HomeMy WebLinkAboutAgenda Report - December 20, 2017 I-02TM
CITY OF LODI
COUNCIL COMMUNICATION
AGENDA ITEM
AGENDA TITLE: Receive and File City's Comprehensive Annual Financial Report (Fiscal Year
2016/17) by Macias, Gini & O'Connell, LLP
MEETING DATE: December 20, 2017
PREPARED BY: Derrick A. Cotten, 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 2016/17:
• 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 & O' 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 24th year. A copy of the GFOA
certificate is included in the 2016/17 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.
•
i [
Funding Available: Not applicable.
Derrick A. Cotten
Financial Services Manager
APPROVED:
Steve wabauer, anager
CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Year Ended June 30, 2017
DOUG KUEHNE, MAYOR
ALAN NAKANISHI, MAYOR PRO TEM
MARK CHANDLER, COUNCILMEMBER
BOB JOHNSON, COUNCILMEMBER
JOANNE MOUNCE, COUNCILMEMBER
STEVE SCHWABAUER, CITY MANAGER
Prepared by the Financial Services Division
Derrick Cotten, Financial Services Manager
Robin Xiang, Supervising Accountant
INTRODUCTORY SECTION
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2017
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents
Letter of Transmittal v
Certificate of Achievement for Excellence in Financial Reporting xiv
Organization Chart of the City of Lodi xv
Directory of Officials and Advisory Bodies xvi
FINANCIAL SECTION
Independent Auditor's Report 1
MANAGEMENTS 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 Change 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 87
Schedule of Changes in Net Pension Liability and Related Ratios - Safety Plan 88
Schedule of Pension Contributions 89
Schedule of Funding Progress — OPEB Plan 90
Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — General Fund 91
Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Streets Fund 92
Note to the Required Supplementary Information 93
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2017
TABLE OF CONTENTS - continued
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Combining Balance Sheet — Nonmajor Governmental Funds 95
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds 96
Nonmajor Governmental Funds - Special Revenue Funds 97
Combining Balance Sheet — Nonmajor Governmental Funds — Special Revenue Funds 99
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds — Special Revenue Funds 100
Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Nonmajor Governmental Funds — Special Revenue Funds:
Parks, Recreation, and Community Services Fund 101
Public Safety Fund 102
Community Development Fund 103
Transportation Fund 104
HOME Program and Community Development Block Grants Fund 105
Nonmajor Governmental Funds - Capital Project Funds 107
Combining Balance Sheet — Nonmajor Governmental Funds — Capital Project Funds 108
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds — Capital Project Funds 109
Internal Service Funds 111
Combining Statement of Net Position - Internal Service Funds 112
Combining Statement of Revenues, Expenses, and Changes in Net Position — Internal Service Funds 113
Combining Statement of Cash Flows - Internal Service Funds 114
Combining Statement of Fiduciary Net Position - Private -Purpose Trust Funds 115
Combining Statement of Changes in Fiduciary Net Position - Private -Purpose Trust Funds 116
Statement of Changes in Assets and Liabilities - Agency Fund 117
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2017
TABLE OF CONTENTS - continued
STATISTICAL SECTION (UNAUDITED) 119
Government -wide information:
Net Position by Component - Last Ten Fiscal Years 120
Changes in Net Position - Last Ten Fiscal Years 121
Fund information:
Fund Balances, Governmental Funds - Last Ten Fiscal Years 123
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 124
Tax Revenues by Source, Governmental Funds - Last Ten Fiscal Years 126
Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 127
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 128
Principal Property Taxpayers -Current Year and Nine Years Ago 129
Property Tax Levies and Collections - Last Ten Fiscal Years 130
Electricity Sold by Type of Customer - Last Ten Fiscal Years 131
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 132
Ratios of General Bonded Debt Outstanding- Last Ten Fiscal Years 133
Legal Debt Margin Information - Last Ten Fiscal Years 134
Direct and Overlapping Governmental Activities Debt 135
Pledged -Revenue Coverage - Last Ten Fiscal Years 136
Demographic and Economic Statistics - Last Ten Fiscal Years 139
Principal Employers - Current Year and Nine Years Ago 140
Full -Time Equivalent City Government Employees By Department - Last Ten Fiscal Years 141
Operating Indicators by Function/Program/Department - Last Ten Fiscal Years 142
Capital Asset Statistics by Function/Program/Department - Last Ten Fiscal Years 144
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 147
Independent Auditor's Report on Compliance for the Major Federal Program and Report on Internal Control Over Compliance
Required by the Uniform Guidance 149
Schedule of Expenditures of Federal Awards 151
Notes to the Schedule of Expenditures of Federal Awards 152
Schedule of Findings and Questioned Costs 153
Summary Schedule of Prior Audit Findings 155
CONTINUING DISCLOSURES (UNAUDITED)
Annual Report for Electric Utility 157
Annual Report for Wastewater Utility 163
Annual Report for the Lodi Public Financing Authority 170
Annual Report for Water Utility 173
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CITY COUNCIL
DOUG KUEHNE, Mayor
ALAN NAKANISHI,
Mayor Pro Tempore
COUNCILMEMBERS:
MARK CHANDLER
BOB JOHNSON
JOANNE MOUNCE
December 12, 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, 2017, 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,
2017, 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 based on a comprehensive internal control framework established
for this purpose. 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 Nos. 61 and 80.
The City was incorporated December 6, 1906, as a municipal corporation under the general laws of the State of California. The City operates under
a Council -Manager form of government. Under the Council -Manager form of government, policy making and legislative authority are entrusted to
the City Council. The City Council consists of five members elected at -large by its voters for four-year terms, with no term limits. Elections are held
in November of even -numbered years. Each year the Mayor and Mayor Pro -Tempore are chosen by the members of the City Council. The Mayor
presides at Council meetings and acts as the ceremonial head of the City, the Mayor Pro Tempore serves as Mayor in his or her absence. The City
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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 protection (police and fire), public utilities services (electric, water, and
wastewater), public works, transit services, parks and recreation, library, community development, and general government (City Manager, City
Clerk, City Attorney, human resources, information systems, financial services, and budget and treasury).
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 of Lodi is located in California's fertile San Joaquin Valley, adjacent to State Highway Route 99, between Stockton, 10 miles to the south,
and Sacramento, 35 miles to the north. The City population is estimated to be approaching 65,000 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
Management Allocation 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 diverse local economy. Lodi is best known for its Zinfandel wines; however, Lodi is an authentic and dynamic wine
region with more than 80 wineries within 10 miles of downtown. The City's employment base is just as diverse with industry that includes
agribusiness, biotechnology, distribution, food and beverage product manufacturing, general service, government, health care, heavy
manufacturing, and ,of course, wine based tourism and lodging.
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.
The City is growing and over the last few years it has seen significant new commercial, industrial and residential development projects come to
fruition. Hundreds of new homes have already been constructed and hundreds more are entitled. The City's first market rate apartment complex in
over 25 years is being completed along with an age restricted apartment complex. Combined with the ever growing strength of the wine grape and
tourism industries is a positive indicator for the City moving forward. The City's focus on economic development, compact development and quality
of life has encouraged these investments within the City, collectively creating hundreds of new employment and housing opportunities.
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The most difficult budget issue facing the City is the California Public Employees' Retirement System (CaIPERS) funding crisis. The City is well
aware of this challenge and is taking aggressive steps to address this concern. More details can be found in the Economic Factors and Next Year's
Budget section of the Management's Discussion and Analysis in this report.
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. In 2017, steady progress toward buildout and occupancy of the new retail development has occurred and that is
expected to continue into 2018.
Tourism continues to be a major driving factor of the local economy. The City currently has three approved hotel sites, one with an issued building
permit, and the two others with permits ready or near ready for issuance. Additional progress on all three projects is expected in 2018.
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 Employee Training and Education
Provide for a Balanced Community Evaluate Telecommunications Opportunities
Enhance Access through Implementation of IT Strategic Plan Provide Resources to Maintain City's Infrastructure
Promote Urban Forestry Promote Public Relations and Marketing Efforts
Attract, Retain and Invest in a Quality City Work Force Ensure Open and Accessible Public Meetings
Encourage Public Arts, Cultural and Recreational Opportunities Pursue Efforts to be Entrepreneurial
Provide Appropriate and Sufficient City Facilities Improve Customer Service
Develop Short and Long Range Operational Plans Continue to use Partnerships to Advance City's Objectives
Develop Effective Records Management Program Provide a Balanced Budget and Adhere to Adopted Policies
Promote Commercial/Industrial Base
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2.) Project Specific Goals
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:
Economic development for "shovel ready" land
Economic development and incentive program to focus on underutilized parcels
Public Safety, Gang Reduction Intervention Program, training anc increase in staffing
Fiscal sustainability, asset preservation, CALPERS and Other Postemployment 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 fiscal year 2016-17. The following projects are
underway and will see significant progress or be completed in 2018.
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 nine residential development projects that have been approved and total about 1,500 dwelling units. Dwelling units are fairly evenly
divided among low, medium and high density units. Sales in four of the nine projects are ongoing. Construction is proceeding in seven of the nine
projects this year and the remaining two are expected to begin construction in 2018. In addition, the City's first market rate apartment complex in
over 25 years and a new age restricted apartment complex should open in 2018.
Industrial Reuse
MHA construction, an international modular wall construction company in the multi -family segment recently acquired the majority of a long closed
auto dealership bringing thirty to eighty new jobs to Lodi by full build out. Lodi is also seeing growth at the former Blue Shield call center which was
acquired by Cepheid, a leader in infectious disease diagnosis products.
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 fiscal year 2009-10 and will continue through fiscal year 2017-18. To date, approximately 14,400 meters have been
installed. Estimated cost for the complete program is $42.5 million.
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Library Roof Repairs and Teen Scene Upgrade
The library's roof, installed in the mid 1980's, reached its useful life and needed replacement. The replacement project was approved and
completed in November 2017. The repair of $420,000 will enhance the usability and reduce liability at the library while ensuring it will be useful for
years to come.
The library continues to remake itself into a modern space in an attempt to attract patrons from all demographics within the City. The Teen Scene is
the first dedicated teen space (2,500 square feet) in the library. The project is estimated at just shy of $1 million, with approximately $300,000
donated by the Lodi Public Library Foundation, which continues to be a strong contributor to the success of the City's library.
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
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 management
estimates and judgments are required 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 2016-17, the City Council and City Manager made several supplemental appropriations for operating budgets and capital projects.
Long Term Financial Planning
The City has implemented a long-term financial planning practice to review the impact of current decisions on the City's General Fund. This analysis
can be found in the City's budget document beginning in fiscal year 2017-18 and includes assumptions, revenue, expenditures, and fund balance
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projections. In addition, there is discussion of risks and opportunities not modeled. The tool is a baseline projection that provides management and
policy makers a view of what the City's financial condition may be if current operations are maintained and a reasonable set of economic
assumptions are made. This plan is updated periodically as new information is available that will materially impact the projection.
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 $22.8 million for fiscal year 2016-17. 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 $11,447,985, or 25.89% of revenues at the
end of fiscal year 2016-17.
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 one-year
U.S. Treasury Bill.
Appropriation Limitation
Article XIII B of the Constitution of the State of California (Proposition 4) provides for the limitation of expenditures by state and local governments.
Under the provisions of this article, City appropriations funded through tax sources may not exceed Fiscal Year 1979 appropriation levels except as
adjusted for increases in population and the growth in the California per capita income or non-residential assessed valuation due to new
construction within the City.
Excluded from the limitation are appropriations funded through charges for services, fines and forfeitures, grants, transfers of service responsibilities
between government agencies and indebtedness incurred prior to Fiscal Year 1979. Pursuant to subsequent legislation adopted after Article XIII B,
the City is required to annually establish and adopt its appropriations limit by resolution. For fiscal year 2016-17, the City's appropriations subject to
limit were $37,281,365 and the appropriation limit was $95,607,750, leaving appropriations at $58,326,385 below the limit.
Debt Administration
At June 30, 2017, the City had outstanding Certificates of Participation and Revenue Bonds of $156,945,920. 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.
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In 2004, the City issued $27,360,000 in Wastewater Certificates of Participation (2004A) to finance the costs of improvements to the wastewater
collection, treatment and disposal system. These bonds were partially refunded with the 2012 Refunding Wastewater Revenue Bonds, Series A.
In 2007, the City issued $30,320,000 in Wastewater Certificates of Participation (2007A) to finance Phase III of the wastewater improvements and to
refund the 1991 Certificates of Participation. 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
(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.
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.
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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 fiscal year 2016-17 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, 2017, the Insurance Fund had a net position of $4,571,274.
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.
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, 2016. These Certificates of
Achievement are prestigious national award 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-four
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.
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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 Derrick Cotten, Financial Services Manager, Robin Xiang,
Supervising Accountant, Harron Akbar, Accountant and the entire Finance Team. Their work in preparing this year's CAFR is greatly appreciated.
I would also like to thank you for your continued interest and support in planning and conducting the financial operations of the City in a responsible
and progressive manner.
Respectfully submitted,
6t4 -t,
Andrew Keys
Deputy City Manager/Internal Services Director
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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, 2016
Executive Director/CEO
City of Lodi
Citizens
City Council
Library
Board
Library
City Attorney
City Manager
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DIRECTORY OF OFFICIALS AND ADVISORY BODIES
CITY COUNCIL
Doug Kuehne
Alan Nakanishi
Mark Chandler
Bob Johnson
JoAnne Mounce
ADVISORY BODIES
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PRINCIPAL ADMINISTRATIVE OFFICERS
Steve Schwabauer
Andrew Keys
Janice Magdich
Jennifer Ferraiolo
Dean Gualco
Larry Rooney
Jeff Hood
Charles Swimley
Elizabeth Kirkley
Steve Schwabauer
Tod Patterson
xvi
Mayor
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FINANCIAL SECTION
The Financial Section is comprised of the Independent Auditor's Report, Management's Discussion and Analysis,
Basic Financial Statements, including the notes, Required Supplementary Information, and Supplementary
Information which includes Combining and Individual Fund Statements and Schedules.
Certified
Public
Accountants
Independent Auditor's Report
The Honorable Members of City Council
City of Lodi, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining
fund information of the City of Lodi, California (City), as of and for the year ended June 30, 2017, 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, 2017, 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 S 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 balance — budget and actual — for the General and Streets funds 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 December 12, 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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and
not to provide an opinion on the effectiveness of the City's 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.
oLCiaLS g/ki / Oteij Z.6?
Sacramento, California
December 12, 2017
2
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, 2017.
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 $205,057,018 (net position). Of this amount, $60,699,266 is unrestricted deficit.
• The City's total net position increased by $17,086,030 in fiscal year 2017.
• As of June 30, 2017, the City's governmental funds reported combined ending fund balances of $30,232,042, an increase of $3,117,069 in
comparison with the prior year. Of this amount, $11,447,985 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 $14,968,357, of which $11,447,985 is unassigned or 25.89% of total
general fund revenues of $44,221,656.
• The City's total long-term liabilities increased by $14,262,311 (4.63%) 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.
3
Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental
revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through users fees and
charges (business -type activities). The governmental activities of the City include general government, public protection, public works, community
development, library, 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 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.
4
• 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, contributions to the 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 for the General Fund and Streets Fund.
Combining Statements and Schedules
The combining statements and schedules in connection with non -major governmental funds, internal service funds and fiduciary funds are
presented immediately following the required supplementary information.
5
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 $205,057,018 at the close of the current fiscal year.
City of Lodi's Net Position
Governmental
Activities
2017
Assets:
Current and other assets $ 53,240,280
Capital assets 136,432,091
Total assets 189,672,371
Deferred outflows of resources
Liabilities:
Long-term net OPEB obligation
Long-term net pension liability
Other long-term liabilities
Other liabilities
Total liabilities
Deferred inflows of resources
Net position:
Net investment in capital assets
Restricted
Unrestricted
Total net position
17,821,434
8,939,061
95, 864,664
36,067,833
8,215,297
149, 086, 855
2,828,147
117,196,121
15,545,059
(77,162, 377)
$ 55,578,803
2016
48,517,710
131, 759, 274
Business -type
Activities
2017
87,988,072
241, 202, 789
180,276,984 329,190,861
7,165,075 11,812,878
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)
22,155,886
159,181, 909
9,572,998
2016
Total
2017
86,936,283 $ 141,228,352
238,195, 394 377,634, 880
325,131,677 518,863,232
9,090,899
17,099,298
165,079,980
10,485,032
190, 910, 793 192, 664, 310
614,731
129,085,926
3,929,138
16,463,151
48,183,034 149,478,215
1,770,312
29,634,312
8,939,061
118,020,550
195,249,742
17,788,295
2016
135,453, 993
369,954,668
505,408,661
16,255,974
7,560,300
98,123,484
202,263,258
17, 583,405
339,997,648 325,530,447
3,442,878
121,468,454 246,282,047
3,892,388 19,474,197
14,427,112 (60,699,226)
8,163,200
232, 724, 447
17,803,754
(62, 557,213 )
139,787,954 $ 205,057,018 187,970,988
Assets. The City's total assets increased by $13,454,571. The increase is primarily due to the following:
Governmental activities. Total assets for the governmental activities had an increase of $9,395,387 or 5.21%. Current and other assets
increased by $4,722,570 primarily resulting from the increase in cash and investments, $7,881,471; offset by the decrease in due from other
6
governmental agencies, $2,621,133, and accounts receivables, $738,621. Capital assets increased by $4,672,817 largely from construction in
progress. Other insignificant activities make up the difference.
Business -type activities. Total assets for the business -type activities had an increase of $4,059,184. Current and other assets increased by
$1,051,789 primarily due to increases in advance receivable of $1,252,823. Capital assets increased by $3,007,395 largely from machinery and
equipment. Other insignificant activities contributed to the difference.
Deferred outflows of resources. The increase in deferred outflows of resources of $13,378,338 is primarily from changes in various pension
components related to the Miscellaneous and Safety Plans per the CaIPERS valuation reports and current pension contributions made after the
measurement date of June 30, 2016.
Liabilities. The City's total liabilities increased by $14,467,201 or 4.44%. The increase is primarily due to the following:
Governmental activities. Total liabilities for the governmental activities had a significant increase of $16,220,718 or 12.21%, primarily from the net
pension liability and the net OPEB obligation.
Business -type activities. Total liabilities for the business -type activities decreased by $1,753,517 or 0.91%. The decrease is primarily attributable
to the principal payments on long-term debt offset by an increase in pension liability. Other insignificant activities offset the difference.
Deferred inflows of resources. The decrease in deferred inflows of resources of $4,720,322 represents changes in various pension
components related to the Miscellaneous and Safety Plans per the CaIPERS valuation reports.
Net position. The City's overall financial position increased by $17,086,030, or 9.09%, during the fiscal year.
The largest portion ($246,282,047) 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 plus debt
related deferred outflows of resources. 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 and deferred outflows of
resources, 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, $19,474,197 (9.50%) 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 $60,699,226. 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 primarily due to recording a net OPEB obligation and a net pension liability.
7
City of Lodi's Change in Net Position
Governmental Business -type
Activities Activities Total
2017 2016 2017 2016 2017 2016
Revenues
Program revenues:
Charges for services $ 9,775,083 6,956,105 93,647,907 94,838,592 $ 103,422,990 101,794,697
Operating grants and contributions 2,391,015 2,595,874 4,513,922 5,088,818 6,904,937 7,684,692
Capital grants and contributions 12,830,462 10,558,743 7,972,612 2,860,171 20,803,074 13,418,914
General revenues:
Property taxes 14,859,923 13,919,218 14,859,923 13,919,218
Other taxes 11,684,301 11,407,984 11,684,301 11,407,984
Grants and contributions not restricted to specific programs 11,777,544 11,834,331 11,777,544 11,834,331
Litigation — environmental lawsuits proceeds 100,000 100,000
Rent 1,954,385 4,200 1,958,585
Other 978,931 1,043,915 3,601,914 4,908,960 4,580,845 5,952,875
Total revenues 64,297,259 60,270,555 109,736,355 107,800,741 174,033,614 168,071,296
Expenses
General government 9,650,423 10,368,800 9,650,423 10,368,800
Public protection 33,238,886 31,394,604 33,238,886 31,394,604
Public works 10,614,158 10,326,560 10,614,158 10,326,560
Community development 1,709,246 1,792,520 1,709,246 1,792,520
Library 1,252,743 1,389,105 1,252,743 1,389,105
Parks and recreation 3,663,013 4,262,128 3,663,013 4,262,128
Interest on long-term debt 824,021 821,768 824,021 821,768
Electric 62,790,906 61,764,151 62,790,906 61,764,151
Wastewater 16,317,764 14,023,975 16,317,764 14,023,975
Water 11,960,786 10,967,387 11,960,786 10,967,387
Transit 4,925,638 4,414,594 4,925,638 4,414,594
Total expenses 60,952,490 60,355,485 95,995,094 91,170,107 156,947,584 151,525,592
Changes in net position before transfers 3,344,769 (84,930) 13,741,261 16,630,634 17,086,030 16,545,704
Transfers 4,051,000 4,469,495 (4,051,000) (4,469,495)
Changes in net position 7,395,769 4,384,565 9,690,261 12,161,139 17,086,030 16,545,704
Net position at beginning of year 48,183,034 43,798,469 139,787,954 127,616,815 187,970,988 171,425,284
Net position at end of year $ 55,578,803 48,183,034 149,478,215 139,787,954 $ 205,057,018 187,970,988
Analysis of Chancres in Net Position
Governmental activities
Net position for the governmental activities increased by $7,395,769 in the current fiscal year, which is an increase of $3,011,204 relative to last
year's increase of $4,384,565.
8
The key factors impacting this increase are:
Revenues increased $4,026,704 from the prior fiscal year. Key elements of this increase are:
• Capital grants and contributions increased by $2,271,719 or 21.52% 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, $3,242,603; offset by a decrease in
development impact fees collected, $963,121. The difference is offset by other insignificant increases.
• Property taxes increased by $940,705 or 6.76% compared to prior year. The economy continues to show evidence of positive movement
particularly in the housing market. Home prices continue to rise 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.
• Charges for services increased by $2,818,978 from the prior fiscal year. The increase is due to $2,135,227 of rent previously recorded as
general revenues. The difference is due to various fees and services provided during the fiscal year.
Expenses for governmental functions totaled $60,952,490, an increase of $597,005 or 0.99% relative to the prior fiscal year.
Transfers from business -type activities decreased by $418,495, 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 $9,690,261 in the current year, which is a decrease of $2,470,878 from last year's
increase of $12,161,139. The key elements of this decrease are:
• Transfers to the governmental activities for various capital projects decreased by $418,495 in comparison to the prior year.
• Charges for services in the Electric Fund decreased by $1,659,598 primarily from the decline in commercial customer revenue, offset by
the increase in Wastewater Fund by $146,676, and the increase in the Water Fund by $312,490.
• Increase in the greenhouse gas allowance (GHG) of $798,871 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.
• Operating grants in the Transit fund declined by $1,373,107 primarily from a decline in Article 8 operating funds.
• Capital contributions increased by $5,112,441, primarily from the water meter project phase 5, Reynolds Ranch subdivision and the Lodi
Shopping Center.
• Other revenues decreased by $1,176,150 primarily from work for others in the Electric Fund triggered by new residential and commercial
developments in the prior year.
• Increase in pension expense by $2,889,123 as the result of increasing pension cost. Other salary and benefits increased by $460,288.
• Bulk power cost decreased by $2,138,616 compared to the prior year primarily attributable to overall decrease in generation and in third
party revenues offset by an increase in transmission, management services costs paid to NCPA.
• Supplies, materials and services increased by $4,071,668 primarily due to Wastewater and Transit maintenance and repair projects, the
Public benefits program, and various increases in supplies and services.
9
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 $30,232,042. This represents an
increase of $3,117,069, an increase of $438,457 in comparison to the prior year increase of $2,678,612 resulting from the increase in total
revenues, increase in total expenditures and decrease in net 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
$11,447,985 while total fund balance was $14,968,357. 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 28.80%
and 37.66% of total General Fund expenditures, respectively.
