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Home My WebLink AboutAgenda Report - February 19, 2020 H-01AGENDA ITEM �0 1 '- CITY OF LODI COUNCIL COMMUNICATION AGENDA TITLE: Receive and File City's Comprehensive Annual Financial Report (Fiscal Year 2018/19) by The Pun Group MEETING DATE: February 19, 2020 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 2018/19: 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." Vanessa Burke, Managing Partner of the Pun Group, LLP and Paul Phangureh, Assurance Manager 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 26th year. A copy of the GFOA certificate is included in the 2018/19 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! Manager (L4Z',( 4�_ Andrew Keys, Depffty City Manager APPROVED: S ephen Sc suer, City Manager COMPREHENSIVE ANNUAL r (This page intentionally left blank.) CITY OF LODI, CALIFORNIA 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 (This page intentionally left blank.) INTRODUCTORY SECTION LOD, .y V� 1 t { (This page intentionally left blank.) TABLE OF CONTENTS INTRODUCTORYSECTION.................................................................................................................................. Tableof Contents................................................................................................................................................................. I Letterof Transmittal............................................................................................................................................................ III Certificate of Achievement for Excellence in Financial Reporting................................................................................ XIII Cityof Lodi Organization Chart......................................................................................................................................... XIV Mayorand Council................................................................................................................................................... XV Advisory Bodies and Directory of Officials...................................................................................................................... XVI FINANCIAL SECTION.............................................................................................................................................. IndependentAuditors' Report........................................................................................................................................... 1 MANAGEMENT'S DISCUSSION AND ANALYSIS.................................................................................................... 5 BASIC FINANCIAL STATEMENTS.............................................................................................................................. 15 Government -wide Financial Statements: ................................................................................................................... 17 Statementof Net Position............................................................................................................................................................. 19 Statementof Activities................................................................................................................................................................... 20 FundFinancial Statements: ........................................................................................................................................ 23 BalanceSheet —Governmental Funds......................................................................................................................................... 27 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ........................................ 28 Statement of Revenues, Expenditures, and Changes in Fund Balances—Governmental Funds ......................................... 29 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to theStatement of Activities......................................................................................................................................................... 30 Statement of Net Position — Proprietary Funds.......................................................................................................................... 31 Statement of Revenues, Expenses, and Changes in Net Position — Proprietary Funds......................................................... 33 Statement of Cash Flows — Proprietary Funds............................................................................................................................. 35 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.................................................................................................................................................... 41 REQUIRED SUPPLEMENTARY INFORMATION........................................................................................................ 89 Schedule of Changes in Net Pension Liability and Related Ratios — Miscellaneous Plan ....................................................... 91 Schedule of Changes in Net Pension Liability and Related Ratios — Safety Plan..................................................................... 93 Schedule of Pension Contributions................................................................................................................................................ 95 Schedule of Changes in Net OPEB Liability and Related Ratios................................................................................................. 97 Schedule of Employer OPEB Contributions......................................................................................................................... 98 Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — General Fund ........................ 99 Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Streets Fund ......................... 100 Note to the Requires Supplementary Information.................................................................................................................... 101 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES................................................................. 102 Nonmajor Governmental Funds................................................................................................................................................ 104 Combining Balance Sheet — Nonmajor Governmental Funds.................................................................................................. 106 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds...... 107 Nonmajor Governmental Funds —Special Revenue Funds....................................................................................................... 108 Combining Balance Sheet — Nonmajor Governmental Funds — Special Revenue Funds......................................................... 109 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds — SpecialRevenues........................................................................................................................................................................ 111 Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Nonmajor Governmental Funds—Special Revenue Funds: Parks, Recreation, and Community Services Fund............................................................................................................... 113 PublicSafety Fund................................................................................................................................................................. 114 CommunityDevelopment Fund............................................................................................................................................ 115 TransportationFund.............................................................................................................................................................. 116 HOME Program and Community Development Block Grants Fund.................................................................................... 117 TABLE OF CONTENTS (CONTINUED) Nonmajor Governmental Funds —Capital Project Funds.......................................................................................................... 118 Combining Balance Sheet — Nonmajor Governmental Funds — Capital Project Funds........................................................... 120 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds — CapitalProject Funds.............................................................................................................................................................. 122 InternalService Funds............................................................................................................................................................... 124 Combining Statement of Net Position — Internal Service Funds............................................................................................. 126 Combining Statement of Revenues, Expenses, and Changes in Net Position — Internal Service Funds ............................... 127 Combining Statement of Cash Flows — Internal Service Funds................................................................................................. 128 FiduciaryFunds....................................................................................................................................................................... 130 Combining Statement of Fiduciary Net Position — Private — Purpose Trust Funds................................................................. 131 Combining Statement of Changes in Fiduciary Net Position — Private — Purpose Trust Funds ............................................. 132 Statement of Changes in Assets and Liabilities —Agency Fund.............................................................................................. 133 STATISTICAL SECTION (UNAUDITED)................................................................................................................... 134 Government -wide information: Net Position by Component — Last Ten Fiscal Years.............................................................................................................. 137 Changes in Net Position — Last Ten Fiscal Years.................................................................................................................. 138 Fund information: Fund Balances, Governmental Funds— Last Ten Fiscal Years.............................................................................................. 140 Changes in Fund Balances of Governmental Funds — Last Ten Fiscal Years........................................................................ 141 Tax Revenues by Source, Governmental Funds — Last Ten Fiscal Years................................................................................. 142 Assessed Value and Estimated Actual Value of Taxable Property— last Ten Fiscal Years ..................................................... 143 Direct and Overlapping Property Tax Rates — Last Ten Fiscal Years...................................................................................... 144 Principal Property Taxpayers — Current Year and Nine Years Ago......................................................................................... 145 Property Tax Levies and Collections — Last Ten Fiscal Years.................................................................................................. 146 Electricity Sold by Type of Customer — Last Ten Fiscal Years................................................................................................. 147 Ratios of Outstanding Debt by Type — Last Ten Fiscal Years.................................................................................................. 148 Ratios of General Bonded Debt Outstanding— Last Ten Fiscal Years...................................................................................... 149 Legal Debt Margin Information — Last Ten Fiscal Years......................................................................................................... 150 Direct and Overlapping Governmental Activities Debt.......................................................................................................... 151 Pledged -Revenue Coverage — last Ten Fiscal Years............................................................................................................... 152 Demographic and Economic Statistics — Last Ten Fiscal Years............................................................................................... 153 Principal Employers — Current Year and Nine Years Ago....................................................................................................... 154 Full -Time Equivalent City Government Employees by Department — Last Ten Fiscal Years ................................................. 155 Operating Indicators by Function/Program/Department— Last Ten Fiscal Years................................................................. 156 Capital Asset Statistics by Function/Program/Department— Last Ten Fiscal Years.............................................................. 158 CONTINUING DISCLOSURES (UNAUDITED)....................................................................................................... 160 Annual Report for Electric Utility........................................................................................................................................ 162 Annual Report for Wastewater Utility................................................................................................................................ 167 Annual Report for the Lodi Public Financing Authority...................................................................................................... 174 AnnualReport for Water Utility.......................................................................................................................................... 177 CITY COUNCIL CITY OF L O D MARK CHANDLER, Mayor DOUG KUEHNE, 2015 "Wine Region of the Year" Mayor Pro Tempore BOB JOHNSON INTERNAL SERVICES — FINANCIAL JOANNE MOUNCE SERVICES 310 WEST ELM STREET ALAN NAKANISHI P.O. BOX 3006 LODI, CALIFORNIA 95241-1910 (209) 333-6800 / FAX (209) 333-6795 www.lodi.gov accounting(cDlodi.gov February 19, 2020 To the Honorable Mayor, Members of the City Council of the City of Lodi: STEPHEN SCHWABAUER City Manager JENNIFER M. FERRAIOLO City Clerk JANICE D. MAGDICH City Attorney ANDREW KEYS Deputy City Manager/ Internal Services Director The Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 2019, 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, 2019, 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 auditors' report. THE REPORTING ENTITY AND SERVICES PROVIDED The funds included in the CAFR are those deemed dependent upon the City, controlled by the City Council, and the financial reporting entity of the City 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). Several municipal services are provided through other government agencies, private companies or public utility companies, including: Number of Facilities Elementary and Secondary Schools 39 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 68,300 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 3,500 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. The past few years has seen on average 200 new single family homes constructed and sold. The City has entitled over 2,000 residential lots that will allow a consistent amount of residential growth over the next eight to ten years. The City's first market rate apartment complex in over 25 years has completed construction and is fully rented. A 142 unit senior apartment complex will be finishing construction in late 2019. Another 150 unit senior apartment complex will begin construction in 2019 with occupancy in late 2020. The City has seen commercial investment in pad buildings, stand- alone commercial developments and entertainment facilities with a new bowling alley. A new 400,000 sq. ft. wine storage facility is being constructed, showing the ever growing strength of the wine grape and tourism industries; all this activity 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. The City has continued to contribute excess budget reserves to the trust account. 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 November 2018, Lodi's residents successfully passed a %2 cent sales tax, Measure L. Measure L revenue will go to maintaining neighborhood police patrols and gang violence interventions to help reduce crime; improve emergency 911 rapid response times by restoring firefighter and adding police positions; fix iv 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. Measure L was effective as of April 1, 2019. As part of the mid -year budget, Council approved adding six new police officers and three new firefighters to fully fund Engine One. In this fiscal year, Measure L will begin to fund capital improvement projects that are important to the community. The sales tax measure should bring in approximately $5.2 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 economic development (business retention and attraction) and expanding the tax base to fund City services. Two significant economic development projects in 2019 are the Candlewood Suites and Fairfield Inn & Suites projects, which when completed would add to the transient occupancy, sales tax and property tax revenues. In the last year, Lodi had identified and implemented activities to expand tax and other revenue opportunities, jumpstart a strong business retention and expansion program, increase entertainment opportunities for families and young people, collaborate with local and regional transportation and other economic development agencies to address infrastructure and secure business leads. In 2019, Lodi's local economy employs just over 33 thousand people. Since 2016, the employment grew at a rate of about 2.05 percent per year. The most common employment sectors for those who live in Lodi are Health Care & Social Assistance (3,446 people), Educational Services (2,932 people), and Retail Trade (2,894 people). Other common employment sectors are Construction (3,014), Manufacturing (2,593), and Agriculture (2.452). The highest paid employment sectors are Utilities, Professional, Scientific, & Technical Services, and Public Administration with average earnings per job of $77,159, $64,447, and $61,797, respectively. The median household income in Lodi is $52,244. The median property value in Lodi, is $269,400 and the homeownership rate is 53.9 percent. The largest share of households pay between $2,000 and $3,000 in total taxes. In 2018-2019, 28.5 percent of the population in Lodi had at least a High School diploma, 12.72 percent had a Bachelor's Degree, and 6.95 percent had at least one Graduate Degree. Tourism continues to be a major driving factor of the local economy. Two hotel developments that 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. Both are expected to open in FY 2020. The City saw unprecedented growth with 2,268 dwelling units among twelve residential development projects. These projects have been approved and the dwelling units are fairly evenly divided among low, medium and high density units. Sales for five of these projects are ongoing. Construction will continue to proceed on additional developments over the coming year. In addition to the growth on the residential side, the City has experienced growth in the downtown area of Lodi. New restaurants and expansion of current restaurants include Five Windows Beer Company, Idol Beer Works, Brick House and The Oxford. Currently under construction is the new Lodi Bowling Alley, Papapavlos Bistro & Bar in other areas of Lodi. Lodi's Target Industries Research, Development and Technology With an impressive base of companies that operate alongside each other, and not far from the state capital, Lodi offers a stable environment for two industry sectors highly dependent on research, development and quickly -evolving technology, grape growing and agriculture, and advanced medical technology. From young entrepreneurs to scientific researchers at the close -by UC Cooperative Extension Service, and from established businesses like Ag Industrial Machinery and Acampo Machine Works, patented and patent -pending technological solutions for the management of agricultural crops are tried and tested in Lodi. Among them are Agro Thermal Systems, a technological breakthrough for wine growers aimed at flavor development, enhancement of flowering, and deepening of color. Yield enhancement technology has been integrated into olives, almonds, walnuts and cherries as well. v In addition to agricultural research and technology, other industries centering on technology have moved into Lodi. Industry leaders in precision manufacturing of optically -clear laboratory consumables to healthcare clinical testing materials, Cepheid and Scientific Specialties, together employ over 400 full-time employees in Lodi. Transportation access, abundance of water, low cost land, and affordable, reliable municipal power served as key location factors for these companies. Manufacturing Lodi could very well represent the future of new manufacturing locations. Choosing Lodi as a business location for manufacturing has a substantial bearing on a company's cost of labor, tax burden, transportation costs, utility expenditures, and other major expense categories. Manufacturers like North American Pipe Company, Pacific Coast Producers, Epic Plastics, Archer Daniels Midland, Holz Rubber, Lodi Iron Works, Lustre -Cal, Mepco Label Systems, Schaefer Systems International, and Miller Packing comprise the largest share of Lodi's manufacturing sector. These manufacturers found key location factors in Lodi including 1) availability of an efficient power supply, 2) availability of affordable water, 3) proximity to raw materials, 4) access to markets, 5) labor supply, 6) transportation access, and 7) affordable rents and tax burden. In 2018-2019, a total of 38 businesses in food processing, plastics and other manufacturing, generated an estimated level of sales of $520 million (2018-2019 San Joaquin Partnership Annual Report). Healthcare From forming strategic partnerships to enhance patient care, to harnessing cutting edge technology, Lodi is home to one of the top healthcare systems in the state. With many renowned facilities and specialties, Adventist Health Lodi Memorial (AHLM) employs more than 1,100 employees. Lodi -based world-renowned surgeon, Dr. Stephen Howell, developed an FDA - approved kinematic alignment using a 3D technology to map the knee as it was before arthritis develops allowing a custom, individualized placement of the implant in the knee for each patient. Better outcomes included faster recovery times, function, and flexion, pain relief, and improved implant survival. Dr. Howell trains surgeons all over the world in this first - generation tool. Transaortation. Distribution and Loeistics (TDL Lodi is strategically located between Interstate 5 and State Route (SR) 99. Since 2018-2019, there are an estimated number of 33 transportation and logistics businesses in Lodi generating $33.98 million in sales (2018-2019 San Joaquin Partnership Annual Report). With a rapidly growing number of logistic businesses in the area, Lodi and the San Joaquin Valley are quickly becoming a logistics hub. In addition to major interstate highways and rail systems, Lodi's transportation and logistics target industry is also served by a regional deep -water port and airport located just nine miles to the south in Stockton. The City of Lodi supports transportation, distribution and logistics in Lodi by serving on the TDL Partnership, a Delta College Initiative and workforce intermediary to strengthen the talent pipeline for skilled commercial drivers and other TDL trades. The partnership of Delta College, Adult Education Academies, and two local unified school districts work with local employers to receive on- the -job training and classroom preparation to excel in this industry which leads to family sustaining wages. Approximately 77 acres of vacant and undeveloped land with immediate interstate access are available in Lodi and suitable for the development of transportation and logistics services. At least another 66 acres are available for TDL purposes with 1.7 miles from SR 99. In 2019, Transportation, Distribution and Logistics was the top growth industry in San Joaquin County and was second in terms of location quotient, a measure of how concentrated a particular industry, cluster, and occupation is in a region. In 2018, TDL was fifth in Gross Regional Product in San Joaquin County. The PG&E facilities that provide transmission of power to the Lodi Electric Utility system are NOT located within high fire threat areas and as such, there is a low risk of a power shut off by PG&E as it relates to Lodi's interconnected facilities. Should PG&E determine the need to shut off larger transmission facilities that serve areas throughout California, there is a possibility that Lodi Electric, as well as other publicly owned utilities, could experience outages. To date, Lodi Electric Utility's distribution system has not been impacted by PG&E PSPS events. Vi California faces a continued and growing threat of extreme weather and wildfires. As an additional precautionary measure following the 2017 and 2018 wildfires, PG&E enhanced and expanded its Community Wildfire Safety Program. Part of that program includes turning off power during extreme weather or wildfire conditions. While the City of Lodi Electric Utility owns, operates and maintains Lodi's electric system which provides power to Lodi residents and businesses, Lodi's electric system is interconnected with the system of PG&E. 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 reinforce 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 • Opportunities • Provide Employee Training and Education • Pursue Efforts to be Entrepreneurial • Provide for a Balanced Community • Provide Appropriate and Sufficient City • Evaluate Telecommunications Opportunities Facilities • Enhance Access through Implementation of IT • Improve Customer Service Strategic Plan • Develop Short and Long Range Operational • Provide Resources to Maintain City's Plans Infrastructure • Continue to use Partnerships to Advance City's • Promote Urban Forestry Objectives • Promote Public Relations and Marketing • Develop Effective Records Management Efforts Program • Attract, Retain and Invest in a Quality City 0 Provide a Balanced Budget and Adhere to Work Force Adopted Policies • Ensure Open and Accessible Public Meetings • Promote Commercial/Industrial Base • Encourage Public Arts, Cultural and Recreational Vii 2.) Project Specific Goals 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 2018-19. The following projects were recently completed, are underway and will see significant progress, or be completed in 2019. Lockeford Street Improvement Project This project consists of reconstructing East Lockeford Street. The project provides for bike lanes, a two-way left turn lane, traffic signals, sidewalks and improved lighting. Construction began in April 2019 and is estimated to be completed in October 2019. The construction cost to complete this project is $3.8 million and is mostly funded by State and Federal grants. Residential Development The City has twelve residential development projects that have been approved and total about 2,268 dwelling units. Dwelling units are fairly evenly divided among low, medium and high density units. Sales in five of the twelve projects are ongoing. Construction is proceeding in eight of the twelve projects this year and the remaining four are expected to begin construction in late 2019 / early 2020. Downtown and Infill Development The City has seen some growth in the downtown area of Lodi with the beer segment which includes Five Windows Beer Company, Idol Beer Works, a brewery expansion at Lodi Beer Company, and a beer/distillery expansion at Dancing Fox. In addition, there are new restaurants that will be coming to downtown, including Brick House, and The Oxford, occupying critical vacant space in the sector. Currently under construction on the outskirts of downtown, is a Papapavlos Bistro & Bar. Across Lockeford Street is the new Lodi Bowling Alley. This project consists of a two-story bowling alley that will be equipped with 34 lanes, bar and banquet room. Both projects will put vacant land to use, generating foot traffic on the edges of downtown. 