates.
147
Table 1 A table setting forth the City's power supply resources.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
POWER SUPPLY RESOURCES
Source
Purchased Power (2)
Western
NCPA
Geothermal Project
Hydroelectric Project
Combustion Turbine Project No. 1
Capital Facilities, Unit One
Lodi Energy Center (6)
Contracts, Exchanges and Bilaterals(3)
Total
Total Capacity and Energy Sold at Wholesale
City System Requirement for Retail Load
Capacity
Available
Actual Energy
% of Total
(MW)(1)(4)
(MWh)
Energy
4.7
11,240
2.28%
13.3
86,893
17.64
26.2
20,753
4.21
9.4
196
0.04
19.6
1,527
0.31
26.6
117,954
23.95
70.0
254,006
51.57
169.8
492,5694) (5)
100.00%
N/A
40,916
143.2
451,653
(1) Non -coincident capacity available.
(2) Entitlements, firm allocations and contract amounts.
(3) Includes participation in NCPA/Seattle City Light exchange.
(4) Units at Backbone Output.
(5) Includes supply from exchanges and line losses.
(6) Lodi Energy Center commenced commercial operation on November 27, 2012.
Table 2 A table showing the average number of customers, sales, revenues and demand for the past five fiscal years.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
CUSTOMER SALES, REVENUE AND DEMAND
Fiscal Years Ended June 30,
2010 2011 2012 2013 2014
Number of Customers:
Residential
21,981
22,251
22,244
22,369
22,547
Commercial
3,163
2,865
2,834
2,902
2,898
Industrial
31
39
37
39
38
Other
194
229
235
246
250
Total Customers
25,369
25,384
25,350
25,556
25,733
Kilowatt -Hour (kWh) Sales:
Residential
150,811,587
144,256,683
149,814,375
151,814,834
148,762,783
Commercial
146,644,990
137,584,723
138,735,487
140,733,500
146,176,148
Industrial
125,000,860
128,072,575
135,620,441
131,473,405
130,333,102
Other
11,563,550
11,216,348
11,485,428
11,800,726
12,022,160
Total kWh sales
434,020,987
421,130,329
435,655,731
435,822,465
437,294,193
Revenues from Sale of Energy:
Residential
$ 27,642,200 $
24,513,202 $
25,606,368 $
25,377,978 $
25,270,075
Commercial
24,901,257
21,870,624
21,814,073
21,816,149
23,127,603
Industrial
15,015,036
13,914,539
14,876,828
14,173,951
14,381,296
Other
2,105,196
1,868,985
1,954,099
1,861,567
1,913,833
Total Revenues from
Sale of Energy: $ 69,663,689 $ 62,167,350 $ 64,251,368 $ 63,229,645 $ 64,692,808
Peak Demand (MW) 119.6 123.9 116.0 123.3 128.7
Excludes revenues from California Energy Commission Tax.
Sources: City of Lodi, audited annual financial statements and Customer Information System reports.
149
Table 3 A table showing the outstanding debt of joint powers agencies in which Lodi participates.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
OUTSTANDING DEBT OF JOINT POWERS AGENCIES
(Dollar Amounts in Millions)
NCPA
Geothermal Project Three
Hydroelectric Project
Capital Facilities Project Unit One
Lodi Energy Center Project
TANC
COTP
TOTAL*
Outstanding
Debt(')
Lodi's
Participation (2)
Lodi's Share of
Outstanding
Debt
$ 41.5
10.28% $
4.3
416.9
10.37
43.2
49.5
39.50
19.5
247.5
17.03
42.1
314.2
$ 1,069.6
Columns may not add to totals due to independent rounding.
1.92(3)
10.48% $
M
112.1
(1) Principal only. Does not include obligation for payment of interest on such debt.
(2) Participation obligation is subject to increase upon default of another project participant. Such increase shall not exceed, without the written
Consent of a non -defaulting participant, an accumulated maximum of 25% of such non -defaulting participant's original participation.
(3) Lodi's actual payment obligation differs slightly from this percentage due to varying shares of certain series of TANC bonds relating to each
TANC member -participant's taxable portion and each TANC member -participant's participation or non -participation in acquisition of assets from
Vernon. Effective July 1, 2014, Lodi has entered into a layoff of its COTP interest which will effectively reduce Lodi's share of outstanding debt to
$0. Lodi remains contractually obligated for its share.
Source: Northern California Power Agency.
150
Table 4 A table showing a summary of operating results for the past five fiscal years.