The fund balance of the General Fund increased by $1,721,164 during the current fiscal year, an increase of $952,524 from last year's increase of
$768,640. Key factors in this increase are:
• Total revenues increased by $1,078,435, primarily from the net increase in secured property tax of $592,976, increase in vehicle license
fee of $331,980; and, increase in business license tax of $140,585. Other insignificant increases and decreases offset the difference.
• Total expenditures increased by $1,290,734 primarily from increase in salaries and wages for the vacancies filled during the current year
and the increases approved in labor negotiations, and increases related to OPEB and pensions. Other insignificant increases and
decreases offset the difference.
• Net transfers out decreased by $1,164,823 primarily due to less transfers out to the Capital Outlay Reserve Fund for construction of fire
station #2.
Total fund balance of the Streets Funds was $5,223,958. Intergovernmental revenues of $9,883,250 offset by capital expenditures of $8,092,111
were the largest components that resulted in the increase of $1,649,442 to fund balance.
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 $5,072,853, Wastewater Fund was $8,570,542, Water Fund was
$(419,781), Transit Fund was $3,239,537, and the Internal Service Funds unrestricted net position was $5,476,259.
Other factors concerning the finances of these funds are discussed in the City's business -type activities.
10
GENERAL FUND BUDGETARY HIGHLIGHTS
Differences between the original budget and the final budget in the General Fund were a net increase in appropriations of $2,871,141. The
increase in appropriations can be briefly summarized as follows:
• $2,841,486 increase in general government and $40,931 increase in library are primarily the result of the City amending its budget to
establish a pension stabilization account.
Significant differences between the final budget and the actual revenues and expenditures can be briefly summarized as follows:
• Taxes — a favorable variance of $780,549 was primarily due to positive variances in property tax ($247,045), transient occupancy tax
($198,735), business license tax ($217,739), and sales and use tax ($223,897), offset by a negative variance in in -lieu of vehicle license
fees ($20,307).
• For expenditures, a favorable variance between the final budget and actual expenditures of $1,967,542 was primarily due to savings from
vacancies and the continued overall effort to reduce spending and costs.
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, 2017, amounts to $377,634,880 (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
$7,680,212, a 2.08% increase (a 3.55% increase in governmental activities and 1.26% increase 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
2017 2016 2017 2016
$ 24,947,834
18,416,565
41,234, 529
1,166, 057
2,694,344
47,667,855
304,907
$ 136,432,091
24, 947, 834
11,116,297
43, 090,432
613,979
2,135,160
49,550,665
304,907
5,535,718
15,409,186
27,924,759
187,261,549
5,071,577
131,759,274 241,202,789
Total
2017
5,535,718 $ 30,483,552
14,596,259 33,825,751
29,067,978 69,159,288
183, 903, 354 188,427,606
5,092,085 7,765,921
47,667, 855
304,907
2016
30,483, 552
25,712,556
72,158,410
184, 517, 333
7,227,245
49,550,665
304,907
238,195, 394 $ 377, 634, 880 369, 954, 668
An increase in construction in progress compared to prior year was primarily from the Harney Lane grade separation project.
Additional information on the City's capital assets can be found in Note 6 on pages 53-55 of this report.
11
Long-term debt
At the end of the current fiscal year, the City had total bonded debt outstanding of $156,945,920. Of this amount, $18,752,590 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 $138,193,330 from the business -type activities consists of $34,083,105 for the Water Fund; $45,441,595 for the
Wastewater Fund; and $58,668,630 for the Electric Fund.
City of Lodi's Outstanding Debt
Governmental Business -type
Activities Activities
Certificates of Participation and
Revenue Bonds $ 18,752,590
Total
138,193,330 156,945,920
The City's total bonded debt decreased by $6,107,968 during the current fiscal year due to principal payments and amortization of issuance
premiums.
Bond Rating
There have been no changes to the City's bond ratings since the previous report.
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.
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 debt,
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 Rating Services 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 & 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 56-62 of this report.
12
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
Economic indicators continue to be positive, leading to growth in sales and tourism occupancy taxes. General Fund revenue growth is projected
at 7.4% from the fiscal year 2016/17 budgeted revenue and transfers in, totaling $50,388,780. The City added to its reserve balance again in
fiscal year 2016/17 and is projecting a balanced budget in the General Fund in fiscal year 2017/18. The City's General Fund reserves are healthy
for now, but there is a projected CaIPERS contribution increase of approximately $10 million City-wide and over $7 million in the General Fund
between now and 2022/23, it is apparent that caution is required.
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. It is also the most impacted by the cost increases imposed on the City by CaIPERS (see below).
The City has maintained its workforce over the past three years with strategic reductions to capture cost savings and recognize efficiencies. The
City reduced a net of 4 positions this year, adding a new accountant and eliminating the following full time equivalents: two in the library, one in
Parks, Recreation and Cultural Services, one in the electric utility and one in the water/wastewater utility.
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.
Balancing the fiscal year 2017/18 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.
Employee costs and retirement contributions — The primary challenge facing the City stems from the CaIPERS funding crisis. The City's combined
funded status for the Safety and Miscellaneous employee plans is approximately 63% as of the most recent June 30, 2016, actuarial report. Staff
estimates that the City's combined CaIPERS bill will increase from approximately $10 million per year in fiscal year 2015/16 to between $16.5
million and $17.8 million by fiscal year 2022/23 when CaIPERS implements the phased discount rate reduction from 7.5% to 7.0% as is the current
policy. The funded status of the City's plans is expected to decrease over that span, despite the increased contribution requirements as the
discount rate drops. The City has already taken four major steps to address these increased pension funding demands. They are as follows:
1.) The City Council created a Pension Stabilization Fund (PSF) via a Section 115 Trust with Public Agency Retirement Services
(PARS) at the close of fiscal year 2016/17. Initial General Fund funding for the PSF came in the form of reserves over policy of
$2.8 million.
2.) The City acted again during fiscal year 2017/18 budgeting for additional monthly contributions from the General Fund to the City's
PSF totaling $2,019,230.
3.) The City acted a third time in fiscal year 2017/18 by electing to make its Unfunded Accrued Liability (UAL) payment in full in July
2017, realizing a 3.6% savings on the annual CaIPERS UAL bill as compared to the monthly billing option, which was used as the
basis for the fiscal year 2017/18 budget.
4.) The fourth major action on pension stabilization came in the form of Council adopting a Pension Stabilization policy on December
6, 2017, that invests all General Fund reserves in excess of the 16% reserve policy in the PSF until such time as the City's
pension system is 80% funded. Funded status is calculated by comparing total accrued liabilities to combined CaIPERS and PSF
13
assets. Other funds are similarly required to make contributions to the PSF on a prorated basis to the General Fund contribution
based on the current year's total CaIPERS budget for that fund. Implementation of that policy will result in additional funding to
the PSF of $3.4 million from the General Fund in fiscal year 2017/18 and another $1.3 million from operations outside the General
Fund.
Based on a combination of these actions, by the end of fiscal year 2017/18, total funding in the PSF is estimated as follows: General Fund: $8.2
million; Other Funds $2.9 million.
Current labor agreements with all City bargaining units expire on December 31, 2017. Current negotiations are proceeding favorably, maintaining
the tradition of strong labor-management relationships. There are no tentative agreements at this time.
Capital programs — The City continues to utilize one-time funds for capital maintenance, rather than ongoing operations. The Library and Parks,
Recreation and Cultural Services (PRCS), are strategically using resources from vacant positions to add to fund balances and deploying reserves
to capital projects as necessary. This strategy resulted in funding for the roof repair and teen center project at the library that will be completed in
late 2017. With the failure of Measure R, a 1/8 cent sales tax measure for PRCS capital, the PRCS department has begun scrutinizing operations
and capturing budget savings caused primarily by vacancy and utilizing that funding for needed capital replacement and repairs at various facilities
City wide.
Imposed costs — The primary concern to the City's budget is the imposed cost increases by CaIPERS related to the discount rate reduction from
7.5% to 7.0%. CaIPERS' board is currently considering its Asset Liability Management and Amortization policies, which may have an impact on
the discount rate or on the phased in approach currently adopted by the board to implement the discount rate reduction. Management is
aggressively implementing solutions to counter the imposed costs from the currently approved reduction. A further discount rate reduction or
modification to the amortization policy would have significant impacts on the City's ability to fund current operations and require difficult service
level and service priority discussions.
Rapidly increasing health care costs continue to be a concern. 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 and possibly the City's competitiveness in the labor marketplace. 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 fiscal year 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 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
The City continues its commitment to promoting economic development (business retention and attraction) and expanding the tax base to fund
City 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. In 2017,
steady progress toward buildout and occupancy of the new retail development has occurred and that is expected to continue into 2018.
14
Tourism continues to be a major driving factor of the local economy. The City currently has three approved hotel sites, one with an issued building
permit, and the two others with permits ready or near ready for issuance. Additional progress on all three projects is expected in 2018.
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.
The City is growing and over the last few years it has seen significant new commercial, industrial and residential development projects come to
fruition. Hundreds of new homes have already been constructed and hundreds more are entitled. The City's first market rate apartment complex
in over 25 years is being completed along with an age restricted apartment complex. The combined ever-growing strength of the wine grape and
tourism industries is a positive indicator for the City moving forward. The City's focus on economic development, compact development and
quality of life has encouraged these investments within the City, collectively creating hundreds of new employment and housing opportunities.
The City's unemployment rate is roughly 0.5 percent lower than that of San Joaquin County. The City's diversified economic base contributes to
this relatively stronger employment market and continues to help the City maintain its revenue base. Lodi is best known for its Zinfandel wines;
however, Lodi is an authentic and dynamic wine region with more than 80 wineries within 10 miles of downtown. The City's employment base is
just as diverse with industry that includes agribusiness, biotechnology, distribution, food and beverage product manufacturing, general service,
government, health care, heavy manufacturing, and, of course, wine based tourism and lodging.
Lodi Unified School District, Adventist Health Lodi Memorial Hospital, Pacific Coast Producers, Blue Shield and Tree House Foods have the
highest year-round employment in the City. Large national and international manufacturers such as Dart Container Corporation and 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, continues to invest in Lodi and increase production of its proprietary
molecular diagnostic product and the expansion is expected to create hundreds of additional jobs over the next few years. Mitsui Home America
(MHA) has begun tenant improvements at the former Plummer auto dealership/Calturas wine and beer center, and expects to open December
2017 with approximately 30 employees, with a build -out of approximately 80 employees. MHA provides pre -fabricated lumber wall systems for
commercial buildings, including the Rubicon Apartment complex under construction in Reynolds Ranch. MHA's parent company is Japan's Mitsui,
one of the world's largest conglomerates, that dates its origins to the 17th century.
REQUEST FOR INFORMATION
This financial report is designed to provide citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances
and to demonstrate the City' accountability for the money it receives. If you have any questions about this report or need additional information,
contact the Financial Services Division of the City of Lodi at 310 W. Elm Street, Lodi, California, 95240.
15
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
City of Lodi
Statement of Net Position
June 30, 2017
Governmental Business -type
Activities Activities
Total
ASSETS
Cash and investments $ 45,533,596 $ 37,089,489 $ 82,623,085
Accounts receivable, net 6,274,726 8,244,517 14,519,243
Property tax receivable 41,462 - 41,462
Interest receivable 53,962 70,776 124,738
Internal balances (1,088,311) 1,088,311 -
Due from other governmental agencies 2,176,149 1,375,170 3,551,319
Restricted cash and investments 27,805,247 27,805,247
Advance receivable 9,082,666 9,082,666
Inventory 145,776 3,231,896 3,377,672
Other assets 102,920 - 102,920
Capital assets:
Nondepreciable 43,669,306 20,944,904 64,614,210
Depreciable, net 92,762,785 220,257,885 313,020,670
Total assets 189,672,371 329,190,861 518,863,232
DEFERRED OUTFLOWS OF RESOURCES
Unamortized losses on defeasance
Related to pensions
Total deferred outflows of resources
381,590
17,439,844
7,066,131 7,447,721
4,746,747 22,186,591
17,821,434
11,812,878 29,634,312
LIABILITIES
Accounts payable and accrued liabilities 7,056,501 6,358,186 13,414,687
Accrued salaries and wages 827,017 827,017
Accrued interest 207,343 2,063,378 2,270,721
Unearned revenue 124,436 1,151,434 1,275,870
Long-term liabilities:
Due within one year 5,050,076 6,626,520 11,676,596
Due in more than one year 31,017,757 152,555,389 183,573,146
Other long-term obligations:
Net OPEB obligation 8,939,061 8,939,061
Net pension liability 95,864,664 22,155,886 118,020,550
Total liabilities 149,086,855 190,910,793 339,997,648
DEFERRED INFLOWS OF RESOURCES
Related to pensions 2,828,147 614,731 3,442,878
NET POSITION
Net investment in capital assets 117,196,121 129,085,926 246,282,047
Restricted for:
Road -related projects 5,286,754 - 5,286,754
Capital projects 5,071,616 - 5,071,616
Debt service - 3,929,138 3,929,138
Home and CDBG program 69,932 69,932
Public safety 428,841 428,841
Community development 3,892,405 - 3,892,405
Parks, recreation, and community services 795,511 795,511
Unrestricted (77,162,377) 16,463,151 (60,699,226)
Total net position $ 55,578,803 $ 149,478,215 $ 205,057,018
The notes to financial statements are an integral part of this statement. 17
City of Lodi
Statement of Activities
For the Year Ended June 30, 2017
Program Revenues Net (Expense) Revenue and Changes in Net Position
Operating Grants and Capital Grants and Governmental Business -type
Functions/Programs Expenses Charges for Services Contributions Contributions Activities Activities
Total
Primary government:
Governmental activities:
General government $ 9,650,423 $ 3,246,136 $ 60,464 $ - $ (6,343,823) $ - $ (6,343,823)
Public protection 33,238,886 779,223 1,217,559 121,826 (31,120,278) - (31,120,278)
Public works 10,614,158 1,209,311 1,045,712 12,367,232 4,008,097 - 4,008,097
Community development 1,709,246 2,838,343 32,604 1,161,701 - 1,161,701
Library 1,252,743 42,616 34,676 (1,175,451) - (1,175,451)
Parks and recreation 3,663,013 1,659,454 341,404 (1,662,155) - (1,662,155)
Interest on long-term debt 824,021 - - (824,021) - (824,021)
Total governmental activities 60,952,490 9,775,083 2,391,015 12,830,462 (35,955,930) - (35,955,930)
Business -type activities:
Electric
Wastewater
Water
Transit
Total business -type activities
Total
62,790,906 65,847,581 2,369,725 553,776 - 5,980,176 5,980,176
16,317,764 15,106,432 4,029,314 - 2,817,982 2,817,982
11,960,786 12,473,676 616,366 1,427,149 - 2,556,405 2,556,405
4,925,638 220,218 1,527,831 1,962,373 - (1,215,216) (1,215,216)
95,995,094 93,647,907 4,513,922 7,972,612 10,139,347 10,139,347
156,947,584 $ 103,422,990 $ 6,904,937 $ 20,803,074 (35,955,930) 10,139,347 (25,816,583)
General revenues:
Property taxes
Franchise taxes
Business license tax
Transient occupancy tax
Grants and contributions not restricted to specific programs
Investment earnings
Other
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning
Net position - ending
The notes to financial statements are an integral part of this statement. 18
14,859,923 - 14,859,923
9,099,494 - 9,099,494
1,736,072 - 1,736,072
848,735 - 848,735
11,777,544 11,777,544
257,356 816,433 1,073,789
721,575 2,785,481 3,507,056
4,051,000 (4,051,000) -
43,351,699
7,395,769
48,183,034
(449,086) 42,902,613
9,690,261 17,086,030
139, 787,954 187,970,988
55,578,803 $ 149,478,215 $ 205,057,018
FUND FINANCIAL STATEMENTS
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 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.
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, 2017
Other Governmental Total Governmental
General Streets Funds Funds
ASSETS
Cash and investments $ 15,550,701 $ 4,091,482 $ 11,564,016 $ 31,206,199
Accounts receivable, net 5,253,103 735,748 253,367 6,242,218
Property tax receivable 41,462 - - 41,462
Interest receivable 12,861 6,600 13,519 32,980
Due from other funds - 195,698 195,698
Due from other governmental agencies 1,668,789 507,360 2,176,149
Inventory - 1,355 1,355
Total assets $ 20,858,127 $ 6,502,619 $ 12,535,315 $ 39,896,061
LIABILITIES
Accounts payable and other liabilities $ 4,716,588 $
Accrued salaries and wages 827,017
Due to other funds
Advances from other funds
Unearned revenue 78,632
Total liabilities 5,622,237
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue
1,222,421 $
1,222,421
267,533 56,240
FUND BALANCES
Nonspendable
Inventory
Restricted for:
Road -related projects
Capital projects
Home and CDBG program
Public safety
Community development
Parks, recreation and community services
Committed
Pension 2,941,844
Video - related capital projects 578,528
Unassigned 11,447,985
Total fund balances 14,968,357
5,223,958
940,641 $ 6,879,650
827,017
195,698 195,698
1,088,311 1,088,311
45,804 124,436
2,270,454 9,115,112
225,134 548,907
1,355 1,355
6,556 5,230,514
4,891,259 4,891,259
25,225 25,225
428,841 428,841
3,892,405 3,892,405
794,086 794,086
2,941,844
578,528
11,447,985
5,223,958
10,039,727 30,232,042
Total liabilities, deferred inflows of resources, and fund balances $ 20,858,127 $
6,502,619 $ 12,535,315 $ 39,896,061
The notes to 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, 2017
Fund balances - total governmental funds $ 30,232,042
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.
43,669,306
92,738,182
17,439,844
(2,828,147)
Long-term liabilities and related accounts are not due and payable in the current period
and therefore are not reported in the governmental funds as follows:
Compensated absences (7,475,155)
Long-term debt (18,854,970)
Issuance premium (to be amortized as interest expense) (762,590)
Unamortized losses on defeasance (to be amortized as interest expense) 381,590
Accrued interest (207,343)
Net pension liability (95,864,664)
Net OPEB obligation (8,939,061)
Other long-term assets are not available to pay for current period expenditures and,
therefore, are deferred in the funds. 548,907
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
5,500,862
Net position of governmental activities $ 55,578,803
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
For the Year Ended June 30, 2017
Other Governmental Total Governmental
General Streets Funds Funds
REVENUES
Taxes $ 26,490,919 $ $
Licenses and permits 86,844
Intergovernmental revenues 12,830,329 9,883,250
Charges for services 1,852,855 1,095,631
Fines, forfeits, and penalties 906,563
Investment and rental income 1,734,773 22,325
Miscellaneous revenue 319,373 156,149
Total revenues 44,221,656 11,157,355
EXPENDITURES
Current:
General government
Public protection
Public works
Community development
Library
Parks and recreation
Capital outlay
Debt service:
Interest
Principal retirement
Total expenditures
Excess (deficiency) of revenues over (under) expenditures
6,926,368
29,969,781
1,698,518
1,152,721
2,036,612
8,092,111
39,747,388 10,128,723
$ 26,490,919
1,928,188 2,015,032
1,261,109 23,974,688
2,773,823 5,722,309
906,563
562,188 2,319,286
342,105 817,627
6,867,413 62,246,424
2,572,511 9,498,879
231,516 30,201,297
872,730 4,607,860
1,650,876 1,650,876
1,152, 721
2,377,753 2,377,753
3,500,259 11,592,370
858,182
1,240,417
858,182
1,240,417
13,304,244 63,180,355
4,474,268 1,028,632 (6,436,831) (933,931)
OTHER FINANCING SOURCES (USES)
Transfers in 3,952,000 620,810 7,149,774 11,722,584
Transfers out (6,705,104)
(966,480) (7,671,584)
Total other financing sources (uses) (2,753,104) 620,810 6,183,294 4,051,000
Changes in fund balances 1,721,164 1,649,442 (253,537) 3,117,069
Fund balances - beginning 13,247,193 3,574,516 10,293,264 27,114,973
Fund balances - ending $ 14,968,357 $ 5,223,958 $ 10,039,727 $ 30,232,042
The notes to 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
For the Year Ended June 30, 2017
Changes in fund balances - total governmental funds
$ 3,117,069
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. In addition, contributed capital
assets do not impact the governmental funds however they are reported in the
statement of activities.
Capital outlays, capital asset contributions, and depreciation expense are as follows:
Capital outlays 11,592,370
Capital asset contributions 1,489,658
Depreciation expense (8,391,791)
The statement of activities reports gain and losses arising from the disposal of
exisiting capital assets. However, in the governmental funds, any proceeds from
the sale of disposed capital assets increases financial resources. Thus, the change
in net position differs from the change in fund balance by the book value of the
disposed capital assets.
Repayments of the principal are expenditures in the governmental funds, but the repayments
reduce long-term liabilities in the statement of net position.
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 loss of the internal service
funds are reported with governmental activities.
(15,973)
1,240,417
(383,166)
Other expenses in the statement of activities that do not use c.rrrent financial resources are not reported as
expenditures in the governmental funds.