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 finishing construction and will be open by late September 2019. The 72 room Fairfield Inn and Suites is currently under construction and is scheduled to open in March 2020. 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. The final phase of construction will begin in FY2020. Candy Cane Park Playground In February 2019, the Parks and Recreation Commission confirmed the selection of Candy Cane Park for renovation. The park is undergoing an extreme makeover, which includes replacing of sidewalks and curbing, a larger play area and modified irrigation due to changing hardscape. The project is estimated at $350,000 with funding coming from Parks and Recreation funds, Measure L and the Street fund. 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 Generally Accepted Accounting Principles. 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 2018-19, 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 2018-19 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 was $23.3 million for fiscal year 2018-19. In fiscal year 2019-20, the City has budgeted to take the first of three steps to fund another 16% Measure L Reserve fund over three years. The goals allow for variations from year-to-year to account for economic and fiscal changes. The General Fund maintained an unassigned fund balance of $11,172,483, or 22.60% of revenues at the end of fiscal year 2018-19. ix 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. The policy has three objectives: (1) protect principle; (2) provide for liquidity needs, and (3) obtain the most reasonable rate of return within the first two objectives. All investment activities are to be undertaken and judged using the Prudent Investor Standard as described within the policy. 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 2018-19, 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, 2019, the City had outstanding Certificates of Participation and Revenue Bonds of $126,867,624. These liabilities are discussed in Note 7 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). x 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 2018-19 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, 2019, the Insurance Fund had a net position of $4,795,016. 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, 2018. 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-six consecutive years. We believe our current report continues to conform to the Certificate of Achievement program requirements and we are submitting it to GFOA this year. A 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 XII 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, 2018 f Executive Director/CEO XIII CITY OF LODI ORGANIZATIONAL CHART CITIZENS OF LODI CITY COUNCIL LIBRARY a RISK MANAGEMENT ------------- DEPUTY CITY MANAGER POLICE DEPARTMENT PUBLIC WORKS BUDGET/TREASURY FINANCIAL SERVICES FIRE i HUMAN RESOURCES ELECTRIC UTILITY ' INFORMATION COMMUNITY SYSTEMS DEVELOPMENT PARKS, REC., & CULTURAL SERVICES XIV CITY O F 9 •� / r O • CALIFORNIA Mayor and Council Mark Chandler Mayor Lodi City Council Members work to provide citizens with a better, more attractive, and healthier place in which to live. Council establishes local laws, sets policies, approves programs, appropriates funds, and supervises the operations of City government. Council Members are elected on a by -district basis from five single -member Council districts by voters residing in the district in which the Council Member resides. Council Members hold four-year terms and elections are held in November of even - numbered years. Doug Kuehne Mayor Pro Tempore JoAnne Mounce Council Member xv Bob Johnson Council Member Alan Nakanishi Council Member ADVISORY BODIES AND DIRECTORY OF OFFICIALS 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 Melissa Price Steve Schwabauer Tod Patterson XVI 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 Interim 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.rw 0 THE � PUN 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, 2019, and the related notes to the basic 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, 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, 2019, 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. 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 Pension Contributions, and the Schedule of Changes in the Net OPEB Liability and Related Ratios and the Schedules of Employer OPEB Contributions on pages 5 through 14 and 91 through 101 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, the Combining and Individual Nonmajor Fund Financial Statements and the Budgetary Comparison Schedules, and the 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 the 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. 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. To the Honorable Mayor and Members of the City Council of the City of Lodi Lodi, California Page 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 10, 2020, 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. Walnut Creek, California February 10, 2020 This page is intentionally left blank CITY OF LODI MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2019 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, 2019. FINANCIAL HIGHLIGHTS • The assets and the deferred outflows of resources of the City exceeded its liabilities and the deferred inflows of resources at the close of the fiscal year by $205,077,060 (net position). Of this amount, $87,085,974 is unrestricted deficit. • The City's total net position increased by $15,590,546 in fiscal year 2019. • As of June 30, 2019, the City's governmental funds reported combined ending fund balances of $46,350,479, an increase of $11,519,731 in comparison with the prior year. Of this amount, $11,172,483 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 $22,452,412, of which $11,172,483 is unassigned or 26.4% of total general fund expenditures of $42,226,306. • The City's total long-term liabilities increased by $3,317,283 or 1.84% during the current fiscal year. Other liabilities increased $5,354,943 or 42.16%. 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, liabilities and deferred inflow of resources, with the difference reported as net position. Overtime, 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 user 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. CITY OF LODI MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) June 30, 2019 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. 6 CITY OF LODI MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) June 30, 2019 Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. The activities of the Industrial Way -Beckman special assessment and various landscape and lighting districts are accounted for and reported under the fiduciary funds. The activities of the Private -Purpose Trust and the Hutchins Street Square Bequest are also accounted for under the fiduciary funds. Since the resources of these funds are not available to support the City's own programs, they are not reflected in the government -wide financial statements. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the Basic Financial Statements The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report presents certain required supplementary information concerning changes in net pension and other post -employment liabilities 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. GOVERNMENT -WIDE FINANCIAL ANALYSIS Governmenta I Busi ness-type Activities Activities Total 2019 2018 2019 2018 2019 2018 Assets: Current and other assets $ 70,248,521 $ 55,518,067 $ 100,433,764 $ 84,853,628 $ 170,682,285 $ 140,371,695 Capital assets 133,232,653 137,566,325 245,255,952 244,153,401 378,488,605 381,719,726 Total assets 203,481,174 193,084,392 345,689,716 329,007,029 549,170,890 522,091,421 Deferred outflows of resources 19,965,907 21,122,850 10,970,407 12,136,938 30,936,314 33,259,788 Liabilities: Net OPEB obligation 33,422,021 33,275,362 - - 33,422,021 33,275,362 Net pension liability 109,495,299 110,076,401 26,790,552 25,851,930 136,285,851 135,928,331 Long-term liabilities outstanding 42,188,284 34,787,789 141,529,292 145,612,504 183,717,576 180,400,293 Other liabilities 8,277,658 5,031,822 9,779,869 7,670,762 18,057,527 12,702,584 Total liabilities 193,383,262 183,171,374 178,099,713 179,135,196 371,482,975 362,306,570 Deferred inflows of resources 3,204,039 3,444,447 343,129 113,678 3,547,168 3,558,125 Net position: Invested in capital assets, net of related debt 116,151,450 119,222,288 129,858,469 137,290,786 246,009,919 256,513,074 Restricted 25,750,892 25,903,963 20,402,223 20,178 46,153,115 25,924,141 Unrestricted (115,042,563) (117,534,830) 27,956,589 24,584,129 (87,085,974) (92,950,701) Total net position $ 26,859,779 $ 27,591,421 $ 178,217,281 $ 161,895,093 $ 205,077,060 $ 189,486,514 CITY OF LODI MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) June 30, 2019 As noted earlier, net position may serve over time as a useful indicator of a government's financial position. The City's assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $205,077,060 at the close of the current fiscal year. Assets. The City's total assets increased by $27,079,469. The increase is primarily due to the following: Governmental Activities. Total assets for governmental activities had an increase of $10,396,782 or 5.38%. Current and other assets increased by $14,730,454 primarily resulting from the increase in restricted assets of $11,617,849, $814,053 increase in due from other governmental agencies, and accounts receivables $455,466. Capital assets decreased by $4,306,060. Other insignificant activities make up the difference. Business -type Activities. Total assets for the business -type activities had an increase of $16,682,687 or 5.07%. Current and other assets increased by $15,580,137 primarily due to increases in inventory of 733,290, increase in advance receivable of $1,444,297. Capital assets increased by $1,102,551 largely from prior period restatement of machinery and equipment. Other insignificant activities contributed to the difference. Deferred outflows of resources. The decrease in total deferred outflows of resources of $2,323,474 is primarily from changes in various components related to the Miscellaneous and Safety Plans in the CalPERS valuation reports and current pension contributions made after the measurement date of June 30, 2018. Liabilities. The City's total liabilities increased by $9,176,405 or 2.53%. The increase is primarily due to the following: Governmental Activities. Total liabilities for the governmental activities had an increase of $10,211,888 or 5.58%, primarily from an increase in current liabilities. Increases in liabilities included prior period adjustment to compensated absences for the sick leave conversion bank options. Business -type Activities. Total liabilities for the business -type activities decreased by $1,035,483 or 0.58%. The decrease is primarily attributable to an increase in current liabilities offset by a decrease in net pension liability. Increases in current liabilities include accrued salaries and wages, accounts payable and a decrease in unearned revenue. Other insignificant activities offset the difference. Net position. The City's overall financial position increased during the fiscal year. The net position has increased by $15,590,546, or 8.23% The largest portion ($246,009,919) 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 are reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources. An additional portion of the City's net position, $46,153,115 (22.51%) 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 $87,085,974. At the end of the current fiscal year, the City is able to report positive balances in the General Fund and all Enterprise activities. Unrestricted net position is negative for the governmental -type activities primarily as a result of the City's outstanding pension and OPEB obligations. 8 CITY OF LODI MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) June 30, 2019 Part of the overall change in fund balance is a result of prior period adjustments. In total, the City restated and decreased the beginning net position by ($3,790,253). Of this amount, $4,609,884 was an increase in net position to the Business -type Activities to restate the capital asset balances and an adjustment related to pension expense for GASB 68. In addition, ($8,400,137) was restated in the Internal Service Funds related to the pension expense for GASB 68 and an adjustment to restate the sick leave conversion balances under GASB 75. More information on the prior period adjustment can be found in Note 16 of the Notes to the Basic Financial Statements. For purposes of Management's Discussion and Analysis, the fiscal year ending June 30, 2018 was not adjusted for the 2019 restatements. 9 Governmental Business -type Activities Activities Total 2019 2018 2019 2018 2019 2018 Revenues Program revenues: Charges for services $ 5,666,801 $ 10,060,332 $ 97,426,034 $ 97,391,760 $103,092,835 107,452,092 Operating grants and contributions 7,968,497 2,286,476 8,260,984 5,969,086 16,229,481 8,255,562 Capital grants and contributions 6,861,267 8,737,149 2,092,051 11,307,763 8,953,318 20,044,912 General revenues: Property taxes 11,049,741 10,324,516 - - 11,049,741 10,324,516 Sales taxes 14,286,516 11,333,228 14,286,516 11,333,228 Other taxes 17,372,832 17,097,961 17,372,832 17,097,961 Grants and contributions not restricted to specific programs 441,341 600,573 441,341 600,573 Other 3,482,616 1,244,101 3,905,811 2,960,323 7,388,427 4,204,424 Total revenues 67,129,611 61,684,336 111,684,880 117,628,932 178,814,491 179,313,268 Expenses General government 11,389,809 11,600,548 - - 11,389,809 11,600,548 Public protection 33,396,412 38,794,510 33,396,412 38,794,510 Public works 11,013,342 9,823,848 11,013,342 9,823,848 Community development 2,186,691 1,999,587 2,186,691 1,999,587 Library 785,325 1,752, 595 785,325 1,752,595 Parks and recreation 4,141,648 4,672,015 4,141,648 4,672,015 Interest on long-term debt 781,669 768,077 781,669 768,077 Electric - - 64,103,994 67,943,086 64,103,994 67,943,086 Wastew ater 14,409,738 16,008,272 14,409,738 16,008,272 Water 12,139, 381 11,775, 718 12,139, 381 11,775, 718 Transit 5,085,693 5,232,628 5,085,693 5,232,628 Total expenses 63,694,896 69,411,180 95,738,806 100,959,704 159,433,702 170,370,884 Changes in net position before transfers 3,434,715 (7,726,844) 15,946,074 16,669,228 19,380,789 8,942,384 Transfers 4,233,780 4,252,350 (4,233,780) (4,252,350) - - Changes in net position 7,668,495 (3,474,494) 11,712,294 12,416,878 19,380,789 8,942,384 Net position at beginning of year 27,591,421 55,578,803 161,895,093 149,478,215 189,486,514 205,057,018 Prior period adjustments (8,400,137) (24,512,888) 4,609,894 - (3,790,243) (24,512,888) Net position at beginning of year, as restated 19,191,284 31,065,915 166,504,987 149,478,215 185,696,271 180,544,130 Net position at end of year $ 26,859,779 $ 27,591,421 $ 178,217,281 $ 161,895,093 $205,077,060 $189,486,514 Part of the overall change in fund balance is a result of prior period adjustments. In total, the City restated and decreased the beginning net position by ($3,790,253). Of this amount, $4,609,884 was an increase in net position to the Business -type Activities to restate the capital asset balances and an adjustment related to pension expense for GASB 68. In addition, ($8,400,137) was restated in the Internal Service Funds related to the pension expense for GASB 68 and an adjustment to restate the sick leave conversion balances under GASB 75. More information on the prior period adjustment can be found in Note 16 of the Notes to the Basic Financial Statements. For purposes of Management's Discussion and Analysis, the fiscal year ending June 30, 2018 was not adjusted for the 2019 restatements. 9 CITY OF LODI MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) June 30, 2019 Analysis of Changes in Net Position Governmental Activities Net position for the governmental activities increased by $7,668,495, not considering the impact of the prior period adjustment to beginning net position of $(8,400,137) in the current fiscal year. The change in net position is an improvement over last year's decrease of $(3,474,494) by $11,142,989. The increase is primarily a result of the following: • The City receives other taxes, such as franchise tax, business licenses and tourism occupancy tax. These other taxes increased by $274,871 or 1.61% compared to prior year. The economy continues to show evidence of positive movement particularly in the housing market, businesses and tourism. • Sales tax saw a significant increase of $2,953,288 or 26.06% from prior year. For General Fund, sales tax increased by $1,498,953. Primarily from the new Measure L sales tax revenue of $1,454,335. • Property taxes increased by $725,225 from prior year. • Capital grants and contributions decreased by $1,875,882 from the prior fiscal year. The difference is due to departments utilizing state and federal grants for projects. Public Works used Federal grants to complete various projects in the prior fiscal year reducing the amount of grants in this fiscal year. Expenses for governmental functions totaled $63,694,896, a decrease of $5,716,284 or 8.24% relative to the prior fiscal year. Business -type Activities Business -type activities increased the City's net position by $11,712,294 in the current year, which is a decrease of $704,584 from last year's increase of $12,416,878. The key elements of this change are: Charges for services in the Electric Fund decreased by $1,285,538, Wastewater Fund increased by $990,661, and the Water Fund increased by $339,450. Increase in the greenhouse gas allowance (GHG) of $123,511 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. Other revenues increased by $647,371 primarily from more positive investments returns. Bulk power cost decreased by $1,405,937 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. 10 CITY OF LODI MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) June 30, 2019 At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $46,350,479, for a net change in fund balances of $11,519,731. In comparison to the prior year, the change in fund balance resulted from an increase in overall revenues and expenditures coming in under budget. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the General Fund was $11,172,483 while total fund balance was $22,452,412. 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 26.46% and 53.17% of total General Fund expenditures, respectively. The fund balance of the General Fund increased by $3,684,507 during the current fiscal year, a decrease of $115,041 from last year's fund balance of $3,799,548. Key factors in this increase are: • Total revenues increased by $4,137,219, primarily from the net increase of sales tax of $2,953,288 which includes the additional revenue from Measure L sales tax, an increase of secured property tax of $725,225, increase in vehicle license fee of $252,232; and an increase in business license tax of $64,325. Other insignificant increases and decreases offset the difference. • Total expenditures increased by $1,757,998 primarily from increase in salaries and wages for vacancies filled during the current year, increases approved in labor negotiations, and increases related to OPEB and pensions. Other insignificant increases and decreases offset the difference. Total fund balance of the Streets Funds was $9,541,949. Intergovernmental revenues of $6,364,488 offset by capital expenditures of $2,533,264 were the largest components that resulted in the increase of $3,144,797 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 $26,388,672, Wastewater Fund was $9,002,045, Water Fund was $(9,873,898), Transit Fund was $2,439,770 and the Internal Services Funds unrestricted net position was $(36,437,375). 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 $1,319,370. The increase in appropriations can be briefly summarized as follows: • $1,260,438 increase in general revenues • $58,932 decrease in overall expenditures Significant differences between the final budget and the actual revenues and expenditures can be briefly summarized as follows: • Sales and use tax revenue, a favorable variance between the final budget and actual revenue of $1,133,196, which resulted from an increase in sales tax. Investment and rental income had a favorable variance between is CITY OF LODI MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) June 30, 2019 the budget and actual of $548,094. All additional revenues had an unfavorable variance between final budget and actuals but were not significant. • For expenditures, a favorable variance between the final budget and actual expenditures of $1,974,242 was due to pension stabilization expense being recorded as restricted cash ($2,142,605) 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, 2019, amounts to $378,488,605 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, machinery and equipment, vehicles, infrastructure, works of art, and construction in progress. The total decrease in the City's investment in capital assets for the current fiscal year was $3,231,121, a 0.85% decrease (a 3.15% decrease in governmental activities and 0.45% decrease in business -type activities). A decrease in construction in progress compared to prior year was primarily from the Water Meter Project Phase 7. Additional information on the City's capital assets can be found in Note 6 on pages 62-63 of this report. Long-term debt At the end of the current fiscal year, the City had total bonded debt outstanding of $138,339,781. Of this amount, $16,884,930 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 $121,454,851 from the business -type activities consists of $32,113,704 for the Water Fund, $41,606,581 for the Wastewater Fund; and $47,734,566 for the Electric Fund. The City's total bonded debt decreased by $4,480,990 during the current fiscal year. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET Economic indicators continue to be positive, leading to projected continued growth in property, sales, and tourism occupancy taxes. The biggest share of growth is coming for the newly added sales tax Measure L. General Fund revenue growth is projected at 7.4% from FY18/19 actuals to the FY 2019/20 budgeted revenue, totaling $59,605,690. The City added to its reserve balance again in FY 2018/19 and is projecting a balanced budget in the General Fund in FY 2019/20. The City's General Fund reserves are healthy, but projected CalPERS cost of $7.95 million in FY19/20 are anticipated to continue to grow to $16.5 million and $17.8 million by 2024/25, for an 87% increase over the forecast term; making it apparent that caution and fiscal prudence will be required in the coming years. `v: Governmental Business -type Activities Activities Total Land $ 24,886,595 $ 5,535,718 $ 30,422,313 Buildings and Improvements 37,238,324 25,352,376 62,590,700 Machineryand equipment 3,487,139 193,646,386 197,133,525 Vehicles 21271,268 3,682,945 5,954,213 Infrastructure 62,939,799 - 62,939,799 Work of Art 304,907 - 304,907 Construction in Progress 2,104,621 17,038,527 19,143,148 Tota 1 $ 133,232,653 $ 245,255,952 $ 378,488,605 A decrease in construction in progress compared to prior year was primarily from the Water Meter Project Phase 7. Additional information on the City's capital assets can be found in Note 6 on pages 62-63 of this report. Long-term debt At the end of the current fiscal year, the City had total bonded debt outstanding of $138,339,781. Of this amount, $16,884,930 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 $121,454,851 from the business -type activities consists of $32,113,704 for the Water Fund, $41,606,581 for the Wastewater Fund; and $47,734,566 for the Electric Fund. The City's total bonded debt decreased by $4,480,990 during the current fiscal year. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET Economic indicators continue to be positive, leading to projected continued growth in property, sales, and tourism occupancy taxes. The biggest share of growth is coming for the newly added sales tax Measure L. General Fund revenue growth is projected at 7.4% from FY18/19 actuals to the FY 2019/20 budgeted revenue, totaling $59,605,690. The City added to its reserve balance again in FY 2018/19 and is projecting a balanced budget in the General Fund in FY 2019/20. The City's General Fund reserves are healthy, but projected CalPERS cost of $7.95 million in FY19/20 are anticipated to continue to grow to $16.5 million and $17.8 million by 2024/25, for an 87% increase over the forecast term; making it apparent that caution and fiscal prudence will be required in the coming years. `v: CITY OF LODI MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) June 30, 2019 The General Fund continues to be the greatest focus. It funds all core municipal services including police, fire, public works, administration, economic development, transfers to the parks and library funds and other essential public services. The great majority of City employees' costs are funded by the General Fund, and is 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 increased by a net of ten positions this year; adding four Firefighters, adding one Administrative Secretary, adding six Police Officers, and the removal of one Neighborhood Services Manager. The City will continue its capital efforts in the coming year. Significant projects expected to be undertaken include various park projects, and continuation of the water meter and water system maintenance capital projects, Lockeford Street Improvement Project, pavement resurfacing and Church Street Realignment. Balancing the 2019/20 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 CalPERS funding crisis. The City's combined funded status for the Safety plans is approximately 60.25% and Miscellaneous employee plans is approximately 70.3% as of the most recent June 30, 2018, actuarial report. Staff estimates that the City's combined CalPERS bill will increase from approximately $10 million per year in FY 2018/19 to between $16.5 million and $17.8 million by FY 2024/25. 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. Based on the City's aggressive funding actions over the past three years, by the end of FY 2018/19, total funding in the Pension Stabilization Fund (PSF) is estimated as follows: General Fund: $10.6 million; Other Funds $3.3 million. An additional $2.2 million will be invested based on the ending results for FY18/19 and the City's Pension Stabilization Policy. This is roughly 19% of each fund's pension contribution for the FY18/19. Imposed costs — The primary concern to the City's budget is the imposed cost increases by CalPERS related to the discount rate reduction from 7.5% to 7.0%. Management has aggressively implemented solutions to counter the imposed costs from the phase of the discount rate reduction. As part of the employee negotiation process that has occurred over the last fiscal year, contracts with employees called for cost sharing agreement to help offset the value of the retirement contributions. As of January 2020, all employees in the City will be contributing some portion of the City's normal cost ranging from 1% to 3%. The City has negotiated with all units and has presented to Council for approval all agreements. The new agreements became effective in July 2019 or January 2020, depending on the bargaining unit. The final labor contracts will be presented to Council in March 2020 for approval. The new agreements provide salary increases from 9% to 17.3% over the term of the contracts. Salary increases are implemented in different phases based on the approved agreement. 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. In addition, part of the new Measure L sales tax will be used to fund capital projects and maintain recreation facilities for the Park and Cultural Services that are important to the community. 