Operating Revenues
Rate Revenue
ECA Revenue
Other Revenue
Total Operating Revenue
Operating Expenses
Purchased Power
Non -Power Costs (Z)
Total Operating Expenses
Net Revenue Available for Debt Service
Parity Debt Service
2002 C & D, 2008 A Bonds
Total Net Debt Service
Debt Service Coverage
Remaining Revenue Available for Other Purposes
Non -Operating Revenue/Expenses
Greenhouse gas allowance
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
CITY OF LODI
ELECTRIC SYSTEM
SUMMARY OF OPERATING RESULTS
Ending Fiscal Year June 30 (Dollars in 000s)
Actual 2010 Actual 2011 Actual 2012 Actual 2013
$ 62,613
7,050
625
70,288
$ 59,676
2,491
1,140
63,307
$ 61,658
2,593
969
65,220
37,943
35,282
39,416
12,006
13,115
10,748
49,949
48,397
50,164
20,339
14,910
15,056
7,194
7,232
7,291
7,194
7,232
7,291
2.83
2.06
2.07
13,145
7,678
7,765
(6,977) (6,977) (6,977)
6,168 701 788
13,854
5,877
6,168
$ 25,899
25,899 28,455
1,854 1,141
701 788
$ 28,454 $ 30,384
$ 61,888
1,341
745
63,974
39,191
12,018
51,209
12,765
8,414
8,414
1.52
4,351
2,018
(6,977)
(608)
30,384
1,306
(608)
$ 31,082
Actual 2014
$ 61,837
2,856
2,451
67.144
37,303
13,046
50,349
16,795
8,356
8,356
2.01
8,439
453
(6,977)
1,915
31,082
942
1,915
$ 33,939
Source: City of Lodi
(1) As defined in the Installment Purchase Contract, this may or may not be on the same basis as Generally Accepted Accounting Principles.
(2) Non -power costs include cost of services provided by other departments and does not include depreciation and amortization expense.
151
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
July 2013 Established Electric Vehicle and Industrial Equipment Charging Rates
April 2009 Established Economic Development Rates updated July 2013
December 2007 Established Solar Initiative Surcharge of $0.00125 per kilowatt-hour
August 2007 Implemented monthly Energy Cost Adjustment
December 2005 Average 17% increase across all rate classes
December 2002 4.5% average rate increase
August 2001 Increased MCA for all but contract customers: 10% to 12% rate change
June 2001 Implemented MCA for residential and small commercial: 8% to 10% rate change
December 1998 5.00% rate decrease for small commercial/industrial customers
May 1998 2.50% general rate increase to fund public benefit programs
September 1997 4.5 to 5.5 cents per kilowatt-hour, non -demand, non -time -use, contract rate available for new large
commercial/industrial loads
December 1996 10% to 40% economic development discount on new small to medium commercial/industrial electric loads
November 1996 Economic Stimulus Rate Credit increased to 1.262 cents per kilowatt-hour from 0.4 cents per
kilowatt-hour for largest primary service customers (estimated 19% reduction)
Source: City of Lodi.
152
ANNUAL REPORT FOR WASTEWATER UTILITY
The Lodi Wastewater Utility has Continuing Disclosure requirements associated with its 2004 Series A Certificates of Participation, 2007 Series A
Certificates of Participation and the 2012 Refunding Wastewater 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 user for the most recent fiscal year (applicable only to the 2004 Series
A issue).
3. A table showing the largest users by service charge revenues for the most recent fiscal year.
4. A table showing a schedule of service charges.
5. A table showing a summary of historic operating results and debt service coverage for the past five fiscal years.
Additionally, the Certificate for the 2007 Series A issue requires a description of any additional indebtedness incurred during the prior fiscal year
which is payable from the system net revenues on a parity with the installment payments.
Reporting of Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2014, 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.
153
Table 1 A table setting forth the City's number of connections by user type for the past five fiscal years.
User Type
Residential
Commercial/Industrial
Total All Users
Source: City of Lodi
City of Lodi
Wastewater System
Number of Connections by User Type
as of June 30
and Percentage of Fiscal Year 2013-14 Service Charge Revenue by User Type
% of FY 13/14
Service Charge
2010 2011 2012 2013 2014 Revenue
21,974 21,956 21,864 21,959 22,076
1,768 1,785 1,819 1,851 1,851
23,742 23,741 23,683 23,810 23,927
154
76%
24%
100%
Table 2 A table showing the proportion of service charge revenue by class of user for the most recent fiscal year.
