HomeMy WebLinkAboutAgenda Report - February 6, 2019 H-02CITY OF LODI
COUNCIL COMMUNICATION
AGENDA ITEM
N -2
AGENDA TITLE: Receive and File City's Comprehensive Annual Financial Report (Fiscal Year
2017/18) by The Pun Group
MEETING DATE: February 6, 2019
PREPARED BY: Accounting Manager
RECOMMENDED ACTION:
Receive and file the following reports and financial statements
submitted by The Pun Group, LLP and the Internal Services
Department for Fiscal Year 2017/18:
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 compiled with
all agreements and covenants to obtain grant funds and debt financing. The Pun Group, LLP issued an
"unqualified opinion." Ken Pun, Managing Partner of the Pun Group, LLP 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 25th year. A copy of the GFOA
certificate is included in the 2017/18 financial reports.
FISCAL IMPACT
By law and good management practice, the City's financial records are
audited by independent auditors according to Generally Accepted Auditing
Standards. Well-maintained financial records are the cornerstone by which
the City fulfills its fiduciary responsibilities to the public.
FUNDING AVAILABLE: Not applicable.
Melissa Munoz, Accoun
g Manager
Andrew Keys, Deputy City Manager
APPROVED:
-S eph-rk.Sch -bauer, City Manager
CITY OF LODI, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Year Ended June 30, 2018
MARK CHANDLER, MAYOR
DOUG KUEHNE, MAYOR PRO TEM
ALAN NAKANISHI, COUNCILMEMBER
BOB JOHNSON, COUNCILMEMBER
JOANNE MOUNCE, COUNCILMEMBER
STEVE SCHWABAUER, CITY MANAGER
Prepared by the Financial Services Division
Melissa Munoz, Accounting Manager
Robin Xiang, Supervising Accountant
Harron Akbar, Accountant
INTRODUCTORY SECTION
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2018
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents
Letter of Transmittal III
Certificate of Achievement for Excellence in Financial Reporting xi
Organization Chart of the City of Lodi xii
Directory of Officials and Advisory Bodies xiii
FINANCIAL SECTION
Independent Auditors' Report 1
MANAGEMENT'S DISCUSSION AND ANALYSIS 5
BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements:
Statement of Net Position 19
Statement of Activities 20
Fund Financial Statements: 24
Balance Sheet — Governmental Funds 28
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 29
Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds 30
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances 31
of Governmental Funds to the Statement of Activities
Statement of Net Position — Proprietary Funds 33
Statement of Revenues, Expenses, and Changes in Net Position — Proprietary Funds 35
Statement of Cash Flows — Proprietary Funds 37
Statement of Fiduciary Net Position — Fiduciary Funds 39
Statement of Change in Fiduciary Net Position - Private -Purpose Trust Funds 40
Notes to Basic Financial Statements 43
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in Net Pension Liability and Related Ratios - Miscellaneous Plan 86
Schedule of Changes in Net Pension Liability and Related Ratios - Safety Plan 87
Schedule of Pension Contributions 88
Schedule of Funding Progress — OPEB Plan 89
Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — General Fund 90
Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Streets Fund 91
Note to the Required Supplementary Information 92
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Combining Balance Sheet — Nonmajor Governmental Funds 96
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds 97
Nonmajor Governmental Funds - Special Revenue Funds 100
Combining Balance Sheet — Nonmajor Governmental Funds — Special Revenue Funds 101
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds — Special Revenue Funds 102
Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Nonmajor Governmental Funds — Special Revenue Funds:
Parks, Recreation, and Community Services Fund 105
Public Safety Fund 106
Community Development Fund 107
Transportation Fund 108
HOME Program and Community Development Block Grants Fund 109
Nonmajor Governmental Funds - Capital Project Funds 112
Combining Balance Sheet — Nonmajor Governmental Funds — Capital Project Funds 113
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds — Capital Project Funds 115
Internal Service Funds 118
Combining Statement of Net Position - Internal Service Funds 119
Combining Statement of Revenues, Expenses, and Changes in Net Position — Internal Service Funds 120
Combining Statement of Cash Flows - Internal Service Funds 121
Combining Statement of Fiduciary Net Position - Private -Purpose Trust Funds 124
Combining Statement of Changes in Fiduciary Net Position - Private -Purpose Trust Funds 125
Statement of Changes in Assets and Liabilities - Agency Fund 126
CITY OF LODI
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2018
TABLE OF CONTENTS - continued
STATISTICAL SECTION (UNAUDITED)
Government -wide information:
Net Position by Component - Last Ten Fiscal Years 130
Changes in Net Position - Last Ten Fiscal Years 131
Fund information:
Fund Balances, Governmental Funds - Last Ten Fiscal Years 133
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 134
Tax Revenues by Source, Governmental Funds - Last Ten Fiscal Years 135
Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 136
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 137
Principal Property Taxpayers -Current Year and Nine Years Ago 138
Property Tax Levies and Collections - Last Ten Fiscal Years 139
Electricity Sold by Type of Customer - Last Ten Fiscal Years 140
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 142
Ratios of General Bonded Debt Outstanding- Last Ten Fiscal Years 144
Legal Debt Margin Information - Last Ten Fiscal Years 145
Direct and Overlapping Governmental Activities Debt 147
Pledged -Revenue Coverage - Last Ten Fiscal Years 148
Demographic and Economic Statistics - Last Ten Fiscal Years 149
Principal Employers - Current Year and Nine Years Ago 150
Full -Time Equivalent City Government Employees By Department - Last Ten Fiscal Years 151
Operating Indicators by Function/Program/Department - Last Ten Fiscal Years 153
Capital Asset Statistics by Function/Program/Department - Last Ten Fiscal Years 155
SINGLE AUDIT REPORTS
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of SA - 1
Financial Statements Performed in Accordance With Government Auditing Standards
Independent Auditor's Report on Compliance for the Major Federal Program and Report on Internal Control Over Compliance SA - 3
Required by the Uniform Guidance
Schedule of Expenditures of Federal Awards SA - 7
Notes to the Schedule of Expenditures of Federal Awards SA - 8
Schedule of Findings and Questioned Costs SA - 9
Summary Schedule of Prior Audit Findings SA - 12
CONTINUING DISCLOSURES (UNAUDITED)
Annual Report for Electric Utility 158
Annual Report for Wastewater Utility 163
Annual Report for the Lodi Public Financing Authority 170
Annual Report for Water Utility 173
CITY COUNCIL
MARK CHANDLER, Mayor
DOUG KUEHNE,
Mayor Pro Tempore
COUNCILMEMBERS:
ALAN NAKANISHI
BOB JOHNSON
JOANNE MOUNCE
January 17, 2019
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, 2018, 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, 2018, 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 by district by its voters for four-year terms, with no
term limits. Elections are held in November of even -numbered years. Each year the Mayor and Mayor
Pro -Tempore are chosen by the members of the City Council. The Mayor presides at Council meetings
and acts as the ceremonial head of the City, the Mayor Pro Tempore serves as Mayor in his or her
absence. The City Manager is responsible for carrying out the policies and ordinances of the City
Council, for appointing department heads, and overseeing the operations of the City. The City Manager,
City Attorney and the City Clerk are appointed by the City Council.
The City provides a wide range of municipal services including public 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).
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Several municipal services are provided through other government agencies, private companies or public
utility companies, including:
Number of
Facilities
Elementary and Secondary Schools 30
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 at approximately 67,000 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 approximately 10 to 150 employees and
produce a wide variety of products, services and commodities.
The City is growing. 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 has completed construction on some buildings and begun renting units. Full build out of the market
rate complex along with an age restricted apartment complex is expected in the coming year. 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.
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. In December 2017, the City approved a Pension Stabilization Funding Policy that
requires unassigned reserves in excess of the General Fund target be invested at Public Agency
Retirement System (PARS) in an IRS Section 115 irrevocable trust known as a Pension Rate
Stabilization Program. Non General Funds must contribute their proportional share to the trust as well.
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.
The City of Lodi has worked hard in recent years to protect key measures of quality of life that residents
tell us they value — safe neighborhoods, adequate emergency response, decent roads and more.
Residents desire the City to maintain or increase current levels of service while also being fiscally
responsible. In order to do so, Measure L, a 1/2 cent sales tax measure, was filed for the November 6,
2018 ballot, and passed with a 58.70% approval The additional sales tax revenue will go to maintain and
protect the services resident's value the most, including maintaining neighborhood police patrols and
gang violence interventions to help reduce crime; improve emergency 911 rapid response times by
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restoring firefighter and adding police positions; fix potholes and maintain city streets; repair/upgrade Lodi
Lake Park and our trail system, and maintain recreation facilities/programs; provide homelessness
solutions, including both intervention services and enforcement. The sales tax measure is projected to
bring in approximately $5.4 million in additional general revenues to the City. 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
In addition to Measure L, the City continues its commitment to promote 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 2018, steady progress toward buildout and occupancy of the new
retail development has occurred and that is expected to continue into 2019.
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 and 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
2017-18. The following projects were recently completed, are underway and will see significant progress,
or be completed in 2019.
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. The construction cost to
complete this project was $15.1 million and was mostly funded by State and Federal grants. This project
was accepted by Council on June 6, 2018.
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 should complete construction and a new age restricted apartment
complex should open in 2018.
Hotel Development
Two hotel developments that present significant opportunity for economic development and new tax
revenue are underway. The 95 room Candlewood Inn and Suites is currently under construction and is
expected to be completed in late 2019. The 72 room Fairfield Inn and Suites is currently in building plan
review with construction possible in 2019.
Infill Development
The new 34 lane Lodi Bowling Alley is currently in building review with construction possible in 2019.
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 16,000 parcels over an eleven 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 2020-
21. To date, approximately 15,300 meters have been installed. Estimated cost for the complete program
is $42.5 million.
Henry Glaves, Jr. Park Playground
In August 2018, Parks, Recreation and Cultural Services staff completed the replacement of the
playground at Henry Glaves, Jr. Park. The old playground at the park was well over twenty years old and
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had far exceeded its useful life. This was the first City funded replacement of any playground equipment
in Lodi in twenty four years.
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 2017-18, 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
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 2018, the target for the
Electric enterprise fund working capital is $23.3 million for fiscal year 2017-18. The goals allow for
variations from year-to-year to account for economic and fiscal changes. The General Fund maintained
an unassigned fund balance of $9,736,786, or 21.50% of revenues at the end of fiscal year 2017-18.
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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 2017-18, the
City's appropriations subject to limit were $39,885,778 and the appropriation limit was $105,753,512,
leaving appropriations at $65,867,734 below the limit.
Debt Administration
At June 30, 2018, the City had outstanding Certificates of Participation and Revenue Bonds of
$142,227,294. These liabilities are discussed in Note 8 of the Basic Financial Statements and
summarized below.
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.
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.
On December 1, 2017, the City issued $7,762,794 Installment Purchase Agreement, refunding the
Certificates of Participation, 2007 A (2007 COP).
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On June 13, 2018 the City issued $41,610,000 Electric System Revenue Refunding Bonds (2018 Bonds)
to allow the City prepay and cause the immediate defeasance of the outstanding $55,785,000 Certificates
of Participation (Electric System Revenue Certifications of Participation 2008 Series A).
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.
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 2017-18 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, 2018, the Insurance Fund had a
net position of $5,722,710.
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 The Pun Group 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, 2017. 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-five consecutive years. We believe our current report continues to
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conform to the Certificate of Achievement program requirements and we are submitting it to GFOA this
year.
ACKNOWLEDGMENTS
As always the professionalism, dedication and efficiency of the Financial Services Division Accounting
staff made it possible for the timely preparation of this report and are to be commended. I would also like
to personally thank Melissa Munoz, Accounting 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,
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, 2017
P7,444:ct
Executive Director/CEO
xi
City of Lodi
Citizens
City Council
Library
Board
Library
City Attorney
City Manager
City Clerk
Boards and
Commissions
Deputy City
Manager/Internal
Services Director
Parks, Rec. &
Cultural
Services
Community
Development
Electric Utility
Public Works
Fire
Police
Budget/
Treasury
Division
xii
Financial
Services
Division
Human
Resources
Division
Information
Systems
Division
DIRECTORY OF OFFICIALS AND ADVISORY BODIES
CITY COUNCIL
Mark Chandler
Doug Kuehne
Alan Nakanishi
Bob Johnson
JoAnne Mounce
ADVISORY BODIES
Planning Commission
Library Board
Recreation Commission
Site Plan and Architectural Review Committee
PRINCIPAL ADMINSTRATIVE OFFICERS
Steve Schwabauer
Andrew Keys
Janice Magdich
Jennifer Ferraiolo
Anwan Baker
Gene Stoddart
Jeff Hood
Charles Swimley
Elizabeth Kirkley
Steve Schwabauer
Tod Patterson
Mayor
Mayor Pro Tempore
Council Member
Council Member
Council Member
Lodi Improvement Committee
Lodi Arts Commission
Youth Commission
Lodi Senior Citizens' Commission
City Manager
Deputy City Manager
City Attorney
City Clerk
Library Services Director
Fire Chief
Parks, Recreation &
Cultural Services Director
Public Works Director
Electric Utility Director
Community Development Director
Police Chief
FINANCIAL SECTION
The Financial Section is comprised of the Independent Auditor's Report, Management's
Discussion and Analysis, Basic Financial Statements, including the notes, Required
Supplementary Information, and Supplementary Information which includes Combining
and Individual Fund Statements and Schedules.
TPUHE
N GROUP
ACCOUNTANTS & ADVISORS
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and Members of the City Council
of the City of Lodi
Lodi, California
Report on 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 (the "City"), as of and
for the year ended June 30, 2018, 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.
Auditors' 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 of 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 City'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 City'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.
2121 North California Blvd., Suite 290,Walnut Creek, California 94596
Tel: 925-974-3394 • Fax: 949-777-8850
www.pungroup.com
To the Honorable Mayor and Members of the City Council
of the City of Lodi
Lodi, California
Page 2
Opinions
In our opinion, based on our audit, 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, 2018, and the respective changes in financial position,
and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Emphasis of a Matter
Implementation of GASB Statement No. 75
As discussed in Note 14 to the financial statements, the City implemented Governmental Accounting Standards Board
("GASB") Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions.
The adoption of this standard required retrospective application of previously reported net position as of July 1, 2017
as described in Note 16 to the financial statements. In addition, the net other postemployment benefit (OPEB) liability
is reported in the Statement of Net Position in the amount of $33,275,362 as of the measurement date. Net OPEB
liability is calculated by actuaries using estimates and actuarial techniques from an actuarial valuation as of
June 30, 2017, the measurement date. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion
and Analysis, Budgetary Comparison Schedules, Schedules of Changes in Net Pension Liability and Related Ratios,
Schedules of Plan Contributions — Pension, and the Schedule of Changes in the Net OPEB Liability and Related Ratios
on pages 5 through 15 and 92 through 97 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 Nonmajor Fund Financial
Statements and Budgetary Comparison Schedules, and Statistical Section, are presented for purposes of additional
analysis and are not a required part of the basic financial statements.
The Combining and Individual Nonmajor Fund Financial Statements and Budgetary Comparison Schedules 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.
To the Honorable Mayor and Members of the City Council
of the City of Lodi
Lodi, California
Page 3
Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements
and certain additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in the United
States of America. In our opinion, the Combining and Individual Nonmajor Fund Financial Statements and Budgetary
Comparison Schedules are fairly stated in all material respects in relation to the basic financial statements as a whole.
The Introductory and Statistical Sections have not been subjected to the auditing procedures applied in the audit of the
basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 17, 2019, 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.
/Z./ /1-4i-gt/
Walnut Creek, California
January 17, 2019
This page intentionally left blank.
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, 2018. Amounts for the year ended
June 30, 2017 were audited by other auditors. Certain amounts have been reclassified to conform to current
year presentation
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 $189,486,514 (net position). Of this amount,
$92,950,701 is unrestricted deficit.
• The City's total net position decreased by $15,570,504 in fiscal year 2018, including the retroactive
effect of the implementation of GASB's statements 74 and 75 for other post -employment benefits
(OPEB) of $24,512,866.
• As of June 30, 2018, the City's governmental funds reported combined ending fund balances of
$34,830,746, an increase of $4,598,704 in comparison with the prior year. Of this amount,
$9,736,786 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 $18,767,905, of which
$9,736,786 is unassigned or 21.5% of total general fund revenues of $45,288,116.
• The City's total long-term liabilities increased by $22,308,923 or 6.56% 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.
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.
5
Fund Financial Statements
The fund financial statements are designed to report information about groupings of related accounts, which
are used to maintain control over resources that have been segregated for specific activities or objectives.
The City, like other state and local governments, uses fund accounting to ensure and demonstrate
compliance with finance -related legal requirements. All of the funds of the City can be divided into the
following three categories: Governmental funds, Proprietary funds, and Fiduciary funds.
Governmental Funds. Governmental funds are used to account for essentially the same functions reported
as governmental activities in the government -wide financial statements. Most of the City's basic services are
reported in governmental funds. These statements, however, focus on (1) how cash and other financial
assets can readily be converted to available resources and (2) the balances left at year-end that are available
for spending. Such information may be useful in determining financial resources available in the near future
to finance City programs.
Because the focus of governmental funds is narrower than that of the government -wide financial statements,
it is useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government -wide financial statements. By doing so, readers may better
understand the long-term impact of the government's near-term financing decisions. Both the governmental
funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund
balances provide a reconciliation to facilitate this comparison between governmental funds and governmental
activities.
The City maintains several individual governmental funds organized according to their type (general, special
revenue, capital projects and debt service). Information is presented separately in the governmental funds
balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund
balances for the General Fund and Streets Fund which are considered major funds. Data from the remaining
governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the
non -major governmental funds is provided in the form of combining statements elsewhere in this report.
The City adopts an annual budget for its General Fund and special revenue funds. Budgetary comparison
statements and schedules have been provided for the General Fund and the special revenue funds to
demonstrate compliance with this budget.
Proprietary Funds. Proprietary funds are generally used to account for services for which the City charges
customers, either outside customers, or internal units or departments of the City. Proprietary funds provide
the same type of information as shown in the government -wide financial statements, only in more detail. The
City maintains the following two types of proprietary funds:
• Enterprise funds are used to report the same functions presented as business -type activities in the
government -wide financial statements. The City uses enterprise funds to account for the operations
of the Electric, Wastewater, Water, all of which are considered to be major funds and the Transit
system, which is considered to be a non -major enterprise fund.
• 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
6
resources of these funds are not available to support the City's own programs, they are not reflected in the
government -wide financial statements. The accounting used for fiduciary funds is much like that used for
proprietary funds.
Notes to the Basic Financial Statements
The notes to the basic financial statements provide additional information that is essential to a full
understanding of the data provided in the government -wide and fund financial statements.
Required Supplementary Information
In addition to the basic financial statements and accompanying notes, this report presents certain required
supplementary information concerning changes in net pension liability and related ratios for the City's
Miscellaneous and Safety pension plans, the City's progress in funding its obligation to provide other
postemployment benefits (OPEB) to its employees, and schedules comparing budget to actual amounts in the
General Fund and Streets Fund.
Combining Statements
The combining statements in connection with non -major governmental funds, internal service funds and
fiduciary funds are presented immediately following the required supplementary information on pensions.
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
$189,487,959 at the close of the current fiscal year.
Assets:
Current and other assets
Capital assets
Total assets
City of Lodi's Net Assets
June 30, 2018
Governmental Business -type
Activities Activities
Total
2018 2017 2018 2017 2018 2017
$ 55, 518, 067 $ 53, 240, 280 $ 84, 853, 628 $ 87, 988, 072 $ 140, 371, 695 $ 141, 228, 352
137,566,325 136,432,091 244,153,401 241,202,789 381,719,726 377,634,880
193, 084, 392 189, 672, 371 329, 007, 029 329,190, 861 522, 091, 421 518, 863, 232
Deferred outflows of resources 21,122,850 17,821,434 12,136,938 11,812,878 33,259,788 29,634,312
Liabilities:
Net OPEB obligation 33,275,362 8,939,061 33,275,362 8,939,061
Net pension liability 110,076,401 95,864,664 25,851,930 22,155,886 135,928,331 118,020,550
Long-term liabilities outstanding 34,787,789 36,067,833 145,612,504 159,181,909 180,400,293 195,249,742
Other liabilities 5,031,822 8,215,297 7,670,762 9,572,998 12,702,584 17,788,295
Total liabilities 183,171,374 149,086,855 179,135,196 190,910,793 362,306,570 339,997,648
Deferred inflows of resources
3,444,447 2,828,147 113,678 614,731 3,558,125 3,442,878
Net position:
Invested in capital assets,
net of related debt 119,222,288 117,196,121 137,290,786 129,085,926 256,513,074 246,282,047
Restricted 25,903,963 15,545,059 20,178 3,929,138 25,924,141 19,474,197
Unrestricted (117,534,830) (77,162,377) 24,584,129 16,463,151 (92,950,701) (60,699,226)
Total net position $ 27,591,421 $ 55,578,803 $ 161,895,093 $ 149,478,215 $ 189,486,514 $ 205,057,018
7
Assets. The City's total assets increased by $3,228,189. The increase is primarily due to the following:
Governmental activities. Total assets for the governmental activities had an increase of $3,412,021 or
1.80%. Current and other assets increased by $2,277,787 primarily resulting from the increase in restricted
assets, $1,541,020 offset by the decrease in due from other governmental agencies, $1,340,138 and
accounts receivables $200,882. Other insignificant activities make up the difference.
Business -type activities. Total assets for the business -type activities had a decrease of $183,832 or 0.06%.
Current and other assets decreased by $3,134,444 primarily due to decreases in restricted investments of
$7,686,931. Capital assets increased by $2,950,612 largely from machinery and equipment. Other
insignificant activities contributed to the difference.
Deferred outflows of resources. The increase in deferred outflows of resources of $3,625,476 is primarily
from changes in various 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, 2017.
Liabilities. The City's total liabilities increased by $22,308,923 or 6.56%. The increase is primarily due to the
following:
Governmental activities. Total liabilities for the governmental activities had a significant increase of
$34,084,519 or 22.86%, primarily from the net pension liability and the net OPEB obligation.
Business -type activities. Total liabilities for the business -type activities decreased by $11,775,597 or 6.17%.
The decrease is primarily attributable to the refunding of principal on long-term debt offset by an increase in
pension liability. Other insignificant activities offset the difference.
Deferred inflows of resources. The increase in deferred inflows of resources of $115,247 represents
changes in various components related to the Miscellaneous and Safety Plans per the CaIPERS valuation
reports.
Net position. The City's overall financial position decreased during the fiscal year. The net position has
decreased by $15,570,504, or 7.59%
The largest portion ($256,513,074) of the City's net position reflects its investment in capital assets net of any
associated depreciation (e.g., land, buildings and improvements, machinery and equipment); less any related
debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide
services to citizens; consequently, these assets are not available for future spending. Although the City's
investment in its capital assets is reported net of related debt, it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets themselves cannot be used to
liquidate these liabilities.
An additional portion of the City's net position, $25,924,141 (13.68 %) 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 $92,950,701. 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 as a result of the City's outstanding pension and OPEB obligations.
8
Governmental Business -type
Activities Activities
Total
2018 2017 2018 2017 2018 2017
Revenues
Program revenues:
Charges for services $ 10,060,332 $ 9,775,083 $ 97,391,760 $ 93,647,907 $ 107,452,092 103,422,990
Operating grants and contributions 2,286,476 2,391,015 5,969,086 4,513,922 8,255,562 6,904,937
Capital grants and contributions 8,737,149 12,830,462 11,307,763 7,972,612 20,044,912 20,803,074
General revenues:
Property taxes 10,324,516 14,859,923 10,324,516 14,859,923
Sales taxes 11,333,228 11,749,969 11,333,228 11,749,969
Other taxes 17,097,961 11,684,301 17,097,961 11,684,301
Grants and contributions not restricted to
specific programs 600,573 27,575 - - 600,573 27,575
Other 1,244,101 978,931 2,960,323 3,601,914 4,204,424 4,580,845
Total revenues 61,684,336 64,297,259 117,628,932 109,736,355 179,313,268 174,033,614
Expenses
General government 11,600,548 9,650,423 11,600,548 9,650,423
Public protection 38,794,510 33,238,886 38,794,510 33,238,886
Public works 9,823, 848 10,614,158 9,823,848 10, 614,158
Community development 1,999,587 1,709,246 - 1,999,587 1,709,246
Library 1,752,595 1,252,743 - 1,752,595 1,252,743
Parks and recreation 4,672,015 3,663,013 - 4,672,015 3,663,013
Interest on long-term debt 768,077 824,021 - - 768,077 824,021
Eectric 67,943,086 62,790,906 67,943,086 62,790,906
Wastewater 16,008,272 16,317,764 16,008,272 16,317,764
Water - - 11,775,718 11,960,786 11,775,718 11,960,786
Transit - - 5,232,628 4,925,638 5,232,628 4,925,638
Total expenses 69,411,180 60,952,490 100,959,704 95,995,094 170,370,884 156,947,584
Changes in net position before transfers (7,726,844) 3,344,769 16,669,228 13,741,261 8,942,384 17,086,030
Transfers 4,252,350 4,051,000 (4,252,350) (4,051,000) - -
Changes in net position (3,474,494) 7,395,769 12,416,878 9,690,261 8,942,384 17,086,030
Net position at beginning of year, as previously reported 55,578,803 48,183,034 149,478,215 139,787,954 205,057,018 187,970,988
Adjustment related to OPER (24,512,888) - - - (24,512,888)
Net position at beginning of year, as restated 31,065,915 48,183,034 149,478,215 139,787,954 180,544,130 187,970,988
Net position at end of year $ 27,591,421 $ 55,578,803 $ 161,895,093 $ 149,478,215 $ 189,486,514 $ 205,057,018
Analysis of Changes in Net Position
Governmental activities
Net position for the governmental activities decreased by $3,474,494 in the current fiscal year, which is a
decrease of $10,870,263 relative to last year's increase of $7,395,769. The key factors impacting this
increase are:
Revenues decreased $2,612,923 from the prior fiscal year. Key elements of this decrease are:
• In addition to sales tax and property tax, the City receives other taxes, such as franchise tax,
business licenses and transient occupancy tax. These other taxes increased by $5,413,660 or
46.33% compared to prior year. The economy continues to show evidence of positive movement
particularly in the housing market. With continued growth in the housing market there has been an
increase in property tax revenues in the current year, businesses and tourism are also seeing an
increase.
• Property taxes went down by $4,535,407 from a reclassification of tax revenue. Previously Motor -in -
Lieu taxes were categorized with property taxes and are now reported in other taxes.
• Capital grants and contributions decreased by $4,093,313 from the prior fiscal year. The difference is
due to departments utilizing state and federal grants for projects.
9
Expenses for governmental functions totaled $69,411,180, an increase of $8,458,691 or 13.88% relative to
the prior fiscal year.
Transfers from business -type activities increased by $201,350, primarily due to contributions from the
enterprise funds for various capital projects.
Business -type activities
Business -type activities increased the City's net position by $12,416,878 in the current year, which is an
increase of $2,726,617 from last year's increase of $9,690,261. The key elements of this decrease are:
• Transfers to the governmental activities for various capital projects increase by $201,350 in
comparison to the prior year.
• Charges for services in the Electric Fund increased by $3,399,128, Wastewater Fund decreased by
$192,889, and the increase in the Water Fund by $531,347.
• Decrease in the greenhouse gas allowance (GHG) of $107,638 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.
• Capital contributions increased by $3,335,151 due to completion of Harney Lane Grade Separation
project which was previously included.
• Other revenues decreased by $641,592 primarily from investments.
• Bulk power cost increased by $2,168,952 compared to the prior year primarily attributable to overall
increase in generation and in third party increase in transmission, management services costs paid to
NCPA.
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 $34,830,746. This represents an increase of $4,598,704, an increase of $1,481,638 in comparison to the
prior year increase of $3,117,069, 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 $9,736,786 while total fund balance was $18,767,905. 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 24.06% and
46.38% of total General Fund expenditures, respectively.
The fund balance of the General Fund increased by $3,799,548 during the current fiscal year, an increase of
$2,078,384 from last year's increase of $1,721,164.
10
Key factors in this increase are:
• Total revenues increased by $1,066,460, primarily from the net increase in secured property tax of
$299,368, increase in vehicle license fee of $272,874; increase in late fees of $359,544, increase of
strike team reimbursement of $203,609 and, increase in business license tax of $61,948. Other
insignificant increases and decreases offset the difference.
• Total expenditures increased by $720,920 primarily from increase in salaries and wages for the
vacancies filled during the current year and the increases approved in labor negotiations, increases
related to OPEB and pensions. Other insignificant increases and decreases offset the difference.
Total fund balance of the Streets Funds was $6,397,152. Intergovernmental revenues of $7,641,630 offset by
capital expenditures of $5,712,335 were the largest components that resulted in the increase of $1,173,196 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 $10,000,373 Wastewater Fund was
$11,104,904, Water Fund was $(235,491), Transit Fund was, $3,714,342 and the Internal Services Funds
unrestricted net position was $(27,626,438).
Other factors concerning the finances of these funds are discussed in the City's business -type activities.
GENERAL FUND BUDGETARY HIGHLIGHTS
Differences between the original budget and the final budget in the General Fund were a net increase in
appropriations of $535,965. The increase in appropriations can be briefly summarized as follows:
• $532,780 increase in general government, $12,827 increase in public protection.
Significant differences between the final budget and the actual revenues and expenditures can be briefly
summarized as follows:
• Taxes — a favorable variance of $795,827 was due to positive variances in property tax, transient
occupancy tax ($66,828), business license tax ($179,687), sales and use tax $157,602, offset by a
negative variance in in -lieu of vehicle license fees ($20,307) and an unfavorable variance of $83,363
in fines, forfeits, and penalties.
• For expenditures, a favorable variance between the final budget and actual expenditures of
$2,671,936 was due to pension stabilization expense being recorded as restricted cash ($2,871,141)
and 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, 2018,
amounts to $381,719,726 (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 $4,084,846, a 1.08% increase (a 0.83% increase in governmental activities and 1.22% increase in
business -type activities) as shown in the table below.
11
Land
Construction in Progress
Buildings and Improvements
Machinery and Equipment
Vehicles
Infrastructure
Work of Art
Total
Governmental Activities
2018 2017
Business -type
Activities
Total
2018 2017 2018 2017
$ 24,947,834 $ 24,947,834 $ 5,535,718 $ 5,535,718 $ 30,483,552 $ 30,483,552
4,212,019 18, 416, 565 16, 901, 403 15, 409,186 21,113, 422 33, 825, 751
39, 099, 526 41, 234, 529 26, 637, 253 27, 924, 757 65, 736, 779 69,159, 286
2,078,972 1,166, 057 190, 875,150 187, 261, 550 192, 954,122 188,427, 607
2,607,087 2,694,344 4,203,877 5,071,578 6,810,964 7,765,922
64,315,980 47,667,855 64,315,980 47,667,855
304,907 304,907 304,907 304,907
$ 137,566,325 $ 136,432,091 $244,153,401 $ 241,202,789 $381,719,726 $ 377,634,880
A decrease 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 60-61 of this report.
Long-term debt
At the end of the current fiscal year, the City had total bonded debt outstanding of $142,900,403. Of this
amount, $17,838,760 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
$125,061,644 from the business -type activities consists of $33,113,405 for the Water Fund $43,656,795 for
the Wastewater Fund; and $48,291,443 for the Electric Fund.
The City's total bonded debt decreased by $14,152,481 during the current fiscal year.
Bond Rating
In April 2018, Moody's Investor Service assigned it 'A2' rating with a stable outlook to the City's electric utility
debt instruments given the utilities satisfactory financial performance, an improving service area economy and
a competitive electric rate structure, which is lower than the neighboring investor owned utility, Pacific Gas
and Electric Company.