13 CITY OF LODI MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) June 30, 2019 Rapidly increasing health care costs also 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. Another significant cause of concern is workers' compensation. The City is self-funded for worker's compensation costs. The City'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 is deep-rooted in California's rival wine country, is as ripe for commercial and residential real estate development as it is for its Zinfandel grapes. Because of its agricultural roots, the City has unfolded into an international tourist destination and real estate market, attracting medical biotech and light industrial development to the area. With San Joaquin County's charming architecture, and Lodi's awe-inspiring vineyards, almond, olive and fruit orchards, it is easy to see why so many are drawn to the areas for its beauty and abundance. Investors are beginning to look to the City as an opportunity for adding commercial real estate, residential, in -fill, and mixed-use development to its picturesque agricultural setting. The City's strength as a real estate market lies in its strong infrastructure, abundant water, wine tourism industry, and affordable real estate. The accessibility to Interstate 5 and Highway 99 allows manufacturers and distributors to get their product out to market quickly. The Lodi Energy Center, located only about three miles outside the city on 1-5 provides consistent and dependable local electricity, which is particularly crucial for its industrial thermoforming companies. The city -owned power is more reliable and less expensive than the investor owned utilities in the area. 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. 14 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. E (This page intentionally left blank.) GOVERNMENT -WIDE FINANCIAL STATEMENTS (This page intentionally left blank.) ASSETS Cash and investments Restricted cash and investments Accounts receivables (net) Property tax receivable Interest receivable Due from other governmental agencies 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 CITY OF LODI Statement of Net Position June 30, 2019 Primary Government Governmental Business -type Activities Activities Total $ 50,612,594 11,617,849 6,529,310 80,324 55,005 1,650,065 142,044 110,009 (548,679) 27,296,123 105,936,530 203,481,174 17,775,219 1,862,969 327,719 19,965,907 7,107, 277 810,249 185,378 174,754 5,557,689 36,630,595 109,495,299 33,422,021 193,383,262 1,197,077 2,006,962 3,204,039 116,151,450 25,750,892 (115,042,563) $ 26,859,779 The notes to financial statements are an integral part of this statement. 19 $ 55,437,336 20,402,223 7,236,280 83,417 1,400,000 10,900,902 4,415,760 9,167 548,679 22,574,245 222,681,707 345,689,716 $ 106,049,930 32,020,072 13,765,590 80,324 138,422 3,050,065 10,900,902 4,557,804 119,176 49,870,368 328,618,237 549,170,890 4,026,351 21,801,570 - 1,862,969 6,944,056 7,271,775 10,970,407 30,936,314 7,180,404 250,883 1,677,146 671,436 6,694,228 134,835,064 26,790,552 178,099,713 14,287,681 1,061,132 1,862,524 846,190 12,251,917 171,465,659 136,285,851 33,422,021 371,482,975 343,129 1,540,206 - 2,006,962 343,129 3,547,168 129,858,469 20,402,223 27,956,589 $ 178,217,281 246,009,919 46,153,115 (87,085,974) $ 205,077,060 CITY OF LODI Statement of Activities For the Year Ended June 30, 2019 Business -type activities Electric 64,103,994 67,961,351 Program Revenues 139,731 Transit Funds 5,085,693 216,006 Operating Grants and Capital Grants and Functions/Programs Expenses Charges for Services Contributions Contributions Primary government: 12,139,381 13,344,473 620,998 (121,090) Governmental activities: 95,738,806 97,426,034 8,260,984 2,092,051 General government $ 11,389,809 $ 322,470 $ 3,010,812 $ Public protection 33,396,412 368,147 533,346 786,389 Public works 11,013,342 2,631,369 2,551,481 5,267,859 Community development 2,186,691 1,058,665 1,504,245 720,826 Library 785,325 - 52,599 86,193 Parks and recreation 4,141,648 1,286,150 316,014 - Debt Service 781,669 - - Total governmental activities 63,694,896 5,666,801 7,968,497 6,861,267 Business -type activities Electric 64,103,994 67,961,351 2,385,598 139,731 Transit Funds 5,085,693 216,006 2,814,525 781,518 Wastewater 14,409,738 15,904,204 2,439,863 1,291,892 Water 12,139,381 13,344,473 620,998 (121,090) Total business -type activities 95,738,806 97,426,034 8,260,984 2,092,051 Total primary government $ 159,433,702 $ 103,092,835 $ 16,229,481 $ 8,953,318 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 (Continued) For the Year Ended June 30, 2019 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business -type Activities Activities Total $ (8,056,527) $ $ (8,056,527) (31,708,530) (31,708,530) (562,633) (562,633) 1,097,045 1,097,045 (646,533) (646,533) (2,539,484) (2,539,484) (781,669) (781,669) (43,198,331) (43,198,331) 6,382,686 6,382,686 (1,273,644) (1,273,644) 5,226,221 5,226,221 1,705,000 1,705,000 12, 040, 263 12, 040, 263 (43,198,331) 12,040,263 (31,158,068) 11,049,741 - 11,049,741 138,633 138,633 14,286,516 14,286,516 5,399,494 5,399,494 9,212,445 9,212,445 1,886,659 1,886,659 735,601 735,601 441,341 - 441,341 3,129,648 1,584,188 4,713,836 352,968 2,321,623 2,674,591 4,233,780 (4,233,780) - 50,866,826 (327,969) 50,538,857 7,668,495 11, 712, 294 19, 380, 789 19,191, 284 166,504,987 185,696, 271 $ 26,859,779 $ 178,217,281 $ 205,077,060 The notes to financial statements are an integral part of this statement. 21 (This page intentionally left blank.) FUND FINANCIAL STATEMENTS Governmental Fund Types Major Funds: • General Fund • Streets Fund • Gas Tax • Development Impact Mitigation Fees • Measure K Sales Tax • Intermodal Surface Transportation Efficiency Act (ISTEA) Proprietary Fund Types Major Funds: • Electric Fund • Wastewater Fund • Water Fund Nonmajor Enterprise Fund: • Transit Fund Internal Service Funds Private -purpose Trust Funds Agency Fund 1.r (This page intentionally left blank.) FUND FINANCIAL STATEMENT DESCRIPTIONS 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. Intermodal Surface Transportation Efficiency Act (IS TEA) 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. 25 FUND FINANCIAL STATEMENT DESCRIPTIONS (CONTINUED) 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. Internal Service Funds: These funds are used to account for interdepartmental operations where it is the stated intent that costs of providing services to the departments of the City on a continuing basis be financed or recovered primarily by charges to the user departments. 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. 26 ASSETS Cash and investments Accounts receivables, net Property taxes receivables Interest receivable Due from other funds Due from other governmental agencies Inventory Restricted cash and investments 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 Home and CDBG program Public safety Community development Debt service Pension Committed Video - related capital projects Parks, recreation and community services Assigned Capital projects Unassigned Total fund balances CITY OF LODI Balance Sheet Governmental Funds June 30, 2019 General Fund Streets Other Governmental Funds Total Governmental Funds $ 13,497,734 $ 7,791,408 $ 14,641,361 $ 35,930,503 5,255,725 1,029,634 238,694 6,524,053 80,324 - - 80,324 18,298 11,251 7,853 37,402 - - 82,448 82,448 976,335 673,730 1,650,065 - 1,077 1,077 10,716,555 198,627 572,117 11,487,299 $ 29,568,636 $ 10,007,255 $ 16,217,280 $ 55,793,171 $ 5,717,668 $ 382,454 $ 779,501 $ 6,879,623 640,070 21,330 134,608 796,008 - - 82,448 82,448 - 548,679 548,679 66,883 - 107,871 174,754 6,424,621 403,784 1,653,107 8,481,512 691,603 61,522 208,055 961,180 691,603 61,522 208,055 961,180 - 1,077 1,077 9,343,322 38,817 9,382,139 - 26,122 26,122 423,693 423,693 3,597,428 3,597,428 - - 1,260 1,260 10,716,555 198,627 572,117 11,487,299 563,374 - - 563,374 - 716,188 716,188 - 8,979,416 8,979,416 11,172,483 - - 11,172,483 22,452,412 9,541,949 14,356,118 46,350,479 Total liabilities, deferred inflows of resources and fund balances $ 29,568,636 $ 10,007,255 $ 16,217,280 $ 55,793,171 The notes to financial statements are an integral part of this statement. 27 CITY OF LODI Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2019 Fund balances - total governmental funds $ 46,350,479 Amounts reported for governmental activities in the statement of net position are different because Capital assets used in governmental activities are not current Financia resources and, therefore, are not reported in the funds. Nondepreciable capital assets 27,296,123 Depreciable capital assets, net 105,936,529 Internal Service Fund capital asset (21,708) Deferred outflows of resources related to pensions & OPEB reported in government-wide statement of net positior 19,638,188 Deferred inflows of resources related to pensions & OPEB are reported in government-wide statement of net positior (3,204,038) Deferred outflows of resources related to unamortized losses on defeasance are not reported in governmental funds 327,719 Amounts reported in Internal Service Funds Deferred outflows of resources related to pensions & OPEB (2,090,214) Deferred inflows of resources related to pensions & OPEB 2,026,328 Long-term liabilities and related accounts are not due and payable in the current perioc and therefore are not reported in the governmental funds as follows Accrued Interest (185,378) Long-term liabilities - Due within one yeas (5,557,689) Long-term Liabilities - Due in more than one yeas (36,630,595) Net pension liability (109,495,299) Net OPEB liability (33,422,021) Long-term liabilities reported in the Internal Service Fund! Net pension liability 1,512,040 Net OPEB liability 41,526,837 Accrued compensated absences 157,604 Self-insurance liability 8,065,373 Other long-term assets are not available to pay for current period expenditures and therefore, are deferred in the funds. 961,180 Internal service funds are used by management to charge the costs of genera liability insurance, workers' compensation insurance, health benefits insurance, other insurance, employee benefits and the cost of operating and maintaining the City's fleet to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position (36,331,679) Net position of governmental activities $ 26,859,779 The notes to financial statements are an integral part of this statement. 28 CITY OF LODI Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2019 Other Governmental Total Governmental General Fund Streets Funds Funds REVENUES Taxes Sales and use tax Licenses and permits Intergovernmental revenues Charges for services Fines, forfeits, and penalties Investment and rental income Miscellaneous revenue Total revenues EXPENDITURES Current: General government Public protection Public works Community development Library Parks and recreation Capital outlay Debt service: Interest Principal retirement Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Proceeds from sale of property Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending $ 28,422,573 $ $ $ 28,422,573 14,286,516 14,286,516 65,639 1,504,185 1,569,824 1,186,022 6,364,488 1,662,957 9,213,467 1,772,088 832,451 3,953,871 6,558,410 1,274,624 - - 1,274,624 2,195,924 111,782 686,115 2,993,821 221,949 510,146 80,164 812,259 49,425,335 7,818,867 7,887,292 65,131,494 7,136,809 - 2,471,862 9,608,671 31,743,158 - 206,254 31,949,412 2,180,840 2,258,326 1,012,686 5,451,852 - - 2,112,118 2,112,118 1,165,499 - 1,165,499 - - 2,680,488 2,680,488 2,553,264 826,818 3,380,082 - 828,797 828,797 - - 1,072,195 1,072,195 42,226,306 4,811,590 11,211,218 58,249,114 7,199,029 3,007,277 (3,323,926) 6,882,380 4,233,780 137,520 8,830,445 13,201,745 (7,749,000) - (1,218,965) (8,967,965) 698 - 402,873 403,571 (3,514,522) 137,520 8,014,353 4,637,351 3,684,507 3,144,797 4,690,427 11,519,731 18,767,905 6,397,152 9,665,691 34,830,748 $ 22,452,412 $ 9,541,949 $ 14,356,118 $ 46,350,479 The notes to financial statements are an integral part of this statement. 29 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, 2019 Changes in fund balances - total governmental funds $ 11,519,731 Amounts reported for governmental activities are different because: (4,822) Governmental funds report capital outlays as expenditures. However, in the (26,936) statement of activities the cost of those assets is allocated over their estimated 53,830 useful lives and reported as depreciation expense. In addition, contributed capital (128,182) assets do not impact the governmental funds however they are reported in the 12,318 statement of activities. (341,089) Capital outlays, capital asset contributions, and depreciation expense are as follows: $ 7,668,495 Capital outlays 3,380,082 Capital asset contributions 1,541,371 Depreciation expense (9,101,731) Less: Internal service fund depreciaiton 1,447 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 1,072,195 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. (328,259) 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 18,540 Less Internal Service Funds compensated absences (4,822) Amortization of loss on defeasance (26,936) Amortization of bond premium 53,830 Change in unavailable revenue (128,182) Change in accrued interest 12,318 Change in net pension liability and related amounts (341,089) Change in net position of governmental activities $ 7,668,495 The notes to financial statements are an integral part of this statement. 30 ASSETS Current assets: Cash and investments Restricted cash and investments Account receivables, net Interest Receivable Due from other governmental agencies Advance receivables Due from other fund Inventory Other assets Total current assets Noncurrent assets: Restricted assets with fiscal agents Restricted cash and investments Advances to other funds Capital assets: Nondepreciable Depreciable, net Total noncurrent assets Total assets DEFERRED OUTFLOWS OF RESOURCES Unamortized losses on defeasance Related to OPEB Related to pensions Total deferred outflows of resources LIABILITIES Current liabilities: Accounts payable and other liabilities Accrued salaries and wages Advances from other funds Accrued interest Due to other funds Unearned revenue Loans payable Accrued compensated absences Pollution remediation obligation Certificates of participation and revenue bonds payable Total current liabilities 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 DEFERRED INFLOWS OF RESOURCES Related to pensions Related to OPEB Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for: Debt service Pensions Pollution Remediation Unrestricted Total net position CITY OF LODI Statement of Net Position Proprietary Funds June 30, 2019 Business -type Activities Electric Wastewater Water $ 26,108,963 $ 19,414,709 $ 8,846,454 - - 13,172,470 3,557,264 1,120,218 782,310 34,845 22,771 24,367 10,900,902 3,887,999 50,257 477,504 9,167 44,499,140 20,607,955 23,303,105 20,884 2,465,248 2,377,384 1,320,168 489,360 489,360 - - 548,679 763,785 14, 709,457 1,588,584 38,837,955 77,790,930 94,810,274 40,942,792 95,454,995 99,814,281 85,441,932 116,062,950 123,117,386 4,827,584 2,116,472 - 2,325,088 1,445,064 157,931 7,152,672 3,561,536 157,931 2,707,033 1,153,580 2,187,251 132,000 99,894 11,945 705,562 808,271 163,313 - 660,104 214,078 - - 389,395 309,456 34,478 - - 400,000 2,187,246 2,116,195 1,029,700 6,335,314 4,487,396 4,486,791 672,610 832,737 941,448 45,547,320 39,490,386 31,084,004 15,470,683 9,615,175 1,050,839 - - 16,189,754 62,523,350 50,047,009 48,324,597 68,858,664 54,534,405 52,811,388 198,146 123,150 13,459 198,146 123,150 13,459 (4,191,930) 53,010,278 64,285,154 20,884 2,465,248 2,377,384 1,320,168 489,360 489,360 - - 13,172,470 26,388,672 9,002,045 (9,873,898) $ 23,537,794 $ 64,966,931 $ 70,450,470 The notes to financial statements are an integral part of this statement. 31 CITY OF LODI Statement of Net Position (Continued) Proprietary Funds June 30, 2019 ASSETS Current assets: Cash and investments Restricted cash and investments Account receivables, net Interest Receivable Due from other governmental agencies Advance receivables Due from other fund Inventory Other assets Total current assets Noncurrent assets: Restricted assets with fiscal agents Restricted cash and investments Advances to other funds Capital assets: Nondepreciable Depreciable, net Total noncurrent assets Total assets DEFERRED OUTFLOWS OF RESOURCES Unamortized losses on defeasance Related to OPEB Related to pensions Total deferred outflows of resources LIABILITIES Current liabilities: Accounts payable and other liabilities Accrued salaries and wages Advances from other funds Accrued interest Due to other funds Unearned revenue Loans payable Accrued compensated absences Pollution remediation obligation Certificates of participation and revenue bonds payable Total current liabilities 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 DEFERRED INFLOWS OF RESOURCES Related to pensions Related to OPEB Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for: Debt service Pensions Pollution Remediation Unrestricted Total net position Governmental Business -type Activities Activities Non -Major Transit Funds Total Enterprise Funds Internal Service Funds $ 1,067,210 $ 55,437,336 $ 14,682,091 - 13,172,470 46,562 1,776,488 7,236,280 5,258 1,434 83,417 17,603 1,400,000 1,400,000 - - 10,900,902 - - - 75,398 - 4,415,760 140,967 98,268 9,167 110,008 4,245,132 92,655,332 15,077,887 - 4,863,516 - 67,349 2,366,237 83,988 - 548,679 - 5,512,419 22,574,245 - 11,242,548 222,681,707 21,708 16,822,316 253,034,384 105,696 21,067,448 345,689,716 15,183,583 - 6,944,056 - - - 1,862,969 98,268 4,026,351 227,245 98,268 10,970,407 2,090,214 1,132,540 7,180,404 227,654 7,044 250,883 14,241 1,677,146 - - - 75,398 11,332 671,436 - - 214,078 - 13,680 747,009 45,340 - 400,000 - - 5,333,141 - 1,164,596 16,474,097 362,633 672,610 - - - 8,065,374 76,805 1,850,990 8,217,080 - 116,121,710 - 653,855 26,790,552 1,512,040 - - 33,422,021 - 16,189,754 - 730,660 161,625,616 51,216,515 1,895,256 178,099,713 51,579,148 8,374 343,129 19,366 - - 2,006,962 8,374 343,129 2,026,328 16,754,967 129,858,469 21,708 - 4,863,516 - 67,349 2,366,237 83,988 - 13,172,470 - 2,439,770 27,956,589 (36,437,375) $ 19,262,086 $ 178,217,281 $ (36,331,679) The notes to financial statements are an integral part of this statement. 32 CITY OF LODI Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Year Ended June 30, 2019 The notes to financial statements are an integral part of this statement. 33 Business -type Activities Electric Wastewater Water OPERATING REVENUES Charges for services $ 67,961,351 $ 15,904,204 $ 13,344,473 OPERATING EXPENSES Personnel services 10,094,767 4,575,112 3,014,211 Supplies, materials and services 12,637,458 2,937,048 3,339,632 Utilities 36,982,797 795,186 537,561 Depreciation 2,293,864 4,319,907 3,264,761 Claims - - - Total operating expenses 62,008,886 12,627,253 10,156,165 Operating income (loss) 5,952,465 3,276,951 3,188,308 NONOPERATING REVENUES (EXPENSES) Investment income 426,995 650,332 448,331 Interest expense (2,095,098) (1,782,485) (1,983,216) Operating grants - 2,439,863 620,998 Greenhouse gas allowance 2,385,598 - - Other revenues 1,399,399 273,583 380,777 Gain on sale of city property 36,686 17,417 466 Total nonoperating revenues (expenses) 2,153,580 1,598,710 (532,644) Income (loss) before contributions and transfers 8,106,045 4,875,661 2,655,664 Capital contributions 139,731 1,291,892 (121,090) Transfers out (2,149,040) (1,083,710) (821,900) Change in net position 6,096,736 5,083,843 1,712,674 Total net position (deficit) - beginning, as restated (Note 16) 17,441,058 59,883,088 68,737,796 Total net position (deficit) - ending $ 23,537,794 $ 64,966,931 $ 70,450,470 The notes to financial statements are an integral part of this statement. 33 CITY OF LODI Statement of Revenues, Expenses, and Changes in Net Position (Continued) Proprietary Funds For the Year Ended June 30, 2019 OPERATING REVENUES Charges for services OPERATING EXPENSES Personnel services Supplies, materials and services Utilities Depreciation Claims Total operating expenses Operating income (loss) NONOPERATING REVENUES (EXPENSES) Investment income Interest expense Operating grants Greenhouse gas allowance Other revenues Gain on sale of city property Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Capital contributions Transfers out Change in net position Total net position (deficit) - beginning, as restated (Note 16) Total net position (deficit) - ending The notes to financial statements are an integral part of this statement. 34 Governmental Business -type Activities Activities Non -Major Transit Funds Total Enterprise Funds Internal Service Funds $ 216,006 $ 97,426,034 $ 12,161,074 361,589 18, 045, 679 1,543,201 3,260,464 22,174,602 8,070,955 56,737 38,372,281 11,506 1,406,903 11,285,435 1,447 - - 3,348,273 5,085,693 89,877,997 12,975,382 (4,869,687) 7,548,037 (814,308) 58,530 1,584,188 200,629 - (5,860,799) - 2,814,525 5,875,386 - 2,385,598 - 211,319 2,265,078 285,420 1,966 56,535 - 3,086,340 6,305,986 486,049 (1,783,347) 13,854,023 (328,259) 781,518 2,092,051 (179,130) (4,233,780) (1,180,959) 11,712,294 (328,259) 20,443,045 166,504,987 (36,003,420) $ 19,262,086 $ 178,217,281 $ (36,331,679) The notes to financial statements are an integral part of this statement. 34 CITY OF LODI Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2019 Business -type Activities - Enterprise Funds CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Operating grants Repaid from other funds Received - greenhouse gas allowance Sale of property Transfers out Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Fees received for water meter installations Acquisition and construction of capital assets Fees received from developers Capital grants received Principal payments on debt Interest payments on debt Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments Net cash provided by investing activities Electric Wastewater Water CASH FLOWS FROM OPERATING ACTIVITIES 435,346 2,385,598 - Cash receipts from customers $ 68,434,425 $ 16,284,478 $ 13,999,706 Cash from interfund customers - - - Payments to suppliers (50,368,569) (2,281,763) (4,058,434) Payments to employees (7,905,476) (3,798,650) (2,883,115) Due from other funds charges for services (3,940) (758,835) (510,950) Net cash provided (used) by operating activities 10,156,440 9,445,230 6,547,207 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Operating grants Repaid from other funds Received - greenhouse gas allowance Sale of property Transfers out Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Fees received for water meter installations Acquisition and construction of capital assets Fees received from developers Capital grants received Principal payments on debt Interest payments on debt Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments Net cash provided by investing activities Net increase (decrease) in cash and cash equivalents 2,439,863 620,998 - - 435,346 2,385,598 - - 36,686 17,417 466 (2,149,052) (1,083,710) (821,900) $ 20,199,467 $ 273,232 1,373,570 234,910 - - 33,347 (1,375,623) (6,888,453) 120,348 1,521,843 548,873 (168,442) (193,726) (1,764,687) (980,000) (1,522,360) (1,570,390) (1,985,666) 20,884 (1,569,866) (9,674,657) (2,980,413) Restricted cash and investments 411,289 350,575 422,062 411,289 350,575 422,062 Net increase (decrease) in cash and cash equivalents 9,271,095 1,494,718 4,223,766 Balances - beginning of year 18,178,920 18,704,749 20,661,902 Balances - end of the year $ 27,450,015 $ 20,199,467 $ 24,885,668 Reconciliation to the statement of net position: Cash and investments $ 26,108,963 $ 19,414,709 $ 8,846,454 Restricted cash and investments - - 13,172,470 Restricted assets with fiscal agents 20,884 2,465,248 2,377,384 Restricted cash and investments 1,320,168 489,360 489,360 Less: Guaranteed Investment Contract - (2,169,850) - Total cash and cash equivalents $ 27,450,015 $ 20,199,467 $ 24,885,668 The notes to financial statements are an integral part of this statement. 35 CITY OF LODI Statement of Cash Flows (Continued) Proprietary Funds For the Year Ended June 30, 2019 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating Income Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Expense Other revenues Loan proceeds Fees received for water meter installations Changes in assets, liabilities and deferred outflow/inflows of resources: Loans receivable Customer Receivables Advance receivable Inventory Other assets Deferred inflows of resources Deferred outflows of resources Compensated absences Accounts Payable - Supplier Accrued salaries and wages Net pension liability, OPEB and related amounts Self-insurance liability Pollution remediation obligation Unclaimed Property Net cash provided by operating activities 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 Business -type Activities - Enterprise Funds Electric Wastewater Water $ 5,952,465 $ 3,276,951 $ 3,188,308 2,293,864 4,319,907 3,264,761 1,399,399 273,583 347,430 (15,473) 11,765 - 15,161 - - 182,694 94,927 122,568 (1,444,297) - - (525,246) (5,037) (203,007) (9,167) (259,755) (121,326) (16,722) (31,301) 36,229 (7,235) 1,212,670 696,673 (40,181) 114,502 84,390 10,271 1,270,924 777,168 144,782 (263,768) 9,445,230 $ 10,156,440 $ $ 6,547,207 $ 139,731 1,291,892 $ (121,090) 438,871 297,292 19,700 556,877 - - $ 1,135,479 $ 1,589,184 $ (101,390) The notes to financial statements are an integral part of this statement. M CITY OF LODI Statement of Cash Flows (Continued) Proprietary Funds For the Year Ended June 30, 2019 The notes to financial statements are an integral part of this statement. 37 Business -type Activities - Enterprise Funds Governmental Activities Non -Major Transit Fund Total Enterprise Funds Internal Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers $ 427,325 $ 99,145,934 $ 341,935 Cash from interfund customers - - 12,156,716 Payments to suppliers (2,591,102) (59,299,868) (11,338,239) Payments to employees (347,737) (14,934,978) (1,684,051) Due from other funds (47,222) (1,320,947) Net cash provided (used) by operating activities (2,558,736) 23,590,141 (523,639) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Operating grants 1,817,859 4,878,720 Repaid from other funds - 435,346 Received - greenhouse gas allowance - 2,385,598 Sale of property 1,966 56,535 Transfers out (179,130) (4,233,792) Net cash provided (used) by noncapital financing activities 1,640,695 3,522,407 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Fees received for water meter installations - 33,347 Acquisition and construction of capital assets (1,467,274) (9,611,002) Fees received from developers - 1,902,274 Capital grants received 2,263,279 2,263,279 Principal payments on debt - (2,938,413) Interest payments on debt - (5,078,416) Net cash provided (used) by capital and related financing activities 796,005 (13,428,931) - CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 58,574 1,242,500 199,987 Net cash provided by investing activities 58,574 1,242,500 199,987 Net increase (decrease) in cash and cash equivalents (63,462) 14,926,117 (323,652) Balances - beginning of year 1,198,021 58,743,592 15,136,293 Balances -end of the year $ 1,134,559 $ 73,669,709 $ 14,812,641 Reconciliation to the statement of net position: Cash and investments $ 1,067,210 $ 55,437,336 $ 14,682,091 Restricted cash and investments - 13,172,470 46,562 Restricted assets with fiscal agents - 4,863,516 83,988 Restricted cash and investments 67,349 2,366,237 - Less: Guaranteed Investment Contract - (2,169,850) - Total cash and cash equivalents $ 1,134,559 $ 73,669,709 $ 14,812,641 The notes to financial statements are an integral part of this statement. 37 CITY OF LODI Statement of Cash Flows (Continued) Proprietary Funds For the Year Ended June 30, 2019 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating Income Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Expense Other revenues Loan proceeds Fees received for water meter installations Changes in assets, liabilities and deferred outflow/inflows of resources: Loans receivable Customer Receivables Advance receivable Inventory Other assets Deferred inflows of resources Deferred outflows of resources Compensated absences Accounts Payable - Supplier Accrued salaries and wages Net pension liability, OPEB and related amounts Self-insurance liability Pollution remediation obligation Unclaimed Property Net cash provided (used) by operating activities 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 Business -type Activities - Enterprise Funds Non -Major Transit Fund Total Enterprise Funds Governmental Activities Internal Service Funds $ (4,869,687) $ 7,548,037 $ (814,308) 1,406,903 11,285,435 1,447 211,319 2,231,731 285,418 - (3,708) - 15,161 - 400,189 52,158 (1,444,297) - (733,290) 4,757 (9,167) 1,323 212,079 (6,044) (403,847) - (1,144) (3,451) (364,580) 678,878 2,548,040 20,251 6,319 215,482 11,652 14,720 2,207,594 - - - 70,838 (263,768) - - (4,674) $ (2,558,736) $ 23,590,141 $ (523,639) 781,518 $ 2,092,051 - 755,863 556,877 $ 781,518 $ 3,404,791 $ The notes to financial statements are an integral part of this statement. 