City of Lodi
Wastewater System
Proportion of Service Charge Revenues by Class of User
Fiscal Year 2013-14
Percentage of Total Annual Service
User Type Charge Revenue
Single Family
Residential
Multiple Family Residential
Commercial/Industrial
Total
Source: City of Lodi
155
60%
16%
24%
100%
Table 3 A table showing the largest users by service charge revenue for the most recent fiscal year.
User
Cottage Bakery
Lodi Unified School District
General Mills
City of Lodi
Miller Packing Company
Lodi Memorial Hospital
Blue shield of California
Archer Daniels Midland
Pacific Coast Producers
Del Castillo Foods
Total top ten users
Total System
City of Lodi
Wastewater System
Largest Users by Service Charge Revenues
Fiscal Year 2013-14
Type of Business
Specialty bakery, frozen dough
K-12, adult education
Cereals, bread mixes, snack foods
Government
Hot dog producer
Health Care
Health Insurance
Agricultural processor
Private label fruit canning
Tortilla producer
156
Service Charge
Revenue
520,249
308,227
269,177
65,439
44,076
41,123
38,217
30,744
29,496
20,882
1,367,630
14,305,093
Percentage of
Total
Annual Service
Charge Revenue
3.64%
2.15
1.88
.46
.31
.29
.27
.21
.20
.15
9.56%
100.00%
Table 4 A table showing the schedule of service charges.
For Residential Users (per month):
1 Bedroom ..............................
2 Bedrooms ............................
3 Bedrooms ............................
4 Bedrooms ............................
5 Bedrooms ............................
6 Bedrooms ............................
7 Bedrooms ............................
For Commercial/Industrial Users:
Moderate Strength (annual per Sewage Service Unit (SSU)......
High Strength:
Flow (annual per MG) ............................................
BOD (annual per 1,000 lbs.) ....................................
SS (annual per 1,000 lbs.) .....................................
Grease Interceptor/Septic Holding Tank Waste within
City Limits (per 1,000 gal.) .....................................
Septic Holding Tank Waste Outside City Limits (per
1,000 gal.)...........................................................
Disposal to Storm Drain System (per MG) .................
Disposal to Industrial System:
Flow (per MG, annual basis) ....................
BOD (per 1,000 lbs., annual basis)............
Winery Waste (per 1,000 gallons) ............................
City of Lodi
Wastewater System
Schedule of Wastewater Service Charges
Service Charge Service Charge
(effective July (effective July
1, 2010) 1, 2011
157
Service
Service
Charge
Charge
(effective July
(effective July
1, 2012)
1, 2013)
$23.30
$24.47
$25.20
$25.83
31.07
32.62
33.60
34.44
38.84
40.78
42.00
43.05
46.61
48.93
50.40
51.66
54.37
57.09
58.80
60.27
62.14
65.24
67.20
68.88
69.91
73.40
75.60
77.49
$372.84
$391.44
$403.20
$413.28
3,145.95
3,303.25
3,402.35
3,487.41
519.16
545.12
561.47
575.51
324.61
340.84
351.07
359.85
274.89
288.63
297.29
304.72
583.55
612.73
631.11
646.89
288.74
303.18
312.28
320.09
2,485.03
2,609.28
2,687.56
22.78
23.92
24.64
278.35
292.27
301.01
301.04
Table 5 A table showing historic operating results and debt service coverage for the past five fiscal years.
Operating Revenues
Charges for Services
Non -Operating Revenues
Interest Income
Rent
Other
Total System Revenues
Operating Expenses
Personnel services
Supplies, Materials and services
Utilities
Total Operating Expenses
System Net Revenues
Parity Debt Service
2003 Installment Payments
2004 Installment Payments
2007 Installment Payments
2012 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 2009-10 through 2013-14
2009-10 2010-11 2011-12 2012-13
$11,513,389
$13,089,679
$13,280,216
$13,747,216
298,337
220,600
216,108
301,347
472,578
3,198,194
290,819
256,868
12,284,304
16, 508,473
13, 787,143
14,305,431
2,800,891
3,257,618
3,130,012
3.089,930
2,532,246
1,955,464
2,818,041
1,900,710
847,167
758,934
710,622
683,508
6,180,304
5,972,016
6,658,675
5,674,148
6,104,000
10,536,457
7,128,468
8,631,283
381,400
381,393
379,170
381,122
2,138,700
2,147,600
2,139,350
1,705,213
1,631,500
1,588,750
1,599,050
1,598,950
374,519
4,151,600
4,117,743
4,117,570
4,059,804
1.47
2.56
1.73
2.13
1,451,478
1,451,480
(778,092)
1,451,480
1,451,478
1,451,480
(778,092)
1,451,480
$500,922
$4,967,234
$3,788,990
$3,119,999
158
2013-14
$14,305,093
427,308
453,798
15,186,199
3,215,190
2,145, 745
642,508
6,003,443
9,182,756
3,280,111
98,321
1,603,550
1,921,700
6,903,682
1.33
1,318,000
1,318,000
$961,072
Additional Indebtedness
The Wastewater Utility did not incur any additional indebtedness during the 2013-14 fiscal year which is payable from the system net revenues on a
parity with the installment payments.
