HomeMy WebLinkAboutAgenda Report - February 15, 2017 I-01TM
CITY OF LODI
COUNCIL COMMUNICATION
AGENDA ITEM
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AGENDA TITLE Receive and File City's Comprehensive Annual Financial Report (Fiscal Year
2015/16) by Macias, Gini & O'Connell, LLP
MEETING DATE: February 15, 2017
PREPARED BY: Ruby R. Paiste, Financial Services 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 2015/16:
• The Combined Comprehensive Annual Financial & Single Audit
Report
• Report to Council
• 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 & 0' Connell, LLP
(MGO) issued an "unqualified opinion." Scott Brunner, Director of MGO will be present to answer
questions during the Council meeting.
The reports will be provided to federal and State oversight agencies, bond trustees and insurance
companies for their review and evaluation. Copies of the reports are provided to the City Council and
also available to the public by contacting the Financial Services Division or the City's website at
www.lodi.gov and at the Lodi Public Library.
The City received a Certificate of Achievement for Excellence in Reporting from the Government Finance
Officers Association of United States and Canada (GFOA) for the 23rd year. A copy of the GFOA
certificate is included in the 2015/16 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.
Funding Available: Not applicable.
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Ry R. Paiste
Financial Services Manager
APPROVED:
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, City Manager
CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2016
CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Year Ended June 30, 2016
MARK CHANDLER, MAYOR
DOUG KUEHNE, 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
Derrick Cotten, Supervising Accountant
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INTRODUCTORY SECTION
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2016
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents
Letter of Transmittal v
Certificate of Achievement for Excellence in Financial Reporting xiii
Organization Chart of the City of Lodi xiv
Directory of Officials and Advisory Bodies xv
FINANCIAL SECTION
Independent Auditor's Report 1
MANAGEMENT'S DISCUSSION AND ANALYSIS 3
BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements:
Statement of Net Position 17
Statement of Activities 18
Fund Financial Statements: 19
Balance Sheet—Governmental Funds 23
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 24
Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 25
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances
of Governmental Funds to the Statement of Activities 26
Statement of Net Position — Proprietary Funds 27
Statement of Revenues, Expenses and Changes in Net Position — Proprietary Funds 28
Statement of Cash Flows — Proprietary Funds 29
Statement of Fiduciary Net Position —Fiduciary Funds 31
Statement of Changes in Fiduciary Net Position - Private -Purpose Trust Funds 32
Notes to Basic Financial Statements 33
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in Net Pension Liability and Related Ratios - Miscellaneous Plan 91
Schedule of Changes in Net Pension Liability and Related Ratios - Safety Plan 92
Schedule of Pension Contributions 93
Schedule of Funding Progress — OPEB Plan 94
Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — General Fund 95
Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — Streets Fund 96
Note to the Required Supplementary Information 97
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Combining Balance Sheet — Nonmajor Governmental Funds 99
Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds 100
Nonmajor Governmental Funds - Special Revenue Funds 101
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2016
TABLE OF CONTENTS - continued
Combining Balance Sheet —Nonmajor Governmental Funds — Special Revenue Funds 103
Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds — Special Revenue Funds 104
Schedules of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual — Nonmajor Governmental Funds — Special Revenue Funds 105
Nonmajor Governmental Funds - Capital Project Funds 111
Combining Balance Sheet — Nonmajor Governmental Funds — Capital Project Funds 112
Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds — Capital Project Funds 113
Internal Service Funds 115
Combining Statement of Fund Net Position - Internal Service Funds 116
Combining Statement of Revenues, Expenses and Changes in Fund Net Position — Internal Service Funds 117
Combining Statement of Cash Flows - Internal Service Funds 118
Combining Statement of Fiduciary Net Position - Private -Purpose Trust Funds 119
Combining Statement of Changes in Fiduciary Net Position - Private -Purpose Trust Funds 120
Statement of Changes in Assets and Liabilities - Agency Fund 121
STATISTICAL SECTION (UNAUDITED) 123
Government -wide information:
Net Position by Component - Last Ten Fiscal Years 124
Changes in Net Position - Last Ten Fiscal Years 125
Fund information:
Fund Balances, Governmental Funds - Last Ten Fiscal Years 127
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 128
Tax Revenues by Source, Governmental Funds - Last Ten Fiscal Years 130
Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 131
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 132
Principal Property Taxpayers -Current Year and Nine Years Ago 133
Property Tax Levies and Collections - Last Ten Fiscal Years 134
Electricity Sold by Type of Customer - Last Ten Fiscal Years 135
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 136
Ratios of General Bonded Debt Outstanding- Last Ten Fiscal Years 137
Legal Debt Margin Information - Last Ten Fiscal Years 138
Direct and Overlapping Governmental Activities Debt 139
Pledged -Revenue Coverage - Last Ten Fiscal Years 140
Demographic and Economic Statistics - Last Ten Fiscal Years 143
Principal Employers - Current Year and Nine Years Ago 144
Full -Time Equivalent City Government Employees By Department - Last Ten Fiscal Years 145
Operating Indicators by Function/Program/Department - Last Ten Fiscal Years 146
Capital Asset Statistics by Function/Program/Department - Last Ten Fiscal Years 148
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CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2016
TABLE OF CONTENTS - continued
SINGLE AUDIT REPORTS
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 151
Independent Auditor's Report on Compliance for the Major Federal Program and on Internal Control over Compliance Required by the Uniform Guidance 153
Schedule of Expenditures of Federal Awards 155
Notes to the Schedule of Expenditures of Federal Awards 157
Schedule of Findings and Questioned Costs 158
Schedule of Prior Year Finding and Questioned Costs 160
CONTINUING DISCLOSURES (UNAUDITED)
Annual Report for Electric Utility 163
Annual Report for Wastewater Utility 169
Annual Report for the Lodi Public Financing Authority 176
Annual Report for Water Utility 179
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CITY COUNCIL
DOUG KUEHNE, Mayor
ALAN NAKANISHI,
Mayor Pro Tempore
COUNCILMEMBERS:
MARK CHANDLER
BOB JOHNSON
JOANNE MOUNCE
January 26, 2017
STEVE SCHWABAUER
CITY OF LODI City Manager
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
of the City of Lodi:
JENNIFER FERRAIOLO
City Clerk
JANICE MAGDICH
City Attorney
The Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 2016, 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,
2016, in conformity with accounting principles generally accepted in the United States of America (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 auditor's 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. Elections are held
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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 63,219 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.
The primary challenge facing the City stems from the PERS funding crisis. Staff estimates that its PERS bill will increase from approximately $10
million per year to between $18.2 million and $19.6 million over the next seven years if PERS fully implements its current laddered strategy to
address losses from 2009, decreases in their assumed discount rate and increases in life expectancy rates. This year reflects the City's first and
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important steps in addressing its unfunded PERS liability by Council's action to establish a PERS Stabilization Fund to receive initial funding of 80%
of the balance of reserves in excess of the General Fund Reserve Requirement. Initial funding for the reserve will total $2,830,210.
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.
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 aspirational goals, objectives and major projects that support and re -enforce the City's
mission statement. Council then set project specific goals at a series of workshops in 2016.
1). Aspirational Goals
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 for a Balanced Community
Enhance Access through Implementation of Information Systems Strategic Plan
Promote Urban Forestry
Attract, Retain and Invest in a Quality City Work Force
Encourage Public Arts, Cultural and Recreational Opportunities
Provide Appropriate and Sufficient City Facilities
Develop Short and Long Range Operational Plans
Develop Effective Records Management Program
Promote Commercial/Industrial Base
2). Project Specific Goals
Provide Employee Training and Education
Evaluate Telecommunications Opportunities
Provide Resources to Maintain City's Infrastructure
Promote Public Relations and Marketing Efforts
Ensure Open and Accessible Public Meetings
Pursue Efforts to be Entrepreneurial
Improve Customer Service
Continue to use Partnerships to Advance City's Objectives
Provide a Balanced Budget and Adhere to Adopted Policies
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. Council set the following priorities and categories in 2016:
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Economic development for "shovel ready" land
Economic development and incentive program to focus on underutilized parcels
Public Safety, Gang Reduction Intervention Program, training and increase in staffing
Fiscal sustainability, asset preservation, CALPERS and Other Post -Employment Benefits
East side rehabilitation, incentive programs and infrastructure
Additional priorities that did not fit into the above categories include 1) addressing homelessness issues, 2) providing downtown Wi-Fi and music
and 3) beautification of highway overpasses.
As discussed above, economic revitalization continued to be an active focal point of the City in 2015-16. The following projects are underway and
will see significant progress or be completed in 2017.
Harney Lane Union Pacific Railroad Grade Separation (UPRR)
This project consists of widening and realignment of Harney Lane including the construction of a new three -span approximately 248 feet long and 88
feet wide to grade separate Harney Lane at the Union Pacific Railroad track. It also includes signal modifications, drainage and utility installation,
street lighting, landscaping, construction of raised medians, curb gutter and sidewalk. Estimated cost to complete this project is $16.0 million and is
funded by State and Federal grants.
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 two of the five projects are ongoing. Construction is proceeding in three of the
remaining projects this year and one is expected to begin construction in spring of 2017.
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 an eight 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 2017-18. To date, approximately 14,400 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 operating income in addition to
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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 2015-16, 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 2014, the
target for the Electric enterprise fund working capital is $23.2 million for fiscal year 2015-16. 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 $11,185,453, or 25.93% of revenues at the
end of fiscal year 2015-16.
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.
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Excluded from the limitation are appropriations funded through charges for services, fines and forfeitures, grants, transfers of service responsibilities
between government agencies and indebtedness incurred prior to Fiscal Year 1979. Pursuant to subsequent legislation adopted after Article XIII B,
the City is required to annually establish and adopt its appropriations limit by resolution. For 2015-16, the City's appropriations subject to limit were
$36,831,981 and the appropriation limit was $90,095,588, leaving appropriations at $53,263,605 below the limit.
Debt Administration
At June 30, 2016, the City had outstanding Certificates of Participation and Revenue Bonds of $163,053,888. These liabilities are discussed in Note
8 of the Basic Financial Statements and summarized below.
In 1999, the Electric Utility issued $43.96 million Certificates of Participation (COPs) to finance the costs of certain improvements to the distribution
and transmission facilities of the City's electric system. These COPs were refunded by the issuance of the 2002 Electric Systems Revenue
Certificates of Participation. The 2002 COPs were refunded with the 2008 Electric Systems Revenue Certificates of Participation thereby eliminating
a variable rate obligation.
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 111 of the wastewater improvements and to
refund the 1991 Certificates of Participation. These bonds were partially refunded with the 2016 Refunding Wastewater Revenue Bonds, Series A.
On July 24, 2008, the City issued the $60,685,000 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.
On September 1, 2012, the City issued $19,080,000 Refunding Lease Revenue Bonds (2012 LRB) 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.
The City also issued the $17,105,000 2012 Refunding Wastewater Revenue Bonds (2012 Bonds) in September 2012 to advance refund the
$17,115,000 principal amount of the 2004 Wastewater Revenue Certificates of Participation (2004 COP). The 2004 COP were issued to provide
funds to finance the costs of certain improvements to the wastewater collection, treatment and disposal system of the City.
On March 10, 2016, the City issued the $20,295,000 2016 Refunding Wastewater Revenue Bonds, Series A (2016 Bonds) to partially refund
$21,415,000 outstanding principal of the 2007A COP.
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The City's debt management policy includes a commitment to monitor all forms of debt annually during the preparation of the City's Financial Plan
and Budget to ensure compliance. Also, the City will generally conduct financing on a competitive basis, will seek an investment grade rating on any
direct debt and will obtain credit enhancements such as letters of credit or insurance when necessary for marketing purposes, availability and cost
effectiveness.
Interim Financial Reporting
Monthly financial reports are prepared to present the City's financial condition and 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 the Uniform Guidance, which is
a requirement of all local and state governments expending in excess of $750,000 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 2015-16 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, long-term disability, workers' compensation, general liability and unemployment insurance. General liability
and workers' compensation are administered by outside agencies. The City administers unemployment insurance and long-term disability. Self-
insurance transactions are accounted for under the Insurance Funds. At June 30, 2016, the Insurance Fund had a net position of $4,054,956.
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 GAAP.
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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, 2015. These Certificates of
Achievement are prestigious national and state awards recognizing conformance with the highest standards for preparation of state and local
government financial reports. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and
efficiently organized CAFR, whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles
and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. The City has received a Certificate of Achievement for the last twenty-three
consecutive years. We believe our current report continues to conform to the Certificate of Achievement program requirements and we are
submitting it to GFOA this year.
ACKNOWLEDGMENTS
As always the professionalism, dedication and efficiency of the Financial Services Division Accounting staff made it possible for the timely
preparation of this report and are to be commended. I would also like to personally thank Ruby Paiste, Financial Services Manager, Derrick Cotten,
Supervising Accountant, Tyson Mordhorst, Senior Programmer Analyst and Nancy Spinelli, Finance Technician. Their work in preparing this year's
CAFR is greatly appreciated.
would also like to thank you for your continued interest and support in planning and conducting the financial operations of the City in a responsible
and progressive manner.
Respectfully submitted,
VO416111ter.1111f.110 WY" -
Steve Schwabauer
City Manager
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Lodi
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2015
-ite0.404,
Executive Director/CEO
City of Lodi
Citizens
City Council
Library
Board
Library
City Attorney
City Manager
City Clerk
Boards and
Commissions
Deputy City
Manager/Internal
Services Director
Parks, Rec. &
Cultural
Services
Community
Development
Electric Utility
Public Works
Fire
Police
Budget/
Treasury
Division
Financial
Services
Division
Human
Resources
Division
Information
Systems
Division
FY 2015-2016
DIRECTORY OF OFFICIALS AND ADVISORY BODIES
CITY COUNCIL
Mark Chandler
Doug Kuehne
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 Ferraiolo
Dean Gualco
Larry Rooney
Jeff Hood
Charles Swimley
Elizabeth Kirkley
Steve Schwabauer
Tod Patterson
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Mayor
Mayor Pro Tempore
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
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.
Certified
Public
Accountants
Independent Auditor's Report
The Honorable Members of City Council
City of Lodi, California
Report on the Financial Statements
Century City
Los Angeles
Newport Beach
Oakland
Sacramento
San Diego
San Francisco
Walnut Creek
Woodland Hills
We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining
fund information of the City of Lodi, Califomia (City), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which
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, 2016, 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.
Macias Gini & O'Connell LLP
3000 5 Street, Suite 300
Sacramento, CA 95816
1
www.mgocpa.com
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 changes in net
pension liability and related ratios, the schedule of pension contributions, the schedule of funding progress for the OPEB plan, and the schedules of revenues,
expenditures and changes in fund balances — budget and actual — for the General Fund and Streets Fund as listed in the table of contents be presented to
supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic,
or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of
the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
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
introductory section, combining and individual fund statements and schedules, statistical section, and continuing disclosures section are presented for purposes of
additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards, and is also not a required part of the basic financial statements.
The combining and individual fund 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 fund 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 disclosures 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 January 25, 2017 on our consideration of the City's internal control
over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The
purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on 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 the City's internal control over financial reporting and compliance.
AciAs get(
Sacramento, California
January 25, 2017
oicenitert l4P
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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, 2016.
FINANCIAL HIGHLIGHTS
• The assets and the deferred outflows of resources of the City exceeded its liabilities and the deferred inflows of resources at the close of
the fiscal year by $187,970,988 (net position). Of this amount, $62,557,213 is unrestricted deficit.
• The City's total net position increased by $16,545,704 in fiscal year 2016.
• As of June 30, 2016, the City's governmental funds reported combined ending fund balances of $27,114,973, an increase of $2,678,612 in
comparison with the prior year. Of this amount, $11,185,453 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 $13,247,193, of which $11,185,453 is unassigned or 25.93% of total
general fund revenues of $43,143,221.
• The City's total long-term liabilities decreased by $2,124,130 (1.04%) 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 Basic Financial
Statements. This report also includes required supplementary information and combining and individual fund statements and schedules 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.
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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 (general, special revenue, capital projects and debt
service). Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues,
expenditures, and changes in fund balances for the General Fund and Streets Fund which are considered major funds. Data from the remaining
governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non -major governmental funds is
provided in the form of combining statements elsewhere in this report.
The City adopts an annual budget for its General Fund and special revenue funds. Budgetary comparison statements 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 enterprise fund.
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• 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
changes in net pension liability and related ratios for the City's Miscellaneous and Safety pension plans, the City's progress in funding its
obligation to provide other postemployment benefits (OPEB) to its employees, and schedules comparing budget to actual amounts in the General
Fund and Streets Fund.
Combining Statements
The combining statements in connection with non -major governmental funds, internal service funds and fiduciary funds are presented immediately
following the required supplementary information on pensions.
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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 and deferred inflows of resources by $187,970,988 at the close of the current fiscal year.
Assets:
Current and other assets
Capital assets
Total assets
Deferred outflows of resources
Liabilities:
Net OPEB obligation
Net pension liability
Long-term liabilities
Other liabilities
Total liabilities
Deferred inflows of resources
Net position:
Net investment in capital assets
Restricted
Unrestricted
Total net position
City of Lodi's Net Position
Governmental
Activities
2016
$ 48,517,710
131,759,274
180,276,984
7,165,075
7,560,300
81,024,186
37,183,278
7,098,373
132,866,137
6,392,888
111,255,993
13,911,366
(76,984,325)
$ 48,183,034
Business -type
Activities
2015 2016
44,957,568
125,703,452
86,936,283
238,195,394
170,661,020 325,131,677
6,317,566 9,090,899
5,343,727
74,791,178
34,313,177
6,505,235
17,099,298
165,079,980
10,485,032
120, 953, 317 192, 664, 310
12,226,800 1,770,312
105,943,664
12,001,224
(74,146,419)
43,798,469
121,468,454
3,892,388
14,427,112
2015
Total
2016
82,429,647 $ 135,453,993
238,569,011 369,954,668
320,998,658 505,408,661
8,240,201
16,870,603
170,074,211
10,723,874
197,668,688
3,943,356
119,924,203
6,810,256
892,356
139,787,954 127,626,815 $
Assets. The City's total assets increased by $13,748,983. The increase is primarily due to the following:
16,255,974
7,560,300
98,123,484
202,263,258
17,583,405
325,530,447
8,163,200
232,724,447
17,803,754
(62,557,213)
2015
127,387,215
364,272,463
491,659,678
14,557,767
5,343,727
91,661,781
204,387,388
17,229,109
318,622,005
16,170,156
225,867,867
18,811,480
(73,254,063)
187,970,988 171,425,284
Governmental activities. Total assets for the governmental activities had an increase of $9,615,964 or 5.63%. Current and other assets
increased by $3,560,142 primarily resulting from the increase in accounts receivables, $2,407,275 and due from other governmental agencies,
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$4,448,303 offset by the decrease in cash and investments, $3,696,014. Capital assets increased by $6,055,822 largely from building and
improvements. Other insignificant activities make up the difference.
Business -type activities. Total assets for the business -type activities had an increase of $4,133,019. Current and other assets increased by
$4,506,636 primarily due to increases in cash and investments as a result of a reduction in contributions made to the Capital Outlay Fund for
various projects in the prior year by $2,919,119; increase in charges for services due to increased rates in the Electric Fund by $2,269,859 and in
the Wastewater Fund by $245,633; offset by the decrease in the Water Fund by $561,433, due to overall decrease in water usage to comply with
state conservation mandates. Additionally, revenue from the Greenhouse gas allowance decreased by $751,922, compared to the prior year.
Other insignificant activities contributed to the difference.
Deferred outflows of resources. The increase in deferred outflows of resources of $1,698,207 is primarily from the current pension contributions
made after the measurement date of June 30, 2015 per the CaIPERS valuation reports.
Liabilities. The City's total liabilities increased by $6,908,442 or 2.17%. The increase is primarily due to the following:
Governmental activities. Total liabilities for the governmental activities had a significant increase of $11,912,820 or 9.85%, primarily from the net
pension liability and the net OPEB obligation.
Business -type activities. Total liabilities for the business -type activities decreased by $5,004,378 or 2.53%. The decrease is primarily attributable
to the principal payments on long-term debt offset by a new loan payable. Other insignificant activities offset the difference.
Deferred inflows of resources. The decrease in deferred inflows of resources of $8,006,956 represents changes in various components related
to the Miscellaneous and Safety Plans per the CaIPERS valuation reports.
Net position. The City's overall financial position has increased during the fiscal year. The net position has increased by $16,545,704, or 9.65%.
The largest portion ($232,724,447) 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, $17,803,754 (9.47%) represents resources that are subject to external restrictions on how they may
be used. The remaining balance of unrestricted net position amounts to a deficit of $62,557,213. At the end of the current fiscal year, the City is
able to report positive balances in two categories of net position for the City as a whole. Unrestricted net position is negative for the governmental -
type activities.
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City of Lodi's Change in Net Position
Governmental Business -type
Activities Activities Total
2016 2015 2016 2015 2016 2015
Revenues
Program revenues:
Charges for services $ 6,956,105 6,193,492 94,838,592 92,904,205 $ 101,794,697 99,097,697
Operating grants and contributions 2,595,874 3,369,054 5,088,818 5,185,575 7,684,692 8,554,629
Capital grants and contributions 10,558,743 3,130,921 2,860,171 5,283,584 13,418,914 8,414,505
General revenues:
Property taxes 13,919,218 13,502,085 13,919,218 13,502,085
Other taxes 11,407,984 11,128,660 11,407,984 11,128,660
Grants and contributions not restricted to specific programs 11,834,331 10,650,893 11,834,331 10,650,893
Litigation — environmental lawsuits proceeds 100,000 100,000
Rent 1,954,385 1,941,477 4,200 4,200 1,958,585 1,945,677
Other 1,043,915 750,606 4,908,960 3,376,133 5,952,875 4,126,739
Total revenues 60,270,555 50,667,188 107,800,741 106,753,697 168,071,296 157,420,885
Expenses
General government 10,368,800 9,108,789 10,368,800 9,108,789
Public protection 31,394,604 27,426,291 31,394,604 27,426,291
Public works 10,326,560 10,281,419 10,326,560 10,281,419
Community development 1,792,520 1,164,964 1,792,520 1,164,964
Library 1,389,105 1,324,130 1,389,105 1,324,130
Parks and recreation 4,262,128 3,115,763 4,262,128 3,115,763
Interest on long-term debt 821,768 817,918 821,768 817,918
Electric 61,764,151 64,366,530 61,764,151 64,366,530
Wastewater 14,023,975 12,911,955 14,023,975 12,911,955
Water 10,967,387 9,905,544 10,967,387 9,905,544
Transit 4,414,594 4,133,679 4,414,594 4,133,679
Total expenses 60,355,485 53,239,274 91,170,107 91,317,708 151,525,592 144,556,982
Changes in net position before transfers (84,930) (2,572,086) 16,630,634 15,435,989 16,545,704 12,863,903
Transfers 4,469,495 7,513,614 (4,469,495) (7,513,614)
Changes in net position 4,384,565 4,941,528 12,161,139 7,922,375 16,545,704 12,863,903
Net position at beginning of year, as previously reported 43,798,469 119,822,255 127,626,815 139,393,690 171,425,284 259,215,945
Restatement related to pensions (80,965,314) (19,689,250) (100,654,564)
Net position at beginning of year, as restated 43,798,469 38,856,941 127,616,815 119,704,440 171,425,284 158,561,381
Net position at end of year $ 48,183,034 43,798,469 139,787,954 127,626,815 $ 187,970,988 171,425,284
Analysis of Changes in Net Position
Governmental activities
Net position for the governmental activities increased by $4,384,565 in the current fiscal year, which is a decrease of $556,963 relative to last
year's increase of $4,941,528. The key factors impacting this increase are:
Revenues increased $9,603,367 from the prior fiscal year. Key elements of this increase are:
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• Capital grants and contributions increased by $7,427,822 or 237.24% from the prior fiscal year. The increase in capital contributions was
mainly attributable to state and federal funds used for the Harney Lane Grade Separation project, $4,024,368; state grants for the Boat
Launch Facility, $663,977; an increase in development impact fees collected, $1,843,627, and donations received for capital projects,
$389,391. The difference is offset by other insignificant increases.
• Property taxes increased by $417,133 or 3.09% compared to prior year. The economy continues to show evidence of positive movement
particularly in the housing market. Rising home prices coupled with record low 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 $1,183,438 or 11.11% basically from sales tax revenues which
increased by $1,761,953 offset by the triple flip reduction of $578,140. The overall increase in sales tax is attributed to a general increase
in consumer spending, steady increase in auto sales spurred by low interest rates, easy credit and manufacturer's incentives, and the
general increase in building and construction.
Expenses for governmental functions totaled $60,355,485, an increase of $7,116,211 relative to the prior fiscal year. The key elements of this
increase are:
• General government — the increase of $1,260,011 is primarily due to increase in salaries and benefits from approved labor negotiations
and the increase in OPEB obligations and pension liability. Other insignificant increases offset the difference.
• Public protection — an increase of $3,968,313 is primarily from filling vacancies in Police and Fire departments, six new fire fighters, 14
new police officers and police trainees, several promotions and retirements, along with the increase in OPEB obligations and pension
liability. Other insignificant increases offset the difference.
• Community development — the increase of $627,556 is primarily due to increases in salaries and benefits and filling a vacancy in the
current year and the increase in OPEB obligations. Other insignificant increases offset the difference.
• Parks and recreation — the increase of $1,146,365 is primarily due to increases in salaries and benefits and the increase in OPEB
obligations and pension liability.
Transfers from business -type activities decreased by $3,044,119, primarily due to contributions from the enterprise funds for various capital
projects in prior year.
Business -type activities
Business -type activities increased the City's net position by $12,161,139 in the current year, which is an increase of $4,238,764 from last year's
increase of $7,922,375. The key elements of this increase are:
• Transfers to the governmental activities for various capital projects decreased by $3,044,119 in comparison to the prior year.
• Charges for services in the Electric Fund increased by $2,269,859 primarily from sales due to growth and increased usage by commercial
customers, and the increase in Wastewater Fund by $245,633 offset by the decrease in the Water Fund by $561,433 due to conservation
efforts as mandated by the State.
• Decrease in the greenhouse gas allowance (GHG) of $751,922 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.
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• Capital contributions decreased by $2,423,413, primarily from federal funds received for the purchase of buses for the Transit Fund in the
prior year.
• Other revenues increased by $1,532,827 primarily from work for others in the Electric Fund triggered by new residential and commercial
developments.
• Bulk power cost decreased by $723,927 compared to the prior year primarily attributable to overall decrease in generation, transmission
and management services costs paid to NCPA offset by a decrease in third party revenues.
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 $27,114,973. This represents an
increase of $2,678,612, a decrease of $614,780 in comparison to the prior year increase of $3,293,392 resulting from the increase in total
revenues, increase in total expenditures and decrease in transfers in.
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
$11,185,453 while total fund balance was $13,247,193. 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 29.09%
and 34.45% of total General Fund expenditures, respectively.
The fund balance of the General Fund increased by $768,640 during the current fiscal year, a decrease of $2,236,153 from last year's increase of
$3,004,793. Key factors in this decrease are:
• Total revenues increased by $889,146, primarily from the net increase in sales tax of $1,183,813; increase in property tax of $417,133,
decrease in State mandated reimbursements of $942,828; and, increase in transient occupancy tax of $117,060. Other insignificant
increases and decreases offset the difference.