In April 2018, Standard and Poor's Rating Services assigned its `A-' rating with a stable outlook to the City's
electric Utility debt instruments given the utilities improving rate competitiveness, good and consistent liquidity
and a renewable energy portfolio resource mix that is currently sufficient to meet state requirements through
2020.
Additional information on the City's long-term debt can be found in Note 7 on pages 61-65 of this report.
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 FY 2018/19 budgeted revenue, totaling
$51,300,380. The City added to its reserve balance again in FY 2017/18 and is projecting a balanced budget
in the General Fund in FY 2017/18. The City's General Fund reserves are healthy for now, but projected
CaIPERS cost of $7.1 million are anticipated to continue to grow to $13.5 million by 2024-25, for an 89%
increase over the forecast term; making it apparent that caution and being fiscally prudent will be required in
the coming years.
The General Fund continues to be of the greatest focus. It funds all of the core municipal services including
police, fire, administration, economic development, transfers to the parks and library funds and other essential
12
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 Deputy PRCS Director and eliminating the following full time equivalents: one ground worker, senior
administrative clerk, librarian, parks superintendent, and electrician. In addition the Finance Services Division
Manager position was re -classed into an Accounting Manager and a Revenue Manager position was added.
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 2018-19 budget involves balancing several critical issues: employee costs and retirement
contributions; capital programs; and combination of cost increases that were either a) imposed on the City by
external forces, or b) negotiated by the City with its bargaining groups.
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, 2017, actuarial report. Staff estimates that the City's
combined CaIPERS bill will increase from approximately $10 million per year in FY 2017-18 to between $16.5
million and $17.8 million by FY 2022-23 if 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 Solutions (PARS) at the close of FY 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 FY 2017-18 budgeting for additional monthly contributions from
the General Fund to the City's pension stabilization fund totaling $2,019,230.
3.) The City acted a third time in FY 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 FY 2017-18
budget. This practice was continued with the July 2018 payment that will be reflected in the
FY 2018-19 financial statements.
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 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
PERS 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 FY 2017-18 and another $1.3 million from
operations outside the General Fund. Based on the strong performance of the General Fund
in FY 2017-18, an additional $1.3 million from the General Fund and $0.5 million from
operations outside the General Fund will be contributed to the PSF in FY 2018-19 as required
by the policy.
Based on a combination of these actions, by the end of FY 2017-18, total funding in the PSF made is
estimated as follows: General Fund: $8.2 million; Other Funds $2.9 million.
Current labor agreements with all City bargaining units expired on December 31, 2017. Negotiations have
proceeded favorably, maintaining the tradition of strong labor-management relationships. The City has
negotiated with all units and has presented to Council for approval all agreements. The new agreements will
13
become effective in June 2019 or December 2019, depending on the bargaining unit. The final labor contract
was presented to Council in December 2018 bfor approval.
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.
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. Recently negotiated contracts include a 5% increase to the amount the City pays
towards an employee's health care premium. The new amount remains capped for the term of the
agreements.
A third cost increase that is a cause of concern is worker's compensation. The City is self-funded for worker's
compensation costs. Lodi's claim experience has ebbed and flowed since a spike in 2008/09. Current loss
experience is relatively level with costs trending upward with the settlement of old claims. The City has
funded its actuarial liability at 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 2018,
steady progress toward buildout and occupancy of the new retail development has occurred and that is
expected to continue into 2019.
Tourism continues to be a major driving factor of the local economy. Two hotel developments present
significant opportunity for economic development are underway. The Candlewood Inn and Suites and the
Fairfield Inn and Suites are currently in building review or active construction, with progress to be significant in
FY 2019. In addition, a developer is currently exploring options for an Extended Stay Motel 6.
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 saw unprecedented growth with 210 single family houses constructed in eight separate projects
including Rosegate 1, The Vine, Harvest Crossing, Villa Fiore and Orchard Lane. Current projections suggest
the City will see another 200 homes in 18/19 and another 156 multi -family units. The City's first market rate
apartment complex in over 25 years, had 80 units become occupied and 156 market rate units and 143 senior
living apartments begin construction in Reynolds Ranch. 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.
14
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 completed tenant improvements
at the former Plummer auto dealership/Calturas wine and beer center. 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
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BASIC FINANCIAL STATEMENTS
The Government -wide Financial Statements provide a broad overview of the City's
financial position and operating results. Information is grouped by governmental
activities or business -type activities.
The Fund Financial Statements report information about the City's Governmental
Funds, Proprietary Funds, and the Fiduciary Funds.
The notes have an integral role in disclosing information essential to the fair
presentation of the Basic Financial Statements.
GOVERNMENT -WIDE FINANCIAL STATEMENTS
City of Lodi
Statement of Net Position
June 30, 2018
ASSETS
Cash and investments
Accounts receivables (net)
Property tax receivable
Interest receivable
Due from other governmental agencies
Restricted assets
Advance receivable
Inventory
Other assets
Internal balances
Capital assets, net: Nondepreciable
Capital assets, net: Depreciable, net
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Related to pensions
Related to OPEB
Unamortized losses on defeasance
Total deferred outflows of resources
LIABILITIES
Accounts payable and accrued liabilities
Accrued salaries and wages
Accrued interest
Unearned revenue
Long term liabilities:
Due within one year
Due in more than one year
Other long-term obligations:
Net pension liability
Net OPEB liability
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Related to pensions
Related to OPEB
Total deferred inflows of resources
NET POSITION
Net investment in capital assets
Restricted
Unrestricted (deficit)
Total net position
The notes to financial statements are an integral part of this statement.
Primary Government
Governmental Activities
$
49,222,007
6,073,844
67,665
44,204
836,011
147,030
111,331
(984,025)
29,464,760
108,101,565
193,084,392
18,748,965
2,019,230
354,655
21,122,850
4,570,646
82,642
197,695
180,839
4,251,827
30,535,962
110,076,401
33,275,362
183,171,374
1,248,632
2,195,815
3,444,447
119,222,288
25,903,963
(117,534,830)
$ 27,591,421
19
Business -type Activities
$
Total
40,795,122 $
8,358,283
58,807
1,400,000
20,118,316
9,456,605
3,682,470
984,025
22,437,121
221,716,280
329,007,029
4,515,743
7,621,195
12,136,938
5,727,284
35,401
1,015,114
892,964
6,357,245
139,255,258
25,851,930
179,135,196
113,678
113,678
137,290,786
20,178
24,584,129
90,017,129
14,432,127
67,665
103,011
2,236,011
20,118,316
9,456,605
3,829,500
111,331
51,901,881
329,817,845
522,091,421
23,264,708
2,019,230
7,975,850
33,259,788
10,297,930
118,043
1,212,809
1,073,803
10,609,072
169,791,220
135,928,331
33,275,362
362,306,570
1,362,310
2,195,815
3,558,125
256,513,074
25,924,141
(92,950,701)
$ 161,895,093 $
189,486,514
City of Lodi
Statement of Activities
For the Year Ended June 30, 2018
Program Revenues
Operating Grants and
Functions/Programs Expenses Charges for Services Contributions
Primary government:
Governmental activities:
General government
Public protection
Public works
Community development
Library
Parks and recreation
Debt Service
Total governmental activities
11,600,548 $ 3,669,845 $ 30
38,794,510 1,000,142 1,165,679
9,823,847 990,285 1,045,968
1,999,587 2,665,268 40,180
1,752,595 37,006 34,619
4,672,015 1,697,786
768,077 -
69,411,180 10,060, 332 2,286,476
Business -type activities:
Electric 67,943,086 69,246,709 2,236,049
Nonmajor Fund Transit 5,232,628 226,485 3,123,071
Wastewater 16,008,272 14,913,543
Water 11,775,718 13,005,023 609,966
Total business -type activities 100,959,704 97,391,760 5,969,086
Total primary government $ 170,370,884 $ 107,452,092 $ 8,255,562
General revenues:
Property taxes
Special assessments
Sales tax
Document transfer
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, as restated (Note 16)
Net position - ending
The notes to financial statements are an integral part of this statement.
20
City of Lodi
Statement of Activities
For the Year Ended June 30, 2018
(Continued)
Net (Expense) Revenue and Changes in Net Position
Primary Government
Capital Grants and
Contributions Governmental Activities Business -type Activities Total
$
111,776
7,893,689
360,000
371,684
8,737,149
$
(7,930,673) $
(36,516,913)
106,095
705,861
(1,320,970)
(2,602,545)
(768,077)
(48,327,223)
$
(7,930,673)
(36,516,913)
106,095
705,861
(1,320,970)
(2,602,545)
(768,077)
(48,327,223)
2,510,146 - 6,049,818 6,049,818
1,845,168 - (37, 904) (37, 904)
3,801,959 - 2,707,230 2,707,230
3,150,490 - 4,989,761 4,989,761
11,307,763
13,708,905 13,708,905
$ 20,044,912 (48,327,223) 13,708,905 (34,618,318)
10,324,516 10,324,516
43,763 43,763
11, 333, 228 11, 333, 228
5,147, 262 5,147, 262
9,217,774 9,217,774
1,822,334 1,822,334
866,828 866,828
600,573 600,573
310,936 2,244,267 1,026,992
933,165 716,056 3,177,432
4,252,350 (4,252,350) -
44,852,729
(3,474,494)
31, 065, 915
(1,292,027) 43,560,702
12,416,878 8,942,384
149,478,215 180,544,130
$ 27,591,421 $ 161,895,093 $ 189,486,514
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FUND FINANCIAL STATEMENTS
FUND FINANCIAL STATEMENTS
Governmental Fund Types
Governmental funds consist of the General Fund, special revenue funds,
debt service fund and capital projects funds.
Major Governmental Funds:
General Fund
This fund is maintained to account for all financial resources that are not
restricted as to their use. This includes property and sales taxes,
business tax receipts, franchise taxes and various subventions such as
Motor Vehicle In -Lieu fees received from the State of California. With the
exception of grant programs, General Fund resources can be utilized for
any legitimate governmental purpose.
Streets Fund
This fund was established to account for the following:
Gas Tax
To account for revenues and expenditures apportioned to the City under
the Streets and Highway Code. Portions of the tax rate levied by the
State of California on all gasoline purchases are allocated to cities
throughout the State on a population basis. These funds are restricted for
expenditure by the State of California for street related purposes only.
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.
24
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.
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.
25
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.
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City of Lodi
Balance Sheet
Governmental Funds
June 30, 2018
Other Governmental Total Governmental
General Fund Streets Funds Funds
ASSETS
Cash and investments $ 10,247,211 $ 4,465,029 $ 10,196,513 $ 24,908,753
Restricted cash and investments 8,573,950 156,702 446,311 9,176,963
Accounts receivables, net 4,137,816 1,534,396 344,215 6,016,427
Property taxes receivables 67,665 67,665
Interest receivable 12,597 5,721 8,924 27,242
Due from other funds - 61,503 61,503
Due from other governmental agencies 569,900 266,112 836,012
Inventory - 1,306 1,306
Total assets $ 23,039,239 $ 6,731,748 $ 11,324,884 $ 41,095,871
LIABILITIES
Accounts payable and other liabilities
Accrued salaries and wages
Due to other funds
Advances from other funds
Unearned revenue
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue
3,797,974 $ 274,968 $ 285,630 $ 4,358,572
63,751 5,077 11,226 80,054
61,503 61,503
- - 984,025 984,025
409,609 54,551 272,104 736,264
4,271,334 334,596 1,614,488 6,220,418
44,707 44,707
FUND BALANCES
Nonspendable
Inventory 1,306 1,306
Restricted
Road -related projects 6,240,450 160 6,240,610
Capital projects - 5,082,749 5,082,749
Home and CDBG program 371,191 371,191
Public safety 25,303 25,303
Community development 3,141,317 3,141,317
Parks, recreation and community services 1,042,917 1,042,917
Debt service 746 746
Committed
Pension 8,573,949 156,702 8,730,651
Video - related capital projects 457,170 - 457,170
Unassigned 9,736,786 9,736,786
Total fund balances 18,767,905 6,397,152 9,665,689 34,830,746
Total liabilities and fund balances
The notes to financial statements are an integral part of this statement.
$ 23,039,239 $ 6,731,748 $ 11,324,884 $ 41,095,871
28
City of Lodi
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position
June 30, 2018
Fund balances - total governmental funds
Amounts reported for governmental activities in the statement of net position are different because:
$ 34,830,746
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds.
Nondepreciable capital assets 29,464,760
Depreciable capital assets, net 108,101,566
Deferred outflows of resources related to pensions are not reported in governmental funds. 21,122,850
Deferred inflows of resources related to pensions are not reported in governmental funds. (3,444,447)
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:
Accrued Interest (197,695)
Long-term liabilities - Due within one year (4,251,827)
Long-term Liabilities - Due in more than one year (30,535,962)
Net pension liability (110,076,401)
Net OPEB liability (33,275,362)
Other long-term assets are not available to pay for current period expenditures and,
therefore, are deferred in the funds. 600,131
Internal service funds are used by management to charge the costs of general
liability insurance, workers' compensation insurance, health benefits insurance,
other insurance, employee benefits and the cost of operating and maintaining the
City's fleet to individual funds. The assets and liabilities of the internal service funds
are included in governmental activities in the statement of net position.
Net position of governmental activities
The notes to financial statements are an integral part of this statement.
29
15,253,062
$ 27,591,421
REVENUES
Taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines, forfeits, and penalties
Investment and rental income
Miscellaneous revenue
Total revenues
City of Lodi
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended June 30, 2018
Other Govemmental Total Govemmental
General Fund Streets Funds Funds
$
27,422,477 $ $ - $ 27,422,477
67,757 1,696,202 1,763,959
12,377,159 7,641,630 788,338 20,807,127
1,934,180 703,770 3,381,808 6,019,758
1,396,137 - 1,396,137
1,747,857 20,820 556,742 2,325,419
342,549 362,659 500,685 1,205,893
45,288,116 8,728,879 6,923,775 60,940,770
EXPENDITURES
Current:
General government 6,980,564 2,757,150 9,737,714
Public protection 30,576,759 - 210,610 30,787,369
Public works 1,852,852 2,305,308 470,048 4,628,208
Community development 1,756,328 1,756,328
Library 1,058,133 - 1,058,133
Parks and recreation - - 2,497,075 2,497,075
Capital outlay 5,712,335 2,583,851 8,296,186
Debt service:
Interest 804,619 804,619
Principal retirement 1,028,784 1,028,784
Total expenditures 40,468,308 8,017,643 12,108,465 60,594,416
Excess (deficiency) of revenues over expenditures 4,819,808 711,236 (5,184,690) 346,354
OTHER FINANCING SOURCES (USES)
Transfers in 5,949,190 461,960 7,452,305
Transfers out (6,969,450) - (2,641,655)
Total other financing sources (uses) (1,020,260) 461,960 4,810,650
Net change in fund balances 3,799,548 1,173,196 (374,040)
Fund balances -beginning 14,968,357 5,223,956 10,039,729
13,863,455
(9,611,105)
4,252,350
4,598,704
30,232,042
Fund balances -ending $ 18,767,905 $ 6,397,152 $ 9,665,689 $
The notes to financial statements are an integral part of this statement.
34,830,746
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, 2018
Changes in fund balances - total governmental funds
$ 4,598,704
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 8,296,186
Capital asset contributions 770,505
Depreciation expense (7,921,428)
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
(9,577)
1,028,784
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. 2,583,482
Other expenses in the statement of activities that do not use current financial resources are not reported as
expenditures in the governmental funds.
Change in compensated absences (630,371)
Amortization of loss on defeasance (26,936)
Amortization of bond premium 53,830
Change in unavailable revenue 51,224
Change in accrued interest 9,648
Change in net pension liability and related amounts (11,069,820)
Change in OPEB obligation (1,208,724)
Change in net position of governmental activities $ (3,474,494)
The notes to financial statements are an integral part of this statement.
31
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ASSETS
Current assets:
Cash and investments
Restricted assets with fiscal agents
Account receivables, net
Interest Receivable
Due from other governmental agencies
Advance receivables
Due from other fund
Inventory
Other assets
Total current assets
City of Lodi
Statement of Net Position
Proprietary Funds
June 30, 2018
Business -type Activities
Electric Wastewater Water
18,149,010 $ 18,471,753 $ 18,359,607
29,910 232,996 2,302,295
3,755,108 1,215,166 904,900
19,228 20,303 17,800
9,456,605
3,362,753 45,221 274,496
34,772,614 19,985,439 21,859,098
Noncurrent assets:
Restricted assets with fiscal agents 2,169,847
Advances to other funds 2,192,177
Nondepreciable 763,785 10,908,901 6,453,630
Depreciable, net 39,081,448 78,108,225 92,541,484
Total noncurrent assets 39,845,233 91,186,973 101,187,291
Total assets 74,617,847 111,172,412 123,046,389
DEFERRED OUTFLOWS OF RESOURCES
Unamortized losses on defeasance 5,266,456 2,354,740
Related to pensions 2,511,122 1,706,627 173,915
Total deferred outflows of resources 7,777,578 4,061,367 173,915
LIABILITIES
Current liabilities:
Accounts payable and other liabilities 2,589,283 456,909 2,227,430
Accrued salaries and wages 17,498 15,504 1,674
Advances from other funds - - 1,208,152
Accrued interest 14,902 834,440 165,761
Due to other funds -
Unearned revenue 660,104
Loans payable 172,292 -
Accrued compensated absences 420,697 273,227 41,714
Pollution remediation obligation 400,000
Certificates of participation and revenue bonds payable 445,435 3,590,214 998,843
Total current liabilities 3,660,107 5,170,294 5,703,678
Noncurrent liabilities:
Loans payable
Self insurance liability
Accrued compensated absences
Certificates of participation and revenue bonds payable
Net pension liability
Net OPEB liability
Pollution remediation obligation
Total noncurrent liabilities
Total liabilities
923,596
832,737 941,448
47,846,008 40,066,582
14,375,769 9,770,167
63,978,110
67,638,217
32,114,561
995,648
16,453,523
50,778,197 49,563,732
55,948,491 55,267,410
DEFERRED INFLOWS OF RESOURCES
Related to pensions 63,215 42,963 4,379
Related to OPEB - - -
Total deferred inflows of resources 63,215 42,963 4,379
NET POSITION
Net investment in capital assets 4,673,437 48,137,418 68,184,004
Restricted for:
Debt service 20,178
Unrestricted 10,000,378 11,104,907 (235,489)
Total net position $ 14,693,993 $ 59,242,325 $ 67,948,515
The notes to financial statements are an integral part of this statement.
33
City of Lodi
Statement of Net Position
Proprietary Funds
June 30, 2018
(Continued)
Business -type Activities Govemmental Activities
Nonmajor Fund Transit Total Enterprise Funds Internal Service Funds
1,198,021 $ 56,178,391 $ 15,136,293
2,565,201
2,483,111 8,358,285 57,415
1,477 58,808 16,961
1,400,000 1,400,000
9,456,605
71,500
3,682,470 145,724
111,331
5,082,609 81,699,760 15,539,224
4,310,804
11,985,122
16,295,926
21,378,535
124,079
124,079
2,169,847
2,192,177
22,437,120
221,716,279
23,155
248,515,423 23,155
330,215,183 15,562,379
7,621,196 269,518
4,515,743 2,019,230
12,136,939 2,288,748
453,662 5,727,284 212,077
725 35,401 2,589
1,208,152
1,015,103
71,500
232,859 892,963
172,292
14,824 750,462 40,518
400,000
5,034,492
702,070
15,236,149 326,684
923,596
7,994,536
76,805 1,850,990 112,264
120,027,151
710,346 25,851,930 1,542,965
33,275,362
16,453,523 -
787,151 165,107,190 42,925,127
1,489,221
180,343,339 43,251,811
3,123 113,680 6,784
2,195,815
3,123 113,680 2,202,599
16,295,927 137,290,786 23,155
20,178 -
3,714,343 24,584,139 (27,626,438)
20,010,270 $ 161,895,103 $ (27,603,283)
The notes to financial statements are an integral part of this statement.
34
City of Lodi
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
For the Year Ended June 30, 2018
Business -type Activities
Electric
Wastewater Water
OPERATING REVENUES
Charges for services $ 69,246,709 $ 14,913,543 $ 13,005,023
OPERATING EXPENSES
Personnel services 10,570,157 5,171,246 2,886,138
Supplies, materials and services 13,775,553 3,682,049 3,220,625
Utilities 39,583,812 726,588 518,271
Depreciation 2,368,139 4,249,995 3,088,616
Claims - - -
Total operating expenses 66,297,661 13,829,878 9,713,650
Operating income (loss) 2,949,048 1,083,665 3,291,373
NONOPERATING REVENUES (EXPENSES)
Investment income 169,856 399,403 99,018
Interest expense (1,672,701) (2,178,392) (2,062,067)
Operating grants - 609,966
Greenhouse gas allowance 2,262,087 -
Nonoperating expense - - -
Other revenues 1,577,898 201,603 322,686
Total nonoperating revenues (expenses) 2,337,140 (1,577,386) (1,030,397)
Income (loss) before contributions and transfers 5,286,188 (493,721) 2,260,976
Capital contributions 2,510,146 3,801,959 3,150,490
Transfers out (2,145,285) (1,108,270) (820,560)
Operating grants - -
Loan proceeds 20,177 11,765
Change in net position 5,671,226 2,211,733 4,590,906
Total net position (deficit) - beginning 9,022,767 57,030,592 63,357,609
Total net position (deficit) - ending $ 14,693,993 $ 59,242,325 $ 67,948,515
The notes to financial statements are an integral part of this statement.
35
City of Lodi
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
For the Year Ended June 30, 2018
(Continued)
Business -type Activities Governmental Activities
Nonmajor Fund Transit Total Enterprise Funds Internal Service Funds
$ 226,485 $ 97,391,760 $ 13,704,243
452,237 19,079,778 1,874,344
3,308,886 23,987,113 8,111,380
55,558 40,884,229 15,671
1,415,947 11,122,697 1,447
- - 2,535,853
5,232,628
(5,006,143)
21,740
2,723,071
137,132
95, 073, 817 12,538,695
2,317,943 1,165,548
690,017 30,793
(5,913,160)
3,333,037 -
2,262,087 -
1,208,724
2,239,319 178,707
2,881,943 2,611,300
(2,124,200) 4,929,243
1,845,168 11,307,763
(177,945) (4,252,060)
400,000 400,000
31,942
(56,977) 12,416,888
20,067,247 149, 478, 215
1,418,224
2,583,772
(290)
2,583,482
(30,186,765)
20,010,270 $ 161,895,103 $
(27,603,283)
The notes to financial statements are an integral part of this statement.
36
City of Lodi
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2018
Business -type Activities - Enterprise Funds
Electric Wastewater
Water
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers $ 70,989,436 $ 15,092,181 $ 13,581,112
Cash from interfund 172,241
Payments to suppliers (53,558,349) (3,834,553) (3,804,116)
Payments to employees (8,285,520) (3,872,422) (2,860,175)
Due to other funds (4,877) (665,234) (487,530)
Net cash provided (used) by operating activities 9,312,931 6,719,972 6,429,291
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Operating grants -
Repaid from other funds -
Received - greenhouse gas allowance 2,262,087
Transfers out (3,093,283)
Transfer in 949,593
Net cash provided (used) by noncapital financing activities 118,397
64,286
(1,108,270)
609,966
40,000
(820,560)
(1,043,984) (170,594)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Fees received for water meter installations - - 21,577
Acquisition and construction of capital assets 3,499 (1,401,527) (3,809,101)
Fees received from developers 137,611 550,911 362,481
Capital grants received - 441,142 -
Principalpaymentsondebt (16,869,254) (1,430,441) (950,000)
Interest payments on debt (3,560,020) (1,615,513) (2,064,442)
Net cash provided (used) by capital and related financing activities (20,288,164) (3,455,428) (6,439,485)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 5,712,306 (47,188) 85,725
Net cash provided (used) by investing activities 5,712,306 (47,188) 85,725
Net increase (decrease) in cash and cash equivalents (5,144,530) 2,173,372 (95,063)
Balances - beginning of year 23,323,450 16,531,377 20,756,966
Balances - end of the year $ 18,178,920 $ 18,704,749 $ 20,661,903
Reconciliation of operating income (loss) to net cash provided (used) by operating activities:
Operating Income $ 3,438,837 $ 1,190,666 $ 3,291,373
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:
Depreciation Expense 2,368,139 4,249,995 3,088,616
Deferred inflows (outflows) of resources - - Other revenues 1,577,898 201,603 322,686
Changes in assets and liabilities:
Loans receivable 39,744 - Customer Receivables 812,137 (22,966) 198,232
Advance receivable (373,939) - -
Due from other governmental agencies - - 55,170
Inventory (509,443) 41,191 17,678
Other assets - -
Compensated absences 139,489 106,779 21,954
Accounts Payable - Supplier (325,080) (239,342) (69,942)
Accrued salaries and wages - - -
Due to other funds - - Net pension liability and related amounts 2,145,149 1,192,046 4,009
Self-insurance liability - - -
Pollution remediation obligation (500,485)
Net cash provided (used) by operating activities $ 9,312,931 $ 6,719,972 $ 6,429,291
Noncash investing capital and financing activities:
Capital asset contributions
Amortization of issuance premium
Amortization of losses on defeasance
Total noncash investing, capital and financing activities
2,372,535 $ 2,809,906 $ 2,766,433
39,770 617,207 19,700
31,348 283,090 -
2,443,653 $ 3,710,203 $ 2,786,133
Reconciliation to the statement of net position:
Cash and investments $ 18,149,010 $ 18,471,753 $ 18,359,607
Restricted assets with fiscal agents 29,910 232,996 2,302,295
Total cash and cash equivalents $ 18,178,920 $ 18,704,749 $ 20,661,902
The notes to financial statements are an integral part of this statement.
37
City of Lodi
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2018
(Continued)
Business -type Activities - Enterprise Funds Governmental Activities
Nonmajor Fund Transit Total Enterprise Funds Internal Service Funds
363,617 $ 100,026,346 $ 153,800
172,241 13,748,052
(3,314,099) (64,511,117) (12,693,980)
(336,268) (15,354,385) (389,693)
(44,789) (1,202,430) (71,500)
(3,331,539)
1,867,860
(177,945)
1,689,915
(883,437)
1,586,697
19,130,655 746,679
2,477,826
104,286
2,262,087
(5,200,058)
949,593
(290)
593,734 (290)
21,577
(6,090,566)
1,051,003
2,027,839
(19,249,695)
(7,239,975)
703,260 (29,479,817)
23,353 5,774,196 34,814
23,353 5,774,196 34,814
(915,011)
2,113,032
(3,981,232) 781,203
62,724,825 14,355,090
1,198,021 $ 58,743,593 $ 15,136,293
$ (5,006,143) $
2,914,733 $ 1,165,548
1,415,947 11,122,697 1,447
253,275
137,132 2,239,319 178,707
39,744 -
- 987,403 (24,907)
- (373,939) -
55,170 -
(450,574) (1,303)
(8,410)
(1,022) 267,200 20,062
37,760 (596,604) 35,225
2,589
- - (27,692)
84,787 3,425,991
- - (847,862)
(500,485) -
$ (3,331,539) $ 19,130,655 $ 746,679
$ $ 7,948,874 $
676,678
314,438
$ - $ 8,939,990 $
$
1,198,021 $ 56,178,391 $ 15,136,293
- 2,565,201 -
$ 1,198,021 $ 58,743,592 $ 15,136,293
The notes to financial statements are an integral part of this statement.
38
City of Lodi
Statement of Fiduciary Net Position
June 30, 2018
Private -Purpose Trust
Funds Custodial Funds
ASSETS
Cash and investments $ 136,097 $ 423,289
Interest receivable 2 478
Total assets 136,099 $ 423,767
LIABILITIES
Agency obligations $ 423,767
NET POSITION $ 136,099
The notes to financial statements are an integral part of this statement.
39
City of Lodi
Statement of Changes in Fiduciary Net Position
For the Year Ended June 30, 2018
Private -Purpose Trust
Funds
ADDITIONS
Investment and rental income $
DEDUCTIONS
Current:
Library
100,021
Net Position -- beginning of the year 236,120
Net Position -- end of the year $ 136,099
The notes to financial statements are an integral part of this statement.
40
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NOTES TO THE BASIC FINANCIAL STATEMENTS
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
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.
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.
Custodial Funds account for assets held by the City as a trustee or as an agent for individuals, private
organizations, related organizations and/or other governmental units. This fund was established to account for
special assessments collected on the 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 non-operating items. Operating revenues
and expenses generally result from providing services in connection with the fund's principal ongoing operations.
The principal operating revenues of the City's enterprise funds and internal service funds are charges for
customer services including: electric, wastewater, water and public transportation fees. Operating expenses for
enterprise funds and internal service funds include the cost of services, administrative expenses, and
depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-
operating revenues and expenses.
D. Cash and Investments
The City maintains a cash and investment pool that is available for all funds of the City for the purpose of
increasing interest earnings through investment activities. Investments are generally stated at fair value with the
exception of guaranteed investment contracts, which are stated at cost. Income earned or losses arising from the
investment of pooled cash are allocated to various funds based on month-end cash balances in accordance with
California Government Code Section 53647. Changes in fair value of investments are recognized as a
component of investment income.
45
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
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 $2,169,847 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 2018 Bonds restricted for debt service. In
the Wastewater Fund, the restricted assets represent the proceeds of the 2004A, the 2016A Refunding
Wastewater Revenue Bonds, and the 2017 Installment Purchase Agreement 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, 2018, upon which the 2017-2018 levy was based, was
$6,091,975,000.
Secured property taxes are levied on October 1 and are due in two installments on November 1 and February 1.
The tax becomes delinquent after December 10 and April 10, respectively. Unsecured property tax is levied on
July 1, due on July 31 and becomes delinquent after August 31.
Property taxes levied for the year ended June 30, 2018, 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.
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.
46
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 1 - Summary of Significant Accounting Policies (Continued)
1. 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, long-term debt and
other long-term obligations are reported as liabilities in the applicable governmental activities, business -type
activities, or proprietary fund statement of net position. Bond premiums are deferred and amortized over the life
of the bonds. Bonds payable are reported net of the applicable bond premium. Losses occurring from advance
refunding are reported as deferred outflows of resources and amortized as an expense for both governmental
and business -type activities.
K. Due from Other Government Agencies
Loans receivable reported in the HOME Program and Community Development Block Grants (CDBG) 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, 2018, 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, 2018, a total of twenty-four loans to industrial and commercial customers have been approved. At
June 30, 2018, there were three outstanding loans, with a balance of $12,995.
L. 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 11).
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.
47
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
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 on the 2012 Refunding Revenue Bonds amortized over 11
years, the 2016 Refunding Revenue Bonds amortized over 21 years and the 2018 Refunding Revenue Bond over
14 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 the CaIPERS' valuation measurement date is June 30, 2017. Those contributions will be
recognized as a reduction of the net pension liability in the year ending June 30, 2019. 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.
Related to Other Post -Employment Benefits (OPEB)
OPEB contributions made in the current year are reported as deferred outflows of resources per GASB Statement
No. 75 the valuation measurement date is June 30, 2017. Those contributions will be recognized as a reduction
of the net pension liability in the year ending June 30, 2019.
Unavailable Revenue
The unavailable revenue in the governmental funds is related to the HCD's First-time Homebuyers Program.
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. The City
uses basic approach to account for infrastructure which is the cost to acquire, construct, or improve a capital
asset is not recognized immediately as expense when incurred, but instead is deferred and allocated over the
estimated useful life of the asset.