159
ANNUAL REPORT FOR THE LODI PUBLIC IMPROVEMENT CORPORATION AND THE LODI PUBLIC FINANCING AUTHORITY
The Lodi Public Improvement Corporation and the Lodi Public Financing Authority have Continuing Disclosure requirements associated with its
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, 2014, none of the specified events have occurred.
Further, there is no knowledge on the part of the City Council, officers or employees of the City of any impending Significant Event that would
require disclosure under the provisions of the Certificates.
Table 1 A table setting forth the approved budget and actual results for the most recent fiscal year.
Please refer to the Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual on page 79 of this Comprehensive
Annual Financial Report.
160
Table 2 A table showing the comparative statements of revenue, expenditures and changes in fund balance for the general fund for the
past five fiscal years.
Revenues:
Taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines, forfeits and penalties
Investment and rental income
Miscellaneous revenue
Total revenues
Expenditures:
Current:
General government
Public protection
Public works
Library
Parks and recreation
Debt service:
Interest and fiscal charges
Principal payments
Total expenditures
Deficiency of revenues under expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GENERALFUND
2010
23,118,461
72,171
7,772,071
1,343,199
1,441,354
516,304
462,592
34,726,152
6,411,741
23,854,905
1,471, 779
1,322,052
2,234,349
12,578
135,425
35,442,829
(716,677)
5,367,983
(4,632,278)
1,235,705
519,028
3,766,188
4,285,216
LAST FIVE YEARS
161
2011
23,061,164
83,395
10,032,523
1,035,220
1,404,307
455,923
480,028
36,552,560
6,478,159
24,091,472
1,421,238
1,357,473
2,191,102
6,427
141,576
35,687,447
865,113
5,379,186
(4,383,110)
3,021,628
1,861,189
4,285,216
6,146,405
2012
22,928,438
79,745
10,449,364
682,156
1,355,101
807,270
286,125
36, 588,199
6,007,327
24, 923,155
1,112, 569
1,380,972
34, 830, 336
3,164,176
5,370,230
(8,391,858)
996,076
142,548
6,146,405
6,288,953
2013
23,022,370
62,582
10,531,871
1,105,178
1,628,870
979,100
393,299
37,723,270
5,943,192
25,920,654
1,555,833
1,410,657
2014
23,718,396
83,420
11, 319, 708
1,025,851
1,552,531
1,548,787
352,331
39,601,024
6,482,226
26,470,110
1,554,939
1,267,850
33,424,023 35,775,125
2,892,934 3,825,899
5,367,990
(6,584,665)
1,216,675
1,676,259
6,288,953
7,965,212
3,952,000
(6,269,351)
(2,317,351)
1,508,548
7,965,212
9,473,760
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 115.
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 118.
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 117.
Table 6 A table showing the Employee -paid and City -paid employee portion of 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, 2014
Emolovee Paid*
7.0%
7.0
7.0
7.0
9.0
9.0
7.0
7.0
7.0
0.0
9.0
9.0
7.0
*PEPRA Miscellaneous Employees 6.75
*PEPRA Safety Employees 11.25
162
City Paid Total Employee Share
% 7.0%
7.0
7.0
7.0
9.0
9.0
7.0
7.0
7.0
7.0 7.0
9.0
9.0
7.0
6.75
11.25
ANNUAL REPORT FOR WATER UTILITY
The Lodi Water Utility has Continuing Disclosure requirements associated with its 2010 Series A and B Certificates of Participation. The annual
report includes, by reference, the audited financial statement of the City of Lodi (including the Water Utility).