38 CITY OF LODI Statement of Fiduciary Net Position June 30, 2019 Private -Purpose Trust Funds Agency Funds ASSETS Cash and investments $ 145,833 $ 367,800 Interest receivable 2 451 Total assets 145,835 $ 368,251 LIABILITIES Deposits payable - $ 368,251 NET POSITION $ 145,835 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, 2019 ADDITIONS Investment and rental income DEDUCTIONS Current: Library Change in Fiduciary Net Position Net Position - beginning of the year Net Position - end of the year Private -Purpose Trust Funds 12,543 2,807 9,736 136,099 $ 145,835 The notes to financial statements are an integral part of this statement. 40 NOTES TO THE BASIC FINANCIAL STATEMENTS Z M PAl FS�F �I 0�I�� U►GIIWGE9 I►` ACCNIp --WNERY ` C4 WINERY (This page intentionally left blank.) CITY OF LODI Notes to Basic Financial Statements June 30, 2019 Note 1— Summary of Significant Accounting Policies A. The Financial Reporting Entity The City of Lodi (City) was incorporated on December 6, 1906, as a municipal corporation under the General Laws of the State of California. The City operates under a Council -Manager form of government and provides the following services: general government, public works, community development, public protection (police and fire), public utilities, library, parks and recreation. The accounting policies of the City conform to generally accepted accounting principles (GAAP) as applicable to governments in the United States of America. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting and financial reporting principles. An elected five -member council governs the City of Lodi. As required by GAAP, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The component units, although legally separate entities, are, in substance, part of the City's operations and therefore, their activities are blended with data of the City. Blended Component Units The blended component units of the City are as follows: The Lodi Public Improvement Corporation (LPIC) was formed on April 26, 1988, for the purpose of rendering financial assistance to the City in the issuance of the 1988 Certificates of Participation (refunded by the issuance of the 1991 Certificates of Participation) to finance the expansion of the City's White Slough Pollution Control Facility. Since then, several Certificates of Participation were issued to finance various major projects (See Note 7). The City Council constitutes the Board of Directors of LPIC. The funds of LPIC have been included in the Enterprise (Electric and Wastewater) Funds and in the other governmental funds in the accompanying basic financial statements. The Lodi Financing Corporation (LFC) was formed on October 12, 1999, for the purpose of assisting the City with the financing of the costs of its environmental abatement program and enhancing the water supply of the City for the use, benefit and enjoyment of the citizens served by the City. The City Council is the Board of Directors of LFC. The funds of LFC are included in the Water Fund in the accompanying basic financial statements. The Lodi Public Financing Authority (LPFA) was created by a Joint Exercise of Powers Agreement between the City and the Industrial Development Authority (IDA) on July 21, 2010, for the purpose of assisting the City in the financings of public capital improvements. The 2010 Water Revenue Bonds Series A and B were issued in October 2010 to provide funds for a new water treatment facility. On September 1, 2012, the $19,080,000 Refunding Lease Revenue Bonds (2012 LRB) were issued to prepay and cause the immediate defeasance of the outstanding $21,025,000 Certificates of Participation (2002 COP). The 2002 COP were issued in January 2002 to provide funds to finance the costs of constructing, furnishing and equipping a new police building and jail for the City, to finance portions of certain other projects and to refund the outstanding 1995 and 1996 Certificates of Participation. The $17,105,000 2012 Refunding Wastewater Revenue Bonds (2012 Bonds) were also issued in September 2012 to advance refund the $17,115,000 principal amount of the 2004 Wastewater Revenue Certificates of Participation (2004 COP). The 2004 COP were issued to provide funds to finance the costs of certain improvements to the wastewater collection, treatment and disposal system of the City. The 2016 Refunding Wastewater Revenue Bonds (2016 Bonds) were issued to refinance $21,415,000 principal amount of the 2007 Wastewater System Revenue Certificates of Participation (2007 COP). 43 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) A. The Financial Reporting Entity (Continued) The City Council constitutes the Board of Directors of LPFA. The funds of LPFA have been included in the governmental activities and Enterprise (Wastewater and Water) Funds and in the accompanying basic financial statements. B. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non -fiduciary activities of the primary government and its component units. For the most part the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities that rely, to a significant extent, on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and accrual basis of accounting, as are the proprietary fund and private -purpose trust fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grant and similar items are recognized as revenue as soon as all eligibility requirements have been met. Agency funds use the accrual basis of accounting, but they do not have a measurement focus. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers property tax revenues to be available if they are collected within 60 days of the end of the current fiscal year. All other revenues are considered to be available if they are generally collected within 120 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to vacation, sick leave, claims and judgments, are recorded only when payment is due. Property taxes, other local taxes, licenses, intergovernmental revenues, and interest associated with the current fiscal period are all considered susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenues are considered to be measurable and available when the City receives cash. 44 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) The City reports the following major governmental funds: The General Fund is the City's primary operating fund. It accounts for all financial resources of the City except those required to be accounted for in another fund. The Streets Fund accounts for Gas Tax revenues apportioned to the City under the State Streets and Highway Code, impact fees charged to provide for the building of various storm drains and street improvements needed to serve new developments, and to account for funds apportioned to the City for sales tax collections under Measure K. The City reports the following major proprietary (enterprise) funds: The Electric Fund accounts for the provision of electric services to the residents of the City. All activities necessary to provide such services are accounted for in this fund, including but not limited to, source of supply, overhead, systems maintenance, customer service, engineering, administration, capital improvements, and maintenance and debt service. The Wastewater Fund accounts for the provision of wastewater collection and treatment services to the residents of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, improvements and debt service. The Water Fund accounts for the provision of water to the residents of the City as well as some customers in the San Joaquin County (County). All activities to provide such services are accounted for in this fund, including, but not limited to administration, operations, distribution, maintenance, capital improvements and debt service. Additionally, the City reports the following fund types: The Internal Service Funds account for the City's claims, benefits and fleet services. The Fiduciary Funds account for assets held in trust for other agencies. Private -Purpose Trust Funds are used to account for trust agreements under which the principal and income benefit individuals, private organizations or other governments. They were established to account for assets held and invested by the Library Board as trustee; and to account for assets held by the City in accordance with a trust agreement on behalf of the Hutchins Square. These funds can only be spent in accordance with the trust agreements. Agency Fund account for assets held by the City as a trustee or as an agent for individuals, private organizations, related organizations and/or other governmental units. This fund was established to account for special assessments collected on the property tax roll by the City on behalf of the property owners within the Industrial Way/Beckman Districts, the Downtown/Cherokee Lane Districts and various landscape and lighting districts around the City. The effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this rule are charges to other City departments from the Electric, Wastewater, Water and Transit Funds. These charges have not been eliminated because elimination would distort the direct costs and program revenues reported in the statement of activities. 45 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) 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. 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 cleanup, investigation or remediation expenses incurred by the City in the specified areas and that they will not be used for the payment of legal or technical fees. These funds are accounted for in the Water Fund. F. Restricted Cash and Investments with Fiscal Agents Restricted assets represent the proceeds from debt and other cash and investments held by fiscal agents by agreement that meet the definition of cash and cash equivalents, with the exception of a $2,169,850 guaranteed investment contract held in the Wastewater Fund which is a long-term investment. In the Electric Fund, restricted assets represent the proceeds of the 2018 Electric 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. Receivables Revenues are recorded when received in cash, except revenues subject to accrual (up to 90 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are sales tax, special assessments, intergovernmental revenues, other taxes, interest revenue, rental revenue and certain charges for services. 46 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) G. Receivables (Continued) Federal and State grants are considered receivable and accrued as revenue when all eligibility requirements have been met under the accrual basis of accounting in the government -wide statement of net positions. The amount recognized as revenue under the modified accrual basis of accounting in the governmental funds is limited to the amount that is deemed measureable and available. Billed but not collected and unbilled utility revenue earned is recognized as revenue and accounts receivable in the enterprise funds. H. Loan Receivables Loans receivable reported in the HOME Program and Community Development Block Grants Special Revenue Fund represent funds loaned to first-time homebuyers. Loans receivable in the Electric Enterprise Fund represent loans to eligible industrial and commercial customers participating in the Lodi Energy Efficiency Financing Pilot Project. In December 2009, the City entered into a contractual relationship with the California Department of Housing and Community Development (HCD) to administer a First-time Homebuyers Program. The loan program is intended to provide deferred down -payment assistance to first-time homebuyers who are at or below 80% of the median income, for the purchase of homes within Lodi. The loan bears 2% interest and is due and payable 30 years from close of escrow, upon transfer of the property or when the home is no longer owner -occupied, whichever comes first. At June 30, 2019, the outstanding balance of these loans amounted to $27,159, 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, 2019, a total of twenty-three loans to industrial and commercial customers have been approved. At June 30, 2019, there were three outstanding loans, with a balance of $71,203. 1. 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, 2019, upon which the 2018-19 levy was based, was $6,149,013,174. 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, 2019, 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. 47 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) 1. Property Taxes (Continued) 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. J. 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. K. 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. L. 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. M. 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). 48 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) N. 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. O. Deferred Outflows and Inflows of Resources Unamortized Losses on Defeasance Deferred outflows of resources reported in the Wastewater Enterprise Fund and business -type activities include the refunding loss incurred on the issuance of the 2012 Refunding Revenue Bonds amortized over 11 years, and the 2016 Refunding Revenue Bonds amortized over 21 years. Deferred outflows of resources reported in the governmental activities represent the refunding loss incurred with the issuance of the 2012 Refunding Lease Revenue Bonds. Related to Pensions Pension contributions made in the current year, changes of assumptions, difference between expected and actual experience and the net difference between projected and actual earnings on plan investments are reported as deferred outflows or deferred inflows of resources per GASB Statement No. 71 as the CAPERS' valuation measurement date is June 30, 2018. These amounts are to be recognized in future pension expense and the amortization period differs depending on the source of the gain or loss. Rclmtorl to r1DFR OPEB contributions made in the current year are reported as deferred outflows of resources per GASB Statement No. 71 as the CaIPERS' valuation measurement date is June 30, 2018. Those contributions will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2020. Plan earnings in excess of earnings projected, changes in assumptions, differences between expected and actual experience in the OPEB actuarial report are reported as deferred outflows or inflows of resources. Unavailable Revenue The unavailable revenue in the governmental funds is related to the HCD's First-time Homebuyers Program, Development Impact Fees, fines, forfeits, and penalties, and miscellaneous revenue for various projects. All fees are expected to be repaid in full. P. 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 Fund and other governmental funds and as assets in the government -wide financial statements to the extent the City's capitalization threshold is met. 49 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) R a] R. Capital Assets (Continued) The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset useful lives are not capitalized. As required by the Governmental Accounting Standards Board Statement No. 34, beginning July 1, 2002, the City has capitalized infrastructure, primarily its network of streets, as part of the capital assets shown in the governmental activities column on the government -wide statement of net position. This capitalization included infrastructure that could be identified and has been acquired since July 1, 1980. Depreciation of capital assets is provided on the straight-line basis over the following estimated useful lives: Years Buildings and improvements 3-40 Machinery and equipment 2-40 Vehicles 5-15 Infrastructure 10-50 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. Employees hired prior to July 1, 1994, after 10 years with the City and only upon retirement, may convert their accumulated sick leave time to medical insurance premiums under the following options: bank or conversion. The bank option converts the unused sick leave into a dollar amount that will be placed into a "bank" to be used for medical insurance premiums for the employee. The conversion option takes the unused sick leave and converts it to days and the City will pay the medical insurance premiums for the employee for each day after conversion. 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 CalPERS 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. The following timeframes are used for Pensions reporting: Valuation Date: June 30, 2017, rolled forward to June 30, 2018 Measurement Date: June 30, 2018 Measurement Period: July 1, 2017 to June 30, 2018 50 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) S. T I" 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. The following timeframes are used for OPEB reporting: Valuation Date: June 30, 2017, rolled forward to June 30, 2018 Measurement Date: June 30, 2018 Measurement Period: Juley 1, 2017 to June 30, 2018 Self -Insurance The City is self-insured for general liability, workers' compensation, dental benefits, unemployment and long-term disability. Various City funds are charged premiums for the City's self-insurance liability, which is accounted for in an internal service fund. The accrued liability for estimated self-insured claims represents an estimate of the eventual loss on claims arising prior to year-end including claims incurred but not reported. 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. 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, 2019 and classified fund balances into the following five categories: Non -spendable — 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. 51 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) U. Net Position (Continued) Restricted — Amounts that are restricted by external parties such as creditors or imposed by grants, laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. The City has legislative restrictions on amounts collected and reported in the City's various governmental funds. Committed — Amounts that can only be used for specific purposes pursuant to constraints imposed by a formal action by the City's "highest level of decision-making authority', which the City considers to be an ordinance passed by the Lodi City Council. Assigned — Amounts that have been allocated by action of the Lodi City Council in which the City's intent is to use the funds for a specific purpose. Once assigned, funds may only be released by resolution of the City Council. Unassigned — Amounts that constitute the residual balances that have no restrictions placed upon them and are reported in the General Fund. For other governmental funds, as restrictions exceed available resources only deficit amounts are reported in the unassigned category. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, and then unrestricted resources as they are needed. The City does not have a policy on the order of spending unrestricted amounts when an expenditure is incurred for which amounts in any of the unrestricted fund balance classifications could be used. Therefore, by default under GASB Statement No. 54, the City uses committed resources first, then assigned resources and unassigned resources last as they are needed. It is the City's policy to maintain an unassigned fund balance in the General Fund of at least 16% of revenues and working capital balances in the Water and Wastewater enterprise funds of at least 25% of operating expenses and the target for the Electric Enterprise Fund working capital is $22.8 million. The policy allows for variations from year - to year to account for economic and fiscal changes. The City Council also adopted a policy to establish the following reserves: Catastrophic reserve — To maintain the ability of the City to meet operational costs during times of declared emergency or major catastrophe, the City shall designate General Fund balance of a minimum of 8% of annual General Fund revenues reported as unassigned fund balance. This reserve may only be drawn upon pursuant to an emergency as declared under the Municipal Code. Economic reserve — To maintain the City's economic viability and to meet seasonal cash flow 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. 52 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) 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. Future Implementation of New Governmental Accounting Standards The City is currently analyzing its accounting practices to determine the potential impact on the financial statements for the following GASB Statements: In November 2016, GASB issued Statement No. 83, Certain Asset Retirement Obligations (GASB Statement No. 83), to address accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. GASB Statement No. 83 requires the current value of a government's AROs to annually be adjusted for the effects of general inflation or deflation, and relevant factors that may significantly change the estimated asset retirement outlays. This statement also requires disclosure of information about the nature of a government's AROs, the methods and assumptions used for the estimates of the liabilities, and the estimated remaining useful life of the associated tangible capital assets. This statement did not have a significant impact to the City's basic financial statements. In April 2018, GASB issued Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements (GASB Statement No. 88), 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. This 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. This statement did not have a significant impact to the City's basic financial statements. Future Implementations: In January 2017, GASB issued Statement No. 84, Fiduciary Activities (GASB Statement No. 84), to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The statement establishes criteria for identifying fiduciary activities of all state and local governments. It also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources. GASB Statement No. 84 is effective for the City's fiscal year ending June 30, 2020. In June 2017, GASB issued Statement No. 87, Leases (GASB Statement No. 87), to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This statement increases 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 53 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 1— Summary of Significant Accounting Policies (Continued) X. Future Implementation of New Governmental Accounting Standards (Continued) resources or outflows of resources based on the payment provisions of the contract. It also establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. GASB Statement No. 87 is effective for the City's fiscal year ending June 30, 2021. In June 2018, GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period (GASB Statement No. 89), to (1) enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and (2) simplify accounting for interest cost incurred before the end of a construction period. 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. GASB Statement No. 89 is effective for the City's fiscal year ending June 30, 2021. In August 2018, the GASB issued Statement No. 90, Majority Equity Interests — an Amendment of GASB Statements No. 14 and No. 61 (GASB Statement No. 90), to improve 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. This statement requires that a component unit in which a government has a 100 percent equity interest account for its assets, deferred outflows of resources, liabilities, and deferred inflows of resources at acquisition value at the date the government acquired a 100 percent equity interest in the component unit. GASB Statement No. 90 is effective for the City's fiscal year ending June 30, 2020. In May 2019, GASB issued Statement No. 91, Conduit Debt Obligations (GASB Statement No. 91), to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. GASB Statement No. 91 is effective for the City's fiscal year ending June 30, 2022. Note 2 — Cash and Investments Cash and investments as of June 30, 2019 are classified in the accompanying financial statements as follows: Fiduciary Funds Governmental Business -type Statement of Activities Activities Total Net Position Total Cash and investments $ 50,612,594 $ 55,437,336 $ 106,049,930 $ 513,633 $ 106,563,563 Restricted cash and investments $ 11,617,849 $ 20,402,223 $ 32,020,072 $ - $ 32,020,072 54 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 2 — Cash and Investments (Continued) Cash and investments as of June 30, 2019 consist of the following: Cash on hand $ 3,396 Demand deposits 3,973,891 3,977,287 Investments 134,606,348 Total cash and investments $ 138,583,635 A. Authorized Investments The City has adopted an investment policy pursuant to Government Code Section 53601, which authorizes the City to invest 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 Maturity Maximum % of Portfolio Minimum Quality Requirements U.S. Treasury Obligations 5 years 100% None US Government Agency Securities & Indefinite 100% None Instrumentalities 5 years 100% None Bankers Acceptances 180 days 40% None Certificates of Deposit 5 years 100% None Negotiable Certificates of Deposit 5 years 30% None Credit rating of P1/A1 or A1+/F1 or F1+ Commercial Paper 270 days 30% by Moody's S&P or Fitch California State Local Agency Investment Fund Indefinite 100% None Passbook Deposits Indefinite 100% None Mutual Funds & Money Market Mutual Funds N/A 20% Multiple Requirements per Gov't Code Medium Term Corporation Notes 5 years 30% A-/A3/A- by Moody's, S&P, or Fitch Joint Powers Authority Pool Indefinite 30% 1�1 Multiple Requirements per Gov't Code Certificates of Deposit Account Registry Service (CDARS) Indefinite 30% None Supranational Obligations 5 years 30% AA-/Aa3/AA- by Moody's, S&P, or Fitch Municipal Securities (50 States or California Local Agencies) 5 years 100% None (1) Funds held at NCPA shall not count to this limit) 55 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 2 — Cash and Investments (Continued) 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. Restricted Cash The City has established a pension stabilization account with Public Agency Retirement Services (PARS), which invests in a Balanced Index PLUS Fund. The investments made by the City to this fund, are in restricted cash and investments. D. 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. Investment Type AAA/Aaa AA+/AA/AA- A+/AIA- 888+/888/888- NR Total Investments by Fair Value: Held by Trustee: US Agency Securities $ 250,276 $15,099,528 $ $ - $ 909,986 $ 16,259,790 Money Market Mutual Funds - - - 5,780,808 5,780,808 Municipal Securities 2,353,792 10,857,675 2,143,437 - - 15,354,904 Corporate Securities 1,109,386 6,315,095 11,857,930 902,535 - 20,184,946 Negotiable Certificate of Deposits - - - - 12,563,918 12,563,918 Guaranteed Investments Contracts 2,169,850 2,169,850 Exempt from Credit Rating Disclosure: - U.S Treasury Notes 10,146,787 10,146,787 Held by City: CALTRUST - 10,062,816 10,062,816 PARS - 13,937,524 13,937,524 Local Bank Certificate of Deposits - 2,270,273 2,270,273 Demand Deposits - - 3,973,891 3,973,891 Cash on hand - 3,396 3,396 LAIF 25,874,732 25,874,732 Total Cash and Investments $ 3,713,454 $ 32,272,298 $ 14,001,367 $ 902,535 $ 87,693,981 $ 138,583,635 56 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 2 — Cash and Investments (Continued) 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. 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, CalTRUST, 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. These investments in aggregate total are greater than 5% of the total investments, and no one individual holding is greater than 5% of the total investments. Reporting Unit Issuer Investment Type Reported Amount Entity Wide: FEDERAL FARM CREDIT BANK SYSTEM Federal Agency Obligations $ 3,765,683 FEDERAL HOME LOAN BANK Federal Agency Obligations 3,895,976 FEDERAL HOME LOAN MORTGAGE CORPORATION Federal Agency Obligations 3,986,413 F. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover collateral securities that are in the possession of an outside party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial risk for deposits, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law. The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured deposits. The City's deposits with financial institutions, exceeded federal depository insurance limits by $12,318,393, 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. 