• Total expenditures increased by $2,383,958 primarily from increase in salaries and wages for the vacancies filled during the current year
and the increases approved in labor negotiations, increases related to OPEB and pensions. Other insignificant increases and decreases
offset the difference.
Total fund balance of the Streets Funds was $3,574,516. Intergovernmental revenues of $6,751,837 offset by capital expenditures of $6,155,406
were the largest components that resulted in the increase of $382,204 to fund balance.
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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 Electric Fund was $570,497, Wastewater Fund was $8,624,568, Water Fund was $935,540,
Transit Fund was, $4,296,507, and the Internal Services Funds unrestricted net position was $5,857,978.
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 $818,446. The increase
in appropriations can be briefly summarized as follows:
• $25,386 increase in general government
• $960,580 increase in public protection
• $167,520 decrease in public works
Significant differences between the final budget and the actual revenues and expenditures can be briefly summarized as follows:
• Taxes — a favorable variance of $296,183 was due to positive variances in real property transfer tax ($183,480), transient occupancy tax
($82,529), business license tax ($127,153), cable TV franchise fees ($64,140), electric, gas and industrial waste franchise ($103,503),
offset by a negative variance in property tax ($49,151), card room tax ($15,161),) and in -lieu of vehicle license fees ($200,310).
• For expenditures, a favorable variance between the final budget and actual expenditures of $1,657,752 was due to savings from
vacancies and the continued overall effort to reduce spending and costs.
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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, 2016, amounts to $369,954,668 (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 increase in the City's investment in capital assets for the current fiscal year was
$5,682,205, a 1.56% increase (a 4.82% increase in governmental activities and 0.16% decrease in business -type activities) as shown in the table
below.
Land
Construction in Progress
Buildings and Improvements
Machinery and Equipment
Vehicles
Infrastructure
Work of Art
Total
Changes in Capital Assets, Net of Depreciation
Governmental Activities Business -type Activities
2016 2015 2016 2015
$ 24,947,834
11,116,297
43,090,432
613,979
2,135,160
49,550,665
304,907
$ 131,759,274
$ 24,947,834 $
12,124,679
36,344,383
549,226
1,758,667
49,673,756
304,907
$ 125,703,452 $
5,535,718 $
14,596,259
29,067,978
183,903,354
5,092,085
238,195,394 $
Total
2016 2015
5,535,718 $ 30,483,552 $
14,478,947 25,712,556
29,340,217 72,158,410
184,431,755 184,517,333
4,782,374 7,227,245
49,550,665
304,907
30,483,552
26,603,626
65,684,600
184, 980, 981
6,541,041
49,673,756
304,907
238,569,011 $ 369,954,668 $ 364,272,463
An increase in building and improvements compared to prior year was primarily from building improvements for Fire Station # 2 and Fire Station
#3 and the City Hall Annex improvements.
Additional information on the City's capital assets can be found in Note 6 on pages 54-56 of this report.
12
Long-term debt
At the end of the current fiscal year, the City had total bonded debt outstanding of $163,053,888. Of this amount, $19,636,420 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 $143,417,468 from the business -type activities consists of $35,017,805 for the Water Fund; $47,316,124 for the
Wastewater Fund; and $61,083,539 for the Electric Fund.
Certificates of Participation and
Revenue Bonds
City of Lodi's Outstanding Debt
Governmental Business -type
Activities Activities
Total
$ 19,636,420 143,417,468 163,053,888
The City's total bonded debt decreased by $6,663,729 during the current fiscal year.
Bond Rating
In October 2016, Fitch Rating Services affirmed its `A-' rating with a stable outlook on outstanding electric utility debt instruments given the
improved financial profile in fiscal year 2016 as rate increases, relatively stable sales and reduction in debt service payments have bolstered
operating margins and coverage levels. Further improvement is expected in fiscal year 2017.
In July 2016, Fitch Rating Services affirmed its rating of `AA-' on the outstanding public improvement bonds with a stable outlook. Fitch also
affirmed the issuer default rating (IDR) for the City of Lodi at `AA'. The 'AA' IDR reflects the City's solid expenditure control, low long-term
liabilities, strong reserves and gap -closing capacity. Revenue performance has steadily increased in recent years, but the City's limited legal
ability to raise revenues presents an ongoing challenge.
In February 2016, Fitch Ratings also assigned an 'AA-` to the 2016 refunding wastewater revenue bonds and in addition, affirmed the 'AA' ratings
with a stable outlook on the 2004 and 2007 wastewater system revenue certificates, and the 2012 refunding wastewater revenue bonds. The
system continues to demonstrate sound debt service coverage, strong liquidity, and reasonable multi-year projections.
Standard and Poor's Rating Services also raised its long-term rating and underlying rating to `AA-' from `A+' on the wastewater system parity -lien
obligations and assigned its 'AA-` long-term rating to the 2016 refunding wastewater revenue bonds with a stable outlook. The raised ratings
reflect the City's comprehensive management practices, good transparency and disclosure, and consistently strong and improved financial
performance.
Additional information on the City's long-term debt can be found in Note 8 on pages 57-64 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 sustainable revenue levels. General Fund revenue
growth is essentially flat from 2015/16 totaling $46,916,020, representing mere 0.4 percent growth in revenues year over year. The City is
currently spending down reserves at a rate of approximately $1.5 million on labor contracts that run through June 2017. While the City has excess
13
reserves to fund the contracts through that time, flat revenue growth suggests the City may not have the resources to sustain those costs once the
agreements expire. Combined with a PERS projected increase of approximately $9 million between now and 2022/23, it is apparent that caution
is required.
This past year showed continued growth for Costco, Home Depot stores along with the opening of Dick's Sporting Goods and the Boot Barn at
Reynolds Ranch. Additional retailers like Home Goods, PetSmart and the relocation of Ross are moving forward with plans to complete other
sections of this development. The Lodi Shopping Center is well underway. The new Super Walmart opened in July along with Buffalo Wild
Wings, Ulta Beauty, Jamba Juice, Panda Express, McDonalds and Kentucky Fried Chicken. The existing Walmart space has signed on Hobby
Lobby, The Party Store and Petco as tenants. Plans have also been submitted to build a 76 -room La Quinta Inn and Suites Hotel. Occupancy is
expected in 2017. Similar plans were also received for a Candlewood Suites Hotel. It is estimated that these additional businesses will bring
approximately 200 jobs to the City.
Residential development continues to be a bright spot for the local economy. The Rose Gate subdivision construction is continuing with robust
demand and sales and is expected to be completed in 2017. Reynolds Ranch residential construction and sales have also started with closures in
calendar year 2016. Lodi will see its first apartment construction in over 10 years in the area. It is expected that 156 units will be available in 2017
from this project. Reynolds Ranch is also working on a 140 -unit senior housing project. Plans are also on file for approximately 175 units in the
Van Ruiten Subdivision.
Construction is nearly complete on an Eden Housing 80 -unit senior housing project that has been in the works for about 10 years.
The General Fund continues to be of the 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 great majority of City
employees.
The City has reduced its workforce by 16% over the past twelve years, from 470 full-time budgeted employees in 2004/05 to 397 full-time
budgeted employees in 2016/17. The City added a net of 4 positions this year to address capital maintenance needs, succession planning and
operational efficiencies in various departments.
The City will continue its capital efforts in the coming year. Significant projects expected to be undertaken include various electrical system
maintenance projects, water meter and water system maintenance projects, various wastewater system maintenance projects, including a
recycled wastewater storage facility that is funded by a state grant, and street maintenance. The City continued its phased financial systems
implementation and activated the business license and animal license modules, adding to the existing financials, human resources and payroll
modules. Utility billing and fleet management modules went live in 2016/17.
Balancing the 2016/17 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.
Employee costs and retirement 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. 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
14
of their salaries 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.
The City was successful in negotiating labor agreements with all its bargaining units through December 31, 2017. These agreements called for a
three percent raise in 2015 and two percent raises in 2016 and 2017 (except for IBEW). City medical contributions were held at 2014 levels.
Funding for the General Fund component of these agreements is provided by reserves in excess of the reserve target established by Council.
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 and the triple flip close-out to address deferred
maintenance projects on its buildings. Scheduled to be completed this year are financial system implementation and various roof, parking lot and
facility maintenance projects totaling about $800,000.
Imposed costs — While revenues have increased slightly, the cost of retirement and insurance continue to rise. In the last few years, CaIPERS
has revised a number of its actuarial assumptions and policies including a reduction in discount (assumed earnings) rate from 7.75% to 7.5%,
shortening the time period for amortizing gains and losses and more costly mortality assumptions. Rates for Miscellaneous plan employees rose
1.803 points (from 19.994% to 21.797%) while Safety plan rates increased 3.884 points (from 40.870% to 44.754%). Total additional cost to the
City is about $1.3 million.
In December of 2014, CaIPERS 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, CaIPERS recovered these losses over a 30 -year rolling period. In 2013, CaIPERS reduced
that time frame. The increase is phased in on a bell curve over five years, levels out for 20 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 21.797% to 28.3% for the
Miscellaneous group, and 44.754% to 55.2% for the Safety group, in the next five years. Near the close of calendar year 2016, CaIPERS again
cut its discount rate from 7.5% to 7%. Staff analysis of the PERS circular released to calculate impacts suggests that pension costs will increase
to between $18.2 million and $19.6 million between now and 2022/23 as a result of the discount rate change.
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 has managed the impact of the Affordable
Care Act, and through prudent management of part-time hours, has allowed 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. Lodi's claim
experience has ebbed and flowed since a spike in 2008/09. Current loss experience is relatively level with costs trending upward with the
settlement of old claims. The City has funded its actuarial liability at slightly more than the 90 percent confidence level. Staff continues to manage
the program and provide education to employees to minimize injuries and work time losses.
Economic Development
During the Great Recession, the City has fared better than the surrounding area, as a whole. While not immune to the 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 1 percent lower than that of San Joaquin County. The City's diversified economic base
continues to help the City maintain its revenue base.
15
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 Unified School District, Lodi Health Hospital, Pacific Coast Producers, Blue Shield and TreeHouse Foods, Inc. have the highest year-round
employment in the City. Large national and international manufacturers such as North American Specialty Products find the City an attractive base
for their West Coast operations. Cepheid, a Sunnyvale, California-based biotech company with a growing manufacturing presence in Lodi since
2012, reaffirmed its commitment to Lodi in 2016 upon its acquisition of a neighboring property. The additional space will allow Cepheid to increase
Lodi production of its proprietary molecular diagnostic product and the expansion is expected to create 250 to 300 additional jobs over the next
few years. This positive news came on the heels of the disappointing closure of the General Mills food manufacturing plant, a Lodi staple and a
major regional employer. After months of collaboration with City staff, General Mills sold the 77 -acre property to RRM Enterprises, an investment
group that owns Bond Manufacturing, an outdoor consumer living products manufacturing company. Both currently occupies approximately 25
percent of the 1.1 million square foot facility and is actively marketing available space to prospective tenants.
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.
16
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
Related to pensions
TOTAL DEFERRED OUTFLOWS OF RESOURCES
LIABILITIES
Accounts payable and accrued liabilities
Accrued salaries and wages
Accrued interest
Unearned revenue
Net OPEB obligation
Net pension liability
Long-term liabilities:
Due within one year
Due in more than one year
TOTAL LIABILITIES
CITY OF LODI
STATEMENT OF NET POSITION
June 30, 2016
Governmental Business -type
Activities Activities
37,652,125
7,013,347
9,082
38,017
(1,266,882)
4,797,282
140,441
134,298
36,369,038
95,390,236
180,276,984
Total
35,639,889 $ 73,292,014
9,212,022 16,225,369
9,082
48,190 86,207
1,266,882
1,422,878 6,220,160
28,269,168 28,269,168
6,347 6,347
7,829,843 7,829,843
3,200,241 3,340,682
40,823 175,121
20,131,977 56,501,015
218,063,417 313,453,653
325,131,677 505,408,661
408,526 7,606,054 8,014,580
6,756,549 1,484,845 8,241,394
7,165,075
6,062,717
704,998
214,610
116,048
7,560,300
81,024,186
5,069,339
32,113,939
132,866,137
9,090,899 16,255,974
7,157,791
2,169,538
1,157,703
17,099,298
6,339,360
158,740,620
13,220,508
704,998
2,384,148
1,273,751
7,560,300
98,123,484
11,408,699
190,854,559
192,664,310 325,530,447
DEFERRED INFLOWS OF RESOURCES
Related to pensions 6,392,888 1,770,312 8,163,200
NET POSITION
Net investment in capital assets 111,255,993 121,468,454 232,724,447
Restricted for:
Road -related projects 3,596,304 3,596,304
Capital projects 7,031,031 7,031,031
Debt service 3,892,388 3,892,388
Public safety 474,607 474,607
Community development 2,423,259 2,423,259
Parks, recreation and community services 386,165 386,165
Unrestricted (76,984,325) 14,427,112 (62,557,213)
TOTAL NET POSITION $ 48,183,034 139,787,954 $ 187,970,988
The notes to the financial statements are an integral part of this statement. 17
CITY OF LODI
STATEMENT OF ACTIVITIES
Year ended June 30, 2016
Net (Expense) Revenue and
Program Revenues Changes in Net Position
Operating Capital
Charges for Grants and Grants and Governmental Business -type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
PRIMARY GOVERNMENT:
Governmental activities:
General government $ 10,368,800 1,489,967 70,104 (8,808,729) $ (8,808,729)
Public protection 31,394,604 740,595 1,382,654 1,503,802 (27,767,553) (27,767,553)
Public works 10,326,560 734,157 1,063,740 7,506,486 (1,022,177) (1,022,177)
Community development 1,792,520 2,291,768 65,904 565,152 565,152
Library 1,389,105 62,908 13,472 189,391 (1,123,334) (1,123,334)
Parks and recreation 4,262,128 1,636,710 1,359,064 (1,266,354) (1,266,354)
Interest on long-term debt 821,768 (821,768) (821,768)
Total governmental activities 60,355,485 6,956,105 2,595,874 10,558,743 (40,244,763) (40,244,763)
Business -type activities:
Electric 61,764,151 67,507,179 1,570,854 402,185 7,716,067 7,716,067
Wastewater 14,023,975 14,959,756 655,784 1,591,565 1,591,565
Water 10,967,387 12,161,186 617,026 532,295 2,343,120 2,343,120
Transit 4,414,594 210,471 2,900,938 1,269,907 (33,278) (33,278)
Total business -type activities 91,170,107 94,838,592 5,088,818 2,860,171 11,617,474 11,617,474
Total primary government $ 151,525,592 101,794,697 7,684,692 13,418,914 (40,244,763) 11,617,474 (28,627,289)
The notes to the financial statements are an integral part of this statement.
General revenues:
Taxes:
Property taxes 13,919,218 13,919,218
Franchise taxes 9,072,513 9,072,513
Business license tax 1,551,992 1,551,992
Transient occupancy tax 783,479 783,479
Grants and contributions not restricted to specific programs 11,834,331 11,834,331
Investment earnings 325,320 951,529 1,276,849
Rent 1,954,385 4,200 1,958,585
Litigation - environmental lawsuits proceeds 100,000 100,000
Other 718,595 3,957,431 4,676,026
Transfers 4,469,495 (4,469,495)
Total general revenues and transfers 44,629,328 543,665 45,172,993
Changes in net position 4,384,565 12,161,139 16,545,704
Net position, beginning of year 43,798,469 127,626,815 171,425,284
Net position, end of year $ 48,183,034 139,787,954 $ 187,970,988
18
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 Funds:
General Fund
This fund is maintained to account for all financial resources that are not restricted as to their use. This includes
property and sales taxes, business tax receipts, franchise taxes and various subventions such as Motor Vehicle In -
Lieu fees received from the State of California. With the exception of grant programs, General Fund resources
can be utilized for any legitimate governmental purpose.
Streets Fund
This fund was established to account for the following:
Gas Tax
To account for revenues and expenditures apportioned to the City under the Streets and Highway Code.
Portions of the tax rate levied by the State of California on all gasoline purchases are allocated to cities
throughout the State on a population basis. These funds are restricted for expenditure by the State of
California for street related purposes only.
19
Development Impact Mitigation Fees
To account for impact fees charged to provide for the building of various storm drains and street improvements
needed to serve new development. The fees are calculated on a per acre basis and are collected at
subdivision final map approval or with building permit stage effective November 4, 1991.
Measure K Sales Tax
To account for revenues and expenditures apportioned to the City for sales tax collections under Measure K.
Expenditures for administration, maintenance and construction must be for street -related projects.
Intermodal Surface Transportation Efficiency Act (ISTEA)
To account for revenues from the federal highway administration for programs including surface transportation
program (STP) for streets and roads, congestion mitigation and air quality program (CMAQ) and hazard
elimination safety (HES) for street lighting projects.
Proprietary Fund Types
Proprietary funds consist of the enterprise funds and the internal service funds.
Major Enterprise Funds include:
Electric Fund
The City established this fund in order to account for the provision of electric services to the residents of the
City. All activities necessary to provide such services are accounted for in this fund, including but not limited to,
source of supply, overhead, systems maintenance, customer service, engineering, administration, capital
improvements maintenance and debt service.
Wastewater Fund
This fund was established by the City in order to account for the provision of waste water collection and
treatment services to the residents of the City. All activities necessary to provide such services are accounted
for in this fund, including, but not limited to, administration, operations, maintenance, improvements and debt
service.
20
Water Fund
This fund was established by the City in order to account for the provision of water to the residents of the City
as well as some customers in the County. All activities to provide such services are accounted for in this fund,
including, but not limited to administration, operations, distribution, maintenance, capital improvements and
debt service.
Nonmajor Enterprise Fund:
Transit Fund
This fund is used to account for the operations of the Dial -A -Ride and the Grapeline bus system.
Fiduciary Fund 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.
21
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CITY OF LODI
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2016
Other Total
General Streets Governmental Governmental
Fund Fund Funds Funds
ASSETS
Cash and investments $ 12,110,320 149,072 11,047,742 $ 23,307,134
Receivables:
Accounts, net 5,898,954 693,982 371,701 6,964,637
Property taxes 9,082 9,082
Interest 12,330 2,834 8,362 23,526
Due from other funds 68,114 68,114
Due from other governmental agencies 4,026,083 771,199 4,797,282
Inventory 1,121 1,121
Other assets 32,523 758 33,281
Total assets $ 18,063,209 4,871,971 12,268,997 $ 35,204,177
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities $ 4,035,439 1,297,455 555,561 $ 5,888,455
Accrued salaries and wages 704,998 704,998
Due to other funds 68,114 68,114
Advances from other funds 1,266,882 1,266,882
Unearned revenue 75,579 40,469 116,048
Total liabilities 4,816,016 1,297,455 1,931,026 8,044,497
Deferred inflows of resources:
Unavailable revenue 44,707 44,707
Fund balances:
Nonspendable
Inventory 1,121 1,121
Other assets 32,523 758 33,281
Restricted
Road -related projects 3,574,516 21,788 3,596,304
Capital projects 6,986,324 6,986,324
Public safety 473,849 473,849
Community development 2,423,259 2,423,259
Parks, recreation and community services 386,165 386,165
Committed
Video- related capital projects 465,127 465,127
Assigned
Subsequent year budget 1,564,090 1,564,090
Unassigned 11,185,453 11,185,453
Total fund balances 13,247,193 3,574,516 10,293,264 27,114,973
Total liabilities, deferred inflows of resources, and fund balances $ 18,063,209 4,871,971 12,268,997 $ 35,204,177
The notes to the financial statements are an integral part of this statement. 23
CITY OF LODI
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
June 30, 2016
Fund balances - total governmental funds $ 27,114,973
Amounts reported for governmental activities in the statement of net position are different because:
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
Deferred outflows of resources related to pensions are not reported in governmental funds.
Deferred inflows of resources related to pensions are not reported in governmental funds.
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
Net pension liability
Net OPEB obligation
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
36,369,038
95,364,186
6,756,549
(6,392,888)
(7,655,182)
(20,095,387)
(816,420)
408,526
(214,610)
(81,024,186)
(7,560,300)
44,707
5,884,028
Net position of governmental activities $ 48,183,034
The notes to the financial statements are an integral part of this statement. 24
CITY OF LODI
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
Year ended June 30, 2016
Other Total
General Streets Governmental Governmental
Fund Fund Funds Funds
Revenues:
Taxes $ 25,327,203
Licenses and permits 92,702
Intergovernmental revenues 12,887,767 6,751,837
Charges for services 1,437,440 1,035,795
Fines, forfeits and penalties 1,494,758
Investment and rental income 1,554,198 44,317
Miscellaneous revenue 349,153 63,071
Total revenues 43,143,221 7,895,020
1,552,860
1,443,319
3,356,490
556,970
704,233
25,327,203
1,645,562
21,082,923
5,829,725
1,494,758
2,155,485
1,116,457
7,613,872 58,652,113
Expenditures:
Current:
General government 6,824,884 2,534,854 9,359,738
Public protection 28,612,592 208,366 28,820,958
Public works 1,866,277 1,964,570 239,387 4,070,234
Community development 1,601,504 1,601,504
Library 1,152,901 1,152,901
Parks and recreation 2,368,834 2,368,834
Capital outlay 6,155,406 6,962,083 13,117,489
Debt service:
Interest and fiscal charges 846,725 846,725
Principal payment 260,000 260,000
Total expenditures 38,456,654 8,119,976 15,021,753 61,598,383
Excess (deficiency) of revenues over (under) expenditures
Other financing sources (uses):
Transfers in
Transfers out
Capital lease proceeds
Loan proceeds
Total other financing sources (uses)
4,686,567 (224,956)
3,952,000
(7,869,927)
607,160
(3,917,927) 607,160
(7,407,881) (2,946,270)
8,751,224
(845,962)
562,387
468,000
13,310,384
(8,715,889)
562,387
468,000
8,935,649 5,624,882
Changes in fund balances 768,640 382,204 1,527,768 2,678,612
Fund balances, beginning of year 12,478,553 3,192,312 8,765,496 24,436,361
Fund balances, end of year $ 13,247,193 3,574,516 10,293,264 $ 27,114,973
The notes to the financial statements are an integral part of this statement.
25
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, 2016
Net change in fund balances - total governmental funds
Amounts reported for governmental activities are different because:
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 and depreciation expense are as follows:
Capitalized capital outlays
Depreciation expense
Long-term debt proceeds provide current financial resources to governmental funds,
but issuing debt proceeds increases long-term liabilities in the statement of net position. Repayments
of the principal are expenditures in the governmental funds, but the repayments
reduce long-term liabilities in the statement of net position.
Proceeds from long-term debt:
Loans payable
Capital lease payable
Principal payment
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 of the internal service
funds are reported with governmental activities.
$ 2,678,612
14,486,713
(8,429,443)
(468,000)
(562,387)
260,000
59,783
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 (1,922,976)
Amortization of loss on defeasance (26,936)
Amortization of bond premium 53,830
Change in accrued interest (3,407)
Change in net pension liability and related amounts 475,349
Change in OPEB obligation (2,216,573)
Change in net position of governmental activities $ 4,384,565
The notes to the financial statements are an integral part of this statement. 26
CITY OF LODI
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
June 30, 2016
Business -type Activities -Enterprise Funds
Electric
Nonmajor Fund
Wastewater Water Transit
Total
Governmental
Activities -
Internal
Service
Funds
ASSETS
Current assets:
Cash and investments $ 12,269,020 15,618,946 6,270,786 1,481,137 $ 35,639,889 $ 14,344,991
Restricted cash and investments 14,271,306 14,271,306
Restricted assets with fiscal agents 9,345,180 130,957 2,351,875 11,828,012
Receivables:
Accounts, net 4,334,740 1,113,898 1,013,974 2,749,410 9,212,022 48,710
Interest 12,534 15,804 18,114 1,738 48,190 14,491
Due from other governmental agencies 15,000 55,170 1,352,708 1,422,878
Advance receivable 7,829,843 7,829,843
Loans receivable 6,347 6,347
Inventory 2,789,321 117,260 293,660 3,200,241 139,320
Other assets 10,204 29,629 990 40,823 101,017
Total current assets 36,597,189 17,041,494 24,275,875 5,584,993 83,499,551 14,648,529
Noncurrent assets:
Restricted assets with fiscal agents 2,169,850 2,169,850
Advances to other funds 192,857 1,650,403 1,843,260
Capital assets, net:
Nondepreciable 763,785 9,018,002 8,369,152 1,981,038 20,131,977
Depreciable, net 39,894,453 78,885,024 84,447,688 14,836,252 218,063,417 26,050
Total capital assets 40,658,238 87,903,026 92,816,840 16,817,290 238,195,394 26,050
Total noncurrent assets 40,658,238 90,265,733 94,467,243 16,817,290 242,208,504 26,050
TOTAL ASSETS 77,255,427 107,307,227 118,743,118 22,402,283 325,708,055 14,674,579
DEFERRED OUTFLOWS OF RESOURCES
Unamortized losses on defeasance 4,826,489 2,779,565 7,606,054
Related to pensions 853,000 541,420 50,115 40,310 1,484,845
TOTAL DEFERRED OUTFLOWS OF RESOURCES 5,679,489 3,320,985 50,115 40,310 9,090,899
LIABILITIES
Current liabilities:
Accounts payable and other liabilities 3,041,868 526,316 3,364,338 225,269 7,157,791 174,262
Accrued interest 1,499,640 498,639 171,259 2,169,538
Unearned revenue 660,104 497,599 1,157,703
Self-insurance liability 2,118,423
Accrued compensated absences 284,611 190,232 22,684 18,024 515,551 27,397
Certificates of participation and revenue bonds payable 2,414,909 1,874,520 934,700 5,224,129
Loans payable 199,680 199,680
Pollution remediation obligation 400,000 400,000
Total current liabilities 7,440,708 3,089,707 5,553,085 740,892 16,824,392 2,320,082
Noncurrent liabilities:
Advances from other funds 576,378 576,378
Self-insurance liability 6,362,519
Accrued compensated absences 812,973 924,621 75,638 1,813,232 107,950
Certificates of participation and revenue bonds payable 58,668,630 45,441,604 34,083,105 138,193,339
Loans payable 1,300,320 1,300,320
Net pension liability 9,823,050 6,234,929 577,114 464,205 17,099,298
Pollution remediation obligation 17,433,729 17,433,729
Total noncurrent liabilities 71,181,351 52,601,154 52,093,948 539,843 176,416,296 6,470,469
TOTAL LIABILITIES 78,622,059 55,690,861 57,647,033 1,280,735 193,240,688 8,790,551
DEFERRED INFLOWS OF RESOURCES
Related to pensions 1,016,992 645,509 59,750 48,061 1,770,312
NET POSITION
Net investment in capital assets (1,167,020) 45,667,274 60,150,910 16,817,290 121,468,454 26,050
Restricted:
Debt service 3,892,388 3,892,388
Unrestricted 570,497 8,624,568 935,540 4,296,507 14,427,112 5,857,978
TOTAL NET POSITION $ 3,295,865 54,291,842 61,086,450 21,113,797 $ 139,787,954 $ 5,884,028
The notes to the financial statements are an integral part of this statement. 27
OPERATING REVENUES
Charges for services
CITY OF LODI
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION
PROPRIETARY FUNDS
Year ended June 30, 2016
Business -type Activities - Enterprise Funds
Nonmajor Fund
Electric Wastewater Water Transit
$ 67,507,179 14,959,756 12,161,186 210,471 $
Total
Governmental
Activities -
Internal
Service
Funds
94,838,592 $ 12,344,712
OPERATING EXPENSES
Personnel services 6,357,852 2,923,572 2,515,542 346,340 12,143,306 1,642,934
Supplies, materials and services 11,976,634 3,622,348 3,008,676 2,596,525 21,204,183 7,489,836
Utilities 37,849,076 691,632 496,316 60,604 39,097,628 16,602
Depreciation 2,285,346 4,019,051 2,851,872 1,411,125 10,567,394 1,448
Claims 3,375,668
TOTAL OPERATING EXPENSES 58,468,908 11,256,603 8,872,406 4,414,594 83,012,511 12,526,488
OPERATING INCOME (LOSS)
9,038,271 3,703,153 3,288,780 (4,204,123) 11,826,081 (181,776)
NONOPERATING REVENUES (EXPENSES)
Investment income 226,205 460,682 244,289 20,353 951,529 124,221
Interest expense (3,288,042) (2,297,328) (2,094,981) (7,680,351)
Operating grants 617,026 2,900,938 3,517,964
Greenhouse gas allowance 1,570,854 1,570,854
Litigation -environmental lawsuits proceeds 100,000 100,000
Loss on disposal of capital assets (7,201) (470,044) (477,245)
Other revenues 2,569,806 1,056,361 287,839 47,625 3,961,631 242,338
TOTAL NONOPERATING REVENUES (EXPENSES) 1,071,622 (1,250,329) (845,827) 2,968,916 1,944,382 366,559
INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 10,109,893 2,452,824 2,442,953 (1,235,207) 13,770,463 184,783
Capital contributions 402,185 655,784 532,295 1,269,907 2,860,171
Transfers in 125,000 125,000
Transfers out (2,318,165) (1,282,165) (994,165) (4,594,495) (125,000)
Net capital contributions and transfers (1,790,980) (626,381) (461,870) 1,269,907 (1,609,324) (125,000)
Changes in net position 8,318,913 1,826,443 1,981,083 34,700 12,161,139 59,783
NET POSITION - BEGINNING OF YEAR, as previously reported (5,023,048) 52,465,399 59,105,367 21,079,097 127,626,815 (588,125)
Change in accounting 6,412,370
NET POSITION - BEGINNING OF YEAR, restated
NET POSITION - END OF YEAR
The notes to the financial statements are an integral part of this statement.