The annual report also contains the following four (4) tables as required in the Certificates:
1. A table setting forth the City's number of accounts and revenues by user type for the past five fiscal years.
2. A table showing the largest users by service charge revenues for the most recent fiscal year.
3. A table showing a schedule of selected rates effective January 1, 2014.
4. A table showing a summary of historic operating results and debt service coverage for the past five fiscal years.
Additionally, the Certificate for the 2010 Series A issue requires a description of any additional indebtedness incurred during the prior fiscal year
which is payable from the system net revenues on a parity with the installment payments.
Reporting of Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2014, 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.
163
Table 1 A table showing number of accounts and revenues by user type.
CITY OF LODI
WATER SYSTEM
Number of Accounts and Revenues by User Type
Commercial/Industrial/
Municipal
Year Ending
Number of
December 31
Accounts
2007
1,445
2008
1,470
2009
1,382
2010
1,383
2011
1,396
2012
1,432
2013
1,415
Source: City of Lodi
Residential
Number of
Revenue
Accounts
Revenue
$ 2,043,731
21,533
$ 8,715,928
2,184,496
21,449
9,429,594
2,188,486
21,577
9,600,129
2,097,001
21,622
9,604,412
2,169,967
21,593
9,706,537
2,329,957
23,399
8,411,315
2,436,777
21,717
10,353,374
164
Table 2 A table showing the largest users by service charge revenue for the most recent fiscal year.
User
Lodi Unified School District
City of Lodi
Pacific Coast Producers
General Mills
Cottage Bakery
Lodi Memorial Hospital
Temple Baptist Church
Miller Packing Company
Blue Shield of California
Wine & Roses
Subtotal Top Ten Users
TOTALSYSTEM
City of Lodi
Water System
Largest Users by Service Charge Revenues
Fiscal Year 2013-14
Type of Business
K-12, adult education
Government
Private label fruit canning
Cereals, bread mixes, snack foods
Specialty bakery, frozen dough
Health care
Church
Hot dog producer
Health insurance
Hotel and restaurant
165
Service Charge
Revenue
$ 271,502
222,929
92,193
77,319
62,581
46,142
18,746
14,855
12,240
11,490
$ 829,997
$ 12,756,076
Percentage of
Total
Annual Service
Charae Revenue
2.13%
1.75
0.72
0.61
0.49
0.36
0.15
0.12
0.09
0.09
6.51%
100.00%
Table 3 A table showing selected rates effective January 1, 2014.
CITY OF LODI
WATER SYSTEM
Selected Rates Effective January 1, 2014
Percent Increase Current
Flat Rates ($/month)
Single Family Residential Unit ($/month)
1 Bedroom $30.65
2 Bedroom $36.81
3 Bedroom $44.12
Metered Water Rates
Service Charge ($/month)
Single Family Residential
Up to 3/4" Meter
$24.37
Multi -Family and Non -Residential
1" Meter
$24.37
1 1/2" Meter
$61.75
2" Meter
$77.15
Water Usage rates ($/CCF)
Single Family Residential
Tier 1 - 0 to 10 CCF/month
$0.94
Tier 2 - 11 to 50 CCF/month
$1.41
Tier 3 - Over 50CCF/month
$1.87
Multi -Family and Non -Residential
All Water Usage
0.94
Source: City of Lodi.
166
Table 4 A table showing historic operating results and debt service coverage for the past five fiscal years.