Change in compensated absences 180,027
Amortization of loss on defeasance (26,936)
Amortization of bond premium 53,830
Change in unavailable revenue 504,200
Change in accrued interest 7,267
Change in net pension liability and related amounts (592,442)
Change in OPEB obligation (1,378,761)
Change in net position of governmental activities $ 7,395,769
The notes to the financial statements are an integral part of this statement. 26
City of Lodi
Statement of Fund Net Position
Proprietary Funds
June 30, 2017
Business -type Activities
Nonmajor Fund
Electric Wastewater Water Transit
Governmental
Activities
Total Enterprise Funds Internal Service Funds
ASSETS
Current assets:
Cash and investments $ 14,037,173 $ 16,381,062 $ 4,558,222 $ 2,113,032 $ 37,089,489 $ 14,327,397
Restricted cash and investments - - 13,844,773 - 13,844,773 -
Restricted cash and investments with fiscal agents 9,286,277 150,376 2,353,971 - 11,790,624 -
Accounts receivable, net 4,641,286 1,192,200 1,103,131 1,307,900 8,244,517 32,508
Interest receivable 20,173 23,307 24,207 3,089 70,776 20,982
Due from other funds _ _
- 27,692
Due from other governmental agencies 55,170 1,320,000 1,375,170 -
Advance receivable 9,082,666 - - - 9,082,666
Inventory 2,853,310 86,412 292,174 - 3,231,896 144,421
Other assets - - _ _ _
102,920
Total current assets 39,920,885 17,833,357 22,231,648 4,744,021 84,729,911 14,655,920
Noncurrent assets:
Restricted assets with fiscal agents 2,169,850 . - 2,169,850
Advances to other funds 64,286 1,024,025 - 1,088,311
Capital assets:
Nondepreciable 763,785 9,960,740 6,793,737 3,426,642 20,944,904
Depreciable, net 39,064,648 79,079,382 88,712,787 13,401,068 220,257,885 24,603
Total noncurrent assets 39,828,433 91,274,258 96,530,549 16,827,710 244,460,950 24,603
Total assets 79,749,318 109,107,615 118,762,197 21,571,731 329,190,861 14,680,523
DEFERRED OUTFLOWS OF RESOURCES
Unamortized losses on defeasance 4,524,834 2,541,297 - 7,066,131
Related to pensions 2,576,364 1,820,983 216,508 132,892 4,746,747
Total deferred outflows of resources 7,101,198 4,362,280 216,508 132,892 11,812,878
LIABIUTIES
Current liabilities:
Accounts payable and other liabilities 2,948,660 696,251 2,297,372 415,903 6,358,186 176,851
Accrued interest 1,437,118 458,122 168,138 - 2,063,378 -
Due to other funds
27,692
Unearned revenue - 660,104 491,330 1,151,434 -
Loans payable 204,432 - 204,432
Self-insurance liability - - - - 2,365,077
Accrued compensated absences 322,597 207,201 19,760 18,392 567,950 29,371
Certificates of participation and revenue bonds payable 2,534,909 1,949,529 969,700 - 5,454,138 -
Pollution remediation obligation - - 400,000 400,000
Total current liabilities 7,447,716 3,311,103 4,515,074 925,625 16,199,518 2,598,991
Noncurrent liabilities:
Self-insurance liability - - - - 6,477,321
Accrued compensated absences 791,348 900,695 - 74,258 1,766,301 103,349
Certificates of participation and revenue bonds payable 56,133,721 43,492,066 33,113,405 - 132,739,192 -
Loans payable 1,095,888 - - - 1,095,888
Net pension liability 12,025,422 8,499,611 1,010,570 620,283 22,155,886 -
Pollution remediation obligation - - 16,954,008 - 16,954,008
Total noncurrent liabilities 70,046,379 52,892,372 51,077,983 694,541 174,711,275 6,580,670
Total liabilities 77,494,095 56,203,475 55,593,057 1,620,166 190,910,793 9,179,661
DEFERRED INFLOWS OF RESOURCES
Related to pensions 333,654 235,828 28,039 17,210 614,731
NET POSITION
Net investment in capital assets 20,776 48,460,050 63,777,390 16,827,710 129,085,926 24,603
Restricted for:
Debt service 3,929,138 - - - 3,929,138 -
Unrestricted 5,072,853 8,570,542 (419,781) 3,239,537 16,463,151 5,476,259
Total net position $ 9,022,767 $ 57,030,592 $ 63,357,609 $ 20,067,247 $ 149,478,215 $ 5,500,862
The notes to 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 Fund Net Position
Proprietary Funds
For the Year Ended June 30, 2017
Business -type Activities
Governmental
Activities
Electric
Nonmajor Fund
Wastewater Water Transit
$ 65,847,581 $
15,106,432
12,473,676 $
Total Enterprise Funds Internal Service Funds
220,218 $ 93,647,907 $ 13,699,647
OPERATING EXPENSES
Personnel services 7,591,106 4,501,156 2,998,026 407,518 15,497,806 1,669,133
Supplies, materials and services 13,955,262 4,828,494 3,468,229 3,023,866 25,275,851 8,935,742
Utilities 35,706,710 798,452 453,488 59,071 37,017,721 14,327
Depreciation 2,357,261 4,078,389 2,989,058 1,435,183 10,859,891 1,447
Claims - - - -
3,687,649
Total operating expenses 59,610,339 14,206,491 9,908,801 4,925,638 88,651,269 14,308,298
Operating income (loss)
6,237,242 899,941
2,564,875 (4,705,420) 4,996,638 (608,651)
NONOPERATING REVENUES (EXPENSES)
Investment income 151,112 510,079 132,364 22,878 816,433 72,950
Interest expense (3,180,567) (2,111,273) (2,051,985) (7,343,825)
Operating grants 616,366 1,527,831 2,144,197
Greenhouse gas allowance 2,369,725 - - 2,369,725 -
Other revenues 1,732,614 511,689 395,390 145,788 2,785,481 152,535
Total nonoperating revenues (expenses) 1,072,884 (1,089,505) (907,865) 1,696,497 772,011 225,485
Income (loss) before contributions and transfers 7,310,126 (189,564) 1,657,010 (3,008,923) 5,768,649 (383,166)
Capital contributions 553,776 4,029,314 1,427,149 1,962,373 7,972,612
Transfers out (2,137,000) (1,101,000) (813,000) - (4,051,000)
Changes in net position 5,726,902 2,738,750 2,271,159 (1,046,550) 9,690,261 (383,166)
Total net position - beginning 3,295,865 54,291,842 61,086,450 21,113,797 139,787,954 5,884,028
Total net position - ending $ 9,022,767 $ 57,030,592 $ 63,357,609 $ 20,067,247 $ 149,478,215 $ 5,500,862
The notes to financial statements are an integral part of this statement. 28
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash receipts from interfund services provided
Payments to suppliers
Payments to employees
Payments for interfund services provided
Net cash provided (used) by operating activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Operating grants
Repaid advance from other funds
Repaid advance to other funds
Received - greenhouse gas allowance
Transfers out
Net cash provided (used) by noncapital financing activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Fees received for water meter installations
Acquisition and construction of capital assets
Fees received from developers
Capital grants received
Principal payments on debt
Interest payments on debt
Net cash provided (used) by capital and related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments
Net increase (decrease) in cash and cash equivalents
Balances - beginning of year
Balances - end of the year
City of Lodi
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2017
Business -type Activities - Enterprise Funds
Governmental
Activities
Electric
Wastewater
Water
Nonmajor Fund
Transit
$ 65,920,109 $
110,921
(49,808,279)
(7,779,075)
(4,543)
8,439,133
15,584,448 $ 12,780,899
(4,702,935) (5,037,345)
(3,932,675) (2,765,598)
(723,228) (429,573)
$ 366,006
(2,844,072)
(375,885)
(48,231)
6,225,610
(576,378)
2,369,725
(2,137,000)
(343,653)
(1,057,594)
83,914
(2,589,680)
(2,941,434)
128,571
(1,101,000)
4,548,383
616,366
626,378
(813,000)
(2,902,182)
3,002,049
(972,429)
429,744
3,002,049
(2,038,749)
579,311
273,267
(1,575,000)
(1,913,522)
(6,504,794)
(4,674,693)
19,255
(4,477,695)
206,847
(915,000)
(2,055,106)
(7,221,699)
118,564 203,047 106,571
1,709,250 781,535 (2,137,001)
(1,445,603)
1,956,104
510,501
21,527
631,895
21,614,200 15,749,903 22,893,967 1,481,137
$ 23,323,450 $ 16,531,438 $ 20,756,966 $ 2,113,032
The notes to financial statements are an integral part of this statement. 29
Total Enterprise Funds
Internal Service Funds
$ 94,651,462
110,921
(62,392,631)
(14,853,233)
(1,205,575)
16,310,944
3,618,415
(576,378)
754,949
2,369,725
(4,051,000)
2,115,711
19,255
(9,019,641)
870,072
2,229,371
(5,079,680)
(6,910,062)
(17,890,685)
$ 168,737
13,699,647
(12,280,677)
(1,671,760)
(84,053)
449,709 66,459
985,679 (17,594)
61,739,207 14,344,991
$ 62,724,886 $ 14,327,397
(continued)
City of Lodi
Statement of Cash Flows (continued)
Proprietary Funds
For the Year Ended June 30, 2017
Business -type Activities - Enterprise Funds
Governmental
Activities
Electric
Nonmajor Fund
Wastewater Water Transit
Total Enterprise Funds Internal Service Funds
Reconciliation to the statement of net position
Cash and investments $ 14,037,173 $ 16,381,062 $ 4,558,222 $ 2,113,032 $ 37,089,489 $ 14,327,397
Restricted cash and investments 13,844,773 13,844,773
Restricted assets with fiscal agents 9,286,277 150,376 2,353,971 11,790,624
Total cash and cash equivalents $ 23,323,45C $ 16,531,438 $ 20,756,966 $ 2,113,032 $ 62,724,886 $ 14,327,397
Reconciliation of operating income (loss) to net cash provided (used) by
operating activities:
Operating Income (loss) $ 6,237,242 $ 899,941 $ 2,564,875 $ (4,705,420) $ 4,996,638 $ (608,651)
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating
activities:
Depreciation expense 2,357,261 4,078,389 2,989,058 1,435,183 10,859,891 1,447
Other revenues 1,732,614 511,689 395,390 145,788 2,785,481 152,535
Changes in assets and liabilities:
Loans receivable 6,347 - 6,347 -
Accounts receivables, net (306,546) (78,302) (89,157) - (474,005) 16,202
Due from other funds - - (27,692)
Advance receivables (1,252,823) - (1,252,823)
Due from other governmental agencies 15,000 - 15,000 -
Inventory (63,989) 30,848 1,486 -
(31,655) (5,101)
Other assets 10,204 29,629 990 40,823 (1,903)
Accrued compensated absences 16,361 (6,957) (2,924) (1,012) 5,468 (2,627)
Accounts payable and other liabilities (93,208) 169,935 (1,066,966) 190,634
(799,605) 2,589
Due to other funds - - - - 27,692
Net pension liability and related amounts (204,330) 575,438 235,352 32,645 639,105 -
Self-insurance liability - - 361,456
Pollution remediation obligation (479,721) (479,721)
Net cash provided (used) by operating activities $ 8,439,133 $ 6,225,610 $ 4,548,383 $ (2,902,182) $ 16,310,944 $ (84,053)
Noncash investing, capital and financing activities
Capital asset contributions
Amortization of issuance premium
Amortization of losses on defeasance
469,862 $
24,909
301,655
The notes to financial statements are an integral part of this statement. 30
3,176,736 $ 1,201,047 $
299,529 19,700
238,268
$ 4,847,645 $
344,138
539,923
ASSETS
Cash and investments
Interest receivable
Total assets
City of Lodi
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2017
Private -Purpose Trust
Funds Agency Fund
$
236,118 $ 406,729
2 590
236,120 407,319
LIABILITIES
Agency obligations - 407,319
NET POSITION - EXPENDABLE
The notes to financial statements are an integral part of this statement. 31
$
236,120 $
City of Lodi
Statement of Changes in Fiduciary Net Position
Private-Purpose Trust Funds
For the Year Ended June 30, 2017
ADDITIONS
Investment and rental income
DEDUCTIONS
Current:
Library
$ 10,301
9,410
Changes in net position 891
Net position -- beginning 235,229
Net position -- end
The notes to financial statements are an integral part of this statement. 32
$ 236,120
NOTES TO BASIC FINANCIAL STATEMENTS
CITY OF LODI
Notes to Basic Financial Statements
June 30, 2017
(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
33
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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 $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 and
Enterprise (Wastewater and Water) Funds 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.
34
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of
accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they
are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers property tax revenues
to be available if they are collected within 60 days of the end of the current fiscal year. All other revenues are considered to be available if they
are generally collected within 120 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as
under accrual accounting. However, debt service expenditures, as well as expenditures related to vacation, sick leave, claims and judgments,
are recorded only when payment is due.
Property taxes, other local taxes, licenses, intergovernmental revenues, and interest associated with the current fiscal period are all considered
susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenues are considered to be
measurable and available when the City receives cash.
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 State 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, 2017
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 ircluding: 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 fuids 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, 2017
(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 Cash and Investments 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
The 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, 2017, upon which the 2016-17 levy was based, was $5,860,269,629.
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, 2017, 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, 2017
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. .
(j) Long-term Obligations
In the government -wide financial statements and in the proprietary fund financial statements, Tong -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, 2017
(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. At
June 30, 2017, the outstanding balance of these loans amounted to $44,707, which the City included in due from other governmental agencies.
In December 2012, the City increased the loan funds in its public benefits program from which G2, G3, G4, G5 or 11 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 $150,000 per customer. As of June 30, 2017, a total of twenty-three loans to industrial and commercial
customers have been approved. At June 30, 2017, there were no outstanding loans, however, twenty-three loans had 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 the 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 the 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
39
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
Revenue Bonds amortized over 21 years. Deferred outflows of resources reported in the governmental activities represent the refunding loss
incurred with the issuance of the 2012 Refunding Lease Revenue Bonds.
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, 2016. Those contributions will be recognized as a reduction of the net pension liability in the year
ending June 30, 2018. 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 outflows or inflows of resources.
Unavailable Revenue
The unavailable revenue in the governmental funds is related to the HCD's First-time Homebuyers Program, Development Impact Fees, Fines,
forfeits, and penalties, and miscellaneous revenue for various projects. All fees are expected to be repaid in full.
(o) Capital Assets
Capital assets, which include land, works of art, 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 $10,000 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 acquisition 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, 2017
(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: June 30, 2015, rolled forward to June 30, 2016
Measurement Date: June 30, 2016
Measurement Period: July 1, 2015 to June 30, 2016
(r) Self -Insurance
The City is self-insured for general liability, workers' compensation, dental benefits, unemployment and long-term disability. Various City funds
are charged premiums for the City's self-insurance liability, which is accounted for in an internal service fund. The accrued liability for estimated
self-insured claims represents an estimate of the eventual loss on claims arising prior to year-end including claims incurred but not reported.
41
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
(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.
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, 2017 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.
42
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
Unassigned — Amounts that constitute the residual balances that have no restrictions placed upon them and are reported in the General
Fund. For other governmental funds, as restrictions exceed available resources only deficit amounts are reported in the unassigned
category.
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, and then unrestricted
resources as they are needed.
The City does not have a policy on the order of spending unrestricted amounts when an expenditure is incurred for which amounts in any of the
unrestricted fund balance classifications could be used. Therefore, by default under GASB Statement No. 54, the City uses committed
resources first, then assigned resources and unassigned resources last as they are needed.
It is the City's policy to maintain an unassigned fund balance in the General Fund of at least 16% of revenues and working capital balances in the
Water and Wastewater enterprise funds of at least 25% of operating expenses and the target for the Electric Enterprise Fund working capital is
$22.8 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 reported as unassigned fund balance.
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 reported as unassigned fund balance. 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.
43
CITY OF LODI
Notes to Basic Finercial Statements (continued)
June 30, 2017
(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) 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 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 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.
In January 2017, GASB issued Statement No. 84, Fiduciary Activities. This statement is to improve guidance regarding the identification of
fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The requirements of this
statement are effective for the City's year ending June 30, 2020.
In March 2017, GASB issued Statement No. 85, Omnibus. This statement is to address practice issues that have been identified during
implementation and application of certain GASB Statements. This statement addresses a variety of topics including issues related to blending
component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment
benefits). The requirements of this statement are effective for the City's year ending June 30, 2018.
44
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
In May 2017, GASB issued Statement No. 86, Certain Debt Extinguishment Issues. This statement is to improve consistency in accounting and
financial reporting for in -substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets are
placed in an irrevocable trust for the sole purpose of extinguishing debt. The requirements of this statement are effective for the City's year
ending June 30, 2018.
In June 2017, GASB issued Statement No. 87, Leases. This statement is to recognize in the financial statements certain lease assets and
liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on
the payment provisions of the contract. The requirements of this statement are effective for the City's year ending June 30, 2021.
(2) CASH AND INVESTMENTS
Cash and investments as of June 30, 2017 are classified in the accompanying financial statements as follows:
Government -wide statement of net position:
Cash and investments $ 82,623,085
Restricted cash and investments 27,805,247
Fiduciary funds cash and investments:
Private -purpose trust funds 236,118
Agency fund 406,729
Total cash and investments $ 111,071,179
Cash and investments as of June 30, 2017 consist of the following:
Cash on hand $ 3,496
Deposits with financial institutions 14,020,374
Investments 97,047,309
Total cash and investments $ 111,071,179
45
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
(a) Authorized Investments
The City has adopted an investment policy pursuant to Government Code Section 53601, which authorizes the City to invest in obligations of the
U.S. Treasury, U.S Government agency securities and instruments, bankers' acceptances, certificates of deposit, negotiable certificates of
deposit, commercial paper, 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 and repurchase agreements, which are
permitted by the Government Code. 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% 25%
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% $50m per account
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%
The City has established a pension stabilization account with Public Agency Retirement Services (PARS), which invests in a Balanced Index
PLUS Fund.
46
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
(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, 2017
Maturity Less
than One Year
Maturity One Maturity
to Five Years Over 5 Years
Total
LAIF $ 34,541,910 $ 34,541,910
CALTRUST 44, 372,255 44, 372,255
PARS 3,938,615 3,938,615
Money Market Mutual Funds 110,845 110,845
Held by bond trustee:
Negotiable Certificates of Deposit 1,357,233 3,185,093 4,542,326
U.S. Agency Securities 1,621,954 1,621,954
LAIF 969,760 969,760
Money Market Mutual Funds 4,656,592 4,656,592
Guaranteed investment contracts 2,169,850 2,169,850
Total investments subject to interest rate risk $ 45,574,955 49,179,302 2,169,850 96,924,107
Equities and options 123,202
Total investments $ 97,047,309
Investments in equities and options 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, 2017
(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 U.S. Agency Securities have a rating by S&P of AA+.
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 PARS Balanced Index PLUS fund, GICs, and LAIF do not have a
rating provided by a nationally recognized statistical rating organization. The CALTRUST Short- term fund is rated "AAf" by S&P while the
CALTRUST Medium-term fund is rated "A+f" by S&P. 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. $14,213,135 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, 2017
(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, 2017 was $22.8 billion. LAIF is part of the California Pooled Investment
Account (PMIA), which at June 30, 2017 had a balance of $77.6 billion. Of this amount, 2.89% 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 194 days as of June 30, 2017.
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, 2017, the City's
investment in CALTRUST is $44.4 million. CALTRUST is an innovative partnership between the CSAC Finance Corporation and the League of
California Cities to provide a convenient method for local agencies to pool their assets for investment. The weighted average to maturity of
CALTRUST investments was as follows: CALTRUST Short-term, 11 months and CALTRUST Medium-term, 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, 2017 was divided among the following
asset classes: CALTRUST Short-term was $1.5 billion and CALTRUST Medium-term was $1.1 billion.
49
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
(h) Fair Value Measurements
In accordance with GASB Statement 72, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Fair value is a market-based measurement for a particular asset or liability
based on 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 hierarchy of inputs used to generate the
valuation is classified into three different levels.
• 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, 2017:
Investment Type
Negotiable Certificates of Deposit
U. S. Agency Securities
Money Market Mutual Funds
Equities and Options
Total investments subject to fair value hierarchy
S
Fair Value
Measurements
Total Using Level 1 Using Level 2
4,542,326 $ 4,542,326
1,621,954 1,621,954
4,767,437 4,767,437
123,202 123,202
11,054,919
Investments not subject to fair value hierarchy:
LAIF 35,511,670
CALTRUST 44,372,255
PARS 3,938,615
Guaranteed Investment Contracts 2,169,850
Total investments $ 97,047,309
50
123,202 $ 10,931,717
(3)
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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 $ 24,527
Uncollectibles related to electric sales and services 179,865
Uncollectibles related to wastewater services 73,924
Uncollectibles related to water sales and services 74,806
Total uncollectibles of the current fiscal year $ 353,122
(4) INTERFUND RECEIVABLES/PAYABLES
Interfund receivables and payables at June 30, 2017 are as follows:
Due from Due to Amount
Other governmental Other governmental $ 195,698
Internal Service Internal Service 27,692
$
223,390
"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 $195,698 and $27,692 represents cash deficits in other governmental funds and internal service funds.
Advances from Advances to Amount
Wastewater Other governmental $ 64,286
Water Other governmental 1,024,025
$ 1,088,311
The $64,286 advance from the Wastewater Fund was used for the Grape Bowl Improvements — Phase 3 and is being repaid with annual
payments through fiscal year 2017-18. The advances from the Water Fund were used for the construction of Fire Station #4, $1,024,025 and
have no defined repayment terms; however, the City is repaying as funds are available.
51
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
(5) TRANSFERS
Transfers for the year ended June 30, 2017, are summarized as follows:
Transfers in
Transfers out:
General
Other governmental
Electric
Wastewater
Water
Total
$
General
2,104,000
1,068,000
780,000
Other
Streets Governmental
620,810 6,084,294 $
966,480
33,000
33,000
33,000
$ 3,952,000
Total
6,705,104
966,480
2,137,000
1,101,000
813,000
620,810 7,149,774 $ 11,722,584
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 $6,084,294 from the General Fund to other governmental funds represents transfer of $1,100,294 to the Debt Service Fund for
the interest required to pay the 2012 Refunding Lease Revenue Bonds; $3,949,800 to Parks, Recreation, and Community Services Fund for
operating costs; $165,000 to Community Development Fund for operating costs; $434,200 to the Vehicle and Equipment Fund for vehicle
replacements and computer replacements; and $435,000 to the Capital Outlay Reserve Fund for various capital projects.
The transfer of $620,810 from the General Fund to the Streets Fund is for operations and for various streets projects.
The transfer out of $966,480 from other governmental funds to other governmental funds includes $655,750 transferred from Parks, Recreation,
and Community Services Fund to the Debt Service Fund for the interest required to pay the 2012 Refunding Lease Revenue Bonds, transfer of
$234,430 from Parks, Recreation, and Community Services Fund to Parks Capital Fund for park -related capital projects, and transfer of $21,000
from the Community Development Fund, and $55,300 from the Parks, Recreation, and Community Services Fund to the Vehicle and Equipment
Fund for fleet replacement.
The transfer out from the Electric Fund of $33,000, transfer out from Wastewater Fund for $33,000, and Water Fund for $33,000 to other
governmental funds represent transfers to the Vehicle and Equipment Fund for the various projects.
52
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
(6) CAPITAL ASSETS
Capital assets activity of the primary government for the year ended June 30, 2017, was as follows:
Balance Balance
Governmental activities June 30, 2016 Increases Decreases June 30, 2017
Capital assets, not being depreciated:
Land $ 24,947,834 $ 24,947,834
Work of art 304,907 304,907
Construction in progress 11,116,297 8,416,011 (1,115,743) 18,416,565
Total capital assets, not being depreciated 36,369,038 8,416,011 (1,115,743) 43,669,306
Capital assets, being depreciated:
Buildings and improvements 77,227,603 286,446 77,514,049
Machinery and equipment 11,982,247 806,383 12,788,630
Vehicles 10,775,826 1,156,008 (129,635) 11,802,199
Infrastructure 146,034,325 3,532,923 149,567,248
Total capital assets, being depreciated 246,020,001 5,781,760 (129,635) 251,672,126
Less accumulated depreciation for:
Buildings and improvements 34,137,171 2,142,349 36,279,520
Machinery and equipment 11,368,268 254,305 11,622,573
Vehicles 8,640,666 580,851 (113,662) 9,107,855
Infrastructure 96,483,660 5,415,733 101,899,393
Total accumulated depreciation 150,629,765 8,393,238 (113,662) 158,909,341
Total capital assets, being depreciated, net 95,390,236 (2,611,478) (15,973) 92,762,785
Governmental activities capital assets, net $ 131,759,274 5,804,533 (1,131,716) $ 136,432,091
53
CITY OF LODI
Notes to Basic Finarcial Statements (continued)
June 30, 2017
Balance Balance
Business -type activities June 30, 2016 Increases Decreases June 30, 2017
Capital assets, not being depreciated:
Land $ 5,535,718 $ 5,535,718
Construction in progress 14,596,259 2,904,670 (2,091,743) 15,409,186
Total capital assets, not being depreciated 20,131,977 2,904,670 (2,091,743) 20,994,904
Capital assets, being depreciated:
Buildings and improvements 48,417,000 164,775 48,581,775
Machinery and equipment 274,314,918 11,620,723 285,935,641
Vehicles 12,187,896 1,268,861 (12,702) 13,444,055
Total capital assets, being depreciated 334,919,814 13,054,359 (12,702) 347,961,471
Less accumulated depreciation for:
Buildings and improvements 19,349,022 1,307,994 20,657,016
Machinery and equipment 90,411,564 8,262,528 98,674,092
Vehicles 7,095,811 1,289,369 (12,702) 8,372,478
Total accumulated depreciation 116,856,397 10,859,891 (12,702) 127,703,586
Total capital assets, being depreciated, net 218,063,417 2,194,468 220,257,885
Business -type activities capital assets, net
$ 238,195,394
54
5,099,138
(2,091,743) $ 241,202,789
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
Depreciation expense was charged to function/programs of the primary government as follows:
Governmental activities:
General government $ 337,508
Public protection 974,205
Public works 5,742,488
Community development 14,881
Library 70,870
Parks and recreation 1,251,839
Internal service funds 1,447
Total depreciation expense - governmental activities $ 8,393,238
Business -type activities:
Electric $ 2,357,261
Wastewater 4,078,389
Water 2,989,058
Transit 1,435,183
Total depreciation expense - business -type activities $ 10,859,891
(7) OPERATING LEASES
The City is obligated under an operating lease for the use of facilities. Total costs for such lease was $10,000 for the year ended June 30, 2017.