(5,023,048) 52,465,399
59,105,367 21,079,097
127,626,815 5,824,245
$ 3,295,865 54,291,842 61,086,450 21,113,797 $ 139,787,954 $ 5,884,028
28
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
Proceeds from litigation settlements
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 in
Transfers out
Net cash provided by (used) in noncapital financing activities
Cash flows from capital and related financing activities:
Proceeds from loans payable
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
Change 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 - continued
PROPRIETARY FUNDS
Year ended June 30, 2016
Business -type Activities - Enterprise Funds
Electric
$ 69,620,632
122,996
(50,041,148)
(7,053,684)
(4,001)
12,644,795
1,570,854
125,000
(2,318,165)
(622,311)
1,500,000
(2,429,335)
12,205
(5,195,000)
(3,102,002)
(9,214,132)
192,721
3,001,073
18,613,127
$ 21,614,200
Wastewater
15,868,177
(3,975,657)
(3,536,647)
(613,600)
7,742,273
183,572
(1,282,165)
(1,098,593)
(1,902,913)
464,605
(1,535,000)
(2,131,275)
(5,104,583)
247,889
1,786,986
13,962,917
15,749,903
The notes to the financial statements are an integral part of this statement. 29
Nonmajor Fund
Water Transit
12,923,310
(3,352,296)
(2,659,025)
(467,860)
100,000
6,544,129
617,026
100,000
(994,165)
(277,139)
76,101
(4,995,209)
332,767
(870,000)
(2,098,606)
(7,554,947)
218,042
(1,069,915)
23,963,882
22,893,967
258,096 $
(2,755,452)
(343,315)
(49,500)
(2,890,171)
2,800,173
2,800,173
(638,979)
1,652,272
1,013,293
18,958
942,253
538,884
1,481,137 $
Total
98,670,215 $
122,996
(60,124,553)
(13,592,671)
(1,134,961)
100,000
24,041,026
3,417,199
283,572
1,570,854
125,000
(4,594,495)
802,130
1,500,000
76,101
(9,966,436)
809,577
1,652,272
(7,600,000)
(7,331,883)
(20,860,369)
677,610
4,660,397
57,078,810
61,739,207 $
Governmental
Activities -
Internal Service
Funds
193,628
12,344,712
(10,740,702)
(1,587,421)
210,217
(125,000)
(125,000)
118,652
203,869
14,141,122
14,344,991
CITY OF LODI
STATEMENT OF CASH FLOWS - continued
PROPRIETARY FUNDS
Year ended June 30, 2016
Business -type Activities - Enterprise Funds
Nonmajor Fund
Electric Wastewater Water Transit
Total
Governmental
Activities -
Internal Service
Funds
Reconciliation to the statement of net position:
Cash and investments $ 12,269,020 15,618,946 6,270,786 1,481,137 $ 35,639,889 $ 14,344,991
Restricted cash and investments 14,271,306 14,271,306
Restricted assets with fiscal agents - current 9,345,180 130,957 2,351,875 11,828,012
Total cash and cash equivalents $ 21,614,200 15,749,903 22,893,967 1,481,137 $ 61,739,207 $ 14,344,991
Reconciliation of operating income (loss) to net cash provided by
(used in) operating activities:
Operating Income (loss) $ 9,038,271 3,703,153 3,288,780 (4,204,123) $ 11,826,081 $ (181,776)
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation 2,285,346 4,019,051 2,851,872 1,411,125 10,567,394 1,448
Costs of issuance paid out of debt proceeds 261,039 261,039
Proceeds from litigation settlements 100,000 100,000
Other revenues 2,569,806 1,056,361 287,839 47,625 3,961,631 242,338
Change in assets and liabilities:
Decrease in loans receivable 82,351 82,351
Decrease (increase) in accounts receivable 549,893 (103,311) (169,432) 277,150 (48,710)
Increase in advance receivables (873,046) (873,046)
Decrease (increase) in due from other governmental agencies (15,000) 306,858 291,858
Decrease (increase) in inventory (34,130) (24,890) (21,860) (80,880) 30,612
Decrease (increase) in other assets (10,204) (29,629) 336,859 297,026 (101,017)
Increase (decrease) in accounts payable and accrued liabilities (267,660) (511,426) 465,073 (147,823) (461,836) 36,754
Increase (decrease) in compensated absences 268,422 340,836 (10,553) 15,340 614,045 55,513
Decrease in net pension liability and related amounts (964,254) (953,911) (132,930) (12,315) (2,063,410)
Increase in self-insurance liability 175,055
Decrease in pollution remediation obligation (758,377) (758,377)
Net cash provided by (used in) operating activities $ 12,644,795 7,742,273 6,544,129 (2,890,171) $ 24,041,026 $ 210,217
Noncash Investing, Capital and Financing Activities
Capital asset contributions
Book value of disposed capital assets
Amortization of issuance premium
Refunding debt proceeds deposited into escrow
Defeasance of old debt
Change in unearned revenue
389,980 191,179 123,427
7,201 470,044
24,909 205,805 19,700
22,784,519
21, 545,043
The notes to the financial statements are an integral part of this statement. 30
382,365
704,586
477,245
250,414
22,784,519
21,545,043
382,365
CITY OF LODI
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
June 30, 2016
Private -Purpose
Trust Funds
Agency Fund
ASSETS
Cash and investments $ 235,229 $ 422,207
Receivables:
Interest 440
TOTAL ASSETS 235,229 422,647
LIABILITIES
Agency obligations 422,647
NET POSITION - EXPENDABLE
The notes to the financial statements are an integral part of this statement. 31
$ 235,229 $
CITY OF LODI
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PRIVATE -PURPOSE TRUST FUNDS
Year ended June 30, 2016
ADDITIONS
Investment and rental income
DEDUCTIONS
Current
Library
$ 19,091
22,767
CHANGE IN NET POSITION (3,676)
NET POSITION, BEGINNING OF YEAR 238,905
NET POSITION, END OF YEAR $ 235,229
The notes to the financial statements are an integral part of this statement. 32
NOTES TO BASIC FINANCIAL STATEMENTS
CITY OF LODI
Notes to Basic Financial Statements
June 30, 2016
(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 Bonds Series A and B were issued in October 2010 to provide funds for a new water treatment facility. On September 1, 2012,
the $19,080,000 Refunding Lease Revenue Bonds (2012 LRB) were issued 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
33
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
outstanding 1995 and 1996 Certificates of Participation. The $17,105,000 2012 Refunding Wastewater Revenue Bonds (2012 Bonds) were also
issued in September 2012 to advance refund the $17,115,000 principal amount of the 2004 Wastewater Revenue Certificates of Participation
(2004 COP). The 2004 COP were issued to provide funds to finance the costs of certain improvements to the wastewater collection, treatment
and disposal system of the City. The 2016 Refunding Wastewater Revenue Bonds (2016 Bonds) were issued to refinance $21,415,000 principal
amount of the 2007 Wastewater System Revenue Certificates of Participation (2007 COP).
The City Council constitutes the Board of Directors of LPFA. The funds of LPFA have been included in the governmental activities, Enterprise
(Wastewater and Water) Fund and 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
34
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers property tax revenues
to be available if they are collected within 60 days of the end of the current fiscal year. All other revenues are considered to be available if they
are generally collected within 120 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as
under accrual accounting. However, debt service expenditures, as well as expenditures related to vacation, sick leave, claims and judgments,
are recorded only when payment is due.
Property taxes, other local taxes, licenses, intergovernmental revenues, and interest associated with the current fiscal period are all considered
susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenues are considered to be
measurable and available when the City receives cash.
The City reports the following major governmental funds:
The General Fund is the City's primary operating fund. It accounts for all financial resources of the City except those required to be
accounted for in another fund.
The Streets Fund accounts for Gas Tax revenues apportioned to the City under the Streets and Highway Code, impact fees charged to
provide for the building of various storm drains and street improvements needed to serve new developments, and to account for funds
apportioned to the City for sales tax collections under Measure K.
The City reports the following major proprietary (enterprise) funds:
The Electric Fund accounts for the provision of electric services to the residents of the City. All activities necessary to provide such
services are accounted for in this fund, including but not limited to, source of supply, overhead, systems maintenance, customer service,
engineering, administration, capital improvements, and maintenance and debt service.
The Wastewater Fund accounts for the provision of wastewater collection and treatment services to the residents of the City. All
activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations,
maintenance, improvements and debt service.
The Water Fund accounts for the provision of water to the residents of the City as well as some customers in the San Joaquin County
(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.
35
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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 Fund 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
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.
36
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(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 2008 Certificates of Participation restricted for debt service. In the
Wastewater Fund, the restricted assets represent the proceeds of the 2004A, the 2007A Certificates of Participation and the 2016A Refunding
Wastewater Revenue Bonds, issued for improvements to the City's wastewater collection, treatment and disposal system. In the Water Fund,
restricted assets represent the proceeds of the 2010A and 2010B Revenue Bonds issued for the purpose of providing funds to pay the cost of a
new Water Treatment Facility.
(g) Property Taxes
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 1st for all real and personal property
located in the City. Property sold after the assessment date (January 1st) is reassessed and the amount of property tax assessed is prorated.
The assessed value at January 1, 2016, upon which the 2015-16 levy was based, was $5,648,309,000.
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, 2016, are recorded as receivables. 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.
37
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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:
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 are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium. Losses
occurring from advance refunding are reported as deferred outflows of resources and amortized as an expense for both governmental and
business -type activities.
38
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(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, 2016, a total of twenty-two loans to industrial and commercial customers have been approved.
(I) Advance Receivable
Advance receivable reported in the Electric Enterprise Fund represents the City's portion of the Northern California Power Agency's (NCPA)
General Operating Reserve that is refundable upon demand by the City (See Note 12).
(m) Inventory
Other governmental funds inventories are recorded at cost and are recognized as expenditures when consumed rather than when purchased.
For the proprietary fund types, inventories are recorded at cost using the weighted average cost method, which approximates market, and
expense is recognized when inventories are consumed in operations.
(n) Deferred Outflows and Inflows of Resources
Unamortized Losses on Defeasance
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, the 2012 Refunding Revenue Bonds amortized over 11 years, and the 2016 Refunding Revenue Bonds
amortized over 21 years. Deferred outflows of resources reported in the governmental activities represent refunding loss incurred with the
issuance of the 2012 Refunding Lease Revenue Bonds.
39
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Related to Pensions
Pension contributions made in the current year are reported as deferred outflows of resources per GASB Statement No. 71 as the CaIPERS'
valuation measurement date is June 30, 2015. Those contributions will be recognized as a reduction of the net pension liability in the year
ending June 30, 2017. Plan earnings in excess of earnings projected, changes in assumptions, differences between expected and actual
experience in the CaIPERS actuarial report are reported as deferred inflows of resources.
Unavailable Revenue
The unavailable revenue in the other governmental funds is related to the HCD's First-time Homebuyers Program.
(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.
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
40
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(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) Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and
pension expense, information about the fiduciary net position of the Miscellaneous and Safety Plans (Plans) and additions to/deductions from the
Plans' fiduciary net position have been determined on the same basis as they are reported by the CaIPERS Financial Office. For this purpose,
benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit
terms. Investments are reported at fair value.
GASB Statement No. 68 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For
this report, the following timeframes are used:
Valuation Date:
Measurement Date:
Measurement Period:
(r) Self -Insurance
June 30, 2014
June 30, 2015
July 1, 2014 to June 30, 2015
The City is self-insured for general liability, workers' compensation, dental benefits, unemployment and long-term disability. Various City funds
are charged premiums for the City's self-insurance liability, which is accounted for in an internal service fund. The accrued liability for estimated
self-insured claims represents an estimate of the eventual loss on claims arising prior to year-end including claims incurred but not reported.
(s) Net 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.
41
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Restricted Net Position — Assets restricted by external creditors, grantors, contributors, enabling legislation 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.
(t) 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 constraints imposed on the use of funds. The City evaluated each of its funds
at June 30, 2016 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.
42
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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 capital is
$23.2 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.
(u) Statement of Cash Flows
A statement of cash flows is presented for proprietary fund types. For purposes of reporting cash flows, the City considers all highly liquid
investments with maturities of three months or less when purchased and investments maintained in the pool to be cash equivalents.
(v) Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Actual results could differ from those estimates.
(w) Change in Accounting
Net pension liability and related deferred inflows and outflows of resources and net OPEB obligation previously presented in the Internal Service
Funds were reclassified as reconciling items in the government -wide statements resulting in restatements of beginning net position of the Fleet
Services Fund of $1,068,643 and Benefits Fund of $5,343,727.
43
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(x) Implementation of New Governmental Accounting Standards
During the fiscal year, the City implemented GASB Statement No.72 (GASB 72), Fair Value Measurement and Application. The objective of
GASB 72 is to improve financial reporting by clarifying the definition of fair value for financial reporting purposes, establishing general principles
for measuring fair value, providing additional fair value application guidance, and enhancing disclosures about fair value measurements. These
improvements are based in part on the concepts and definitions established in Concepts Statement No. 6, Measurement of Elements of
Financial Statements, and other relevant literature. Information required by GASB 72 to be disclosed can be found in Note 2.
(y) Future Implementation of New Governmental Accounting Standards
The City is currently analyzing its accounting practices to determine the potential impact on the financial statements for the following GASB
Statements:
In June 2015, GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This
statement addresses reporting by governments that provide other postemployment benefits (OPEB) to their employees and for governments that
finance OPEB for employees of other governments. The requirements of this statement are effective for the City's year ending June 30, 2018.
In August 2015, GASB issued Statement No. 77, Tax Abatement Disclosures. This statement requires governments that enter into tax
abatement agreements to disclose certain information about the agreements. The requirements of this statement are effective for the City's year
ending June 30, 2017.
In December 2015, the GASB issued Statement No. 79, Certain External Investment Pools and Pool Participants. This statement establishes
criteria for an external investment pool to qualify for making the election to measure all investments at amortized cost for financial reporting
purposes. Pool participants should also measure their investments at amortized cost if the external pool meets these criteria. If an external
investment pool does not meet the criteria, then the pool should apply the provisions in paragraph 16 of Statement No. 31, Accounting and
Financial Reporting for Certain Investments and for External Investment Pools and pool participants should measure their investments at fair
value. The requirements of this statement are effective for the City's year ending June 30, 2017.
In January 2016, the GASB issued Statement No. 80, Blending Requirements for Certain Component Unit. This statement amends the blending
requirements for the financial statement presentation of component units of all state and local governments. The additional criterion requires
blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The
additional criterion does not apply to component units included in the financial reporting entity pursuant to the provisions of Statement No. 39,
Determining Whether Certain Organizations Are component Units. The requirements of this statement are effective for the City's year ending
June 30, 2017.
44
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
In March 2016, the GASB issued Statement No. 81, Irrevocable Split -Interest Agreements. This statement requires that a government that
receives resources pursuant to an irrevocable split -interest agreement recognize assets, liabilities, and deferred inflows of resources at the
inception of the agreement. It further requires that a government recognize assets representing its beneficial interests in irrevocable split -
interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. It
also requires the recognition of revenue when the resources become applicable to the reporting period. The requirements of this statement are
effective for the City's year ending June 30, 2018.
In March 2016, the GASB issued Statement No. 82, Pension Issues. This statement addresses certain issues that have been raised with respect
to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting
and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain
Provisions of GASB Statements 67 and 68. This statement addresses the issues regarding the presentation of payroll -related measures in
required supplementary information, the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of
Practice for financial reporting purposes, and the classification of payments made by employers to satisfy employee (plan member) contribution
requirements. The requirements of this statement are effective for the City's year ending June 30, 2017.
In November 2016, the GASB issued Statement No. 83, Certain Asset Retirement Obligations. This statement addresses accounting and
financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a
tangible capital asset. This statement establishes criteria in determining the timing and pattern of recognition of a liability and a corresponding
deferred outflow of resources for AROs and requires that recognition occur when the liability is both incurred and reasonably estimable. The
requirements of this statement are effective for the City's year ending June 30, 2019.
(2) CASH AND INVESTMENTS
Cash and investments as of June 30, 2016 are classified in the accompanying financial statements as follows:
Government -wide statement of net position:
Cash and investments $ 73,292,014
Restricted assets 28,269,168
Fiduciary funds cash and investments:
Private -purpose trust funds 235,229
Agency fund 422,207
Total cash and investments $ 102,218,618
45
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Cash and investments as of June 30, 2016 consist of the following:
Cash on hand $ 3,161
Deposits with financial institutions 6,716,228
Investments 95,499,229
Total cash and investments
(a) Authorized Investments
$ 102,218,618
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, supranationals and medium term notes as permitted
by the Government Code. The City is not authorized to enter into reverse repurchase agreements. The City selects its investments based on
safety, liquidity and yield.
The following table identifies the permitted investment types authorized per the City's investment policy. The table also identifies certain
provisions that address interest rate risk and concentration of credit risk.
Maximum Maximum % of Maximum Investment
Permitted Investments/Deposits Maturity Portfolio in One issuer
U.S. Treasury Obligations 5 years 100%
U.S. Agency Securities 5 years 100%
Banker's Acceptances 180 days 40%
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%
Medium term Notes 5 years 30%
Investment Trust of California (CALTRUST) Indefinite 100%
Certificate of Deposit Account Registry Service (CDARS) 5 years 30%
Supranational Obligations 5 years 30%
46
25%
$50m per account
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(b) Investments Authorized by Debt Agreements
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 its fair value is to changes in market interest rates. Information about the sensitivity of the
fair values of the City's investments to market interest rate fluctuations is provided by the following table that shows the maturity date of each
investment:
Investment as of June 30, 2016
Maturity Maturity
Less than One Year One to Five Years
Total
LAIF $ 37,062,858 $ 37,062,858
CALTRUST 44,207,351 44,207,351
Money Market Mutual Funds 102,676 102,676
Held by bond trustee:
Negotiable Certificates of Deposit 2,060,925 3,203,980 5,264,905
U.S. Agency Securities 645,828 645,828
LAIF 1,743,407 1,743,407
Money Market Mutual Funds 4,173,876 4,173,876
Guaranteed investment contracts (GICs) 2,169,850 2,169,850
Total investments subject to interest rate risk $ 45,143,742 50,227,009 95,370,751
Equities and options 128,478
Total investments $ 95,499,229
Investments in equities are shares of stock received by the Library as an endowment from a private citizen.
47
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(d) Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by
the assignment of a rating by a nationally recognized statistical rating organization. The money market 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
"AAA -m." 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.
(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. $9,706,901 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.
48
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(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, 2016 was $22.7 billion. LAIF is part of the California Pooled Investment
Account (PMIA), which at June 30, 2016 had a balance of $75.4 billion. Of this amount, 2.81% was invested in medium-term and short-term
structured notes and asset-backed securities. PMIA is not SEC -registered, but is required to invest according to California State Code. The
average maturity of PMIA investments was 167 days as of June 30, 2016.
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 value 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, 2016, the City's
investment in CALTRUST is $44.2 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, 13 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, 2016 was divided among the following
asset classes: CALTRUST Short term was $1.2 billion and CALTRUST Medium Term was $911 million.
49
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(h) Fair Value Measurements
In accordance with GASB 72, Fair Value is the price that would be received to sell an asset or paid to
between market participants at the measurement date. Fair value is a market-based measurement
assumptions that market participants would use in pricing the asset or liability.
Valuation inputs are assumptions that market participants use in pricing an asset or liability. The
valuation is classified into three different levels.
transfer a liability in an orderly transaction
for a particular asset or liability based on
hierarchy of inputs used to generate the
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.
• Level 2 inputs include quoted prices for similar assets or liabilities in markets that are active; quoted prices for identical or similar assets
or liabilities in markets that are not active; and inputs other than quoted prices that are observable for an asset, either directly or
indirectly.
• Level 3 inputs are unobservable inputs from the asset or liability where there is very little market activity and they should be used only
when relevant Level 1 and Level 2 inputs are unavailable.
The City has the following fair value measurements as of June 30, 2016:
Investment Type
Negotiable Certificates of Deposit
U. S. Agency Securities
Money Market Mutual Funds
Equities and Options
Total investments subject to fair value heirarchy
Investments not subject to fair value heirachy
LAIF
CALTRUST
Guaranteed Investment Contracts
Total investments
50
Total
$ 5,264,905 $
645,828
4,276,552
128,478
10,315,763
38, 806, 265
44, 207, 351
2,169, 850
$ 95,499,229
Fair Value
Measurements
Using Level 2
5,264,905
645,828
4,276,552
128,478
$ 10,315,763
(3)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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 $ 3,865
Uncollectibles related to electric sales and services 201,250
Uncollectibles related to wastewater services 45,360
Uncollectibles related to water sales and services 42,995
Total uncollectibles of the current fiscal year $ 293,470
(4) INTERFUND RECEIVABLES/PAYABLES
Interfund receivables and payables at June 30, 2016 are as follows:
Due from Due to Amount
Other governmental Other governmental $ 68,114
"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 $68,114 represents cash deficits in other governmental funds.
Advances from Advances to Amount
Wastewater Other governmental $ 192,857
Water Electric 576,378
Water Other governmental 1,074,025
$ 1,843,260
The $192,857 advance from the Wastewater Fund was used for the Grape Bowl Improvements - Phase 3. The advances from the Water Fund
were used for the City Hall Annex Phase 2, $576,378; and for the construction of Fire Station #4, $1,074,025.
51
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(5) TRANSFERS
Transfers for the year ended June 30, 2016, are summarized as follows:
Transfers in
Other
Transfers out: General Streets Governmental Electric Total
General $ 607,160 7,262,767 $ 7,869,927
Other governmental 845,962 845,962
Electric 2,104,000 214,165 2,318,165
Wastewater 1,068,000 214,165 1,282,165
Water 780,000 214,165 994,165
Internal service 125,000 125,000
Total $ 3,952,000 607,160 8,751,224 125,000 $ 13,435,384
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
operating contributions to the General Fund.
The transfer of $7,262,767 from the General Fund to other governmental represents transfer of $666,503 to the Debt Service Fund for the
interest required to pay the 2012 Refunding Lease Revenue Bonds; $3,725,820 to Parks, Recreation and Community Services for operating
costs; $165,000 to Community Development for operating costs; $770,304 to the Vehicle and Equipment Fund for vehicle replacements and
computer replacements; and $1,783,140 to the Capital Outlay Reserve Fund for various capital projects; $152,000 for the Library capital project.
The transfer of $607,160 from the General Fund to the Streets Fund is for operations and for various streets projects.
The transfer out of $845,962 from other governmental to other governmental includes $436,720 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 $299,510
from Parks, Recreation and Community Services to Parks Capital Fund for park -related capital projects, and transfer of $35,000 from the
Community Development, $72,700 from the Parks, Recreation and Community Services to the Vehicle and Equipment Fund for fleet
replacement, and a transfer of $2,032 from the Vehicle and Equipment to the Debt Service Fund for the interest required to pay the loan secured
for the purchase of a new fire engine.
52
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
The transfer out from the Electric Fund of $214,165, transfer out from Wastewater Fund for $214,165, and Water Fund for $214,165 to other
governmental represent transfers to the Vehicle and Equipment Fund for the Data Center Refresh project.
The transfer out of $125,000 from the Insurance Fund to the Electric Fund is for the cost to remodel and make ergonomic improvements at the
Supervisory Control and Data Acquisition (SCADA) operations room at the Electric Utility facility.
53
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(6) CAPITAL ASSETS
Capital assets activity of the primary government for the year -ended June 30, 2016, was as follows:
Balance Balance
Governmental activities June 30, 2015 Increases Decreases June 30, 2016
Capital assets, not being depreciated:
Land $ 24,947,834 $ 24,947,834
Work of Art 304,907 304,907
Construction in progress 12,124,679 6,156,830 (7,165,212) 11,116,297
Total capital assets, not being depreciated 37,377,420 6,156,830 (7,165,212) 36,369,038
Capital assets, being depreciated:
Buildings and improvements 68,538,889 8,688,714 77,227,603
Machinery and equipment 11,606,838 393,381 (17,972) 11,982,247
Vehicles 11,042,470 2,633,536 (2,900,180) 10,775,826
Infrastructure 140,402,458 5,631,867 146,034,325
Total capital assets, being depreciated 231,590,655 17,347,498 (2,918,152) 246,020,001
Less accumulated depreciation for:
Buildings and improvements 32,194,506 1,942,665 34,137,171
Machinery and equipment 11,057,612 328,628 (17,972) 11,368,268
Vehicles 9,283,803 2,257,043 (2,900,180) 8,640,666
Infrastructure 90,728,702 5,754,958 96,483,660
Total accumulated depreciation 143,264,623 10,283,294 (2,918,152) 150,629,765
Total capital assets, being depreciated, net 88,326,032 7,064,204 95,390,236
Governmental activities capital assets, net $ 125,703,452 13,221,034 (7,165,212) $ 131,759,274
54
Business -type activities
Capital assets, not being depreciated:
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Balance Balance
June 30, 2015 Increases Decreases June 30, 2016
Land $ 5,535,718 $ 5,535,718
Construction in progress 14,478,947 3,779,225 (3,661,913) 14,596,259
Total capital assets, not being depreciated 20,014,665 3,779,225 (3,661,913) 20,131,977
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
47,395,387
265,809,904
11,236,387
1,021,613
8,982,259
1,629,440
324,441,678 11,633,312
18,055,170
81,378,149
6,454,013
1,293,852
9,033,415
1,319,729
105,887,332 11,646,996
(477,245)
(677,931)
48,417,000
274,314,918
12,187,896
(1,155,176) 334,919,814
(677,931)
19,349,022
90,411,564
7,095,811
(677,931) 116,856,397
218,554,346 (13,684) (477,245) 218,063,417
$ 238,569,011
3,765,541
(4,139,158) $ 238,195,394
The City conducted a physical count of its entire Fleet inventory in conjunction with the transition to a new work -order system during the fiscal
year. A discrepancy on the number of vehicles in comparison to the number in the capital asset system resulted in an adjustment to add fully
depreciated vehicles in governmental activities of $1,852,403 and $1,079,602 in the business -type activities.