CITY OF LODI
WATER SYSTEM
Historical Operating results and Debt Service Coverage
Fiscal Years 2009-10 through 2013-14
2009-10 2010-11 2011-12 2012-13
Gross Revenues
Water Sales (1) $ 11,715,748
Investment Earnings 103,640
Water Impact Mitigation Fees 270,863
Meter Retrofit Installation Charges
Other Revenues 1I
372,034
Total Gross Revenues
12,462,285
Operating and Maintenance Expenses
Debt Service Coverage
Personnel Services (3)
1,325,536
Supplies, Materials and Services (3)
1,981,880
New Treatment Plant Operations (net)
31.09 3.67
Utilities
733,653
Administrative Overhead
1,060,122
Total O & M Expenses
5,101,191
Net Revenue Available for Debt Service
7,361,094
Debt Service
11,940,022
83,374
14,803
1,653,399
359,979
14,051,577
1,359,227
2,590,222
652,296
1,060,122
5,661,865
8,389,712
12,083,226
119,526
111,429
675,815
285,093
13,275,089
1,856,131
1,781,622
693,657
1,060,120
5,391,530
7,883,559
12,441,039
67,892
2,529
585,965
269,335
13,366,850
2,272,568
2,882,547
683,635
1,060,120
6,898,870
6,467,980
2013-14
12,756,076
118,799
60,000
405,677
825,314
14,165,866
2,392,611
3,014,227
648,233
780,000
6,835,071
7,330,795
1991 California DWR SRF loan `"' 228,025 1,433,395
2010 Bonds (5) 849,968 2,304,811 2,335,360 2,355,230
Total Net Debt Service 228,025 2,283,363 2,304,811 2,335,360 2,355,230
Debt Service Coverage (S)
Debt Service Coverage
32.28 3.67
3.42
2.77
3.11
Debt Service Coverage
(excluding impact mitigation fees)
31.09 3.67
3.37
2.77
3.09
Net Remaining Revenues Available for Capital
7,133,069 6,106,349
5,578,748
4,132,620
4,975,566
Capital Improvement Projects
Meter Retrofit Program (7)
919,555
6,325,558
6,536,687
6,891,350
167
Other Water System Improvements (8)
3,932,424
3,666,202
540,832
1,144,363
380,675
Total Capital Improvement Projects
3,932,424
4,585,757
6,866,390
7,681,050
7,272,025
Net Change in Reserve
3,200,645
1,520,592
(1,287,639)
(3,548,520)
(2,296,459)
Water Enterprise Fund (9)
Beginning Cash Balance
13,469,170
14,120,605
12,807,412
12,465,350
9,044,659
Ending Cash Balance
$ 14,120,605
12,807,412
12,465,350
9,044,659
7,027,567
(1) Water sales reflect Council -adopted rate increases of 2.5% effective January 1, 2014.
(2) Includes rent, sales of City property, discounts, water reimbursements, and damage to property, water tap fees, DBCP reimbursements,
and other miscellaneous revenues. DBCP re imbursements are expected to decline be ginning in Fiscal Year 201 2-13 as new plant
becomes operational and groundwater draws diminish. PCE/TCE litigation revenues are excluded from Fiscal year 2005-06 through 2009-
10. Fiscal year 2009-10 reflects one-time adjustments from prior years.
(3) PCE/TCE litigation expenses are excluded from Fiscal Year 2006-07 through Fiscal year 2010-11.
(4) Debt service on 1991 Loan was paid off in full on October 1, 2010.
(5) Reflects total debt service for the 2010 Water Revenue Bonds net of the 35% interest rate subsidy for the Series 2010B bonds.
(6) Coverage calculated based on Net Revenues divided by net Debt Service and Net Revenues less mitigation fees divided by Net Debt
Service.
(7) Annual capital costs of transition to water meters. Program expected to be completed in Fiscal Year 2017-18.
(8) Excludes costs of the Project to be funded from proceeds of the Series 2010 Bonds.
(9) Water Enterprise Fund balance includes both operating and capital reserves and is presented on a cash basis. Cash position is expected
to increase substantially upon completion of the water meter installation program.
Source: City of Lodi
J.
13
-n
i'1
CITY OF LODI
Independent Accountant's Report on
Applying Agreed -Upon Procedures
For Appropriations Limit
For the Fiscal Year Ended June 30, 2014
Certified Public Accountants.
Sacramento
3000 S Street, Suite 300
Certified ftbHc �_- �+ Sacramento, CA 95815
4 �i 916.428.450a
Walnut Creek
Oakland
LA/Century City
INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON Newport Beach
PROCEDURES RELATED TO THE ARTICLE XIII -B San Diego
APPROPRIATIONS LIMIT CALCULATION
Seattle
City Council
Lodi, California
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, 2014. These
procedures, which were agreed to by City management and the League of California Cities (as presented
in its publication entitled Article XIII -B Appropriations Limitations Uniform Guidelines), were performed
solely to assist the City in meeting the requirements of Section 1.5 of Article XIII -B of the California
Constitution. The City's management is responsible for the Appropriations Limit Worksheet. This
agreed-upon procedures engagement was conducted in accordance with attestation standards established
by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely
the responsibility of those parties specified in this report. Consequently, we make no representation
regarding the sufficiency of the procedures described below either for the purpose for which this report
has been requested or for any other purpose.
The procedures performed and our findings were as follows:
We obtained the completed worksheets setting forth the calculations necessary to establish
the City's appropriations limit and compared the limit and annual adjustment factors included
in those worksheets to the limit and annual adjustment factors that were adopted by resolution
of the City Council. We also compared the population and inflation options included in the
aforementioned worksheets to those that were selected by a recorded vote of the City
Council.