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, 2017, are as follows:
Years Ending
2018 $ 10,000
Total minimum lease payments required
under operating leases $ 10,000
55
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
(8) LONG-TERM LIABILITIES
The following is a summary of long-term liability transactions of the City for the year ended June 30, 2017:
Interest Rates
Governmental activities:
Compensated absences
2012 Revenue Bonds 2.0-5.0%
Issuance premium
Total
Note payable
Loan payable
Capital lease
Self-insurance liability
6.00%
1.93%
2.08%
Amounts Due
Within One
June 30, 2016 Additions Reductions June 30, 2017 Year
$ 7,790,529 2,361,031 (2,543,685) $ 7,607,875 $ 1,602,385
18, 820, 000
816,420
19,636,420
245,000
468,000
562,387
(830,000) 17,990,000
(53,830) 762,590
(883,830) 18,752,590
(245,000)
(89,989) 378,011
(75,428) 486,959
8,480,942 2,365,077 (2,003,621) 8,842,398
Governmental activities long-term liabilities $ 37,183,278
56
4,726,108 (5,841,553) $
860.000
53.830
913,830
91,775
77,009
2,365,077
36,067,833 $ 5,050,076
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
Interest Rates
Amounts Due
Within One
June 30, 2016 Additions Reductions June 30, 2017 Year
Business -type activities:
Compensated absences $ 2,328,783 988,580 (983,112) $ 2,334,251 $ 567,950
Pollution remediation obligation 17,833,729 (479,721) 17,354,008 400,000
Loan payable 2.30% 1,500,000 (199,680) 1,300,320 204,432
Certificates of Participation and Revenue Bonds:
2010 Revenue Bonds A & B 2.50-6.637% 34,545,000 (915,000) 33,630,000 950,000
Issuance premium 472,805 (19,700) 453,105 19,700
Total 35,017,805 (934,700) 34,083,105 969,700
2008 Certificates of Participation A
Issuance premium
Total
3.85-5.05%
2004 Certificates of Participation A 2.0-5.5%
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
60,685,000
398,539
(2,390,000)
(24,909)
61,083,539 (2,414,909)
58,295,000
373,630
2,510,000
24,909
58,668,630 2,534,909
2,070,000 2,070,000
4.0-5.0% 7,890,000 (160,000)
47,538 (2,237)
2.0-5.0%
2.0-3.25%
7,937,538 (162,237)
13,090,000
1,205,773
(1,415,000)
(166,313)
14,295,773 (1,581,313)
20,295,000
2,717,813
23,012,813
143,417,468
165,079,980 988,580
57
7,730,000 175,000
45,301 2,237
7,775,301 177,237
11,675,000
1,039,460
1,475, 000
166,313
12,714,460 1,641,313
20,295,000
(130,979) 2,586,834 130,979
(130,979) 22,881,834 130,979
(5,224,138) 138,193,330 5,454,138
(6,886,651) $ 159,181,909 $ 6,626,520
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
Long-term debt payable at June 30, 2017, comprised of the following individual issues:
Loans Payables
In August 2015, 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 2015, 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.
Annual debt service requirements to maturity of the loans payables are as follows:
Year
Ending Governmental Activities
June 30, Principal Interest
2018 $ 91,775 $ 7,397
2019 93,571 5,601
2020 95,402 3,770
2021 97,263 1,908
Total $ 378,011 $ 18,676
Year
Ending Business -type Activities
June 30, Principal Interest
2018 $ 204,432 $ 30,323
2019 209,200 25,555
2020 214,078 20,677
2021 219,027 15,728
2022 224,178 10,577
Thereafter 229,405 5,350
Total $ 1,300,320 $ 108,210
58
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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.
The present values of future minimum capital lease payments as of June 30, 2017, are as follows:
Year Ending, June
30
2018
2019
2020
2021
2022
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
86,540
519,240
(32,281)
486,959
On May 12, 2004, the City issued $27,360,000 Certificates of Participation (2004A COP) 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 commencing 2024 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
$2,758,275. Interest paid for the current year and total net revenues were $98,326 and $6,579,410, respectively.
On November 16, 2007, the City issued $30,320,000 Certificates of Participation (2007A COP) 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
59
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
certificates. The total principal and interest remaining to be paid on the unrefunded certificates is $13,150,634. Principal and interest paid for the
current year and total net revenues were $547,613 and $6,579,410, respectively.
On July 24, 2008, the City issued $60,685,000 Certificates of Participation (2008A COP) 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 $82,714,350. Principal and interest pad for the current year and total net revenues were $5,288,025 and $15,556,473,
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
$63,328,484. Principal and interest paid for the current year and total net revenues were $2,308,061 and $6,111,155, respectively.
On September 1, 2012, the City issued $19,080,000 Refunding Lease Revenue Bonds (2012 LRB) 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 $24,700,482. 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 $824,562.
On August 16, 2012, 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. 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. 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 $13,605,750. Principal and interest paid for the current year and total net revenues were $1,947,100 and $6,579,410, respectively.
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. Principal is payable annually on October 1 in
60
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
amounts ranging from $110,000 to $2,175,000 beginning in 2018 with final payment due in 2037. 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. Interest paid for the current year and total net revenues were $474,109 and $6,579,410, respectively. At June 30, 2017, 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.
Annual debt service requirements to maturity for certificates of participation and bonds are as follows:
Year Ending Governmental Activities Business -type Activities
June 30, Principal Interest Principal Interest
2018 $ 860,000 $ 794,913 $ 5,110,000 $ 6,558,519
2019 900,000 755,213 5,285,000 6,332,319
2020 930,000 721,087 5,510,000 6,099,019
2021 965,000 685,337 5,745,000 5,852,969
2022 1,020,000 635,712 6,005,000 5,613,650
2023-2027 5,905,000 2,329,313 35,870,000 23,173,021
2028-2032 7,410,000 788,907 37,395,000 13,676,417
2033-2037 24,160,000 5,502,862
2038-2040 8,615,000 940,573
Total $ 17,990,000 $ 6,710,482 $ 133,695,000 $ 73,749,349
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.
61
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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.
(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.
62
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
The Plans' provisions and benefits in effect at June 30, 2017, 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
Prior to
January 1, 2013
2% @ 55
5 years of service
monthly for life
50-67
1.426%-2.418%
7%
21.797%
Safety Plan
Plan
On or after
January 1, 2013
2% @ 62
5 years of service
monthly for life
52-67
1% to 2.5%
6.75%
21.797%
Prior to
December 22, 2012 to
December 22, 2012 December 31, 2012
3% @ 50
5 years of service
monthly for life
50-55
3%
9%
44.754%
63
3% @ 55
5 years of service
monthly for life
50-55
2.4% to 3%
9%
44.754%
On or after
January 1, 2013
2.7% @ 57
5 years of service
monthly for life
50-57
2% to 2.7%
11.25%
44.754%
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
Employees Covered
At June 30, 2016, 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 395 183
Inactive employees entitled to but not yet receiving benefits 125 24
Active employees 258 118
Contributions
Total 778 325
For the year ended June 30, 2017, the City's actuarially determined contributions were as follows:
Miscellaneous Safety
Plan Plan
Actuarially determined contribution $ 3,880,495 $ 5,136,610
Contributions in relation to the actuarially
determined contribution (3,880,495) (5,136,610)
Contribution deficiency (excess) $ $
Covered employee payroll $ 17,802,886 $ 11,477,432
Contributions as a percentage of covered
employee payroll 21.797% 44.754%
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 cf 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.
64
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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, 2016, using an annual actuarial valuation as of June 30, 2015 rolled forward to
June 30, 2016 using standard update procedures.
Actuarial Assumptions
The total pension liabilities in the June 30, 2015 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, 2015 June 30, 2015
June 30, 2016 June 30, 2016
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, 2015 valuation were based on the 2014 CaIPERS
Experience Study for the period from 1997 to 2011. Further details of the Experience Study can be found on the CaIPERS website.
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% 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.
65
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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
(geometric) 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
Current Target Real Return Real Return
Allocation Years 1 - 10 (1) Years 11 + (2)
Global Equity 47.0 % 5.25 % 5.71 %
Global Fixed Income 19.0 0.99 2.43
Inflation Sensitive 6.0 0.45 3.36
Private Equity 12.0 6.83 6.95
Real Estate 11.0 4.50 5.13
Infrastructure and Forestland 3.0 4.50 5.09
Liquidity 2.0 (0.55) (1.05)
(1) An expected inflation of 2.50% used for this period
(2) An expected inflation of 3.00% used for this period
66
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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, 2015 (1) $ 166,801,735 $ 126,077,924 $ 40,723,811
Changes in the year:
Service cost 2,464,894 2,464,894
Interest on the total pension liability 12,565,553 12,565,553
Differences between expected and actual
experience 542,177 542,177
Contribution - employer 3,500,179 (3,500,179)
Contribution - employee 1,241,136 (1,241,136)
Net investment income (2) 643,509 (643,509)
Benefit payments, including refunds of employee
contributions (8,641,550) (8,641,550)
Other changes in fiduciary net position (76,838) 76,838
Net changes during measurement period 6,931,074 (3,333,564) 10,264,638
Balance at June 30, 2016 $ 173,732,809 $ 122,744,360 $ 50,988,449
67
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
Safety Plan: Increase (Decrease)
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability
Balance at June 30, 2015 (1) $ 163,858,600 $ 106,458,927 $ 57,399,673
Changes in the year:
Service cost 2,890,607 2,890,607
Interest on the total pension liability 12,357,788 12,357,788
Differences between expected and actual
experience 600,847 600,847
Contribution - employer 4,660,278 (4,660,278)
Contribution - employee 1,062,984 (1,062,984)
Net investment income (2) 558,434 (558,434)
Benefit payments, including refunds of employee
contributions (8,730,081) (8,730,081)
Other changes in fiduciary net position (64,882) 64,882
Net changes during measurement period 7,119,161 (2,513,267) 9,632,428
Balance at June 30, 2016 $ 170,977,761 $ 103,945,660 $ 67,032,101
(1) The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary
self-insurance and OPEB expense.
(2) Net of administrative expenses.
68
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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:
1% Decrease
Net Pension Liability
Current Discount Rate
Net pension Liability
1% Increase
Net Pension Liability
Miscellaneous Plan Safety Plan
6.65% 6.65%
$ 73,487,124 $ 90, 056,143
7.65% 7.65%
$ 50,988,449 $ 67,032,101
8.65% 8.65%
$ 32, 339, 982 $ 48,112,131
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 Expense and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2017, the City recognized pension expense of $3,919,916 and $6,247,800 for the Miscellaneous and Safety Plans,
respectively.
69
CITY OF LODI
Notes to Basic Finarcial Statements (continued)
June 30, 2017
At June 30, 2017, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following
sources:
Pension contributions subsequent to
measurement date
Changes of assumptions
Difference between expected and
actual experience
Net differences between projected
and actual earnings on plan
investments
Miscellaneous Plan
Deferred
Outflows of
Resources
$ 3,880,495 $
355,219
6,688,211
Deferred
Inflows of
Resources
901,089
513,624
Total $ 10,923,925 $ 1,414,713 $
Safety
Plan
Deferred
Outflows of
Resources
5,136,610 $
457,788
5,668,268
11,262,666 $
Deferred
Inflows of
Resources
1,539,493
488,672
2,028,165
The $3,880,495 and $5,136,610 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, 2018. Other amounts reported as deferred outflows and
deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ending
June 30
2018 $
2019
2020
2021
Total $
Misce laneous
Plan
(321,458) $
1,074,556
3,110,803
1,764,816
5,628,717 $
70
Safety
Plan
1,537
1,539
2,577,085
1,517,730
4,097,891
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
(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.
71
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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 vias 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. However the City Council authorized the City
Manager to deposit an additional $1,000,000 with CaIPERS this year. For fiscal year 2016-17, the City contributed $1,771,955, or 54.61 %, 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 $ 3,244,557
Interest on net OPEB obligation 226,887
Adjustment to annual required contribution (320,728)
Annual OPEB cost (expense) 3,150,716
Contributions made (1,771,955)
Increase in net OPEB obligation 1,378,761
Net OPEB obligation - beginning of yea 7,560,300
Net OPEB obligation - end of year $ 8,939,061
72
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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
06/30/2015 $ 1,276,201 54.83% $ 5,343,727
06/30/2016 3,024,169 26.70% 7,560,300
06/30/2017 3,150, 716 56.24% 8,939,061
(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.
73
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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, 2017,
the remaining amortization period is 22 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
74
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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 $8,842,398 at June 30, 2017, 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, 2017 and 2016 are as follows:
Beginning
FY 15-16 $ 8,305,887
FY 16-17 8,480,942
(12) PARTICIPATION IN JOINT VENTURES
Northern California Power Agency
Current -Year
Claims and Changes
in Estimates
$ 2,118,423
2,365,077
Claim
Payments Ending
$ (1,943,368) $ 8,480,942
(2,003,621) 8,842,398
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.
75
CITY OF LODI
Notes to Basic Finarcial Statements (continued)
June 30, 2017
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, 2017, the City's balance in the NCPA General Operating Reserve, which has been credited with annual interest earnings and
settlements, is $9,082,666.
76
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
Project Participation
The NCPA members and their percentage share at June 30, 2017, 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
Bulk power purchased by the City through NCPA amounted to $35,649,861 during the year ended June 30, 2017 and is reflected in utilities
expense in the Electric Enterprise Fund.
77
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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 $33 million at June 30, 2017.
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 55 MW 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 Hycroelectric 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, 2017,
approximately $354 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, 2017, 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.
Under a power purchase agreement, the City is obligated to pay 39.5% of the debt service and operating costs. At June 30, 2017, approximately
$38 million in long-term debt was outstanding.
78
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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, 2017, 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, 2017,
approximately $351 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, 2017
(in thousands)
Assets and Deferred Outflows of Resources Liabilities, Deferred Inflows of Resources and Net Position
Current assets $ 88,453 Long-term debt, net $ 737,022
Restricted assets 221,783 Current liabilities 101,550
Electric plant, net 559,841 Non-current liabilities 218,427
Other assets 236,269 Deferred inflows of resources 76,899
Total assets 1,106,346 Net position 34,060
Total liabilities, deferred inflows of resources
Deferred outflows of resources 61,612 and net position $ 1,167,958
Total assets and deferred outflows
of resources $ 1,167,958
79
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
Condensed Statement of Revenues, Expenses
and Changes in Net Position
Year ended June 30, 2017
(in thousands)
Sales for resale
Operating expenses
Other expenses
Future recoverable costs
Net revenues before refunds
Refunds to participants
Increase in net position
Net position, beginning of year
Net position, end of year $
466,738
(418,307)
(21,561)
(13,274)
13,596
(7,499)
Combined Statement of Cash Flows
Year ended June 30, 2017
(in thousands)
Net cash from operating activities $
Net from investing activities
Net cash from capital and related
financing activities
Net cash from noncapital
and related financing activities
78,989
10,963
(75,649)
5,430
6,097 Increase in cash and cash equivalents 19,733
27,963 Cash and cash equivalents, beginning
of year 106,311
34,060 Cash and cash equivalents end of year $ 126,044
At June 30, 2017, NCPA's total net outstanding long-term debt was $776,517,000 at an average interest rate of 5%. The current portion of long-
term debt at June 30, 2017, was $39,495,000.
Complete financial information for NCPA may be obtained at the-ollowing 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
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.
80
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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
81
CITY OF LODI
Notes to Basic Finarcial Statements (continued)
June 30, 2017
(13) MEMBERSHIP IN INSURANCE POOLS
California Joint Powers Risk Management Authority
The City is a member, along with sixteen 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 Boarc 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 premiums to the CJPRMA. These premiums 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, 2017, premiums of $148,370 were paid to CJPRMA for
the liability program.
The participants at June 30, 2017, are as follows: Alameda, Chico, Fairfield, Fremont, Livermore, Lodi, Northern California Cities Self Insurance
Fund, Petaluma, Redding, Redwood Empire Municipal Insuranze 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'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
$406,344 in premiums to LAWCX during the year ended June 30, 2017.
The participants at June 30, 2017, 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
82
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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-three 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 $111,238 in premiums to CaITIP during the year ended June 30, 2017. 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.
83
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
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) DEFICIT IN FUND EQUITY
Internal Service Funds — Fleet Services Fund— A deficit in fund equity in the amount of $24,033 at June 30, 2017, is attributed to the increase in
personnel expenses. The City will evaluate the rates charged to departments to eliminate the deficit during the budget process.
(15) POLLUTION REMEDIATION OBLIGATION
The City relies on groundwater for its drinking water and in the late 1980's, PCE and TCE pollution was discovered in several municipal water
supply wells. Investigations conducted by the California Regional Water Quality Control Board (RWQCB) in the early 1990's under the Well
Investigation program revealed numerous areas where TCE was discharged, or where PCE from dry cleaning operations was discharged to the
sewer system. In 1997, the Department of Toxic Substances Control (DTSC) and the City entered into a cooperative agreement whereby the
City assumed a lead role in the cleanup and agreed to pursue legal action against potentially responsible parties (PRPs). The City's estimate of
the pollution remediation obligation was $70 million. The City has settled with all the involved parties.
The City received a draft cleanup and abatement order to investigate the discharges of waste, clean up the waste and abate the effects of the
discharges of waste in conformance with the State Water Resources Control Board's (SWRCB) Resolution No. 92-49 Policies and Procedures
for Investigation and Cleanup and Abatement of Discharges Under the Water Code Section 13304 and with the RWQCB's Water Quality Control
Plan for the Sacramento River and San Joaquin River. The City then engaged the services of Treadwell and Rollo to advise the City on courses
of action in the preparation of feasibility studies, remedial design, and remedial action plan to comply with the technical and reporting
requirements of the SWRCB. The City's estimated total pollution remediation obligation as of June 30, 2017, is $17,354,008. This amount is an
estimate and subject to changes resulting from price increases or reductions, technology, or changes in applicable laws or regulations.
84
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
(16) COMMITMENTS AND CONTINGENCIES
Litigation and claims — The City from time to time is a party to various claims, legal actions, and complaints arising in the ordinary course of
business. In the opinion of the City's administration, the various claims, legal actions, and complaints resulting from such litigation not covered
by the City's self-insurance program (see Note 11) would not materially affect the financial position of 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, 2017, 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, 2017 are as follows:
Governmental Activities:
General Fund
Other governmental funds
Total governmental activities
37,669
5,925,061
5,962,730
85
Business -type Activities:
Electric Fund $ 642,535
Wastewater Fund 1,409,378
Water Fund 4,846,473
Transit Fund 623,993
Total business -type activities $ 7,522,379
CITY OF LODI
Notes to Basic Financial Statements (continued)
June 30, 2017
(17) SUBSEQUENT EVENTS
On December 6, 2017, the City Council formally approved the City's Pension Stabilization policy that invests all General Fund reserves in excess
of the 16% reserve policy in the pension stabilization account until such time as the City's pension system is 80% funded. Funded status is
calculated by comparing total accrued liabilities to combined CaIPERS and pension stabilization account assets. Other funds are similarly
required to make contributions to the pension stabilization account on a prorated basis to the General Fund contribution based on the current
year's total PERS budget for that fund.
On December 6, 2017, the Lodi Public Financing Authority (PFA) of the City issued refunding bonds in an amount of $7,555,000 for the purpose
of refunding the outstanding Wastewater System Revenue Certificates of Participation, 2007 Series A.
86
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF LODI
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
MISCELLANEOUS PLAN
Measurement Period 2015-16 (1)
2014-15 (1) 2013-14 (1)
Total Pension Liability
Service Cost $ 2,464,894 $ 2,358,112
$ 2,478,901
Interest 12,565,553 12,061,399 11, 705,179
Differences Between Expected and Actual Experience 542,177 (1,655,012)
Changes of Assumptions (2,903,507)
Benefit Payments, Including Refunds of Employee Contributions (8,641,550) (8,208,103) (7,729,680)
Net Change in Total Pension Liability 6,931,074 1,652,889 6,454,400
Total Pension Liability - Beginning 166,801,735 165,148,846 158,694,446
Total Pension Liability- Ending (a) 173,732,809 166,801,735 165,148,846
Plan Fiduciary Net Position
Contributions - Employer 3,500,179 2,994,958 2,694,850
Contributions - Employee 1,241,136 1,183,452 1,237,916
Net Investment Income (2) 643,509 2,829,910 19,249,151
Benefit Payments, Including Refunds of Employee Contributions (8,641,550) (8,208,103) (7,729,680)
Other Changes in FiduciaryNet Position
(76,838) (145,538)
Net Change in Fiduciary Net Position (3,333,564) (1,345,321) 15,452,237
Plan Fiduciary Net Position - Beginning 126,077,924 127,423,245 111,971,008
Plan Fiduciary Net Position - Ending (b) 122,744,360 126,077,924 127,423,245
Plan Net Pension Liability - Ending (a) - (b) $ 50,988,449 $ 40,723,811 $ 37,725,601
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability 70.65% 75.59% 77.16%
Covered Payroll $ 17,423,446 $ 16,572,579 $ 16,669,363
Plan Net Pension Liability as a Percentage of
Covered Payroll 292.64% 245.73% 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: There have been no changes in benefit terms. The figures above do not include any liability impact that
may have resulted from plan changes which occurred after June 30, 2015. 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: In fiscal year 2015-16, there were no changes. In fiscal year 2014-15, the discount rate was
changed from 7.5 percent (net of administrative expense) to 7.65 percent.
Information in this schedule is not available prior to fiscal year 2013-14 measurement period. Additional years will be added
to this schedule until 10 years of data is presented.
87
CITY OF LODI
REQUIRED SJPPLEMENTARY 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 - Ending (a) - (b)
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability
2015-16 (1)
$ 2,890,607
12,357,788
600,847
(8,730,081)
7,119,161
163,858,600
170,977,761
2014-15 (1)
$ 2,968,819
11,827,918
(932,918)
(2,939,033)
(8,134,067)
2013-14 (1)
$ 3,048,048
11,390,793
(7,448,361)
2,790,719 6,990,480
161,067,881 154,077,401
163,858,600 161,067,881
4,660,278 4,176,197 4,106,044
1,062,984 1,007,876 1,058,376
558,434 2,397,191 16,070,261
(8,730,081) (8,134,067) (7,448,361)
(64,882) (119,971) -
(2,513,267) (672,774) 13,786,320
106,458,927 107,131, 701 93,345, 381
103, 945,660 106,458,927 107,131,701
$ 67,032,101 $ 57,399,673 $ 53,936,180
60.79% 64.97%
Covered Payroll $ 11,106,615 $ 11,293,867
Plan Net Pension Liability as a Percentage of
Covered Payroll 603.53% 508.24%
(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: There have been no changes in benefit terms. The figures above do not include any liability impact that
may have resulted from plan changes which occurred after June 30, 2015. This applies for voluntary benefit changes as
well as any offers to Two Years Additional Service Credits (a.ka. Golden Handshakes).
Changes of Assumptions: In fiscal year 2015-16, there were no changes. In fiscal year 2014-15, the discount rate was
changed from 7.5 percent (net of administrative expense) to 7.65 percent.
Information in this schedule is not available prior to fiscal year 2013-14 measurement period. Additional years will be added
to this schedule until 10 years of data is presented.