55
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Depreciation expense was charged to function/programs of the primary government as follows:
Governmental activities:
General government $ 213,302
Public protection 821,107
Public works 5,850,047
Community development 14,168
Library 72,652
Parks and recreation 1,458,167
Internal service funds 1,448
Total depreciation expense - governmental activities $ 8,430,891
Business -type activities:
Electric $ 2,285,346
Wastewater 4,019,051
Water 2,851,872
Transit 1,411,125
Total depreciation expense - business -type activities $ 10,567,394
(7) OPERATING LEASES
The City is obligated under an operating lease for the use of facilities. Total costs for such lease was $21,000 for the year ended June 30, 2016.
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, 2016, are as follows:
Years Ending
2017 $ 10,000
Total minimum lease payments required
under operating leases $ 10,000
56
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(8) LONG-TERM LIABILITIES
The following is a summary of long-term liability transactions of the City for the year ended June 30, 2016:
Governmental activities:
Compensated absences
2012 Revenue Bonds
Issuance premium
Total
Note payable
Loan payable
Capital lease
Self-insurance liability
Interest Rates
2.0-5.0%
6.00%
1.93%
2.08%
Amounts Due
Within One
June 30, 2015 Additions Reductions June 30, 2016 Year
$ 5,812,040 6,784,366 (4,805,877) $ 7,790,529 $ 1,656,668
19,080,000
870,250
(260,000)
(53,830)
19,950,250 (313,830)
245,000
8,305,887
468,000
562,387
2,118,423 (1,943,368)
18,820,000
816,420
830,000
53,830
19,636,420 883,830
245,000 245,000
468,000 89,989
562,387 75,429
8,480,942 2,118,423
Governmental activities Long-term
liabilities $ 34,313,177 9,933,176 (7,063,075) $ 37,183,278 $ 5,069,339
57
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Interest Rates
Amounts Due
Within One
June 30, 2015 Additions Reductions June 30, 2016 Year
Business -type activities:
Compensated absences $ 1,714,738 2,099,359 (1,485,314) $ 2,328,783 $ 515,551
Pollution remediation obligation 18,592,106 (758,377) 17,833,729 400,000
Loan payable 1,500,000 1,500,000 199,680
Certificates of Participation and Revenue Bonds:
2010 Revenue Bonds A & B 2.50-6.637% 35,415,000 (870,000) 34,545,000 915,000
Issuance premium 492,505 (19,700) 472,805 19,700
Total 35,907,505 (889,700) 35,017,805 934,700
2008 Certificates of Participation A
Issuance premium
Total
2002 Certificates of Participation D
2004 Certificates of Participation A
2007 Certificates of Participation A
Issuance premium
Total
2012 Revenue Bonds A
Issuance premium
Total
2016 Revenue Bonds A
Issuance premium
Total
Total Certificates of Participation and Revenue Bonds
Business -type activities long-term liabilities
3.85-5.05%
1.54-5.25%
2.0-5.5%
4.0-5.0%
2.0-5.0%
2.0-3.25%
60,685,000
423,448
(24,909)
61,108,448 (24,909)
5,195,000 (5,195,000)
60,685,000
398,539
2,390,000
24,909
61,083,539 2,414,909
2,070,000 2,070,000
29,460,000
184,328
29,644,328
14,470,000
1,372,086
15,842,086
20,295,000
2,750,558
23,045,558
149,767,367 23,045,558
$ 170,074,211 26,644,917
58
(21,570,000)
(136,790)
(21,706,790)
(1,380,000)
(166,313)
(1,546,313)
7,890,000 160,000
47,538 2,228
7,937,538 162,228
13,090,000
1,205,773
1,415,000
166,313
14,295,773 1,581,313
20,295,000
(32,745) 2,717,813 130,979
(32,745) 23,012,813 130,979
(29,395,457) 143,417,468 5,224,129
(31,639,148) $ 165,079,980 $ 6,339,360
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Long-term debt payable at June 30, 2016, 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.
Annual debt service requirements to maturity of the note payable are as follows:
Year
Ending Governmental Activities
June 30, Principal Interest
2017 $ 245,000 $ 11,025
Total $ 245,000 $ 11,025
Loans Payables
In August 2016, the City obtained a loan in the amount of $1.5 million to finance the Electric Enterprise Fund's LED Street Light Retrofit project.
Annual principal and interest payment is approximately $235,000 with final payment due December 1, 2022. The annual payments will be paid
from the Greenhouse Gas Free Allowance proceeds.
In September 2016, the City obtained a loan in the amount of $468,000 to finance the purchase of a fire engine. Annual principal and interest
payment is $99,172 with final payment due on December 1, 2020. The annual payments will be paid from Fire department appropriations.
59
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Annual debt service requirements to maturity of the loans payables are as follows:
Year
Ending Governmental Activities
June 30, Principal Interest
2017 $ 89,989 9,183
2018 91,775 $ 7,397
2019 93,571 5,601
2020 95,402 3,770
2021 97,263 1,908
Total $ 468,000 $ 27,859
Year
Ending Business -type Activities
June 30, Principal Interest
2017 $ 199,680 $ 35,075
2018 204,432 30,323
2019 209,200 25,555
2020 214,078 20,677
2021 219,027 15,728
Thereafter 453,583 15,927
Total $ 1,500,000 $ 143,285
Capital Lease
On June 22, 2016, the City entered into a lease -purchase agreement for the acquisition of Dispatch Console equipment for the Police
Department. The new equipment will provide the City with a more flexible system for better connectivity between the Lodi Police Department
dispatch operators and field personnel.
60
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
The present values of future minimum capital lease payments as of June 30, 2016, are as follows:
Fiscal Years
Ending
2017
2018
2019
2020
2021
and thereafter
Total minimum lease payments
Less amounts representing interest
Present value of minimum capital lease payments
Certificates of Participation and Revenue Bonds
86,540
86,540
86,540
86,540
86,540
173,080
605,780
(43,393)
$ 562,387
$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 $2,856,600. Interest
paid for the current year and total net revenues were $98,325 and $9,703,852 respectively.
$30,320,000 Certificates of Participation (2007A COP) were issued on November 16, 2007 to provide funds to finance the costs of certain
improvements to the wastewater collection, treatment and disposal system of the City and to provide resources for the repayment of the 1991
Certificates of Participation (Wastewater Treatment Plant Expansion Refunding Project). The 2007 COP were partially refunded by the issuance
of the 2016 Wastewater Refunding Revenue bonds. Principal is payable annually on October 1 in amounts ranging from $50,000 to $685,000
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 unrefunded certificates is $13,698,247. Principal and interest paid for the
current year and total net revenues were $1,606,850 and $9,703,852, 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
61
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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 made on 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 $0. Principal and interest paid for the current year and total net revenues were $5,331,368 and
$19,234,903, 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 $87,942,625. Interest paid for the current year and total net revenues were $2,957,775 and $19,234,903, 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
operation and maintenance costs, to repay these certificates. The total principal and interest remaining to be paid on the certificates is
$66,298,590. Principal and interest paid for the current year and total net revenues were $2,351,580 and $6,224,150, 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, 2016, 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 $26,355,043 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 $840,912.
62
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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 $17,513,950. 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 $1,961,100 and $9,703,852 respectively. At June 30, 2016, the remaining balance of the
refunded debt is $0.
Advance refunding
On March 10, 2016, the City issued $20,295,000 2016 Refunding Wastewater Revenue Bonds (2016 Bonds) for an advance refunding of the
$21,415,000 principal amount of the 2007 Wastewater Revenue Certificates of Participation. The refunding was undertaken to reduce future
debt service payments. The reacquisition price exceeded the net carrying amount of the old debt by $1,580,567. This amount is amortized over
the life of the old debt which is the same as the refunding debt obligation and reported as unamortized losses on defeasance. The transaction
also resulted in an economic gain of $3,694,902 and a reduction of $4,957,335 in future debt payments. 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 2016
bonds is $31,886,856. Principal is payable annually on October 1 in amounts ranging from $110,000 to $2,175,000 beginning in 2018 with final
payment due in 2037. There was no principal or interest paid for the current year and total net revenues were $9,703,852. At June 30, 2016,
the remaining balance of the refunded debt is $21,415,000.
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.
63
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Annual debt service requirements to maturity for certificates of participation and bonds are as follows:
Year Ending Governmental Activities Business -type Activities
2017
2018
2019
2020
2021
2022-2026
2027-2031
2032-2036
2037-2040
June 30, Principal Interest Principal Interest
$ 830,000 $ 824,563 $ 4,880,000 $ 6,760,569
860,000 794,912 5,220,000 6,558,519
900,000 755,212 5,285,000 6,330,119
930,000 721,087 5,515,000 6,095,719
965,000 685,337 5,755,000 5,848,369
5,620,000 2,625,106 35,880,000 24,712,799
7,110,000 1,095,723 36,365,000 15,341,504
1,605,000 33,103 28,505,000 6,459,062
11,170,000 1,554,108
Total
$ 18,820,000 $ 7,535,043 $ 138,575,000 $ 79,660,768
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.
64
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(9) PENSION PLAN
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the City's separate Miscellaneous and Safety Plans (Plans),
agent multiple -employer defined benefit pension plans administered by the California Public Employees' Retirement System (CaIPERS), which
acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are
established by State statute and City resolution. CaIPERS issues publicly available reports that include a full description of the pension plans
regarding benefit provisions, assumptions and membership information that can be found on the CaIPERS website.
Benefits Provided
CaIPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be
public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with
five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non -duty disability benefits
after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement
2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law.
65
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
The Plans' provisions and benefits in effect at June 30, 2016, are summarized as follows:
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of eligible compensation
Required employee contribution rates
Required employer contribution rates
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of eligible compensation
Required employee contribution rates
Required employer contribution rates
Miscellaneous Plan
Prior to On or after
January 1, 2013
2% @ 55
5 years of service
monthly for life
50-55
2%-2.418%
7%
19.994%
Safety Plan
January 1, 2013
2% @ 62
5 years service
monthly for life
52-67
1% to 2.5%
6.75%
19.994%
Prior to December 22, 2012 to
December 22, 2012 December 31, 2012
3% @ 50
5 years of service
monthly for life
50
66
3%
9%
40.870%
3% @ 55
5 years of service
monthly for life
50-55
2.4% to 3%
9%
40.870%
On or after
January 1, 2013
2.7% @ 57
5 years of service
monthly for life
50-57
2% to 2.7%
11.25%
40.870%
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Employees Covered
At June 30, 2015, the most recent actuarial valuation available, the following employees were covered by the benefits of the City's Plans:
Miscellaneous Plan Safety Plan
Inactive employees or beneficiaries currently receiving benefits 367 162
Inactive employees entitled to but not yet receiving benefits 128 14
Active employees 252 118
Total 747 294
Contributions
For the year ended June 30, 2016, the City's actuarially determined contributions were as follows:
Miscellaneous Safety
Plan Plan
Actuarially determined contribution
Contributions in relation to the actuarially
Determined Contribution
Contribution deficiency (excess)
Covered employee payroll
Contributions as a percentage of covered
employee payroll
$ 3,536,316 $ 4,705,078
(3,536,316) (4,705,078)
$ 16,572,579 $ 11,293,867
21.34% 41.66%
Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined
on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are
determined annually on an actuarial basis as of June 30 by CaIPERS. The actuarially determined rate is the estimated amount necessary to finance the
costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to
contribute the difference between the actuarially determined rate and the contribution rate of employees.
67
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Net Pension Liability
The City's net pension liability for each Plan is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension
liability of each of the Plans is measured as of June 30, 2015, using an annual actuarial valuation as of June 30, 2014 rolled forward to June 30, 2015
using standard update procedures.
Actuarial Assumptions
The total pension liabilities in the June 30, 2014 actuarial valuations were determined using the following actuarial assumptions:
Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Investment Rate of Return
Mortality
Miscellaneous Plan Safety Plan
June 30, 2014 June 30, 2014
June 30, 2015 June 30, 2015
Entry -Age Normal Cost Method
7.65% 7.65%
2.75% 2.75%
7.65% (1) 7.65% (1)
Based on rates of CaIPERS Experience Study
(1) Net of pension plan investment expenses, including inflation
The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2014 valuation were based on the 2014 CaIPERS
Experience Study for the period from 1997 to 2011. Further details of the Experience Study can found on the CaIPERS website.
Change in Assumptions
GASB 68 states that the long-term expected rate of return should be determined net of pension plan investment expenses, but without reduction for
pension plan administrative expense. The discount rate changed from 7.50% (net of administrative expense in 2014) to 7.65% as of the June 30, 2015
measurement date to correct the adjustment, which previously reduced the discount rate for administrative expenses.
68
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Discount Rate
The discount rate used to measure the total pension liability was 7.65% for each Plan. To determine whether the municipal bond rate should be used in
the calculation of a discount rate for each plan, CaIPERS stress tested plans that would most likely result in a discount rate that would be different from
the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.65% discount rate is
adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.65 percent will be applied to all
plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the
CaIPERS website.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of
expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In
determining the long-term expected rate of return, CaIPERS took into account both short-term and long-term market return expectations as well as the
expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the short-
term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-
term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return
that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of
return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.
The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions
applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses.
Asset Class
New Strategic Real Return Real Return
Allocation Years 1 - 10 (1) Years 11 + (2)
Global Equity 51.0% 5.25% 5.71%
Global Fixed Income 19.0 0.99 2.4
Inflation Sensitive 6.0 0.45 3.36
Private Equity 10.0 6.83 6.95
Real Estate 10.0 4.50 5.13
Infrastructure and Forestland 2.0 4.50 5.09
Liquidity 2.0 (0.55) (1.05)
An expected inflation of 2.5 percent used for this period.
An expected inflation of 3.0 percent used for this period.
69
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Changes in the Net Pension Liability
The changes in the Net Pension Liability for each Plan follows:
Miscellaneous Plan: Increase (Decrease)
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability
Balance at June 30, 2014 (1) $ 165,148,846 $ 127,423,245 $ 37,725,601
Changes in the year:
Service cost 2,358,112 2,358,112
Interest on the total pension liability 12,061,399 12,061,399
Changes of assumptions (2,903,507) (2,903,507)
Differences between Expected and Actual
Experience (1,655,012) (1,655,012)
Contribution - employer 2,994,958 (2,994,958)
Contribution - employee 1,183,452 (1,183,452)
Net investment income (2) 2,829,910 (2,829,910)
Benefit payments, including refunds of employee
contributions (8,208,103) (8,208,103)
Other changes in fiduciary net position (145,538) 145,538
Net changes during measurement period 1,652,889 (1,345,321) 2,998,210
Balance at June 30, 2015 $ 166,801,735 $ 126,077,924 $ 40,723,811
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Safety Plan: Increase (Decrease)
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability
Balance at June 30, 2014 (1) $ 161,067,881 $ 107,131,701 $ 53,936,180
Changes in the year:
Service cost 2,968,819 2,968,819
Interest on the total pension liability 11,827,918 11,827,918
Changes of assumptions (2,939,033) (2,939,033)
Differences between Expected and Actual
Experience (932,918) (932,918)
Contribution - employer 4,176,197 (4,176,197)
Contribution - employee 1,007,876 (1,007,876)
Net investment income (2) 2,397,191 (2,397,191)
Benefit payments, including refunds of employee
contributions (8,134,067) (8,134,067)
Other changes in fiduciary net position (119,971) 119,971
Net changes during measurement period 2,790,719 (672,774) 3,463,493
Balance at June 30, 2015 $ 163,858,600 $ 106,458,927 $ 57,399,673
(1) The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary
self insurance and OPEB expense.
(2) Net of administrative expenses.
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City's net
pension liability would be if it were calculated using a discount rate that is 1 -percentage point lower or 1 -percentage point higher than the current rate:
71
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
1% Decrease
Net Pension Liability
Current Discount Rate
Net pension Liability
1% Increase
Net Pension Liability
Miscellaneous Plan Safety Plan
6.65% 6.65%
$ 62, 575, 329 $ 79, 677, 343
7.65% 7.65%
$ 40, 723, 811 $ 57, 399, 673
8.65% 8.65%
$ 22, 637, 288 $ 39,101, 351
Pension Plan Fiduciary Net Position
Detailed information about each pension plan's fiduciary net position is available in the separately issued CaIPERS financial reports
Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2016, the City recognized pension expense of $1,391,323 and $4,234,579 for the Miscellaneous and Safety Plans,
respectively. At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following
sources:
72
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Miscellaneous Plan Safety Plan
Deferred Deferred Deferred Deferred
Outflows of Inflows of Outflows of Inflows of
Resources Resources Resources Resources
Pension contributions subsequent to
measurement date $ 3,536,316 $ $ 4,705,078 $
Changes of assumptions 1,902,299 2,239,264
Difference between Expected and
Actual Experiences 1,084,318 710,795
Net differences between projected
and actual earnings on plan
investments 1,229,568 996,956
Total $ 3,536,316 $ 4,216,185 $ 4,705,078 $ 3,947,015
The $3,536,316 and $4,705,078 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be
recognized as a reduction of the net pension liability in the year ending June 30, 2017. Other amounts reported as deferred inflows of resources
related to pensions will be recognized as pension expense as follows:
Year Ending Miscellaneous Safety
June 30 Plan Plan
2016 $ 2,430,421 $ 1,630,641
2017 2,273,231 1,630,641
2018 858,520 1,630,639
2019 (1,345,987) (944, 906)
Total
$ 4,216,185 $ 3,947,015
73
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(10) 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 CaIPERS healthcare program. Employees who retire from the City and receive a CaIPERS 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.
74
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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 CaIPERS 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 Retiree Health Plan are based on pay-as-you-go financing. For fiscal year 2014-15, the City contributed
$807,596, or 26.70%, 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 No. 45. The ARC represents a level of funding that, if paid on an
ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not
to exceed thirty years.
The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes
in the City's net OPEB obligation:
Annual required contribution
Interest on net OPEB obligation
Adjustment to annual required contribution
Annual OPEB cost (expense)
Contributions made
Increase in net OPEB obligation
Net OPEB obligation - beginning of year
Net OPEB obligation - end of year
75
$ 3,090,631
187,030
(253,492)
3,024,169
(807,596)
2,216,573
5,343,727
$ 7,560,300
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation, are as follows:
Percentage of Net
Year Annual Annual OPEB OPEB
ended OPEB Cost Cost Contributed Obligation
06/30/2014 $ 1,223,236 57.67% $ 4,767,274
06/30/2015 1,276,201 54.83% 5,343,727
06/30/2016 3,024,169 26.70% 7,560,300
(d) Funding Status and Funding Progress
As of January 1, 2016, 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)
$ 39,041,375
$ 39,041,375
Funded ratio (actuarial value of plan assets/AAL) 0%
Annual covered payroll (active plan members) $ 35,498,642
UAAL as percentage of annual covered payroll 110%
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.
76
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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, 2016 actuarial valuation, the entry age normal cost method was used. The actuarial assumptions included a 3.5% discount rate
to calculate the present value of future benefit payments; a 2.75% inflation rate; an annual healthcare cost trend rate of 7.25% for calendar year
2016, decreasing to 6.75% for calendar year 2017, then gradually decreasing to 5.3% for calendar year 2019 and beyond; the CaIPERS
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 CaIPERS 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, 2016,
the remaining amortization period is 23 years.
The City's unfunded actuarial accrued liability (UAAL) increased from $16,879,493 as of January 1, 2014 to $39,041,375 as of June 1, 2016.
Approximately $18 million of this change was due to the addition of the implicit subsidy liability. When premiums for retirees are determined
using a blend of active employee and retiree experience, it creates an implicit subsidy to the retirees. Revised Actuarial Standard Practice No. 6
(ASOP 6) effectively requires most public agencies to calculate an implicit subsidy liability whenever their retirees participate in the group medical
plans but only pay the same premiums as active employees. ASOP 6 is effective for all actuarial valuations with a measurement date on or after
March 31, 2015. Prior to this new standard, many public agencies did not report an implicit subsidy liability because of the "community rating"
exemption for employers participating in large pooled health plans like CaIPERS.
(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
77
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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.
General liability and workers' compensation claims are administered by an outside agency and all other claims are administered by the City. The
City has accrued a liability of $8,480,942 at June 30, 2016, 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, 2016 and 2015 are as follows:
Beginning
FY 14-15 $ 9,021,759
FY 15-16 8,305,887
(12) PARTICIPATION IN JOINT VENTURES
Northern California Power Agency
Current -Year
Claims and Changes
in Estimates
$ 634,932
2,118,423
Claim
Payments Ending
$ (1,350,804)
(1,943,368)
$ 8,305,887
8,480,942
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.
78
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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.
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, 2016, the City's balance in the NCPA General Operating Reserve, which has been credited with annual interest earnings and
settlements, is $7,829,843.
79
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Project Participation
The NCPA members and their percentage share at June 30, 2016, which is the most recent available data, are as follows:
NCPA MEMBERS
Hydro Combustion Multiple Lodi
Geothermal Electric Turbine Capital Transmission Energy
Project Project Project #1 Facilities Project Center
Alameda 16.8825% 10.00% 21.820% 19.00% 30.7802%
Bay Area Rapid Transit 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 Department of Water Resources 33.5000
Modesto Irrigation District 10.7143
Power & Water Resources Pooling Agency 2.6679
Turlock Irrigation District 6.3305 9.6106
80
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Bulk power purchased by the City through NCPA amounted to $37,788,477 during the year ended June 30, 2016 and is reflected in utilities
expense in the Electric Enterprise Fund.
NCPA Geothermal Project
A purchase power agreement with NCPA obligates the City for a 10.28% share of the operating costs and debt service of two of NCPA's 110 -
megawatt (MW) steam powered plants, Project Number 2 and Project Number 3. Outstanding long-term debt related to this project was
approximately $35 million at June 30, 2016.
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, 2016,
approximately $376 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, 2016, 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.
81
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Under a power purchase agreement, the City is obligated to pay 39.5% of the debt service and operating costs. At June 30, 2016, approximately
$41 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, 2016, 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, 2016,
approximately $360 million in long-term debt was outstanding. The following are the most recent available audited condensed financial
statements of NCPA:
Condensed Statement of Net Position
June 30, 2016
(in thousands)
Liabilities, Deferred Inflows of Resources and Net
Assets and Deferred Outflows of Resources Position
Current assets $ 83,366 Long-term debt, net $ 776,982
Restricted assets 211,759 Current liabilities 91,653
Electric plant, net 588,870 Non-current liabilities 214,612
Other assets 249,574 Deferred inflows of resources 85,800
Total assets 1,133,569 Net position 27,963
Total liabilities, deferred inflows of resources
Deferred outflows of resources 63,441 and net position $ 1,197,010
Total assets and deferred outflows
of resources $ 1,197,010
82
Sales for resale
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
Condensed Statement of Revenues, Expenses
and Changes in Net Position
Year ended June 30, 2016
(in thousands)
$ 452,645
Operating expenses
Other expenses
Future recoverable costs
Net revenues before refunds
Refunds to participants
Decrease in net position
Net position, beginning of year
Net position, end of year $
(407,051)
(38,860)
(140)
6,594
(8,622)
(2,028)
29,991
Combined Statement of Cash Flow
Year ended June 30, 2016
(in thousands)
Net cash from operating activities $
82,898
Net from investing activities (2,549)
Net cash from capital and related
financing activities
Net cash from noncapital
and related financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents, beginning
of year
(74,654)
(2,563)
3,132
103,179
27,963 Cash and cash equivalents end of year $ 106,311
At June 30, 2016, NCPA's total net outstanding long-term debt was $814,232,000 at an average interest rate of 5%. The current portion of long-
term debt at June 30, 2016, was $37,250,000.
Complete financial information for NCPA may be obtained at the following administration office:
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6411
Transmission Agency of Northern California
The Transmission Agency of Northern California (TANC) was organized under the California Government Code pursuant to a joint powers
agreement entered into by fifteen Northern California utilities including the City of Lodi. The purpose of TANC is to provide electric transmission
or other facilities for the use of its members through its authority to acquire, construct, finance, operate and maintain facilities for electric power
transmission. The joint powers agreement provides that the costs of TANC's activities can be financed or recovered through assessment of its
83
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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, 2016,
approximately $216 million in long-term debt was outstanding of which $8 million is considered current.
Effective July 1, 2016, the City laid off and relinquished its interest and obligations in the California -Oregon Transmission Project to other TANC
members for 25 years. .
Complete financial information for TANC may be obtained at the following administration office:
Transmission Agency of Northern California
35 Iron Point Circle, Suite 255
Folsom, CA 95630
84
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(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, 2016, premiums of $120,863 were paid to CJPRMA for
the liability program.
The participants at June 30, 2016, 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
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
$402,380 in premiums to LAWCX during the year ended June 30, 2016.
The participants at June 30, 2016, 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
85
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
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-four 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.
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 $92,508 in premiums to CaITIP during the year ended June 30, 2016. 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.
86
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
City of Lodi Transit System
Self -
Insured Limit Physical
Program Retention (in millions) Damage
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) 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, 2016, is $17,833,729. This amount is an
estimate and subject to changes resulting from price increases or reductions, technology, or changes in applicable laws or regulations.
87
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(15) 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
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, 2016, for any of the City's outstanding Certificates of Participation and Revenue Bonds.
Construction and Other Significant Commitments — Commitments are existing arrangements to enter into future transactions or events, such
construction contracts for ongoing projects and long-term contractual obligations with suppliers for future purchases at specified prices and
sometimes specified quantities. Significant commitments as of June 30, 2016 are as follows:
General Fund $ 48,353
Other governmental funds 12,785,997
Total $ 12,834,350
88
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2016
(16) SUBSEQUENT EVENTS
On October 19, 2016, the City Council formally approved the City's Budget and Fiscal Policies to establish guidelines for budget development,
administration, and management as well as outline the City's policies in regard to cost recovery of various programs, target reserve levels in all
funds and funding mechanisms for various programs.
The City Council also approved the establishment of an irrevocable trust to pre -fund the unfunded liability associated with the City's Other Post -
Employment Benefits (OPEB) costs and entered into an agreement with the California Employer's Retiree Benefit Trust Program (CEBRT),
selected an investment strategy and further appropriated funds in the amount of $1 million to fund the initial deposit to the trust.
Additionally, the City Council approved the establishment of a pension stabilization trust to pre -fund the unfunded liability associated with the
City's pension fund and entered into an agreement with Public Agency Retirement Services (PARS) and designated that at least 80% of the
available funds over the General Fund reserve requirements for fiscal year 2015-16 be deposited into the trust and approve an appropriation
adjustment to fund the trust once the final numbers for the fiscal year are known. Council further approved the Balanced (Passive Option) as the
investment strategy. Initial deposit to the trust fund will be in the amount of $2,830,210.
On December 21, 2016, the CaIPERS Board of Administration approved lowering the CaIPERS discount rate assumption, the long-term rate of
return, from 7.50 percent to 7.00 percent over the next three years. This will increase the City's employer contribution costs beginning in fiscal
year 2018-19.