48
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
O. Capital Assets (Continued)
Depreciation of capital assets is provided on the straight-line basis over the following estimated useful lives:
Years
Buildings and improvements 3 - 40
Machinery and equipment 2 - 40
Vehicles 5 - 15
Infrastructure 10 — 50
P. Compensated Absences/Vacation and Sick Leave
The City accrues for compensated absences, in the government -wide financial statements and the proprietary
funds financial statements, to pay its employees for the unused vacation, compensatory time, and miscellaneous
leave. The City is not obligated to pay for unused sick leave if employees terminate prior to retirement.
Q. 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, 2016, rolled forward to June 30, 2017
Measurement Date: June 30, 2017
Measurement Period: July 1, 2016 to June 30, 2017
R. Other Post -Employment Benefits (OPEB)
For purposes of measuring the Net OPEB liability, deferred outflows of resources and deferred inflows of
resources related to pensions, and OPEB expense, information about the fiduciary net position of the plans and
additions to/deductions from the plans' fiduciary net position have been determined on the same basis as they are
reported by the plans (Note 9).
The following timeframes are used for OPEB reporting:
Valuation date
Measurement Date
Measurement Period
S. Self -Insurance
June 30, 2017
June 30, 2017
July 1, 2016 to June 30, 2017
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.
49
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
T. 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.
U. 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, 2018 and classified fund balances into the following five categories:
Nonspendable — Amounts that cannot be spent because they are (1) not in spendable form, such as
prepaid items, inventories and long-term receivables for which the payment of proceeds are not restricted or
committed with respect to the nature of the specific expenditures of that fund or (2) legally or contractually
required to remain intact.
Restricted — Amounts that are restricted by external parties such as creditors or imposed by grants, laws or
regulations of other governments or imposed by law through constitutional provisions or enabling legislation.
The City has legislative restrictions on amounts collected and reported in the City's various governmental
funds.
Committed — Amounts that can only be used for specific purposes pursuant to constraints imposed by a
formal action by the City's "highest level of decision-making authority", which the City considers to be an
ordinance passed by the Lodi City Council.
Assigned — Amounts that have been allocated by action of the Lodi City Council in which the City's intent is
to use the funds for a specific purpose. Once assigned, funds may only be released by resolution of the City
Council.
Unassigned — Amounts that constitute the residual balances that have no restrictions placed upon them
and are reported in the General Fund. For other governmental funds, as restrictions exceed available
resources only deficit amounts are reported in the unassigned category.
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted
resources first, and then unrestricted resources as they are needed.
The City does not have a policy on the order of spending unrestricted amounts when an expenditure is incurred
for which amounts in any of the unrestricted fund balance classifications could be used. Therefore, by default
under GASB Statement No. 54, the City uses committed resources first, then assigned resources and
unassigned resources last as they are needed.
50
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 1 - Summary of Significant Accounting Policies (Continued)
U. Fund Balance (Continued)
It is the City's policy to maintain an unassigned fund balance in the General Fund of at least 16% of revenues and
working capital balances in the Water and Wastewater enterprise funds of at least 25% of operating expenses
and the target for the Electric Enterprise Fund working capital is $23.3 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.
V. 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.
W. 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.
X. 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 applies to government employers who provide OPEB to their employees
and for governments that finance OPEB for employees of other governments. This statement basically parallels
GASB Statement 68 and replaces GASB Statement 45. Application of this statement had a significant effect on
the City's financial statements (see Note 9).
In December 2015, 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. Furthermore, this
Statement 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. This Statement requires that a government recognize revenue when the resources
become applicable to the reporting period. Application of this statement did not have a significant effect on the
City's financial statements.
51
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
X. Implementation of New Governmental Accounting Standards (Continued)
In March 2017, GASB Issued Statement No. 85, Omnibus 2017. This Statement addresses practices issues that
have been identified during implementation and application of certain GASB Statements. This Statement also
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
[OPEB]). Application of this statement did not have a significant effect on the City's financial statements.
In April 2017, GASB issued Statement No. 86, Certain Debt Extinguishment Issues. This Statement improves
consistency in accounting and financial reporting for in -substance defeasance of debt by providing guidance for
transactions in which cash and other monetary assets acquired with only existing resources -resources other than
the proceeds of refunding debt -are placed in an irrevocable trust for the sole purpose of extinguishing debt. This
Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished
and notes to financial statements for debt that is defeased is substance. Application of this statement did not
have a significant effect on the City's financial statements.
Future Implementations:
In November 2016, GASB issued Statement No. 83, Certain Asset Retirement Obligations. This Statement
establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred
outflow of resources for asset retirement obligations (ARO). This Statement requires that recognition occur when
the liability is both incurred and reasonably estimable. The determination of when the liability is incurred should
be based on the occurrence of external laws, regulations, contracts, or court judgments, together while the
occurrence of an internal event that obligates a government to perform asset retirement activities. Laws and
regulations may require governments to take specific actions to retire certain tangible capital assets at the end of
the useful lives of those capital assets, such as decommissioning nuclear reactos and dismantling and removing
sewage treatment plants. Other obligations to retire tangible capital assets may arise from contracts or court
judgments. Internal obligating events include the occurrence of contamination, placing into operation a tangible
capital asset that is required to be retired, abandoning a tangible capital asset before it is placed into operation, or
acquiring a tangible capital asset that has an existing ARO. Application of this statement is effective for the City's
fiscal 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 all state and local governments. The focus of the criteria
generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries
with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and
postemployment benefit arrangements that are fiduciary activities. The requirements of this statement are
effective for the City's year ending June 30, 2020.
In June 2017, GASB issued Statement No. 87, Leases. This Statement increase the usefulness of governments'
financial statements by requiring recognition of 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 for the contract. It establishes a single model for lease accounting based on the foundational
principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is
required to recognize a lease liability and an intangible right -to -use lease asset, and a lessor is required to
recognize lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency
of information about governments' leasing activities. The requirements of this statement are effective for the
City's year ending June 30, 2021.
In April 2018, GASB issued Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings
and Direct Placements. This Statement is to improve the information that is disclosed in notes to government
financial statements related to debt, including direct borrowings and direct placements. It also clarifies which
liabilities governments should include when disclosing information related to debt.
52
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
X. Implementation of New Governmental Accounting Standards (Continued)
This Statement also defines debt for purposes of disclosures in notes to financial statements as a liability that
arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more
payments to settle an amount that is fixed at the date the contractual obligation is established. In addition, the
statement requires that additional essential information related to debt be disclosed in notes to financial
statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt
agreements related to significant events of default with finance -related consequences, significant termination
events with finance -related consequences, and significant subjective acceleration clauses. Application of this
statement is effective for the City's fiscal year ending June 30, 2020.
In June 2018, GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a
Construction Period. This Statement establishes accounting requirements for interest cost incurred before the
end of a construction period. Such interest cost includes all interest that previously was accounted for in
accordance with the requirements of paragraphs 5-22 of Statement No. 62, Codification of Accounting and
Financial Reporting Guidance Contained in Pre -November 30, 1989 FASB and AICPA Pronouncements, which
are superseded by this Statement. This Statement requires that interest cost incurred before the end of a
construction period be recognized as an expense in the period in which the cost is incurred for financial
statements prepared using the economic resources measurement focus. As a result, interest cost incurred before
the end of a construction period will not be included in the historical cost of a capital asset reported in a business -
type activity or enterprise fund. Application of this statement is effective for the City's fiscal year ending June 30,
2021.
In August 2018, GASB issued Statement No. 90, Majority Equity Interests — An Amendment of GASB Statements
No. 14 and No. 61. This Statement improves the consistency and comparability of reporting a government's
majority equity interest in a legally separate organization and to improve the relevance of financial statement
information for certain component units. It defines a majority equity interest and specifies that a majority equity
interest in a legally separate organization should be reported as an investment if a government's holding of the
equity interest meets the definition of an investment. A majority equity interest that meets the definition of an
investment should be measured using the equity method, unless it is held by a special-purpose government
engaged only in fiduciary activities, a fiduciary fund, or an endowment (including permanent and term
endowments) or permanent fund. Those governments and funds should measure the majority equity interest at
fair value. Application of this statement is effective for the City's fiscal year ending June 30, 2020.
Note 2 — Cash and Investments
Cash and investments as of June 30, 2018 are classified in the accompanying financial statements as follows:
Cash and investments as of June 30, 2018 are classified in the accompanying financial statements as follows:
Statement of net position:
Cash and investments $ 90,017,129
Restricted assets 20,118,316
Fiduciary funds cash and investments:
Private -purpose trust funds 136,097
Custodial fund 423,289
Total cash and investments $ 110,694,831
Cash and investments as of June 30, 2018 consist of the following:
Cash on hand $ 3,396
Deposits with financial institutions 3,950,180
Investments 106, 741, 255
Total cash and investments $ 110,694,831
53
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 2 — Cash and Investments (Continued)
A. Authorized Investments
The City has adopted an investment policy pursuant to Government Code Section 53601, which authorizes the
City to surplus funds in the City Treasury in certain investment categories authorized by the California
Government Code and the City's Investment Policy. The City's Investment Policy is more restrictive than the
Government Code.
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.
Permitted Investments
Maximum %
Maturity of Portfolio Minimum Quality Requirements
U.S. Treasury Obligtions
US Government Agency Securities & Instrumentalities
Bankers Aceeptances
Certificates of Deposit
Negotiable Certificates of Deposit
Commerical Paper
California State Local Agency Investment Fund
Passbook Deposits
Mutual Funds & Money Market Mutual Funds
Medium Term Corporation Notes
Joint Powers Authority Pool
Certificates of Deposit Account Registry Service (CDARS)
Supranational Obligations
Municipal Securities (50 States or California Local Agencies)
(1) Funds held at NCPA shall not count to this limit)
5 years
5 years
180 days
5 years
5 years
270 days
Indefinite
Indefinite
N/A
5 years
Indefinite
Indefinite
5 years
5 years
100% None
100% None
40% None
100% None
30% None
Credit rating of P1/A1 or A1+/F1 or F1+ by
30% Moody's S&P or Fitch
100% None
100% None
20% Multiple Requirements per GoVt Code
30% A-/A3/A- by Moody's, S&P, or Fitch
30% (1) Multiple Requirements per Godt Code
30% None
30% AA-/Aa3/AA- by Moody's, S&P, or Fitch
100% None
The City has established a pension stabilization account with Public Agency Retirement Services (PARS), which
invests in a Balanced Index PLUS Fund.
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. Disclosure Relating to Interest Rate Risk and Credit Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to
changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by
purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities
so that a portion of the portfolio is maturing or coming close to maturity over time as necessary to provide the
cash flow and liquidity needed for operations. The City monitors the interest rate risk inherent in its portfolio by
measuring the weighted average maturity of its portfolio, as well as limiting a securities maturity to five years or
less for investments in the investment pool. Investments held outside the investment pool can have longer
maturities as these funds are restricted by bond covenants and are held to the maturity of the bonds.
54
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 2 — Cash and Investments (Continued)
C. Disclosure Relating to Interest Rate Risk and Credit Risk (Continued)
Investment Type
AA+/AA/AA- A+/A/A- AAA/AAA
BBB+ NR Total
Investments by Fair Value:
Held by City:
CALTRUST
PARS
Local Bank Certificate of Deposits
Negotiable Certificate of Deposits
Guaranteed Investments Contracts
LAI F
Held by Trustee:
US Agency Securities
Money Market Mutual Funds
Municipal Securities
Corporate Securities
Exempt from Credit Rating Disclosure:
U.S Treasury Notes
Total Investments
13,013,508
4,545,831
7,160,137
5,328,688
584,904
6,645,565
$ - $ - $ 17,390,559 $
- - 11,095,822
- - 2,249,995
- - 7,996,699
- - 2,169,850
- - 15,947,421
1,733,643
597,347
152,147
246,270
9,882,869
17,390,559
11,095,822
2,249,995
7,996,699
2,169,850
15,947,421
13,013,508
4,545,831
9,724,954
12,723,747
9,882,869
$ 30,048,164 $ 7,230,469 $ 2,330,990 $ 152,147 $ 66,979,485 $ 106,741,255
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 nationally recognized statistical rating organization.
Presented below and on the following page is the minimum rating required by the California Government Code,
the City's investment policy, or debt agreements and the actual rating at year end for each investment type.
D. Concentration of Credit Risk
The California Government Code and the investment policy of the City contain limitations on the amount that can
be invested in any one issuer. Investments in any one issuer (other than investments issued by or explicitly
guaranteed by the US Government and investments in mutual funds, external investment pools, and other pooled
investments) that represent 5% or more of the total City investments are required to be disclosed. Investments in
LAIF, CaITRUST, and money market mutual funds are not subject to the concentration of credit risk disclosure.
The City holds 58.41% of its investments in the various securities. There are no investments with any one issuer
greater than 5% of total investments.
Reporting Unit Issuer
Investment Type Reported Amount
Entity Wide: Federal Farm Credit Bank System
Federal Home Loan Bank
Federal Home Loan Mortgage Corporation
Federal National Mortgage Association
55
Federal Agency Obligations
Federal Agency Obligations
Federal Agency Obligations
Federal Agency Obligations
$ 3,469,102
3,495,781
2,211,077
3,382,883
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 2 — Cash and Investments (Continued)
E. 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. $7,160,187 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.
Investment Type 12 Months or Less 13 to 24 Months 25 to 36 Months 37 to 60 Months Total
Investments by Fair Value:
Held by City:
CALTRUST $ 17,390,559 $ - $ - $ - $ 17,390,559
LAIF 15,947,421 15,947,421
PARS 11,095,822 - 11,095,822
Held by Trustee:
Negotiable Certificate of Deposits 1,250,000 1,500,000 5,246,699 7,996,699
Local Certificate of Deposits 2,249,995 - 2,249,995
US Agency Securities 993,503 2,476,901 1,453,643 8,089,461 13,013,508
Money Market Mutual Funds 4,545,831 - 4,545,831
Municipal Securities 494,070 1,645,262 2,528,665 5,056,957 9,724,954
Corporate Securities 501,165 2,780,071 3,197,937 6,244,574 12,723,747
Guaranteed Investments Contracts 2,169,850 2,169,850
U.S Treasury Notes 1,487,281 1,977,925 1,441,813 4,975,850 9,882,869
Total lnvestments $ 54,705,647 $ 10,130,159 $ 10,122,058 $ 31,783,391 $ 106,741,255
56
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 2 — Cash and Investments (Continued)
F. Investments in Investment Pools
The City is a voluntary participant in the California 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. At June 30, 2018, the City's
investment position in LAIF was $15.9 million. The City is also a voluntary participant in the CaITRUST which is a
Joint Powers Authority governed by a Board of Trustees made up of local treasurers and investment officers.
The Board of Trustees sets overall policy for CaITRUST, and selects and supervises the activities of the
Investment Manager and other agents. As of June 30, 2018, the City's investment in CaITRUST is $17.4 million;
all of which is invested in the Medium term fund.
G. 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, 2018:
Investment Type Level 1
Level 2 Total
Investments by Fair Value:
Held by City:
Negotiable Certificate of Deposits $ $ 7,996,699 $ 7,996,699
US Agency Securities 13,013,508 13,013,508
Municipal Securities 9,724,954 9,724,954
Corporate Securities 12,723,747 12,723,747 25,447,494
Subtotal $ 12, 723, 747 $ 43,458, 908 $ 56,182, 655
Investments Exempt from Fair Value Hierarchy:
Held by City
CALTRUST $ $ $ 17,390,559
PARS 11, 095, 822
LAIF 15,947,421
Local Certificate of Deposits 2,249,995
Money Market Mutual Funds - - 4,545,831
Guaranteed Investments Contracts - - 2,169,850
U.S Treasury Notes 9,882,869
Total Investments $ $ - $ 119,465,002
57
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 3 — Allowance for Uncollectible Accounts)
Receivables of the General Fund, Electric, Wastewater and Water funds are reported net of uncollectible amounts.
Total allowance provided for uncollectible amounts related to receivables of the current period are as follows:
Uncollectibles related to late charges and services
Uncollectibles related to electric sales and services
Uncollectibles related to wastewater services
Uncollectibles related to water sales and services
Total uncollectibles of the current fiscal year
Note 4 — Interfund Receivables / Payable
Interfund receivables and payables at June 30, 2018 are as follows:
$ 44,519
346,773
150,726
134,298
$ 676,316
Due from Due to Amount
Non -major governmental Non -major governmental
Community Development Home & CBG $ 8,588
Transportation 52,915
Internal Service Funds Internal Service Funds
Insurance Fleet 71,500
$ 133,003
"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 $61,503 and $71,500 represents cash deficits in other governmental
funds and internal service funds.
The advances from the Water Fund were used for the construction of Fire Station #4 and have no defined
repayment terms; however, the City is repaying as funds are available.
Advances to
Other governmental
Advances from Amount
Water $ 984,025
58
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 5 — Transfers
Transfers for the year ended June 30, 2018, are summarized as follows:
Transfers In:
Transfers Out:
General
Other governmental
Electric
Wastewater
Water
Transit
Fleet
General
Other
Streets Governmental Total
$ - $ 461,960 $ 6,507,490 $ 6,969,450
1,696,840 - 944,815 2,641,655
2,145, 285 - 2,145, 285
1,108, 270 1,108, 270
820,560 - 820,560
177,945 - - 177,945
290 290
Total $ 5,949,190 $ 461,960 $ 7,452,305 $ 13, 863, 455
During the year, various interfund transfers were made to finance expenditures, subsidize operating losses and
service debt.
Transfers out of $2,145,285 from the Electric Fund, $1,108,270 from the Wastewater Fund, $820,560 from the Water
Fund and $177,945 from Transit represent operating contributions to the General Fund.
The transfer of $461,960 from the General Fund to the Streets Fund is for operations and for various streets projects.
The transfer of $6,507,490 from the General Fund to other governmental funds represents transfer of $1,101,250 to
the Debt Service Fund for the interest required to pay the 2012 Refunding Lease Revenue Bonds; $3,853,240 to
Parks, Recreation, and Community Services Fund for operating costs; $435,000 to the Vehicle and Equipment Fund
for vehicle replacements and computer replacements; $421,000 to the Capital Outlay Reserve Fund for various
capital projects; and $697,000 to Library Capital.
The transfer out of $944,815 from other governmental funds to other governmental funds includes $655,890
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 $206,225 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 $61,700 from the Parks, Recreation, and Community Services Fund to the Vehicle and
Equipment Fund for fleet replacement.
The transfer of $290 from Fleet Fund to General Fund is to cover the expenses of the City's new website.
59
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 6 — Capital Assets
Capital assets activity of the primary government for the year ended June 30, 2018, was as follows:
Governmental activities July 1, 2017 Increases Decreases June 30, 2018
Capital assets, not being depreciated:
Land $ 24,947,834 - $ 24,947,834
Work of Art 304,907 - 304,907
Construction in progress 18,416,565 973,217 (15,177,763) 4,212,019
Total capital assets, not being depreciated $ 43,669,306 $ 973,217 $ (15,177,763) $ 29,464,760
Capital assets, being depreciated:
Buildings and improvements 77,456,162 - 77,456,162
Machineryand equipment 12,730,562 1,320,539 (6,247) 14,044,854
Vehicles 11,802,201 288,344 (386,089) 11,704,456
Infrastructure 149,567,248 21,915,633 171,482,881
Total capital assets, being depreciated
251,556,173 23,524,516
(392,336) 274,688,353
Less accumulated depreciation for:
Buildings and improvements 36,246,234 2,111,849 38,358,083
Machineryand equipment 11,564,506 407,623 (6,247) 11,965,882
Vehicles 8,953,782 500,457 (358,316) 9,095,923
Infrastructure 101,899,393 5,267,507 107,166,900
Total accumulated depreciation 158,663,915 8,287,436
Total capital assets, being depreciated, net 92,892,258 15,237,080
Governmental activities capital assets, net $ 136,561,564 $ 16,210,297
(364,563) 166,586,788
(27,773) 108,101,565
$ (15,205,536) $ 137,566,325
Business -type activities July 1, 2017 Increases Decreases June 30, 2018
Capital assets, not being depreciated:
Land 5,535,718 - 5,535,718
Construction in progress 15,409,186 1,901,433 (409,216) 16,901,403
Total capital assets, not being depreciated
20,944,904 1,901,433
Capital assets, being depreciated:
Buildings and improvements 48,581,773
Machineryand equipment 285,935,643 12,099,400
Vehicles 13,444,052 481,692
Total capital assets, being depreciated
347,961,468 12,581,092
(409,216) 22,437,121
(207,844)
48,581,773
298,035,043
13,717,900
(207,844) 360,334,716
Less accumulated depreciation for:
Buildings and improvements 20,657,017 1,287,504 21,944,521
Machineryand equipment 98,674,092 8,485,800 107,159,892
Vehicles 8,372,474 1,349,393 (207,844) 9,514,023
Total accumulated depreciation 127,703,583 11,122,697 (207,844) 138,618,436
Total capital assets, being depreciated, net 220,257,885 1,458,395 221,716,280
Business -type activities capital assets, net $ 241,202,789 $ 3,359,828 $ (409,216) $ 244,153,401
60
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 6 — Capital Assets (Continued)
Depreciation expense was charged to function/programs of the primary government as follows:
Governmental activities: Business -type activities:
General government
Public protection
Public works
Com munity development
Library
Parks and recreation
Internal service funds
$ 617,558
659,666
5,285,609
19,549
71,465
1,267,579
1,447
Total depreciation expense $ 7,922,873
Note 7 — Long — Term Liabilities
Electric
Wastewater
Water
Transit
Total depreciation expense
$ 2,368,139
4,249,995
3,088,616
1,415,947
$ 11,122,697
The following is a summary of long-term debt payable at June 30, 2018 and transactions for the year ended
June 30, 2018 for the following individual issues:
Governmental activities: July 1, 2017
Additions
Compensated absences $ 7,607,875 $
2012 Lease Revenue Bonds 17,990,000
Issuance premium 762,590
Total 18,752,590
Loan payable 378,011
Capital lease 486,959
Self-insurance liability
Reductions
4,663,614 $ (4,013,177)
8,842,398 1,121, 320
Governmental activities long-term liabilities $ 36,067,833
$ 5,784,931
61
(860,000)
(53,830)
(913,830)
(91, 775)
(77,009)
(1,969,182)
$ (7,064,973)
June 30, 2018
$ 8,258,312
17,130, 000
708,760
17, 838, 760
286,236
409,949
7,994,536
$ 34,787,793
Amounts Due
Within One Year
$ 2,004,483
900,000
53,830
953,830
93,571
78,624
1,121,320
$ 4,251,827
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 7 — Long — Term Liabilities (Continued)
Interest Rates
Business -type activities:
Compensated absences
Pollution remediation obligation
Loan payable 2.30%
Certificates of Participation and Revenue Bonds:
2004 Certificates of Parti 2.0-5.5%
Amounts Due
July 1, 2017 Additions Reductions June 30, 2018 Within One Year
$ 2,334,250 $ 1,912,370 $ (1,645,171) $ 2,601,449 $ 750,461
17,354,008 - (500,486) 16,853,522 400,000
1,300,320 - (204,432) 1,095,888 172,292
2,070,000 2,070,000
2007 Certificates of Parti 4.0-5.0% 7,730,000 - (7,730,000)
Issuance premium 45,301 - (45,301)
Total 7,775,301 (7,775,301)
2008 Certificates of Parti 3.85-5.05% 58,295,000 (58,295,000)
Issuance premium 373,630 (373,630)
Total 58,668,630 (58,668,630)
2010 Revenue Bonds A 2.50-6.637% 33,630,000 (950,000) 32,680,000 980,000
Issuance premium 453,105 (19,700) 433,405 18,843
Total 34,083,105 (969,700) 33,113,405 998,843
2012 Revenue Bonds A 2.0-5.0% 11,675,000 - (1,475,000) 10,200,000 1,535,000
Issuance premium 1,039,460 - (166,313) 873,147 166,313
Total 12,714,460 (1,641,313) 11,073,147 1,701,313
2016 Revenue Bonds A 2.0-3.25% 20,295,000 - 20,295,000 1,650,000
Issuance premium 2,586,834 (130,979) 2,455,855 130,979
Total 22,881,834 (130,979) 22,750,855 1,780,979
2017 Installment 2.0-5.0% 7,762,794 7,762,794 107,922
Issuance premium
Total 7,762,794 7,762,794 107,922
2018 Revenue Bonds 2.0-5.0% - 41,610,000 - 41,610,000
Issuance premium - 6,681,443 - 6,681,443 445,435
Total 48,291,443 48,291,443 445,435
Total Certificates of Participation and Revenue Bonds 138,193,330 56,054,237 (69,185,923) 125,061,644 5,034,492
Business -type activities long-term liabilities $ 159,181,908 $ 57,966,607 $ (71,536,012) $ 145,612,503 $ 6,357,245
Loans Payable
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.
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.
62
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 7 — Long — Term Liabilities (Continued)
Loans Payable (Continued)
Annual debt service requirements to maturity of the loans payables are as follows:
Year Ending Governmental Activities Year Ending Business -type Activities
June 30, Principal Interest June 30, Principal Interest
2019 $ 93,571 $ 5,601 2019 $ 172,292 $ 25,555
2020 95,402 3,770 2020 214,078 20,677
2021 97,263 1,908 2021 219,027 15,728
Total $ 286,236 $ 11,279 2022 224,178 10,577
2023 192,497 5,350
Total $1,095,888 $ 77,887
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, 2018, are as follows:
Year Ending, June 30
2019 $ 86,540
2020 86,540
2021 86,540
2022 86,540
2023 86,540
Total minimum lease payments 432,700
Less amounts representing interest (22,751)
Present value of minimum capital lease payments $ 409,949
Certificates of Participation and Revenue Bonds
Governmental Activities:
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, 2018, 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 $23,045,569.
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 $794,913.
63
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 7 — Long — Term Liabilities (Continued)
Enterprise Activities:
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 $2,659,956. Interest paid
for the current year and total net revenues were $98,326 and $6,533,174, 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 $60,360,828. Principal and interest paid for the current year and total net revenues were $2,967,656 and
$6,975,156, respectively.
On August 16, 2012, the City issued $17,105,000 2012 Refunding Wastewater Revenue Bonds Series A (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
$11,656,450. Principal and interest paid for the current year and total net revenues were $1,949,300 and $6,533,174,
respectively.
On March 10, 2016, the City issued $20,295,000 2016 Refunding Wastewater Revenue Bonds Series A (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 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 $31,037,706. Interest paid for the current year and total net revenues were $849,150 and $6,533,174,
respectively. At June 30, 2018, the remaining balance of the refunded debt is $21,339,735.
On December 1, 2017, the City issued $7,762,794 2017 Installment Purchase Agreement for an advance refunding of
the $7,555,000 principal amount of the 2007 Wastewater Revenue Certificates of Participation. Principal is payable
annually on October 1 in amounts ranging from $107,000 to $545,000 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 2017 Agreement is $10,404,810.
On June 13, 2018, the City issued $41,610,000 Electric System Revenue Refunding Bonds (2018 Bonds) to allow the
City to prepay and cause the immediate defeasance of the outstanding $55,785,000 Certificates of Participation
(Electric System Revenue Certificates of Participation 2008 Series A). Principal is payable annually on September 1
in amounts ranging from $1,710,000 to $4,045,000 beginning in 2019 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 $59,467,804.
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.
64
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 7 — Long — Term Liabilities (Continued)
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
2019 $ 900,000 $ 755,213 $ 4,272,922 $ 3,562,724
2020 930,000 721,087 5,078,903 3,465,443
2021 965,000 685,337 5,179, 846 3,362,066
2022 1,020,000 635,712 5,410,675 3,250,128
2023-2027 5,905,000 2,329,313 32, 487, 032 13, 831, 479
2028-2032 7,410,000 788,907 31,343,153 9,493,025
2033-2037 - 22, 865,113 5,167, 385
2038-2040 7,980,150 916,250
Total $17,130,000 $ 5,915,569 $ 114, 617, 794 $43,048,500
Note 8 — Pension Plans
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.
The Plans' provisions and benefits in effect at June 30, 2018, are summarized as follows:
Miscellaneous Plan
Prior to On or after
Hire date 1 -Jan -13 1 -Jan -13
Benefit formula 2% @ 55 2% @ 62
Benefit vesting schedule 5 years of service 5 years of service
Benefit payments monthly for life monthly for life
Retirement age 50-67 52-67
Monthly benefits, as a % of eligible compensation 1.426%-2.418% 1% to 2.5%
Required employee contribution rates 7% 6.75%
Required employer contribution rates 21.80% 21.80%
65
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 8 — Pension Plans (Continued)
Safety Plan
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
Prior to
22 -Dec -12
3% @ 50
5 years of service
monthly for life
50-55
3%
9%
44.75%
December 22, 2012 to
31 -Dec -12
3% @ 55
5 years of service
monthly for life
50-55
2.4% to 3%
9%
44.75%
On or after
1 -Jan -13
2.7% @ 57
5 years of service
monthly for life
50-57
2% to 2.7%
11.25%
44.75%
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:
Inactive employees or beneficiaries currently receiving benefits
Inactive employees entitled to but not yet receiving benefits
Active employees
Total
Contributions
Miscellaneous Plan
Safety Plan
409 187
121 20
266 119
796 326
Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for
all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following
notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as
of June 30 by CaIPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of
benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
The City is required to contribute the difference between the actuarially determined rate and the contribution rate of
employees. The contributions for the measurement period were as follows:
Aggregate
Miscellaneous Safety Total
Contributions - employer $ 2,795,484 $ 3,539,856 $ 6,335,340
66
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 8 — Pension Plans (Continued)
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, 2017, using an annual actuarial
valuation as of June 30, 2016 rolled forward to June 30, 2017 using standard update procedures.
Actuarial Assumptions
The total pension liabilities in the June 30, 2016 actuarial valuations were determined using the following actuarial
assum ptions:
Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Investment Rate of Return
Mortality
Miscellaneous Plan Safety Plan
June 30, 2016
June 30, 2017
June 30, 2016
June 30, 2017
Entry -Age Normal Cost Method
7.15%
2.75%
7.65% (1)
7.15%
2.75%
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, 2016 valuation were
based on the 2014 CaIPERS Experience Study for the period from 1997 to 2014. 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 7.15% 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 7.15% 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.
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.
67
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 8 — Pension Plans (Continued)
Asset Class
Current Target Real Return
Allocation Years 1 - 10 (1)
Real Return
Years 11 + (2)
Global Equity
Global Fixed Income
Inflation Sensitive
Private Equity
Real Estate
Infrastructure and Forestland
Liquidity
47.00%
19.00%
6.00%
12.00%
11.00%
3.00%
2.00%
(1) An expected inflation of 2.50% used for this period
(2) An expected inflation of 3.00% used for this period
Changes in the Net Pension Liability
The changes in the Net Pension Liability for each Plan follows:
Miscellaneous Plan:
Balance at June 30, 2016 (1)
Changes in the year:
Service cost
Interest on the total pension liability
Changes in Assumptions
Differences between expected and actual
experience
Contribution - employer
Contribution - employee
Net investment income (2)
Benefit payments, including refunds of employee
contributions
Other changes in fiduciary net position
Net changes during measurement period
Balance at June 30, 2017
5.25% 5.71%
0.99% 2.43%
0.45% 3.36%
6.83% 6.95%
4.50% 5.13%
4.50% 5.09%
-0.55% -1.05%
Increase (Decrease)
Total Pension
Liability
$ 173,732,809
2,862,495
12, 923, 048
10,541,016
(398, 276)
(9,129, 724)
16, 798, 559
Plan Fiduciary Net Net Pension
Position Liability
$ 122,744,359 $ 50,988,450
3,950,727
1,341,146
13,581,014
(9,129, 724)
(181,224)
9,561,939
2,862,495
12, 923, 048
10,541,016
(398,276)
(3,950,727)
(1,341,146)
(13,581,014)
181,224
7,236,620
$ 190, 531, 368 $ 132, 306, 298 $ 58, 225, 070
68
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 8 — Pension Plans (Continued)
Safety Plan:
Balance at June 30, 2016 (1)
Changes in the year:
Service cost
Interest on the total pension liability
Changes in Assumptions
Differences between expected and actual
experience
Contribution - employer
Contribution - employee
Net investment income (2)
Benefit payments, including refunds of employee
contributions
Other changes in fiduciary net position
Net changes during measurement period
Balance at June 30, 2017
Increase (Decrease)
Total Pension Plan Fiduciary Net
Liability Position
$ 170, 977, 761 $ 103, 945, 660
3,336,917
12, 869, 943
10, 945, 791
1,123, 761
(9,433,148)
18, 843, 264
5,220,306
1,095,689
11, 443, 777
(9,433,148)
(154, 520)
Net Pension
Liability
$ 67,032,101
3,336,917
12, 869, 943
10,945,791
1,123, 761
(5,220,306)
(1,095,689)
(11,443, 777)
154,520
8,172,104 10, 671,160
$ 189,821,025 $ 112,117,764 $ 77,703,261
(1) The fiduciary net position includes receivables for employee service buybacks, deficiency reserves,
fiduciary self-insurance and OPEB Expense.