88
66.51%
$ 11,194,123
481.83%
CITY OF LODI
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF PENSION CONTRIBUTIONS
Miscellaneous Plan:
Actuarially Determined Contributions
Contributions in Relation to the Actuarially Determined Contributions
Contribution Deficiency
Covered Payroll
Contributions as a Percentage of Covered Payroll
Safety Plan:
Actuarially Determined Contributions
Contributions in Relation to the Actuarially Determined Contributions
Contribution Deficiency
Covered Payroll
Contributions as a Percentage of Covered Payroll
Notes to Schedule:
2016-17 2015-16
2014-15 2013-14
$ 3,880,495 $ 3,500,179 $ 2,994,958 $ 2,694,850
(3,880,495) (3,500,179) (2,994,958) (2,694,850)
$ - $
$ - $
$ 17,802,886 $ 17,423,446 $ 16,572,579 $ 16,669,363
21.80% 20.09% 18.07% 16.17%
$ 5,136,610 $ 4,660,278 $ 4,176,197 $ 4,106,044
(5,136,610) (4,660,278) (4,176,197) (4,106,044)
$ 11,477,432 $ 11,106,615 $ 11,293,867 $ 11,194,123
44.75% 41.96% 36.98% 36.68%
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2016-17 were from the June 30, 2014
public agency funding valuations.
Actuarial Cost Method
Amortization Method/Period
Asset Valuation Method
Inflation
Salary Increases
Payroll Growth
Investment Rate of Return
Retirement Age
Mortality
Entry Age Normal
Level percent of payroll over 30 years.
Market value of assets.
2.75%
Varies by Entry Age and Service
3.00%
7.50% Net of Pension Plan Investment and Administrative Expenses; includes Inflation.
The probabilities of Retirement are based on the 2014 CaIPERS Experience Study for the period from 1997 to
2011
The probabilities of mortality are based on the 2014 CaIPERS Experience Study for the period from 1997 to
2011. Pre -retirement and Post-retirement mortality rates include 20 years of projected on-going mortality
improvement using Scale BB published by the Society of Actuaries.
Changes of Assumptions: In fiscal year 2016-17, the probabilities of mortality were updated to include the 2014 CaIPERS Experience Study through
2011, and mortality rates were changed from 5 years of projected mortality improvement using Scale AA to 20 years of projected on-going mortality
improvement using Scale BB. In fiscal year 2015-16, the asset valuation method was changed to market value of assets from actuarial value of
assets. No change in assumptions for fiscal year 2014-15.
89
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)}
1/1/2012 $ 0 $ 17,011 $ 17,011 0% $ 7,305 233%
1/1/2014 0 16,879 16,879 0% 5,697 296%
1/1/2016 0 39,041 39,041 0% 35,499 110%
90
City of Lodi
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund
For the Year Ended June 30, 2017
Budgeted Amounts Variance with
Original Final Actual Final Budget
REVENUES
Taxes $ 25,710,370 $ 25,710,370 $ 26,490,919 $ 780,549
Licenses and permits 95,280 95,280 86,844 (8,436)
Intergovernmental revenues 12,582,190 12,582,190 12,830,329 248,139
Charges for services 1,296,580 1,296,580 1,852,855 556,275
Fines, forfeits, and penalties 1,489,500 1,489,500 906,563 (582,937)
Investment and rental income 1,562,360 1,562,360 1,734,773 172,413
Miscellaneous revenue 233,100 233,100 319,373 86,273
Total revenues 42,969,380 42,969,380 44,221,656 1,252,276
EXPENDITURES
Current:
General government:
City Manager 1,067,720 1,067,720 1,029,783 37,937
City Clerk 686,170 686,170 640,511 45,659
City Attorney 530,830 539,830 532,270 7,560
Human Resources 505,040 540,836 533,195 7,641
Information Systems 1,249,800 1,249,800 1,069,401 180,399
Financial Services 1,805,250 1,795,250 1,781,234 14,016
Budget and Treasury 266,740 266,740 265,803 937
Non Departmental 1,140,130 3,946,820 3,904,381 42,439
Total general government 7,251,680 10,093,166 9,756,578 336,588
Public protection:
Police 19,583,220 19,574,248 18,843,212 731,036
Fire 11,391,860 11,389,556 11,126,569 262,987
Total public protection 30,975,080 30,963,804 29,969,781 994,023
Public works 2,173,770 2,173,770 1,698,518 475,252
Library 1,314,400 1,355,331 1,193,652 161,679
Total expenditures 41,714,930 44,586,071 42,618,529 1,967,542
Excess (deficiency) of revenues over (under) expenditures 1,254,450 (1,616,691) 1,603,127 3,219,818
OTHER FINANCING SOURCES (USES)
Transfers in 3,952,000 3,952,000 3,952,000
Transfers out (6,705,840) (6,705,840) (6,705,104) 736
Total other financing sources(uses) (2,753,840) (2,753,840) (2,753,104) 736
Changes in fund balance (budgetary basis) (1,499,390) (4,370,531) (1,149,977) $ 3,220,554
Basis adjustment:
Pension set aside 2,871,141
Changes in fund balance (GAAP basis) 1,721,164
Fund balances - beginning
Fund balances - ending
13,247,193 13,247,193 13,247,193
$ 11,747,803 $ 8,876,662 $ 14,968,357
The note to the required supplementary information is an integral part of this schedule. 91
City of Lodi
Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual - Streets Fund
For the Year Ended June 30, 2017
Budgeted Amounts
Criginal Final
Actual
Variance with
Final Budget
REVENUES
Intergovernmental revenues $ 13,297,940 $ 13,297,940 $ 9,883,250 $ (3,414,690)
Charges for services 865,010 865,010 1,095,631 230,621
Investment and rental income 11,220 11,220 22,325 11,105
Miscellaneous revenue 40,000 40,000 156,149 116,149
Total revenues 14,214,170 14,214,170 11,157,355 (3,056,815)
EXPENDITURES
Current:
Public works 2,507,610 2,571,740 2,100,742 470,998
Capital outlay 1,380,000 12,826,651 8,092,111 4,734,540
Total expenditures 3,887,610 15,398,391 10,192,853 5,205,538
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES
Transfers in
Changes in fund balance (budgetary basis)
Basis adjustment:
Pension set aside
10,326,560 (1,184,221)
620,810
964,502 2,148,723
620,810 620,810
10,947,370 (563,411)
1,585,312 $ 2,148,723
64,130
Changes in fund balance (GAAP basis) 1,649,442
Fund balances - beginning 3,574,516
Fund balances - ending
3,574,516 3,574,516
$ 14,521,886 $ 3,011,105 $ 5,223,958
The note to the required supplementary information is an integral part of this schedule. 92
CITY OF LODI
Note to the Required Supplementary Information
June 30, 2017
Budgetary Data
The City adopts an annual budget for the General Fund and special revenue funds. These budgets are prepared in accordance with
generally accepted accounting principles with the exception of deposits into the pension stabilization account that the City budgeted for as
expenditures in the General; Streets; Parks, Recreation, and Community Services; and Community Development funds. 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 budgetary comparison schedules 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 combining and individual fund statements and schedules for capital projects and debt service
funds.
The City Council follows the following procedures in establishing the budgetary data reflected in the accompanying required
supplementary information and in the budgetary comparison schedules for nonmajor special revenue funds:
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.
93
Final Budget
The final budgetary data presented in the required supplementary information and in the budgetary comparison schedules for
nonmajor special revenue funds 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
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 or committed 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 Tong -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, 2017
Total Other
Special Revenue Funds Capital Projects Funds Governmental Funds
ASSETS
Cash and investments $ 4,786,535 $ 6,777,481 $ 11,564,016
Accounts receivable, net 77,675 175,692 253,367
Interest receivable 7,169 6,350 13,519
Due from other funds 195,698 - 195,698
Due from other governmental agencies 507,360 - 507,360
Inventory 1,355 - 1,355
Total assets $ 5,575,792 $ 6,959,523 $ 12,535,315
LIABILITIES
Accounts payable and other liabilities
Due to other funds
Advances from other funds
Unearned revenue
Total liabilities
141,045 $
195,698
45,804
382,547
799,596 $
1,088,311
940,641
195,698
1,088,311
45,804
1,887,907 2,270,454
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 44,777 180,357 225,134
FUND BALANCES
Nonspendable
Inventory 1,355 - 1,355
Restricted for:
Road -related projects 6,556 - 6,556
Capital projects - 4,891,259 4,891,259
Home and CDBG program 25,225 - 25,225
Public safety 428,841 - 428,841
Community development 3,892,405 - 3,892,405
Parks, recreation and community services 794,086 - 794,086
Total fund balances 5,148,468 4,891,259 10,039,727
Total liabilities, deferred inflows of resources, and fund balances
$ 5,575,792 $ 6,959,523 $ 12,535,315
95
City of Lodi
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2017
Total Other
Special Revenue Funds Debt Service Fund Capital Projects Funds Governmental Funds
REVENUES
Licenses and permits $ 1,928,188 $
Intergovernmental revenues 1,261,109
Charges for services 2,669,401
Investment and rental income 535,792
Miscellaneous revenue 112,294
Total revenues 6,506,784
- $ 1,928,188
1,261,109
104,422 2,773,823
26,396 562,188
229,811 342,105
360,629 6,867,413
EXPENDITURES
Current:
General government 2,518,139 - 54,372 2,572,511
Public protection 231,516 - 231,516
Public works 872,730 - - 872,730
Community development 1,650,876 - - 1,650,876
Parks and recreation 2,377,753 - - 2,377,753
Capital outlay 76,022 - 3,424,237 3,500,259
Debt service:
Interest 11,112 836,055 11,015 858,182
Principal retirement 75,428 919,989 245,000 1,240,417
Total expenditures 7,813,576 1,756,044 3,734,624 13,304,244
Deficiency of revenues under expenditures (1,306,792) (1,756,044) (3,373,995)
(6,436,831)
OTHER FINANCING SOURCES (USES)
Transfers in 4,114,800 1,756,044 1,278,930 7,149,774
Transfers out (966,480) - - (966,480)
Total other financing sources (uses) 3,148,320 1,756,044 1,278,930 6,183,294
Changes in fund balances 1,841,528 - (2,095,065) (253,537)
Fund balances - beginning 3,306,940 - 6,986,324 10,293,264
Fund balances - ending $ 5,148,468 $ $ 4,891,259 $ 10,039,727
96
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
NONMAJOR 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.
97
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City of Lodi
Combining Balance Sheet
Nonmajor Governmental Funds - Special Revenue Funds
June 30, 2017
Parks, Recreation, and Community
Community Services Public Safety Development
Transportation
HOME Program and
Community
Development Block Total Nonmajor
Grants Special Revenue Funds
ASSETS
Cash and investments $ 762,130 $ 349,466 $ 3,674,939 $ $ - $ 4,786,535
Accounts receivable, net 62,439 - - 15,236 77,675
Interest receivable 963 592 5,545 (13) 82 7,169
Due from other funds - 195,698 195,698
Due from other governmental agencies 93,585 32,604 381,171 507,360
Inventory 1,355 - - 1,355
Total assets $ 826,887 $ 443,643 $ 3,908,786 $ 15,223 $ 381,253 $ 5,575,792
LIABILITIES
Accounts payable and other liabilities
Due to other funds
Unearned revenue
Total liabilities
31,376 $ - $ 16,381 $ $ 93,288 $ 141,045
- 8,667 187,031 195,698
14,802 - 31,002 45,804
31,376 14,802 16,381 8,667 311,321 382,547
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 70 - - - 44,707 44,777
FUND BALANCES
Nonspendable
Inventory 1,355 - - 1,355
Restricted for:
Road -related projects 6,556 6,556
Public safety - 428,841 428,841
Home and CDBG program - 25,225 25,225
Community development - - 3,892,405 3,892,405
Parks, recreation and community services 794,086 - 794,086
Total fund balances 795,441 428,841 3,892,405 6,556 25,225 5,148,468
Total liabilities, deferred inflows of resources, and fund balances $ 826,887 $ 443,643 $ 3,908,786 $ 15,223 $ 381,253 $ 5,575,792
99
City of Lodi
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds - Special Revenue Funds
For the Year Ended June 30, 2017
Parks, Recreation, and Community
Community Services Public Safety Development
Transportation
HOME Program and
Community
Development Block Total Nonmajor Special
Grants Revenue Funds
REVENUES
Licenses and permits $ $ $ 1,928,188 $ $ - $ 1,928,188
Intergovernmental revenues 46,023 270,136 32,604 15,236 897,110 1,261,109
Charges for services 1,759,246 - 910,155 - - 2,669,401
Investment and rental income 514,463 2,362 18,591 52 324 535,792
Miscellaneous revenue 25,914 - 86,380 - 112,294
Total revenues 2,345,646 272,498 2,975,918 15,288 897,434 6,506,784
EXPENDITURES
Current:
General government 2,518,139 - 2,518,139
Public protection - 231,516 - - 231,516
Public works - - - 872,730 872,730
Community development - - 1,650,876 1,650,876
Parks and recreation 2,377,753 - 2,377,753
Capital outlay 46,023 29,999 76,022
Debt service:
Interest 11,112 - 11,112
Principal retirement 75,428 - - 75,428
Total expenditures 4,941,915 318,056 1,650,876 29,999 872,730 7,813,576
Excess (deficiency) of revenues over (under) expenditures
(2,596,269) (45,558)
1,325,042 (14,711)
24,704 (1,306,792)
OTHER FINANCING SOURCES (USES)
Transfers in 3,949,800 - 165,000 4,114,800
Transfers out (945,480) - (21,000) - - (966,480)
Total other financing sources(uses) 3,004,320 - 144,000 - 3,148,320
Changes in fund balances 408,051 (45,558) 1,469,042 (14,711) 24,704 1,841,528
Fund balances - beginning 387,390 474,399 2,423,363 21,267 521 3,306,940
Fund balances - ending $ 795,441 $ 428,841 $ 3,892,405 $ 6,556 $ 25,225 $ 5,148,468
100
City of Lodi
Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual - Parks, Recreation, and Community Services Fund
For the Year Ended June 30, 2017
REVENUES
Intergovernmental revenues
Charges for services
Investment and rental income
Miscellaneous revenue
Total revenues
Budgeted Amounts
Original Final
$
1,820,180
463,920
7,500
2,291,600
$
Actual
Variance with
Final Budget
46,000 $ 46,023 $ 23
1,822,180 1,759,246 (62,934)
481,920 514,463 32,543
27,730 25,914 (1,816)
2,377,830 2,345,646 (32,184)
EXPENDITURES
Current:
General government 2,868,280 2,888,280 2,618,907 269,373
Parks and recreation 2,549,110 2,649,878 2,377,753 272,125
Capital outlay - 49,289 46,023 3,266
Total expenditures 5,417,390 5,587,447 5,042,683 544,764
Deficiency of revenues under expenditures
(3,125,790) (3,209,617)
(2,697,037) 512,580
OTHER FINANCING SOURCES (USES)
Transfers in 3,949,800 3,949,800 3,949,800
Transfers out (875,250) (1,020,480) (945,480) 75,000
Total other financing sources (uses) 3,074,550 2,929,320 3,004,320 75,000
Changes in fund balance (budgetary basis)
(51,240) (280,297)
307,283 $ 587,580
Basis adjustment:
Pension set aside 100,768
Changes in fund balance (GAAP basis) 408,051
Fund balances - beginning 387,390 387,390 387,390
Fund balances - ending $ 336,150 $ 107,093 $ 795,441
101
City of Lodi
Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual - Public Safety Fund
For the Year Ended June 30, 2017
REVENUES
Intergovernmental revenues
Fines, forfeits, and penalties
Investment and rental income
Miscellaneous revenue
Total revenues
Budgeted Amounts
Original Final
$
349,280 $
3,000
1,700
353,980
Actual
713,280 $
3,000
1,700
562,387
1,280,367
Variance with
Final Budget
270,136 $
2,362
(443,144)
(3,000)
662
(562,387)
272,498 (1,007,869)
EXPENDITURES
Current:
Public protection 378,250 1,391,933 231,516 1,160,417
Debt service:
Interest 11,112 11,112 11,112
Principal retirement 75,428 75,428 75,428
Total expenditures 464,790 1,478,473 318,056 1,160,417
Changes in fund balance (24,270) (111,566) (45,558) $ 66,008
Fund balances - beginning 474,399 474,399 474,399
Fund balances - ending $ 450,129 $ 362,833 $ 428,841
102
City of Lodi
Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual - Community Development Fund
For the Year Ended June 30, 2017
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
REVENUES
Licenses and permits $ 1,203,200 $ 1,203,200 $ 1,928,188
$ 724,988
Intergovernmental revenues 362,000 362,000 32,604 (329,396)
Charges for services 529,300 529,300 910,155 380,855
Investment and rental income 8,640 8,640 18,591 9,951
Miscellaneous revenue 100,620 100,620 86,380 (14,240)
Total revenues 2,203,760 2,203,760 2,975,918 772,158
EXPENDITURES
Current:
Community development
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
Changes in fund balance (budgetary basis)
2,171,120 2,238,682
32,640 (34,922)
165,000
(21,000)
144,000
1,718,438 520,244
1,257,480 1,292,402
165,000 165,000
(21,000) (21,000)
144,000 144,000
176,640 109,078
1,401,480 $ 1,292,402
Basis adjustment:
Pension set aside 67,562
Changes in fund balance (GAAP basis) 1,469,042
Fund balances - beginning 2,423,363 2,423,363 2,423,363
Fund balances - ending
$ 2,600,003 $ 2,532,441 $ 3,892,405
103
City of Lodi
Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual - Transportation Fund
For the Year Ended June 30, 2017
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
REVENUES
Intergovernmental revenues $ 47,100 $ 47,100 $ 15,236 $ (31,864)
Investment and rental income - - 52 52
Total revenues 47,100 47,100 15,288 (31,812)
EXPENDITURES
Capital outlay 30,000 30,000 29,999 1
Changes in fund balance
Fund balances - beginning
Fund balances - ending
17,100 17,100 (14,711) $ (31,811)
21,267 21,267 21,267
$
38,367 $ 38,367 $ 6,556
104
City of Lodi
Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual - HOME Program and Community Development Block
Grants Fund
For the Year Ended June 30, 2017
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
REVENUES
Intergovernmental revenues $ 1,128,620 $ 1,128,620 $ 897,110 $ (231,510)
Investment and rental income 324 324
Total revenues 1,128,620 1,128,620 897,434 (231,186)
EXPENDITURES
Current:
Public works
Changes in fund balance
1,128,620 1,128,620
872,730 255,890
24,704 $ 24,704
Fund balances - beginning 521 521 521
Fund balances - ending $ 521 $
105
521 $ 25,225
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NONMAJOR GOVERNMENTAL FUNDS
CAPITAL PROJECT FUNDS
NONMAJOR 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.
107
City of Lodi
Combining Balance Sheet
Nonmajor Governmental Funds - Capital Projects Funds
June 30, 2017
Vehicle and
Equipment
Library
Total Nonmajor Capital
Hutchins Street Square Capital Outlay Reserve Parks Capital Projects Funds
ASSETS
Cash and investments $ 2,092,941 $ 14,567 $ 3,290 $ 3,725,303 $
Accounts receivable, net - 175,692
Interest receivable 2 4,998
Total assets $ 2,092,941 $ 14,567 $ 3,292 $ 3,905,993 $
941,380 $
1,350
6,777,481
175,692
6,350
942,730 $ 6,959,523
LIABILITIES
Accounts payable and other liabilities $ 57,038 $ - $ - $ 713,268 $ 29,290 $ 799,596
Advances from other funds - - 1,024,025 64,286 1,088,311
Total liabilities 57,038 1,737,293 93,576 1,887,907
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - 180,357 - 180,357
FUND BALANCES
Restricted for:
Capital projects 2,035,903 14,567 3,292 1,988,343 849,154 4,891,259
Total liabilities, deferred inflows of resources, and fund balances $ 2,092,941 $ 14,567 $ 3,292 $ 3,905,993 $ 942,730 $ 6,959,523
108
City of Lodi
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds - Capital Projects Funds
For the Year Ended June 30, 2017
Vehicle and Equipment
Total Nonmajor Capital
Library Hutchins Street Square Capital Outlay Reserve Parks Capital Projects Funds
REVENUES
Charges for services $ - $ - $ - $ 104,422 $ - $ 104,422
Investment and rental income 6 20,609 5,781 26,396
Miscellaneous revenue 91,366 - - - 138,445 229,811
Total revenues 91,366 6 125,031 144,226 360,629
EXPENDITURES
Current:
General government 54,372 - - 54,372
Capital outlay 1,060,375 310,927 - 1,769,720 283,215 3,424,237
Debt service:
Interest - - 11,015 11,015
Principal retirement - - 245,000 - 245,000
Total expenditures 1,114,747 310,927 - 2,025,735 283,215 3,734,624
Excess (deficiency) of revenues over (under) expenditures (1,023,381) (310,927) 6 (1,900,704) (138,989) (3,373,995)
OTHER FINANCING SOURCES
Transfers in 609,500 - - 435,000 234,430 1,278,930
Changes in fund balances (413,881) (310,927) 6 (1,465,704) 95,441 (2,095,065)
Fund balances - beginning - 2,449,784 325,494 3,286 3,454,047 753,713 6,986,324
Fundbalances- ending $ 2,035,903 $ 14,567 $ 3,292 $ 1,988,343 $ 849,154 $ 4,891,259
109
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
111
ASSETS
Current assets:
Cash and investments
Accounts receivable, net
Interest receivable
Due from other funds
Inventory
Other assets
Noncurrent assets:
Capital assets:
Depreciable, net
Total assets
City of Lodi
Combining Statement of Fund Net Position
Internal Service Funds
June 30, 2017
Total Internal Service
Fleet Services Benefits Insurance Funds
$
723
(144)
144,421
$
899,735 $ 13,427,662 $ 14,327,397
31,785 - 32,508
1,320 19,806 20,982
27,692 27,692
- 144,421
102,920 - 102,920
24,603 - 24,603
169,603 1,035,760
13,475,160 14, 680, 523
LIABILITIES
Current liabilities:
Accounts payable and other liabilities 33,224 82,139 61,488 176,851
Due to other funds 27,692 - 27,692
Self-insurance liability - - 2,365,077 2,365,077
Accrued compensated absences 29,371 - 29,371
Noncurrent liabilities:
Self-insurance liability - - 6,477,321 6,477,321
Accrued compensated absences 103,349 - 103,349
Total liabilities 193,636 82,139 8,903,886 9,179,661
NET POSITION
Net investment in capital assets
Unrestricted
Total net position
24,603
24,603
(48,636) 953,621 4,571,274 5,476,259
$
(24,033) $ 953,621
112
4,571,274 $ 5,500,862
OPERATING REVENUES
Charges for services
City of Lodi
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position
Internal Service Funds
For the Year Ended June 30, 2017
Total Internal Service
Fleet Services Benefits Insurance Funds
$ 1,590,782 $ 8,015,168 $
4,093,697 $ 13,699,647
OPERATING EXPENSES
Personnel services 826,538 705,653 136,942 1,669,133
Supplies, materials and services 900,417 6,816,310 1,219,015 8,935,742
Utilities 13,657 - 670 14,327
Depreciation 1,447 - 1,447
Claims 34,200 1,288,372 2,365,077 3,687,649
Total operating expenses 1,776,259 8,810,335 3,721,704 14,308,298
Operating income (loss)
NONOPERATING REVENUES
Investment income
Other revenues
Total nonoperating revenues
Changes in net position
Total net position - beginning
Total net position - ending
(185,477) (795,167)
(1,240) 7,380
43,209 31,811
41,969 39,191
(143,508) (755,976)
371,993 (608,651)
66,810 72,950
77,515 152,535
144,325 225,485
516,318 (383,166)
119,475 1,709,597 4,054,956 5,884,028
$
(24,033) $ 953,621 $
113
4,571,274 $ 5,500,862
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash from interfund
Payments to suppliers
Payments to employees
Net cash provided (used) by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments
Net increase (decrease) in cash and cash equivalents
Balances - beginning of year
Balances - end of the year
City of Lodi
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2017
Total lnternal Service
Fleet Services Benefits Insurance Funds
59,411 $ 31,811 $ 77,515 $ 168,737
1,618,474 8,015,168 4,066,005 13,699,647
(984,909) (8,102,474) (3,193,294) (12,280,677)
(829,165) (705,653) (136,942) (1,671,760)
(136,189) (761,148) 813,284 (84,053)
(1,096) 7,772 59,783 66,459
(137,285) (753,376) 873,067 (17,594)
137,285 1,653,111 12,554,595 14, 344, 991
$ 899,735 $ 13,427,662 $ 14,327,397
Reconciliation of operating income (loss) to net cash provided (used) by
operating activities:
Operating Income (loss) $ (185,477) $ (795,167) $ 371,993 $ (608,651)
Adjustments to reconcile operating income (loss) to net cash provided (used) by
operating activities:
Depreciation expense 1,447 1,447
Other revenues 43,209 31,811 77,515 152,535
Changes in assets and liabilities:
Accounts receivable, net 16,202 16,202
Due from other funds - (27,692) (27,692)
Inventory (5,101) (5,101)
Other assets (1,903) (1,903)
Accrued compensated absences (2,627) - (2,627)
Accounts payable and other liabilities (31,534) 4,111 30,012 2,589
Due to other funds 27,692 - 27,692
Self-insurance liability - 361,456 361,456
Net cash provided (used) by operating activities $ (136,189) $ (761,148) $ 813,284 $ (84,053)
114
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
Interest receivable
Total assets
City of Lodi
Combining Statement of Fiduciary Net Position
Private -Purpose Trust Funds
June 30, 2017
Library
$
Hutchins Street Square
Bequest Total
234,575 $
234,575
1,543 $
2
236,118
2
1,545 236,120
NET POSITION - EXPENDABLE $ 234,575 $ 1,545 $ 236,120
115
ADDITIONS
Investment and rental income
City of Lodi
Combining Statement of Changes in Fiduciary Net Position
Private -Purpose Trust Funds
For the Year Ended June 30, 2017
Library
Hutchins Street Square
Bequest Total
$ 10,293 $ 8 $ 10,301
DEDUCTIONS
Current:
Library 9,410 - 9,410
Changes in net position 883 8 891
Net position -- beginning 233,692 1,537 235,229
Net position -- end $ 234,575 $
116
1,545 $ 236,120
City of Lodi
Statement of Changes in Assets and Liabilities
Agency Fund
For the Year Ended June 30, 2017
Special Assessments
Balance Balance
July 1, 2016 Additions Deductions June 30, 2017
ASSETS
Cash and investments $ 422,207 $ 36,575 $ 52,053 $ 406,729
Interest receivable 440 590 440 590
Total assets $ 422,647 $ 37,165 $ 52,493 $ 407,319
LIABILITIES
Agency obligations
$ 422,647 $ $ 15,328 $ 407,319
117
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STATISTICAL SECTION
UNAUDITED
STATISTICAL SECTION
The Statistical Section provides detailed information as a framework for understanding the information in the financial statements, notes and
required supplementary information. This section presents additional data and analysis that may provide the reader with valuable insight
regarding the demographics and the overall health of the City.