89
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REQUIRED SUPPLEMENTARY INFORMATION
Measurement Period
CITY OF LODI
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
MISCELLANEOUS PLAN
2014-15 (1) 2013-14 (1)
Total Pension Liability
Service Cost $ 2,358,112 $ 2,478,901
Interest 12, 061, 399 11, 705,179
Differences Between Expected and Actual Experience (1,655,012)
Changes of Assumptions (2,903,507)
Benefit Payments, Including Refunds of Employee Contributions (8,208,103) (7,729,680)
Net Change in Total Pension Liability 1,652,889 6,454,400
Total Pension Liability- Beginning 165,148,846 158,694,446
Total Pension Liability- Ending (a) 166,801,735 165,148,846
Plan Fiduciary Net Position
Contributions - Employer 2,994,958 2,694,850
Contributions - Employee 1,183,452 1,237,916
Net Investment Income (2) 2,829,910 19,249,151
Benefit Payments, Including Refunds of Employee Contributions (8,208,103) (7,729,680)
Other Changes in Fiduciary Net Position
Net Change in Fiduciary Net Position
Plan Fiduciary Net Position - Beginning
Plan Fiduciary Net Position - Ending (b)
Plan Net Pension Liability/(Asset) - Ending (a) - (b)
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability
Covered -Employee Payroll
Plan Net Pension Liability/(Asset) as a Percentage of
Covered -Employee Payroll
(145,538)
(1,345,321)
127,423,245
126,077,924
$ 40,723,811
75.59%
$ 15,904,486
15,452,237
111,971,008
127,423,245
$ 37,725,601
77.16%
$ 16,669,363
256.05% 226.32%
(1) Historical information is required only for measurement periods for which GASB 68 is applicable.
(2) Net of administrative expenses.
Notes to Schedule:
Benefit Changes: The figures above do not include any liability impact that may have resulted from plan
changes which occurred after June 30, 2014. This applies for voluntary benefit changes as well as any
offers to Two Years Additional Service Credits (a.k.a. Golden Handshakes).
Changes of Assumptions: The discount rate was changed from 7.5 percent (net of administrative expense) to 7.65 percent.
91
CITY OF LODI
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
SAFETY PLAN
Measurement Period
Total Pension Liability
Service Cost
Interest
Changes of Benefit Terms
Differences Between Expected and Actual Experience
Changes of Assumptions
Benefit Payments, Including Refunds of Employee
Benefit Payments, Including Refunds of Employee Contributions
Net Change in Total Pension Liability
Total Pension Liability - Beginning
Total Pension Liability - Ending (a)
Plan Fiduciary Net Position
Contributions - Employer
Contributions - Employee
Net Investment Income (2)
Benefit Payments, Including Refunds of Employee Contributions
Other Changes in Fiduciary Net Position
Net Change in Fiduciary Net Position
Plan Fiduciary Net Position - Beginning
Plan Fiduciary Net Position - Ending (b)
Plan Net Pension Liability/(Asset) - Ending (a) - (b)
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability
Covered -Employee Payroll
Plan Net Pension Liability/(Asset) as a Percentage of
Covered -Employee Payroll
2014-15 (1)
$ 2,968,819
11,827,918
(932,918)
(2,939,033)
(8,134,067)
2,790,719
161,067,881
2013-14 (1)
$ 3,048,048
11,390,793
(7,448,361)
6,990,480
154,077,401
163,858,600 161,067,881
4,176,197 4,106,044
1,007,876 1,058,376
2,397,191 16,070,261
(8,134,067) (7,448,361)
(119,971) -
(672,774) 13,786,320
107,131,701 93,345,381
106,458,927 107,131,701
$ 57,399,673 $ 53,936,180
64.97%
$ 11,569,013
496.15%
(1) Historical information is required only for measurement periods for which GASB 68 is applicable.
(2) Net of administrative expenses.
Notes to Schedule:
Benefit Changes: The figures above do not include any liability impact that may have resulted from plan
changes which occurred after June 30, 2014. This applies for voluntary benefit changes as well as any
offers to Two Years Additional Service Credits (a.k.a. Golden Handshakes).
66.51%
$ 11,194,123
481.83%
Changes of Assumptions: The discount rate was changed from 7.5 percent (net of administrative expense) to 7.65 percent.
92
CITY OF LODI
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF PENSION CONTRIBUTIONS
2015-16 2014-15 2013-14
Miscellaneous Plan:
Actuarially Determined Contributions $ 3,536,316 $ 2,994,958 $ 2,694,850
Contributions in Relation to the Actuarially Determined Contributions (3,536,316) (2,994,958) (2,694,850)
Contribution Deficiency
Covered -Employee Payroll $ 16,572,579 $ 15,904,486 $ 16,669,363
Contributions as a Percentage of Covered -Employee Payroll 21.34%
Safety Plan:
Actuarially Determined Contributions
Contributions in Relation to the Actuarially Determined Contributions
Contribution Deficiency
Covered -Employee Payroll
Contributions as a Percentage of Covered -Employee Payroll
Notes to Schedule:
18.83% 16.17%
$ 4,705,078 $ 4,176,197 $ 4,106,044
(4,705,078) (4,176,197) (4,106,044)
$ 11,293,867
41.66%
$ - $
$ 11,569,013
36.10%
$ 11,194,123
36.68%
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2015-16 were from
the June 30, 2013 public agency valuations.
Actuarial Cost Method
Amortization Method/Period
Entry Age Normal
For details, see June 30, 2013 Funding Valuation Report.
Asset Valuation Method Actuarial Value of Assets. For details, see June 30, 2013 Funding Valuation Report.
Inflation 2.75%
Salary Increases Varies by Entry Age and Service
Payroll Growth 3.00%
Investment Rate of Return 7.50% Net of Pension Plan Investment and Administrative Expenses; includes Inflation.
Retirement Age
Mortality
The probabilities of Retirement are based on the 2010 CaIPERS Experience Study for the
period from 1997 to 2007.
The probabilities of mortality are based on the 2010 CaIPERS Experience Study for
the period from 1997 to 2007. Pre -retirement and Post-retirement mortality rates include
5 years of projected mortality improvement using Scale AA published by the Society of Actuaries.
93
City of Lodi
Required Supplementary Information
Schedule of Funding Progress — OPEB Plan
(in thousands of dollars)
Unfunded
Actuarial
Actuarial Actuarial Accrued Annual UAAL As a
Actuarial Value Accrued Liability Funded Covered Percentage of
Valuation of Assets Liability (UAAL) Ratio Payroll Covered Payroll
Date (A) (B) [(B) - (A)] [(A) / (B)] (C) {[(B) — (A)]/(C)}
1/1/12 $ 0 $ 17,011 $ 17,011 0% $ 7,305 233%
1/1/14 0 16,879 16,879 0% 5,697 296%
1/1/16 0 39,041 39,041 0% 35,499 110%
94
CITY OF LODI
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
Year ended June 30, 2016
Budget Variance with
Original Final Actual Final Budget
REVENUES
Taxes $ 25,031,020 25,031,020 25,327,203 $ 296,183
Licenses and permits 95,500 95,500 92,702 (2,798)
Intergovernmental revenues 12,802,770 12,802,770 12,887,767 84,997
Charges for services 1,578,360 1,578,360 1,437,440 (140,920)
Fines, forfeits and penalties 1,503,900 1,503,900 1,494,758 (9,142)
Investment and rental income 1,525,100 1,525,100 1,554,198 29,098
Miscellaneous revenue 215,100 215,100 349,153 134,053
Total revenues 42,751,750 42,751,750 43,143,221 391,471
EXPENDITURES
Current:
General government:
City Manager 934,230 1,008,020 986,544 21,476
City Clerk and Council 547,020 537,086 515,455 21,631
City Attorney 488,650 520,470 506,871 13,599
Human Resources 450,330 458,160 451,236 6,924
Information Systems 1,185,650 1,238,150 1,144,293 93,857
Financial Services 1,697,170 1,765,600 1,682,702 82,898
Budget and Treasury 273,170 273,170 250,996 22,174
Non Departmental 1,485,840 1,286,790 1,286,787 3
Total general government 7,062,060 7,087,446 6,824,884 262,562
Public protection:
Police 18,016,970 18,583,900 18,134,374 449,526
Fire 10,534,150 10,927,800 10,478,218 449,582
Total public protection 28,551,120 29,511,700 28,612,592 899,108
Public Works 2,341,840 2,174,320 1,866,277 308,043
Library
Total expenditures
EXCESS OF REVENUES OVER
EXPENDITURES
1,340,940 1,340,940 1,152,901 188,039
39,295,960 40,114,406 38,456,654 1,657,752
3,455,790 2,637,344 4,686,567 2,049,223
OTHER FINANCING SOURCES (USES)
Transfers in 3,952,000 3,952,000 3,952,000
Transfers out (7,558,340) (7,869,927) (7,869,927)
Total other financing sources (uses) (3,606,340) (3,917,927) (3,917,927)
CHANGES IN FUND BALANCE (150,550) (1,280,583) 768,640 2,049,223
FUND BALANCE , beginning of year 10,928,986 10,928,986 12,478,553 1,549,567
FUND BALANCE, end of year $ 10,778,436 9,648,403 13,247,193 $ 3,598,790
The note to the required supplementary information is an integral part of this schedule.
95
CITY OF LODI
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - STREETS FUND
Year ended June 30, 2016
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
CHANGES IN FUND BALANCE
$
ORIGINAL FINAL
BUDGET BUDGET ACTUAL VARIANCE
2,650,330 19,695,512
561,790 561,790
3,930 3,930
40,000 40,000
3,256,050 20,301,232
2,372,990
2,361,000
2,369,345
20,029,464
4,733,990 22,398,809
(1,477,940) (2,097,577)
607,160
6,751,837 $
1,035,795
44,317
63,071
(12,943,675)
474,005
40,387
23,071
7,895,020 (12,406,212)
1,964,570
6,155,406
404,775
13,874,058
8,119,976 14,278, 833
(224,956) 1,872,621
607,160 607,160
(870,780) (1,490,417)
FUND BALANCE, BEGINNING OF YEAR 3,192,312
382,204 1,872,621
3,192,312 3,192,312
FUND BALANCE, END OF YEAR $ 2,321,532 1,701,895 3,574,516 $ 1,872,621
The note to the required supplementary information is an integral part of this schedule.
96
CITY OF LODI
Note to the Required Supplementary Information
June 30, 2016
Budgetary Data
The City adopts an annual budget for the general and special revenue funds. These budgets are prepared in accordance with generally
accepted accounting principles. As part of the City's internal controls, the City maintains budgetary controls. The objective of these
budgetary controls is to ensure compliance with the legal provisions embodied in the annual appropriated budget approved by the City
Council. The accompanying financial statements present budget and actual data only of funds for which an annual budget was adopted.
The budgets for capital projects are primarily "long-term" budgets that emphasize the major programs and capital project plans extending
over a number of years. Due to the long-term nature of these projects, "annual" budget and actual comparisons are not considered
meaningful. Formal budgetary integration is not employed for debt service funds since effective budgetary control is alternatively achieved
through the bond indenture provisions. Accordingly, no budgetary information is included in the accompanying basic financial statements
for capital projects and debt service funds.
The City Council follows the following procedures in establishing the budgetary data reflected in the accompanying basic financial
statements:
Original Budget
On or prior to the first regular Council meeting in June of each year, the City Manager submits to the City Council a proposed
Financial Plan and Budget for the fiscal year commencing July 1. The budget includes proposed expenditures and the means of
financing them.
Budgeted revenues are adopted by the City Council at the time the budget is approved. Budgeted revenues are modified when
the tax base changes, when fees are modified or when new revenue sources are identified.
Public hearings are conducted during meetings of the City Council to obtain citizens' comments. Prior to July 1, the budget is
legally enacted through passage of a resolution.
Final Budget
The final budgetary data presented in the basic financial statements reflects the following changes to the original budget:
• Budgeted expenditures represent original appropriations adjusted by budget transfers and appropriation amendments.
The legal level of budgetary control (that is, the level at which expenditures can not legally exceed the appropriated
97
amount) is at the department level. The operating budget is prepared and controlled at the department level (e.g., city
clerk, city manager, etc.) for the General Fund. Special revenue fund expenditures, including transfers out, are approved
by Council at the fund level.
• The City Manager may transfer appropriations from one activity to another within a department without approval from the
City Council. All other appropriation adjustments during the year, whether transfers, increases or decreases, require City
Council approval.
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, 2016
Special Capital
Revenue Projects
ASSETS
Total
Cash and investments $ 2,729,220 8,318,522 $ 11,047,742
Receivables:
Accounts, net 46,172 325,529 371,701
Interest 3,389 4,973 8,362
Due from other funds 68,114 68,114
Due from other governmental agencies 771,199 771,199
Inventory 1,121 1,121
Other assets 758 758
Total assets $ 3,619,973 8,649,024 $ 12,268,997
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities
Due to other funds
Advances from other funds
Unearned revenue
Total liabilities
Deferred Inflows of Resources:
Unavailable revenue
$ 159,743
68,114
40,469
395,818 $
1,266,882
268,326
555,561
68,114
1,266,882
40,469
1,662,700 1,931,026
44,707 44,707
Fund Balances:
Nonspendable:
Inventory 1,121 1,121
Other assets 758 758
Restricted for:
Road -related projects 21,788 21,788
Capital projects 6,986,324 6,986,324
Public safety 473,849 473,849
Community development 2,423,259 2,423,259
Parks, recreation and community services 386,165 386,165
Total fund balances 3,306,940 6,986,324 10,293,264
Total liabilities, deferred inflows of resources, and fund balances $ 3,619,973 8,649,024 $ 12,268,997
99
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
Year ended June 30, 2016
Special Debt Capital
Revenue Service Projects
Revenues:
Licenses and permits $ 1,552,860
Intergovernmental revenues 1,443,319
Charges for services 2,375,618
Investment and rental income 505,664
Miscellaneous revenue 68,601
Total revenues 5,946,062
Expenditures:
Current:
General government
Public protection
Public works
Community development
Parks and recreation
Capital outlay
Debt service:
Interest and fiscal charges
Principal payment
Total expenditures
Deficiency of revenues under expenditures
2,534,854
208,366
239,387
1,601,504
2,368,834
701,281
845,255
980,872
51,306
635,632
Total
1,552,860
1,443,319
3,356,490
556,970
704,233
1,667,810 7,613,872
2,534,854
208,366
239,387
1,601,504
2,368,834
6,260,802 6,962,083
1,470 846,725
260,000 260,000
7,654,226 1,105,255
(1,708,164) (1,105,255)
6,262,272 15,021,753
(4,594,462) (7,407,881)
Other financing sources (uses):
Transfers in 3,890,820 1,105,255 3,755,149
Transfers out (843,930) (2,032)
Capital lease proceeds 562,387
Loan proceeds 468,000
Total other financing sources (uses) 3,046,890 1,105,255 4,783,504
Changes in fund balances 1,338,726 189,042
Fund balances, beginning of year 1,968,214 6,797,282
Fund balances, end of year $ 3,306,940 6,986,324 $
100
8,751,224
(845,962)
562,387
468,000
8,935,649
1,527,768
8,765,496
10,293,264
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.
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.
101
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NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
June 30, 2016
Parks, HOME Program and
Recreation and Community
Community Public Community Development
Services Safety Development Transportation Block Grants Total
ASSETS
Cash and Investments $ 382,185 2,347,035 $ 2,729,220
Receivables:
Accounts, net 610 1,491 44,071 46,172
Interest 432 475 2,450 32 3,389
Due from other funds 68,114 68,114
Due from other governmental agencies 482,984 99,165 65,904 123,146 771,199
Inventory 1,121 1,121
Other assets 104 550 104 758
TOTAL ASSETS $ 485,251 483,866 2,483,607 44,071 123,178 $ 3,619,973
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES
LIABILITIES
Accounts payable and other liabilities $ 58,022 60,244 23 41,454 $ 159,743
Due to other funds 39,839 22,781 5,494 68,114
Unearned revenue 9,467 31,002 40,469
TOTAL LIABILITIES 97,861 9,467 60,244 22,804 77,950 268,326
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue
44,707 44,707
FUND BALANCES
Nonspendable
Inventory 1,121 1,121
Other assets 104 550 104 758
Restricted for:
Road -related projects 21,267 521 21,788
Public safety 473,849 473,849
Community development 2,423,259 2,423,259
Parks, recreation and community services 386,165 386,165
TOTAL FUND BALANCES 387,390 474,399 2,423,363 21,267 521 3,306,940
TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES $ 485,251 483,866 2,483,607 44,071 123,178 $ 3,619,973
103
REVENUES
Licenses and permits
Intergovernmental revenues
Charges for services
Investment and rental income
Miscellaneous revenue
Total revenues
EXPENDITURES
Current
General government
Public protection
Public works
Community development
Parks and recreation
Capital outlay
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2016
$
Parks, HOME Program and
Recreation and Community
Community Public Community Development
Services Safety Development Transportation Block Grants
663,977
1,636,709
482,383
25,832
429,771
3,736
2,808,901 433,507
2,534,854
2,368,834
663,977
208,366
5,567,665 208,366
1,552,860
65,904
738,909
19,545
42,769
43,998 239,669
2,419,987 43,998
1,601,504
37,304
1,601,504 37,304
Total
$ 1,552,860
1,443,319
2,375,618
505,664
68,601
239,669 5,946,062
239,387
2,534,854
208,366
239,387
1,601,504
2,368,834
701,281
239,387 7,654,226
(2,758,764) 225,141 818,483 6,694 282 (1,708,164)
3,725,820
(808,930)
165,000
(35,000)
3,890,820
(843,930)
2,916,890 130,000 3,046,890
CHANGES IN FUND BALANCES 158,126 225,141 948,483 6,694 282 1,338,726
FUND BALANCES, beginning of year 229,264 249,258 1,474,880 14,573 239 1,968,214
FUND BALANCES , end of year $ 387,390 474,399 2,423,363 21,267 521 $ 3,306,940
104
CITY OF LODI
SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS
Year ended June 30, 2016
PARKS, RECREATION AND
COMMUNITY SERVICES
FINAL
BUDGET ACTUAL VARIANCE
REVENUES
Intergovernmental revenues $ 710,000 663,977 $ (46,023)
Charges for services 1,752,650 1,636,709 (115,941)
Investment and rental income 430,050 482,383 52,333
Miscellaneous revenue 10,000 25,832 15,832
Total Revenue 2,902,700 2,808,901 (93,799)
EXPENDITURES
Current
General government
Parks and recreation
Capital outlay
Total Expenditures
DEFICIENCY OF REVENUES UNDER
EXPENDITURES
2,703,350
2,517,900
710,000
5,931,250
2,534,854
2,368,834
663,977
168,496
149,066
46,023
5,567,665 363,585
(3,028,550) (2,758,764) 269,786
OTHER FINANCING SOURCES (USES)
Transfers in 3,725,820 3,725,820
Transfers out (808,930) (808,930)
Total other financing sources (uses) 2,916,890 2,916,890
CHANGES IN FUND BALANCE (111,660)
158,126 269,786
FUND DEFICIT, BEGINNING OF YEAR 229,264 229,264
FUND BALANCE, END OF YEAR $ 117,604 387,390 $ 269,786
105
CITY OF LODI
SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (continued)
Year ended June 30, 2016
PUBLIC SAFETY
FINAL
BUDGET ACTUAL VARIANCE
REVENUES
Intergovernmental revenues $ 499,974 429,771 $ (70,203)
Fines, forfeits and penalties 3,000 (3,000)
Investment and rental income 480 3,736 3,256
Total Revenue 503,454 433,507 (69,947)
EXPENDITURES
Current
Public protection 622,994 208,366
CHANGES IN FUND BALANCE (119,540) 225,141
FUND BALANCE, BEGINNING OF YEAR 249,258 249,258
FUND BALANCE, END OF YEAR $ 129,718 474,399 $
106
414,628
344,681
344,681
CITY OF LODI
SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (continued)
Year ended June 30, 2016
COMMUNITY DEVELOPMENT
FINAL
BUDGET ACTUAL VARIANCE
REVENUES
Licenses and permits $ 755,500 1,552,860 $ 797,360
Intergovernmental revenues 400,000 65,904 (334,096)
Charges for services 412,800 738,909 326,109
Investment and rental income 3,520 19,545 16,025
Miscellaneous revenue 122,680 42,769 (79,911)
Total Revenue 1,694,500 2,419,987 725,487
EXPENDITURES
Current
Community development
EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER)
EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
2,043,410
(348,910)
1,601,504 441,906
818,483 1,167,393
165,000 165,000
(35,000) (35,000)
130,000 130,000
CHANGES IN FUND BALANCE (218,910) 948,483 1,167,393
FUND BALANCE, BEGINNING OF YEAR
1,474,880 1,474,880
FUND BALANCE, END OF YEAR $ 1,255,970 2,423,363 $ 1,167,393
107
CITY OF LODI
SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (continued)
Year ended June 30, 2016
REVENUES
Intergovernmental revenues
EXPENDITURES
Capital outlay
TRANSPORTATION
FINAL
BUDGET ACTUAL VARIANCE
$ 44,027 43,998 $ (29)
44,000
37,304 6,696
CHANGES IN FUND BALANCE 27 6,694 6,667
FUND BALANCE, BEGINNING OF YEAR
14,573 14,573
FUND BALANCE, END OF YEAR $ 14,600 21,267 $ 6,667
108
CITY OF LODI
SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (continued)
Year ended June 30, 2016
REVENUES
Intergovernmental revenues
EXPENDITURES
Current
Public works
CHANGES IN FUND BALANCE
FUND BALANCE, BEGINNING OF YEAR
HOME PROGRAM and COMMUNITY DEVELOPMENT
BLOCK GRANTS
FINAL
BUDGET ACTUAL VARIANCE
$ 1,008,950 239,669 $ (769,281)
1,008,950
239,387 769,563
282 282
239 239
FUND BALANCE, END OF YEAR $ 239 521 $ 282
109
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NONMAJOR GOVERNMENTAL FUNDS
CAPITAL PROJECT FUNDS
CAPITAL PROJECT FUNDS
Vehicle and Equipment
This fund was established to account for the financing and replacement of vehicles and equipment for all funds of the City with the exception of the
Enterprise Funds. Financing is primarily provided through transfers from other funds, interest earnings and sales of surplus property.
Library
This fund is used to account for the acquisition, construction and installation of capital facilities for the Library.
Hutchins Street Square
When the old Lodi High School burned down, the City purchased the property and renamed it Hutchins Street Square. The Old Lodi High Site
Foundation was established 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 construction projects and capital purchases in excess of $10,000 with 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.
111
CITY OF LODI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS - CAPITAL PROJECT FUNDS
June 30, 2016
Capital
Vehicle and Hutchins Outlay Parks
Equipment Library Street Square Reserve Capital Total
ASSETS
Cash and investments $ 2,658,375 325,494 3,285 4,373,695 957,673 $ 8,318,522
Receivables:
Accounts, net 7,585 317,944 325,529
Interest 1 3,861 1,111 4,973
TOTAL ASSETS $ 2,665,960 325,494 3,286 4,695,500 958,784 $ 8,649,024
LIABILITIES
Accounts payable and other liabilities $ 216,176 167,428 12,214 $ 395,818
Advances from other funds 1,074,025 192,857 1,266,882
TOTAL LIABILITIES 216,176 1,241,453 205,071 1,662,700
FUND BALANCES
Restricted for:
Capital projects
TOTAL LIABILITIES AND FUND BALANCES
2,449,784 325,494 3,286 3,454,047 753,713 6,986,324
$ 2,665,960
325,494 3,286 4,695,500 958,784 $ 8,649,024
112
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS - CAPITAL PROJECT FUNDS
Year ended June 30, 2016
REVENUES
Charges for services
Investment and rental income
Miscellaneous revenue
Total revenues
EXPENDITURES
Capital outlay
Debt service:
Interest and fiscal charges
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Capital lease proceeds
Loan proceeds
Total other financing sources (uses)
Vehicle and
Equipment
Library
Hutchins Capital
Street Outlay Parks
Square Reserve Capital
980,872 $
10 40,758 10,538
302,680 189,391 143,561
302,680 189,391 10 1,021,630 154,099
1,771,383 15,897
3,874,517 599,005
Total
980,872
51,306
635,632
1,667,810
6,260,802
1,470 1,470
1,772,853 15,897
3,874,517
599,005 6,262,272
(1,470,173) 173,494 10 (2,852,887) (444,906) (4,594,462)
1,520,499
(2,032)
468,000
152,000
1,986,467 152,000
1,783,140 299,510
562,387
2,345,527
3,755,149
(2,032)
562,387
468,000
299,510 4,783,504
CHANGES IN FUND BALANCES 516,294 325,494 10 (507,360) (145,396) 189,042
FUND BALANCES , BEGINNING OF YEAR 1,933,490 3,276 3,961,407 899,109 6,797,282
FUND BALANCES, END OF YEAR $ 2,449,784 325,494 3,286 3,454,047 753,713 $ 6,986,324
113
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INTERNAL SERVICE FUNDS
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
115
CITY OF LODI
COMBINING STATEMENT OF FUND NET POSITION
INTERNAL SERVICE FUNDS
June 30, 2016
Fleet
Services
Benefits
Insurance Total
ASSETS
Current assets:
Cash and investments $ 137,285 1,653,111 12,554,595 $ 14,344,991
Receivables:
Accounts, net 16,925 31,785 48,710
Interest 1,712 12,779 14,491
Inventory 139,320 139,320
Other assets 101,017 101,017
Noncurrent assets:
Capital assets (net) 26,050 26,050
Total assets 319,580 1,787,625 12,567,374 14,674,579
LIABILITIES
Current liabilities:
Accounts payable and other liabilities
Self-insurance liability
Accrued compensated absences
Noncurrent liabilities:
Self-insurance liability
Accrued compensated absences
Total liabilities
64,758 78,028
27,397
107,950
200,105 78,028
31,476 174,262
2,118,423 2,118,423
27,397
6,362,519 6,362,519
107,950
8,512,418 8,790,551
NET POSITION
Net investment in capital assets 26,050 26,050
Unrestricted (deficit) 93,425 1,709,597 4,054,956 5,857,978
Total net position $ 119,475 1,709,597 4,054,956 $ 5,884,028
116
CITY OF LODI
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDS
Year ended June 30, 2016
Fleet
Services
Benefits
Insurance Total
OPERATING REVENUES
Charges for services $ 1,593,311 7,633,467 3,117,934 $ 12,344,712
OPERATING EXPENSES
Personnel services 790,096
Supplies, materials and services 926,054
Utilities 16,037
Depreciation 1,448
Claims 26,100
TOTAL OPERATING EXPENSES
OPERATING LOSS
NONOPERATING REVENUES
Investment income
Other revenues
TOTAL NONOPERATING REVENUES
715,059
5,692,191
1,231,145
1,759,735 7,638,395
137,779 1,642,934
871,591 7,489,836
565 16,602
1,448
2,118,423 3,375,668
3,128,358 12,526,488
(166,424) (4,928) (10,424) (181,776)
13,957
145,876 69,780
145,876 83,737
110,264 124,221
26,682 242,338
136,946 366,559
INCOME (LOSS) BEFORE TRANSFERS (20,548) 78,809 126,522 184,783
Transfers out (125,000) (125,000)
Changes in net position (20,548) 78,809 1,522 59,783
NET POSITION - BEGINNING OF YEAR, as previously reported (928,620) (3,712,939) 4,053,434 (588,125)
Change in accounting 1,068,643 5,343,727 6,412,370
NET POSITION - BEGINNING OF YEAR, as restated 140,023 1,630,788 4,053,434 5,824,245
NET POSITION - END OF YEAR $ 119,475 1,709,597 4,054,956 $ 5,884,028
117
CITY OF LODI
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
Year ended June 30, 2016
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 (used for) operating activities
Cash flows from noncapital financing activities:
Transfers out
Cash flows from investing activities:
Interest on investments
Change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Reconciliation of operating loss to net cash provided by (used for) operating activities:
Operating loss
Adjustments to reconcile operating loss to
net cash provided by (used for) operating activities:
Depreciation
Other revenues
Changes in assets and liabilities:
Increase in accounts receivable
Decrease in inventory
Increase in other assets
Increase in accounts payable and accrued liabilities
Increase in compensated absences
Increase in self-insurance liability
Net cash provided by (used for) operating activities
118
Fleet
Services
$ 128,951
1,593,311
(926,926)
(734, 583)
60,753
Benefits
37,995
7,633,467
(6,998,578)
(715, 059)
(42,175)
49 13,309
60,802 (28,866)
76,483 1,681,977
$ 137,285 1,653,111
$ (166,424) (4,928)
1,448
145,876 69,780
(16,925) (31,785)
30,612
(101,017)
10,653 25,775
55,513
$ 60,753 (42,175)
Insurance
Total
26,682 $ 193,628
3,117,934 12,344,712
(2,815,198) (10,740,702)
(137,779) (1,587,421)
191,639 210,217
(125,000) (125,000)
105,294
171,933
118,652
203,869
12,382,662 14,141,122
12,554,595 $ 14,344,991
(10,424) $ (181,776)
26,682
326
175,055
1,448
242,338
(48, 710)
30,612
(101,017)
36,754
55,513
175,055
191,639 $ 210,217
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.