57 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 2 — Cash and Investments (Continued) F. Custodial Credit Risk (Continued) 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 $ 10,062,816 $ $ $ $ 10,062,816 LAIF 25,874,732 25, 874,732 PARS 13,937,524 13,937,524 Local Bank Certificate of Deposits 2,270,273 2,270,273 Cash on Hand 3,396 3,396 Demand Deposits 3,973,891 3,973,891 Held by Trustee: Negotiable Certificate of Deposits 1,247,923 1,495,613 2,252,798 7,567,585 12,563,918 US Agency Securities 2,498,758 3,211,635 3,239,083 7,310,314 16,259,790 Money Market Mutual Funds 5,780,808 - - - 5,780,808 Municipal Securities 2,752,218 3,049,820 3,964,546 5,588,320 15,354,904 Corporate Securities 4,763,267 4,160,440 3,665,729 7,595,509 20,184,945 Guaranteed Investments Contracts - - - 2,169,850 2,169,850 U.S Treasury Notes 1,994,832 2,494,717 2,650,109 3,007,129 10,146,787 Total Investments $ 75,160,438 $ 14,412,225 $ 15,772,265 $ 33,238,707 $ 138,583,635 G. 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, 2019, the City's investment position in LAIF was $25.8 million. The City is also a voluntary participant in the CalTRUST 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 CalTRUST, and selects and supervises the activities of the Investment Manager and other agents. As of June 30, 2019, the City's investment in CalTRUST is $10.1 million; all of which is invested in the Medium term fund. H. Investments in Guaranteed Investment Contracts The City has entered into nonparticipating guaranteed investment contracts (GICs), which are authorized under bond documents as outlined in the City's investment policy or the debt agreement. GICs are non -marketable interest bearing agreements with or guaranteed by certain financial institutions. The agreements provide for a guaranteed return on principal over a specified period. A GIC is a general obligation instrument issued by a financial institution, subject to applicable legal restrictions. The City's investments in GIC's represent proceeds from bond issues that have been set aside (held for the benefit of the bondholders) as debt service reserves and proceeds of bonds that have been invested until used on the projects being financed. The investment contracts holding debt service reserves are held long-term and bear interest 5.455%, while most project funds are invested short-term with lower 58 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 2 — Cash and Investments (Continued) rates. All of the investment contracts are collateralized by investments, with $2,169,850 collateralized at 104% to 105%, as set forth in the legal agreements. 1. 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, 2019: Investment Type Investments by Fair Value: Held by City: Negotiable Certificate of Deposits US Agency Securities Money Market Guaranteed Investments Contracts U.S Treasury Notes Municipal Securities Corporate Securities Subtotal Investments Exempt from Fair Value Hierarchy: Held by City CALTRUST PARS LAIF Local Certificate of Deposits Cash on Hand Demand Deposits Total Investments Level 1 Level 2 Total $ $ 12,563,918 $ 12,563,918 16,259,790 16,259,790 - 5,780,808 2,169,850 - 10,146,787 15,354,904 15,354,904 20,184,946 20,184,946 64,363,558 82,461,003 59 10,062,816 13,937,524 25,874,732 2,270,273 3,396 3,973,891 $ - $ - $ 138,583,635 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 3 — Allowance for Uncollectible Accounts Receivables of the General Fund, Electric, Wastewater and Water funds, as well as the miscellaneous receivables 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 $ 38,858 Electric sales and services 180,627 Wastewater services 48,955 Water sales and services 41,509 Miscellaneous billing 552,094 Total uncollectibles of the current fiscal year $ 862,043 Note 4 — Interfund Receivables/Payables Interfund receivables and payables at June 30, 2019 are as follows: Due from Due to Amount Non -major governmental Non -major governmental Community Development Transportation 15,848 Home & CDBG 66,600 Internal Service Funds Internal Service Funds Benefits Fleet 75,398 $ 157,846 "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 $82,448 represents cash deficits in other governmental funds. The $75,398 represents cash deficits in the Internal Service Funds. Advancesto Advances from Other governmental Water Amount $ 548,679 The advances from the Water Fund were used for the construction of Fire Station #4. In FY2019, the interfund loan was taken to Council to establish interest terms and repayment terms. The repayment terms include a quarterly payment of all fee revenue collected, to be applied to outstanding principle prior to calculation of quarterly interest calculation. Interest is calculated on a quarterly compounded basis after payment is applied at the rate of the Variable -1 year United States Treasury Note. The final payment to be made by June 30, 2024. 60 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 5 — Transfers Transfers for the year ended June 30, 2019, are summarized as follows: Transfers Out: General Other governmental Electric Wastewater Water Transit Total Transfers In Other General Streets Governmental Total $ - $ 137,520 $ 7,606,480 - - 1,223,965 2,149,040 - - 1,083,710 - - 821,900 - - 179,130 - - $ 4,233,780 $ 137,520 $ 8,830,445 $ 7,744,000 1,223,965 2,149,040 1,083,710 821,900 179,130 $ 13,201,745 During the year, various interfund transfers were made to finance expenditures, subsidize operating losses and service debt. Transfers out of $2,149,040 from the Electric Fund, $1,083,710 from the Wastewater Fund, $821,900 from the Water Fund and $179,130 from the Transit Fund represent operating contributions to the General Fund. The transfer of $137,520 from the General Fund to the Streets Fund is for operations and for various streets projects. The transfer of $7,606,480 from the General Fund to other governmental funds represents transfer of $1,101,430 to the Debt Service Fund for the interest required to pay the 2012 Refunding Lease Revenue Bonds; $3,881,960 to Parks, Recreation, and Community Services Fund for operating costs; $430,000 to the Capital Outlay Reserve Fund for various capital projects; $2,126,370 to Vehicle Replacement Funds to fund vehicle replacements; and $100,000 from Library to Library Capital Fund for library -related capital projects. In addition, Community Development transferred to the General Fund $(33,280) for normal operating costs. The transfer out of $1,223,965 from other governmental funds to other governmental funds includes $656,010 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 $318,000 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 $190,675 from the Parks, Recreation, to the Vehicle and Equipment Fund for fleet replacement; the Arts fund transferred $5,000 to Parks and Recreation Capital fund; and $33,280 was transferred in from Community Development to General Fund. 61 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 6 — Capital Assets Capital assets activity of the primary government for the year ended June 30, 2019, was as follows: As Restated Governmental activities July 1, 2018 Increases Decreases June 30, 2019 Capital assets, not being depreciated: Land Work of Art Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings and improvements Machinery and equipment Vehicles Infrastructure Total capital assets, being depreciated Less accumulated depreciation for: Buildings and improvements Machinery and equipment Vehicles Infrastructure Total accumulated depreciation Total capital assets, being depreciated, net Governmental activities capital assets, net $ 24,947,834 $ - $ (61,239) $ 24,886,595 304,907 - - 304,907 4,212,019 1,240,061 (3,347,459) 2,104,621 29,464,760 1,240,061 (3,408,698) 27,296,123 77,456,162 235,362 (219,567) 77,471,957 14,044,854 2,373,287 - 16,418,141 11,704,456 131,426 (146,253) 11,689,629 171,482,881 4,288,776 - 175,771,657 274,688,353 7,028,851 (365,820) 281,351,384 33,356,636 2,095,117 (219,567) 40,232,186 11,965,882 900,579 - 12,866,461 9,189,525 441,077 (146,253) 9,484,349 107,166,900 5,664,958 - 112,831,858 166,678,943 9,101,731 (365,820) 175,414,854 108,009,410 (2,072,880) - 105,936,530 $ 137,474,170 $ (832,819) $ (3,408,698) $ 133,232,653 As Restated Business -type activities July 1, 2018 Increases Decreases June 30, 2019 Capital assets, not being depreciated: Land $ 5,535,718 $ - $ - $ 5,535,718 Construction in progress 17,616,644 9,085,135 (9,663,252) 17,038,527 Total capital assets, not being depreciated 23,152,362 9,085,135 (9,663,252) 22,574,245 Capital assets, being depreciated: Buildings and improvements 48,581,773 - - 48,581,773 Machinery and equipment* 300,720,549 11,468,440 (2,672,542) 309,516,447 Vehicles 13,717,900 812,730 (403,548) 14,127,082 Total capital assets, being depreciated 363,020,222 12,281,170 (3,076,090) 372,225,302 Less accumulated depreciation for: Buildings and improvements 21,944,521 1,284,876 - 23,229,397 Machinery and equipment* 107,191,953 8,678,108 - 115,870,061 Vehicles 9,514,023 1,322,451 (392,337) 10,444,137 Total accumulated depreciation 138,650,497 11,285,435 (392,337) 149,543,595 Total capital assets, being depreciated, net 224,369,725 995,735 (2,683,753) 222,681,707 Business -type activities capital assets, net $ 247,522,087 $ 10,080,870 $ (12,347,005) $ 245,255,952 *Construction in progress for July 1, 2018 were restated in the amount of $715,241. Machinery and equipment balances for July 1, 2018 were restated in the amount of $2,653,445. 62 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 6 — Capital Assets (Continued) Depreciation expense was charged to function/programs of the primary government as follows: Governmental Activities: General government Public protection Public works Community development Library Parks and recreation Internal service funds Total depreciation expense Business -type Activities: $ 1,544,290 Electric $ 2,293,864 692,396 Wastewater 4,319,907 5,198,667 Water 3,264,761 19,549 Transit 1,406,903 71,465 Total depreciation expense $ 11,285,435 1,573,917 1,447 $ 9,101,731 Note 7 — Long — Term Liabilities The following is a summary of long-term liability transactions of the City for the year ended June 30, 2019: Governmental activities: As Restated July 1, 2018 Additions Reductions June 30, 2019 Amounts Due Within One Year Compensated absences $ 8,258,312 $ 4,579,877 $ (4,229,015) $ 8,609,174 $ 2,355,345 Sick leave conversion* 8,474,218 (369,402) 8,104,816 - 2012 Lease Revenue Bonds 17,130,000 (900,000) 16,230,000 930,000 Issuance premium 708,760 (53,830) 654,930 53,830 Total 17,838,760 (953,830) 16,884,930 983,830 Loan payable 286,236 (93,571) 192,665 95,402 Capital lease 409,949 - (78,624) 331,325 80,272 Self-insurance liability 7,994,536 2,042,840 (1,972,002) 8,065,374 2,042,840 Governmental activities long-term liabilities $ 42,892,609 $ 6,622,717 $ (7,327,042) $ 42,188,284 $ 5,557,689 *Sick leave conversion bank options balances restated as of July 1, 2018 in the amount of $8,104,816. 63 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 7 — Long — Term Liabilities (Continued) Business -type activities: As Restated July 1, 2018 Additions Reductions June 30, 2019 Amounts Due Within One Year Compensated absences $ 2,601,449 $ 2,626,472 $ (2,629,922) $ 2,597,999 $ 747,009 Pollution remediation obligation 16,853,522 (263,768) 16,589,754 400,000 Loan payable 1,095,888 (209,200) 886,688 214,078 Certificates of Participation and Revenue Bonds: 2004 Certificates of Participation A 2,070,000 2,070,000 - 2010 Water Revenue Bonds A & B 32,680,000 (980,000) 31,700,000 1,010,000 Issuance premium 433,405 (19,701) 413,704 19,700 Total 33,113,405 (999,701) 32,113,704 1,029,700 2012 Wastewater Refunding Revenue Bonds A 10,200,000 (1,535,000) 8,665,000 1,600,000 Issuance premium 873,147 (166,314) 706,833 166,313 Total 11,073,147 (1,701,314) 9,371,833 1,766,313 2016 Wastewater Refunding Revenue Bonds A 20,295,000 (110,000) 20,185,000 110,000 Issuance premium 2,455,855 (130,979) 2,324,876 130,979 Total 22,750,855 (240,979) 22,509,876 240,979 2017 Installment Purchase Agreement 7,762,794 (107,922) 7,654,872 108,903 Issuance premium - - - Total 7,762,794 (107,922) 7,654,872 108,903 2018 Electric System Refunding Revenue Bonds 41,610,000 41,610,000 1,710,000 Issuance premium 6,681,443 (556,877) 6,124,566 477,246 Total 48,291,443 (556,877) 47,734,566 2,187,246 Total Certificates of Participation and Revenue Bonds 125,061,643 (3,606,792) 121,454,851 5,333,141 Business -type activities long-term liabilities $ 145,612,503 $ 2,626,472 $ (6,709,683) $ 141,529,292 $ 6,694,228 Loans Payables Governmental Activities: 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. Business -type Activities: 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. 64 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 7 — Long — Term Liabilities (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 2020 $ 95,402 $ 3,770 2020 $ 214,078 $ 20,677 2021 97,263 1,908 2021 219,027 15,728 Total $ 192,665 $ 5,678 2022 2023 Total Capital Lease 224,178 10,577 229,405 5,350 $ 886,688 $ 52,332 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, 2019, are as follows: Year Ending, June 30 2020 2021 2022 2023 Total minimum lease payments Plus amounts representing interest Present value of minimum capital lease payments Certificates of Participation and Revenue Bonds 80,272 81,955 83,673 85,425 331,325 14,834 $ 346,159 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, 2019, 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 $21,390,356. 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 $755,213. 65 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 7 — Long — Term Liabilities (Continued) Certificates of Participation and Revenue Bonds (Continued) Business -type 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 $2,561,630. Interest paid for the current year and total net revenues were $98,326 and $9,563,357, 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 $57,391,672. Principal and interest paid for the current year and total net revenues were $2,969,156 and $8,336,525, 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 $9,707,350. Principal and interest paid for the current year and total net revenues were $1,949,100 and $9,563,357, 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 $30,078,556. Interest paid for the current year and total net revenues were $849,150 and $9,563,357, respectively. At June 30, 2019, the remaining balance of the refunded debt is $21,264,470. 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 $10,021,445. 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. 66 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 7 — Long — Term Liabilities (Continued) Certificates of Participation and Revenue Bonds (Continued) The various indentures contain significant limitations and restrictions on annual debt service requirements, maintenance of and flow of moneys through various restricted accounts and minimum revenue bond coverage. The City is in compliance with all such significant limitations and restrictions. Annual debt service requirements to maturity for certificates of participation and bonds are as follows: Year Ending Governmental Activities 18,014,418 Business -type Activities 2,210,000 June 30, Principal Interest Principal Interest 2020 $ 930,000 $ 721,087 $ 4,538,903 $ 6,002,497 2021 965,000 685,337 5,179,846 5,357,066 2022 1,020,000 635,712 5,410,675 5,132,628 2023 1,065,000 583,587 5,656,416 4,872,773 2024 1,120,000 528,962 5,912,098 4,587,970 2025-2029 6,505,000 1,714,342 33,176,783 18,116,763 2030-2034 2035-2039 2040-2044 Total Note 8 — Pension Plans Plan Descriptions 4,625,000 291,329 31,785,733 9,738,583 18,014,418 3,343,622 2,210,000 146,678 $ 16,230,000 $ 5,160,356 $ 111,884,872 $ 57,298,580 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. CalPERS 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 CalPERS website. Benefits Provided CalPERS 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. 67 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 8 — Pension Plans (Continued) The Plans' provisions and benefits in effect at June 30, 2019, are summarized as follows: Miscellaneous 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 Employees Covered Safety Plan Prior to December 22, 2012 to On or after 22 -Dec -12 31 -Dec -12 1 -Jan -13 3% @ 50 5 years of service monthly for life 50-55 3% 9% 44.75% 3% @ 55 5 years of service monthly for life 50-55 2.4% to 3% 9% 44.75% 2.7% @ 57 5 years of service monthly for life 50-57 2% to 2.7% 11.25% 44.75% At June 30, 2019, the most recent actuarial valuation available, the following employees were covered by the benefits of the City's Plans: Miscellaneous Safety Plan Plan Inactive employees or beneficiaries currently receiving benefits 255 108 Inactive employees entitled but not yet receiving benefits 117 24 Active employees 130 194 Total 502 326 Contributions 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 CalPERS. 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 $ 4,208,873 $ 5,549,746 $ 9,758,619 68 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% 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 Employees Covered Safety Plan Prior to December 22, 2012 to On or after 22 -Dec -12 31 -Dec -12 1 -Jan -13 3% @ 50 5 years of service monthly for life 50-55 3% 9% 44.75% 3% @ 55 5 years of service monthly for life 50-55 2.4% to 3% 9% 44.75% 2.7% @ 57 5 years of service monthly for life 50-57 2% to 2.7% 11.25% 44.75% At June 30, 2019, the most recent actuarial valuation available, the following employees were covered by the benefits of the City's Plans: Miscellaneous Safety Plan Plan Inactive employees or beneficiaries currently receiving benefits 255 108 Inactive employees entitled but not yet receiving benefits 117 24 Active employees 130 194 Total 502 326 Contributions 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 CalPERS. 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 $ 4,208,873 $ 5,549,746 $ 9,758,619 68 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 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, 2018, using an annual actuarial valuation as of June 30, 2017 rolled forward to June 30, 2018 using standard update procedures. Actuarial Assumptions The total pension liabilities in the June 30, 2017 actuarial valuations were determined using the following actuarial assumptions: Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions: Discount Rate Inflation Investment Rate of Return Mortality Miscellaneous Plan Safety Plan June 30, 2017 June 30, 2017 June 30, 2018 June 30, 2018 Entry -Age Normal Cost Method 7.15% 7.15% 2.75% 2.75% 7.50% ilk 7.50% ill Based on rates of CalPERS 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, 2017 valuation were based on the 2017 CalPERS Experience Study for the period from 1997 to 2017. Further details of the Experience Study can be found on the CalPERS 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, CalPERS 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 CalPERS 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, CAPERS 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. 69 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 8 — Pension Plans (Continued) 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. Current Target Real Return Real Return Asset Class Allocation Years 1- 10 (l) Years 11 +(Z) Global Equity 50.00% Fixed Income 28.00% Inflation Sensitive 0.00% Private Equity 8.00% Real Estate 13.00% Liquidity 1.00% (1) An expected inflation of 2.00% used for this period. (2) An expected inflation of 2.92% 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, 2017 ill Changes in the year: Service cost Interest on the total pension liability Changes in assumptions Changes in benefit terms Differences between expected and actual experience Contribution - employer Contribution - employee Net investment income (z) Benefit payments, including refunds of employee contributions Other changes in fiduciary net position Net changes during measurement period Balance at June 30, 2018 4.80% 5.98% 1.00% 2.62% 77.0% 1.81% 6.30% 7.23% 3.75% 4.93% 0.00% -0.92% Increase (Decrease) Total Pension Plan Fiduciary Net Liability Position Net Pension Liability $ 190,531,368 $ 132,306,298 $ 58,225,070 3,020,122 - 3,020,122 13,374,883 13,374,883 (950,894) (950,894) 47,853 47,853 830,292 - 830,292 - 4,208,873 (4,208,873) 1,364,684 (1,364,684) 11,191,848 (11,191,848) (9,814,728) (9,814,728) - - (598,013) 598,013 6,507,528 6,352,664 154,864 $ 197,038,896 $ 138,658,962 $ 58,379,934 (1) The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary self-insurance and OPEB expense. (2) Net of administrative expenses. 70 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 8 — Pension Plans (Continued) Safety Plan: Balance at June 30, 2017 Ili Changes in the year: Service cost Interest on the total pension liability Changes in assumptions Changes in benefit terms Differences between expected and actual experience Contribution - employer Contribution - employee Net investment income Izl Benefit payments, including refunds of employee contributions Other changes in fiduciary net position Net changes during measurement period Balance at June 30, 2018 Increase (Decrease) Total Pension Plan Fiduciary Net Liability Position Net Pension Liability $ 189,821,025 $ 112,118,815 $ 77,702,210 3,385,583 - 3,385,583 13,288,494 13,288,494 (681,450) (681,450) (122,816) - (122,816) 1% Decrease 5,549,746 (5,549,746) Net Pension Liability 1,079,094 (1,079,094) Current Discount Rate 9,544,033 (9,544,033) (9,712,985) (9,712,985) - - (506,769) 506,769 6,156,826 5,953,119 203,707 $ 195,977,851 $ 118,071,934 $ 77,905,917 (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: Pension Plan Fiduciary Net Position Detailed information about each pension plan's fiduciary net position is available in the separately issued CalPERS financial reports. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2019, the City recognized pension expense of $3,919,916 and $6,247,800 for the Miscellaneous and Safety Plans, respectively. 71 Miscellaneous Plan Safety Plan 1% Decrease 6.15% 6.15% Net Pension Liability $83,800,072 $104,835,584 Current Discount Rate 7.15% 7.15% Net pension Liability $58,379,934 $77,905,917 1% Increase 8.15% 8.15% Net Pension Liability $37,299,772 $55,833,152 Pension Plan Fiduciary Net Position Detailed information about each pension plan's fiduciary net position is available in the separately issued CalPERS financial reports. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2019, the City recognized pension expense of $3,919,916 and $6,247,800 for the Miscellaneous and Safety Plans, respectively. 71 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 8 — Pension Plans (Continued) At June 30, 2019, 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 Deferred Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources Resources Resources $ 4,907,206 $ - 3,011,718 633,929 553,528 113,794 $ 6,195,073 $ - $ 11,102,279 $ - 5,733,509 655,196 8,745,227 1,289,125 760,307 137,287 1,313,835 251,081 354,471 - 285,758 - 640,229 - $ 8,826,923 $ 747,723 $ 12,974,647 $ 792,483 $ 21,807,570 $ 1,540,206 The $4,907,206 and $6,195,073 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 next measurement period or 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 Miscellaneous Safety 30 -Jun Plan Plan Total 2019 $ 4,589,765 $ 4,091,993 $ 8,681,758 2020 345,855 3,032,638 3,378,493 2021 (1,378,761) (784,056) (2,162,817) 2022 (384,865) (353,484) (738,349) Total $ 3,171,994 $ 5,987,091 $ 9,159,085 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 CalPERS healthcare program. Employees who retire from the City and receive a CalPERS pension are eligible for postemployment medical benefits. The City contributes the minimum amount provided under Government Code Section 22825 of the Public Employees Medical and Hospital Care Act. In general, retirees must contribute any premium amounts in excess of the City contribution. However, as described below, a closed group of active employees and retirees receive additional postemployment benefits. Employees hired prior to the dates shown in the following table are allowed to convert their accumulated sick leave into postemployment medical benefits at retirement as long as they have ten or more years of service with the City. 72 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 9 — Post Employment Benefits Other Than Pensions (Continued) A. B. C. rai E. Plan Description (Continued) 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 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. Eligibility Plan Active plan members 283 Inactive plan members entitled to, but not yet receiving benefits 194 Retirees electing coverage 93 Retirees 7 Total 577 Funding Policy 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 2018-19, the City contributed $1,862,969. Net OPEB Liability The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation: Actuarial accrued liability (AAL) Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Actuarial Methods and Assumptions $ 34,566,187 1,144,166 $ 33,422,021 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 73 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 9 — Post Employment Benefits Other Than Pensions (Continued) E F. G. Actuarial Methods and Assumptions (Continued) 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. 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 Measurement date: June 30, 2018 Actuarial Cost Method Entry Age Normal level percent of pay cost method Actuarial Assumptions: Discount Rate 3.66% Inflation 2.75% Wage Inflation 3.00% Expected Rate of Return 6.73% per annum. This discount rate assumes the City continues to fully fund for its retiree benefits through the California Employers' Retiree Benefit Trust (CERBT) under its investment strategy 1 of 7.28% with an additional margin for adverse deviation. Healthcare Trend Rate An annual healthcare cost trend rate of 6.8% initially reduced by decrements to an ultimate of 4.40% therefore. Discount Rate 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 OPEB published median interest rate for strategy 1 of 7.59% with an additional margin for adverse deviation. The table below reflects 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 geometric rates of return are net of administrative expenses. Asset Class Target Allocation Global equity 57.00% Fixed income 27.00% TIPS 5.00% Commodities 3.00% Real estate 8.00% 1 - Long term expected rate of return in 6.73% 74 Long-term Expected Real Rate of Returnl 4.82% 1.47% 1.29% 0.84% 3.76% CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 9 — Post Employment Benefits Other Than Pensions (Continued) G. H. Discount Rate (Continued) 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 (2.66%) or 1 -percentage point higher (4.66%) than the current discount rate: Plan's Net OPEB Liability/(Asset) Discount Rate - 1% Current Discount Discount Rate + 1% (2.66%) Rate (3.66%) (4.66%) $ 37,208,508 $ 33,422,021 $ 30,218,615 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% PPO 4.50% City Plan $ 29,760,503 5.00% 6.00% 5.50% 6.50% 33,422,021 37,826,184 1. OPEB Liabilities, OPEB Expense and Deferred Outflows/Inflows of Resources to OPEB For the year ended June 30, 2019, the City recognized OPEB expense of $1,553,080 for the City Plan. At June 30, 2019 the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Contributions subsequent to measurement date $ 1,862,969 $ - Change of assumptions - 1,987,042 Difference between expected and actual experience - 19,920 $ 1,862,969 $ 2,006,962 The $1,862,969 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB 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 2020 $ (392,361) 2021 (392,361) 2022 (392,359) 2023 (384,147) 2024 (385,327) Thereafter (60,407) $ (2,006,962) 75 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 9 — Post Employment Benefits Other Than Pensions (Continued) J. 