(2) Net of administrative expenses.
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each
Plan, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1 -
percentage point lower or 1 -percentage point higher than the current rate:
1% Decrease
Net Pension Liability
Current Discount Rate
Net pension Liability
1% Increase
Net Pension Liability
Pension Plan Fiduciary Net Position
Miscellaneous Plan Safety Plan
6.15% 6.15%
$83,480,241 $104,180,259
7.15% 7.15%
$58,225,070 $ 77,703,261
8.15% 8.15%
$37,353,443 $56,060,808
Detailed information about each pension plan's fiduciary net position is available in the separately issued CaIPERS
financial reports
69
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 8 — Pension Plans (Continued)
Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2018, the City recognized pension expense of $8,321,133 and $10,011,164 for the
Miscellaneous and Safety Plans, respectively.
At June 30, 2018, 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
Total
Miscellaneous Plan
Safety Plan
TOTAL
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
$ 1,404,667 $
6,776,367
- $ 2,025,661 $
- 8,339,650
168,261 256,035
1,806,338
$10,155,633
- $ 3,430,328 $
839,726 15,1 16,017
1,170,928 266,549
839,726
1,339,189 522,584
1,572,836 3,379,174
$ 256,035 $13,109,075 $ 1,106,275 $23,264,708 $ 1,362,310
The $1,404,667 and $2,025,661 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, 2019.
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized
as pension expense as follows:
Year Ending
30 -Jun
Miscellaneous
Plan
Safety
Plan
2019 $ 3,703,070 $2,046,477
2020 5,014,833 4,622,023
2021 770,922 3,562,668
2022 (993,897) (254,026)
Total $ 8,494,931
Total
$ 5,749,547
9,636,856
4,333,590
(1,247,923)
$9,977,142 $18,472,070
Note 9 — Post Employment 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.
70
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 9 — Post Employment Benefits Other Than Pensions (Continued)
A. Plan Description (Continued)
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
B. Eligibility
Employees of the City are eligible for retiree health benefits if they retire from the City and commence pension
benefits under PERS (typically on or after age 50 with at least five years of PERS eligible service). Membership in
the plan consisted of the following at June 30, 2017, the date of the latest actuarial valuation.
C. Funding Policy
Eligibility Plan
Active plan members 283
Inactive plan members entitled to, but not yet
receiving benefits 93
Retirees electing coverage 194
Retirees 7
Total 577
Contribution requirements of the Retiree Health Plan are based on pay-as-you-go financing. The City's policy is
to fund the normal cost (current accrual for benefits being earned) plus an amortization of the net (unfunded
accrued) OPEB liability. For fiscal year 2017-18, the City contributed $2,947,260, of which $1,000,000 was
placed in an OPEB Trust.
71
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 9 — Post Employment Benefits Other Than Pensions (Continued)
D. Net OPEB Liability
The City's net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to calculate the net
OPEB liability was determined by an actuarial valuation as of June 30, 2017. The net OPEB liability at
June 30, 2018 was:
Actuarial accrued liability (AAL)
Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL)
E. Actuarial Methods and Assumptions
$ 34, 354, 842
(1,079,480)
$ 33, 275, 362
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.
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.
F. Actuarial Valuations
The net OPEB liability in the June 30, 2017 actuarial valuation was determined using the following actuarial
assumptions, applied to all periods included in the measurement, unless otherwise specified:
Actuarial Methods and Assumptions Used to Determine Total OPEB Liability
Valuation date: June 30, 2017
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Wage Inflation
Expected Rate of Return
Healthcare Trend Rate
G. Discount Rate
Measurement date: June 30, 2017
Entry Age Normal level percent of pay cost method
3.60%
2.75%
3.00%
6.73% per annum. This discount rate assumes the
An annual healthcare cost trend rate of 6.8%
initially reduced by decrements to an ultimate of
4.40% therefore.
The discount rate used to measure the net OPEB liability was 3.60%. This discount rate assumes the City
continues to fully fund for its retiree health benefits through the California Employers" Retiree Benefit Trust
(CERBT) under its investment allocation strategy 2. The rate reflects the CERBT published median interest rate
for strategy 1 of 6.73% with an additional margin for adverse deviation.
72
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 9 — Post Employment Benefits Other Than Pensions (Continued)
G. Discount Rate (Continued)
The table below reflects long-term expected real
using the capital market assumptions applied
geometric rates of return are net of administrative
Asset Class
Global equity
Global fixed income
Inflation sensitive
Private equity
Real estate
Target
Allocatio
rate of return by asset class. The rate of return was calculated
to determine the discount rate and asset allocation. These
expenses.
Long-term Expected
n Real Rate of Return
40.00%
39.00%
10.00%
3.00%
8.00%
1 - Long term expected rate of return in 6.73%
5.50%
2.35%
1.50%
1.75%
3.65%
H. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the City, as well as what the City's net OPEB liability would be if it
were calculated using a discount rate 1 -percentage point lower (6.0%) or 1 -percentage point higher (8.0%) than
the current discount rate:
Plan's Net OPEB Liability/(Asset)
Discount Rate - 1%
(2.60%)
Current Discount
Rate (3.60%)
Discount Rate + 1%
(4.60%)
$ 37, 086, 366 $ 33, 275, 362 $ 30, 053, 277
I. Sensitivity of the Net OPEB Liability to changes in the Healthcare Cost Trend Rate
The following presents the net OPEB liability of the City, as well as what the City's net OPEB liability would be if it
were calculated using healthcare cost trend rates 1 -percentage point lower (5.0%HMO/5.5%PPO decreasing to
4.0%HMO/4.5%PPO) or 1 -percentage point higher (7.0%HMO/6.5%PPO decreasing to 6.0%HMO/6.5%PPO)
than the current healthcare cost trend rates:
1% Decrease
Current Discount Rate 1% Increase
HMO 4.00% 5.00% 6.00%
PPO 4.50% 5.50% 6.50%
City Plan $ 29,880,363 $ 33,275,362 $ 37,345,945
73
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 9 — Post Employment Benefits Other Than Pensions (Continued)
J. OPEB Liabilities, OPEB Expense and Deferred Outflows/Inflows of Resources to OPEB
For the year ended June 30, 2018, the City recognized OPEB expense of $1,810,506 for the City Plan. At June
30, 2018 the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from
the following sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Contributions subsequent to
measurement date $ 2,019,230 $
Change of assumptions
actual experience
(2,162,961)
(32,854)
$ 2,019,230 $ (2,195,815)
The $2,019,230 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, 2019.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will
be recognized as OPEB expense as follows:
Measurement Period Ended June 30,
2019 $ (363,964)
2020 (363,964)
2021 (363,964)
2022 (363,962)
2023 (355,750)
Thereafter (384,211)
$ (2,195,815)
74
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 9 — Post Employment Benefits Other Than Pensions (Continued)
K. Change in Net OPEB Liability
Increase (Decrease)
Total OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2016 (as restated) $ 36,607,931 $ - $ 36,607,931
Changes Recognized for the Measurement Period:
Service Cost 1,139,099 1,139,099
Interest on the total OPEB liability 1,073,783 1,073,783
Changes of assumptions (2,518,711) - (2,518,711)
Employer contributions 2,947,260 (2,947,260)
Net investment income 79,789 (79,789)
Benefit payments, including refunds of member
contributions (1,947,260) (1,947,260)
Administrative expenses - (309) 309
Net Changes during July 1, 2016 to June 30, 2017 (2,253,089) 1,079,480 (3,332,569)
Balance at June 30, 2017 (Measurement Date) $ 34,354,842 $ 1,079,480 $ 33,275,362
Note 10 — 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 15).
The City is self-insured for workers' compensation up to the first $250,000 per claim. Any claims of $250,000 up to
California statutory limits are covered under a purchased policy through the membership with the Local Agency
Workers' Compensation Excess Joint Powers Authority with coverage up to $300,000,000 in the current year. The
City has not had any settlements that exceeded its workers' compensation insurance coverage.
The City is fully self-insured for dental and unemployment benefits 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 $7,994,538 at June 30, 2018, 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.
75
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 10 — Claims and Benefits (Continued)
Changes in the self-insurance liability for the years ended June 30, 2018, 2017 and 2016 are as follows:
Current Year Claims &
Beginning
FY 17-18 $ 8,842,398
FY 16-17 8,480,942
FY 15-16 8,305,887
Changes In Estimates Claim Payments
Note 11 — Participation in Joint Ventures
Northern California Power Agency
$ 1,121,320
2,365,077
2,118,423
$ (1,969,182)
(2,003,621)
(1,943,368)
Ending
$ 7,994,536
8,842,398
8,480,942
The City, along with fifteen other public agencies, is a member of the Northern California Power Agency (NCPA) that
was formed in 1968 as a joint powers agency. The membership consists of twelve cities with publicly owned electric
utility distribution systems, one port authority, one transit authority, one public utility district, one associate member.
NCPA is generally empowered to purchase, generate, transmit, distribute and sell electrical energy. Members
participate in the projects of NCPA on an elective basis. NCPA is governed by a Commission comprised of one
representative from each member. 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 members.
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 NCPA's members may choose which projects it wishes to participate in, and is known as a "Project
Participant" for each such 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. As of June 30, 2018, the City has not had an
increase as a result of a defaulting party to the Member Agreement.
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.
76
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 11 - Participation in Joint Ventures (Continued)
General Operating Reserve with NCPA (Continued)
As of June 30, 2018, the City's balance in the NCPA General Operating Reserve, which has been credited with
annual interest earnings and settlements, is $9,456,605, and is shown as "advance receivable" in the Business -Type
Activities on the Government -Wide Statement of Net Position.
Project Participation
The NCPA members and their percentage share at June 30, 2018, 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 16.88 % 10.00 % 21.82 % 19.00 % 30.78 %
Bay Area Rapid Transit 6.60
Biggs 0.23 0.20 0.34 0.27
Gridley 0.34 0.35 0.62 1.96
Healdsburg 3.67 1.66 5.83 6.69 1.64
Lodi 10.28 10.37 13.39 39.50 20.61 9.50
Lompoc 3.68 2.30 5.83 5.00 6.71 2.04
Palo Alto 22.92
Plumas-Sierra Rural Electric Coop 0.70 1.69 1.82 1.31 0.79
Roseville 7.88 12.00 36.50 13.08
Santa Clara 44.39 37.02 41.67 25.75
Ukiah 5.61 2.04 9.09 10.23 1.79
OTHER PARTICIPANTS
Azusa 2.79
California Department of Water Resources 33.50
Modesto Irrigation District 10.71
Power & Water Resources Pooling Agency 2.67
Turlock Irrigation District 6.33 9.61
Bulk power purchased by the City through NCPA amounted to $39,583,812 during the year ended June 30, 2018 and
is reflected in utilities expense in the Electric Enterprise Fund.
Geothermal Project
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 165 MW (nameplate rating) turbine
generator units utilizing low temperature geothermal steam; associated electrical, mechanical and control facilities; a
heat dissipation system; a steam gathering system; a transmission tap -line; and, other related facilities. Geothermal
steam for the project is derived from the geothermal property, which includes well pads, access roads, steam wells
and re-injection wells.
Under a power purchase agreement with NCPA, the City is obligated to pay 10.28% of the operating and debt service
costs. Outstanding long-term debt related to this project was approximately $29 million at June 30, 2018.
77
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 11 — Participation in Joint Ventures (Continued)
Hydroelectric Project
NCPA contracted to finance, manage, construct and operate Hydroelectric Project Number One for the licensed
owner, Calaveras County Water District. In exchange, NCPA has the right to the electric output of the project for 50
years from February 1982. NCPA has also the option to purchase power from the project in excess of the District's
requirements for the subsequent 50 years, subject to regulatory approval.
Under a power purchase agreement with NCPA, the City is obligated to pay 10.37% of the debt service and operating
costs. At June 30, 2018, approximately $315 million in long-term debt used to finance this project was outstanding.
Combustion Turbine Project #1
The original project consisted of five combustion turbine units, each nominally rated at 25 MW. Concurrent with the
final project bond maturity, two units located in Roseville were acquired by an NCPA member. The remaining project
consists of two units 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, 2018, there was no outstanding long-term debt related to this project.
Multiple 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, 2018, approximately $34 million in long-term debt was outstanding.
Transmission Project
The project was undertaken to meet certain obligations of NCPA under the NCPA/PG&E Interconnection Agreement.
The project includes co -tenancy interest in PG&E's 230 kV Castle Rock to Lakeville Substation Transmission Line in
Sonoma County, additional firm transmission rights in that transmission line, and a central dispatch facility. The City
is obligated to pay 20.6077% of the debt service and operating costs. At June 30, 2018, there was no outstanding
long-term debt related to this project.
Lodi Energy Center
The project is a 296 MW natural gas-fired, combined -cycle power generation plant located in Lodi on City property.
Pursuant to a power sales agreement, NCPA owns and operates the project, selling the capacity and energy to
various project participants, including both members and non-members of NCPA.
The City is obligated to pay 9.5% of operating costs and 17.03% of the debt service with Issue One. Outstanding
long-term debt related to Issue One for the project was approximately $227 million at June 30, 2018.
The following are the most recent available audited condensed financial statements of NCPA. These financial
statements are not reported as part of the City's operations:
At June 30, 2018, NCPA's total net outstanding long-term debt was $736,932,000 at an average interest rate of 5%.
The current portion of long-term debt at June 30, 2018, was $42,335,000. Lodi's portion of the long-term debt is
$88,399,561.
78
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 11 — Participation in Joint Ventures (Continued)
Complete financial information for NCPA may be obtained at the following administration office:
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6411
Transmission Agency of Northern California
Condensed Statement of Net Position
June 30, 2018
(in thousands)
Assets and Deferred Outflows of Resources
Current assets $ 89,908
Restricted assets 219,905
Electric plant, net 531,337
Other assets 231,430
Total assets 1,072,580
Deferred outflows of resources 61,076
Total assets and deferred outflows of resources $ 1,133,656
Liabilities, Deferred Inflows of Resources and Net Position
Long-term debt, net
Current liabilities
Non-current liabilities
Deferred inflows of resources
Net position
Total liabilities, deferred inflows
of resources and net position
$ 694,597
95,389
231,517
74,085
38,068
$ 1,133,656
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 11 — Participation in Joint Ventures (Continued)
Condensed Statement of Revenues, Expenses
and Changes in Net Position
Year ended June 30, 2018
(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
$ 560,883
(509,190)
(25, 559)
(11,812)
14,322
(10,314)
4,008
34,060
$ 38,068
Combined Statement of Cash Flows
Year ended June 30, 2018
(in thousands)
Net cash from operating activities $ 83,380
Net from investing activities (26,549)
Net cash from capital and related
financing activities (76,471)
Net cash from noncapital
and related financing activities (2,408)
Increase in cash and cash equivalents (22,048)
Cash and cash equivalents, beginning
of year 126,044
Cash and cash equivalents end of year $ 103,996
The City of Lodi is a member of the Transmission Agency of Northern California (TANC), a California Joint Powers
Agency formed in the early 1980's to build the California Oregon Transmission Project (COTP) — a transmission line
connecting the Pacific Northwest with Central California.
On April 2, 2014, the Lodi City Council approved a 25 -year layoff of the City's 26.7 MW share of the COTP transfer
capability, effective July 1, 2014, whereby the City and all the TANC Members who are in the CAISO Balancing
Authority lay off their interests to certain other COTP participants — specifically the Sacramento Municipal Utility
District, Modesto Irrigation District and Turlock Irrigation District. In exchange, these entities pay the City's current
allocated share of COTP costs. This layoff arrangement does not change Lodi's membership status in TANC and
does not relieve the City of its obligations under the TANC Agreement in the event of any default in payment by an
acquiring party.
80
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 11 — Participation in Joint Ventures (Continued)
TANC and certain TANC Members have arranged for Pacific Gas & Electric (PG&E) to provide TANC and its
members with 300 MW of firm bi-directional transmission capacity on its transmission system between its Midway
Substation near Buttonwillow, CA and its Telsa Substation near Tracy, CA, near the southern physical terminus of the
COTP under an agreement known as the South of Telsa (SOT) Principles. The City's share of this Telsa-Midway
Transmission Service is 6.21 MW. The City has utilized its full allocation of Telsa-Midway Transmission Service for
firm and no -firm power transactions in the past. The City is responsible for 2.07% of TANC's SOT debt service of
approximately $53,000 per year.
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
Note 12 — 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 Board members elect officers of CJPRMA every two years.
The ultimate cost of the program to the City depends on the catastrophic losses of all members, as well as the City's
own loss experience and will be determined through an actuarial analysis of loss history during the ten-year period
preceding the three years prior to the end of the current program year. The City periodically pays 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, 2018, premiums of $165,785 were paid to CJPRMA for
the liability program.
The participants at June 30, 2018, are as follows: Alameda, Chico, Fairfield, Fremont, Livermore, Lodi, Northern
California Cities Self Insurance Fund, Petaluma, Redding, Redwood Empire Municipal Insurance Fund, Richmond,
Roseville, San Leandro, San Rafael, Santa Rosa, Small Cities Organized Risk Effort, Stockton, Sunnyvale, Vacaville,
Vallejo, and Yolo County Public Agencies Risk Management Insurance Authority.
Complete financial information for CJPRMA may be obtained at the following administration office:
California Joint Powers Risk Management Authority
3252 Constitution Dr.
Livermore, CA 94551
Local Agency Workers' Compensation Excess Joint Powers Authority
The City, along with thirty-three other public agencies, is a member of the Local Agency Workers' Compensation
Excess Joint Powers Authority (LAWCX), which was formed July 1992, for the purpose of sharing the risk of workers'
compensation losses. LAWCX offers $150,000, $250,000, $350,000, $500,000 and $1 million self-insured retentions
(SIR) or a member can attach directly to the purchased excess insurance. LAWCX covers the layer above the
member SIR up to $5 million. The City'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 $447,075 in premiums to LAWCX during the year ended June 30, 2018.
81
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 12 — Membership in Insurance Pools (Continued)
The participants at June 30, 2018, are as follows: City of Alameda, Association of Bay Area Governments Shared
Risk Pool (ABAG SHARP), Bay Cities Joint Powers Insurance Authority (BCJPIA), City of Benicia, Central Contra
Costa County Transit Agency (CCCTA), California Housing Workers' Compensation Authority (CHWCA), Central San
Joaquin Valley Risk Management Authority (CSJVRMA), City of Clovis, City of Coronado, City of Encinitas, Fire
Agencies Self Insurance System (FASIS), City of Gilroy, City of Livermore, City of Lodi, Town of Los Gatos, City of
Merced, Monterey County Local Agencies Insurance Authority (MCLAIA), City of Morgan Hill, City of Newark, City of
Placentia, City of Pleasanton, Public Agency Risk Sharing Authority of California (PARSAC), City of Roseville, Public
Entity Risk Management Authority (PERMA), City of San Leandro, City of Santa Maria, City of Santee, Small Cities
Organized Risk Effort (SCORE), City of South Lake Tahoe, City of Suisun City, City of Vacaville, City of Vallejo,
Vector Control Joint Powers Agency (VCJPA) and City of Vista.
Complete financial information for LAWCX may be obtained at the following administration office:
Local Agency Workers' Compensation Excess Joint Powers Authority
1750 Creekside Oaks Drive, Suite 200
Sacramento, California 95833
California Transit Insurance Pool
The City, along with thirty-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 official's 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 $134,249 in premiums to CaITIP during the year ended June 30, 2018. 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.
Program
Self -Insured Limit Physical
Retention (in millions) Damage
City of Lodi Transit System 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 20
Sacramento, California 95833
82
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 13 — Deficit in Net Position
The City has a deficit net position in its governmental activities in the amount of ($117,534,830) which is primarily
attributable to the net pension and OPEB obligations outstanding as of June 30, 2018.
A deficit in net position in the amount of ($1,370,125) in the ISF Fleet Services Fund at June 30, 2018, 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.
A deficit in net position in the amount of ($31,955,868) in the ISF Benefits Fund at June 30, 2018, is attributed to the
restatement of the OPEB Liability as required by GASB 75.
Note 14 — Pollution Remediation Obligation
The City relies on groundwater for its drinking water and in the late 1980's, PCE and TCE pollution was discovered in
several municipal water supply wells. Investigations conducted by the California Regional Water Quality Control
Board (RWQCB) in the early 1990's under the Well Investigation program revealed numerous areas where TCE was
discharged, or where PCE from dry cleaning operations was discharged to the sewer system. In 1997, the
Department of Toxic Substances Control (DTSC) and the City entered into a cooperative agreement whereby the City
assumed a lead role in the cleanup and agreed to pursue legal action against potentially responsible parties (PRPs).
The City's estimate of the pollution remediation obligation was $70 million. The City has settled with all the involved
parties.
The City received a draft cleanup and abatement order to investigate the discharges of waste, clean up the waste and
abate the effects of the discharges of waste in conformance with the State Water Resources Control Board's
(SWRCB) Resolution No. 92-49 Policies and Procedures for Investigation and Cleanup and Abatement of Discharges
Under the Water Code Section 13304 and with the RWQCB's Water Quality Control Plan for the Sacramento River
and San Joaquin River. The City then engaged the services of Treadwell and Rollo to advise the City on courses of
action in the preparation of feasibility studies, remedial design, and remedial action plan to comply with the technical
and reporting requirements of the SWRCB. The City's estimated total pollution remediation obligation as of June 30,
2018, is $16,853,522. This amount is an estimate and subject to changes resulting from price increases or
reductions, technology, or changes in applicable laws or regulations.
Note 15 — 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 an initial term of 40 years. The agreement provides for the purchase of 6,000 acre feet per year
and the City pays the District $1.2 million annually. The initial term of the agreement was for 40 years. In January
2008, the District and the City of Lodi amended the 2003 water sale contract to, among other matters, extend that
agreement for four years to October 2047.
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, 2018, for any of the
City's outstanding Certificates of Participation and Revenue Bonds.
83
City of Lodi
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2018
Note 15 — Commitments and Contingencies (Continued)
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, 2018 are as follows:
Governmental Activities: Business -type Activities:
General Fund
Other governmental funds
$ 32,145 Electric Fund $ 204,639
865,136 Wastewater Fund 7,316,328
Water Fund 1,063,223
Transit Fund 2,030,104
Total governmental activities $ 897,281 Total business -type activities $10,614,293
Note 16 — Prior Period Adjustment
The City recorded the following prior period adjustments to the beginning net position of the Governmental Activities
in order to record beginning balances of OPEB-related items as part of GASB Statement 75 implementation.
Statement of Net Position June 30, 2017 $ 55,578,803
Prior Period Adjustment - To
implement OPEB per GASB 75 (24,512,888)
June 30, 2017 - Adjusted $ 31,065,915
Note 17 — Subsequent Events
On June 20, 2018, the Lodi City Council voted unanimously for a 1/2 cent City sales tax measure to be placed on the
November 6, 2018 ballot (Measure L). Measure L was certified the first week of December and passed by 58.7% of
the voters. The sales tax measure authorizes a 1/2 cent sales tax to provide needed revenue to return essential public
services to pre -recession levels, maintain existing City services, and provide key improvements to City of Lodi public
facilities and infrastructure. The sales tax measure is anticipated to bring in approximately $5.4 million in additional
general revenues to the City. Revenue collections will begin as soon as April 2019.
On December 31, 2017, all employment contracts, Memorandum of Understanding's (MOU's), between the City of
Lodi and the employees' Unions expired. The City has been negotiating with the employees' labor unions on terms
and conditions of employment and the MOU's. In August 2018, the first MOU contract was presented to City Council
for approval. The final MOU contract was presented and approved by Council in December 2018. The new MOU
contracts are extended through June 30, 2019 or December 31, 2019, depending on the bargaining unit.
84
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF LODI
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
MISCELLANEOUS PLAN
Measurement Period 2016-17 (1)
Total Pension Liability
Service Cost
Interest
Differences Between Expected and Actual Experience
Changes of Assumptions
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)
2015-16 (1)
$ 2,862,495 $ 2,464,894
12, 923, 048 12, 565, 553
(398,276) 542,177
10,541,016
(9,129,724) (8,641,550)
16,798,559 6,931,074
173, 732, 809 166, 801, 735
190, 531,368 173,732,809
2014-15 (1)
$ 2,358,112
12,061,399
(1,655,012)
(2,903,507)
(8,208,103)
1,652,889
165,148,846
166,801,735
2013-14 (1)
$ 2,478,901
11,705,179
(7,729,680)
6,454,400
158,694,446
165,148,846
3,950,727 3,500,179 2,994,958 2,694,850
1,341,146 1,241,136 1,183, 452 1,237,916
13,581,014 643,509 2,829,910 19,249,151
(9,129,724) (8,641,550) (8,208,103) (7,729,680)
(181,224) (76,838) (145,538) -
9,561,939 (3,333,564) (1,345,321) 15,452,237
122, 744,359 126,077,924 127,423,245 111,971,008
132, 306, 298 122,744, 360 126,077,924 127,423,245
$ 58,225,070 $ 50,988,449 $ 40,723,811 $ 37,725,601
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability 69.44% 70.65% 75.59%
Covered Payroll $ 17,970,339 $ 17,423,446 $ 16,572,579
Plan Net Pension Liability as a Percentage of
Covered Payroll 324.01% 292.64% 245.73%
(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 2017-18, the discount rate was changed from 7.65 percent to 7.15 percent. 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.
86
77.16%
$ 16,669,363
226.32%
CITY OF LODI
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
SAFETY PLAN
Measurement Period
Total Pension Liability
Service Cost
Interest
Changes of Benefit Terms
Differences Between Expected and Actual Experience
Changes of Assumptions
Benefit Payments, Including Refunds of Employee
Benefit Payments, Including Refunds of Employee Contributions
Net Change in Total Pension Liability
Total Pension Liability - Beginning
Total Pension Liability - Ending (a)
Plan Fiduciary Net Position
Contributions - Employer
Contributions - Employee
Net Investment Income (2)
Benefit Payments, Including Refunds of Employee Contributions
Other Changes in Fiduciary Net Position
Net Change in Fiduciary Net Position
Plan Fiduciary Net Position - Beginning
Plan Fiduciary Net Position - Ending (b)
Plan Net Pension Liability - Ending (a) - (b)
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability
Covered Payroll
Plan Net Pension Liability as a Percentage of
Covered Payroll
2016-17 ") 2015-16 (1) 2014-15 ")
3,336,917
12,869,943
1,123,761
10,945,791
(9,433,148)
18,843,264
170,977,761
189,821,025
$ 2,890,607 $ 2,968,819
12, 357,788 11, 827,918
600,847 (932,918)
(2,939,033)
(8,730,081) (8,134,067)
7,119,161
163,858,600
2013-14 (1)
$ 3,048,048
11, 390,793
(7,448,361)
2,790,719 6,990,480
161, 067,881 154, 077,401
170, 977,761 163, 858,600 161, 067,881
5,220,306 4,660,278 4,176,197 4,106,044
1,095,689 1,062,984 1,007,876 1,058,376
11,443,777 558,434 2,397,191 16,070,261
(9,433,148) (8,730,081) (8,134,067) (7,448,361)
(154,520) (64,882) (119,971) -
8,172,104 (2,513,267) (672,774) 13,786,320
103,945,660 106,458,927 107,131,701 93,345,381
112,117,764 103, 945, 660 106,458, 927 107,131, 701
$ 77,703,261 $ 67,032,101 $ 57,399,673 $ 53,936,180
59.06% 60.79% 64.97% 66.51%
$ 11,518,923 $ 11,106,615 $ 11,293,867 $ 11,194,123
674.57% 603.53% 508.24%
(I) 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 2017-18, the discount rate was changed from 7.65 percent to 7.15 percent. 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
481.83%
CITY OF LODI
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF PENSION CONTRIBUTIONS
2017-18 (1) 2016-17 (1) 2015-16 (1) 2014-15 (1) 2013-14 (1)
Miscellaneous Plan:
Actuarially Determined Contributions $ 3,950,727 $ 3,880,495 $ 3,500,179 $ 2,994,958 $ 2,694,850
Contributions in Relation to the Actuarially Determined Contributions (2) (3,950,727) (3,880,495) (3,500,179) (2,994,958) (2,694,850)
Contribution Deficiency $ - $ - $ - $ - $ -
Covered Payroll (3, 4) $ 17,970,339 $ 17,802,886 $ 17,423,446 $ 16,572,579 $ 16,669,363
Contributions as a Percentage of Covered Payroll 21.98% 21.80% 20.09% 18.07% 16.17%
Safety Plan:
Actuarially Determined Contributions $ 5,220,306 $ 5,136,610 $ 4,660,278 $ 4,176,197 $ 4,106,044
Contributions in Relation to the Actuarially Determined Contributions (2) (5,220,306) (5,136,610) (4,660,278) (4,176,197) (4,106,044)
Contribution Deficiency $ - $ - $ - $ - $ -
Covered Payroll (3, 4) $ 11,518,923 $ 11,477,432 $ 11,106,615 $ 11,293,867 $ 11,194,123
Contributions as a Percentage of Covered Payroll 45.32% 44.75% 41.96% 36.98% 36.68%
Notes to Schedule:
(1) Historical information is required only for measurement periods for which GASB 68 is applicable.
(2) Emplolyers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to
make additioanl contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determind contributions.
(3) Covered -Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB 68 defines
covered -employee payroll as the total payroll of employees that are provided pensions through the pension plan. Accordingly, if pensionalbe earnings are
different than total earnings for covered -employers, the employer should display in the disclosure footnotes the payroll based on total earnings for the
covered group and recalculate the required payroll -related ratios.
(4) Payroll from prior year $17,970,339 for miscellaneous was assumed to increase by 1.00 percent payroll growth assumption.
Payroll from prior year $11,477,432 fo safety was assumed to increase by 0.36 percent payroll growth assumption.
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.