ASSETS
Cash and Investments
CITY OF LODI
COMBINING STATEMENT OF FIDUCIARY NET POSITION
PRIVATE -PURPOSE TRUST FUNDS
June 30, 2016
Library
Hutchins Street
Square Bequest
Total
$ 233,692 1,537 $ 235,229
NET POSITION -EXPENDABLE $ 233,692 1,537 $ 235,229
119
CITY OF LODI
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PRIVATE -PURPOSE TRUST FUNDS
Year ended June 30, 2016
ADDITIONS
Investment income and donations
Library
$ 19,076
Hutchins Street
Square Bequest Total
15 $ 19,091
DEDUCTIONS
Current
Library 22,767 22,767
CHANGES IN NET POSITION (3,691) 15
NET POSITION, BEGINNING OF YEAR 237,383 1,522
NET POSITION, END OF YEAR $ 233,692 1,537 $
120
(3,676)
238,905
235,229
CITY OF LODI
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUND
Year ended June 30, 2016
Special Assessments
Balance Balance
July 1, 2015 Additions Deductions June 30, 2016
ASSETS
Cash and investments $ 428,973
Interest receivable 277
TOTAL ASSETS
$ 429,250
28,671
35,437 $ 422,207
440 277 440
29,111
35,714 $ 422,647
LIABILITIES
Agency obligations $ 429,250 6,603 $ 422,647
121
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STATISTICAL SECTION
UNAUDITED
(This page intentionally left blank.)
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.
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.
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.
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.
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.
Sources
Unless otherwise noted, the information in these schedules are derived from the comprehensive annual financial
report for the current year.
123
124-129
130-135
136-142
143-145
146-150
CITY OF LODI
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Governmental activities:
Net investment in capital assets $ 111,256 $ 105,944 $ 105,462 $ 106,828 $ 107,587 $ 114,165 $ 113,308 $ 115,036 $ 107,874 $ 110,815
Restricted 13,911 12,001 11,809 12,601 16,176 14,894 13,233 13,492 15,043 15,044
Unrestricted (76,984) (74,146) 2,551 1,157 (3,606) (5,148) (6,110) (3,462) (4,162) (3,968)
Total governmental activities net position $ 48,183 $ 43,799 $ 119,822 $ 120,586 $ 120,157 $ 123,911 $ 120,431 $ 125,066 $ 118,755 $ 121,891
Business -type activities:
Net investment in capital assets $ 121,468 $ 119,924 $ 116,156 $ 113,008 $ 109,582 $ 104,858 $ 100,233 $ 95,533 $ 98,109 $ 97,961
Restricted 3,893 6,810 6,703 6,600 6,533 5,303 8,657 8,711
Unrestricted 14,427 892 16,535 14,827 (34,563) (34,129) (28,591) (35,448) 26,460 6,417
Total business -type activities net position $ 139,788 $ 127,626 $ 139,394 $ 134,435 $ 81,552 $ 76,032 $ 71,642 $ 60,085 $ 133,226 $ 113,089
Primary government:
Net investment in capital assets $ 232,724 $ 225,868 $ 221,618 $ 219,836 $ 217,169 $ 219,023 $ 213,541 $ 210,569 $ 205,983 $ 208,776
Restricted 17,804 18,811 18,512 19,201 22,709 20,197 13,233 13,492 23,700 23,755
Unrestricted (62,557) (73,254) 19,086 15,984 (38,169) (39,277) (34,701) (38,910) 22,298 2,449
Total primary government net position $ 187,971 $ 171,425 $ 259,216 $ 255,021 $ 201,709 $ 199,943 $ 192,073 $ 185,151 $ 251,981 $ 234,980
Source: City of Lodi Financial Services Division
124
CITY OF LODI
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Expenses
Governmental activities:
General government $ 10,369 $ 9,109 $ 9,580 $ 8,943 $ 9,381 $ 8,262 $ 8,749 $ 9,451 $ 8,307 $ 7,853
Public protection 31,395 27,426 27,884 25,930 25,432 25,113 27,186 27,110 25,531 23,328
Public works 10,326 10,281 10,644 10,546 10,248 9,305 10,462 10,464 12,224 10,599
Community development 1,792 1,165 1,174 1,050 1,003 973 1,114 1,323 2,027 2,130
Library 1,389 1,324 1,282 1,342 1,381 1,355 1,440 1,495 1,696 1,630
Parks and recreation 4,262 3,116 3,164 2,933 2,913 5,778 5,077 4,609 4,414 4,172
Interest and fiscal charges 822 818 825 416 1,033 1,075 1,105 1,134 1,166 1,201
Total governmental activities expenses 60,355 53,239 54,553 51,160 51,391 51,861 55,133 55,586 55,365 50,913
Business -type activities:
Electric 61,764 64,367 61,974 61,106 62,599 63,399 64,364 73,358 65,201 67,534
Wastewater 14,024 12,912 12,527 13,423 17,441 11,687 11,289 10,940 12,227 9,271
Water 10,967 9,905 11,014 (34,877) 7,953 8,188 6,148 9,604 9,920 9,875
Transit 4,415 4,134 3,834 4,141 4,256 4,132 4,785 4,832 3,908 3,577
Total business -type activities expenses 91,170 91,318 89,349 43,793 92,249 87,406 86,586 98,734 91,256 90,257
Total primary government expenses $ 151,525 $ 144,557 $ 143,902 $ 94,953 $ 143,640 $ 139,267 $ 141,719 $ 154,320 $ 146,621 $ 141,170
Program Revenues
Governmental activities:
Charges for services:
General government $ 1,490 $ 1,971 $ 1,955 $ 2,337 $ 1,718 $ 1,793 $ 2,184 $ 1,631 $ 1,544 $ 1,280
Public protection 740 609 582 538 500 643 714 844 837 582
Public works 734 832 415 224 166 356 326 358 755 295
Community development 2,292 1,378 1,219 1,458 993 1,601 786 749 1,085 1,174
Library 63 43 43 44 43 47 48 44 53 53
Parks and recreation 1,637 1,360 1,479 1,404 1,241 1,245 1,269 1,158 851 1,007
Operating grants and contributions 2,596 3,369 2,686 2,341 2,300 2,236 1,927 1,951 2,305 2,589
Capital grants and contributions 10,559 3,131 5,359 4,216 5,025 6,737 5,122 10,822 4,717 6,975
Total governmental activities program revenues 20,111 12,693 13,738 12,562 11,986 14,658 12,376 17,557 12,147 13,955
Business -type activities:
Charges for services:
Electric 67,507 65,237 64,693 63,230 64,251 62,167 69,664 74,000 69,284 65,809
Wastewater 14,960 14,714 14,305 13,747 13,280 13,090 11,513 9,276 9,091 8,524
Water 12,161 12,723 12,756 12,441 12,083 11,940 11,716 11,787 11,350 10,040
Transit 210 230 203 185 186 195 217 251 278 401
Operating grants and contributions 5,089 5,186 4,431 5,178 4,214 3,983 3,449 3,653 3,381 2,621
Capital grants and contributions 2,860 5,284 2,846 4,715 3,206 5,150 1,408 5,774 8,064 19,984
Total business -type activities program revenues 102,787 103,374 99,234 99,496 97,220 96,525 97,967 104,741101,448 107,379
Total primary government program revenues $ 122,898 $ 116,067 $ 112,972 $ 112,058 $ 109,206 $ 111,183 $ 110,343 $ 122,298 $ 113,595 $ 121,334
Net (Expense)/Revenue
Governmental activities $ (40,244) $ (40,546) $ (40,815) $ (38,598) $ (39,405) $ (37,203) $ (42,757) $ (38,029) $ (43,218) $ (36,958)
Business -type activities 11,617 12,056 9,885 55,703 4,971 9,119 11,381 6,007 10,192 17,122
Total primary government net expense $ (28,627) $ (28,490) $ (30,930) $ 17,105 $ (34,434) $ (28,084) $ (31,376) $ (32,022) $ (33,026) $ (19,836)
(Continued)
125
CITY OF LODI
CHANGES IN NET POSITION (Continued)
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
General Revenues and Other Changes in Net Position:
Governmental activities:
Taxes:
Property $ 13,919 $ 13,502 $ 12,758 $ 12,218 $ 12,103 $ 12,698 $ 12,836 $ 13,564 $ 13,838 $ 9,524
Franchise taxes 9,073 8,976 8,838 8,735 8,712 8,692 8,658 8,357 9,338 9,609
Business license tax 1,552 1,486 1,528 1,524 1,628 1,246 1,242 1,190 1,140 1,082
Transient occupancy tax 783 666 594 546 486 426 382 405 396 380
Grants and contributions not restricted to specific programs 11,834 10,651 10,138 9,382 9,277 8,954 7,064 8,249 9,593 14,772
Investment earnings 326 145 203 44 132 133 155 467 1,008 874
Rent 1,954 1,942 1,906 1,370
Other 719 605 528 610 2,052 1,556 1,917 2,382 1,077 621
Special item -gain on sale of parkland 321
Transfers 4,469 7,514 4,792 5,682 1,261 6,657 5,868 5,368 3,693 4,727
Total governmental activities 44,629 45,487 41,285 40,111 35,651 40,683 38,122 39,982 40,083 41,589
Business -type activities:
Investment earnings 952 632 757 497 566 575 731 1,385 2,028 2,380
Litigation- environmental lawsuits proceeds 100 1,107 300 2,010 8,892 6,222
Rent 4 4 4
Other 3,957 2,745 2,370 1,258 1,244 1,353 923 1,891 2,717 1,749
Special item -swap termination (8,979)
Transfers (4,469) (7,514) (4,792) (5,682) (1,261) (6,657) (5,868) (5,368) (3,693) (4,727)
Total business -type activities 544 (4,133) (1,661) (2,820) 549 (4,729) (3,914) (9,061) 9,944 5,624
Total primary government $ 45,173 $ 41,354 $ 39,624 $ 37,291 $ 36,200 $ 35,954 $ 34,208 $ 30,921 $ 50,027 $ 47,213
Change in Net Position
Governmental activities $ 4,385 $ 4,941 $ 470 $ 1,513 $ (3,754) $ 3,480 $ (4,635) $ 1,953 $ (3,135) $ 4,631
Business -type activities 12,161 7,923 8,224 52,883 5,520 4,390 7,467 (3,054) 20,136 22,746
Total primary government $ 16,546 $ 12,864 $ 8,694 $ 54,396 $ 1,766 $ 7,870 $ 2,832 $ (1,101) $ 17,001 $ 27,377
Source: City of Lodi Financial Services Division
126
CITY OF LODI
FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
General Fund
Reserved $ $ $ $ $ $ $ 389 $ 383 $ 1,150 $ 1,144
Unreserved 3,896 3,383 4,159 5,175
Nonspendable 33 10 9 6 357
Committed 465 345 301 277
Assigned 1,564 26 29 65 50 136
Unassigned 11,185 12,107 9,134 7,614 6,233 5,654
Total General Fund $ 13,247 $ 12,478 $ 9,474 $ 7,965 $ 6,289 $ 6,147 $ 4,285 $ 3,766 $ 5,309 $ 6,319
All other governmental funds
Reserved $ $ $ $ $ $ $ 7,801 $ 1,487 $ 1,932 $ 1,874
Unreserved, reported in:
Special revenue funds 963 6,540 7,433 6,651
Capital projects funds 3,649 5,217 5,504 6,200
Nonspendable 1 1 4 3 1
Restricted 13,867 11,957 11,764 12,556 15,017 13,786
Unassigned (99) (512) (863) (846)
Total all other governmental funds $ 13,868 $ 11,958 $ 11,669 $ 12,047 $ 14,155 $ 12,940 $ 12,413 $ 13,244 $ 14,869 $ 14,725
$ 27,115 $ 24,436 $ 21,143 $ 20,012 $ 20,444 $ 19,087 $ 16,698 $ 17,010 $ 20,178 $ 21,044
Implemented GASB 54 during the 2011 fiscal year changing the presentation of fund balance.
Source: City of Lodi Financial Services Division
127
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Revenues:
Taxes $ 25,327 $ 24,631 $ 23,719 $ 23,022 $ 22,928 $ 23,061 $ 23,118 $ 23,516 $ 24,712 $ 20,594
Licenses and permits 1,646 967 852 921 686 954 520 431 683 717
Intergovernmental revenues 21,083 17,557 17,392 14,625 15,289 16,865 12,579 13,229 14,980 19,892
Charges for services 5,830 3,827 3,558 3,880 3,427 3,946 4,116 3,329 4,757 4,696
Fines and forfeitures 1,495 1,573 1,557 1,632 1,357 1,407 1,444 1,416 1,321 1,245
Investment and rental income 2,155 2,029 2,025 1,389 1,264 817 923 922 1,312 998
Contributions and donations 282 1,003 689
Miscellaneous revenue 1,116 538 1,078 813 799 1,093 1,762 822 304
Total revenues 58,652 51,404 50,106 46,547 45,764 48,538 43,793 44,605 48,587 48,446
Expenditures:
Current:
General government 9,360 9,151 9,019 8,522 8,820 7,667 7,666 8,431 9,545 8,893
Public protection 28,821 26,646 27,093 26,282 25,249 24,489 24,466 24,716 23,979 22,211
Public works 4,070 4,508 4,393 4,532 4,174 3,715 4,383 4,657 5,842 5,587
Community development 1,601 1,226 1,192 1,111 1,037 969 1,013 1,341 2,006 2,062
Library 1,153 1,311 1,268 1,411 1,381 1,357 1,322 1,500 1,673 1,588
Parks and recreation 2,369 2,145 2,299 2,370 2,254 4,127 4,180 3,776 3,826 3,598
Capital outlay 13,117 9,842 7,652 6,271 2,961 9,377 5,108 6,791 4,207 3,526
Debt service:
Interest and fiscal charges 847 845 851 483 1,039 1,081 1,110 1,139 1,170 1,205
Principal payments 260 245 630 752 725 789 898 900
Advance refunding escrow 1,689
Total expenditures 61,598 55,674 53,767 52,916 47,545 53,534 49,973 53,140 53,146 49,570
Excess (deficiency) of revenues
over (under) expenditures (2,946) (4,270) (3,661) (6,369) (1,781) (4,996) (6,180) (8,535) (4,559) (1,124)
(Continued)
128
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS (continued)
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Other financing sources (uses):
Transfers in 13,310 15,599 11,596 12,546 14,486 11,881 11,173 10,609 7,058 8,863
Transfers out (8,716) (8,036) (6,804) (6,864) (11,348) (5,224) (5,305) (5,242) (3,365) (4,136)
Proceeds from sale of land 98
Refunding bonds issued 20,103
Payment to refunded bond escrow agent (19,848)
Capital lease proceeds 563
Loan proceeds 468
Total other financing sources (uses) 5,625 7,563 4,792 5,937 3,138 6,755 5,868 5,367 3,693 4,727
Special item- sale of parkland 630
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
2,679 3,293 1,131 (432) 1,357 2,389 (312) (3,168) (866) 3,603
24,436 21,143 20,012 20,444 19,087 16,698 17,010 20,178 21,044 17,441
$ 27,115 $ 24,436 $ 21,143 $ 20,012 $ 20,444 $ 19,087 $ 16,698 $ 17,010 $ 20,178 $ 21,044
Debt service as a percentage of noncapital expenditures 2.3%
Source: City of Lodi Finance Services Division
1.8% 1.9%
129
5.5%
3.9% 4.3% 4.3% 4.3% 4.4% 4.8%
City of Lodi
TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
% Change
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2007 to
2016
Property $ 9,151 $ 8,810 $ 8,314 $ 7,955 $ 7,861 $ 8,285 $ 8,342 $ 8,887 $ 9,210 $ 9,289 -1%
Sales and Use 11,809 10,625 10,111 9,350 9,246 8,663 6,873 8,028 9,296 10,137 16%
Transient Occupancy 783 666 594 545 486 426 382 405 396 380 106%
Franchise 1,990 1,942 1,862 1,758 1,734 1,715 1,681 1,415 976 929 114%
Documentary Transfer 223 159 155 120 91 95 117 114 125 235 -5%
Motor Vehicle in Lieu 4,572 4,533 4,289 4,143 4,151 4,317 4,377 4,784 4,797 4,635 -1%
Public Protection 365 362 341 325 295 250 267 296 338 390 -6%
Business License 1,552 1,133 1,220 1,187 1,182 958 962 1,038 1,140 1,082 43%
In Lieu Franchise 7,082 7,033 6,977 6,977 6,977 6,977 6,977 6,942 8,362 8,680 -18%
Totals $ 37,527 $ 35,263 $ 33,863 $ 32,360 $ 32,023 $ 31,686 $ 29,978 $ 31,909 $ 34,640 $ 35,757
Note: General governmental tax revenues are included in taxes, licenses and permits, intergovernmental revenues and miscellaneous revenues.
Source: City of Lodi Financial Services Division
130
5%
CITY OF LODI
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Secured roll $ 5,394,659 $ 5,156,704 $ 4,895,091 $ 4,737,807 $ 4,738,823 $ 4,907,588 $ 4,986,693 $ 5,156,706 $ 5,069,788 $ 4,799,141
Utility roll 3,490 3,490 3,490 2,382 2,382 2,423 2,423 2,031 2,035 2,773
Unsecured roll 250,160 257,856 230,827 233,398 226,651 270,600 270,315 263,648 258,687 242,082
Gross assessed value 5,648,309 5,418,050 5,129,408 4,973,587 4,967,856 5,180,611 5,259,431 5,422,385 5,330,510 5,043,996
Less exemptions (1) 331,562 326,833 324,439 327,783 314,448 321,138 332,701 265,154 243,259 229,049
Net assessed value 5,316,747 5,091,217 4,804,969 4,645,804 4,653,408 4,859,473 4,926,730 5,157,231 5,087,251 4,814,947
Land 1,601,581 1,469,347 1,364,401 1,227,969 1,264,884 1,322,830 1,345,815 1,562,729 1,537,554 1,431,203
Improvements 3,736,867 3,610,391 3,443,266 3,445,328 3,401,792 3,534,778 3,600,824 3,577,741 3,503,186 3,327,453
Personal property 309,861 338,312 321,741 300,290 301,180 323,003 312,792 281,915 289,770 285,340
Gross assessed value 5,648,309 5,418,050 5,129,408 4,973,587 4,967,856 5,180,611 5,259,431 5,422,385 5,330,510 5,043,996
Less exemptions (1) 331,562 326,833 324,439 327,783 314,448 321,138 332,701 265,154 243,259 229,049
Net assessed value $ 5,316,747 $ 5,091,217 $ 4,804,969 $ 4,645,804 $ 4,653,408 $ 4,859,473 $ 4,926,730 $ 5,157,231 $ 5,087,251 $ 4,814,947
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 - $60,519 and other - $271,043 =$331,562
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
131
CITY OF LODI
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN FISCAL YEARS
(Rate per $100 of assessed value)
Basic
Fiscal Countywide
Year Levy School All Other Total
2016 1.0000 0.0599 0.0000 1.0599
2015 1.0000 0.0658 0.0000 1.0658
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
Source: San Joaquin County Tax Collector
132
CITY OF LODI
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
(Dollar amounts in thousands)
Taxpayer
Fiscal Year
2016 2007
Percent of Percent of
Total City Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Value Rank Value Value Rank Value
Lodi Memorial Hospital Assn $ 151,615 1 2.991 % $ %
Pacific Coast Producers 93,015 2 1.835 34,451 2 0.753
California Physicians Service Corp 56,078 3 1.106
Big Box Property 39,150 4 0.772
ConAgra/Cottage Bakery 35,499 5 0.700 24,966 4 0.546
Winterfell Vintage 27,547 6 0.543
RRM Enterprises 24,900 7 0.491
Costco 19,883 8 0.392
Archer Daniels Midland Co Corp 18,046 9 0.356
North American Specialty Products LLC 16,840 10 0.332
General Mills 145,809 1 3.189
Pacific Coast Producers Corp. 27,719 3 0.606
Kristmont West 21,961 5 0.480
Certainteed Corp 19,455 6 0.425
Parinehs Exchange 2004 LLC 19,318 7 0.423
Dart Container Corp 17,980 8 0.393
Panattoni, Carl D ETAL 13,243 9 0.290
Ford Construction Co. Inc. 13,031 10 0.285
Principal Secured Property Valuation 482,573 9.518 337,933 7.390
Other Secured Taxpayers 4,912,086 96.886 4,461,208 97.553
Exemptions relative to secured tax roll 324,682 6.404 226,041 4.943
Total Secured Property Valuation $ 5,069,977 100.000 % $ 4,573,100 100.000 %
Source: San Joaquin County Assessor's Office
133
CITY OF LODI
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Collected Within the Total Collections
Fiscal Year of the Levy to Date
Taxes
Levied for Percent Percent
Fiscal the Fiscal of of
Year Year Amount Levy (1) Amount Levy
2016 $ 9,117 $ 9,117 100.0% $ 9,117 100.0%
2015 8,742 8,742 100.0% 8,742 100.0%
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%
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
134
CITY OF LODI
ELECTRICITY SOLD BY TYPE OF CUSTOMER
LAST TEN FISCAL YEARS
Type of Customer Billed Accounts
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
City Accounts 213 212 207 204 195 197 189 189 187 186
Contract Large Industrial 5 5
Contract Medium Industrial 1 1
Contract Small Industrial 1 0
Domestic Residential 22,497 22,393 22,623 22,541 22,361 22,360 22,525 22,506 22,510 22,938
Domestic Mobile Home Park 13 13 13 13 13 13 13 13 13 13
Dusk to Dawn 85 88 89 88 92 89 89 92 92 95
Large Commercial 348 337 339 344 336 350 357 377 380 375
Large Industrial 44 41 39 40 38 40 39 37 32 33
Medium Industrial 11 12 11 11 9 9 9 8 8 10
Residental Low Income 2,688 2,798 2,788 2,582 2,531 2,258 2,193 1,847 1,943 2,003
Small Commerical 3,416 3,332 3,367 3,358 3,340 3,324 3,280 3,249 3,199 3,241
Small Industrial 11 7 8 9 11 11 10 10 9 9
Total 29,326 29,233 29,484 29,190 28,926 28,651 28,704 28,328 28,380 28,909
Source: City of Lodi Financial Services Division
135
CITY OF LODI
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
Governmental Activities Business -type Activities
Total Certificates of Notes/ Total Total
Fiscal Lease Revenue Loan Notes Capital Governmental Participation and Loan Business -type Primary Percent of Personal Per
Year Bonds Payable Payable Lease Activities Revenue Bonds Payable Activities Government Income (1) Capita (1)
2016 $ 19,637 $ 468 $ 245 $ 562 $ 20,912 $ 143,417 $ 1,500 $ 144,917 $ 165,829 7.26 % $ 2,623
2015 19,950 245 20,195 149,767 149,767 169,962 7.67 2,667
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 9.63 2,988
2012 21,025 245 21,270 173,241 173,241 194,511 10.07 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
Details regarding the City's outstanding debt can be found in Note 8 of these financial statements.
(1) See Demographic and Economic Statistics table for personal income and population.
Source: City of Lodi Financial Services Division
136
CITY OF LODI
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
Percent of
Less Amounts Assessed
Fiscal Lease Revenue Available for Value (1) of Per
Year Bonds Debt Service Net Property Capita
2016 $ 19,637 $ 19,637 0.4 % $ 310.62
2015 19,950 19,950 0.4 313.09
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
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
137
CITY OF LODI
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
FISCAL YEAR
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Assessed valuation (1) $ 5,377,266 $ 5,152,666 $ 4,867,731 $ 4,709,916 $ 4,718,766 $ 4,926,130 $ 4,995,362 $ 5,227,580 $ 5,159,269 $ 4,887,074
Conversion percentage 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
Adjusted assessed valuation 1,344,317 1,288,167 1,216,933 1,177,479 1,179,692 1,231,533 1,248,841 1,306,895 1,289,817 1,221,769
Debt limit percentage 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%
Debt Limit 201,647 193,225 182,540 176,622 176,954 184,730 187,326 196,034 193,473 183,265
Total net debt applicable to limit 19,637 19,950 20,004 20,048 19,333 19,963 20,573 21,163 21,728 22,283
Legal debt margin $ 182,010 $ 173,275 $ 162,536 $ 156,574 $ 157,621 $ 164,767 $ 166,753 $ 174,871 $ 171,745 $ 160,982
Total net debt applicable to the limit as
a percent of debt limit 9.7% 10.3% 11.0% 11.4% 10.9% 10.8% 11.0% 10.8% 11.2% 12.2%
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 $271,043 deducted for 2016.