Contents Pages
Financial Trends
These schedules contain trend information to help the reader understand how the City's financial performance
and well-being has changed over time. 120-125
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.
119
126-131
132-138
139-141
142-146
CITY OF LODI
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2017 2016 2015(1) 2014 2013 2012 2011 2010 2009 2008
Governmental activities:
Net investment in capital assets $ 117,196 $ 111,256 $ 105,944 $ 105,462 $ 106,828 $ 107,587 $ 114,165 $ 113,308 $ 115,036 $ 107,874
Restricted 15,545 13,911 12,001 11,809 12,601 16,176 14,894 13,233 13,492 15,043
Unrestricted (77,162) (76,984) (74,146) 2,551 1,157 (3,606) (5,148) (6,110) (3,462) (4,162)
Total governmental activities net position $ 55,579 $ 48,183 $ 43,799 $ 119,822 $ 120,586 $ 120,157 $ 123,911 $ 120,431 $ 125,066 $ 118,755
Business -type activities:
Net investment in capital assets $ 129,086 $ 121,468 $ 119,924 $ 116,156 $ 113,008 $ 109,582 $ 104,858 $ 100,233 $ 95,533 $ 98,109
Restricted 3,929 3,893 3,810 6,703 6,600 6,533 5,303 8,657
Unrestricted 16,463 14,427 892 16,535 14,827 (34,563) (34,129) (28,591) (35,448) 26,460
Total business -type activities net position $ 149,478 $ 139,788 $ 127,626 $ 139,394 $ 134,435 $ 81,552 $ 76,032 $ 71,642 $ 60,085 $ 133,226
Primary government:
Net investment in capital assets $ 246,282 $ 232,724 $ 225,868 $ 221,618 $ 219,836 $ 217,169 $ 219,023 $ 213,541 $ 210,569 $ 205,983
Restricted 19,474 17,804 13,811 18,512 19,201 22,709 20,197 13,233 13,492 23,700
Unrestricted (60,699) (62,557) (73,254) 19,086 15,984 (38,169) (39,277) (34,701) (38,910) 22,298
Total primary government net position $ 205,057 $ 187,971 $ 171,425 $ 259,216 $ 255,021 $ 201,709 $ 199,943 $ 192,073 $ 185,151 $ 251,981
(1) Fiscal year 2015 beginning net position was restated due to the implementation of GASB 68.
Source: City of Lodi Financial Services Division
120
CITY OF LODI
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Expenses
Governmental activities:
General government $ 9,650 $ 10,369 $ 9,109 $ 9,580 $ 8,943 $ 9,381 $ 8,262 $ 8,749 $ 9,451 $ 8,307
Public protection 33,239 31,395 27,426 27,884 25,930 25,432 25,113 27,186 27,110 25,531
Public works 10,614 10,326 10,281 10,644 10,546 10,248 9,305 10,462 10,464 12,224
Community development 1,709 1,792 1,165 1,174 1,050 1,003 973 1,114 1,323 2,027
Library 1,253 1,389 1,324 1,282 1,342 1,381 1,355 1,440 1,495 1,696
Parks and recreation 3,663 4,262 3,116 3,164 2,933 2,913 5,778 5,077 4,609 4,414
Interest and fiscal charges 824 822 818 825 416 1,033 1,075 1,105 1,134 1,166
Total governmental activities expenses 60,952 60,355 53,239 54,553 51,160 51,391 51,861 55,133 55,586 55,365
Business -type activities:
Electric 62,791 61,764 64,367 61,974 61,106 62,599 63,399 64,364 73,358 65,201
Wastewater 16,318 14,024 12,912 12,527 13,423 17,441 11,687 11,289 10,940 12,227
Water 11,961 10,967 9,905 11,014 (34,877) 7,953 8,188 6,148 9,604 9,920
Transit 4,925 4,415 4,134 3,834 4,141 4,256 4,132 4,785 4,832 3,908
Total business -type activities expenses 95,995 91,170 91,318 89,349 43,793 92,249 87,406 86,586 98,734 91,256
Total primary govemment expenses $ 156,947 $ 151,525 $ 144,557 $ 143,902 $ 94,953 $ 143,640 $ 139,267 $ 141,719 $ 154,320 $ 146,621
Program Revenues
Governmental activities:
Charges for services:
General government $ 3,246 $ 1,490 $ 1,971 $ 1,955 $ 2,337 $ 1,718 $ 1,793 $ 2,184 $ 1,631 $ 1,544
Public protection 779 740 609 582 538 500 643 714 844 837
Public works 1,209 734 832 415 224 166 356 326 358 755
Community development 2,838 2,292 1,378 1,219 1,458 993 1,601 786 749 1,085
Library 43 63 43 43 44 43 47 48 44 53
Parks and recreation 1,660 1,637 1,360 1,479 1,404 1,241 1,245 1,269 1,158 851
Operating grants and contributions 2,391 2,596 3,369 2,686 2,341 2,300 2,236 1,927 1,951 2,305
Capital grants and contributions 12,830 10,559 3,131 5,359 4,216 5,025 6,737 5,122 10,822 4,717
Total governmental activities program revenues 24,996 20,111 12,693 13,738 12,562 11,986 14,658 12,376 17,557 12,147
Business -type activities:
Charges for services:
Electric 65,848 67,507 65,237 64,693 63,230 64,251 62,167 69,664 74,000 69,284
Wastewater 15,106 14,960 14,714 14,305 13,747 13,280 13,090 11,513 9,276 9,091
Water 12,474 12,161 12,723 12,756 12,441 12,083 11,940 11,716 11,787 11,350
Transit 220 210 230 203 185 186 195 217 251 278
Operating grants and contributions 4,514 5,089 5,186 4,431 5,178 4,214 3,983 3,449 3,653 3,381
Capital grants and contributions 7,972 2,860 5,284 2,846 4,715 3,206 5,150 1,408 5,774 8,064
Total business -type activities program revenues 106,134 102,787 103,374 99,234 99,496 97,220 96,525 97,967 104,741 101,448
Total primary government program revenues $ 131,130 $ 122,898 $ 116,067 $ 112,972 $ 112,058 $ 109,206 $ 111,183 $ 110,343 $ 122,298 $ 113,595
Net (Expense)/Revenue
Governmental activities
Business -type activities
Total primary government net expense
$ (35,956) $ (40,244) $ (40,546) $ (40,815) $ (38,598) $ (39,405) $ (37,203) $ (42,757) $ (38,029) $ (43,218)
10,139 11,617 12,056 9,885 55,703 4,971 9,119 11,381 6,007 10,192
$ (25,817) $ (28,627) $ (28,490) $ (30,930) $ 17,105 $ (34,434) $ (28,084) $ (31,376) $ (32,022) $ (33,026)
(Continued)
121
CITY OF LODI
CHANGES IN NET POSITION (Continued)
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
General Revenues and Other Changes in Net Position:
Governmental activities:
Taxes:
Property $ 14,860 $ 13,919 $ 13,502 $ 12,758 $ 12,218 $ 12,103 $ 12,698 $ 12,836 $ 13,564 $ 13,838
Franchise taxes 9,099 9,073 8,976 8,838 8,735 8,712 8,692 8,658 8,357 9,338
Business license tax 1,736 1,552 1,486 1,528 1,524 1,628 1,246 1,242 1,190 1,140
Transient occupancy tax 849 783 666 594 546 486 426 382 405 396
Grants and contributions not restricted to specific programs 11,778 11,834 10,651 10,138 9,382 9,277 8,954 7,064 8,249 9,593
Investment earnings 257 326 145 203 44 132 133 155 467 1,008
Rent 1,954 1,942 1,906 1,370
Other 722 719 605 528 610 2,052 1,556 1,917 2,382 1,077
Special item -gain on sale of parkland 321
Transfers 4,051 4,469 7,514 4,792 5,682 1,261 6,657 5,868 5,368 3,693
Total governmental activities 43,352 44,629 45,487 41,285 40,111 35,651 40,683 38,122 39,982 40,083
Business -type activities:
Investment earnings 816 952 632 757 497 566 575 731 1,385 2,028
Litigation- environmental lawsuits proceeds 100 1,107 300 2,010 8,892
Rent 4 4 4
Other 2,786 3,957 2,745 2,370 1,258 1,244 1,353 923 1,891 2,717
Special item -swap termination (8,979)
Transfers (4,051) (4,469) (7,514) (4,792) (5,682) (1,261) (6,657) (5,868) (5,368) (3,693)
Total business -type activities (449) 544 (4,133) (1,661) (2,820) 549 (4,729) (3,914) (9,061) 9,944
Total primary government $ 42,903 $ 45,173 $ 41,354 $ 39,624 $ 37,291 $ 36,200 $ 35,954 $ 34,208 $ 30,921 $ 50,027
Change in Net Position
Governmental activities $ 7,396 $ 4,385 $ 4,941 $ 470 $ 1,513 $ (3,754) $ 3,480 $ (4,635) $ 1,953 $ (3,135)
Business -type activities 9,690 12,161 7,923 8,224 52,883 5,520 4,390 7,467 (3,054) 20,136
Total primary government $ 17,086 $ 16,546 $ 12,864 $ 8,694 $ 54,396 $ 1,766 $ 7,870 $ 2,832 $ (1,101) $ 17,001
Source: City of Lodi Financial Services Division
122
CITY OF LODI
FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
General Fund
Reserved $ $ $ $ $ $ $ $ 389 $ 383 $ 1,150
Unreserved 3,896 3,383 4,159
Nonspendable 33 10 9 6 357
Committed 3,520 465 345 301 277
Assigned 1,564 26 29 65 50 136
Unassigned 11,448 11,185 12,107 9,134 7,614 6,233 5,654
Total General Fund $ 14,968 $ 13,247 $ 12,478 $ 9,474 $ 7,965 $ 6,289 $ 6,147 $ 4,285 $ 3,766 $ 5,309
All other governmental funds
Reserved $ $ $ $ $ $ $ $ 7,801 $ 1,487 $ 1,932
Unreserved, reported in:
Special revenue funds 963 6,540 7,433
Capital projects funds 3,649 5,217 5,504
Nonspendable 1 1 1 4 3 1
Restricted 15,263 13,867 11,957 11,764 12,556 15,017 13,786
Unassigned (99) (512) (863) (846)
Total all other governmental funds $ 15,264 $ 13,868 $ 11,958 $ 11,669 $ 12,047 $ 14,155 $ 12,940 $ 12,413 $ 13,244 $ 14,869
$ 30,232 $ 27,115 $ 24,436 $ 21,143 $ 20,012 $ 20,444 $ 19,087 $ 16,698 $ 17,010 $ 20,178
Implemented GASB 54 during the 2011 fiscal year changing the presentation of fund balance.
Source: City of Lodi Financial Services Division
123
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Revenues:
Taxes $ 26,491 $ 25,327 $ 24,631 $ 23,719 $ 23,022 $ 22,928 $ 23,061 $ 23,118 $ 23,516 $ 24,712
Licenses and permits 2,015 1,646 967 852 921 686 954 520 431 683
Intergovernmental revenues 23,975 21,083 17,557 17,392 14,625 15,289 16,865 12,579 13,229 14,980
Charges for services 5,722 5,830 3,827 3,558 3,880 3,427 3,946 4,116 3,329 4,757
Fines, forfeits, and penalties 906 1,495 1,573 1,557 1,632 1,357 1,407 1,444 1,416 1,321
Investment and rental income 2,319 2,155 2,029 2,025 1,389 1,264 817 923 922 1,312
Contributions and donations 818 282 1,003 689
Miscellaneous revenue 1,116 538 1,078 813 799 1,093 1,762 822
Total revenues 62,246 58,652 51,404 50,106 46,547 45,764 48,538 43,793 44,605 48,587
Expenditures:
Current:
General government 9,499 9,360 9,151 9,019 8,522 8,820 7,667 7,666 8,431 9,545
Public protection 30,201 28,821 26,646 27,093 26,282 25,249 24,489 24,466 24,716 23,979
Public works 4,608 4,070 4,508 4,393 4,532 4,174 3,715 4,383 4,657 5,842
Community development 1,651 1,601 1,226 1,192 1,111 1,037 969 1,013 1,341 2,006
Library 1,153 1,153 1,311 1,268 1,411 1,381 1,357 1,322 1,500 1,673
Parks and recreation 2,378 2,369 2,145 2,299 2,370 2,254 4,127 4,180 3,776 3,826
Capital outlay 11,592 13,117 9,842 7,652 6,271 2,961 9,377 5,108 6,791 4,207
Debt service:
Interest 858 847 845 851 483 1,039 1,081 1,110 1,139 1,170
Principal payments 1,240 260 245 630 752 725 789 898
Advance refunding escrow 1,689
Total expenditures 63,180 61,598 55,674 53,767 52,916 47,545 53,534 49,973 53,140 53,146
Excess (deficiency) of revenues
over (under) expenditures (934) (2,946) (4,270) (3,661) (6,369) (1,781) (4,996) (6,180) (8,535) (4,559)
(Continued)
124
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS (continued)
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Other financing sources (uses):
Transfers in 11,723 13,310 15,599 11,596
Transfers out (7,672) (8,716) (8,036) (6,804)
Proceeds from sale of land
Refunding bonds issued
Payment to refunded bond escrow agent
Capital lease proceeds 563
Loan proceeds 468
12,546 14,486
(6,864) (11,348)
20,103
(19, 848)
11,881 11,173 10,609 7,058
(5,224) (5,305) (5,242) (3,365)
98
Total other financing sources (uses) 4,051 5,625 7,563 4,792
5,937 3,138
6,755 5,868
5,367 3,693
Special item- sale of parkland 630
Net change in fund balances 3,117 2,679 3,293 1,131 (432) 1,357 2,389 (312) (3,168) (866)
Fund balances, beginning of year 27,115 24,436 21,143 20,012 20,444 19,087 16,698 17,010 20,178 21,044
Fund balances, end of year $ 30,232 $ 27,115 $ 24,436 $ 21,143 $ 20,012 $ 20,444 $ 19,087 $ 16,698 $ 17,010 $ 20,178
Debt service as a percentage of noncapital expenditures
Source: City of Lodi Finance Services Division
4.1% 2.3%
1.8% 1.8%
125
5.2% 3.7%
4.2% 4.1%
4.2% 4.2%
City of Lodi
TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
Change
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2008 to
2017
Property $ 9,744 $ 9,151 $ 8,810 $ 8,314 $ 7,955 $ 7,861 $ 8,285 $ 8,342 $ 8,887 $ 9,210 6%
Sales and Use 11,750 11,809 10,625 10,111 9,350 9,246 8,663 6,873 8,028 9,296 26%
Transient Occupancy 849 783 666 594 545 486 426 382 405 396 114%
Franchise 1,915 1,990 1,942 1,862 1,758 1,734 1,715 1,681 1,415 976 96%
Documentary Transfer 240 223 159 155 120 91 95 117 114 125 92%
Motor Vehicle in Lieu 4,904 4,572 4,533 4,289 4,143 4,151 4,317 4,377 4,784 4,797 2%
Public Protection 378 365 362 341 325 295 250 267 296 338 12%
Business License 1,736 1,552 1,133 1,220 1,187 1,182 958 962 1,038 1,140 52%
In Lieu Franchise 7,131 7,082 7,033 6,977 6,977 6,977 6,977 6,977 6,942 8,362 -15%
Totals
$ 38,647 $ 37,527 $ 35,263 $ 33,863 $ 32,360 $ 32,023 $ 31,686 $ 29,978 $ 31,909 $ 34,640 12%
Note: General governmental tax revenues are included in taxes, licenses and permits, intergovernmental revenues and miscellaneous revenues.
Source: City of Lodi Financial Services Division
126
CITY OF LODI
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Secured roll $ 5,603,023 $ 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
Utility roll 2,300 3,490 3,490 3,490 2,382 2,382 2,423 2,423 2,031 2,035
Unsecured roll 254,946 250,160 257,856 230,827 233,398 226,651 270,600 270,315 263,648 258,687
Gross assessed value 5,860,269 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
Less exemptions (1) 334,485 331,562 326,833 324,439 327,783 314,448 321,138 332,701 265,154 243,259
Net assessed value $ 5,525,784 $ 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
Land $ 1,711,208 $ 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
Improvements 3,854,604 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
Personal property 294,457 309,861 338,312 321,741 300,290 301,180 323,003 312,792 281,915 289,770
Gross assessed value 5,860,269 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
Less exemptions (1) 334,485 331,562 326,833 324,439 327,783 314,448 321,138 332,701 265,154 243,259
Net assessed value $ 5,525,784 $ 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
Total Direct Tax Rate 1.00%
1.00%
1.00% 1.00%
1.00% 1.00%
(1) All exemptions (secured, utility, and unsecured rolls) are homeowners - $59,458 and other - $275,027 =$334,485
1.00% 1.00%
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
127
1.00% 1.00%
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
2017 1.0000 0.0551 0.0000 1.0551
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
Source: San Joaquin County Tax Collector
128
CITY OF LODI
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
(Dollar amounts in thousands)
Taxpayer
Fiscal Year
2017 2008
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 $ 151,223 1
Pacific Coast Producers 105,902 2
California Physicians Service Corp 54,978 3
Big Box Property 36,873 4
ConAgra/Cottage Bakery 35,072 5
Walmart 30,781 6
Winterfell Vintage 28,094 7
Costco 19,845 8
Archer Daniels Midland Co Corp 17,555 9
North American Specialty Products LLC 17,527 10
General Mills
Pacific Coast Producers Corp.
Parinehs Exchange 2004 LLC
Certainteed Corp
Dart Container Corp
Lodi Memorial Hospital Assn
Principal Secured Property Valuation 497,850
Other Secured Taxpayers 5,105,173
Exemptions relative to secured tax roll 327,605
Total Secured Property Valuation $ 5,275,418
Source: San Joaquin County Assessor's Office
2.867
2.007
1.042
0.699
0.665
0.583
0.533
0.376
0.333
0.332
$ 65,562 2 1.353
35,095 3 0.724
14,851 10 0.306
16,744 8 0.346
144,376 1 2.981
27,092 4 0.559
19,704 5 0.407
19,700 6 0.407
18,395 7 0.380
16,164 9 0.334
9.437 377,683 7.797
96.773 4,692,105 96.869
6.210 226,041 4.666
100.000 % $ 4,843,747 100.000 %
129
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
2017 $ 9,821 $ 9,821 100.0% $ 9,821 100.0%
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%
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
130
CITY OF LODI
ELECTRICITY SOLD BY TYPE OF CUSTOMER
LAST TEN FISCAL YEARS
Type of Customer Billed Accounts
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
City Accounts 217 213 212 207 204 195 197 189 189 187
Contract Large Industrial 5
Contract Medium Industrial 1
Contract Small Industrial 1
Domestic Residential 21,917 22,497 22,393 22,623 22,541 22,361 22,360 22,525 22,506 22,510
Domestic Mobile Home Park 13 13 13 13 13 13 13 13 13 13
Dusk to Dawn 85 85 88 89 88 92 89 89 92 92
Large Commercial 355 348 337 339 344 336 350 357 377 380
Large Industrial 35 44 41 39 40 38 40 39 37 32
Medium Industrial 10 11 12 11 11 9 9 9 8 8
Residental Low Income 2,669 2,688 2,798 2,788 2,582 2,531 2,258 2,193 1,847 1,943
Small Commerical 3,434 3,416 3,332 3,367 3,358 3,340 3,324 3,280 3,249 3,199
Small Industrial 10 11 7 8 9 11 11 10 10 9
Total 28,745 29,326 29,233 29,484 29,190 28,926 28,651 28,704 28,328 28,380
Source: City of Lodi Financial Services Division
131
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
Fiscal Lease Revenue Loan
Year Bonds Payable
2017 $ 18,753 $
2016 19,637
2015 19,950
2014 20,004
2013 20,058
2012 21,025
2011 21,655
2010 22,265
2009 22,855
2008 23,420
Total Certificates of Notes/ Total Total
Notes Capital Governmental Participation and Loan Business -type Primary Percent of Personal Per
Payable Lease Activities Revenue Bonds Payable Activities Govemment Income (1) Capita (1)
378 $ 487 $ 19,618 $ 138,193 $ 1,300 $ 139,493 $ 159,111 6.41 % $ 2,484
468 245 562 20,912 143,417 1,500 144,917 165,829 7.49 2,603
245 20,195 149,767 149,767 169,962 7.67 2,667
245 20,249 157,297 157,297 177,546 8.45 2,789
245 20,303 167,743 167,743 188,046 9.63 2,988
245 21,270 173,241 173,241 194,511 10.07 3,096
245 21,900 178,827 178,827 200,727 10.67 3,213
245 22,510 144,165 1,409 145,574 168,084 8.49 2,645
245 23,100 148,529 1,585 150,114 173,214 8.81 2,736
94 245 23,759 140,640 1,755 142,395 166,154 8.99 2,622
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
132
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
2017 $ 18,753 $ 18,753 0.3 % $ 292.74
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
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
133
CITY OF LODI
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
FISCAL YEAR
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Assessed valuation (1) $ 5,585,242 $ 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
Conversion percentage 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
Adjusted assessed valuation 1,396,311 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
Debt limit percentage 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%
Debt Limit 209,447 201,647 193,225 182,540 176,622 176,954 184,730 187,326 196,034 193,473
Total net debt applicable to limit 18,753 19,637 19,950 20,004 20,048 19,333 19,963 20,573 21,163 21,728
Legal debt margin $ 190,694 $ 182,010 $ 173,275 $ 162,536 $ 156,574 $ 157,621 $ 164,767 $ 166,753 $ 174,871 $ 171,745
Total net debt applicable to the limit as
a percent of debt limit 9.0% 9.7% 10.3% 11.0% 11.4% 10.9% 10.8% 11.0% 10.8% 11.2%
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 $275,027 deducted for 2017.