88
CITY OF LODI
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years 1
For the Year Ended June 30, 2018
Measurement period, year ending: 6/30/2017 1
Total OPEB liability
Service cost $ 1,139,099
Interest 1,073,783
Changes of benefit terms
Differences between expected and actual experience
Changes of assumptions (2,518,711)
Benefit payments, including refunds of member contributions (1,947,260)
Net change in total OPEB liability (2,253,089)
Total OPEB liability - beginning 36,607,931
Total OPEB liability - ending (a) $ 34,354,842
OPEB fiduciary net position
Contributions - employer $ 2,947,260
Net investment income 79,789
Benefit payments, including refunds of member contributions (1,947,260)
Administrative expense (309)
Net change in plan fiduciary net position 1,079,480
Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b) 1,079,480
Plan net OPEB liability - ending (a) - (b) $ 33,275,362
Plan fiduciary net position as a percentage of the total OPEB liability 3.14%
Covered -employee payroll $ 35,314,645
Plan net OPEB liability as a percentage of covered -employee payroll 94.23%
1 Ten year historical information is not available.
89
City of Lodi
General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
For the Year Ended June 30, 2018
REVENUES
Taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines, forfeits, and penalties
Investment and rental income
Miscellaneous revenue
Total revenues
EXPENDITURES
Current:
City Manager
City Clerk
City Attorney
Human Resources
Information Systems
Financial Services
Budget and Treasury
Non Departmental
Total general government
Public protection:
Police
Fire
Total public protection
Public works
Library
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER)
EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
Net changes in fund balance
FUND BALANCES, beginning of year
FUND BALANCES, end of year
Basis adjustment:
Cummulative pension set aside
Fund balance (budgetary basis)
See accompanying notes to the required supplementary information.
Budgeted Amounts
Original
Final
26,626,650 $
98,820
12,473,240
1,603,830
1,480,000
1,558,630
289,000
44,130,170
476,690
562,290
557,480
496,340
1,249,800
1,900,510
289,230
3,596,380
9,128,720
Actual
26,626,650 $
98,820
12,473,240
1,813,830
1,480,000
1,558,630
289,000
44,340,170
476,564
667,729
557,398
531,281
1,256,042
1,865,274
289,191
4,009,021
9,652,500
19,804,640 19, 720,035
11,695,580 11,793,012
31,500,220 31,513,047
2,322,320 2,321,968
1,129,940 1,129,650
44,081,200 44,617,165
48,970 (276,995)
5,949,190 5,949,190
(6,969,450) (6,969,450)
(1,020,260) (1,020,260)
(971,290) (1,297,255)
14, 968, 357 14, 968, 357
13,997,067 $ 13,671,102
90
Variance with
Final Budget
27,422,477 $
67,757
12,377,159
1,934,180
1,396,137
1,747,857
342,549
45,288,116
473,037
590,628
513,978
477,112
1,185,244
1,590,176
269,881
1,880,508
6,980,564
19,474,114
11,102,645
30,576,759
1,852,852
1,058,133
40,468,308
4,819,808
5,949,190
(6,969,450)
(1,020,260)
795,827
(31,063)
(96,081)
120,350
(83,863)
189,227
53,549
947,946
(3,527)
(77,101)
(43,420)
(54,169)
(70,798)
(275,098)
(19,310)
(2,128,513)
(2,671,936)
(245,921)
(690,367)
(936,288)
469,116
71,517
(3,067,591)
(2,119,645)
3,799,548 $
14,968,357
18,767,905
(8,573,949)
10,193,956
(2,119,645)
REVENUES
Intergovernmental revenues
Charges for services
Investment and rental income
Miscellaneous revenue
Total revenues
City of Lodi
Streets
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
For the Year Ended June 30, 2018
Budgeted Amounts
Variance with
Original Final Actual Final Budget
6,678,420 $ 6,678,420 $ 7,641,630 $ 963,210
1,310,890 1,310,890 703,770 (607,120)
26,570 26,570 20,820 (5,750)
486,900 486,900 362,659 (124,241)
8,502,780 8,502,780 8,728,879 226,099
EXPENDITURES
Current:
Public works 2,544,350 2,544,060 2,305,308
Capital outlay 1,495,000 9,380,397 5,712,335
Total expenditures 4,039,350 11,924,457 8,017,643
Excess (deficiency) of revenues over expenditures 4,463,430 (3,421,677) 711,236
OTHER FINANCING SOURCES (USES)
Transfers in 461,960 461,960 461,960
Total other financing sources (uses) 461,960 461,960 461,960
238,752
3,668,062
3,906,814
4,132,913
Net change in fund balance 4,925,390 (2,959,717) 1,173,196 $
Fund balances, beginning of year 5,223,956 5,223,956 5,223,956
Fund balances, end of year $ 10,149,346 $ 2,264,239 6,397,152
Basis adjustment:
Cummulative pension set aside (156,702)
Fund balance (budgetary basis) $ 6,240,450
See accompanying notes to the required supplementary information.
91
4,132,913
CITY OF LODI
Note to the Required Supplementary Information
June 30, 2018
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.
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
92
CITY OF LODI
Note to the Required Supplementary Information (Continued)
June 30, 2018
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 long-term debt;
Capital Projects Funds account for the financial resources to be used for the acquisition or
construction of major capital facilities, other than those financed by proprietary funds.
95
ASSETS
Cash and investments
Restricted cash and investments
Accounts receivable, net
Due from other funds
Interest Receivables
Due from other governmental agencies
Inventory
Total assets
LIABILITIES
Accounts payable and other liabilities
Accrued salaries and wages
Due to other funds
Advances from other funds
Unearned revenue
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue
Total deferred inflows of resources
FUND BALANCES
Nonspendable
Inventory
Restricted
Road -related projects
Capital projects
Home and CDBG program
Public safety
Community development
Parks, recreation and community services
Debt service
Total fund balances
City of Lodi
Combining Balance Sheet
Nonmajor Governmental Funds
Summary by Fund Type
June 30, 2018
Special revenue funds
Total Other
Capital projects funds Debt service funds Governmental Funds
$ 4,085,093 $
446,311
117,567
61,503
4,815
266,112
1,306
6,110,674 $
226,648
4,109
4,982,707 $
746 $
6,341,431 $
179,670 $
11,226
61,503
103,407
355,806
44,707
44,707
1,306
160
371,191
25,303
3,141,317
1,042,917
10,196,513
446,311
344,215
61,503
8,924
266,112
1,306
746 $
105,960 $
984,025
168,697
1,258,682
5,082,749
4,582,194 5,082,749
746
746
11,324,884
285,630
11,226
61,503
984,025
272,104
1,614,488
44,707
44,707
1,306
160
5,082,749
371,191
25,303
3,141,317
1,042,917
746
9,665,689
Total liabilities and fund balances $
4,982,707 $ 6,341,431 $
746 $ 11,324,884
96
City of Lodi
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds
Summary by Fund Type
For the Year Ended June 30, 2018
Total Other
Special revenue funds Capital projects funds Debt service funds Governmental Funds
REVENUES
Licenses and permits $ 1,696,202 $ $ - $ 1,696,202
Intergovernmental revenues 788,338 788,338
Charges for services 2,900,279 481,529 3,381,808
Investment and rental income 539,807 16,935 556,742
Miscellaneous revenue 14,602 486,083 500,685
Total revenues 5,939,228 984,547 6,923,775
EXPENDITURES
Current:
General government 2,693,136 64,014 2,757,150
Public protection 210,610 - 210,610
Public works 470,048 470,048
Community development 1,756,328 1,756,328
Parks and recreation 2,497,075 - 2,497,075
Capital outlay 59,660 2,524,191 2,583,851
Debt service:
Interest - 804,619 804,619
Principal retirement 77,009 951,775 1,028,784
Total expenditures 7,763,866 2,588,205 1,756,394 12,108,465
Excess (deficiency) of revenues over expenditures (1,824,638) (1,603,658) (1,756,394) (5,184,690)
OTHER FINANCING SOURCES (USES)
Transfers in 3,900,018 1,795,147 1,757,140 7,452,305
Transfers out (2,641,655) - - (2,641,655)
Total other financing sources (uses) 1,258,363 1,795,147 1,757,140 4,810,650
Net change in fund balances (566,275) 191,489 746 (374,040)
Fund balances - beginning 5,148,469 4,891,260 10,039,729
Fundbalances- ending $ 4,582,194 $ 5,082,749 $ 746 $ 9,665,689
97
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.
99
City of Lodi
Combining Balance Sheet
Nonmajor Special revenue funds
June 30, 2018
ASSETS
Cash and investments
Restricted cash and investments
Accounts receivables, net
Due from other funds
Interest receivables
Due from other governmental agencies
Inventory
Total assets
LIABILITIES
Accounts payable and other liabilities
Accrued salaries and wages
Due to other funds
Unearned revenue
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue
Total deferred inflow of resources
Total liabilities and deferred inflows of resources
FUND BALANCES
Nonspendable
Inventory
Restricted
Road -related projects
Public safety
Home and CDBG program
Community development
Parks, recreation and community services
Total fund balances
Parks, Recreation &
Community Services Public Safety
829,600 $
278,914
64,492
945
1,306
380,077
509
4,551
1,175,257 $
385,137
65,082 $
7,493
58,459
131,034
13,946
13,946
131,034 13,946
1,306
1,042,917
371,191
1,044,223 371,191
Total liabilities, deferred inflows of resources and fund balances $ 1,175,257 $ 385,137
100
City of Lodi
Combining Balance Sheet
Nonmajor Special revenue funds (continued)
June 30, 2018
HOME Program and
Community Development Total Nonmajor Special
Community Development Transportation Block Grants revenue funds
2,875,416 $ $ $ 4,085,093
167,397 446,311
53,075 117,567
61,503 61,503
3,298 63 4,815
72,784 188,777 266,112
1,306
3,180,398 $ 53,075 $ 188,840 $ 4,982,707
35,348 $ $ 79,240 $
3,733
52,915 8,588
31,002
39,081 52,915 118,830
39,081 52,915
179,670
11,226
61,503
103,407
355,806
44,707 44,707
44,707 44,707
163,537 400,513
1,306
160 160
371,191
25,303 25,303
3,141,317 3,141,317
1,042,917
3,141,317
160 25,303 4,582,194
$ 3,180,398 $ 53,075 $ 188,840 $ 4,982,707
101
City of Lodi
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Special revenue funds
For the Year Ended June 30, 2018
Parks, Recreation &
Community Services Public Safety
REVENUES
Taxes $ $
Licenses and permits
Intergovernmental revenues 225,034
Charges for services 1,931,213
Investment and rental income 519,164 4,935
Miscellaneous revenue 14,298
Total revenues 2,464,675 229,969
EXPENDITURES
Current:
General government
Public protection
Public works
Community development
Parks and recreation
Capital outlay
Debt service:
Principal
Total expenditures
Excess (deficiency) of revenues over expenditures
2,693,136
2,497,075
210,610
- 77,009
5,190,211 287,619
(2,725,536) (57,650)
OTHER FINANCING SOURCES (USES)
Transfers in 3,900,018
Transfers out (925,700)
Total other financing sources (uses) 2,974,318
Net change in fund balances
248,782 (57,650)
Fund balances - beginning 795,441 428,841
Fund balances - ending $ 1,044,223 $ 371,191
102
City of Lodi
Combining Statement of Revenues, Expenditures, and Changes in
Nonmajor Special revenue funds (continued)
For the Year Ended June 30, 2018
Community
Development
Transportation
HOME Program and
Community
Development Block Total Nonmajor Special
Grants revenue funds
$ $ $ $
1,696,202 1,696,202
40,180 53,075 470,049 788,338
969,066 2,900,279
15,443 189 76 539,807
304 14,602
2,721,195 53,264
1,756,328
59,660
470,125 5,939,228
470,048
2,693,136
210,610
470,048
1,756,328
2,497,075
59,660
- 77,009
1,756,328 59,660
470,048 7,763,866
964,867 (6,396) 77 (1,824,638)
(1,715,955)
3,900,018
(2,641,655)
(1,715,955) 1,258,363
(751,088) (6,396) 77 (566,275)
3,892,405 6,556
25,226 5,148,469
$ 3,141,317 $ 160 $ 25,303 $ 4,582,194
103
REVENUES
Charges for services
Investment and rental income
Miscellaneous revenue
Total revenues
EXPENDITURES
Current:
General government
Parks and recreation
Total expenditures
City of Lodi
Parks, Recreation & Community Services
Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
For the Year Ended June 30, 2018
Budgeted Amounts
Variance with
Original Final Actual Final Budget
1,777,810 $
513,200
5,000
1,777,810 $ 1,931,213 $ 153,403
513,200 519,164 5,964
5,000 14,298 9,298
2,296,010 2,296,010 2,464,675 168,665
2,818,760 2,861,760 2,693,136 168,624
2,552,120 2,748,735 2,497,075 251,660
5,370,880 5,610,495 5,190,211 420,284
EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER)
EXPENDITURES (3,074,870) (3,314,485) (2,725,536)
OTHER FINANCING SOURCES (USES)
Transfers in 3,853,240 3,900,018 3,900,018
Transfers out (790,090) (925,700) (925,700)
Total other financing sources (uses) 3,063,150 2,974,318 2,974,318
588,949
Net changes in fund balance (11,720) (340,167) 248,782 $
FUND BALANCES, beginning of year 795,441 795,441 795,441
FUND BALANCES, end of year $ 783,721 $ 455,274 1,044,223
Basis adjustment:
Cummulative pension set aside (278,914)
Fund balance (budgetary basis) $ 765,309
104
588,949
City of Lodi
Public Safety
Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
For the Year Ended June 30, 2018
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
REVENUES
Intergovernmental revenues $ 356,000 $ 599,643 $ 225,034 $ (374,609)
Investment and rental income 2,030 2,030 4,935 2,905
Total revenues 358,030 601,673 229,969 (371,704)
EXPENDITURES
Current:
General government - 12,066 - 12,066
Public protection 270,500 1,040,626 210,610 830,016
Debt service:
Principal retirement - 77,009 -
Total expenditures 270,500 1,052,692 287,619 842,082
Net change in fund balances 87,530 (451,019) (57,650) $ 470,378
FUND BALANCES, beginning of year 428,841 428,841 428,841
FUND BALANCES, end of year $ 516,371 $ (22,178) $ 371,191
105
City of Lodi
Community Development
Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
For the Year Ended June 30, 2018
REVENUES
Licenses and permits
Intergovernmental revenues
Charges for services
Investment and rental income
Miscellaneous revenue
Total revenues
EXPENDITURES
Current:
Community development
Debt service:
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER)
EXPENDITURES
Budgeted Amounts
Variance with
Original Final Actual Final Budget
1,470,600 $ 1,470,600 $ 1,696,202 $ 225,602
200,000 200,000 40,180 (159,820)
650,000 650,000 969,066 319,066
20,000 20,000 15,443 (4,557)
55,000 55,000 304 (54,696)
2,395,600 2,395,600 2,721,195 325,595
2,026,140 2,277,905
2,026,140 2,277,905
1,756,328 521,577
1,756,328 521,577
369,460 117,695 964,867 (195,982)
OTHER FINANCING SOURCES (USES)
Transfers in -
Transfers out (1,880,520) (1,880,955) (1,715,955) 165,000
Total other financing sources (uses) (1,880,520) (1,880,955) (1,715,955) 165,000
Net change in fund balances (1,511,060) (1,763,260) (751,088) $ 360,982
FUND BALANCES, beginning of year 3,892,405 3,892,405 3,892,405
FUND BALANCES, end of year $ 2,381,345 $ 2,129,145 $ 3,141,317
Basis adjustment:
Cummulative pension set aside (167,397)
Fund balance (budgetary basis) $ 2,973,920
106
City of Lodi
Transportation
Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
For the Year Ended June 30, 2018
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
REVENUES
Intergovernmental revenues $ 49,000 $ 49,000 $ 53,075 $ 4,075
Investment and rental income - - 189 189
Total revenues 49,000 49,000 53,264 4,264
EXPENDITURES
Capital outlay 50,000 88,001 59,660 28,341
Total expenditures 50,000 88,001 59,660 28,341
balances (1,000) (39,001) (6,396) $ 32,605
FUND BALANCES, beginning of year 6,556 6,556 6,556
FUND BALANCES, end of year $ 5,556 $ (32,445) $ 160
107
City of Lodi
HOME Program and Community Development Block Grants
Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
For the Year Ended June 30, 2018
REVENUES
Intergovernmental revenues
Investment and rental income
Total revenues
EXPENDITURES
Public works
Total expenditures
Net change in fund balances
Budgeted Amounts
Original Final
$
Actual
1,044,340 $ 1,044,340 $
1,044,340 1,044,340
1,044,340 1,044,340
1,044,340 1,044,340
Variance with
Final Budget
470,049 $
76
(574,291)
76
470,125 (574,215)
470,048 574,292
470,048 574,292
77 $ 77
FUND BALANCES, beginning of year 25,226 25,226 25,226
FUND BALANCES, end of year $ 25,226 $ 25,226 $ 25,303
108
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.
111
ASSETS
Cash and investments
Accounts receivables, net
Interest receivables
Total assets
City of Lodi
Combining Balance Sheet
Nonmajor Capital projects funds
June 30, 2018
Vehicle and Equipment Library
2,392,257
16,388
$
114,680
2,408,645 $ 114,680
LIABILITIES
Accounts payable and other liabilities $ 45,483 $ 34,300
Advances from other funds -
Unearned revenue
Total liabilities 45,483 34,300
FUND BALANCES
Restricted
Capital projects
Total fund balances
2,363,162 80,380
2,363,162 80,380
Total liabilities and fund balances $ 2,408,645 $ 114,680
112
City of Lodi
Combining Balance Sheet
Nonmajor Capital projects funds
June 30, 2018
(Continued)
Hutchins Street Square Capital Outlay Reserve
5,763 2,837,271
210,260
1 3,187
Total Nonmajor Capital
Parks Capital projects funds
760,703
921
6,110,674
226,648
4,109
$ 5,764 $ 3,050,718 $ 761,624 $ 6,341,431
$ 17,278 $
984,025
168,697
1,170, 000
5,764 1,880,718
5,764 1,880,718
8,899 $
105,960
984,025
168,697
8,899 1,258,682
752,725 5,082,749
752,725 5,082,749
$ 5,764 $ 3,050,718 $ 761,624 $ 6,341,431
113
City of Lodi
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Capital projects funds
For the Year Ended June 30, 2018
REVENUES
Charges for services
Investment and rental income
Miscellaneous revenue
Total revenues
EXPENDITURES
Current:
General government
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Total other financing sources (uses)
Change in fund balances
Fund balances - beginning
Vehicle and Equipment Library
$
43,927
360,000
43,927 360,000
64,014
156,354 991,187
220,368 991,187
(176,441) (631,187)
503,700 697,000
503,700 697,000
327,259 65,813
2,035,903 14,567
Fund balances - ending $ 2,363,162 $ 80,380
114
City of Lodi
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Capital projects funds
For the Year Ended June 30, 2018
(Continued)
Hutchins Street Square Capital Outlay Reserve
2,472
Total Nonmajor Capital
Parks Capital projects funds
481,529 $ - $ 481,529
7,011 7,452 16,935
10,000 72,156 486,083
2,472 498,540 79,608 984,547
994,388 382,262
994,388
64,014
2,524,191
382,262 2,588,205
2,472 (495,848) (302,654) (1,603,658)
388,222 206,225
388,222 206,225
2,472 (107,626) (96,429)
3,292 1,988,344 849,154
1,795,147
1,795,147
191,489
4,891,260
$ 5,764 $ 1,880,718 $ 752,725 $ 5,082,749
115
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INTERNAL SERVICE FUNDS
INTERNAL SERVICE FUNDS
Internal Service Funds are maintained to account for the internal transfer of services between
operating units of the City and to achieve a level of operating efficiency that may not be
available if the same activities were performed by multiple organizations.
Fleet Services 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 is used to account for the following employee benefits:
Dental
Chiropractic
Life/Accidental Insurance
Medical
Vision
Employee Assistance Program
Employee Recognition Program
Unemployment Insurance
Flexible Spending Program
Long Term Disability
Insurance is used to account for the following insurances:
General Liability
Workers' Compensation
Other Insurance
118
City of Lodi
Combining Statement of Net Position
Internal service funds
June 30, 2018
Total Internal service
Fleet Services Benefits Insurance funds
ASSETS
Current assets:
Cash and investments $ - $ 1,451,025 $ 13,685,268 $ 15,136,293
Receivables: Accounts, net 15 36,851 20,549 57,415
Receivables: Interest - 12,869 4,092 16,961
Inventory 145,724 - - 145,724
Due from other fund - 71,500 71,500
Other assets - 111,331 111,331
Depreciable, net 23,155 - 23,155
Total assets 168,894 1,612,076 13,781,409 15,562,379
DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 269,518 - 269,518
Related to OPEB - 2,019,230 2,019,230
Total deferred outflows of resources 269,518 2,019,230 2,288,748
LIABILITIES
Current liabilities:
Accounts payable and other liabilities 31,917 115,997 64,163 212,077
Accrued salaries and wages 2,589 2,589
Accrued compensated absences 40,518 40,518
Due to other fund 71,500 - 71,500
Self insurance liability 7,994,536 7,994,536
Accrued compensated absences 112,264 112,264
Net OPEB Liability - 33,275,362 33,275,362
Net pension liability 1,542,965 - 1,542,965
Total liabilities 1,801,753 33,391,359 8,058,699 43,251,811
DEFERRED INFLOWS OF RESOURCES
Related to pensions 6,784 - 6,784
Related to OPEB - 2,195,815 2,195,815
Total deferred inflows of resources 6,784 2,195,815 2,202,599
NET POSITION
Net investment in capital assets 23,155 23,155
Unrestricted (1,393,280) (31,955,868) 5,722,710 (27,626,438)
Total net position $ (1,370,125) $ (31,955,868) $ 5,722,710 $ (27,603,283)
119
City of Lodi
Combining Statement of Revenues, Expenditures, and Changes in Net Position
Internal service funds
For the Year Ended June 30, 2018
Total Internal service
Fleet Services Benefits Insurance funds
OPERATING REVENUES
Charges for services $ 1,348,691 $ 8,329,193 $ 4,026,359 $ 13,704,243
Total operating revenues 1,348,691 8,329,193 4,026,359 13,704,243
OPERATING EXPENSES
Personnel services 1,099,640 633,997 140,707 1,874,344
Supplies, materials and services 495,878 5,833,278 1,782,224 8,111,380
Utilities 15,371 300 15,671
Depreciation 1,447 - - 1,447
Claims 35,460 1,379,073 1,121,320 2,535,853
Total operating expenses 1,647,796 7,846,348 3,044,551 12,538,695
Operating income (loss) (299,105) 482,845 981,808 1,165,548
NONOPERATING REVENUES (EXPENSES)
Investment income 2,544 8,896
Nonoperating expenses - 1,208,724
Other revenues (22,285) 50,718
Total nonoperating revenues (expenses) (19,741) 1,268,338
Income (loss) before transfers (318,846) 1,751,183
OTHER FINANCING SOURCES (USES)
Transfers out (290) (290)
Change in net position (319,136) 1,751,183 1,151,435 2,583,482
19,353
150,274
30,793
1,208,724
178,707
169,627 1,418,224
1,151,435 2,583,772
Total net position - beginning (1,050,989) (33,707,051) 4,571,275 (30,186,765)
Total net position - ending $ (1,370,125) $ (31,955,868) $ 5,722,710 $ (27,603,283)
120
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash from interfund
Payments to suppliers
Payments to employees
Due to other funds
Net cash provided (used) by operating activities
City of Lodi
Statement of Cash Flows
Internal service funds
For the Year Ended June 30, 2018
Fleet Services Benefits Insurance Total
(21,577) $ 45,651 $ 129,726 $ 153,800
1,392,499 8,329,194 4,026,359 13,748,052
(549,319) (8,395,629) (3,749,032) (12,693,980)
(823,713) 574,727 (140,707) (389,693)
- (71,500) (71,500)
(2,110) 553,943 194,846 746,679
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers out (290) (290)
Net cash (used) by noncapital financing activities (290) - - (290)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 2,400 (2,653) 35,067 34,814
Net cash (used) by investing activities 2,400 (2,653) 35,067 34,814
Net increase in cash and cash equivalents 551,290 229,913 781,203
Balances - beginning of year 899,735 13,455,355 14,355,090
Balances - end of the year $ - $ 1,451,025 $ 13,685,268 $ 15,136,293
Reconciliation of operating income (loss) to net cash provided (used) by operating activities:
Operating Income (loss) $ (299,105) $ 482,845 $ 981,808 $ 1,165,548
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:
Depreciation Expense 1,447 1,447
Changes in assets and liabilities:
Customer Receivables
Inventory
Other assets
Accounts Payable - Supplier
Accrued salaries and wages
Compensated absences
Due to other funds
Self-insurance liability
Deferred inflows (outflows) of resources
Other revenues
Net cash provided (used) by operating activities
709 (5,067) (20,549) (24,907)
(1,303) - - (1,303)
- (8,410) - (8,410)
(1,307) 33,857 2,675 35,225
2,589 - - 2,589
20,062 - 20,062
43,808 - (71,500) (27,692)
(847,862) (847,862)
253,275 - - 253,275
(22,285) 50,718 150,274 178,707
$ (2,110) $ 553,943 $ 194,846 $ 746,679
121
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FIDUCIARY FUNDS
Private -Purpose Trust Funds account for trust agreements under which the principal and
income benefit individuals, private organizations or other governments.
Agency Funds 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.
123
City of Lodi
Combining Statement of Fiduciary Net Position
Private -Purpose Trust Funds
June 30, 2018
Private Sector Trust
Hutchins St Sq/Holz Total Private -purpose
Bequest trust funds
ASSETS
Cash and investments $ 134,577 $ 1,520 $ 136,097
Interest receivable - 2 2
Total assets 134,577 1,522 136,099
FIDUCIARY NET POSITION $ 134,577 $ 1,522 $ 136,099
124
City of Lodi
Combining Statement of Changes in Fiduciary Net Position
Private -Purpose Trust Funds
For the Year Ended June 30, 2018
Private Sector Trust
Hutchins St Sq/Holz Total Private -purpose
Bequest trust funds
ADDITIONS
Investment and rental income $ - $ - $
DEDUCTIONS
Current:
Library 99,998 23
Changes in fiduciary net position (99,998) (23)
Fiduciary Net Position -- beginning of the year 234,575 1,545
100,021
(100,021)
236,120
Fiduciary Net Position -- end of the year $ 134,577 $ 1,522 $ 136,099
125
City of Lodi
Combining Statement of Fiduciary Net Position
Custodial funds
June 30, 2018
Special Assessments
Balance Balance
July 1, 2017 Additions Deductions June 30, 2018
ASSETS
Cash and investments $ 406,729 $ 62,569 $ 45,664 $ 423,634
Interest receivable 590 133 590 133
Total assets $ 407,319 $ 62,702 $ 46,254 $ 423,767
LIABILITIES
Agency obligations 407,319 16,448 423,767
Total liabilities $ 407,319 $ 16,448 $ $ 423,767
126
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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 130-134
These schedules contain trend information to help the reader understand how the City's financial performance
and well-being has changed over time.
Revenue Capacity 135-141
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 142-148
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 149-152
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 153-155
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.
129
CITY OF LODI
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2018 2017 2016 2015(1) 2014 2013 2012 2011 2010 2009
Govemmental activities:
Net investment in capital assets $ 119,222 $ 117,196 $ 111,256 $ 105,944 $ 105,462 $ 106,828 $ 107,587 $ 114,165 $ 113,308 $ 115,036
Restricted 25,904 15,545 13,911 12,001 11,809 12,601 16,176 14,894 13,233 13,492
Unrestricted (117,535) (77,162) (76,984) (74,146) 2,551 1,157 (3,606) (5,148) (6,110) (3,462)
Total govemmental activities net position $ 27,591 $ 55,579 $ 48,183 $ 43,799 $ 119,822 $ 120,586 $ 120,157 $ 123,911 $ 120,431 $ 125,066
Business -type activities:
Net investment in capital assets $ 137,291 $ 129,086 $ 121,468 $ 119,924 $ 116,156 $ 113,008 $ 109,582 $ 104,858 $ 100,233 $ 95,533
Restricted 20 3,929 3,893 6,810 6,703 6,600 6,533 5,303 -
Unrestricted 24,584 16,463 14,427 892 16,535 14,827 (34,563) (34,129) (28,591) (35,448)
Total business -type activities net position $ 161,895 $ 149,478 $ 139,788 $ 127,626 $ 139,394 $ 134,435 $ 81,552 $ 76,032 $ 71,642 $ 60,085
Primary government
Net investment in capital assets $ 256,513 $ 246,282 $ 232,724 $ 225,868 $ 221,618 $ 219,836 $ 217,169 $ 219,023 $ 213,541 $ 210,569
Restricted 25,924 19,474 17,804 18,811 18,512 19,201 22,709 20,197 13,233 13,492
Unrestricted (92,951) (60,699) (62,557) (73,254) 19,086 15,984 (38,169) (39,277) (34,701) (38,910)
Total primary govemment net position $ 189,486 $ 205,057 $ 187,971 $ 171,425 $ 259,216 $ 255,021 $ 201,709 $ 199,943 $ 192,073 $ 185,151
(1) Fiscal year 2015 beginning net position was restated due to the implementation of GASB 68.