Finding: No exceptions were noted as a result of this procedure.
2. For the accompanying Appropriations Limit Worksheet, we added the appropriations limit
for the fiscal year ended June 30, 2013 to the annual adjustment amount, and compared the
resulting amount to the appropriations limit for the fiscal year ended June 30, 2014.
Finding: No exceptions were noted as a result of this procedure.
We compared the current year information presented in the accompanying Appropriations
Limit Worksheet to the worksheets described in procedure No. 1 above.
Finding: No exceptions were noted as a result of this procedure.
www rngocpacom
4. We agreed the appropriations limit for the fiscal year ended June 30, 2013 presented in the
accompanying Appropriations Limit Worksheet to the appropriations limit for the fiscal year
ended June 30, 2013 adopted by the City Council.
Finding: No exceptions were noted as a result of this procedure.
We were not engaged to, and did not, conduct an audit, 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
September 29, 2014
2
CITY OF LODI
APPROPRIATIONS LIMIT WORKSHEET
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
Appropriation Limit for the fiscal year ended June 30, 2013, as adopted
Adjustment factors:
Population factor, fiscal year ended June 30, 2014, as adopted
Inflation factor, fiscal year ended June 30, 2014, as adopted
Adjustment factor for the fiscal year ended June 30, 2014
Annual adjustment
$81,450,625
1.0057
1.0512
1.05719
4,658,311
Appropriation Limit for the fiscal year ended June 30, 2014, as adopted $86,108,936
CITY OF LODI, CALIFORNIA
Report to City Council
For the Year Ended June 30, 2014
Certified Public Accountants.
CITY OF LODI, CALIFORNIA
Report to City Council
For the Year Ended June 30, 2014
Table of Contents
Page(s)
TransmittalLetter.......................................................................................................................................... 1
Required Communications.........................................................................................................................2-4
Status of Prior Year Recommendations..................................................................................................... 5-6
Sacramento
3000 S Street, Suite 300
CAftbHc Sacramento, CA 95816
�aa��aa 916.426.4600
Walnut Creek
Oakland
City COU11C11
LAICentury City
City of Lodi, California Newport Beach
San Diego
We have audited the financial statements of the governmental activities, the business -types activities,
each major fund, and the aggregate remaining fund information of the City of Lodi, California (City), as 5eatt�@
of and for the year ended June 30, 2014, and have issued our report thereon dated December 23, 2014.
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 Audit Service Plan presented to you on June 26, 2014. 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.
In planning and performing our audit of the financial statements of the City as of and for the year ended
June 30, 2014, 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) to determine the audit
procedures that are appropriate in the circumstances 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.
During our audit for the year ended June 30, 2014, 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 23, 2014, 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 23, 2014.
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.
�p,ts g1h; e", 01c6moll 1�p
Sacramento, California
December 23, 2014
www.mgocpacom
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications
For the Year Ended June 30, 2014
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 to the financial statements. As described in
Note 1, the City adopted the provisions of Governmental Accounting Standards Board (GASB) Statement
No. 65 Items Previously Reported as Assets and Liabilities. We noted no transactions entered into by the
City during the year for which there is a lack of authoritative guidance or consensus. All significant
transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the City's financial statements
were:
• The self-insurance liability is based on the development of amounts from various consultants'
actuarial studies.
• The pollution remediation obligation is based upon estimated cash flows determined by an
engineering consultant's remedial action plan.
• The actuarial pension data contained in Note 9 to the financial statements and required
supplementary information (unaudited) is based on actuarial calculations performed in
accordance with the parameters set forth in GASB Statement No. 50 and GASB Statement No.
27, Accounting for Pensions by State and Local Government Employers.
• The actuarial data for other postemployment benefits contained in Note 10 to the financial
statements and required supplementary information (unaudited) is based on actuarial calculations
performed in accordance with GASB Statement No. 45, Accounting and Financial Reporting by
Employers for Postemployment Benefits Other Than Pensions.
We evaluated the key factors and assumptions used to develop these estimates in determining that they
are reasonable in relation to each opinion unit's financial statements.
The financial statements disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Management has corrected all such misstatements. In addition, none of the misstatements detected as a
result of audit procedures and corrected by management were material, either individually or in the
aggregate, to each opinion unit's financial statements.