Source: San Joaquin County Auditor -Controller's Office
134
CITY OF LODI
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
June 30, 2017
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 - Loan payable
City of Lodi -Capital lease
SUBTOTAL DIRECT DEBT
TOTAL DIRECT AND OVERLAPPING DEBT(2)
Total Debt
$ 126,614,970
161, 955, 000
124,925,000
24,735,000
18, 752, 590
378,011
486,959
2016-17 Gross Assessed Valuation $ 5,860,269,000
2016-17 Population 64,058
DEBT RATIOS Total Gross Debt $ 106,962,501 $
Percentage City's Share
Applicable (1) of Debt
7.695 % $
35.945
8.402
35.945
100.00
100.00
100.00
9,743,022
58,214,725
10,496,199
8,890,996
87, 344, 941
18,752,590
378,011
486,959
19,617,560
$ 106,962,501
Per Capita Value
1,670 1.83%
(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
135
CITY OF LODI
PLEDGED -REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Dollars amounts in thousands)
Less:
Adjusted Adjusted Net
Fiscal Annual Operating Available Debt Service
Year Revenues (1) Expenses (2) Revenue Principal Interest Total Coverage
Electric Revenue Certificates of Participation
2017 $ 67,815 $ 52,259 $ 15,556 $ 2,390 $ 2,898 $ 5,288 2.94
2016 70,440 51,205 19,235 5,195 3,094 8,289 2.32
2015 67,132 52,116 15,016 4,960 3,358 8,318 1.81
2014 67,144 50,349 16,795 4,750 3,606 8,356 2.01
2013 63,974 51,209 12,765 4,575 3,839 8,414 1.52
2012 65,220 50,164 15,056 3,270 4,021 7,291 2.07
2011 63,307 48,397 14,910 3,080 4,152 7,232 2.06
2010 70,288 49,949 20,339 2,920 4,274 7,194 2.83
2009 75,195 58,370 16,825 5,240 4,720 9,960 1.69
2008 74,923 54,437 20,486 2,305 3,961 6,266 3.27
Source: City of Lodi Financial Services Division
136
(continued)
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
2017 $ 16,707 $ 10,128 $ 6,579 $ 1,575 $ 1,492 $ 3,067 2.15
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
Source: City of Lodi Financial Services Division
137
(continued)
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 (3) Total Coverage
Water Revenue Bonds
2017 $ 13,844 $ 7,733 $ 6,111 $ 915 $ 1,393 $ 2,308 2.65
2016 13,025 6,801 6,224 870 1,482 2,352 2.65
2015 13,370 5,815 7,555 850 1,506 2,356 3.21
2014 14,166 6,835 7,331 825 1,530 2,355 3.11
2013 13,367 6,899 6,468 800 1,535 2,335 2.77
2012 13,275 5,392 7,883 775 1,530 2,305 3.42
2011 14,051 5,662 8,389 1,409 874 2,283 3.67
Includes all nongeneral obligation long-term debt backed by pledged revenues.
Details regarding the City's outstanding debt can be found in Note 8 to the basic 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
138
CITY OF LODI
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Population
Fiscal Square City Percent
Year Miles Population Change
2017 13.98 64,058 0.7%
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%
San Joaquin
County
Population
746,868
733,383
719,511
710,731
698,414
695,750
690,899
694,293
689,480
685,600
Population
Percent
of County
8.6%
8.6%
8.9%
9.0%
9.0%
9.0%
9.0%
9.2%
9.2%
9.2%
Rank in Size
of California
Cities
139
139
138
135
137
136
135
136
135
133
Personal Per
Income Capita
(millions of Personal
dollars) Income
$ 2,483 $ 38,769
2,284 36,136
2,215 34,755
2,102 33,024
1,952 31,013
1,931 30,732
1,882 30,132
1,980 31,166
1,967 31,071
1,849 29,178
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
6.9%
7.8%
7.8%
8.8%
9.0%
11.3%
13.4%
13.3%
12.2%
7.1%
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.
139
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 3,026 1 11.58 % 3,301 1 12.64 %
Pacific Coast Producers 1,630 2 6.24 1,200 3 4.59
Lodi Health Hospital 1,384 3 5.30 1,360 2 5.21
Blue Shield 858 4 3.28 850 4 3.25
Walmart 487 5 1.86 285 9 1.09
TreeHouse 485 6 1.86
City of Lodi 393 7 1.51 460 7 1.76
Farmers & Merchants Bank 335 8 1.28 336 8 1.29
Costco 237 9 0.91
Target 142 10 0.54 165 10 0.63
Cottage Bakery 700 5 2.68
General Mills 478 6 1.83
Total 8,977 34.36 9,135 34.97
140
CITY OF LODI
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY DEPARTMENT - LAST TEN FISCAL YEARS
Fiscal Year
2017 2016 2015 2014 2013 2012 2011* 2010 2009 2008
Department:
Administration 10 10 10 10 10 12 13 31 32 19
Community Development 11 11 11 9 9 9 13 13 13 14
Electric 51 49 44 43 40 40 41 51 50 48
Financial Services 24 26 39
Fire 54 54 57 53 53 54 64 64 64 64
Internal Services 32 31 31 31 31 29 35
Library 7 10 11 10 11 12 14 14 14 14
Parks and Recreation 31 31 30
Parks, Recreation and Cultural Services 24 26 28 27 27 29 37
Police 103 102 107 104 104 103 125 125 125 125
Public Works 101 100 97 95 92 93 98 102 102 107
Total
393 393 396 382 377 381 440 455 457 460
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
141
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT
LAST TEN FISCAL YEARS
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
General government:
Building permits issued 2,447 2,482 2,404 2,404 1,578 1,461 2,022 1,709 1,754 1,851
Business tax certificates:
Retail sales and service 2,443 2,288 2,281 2,281 2,526 2,485 2,530 2,406 2,496 2,442
Manufacturers and processors 76 78 23 23 78 77 76 80 82 78
Professions 308 316 323 323 362 364 371 373 380 398
Miscellaneous contractors, peddlers, delivery vehicles, etc. 949 1,268 1,256 1,256 1,456 1,362 1,357 1,312 1,411 1,063
Utility billing/customer service:
Number of customers 26,018 26,034 25,912 25,912 23,927 23,761 23,575 25,573 25,555 25,555
Energy sales (KWH) 425,410,574 437,246,335 438,780,911 438,780,911 435,822,465 435,655,731 421,130,329 434,200,987 452,075,554 450,407,709
Peak demand (MVV) 129 124 134 134 122 116 116 120 134 134
Public safety:
Police:
Major reported crimes 2,025 3,068 2,268 2,268 2,643 3,573 2,885 2,377 2,454 2,993
Total arrests 4,226 4,083 3,690 3,690 3,825 4,350 4,410 4,238 4,646 5,590
Dispatched calls for service 37,866 40,390 35,992 35,992 50,124 46,756 52,061 51,870 56,391 55,911
Fire:
Interior structure fire calls 51 33 32 32 67 57 56 47 69 88
Non-structural fire calls 177 154 143 143 209 163 121 123 123 160
Hazardous materials calls 90 73 65 65 58 41 69 70 70 35
Emergency medical calls 3,572 3,123 3,418 3,418 3,882 3,820 3,752 3,494 3,364 3,420
Total emergency calls 5,869 5,238 3,666 3,666 5,823 5,620 5,753 5,385 5,392 5,346
Total number of units dispatched 7,225 7,430 5,727 5,727 7,954 7,855 7,835 7,390 7,038 7,841
Public works:
Miles of streets resurfaced 6 6 6 6 6 6 63 6 5
Fleet job orders completed 2,129 2,162 2,500 2,500 1,803 1,953 2,810 3,303 3,921 3,520
Trees planted 135 135 135 135 131 131 96 130
Water utility:
New connections 205 69 8 8 87 8 17 17 35
Water main breaks 2 3 16 16 14 10 8 6 4 4
Wastewater utility:
Average daily treatment (million gal/day) 4.65MG 4.6MG 4.6MG 4.6MG 5.10MG 5.5MG 6.5MG 6.5MG 6.5MG 6.5MG
Library:
Registered borrowers 64,742 60,362. 58,824 58,824 51,594 47,147 43,927 39,199 53,530 48,969
Circulation of library materials 187,853 199,096 197,673 197,673 215,293 217,742 248,250 251,967 219,711 280,466
Reference, research and informational questions answered 9,695 11,109 13,189 13,189 16,270 14,463 16,234 16,501 15,379 19,257
Annual attendance at libraries 231,602 245,936 224,762 222,148 210,279 207,123 n/a 296,793
Number of programs offered 764 456 432 432 407 432 388 344 316 348
Annual attendance at programs 23,960 15,452 12,888 12,888 14,443 12,993 13,133 10,676 8,765 11,242
Public access computer usage 31,205 34,071 34,071 41,180 45,871 47,428 58,990 52,124 38,388 38,999
(Continued)
142
Community center.
Community center bookings
Instructional classes
Registered students
Yearly attendance
Parks and recreation:
After school program registration (number of participants/sites)
Adult sports
Program/Participation
Programs offered
Partnerships
Tournaments
Youth/Teen sports
Program attendance
Programs offered
Aquatics
Program attendance
Number of programs
Source, City of Lodi
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT - (continued)
LAST TEN FISCAL YEARS
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
597 758 794 769 718 698 926 789 475 494
554 518 500 553 580 307 536 583 507 530
3,010 2,744 2,586 3,269 2,819 3,713 3,438 3,525 3,316 5,550
13,925 13,925 13,925 13,925 13,925 13,925 14,217 13,355 14,050 14,410
1,617/17 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
14,887 14,673 15,285 2,082 2,246 2,420 2,528 2,528 2,284 28,000
14 15 18 17 16 15 16 16 13 11
2 2 2 2 2 3 5 51 3
6 8 10 5 6 12 7 7 10 10
3,496 3,652 3,621 3,672 3,643 3,889 4,251 4251 215,000 195,000
18 18 18 18 19 24 16 16 24 14
28,974 28,195 28,009 27,731 23,414 34,366 32,566 32,566 2,433 50,000
14 14 15 13 13 25 13 13 6 3
143
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT
LAST TEN FISCAL YEARS
General government:
Total square miles
Public safety:
Police:
Fire:
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
13.98 13.98
13.98 13.98
13.98 13.98
13.92 13.92
13.92 13.92
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 23 25 25
Motorcycles and scooters 7 7 7 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 37 38 40
Facilities:
Fire stations 4 4 4 4 4 4 4 4 4 4
Vehicles:
Fire engines 7 6 6 6 6 6 7 7 7 6
Trucks/Trailers 8 6 6 6 6 5 5 6 6 9
Other automobiles 5 11 11 11 11 9 8 10 12 7
Public works:
Miles of streets 202 202 202 202 202 202 202 202 202 200
Miles of alley ways 16 16 16 16 16 16 16 16 16 16
Traffic signals 68 67 67 67 67 67 67 62 62 64
Street lights 7,270 7,270 7,270 7,270 7,270 7,270 7,270 7,270 7,270 7,270
(Continued)
144
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT - (continued)
LAST TEN FISCAL YEARS
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Parks and recreation:
Parks and squares 26 26 26 26 26 26 26 26 26 23
Park acreage 361 361 361 361 361 373 373 373 371 275
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 4 3
Baseball/softball diamonds 20 20 20 20 20 24 24 24 24 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 20 22 25 25 25 22
Ballpark 24 24 24 24 24 24 24 24 24 26
Soccer Field 22 22 22 22 22 22 22 22 22 22
Football Field 1 1 1 1 1 1 1 1 1 3
Handball/Basketball/Volleyball Courts/Bocce Courts 12 12 12 12 12 10 10 10 10 8
Horseshoe Pits 8 8 8 8 8 8 6 6 6 7
Library:
Central library 1 1 1 1 1 1 1 1 1 1
Total items in collection 125,730 130,657 119,554 148,287 149,243 135,113 134,804 130,530 135,197 142,885
Integrated library system 1 1 1 1 1 1 1 1 1 1
Microfilm readers 0 0 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 3 2 2 2 2 2 2 2 0
Electric utility:
Overhead lines 12kv (miles) 117 117 117 117 133 133 133 130 130 130
Overhead lines 60kv (miles) 14 14 14 14 14 14 13 13 13 13
Underground lines (miles) 123 121 118 115 159 159 157 155 154 153
(Continued)
145
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT - (continued)
LAST TEN FISCAL YEARS
Fiscal Year
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Water utility:
Water main lines 243 240 236 236 236 236 236 237 233 233
Water storage capacity (gallons) 4,100,000 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
Water wells 28 28 28 28 28 27 27 26 26 26
Water reservoirs 3 3 3 3 3 2 2 2 2 2
Water Treatment Plant 1 1
Wastewater utility:
Wastewater main lines (miles) 196 196 196 196 196 196 196 191 194 194
Treatment capacity 8.5MG 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 9
Stormwater utility:
Stormwater main drain lines (miles) 128 126 124 124 124 124 124 124 161 119
Stormwater pump stations 16 16 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 2,450 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
146
SINGLE AUDIT REPORTS
Certified
Public
Accountants
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
The Honorable Members of City Council
City of Lodi, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the City of Lodi, California (City), as of and for the year ended June
30, 2017, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon
dated December 12, 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 S Street, Suite 300
Sacramento, CA 95816
147
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.
.. ,5 giki / c Yc ff / 4)
Sacramento, California
December 12, 2017
148
Certified
Public
Accountants
Independent Auditor's Report on Compliance for the Major Federal Program and Report 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
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, 2017. 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 Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance). Those standards and the 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, 2017.
Macias Gini & O'Connell LLP
3000 S Street, Suite 300
Sacramento, CA 95816
149
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 riot 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.
otCiaLS giti (
Sacramento, California
December 12, 2017
'coital LCA'
150
CITY OF LODI
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2017
Federal Grantor
Pass-through Grantor or Direct
Program or Cluster Title
U.S. Department of Housing and Urban Development
Direct:
Community Development Block Grants/Entitlement Grants
Community Development Block Grants/Entitlement Grants
Community Development Block Grants/Entitlement Grants
Community Development Block Grants/Entitlement Grants
Total Community Development Block Grants/Entitlement Grants
U.S. Department of Transportation
Direct:
Federal Transit - Formula Grants
Passed through California Department of Transportation:
Highway Planning and Construction
Passed through California Office of Traffic Safety:
Minimum Penalties for Repeat Offenders for Driving While Intoxicated
Minimum Penalties for Repeat Offenders for Driving While Intoxicated
Passed through City of Stockton:
Minimum Penalties for Repeat Offenders for Driving While Intoxicated
Total Minimum Penalties for Repeat Offenders for Driving While Intoxicated
Total U.S. Department of Transportation
U.S. Environmental Protection Agency
Direct:
Brownfields Assessment and Cleanup Cooperative Agreements
Total Expenditures of Federal Awards
Federal
CFDA
Number
14.218
14.218
14.218
14.218
Grant/Project
Number
Passed
Through to Federal
Subrecipients Expenditures
B -13 -MC -06-0038 $
B -14 -MC -06-0038
B -15 -MC -06-0038
B -16 -MC -06-0038
20.507 CA -2017-102
20.205 STPL-5154(040)
20.608
20.608
20.608
66.818
PT1644
PT1762
AL 1642
99T30201
See accompanying notes to the schedule of expenditures of federal awards.
151
$ 48,275
346,485
- 316,035
76,158 161,935
76,158
872,730
1,320,000
367,664
26,892
50,145
1,757
78,794
1,766,458
32,604
$ 76,158 $ 2,671,792
CITY OF LODI
Notes to the Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2017
NOTE 1 — GENERAL
The accompanying Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2017, 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.
152
CITY OF LODI
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2017
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
Community Development Block Grants/Entitlement Grants
CFDA Number
14.218
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, 2017
Section II — Financial Statement Findings
None
Section III — Federal Award Findings and Questioned Costs
None
CITY OF LODI
Summary Schedule of Prior Audit Findings
For the Year Ended June 30, 2017
There were no audit findings reported for the year ended June 30, 2016.
(This page intentionally left blank.)
CONTINUING DISCLOSURES
UNAUDITED
CONTINUING DISCLOSURE REQUIREMENTS FOR THE CITY OF LODI, THE LODI PUBLIC IMPROVEMENT CORPORATION
AND THE LODI PUBLIC FINANCING AUTHORITY
Fiscal Year 2016-17
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.
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, 2017, none of the specified events have occurred.
Further, there is no knowledge on the part of the City Council, officers or employees of the City of any impending Significant Event that would
require disclosure under the provisions of the Certificates.
157
Table 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)
Capacity
Available
(MW)(1)(4)
Actual Energy % of Total
(MWh) Energy
7.2 34,137 7.7%
11.5
26.2
9.5
19.6
26.6
37.3
83,576
95,710
1,721
1,836
28,554
195,483
19.0
21.7
0.4
0.4
6.5
44.3
Total 137.8 441,017(4) 100.00%
Total Capacity and Energy Sold at Wholesale N/A 3,355
City System Requirement for Retail Load(5) 128.7 437,662
(1) Source: NCPA Annual Resource Adequacy Filings.
(2) Entitlements, firm allocations and contracts.
(3) Includes participation in Astoria 2 Solar Project, Seattle City Light Exchange, and NCPA contracts.
(4) Includes supply from exchanges and line losses.
(5) NCPA All Resources Bill.
Table 2 A table showing the average number of customers, sales, revenues and demand for the past five fiscal years.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
CUSTOMER SALES, REVENUE AND DEMAND
Fiscal Years Ended June 30,
2013 2014 2015 2016 2017
Number of Customers:
Residential 22,369 22,547 22,355 22,459 22,870
Commercial 2,902 2,898 3,264 3,296 3,071
Industrial 39 38 40 44 41
Other 246 250 253 213 170
Total Customers 25,556 25,733 25,912 26,012 26,152
Kilowatt -Hour (kWh) Sales:
Residential 151,814,834 148,762,783 148,950,428 151,137,940 146,192,111
Commercial 140,733,500 146,176,148 149,380,413 150,522,357 149,882,241
Industrial 131,473,405 130,333,102 128,814,673 125,018,845 118,900,040
Other 11,800,726 12,022,160 11,635,397 10,567,193 10,436,182
Total kWh sales 435,822,465 437,294,193 438,780,911 437,246,335 425,410,574
Revenues from Sale of Energy:
Residential $ 25,377,978 $ 25,270,075 $ 25,165,194 $ 26,525,558 $ 26,021,916
Commercial 21,816,149 23,127,603 23,780,354 24,693,195 24,432,075
Industrial 14,173,951 14,381,296 14,418,921 14,469,390 13,852,860
Other 1,861,567 1,913,833 1,871,470 1,819,036 1,540,730
Total Revenues from
Sale of Energy: $ 63,229,645 $ 64,692,808 $ 65,235,939 $ 67,507,179 $ 65,847,581
Peak Demand (MW) 123.3 128.7 134.0 124.3 128.7
Excludes revenues from California Energy Commission Tax.
Sources: City of Lodi Audited Annual Financial Statements and Customer Information System Reports (Lodi Electric).
159
Table 3 A table showing the outstanding debt of joint powers agencies in which Lodi participates.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
OUTSTANDING DEBT OF JOINT POWERS AGENCIES
(Dollar Amounts in Millions)
NCPA
Geothermal Project Three
Hydroelectric Project
Capital Facilities Project Unit One
Lodi Energy Center Project
TOTAL*
Outstanding
Debt(1)
Lodi's
Participation(2)
Lodi's Share of
Outstanding
Debt
$ 32.8 10.28% $ 3.4
343.8 10.60(3) 36.4
37.4 39.50 14.8
230.4 17.03 39.2
$ 644.4 14.56% $ 93.8
Columns may not add to totals due to independent rounding.
(1) Source: NCPA. 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) Participation obligation combined percentage of Generation Entitlement Share adjusted for other NCPA member opt -out and subsequent defeasance.
160
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 2013
Actual 2014 Actual 2015
Actual 2016 Actual 2017
Operating Revenues
Rate Revenue $ 61,888 $ 61,837 $ 63,370 $ 65,265 $ 64,114
ECA Revenue 1,341 2,856 1,867 2,242 1,734
Other Revenue 745 2,451 1,895 2,933 1,967
Total Operating Revenue 63,974 67,144 67,132 70,440 67,815
Operating Expenses
Purchased Power 39,191 37,303 38,512 37,788 35,650
Non -Power Costs (2) 12,018 13,046 13,604 13,417 16,609
Total Operating Expenses 51,209 50,349 52,116 51,205 52,259
Net Revenue Available for Debt Service 12,765 16,795 15,016 19,235 15,556
Parity Debt Service
2002 C & D, 2008 A Bonds 8,414 8,356 8,318 8,289 5,288
Total Net Debt Service 8,414 8,356 8,318 8,289 5,288
Debt Service Coverage 1.52 2.01 1.81 2.32 2.94
Remaining Revenue Available for Other Purposes 4,351 8,439 6,698 10,946 10,268
Non -Operating Revenue/Expenses
Greenhouse gas allowance 2,018 453 2,323 1,571 2,370
In -Lieu Transfer to General Fund (6,977) (6,977) (7,033) (7,082) (7,131)
Net Cash Flow Before Capital Expenditures (608) 1,915 1,988 5,435 5,507
Beginning General Operating Reserve 30,384 31,082 33,850 36,583 42,891
Changes in General Operating Reserve 1,306 942 745 873 1,253
Net Deposit/Withdrawal from Reserve (608) 1,915 1,988 5,435 5,507
Ending General Operating Reserve $ 31,082 $ 33,939 $ 36,583 $ 42,891 $ 49,651
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.