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, 2017 $ 34,354,842 $ 1,079,480 $ 33,275,362 Changes Recognized for the Measurement Period: Service Cost 1,042,935 - 1,042,935 Interest on the total OPEB liability 1,240,787 1,240,787 Changes of assumptions (209,408) - (209,408) Employer contributions 11862,969 (1,862,969) Net investment income 66,683 (66,683) Benefit payments, including refunds of member contributions (1,862,969) (1,862,969) - Administrative expenses - (1,997) 1,997 Net Changes during July 1, 2017 to June 30, 2018 211,345 64,686 146,659 Balance at June 30, 2018 (Measurement Date) $ 34,566,187 $ 1,144,166 $ 33,422,021 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 12). The City is self-insured for workers' compensation up to the first $250,000 per claim. Any claims of $250,000 up to California statutory limits are covered under a purchased policy through the membership with the Local Agency Workers' Compensation Excess Joint Powers Authority with coverage up to $300,000,000 in the current year. The City has not had any settlements that exceeded its workers' compensation insurance coverage (See Note 12). The City is fully self-insured for dental and unemployment for its employees. General liability and workers' compensation claims are administered by an outside agency and all other claims are administered by the City. The City has accrued a liability of $8,065,374 at June 30, 2019, 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. 76 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 10 — Claims and Benefits (Continued) Changes in the self-insurance liability for the years ended June 30, 2019, 2018, and 2017 are as follows: Note 11— Participation in Joint Ventures Northern California Power Agency 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. Its membership consists of twelve cities with publicly owned electric utility distribution systems, one port authority, a transit authority, one public utility district and on 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. A commission comprising of one representative from each member organization governs NCPA. The commission is responsible for the general management of the affairs, property, and business of NCPA. Under the direction of the General Manager, the staff of NCPA is responsible for providing various administrative, operating and planning services for NCPA, its associated power corporations and its members. NCPA's project construction and development programs have been individually financed by project revenue bonds collateralized by NCPA's assignment of all payments, revenues and proceeds associated with its interest in each project. Each Project Participant has agreed to pay its proportionate share of debt service and other costs of the related project, notwithstanding the suspension, interruption, interference, reduction or curtailment of output from the project for any reason. Certain of the revenue bonds are additionally supported by municipal bond insurance credit enhancements. Project Financing and Construction Increase in Non -defaulting Proiect Participant's Original Prosect Entitlement Percentage Upon the failure of any Project Participant to make any payment, which failure constitutes a default under the Member Agreement for the projects, and except as sales and transfers are made pursuant thereto, the Member Agreements provide that Project Entitlement for each non -defaulting Project Participant shall be automatically increased for the remaining term of the Member Agreement; pro rata with those of the non -defaulting Project Participant thereunder; provided, however, that the sum of such increase for any non -defaulting Project Participant shall not exceed, without written consent of such non -defaulting Project Participant, an accumulated maximum of 25% of the non -defaulting Project Participant's original Project Entitlement Percentage Share. General Operating Reserve with NCPA Members of NCPA established a general operating reserve in 1992 for the purposes of providing a vehicle to fund reasonably foreseeable contingent liabilities. It was set up primarily to provide the following advantages: minimizes the number and dollar amount of reserve that might otherwise be funded separately in connection with NCPA's individually financed operating plants, projects and programs; and 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. 77 FY18-19 FY17-18 FY16-17 Beginning Balance $ 7,994,536 $ 8,842,398 $ 8,480,942 Current Year Claims & Changes In Estimates 2,042,840 1,121,320 2,365,077 Claim Payments (1,972,002) (1,969,182) (2,003,621) Ending Balance $ 8,065,374 $ 7,994,536 $ 8,842,398 Note 11— Participation in Joint Ventures Northern California Power Agency 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. Its membership consists of twelve cities with publicly owned electric utility distribution systems, one port authority, a transit authority, one public utility district and on 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. A commission comprising of one representative from each member organization governs NCPA. The commission is responsible for the general management of the affairs, property, and business of NCPA. Under the direction of the General Manager, the staff of NCPA is responsible for providing various administrative, operating and planning services for NCPA, its associated power corporations and its members. NCPA's project construction and development programs have been individually financed by project revenue bonds collateralized by NCPA's assignment of all payments, revenues and proceeds associated with its interest in each project. Each Project Participant has agreed to pay its proportionate share of debt service and other costs of the related project, notwithstanding the suspension, interruption, interference, reduction or curtailment of output from the project for any reason. Certain of the revenue bonds are additionally supported by municipal bond insurance credit enhancements. Project Financing and Construction Increase in Non -defaulting Proiect Participant's Original Prosect Entitlement Percentage Upon the failure of any Project Participant to make any payment, which failure constitutes a default under the Member Agreement for the projects, and except as sales and transfers are made pursuant thereto, the Member Agreements provide that Project Entitlement for each non -defaulting Project Participant shall be automatically increased for the remaining term of the Member Agreement; pro rata with those of the non -defaulting Project Participant thereunder; provided, however, that the sum of such increase for any non -defaulting Project Participant shall not exceed, without written consent of such non -defaulting Project Participant, an accumulated maximum of 25% of the non -defaulting Project Participant's original Project Entitlement Percentage Share. General Operating Reserve with NCPA Members of NCPA established a general operating reserve in 1992 for the purposes of providing a vehicle to fund reasonably foreseeable contingent liabilities. It was set up primarily to provide the following advantages: minimizes the number and dollar amount of reserve that might otherwise be funded separately in connection with NCPA's individually financed operating plants, projects and programs; and 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. 77 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 11- Participation in Joint Ventures (Continued) Project Financing and Construction (Continued) As of June 30, 2019, the City's balance in the NCPA General Operating Reserve, which has been credited with annual interest earnings and settlements, is $10,900,902. Prosect Participation The NCPA members and their percentage share at June 30, 2019, which is the most recent available data, are as follows: NCPA MEMBERS Alameda Bay Area Rapid Transit Biggs Gridley Healdsburg Lodi Lompoc Palo Alto Plumas-Sierra Rural Electric Coop Roseville Santa Clara Ukiah OTHER PARTICIPANTS Azusa California Department of Water Resources Modesto Irrigation District Power & Water Resources Pooling Agency Turlock Irrigation District - 2.79 - - - - - 33.50 - - - - - 10.71 - - - - - 2.67 6.33 - - - 9.61 - Bulk power purchased by the City through NCPA amounted to $37,055,515 during the year ended June 30, 2019 and is reflected in utilities expense in the Electric Enterprise Fund. NCPA Geothermal Prosect 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). With combined 165 MW turbine generator units utilizing low temperature geothermal steam; associated electrical, mechanical and control facilities; a heat dissipation system; a steam gathering system; a transmission 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 $25 million at June 30, 2019. 78 Hydro Combustion Multiple Lodi Geothermal Electric Turbine Capital Transmission Energy Project Project Project #1 Facilities Project Center 16.88% 10.00% 21.82% 19.00% 30.78% 0.00% - - - - - 6.60 0.23 - 0.20 - 0.34 0.27 0.34 - 0.35 - 0.62 1.96 3.67 1.66 5.83 - 6.69 1.64 10.28 10.37 13.39 39.50 20.61 9.50 3.68 2.30 5.83 5.00 6.71 2.04 - 22.92 - - - - 0.70 1.69 1.82 - 1.31 0.79 7.88 12.00 - 36.50 13.08 - 44.39 37.02 41.67 - - 25.75 5.61 2.04 9.09 - 10.23 1.79 - 2.79 - - - - - 33.50 - - - - - 10.71 - - - - - 2.67 6.33 - - - 9.61 - Bulk power purchased by the City through NCPA amounted to $37,055,515 during the year ended June 30, 2019 and is reflected in utilities expense in the Electric Enterprise Fund. NCPA Geothermal Prosect 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). With combined 165 MW turbine generator units utilizing low temperature geothermal steam; associated electrical, mechanical and control facilities; a heat dissipation system; a steam gathering system; a transmission 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 $25 million at June 30, 2019. 78 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 11— Participation in Joint Ventures (Continued) Project Financing and Construction (Continued) Calaveras Hydroelectric Project NCPA contracted to finance, manage, construct and operate Hydroelectric Project Number One for the licensed owner, Calaveras County Water District. In exchange, NCPA has the right to the electric output of the project for 50 years from February 1982. NCPA has also the option to purchase power from the project in excess of the District's requirements for the subsequent 50 years, subject to regulatory approval. Under a power purchase agreement, the City is obligated to pay 10.37% of the operating costs and approximately 10.63% of the debt service. At June 30, 2019, approximately $278 million in long-term debt used to finance this project was outstanding. NCPA Combustion Turbine Prosect #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, 2019, there was no outstanding long-term debt related to this project. Capital Facilities Prosect 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 with NCPA, the City is obligated to pay 39.5% of the operating and debt service costs. Outstanding long-term debt related to this project was approximately $30 million at June 30, 2019. 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 operating and debt service costs. At June 30, 2019 there was no outstanding long-term debt related to this project. Lodi Energy Center The Lodi Energy Center project is a 304 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. This project is located next to the Capital Facilities Projects listed above. The City is obligated to pay 17.03% of the debt service and 9.5% of operating costs. At June 30, 2019, approximately $221 million in long-term debt was outstanding. 79 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 11— Participation in Joint Ventures (Continued) Audited Statements The following are the most recent available audited condensed financial statements of NCPA: At June 30, 2019, NCPA's total net outstanding long-term debt was $680,613,000 at an average interest rate of 5%. The current portion of long-term debt at June 30, 2019, was $33,340,000. Complete financial information for NCPA may be obtained at the following administration office: Northern California Power Agency 651 Commerce Drive Roseville, CA 95678-6411 Condensed Statement of Net Position June 30, 2019 (in thousands) Assets and Deferred Outflows of Resources Current assets Restricted assets Electric plant, net Other assets Total assets Deferred outflows of resources Total assets and deferred outflows of resources Liabilities, Deferred Inflows of Resources and Net Position Long-term debt, net Current liabilities Non-current liabilities Deferred inflows of resources Net position Net investment in capital assets Restricted Unrestricted Total liabilities, deferred inflows of resources and net position 80 $ 99,363 213,312 502,479 224,403 1,039,557 112,427 $ 1,151,984 $ 647,273 103,344 272,445 90,456 (45,572) 49,243 34,705 $ 1,151,894 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 11— Participation in Joint Ventures (Continued) Audited Statements (Continued) Condensed Statement of Revenues, Expenses and Changes in Net Position Year ended June 30, 2019 (in thousands) Sales for resale $ 699,166 Operating expenses (656,115) Other expenses (20,774) Future recoverable costs (7,791) Net revenues before refunds 14,486 Refunds to participants (14,178) Increase in net position 308 Net position, beginning of year 38,068 Net position, end of year $ 38,376 Combined Statement of Cash Flows Year ended June 30, 2019 (in thousands) Net cash from operating activities $ 89,879 Net from investing activities 458 Net cash from capital and related financing activities (86,746) Net cash from noncapital and related financing activities (6,525) Increase in cash and cash equivalents (2,934) Cash and cash equivalents, beginning of year 103,996 Cash and cash equivalents end of year $ 101,062 Transmission Agency of Northern California 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 share of the COTP transfer capability, effective July 1, 2014, whereby the City and all of the TANC members who are in the CAI50 Balancing Authority lay off their interests to certain other COTP participants. In exchange, these entities pay the City's 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. 81 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 11— Participation in Joint Ventures (Continued) Transmission Agency of Northern California (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 Tesla Substation near Tracy, CA, near the southern terminus of the COTP under an agreement known as the South of Tesla (SOT) Principles. The City has utilized its full allocation of Tesla -Midway Transmission Service for power transactions in the past. The City is responsible for 2.07% of TANC's SOT debt service which as of June 30, 2019 had an outstanding balance of approximately $2.6 million. Complete financial information for TANC may be obtained at the following administration office: Transmission Agency of Northern California 35 Iron Point Circle, Suite 225 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 four 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, 2019, premiums of $223,568 were paid to CJPRMA for the liability program. The participants at June 30, 2019, 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 82 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 12 — Membership in Insurance Pools (Continued) 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 $495,382 in premiums to LAWCX during the year ended June 30, 2019. The participants at June 30, 2019, 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 (FASTS), City of Gilroy, City of Livermore, City of Lodi, Town of Los Gatos, City of Merced, Monterey County Local Agencies Insurance Authority (MCLAIA), City of Morgan Hill, City of Newark, City of Placentia, City of Pleasanton, Public Agency Risk Sharing Authority of California (PARSAC), City of Roseville, Public Entity Risk Management Authority (PERMA), City of San Leandro, City of Santa Maria, City of Santee, Small Cities Organized Risk Effort (SCORE), City of South Lake Tahoe, City of Suisun City, City of Vacaville, City of Vallejo, Vector Control Joint Powers Agency (VCJPA) and City of Vista. Complete financial information for LAWCX may be obtained at the following administration office: Local Agency Workers' Compensation Excess Joint Powers Authority 1750 Creekside Oaks Drive, Suite 200 Sacramento, California 95833 California Transit Insurance Pool The City, along with thirty-three other public agencies is a member of the California Transit Insurance Pool (Cal TIP), a joint powers insurance authority which was formed for the purpose of sharing the risk of property damage, bodily injury, personal injury and public officials errors and omissions losses for public transit systems. Liability protection coverage is provided under two programs: Program I applies to members who choose to utilize Cal Tip's claims administrator services. Program II applies to members with self-insured retentions who choose to provide their own claims administrator services. Cal TIP 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. Cal TIP 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. Cal TIP 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 Cal Tip's adjuster. 83 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 12 — Membership in Insurance Pools (Continued) California Transit Insurance Pool (Continued) The City paid $134,249 in premiums to Cal TIP during the year ended June 30, 2019. There have been no reductions in insurance coverage from the prior year and there were no insurance settlements in excess of insurance coverage in any of the last three years. Self -Insured Limit Physical Program Retention (in millions) Damage City of Lodi Transit System I Prefunded 20 Yes Complete financial information for Cal Tip may be obtained at the following administration office: California Transit Insurance Pool 1750 Creekside Oaks Drive, Suite 200 Sacramento, California 95833 Note 13 — Deficit in Net Position The City has a deficit net position in its governmental activities in the amount of ($115,042,563) which is primarily attributable to the net pension and OPEB obligations outstanding as of June 30, 2019. A deficit in net position in the amount of ($1,370,909) in the ISF Fleet Services Fund at June 30, 2019, 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 ($39,755,786) in the ISF Benefits Fund at June 30, 2019, is attributed to 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, Perch loroethylene (PCE) and Trichloroethylene (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, 2019, is $16,589,754. This amount is an estimate and subject to changes resulting from price increases or reductions, technology, or changes in applicable laws or regulations. 84 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 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 12) 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, 2019, for any of the City's outstanding Certificates of Participation and Revenue Bonds. Construction and Other Significant Commitments — Commitments are existing arrangements to enter into future transactions or events, such construction contracts for ongoing projects and long-term contractual obligations with suppliers for future purchases at specified prices and sometimes specified quantities. Significant commitments as of June 30, 2019 are as follows: Governmental Activities: Business -type Activities: General Fund $ 186,784 Electric Fund $ 186,819 Other governmental funds 3,644,880 Wastewater Fund 1,639,232 Water Fund 1,069,398 Transit Fund 1,244,060 Total governmental activities $ 3,831,664 Total business -type activities $ 4,139,509 Note 16 — Prior Period Adjustments Restatement of Fund Balance 85 Net Position Non -major Business -type Electric Wastewater Water Transit Activities Net Position July 1, 2018 $ 14,693,993 $ 59,242,325 $ 67,948,515 $ 20,010,270 $ 161,895,103 Prior Period Adjustments: GASB 68 690,205 469,083 47,804 34,106 Capital assets 2,056,860 171,680 741,477 398,669 Total Prior Period Adjustments 2,747,065 640,763 789,281 432,775 4,609,884 July 1, 2018, as restated $ 17,441,058 $ 59,883,088 $ 68,737,796 $ 20,443,045 $ 166,504,987 85 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 16 — Prior Period Adjustments (Continued) Business -type Activities GASB68 In the process of recording the GASB 68 deferred outflows related to Pensions, the City recorded a prior period adjustment to the beginning net position of the Water, Wastewater, Non -major Transit fund and the Fleet Internal Service Fund. The prior period adjustment was necessary to correctly book the deferred outflows and pension expense related to the City paying the Unfunded Accrued Liability contribution amounts in fiscal year 2018. Business -type Activities (continued) Capital assets In the process of recording the current year capital assets, the City recorded prior period adjustments to the beginning net position of the Electric, Water, Wastewater and Non -major Transit funds. During the analysis of the information provided by the departments for their capital assets, it was determined that certain capital improvement projects and certain machinery and equipment was either completed or placed into service in prior years and not yet capitalized or was not properly valued utilizing a current replacement or actual cost. An adjustment to capital assets was booked to correctly report the value of completed projects, placing the machinery and equipment in service and valuing the replacement of underground utility lines. Net Position July 1, 2018 Prior Period Adjustments GASB 68 GASB 16 Total Prior Period Adjustments July 1, 2018, as restated Net Position Feet Internal Benefits Internal Insurance Internal Total Internal Service Fund Service Fund Service Fund Service Funds $ (1,370,125) $ (31,955,868) $ 5,722,710 $ (27,603,283) 74,081 - (8,474,218) 74,081 (8,474,218) - (8,400,137) $ (1,296,044) $ (40,430,086) $ 5,722,710 $ (36,003,420) Net Position Governmental Activities Net Position July 1, 2018 $ 27,591,421 Prior Period Adjustments GASB 68 74,081 GASB 16 (8,474,218) July 1, 2018, as restated $ 19,191,284 Governmental Activities GASB 68 As required by GASB Statement 34, the Internal Service Funds are to be reported both at the fund level and in the government -wide statements. The prior period adjustment for the Benefits Internal Service Fund to restate the accrued compensated absences balances for the sick leave conversion bank, and the adjustment for the GASB 68 expense in the Fleet Internal Service Fund were also reported at the government -wide statements. 86 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2019 Note 16 — Prior Period Adjustments (Continued) Governmental Activities (Continued) GASB16 During the implementation of GASB 75, entries were made to correctly state the new balances of the accrued liability for the City's sick leave conversion balances. During a review of the current actuarial report, it was determined the City has two sick leave conversion programs: sick leave conversion and sick leave conversion bank. The sick leave conversion was correctly reported under the GASB 75 requirements. The sick leave conversion bank program required a prior period adjustment to recognize the liability balances to be used for future conversions. The City recorded a prior period adjustment to the Benefits Internal Service Fund to reinstate the sick leave conversion bank program balances in accrued compensated absences under GASB 16. Note 17 — Subsequent Events On December 31, 2018, the employment contract, Memorandum of Understanding's (MOU), between the City of Lodi and the International Brotherhood of Electrical Workers (IBEW) expired. The City entered into a successor MOU with IBEW on August 21, 2019, containing significant increases to compensation that should allow the City to better attract and retain these critical employees. The new contract runs from January 1, 2019 through December 31, 2021. On June 30, 2019, the MOUS between the City and the Police Officers Association of Lodi (POAL), Lodi Police Mid - Management Association (LPMMA), and Lodi Police Dispatch Association (LPDA), expired. The City has since entered into a successor MOU with all three groups. MOU with POAL and LPMMA were approved on July 17, 2019, and MOU with LPDA was approved on August 21, 2019, containing significant increases to compensation for all three groups. These MOU should allow the City to better attract and retain critical safety employees in the community. The new contracts run from July 1, 2019, through June 30, 2022. Given the substantial increases to compensation, General Fund Reserves will likely be need to finance some of the contract over the next three-year period. On December 31, 2019, MOU between the City and the Associated Federation of City and County Municipal Employees (AFSCME) General Services and Maintenance and Operators, Lodi City Mid -Management Association, and Lodi Professional Firefighters, will expire. The City has begun negotiations with these employee groups on successor MOU. On June 1, 2020, the Lodi Public Finance Authority's outstanding 2010 Water Revenue Bond, Series B, (Taxable Build America Bonds) will become eligible for optional redemption. Based on current market analysis, interest rates are favorable to achieve significant savings through a refinancing of the outstanding principal. The City is engaged with Fieldman, Rolapp & Associates as Municipal Advisor to manage the refinancing process with an anticipated closing date within 90 days of the optional redemption date. 87 (This page intentionally left blank.) REQUIRED SUPPLEMENTARY INFORMATION 0 ra �i 111J, I 0 -00 (This page intentionally left blank.) CITY OF LODI REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS MISCELLANEOUS 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 Other Miscellaneous Income/(Expense)(3) 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 2017-18(1) 2016-17(1) 1,364,684 1,341,146 $ 3,020,122 $ 2,862,495 13, 374, 883 12, 923, 048 47,853 - 830,292 (398,276) (950,894) 10,541,016 (9,814,728) (9,129,724) 6,507,528 16,798,559 190, 531, 368 173, 732, 809 1WMR_Rg6 1gnsm 16R 4,208,873 3,950,727 1,364,684 1,341,146 11,191, 848 13, 581, 013 (9,814,728) (9,129,724) (206,493) (181,224) (391,520) - 6,352,664 9,561,938 132, 306,298 122, 744,360 138, 658,962 132, 306,298 $ 58,379,934 $ 58,225,070 70.37% 69.44% $ 18,995,671 $ 17,970,339 307.33% 324.01% Notes to Schedule: (1) Historical information is required only for measurement periods for which GASB 68 is applicable. (z) Net of administrative expenses. (3) During Fiscal Year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during Fiscal Year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). 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. 91 CITY OF LODI REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS MISCELLANEOUS PLAN (Continued) 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 (Z) Benefit Payments, Including Refunds of Employee Contributions Other Changes in Fiduciary Net Position Other Miscellaneous Income/(Expense)(3) 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 2015-16(1) 2014-15(1) 2013-14(1) $ 2,464,894 $ 2,358,112 $ 2,478,901 12,565,553 12,061,399 11,705,179 542,177 (1,655,012) - (2,903,507) (8,641,550) (8,208,103) (7,729,680) 6,931,074 1,652,889 6,454,400 1GG Rn171S 1fS 1AR PAr 1S5290A ddr 3,500,179 2,994,958 2,694,850 1,241,136 1,183,452 1,237,916 643,509 2,829,910 19,249,151 (8,641,550) (8,208,103) (7,729,680) (76,838) (145,538) (3,333,564) (1,345,321) 15,452,237 126,077,924 127,423, 245 111, 971,008 122, 744,360 126,077,924 127,423,245 $ 50,988,449 $ 40,723,811 $ 37,725,601 70.65% 75.59% 77.16% $ 17,423,446 $ 16,572,579 $ 16,669,363 292.64% 245.73% 226.32% Notes to Schedule: ill Historical information is required only for measurement periods for which GASB 68 is applicable. ill Net of administrative expenses. (3) During Fiscal Year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits in the State of California's agent OPEB plan. Accordingly, CAPERS recorded a one-time expense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during Fiscal Year 2017-18, CAPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). 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. 92 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 (Z) Benefit Payments, Including Refunds of Employee Contributions Other Changes in Fiduciary Net Position Other Miscellaneous Income/(Expense)(3) 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 Notes to Schedule: Ili Historical information is required only for measurement periods for which GASB 68 is applicable. Net of administrative expenses. 