Source: City of Lodi Financial Services Division
130
CITY OF LODI
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
Expenses
Govemmental activities:
General government $ 11,601 $ 9,650 $ 10,369 $ 9,109 $ 9,580 $ 8,943 $ 9,381 $ 8,262 $ 8,749 $ 9,451
Public protection 38,795 33,239 31,395 27,426 27,884 25,930 25,432 25,113 27,186 27,110
Public works 9,823 10,614 10,326 10,281 10,644 10,546 10,248 9,305 10,462 10,464
Community development 1,999 1,709 1,792 1,165 1,174 1,050 1,003 973 1,114 1,323
Library 1,753 1,253 1,389 1,324 1,282 1,342 1,381 1,355 1,440 1,495
Parks and recreation 4,672 3,663 4,262 3,116 3,164 2,933 2,913 5,778 5,077 4,609
Interest and fiscal charges 768 824 822 818 825 416 1,033 1,075 1,105 1,134
Total govemmental activities expenses $ 69,411 $ 60,952 $ 60,355 $ 53,239 $ 54,553 $ 51,160 $ 51,391 $ 51,861 $ 55,133 $ 55,586
Business -type activities:
Electric 67,943 62,791 61,764 64,367 61,974 61,106 62,599 63,399 64,364 73,358
Wastewater 16,008 16,318 14,024 12,912 12,527 13,423 17,441 11,687 11,289 10,940
Water 11,776 11,961 10,967 9,905 11,014 (34,877) 7,953 8,188 6,148 9,604
Transit 5,233 4,925 4,415 4,134 3,834 4,141 4,256 4,132 4,785 4,832
Total business -type activities expenses 100,960 95,995 91,170 91,318 89,349 43,793 92,249 87,406 86,586 98,734
Total primary government expenses $ 170,371 $ 156,947 $ 151,525 $ 144,557 $ 143,902 $ 94,953 $ 143,640 $ 139,267 $ 141,719 $ 154,320
Program Revenues
Governmental activities:
Charges for services:
General government $ 3,670 $ 3,246 $ 1,490 $ 1,971 $ 1,955 $ 2,337 $ 1,718 $ 1,793 $ 2,184 $ 1,631
Public protection 1,000 779 740 609 582 538 500 643 714 844
Public works 990 1,209 734 832 415 224 166 356 326 358
Community development 2,665 2,838 2,292 1,378 1,219 1,458 993 1,601 786 749
Library 37 43 63 43 43 44 43 47 48 44
Parks and recreation 1,698 1,660 1,637 1,360 1,479 1,404 1,241 1,245 1,269 1,158
Operating grants and contributions 2,287 2,391 2,596 3,369 2,686 2,341 2,300 2,236 1,927 1,951
Capital grants and contributions 8,737 12,830 10,559 3,131 5,359 4,216 5,025 6,737 5,122 10,822
Total govemmental activities program revenues $ 21,084 $ 24,996 $ 20,111 $ 12,693 $ 13,738 $ 12,562 $ 11,986 $ 14,658 $ 12,376 $ 17,557
Business -type activities:
Charges for services:
Electric $ 69,247 $ 65,848 $ 67,507 $ 65,237 $ 64,693 $ 63,230 $ 64,251 $ 62,167 $ 69,664 $ 74,000
Wastewater 14,914 15,106 14,960 14,714 14,305 13,747 13,280 13,090 11,513 9,276
Water 13,005 12,474 12,161 12,723 12,756 12,441 12,083 11,940 11,716 11,787
Transit 227 220 210 230 203 185 186 195 217 251
Operating grants and contributions 5,969 4,514 5,089 5,186 4,431 5,178 4,214 3,983 3,449 3,653
Capital grants and contributions 11,307 7,972 2,860 5,284 2,846 4,715 3,206 5,150 1,408 5,774
Total business -type activities program revenues 114,669 106,134 102,787 103,374 99,234 99,496 97,220 96,525 97,967 104,741
Total primary govemment program revenues $ 135,753 $ 131,130 $ 122,898 $ 116,067 $ 112,972 $ 112,058 $ 109,206 $ 111,183 $ 110,343 $ 122,298
Net (Expense)/Revenue
Governmental activities
Business -type activities
Total primary govemment net expense
$ (48,327) $ (35,956) $ (40,244) $ (40,546) $ (40,815) $ (38,598) $ (39,405) $ (37,203) $ (42,757) $ (38,029)
13,709 10,139 11,617 12,056 9,885 55,703 4,971 9,119 11,381 6,007
$ (34,618) $ (25,817) $ (28,627) $ (28,490) $ (30,930) $ 17,105 $ (34,434) $ (28,084) $ (31,376) $ (32,022)
131
CITY OF LODI
CHANGES IN NET POSITION (Continued)
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
General Revenues and Other Changes in Net Position:
Governmental activities:
Taxes:
Property $ 10,325 $ 14,860 $ 13,919 $ 13,502 $ 12,758 $ 12,218 $ 12,103 $ 12,698 $ 12,836 $ 13,564
Special assessments' 44 - -
Sales' 11,333 - - - - - - - - -
Document transfer' 5,147 - -
Franchise 9,218 9,099 9,073 8,976 8,838 8,735 8,712 8,692 8,658 8,357
Business license 1,822 1,736 1,552 1,486 1,528 1,524 1,628 1,246 1,242 1,190
Transient occupancy 867 849 783 666 594 546 486 426 382 405
Grants and contributions not restricted to specific programs' 601 11,778 11,834 10,651 10,138 9,382 9,277 8,954 7,064 8,249
Investment earnings 311 257 326 145 203 44 132 133 155 467
Rent 1,954 1,942 1,906 1,370
Other 933 722 719 605 528 610 2,052 1,556 1,917 2,382
Special item -gain on sale of parkland 321
Transfers 4,252 4,051 4,469 7,514 4,792 5,682 1,261 6,657 5,868 5,368
Total governmental activities $ 44,853 $ 43,352 $ 44,629 $ 45,487 $ 41,285 $ 40,111 $ 35,651 $ 40,683 $ 38,122 $ 39,982
Business -type activities:
Investment earnings $ 716 $ 816 $ 952 $ 632 $ 757 $ 497 $ 566 $ 575 $ 731 $ 1,385
Litigation- environmental lawsuits proceeds 100 1,107 - 300 2,010
Rent 4 4 4 -
Other 2,244 2,786 3,957 2,745 2,370 1,258 1,244 1,353 923 1,891
Special item -forgiveness of debt
Special item -swap termination (8,979)
Transfers (4,252) (4,051) (4,469) (7,514) (4,792) (5,682) (1,261) (6,657) (5,868) (5,368)
Total business -type activities (1,292) (449) 544 (4,133) (1,661) (2,820) 549 (4,729) (3,914) (9,061)
Total primary government $ 43,561 $ 42,903 $ 45,173 $ 41,354 $ 39,624 $ 37,291 $ 36,200 $ 35,954 $ 34,208 $ 30,921
Change in Net Position
Governmental activities $ (3,474) $ 7,396 $ 4,385 $ 4,941 $ 470 $ 1,513 $ (3,754) $ 3,480 $ (4,635) $ 1,953
Business -type activities 12,417 9,690 12,161 7,923 8,224 52,883 5,520 4,390 7,467 (3,054)
Total primary government $ 8,943 $ 17,086 $ 16,546 $ 12,864 $ 8,694 $ 54,396 $ 1,766 $ 7,870 $ 2,832 $ (1,101)
Source: City of Lodi Financial Services Division
Certain tax amounts have been reclassified in fiscal year 2018.
132
CITY OF LODI
FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
General Fund
Reserved $ - $ - $ - $ - $ - $ - $ - $ - $ 389 $ 383
Unreserved - 3,896 3,383
Nonspendable 33 10 9 6 357
Committed 9,031 3,520 465 345 301 277
Assigned 1,564 26 29 65 50 136
Unassigned 9,737 11,448 11,185 12,107 9,134 7,614 6,233 5,654 - -
Total General Fund $ 18,768 $ 14,968 $ 13,247 $ 12,478 $ 9,474 $ 7,965 $ 6,289 $ 6,147 $ 4,285 $ 3,766
All other govemmental funds
Reserved $ - $ - $ - $ - $ - $ - $ - $ - $ 7,801 $ 1,487
Unreserved, reported in:
Special revenue funds 963 6,540
Debt service funds
Capital projects funds - 3,649 5,217
Nonspendable 1 1 1 1 4 3 1
Restricted 16,062 15,263 13,867 11,957 11,764 12,556 15,017 13,786
Unassigned (99) (512) (863) (846) -
Total all other govemmental funds $ 16,063 $ 15,264 $ 13,868 $ 11,958 $ 11,669 $ 12,047 $ 14,155 $ 12,940 $ 12,413 $ 13,244
$ 34,831 $ 30,232 $ 27,115 $ 24,436 $ 21,143 $ 20,012 $ 20,444 $ 19,087 $ 16,698 $ 17,010
Implemented GASB 54 during the 2011 fiscal year changing the presentation of fund balance.
Source: City of Lodi Financial Services Division
133
CITY OF LODI
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
Revenues:
Taxes $ 27,423 $ 26,491 $ 25,327 $ 24,631 $ 23,719 $ 23,022 $ 22,928 $ 23,061 $ 23,118 $ 23,516
Licenses and permits 1,764 2,015 1,646 967 852 921 686 954 520 431
Intergovernmental revenues 20,807 23,975 21,083 17,557 17,392 14,625 15,289 16,865 12,579 13,229
Charges for services 6,020 5,722 5,830 3,827 3,558 3,880 3,427 3,946 4,116 3,329
Fines, forfeits, and penalties 1,396 906 1,495 1,573 1,557 1,632 1,357 1,407 1,444 1,416
Investment and rental income 2,325 2,319 2,155 2,029 2,025 1,389 1,264 817 923 922
Contributions and donations 818 282 1,003 689
Miscellaneous revenue 1,206 1,116 538 1,078 813 799 1,093 1,762
Total revenues $ 60,941 $ 62,246 $ 58,652 $ 51,404 $ 50,106 $ 46,547 $ 45,764 $ 48,538 $ 43,793 $ 44,605
Expenditures:
Current:
General govemment $ 9,738 $ 9,499 $ 9,360 $ 9,151 $ 9,019 $ 8,522 $ 8,820 $ 7,667 $ 7,666 $ 8,431
Public protection 30,788 30,201 28,821 26,646 27,093 26,282 25,249 24,489 24,466 24,716
Public works 4,628 4,608 4,070 4,508 4,393 4,532 4,174 3,715 4,383 4,657
Community development 1,756 1,651 1,601 1,226 1,192 1,111 1,037 969 1,013 1,341
Library 1,058 1,153 1,153 1,311 1,268 1,411 1,381 1,357 1,322 1,500
Parks and recreation 2,497 2,378 2,369 2,145 2,299 2,370 2,254 4,127 4,180 3,776
Capital outlay 8,296 11,592 13,117 9,842 7,652 6,271 2,961 9,377 5,108 6,791
Debt service:
Interest 805 858 847 845 851 483 1,039 1,081 1,110 1,139
Principal payments 1,028 1,240 260 245 630 752 725 789
Advance refunding escrow 1,689
Total expenditures $ 60,594 $ 63,180 $ 61,598 $ 55,674 $ 53,767 $ 52,916 $ 47,545 $ 53,534 $ 49,973 $ 53,140
Excess (deficiency) of revenues
over (under) expenditures $ 347 $ (934) $ (2,946) $ (4,270) $ (3,661) $ (6,369) $ (1,781) $ (4,996) $ (6,180) $ (8,535)
Other financing sources (uses):
Transfers in $ 13,863 $ 11,723 $ 13,310 $ 15,599 $ 11,596 $ 12,546 $ 14,486 $ 11,881 $ 11,173 $ 10,609
Transfers out (9,611) (7,672) (8,716) (8,036) (6,804) (6,864) (11,348) (5,224) (5,305) (5,242)
Proceeds from sale of land 98
Refunding bonds issued 20,103
Payment to refunded bond escrow agent (19,848)
Capital lease proceeds 563
Loan proceeds 468
Total other financing sources (uses) $ 4,252 $ 4,051 $ 5,625 $ 7,563 $ 4,792 $ 5,937 $ 3,138 $ 6,755 $ 5,868 $ 5,367
Special item -sale of parkland - 630
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
Debt service as a percentage of noncapital expenditures
Source: City of Lodi Finance Services Division
$ 4,599 $ 3,117 $ 2,679 $ 3,293 $ 1,131 $ (432) $ 1,357 $ 2,389 $ (312) $ (3,168)
30,232 6,937 4,258 965 (166) 266 (1,091) (3,480) (3,168)
$ 34,831 $ 10,054 $ 6,937 $ 4,258 $ 965 $ (166) $ 266 $ (1,091) $ (3,480) $ (3,168)
3.5% 4.1% 2.3% 1.8% 1.8% 5.2% 3.7% 4.2% 4.1% 4.2%
134
City of Lodi
TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
% Change 2009 to
2017
Property $ 10,043 $ 9,744 $ 9,151 $ 8,810 $ 8,314 $ 7,955 $ 7,861 $ 8,285 $ 8,342 $ 8,887 5.80%
Sales and Use 11,333 11,750 11,809 10,625 10,111 9,350 9,246 8,663 6,873 8,028 26.40%
Transient Occupancy 867 849 783 666 594 545 486 426 382 405 114.33%
Franchise 2,059 1,915 1,990 1,942 1,862 1,758 1,734 1,715 1,681 1,415 96.19%
Documentary Transfer 281 240 223 159 155 120 91 95 117 114 92.12%
Motor Vehicle in Lieu 5,176 4,904 4,572 4,533 4,289 4,143 4,151 4,317 4,377 4,784 2.23%
Public Protection 401 378 365 362 341 325 295 250 267 296 11.88%
Business License 1,822 1,736 1,552 1,133 1,220 1,187 1,182 958 962 1,038 52.29%
In Lieu Franchise 7,159 7,131 7,082 7,033 6,977 6,977 6,977 6,977 6,977 6,942 -14.72%
Totals $ 39,141 $ 38,647 $ 37,527 $ 35,263 $ 33,863 $ 32,360 $ 32,023 $ 31,686 $ 29,978 $ 31,909 12%
Note: General governmental tax revenues are included in taxes, licenses and permits, intergovernmental revenues and miscellaneous revenues.
135
CITY OF LODI
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Fiscal Year
2018 2017 2016 2015 2014
Secured roll $ 6,174,155 $ 5,603,023 $ 5,394,659 $ 5,156,704 $ 4,895,091
Utility roll 2,300 2,300 3,490 3,490 3,490
Unsecured roll 258,680 254,946 250,160 257,856 230,827
Gross assessed value 6,435,135 5,860,269 5,648,309 5,418,050 5,129,408
Less exemptions (1) 345,179 334,485 331,562 326,833 324,439
Net assessed value $ 6,089,956 $ 5,525,784 $ 5,316,747 $ 5,091,217 $ 4,804,969
Land $ 1,873,216 $ 1,711,208 $ 1,601,581 $ 1,469,347 $ 1,364,401
Improvements 4,286,480 3,854,604 3,736,867 3,610,391 3,443,266
Personal property 275,439 294,457 309,861 338,312 321,741
Gross assessed value 6,435,135 5,860,269 5,648,309 5,418,050 5,129,408
Less exemptions (1) 345,179 334,485 331,562 326,833 324,439
Net assessed value $ 6,089,956 $ 5,525,784 $ 5,316,747 $ 5,091,217 $ 4,804,969
Total Direct Tax Rate 1.00%
1.00% 1.00%
1.00% 1.00%
(1) All exemptions (secured, utility, and unsecured rolls) are homeowners - $59,458 and other - $279,025 =$338,080
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
136
CITY OF LODI
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
(Continued)
Fiscal Year
2013 2012 2011 2010 2009
$ 4,737,807 $ 4,738,823 $ 4,907,588 $ 4,986,693 $ 5,156,706
2,382 2,382 2,423 2,423 2,031
233,398 226,651 270,600 270,315 263,648
4,973,587 4,967,856 5,180,611 5,259,431 5,422,385
327,783 314,448 321,138 332,701 265,154
$ 4,645,804 $ 4,653,408 $ 4,859,473 $ 4,926,730 $ 5,157,231
$ 1,227,969 $ 1,264,884 $ 1,322,830 $ 1,345,815 $ 1,562,729
3,445,328 3,401,792 3,534,778 3,600,824 3,577,741
300,290 301,180 323,003 312,792 281,915
4,973,587 4,967,856 5,180,611 5,259,431 5,422,385
327,783 314,448 321,138 332,701 265,154
$ 4,645,804 $ 4,653,408 $ 4,859,473 $ 4,926,730 $ 5,157,231
1.00% 1.00% 1.00% 1.00% 1.00%
(1) All exemptions (secured, utility, and unsecured rolls) are homeowners - $59,458 and other - $279,025 =$338,080
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
137
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
2018 1.0000 0.1037 0.0000 1.1037
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
Source: San Joaquin County Tax Collector Website
Request from San Joaquin Audit Controllers Office
CITY OF LODI
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
(Dollar amounts in thousands)
Taxpayer
Fiscal Year
2018 2009
Percent of
Total City
Taxable Percent of Total Taxable
Assessed City Taxable Taxable Assessed Assessed
Value Rank Assessed Value Value Rank Value
California Physicians Service Corp $ 603,869 1
Pacific Coast Producers 574,435 2
PACIFIC Cost Producers CORP 465,945 3
Big Box Property 417,330 4
Walmart 347,952 5
Winterfell Vintage 317,100 6
ConAgra/Cottage Bakery 279,667 7
PACIFIC Coast Producers Inc 249,424 8
Costco 222,943 9
North American Specialty Products LLC 214,570 10
Wine & Roses LLC
Fountains At Lodi LLC
Panattoni, Carl D ETAL
Lodi Memorial Hospital Assn
General Mills
Certainteed Corp
Dart Container Corp
Archer Daniels Midland Co Corp
Thule Hitch Systems
Lowes
Principal Secured Property Valuation 3,693,235
Other Secured Taxpayers 2,142,839
Exemptions relative to secured tax roll 286,123
Total Secured Property Valuation $ 5,549,951
138
10.881
10.350
8.395
7.520
6.269
5.714
5.039
4.494
4.017
3.866
$ 42,615 4
86,146 3 1.761
24,653 5 0.504
168,303 1 3.441
152,676 2 27.130
19,431 6 0.397
19,098 7 0.390
16,744 8 0.342
18,932 9 0.387
14,153 10 0.289
66.545 562,751 11.505
38.610 4,593,955 93.916
5.155 265,154 5.421
100.000 % $
4,891,552 100.000
CITY OF LODI
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
Collected Within the Fiscal Total Collections
Year of the Levy to Date
Taxes Levied
Fiscal for the Fiscal Percent of Percent of
Year Year Amount Levy (1) Amount Levy
2018 $ 10,222 $ 10,222 100.0% $ 10,222 100.0%
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%
CITY OF LODI
ELECTRICITY SOLD BY TYPE OF CUSTOMER
LAST TEN FISCAL YEARS
Type of Customer Billed Accounts
2018 2017 2016 2015 2014
City Accounts 223 217 213 212 207
Contract Large Industrial -
Contract Medium Industrial
Contract Small Industrial
Domestic Residential 22,041 21,917 22,497 22,393 22,623
Domestic Mobile Home Park 13 13 13 13 13
Dusk to Dawn 92 85 85 88 89
Industrial 43 - - - -
Large Commercial 96 355 348 337 339
Large Industrial N/A 35 44 41 39
Medium Commercial 375 - - -
Medium Industrial N/A 10 11 12 11
Residental Low Income 2,539 2,669 2,688 2,798 2,788
Small Commerical 3,148 3,434 3,416 3,332 3,367
Small Industrial N/A 10 11 7 8
Total 28,570 28,745 29,326 29,233 29,484
Notes:
"Large commercial" previously had medium commercial combined now "Medium Commercial" stated separately.
Small, Medium, Large Industrial now combined into one "Industrial".
Source: City of Lodi Financial Services Division
Intranet Dashboard Stats Util by Month and Sch
140
CITY OF LODI
ELECTRICITY SOLD BY TYPE OF CUSTOMER
LAST TEN FISCAL YEARS
(Continued)
Type of Customer Billed Accounts
2013 2012 2011 2010 2009
City Accounts 204 195 197 189 189
Contract Large Industrial - -
Contract Medium Industrial -
Contract Small Industrial -
Domestic Residential 22,541 22,361 22,360 22,525 22,506
Domestic Mobile Home Park 13 13 13 13 13
Dusk to Dawn 88 92 89 89 92
Industrial - - - - -
Large Commercial 344 336 350 357 377
Large Industrial 40 38 40 39 37
Medium Commercial - - - - -
Medium Industrial 11 9 9 9 8
Residental Low Income 2,582 2,531 2,258 2,193 1,847
Small Commerical 3,358 3,340 3,324 3,280 3,249
Small Industrial 9 11 11 10 10
Total 29,190 28,926 28,651 28,704 28,328
Notes:
"Large commercial" previously had medium commercial combined now "Medium Commercial" stated separately.
Small, Medium, Large Industrial now combined into one "Industrial".
Source: City of Lodi Financial Services Division
Intranet Dashboard Stats Util by Month and Sch
141
CITY OF LODI
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
Governmental Activities
Total
Fiscal Lease Revenue Loan Notes Capital Governmental
Year Bonds Payable Payable Lease Activities
2018 $ 17,839 $ 286 $ $ 410 $ 18,535
2017 18,753 378 - 487 19,618
2016 19,637 468 245 562 20,912
2015 19,950 245 20,195
2014 20,004 245 20,249
2013 20,058 245 20,303
2012 21,025 245 21,270
2011 21,655 245 21,900
2010 22,265 245 22,510
2009 22,855 245 23,100
Details regarding the City's outstanding debt can be found in Note 7 of these financial
statements.
(1) See Demographic and Economic Statistics table for personal income and
population.
Source: City of Lodi Financial Services Division
142
CITY OF LODI
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
Business -type Activities
Certificates of Notes/ Total Total Percent of
Fiscal Participation and Loan Business -type Primary Personal Per
Year Revenue Bonds Payable Activities Government Income (1) Capita (1)
2018 $ 125,062 $1,096 $ 126,158 $ 144,693 5.56
2017 138,193 1,300 139,493 159,111 6.41
2016 143,417 1,500 144,917 165,829 7.49
2015 149,767 149,767 169,962 7.67
2014 157,297 157,297 177,546 8.45
2013 167,743 167,743 188,046 9.63
2012 173,241 - 173,241 194,511 10.07
2011 178,827 178,827 200,727 10.67
2010 144,165 1,409 145,574 168,084 8.49
2009 148,529 1,585 150,114 173,214 8.81
Details regarding the City's outstanding debt can be found in Note 7 of these financial
statements.
(1) See Demographic and Economic Statistics table for personal income and population.
Source: City of Lodi Financial Services Division
143
$ 2,156
2,484
2,603
2,667
2,789
2,988
3,096
3,213
2,645
2,736
CITY OF LODI
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(Dollar amounts in thousands, except per capita)
Fiscal
Year
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
Lease Revenue
Bonds
Less Amounts
Available for
Debt Service Net
Percent of
Assessed
Value (1) of
Property
Per
Capita
$ 17,839
18,753
19,637
19,950
20,004
20,058
21,025
21,655
22,265
22,855
10
1,692
1,692
1,692
1,692
- $ 17,839
- 18,753
- 19,637
19,950
20,004
20,048
19,333
19,963
20,573
21,163
7.0
0.3
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
% $ 265.77
292.74
310.62
313.09
314.28
318.58
307.73
319.55
323.73
334.26
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
144
CITY OF LODI
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
FISCAL YEAR
2018 2017 2016 2015 2014
Assessed valuation (1) $ 6,156,110 $ 5,585,242 $ 5,377,266 $ 5,152,666 $ 4,867,731
Conversion percentage 25% 25% 25% 25% 25%
Adjusted assessed valuation 1,539,028 1,396,311 1,344,317 1,288,167 1,216,933
Debt limit percentage 15% 15% 15% 15% 15%
Debt Limit 230,854 209,447 201,647 193,225 182,540
Total net debt applicable to limit 17,839 18,753 19,637 19,950
Legal debt margin $ 213,015 $ 190,694 $ 182,010 $ 173,275 $ 182,540
Total net debt applicable to the limit as
a percent of debt limit 7.7% 9.0% 9.7% 10.3% 0.0%
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision
was enacted when assessed valuation was based upon 25% of market value. Effective with the 1982 fiscal year, each parcel is now
assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computation shown above reflect a
conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the
time the legal debt margin was enacted by the State of California for local 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
145
CITY OF LODI
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(Dollar amounts in thousands)
(Continued)
FISCAL YEAR
2013 2012 2011 2010 2009
Assessed valuation (1) $ 4,709,916 $ 4,718,766 $ 4,926,130 $ 4,995,362 $ 5,227,580
Conversion percentage 25% 25% 25% 25% 25%
Adjusted assessed valuation 1,177,479 1,179,692 1,231,533 1,248,841 1,306,895
Debt limit percentage 15% 15% 15% 15% 15%
Debt Limit 176,622 176,954 184,730 187,326 196,034
Total net debt applicable to limit 20,048 19,333 19,963 20,573 21,163
Legal debt margin $ 156,574 $ 157,621 $ 164,767 $ 166,753 $ 174,871
Total net debt applicable to the limit as
a percent of debt limit 11.4% 10.9% 10.8% 11.0% 10.8%
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
146
CITY OF LODI
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
June 30, 2018
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
$ 154,305,582
159,305,582
92,370,000
20,445,000
17,839
286,236
409,950
2017-18 Gross Assessed Valuation $ 6,435,135,000
2017-18 Population 67,121
DEBT RATIOS Total Gross Debt $ 102,727,406 $
Percentage City's Share
Applicable (1) of Debt
7.618 % $ 11,754,999
36.027 57,393,022
8.313 7,678,718
36.027 7,365,720
84,192,460
100.00
100.00
100.00
17,838,760
286,236
409,950
18,534,946
$ 102,727,406
Per Capita Value
1,530 1.60%
(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
147
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
2018 $ 73,505 $ 50,317 $ 23,188 $ 2,510 $ 2,788 $ 5,298 4.38
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
Wastewater Certificates of Participation and Revenue Bonds
2018 $ 19,317 $ 7,302 $ 12,015 $ 1,650 954 $ 2,604 4.61
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
Water Revenue Bonds
2018 $ 17,187 $ 10,895 $ 6,292 $ 950 $ 1,356 $ 2,306 2.73
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
(including developer impact fees) 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.
148
CITY OF LODI
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Personal Per
Population San Joaquin Population Rank in Size Income Capita
Fiscal Square City Percent County Percent of California (millions of Personal Unemployment
Year Miles Population Change Population of County Cities dollars) Income Rate
2018 13.98 67,121 0.7% 758,744 8.8% 136 $ 2,602 $ 38,769 6.9%
2017 13.98 64,058 0.7% 746,868 8.6% 139 2,483 38,769 6.9%
2016 13.98 63,219 0.7% 733,383 8.6% 139 2,284 36,136 7.8%
2015 13.98 63,719 0.4% 719,511 8.9% 138 2,215 34,755 7.8%
2014 13.98 63,651 0.2% 710,731 9.0% 135 2,102 33,024 8.8%
2013 13.98 62,930 0.2% 698,414 9.0% 137 1,952 31,013 9.0%
2012 13.98 62,825 0.8% 695,750 9.0% 136 1,931 30,732 11.3%
2011 13.92 62,473 0.6% 690,899 9.0% 135 1,882 30,132 13.4%
2010 13.92 63,549 0.6% 694,293 9.2% 136 1,980 31,166 13.3%
2009 13.92 63,313 -0.1% 689,480 9.2% 135 1,967 31,071 12.2%
Personal income is the income received by all persons from all sources. Personal income is the sum of net earnings by place of
residence, rental income of persons, personal dividend income, personal interest income, and personal current transfer receipts.
Per capita personal income is calculated as the personal income of residents of a given area divided by the resident population of the area.
In computing per capita personal income, Bureau of Economic analysis uses the Census Bureau's annual midyear population estimates.
Source: State of California, Department of Finance, Demographic Reseach Unit and Department of Labor.
149
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 Labor Force
Lodi Unified School District 3,359 1 12.86 % 3,301 1 12.64 0/U 26,125
Pacific Coast Producers 1,663 2 6.37 1,200 3 4.59 26,125
Lodi Health Hospital 1,390 3 5.32 1,360 2 5.21 26,125
Blue Shield 848 4 3.25 850 4 3.25 26,125
TreeHouse 496 5 1.90 26,125
Walmart 484 6 1.85 285 9 1.09 26,125
City of Lodi 390 7 1.50 460 7 1.76 26,125
Farmers & Merchants Bank 358 8 1.37 336 8 1.29 26,125
Costco 227 9 0.87 26,125
Target 145 10 0.56 165 10 0.63 26,125
Cottage Bakery - 700 5 2.68 26,125
General Mills 478 6 1.83 26,125
Total
2000 Census Labor Force figure
9,360
35.83 9,135
150
34.97
CITY OF LODI
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY DEPARTMENT - LAST TEN FISCAL YEARS
Fiscal Year
2018 2017 2016 2015 2014
Department:
Administration 9 10 10 10 10
Community Development 11 11 11 11 9
Electric 52 51 49 44 43
Financial Services - -
Fire 53 54 54 57 53
Internal Services 31 32 31 31 31
Library 7 7 10 11 10
Parks and Recreation - -
Parks, Recreation and Cultural Services 24 24 26 28 27
Police 103 103 102 107 104
Public Works 101 101 100 97 95
Total 390 393 393 396 382
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
151
CITY OF LODI
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY DEPARTMENT - LAST TEN FISCAL YEARS
(Continued)
Fiscal Year
2013 2012 2011* 2010 2009
Department:
Administration 10 12 13
Community Development 9 9 13
Electric 40 40 41
Financial Services - -
Fire 53 54 64
Internal Services 31 29 35
Library 11 12 14
Parks and Recreation - -
Parks, Recreation and Cultural Services 27 29 37
Police 104 103 125
Public Works 92 93 98
Total 377 381 440
31
13
51
24
64
14
31
125
102
455
32
13
50
26
64
14
31
125
102
457
Community Center, Human Resources and Information Systems were previously included in
Administration. Budget, Financial Services, Human Resources and Information Services are now
Internal Services.
Community Center, Parks & Recreation are now Parks, Recreation and Cultural Services.