161
Table 5 A table showing Lodi Electric Utility Department Rate Changes since November 1996.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
RATE CHANGES
Effective Date Percent Change
July 2017
November 2016
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: Lodi Electric Utility
Average 2% increase across all rate classes
Electric Vehicle rate restructure replacing minimum charge with customer charge; aligning energy charges
with residential rates
City rate restructure replacing minimum charge with customer charge
Residential rate restructure replacing minimum charge with customer charge; reduction to 3 energy tiers
Mobile home park rate restructure replacing minimum charge with customer charge; reduction to 3 energy
tiers; reduction of pad discount
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)
162
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 statements 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, 2017, 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 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 2016-17 Service Charge Revenue by User Type
% of FY 16/17
Service Charge
2013 2014 2015 2016 2017 Revenue
21,959 22,076 21,920 21,700 21,891 78%
1,851 1,851 1,876 1,909 2,001 22%
23,810 23,927 23,796 23,609 23,892 100%
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 2016-17
Percentage of Total Annual Service
User Type Charge Revenue
Single Family
Residential 60%
Multiple Family Residential 18%
Commercial/Industrial 22%
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
Lodi Unified School District
City of Lodi
Pacific Coast Producers
Blue Shield of California
Casa de Lodi
Lodi Memorial Hospital
Archer Daniels Midland
Miller Packing Company
Tokay Villa Apartments
Total top ten users
Total System
City of Lodi
Wastewater System
Largest Users by Service Charge Revenues
Fiscal Year 2016-17
Service Charge
Type of Business Revenue
Specialty bakery, frozen dough $
K-12, adult education
Government
Private label fruit canning
Health insurance
Mobile home park
Health care
Agricultural processor
Hot dog producer
Apartment complex
483,808
336,671
68,305
49,932
43,854
40,749
38,112
35,876
34,419
25,947
Percentage of
Total
Annual Service
Charge Revenue
3.20%
2.23
.45
.33
.29
.27
.25
.24
.23
.17
1,157,603 7.66%
$ 15,106,432 100.00%
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,
2013) 2014 2015) 2016)
For Residential Users (flat rate per month):
1 Bedroom $25.83 $26.48 $27.22 $27.90
2 Bedrooms 34.44 35.30 36.29 37.20
3 Bedrooms 43.05 44.13 45.36 46.49
4 Bedrooms 51.66 52.95 54.43 55.79
5 Bedrooms 60.27 61.78 63.51 65.09
6 Bedrooms . 68.88 70.60 72.58 74.39
7 Bedrooms . 77.49 79.43 81.65 83.69
For Residential Users
(usage based rate per month):
Monthly Usage Charge ($/CCF) (1) $2.68 $2.75 $2.82 $2.89
3/4" Meter Charge 23.52 24.11 24.78 25.40
For Commercial/Industrial Users:
Moderate Strength (annual per Sewage Service Unit (SSU) $413.28 $423.61 $423.61 $446.40
High Strength:
Flow (annual per MG) 3,487.41 3,574.60 3,674.68 3,730.00
BOD (annual per 1,000 lbs.) 575.51 589.90 606.41 616.00
SS (annual per 1,000 lbs.) 359.85 368.85 379.17 385.00
Grease Interceptor/Septic Holding Tank Waste within
City Limits (per 1,000 gal.) 304.72 312.34 321.00 326.00
Septic Holding Tank Waste Outside City Limits (per
1,000 gal.) 646.89 663.06 482.00 489.00
Disposal to Storm Drain System (per MG) 320.09 328.09 328.09
Disposal to Industrial System:
Flow (per MG, annual basis)
BOD (per 1,000 lbs., annual basis)
Winery Waste (per 1,000 gallons) 301.04 301.04 301.00 306.00
(1) Winter water usage determined as average monthly usage from
December through February
167
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 2012-13 through 2016-17
2012-13
2013-14 2014-15
2015-16 2016-17
Operating Revenues
Charges for Services $13,747,216 $14,305,093 $14,714,123 $14,959,756 $15,106,432
Non -Operating Revenues
Interest Income 301,347 427,308 356,590 460,862 510,079
Rent
Other 256,868 453,798 774,007 1,520,966 1,091,001
Total System Revenues 14,305,431 15,186,199 15,884,720 16,941,404 16,707,512
Operating Expenses
Personnel services 3,089,930 3,215,190 3,116,493 2,923,572 4,501,156
Supplies, Materials and services 1,900,710 2,145,745 2,541,909 3,622,348 4,828,494
Utilities 683,509 642,508 676,838 691,632 798,452
Total Operating Expenses 5,674,148 6,003,443 6,335,240 7,237,552 10,128,102
System Net Revenues 8,631,283 9,182,756 9,509,480 9,703,852 6,579,410
Parity Debt Service
2003 Installment Payments 381,122 3,280,111
2004 Installment Payments 1,705,213 98,321 98,325 98,325 98,326
2007 Installment Payments 1,598,950 1,603,550 1,602,850 1,606,850 547,613
2012 Installment Payments 374,519 1,921,700 1,970,350 1,961,100 1,947,100
2016 Installment Payments 474,109
Total Parity Debt Service 4,059,804 6,903,682 3,671,525 3,666,275 3,067,148
Debt Service Coverage 2.13 1.33 2.59 2.65 2.15
Non -Operating Expenses
Transfers (In)/Out 1,451,480 1,318,000 1,068,000 1,068,000 1,101,000
Total Non -Operating Expenses 1,451,480 1,318,000 1,068,000 1,068,000 1,101,000
Net Cashflow Before Capital Expenditures $3,119,999 $961,072 $4,769,955 $4,969,578 $2,430,502
Source: Financial Services Division
168
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 2013 2014 2015 2016 2017
Operating $6.5 $4.3 $5.6 $9.7 $13
Rate Stabilization 0.5 0.5 0.5 0.5 0.5
Impact Mitigation 0.6 0.7 0.8 1.0 1.7
Capital 6.8 8.7 6.9 4.5 1.0
Total $14.4 $14.2 $13.8 $15.7 $16.2
25% Operating
Reserve Goal $1.6 $1.6 $1.5 $2.4 $3.3
Source: City of Lodi
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.
169
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 statements 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, 2017, 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 92 of this Comprehensive
Annual Financial Report.
170
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 FISCAL YEARS
2013 2014 2015 2016 2017
Revenues:
Taxes $ 23,022,370 23,718,396 24,630,745 25,327,203 26,490,919
Licenses and permits 62,582 83,420 87,908 92,702 86,844
Intergovernmental revenues 10,531,871 11,319,708 12,642,107 12,887,767 12,830,329
Charges for services 1,105,178 1,025,851 1,482,448 1,437,440 1,852,855
Fines, forfeits and penalties 1,628,870 1,552,531 1,573,071 1,494,758 906,563
Investment and rental income 979,100 1,548,787 1,546,845 1,554,198 1,734,773
Miscellaneous revenue 393,299 352,331 290,951 349,153 319,373
Total revenues 37,723,270 39,601,024 42,254,075 43,143,221 44,221,656
Expenditures:
Current:
General government 5,943,192 6,482,226 6,490,907 6,824,884 6,926,368
Public protection 25,920,654 26,470,110 26,388,172 28,612,592 29,969,781
Public works 1,555,833 1,554,939 1,882,250 1,866,277 1,698,518
Library 1,410,657 1,267,850 1,311,367 1,152,901 1,152,721
Total expenditures 34,830,336 35,775,125 36,072,696 38,456,654 39,747,388
Excess of revenues over expenditures 2,892,934 3,825,899 6,181,379 4,686,567 4,474,268
Other financing sources (uses):
Transfers in 5,367,990 3,952,000 3,952,000 3,952,000 3,952,000
Transfers out (6,584,665) (6,269,351) (7,128,586) (7,869,927) (6,705,104)
Total other financing sources (uses) (1,216,675) (2,317,351) (3,176,586) (3,917,927) (2,753,104)
Net change in fund balance 1,676,259 1,508,548 3,004,793 768,640 1,721,164
Fund balance, beginning of year 6,288,953 7,965,212 9,473,760 12,478,553 13,247,193
Fund balance, end of year $ 7,965,212.1 9,473,760 12,478,553 13,247,193 14,968,357
171
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 128.
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 131.
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 130.
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, 2017
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
OA
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
172
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 statements 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, 2017, 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.
173
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
2016 1,821 2,991,610 21,683 9,500,400
Source: City of Lodi
Table 2 A table showing the largest users by service charge revenue for the most recent fiscal year.
User
City of Lodi
Lodi Unified School District
Pacific Coast Producers
Lodi Memorial Hospital
Treehouse Foods
Casa de Lodi
All State Packers
Sweetener Products
Lodi Wine & Business Center
Tokay Villa
Subtotal Top Ten Users
TOTAL SYSTEM
City of Lodi
Water System
Largest Users by Service Charge Revenues
Fiscal Year 2016-17
Type of Business
Government
K-12, adult education
Private label fruit canning
Health care
Specialty bakery, frozen dough
Mobile home park
Crop preparation
Sweetener distribution
Tourism center
Apartment complex
175
Service Charge
Revenue
466,320
332,689
149,494
65,816
64,019
28,725
20,044
19,333
18,050
13,931
$ 1,178,421
Percentage of
Total
Annual Service
Charge Revenue
3.74%
2.67
1.20
0.53
0.51
0.23
0.16
0.16
0.14
0.11
9.45%
$ 12,473,676 100.00%
Table 3 A table showing selected rates effective January 1, 2017.
CITY OF LODI
WATER SYSTEM
Selected Rates Effective January 1, 2017
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.
176
$32.84
$39.44
$47.27
$21.87
$34.34
$65.25
$102.52
$0.97
$1.29
$1.60
$1.15
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 2012-13 through 2016-17
2012-13
2013-14 2014-15
2015-16 2016-17
Gross Revenues
Water Sales (1) $ 12,441,039 $ 12,756,076 $ 12,722,619 $ 12,161,186 $ 12,473,676
Investment Earnings 67,982 118,799 87,211 166,791 132,364
Water Impact Mitigation Fees 2,529 60,000 20,299 332,765 206,847
Meter Retrofit Installation Charges 585,965 405,677 56,052 76,103 19,255
Other Revenues (2) 269,335 825,314 483,710 287,839 1,011,756
Total Gross Revenues 13,366,850 14,165,866 13,369,891 13,024,684 13,843,898
Operating and Maintenance Expenses
Personnel Services 2,272,568 2,392,611 2,316,305 2,515,542 2,998,026
Supplies, Materials and Services 2,882,547 3,014,227 2,139,014 3,008,676 3,468,229
Utilities 683,635 648,233 579,774 496,316 453,488
Administrative Overhead 1,060,120 780,000 780,000 780,000 813,000
Total 0 & M Expenses 6,898,870 6,835,071 5,815,093 6,800,534 7,732,743
Net Revenue Available for Debt Service 6,467,980 7,330,795 7,554,798 6,224,150 6,111,155
Debt Service
2010 Bonds (3) 2,335,360 2,355,230 2,356,141 2,351,580 2,308,061
Total Net Debt Service 2,335,360 2,355,230 2,356,141 2,351,580 2,308,061
Debt Service Coverage (4)
Debt Service Coverage 2.77 3.11 3.21 2.65 2.65
Debt Service Coverage
(excluding impact mitigation fees) 2.77 3.09 3.20 2.51 2.56
Net Remaining Revenues Available for Capital 4,132,620 4,975,565 5,198,657 3,872,570 3,803,094
177
Capital Improvement Projects
Meter Retrofit Program (5)
Other Water System Improvements (6)
Total Capital Improvement Projects
Net Change in Reserve
Water Enterprise Fund (7)
Beginning Cash Balance
Ending Cash Balance
(1)
(2)
(3)
(4)
(5)
(6)
(7)
6,536,687
1,144, 363
7,681,050
(3,548,430)
12,465,350
$ 9,044,659
6,891,350
380,675
7,272,025
(2,296,460)
9,044,659
$ 7,027,567 $
4,841,932
267,902
5,109,834
88,823
7,027,567
6,755,522 $
1,606,734 4,589,636
9,097 330,380
1,615,831 4,920,016
2,256,739 (1,116,922)
6,755,522 6,270,786
6,270,786 $ 4,558,222
Water sales reflect Council -adopted rate increases effective January 1, 2015.
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.
Reflects total debt service for the 2010 Water Revenue Bonds net of the 35% interest rate subsidy for the Series 2010B bonds.
Coverage calculated based on Net Revenues divided by net Debt Service and Net Revenues less mitigation fees divided by Net Debt
Service.
Annual capital costs of transition to water meters. Program expected to be completed in Fiscal Year 2017-18.
Excludes costs of the Project to be funded from proceeds of the Series 2010 Bonds.
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
178
CITY OF LODI, CALIFORNIA
Report to City Council
For the Year Ended June 30, 2017
Certified
Public
Accountants
CITY OF LODI, CALIFORNIA
Report to City Council
For the Year Ended June 30, 2017
Table of Contents
Page(s)
Transmittal Letter 1
Required Communications 2-4
Current Year Recommendations 5-7
Status of Prior Year Recommendation 8
Schedule of Uncorrected Misstatements 9
Certified
Public
Accountants
City Council
City of Lodi, California
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, 2017, and have issued our report thereon dated December 12, 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 engagement letter dated May 22, 2017. 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, 2017, 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, 2017, we identified conditions that we believe warrant
communication to the City Council. The Current Year Recommendations section of this report
summarizes those conditions and our recommendations to address them. We also 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 December 12, 2017, on the basic financial statements of the City.
We have also noted certain matters that we reported to management of the City in a separate letter dated
December 12, 2017.
This information is intended solely for the information and use of 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.
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.
(0Caed Z1P'
Sacramento, California
December 12, 2017
Macias Gini & O'Connell LLP
3000 S 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, 2017
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note (1) to the financial statements. No new
accounting policies were adopted and the application of existing policies was not changed during the year
ended June 30, 2017. 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 an actuarial valuation
performed in accordance with GASB Statement No. 45, Accounting and Financial Reporting by
Employers for Postemployment Benefits Other Than Pensions.
We evaluated the key factors and assumptions used to develop these estimates in determining that they
are reasonable in relation to the financial statements taken as a whole.
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.
2
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications (Continued)
For the Year Ended June 30, 2017
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.
The attached schedule summarizes uncorrected misstatements of the financial statements. Management
has determined that their effects are immaterial, both individually and in the aggregate, to the financial
statements taken as a whole. 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 December 12, 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.
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
3
CITY OF LODI, CALIFORNIA
Report to City Council
Required Communications (Continued)
For the Year Ended June 30, 2017
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
Current Year Recommendations
For the Year Ended June 30, 2017
INFORMATION TECHNOLOGY (IT)
Conditions
With recent changes in the City's Information Technology system, we performed an Information
Technology General Controls (ITGC) review during this year's audit and observed the following
conditions:
1. Although a Change Control policy is in place, the City has no formal mechanisms in place to
manage, document, and track system changes. Furthermore, change documentation is not
maintained in one single repository for future reference.
2. The City does not have any formal IT logical security policies or procedures in place.
3. A formal disaster recovery plan has not been finalized.
4. IT strategic plans that are closely aligned with the City objectives have not been developed.
5. No risk assessments have been performed to date.
6. Per inquiry with management, although Service Organization Control (SOC) reports are obtained
from service providers, they are not reviewed and evaluated for potential impact on the City's
internal controls.
7. There is currently no IT security training in place as part of the employee new hire onboarding
and orientation process.
8. Although physical security controls are in place and the server room is locked and accessible
only via badge access, records for approved personnel access and sign -in sheets for visitors are
not maintained.
Recommendations
1. The City should implement stronger internal controls over IT Program Development and Change
Management in order to:
a. Provide reasonable assurance that only appropriately authorized, tested, and approved
changes are made to new applications or existing applications, interfaces, databases, and
operating systems that support key applications and IT dependent manual controls within
significant processes.
b. Provide reasonable assurance that data and program code integrity is maintained during
the migration process.
c. Provide reasonable assurance that data and program code migration to production is
operating effectively and the functionality of change is as intended.
The above control objectives should result in the implementation of controls such as:
- Maintaining production change approvals and documentation.
- Having a documented user requirements gathering process in place.
- Performing and documenting development testing.
- Documenting back -out plans for each production change prior to implementation.
- Performing and documenting user acceptance testing (UAT).
Ensuring segregation of duties (e.g. program developers are not authorized to make code
changes in production).
Documenting a formal emergency change process for system outages.
Documenting the process for failed changes.
Performing and documenting data conversion testing prior to any new system
implementation or major upgrade.
- Having a documented process in place for patches and security fixes.
- Establishing a change classification scheme with tiered/escalated approvals up to
including an executive steering or approval committee.
5
CITY OF LODI, CALIFORNIA
Report to City Council
Current Year Recommendations (Continued)
For the Year Ended June 30, 2017
2. The City should document and publish formal IT logical security policies and procedures,
including a formal user provisioning and de -provisioning policy, which outlines the City's
procedures relating to timely action to requesting, establishing, issuing, suspending, and closing
user accounts. Procedures should exist and be followed relating to ensuring access to City IT
resources and data are appropriately restricted, and unauthorized logical access controls should
be monitored. Additionally, the City IT department should implement an on-going user access
review process for all systems in scope. This should include formal reviews of all regular and
administrative/privileged user access to the City network, as well as access to the applications,
databases, and servers in scope.
3. The City should formalize a comprehensive Disaster Recovery Plan, including systematic
procedures for recovering disrupted systems and networks in order to resume normal operations.
The plan should identify critical IT systems and networks, prioritize their recovery time
objectives, and delineate the steps needed to restart, reconfigure, and recover them. The plan
should also include all the relevant supplier contacts, sources of expertise for recovering
disrupted systems, and a logical sequence of action steps to take for a smooth recovery.
4. The City should develop IT strategic plans that are closely aligned with the City's objectives.
5. The City should perform regular risk assessments in order to identify and react to risks arising
from internal and external sources.
6. The City should evaluate outside service providers to determine those who provide material
financial services that may impact controls. These evaluations should include a formal review of
the service providers' current Service Organization Control (SOC) reports to assess any
deviations noted and their impact to the City, and to evaluate any relevant complementary user
entity controls to determine if these are addressed by the City's internal controls.
7. The City should develop IT security training as part of the new hire orientation and onboarding
process in order to ensure City personnel possess and maintain adequate knowledge about IT
security issues and safeguards and using the City data resources in a responsible and secure
manner.
8. The City should maintain records for approved personnel access and sign -in sheets for visitors.
Furthermore, these records should be reviewed for appropriateness on a regular basis.
Management Response
In 2016-17, the City of Lodi IT made significant strides in developing and securing City IT assets and
data. In January to June 2017, a significant portion of the IT resources had been dedicated to engineering
a stable physical infrastructure ensuring the reduction of catastrophic network and system failure. IT had
implemented new security procedures for both the physical infrastructure as well as logical systems. The
City prioritized upgrading, stabilizing and securing physical infrastructure over logical systems in order
to ensure the platforms on which the logical systems reside where sustainable.
City IT is still actively researching different methodologies for disaster recovery programs. Further
development of a true disaster recovery system is prohibited by fiscal constraints. As part of the service
contract, the City does protect the financial system by contracting with Tyler Technologies for a cloud -
based disaster recovery solution. This provides full back up of the City's enterprise and financial data in
the event of a disaster.
IT recognizes the need to improve testing procedures for data continuity during software and system
upgrades. In August 2017, IT instituted a change management tracking software to help track significant
changes to enterprise application systems. In 2018, IT will work with users of the financial system to
create user acceptance testing procedures to validate changes to the City's financial systems. All results
6
CITY OF LODI, CALIFORNIA
Report to City Council
Current Year Recommendations (Continued)
For the Year Ended June 30, 2017
will be logged in the change management system. In addition, IT will craft policies to respond to failed
testing procedures and continually validate through user acceptance testing.
In 2016, IT had researched the need for external risk assessment agencies to assist with security testing of
all network and data systems. IT had determined at the time that an external risk assessment would be
most beneficial only after the upgrade of the physical infrastructure is complete. IT expects the network
upgrade to be completed by June of 2018.
An IT strategic plan has long been a task on the project list for IT. Competing projects and resources
have delayed the start of this development. IT staff are investigating the use of a third party consultant to
assist with the creation of the plan. Currently, fiscal constraints prohibit the use of a third party in this
fiscal calendar.
In June of 2017, IT and Human Resources staff started working on drafting a new network accessibility
and security policy. The policy would require training of both new and existing employees.
7
CITY OF LODI, CALIFORNIA
Report to City Council
Status of Prior Year Recommendation
For the Year Ended June 30, 2017
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
A formal disaster recovery plan has not been finalized (see current year recommendation item #3).
8
City of Lodi
For the Year Ended June 30, 2017
Schedule of Uncorrected Misstatements
No. Opinion Units
Account Debit Credit
1 Electric Utility Fund / Beginning Net Position $ 684,355
Business -type Activities Capital Assets - Machinery & Equipment (Contributed) $ 684,355
To reduce capital assets for contributed capital overstated in prior years.
2 WasteWater Fund / Capital Assets - Machinery & Equipment (Contributed) $ 439,127
Business -type Activities Beginning Net Position $ 439,127
To increase capital assets for contributed capital understated in prior years.
9
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, 2017
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
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, 2017. These
procedures, which were agreed to by City management as presented in the California Committee on
Municipal Accounting's 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. The sufficiency of these
procedures is solely the responsibility of City management. 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, 2016 to the annual adjustment amount, and compared the
resulting amount to the appropriations limit for the fiscal year ended June 30, 2017.
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 LIP
3000 S Street, Suite 300
Sacramento, CA 95816
Finding: No exceptions were noted as a result of this procedure.
1
www.mgocpa.com
4. We agreed the appropriations limit for the fiscal year ended June 30, 2016 presented in the
accompanying Appropriations Limit Worksheet to the appropriations limit for the fiscal year
ended June 30, 2016 adopted by the City Council.
Finding: No exceptions were noted as a result of this procedure.
This agreed-upon procedures engagement was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants. We were not engaged to and did
not conduct an examination or review, the objective of which would be the expression of an opinion or
conclusion, respectively, on the accompanying Appropriations Limit Worksheet. Accordingly, we do not
express such an opinion or conclusion. 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.
AcAts Oceimei L5)'
1
Sacramento, California
October 19, 2017
2
CITY OF LODI
Appropriations Limit Worksheet
For the Fiscal Year Ended June 30, 2017
Appropriation Limit for the fiscal year ended June. 30, 2016, as adopted
Adjustment factors:
Population factor, fiscal year ended June 30, 2017, as adopted
Inflation factor, fiscal year ended June 30, 2017, as adopted
Adjustment factor for the fiscal year ended June 30, 2017
Annual adjustment
Appropriation Limit for the fiscal year ended June 30, 2017, as adopted
3
$90,095,588
1.0071
1.0537
1.06118
5,512,162
$95,607,750
Fiscal Year 2016/17
Presentation of the CAFR
Presented By: Andrew Keys, Deputy City Manager
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
— Total Fund Balance of $14,968,357
— Unassigned Fund Balance of $11,447,985
(25.89%)
• $601,631 is library fund balance
• $2.6 million greater than the adopted budget
• % of General Fund revenues for 2015/16
— Fully funds Economic and Catastrophic Reserves (8% each)
— Per December 6, 2017, adopted Pension Stabilization Policy all
excess goes to the Pension Stabilization Fund
Pension Stabilization Fund
• December 6, 2017 policy provides General
Fund Reserves above 16% are invested in
pensions.
— Other funds contributed based on FY 2017/18
pension obligations
• Funding deposited into PARS Trust Fund that
can only be spent on Pension costs.
• Contributions to be made are shown on the
following slide.
PSF Investments
General Fund
$3,367,909
Library
32,578
PRCS
105,899
Community Development
59,020
Streets
54,683
Electric Utility
376,750
Water 134,563
Wastewater
134,563
Transit 16,659
Fleet
Total PSF Investments
Status of City's Financial Position
Highlights of Financial Records
• General Fund Budget to Actual Variances
• Revenues $1.25 million over projection
Source
Over/(Under) Target
Engineering Fees
420,587
Secured Property Tax 247,045
Sales Tax 223,897
Business License Tax 217,739
Transient Occupancy Tax 198,735
• Expenses $1.33 million under budget
Function Over/(Under) Budget
General Government (336,588)
Police (731,036)
Fire (336,588)
Total
6
(1,330,611)
Net Pension Liability
— Total Net Pension Liability -$118,020,550
• Governmental -$95,864,664 up by $14.7 million
• Enterprise -$22,155,886 up by $5 million
— Total Net OPEB obligation -$8,939,061
• Up $1.4 million
Change in Accounting
— There were no changes in accounting from
previous years.
Single Audit
• No questioned costs
• No material weaknesses in internal controls
Management Letter
• Review of City's Internal controls — New Findings
• With recent changes in the City's Information Technology, we performed an Information
Technology General Controls (ITGC) review during this year's audit and observed the
following conditions:
City should improve its IT controls over system changes.
• Improved process has been established, implementation in progress.
IT strategic plan needs updating.
• Staffing resources have been insufficient internally given other priorities. Third party
consultants are currently cost prohibitive.
City should perform citywide risk assessment.
• IT is exploring options but it has been cost prohibitive to date
City performed an audit but it needs formal acknowledgement from staff.
• Completed during audit process
City should create IT security training for new employee orientation.
• Training program under development
City needs to establish access history logs for IT infrastructure.
• Logs now in place
• Prior year findings
— A formal disaster recovery plan has not been finalized.
• City has disaster recovery plan for its data but the infrastructure portion is
currently cost prohibitive 10
QUESTIONS?