2
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications (Continued)
For the Year Ended June 30, 2014
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 23, 2014.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves
application of an accounting principle to the governmental unit's financial statements or a determination
of the type of auditor's opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the City's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
Other Matters
We applied certain limited procedures to Management's Discussion and Analysis, the Schedules of
Funding Progress for the Pension Plan and OPEB Plan, and the Schedule of Revenues, Expenditures and
Changes in Fund Balance — Budget and Actual — for the General Fund, which are required supplementary
information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries
of management regarding 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 did not audit the RSI and
do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the combining and individual nonmajor fund financial statements and
schedules and the schedule of expenditures of federal awards, which accompany the financial statements
but are not RSI. With respect to this supplementary information, 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 to the financial statements themselves.
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications (Continued)
For the Year Ended June 30, 2014
We were not engaged to report on the introductory, statistical, and continuing disclosure sections, which
accompany the financial statements but are not RSI. We did not audit or perform other procedures on this
other information and we do not express an opinion or provide any assurance on them.
4
CITY OF LODI, CALIFORNIA
Report to City Council
Status of Prior Year Recommendations
For the Fiscal Year Ended June 30, 2014
The following is a summary of the status of prior years' recommendations.
FROM YEAR ENDED JUNE 30, 2005
INFORMATION TECHNOLOGY (IT)
Computer Operations — Disaster Preparedness/Business Continuity Plans
Condition
The City currently has no disaster preparedness or business continuity plans in place.
Recommendation
The City should work to develop a comprehensive disaster preparedness and business continuity plan.
The plan, upon completion, should be thoroughly tested and provisions made for periodic reviews of the
plan.
Current Year Status
The City continues to perform 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. However, the City does not adhere to best practices recommended that the backup
tapes be stored at least 20 miles from the primary data center.
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.
The City is in the process of implementing the recommendation, and therefore the recommendation has
not been fully implemented.
Current Year Management Response
City financial systems are being transitioned to Tyler Technologies, Inc. Munis software. Core financials
went live in November 2014 and the remaining functionality, including utility billing will be live by the
end of calendar year 2015. The City has contracted with Tyler Technologies, Inc. for backup and disaster
recovery services. As each component of the new system is brought live, it is included in the backup
process. As a result, by the end of calendar 2015 the City will have all of its financial systems backed up
off-site with full disaster recovery capability.
CITY OF LODI, CALIFORNIA
Report to City Council
Status of Prior Year Recommendations (Continued)
For the Year Ended June 30, 2014
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 ME 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 Management Response
The City is in the process of implementing a new financial system which includes a fixed asset module.
This will resolve the current issues resulting from the manual recording of capital assets and manual
calculation of depreciation.
0
2013/14 Comprehensive
Annual Financial Report
City Council
January 7,, 2015
Auditor's Opinion
❑ City engaged an independent auditor
through a competitive process
❑ Macias, Gini, O'Connell,
the City aclean' opinion
LLP has
given
� ror Lne 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 $9,133,366
❑ Includes $182,,490 for Library
❑ About $1.4 million higher than projected for
budget purposes
❑ 20.5% of General Fund revenues for
2014/15
■ Fully funds Catastrophic Reserve (8%)
■ Fully funds Economic Reserve (8%)
■ Surplus reserve amount of $1,918,708
3
Status of City's Financial Position
Highlights of Financial Records
❑ General Fund (cont.)
■ Budget to Actual Variances
❑ Revenues $1.3 million higher than budget
■ Sales taxes up about $454,000
■ Property taxes up about $158,000
■ Business license taxes up about $98,000
■ Franchise fees up about $113,000
■ Rent of City property up about $86,000
■ Transient Occupancy Tax up about $84,000
■ Late payment/re-connection fees up about $346,000
■ Police hiring grant down about $125,000
n
Status of City's Financial Position
Highlights of Financial Records
❑ General Fund (cont.)
■ Budget to Actual Variances (cont.)
❑ Expenditures about $1.1 million under
budget
■ Salary and Benefits savings of about $860,000
■ Service and Supply savings of about $240,000
5
Single Audit
❑ No questioned costs
❑ No material weaknesses in internal
controls
❑ Significant deficiencies identified
■ Benefits Fund deficit related to OPEB
■ Audit adjustment related to capitalizing
certain Water Meter program expenses
0
Management Letter
❑ Review of City's Internal controls
■ No new findings
❑ Prior year findings
■ 2 remain open
❑ IT disaster preparedness plan needs to be fully
tested
■ Backup and disaster recovery with Tyler Technologies
❑ Fixed asset module implementation
■ Tyler module targeted to be live by end of March 2015
Questions?