2017-18 Ill 2016-17 Ill 3,385,583 3,336,917 13,288,494 12, 869, 943 (122,816) 1,123,761 (681,450) 10,945,791 19 719 9R51 19 433.14RI b,1.5b,Ub 16,64S,Lb4 189, 821,025 170, 977, 761 195.977.851 1 R9.R71 .075 5,549,746 5,220,306 1,079,094 1,095,689 9,544,033 11,443,777 (9,712,985) (9,433,148) (174,988) (153,469) (331,781) - 5,953,119 8,173,155 112,118,815 103,945,660 118, 071, 9 34 112,118, 815 $ 77,905,917 $ 77,702,210 60.25% 59.07% $ 11,886,327 $ 11,518,923 655.42% 674.56% iii During Fiscal Year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one- time expense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during Fiscal Year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). 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. 93 CITY OF LODI REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS SAFETY PLAN (Continued) 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) 2015-1611) 2014-1511) 2013-1411) $ 2,890,607 $ 2,968,819 $ 3,048,048 12, 357, 788 11, 827, 918 11, 390, 793 600,847 (932,918) - (2,939,033) (R 7:1n nR1I IR 1:U 17 44R3611 /,11!J,1b1 L,/yU,/ly b,VVU,4dU 163,858,600 161, 067, 881 154, 077, 401 17x1 977 761 164 RSR 6M 161 r167 RR1 Plan Fiduciary Net Position Contributions - Employer 4,660,278 4,176,197 4,106,044 Contributions - Employee 1,062,984 1,007,876 1,058,376 Net Investment Income 1�1 558,434 2,397,191 16,070,261 Benefit Payments, Including Refunds of Employee Contributions (8,730,081) (8,134,067) (7,448,361) Other Changes in Fiduciary Net Position (64,882) (119,971) Other Miscellaneous Income/(Expense)(3) - Net Change in Fiduciary Net Position (2,513,267) (672,774) 13,786,320 Plan Fiduciary Net Position - Beginning 106,458,927 107,131,701 93,345,381 Plan Fiduciary Net Position - Ending (b) 103,945,660 106,458,927 107,131,701 Plan Net Pension Liability - Ending (a) - (b) $ 67,032,101 $ 57,399,673 $ 53,936,180 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 60.79% 64.97% 66.51% Covered Payroll $ 11,106,615 $ 11,293,867 $ 11,194,123 Plan Net Pension Liability as a Percentage of Covered Payroll 603.53% 508.24% 481.83% Notes to Schedule: 11) Historical information is required only for measurement periods for which GASB 68 is applicable. Net of administrative expenses. 131 During Fiscal Year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during Fiscal Year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). 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. 94 CITY OF LODI REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PENSION CONTRIBUTIONS Miscellaneous Plan: 2018-1911) 2017-18111 2016-17(1) Actuarially Determined Contributions Contributions in Relation to the Actuarially Determined Contributions (2) $ 4,907,206 $ 4,208,873 $ 3,880,495 Contribution Deficiency (4,907,206) (4,208,873) (3,880,495) Covered Payroll (3,4) Contributions as a Percentage of Covered Payroll Safety Plan: Actuarially Determined Contributions Contributions in Relation to the Actuarially Determined Contribution S(2) Contribution Deficiency Covered Payroll (3,4) Contributions as a Percentage of Covered Payroll $ 18,995,671 $ 17,970,339 $ 17,802,886 25.83% 23.42% 21.80% $ 6,195,073 $ 5,549,746 $ 5,136,610 (6,195,073) (5,549,746) (5,136,610) $ 11,886,327 $ 11,518,923 $ 11,477,432 52.12% 48.18% 44.75% Notes to Schedule: (l) Historical information is required only for measurement periods for which GASB 68 is applicable. (Z) Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined 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 pensionable earnings aredifferent 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 $18,995,671 for miscellaneous was assumed to increase by 2.75 percent payroll growth assumption. Payroll from prior year $11,886,327 for safety was assumed to increase by 2.75 percent payroll growth assumption. Actuarial Cost Method Entry Age Normal Amortization Method/Period Asset Valuation Method Market value of assets. Inflation 2.75% Salary Increases Varies by Entry Age and Service Payroll Growth 3.00% Investment Rate of Return 7.50% Net of Pension Plan Investment and Administrative Expenses; includes Inflation. Retirement Age The probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Mortality The probabilities of mortality are based on the 2014 CalPERS 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: No changes in assumptions for fiscal year 2017-18. In fiscal year 2016-17, the probabilities of mortality were updated to include the 2014 CalPERS 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. 95 CITY OF LODI REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PENSION CONTRIBUTIONS (Continued) Miscellaneous Plan: Actuarially Determined Contributions Contributions in Relation to the Actuarially Determined Contributions (2) Contribution Deficiency Covered Payroll (3,4) Contributions as a Percentage of Covered Payroll Safety Plan: Actuarially Determined Contributions Contributions in Relation to the Actuarially Determined Contributions(') Contribution Deficiency Covered Payroll (3,4) Contributions as a Percentage of Covered Payroll 2015-16 I11 2014-15(1) 2013-14(1) $ 3,500,179 $ 2,994,958 $ 2,694,850 (3,500,179) (2,994,958) (2,694,850) $ 17,423,446 $ 16,572,579 $ 16,669,363 20.09% 18.07% 16.17% $ 4,660,278 $ 4,176,197 $ 4,106,044 (4,660,278) (4,176,197) (4,106,044) $ 11,106,615 $ 11,293,867 $ 11,194,123 41.96% 36.98% 36.68% Notes to Schedule: (1) Historical information is required only for measurement periods for which GASB 68 is applicable. (Z) Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined 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 pensionable earnings aredifferent 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 $18,995,671 for miscellaneous was assumed to increase by 2.75 percent payroll growth assumption. Payroll from prior year $11,886,327 for safety was assumed to increase by 2.75 percent payroll growth assumption. Actuarial Cost Method Entry Age Normal Amortization Method/Period Asset Valuation Method Market value of assets. Inflation 2.75% Salary Increases Varies by Entry Age and Service Payroll Growth 3.00% Investment Rate of Return 7.50% Net of Pension Plan Investment and Administrative Expenses; includes Inflation. Retirement Age The probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Mortality The probabilities of mortality are based on the 2014 CalPERS 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: No changes in assumptions for fiscal year 2017-18. 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. 96 CITY OF LODI REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS Last Ten Fiscal Years Ili For the Year Ended June 30, 2019 Measurement period, year ending: 6/30/2018 Ili 6/30/2017I1i Total OPEB liability Service cost $ 1,042,935 $ 1,139,099 Interest 1,240,787 1,073,783 Changes of benefit terms - - Differences between expected and actual experience Changes of assumptions (209,408) (2,518,711) Benefit payments, including refunds of member contributions (1,862,969) (1,947,260) Net change in total OPEB liability 211,345 (2,253,089) Total OPEB liability - beginning 34,354,842 36,607,931 Total OPEB liability - ending (a) $ 34,566,187 $ 34,354,842 OPEB fiduciary net position Contributions - employer $ 1,862,969 $ 2,947,260 Net investment income 66,683 79,789 Benefit payments, including refunds of member contributions (1,862,969) (1,947,260) Administrative expense (1,997) (309) Net change in plan fiduciary net position 64,686 1,079,480 Plan fiduciary net position - beginning 1,079,480 - Plan fiduciary net position - ending (b) $ 1,144,166 $ 1,079,480 Plan net OPEB liability - ending (a) - (b) $ 33,422,021 $ 33,275,362 Plan fiduciary net position as a percentage of the total OPEB liability 3.31% 3.14% Covered -employee payroll $ 33,204,023 $ 35,314,645 Plan net OPEB liability as a percentage of covered -employee payroll 100.66% 94.23% Notes to Schedule: (1) Information in this schedule is not available prior to FY2017-18 measurement period. Additional years will be added to this schedule until 10 years of data is presented 97 CITY OF LODI REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER OPEB CONTRIBUTIONS Last Ten Fiscal Years Ill For the Year Ended June 30, 2019 2019 2018 2017 Actuarially determined contribution (2) $ - $ - Contributions in relation to the Valuation date: June 30, 2017 Actuarially determined contribution 1,862,969 2,947,260 Contribution deficiency (excess) $ 1,862,969 $ 2,947,260 $ Covered -employee payroll 33,204,023 34,286,063 Contributions as a percentage of Discount rate 3.66% covered -employee payroll 100.7% 97.1% Actuarially determined contribution for fiscal year June 30, 2019 June 30, 2018 June 30, 2017 Valuation date: June 30, 2017 June 30, 2017 June 30, 2017 Actuarial cost method Entry Age Normal Cost Method Entry Age Normal Cost Method Entry Age Normal Cost Method Asset valuation method Straight line 5 year period Straight line 5 year period Straight line 5 year period Discount rate 3.66% 3.60% Inflation 2.75% 2.75% Payroll increases Mortality Based on assumptions for PERS, Based on assumptions for PERS, Based on assumptions for PERS, Police & Fire members Police & Fire members Police & Fire members June 30, 2016 CalPERS actuarial June 30, 2016 CalPERS actuarial June 30, 2016 CalPERS actuarial valuation valuation valuation Notes to Schedule: Ill Information in this schedule is not available prior to FY2017-18 measurement period. Additional years will be added to this schedule until 10 years of data is presented (2) Per GASB 75 paragraph 57c., these disclosure are only required if the employer calculates an Actuarially Determined Contribution (ADC). The City does not currently calculate an ADC. 98 0% CITY OF LODI General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2019 REVENUES Taxes Sales and use tax 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 Revenue Services Budget and Treasury Non Departmental Total general government Public protection: Police Fire Total public protection Public works Library Total expenditures Original Amounts Final Actual Variance with Final Budget $ 28,387,200 $ 28,387,200 $ 28,422,573 $ 35,373 12,172,600 13,153,320 14, 286,516 1,133,196 101,970 101,970 65,639 (36,331) 569,310 629,198 1,186,022 556,824 1,666,040 1,867,040 1,772,088 (94,952) 1,474,050 1,474,050 1,274,624 (199,426) 1,647,830 1,647,830 2,195,924 548,094 328,600 347,430 221,949 (125,481) 46,347,600 47,608,038 49,425,335 1,817,297 984,940 975,725 888,866 86,859 738,420 731,510 677,958 53,552 693,010 686,100 506,408 179,692 632,220 622,150 625,664 (3,514) 1,316,370 1,297,325 1,139,143 158,182 886,690 868,555 787,965 80,590 1,069,030 1,040,820 975,199 65,621 327,010 322,405 296,707 25,698 1,633,000 1,633,000 1,238,899 394,101 8,280,690 8,177,590 7,136,809 1,040,781 20,752,850 20,518,600 19,982,951 535,649 11,569,300 11,858,920 11,760,207 98,713 32,322,150 32,377,520 31,743,158 634,362 2,466,940 2,394,640 2,180,840 213,800 1,189,700 1,250,798 1,165,499 85,299 44,259,480 44,200,548 42,226,306 1,974,242 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 2,088,120 3,407,490 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Gain on sale of property 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) 7,199,029 3,791,539 4,233,780 4,233,780 4,233,780 (7,749,000) (7,749,000) (7,749,000) - (5,000) (5,000) 698 5,698 (3,520,220) (3,520,220) (3,514,522) 5,698 (1,432,100) (112,730) 3,684,507 $ 3,797,237 18,767,905 18, 767,905 18, 767,905 $ 17,335,805 $ 18,655,175 22,452,412 See accompanying notes to the required supplementary information. (10,716,555) $ 11,735,857 CITY OF LODI Streets Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual For the Year Ended June 30, 2019 REVENUES Intergovernmental revenues Charges for services Investment and rental income Miscellaneous revenue Total revenues EXPENDITURES Current: Public works Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Total other financing sources (uses) Net change in fund balance FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR Basis adjustment: Cummulative pension set aside Fund balance (budgetary basis) Budgeted Amounts Original Final Actual Variance with Final Budget $ 6,066,720 $ 6,066,720 $ 6,364,488 $ 297,768 969,970 969,970 832,451 (137,519) 31,200 31,200 111,782 80,582 50,000 50,000 510,146 460,146 7,117,890 7,117,890 7,818,867 700,977 3,277,630 3,290,168 2,258,326 1,031,842 3,005,040 7,547,120 2,553,264 4,993,856 6,282,670 10,837,288 4,811,590 6,025,698 835,220 (3,719,398) 3,007,277 6,726,675 652,240 652,240 137,520 (514,720) 652,240 652,240 137,520 (514,720) 1,487,460 (3,067,158) 3,144,797 $ 6,211,955 6,397,152 6,397,152 6,397,152 $ 7,884,612 $ 3,329,994 9,541,949 See accompanying notes to the required supplementary information. 100 (198,627) $ 9,343,322 CITY OF LODI Note to the Required Supplementary Information June 30, 2019 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 Fund; 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 cannot legally exceed the appropriated amount) is at the department level. The operating budget is prepared and controlled at the department level (e.g., city clerk, city manager, etc.) for the General Fund. Special revenue fund expenditures, including transfers out, are approved by Council at the fund level. The City Manager may transfer appropriations from one activity to another within a department without approval from the City Council. All other appropriation adjustments during the year, whether transfers, increases or decreases, require City Council approval. 101 COMBINING &INDIVIDUAL FUND STATEMENTS & SCHEDULES i (This page intentionally left blank.) 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. I (This page intentionally left blank.) ASSETS Cash and investments Restricted cash and investments Accounts receivable, net Interest Receivables Due from other funds 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 Public safety Home and CDBG program Community development Debt service Pension Committed Parks, recreation and community services Assigned Capital projects Total fund balances Total liabilities and fund balances CITY OF LODI Combining Balance Sheet Nonmajor Governmental Funds Summary by Fund Type June 30, 2019 $ 655,103 $ 124,398 134,608 - 82,448 - - 548,679 107,871 - 980,030 673,077 36,502 36,502 171,553 171,553 $ 779,501 134,608 82,448 548,679 107,871 1,653,107 _ 208,055 208,055 1,077 1,077 38,817 38,817 Total Other Special revenue funds Capital projects funds Debt service funds Governmental Funds 3,597,428 - 3,597,428 $ 4,993,649 $ 9,646,452 $ 1,260 $ 14,641,361 572,117 - - 572,117 66,989 171,705 238,694 1,964 5,889 7,853 82,448 - 82,448 673,730 673,730 1,077 - - 1,077 $ 6,391,974 $ 9,824,046 $ 1,260 $ 16,217,280 $ 655,103 $ 124,398 134,608 - 82,448 - - 548,679 107,871 - 980,030 673,077 36,502 36,502 171,553 171,553 $ 779,501 134,608 82,448 548,679 107,871 1,653,107 _ 208,055 208,055 1,077 1,077 38,817 38,817 423,693 423,693 26,122 26,122 3,597,428 - 3,597,428 - 1,260 1,260 572,117 - 572,117 716,188 716,188 - 8,979,416 8,979,416 5,375,442 8,979,416 1,260 14,356,118 $ 6,391,974 $ 9,824,046 $ 1,260 $ 16,217,280 106 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, 2019 REVENUES Licenses and permits Intergovernmental revenues Charges for services Investment and rental income Miscellaneous revenue Total revenues EXPENDITURES Current: General government Public protection Public works Community development Parks and recreation Capital outlay Debt service: Interest Principal retirement Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Proceeds from sale of property Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending Special revenue funds Capital projects funds Total Other Debt service funds Governmental Funds $ 1,504,185 $ $ $ 1,504,185 1,662,957 1,662,957 3,010,363 943,508 3,953,871 607,846 78,269 686,115 11,885 68,279 80,164 6,797,236 1,090,056 7,887,292 2,471,862 - 2,471,862 206,254 206,254 1,012,686 1,012,686 2,112,118 2,112,118 2,680,488 - 2,680,488 102,035 724,783 826,818 7,916 57,526 763,355 828,797 78,624 - 993,571 1,072,195 8,671,983 782,309 1,756,926 11,211,218 (1,874,747) 307,747 (1,756,926) (3,323,926) 3,886,960 3,186,045 (1,218,965) - - 402,873 2,667,995 3,588,918 793,248 3,896,665 1,757,440 1,757,440 514 8,830,445 (1,218,965) 402,873 8,014,353 4,690,427 4,582,194 5,082,751 746 9,665,691 $ 5,375,442 $ 8,979,416 $ 1,260 $ 14,356,118 107 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. CITY OF LODI Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2019 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 FUND BALANCES Nonspendable Inventory Restricted Road -related projects Public safety Home and CDBG program Community development Pension Committed Parks, recreation and community services Total fund balances Total liabilities, deferred inflows of resources and fund balances Parks, Recreation & Community Community Services Public Safety Development $ 961,820 $ 413,590 $ 3,618,239 359,692 - 212,425 7,760 4,564 - - 82,448 1,262 634 - - 23,604 106,602 1,077 - - $ 1,331,611 $ 437,828 $ 4,024,278 $ 71,023 $ 189 $ 191,182 111,365 - 23,243 62,923 13,946 - 245,311 14,135 214,425 9,343 - - 9,343 1,077 423,693 - 3,597,428 359,692 212,425 716,188 - - 1,076,957 423,693 3,809,853 $ 1,331,611 $ 437,828 $ 4,024,278 109 CITY OF LODI Combining Balance Sheet (Continued) Nonmajor Special Revenue Funds June 30, 2019 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 FUND BALANCES Nonspendable Inventory Restricted Road -related projects Public safety Home and CDBG program Community development Pension Committed Parks, recreation and community services Total fund balances Total liabilities, deferred inflows of resources and fund balances HOME Program and Community Development Block Transportation Grants Total Nonmajor Special Revenue Funds $ $ $ 4,993,649 572,117 54,665 66,989 - 82,448 68 1,964 543,524 673,730 - - 1,077 $ 54,665 $ 543,592 $ 6,391,974 $ - $ 392,709 $ 655,103 - - 134,608 15,848 66,600 82,448 - 31,002 107,871 15,848 490,311 980,030 - 27,159 36,502 27,159 36,502 1,077 38,817 38,817 - - 423,693 26,122 26,122 - 3,597,428 572,117 - - 716,188 38,817 26,122 5,375,442 $ 54,665 $ 543,592 $ 6,391,974 Me CITY OF LODI Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds For the Year Ended June 30, 2019 REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Investment and rental income Miscellaneous revenue Total revenues EXPENDITURES Current: General government Public protection Public works Community development Parks and recreation Capital outlay Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending Parks, Recreation & Community Services 1,951,699 546,593 11,825 2,510,117 2,471,862 2,680,488 47,308 Public Safety 343,015 2,281 Community Development 1,504,185 213,569 1,058,664 58,456 60 345,296 2,834,934 206,254 2,112,118 fiffil 78,624 - 7,916 - 5,199,658 292,794 2,112,118 (2,689,541) 52,502 722,816 3,886,960 - - (1,164,685) (54,280) 2,722,275 - (54,280) 32,734 52,502 668,536 1,044,223 371,191 3,141,317 $ 1,076,957 $ 423,693 $ 3,809,853 fiffil CITY OF LODI Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Special Revenue Funds For the Year Ended June 30, 2019 REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Investment and rental income Miscellaneous revenue Total revenues EXPENDITURES Current: General government Public protection Public works Community development Parks and recreation Capital outlay Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfersin Transfers out Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending Transportation - - 1,504,185 93,687 1,012, 686 1,662,957 - - 3,010,363 (303) 819 607,846 - - 11,885 93,384 1,013,505 6,797,236 HOME Program and Community Development Block Grants Total Nonmajor Special Revenue Funds 2,471,862 206,254 1,012,686 1,012,686 - 2,112,118 - 2,680,488 54,727 102,035 78,624 - - 7,916 54,727 1,012,686 8,671,983 38,657 819 (1,874,747) 3,886,960 (1,218,965) - - 2,667,995 38,657 819 793,248 160 25,303 4,582,194 $ 38,817 $ 26,122 $ 5,375,442 `sm 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, 2019 EXPENDITURES Current: General government Parks and recreation Capital Outlay Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) 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) 2,743,840 Budgeted Amounts 2,471,862 228,988 Variance with 3,957,140 Original Final Actual Final Budget REVENUES 1,148,532 7,107,330 7,853,830 5,199,658 Charges for services $ 2,406,180 $ 2,406,180 $ 1,951,699 $ (454,481) Investment and rental income 486,000 486,000 546,593 60,593 Miscellaneous revenue 256,500 256,500 11,825 (244,675) Total revenues 3,148,680 3,148,680 2,510,117 (638,563) EXPENDITURES Current: General government Parks and recreation Capital Outlay Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) 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) 2,743,840 2,700,850 2,471,862 228,988 3,481,150 3,957,140 2,680,488 1,276,652 882,340 1,195,840 47,308 1,148,532 7,107,330 7,853,830 5,199,658 2,654,172 (3,958,650) (4,705,150) (2,689,541) 2,015,609 3,886,960 3,886,960 3,886,960 (717,710) (1,164,685) (1,164,685) 3,169,250 2,722,275 2,722,275 (789,400) (1,982,875) 32,734 $ 2,015,609 1,044,223 1,044,223 1,044,223 $ 254,823 $ (938,652) 1,076,957 113 (359,692) $ 717,265 CITY OF LODI Public Safety Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual For the Year Ended June 30, 2019 REVENUES Intergovernmental revenues Investment and rental income Total revenues EXPENDITURES Current: Public protection Debt service: Principal retirement Interest expense Total expenditures Net change in fund balances FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR Budgeted Amounts Variance with Original Final Actual Final Budget $ 382,870 $ 577,757 $ 343,015 $ (234,742) 2,600 2,600 2,281 (319) 385,470 580,357 345,296 (235,061) 315,000 969,388 315,000 969,388 70,470 (389,031) 206,254 763,134 78,624 (78,624) 7,916 (7,916) 292,794 676,594 52,502 $ 441,533 371,191 371,191 371,191 $ 441,661 $ (17,840) $ 423,693 MES CITY OF LODI Community Development Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual For the Year Ended June 30, 2019 REVENUES Licenses and permits Intergovernmental revenues Charges for services Investment and rental income Miscellaneous revenue Total revenues EXPENDITURES Current: Community development Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR Basis adjustment: Cummulative pension set aside Fund balance (budgetary basis) Original $ 1,543,100 200,000 654,000 24,000 Amounts Final $ 1,543,100 $ 200,000 654,000 24,000 Variance with Actual Final Budget 1,504,185 $ (38,915) 213,569 13,569 1,058,664 404,664 58,456 34,456 60 60 2,421,100 2,421,100 2,834,934 413,834 2,229,990 2,515,790 2,112,118 403,672 2,229,990 2,515,790 2,112,118 403,672 191,110 (94,690) 722,816 817,506 165,000 165,000 - (165,000) - - (54,280) (54,280) 165,000 165,000 (54,280) (219,280) 356,110 70,310 668,536 $ 598,226 3,141,317 3,141,317 3,141,317 $ 3,497,427 $ 3,211,627 3,809,853 115 (212,425) $ 3,597,428 CITY OF LODI Transportation Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual For the Year Ended June 30, 2019 REVENUES Intergovernmental revenues Investment and rental income Total revenues EXPENDITURES Capital outlay Total expenditures Net change in fund balances FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR Budgete Original $ 54,730 730 Amounts Final Variance with Actual Final Budget 54,730 $ 93,687 $ 38,957 - (303) (303) 54,730 93,384 38,654 60,000 60,000 54,727 5,273 60,000 60,000 54,727 5,273 (5,270) (5,270) 38,657 $ 43,927 160 160 160 $ (5,110) $ (5,110) $ 38,817 116 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, 2019 Budgeted Amounts Variance with Original Final Actual Final Budget REVENUES Intergovernmental revenues $ 1,233,920 $ 1,233,920 $ 1,012,686 $ (221,234) Investment and rental income - - 819 819 Total revenues 1,233,920 1,233,920 1,013,505 (220,415) EXPENDITURES Public works 1,233,920 2,483,920 1,012,686 1,471,234 Total expenditures 1,233,920 2,483,920 1,012,686 1,471,234 Net change in fund balances - (1,250,000) 819 $ 1,250,819 FUND BALANCES, BEGINNING OF YEAR 25,303 25,303 25,303 FUND BALANCES, END OF YEAR $ 25,303 $ (1,224,697) $ 26,122 fifin +■ ^ 1 11,1 ,1� NONMAJOR ►` �, ,,'�� GOVERNMENTAL FUNDS ► ► �J�fr 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,jl r' 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 (' P 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. 2 (This page intentionally left blank.) CITY OF LODI Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2019 FUND BALANCES Assigned Capital projects 4,617,640 180,382 1,141 Total fund balances 4,617,640 180,382 1,141 Total liabilities, deferred inflows of resources and fund balances $ 4,632,848 $ 180,382 $ 1,141 120 Vehicle and Equipment Library Hutchins Street Square ASSETS Cash and investments $ 4,632,848 $ 180,382 $ 1,140 Accounts receivables, net - - - Interest receivables - - 1 Total assets $ 4,632,848 $ 180,382 $ 1,141 LIABILITIES Accounts payable and other liabilities $ 15,208 $ - $ - Advances from other funds - Total liabilities 15,208 DEFERRRED INFLOWS OF RESOURCES Unavailable revenue - Total deferred inflows of resources FUND BALANCES Assigned Capital projects 4,617,640 180,382 1,141 Total fund balances 4,617,640 180,382 1,141 Total liabilities, deferred inflows of resources and fund balances $ 4,632,848 $ 180,382 $ 1,141 120 CITY OF LODI Combining Balance Sheet (Continued) Nonmajor Capital Projects Funds June 30, 2019 121 Total Nonmajor Capital Capital Outlay Reserve Parks Capital Projects Funds ASSETS Cash and investments $ 3,852,083 $ 979,999 $ 9,646,452 Accounts receivables, net 171,705 - 171,705 Interest receivables 4,721 1,167 5,889 Total assets $ 4,028,509 $ 981,166 $ 9,824,046 LIABILITIES Accounts payable and other liabilities $ 109,190 $ - $ 124,398 Advances from other funds 548,679 548,679 Total liabilities 657,869 673,077 DEFERRRED INFLOWS OF RESOURCES Unavailable revenue 171,553 171,553 Total deferred inflows of resources 171,553 - 171,553 FUND BALANCES Assigned Capital projects 3,199,087 981,166 8,979,416 Total fund balances 3,199,087 981,166 8,979,416 Total liabilities, deferred inflows of resources and fund balances $ 4,028,509 $ 981,166 $ 9,824,046 121 CITY OF LODI Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Capital Projects Funds For the Year Ended June 30, 2019 122 Vehicle and Equipment Library Hutchins Street Square REVENUES Charges for services $ - $ $ Investment and rental income 21,745 (2,442) Miscellaneous revenue 57,055 (2,181) Total revenues 78,800 (4,623) EXPENDITURES Capital outlay 162,367 Debt service: Interest - Total expenditures 162,367 Excess (deficiency) of revenues over expenditures (83,567) (4,623) OTHER FINANCING SOURCES (USES) Transfers in 2,338,045 100,000 Proceeds from sale of property - - Total other financing sources (uses) 2,338,045 100,000 Change in fund balances 2,254,478 100,000 (4,623) Fund balances - beginning 2,363,162 80,382 5,764 Fund balances - ending $ 4,617,640 $ 180,382 $ 1,141 122 CITY OF LODI Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Capital Projects Funds For the Year Ended June 30, 2019 EXPENDITURES Capital outlay Debt service: Interest Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) 452,978 109,438 724,783 57,526 - 57,526 510,504 109,438 Total Nonmajor Capital 485,496 (89,559) Capital Outlay Reserve Parks Capital Projects Funds REVENUES Total other financing sources (uses) 832,873 Charges for services $ 943,508 $ - $ 943,508 Investment and rental income 52,492 6,474 78,269 Miscellaneous revenue - 13,405 68,279 Total revenues 996,000 19,879 1,090,056 EXPENDITURES Capital outlay Debt service: Interest Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) 452,978 109,438 724,783 57,526 - 57,526 510,504 109,438 782,309 485,496 (89,559) 307,747 Transfers in 430,000 318,000 3,186,045 Proceeds from sale of property 402,873 - 402,873 Total other financing sources (uses) 832,873 318,000 3,588,918 Change in fund balances 1,318,369 228,441 3,896,665 Fund balances - beginning 1,880,718 752,725 5,082,751 Fundbalances- ending $ 3,199,087 $ 981,166 $ 8,979,416 123 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 • Employee Assistance Program • Chiropractic • Employee Recognition Program • Life/Accidental Insurance • Unemployment Insurance • Medical • Flexible Spending Program • Vision • Long Term Disability Insurance is used to account for the following insurances: • General Liability • Workers' Compensation • Otherinsurance (This page intentionally left blank.) CITY OF LODI Combining Statement of Net Position Internal Service Funds June 30, 2019 126 Total Internal Service Fleet Services Benefits Insurance Funds ASSETS Current assets: Cash and investments $ $ 1,721,146 $ 12,960,945 $ 14,682,091 Restricted cash and investments - 46,562 46,562 Receivables: Accounts, net 358 130 4,770 5,258 Receivables: Interest - 1,946 15,657 17,603 Inventory 140,967 - - 140,967 Due