Source: City of Lodi Budget Document
152
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT
LAST TEN FISCAL YEARS
Fiscal Year
2018 2017 2016 2015 2014
General government:
Building permits issued 2,699 2,447 2,482 2,404 2,404
Business tax certificates:
Retail sales and service 2,137 2,443 2,288 2,281 2,281
Manufacturers and processors 75 76 78 23 23
Professions 294 308 316 323 323
Miscellaneous contractors, peddlers, delivery vehicles, etc. 1,232 949 1,268 1,256 1,256
Utility billing/customer service:
Number of customers 24,259 26,018 26,034 25,912 25,912
Energy sales (KWH) 425,157,874 425,410,574 437,246,335 438,780,911 438,780,911
Peak demand (MW) 130.9 129 124 134 134
Public safety:
Police:
Major reported crimes 2,062 2,025 3,068 2,268 2,268
Total arrests 3,460 4,226 4,083 3,690 3,690
Dispatched calls for service 37,301 37,866 40,390 35,992 35,992
Fire:
Interior structure fire calls 56 51 33 32 32
Non-structural fire calls 235 177 154 143 143
Hazardous materials calls 55 90 73 65 65
Emergency medical calls 5,364 3,572 3,123 3,418 3,418
Total emergency calls 6,996 5,869 5,238 3,666 3,666
Total number of units dispatched 8,230 7,225 7,430 5,727 5,727
Public works:
Miles of streets resurfaced 0 6 6 6 6
Fleet job orders completed 1,744 2,129 2,162 2,500 2,500
Trees planted 372 135 135 135 135
Water utility:
New connections 180 205 69 8 8
Water main breaks 2 2 3 16 16
Wastewater utility:
Average daily treatment (million gal/day) 4.5MG 4.65MG 4.6MG 4.6MG 4.6MG
Library:
Registered borrowers 63,631 64,742 60,362 58,824 58,824
Circulation of library materials 162,796 187,853 199,096 197,673 197,673
Reference, research and informational questions answered 9,852 9,695 11,109 13,189 13,189
Annual attendance at libraries 225,558 231,602 245,936
Number of programs offered 789 764 456 432 432
Annual attendance at programs 24,682 23,960 15,452 12,888 12,888
Public access computer usage 25,825 31,205 34,071 34,071 41,180
Community center:
Community center bookings 595 597 758 794 769
Instructional classes 438 554 518 500 553
Registered students 2,695 3,010 2,744 2,586 3,269
Yearly attendance 11,011 13,925 13,925 13,925 13,925
Parks and recreation:
After school program registration (number of participants/sites) 17,057/17 1,617/17 19,800/17 315,140/19 254,096/20
Adult sports
Program/Participation 1,000 14,887 14,673 15,285 2,082
Programs offered 5 14 15 18 17
Partnerships 2 2 2 2 2
Tournaments 4 6 8 10 5
Youth/Teen sports
Program attendance 3,480 3,496 3,652 3,621 3,672
Programs offered 11 18 18 18 18
Aquatics
Program attendance 26,571 28,974 28,195 28,009 27,731
Number of programs 8 14 14 15 13
Source: City of Lodi
153
CITY OF LODI
OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT
LAST TEN FISCAL YEARS
(Continued)
Fiscal Year
2013 2012 2011 2010 2009
General government:
Building permits issued 1,578 1,461 2,022 1,709 1,754
Business tax certificates:
Retail sales and service 2,526 2,485 2,530 2,406 2,496
Manufacturers and processors 78 77 76 80 82
Professions 362 364 371 373 380
Miscellaneous contractors, peddlers, delivery vehicles, etc. 1,456 1,362 1,357 1,312 1,411
Utility billing/customer service:
Number of customers 23,927 23,761 23,575 25,573 25,555
Energy sales (KWH) 435,822,465 435,655,731 421,130,329 434,200,987 452,075,554
Peak demand (MW) 122 116 116 120 134
Public safety:
Police:
Major reported crimes 2,643 3,573 2,885 2,377 2,454
Total arrests 3,825 4,350 4,410 4,238 4,646
Dispatched calls for service 50,124 46,756 52,061 51,870 56,391
Fire:
Interior structure fire calls 67 57 56 47 69
Non-structural fire calls 209 163 121 123 123
Hazardous materials calls 58 41 69 70 70
Emergency medical calls 3,882 3,820 3,752 3,494 3,364
Total emergency calls 5,823 5,620 5,753 5,385 5,392
Total number of units dispatched 7,954 7,855 7,835 7,390 7,038
Public works:
Miles of streets resurfaced 6 6 6 3 6
Fleet job orders completed 1,803 1,953 2,810 3,303 3,921
Trees planted 131 131 96
Water utility:
New connections 8 7 8 17 17
Water main breaks 14 10 8 6 4
Wastewater utility:
Average daily treatment (million gal/day) 5.10MG 5.5MG 6.5MG 6.5MG 6.5MG
Library:
Registered borrowers 51,594 47,147 43,927 39,199 53,530
Circulation of library materials 215,293 217,742 248,250 251,967 219,711
Reference, research and informational questions answered 16,270 14,463 16,234 16,501 15,379
Annual attendance at libraries 224,762 222,148 210,279 207,123 n/a
Number of programs offered 407 432 388 344 316
Annual attendance at programs 14,443 12,993 13,133 10,676 8,765
Public access computer usage 45,871 47,428 58,990 52,124 38,388
Community center:
Community center bookings 718 698 926 789 475
Instructional classes 580 307 536 583 507
Registered students 2,819 3,713 3,438 3,525 3,316
Yearly attendance 13,925 13,925 14,217 13,355 14,050
Parks and recreation:
After school program registration (number of participants/sites) 1,715/20 3,232/20 1,920/4 1,920/4 1,920/4
Adult sports
Program/Participation 2,246 2,420 2,528 2,528 2,284
Programs offered 16 15 16 16 13
Partnerships 2 3 5 5 1
Tournaments 6 12 7 7 10
Youth/Teen sports
Program attendance 3,643 3,889 4,251 4,251 215,000
Programs offered 19 24 16 16 24
Aquatics
Program attendance 23,414 34,366 32,566 32,566 2,433
Number of programs 13 25 13 13 6
Source: City of Lodi
154
CITY OF LODI
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT
LAST TEN FISCAL YEARS
Fiscal Year
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
General government:
Total square miles 13.98 13.98 13.98 13.98 13.98 13.98 13.98 13.92 13.92 13.92
Public safety:
Police:
Facilities:
Stations 1 1 1 1 1 1 1 1 1 1
Animal control facility 1 1 1 1 1 1 1 1 1 1
Police training facility (pistol range) 1 1 1 1 1 1 1 1 1 1
Vehicles:
Marked patrol cars 23 23 23 23 23 23 23 23 23 25
Motorcycles and scooters 6 7 7 7 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 37 38
Fire:
Facilities:
Fire stations 4 4 4 4 4 4 4 4 4 4
Vehicles:
Fire engines 6 7 6 6 6 6 6 7 7 7
Trucks/Trailers 5 8 6 6 6 6 5 5 6 6
Other automobiles 8 5 11 11 11 11 9 8 10 12
Public works:
Miles of streets 205 202 202 202 202 202 202 202 202 202
Miles of alley ways 16 16 16 16 16 16 16 16 16 16
Traffic signals 69 68 67 67 67 67 67 67 62 62
Street lights 7,697 7,270 7,270 7,270 7,270 7,270 7,270 7,270 7,270 7,270
Parks and recreation:
Parks and squares 28 26 26 26 26 26 26 26 26 26
Park acreage 366 361 361 361 361 361 373 373 373 371
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 4
Baseball/softball diamonds 20 20 20 20 20 20 24 24 24 24
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 17 20 20 20 20 20 22 25 25 25
Ballpark 24 24 24 24 24 24 24 24 24 24
Soccer Field 22 22 22 22 22 22 22 22 22 22
Football Field 1 1 1 1 1 1 1 1 1 1
Handball/BasketballNolleyball Courts/Bocce Courts 12 12 12 12 12 12 10 10 10 10
Horseshoe Pits 8 8 8 8 8 8 8 6 6 6
Library:
Central library 1 1 1 1 1 1 1 1 1 1
Total items in collection 111,544 125,730 130,657 119,554 148,287 149,243 135,113 134,804 130,530 135,197
Integrated library system 1 1 1 1 1 1 1 1 1 1
Microfilm readers 0 0 0 1 1 1 1 1 1 1
Microfilm readers/printers 0 1 1 1 1 1 1 1 1 1
Self check out machines 3 3 3 2 2 2 2 2 2 2
Electric utility:
Overhead lines 12kv(miles) 129 117 117 117 117 133 133 133 130 130
Overhead lines 60kv (miles) 14 14 14 14 14 14 14 13 13 13
Undergroundlines(miles) 164 123 121 118 115 159 159 157 155 154
Water utility:
Water main lines 240 243 240 236 236 236 236 236 237 233
Water storage capacity (gallons) 4,100,000 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
Water wells 28 28 28 28 28 28 27 27 26 26
Water reservoirs 3 3 3 3 3 3 2 2 2 2
Water Treatment Plant 1 1 1
Wastewater utility:
Wastewater main lines (miles) 196 196 196 196 196 196 196 196 191 194
Treatment capacity 8.5MG 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
Wastewater treatment plant 1 1 1 1 1 1 1 1 1 1
Wastewater Pump Stations 9 9 9
Stormwater utility:
Stormwater main drain lines (miles) 130 128 126 124 124 124 124 124 124 161
Stormwater pump stations 16 16 16 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 2,450 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
155
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SINGLE AUDIT REPORTS
City of Loan
Lodi, California
Single Audit and
Independent Auditors' Reports
For the Year Ended June 30, 2018
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
City of Lodi
Table of Contents
Page
Independent Auditors' 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 SA - 1
Independent Auditors' Report on Compliance for Each Major Federal Program,
on Internal Control Over Compliance Required by the Uniform Guidance,
and on Schedule of Expenditures of Federal Awards SA - 3
Schedule of Expenditures of Federal Awards SA - 7
Notes to the Schedule of Expenditures of Federal Awards SA - 9
Schedule of Findings and Questioned Costs SA - 10
This page intentionally left blank
TPUHE
N GROUP
ACCOUNTANTS & ADVISORS
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
Independent Auditors' Report
To the Honorable Mayor and Members of City Council
of the City of Lodi
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 (the "City"), as of and for the
year ended June 30, 2018, and the related notes to the basic financial statements which collectively comprise the City's
basic financial statements and have issued our report thereon dated January 16, 2019.
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 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 was for the limited purpose described in the first paragraph of this section and
was not designed to identify all deficiencies in internal control 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.
2121 North California Blvd., Suite 290,Walnut Creek, California 94596
Tel: 925-974-3394 • Fax: 949-777-8850
www.pungroup.com
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Page 2
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's basic 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.
Purpose of this 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 City'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.
Paw /I -4-u., /-ip
Walnut Creek, California
January 17, 2019
SA - 2
TPUHE
N GROUP
ACCOUNTANTS & ADVISORS
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM,
ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE
UNIFORM GUIDANCE, AND ON SCHEDULE OF EXPENDITURS OF FEDERAL AWARDS
Independent Auditors' Report
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Report on Compliance for Each Major Federal Program
We have audited the City of Lodi, California's (the "City") compliance with the types of compliance requirements
described in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major
federal programs for the year ended June 30, 2018. The City's major federal programs are identified in the summary of
the auditors' results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and terms and conditions of federal
awards applicable to its federal programs.
Auditors' Responsibility
Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our
audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance
with auditing standards generally accepted in the United States of America; the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 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 each major federal program.
However, our audit does not provide a legal determination of the City's compliance.
Opinion on Each Major Federal Program
In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that
could have a direct and material effect on each of its major federal programs for the year ended June 30, 2018.
2121 North California Blvd., Suite 290,Walnut Creek, California 94596
Tel: 925-974-3394 • Fax: 949-777-8850
www.pungroup.com
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Page 2
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 City's internal control over compliance with the types of requirements that could have a direct and material
effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for
the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal
control over compliance in accordance with 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 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. We
consider the deficiency described as item number 2018-001 in the accompanying Schedule of Findings and Questioned
Costs to be a significant deficiency in internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of
this section and was not designed to identify all deficiencies in internal control over compliance that might be material
weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we
consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The City's response to the internal control over compliance findings identified in our audit is described in the
accompanying Schedule of Findings and Questioned Costs. The City's response was not subjected to the auditing
procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
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.
SA -4
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Page 3
Schedule of Expenditures of Federal Awards
We have audited the financial statements of the governmental activities, the business -type activities, the discretely
presented component units, each major fund, and the aggregate remaining fund information of the City as of and for
the year ended June 30, 2018, and have issued our report thereon dated January 16, 2019 which contained unmodified
opinion on those financial statements. Our audit was conducted for the purpose of forming our opinion on the City's
Basic Financial Statements. The accompanying Schedule of Expenditures of Federal Awards, as required by Title 2
U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the
financial statements. Such information is the responsibility of management and was derived from and relates directly to
the underlying accounting and other records used to prepare the financial statements. The information has been
subjected to the auditing procedures applied in the audit of the basic financial statements and certain other procedures,
including comparing and reconciling such information directly to the underlying accounting and other records used to
prepare the financial statements or to the financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of
Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic financial statements as a
whole.
ica-/ may-, 1-1-ip
Walnut Creek, California
January 17, 2019
SA -5
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SA -6
City of Lodi
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2018
Federal Grantor/Pass - Through
Grantor/Program Title
Federal Grant
CFDA Identification Federal
Number Number Expenditures
U.S. Department of Housing and Urban Development
CDBG - Entitlement Grants Cluster
Direct Program:
Community Development Block Grant 14.218 B -14 -MC -06-0038 $ 2,258
Community Development Block Grant 14.218 B -15 -MC -06-0038 61,070
Community Development Block Grant 14.218 B -16 -MC -06-0038 89,341
Community Development Block Grant 14.218 B -17 -MC -06-0038 317,381
Total CDBG - Entitlement Grants Cluster 470,050
U.S. Department of Transportation
Federal Transit Cluster
Direct Program:
Federal Transit - Formula Grants
Total Federal Transit Cluster
Total U.S. Department of Housing and Urban Development 470,050
20.507 CA -2018-102 1,400,000
1,400,000
Highway Planning and Construction Cluster
Passed through California Department of Transportation:
Highway Planning and Construction 20.205 STPL-5154(040) 636,601
Total Planning and Construction Cluster 636,601
Passed through California Office of Traffic Safety:
Minimum Penalties for Repeat Offenders for DWI
U.S. Environmental Protection Agency
Direct Program:
Title III - NSIP Cl Incentive
20.608 PT18088 78,351
Total U.S. Department of Transportation 2,114,952
66.818 99T30201 40,180
Total U.S. Environmental Protection Agency 40,180
SA -7
Total Expenditures of Federal Awards $ 2,625,182
City of Lodi
Notes to the Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2018
Note 1— Reporting Entity
The financial reporting entity, as defined by the Governmental Accounting Standard Board ("GASB"), consists of the
primary government, which is the City of Lodi, California (the "City"), organizations for which the primary
government is financially accountable, and other organizations for which the nature and significance of their
relationship with the primary government are such that exclusion would cause the reporting entity's financial
statements to be misleading or incomplete.
Note 2 — Basis of Accounting
Funds received under the various grant programs have been recorded within the governmental and proprietary fund
types of the City. The City utilizes the modified accrual method of accounting for the governmental fund types and the
full accrual method of accounting for the proprietary fund types. The accompanying Schedule of Expenditures of
Federal Awards ("Schedule") is presented in accordance with the 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). Therefore, some amounts presented in the schedule may differ from amounts presented
in, or used in, the preparation of the City's basic financial statements.
Note 3 — Schedule of Expenditures of Federal Awards
The accompanying Schedule presents the activity of all federal financial assistance programs of the City. Federal
financial assistance received directly from federal agencies as well as federal financial assistance passed through the
State of California is included in the Schedule. The Schedule was prepared from only the accounts of various grant
programs and, therefore, does not present the financial position, change in fund balance, or results of operations of the
City.
Note 4 — Indirect Cost Rate
The City has not elected to use the 10 -percent de minimis indirect rate as allowed under the Uniform Guidance.
SA -8
City of Lodi
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2018
Section I — Summary of Auditor's Results
Financial Statements
Type of report the auditors 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? No
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major programs:
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? Yes
Type of auditor's report issued on compliance for major programs Unmodified
Any audit findings disclosed that are required to be reported in
accordance with 2 CFR 200.516(a)? 2018-001
Identification of major programs:
CFDA Number(s) Name of Federal Program or Cluster Expenditures
20.205 Highway Planning and Construction Cluster $ 636,601
Total Expenditures of All Major Federal Programs $ 636,601
Total Expenditures of Federal Awards $ 2,625,182
Percentage of Total Expenditures of Federal Awards 24.25%
Dollar threshold used to distinguish between type A and type B program $750,000
Auditee qualified as low-risk auditee in accordance with 2 CFR 200.520?
SA -9
Yes
City of Lodi
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2018
Section II — Financial Statement Findings
A. Current Year Findings — Financial Statement Audit
No findings were noted on the City's financial statement audit for the year ended June 30, 2018.
B. Prior Year Findings — Financial Statement Audit
No findings were noted on the City's financial statement audit for the year ended June 30, 2017.
Section III — Federal Award Findings
A. Current Year Findings and Questioned Costs — Major Federal Award Program Audit
Finding 2018-001 Procurement Policy
Criteria:
Non -Federal entities other than states, including those operating federal programs as subrecipients of states, must
follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own
documented procurement procedures, which reflect applicable state and local laws and regulations, provided that
the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part
200.
A non-federal entity must:
1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors'
performance, maintaining written standards of conduct for employees involved in contracting, awarding
contracts only to responsible contractors, and maintaining records to document history of procurements.
2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with
2 CFR section 200.319.
3. Use the micro -purchase and small purchase methods only for procurements that meet the applicable criteria
under 2 CFR sections 200.320(a) and (b). Under the micro -purchase method, the aggregate dollar amount does
not exceed $3,500 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements
(Davis -Bacon Act)). Small purchase procedures are used for purchases that exceed the micro -purchase amount
but do not exceed the simplified acquisition threshold. Micro -purchases may be awarded without soliciting
competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section
200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate
number of qualified sources (2 CFR section 200.320(b)).
4. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the
following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section
200.320(c); the competitive proposals method under the conditions specified in 2 CFR section 200.320(d); or
the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more
of four circumstances are met, in accordance with 2 CFR section 200.320(0.
SA -10
City of Lodi
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2018
Section III — Federal Award Findings
A. Current Year Findings and Questioned Costs — Major Federal Award Program Audit
Finding 2018-001 Procurement Policy (Continued)
Criteria (Continued):
5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified
acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage
of cost and percentage of construction cost methods of contracting must not be used (2 CFR section
200.323(d)).
6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section
200.326. These provisions are described in Appendix II to 2 CFR part 200, "Contract Provisions for Non -
Federal Entity Contracts Under Federal Awards."
Non-federal entities had a grace period of two full fiscal years after the effective date of the Uniform Guidance
before they had to comply with the procurement requirements of 2 CFR section 200. For a non-federal entity with
a fiscal year-end of June 30, its effective date for the procurement requirements was July 1, 2017. However, during
this grace period, non-federal entities were required to clearly document whether they decided to comply with the
previous version of the applicable procurement standards or the new standards contained in the Uniform Guidance.
Condition:
The City has not updated its purchasing policies and procedures to bring it into compliance with the requirements
of Uniform Guidance. The City has also not formally documented whether it has decided to extend its applicable
date of compliance with 2 CFR part 200 to be effective beginning July 1, 2018.
Context:
See condition above for context of the finding.
Cause:
The City has not evaluated its existing procurement policies for compliance with the requirements of the Uniform
Guidance.
Effect:
The City is not in compliance with the procurement policy provisions of 2 CFR part 200 and the Uniform
Guidance. Not updating the City's procurement policy could lead to future findings and questioned costs related to
federal awards. The current audit did not identify noncompliance with direct and material compliance requirements
of the major federal award program.
Identification as a Repeat Finding:
Not applicable.
SA - 11
City of Lodi
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2018
Section III — Federal Award Findings
A. Current Year Findings and Questioned Costs — Major Federal Award Program Audit
Finding 2018-001 Procurement Policy (Continued)
Recommendation:
The City should evaluate and update existing purchasing policies and procedures in order to bring the City into
compliance with the procurement policy requirements of 2 CFR part 200 and the Uniform Guidance. The updated
policy should include, among other things:
1. Thresholds and appropriate approval procedures for allowable federal procurement methods.
2. Written standards for how conflicts of interest involving employees engaged to select, award, and administer
contracts will be governed.
3. How to ensure that contracts and awards are made only to responsible and eligible contractors and how
oversight of contractor performance will be monitored.
4. How records will be maintained in order to document the history of federal procurements.
Views of Responsible Officials:
The City agrees with the finding and the recommendation.
B. Prior Year Findings and Questioned Costs — Major Federal Award Program Audit
No findings or questioned costs were noted on the City's major federal programs for the year ended
June 30, 2017.
SA -12
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SA - 13
CONTINUING DISCLOSURES
UNAUDITED
CONTINUNING DISCLOSURE REQUIREMENTS FOR THE CITY OF LODI, THE LODI
PUBLIC IMPROVEMENT CORPORATION AND THE LODI PUBLIC FINANCING
AUTHORITY
FISCAL YEAR 2017-2018
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.
157
ANNUAL REPORT FOR ELECTRIC UTILITY
The Lodi Electric Utility (LEU) has Continuing Disclosure requirements associated with its 2018 Electric
System Revenue Refunding Bonds. 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 four (4) tables to reflect the most recently completed fiscal
year as required in the Bonds:
1. Electric System Power Supply Resources
2. Electric System Customers, Sales, Revenues and Peak Demand
3. Outstanding Debt of Joint Powers Agencies
4. Historical Operating Results
Reporting of Significant Events
The Bonds identify sixteen (16) specific events that require special reporting. As of June 30, 2018, 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 Bonds.
158
Table 1 A table setting forth the City's power supply resources.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
POWER SUPPLY RESOURCES
For the Fiscal Year Ended June 30, 2018
Source
Purchased Power(2):
Western
NCPA
Geothermal Project
Hydroelectric Project
Combustion Turbine Project No. 1
Capital Facilities, Unit One
Lodi Energy Center
Contracts and Exchanges(3)
Total
Capacity
Available Actual Energy
(MW)(1)(4) (MWh)
8.10
11.50
26.20
9.50
19.60
26.60
35.50
19,477
80,423
51,030
2,030
3,523
102,133
215,560
% of
Total
Energy
4.10%
17.00%
10.80%
0.40%
0.70%
21.50%
45.50%
137.00 474,176 (4) 100.00%
Total Capacity and Energy Sold at Wholesale N/A
City System Requirement for Retail Load(5)
130.9
38,258
435,918
(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.
159
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
2018
Number of Customers:
Residential 23,145
Commercial 3,075
Industrial 41
Other 169
Total Customers 26,430
Kilowatt Hour (kWh) Sales:
Residential 155, 539, 509
Commercial 144, 244, 913
Industrial 115,066,917
Other 10,306,535
Total kWh sales 425,157,874
Revenues from Sale of Energy:
Residential 27,967,919
Commercial 25,105,915
Industrial 14,877,597
Other 1,295,278
Total Revenues from
Sale of Energy: 69,246,709
Peak Demand (MW) 130.9
Excludes revenues from California Energy Commission Tax.
160
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)
For the Fiscal Year Ended June 30,2018
Outstanding Lodi's
Debt(1) Participation(2)
Lodi's Share
of
Outstanding
Debt
NCPA
Geothermal Project Three $ 28.80 10.28% $ 3.00
Hydroelectric Project 315.50 10.60% (3) 33.40
Capital Facilities Project Unit One 33.60 39.50% 13.30
Lodi Energy Center Project 227.40 17.03% 38.70
TANC(4) 2.60 2.07% 0.05
TOTAL* $ 607.90 14.55% $ 88.45
* Columns may not add to totals due to independent rounding.
(1) Source: NCPA.
(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.
(4) The City is responsible for 2.07% of TANC's South of Tesla debt service of approximately $53,000 per year.
161
Table 4 A table showing a summary of operating results for the past fiscal year.
CITY OF LODI
ELECTRIC SYSTEM
SUMMARY OF OPERATING RESULTS (1)
Ending Fiscal Year June 30 (Dollars in 000s)
Actual 2018
Operating Revenues
Beginning Reserves(1) $ 26,642
Rate Revenue 65,054
ECA Revenue 4,192
Other Revenue 3,495
Total Operating Revenue 72,741
Operating Expenses
Purchased Power
Non -Power Costs (2)
Total Operating Expenses
Net Revenue Available for Debt Service
Parity Debt Service
2002 C & D, 2008 A Bonds
Total Net Debt Service
39,519
16,422
55,941
16,800
5,298
5,298
Debt Service Coverage 4
Remaining Revenue Available for Other 11,502
Purposes
Non -Operating Revenue/Expenses
Greenhouse gas allowance 559
Im pact Fees 138
In -Lieu Transfer to General Fund (7,159)
PERS Stabilization Contribution (603)
Net Cash Flow Before Capital Expenditures (7,065)
Capital Funded from Rates 2,718
Ending Reserves(6) $ 26,573
Source: City of Lodi
Note: Figures shown above are calculated in accordance with the documents pursuant to requirements associated with its 2018
Electric System Revenue Refunding Bonds which may or may not be on the same basis as Generally Accepted Accounting
Principles.
(1) Includes cash held by the City and cash held at NCPA in the General Operating Reserve.
(2) Includes Greenhouse Gas Allowance revenue used to pay eligible Operating Expenses.
(3) Includes operations and maintenance costs of Electric System including cost of services provided by other departments and
loan repayment for LED Streetlight Project. Does not include depreciation and amortization.
(4) The calculation of Debt Service Coverage does not include Available Reserves as permitted by the 2018 Installment
Purchase Agreement.
(5) Includes Greenhouse Gas Revenues not eligible for application to Operating Expenses or Debt Service.
(6) Includes reserve funds held locally and available at NCPA.
162
ANNUAL REPORT FOR WASTEWATER UTILITY
The Lodi Wastewater Utility has Continuing Disclosure requirements associated with its 2004 Series A
Certificates of Participation, 2012 Refunding Wastewater Revenue Bonds, the 2016 Refunding
Wastewater Revenue Bonds and the 2017 Installment Purchase Agreement. 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.
Reporting of Significant Events
The Certificates identify eleven (11) specific events that require special reporting. As of June 30, 2018,
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.
City of Lodi
Wastewater System
Number of Connections by User Type
as of June 30
and Percentage of Fiscal Year 2017-18 Service Charge Revenue by User Type
% of FY 17/18
Service Charge
User Type 2014 2015 2016 2017 2018 Revenue
Residential 22,076 21,920 21,700 21,891 22,083 78%
Commercial/Industrial 1,851 1,876 1,909 2,001 2,041 22%
Total All Users 23,927 23,796 23,609 23,892 24,124 100%
Source: City of Lodi
164
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 2017-18
Percentage of Total Annual
User Type Service Charge Revenue
Single Family Residential 59%
Multiple Family Residential 19%
Commercial/Industrial 22%
Source: City of Lodi
Total 100%
165
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
Lodi Memorial Hospital
Archer Daniels Midland
Blue Shield of California
Miller Packing Company
Tokay Villa Apartments
Casa de Lodi
Total top ten users
City of Lodi
Wastewater System
Largest Users by Service Charge Revenues
Fiscal Year 2017-18
Service Charge
Type of Business Revenue
Specialty bakery, frozen dough $ 476,475
K-12, adult education 343,492
Government 70,696
Private label fruit canning 55,876
Health care 46,104
Agricultural processor 41,562
Health insurance 41,350
Hot dog producer 40,609
Apartment complex 34,596
Mobile home park 28,404
Total System
166
Percentage of Total
Annual Service
Charge Revenue
3.19%
2.30%
0.47%
0.37%
0.31%
0.28%
0.28%
0.27%
0.23%
0.19%
$ 1,179,164 7.91%
$14,913,543 100.00%
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 20143) (effective July 1 2015 (effective July 1, 2016) (effective July 1, 2017)
For Residential Users (flat rate per month):
1 Bedroom $26.48 $27.22 $27.90 $27.90
2 Bedrooms 35.3 36.29 37.2 37.2
3 Bedrooms 44.13 45.36 46.49 46.49
4 Bedrooms 52.95 54.43 55.79 55.79
5 Bedrooms 61.78 63.51 65.09 65.09
6 Bedrooms 70.6 72.58 74.39 74.39
7 Bedrooms 79.43 81.65 83.69 83.69
For Residential Users
(usage based rate per month):
Monthly Usage Charge ($/CCF) (1) $2.75 $2.82 $2.89 $2.89
3/4" Meter Charge 24.11 24.78 25.4 25.4
For Commercial/Industrial Users:
Moderate Strength (annual per Sewage Service Unit i $423.61 $423.61 $446.40 $446.40
High Strength:
Flow (annual per MG) 3,574.60 3,674.68 3,730.00 3,849.00
BOD (annual per 1,000 lbs.) 589.9 606.41 616 636
SS (annual per 1,000 lbs.) 368.85 379.17 385 397
Grease Interceptor/Septic Holding Tank Waste within
City Limits (per 1,000 gal.) 312.34 321 326 336
Septic Holding Tank Waste Outside City Limits (per
1,000 gal.) 663.06 482 489 505
Disposal to Storm Drain System (per MG) 328.09 328.09 328.09
Disposal to Industrial System:
Flow (per MG, annual basis)
BOD (per 1,000 lbs., annual basis)
Winery Waste (per 1,000 gallons) 301.04 301.04 301 316
(1) Winter water usage determined as average monthly usage from December through February
167
Table 5 A table showing summary of 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 2013-14 through 2017-18
2013-14 2014-15 2015-16 2016-17 2017-18
Operating Revenues
Charges for Services $14,305,093 $14,714,213 $14,959,756 $15,106,432 $14,913,543
Non -Operating Revenues
Interest Income 427,308 356,590 460,862 510,079 400,533
Rent
Other 453,798 774,007 1,520,966 1,091,001 752,514
Total System Revenues 15,186,199 15,884,720 16,941,404 16,707,512 16,066,590
Operating Expenses
Personnel services 3,215,190 3,116,493 2,923,572 4,501,156 3,505,621
Supplies, Materials and services 2,145,745 2,541,909 3,622,348 4,828,494 5,065,464
Utilities 642,508 676,838 691,632 798,452 726,588
Total Operating Expenses 6,003,443 6,335,240 7,237,552 10,128,102 9,297,673
System Net Revenues 9,182,756 9,509,480 9,703,852 6,579,410 6,768,917
Parity Debt Service
2003 Installment Payments 3,280,111
2004 Installment Payments 98,321 98,325 98,325 98,326 98,326
2007 Installment Payments 1,603,550 1,602,850 1,606,850 547,613 556,213
2012 Installment Payments 1,921,700 1,970,350 1,961,100 1,947,100 1,949,300
2016 Installment Payments 474,109 849,150
Total Parity Debt Service 6,903,682 3,671,525 3,666,275 3,067,148 3,452,989
Debt Service Coverage 1.33 2.59 2.65 2.15 1.96
Non -Operating Expenses
Transfers (In)/Out 1,318,000 1,068,000 1,068,000 1,101,000 1,108,270
Total Non -Operating Expenses 1,318,000 1,068,000 1,068,000 1,101,000 1,108,270
Net Cashflow Before Capital Expenditures $961,072 $4,769,955 $4,969,578 $2,430,502 $2,207,658
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 2014 2015 2016 2017 2018
Operating $ 4.30 $ 5.60 $ 9.70 $ 13.00 $ 15.40
Rate Stabilization 0.50 0.50 0.50 0.50 0.50
Impact Mitigation 0.70 0.80 1.00 1.70 1.70
Capital 8.70 6.90 4.50 1.00 0.25
Total $ 14.20 $ 13.80 $ 15.70 $ 16.20 $ 17.90
25% Operating
Reserve Goal $ 1.60 $ 1.60 $ 2.40 $ 3.30 $ 3.90
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, 2018,
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
2014 2015 2016 2017 2018
Revenues:
Taxes $23,718,396 $24,630,745 $25,327,203 $26,490,919 $27,422,477
Licenses and permits 83,420 87,908 92,702 86,844 67,757
Intergovernmental revenues 11,319,708 12,642,107 12,887,767 12,830,329 12,377,159
Charges for services 1,025,851 1,482,448 1,437,440 1,852,855 1,934,180
Fines, forfeits and penalties 1,552,531 1,573,071 1,494,758 906,563 1,396,137
Investment and rental income 1,548,787 1,546,845 1,554,198 1,734,773 1,747,857
Miscellaneous revenue 352,331 290,951 349,153 319,373 342,549
Total revenues 39,601,024 42,254,075 43,143,221 44,221,656 45,288,116
Expenditures:
Current:
General government 6,482,226 6,490,907 6,824,884 6,926,368 6,980,564
Public protection 26,470,110 264,338,172 28,612,592 29,969,781 30,576,759
Public works 1,554,939 1,882,250 1,866,277 1,698,518 1,852,852
Library 1,267,850 1,311,367 1,152,901 1,152,721 1,058,133
Total expenditures 35,775,125 36,072,696 38,456,654 39,747,388 40,468,308
Excess of revenues over expenditures 3,825,899 6,181,379 4,686,567 4,474,268 4,819,808
Other financing sources (uses):
Transfers in 3,952,000 3,952,000 3,952,000 3,952,000 5,949,190
Transfers out (6,269,351) (7,128,586) (7,869,927) (6,705,104) (6,969,450)
Total other financing sources (uses (2,317,351) (3,176,586) (3,917,927) (2,753,104) (1,020,260)
Net change in fund balance 1,508,548 3,004,793 768,640 1,721,164 3,799,548
Fund balance, beginning of year 7,965,212 9,473,760 12,478,553 13,247,193 14,968,357
Fund balance, end of year $ 9,473,760 $12,478,553 $13,247,193 $14,968,357 $18,767,905
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, 2018
Bargaining Units Employee Paid* City Paid Total Employee Share
Council appointees 7.00% % 7.00%
Executive management 7.00% 7.00%
Confidential mid -management 7.00% 7.00%
Confidential 7.00% 7.00%
Fire mid -management 9.00% 9.00%
Fire 9.00% 9.00%
Mid -management 7.00% 7.00%
General services 7.00% 7.00%
Maintenance and operators 7.00% 7.00%
IBEW 7.00% 7.00%
Police mid -management 9.00% 9.00%
Police 9.00% 9.00%
Dispatchers 7.00% 7.00%
*PEPRA Miscellaneous Employees
6.75
*PEPRA Safety Employees
11.25
6.75
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, 2017.
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, 2018,
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 Revenue Number of Revenue
December 31 Accounts Accounts
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
2017 2,909 3,087,136 22,106 9,960,627
Source: City of Lodi
Table 2 A table showing the largest users by service charge revenue for the most recent fiscal
year.
User
Type of Business
City of Lodi
Lodi Unified School District
Pacific Coast Producers
Lodi Memorial Hospital
Treehouse Foods
Tokay Villa
Casa de Lodi
Temple Baptist Church
Sweetener Products
Wine & Roses
Subtotal Top Ten Users
TOTAL SYSTEM
Government
K-12, adult education
Private label fruit canning
Health care
Specialty bakery, frozen dough
Apartment complex
Mobile home park
Church
Sweetener distribution
Hotel
175
Service Charge
Revenue
Percentage of Total
Annual Service
Charge Revenue
$ 525,864
352,919
147,898
65,309
57,013
33,143
28,848
22,102
21,213
20,385
$ 1,274,694
4.04%
2.71%
1.14%
0.50%
0.44%
0.25%
0.22%
0.17%
0.16%
0.16%
9.80%
$ 13,005,023 100.00%
Table 3 A table showing selected rates effective January 1, 2018.