Source: San Joaquin County Auditor -Controller's Office
138
CITY OF LODI
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
June 30, 2016
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
City of Lodi - Loan payable
City of Lodi -Capital lease
SUBTOTAL DIRECT DEBT
TOTAL DIRECT AND OVERLAPPING DEBT(2)
Total Debt
$ 153,118,000
89,335,000
152,425,000
36,665,000
19,636,420
245,000
468,000
562,387
2015-16 Gross Assessed Valuation $ 5,648,309,000
2015-16 Population 63,219
DEBT RATIOS Total Gross Debt $ 96,338,717 $
Percentage City's Share
Applicable (1) of Debt
8.865 % $
37.209
9.821
37.209
100.00
100.00
100.00
100.00
13,573,911
33,240,660
14,969,659
13,642,680
75,426,910
19,636,420
245,000
468,000
562,387
20,911,807
$ 96,338,717
Per Capita Value
1,524 1.71%
(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
139
CITY OF LODI
PLEDGED -REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Dollars amounts in thousands)
Fiscal
Year
Adjusted
Annual
Revenues (1)
Less:
Adjusted
Operating
Expenses (2)
Net
Available
Revenue
Electric Revenue Certificates of Participation
2016 $ 70,440 $ 51,205
2015 67,132 52,116
2014 67,144 50,349
2013 63,974 51,209
2012 65,220 50,164
2011 63,307 48,397
2010 70,288 49,949
2009 75,195 58,370
2008 74,923 54,437
2007 67,865 52,984
Source: City of Lodi Financial Services Division
19,235
15,016
16,795
12,765
15,056
14,910
20,339
16,825
20,486
14,881
140
Debt Service
Principal Interest Total
$ 5,195
4,960
4,750
4,575
3,270
3,080
2,920
5,240
2,305
2,350
$ 3,094
3,358
3,606
3,839
4,021
4,152
4,274
4,720
3,961
3,977
$ 8,289
8,318
8,356
8,414
7,291
7,232
7,194
9,960
6,266
6,327
Coverage
2.32
1.81
2.01
1.52
2.07
2.06
2.83
1.69
3.27
2.35
CITY OF LODI
PLEDGED -REVENUE COVERAGE (continued)
LAST TEN FISCAL YEARS
(Dollars amounts in thousands)
Less:
Adjusted Adjusted Net
Fiscal Annual Operating Available Debt Service
Year Revenues (1) Expenses (2) Revenue Principal Interest Total Coverage
Wastewater Certificates of Participation and Revenue Bonds
2016 $ 16,941 $ 7,237 $ 9,704 $ 1,535 $ 2,131 $ 3,666 2.65
2015 15,845 6,335 9,510 1,500 2,172 3,672 2.59
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
Source: City of Lodi Financial Services Division
141
CITY OF LODI
PLEDGED -REVENUE COVERAGE (continued)
LAST TEN FISCAL YEARS
(Dollars amounts in thousands)
Fiscal
Year
Adjusted
Annual
Revenues (1)
Water Revenue Bonds
2016
2015
2014
2013
2012
2011
$ 13,025
13,370
14,166
13,367
13,275
14,051
Less:
Adjusted
Operating
Expenses (2)
$
6,801
5,815
6,835
6,899
5,392
5,662
Net
Available Debt Service
Revenue Principal Interest (3) Total Coverage
$ 6,224 $
7,555
7,331
6,468
7,883
8,389
870 $ 1,482 $ 2,352
850 1,506 2,356
825 1,530 2,355
800 1,535 2,335
775 1,530 2,305
1,409 874 2,283
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
142
2.65
3.21
3.11
2.77
3.42
3.67
CITY OF LODI
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Population
Fiscal Square City Percent
Year Miles Population Change
2016 13.98 63,219 0.7%
2015 13.98 63,719 0.4%
2014 13.98 63,651 0.2%
2013 13.98 62,930 0.2%
2012 13.98 62,825 0.8%
2011 13.92 62,473 0.6%
2010 13.92 63,549 0.6%
2009 13.92 63,313 -0.1%
2008 13.92 63,362 -0.1%
2007 13.17 63,395 0.9%
San Joaquin
County
Population
733,383
719,511
710,731
698,414
695,750
690,899
694,293
689,480
685,600
679,687
Population
Percent
of County
8.6%
8.9%
9.0%
9.0%
9.0%
9.0%
9.2%
9.2%
9.2%
9.3%
Rank in Size
of California
Cities
139
138
135
137
136
135
136
135
133
129
Personal
Income
(millions of
dollars)
$ 2,284
2,215
2,102
1,952
1,931
1,882
1,980
1,967
1,849
1,822
Per
Capita
Personal
Income
$ 36,136
34,755
33,024
31,013
30,732
30,132
31,166
31,071
29,178
28,743
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.
Unemployment
Rate
7.8%
7.8%
8.8%
9.0%
11.3%
13.4%
13.3%
12.2%
7.1%
6.1%
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.
143
CITY OF LODI
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
Current Nine Years Ago
Percent Percent
of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment
Lodi Unified School District 3,209 1 12.28 % 3,301 1 12.64
Pacific Coast Producers 1,600 2 6.12 1,430 2 5.47
Lodi Health Hospital 1,400 3 5.36 1,342 3 5.14
Blue Shield 780 4 2.99 650 5 2.49
TreeHouse 485 5 1.86 695 4 2.66
Walmart 482 6 1.84 317 9 1.21
City of Lodi 393 7 1.50 491 6 1.88
Farmers & Merchants Bank 354 8 1.36 334 8 1.28
General Mills 280 9 1.07 438 7 1.68
Target 180 10 0.69 190 10 0.73
Total 9,163 35.08 9,188 35.17
144
CITY OF LODI
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY DEPARTMENT - LAST TEN FISCAL YEARS
Fiscal Year
2016 2015 2014 2013 2012 2011* 2010 2009 2008 2007
Department:
Administration 10 10 10 10 12 13 31 32 19 35
Community Development 11 11 9 9 9 13 13 13 14 18
Electric 49 44 43 40 40 41 51 50 48 64
Financial Services 24 26 39 30
Fire 54 57 53 53 54 64 64 64 64 64
Internal Services 31 31 31 31 29 35
Library 10 11 10 11 12 14 14 14 14 16
Parks and Recreation 31 31 30 34
Parks, Recreation and Cultural Services 26 28 27 27 29 37
Police 102 107 104 104 103 125 125 125 125 116
Public Works 100 97 95 92 93 98 102 102 107 114
Total
393 396 382 377 381 440 455 457 460 491
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
145
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT
LAST TEN FISCAL YEARS
Flscaf Year
2016 2015 2014 2013 2012 2011 2010 2009 2008' 2007
General government:
Building permits issued 2,482 2,404 1 791 1,578 1,461 2,022 1,709 1,754 1,851 2,317
Business tax certificates:
Retell sales and service 2 288 2,281 2,633 2.526 2,485 2,530 2,406 2,496 2,442 2,632
Manufacturers and processors 78 23 BO 78 77 76 80 82 78 78
Professions 316 323 362 362 364 371 373 380 398 404
Miscellaneous contractors, peddlers, delivery vehicles, etc 1,268 1,256 1,595 1,456 1,362 1,357 1,312 1,411 1,063 1,127
Utility billing/customer service:
Number of customers 26,034 25,912 25,733 23,927 23,761 23,575 25,573 25,555 25,555 25,712
Energy sales (KWH) 437,246,335 438,780,911 437,294,133 435,822,465 435,655,731 421,130,329 434,200,987 452,075,554 450,407,709 456,740,745
Peak demand (MVV) 124 134 126 122 116 116 120 134 134 144
Public safety:
Police:
Major reported crimes 3,068 2,268 2,519 2,643 3,573 2,885 2,377 2,454 2,993 3,096
Total arrests 40,390 3,690 3,656 3,825 4,350 4,410 4,238 4,646 5,590 5,463
Dispatched calls for service 4,083 35,992 35,281 50,124 46,756 52,061 51,870 56,391 55,911 53,686
Interior structure fire calls 33 32 33 67 57 56 47 69 86 79
Nonstructural Pre cdts 154 143 1,923 209 163 121 123 123 160 163
Hazardous materials calls 73 65 53 58 41 69 70 70 35 27
Emergency medical calls 3,123 3,418 3,848 3,882 3,820 3,752 3,494 3,364 3,420 3,213
Total emergency calls 5,238 3,666 4,144 5,823 5,620 5,753 5,385 5,392 5,346 5,000
Total number of unds dtspatehed 7,430 5,727 7,845 7,954 7,855 7,835 7,390 7,038 7,841 7,005
Public works:
Miles of streets resurfaced 6 6 6 6 6 6 3 6 5 4
Fleet job orders completed 2,162 2,500 2,004 1,803 1,953 2810 3,303 3,921 3,520 6,938
Trees planted 135 135 131 131 96 130 95
Water utility:
New connections 69 8 8 8 7 17 17 35 110
Water main breaks 3 16 14 14 10 6 4 4 10
Wastewater utility:
Average daily treatment (million gal/day) 4 6MG 4 6MG 5 OMG 5 10MG 6.5MG 6 5MG 65MG 65MG 65MG 6 9MG
Library:
Registered borrowers 60,362 58,824 55,835 51,594 47,147 43,927 39,199 53,530 48,969 44,556
Circulation of library materials 199,096 197,673 225,476 215,293 217,742 248,250 251,967 219,711 200,466 273,270
Reference, research and informational questions answered 11,109 13,189 16,750 16,270 14,463 16,234 16,501 15,379 19,257 18,854
Annual attendance at libraries 245,936 209,929 224,762 222,148 210,279 207,123 n/a 296,793 288,070
Number of programs offered 456 432 284 407 432 388 344 316 348 339
Annual attendance at programs 15,452 12,888 10,824 14,443 12,993 13,133 10,676 8,765 11,242 10,700
Public access computer usage 34,071 41,180 47,126 45,871 47,428 58,990 52,124 38,388 38,999 35,260
Fire:
(Continued)
146
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT - (continued)
LAST TEN FISCAL YEARS
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Community center:
Community center bookings 758 794 769 718 698 926 789 475 494 302
Instructional classes 518 500 553 580 307 536 583 507 530 478
Registered students 2,744 2,586 3,269 2,819 3,713 3,438 3,525 3,316 5,550 3,548
Yearly attendance 13,925 13,925 13,925 13,925 13,925 14,217 13,355 14,050 14,410 14,429
Parks and recreation:
After school program registration (number of participants/sites) 19,800/17 315,140/19 254,096/20 1,715/20 3,232/20 1,920/4 1,920/4 1,920/4 3,014/4 145,000/12
Adult sports
Program/Participation 14,673 15,285 2,082 2,246 2,420 2,528 2,528 2,284 28,000 36,000
Programs offered 15 18 17 16 15 16 16 13 11 11
Partnerships 2 2 2 2 3 5 5 1 3 3
Tournaments 8 10 5 6 12 7 7 10 10 20
Youth/Teen sports
Program attendance 3,652 3,621 3,672 3,643 3,889 4,251 4,251 215,000 195,000 200,000
Programs offered 18 18 18 19 24 16 16 24 14 14
Aquatics
Program attendance 28,195 28,009 27,731 23,414 34,366 32,566 32,566 2,433 50,000 59,000
Number of programs 14 15 13 13 25 13 13 6 3 8
Source: City of Lodi
147
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT - (continued)
LAST TEN FISCAL YEARS
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
General government:
Total square miles 13.98 13.98 13.98 13.98 13.98 13.92 13.92 13.92 13.92 13.17
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 23 23 25 25 25
Motorcycles and scooters 7 7 5 5 5 5 5 5 5 5
Animal control vehicles 2 2 2 2 2 2 2 2 2 2
Other automobiles 37 37 37 37 37 37 37 38 40 41
Fire:
Facilities:
Fire stations 4 4 4 4 4 4 4 4 4 4
Vehicles:
Fire engines 6 6 6 6 6 7 7 7 6 6
Trucks/Trailers 6 6 6 6 5 5 6 6 9 8
Other automobiles 11 11 11 11 9 8 10 12 7 10
Public works:
Miles of streets 202 202 202 202 202 202 202 202 200 184
Miles of alley ways 16 16 16 16 16 16 16 16 16 16
Traffic signals 67 67 67 67 67 67 62 62 64 66
Street lights 7270 7,270 7,270 7,270 7,270 7,270 7,270 7,270 7,270 7,270
(Continued)
148
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT - (continued)
LAST TEN FISCAL YEARS
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Parks and recreation:
Parks and squares 26 26 26 26 26 26 26 26 23 23
Park acreage 361 361 361 361 373 373 373 371 275 275
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 4 4 3 3
Baseball/softball diamonds 20 20 20 20 24 24 24 24 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 20 20 22 25 25 25 22 22
Ballpark 24 24 24 24 24 24 24 24 26 26
Soccer Field 22 22 22 22 22 22 22 22 22 22
Football Field 1 1 1 1 1 1 1 1 3 3
Handball/Basketball/Volleyball Courts/Bocce Courts 12 12 12 12 10 10 10 10 8 8
Horseshoe Pits 8 8 8 8 8 6 6 6 7 10
Library:
Central library 1 1 1 1 1 1 1 1 1 1
Total items in collection 130,657 119,554 148,287 149,243 135,113 134,804 130,530 135,197 142,885 142,098
Integrated library system 1 1 1 1 1 1 1 1 1 1
Microfilm readers 0 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 3 2 2 2 2 2 2 2 0 1
Electric utility:
Overhead lines 12kv (miles) 117 117 117 133 133 133 130 130 130 129
Overhead lines 60kv (miles) 14 14 14 14 14 13 13 13 13 13
Underground lines (miles) 121 118 115 159 159 157 155 154 153 151
(Continued)
149
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT - (continued)
LAST TEN FISCAL YEARS
Fiscal Year
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Water utility:
Water main lines 240 236 236 236 236 236 237 233 233 238
Water storage capacity (gallons) 4,100,000 4,100,000 4,100,000 4,100,000 1,100,000 1,100,000 1,100,000 1,100,000 1,100,000 1,100,000
Water wells 28 28 28 28 27 27 26 26 26 26
Water reservoirs 3 3 3 3 2 2 2 2 2 2
Water Treatment Plant 1
Wastewater utility:
Wastewater main lines (miles) 196 196 196 196 196 196 191 194 194 189
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
Wastewater Pump Stations 9
Stormwater utility:
Stormwater main drain lines (miles) 126 124 124 124 124 124 124 161 119 161
Stormwater pump stations 16 14 14 14 14 14 14 14 14 14
Central parking district:
Parking structure 1 1 1 1 1 1 1 1 1 1
Parking spaces 2,450 2,450 2,450 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
150
SINGLE AUDIT REPORTS
iii.iioo Certified century city
Public
Accountants Los Angeles
Newport Beach
Oakland
Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Sacramento
Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
San Diego
The Honorable Members of City Council San Francisco
City of Lodi, California
Walnut Creek
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits Woodland Hills
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, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon
dated January 25, 2017.
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. Given these limitations, during
our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have
not been identified.
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.
Macias Gini & O'Connell LLP
3000 5 Street, Suite 300
Sacramento, CA 95816
151
www.mgocpa.com
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.
�K c eli ,
�r�.s r i O
Sacramento, California
January 25, 2017
152
Certified
Public
Accountants
Independent Auditor's Report on Compliance for the Major Federal Program and on
Internal Control over Compliance Required by the Uniform Guidance
The Honorable Members of City Council
City of Lodi, California
Report on Compliance for the Major Federal Program
Century City
Los Angeles
Newport Beach
Oakland
Sacramento
San Diego
San Francisco
Walnut Creek
Woodland Hills
We have audited the City of Lodi's (City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have
a direct and material effect on the City's major federal program for the year ended June 30, 2016. The City's major federal program is identified in the summary
of auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for the City's major federal program 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 the audit requirements of
Title 2 U.S. Code of Federal Regulation Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). Those standards and Uniform Guidance 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 the major federal program. However, our audit does not provide a legal
determination of the City's compliance.
Opinion on 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 its major federal program for the year ended June 30, 2016.
Macias Gini & O'Connell LLP
3000 5 Street, Suite 300
Sacramento, CA 95816
153
www.mgocpa.com
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 the major federal program to determine the auditing procedures that are appropriate in the circumstances for the
purpose of expressing an opinion on compliance for the major federal program and to test and report on internal control over compliance in accordance with the
Uniform Guidance, 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
/'1L5
�''i
Sacramento, California
January 25, 2017
154
CITY OF LODI
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2016
Federal Grantor Federal Passed
Pass-through Grantor or Direct CFDA Grant/Project Through to Federal
Program or Cluster Title Number Number Subrecipients Expenditures
U.S. Department of Housing and Urban Development
Direct:
Community Development Block Grants/Entitlement Grants 14.218 B -13 -MC -06-0038 $ $ 13,177
Community Development Block Grants/Entitlement Grants 14.218 B -14 -MC -06-0038 - 8,070
Community Development Block Grants/Entitlement Grants 14.218 B -15 -MC -06-0038 70,011 218,141
Total Community Development Block Grants/Entitlement Grants 70,011 239,388
U.S. Department of Justice
Direct:
Edward Byrne Memorial Justice Assistance Grant Program 16.738 2014 -DJ -BX -0877 20,738
Edward Byrne Memorial Justice Assistance Grant Program 16.738 2015 -DJ -BX -0947 19,784
Total Edward Byrne Memorial Justice Assistance Grant Program 40,522
U.S. Department of Transportation
Direct:
Federal Transit - Formula Grants
Passed through California Depaitinent of Transportation:
Highway Planning and Construction
20.507 CA -2016-127-00 1,352,708
20.205 STPL-5154(040) 264,070
See accompanying notes to the schedule of expenditures of federal awards.
155
CITY OF LODI
Schedule of Expenditures of Federal Awards (Continued)
For the Year Ended June 30, 2016
Federal Grantor Federal Passed
Pass-through Grantor or Direct CFDA Grant/Project Through to Federal
Program or Cluster Title Number Number Subrecipients Expenditures
U.S. Department of Transportation (Continued)
Passed through California Office of Traffic Safety
Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 PT 1557 33,499
Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 PT 1644 - 67,070
Passed through City of Stockton:
Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 AL1510 - 7,492
Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 AL1642 16,800
Total Minimum Penalties for Repeat Offenders for Driving While Intoxicated 124,861
Total U.S. Department of Transportation 1,741,639
U.S. Environmental Protection Agency
Direct:
Brownfields Assessment and Cleanup Cooperative Agreements 66.818 99T30201 - 65,904
Total Expenditures of Federal Awards $ 70,011 $ 2,087,453
See accompanying notes to the schedule of expenditures of federal awards.
156
CITY OF LODI
Notes to the Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2016
NOTE 1— GENERAL
The accompanying Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2016, 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 — DE MINIMIS INDIRECT COST RATE
For non-federal entities who have never received a negotiated rate, a de minimis rate of 10 percent of modified total direct costs may be used indefinitely as
defined in Uniform Guidance section 200.414. The City does not use the 10 percent de minimis indirect cost rate.
157
CITY OF LODI
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2016
Section I — Summary of Auditor's Results
Financial Statements:
Type of report the auditor issued on whether the financial statements
audited were prepared in accordance with GAAP: Unmodified
Internal control over financial reporting:
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? None reported
Noncompliance material to financial statements noted?
Federal Awards:
Internal control over major federal programs:
No
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? 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 2 CFR 200.516(a)? No
Identification of major federal program:
Name of Federal Program or Cluster
Federal Transit — Formula Grants
CFDA Number
20.507
Dollar threshold used to distinguish between type A and type B programs: $750,000
Auditee qualified as low-risk auditee? Yes
CITY OF LODI
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2016
Section II — Financial Statement Findings
None
Section III — Federal Award Findings and Questioned Costs
None
Financial Statement Findings
Reference Number:
2015-001
CITY OF LODI
Schedule of Prior Year Finding and Questioned Costs
For the Year Ended June 30, 2016
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, $3,568,267, and
$3,712,939 as of June 30, 2009, 2010, 2011, 2012, 2013, 2014, and 2015, respectively.
Effect:
This condition resulted in an increase of $144,672 in the deficit net position of the Benefits Internal Service Fund during the year ended June 30, 2015.
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 should either 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, or report the OPEB liability in other City funds like is done for the net pension liability.
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.
Status:
During the year ended June 30, 2016, the City changed its accounting of the OPEB liability by reporting it as a reconciling item between the governmental funds
and governmental activities, thereby implementing the recommendation.
160
CONTINUING DISCLOSURES
UNAUDITED
CONTINUING DISCLOSURE REQUIREMENTS FOR THE CITY OF LODI, THE LODI PUBLIC IMPROVEMENT CORPORATION
AND THE LODI PUBLIC FINANCING AUTHORITY
Fiscal Year 2015-16
The City of Lodi has executed Continuing Disclosure Certificates associated with the various debt issues outstanding by the Electric Utility,
Wastewater Utility, Water 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.
(This page intentionally left blank.)
ANNUAL REPORT FOR ELECTRIC UTILITY
The Lodi Electric Utility has Continuing Disclosure requirements associated with its 2008 Series A Certificates of Participation. The annual report
includes, by reference, the audited financial statement of the City of Lodi (including the Electric Utility).
The annual report also contains the following five (5) tables as required in the Certificates:
1. A table setting forth the City's power supply resources for the most recently completed fiscal year.
2. A table showing the average number of customers, sales, revenues and demand for the past five fiscal years.
3. A table showing the outstanding debt of joint powers agencies in which Lodi participates and the City of Lodi share of that debt for the most
recent fiscal year.
4. A table showing a summary of Operating Results for the past five fiscal years.
5. A table showing Lodi Electric Utility Department Rate Changes since November 1996 (applicable only to the 2002 Series C and D issues).
Reporting of Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2016, 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 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
Contracts and Exchanges(3)
Total
Capacity
Available
(MW)(1)(4)
7.5
11.5
26.2
9.5
19.6
26.6
45.0
Actual Energy % of Total
(MWh) Energy
12,212
84,115
41,594
517
1,300
102,308
212,827
2.7%
18.5
9.1
0.1
0.3
22.5
46.8
145.9 454,873(4) 100.00%
Total Capacity and Energy Sold at Wholesale N/A 4,655
City System Requirement for Retail Load 124.3 450,218
(1) Source: NCPA. Non -coincident capacity.
(2) Entitlements, firm allocations and contract amounts.
(3) Includes participation in NCPA/Seattle City Light exchange.
(4) Includes supply from exchanges and line losses.
Table 2 A table showing the average number of customers, sales, revenues and demand for the past five fiscal years.
Number of Customers:
Residential
Commercial
Industrial
Other
Total Customers
Kilowatt -Hour (kWh) Sales:
Residential
Commercial
Industrial
Other
Total kWh sales
Revenues from Sale of Energy:
Residential
Commercial
Industrial
Other
Total Revenues from
Sale of Energy:
Peak Demand (MW)
Excludes revenues from California Energy Commission Tax.
Sources: City of Lodi, audited annual financial statements and Customer Information System reports.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
CUSTOMER SALES, REVENUE AND DEMAND
Fiscal Years Ended June 30,
2012
22,244
2,834
37
235
25,350
149,814,375
138,735,487
135,620,441
11,485,428
435,655,731
$ 25,606,368 $
21,814,073
14,876,828
1,954,099
$ 64,251,368 $
116.0
2013
22,369
2,902
39
246
25,556
151,814,834
140,733,500
131,473,405
11,800,726
435,822,465
25,377,978 $
21,816,149
14,173,951
1,861,567
63,229,645 $
123.3
165
2014
22,547
2,898
38
250
25,733
148,762,783
146,176,148
130,333,102
12,022,160
437,294,193
25,270,075 $
23,127,603
14,381,296
1,913,833
64,692,808 $
128.7
2015
22,355
3,264
40
253
25,912
148,950,428
149,380,413
128,814,673
11,635,397
438,780,911
25,165,194 $
23,780,354
14,418,921
1,871,470
65,235,939 $
134.0
2016
22,459
3,296
44
213
26,012
151,137,940
150,522,357
125,018,845
10,567,193
437,246,335
26,525,558
24,693,195
14,469,390
1,819,036
67,507,179
124.3
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)
Lodi's Share of
Outstanding Lodi's Outstanding
Debt(1) Participation(2) Debt
NCPA
Geothermal Project Three $ 34.5 10.28% $ 3.5
Hydroelectric Project 363.9 10.37 37.7
Capital Facilities Project Unit One 41.1 39.50 16.2
Lodi Energy Center Project 235.8 17.03 40.1
TANC
COTP 216.0 1.92(3) 4.14
TOTAL*
$ 891.3
" Columns may not add to totals due to independent rounding.
11.40% $ 101.64
(1) Source: NCPA Financial Statements. Outstanding debt does not include unamortized premium/discount.
(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 TANG bonds relating to each
TANC member -participant's taxable portion and each TANG 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.
166
Table 4 A table showing a summary of operating results for the past five fiscal years.
CITY OF LODI
ELECTRIC SYSTEM
SUMMARY OF OPERATING RESULTS (1)
Ending Fiscal Year June 30 (Dollars in 000s)
Actual 2012
Actual 2013 Actual 2014
Actual 2015 Actual 2016
Operating Revenues
Rate Revenue $ 61,658 $ 61,888 $ 61,837 $ 63,370 $ 65,265
ECA Revenue 2,593 1,341 2,856 1,867 2,242
Other Revenue 969 745 2,451 1,895 2,933
Total Operating Revenue 65,220 63,974 67,144 67,132 70,440
Operating Expenses
Purchased Power 39,416 39,191 37,303 38,512 37,788
Non -Power Costs (2) 10,748 12,018 13,046 13,604 13,417
Total Operating Expenses 50,164 51,209 50,349 52,116 51,205
Net Revenue Available for Debt Service 15,056 12,765 16,795 15,016 19,235
Parity Debt Service
2002 C & D, 2008 A Bonds 7,291 8,414 8,356 8,318 8,289
Total Net Debt Service 7,291 8,414 8,356 8,318 8,289
Debt Service Coverage 2.07 1.52 2.01 1.81 2.32
Remaining Revenue Available for Other Purposes 7,765 4,351 8,439 6,698 10,946
Non -Operating Revenue/Expenses
Greenhouse gas allowance 2,018 453 2,323 1,571
In -Lieu Transfer to General Fund (6,977) (6,977) (6,977) (7,033) (7,082)
Net Cash Flow Before Capital Expenditures 788 (608) 1,915 1,988 5,435
Beginning Operating Reserve 28,455 30,384 31,082 33,850 36,583
Changes in GOR 1,141 1,306 942 745 873
Net Deposit/Withdrawal from Reserves 788 (608) 1,915 1,988 5,435
Ending Operating Reserve $ 30,384 $ 31,082 $ 33,939 $ 36,583 $ 42,891
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.
167
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
September 2015
January 2015
July 2013
April 2009
December 2007
August 2007
December 2005
December 2002
August 2001
June 2001
December 1998
May 1998
September 1997
December 1996
November 1996
Source: City of Lodi.
Extended Economic Development Rates
Average 5% increase across all rate classes
Established Electric Vehicle and Industrial Equipment Charging Rates
Established Economic Development Rates updated July 2013
Established Solar Initiative Surcharge of $0.00125 per kilowatt-hour
Implemented monthly Energy Cost Adjustment
Average 17% increase across all rate classes
4.5% average rate increase
Increased MCA for all but contract customers: 10% to 12% rate change
Implemented MCA for residential and small commercial: 8% to 10% rate change
5.00% rate decrease for small commercial/industrial customers
2.50% general rate increase to fund public benefit programs
4.5 to 5.5 cents per kilowatt-hour, non -demand, non -time -use, contract rate available for new large
commercial/industrial loads
10% to 40% economic development discount on new small to medium commercial/industrial electric loads
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)
168
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, 2012 Refunding Wastewater Revenue Bonds and the 2016 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.
6. A table showing historical reserve balances for the past four 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, 2016, 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.
169
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 2015-16 Service Charge Revenue by User Type
% of FY 15/16
Service Charge
2012 2013 2014 2015 2016 Revenue
21,864 21,959 22,076 21,920 21,700 77%
1,819 1,851 1,851 1,876 1,909 23%
23,683 23,810 23,927 23,796 23,609 100%
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 2015-16
Percentage of Total Annual Service
User Type Charge Revenue
Single Family
Residential 59%
Multiple Family Residential 18%
Commercial/Industrial 23%
Total 100%
Source: City of Lodi
Table 3 A table showing the largest users by service charge revenue for the most recent fiscal year.