CITY OF LODI
WATER SYSTEM
Selected Rates Effective January 1, 2018
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.
$ 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 2013-14 through 2017-18
Gross Revenues
Water Sales (1)
Investment Earnings
Water Impact Mitigation Fees
Meter Retrofit Installation Charges
Other Revenues (2)
2013-14
2014-15 2015-16
2016-17 2017-18
12,756,076
118,799
60,000
405,677
825,314
12, 722, 619
87,211
20,299
56,502
483,710
12,161,186
166,791
332,765
76,103
287,839
12,473,676
132,364
206,847
19,255
1,011,756
13, 005, 023
99,018
362,481
21,577
932,652
Total Gross Revenues 14,165,866 13,369,891 13,024,684 13,843,898 14,420,751
Operating and Maintenance Expenses
Personnel Services 2,392,611 2,316,305 2,515,542 2,998,026 2,833,892
Supplies, Materials and Services 3,014,227 2,139,014 3,008,676 3,468,229 6,722,343
Utilities 648,233 579,774 496,316 453,488 518,271
Administrative Overhead 780,000 780,000 780,000 813,000 820,560
Total 0 & M Expenses 6,835,071 5,815,093 6,800,534 7,732,743 10,895,066
Net Revenue Available for Debt Service 7,330,795 7,554,798 6,224,150 6,111,155 3,525,685
Debt Service
2010 Bonds (3) 2,335,230 2,356,141 2,351,580 2,308,061 2,305,611
Total Net Debt Service 2,335,230 2,356,141 2,351,580 2,308,061 2,305,611
Debt Service Coverage (4)
Debt Service Coverage 3.11 3.21 2.65 2.65 1.53
Debt Service Coverage
(excluding impact mitigation fees) 3.09 3.2 2.51 2.56 1.38
Net Remaining Revenues Available for Capital 4,975,565 5,198,657 3,872,570 3,803,094 1,220,074
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
6,891,350
380,675
4,841,932
267,902
1,606,734
9,097
4,589,636
330,380
4,068,588
114,412
7,272,025 5,109,834 1,615,831 4,920,016 4,183,000
(2,296,460) 88,823 2,256,739 (1,116,922) (2,962,896)
9,044,659
7,027,567
177
7,027,567
6,755,522
6,755,522
6,270,786
6,270,786
4,558,222
4,558,222
4,450,028
Table 4 A table showing historic operating results and debt service coverage for the past five
fiscal years (continued).
(1) Water sales reflect Council -adopted rate increases effective January 1, 2015.
(2) Includes rent, sales of City property, discounts, water reimbursements, and damage to property,
water tap fees, DBCP reimbursements, and other miscellaneous revenues. DBCP
reimbursements are expected to decline beginning in Fiscal Year 2012-13 as new plant becomes
operational and groundwater draws diminish.
(3) Reflects total debt service for the 2010 Water Revenue Bonds net of the 35% interest rate
subsidy for the Series 2010B bonds.
(4) Coverage calculated based on Net Revenues divided by net Debt Service and Net Revenues
less mitigation fees divided by Net Debt Service.
(5) Annual capital costs of transition to water meters. Program expected to be completed in Fiscal
Year 2020-21.
(6) Excludes costs of the Project to be funded from proceeds of the Series 2010 Bonds.
(7) 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
Lodi, California
Independent Accountants' Report on
Agreed -Upon Procedures Applied to
Appropriations Limit Schedule
For the Year Ending June 30, 2019
T
PHEUN GROUP
1< < OLIN IAN f . & A[]VISCIR
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
INDEPENDENT ACCOUNTANTS' REPORT ON
APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
We have performed the procedures enumerated below to the accompanying Appropriations Limit Schedule of the
City of Lodi, California (the "City") for the year ending June 30, 2019. These procedures, which were agreed to by
the City and the League of California Cities (as presented in the publication entitled Agreed-upon Procedures
Applied to the Appropriations Limitation Prescribed by Article XIII -B of the California Constitution), were
performed solely to assist you in meeting the requirements of Section 1.5 of Article XIII -B of the California
Constitution. The City management is responsible for the Appropriations Limit Schedule. This agreed-upon
procedures engagement was conducted in accordance with attestation standards established by the American
Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those
parties specified in this report. Consequently, we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has been requested or any other purpose.
The procedures performed and our findings are described below:
1. We obtained the completed worksheets used by the City to calculate its appropriations limit for the year
ending June 30, 2019, and determined that the limit and annual calculation factors were adopted by
resolution of City Council. We also determined that the population and inflation options were selected by a
recorded vote of the City Council.
Finding: No exceptions were noted as a result of our procedures.
2. For the accompanying Appropriations Limit Schedule, we added the prior year's limit to the total
adjustments, and agreed the resulting amount to the current year's limit.
Finding: No exceptions were noted as a result of our procedures.
3. We agreed the current year information presented in the accompanying Appropriations Limit Schedule to
corresponding information in worksheets used by the City.
Finding: No exceptions were noted as a result of our procedures.
4. We agreed the appropriations limit presented in the accompanying Appropriations Limit Schedule to the
appropriations limit adopted by the City Council.
Finding: No exceptions were noted as a result of our procedures.
4365 Executive Drive, Suite 710, San Diego, California 92121
Tel: 858-242-5100 • Fax: 858-242-5150
www.pungroup.com
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Page 2
We were not engaged to and did not conduct an examination, the objective of which would be the expression of an
opinion on the accompanying Appropriation Limit Schedule. Accordingly, we do not express such an opinion.
Had we performed additional procedures, other matters might have come to our attention that would have been
reported to you. No procedures have been performed with respect to the determination of the appropriation limit
for the base year, as defined by Article XIII -B of the California Constitution.
This report is intended solely for the information and use of the City Council and management of the City and is not
intended to be and should not be used by anyone other than these specified parties.
Paw 44Azei-(-,
San Diego, California
January 17, 2019
2
City of Lodi
Appropriations Limit Schedule
For the Year Ending June 30, 2019
A. Appropriations Limit FY2017-2018
Amount Source
$ 100,166,687 Prior year
B. Calculation Factors:
1) Population increase % 1.0184 State Department of Finance
2) Inflation increase % 1.0367 State Department of Finance
3) Total adjustment % 1.0558 (B1*B2)
C. Annual Adjustment Increase 5,586,825 [A*(B3-1)]
D. Other Adjustments:
1) Loss responsibility (-) - N/A
2) Transfer to private (-) - N/A
3) Transfer to fees (-) - N/A
4) Assumed responsibility (+) N/A
E. Total Adjustments 5,586,825 (C+D)
F. Appropriations Limit FY2018-2019 $ 105,753,512 (A+E)
3
City of Lodi
Notes to Appropriations Limit Schedule
For the Year Ending June 30, 2019
Note 1 — Purpose of Limited Procedures Review
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California
governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective
for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the
appropriations limit is subject to a limited procedures review in connection with the annual audit.
Note 2 — Method of Calculation
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July, 1990, the appropriations limit is
required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population
factors discussed in Notes 3 and 4 below.
Note 3 — Population Factors
A California governmental agency may use as its population factor either the annual percentage change of the
jurisdiction's own population or the annual percentage change in population of the county where the jurisdiction is
located. The factor adopted by the City for the year 2018-2019 represents the annual percentage change in
population for the City of Lodi.
Note 4 — Inflation Factors
A California governmental agency may use as its inflation factor either the annual percentage change in the 4th
quarter per capita personal income (which percentage is supplied by the State Department of Finance) or the
percentage change in the local assessment roll from the preceding year due to the change of local nonresidential
construction. The factor adopted by the City for the year 2018-2019 represents the annual percentage change for
per capita personal income.
Note 5 — Other Adjustments
A California government agency may be required to adjust its appropriations limit when certain events occur, such
as the transfer of responsibility for municipal services to, or from, another government agency or private entity.
The City had no such adjustments for the year 2018-2019.
4
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
January 17, 2019
To the Honorable Mayor and Members of the City Council
of the City of Lodi
Lodi, California
We have audited the financial statements of the governmental activities, the business -type activities, each major fund,
and the aggregate remaining fund information of the City of Lodi (the "City") for the year ended June 30, 2018, and
have issued our report thereon dated January 17, 2019. In accordance with Government Auditing Standards, we have
also issued our report dated January 17, 2019, on our consideration of the City's internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over
financial reporting or on compliance. Professional standards require that we provide you with information about our
responsibilities under generally accepted auditing standards, as well as certain information related to the scope and
timing of our audit. We have communicated such information in our letter to you dated August 13, 2018. Professional
standards also require that we communicate to you the following information related to our audit:
Qualitative Aspects of Accounting Practices
Accounting Policies
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 basic financial statements. Other than those standards describe
below that were implemented in the fiscal year ended June 30, 2018, no new accounting policies were adopted and the
application of existing policies was not changed.
GASB Statement No. 75, Accounting and Financial Repor ingfor Pastemployment Benefits Other Than Pensions
(OPEB) — This statement applies to government employers who provide OPEB to their employees and for
governments that finance OPEB for employees of other governments. This statement basically parallels GASB
Statement No 68, Pensions and replaces prior guidance under GASB Statement No. 45. The City has
implemented GASB No. 75 which is reflected in the accompanying City's financial statements. The adoption
of this standard required retrospective application (reduction) of previously reported net position in the amount
of ($24,512,888) as of July 1, 2017 (Note 16). In addition, the OPEB liability is reported in the June 30, 2018
Statement of Net Position in the amount of $33,275,362 (amount as of the measurement date). Net OPEB
liability is calculated by actuaries using estimates and actuarial techniques from in the actuarial valuation as of
the measurement date.
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.
2121 North California Blvd., Suite 290,Walnut Creek, California 94596
Tel: 925-974-3394 • Fax: 949-777-8850
www.pungroup.com
To the Honorable Mayor and Members of the City Council
of the City of Lodi
Lodi, California
Page 2
Accounting Estimates
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:
• Investments valuation
• Depreciation on capital assets
• Claims payable
• Net pension liability
• Net OPEB liability
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement
users. The most sensitive disclosures affecting the financial statements were:
• Note 1 Summary of Significant Accounting Policies
• Note 7 Long-term Liabilities
• Note 8 Pension Plans
• Note 9 Postemployment Benefits Other Than Pensions
• Note 10 Claims and Benefits
• Note 11 Participation in Joint Ventures (Northern California Power Agency) and
related Advance Receivable
• Note 14 Pollution Remediation Obligations
• Note 16 Prior Period Adjustment—Net OPER Liability
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other
than those that are clearly trivial, and communicate them to the appropriate level of management. Management has
corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and
corrected by management were material, either individually or in the aggregate, to each opinion unit's financial
statements taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is 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 our audit.
To the Honorable Mayor and Members of the City Council
of the City of Lodi
Lodi, California
Page 3
Management Representations
We have requested certain representations from management that are included in the management representation letter
dated January 17, 2019.
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 governmental unit's auditors. However, these discussions occurred
in the normal course of our professional relationship and our responses were not a condition to our retention.
Other Information in Documents Containing Audited Financial Statements
Our responsibility for the supplementary information accompanying the financial statements, as described by
professional standards, is to evaluate the presentation of the supplementary information in relation to the financial
statements as a whole and to report on whether the supplementary information is fairly stated, in all material respects,
in relation to the financial statements as a whole. We applied certain limited procedures to Management's Discussion
and Analysis (MD&A), Budgetary Comparison Schedules, the Schedules of Changes in Net Pension Liability and
Related Ratios, the Schedules of Plan Contributions - Pension, and the Schedule of Changes in the Net OPEB Liability
and Related Ratios, which are Required Supplementary Information ("RSI") that supplement 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 Financial Statements and the Budgetary Comparison
Schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information,
we made certain inquiries of management and evaluated the form, content, and methods of preparing the information
to determine that the information complies with accounting principles generally accepted in the United States of
America, the method of preparing it has not changed from the prior period, and the information is appropriate and
complete in relation to our audit of the financial statements. We compared and reconciled the supplementary
information to the underlying accounting records used to prepare the financial statements or to the financial statements
themselves.
We were not engaged to report on the Introductory and Statistical 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 it.
To the Honorable Mayor and Members of the City Council
of the City of Lodi
Lodi, California
Page 4
Restriction on CTse
This information is intended solely for the 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.
Very truly yours,
Paw 444Lat'/
The Pun Group, LLP
Walnut Creek, California
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIX\GLOBA L
City of Lodi
Presentation to the City Council
For the Fiscal Year Ended June 30, 2018
February 6, 2019
www.PunGroup.com
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIXGLOBA L
Contents
• Scope of Work
• AU -C 260 Required Communications
• Approach to the Audit for City of Lodi
• Overview of Financial Statements
• Key Pension and OPEB Information
• Audit Results
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIX\GLOBA L
Scope of Work
www.PunGroup.com
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIXGLOBA L
Scope of Work
• Financial Statement Audit
• Comprehensive Annual Financial Report
• Compliance Audit
• Single Audit - Federal Expenditures Audit
• Agreed Upon Procedures
• GANN Limit
4
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIX\GLOBA L
AU -C 260 Required Communications
www.PunGroup.com
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIGLOBA L
AU -C 260 Required Communications
• Audit Responsibilities
• Significant findings from Audit
• Accounting Policies, Significant Estimates and Disclosures
• Implementation of GASB Pronouncements including the New OPEB
Standards (GASB 75)
• Management's estimate of the investment fair value, depreciation on
capital assets and net pension and OPEB liabilities
• Note 1 — Summary of Significant Accounting Policies
• Note 8 — Pension Plans
• Note 9 — Post Employment Benefits Other Than Pensions (OPEB)
• Note 15 — Commitments and Contingencies
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIX\GLOBA L
Audit Responsibilities
www.PunGroup.com
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIGLOBA L
Management Responsibilities
• Responsible for the Financial Statements
• Present the Financial Statements in accordance with Accounting
Principles Generally Accepted in the United States of America
• Adopt sound accounting policies
• Establish and maintain internal controls over financial reporting and
compliance
• Provide evidence supporting the amounts and disclosures in the
financial statements
• Fair presentation of financial statements that are free from material
misstatements, whether due to fraud or error
• Prevent and detect fraud
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIGLOBA L
Auditors' Responsibilities
• Perform the audit in conformity 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.
• Communicate with "Those Charged with Governance"
• Assess audit risk of internal control over financial reporting
• Determine fairness presentation of the financial statements
• Render an opinion on the Financial Statements
• Issue recommendations to Management, if any
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIX\GLOBA L
Approach to the Audit
www.PunGroup.com
THE
PL.IN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIGLOBA L
The Pun Group's Audit Approach
• Phase I — Detailed Planning
• Phase II — Risk Based Reviewed of Internal Controls Over Systems and
Compliance
• Financial Reporting
• Revenues — Billings and Cash receipts
• Expenses — Purchasing and Cash Disbursements
• Payroll and Related Liabilities
• General IT Controls
• Phase III — Validation of Account Balances
• Phase IV — Prepared Financial Statements and Issued Audit Opinion
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIX\GLOBA L
Overview of the Financial Statements
www.PunGroup.com
THE
PL.IN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIVIGLOBA L
Comprehensive Annual Financial Report
• Introductory Section
• Letter of Transmittal
• Certificate of Achievement for Excellence in Financial Reporting
• Organization Chart
• Directory of Officials and Advisory Bodies
• Financial Section
• Independent Auditors' Report
• Management's Discussion and Analysis — RSI (Unaudited)
• Basic Financial Statements
• Government -Wide Financial Statements
• Fund Financial Statements
• Notes to Basic Financial Statements
• Required Supplementary Information
• GASB 68 Schedules on Pensions
• GASB 75 Schedules on OPEB
• Budgetary Comparison Schedules — General Fund and Streets Fund
THE
P1.IN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIGLOBA L
Comprehensive Annual Financial Report (Continued)
• Statistical Section
• Financial Trends
• Revenues Capacity
• Debt Capacity
• Demographic Information
• Operating Information
• Single Audit Report
• Independent Auditors' Reports
• Internal Control Over Financial Reporting and Compliance
• Compliance for the Major Programs and Internal Control Over Compliance
• Schedule of Expenditures of Federal Awards
• Schedule of Findings and Questioned Costs
• Summary Schedule of Prior Audit Findings
• Continuing Disclosures (Unaudited)
• Annual Report for:
• Electric Utilities
• Wastewater Utilities
• Lodi Public Financing Authority
• Water Utilities
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIGLOBA L
City of Lodi
Government -Wide Financial Statements
Summary Statement of Net Position
June 30, 2018
Assets
Deferred Outflows of Resources
Liabilities
Deferred Inflows of Resources
Governmental Business -Type
Activities Activities
Total
$ 193, 084, 392 $ 329, 007, 029 $ 522, 091, 421
21,122, 850
183,171, 374
3,444,447
12,136, 938 33, 259, 788
179,135,196 362, 306, 570
113,678 3,558,125
Net Position:
Net investments in capital assets 119,222,288 137,290,786 256,513,074
Restricted 25,903,963 20,178 25,924,141
Unrestricted (117, 534, 830) 24, 584,129 (92, 950, 701)
Total Net Position $ 27,591,421 $ 161,895,093 $ 189,486,514
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIGLOBA L
City of Lodi
Government -Wide Financial Statements
Summary Statement of Activities
For the Year Ended June 30, 2018
Expenses
Program Revenues
Charges for Services
Operating Grants and Contributions
Capital Grants and Contributions
Total Program Revenues
Governmental Business -Type
Activities Activities
Total
$ 69, 411,180 $ 100, 959, 704 $ 170, 370, 884
10, 060, 332
2,286,476
8,737,149
21, 083, 957
97, 391, 760
5,969,086
11, 307, 763
107,452,092
8,255,562
20, 044, 912
114, 668, 609 135, 752, 566
Net Cost of Services (48,327,223) 13,708,905
General Revenues 40,600,379 2,960,322
Transfers 4,252,350 (4,252,350)
(34,618,318)
43, 560, 701
Changes in Net Position $ (3,474,494) $ 12,416,877 $ 8,942,383
TPUHE
N GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIXGLOBA L
Assets
City of Lodi
General Fund
Summary Balance Sheet
June 30, 2018
$ 23, 039, 239
Liabilities 4,271,334
Fund Balance:
Commited 9,031,119
Unassigned 9,736,786
Total Fund Balance
$ 18, 767, 905
TPUHE
N GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIXGLOBAL
City of Lodi
General Fund
Summary Statement of Revenues, Expenditures and Changes in Fund Balance
For the Year Ended June 30, 2018
Revenues:
Taxes $ 27,422,477
Intergovernmental revenues 12,377,159
Other 5,488,480
Total revenues 45,288,116
Expenditures:
General governments 6,980,564
Public protection 30,576,759
Public Works 1,852,852
Library 1,058,133
Total expenditures 40,468,308
Net Transfers (1,020,260)
Changes in Fund Balance
$ 3,799,548
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIX\GLOBA L
Key Financial Indicators and Pension & OPEB Information
19
www.PunGroup.com
TPUHE
N GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIXGLOBA L
City of Lodi
Sales Tax
For the Last Five Fiscal Years
Fiscal Year
Ended
June 30,
Amounts
2018 $ 11,333,228
2017 11,749,967
2016 11,808,621
2015 10,624,808
2014 10,111,136
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIXGLOBAL
City of Lodi
Governmental Activities
Net Cost of Services to Tax Revenues
For the Fiscal Year Ended June 30, 2018
Expenses $ 69,411,180
Less: Program Revenues (21,083,957)
Net Cost of Services 48,327,223
Tax Revenues 39,355,899
Ratio 122.80%
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIXGLOBA L
City of Lodi
General Fund Reserves
Available Fund Balance to Annual Expenditures
For the Fiscal Year Ended June 30, 2018
Unassigned Fund Balance $ 9,735,786
Annual Expenditures 40,468,308
General Fund Reserves Ratio 24.06%
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIGLOBA L
City of Lodi
GASB 68 — The Pension Standard
June 30, 2018
Miscellaneous Safety Total
Net Pension Liablity @ 7.15%
Discount Rate $ 58,225,070 $ 77,702,210 $ 135,927,280
Funded Ratio
Sensitivity Analysis:
Net Pension Liability @ 6.15%
Net Pension Liability @ 8.15%
69.44% 59.07%
$ 83,480,241 $ 104,180,259 $ 187,660,500
$ 37,353,443 $ 56,060,808 $ 93,414,251
TPUHE
N GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIXGLOBA L
City of Lodi
GASB 75 — The OPEB Standard
June 30, 2018
Total
Net OPEB Liablity @ 3.60%
Discount Rate $ 33,275,362
Funded Ratio 3.14%
Sensitivity Analysis:
Net OPEB Liability @ 2.60%
Net OPEB Liability @ 4.60%
$ 37,086,366
$ 30,053,277
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIX\GLOBA L
Single Audit Report
www.PunGroup.com
TPUHE
N GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIXGLOBAL
City of Lodi
Summary Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2018
Total Federal Expenditures $ 2,625,182
Major Program:
20.205 Highway Planning and Construction $ 636,601
Total Tested 24.25%
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIX\GLOBA L
Audit Result
www.PunGroup.com
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIGLOBA L
Audit Result
• Unmodified Opinion
• Financial Statements are fairly presented in all material respects
• Significant accounting policies have been consistently applied
• Estimates are reasonable
• Disclosures are properly reflected in the financial statements
• The City complied, in all material respects, with the compliance
requirements that could have a direct and material effects on its
major federal program.
• Other Results
• No disagreements with Management
• No material weaknesses in internal controls were noted
• One significant deficiencies in internal controls were noted
• No accounting issues
• No irregularities were noted
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AIIGLOBA L
Findings 2018-01 Procurement Policy
Condition:
The City has not updated its purchasing policies and procedures to bring it into
compliance with the requirements of Uniform Guidance. The City has also not
formally documented whether it has decided to extend its applicable date of
compliance with 2 CFR par 200 to be effective beginning July 1, 2018.
Recommendation:
Update existing purchasing policies and procedures to include, but not limited to:
• Thresholds and appropriate approval procedures
• Written standards for how conflict of interest involve employees engaged
to select, award, and administer contracts
• Contracts and awards are made only to responsible and eligible
contractor and how the City monitors its performance
• Retention and maintenance of documentation
T
PHEUN GROUP
ACCOUNTANTS & ADVISORS
A MEMBER OF
AItIXGLOBA L
For more information, contact:
Gary M. Caporicci, CPA, CGFM
Direct +1 949 777 8802
Gary.Caporicci(i PunGroup.com
Kenneth H. Pun, CPA, CGMA
Direct +1 949 777 8801
Ken.Pun(i PunGroup.com
30
TI IF
PUN GROUP
ACCOUNTANTS & ADVISORS
January 17, 2019
To the Honorable Mayor and Members of the City Council
of the City of Lodi
Lodi, California
We have audited the financial statements of the governmental activities, the business -type activities, each major fund,
and the aggregate remaining fund information of the City of Lodi (the "City") for the year ended June 30, 2018, and
have issued our report thereon dated January 17, 2019. In accordance with Government Auditing Standards, we have
also issued our report dated January 17, 2019, on our consideration of the City's internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over
financial reporting or on compliance. Professional standards require that we provide you with information about our
responsibilities under generally accepted auditing standards, as well as certain information related to the scope and
timing of our audit. We have communicated such information in our letter to you dated August 13, 2018. Professional
standards also require that we communicate to you the following information related to our audit:
Qualitative Aspects ufAccountina Practices
Accounting Policies
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 basic financial statements. Other than those standards describe
below that were implemented in the fiscal year ended June 30, 2018, no new accounting policies were adopted and the
application of existing policies was not changed.
GASB Statement No. 75, Accounting and Financial Reporting for Po. temploy hent Benefits Other Than Pensions
(OPEB) — This statement applies to government employers who provide OPEB to their employees and for
governments that finance OPEB for employees of other governments. This statement basically parallels GASB
Statement No 68, Pensions and replaces prior guidance under GASB Statement No. 45. The City has
implemented GASB No. 75 which is reflected in the accompanying City's financial statements. The adoption
of this standard required retrospective application (reduction) of previously reported net position in the amount
of ($24,512,888) as of July 1, 2017 (Note 16). In addition, the OPEB liability is reported in the June 30, 2018
Statement of Net Position in the amount of $33,275,362 (amount as of the measurement date). Net OPEB
liability is calculated by actuaries using estimates and actuarial techniques from in the actuarial valuation as of
the measurement date.
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.
2121 North California Blvd., Suite 290,Walnut Creek, California 94596
Tel: 925-974-3394 • Fax: 949-777-8850
www.pungroup.com
To the Honorable Mayor and Members of the City Council
of the City of Lodi
Lodi, California
Page 2
Accounting Estimates
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:
• Investments valuation
• Depreciation on capital assets
• Claims payable
• Net pension liability
• Net OPEB liability
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement
users. The most sensitive disclosures affecting the financial statements were:
• Note 1 Summary of Significant Accounting Policies
• Note 7 Long-term Liabilities
• Note 8 Pension Plans
• Note 9 Postemployment Benefits Other Than Pensions
• Note 10 Claims and Benefits
• Note 11 Participation in Joint Ventures (Northern California Power Agency) and
related Advance Receivable
• Note 14 Pollution Remediation Obligations
• Note 16 Prior Period Adjustment — Net OPEB Liability
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other
than those that are clearly trivial, and communicate them to the appropriate level of management. Management has
corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and
corrected by management were material, either individually or in the aggregate, to each opinion unit's financial
statements taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is 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 our audit.
To the Honorable Mayor and Members of the City Council
of the City of Lodi
Lodi, California
Page 3
Management Representations
We have requested certain representations from management that are included in the management representation letter
dated January 17, 2019.
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 governmental unit's auditors. However, these discussions occurred
in the normal course of our professional relationship and our responses were not a condition to our retention.
Other Information in Documents Containing Audited Financial Statements
Our responsibility for the supplementary information accompanying the financial statements, as described by
professional standards, is to evaluate the presentation of the supplementary information in relation to the financial
statements as a whole and to report on whether the supplementary information is fairly stated, in all material respects,
in relation to the financial statements as a whole. We applied certain limited procedures to Management's Discussion
and Analysis (MD&A), Budgetary Comparison Schedules, the Schedules of Changes in Net Pension Liability and
Related Ratios, the Schedules of Plan Contributions - Pension, and the Schedule of Changes in the Net OPEB Liability
and Related Ratios, which are Required Supplementary Information ("RSI") that supplement 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 Financial Statements and the Budgetary Comparison
Schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information,
we made certain inquiries of management and evaluated the form, content, and methods of preparing the information
to determine that the information complies with accounting principles generally accepted in the United States of
America, the method of preparing it has not changed from the prior period, and the information is appropriate and
complete in relation to our audit of the financial statements. We compared and reconciled the supplementary
information to the underlying accounting records used to prepare the financial statements or to the financial statements
themselves.
We were not engaged to report on the Introductory and Statistical 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 it.
City of Lodi
Lodi, California
Independent Accountants' Report on
Agreed -Upon Procedures Applied to
Appropriations Limit Schedule
For the Year Ending June 30, 2019
TPUHE
N GROUP
THE
PUN GROUP
ACCOUNTANTS & ADVISORS
INDEPENDENT ACCOUNTANTS' REPORT ON
APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
We have performed the procedures enumerated below to the accompanying Appropriations Limit Schedule of the
City of Lodi, California (the "City") for the year ending June 30, 2019. These procedures, which were agreed to by
the City and the League of California Cities (as presented in the publication entitled Agreed-upon Procedures
Applied to the Appropriations Limitation Prescribed by Article XIII -B of the California Constitution), were
performed solely to assist you in meeting the requirements of Section 1.5 of Article XIII -B of the California
Constitution. The City management is responsible for the Appropriations Limit Schedule. This agreed-upon
procedures engagement was conducted in accordance with attestation standards established by the American
Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those
parties specified in this report. Consequently, we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has been requested or any other purpose.
The procedures performed and our findings are described below:
1. We obtained the completed worksheets used by the City to calculate its appropriations limit for the year
ending June 30, 2019, and determined that the limit and annual calculation factors were adopted by
resolution of City Council. We also determined that the population and inflation options were selected by a
recorded vote of the City Council.
Finding: No exceptions were noted as a result of our procedures.
2. For the accompanying Appropriations Limit Schedule, we added the prior year's limit to the total
adjustments, and agreed the resulting amount to the current year's limit.
Finding: No exceptions were noted as a result of our procedures.
3. We agreed the current year information presented in the accompanying Appropriations Limit Schedule to
corresponding information in worksheets used by the City.
Finding: No exceptions were noted as a result of our procedures.
4. We agreed the appropriations limit presented in the accompanying Appropriations Limit Schedule to the
appropriations limit adopted by the City Council.
Finding: No exceptions were noted as a result of our procedures.
4365 Executive Drive, Suite 710, San Diego, California 92121
Tel: 858-242-5100 • Fax: 858-242-5150
www.pungroup.com
To the Honorable Mayor and Members of City Council
of the City of Lodi
Lodi, California
Page 2
We were not engaged to and did not conduct an examination, the objective of which would be the expression of an
opinion on the accompanying Appropriation Limit Schedule. Accordingly, we do not express such an opinion.
Had we performed additional procedures, other matters might have come to our attention that would have been
reported to you. No procedures have been performed with respect to the determination of the appropriation limit
for the base year, as defined by Article XIII -B of the California Constitution.
This report is intended solely for the information and use of the City Council and management of the City and is not
intended to be and should not be used by anyone other than these specified parties.
San Diego, California
January 17, 2019
2
City of Lodi
Appropriations Limit Schedule
For the Year Ending June 30, 2019
A. Appropriations Limit FY2017-2018
B. Calculation Factors:
1) Population increase %
2) Inflation increase %
3) Total adjustment %
Amount Source
$ 100,166,687 Prior year
1.0184
1.0367
1.0558
State Department of Finance
State Department of Finance
(B1*B2)
C. Annual Adjustment Increase 5,586,825 [A*(B3-1)]
D. Other Adjustments:
1) Loss responsibility (-) N/A
2) Transfer to private (-) N/A
3) Transfer to fees (-) N/A
4) Assumed responsibility (+) - N/A
E. Total Adjustments 5,586,825 (C+D)
F. Appropriations Limit FY2018-2019 $ 105,753,512 (A+E)
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City of Lodi
Notes to Appropriations Limit Schedule
For the Year Ending June 30, 2019
Note 1— Purpose of Limited Procedures Review
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California
governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective
for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the
appropriations limit is subject to a limited procedures review in connection with the annual audit.
Note 2 — Method of Calculation
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July, 1990, the appropriations limit is
required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population
factors discussed in Notes 3 and 4 below.
Note 3 — Population Factors
A California governmental agency may use as its population factor either the annual percentage change of the
jurisdiction's own population or the annual percentage change in population of the county where the jurisdiction is
located. The factor adopted by the City for the year 2018-2019 represents the annual percentage change in
population for the City of Lodi.
Note 4 — Inflation Factors
A California governmental agency may use as its inflation factor either the annual percentage change in the 4th
quarter per capita personal income (which percentage is supplied by the State Department of Finance) or the
percentage change in the local assessment roll from the preceding year due to the change of local nonresidential
construction. The factor adopted by the City for the year 2018-2019 represents the annual percentage change for
per capita personal income.
Note 5 — Other Adjustments
A California government agency may be required to adjust its appropriations limit when certain events occur, such
as the transfer of responsibility for municipal services to, or from, another government agency or private entity.
The City had no such adjustments for the year 2018-2019.
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