User
TreeHouse Foods
General Mills
Lodi Unified School District
Blue shield of California
Archer Daniels Midland
Pacific Coast Producers
Miller Packing Company
Del Castillo Foods
Vienna Convalescent Hospital
The Vintage
Total top ten users
Total System
City of Lodi
Wastewater System
Largest Users by Service Charge Revenues
Fiscal Year 2015-16
Type of Business
Specialty bakery, frozen dough $
Cereals, bread mixes, snack foods
K-12, adult education
Health Insurance
Agricultural processor
Private label fruit canning
Hot dog producer
Tortilla producer
Rehabilitation/Nursing Center
Retirement home
172
Service Charge
Revenue
433,210
239,706
95,192
40,222
35,678
33,783
33,748
23,431
21,738
21,451
978,159
Percentage of
Total
Annual Service
Charge Revenue
2.90%
1.61
.64
.27
.24
.23
.23
.16
.15
.15
6.58%
14,959,756 100.00%
Table 4 A table showing the schedule of service charges.
City of Lodi
Wastewater System
Schedule of Wastewater Service Charges
Service Charge Service Charge Service Charge Service Charge
(effective July 1, (effective July 1, (effective July 1, (effective July 1,
2012) 2013 2014) 2015)
For Residential Users (flat rate per month):
1 Bedroom $25.20 $25.83 $26.48 $27.90
2 Bedrooms 33.60 34.44 35.30 37.20
3 Bedrooms 42.00 43.05 44.13 46.49
4 Bedrooms 50.40 51.66 52.95 55.79
5 Bedrooms 58.80 60.27 61.78 65.09
6 Bedrooms 67.20 68.88 70.60 74.39
7 Bedrooms 75.60 77.49 79.43 83.69
For Residential Users
(usage based rate per month):
Monthly Usage Charge ($/CCF) (1) $2.61 $2.68 $2.75 $2.82
3/4" Meter Charge 22.95 23.52 24.11 24.78
For Commercial/Industrial Users:
Moderate Strength (annual per Sewage Service Unit (SSU) $403.20 $413.28 $423.61 $446.40
High Strength:
Flow (annual per MG) 3,402.35 3,487.41 3,574.60 3,730.00
BOD (annual per 1,000 lbs.) 561.47 575.51 589.90 616.0
SS (annual per 1,000 lbs.) 351.07 359.85 368.85 385.00
Grease Interceptor/Septic Holding Tank Waste within
City Limits (per 1,000 gal.) 297.29 304.72 312.34 326.00
Septic Holding Tank Waste Outside City Limits (per
1,000 gal.) 631.11 646.89 663.06 489.00
Disposal to Storm Drain System (per MG) 312.28 320.09 328.09
Disposal to Industrial System:
Flow (per MG, annual basis) 2,687.56
BOD (per 1,000 lbs., annual basis) 24.64
Winery Waste (per 1,000 gallons) 301.01 301.04 301.04 306.00
(1) Winter water usage determined as average monthly usage from
December through February
173
Table 5 A table showing historic operating results and debt service coverage for the past five fiscal years.
City of Lodi
Wastewater System
Historical Operating Results and Debt Service Coverage
Fiscal Years 2011-12 through 2015-16
2011-12
2012-13 2013-14
2014-15 2015-16
Operating Revenues
Charges for Services $13,280,216 $13,747,216 $14,305,093 $14,714,123 14,959,756
Non -Operating Revenues
Interest Income 216,108 301,347 427,308 356,590 460,682
Rent
Other 290,819 256,868 453,798 774,007 1,520,966
Total System Revenues 13,787,143 14,305,431 15,186,199 15,844,720 16,941,404
Operating Expenses
Personnel services 3,130,012 3.089,930 3,215,190 3,116,493 2,923,572
Supplies, Materials and services 2,818,041 1,900,710 2,145,745 2,541,909 3,622,348
Utilities 710,622 683,508 642,508 676,838 691,632
Total Operating Expenses 6,658,675 5,674,148 6,003,443 6,335,240 7,237,552
System Net Revenues 7,128,468 8,631,283 9,182,756 9,509,480 9,703,852
Parity Debt Service
2003 Installment Payments 379,170 381,122 3,280,111
2004 Installment Payments 2,139,350 1,705,213 98,321 98,325 98,325
2007 Installment Payments 1,599,050 1,598,950 1,603,550 1,602,850 1,606,850
2012 Installment Payments 374,519 1,921,700 1,970,350 1,961,100
2016 Installment Payments
Total Parity Debt Service 4,117,570 4,059,804 6,903,682 3,671,525 3,666,275
Debt Service Coverage 1.73 2.13 1.33 2.59 2.65
Non -Operating Expenses
Transfers (In)/Out (778,092) 1,451,480 1,318,000 1,068,000 1,068,000
Total Non -Operating Expenses (778,092) 1,451,480 1,318,000 1,068,000 1,068,000
Net Cashflow Before Capital Expenditures $3,788,990 $3,119,999 $961,072 $4,769,955 $4,969,578
Source: Financial Services Division
174
Table 6 A table showing historical reserve balances for the past five fiscal years.
City of Lodi
Wastewater System
Historical Reserve Balances
(in millions)
Fund 2012 2013 2014 2015 2016
Operating
Rate Stabilization
Impact Mitigation
Capital
Total
25% Operating
Reserve Goal
Source: City of Lodi
$6.1
0.5
1.4
5.4
$13.4
$6.5
0.5
0.6
6.8
$4.3
0.5
0.7
8.7
$14.4 $14.2
$1.7 $1.6 $1.6
$5.6
0.5
0.8
6.9
$9.7
0.5
1.0
4.5
$13.8 $15.7
$1.5 $2.4
Additional Indebtedness
The Wastewater Utility partially refunded the 2007 Wastewater Certificates of Participation with the issuance of the 2016 Wastewater Refunding
Revenue Bonds during the 2015-16 fiscal year which is payable from the system net revenues on a parity with the installment payments.
175
ANNUAL REPORT FOR THE LODI PUBLIC FINANCING AUTHORITY
The Lodi Public Financing Authority has 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 six (6) 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 sixteen (16) specific events that require special reporting. As of June 30, 2016, 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 86 of this Comprehensive
Annual Financial Report.
176
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.
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GENERAL FUND
LAST FIVE YEARS
2012 2013 2014 2015 2016
Revenues:
Taxes $ 22,928,438 23,022,370 23,718,396 24,630,745 25,327,203
Licenses and permits 79,745 62,582 83,420 87,908 92,702
Intergovernmental revenues 10,449,364 10,531,871 11,319,708 12,642,107 12,887,767
Charges for services 682,156 1,105,178 1,025,851 1,482,448 1,437,440
Fines, forfeits and penalties 1,355,101 1,628,870 1,552,531 1,573,071 1,494,758
Investment and rental income 807,270 979,100 1,548,787 1,546,845 1,554,198
Miscellaneous revenue 286,125 393,299 352,331 290,951 349,153
Total revenues 36,588,199 37,723,270 39,601,024 42,254,075 43,143,221
Expenditures:
Current:
General government 6,007,327 5,943,192 6,482,226 6,490,907 6,824,884
Public protection 24,923,155 25,920,654 26,470,110 26,388,172 28,612,592
Public works 1,112,569 1,555,833 1,554,939 1,882,250 1,866,277
Library 1,380,972 1,410,657 1,267,850 1,311,367 1,152,901
Parks and recreation
Debt service:
Interest and fiscal charges
Principal payments
Total expenditures 33,424,023 34,830,336 35,775,125 36,072,696 38,456,654
Excess of revenues over expenditures 3,164,176 2,892,934 3,825,899 6,181,379 4,686,567
Other financing sources (uses):
Transfers in 5,370,230 5,367,990 3,952,000 3,952,000 3,952,000
Transfers out (8,391,858) (6,584,665) (6,269,351) (7,128,586) (7,869,927)
Total other financing sources (uses) (3,021,628) (1,216,675) (2,317,351) (3,176,586) (3,917,927)
Net change in fund balances 142,548 1,676,259 1,508,548 3,004,793 768,640
Fund balances, beginning of year 6,146,405 6,288,953 7,965,212 9,473,760 12,478,553
Fund balances, end of year $ 6,288,953 7,965,212 9,473,760 12,478,553 13,247,193
177
Table 3 A table showing the assessed valuations for the last ten fiscal years.
Please refer to the table shown in the Statistical Section on page 131.
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 134.
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 133.
Table 6 A table showing the Employee -paid and City -paid employee portion of the retirement plan.
Pension Contributions
As of Fiscal Year Ended June 30, 2016
Bargaining Units Employee Paid*
Council appointees 7.0%
Executive management 7.0
Confidential mid -management 7.0
Confidential 7.0
Fire mid -management 9.0
Fire 9.0
Mid -management 7.0
General services 7.0
Maintenance and operators 7.0
IBEW 7.0
Police mid -management 9.0
Police 9.0
Dispatchers 7.0
*PEPRA Miscellaneous Employees
*PEPRA Safety Employees
City Paid Total Employee Share
oda
7.0%
7.0
7.0
7.0
9.0
9.0
7.0
7.0
7.0
7.0
9.0
9.0
7.0
6.75 6.75
11.25 11.25
178
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, 2016.
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, 2016, 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.
179
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 Residential
Year Ending Number of
December 31 Accounts
Revenue
Number of
Accounts
Revenue
2007 1,445 $ 2,043,731 21,533 $ 8,715,928
2008 1,470 2,184,496 21,449 9,429,594
2009 1,382 2,188,486 21,577 9,600,129
2010 1,383 2,097,001 21,622 9,604,412
2011 1,396 2,169,967 21,593 9,706,537
2012 1,432 2,329,957 23,399 8,411,315
2013 1,415 2,436,777 21,717 10,353,374
2014 1,435 2,534,741 21,722 10,359,235
2015 1,524 2,830,790 21,387 9,410,460
Source: City of Lodi
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
ConAgra Foods
Lodi Memorial Hospital
Lodi Grape Festival
Blue Shield of California
Temple Baptist Church
Wine & Roses
Subtotal Top Ten Users
TOTAL SYSTEM
City of Lodi
Water System
Largest Users by Service Charge Revenues
Fiscal Year 2015-16
Type of Business
K-12, adult education
Government
Private label fruit canning
Cereals, bread mixes, snack foods
Specialty bakery, frozen dough
Health care
Festival Grounds
Health insurance
Church
Hotel and restaurant
181
Service Charge
Revenue
341,088
282,120
129,554
89,726
66,612
58,095
25,089
15,060
13,960
13,949
$ 1,035,253
Percentage of
Total
Annual Service
Charge Revenue
2.81%
2.32
1.07
0.74
0.55
0.48
0.21
0.13
0.12
0.12
8.55%
12,161,186 100.00%
Table 3 A table showing selected rates effective January 1, 2016.
CITY OF LODI
WATER SYSTEM
Selected Rates Effective January 1, 2016
Percent Increase Current
Flat Rates ($/month)
Single Family Residential Unit ($/month)
1 Bedroom
2 Bedroom
3 Bedroom
Metered Water Rates
Service Charge ($/month)
Single Family Residential
Up to 3/4" Meter
Multi -Family and Non -Residential
1" Meter
1 1/2" Meter
2" Meter
Water Usage rates ($/CCF)
Single Family Residential
Tier 1 - 0 to 10 CCF/month
Tier 2 - 11 to 50 CCF/month
Tier 3 - Over 50CCF/month
Multi -Family and Non -Residential
All Water Usage
Source: City of Lodi.
182
$31.88
$38.29
$45.89
$21.23
$33.34
$63.35
$99.53
$0.94
$1.25
$1.55
1.12
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 2011-12 through 2015-16
Gross Revenues
Water Sales (1)
Investment Earnings
Water Impact Mitigation Fees
Meter Retrofit Installation Charges
Other Revenues (2)
Total Gross Revenues
Operating and Maintenance Expenses
Personnel Services (3)
Supplies, Materials and Services (3)
New Treatment Plant Operations (net)
Utilities
Administrative Overhead
Total 0 & M Expenses
Net Revenue Available for Debt Service
Debt Service
2010 Bonds (4)
Total Net Debt Service
Debt Service Coverage (5)
Debt Service Coverage
Debt Service Coverage
(excluding impact mitigation fees)
Net Remaining Revenues Available for Capital
Capital Improvement Projects
Meter Retrofit Program (6)
Other Water System Improvements (7)
2011-12
2012-13 2013-14
2014-15 2015-16
12,083,226 12,441,039 12,756,076 12,722,619 12,161,186
119,526 67,892 118,799 87,211 166,791
111,429 2,529 60,000 20,299 332,765
675,815 585,965 405,677 56,052 76,103
285,093 269,335 825,314 483,710 287,839
13,275,089 13,366,850 14,165,866 13,369,891 13,024,684
1,856,131 2,272,568 2,392,611 2,316,305 2,515,542
1,781,622 2,882,547 3,014,227 2,139,014 3,008,676
693,657 683,635 648,233 579,774 496,316
1,060,120 1,060,120 780,000 780,000 780,000
5,391,530 6,898,870 6,835,071 5,815,093 6,800,534
7,883,559 6,467,980 7,330,795 7,554,798 6,224,150
2,304,811 2,335,360 2,355,230 2,356,141 2,351,580
2,304,811 2,335,360 2,355,230 2,356,141 2,351,580
3.42 2.77 3.11 3.21 2.65
3.37 2.77 3.09 3.20 2.51
5,578,748 4,132,620 4,975,565 5,198,657 3,872,570
6,325,558 6,536,687 6,891,350 4,841,932 1,606,734
540,832 1,144,363 380,675 267,902 9,097
183
Total Capital Improvement Projects
Net Change in Reserve
Water Enterprise Fund (8)
Beginning Cash Balance
Ending Cash Balance
6,866,390
(1,287,639)
12,807,412
12,465,350
7,681,050 7,272,025
(3,548,520) (2,296,460)
12,465,350 9,044,659
9,044,659 7,027,567
5,109,834 1,615„831
88,823
7,027,567
6,755,522
2,256,739
6,755,522
6,270,786
(1) Water sales reflect Council -adopted rate increases effective January 1, 2015.
(2) Includes rent, sales of City property, discounts, water reimbursements, and damage to property, water tap fees, DBCP reimbursements,
and other miscellaneous revenues. DBCP reimbursements are expected to decline beginning in Fiscal Year 2012-13 as new plant
becomes operational and groundwater draws diminish.
(3) PCE/TCE litigation expenses are excluded from Fiscal Year 2006-07 through Fiscal year 2010-11.
(4) Reflects total debt service for the 2010 Water Revenue Bonds net of the 35% interest rate subsidy for the Series 2010B bonds.
(5) Coverage calculated based on Net Revenues divided by net Debt Service and Net Revenues less mitigation fees divided by Net Debt
Service.
(6) Annual capital costs of transition to water meters. Program expected to be completed in Fiscal Year 2017-18.
(7) Excludes costs of the Project to be funded from proceeds of the Series 2010 Bonds.
(8) 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
184
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CITY OF LODI, CALIFORNIA
Report to City Council
For the Year Ended June 30, 2016
Certified
Public
Accountants
CITY OF LODI, CALIFORNIA
Report to City Council
For the Year Ended June 30, 2016
Table of Contents
Page(s)
Transmittal Letter 1
Required Communications 2-4
Status of Prior Year Recommendation 5
Certified
Public
Accountants
City Council
City of Lodi, California
Century City
Los Angeles
Newport Beach
Oakland
Sacramento
San Diego
San Francisco
Walnut Creek
Woodland Hills
We have audited the financial statements of the governmental activities, the business -types activities,
each major fund, and the aggregate remaining fund information of the City of Lodi, California (City), as
of and for the year ended June 30, 2016, and have issued our report thereon dated January 25, 2017.
Professional standards require that we provide you with information about our responsibilities under
generally accepted auditing standards, Government Auditing Standards, and Uniform Administrative
Requirements, as well as certain information related to the planned scope and timing of our audit. We
have communicated such information in our 2016 Audit Service Plan dated May 25, 2016. 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, 2016, 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, 2016, we followed up on our recommendation to address a
condition we identified during previous years' audits. The status of that recommendation is included in
the Status of Prior Year Recommendation section of this report. This report does not affect our report
dated January 25, 2017, on the basic financial statements of the City.
This letter is intended solely for the information and use of City Council and management and is not
intended to be and should not be used by anyone other than these specified parties.
We would like to thank the City's management and staff for the courtesy and cooperation extended to us
during the course of our engagement. We have discussed our comments and suggestions with
management and would be pleased to discuss them further.
i
Lacs gi%Lt Z c comets UR
Sacramento, California
January 25, 2017
Macias Gini & O'Connell LLP
3000 5 Street, Suite 300
Sacramento, CA 95816
1
www.mgocpa.com
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications
For the Year Ended June 30, 2016
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)(x) to the financial statements, the City implemented Governmental Accounting Standards Board
(GASB) Statement No. 72, Fair Value Measurement and Application during the year. Also as described
in Note (1)(w) to the financial statements, the City moved the net OPEB obligation and net pension
liability and deferred outflows and inflows or resources related to pensions previously reported in its
internal services funds to reconciling items in its governmental activities during the year. As of July 1,
2015, the City restated the beginning net position to record the beginning net OPEB obligation, net
pension liability, and deferred outflows and inflows of resources related to pensions as follows:
Internal
Service Funds
Net postion - beginning, as previously reported $ (588,125)
Change in accounting:
Net OPEB obligation 5,343,727
Pension related:
Net pension liability 926,452
Deferred outflows of resources (74,359)
Deferred inflows of resources 216,550
Net Position - beginning, restated $ 5,824,245
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 fair value measurements of investments are based on custodian pricing.
• 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 valuations performed in accordance
with the parameters set forth in GASB Statement No. 68, Accounting and Financial Reporting
for Pensions.
• 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.
2
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications (Continued)
For the Year Ended June 30, 2016
We evaluated the key factors and assumptions used to develop these estimates in determining that they
are reasonable in relation to the financial statements taken as a whole.
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 taken as a whole.
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 January 25, 2017.
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.
3
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications (Continued)
For the Year Ended June 30, 2016
Other Matters
We applied certain limited procedures to management's discussion and analysis, the schedules of
changes in net pension liability and related ratios, the schedule of pension contributions, the schedule of
funding progress for the OPEB plan, and the schedules of revenues, expenditures and changes in fund
balances — budget and actual — for the General Fund and Streets 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 fund 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.
We were not engaged to report on the introductory, statistical, and continuing disclosures 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 Recommendation
For the Year Ended June 30, 2016
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 performs disaster recovery by utilizing Dell Appsure for local backups. The City just started
utilizing AWS (Amazon Web Services) for off site hosting of backups off the Appsure.
The City developed a disaster preparedness plan in 2007, which defines the recovery process. But there
is no evidence that the plan has been fully tested. Since 2007, much has changed with the City's
information systems environment and, therefore the current plan is in need of an update. Therefore, our
recommendation remains in the process of implementation.
Current Year Management Response
The City is working towards a new network architecture that will minimize the risk of network failure.
Using distributed technology within the data center as well as distributed services on the City wide area
network (WAN). Completion of the new architecture will occur in fiscal year 2016-2017.
5
CITY OF LODI
Independent Accountant's Report on Applying
Agreed -Upon Procedures Related to the Article
XIII -B Appropriations Limit Calculation
For the Fiscal Year Ended June 30, 2016
Certified
Public
Accountants
Certified
Public
Accountants
Independent Accountant's Report on Applying Agreed -Upon
Procedures Related to the Article XIII -B
Appropriations Limit Calculation
City Council
Lodi, California
Sacramento
Walnut Creek
San Francisco
Oakland
Los Angeles
Century City
Encino
Newport Beach
San Diego
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, 2016. These
procedures, which were agreed to by City management and the California Committee on Municipal
Accounting (as presented in its publication entitled Agreed -Upon Procedures Applied to the
Appropriations Limitations Prescribed by Article XIII -B of the California Constitution), 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:
1. We obtained the completed worksheets setting forth the calculations necessary to establish
the City's appropriations limit and compared the limit and annual adjustment factors included
in those worksheets to the limit and annual adjustment factors that were adopted by resolution
of the City Council. We also compared the population and inflation options included in the
aforementioned worksheets to those that were selected by a recorded vote of the City
Council.
Finding: No exceptions were noted as a result of this procedure.
2. For the accompanying Appropriations Limit Worksheet, we added the appropriations limit
for the fiscal year ended June 30, 2015 to the annual adjustment amount, and compared the
resulting amount to the appropriations limit for the fiscal year ended June 30, 2016.
Finding: No exceptions were noted as a result of this procedure.
3. We compared the current year information presented in the accompanying Appropriations
Limit Worksheet to the worksheets described in procedure No. 1 above.
Macias Gini & O'Connell LLP
3000 5 Street, Suite 300
Sacramento, CA 95916
Finding: The City's population and inflation factors were errantly switched in the worksheets
described in procedures No. 1 above that were adopted by resolution of the City Council, but
this switch had no impact on the appropriation limit for the fiscal year ended June 30, 2016.
1
www.mgocpa.com
4. We agreed the appropriations limit for the fiscal year ended June 30, 2015 presented in the
accompanying Appropriations Limit Worksheet to the appropriations limit for the fiscal year
ended June 30, 2015 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.
;. (;k;
Sacramento, California
August 1, 2016
oniitei LZ'
2
CITY OF LODI
Appropriations Limit Worksheet
For the Fiscal Year Ended June 30, 2016
Appropriation Limit for the fiscal year ended June 30, 2015, as adopted
Adjustment factors:
Population factor, fiscal year ended June 30, 2016, as adopted
Inflation factor, fiscal year ended June 30, 2016, as adopted
Adjustment factor for the fiscal year ended June 30, 2016
Annual adjustment
Appropriation Limit for the fiscal year ended June 30, 2016, as adopted
3
$$6,477,897
1.0035
1.0382
1.0418337
3,617.691
,095_ 5_18
2015/16 Comprehensive
Annual Financial Report
City Council
February 15, 2017
Auditor's Opinion
❑ City engaged an independent auditor
through a competitive process
❑ Macias, Gini, O'Connell, LLP has given
the City a clean' opinion for the year
■ Reviewed financial records and found
them to be in compliance with all rules
and regulations in all material respects
■ Financial statements fairly present the
balances and operations of the City
Status of City's Financial Position
Highlights of Financial Records
❑ General Fund
■ Unassigned Fund Balance of
$11,185,453
❑ Includes $341,795 for Library,
❑ About $1.3 million higher than projected for
budget purposes
❑ % of General Fund revenues for 2015/16
■ Fully funds Catastrophic Reserve (8%)
■ Fully funds Economic Reserve (8%)
■ Fully funds Pension Reserve (80% of excess)
■ Surplus reserve amount of $707,553
Pension Stabilization Fund
❑ 2016 Council Policy: 80% of excess
reserve committed to new PERS
Stabilization Fund
❑ Initial Funding $2,830,210
❑ Funding deposited into PARS Trust
Fund that can only be spent on
Pension costs.
Status of City's Financial Position
Highlights of Financial Records
0 General Fund (cont.)
• Budget to Actual Variances
0 Revenues $400k higher than budget
• Real property transfer taxes up about $184,000
• Franchise fees up about $168,000
• Transient Occupancy Tax up about $84,000
• Business licenses up about $127,000
• State Motor Vehicle In -lieu down about $200,000
• Sales tax up about $34,000
5
Status of City's Financial Position
Highlights of Financial Records
❑ General Fund (cont.)
■ Budget to Actual Variances (cont.)
❑ Expenditures about $1.7m under budget
■ Salary and Benefits savings of about $1.1m
■ Service and Supply savings of about $600k
Net Pension Liability
■ Total Net Pension Liability -$98,123,484
❑ Governmental -$81,024,186 up by about
$6.2m
❑ Enterprise -$17,099,298 up by about $230k
■ Deferred Outflows/Inflows-$78,194
❑ Governmental -$363,661
❑ Enterprise -$-285,467
Change in Accounting
■ Pension Liability and related inflows and
outflows and OPEB Liability were
reclassified as reconciling items in the
government -wide Financial Statements
resulting in a restatement of $1.1m in
Fleet Svc Fund and $5.3m in the Benefits
Fund
■ Deficit in both funds were eliminated
Single Audit
❑ No questioned costs
❑ No material weaknesses in internal
controls
Management Letter
❑ Review of City's Internal controls
■ No new findings
❑ Prior year findings
■ 1 remain open
❑ IT disaster preparedness plan needs to be fully
tested
■ Backup and disaster recovery with Tyler Technologies
10
Questions?
Please immediately confirm receipt
of this fax by calling 333-6702
CITY OF LODI
P. O. BOX 3006
LODI, CALIFORNIA 95241-1910
ADVERTISING INSTRUCTIONS
SUBJECT: CITIES FINANCIAL TRANSACTION RECORD — CONSOLIDATED
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE/WORKING CAPITAL
PUBLISH DATE: SATURDAY, MARCH 18, 2017
LEGAL AD
TEAR SHEETS WANTED: One (1) please
SEND AFFIDAVIT AND BILL TO:
LNS ACCT. #0510052
DATED: MONDAY, MARCH 13, 2017
JENNIFER M. FERRAIOLO, CITY CLERK
City of Lodi
P.O. Box 3006
Lodi, CA 95241-1910
ORDERED BY: JENNIFER M. FERRAIOLO
CITY CLERK
PAMELA M. FA` RIS
DEPUTY CITY CLERK
ELIZABETH BURGOS
ADMINISTRATIVE CLERK
Verify Appearance of this Legal in the Newspaper — Copy to File
Emailed to the Sentinel at dianer@lodinews.com at i:547,3) on 3/3/17 (date) (pages)
LNS Phoned to confirm receipt of all pages at (time) EB _PMF (initials)
forms\advins.doc
Cities Financial Transaction Report - Consolidated Statement of Revenues,
Expenditures, and Changes in Fund Balance/Working Capital
Consolidated Statement
Fiscal Year 2016
Expenditures Net of Functional Revenues
General Government
Public Safety
Transportation
Community Development
Health
Culture and Leisure
Public Utilities
Other
Total
General Revenues
Taxes
Licenses and Permits
Fines and Forfeitures
Revenue from Use of Money and Property
Intergovernmental State
Intergovernmental County
Other Taxes In -Lieu
Other
Total
Excess/(Deficiency) of General Revenue
Over Net Expenditures
Excess/(Deficiency) of Internal Service
Charges Over Expenses
Beginning Fund Balance/ Working
Capital
Adjustments
Specify:
Total
Expenditures
12,786,525
30,531,311
11,896,689
2,698,191
11,141,613
7,443,305
73,017,321
149,514,955
Functional
Revenues
1,949,702
2,707,618
12,662,376
3,118,919
16,951,200
3,826,347
86,062,318
$ 127,278,480
Amount:
Net
Expenditures/
(Excess)
Revenues
$ 10,836,823
$ 27,823,693
$ (765,687)
$ (420,728)
$ (5,809,587)
$ 3,616,958
$ (13,044,997)
$ 22,236,475
$ 36,897,002
$ 1,330,018
$ 1,554,198
$ 130,623
$ 263,716
$ 40,175,557
$ 17,939,082
$ 181,925
$ 79,537,765
$ 1,453,025
Working Capital Adjustment 23,007,387
Proprietary Adjustment Brought Forward (17,084,867)
Enterprise Transfers (4,469,495)
Total: $ 1,453,025
Ending Fund Balance/ Working Capital
Appropriations Limit
Total Annual Appropriations
Subject to the Limit
$ 99,111,797
90,095,588
36,831,981