from other fund - 75,398 75,398 Prepaid - 110,008 110,008 Restricted cash and investments 83,988 - 83,988 Capital assets, net 21,708 - - 21,708 Total assets 247,021 1,908,628 13,027,934 15,183,583 DEFERRED OUTFLOWS OF RESOURCES Related to pensions 227,245 - - 227,245 Related to OPEB - 1,862,9691,862,969 Total deferred outflows of resources 227,245 1,862,969 - 2,090,214 LIABILITIES Current liabilities: Accounts payable and other liabilities 66,526 (6,416) 167,544 227,654 Accrued salaries and wages 14,241 - 14,241 Accrued compensated absences 45,340 45,340 Due to other fund 75,398 - 75,398 Noncurrent liabilities: Self insurance liability - - 8,065,374 8,065,374 Accrued compensated absences 112,264 8,104,816 - 8,217,080 Net OPEB Liability - 33,422,021 33,422,021 Net pension liability 1,512,040 - - 1,512,040 Total liabilities 1,825,809 41,520,421 8,232,918 51,579,148 DEFERRED INFLOWS OF RESOURCES Related to pensions 19,366 - - 19,366 Related to OPEB - 2,006,962 2,006,962 Total deferred inflows of resources 19,366 2,006,962 2,026,328 NET POSITION Investment in capital assets 21,708 - - 21,708 Unrestricted (deficit) (1,392,617) (39,755,786) 4,795,016 (36,353,387) Total net position $ (1,370,909) $ (39,755,786) $ 4,795,016 $ (36,331,679) 126 CITY OF LODI Combining Statement of Revenues, Expenditures, and Changes in Net Position Internal Service Funds For the Year Ended June 30, 2019 127 Total Internal Service Fleet Services Benefits Insurance Funds OPERATING REVENUES Charges for services $ 2,054,575 $ 7,846,452 $ 2,260,047 $ 12,161,074 Total operating revenues 2,054,575 7,846,452 2,260,047 12,161,074 OPERATING EXPENSES Personnel services 963,574 378,687 200,940 1,543,201 Supplies, materials and services 1,156,841 5,811,480 1,102,634 8,070,955 Utilities 11,506 - - 11,506 Depreciation 1,447 - - 1,447 Claims/premiums 20,730 1,231,018 2,096,525 3,348,273 Total operating expenses 2,154,098 7,421,185 3,400,099 12,975,382 Operating income (loss) (99,523) 425,267 (1,140,052) (814,308) NONOPERATING REVENUES (EXPENSES) Investment income (3,030) 13,399 190,260 200,629 Other revenues 27,688 235,634 22,098 285,420 Total nonoperating revenues (expenses) 24,658 249,033 212,358 486,049 Change in net position (74,865) 674,300 (927,694) (328,259) Total net position - beginning, as restated (Note 16) (1,296,044) (40,430,086) 5,722,710 (36,003,420) Total net position - ending $ (1,370,909) $ (39,755,786) $ 4,795,016 $ (36,331,679) 127 CITY OF LODI Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2019 CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers Cash from interfund customers Payments to suppliers Payments to employees Net cash provided (used) by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Balances - beginning of year Balances - end of the year Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating Income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Expense Changes in assets, liabilities and deferred outflow/inflows of resources: Customer Receivables Inventory Other assets Accounts Payable - Supplier Accrued salaries and wages Unclaimed Property Compensated absences Due to other funds Self-insurance liability Deferred inflows (outflows) of resources Other revenues Net cash provided (used) by operating activities 128 Fleet Services Benefits $ 27,345 $ 272,356 2,058,472 7,771,052 (1,149,710) (7,163,587) (849,089) (634,022) 87,018 245,799 4,822 (369,402) (3,030) 24,322 (3,030) 24,322 83,988 270,121 - 1,451,025 $ 83,988 $ 1,721,146 (99,523) 425,267 1,447 (343) 36,722 4,757 - - 1,323 34,610 (122,412) 11,652 4,822 (369,402) 3,898 (75,398) 98,011 114,068 27,687 235,631 $ 87,018 $ 245,799 CITY OF LODI Statement of Cash Flows Internal Service Funds (Continued) For the Year Ended June 30, 2019 CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers Cash from interfund customers Payments to suppliers Payments to employees Net cash provided (used) by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Balances - beginning of year Balances - end of the year Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating Income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Expense Changes in assets, liabilities and deferred outflow/inflows of resources: Customer Receivables Inventory Other assets Accounts Payable - Supplier Accrued salaries and wages Unclaimed Property Compensated absences Due to other funds Self-insurance liability Deferred inflows (outflows) of resources Otherrevenues Net cash provided (used) by operating activities 129 Insurance Total 15,136,293 $ 42,234 $ 341,935 2,327,192 12,156,716 (3,024,942) (11,338,239) (200,940) (1,684,051) (856,456) (523,639) 1,447 178,695 199,987 178,695 199,987 (677,761) (323,652) 13, 685, 268 15,136,293 $ 13,007,507 $ 14,812,641 (1,140,052) $ (814,308) - 1,447 15,779 52,158 - 4,757 - 1,323 108,053 20,251 11,652 (4,674) (4,674) - (364,580) 71,500 - 70,838 70,838 - 212,079 22,100 285,418 $ (856,456) $ (523,639) 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. ASSETS Cash and investments Interest receivable Total assets CITY OF LODI Combining Statement of Fiduciary Net Position Private -Purpose Trust Funds June 30, 2019 Hutchins St Sq/Holz Total Private -Purpose Library Bequest Trust Funds 144,265 $ 1,568 $ 145,833 2 2 144,265 1,570 145,835 Fiduciary Net Position $ 144,265 $ 1,570 $ 145,835 131 CITY OF LODI Combining Statement of Changes in Fiduciary Net Position Private -Purpose Trust Funds For the Year Ended June 30, 2019 ADDITIONS Investment and rental income DEDUCTIONS Current: Library Changes in fiduciary net position Hutchins St Sq/Holz Total Private -Purpose Library Bequest Trust Funds $ 12,495 $ 48 $ 12,543 2,807 9,688 2,807 48 9,736 Fiduciary Net Position - beginning of the year 134,577 1,522 136,099 Fiduciary Net Position - end of the year $ 144,265 $ 1,570 $ 145,835 132 CITY OF LODI Combining Statement of Fiduciary Net Position Agencyfunds June 30, 2019 133 Special Assessments Balance Balance July 1, 2018 Additions Deductions June 30, 2019 ASSETS Cash and investments $ 423,634 $ 39,231 $ 95,066 $ 367,800 Interest receivable 133 450 132 451 Total assets $ 423,767 $ 39,682 $ 95,198 $ 368,251 LIABILITIES Deposits payable $ 423,767 $ 382,988 $ 438,504 $ 368,251 Total liabilities $ 423,767 $ 382,988 $ 438,504 $ 368,251 133 STATISTICAL SECTION UNAUDITED (This page intentionally left blank.) STATISTICAL SECTION The Statistical Section provides detailed information as a framework for understanding the information in the financial statements, notes and required supplementary information. This section presents additional data and analysis that may provide the reader with valuable insight regarding the demographics and the overall health of the City. Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being has changed over time. Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City's most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments. Operating Information These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the city provides and the activities it performs. Sources Unless otherwise noted, the information in these schedules are derived from the comprehensive annual financial report. 136 CITY OF LODI NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (Dollar amounts in thousands) Fiscal Year 2019 2018(�) 2017 2016 2015(') 2014 2013 2012 2011 2010 Governmental activities: Net investment in capital assets $ 116,151 $ 119,222 $ 117,196 $111,256 $ 105,944 $ 105,462 $ 106,828 $ 107,587 $ 114,165 $ 113,308 Restricted 25,751 25,904 15,545 13,911 12,001 11,809 12,601 16,176 14,894 13,233 Unrestricted (115,043) (117,535) (77,162) (76,984) (74,146) 2,551 1,157 (3,606) (5,148) (6,110) Total governmental activities net position 26,859 27,591 55,579 48,183 43,799 119,822 120,586 120,157 123,911 120,431 Business -type activities: Net investment in capital assets 129,858 137,291 129,086 121,468 119,924 116,156 113,008 109,582 104,858 100,233 Restricted 20,402 20 3,929 3,893 6,810 6,703 6,600 6,533 5,303 - Unrestricted 27,957 24,584 16,463 14,427 892 16,535 14,827 (34,563) (34,129) (28,591) Total business -type activities net position 178,217 161,895 149,478 139,788 127,626 139,394 134,435 81,552 76,032 71,642 Primary government: Net investment in capital assets 246,010 256,513 246,282 232,724 225,868 221,618 219,836 217,169 219,023 213,541 Restricted 46,153 25,924 19,474 17,804 18,811 18,512 19,201 22,709 20,197 13,233 Unrestricted (87,086) (92,951) (60,699) (62,557) (73,254) 19,086 15,984 (38,169) (39,277) (34,701) Total primary government net position $ 205,077 $ 189,486 $ 205,057 $ 187,971 $ 171,425 $ 259,216 $ 255,021 $ 201,709 $ 199,943 $ 192,073 (1) Fiscal year 2015 beginning net position was restated due to the implementation of GASB 68. (2) Fiscal year 2018 beginning net position was restated due to the implementation of GASB 75. Source: City of Lodi Financial Services Division 137 CITY OF LODI CHANGES IN NET POSITION LAST TEN FISCAL YEARS (Dollar amounts in thousands) Fiscal Year 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Expenses Governmental activities: General government $ 11,390 $ 11,601 $ 9,650 $ 10,369 $ 9,109 $ 9,580 $ 8,943 $ 9,381 $ 8,262 $ 8,749 Public protection 33,396 38,795 33,239 31,395 27,426 27,884 25,930 25,432 25,113 27,186 Public works 11,013 9,823 10,614 10,326 10,281 10,644 10,546 10,248 9,305 10,462 Community development 2,187 1,999 1,709 1,792 1,165 1,174 1,050 1,003 973 1,114 Library 785 1,753 1,253 1,389 1,324 1,282 1,342 1,381 1,355 1,440 Parks and recreation 4,142 4,672 3,663 4,262 3,116 3,164 2,933 2,913 5,778 5,077 Interest and fiscal charges 782 768 824 822 818 825 416 1,033 1,075 1,105 Total governmental activities expenses 63,695 69,411 60,952 60,355 53,239 54,553 51,160 51,391 51,861 55,133 Business -type activities: 6,861 8,737 12,830 10,559 3,131 5,359 4,216 5,025 6,737 5,122 Electric 64,104 67,943 62,791 61,764 64,367 61,974 61,106 62,599 63,399 64,364 Wastewater 14,410 16,008 16,318 14,024 12,912 12,527 13,423 17,441 11,687 11,289 Water 12,138 11,776 11,961 10,967 9,905 11,014 (34,877) 7,953 8,188 6,148 Transit 5,086 5,233 4,925 4,415 4,134 3,834 4,141 4,256 4,132 4,785 Total business -type activities expenses 95,738 100,960 95,995 91,170 91,318 89,349 43,793 92,249 87,406 86,586 Total primary government expenses 159,433 170,371 156,947 151,525 144,557 143,902 94,953 143,640 139,267 141,719 Program Revenues Governmental activities: Charges for services: General government 323 3,670 3,246 1,490 1,971 1,955 2,337 1,718 1,793 2,184 Public protection 368 1,000 779 740 609 582 538 500 643 714 Public works 2,631 990 1,209 734 832 415 224 166 356 326 Community development 1,059 2,665 2,838 2,292 1,378 1,219 1,458 993 1,601 786 Library - 37 43 63 43 43 44 43 47 48 Parks and recreation 1,286 1,698 1,660 1,637 1,360 1,479 1,404 1,241 1,245 1,269 Operating grants and contributions 7,968 2,287 2,391 2,596 3,369 2,686 2,341 2,300 2,236 1,927 Capital grants and contributions 6,861 8,737 12,830 10,559 3,131 5,359 4,216 5,025 6,737 5,122 Total governmental activities program revenues 20,496 21,084 24,996 20,111 12,693 13,738 12,562 11,986 14,658 12,376 Business -type activities: Charges for services: Electric 67,961 69,247 65,848 67,507 65,237 64,693 63,230 64,251 62,167 69,664 Wastewater 15,904 14,914 15,106 14,960 14,714 14,305 13,747 13,280 13,090 11,513 Water 13,345 13,005 12,474 12,161 12,723 12,756 12,441 12,083 11,940 11,716 Transit 216 227 220 210 230 203 185 186 195 217 Operating grants and contributions 8,261 5,969 4,514 5,089 5,186 4,431 5,178 4,214 3,983 3,449 Capital grants and contributions 2,092 11,307 7,972 2,860 5,284 2,846 4,715 3,206 5,150 1,408 Total business -type activities program revenues 107,779 114,669 106,134 102,787 103,374 99,234 99,496 97,220 96,525 97,967 Total primary government program revenues 128,275 135,753 131,130 122,898 116,067 112,972 112,058 109,206 111,183 110,343 Net Governmental activities (43,198) (48,327) (35,956) (40,244) (40,546) (40,815) (38,598) (39,405) (37,203) (42,757) Business -type activities 12,040 13,709 10,139 11,617 12,056 9,885 55,703 4,971 9,119 11,381 Total primary government net expense $ (31,158) $ (34,618) $ (25,817) $ (28,627) $ (28,490) $ (30,930) $ 17,105 $ (34,434) $ (28,084) $ (31,376) 138 General Revenues and Other Changes in Net Position: Governmental activities: Taxes: Property Special assessments' Sales' Document transfer' Franchise Business license Transient occupancy Grants and contributions not restricted to specific programs' Investment earnings Rent Other Special item -gain on sale of parkland Transfers Total governmental activities Business -type activities: Investment earnings Litigation- environmental lawsuits proceeds Rent Other Special item -forgiveness of debt Special item -swap termination Transfers Total business -type activities Total primary government Change in Net Position Governmental activities Business -type activities Total primary government Source: City of Lodi Financial Services Division 'Certain tax amounts have been reclassified in fiscal year 2013. CITY OF LODI CHANGES IN NET POSITION LAST TEN FISCAL YEARS (CONTINUED) (Dollar amounts in thousands) Fiscal Year 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 $ 11,050 $ 10,325 $ 9,984 $ 9,373 $ 8,969 $ 8,290 $ 8,075 $ 12,103 $ 12,698 $ 12,836 139 44 - - - - - - - - 14,287 11,333 11,749 11,808 10,624 10,111 9,349 - - - 5,399 5,147 4,903 4,572 4,559 4,315 4,176 - - - 9,212 9,218 9,099 9,073 8,976 8,838 8,735 8,712 8,692 8,658 1,887 1,822 1,736 1,552 1,486 1,528 1,524 1,628 1,246 1,242 736 867 849 783 666 594 546 486 426 382 441 601 2 - 1 180 - 9,277 8,954 7,064 1,576 311 257 326 145 203 44 132 133 155 1,553 - - 1,954 1,942 1,906 1,370 - - - 353 933 722 719 605 528 610 2,052 1,556 1,917 - - - - - - - - 321 - 4,233 4,252 4,051 4,469 7,514 4,792 5,682 1,261 6,657 5,868 50,866 44,853 43,352 44,629 45,487 41,285 40,111 35,651 40,683 38,122 1,584 716 816 952 632 757 497 566 575 731 - - - 100 - - 1,107 - - 300 4 4 4 2,321 2,244 2,786 3,957 2,745 2,370 1,258 1,244 1,353 923 (4,233) (4,252) (4,051) (4,469) (7,514) (4,792) (5,682) (1,261) (6,657) (5,868) (328) (1,292) (449) 544 (4,133) (1,661) (2,820) 549 (4,729) (3,914) 50,538 43,561 42,903 45,173 41,354 39,624 37,291 36,200 35,954 34,208 7,668 (3,474) 7,396 4,385 4,941 470 1,513 (3,754) 3,480 (4,635) 11,712 12,417 9,690 12,161 7,923 8,224 52,883 5,520 4,390 7,467 $ 19,380 $ 8,943 $ 17,086 $ 16,546 $ 12,864 $ 8,694 $ 54,396 $ 1,766 $ 7,870 $ 2,832 139 CITY OF LODI FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (Dollar amounts in thousands) Fiscal Year 2019 2018 2017 2016 2015 2014 2013 2012 2011 1 2010 General Fund Reserved $ 10,717 $ $ $ $ $ $ $ $ $ 389 Unreserved - Special revenue funds 3,896 Nonspendable - 33 10 9 6 357 - Committed 563 9,031 3,520 465 345 301 277 - - Assigned - - - 1,564 26 29 65 50 136 Unassigned 11,172 9,737 11,448 11,185 12,107 9,134 7,614 6,233 5,654 - Total General Fund 22,452 18,768 14,968 13,247 12,478 9,474 7,965 6,289 6,147 4,285 All other governmental funds Reserved 7,801 Unreserved, reported in: Special revenue funds 963 Debt service funds Capital projects funds 3,649 Nonspendable 1 1 1 1 1 4 3 1 - Assigned 8,979 - - - - - - - Committed 716 - - - - - - - - Restricted 14,202 16,062 15,263 13,867 11,957 11,764 12,556 15,017 13,786 Unassigned - - - - - (99) (512) (863) (846) - Total all other governmental funds 23,898 16,063 15,264 13,868 11,958 11,669 12,047 14,155 12,940 12,413 $ 46,350 $ 34,831 $ 30,232 $ 27,115 $ 24,436 $ 21,143 $ 20,012 $ 20,444 $ 19,087 $ 16,698 (1) Implemented GASB 54 during the 2011 fiscal year changing the presentation of fund balance. Source: City of Lodi Financial Services Division 140 Revenues: Taxes *Sales and use tax Licenses and permits Intergovernmental revenues Charges for services Fines, forfeits, and penalties Investment and rental income Contributions and donations Miscellaneous revenue Total revenues Expenditures: Current: General government Public protection Public works Community development Library Parks and recreation Capital outlay Debt service: Interest Principal payments Advance refunding escrow Total expenditures Excess (deficiency) of revenues over(under)expenditures Other financing sources (uses): Transfers in Transfers out Proceeds from sale Refunding bonds issued Payment to refunded bond escrow agent Capital lease proceeds Loan proceeds Residual equity transfer Total other financing sources (uses) Special item -sale of parkland Net change in fund balances Fund balances, beginning of year Fund balances, end of year Debt service as a percentage of noncapital expenditures *Sales and use tax separated in FY2019. CITY OF LODI CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (Dollar amounts in thousands) Fiscal Year 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 $ 28,423 $ 27,423 $ 26,491 $ 25,327 $ 24,631 $ 23,719 $ 23,022 $ 22,928 $ 23,061 $ 23,118 14,287 - - - - - - - - - 1,570 1,764 2,015 1,646 967 852 921 686 954 520 9,213 20,807 23,975 21,083 17,557 17,392 14,625 15,289 12,579 12,579 6,558 6,020 5,722 5,830 3,827 3,558 3,880 3,427 3,946 4,116 1,274 1,396 906 1,495 1,573 1,557 1,632 1,357 1,407 1,444 2,994 2,325 2,319 2,155 2,029 2,025 1,389 1,264 817 923 - - 818 - 282 1,003 - - 689 - 812 1,206 - 1,116 538 - 1,078 813 799 1,093 65,131 60,941 62,246 58,652 51,404 50,106 46,547 45,764 44,252 43,793 9,609 9,738 9,499 9,360 9,151 9,019 8,522 8,820 7,667 7,666 31,949 30,788 30,201 28,821 26,646 27,093 26,282 25,249 24,489 24,466 5,452 4,628 4,608 4,070 4,508 4,393 4,532 4,174 3,715 4,383 2,112 1,756 1,651 1,601 1,226 1,192 1,111 1,037 969 1,013 1,166 1,058 1,153 1,153 1,311 1,268 1,411 1,381 1,357 1,322 2,680 2,497 2,378 2,369 2,145 2,299 2,370 2,254 4,127 4,180 3,380 8,296 11,592 13,117 9,842 7,652 6,271 2,961 9,377 5,108 821 805 858 847 845 851 483 1,039 1,081 1,110 1,080 1,028 1,240 260 - - 245 630 752 725 - - - - - - 1,689 - - - 58,249 60,594 63,180 61,598 55,674 53,767 52,916 47,545 53,534 49,973 6,882 347 (934) (2,946) (4,270) (3,661) (6,369) (1,781) (9,282) (6,180) 13,201 13,863 11,723 13,310 15,599 11,596 12,546 14,486 11,881 11,173 (8,968) (9,611) (7,672) (8,716) (8,036) (6,804) (6,864) (11,348) (5,224) (5,305) 404 (312) - 98 - (28) 20,103 - (4,020) (5,377) (19,848) (3,168) $ 46,351 563 $ 5,768 $ 2,651 $ (28) 468 $ (4,452) $ (4,020) 4,637 4,252 4,051 5,625 7,563 4,792 5,937 3,138 6,755 5,868 - - - - - - - - 630 - 11,520 4,599 3,117 2,679 3,293 1,131 (432) 1,357 (1,897) (312) 34,831 30,232 2,651 (28) (3,321) (4,452) (4,020) (5,377) (3,480) (3,168) $ 46,351 $ 34,831 $ 5,768 $ 2,651 $ (28) $ (3,321) $ (4,452) $ (4,020) $ (5,377) $ (3,480) 3.5% 3.5% 4.1% 2.3% 1.8% 1.8% 5.2% 3.7% 4.2% 4.1% 141 Property Sales and Use Transient Occupancy Franchise Documentary Transfer Motor Vehicle in Lieu Public Protection Business License In Lieu Franchise Totals CITY OF LODI TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (Dollar amounts in thousands) Fiscal Year Change 2010 to 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2019 $ 11,050 $ 10,043 $ 9,744 $ 9,151 $ 8,810 $ 8,314 $ 7,955 $ 7,861 $ 8,285 $ 8,342 5.80% 14,286 11,333 11,750 11,809 10,625 10,111 9,350 9,246 8,663 6,873 26.40% 735 867 849 783 666 594 545 486 426 382 114.33% 2,128 2,059 1,915 1,990 1,942 1,862 1,758 1,734 1,715 1,681 96.19% 230 281 240 223 159 155 120 91 95 117 92.12% 5,399 5,176 4,904 4,572 4,533 4,289 4,143 4,151 4,317 4,377 2.23% 441 401 378 365 362 341 325 295 250 267 11.88% 1,887 1,822 1,736 1,552 1,133 1,220 1,187 1,182 958 962 52.29% 7,197 7,159 7,131 7,082 7,033 6,977 6,977 6,977 6,977 6,977 -14.72% $ 43,353 $ 39,141 $ 38,647 $ 37,527 $ 35,263 $ 33,863 $ 32,360 $ 32,023 $ 31,686 $ 29,978 12% Note: General governmental tax revenues are included in taxes, licenses and permits, intergovernmental revenues and miscellaneous revenues. 142 CITY OF LODI ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (Dollar amounts in thousands) (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 actual market value of taxable property and is subject to the limitations described above. Source: San Joaquin County Auditor -Controller's Office California Municipal Statistics Inc 143 Fiscal Year 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Secured roll $ 6,566,183 $ 6,174,155 $ 5,603,023 $ 5,394,659 $ 5,156,704 $ 4,895,091 $ 4,737,807 $ 4,738,823 $ 4,907,588 $ 4,986,693 Utility roll 1,901 2,300 2,300 3,490 3,490 3,490 2,382 2,382 2,423 2,423 Unsecured roll 247,608 258,680 254,946 250,160 257,856 230,827 233,398 226,651 270,600 270,315 Gross assessed value 6,815,692 6,435,135 5,860,269 5,648,309 5,418,050 5,129,408 4,973,587 4,967,856 5,180,611 5,259,431 Less exemptions (1) 338,170 345,179 334,485 331,562 326,833 324,439 327,783 314,448 321,138 332,701 Net assessed value $ 6,477,522 $ 6,089,956 $ 5,525,784 $ 5,316,747 $ 5,091,217 $ 4,804,969 $ 4,645,804 $ 4,653,408 $ 4,859,473 $ 4,926,730 Land $ 1,971,712 $ 1,873,216 $ 1,711,208 $ 1,601,581 $ 1,469,347 $ 1,364,401 $ 1,227,969 $ 1,264,884 $ 1,322,830 $ 1,345,815 Improvements 4,614,261 4,286,480 3,854,604 3,736,867 3,610,391 3,443,266 3,445,328 3,401,792 3,534,778 3,600,824 Personal property 229,719 275,439 294,457 309,861 338,312 321,741 300,290 301,180 323,003 312,792 Gross assessed value 6,815,692 6,435,135 5,860,269 5,648,309 5,418,050 5,129,408 4,973,587 4,967,856 5,180,611 5,259,431 Less exemptions (1) 338,170 345,179 334,485 331,562 326,833 324,439 327,783 314,448 321,138 332,701 Net assessed value $ 6,477,522 $ 6,089,956 $ 5,525,784 $ 5,316,747 $ 5,091,217 $ 4,804,969 $ 4,645,804 $ 4,653,408 $ 4,859,473 $ 4,926,730 Total Direct Tax Rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% (1) All exemptions (secured, utility, and unsecured rolls) are homeowners - $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 actual market value of taxable property and is subject to the limitations described above. Source: San Joaquin County Auditor -Controller's Office California Municipal Statistics Inc 143 141Ill 2to] II71 DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (Rate per $100 of assessed value) Fiscal Year Basic Countywide Levy City School All Other Total 2019 1.0000 0.0843 0.0225 1.1068 2018 1.0000 0.0000 0.0857 0.0180 1.1037 2017 1.0000 0.0371 0.0180 1.0551 2016 1.0000 0.0401 0.0198 1.0599 2015 1.0000 0.0425 0.0233 1.0658 20141l1 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 0.0000 0.0575 0.0000 1.0575 Source: California Municipal Statistics, Inc. San Joaquin County Tax Collector Website Request from San Joaquin Audit Controllers Office (1) Amounts restated based on new assessed value information provided. Ill CITY OF LODI PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO (Dollar amounts in thousands) Taxpayer Taxable Assessed Value Rank Fiscal Year 2019 Percent of Total City Taxable Taxable Assessed Assessed Value Value Rank 2010 Percent of Total City Taxable Assessed Value California Physicians Service Corp $ 606,537 1 9.364 % $ 51,083 4 1.098 % Pacific Coast Producers 537,777 2 8.302 86,021 3 1.848 PACIFIC Cost Producers CORP 450,225 3 6.951 - - Big Box Property 423,248 4 6.534 Walmart 352,887 6 5.448 Winterfell Vintage 323,136 7 4.989 ConAgra/Cottage Bakery 281,230 8 4.342 PACIFIC Coast Producers Inc 252,962 9 3.905 Costco 224,504 10 3.466 North American Specialty Products LLC - 0.000 - - Wine & Roses LLC - - 16,440 10 0.353 Calpurnia Associates LP 373,739 5 - - Panattoni, Carl D ETAL - - - Lodi Memorial Hospital Assn 155,179 1 3.334 General Mills 147,574 2 3.171 Cottage Bakery 39,950 5 0.858 Certainteed Corp 18,623 7 0.400 Dart Container Corp 18,446 8 0.396 Archer Daniels Midland Co Corp 16,935 9 0.364 Thule Hitch Systems 22,125 6 0.475 Lowes - - - - Principal Secured Property Valuation 3,826,245 59.070 572,376 12.299 Other Secured Taxpayers 2,739,938 42.299 4,414,317 94.850 Exemptions relative to secured tax roll 88,661 1.369 332,701 7.149 Total Secured Property Valuation $ 6,477,522 100.000 % $ 4,653,992 100.000 % 145 CITY OF LODI PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (Dollar amounts in thousands) Taxes Collected Within the Total Collections Levied for Fiscal Year of the Levy to Date the Fiscal Percent of Percent of Fiscal Year Year Amount Levy (1) Amount Levy 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 $ 10,883 10,222 9,821 9,117 8,742 8,353 7,865 7,754 8,143 8,291 $ 10,883 100.0% 10,222 100.0% 9,821 100.0% 9,117 100.0% 8,742 100.0% 8,353 100.0% 7,865 100.0% 7,754 100.0% 8,143 100.0% 8,291 100.0% $ 10,883 100.0% 10,222 100.0% 9,821 100.0% 9,117 100.0% 8,742 100.0% 8,353 100.0% 7,865 100.0% 7,754 100.0% 8,143 100.0% 8,291 100.0% (1) Per agreement with San Joaquin County, the County provides the City of Lodi with 100% of the amount owed to the City for secured properties, regardless of collection status. In exchange, the County is entitled to 100% of revenues collected for interest and penalties. This agreement is commonly referred to as the Teeter Plan. Source: San Joaquin County Auditor/Controller's Office 146 Type of Customer City Accounts Contract Large Industrial Contract Medium Industrial Contract Small Industrial Domestic Residential Domestic Mobile Home Park Dusk to Dawn Industrial Large Commercial Large Industrial Medium Commercial Medium Industrial Residential Low Income Small Commercial Small Industrial Total CITY OF LODI ELECTRICITY SOLD BY TYPE OF CUSTOMER LAST TEN FISCAL YEARS Billed Accounts 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 248 223 217 213 212 207 204 195 197 189 22,228 22,041 21,917 22,497 22,393 22,623 22,541 22,361 22,360 22,525 13 13 13 13 13 13 13 13 13 13 91 92 85 85 88 89 88 92 89 89 - 43 - - - - - - - - 383 96 355 348 337 339 344 336 350 357 69 55 35 44 41 39 40 38 40 39 - 375 - - - - - - - - 14 10 10 11 12 11 11 9 9 9 2,796 2,539 2,669 2,688 2,798 2,788 2,582 2,531 2,258 2,193 2,795 3,148 3,434 3,416 3,332 3,367 3,358 3,340 3,324 3,280 11 N/A 10 11 7 8 9 11 11 10 28,648 28,635 28,745 29,326 29,233 29,484 29,190 28,926 28,651 28,704 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 147 CITY OF LODI RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (Dollar amounts in thousands, except per capita) Details regarding the City's outstanding debt can be found in Note 7 of these financial statements. (1) See Demographic and Economic Statistics table for personal income and population. Source: City of Lodi Financial Services Division 148 Governmental Activities Business -type Activities Total Lease Total Certificates of Notes/ Business- Total Percent of Per Fiscal Revenue Loan Notes Capital Governmental Participation and Loan type Primary Personal Capita Year Bonds Payable Payable Lease Activities Revenue Bonds Payable Activities Government Income (1) (1) 2019 $ 16,885 $ 193 $ $ 331 17,409 $ 121,566 $887 122,453 139,862 5.03 % $ 2,049 2018 17,839 286 410 18,535 125,062 1,096 126,158 144,693 5.56 2,156 2017 18,753 378 487 19,618 138,193 1,300 139,493 159,111 6.41 2,484 2016 19,637 468 245 562 20,912 143,417 1,500 144,917 165,829 7.26 2,623 2015 19,950 - 245 - 20,195 149,767 - 149,767 169,962 7.67 2,667 2014 20,004 245 20,249 157,297 157,297 177,546 8.45 2,789 2013 20,058 245 20,303 167,743 167,743 188,046 9.64 2,988 2012 21,025 245 21,270 173,241 173,241 194,511 10.07 3,096 2011 21,655 245 21,900 178,827 178,827 200,727 10.67 3,213 2010 22,265 245 22,510 144,165 1,409 145,574 168,084 8.49 2,645 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 148 CITY OF LODI RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (Dollar amounts in thousands, except per capita) General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (of which, the City has none). (1) Assessed value has been used because the actual value of taxable property is not readily available in the State of California. Source: City of Lodi Financial Services Division 149 Less Amounts Percent of Fiscal Lease Revenue Available for Assessed Value Per Year Bonds Debt Service Net (1) of Property Capita 2019 $ 16,885 $ 16,885 $ 0.3 $ 247.32 2018 17,839 - 17,839 0.3 265.77 2017 18,753 - 18,753 0.4 292.75 2016 19,637 - 19,637 0.4 310.62 2015 19,950 - 19,950 0.4 313.09 2014 20,004 - 20,004 0.4 314.28 2013 20,058 10 20,048 0.4 318.58 2012 21,025 1,692 19,333 0.4 307.73 2011 21,655 1,692 19,963 0.4 319.55 2010 22,265 1,692 20,573 0.4 323.73 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 149 CITY OF LODI LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (Dollar amounts in thousands) 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) All exemptions (secured, utility, and unsecured rolls) are homeowners - $59,055 Source: San Joaquin County Auditor/Controller's Office California Municipal Statistics Inc. 150 FISCAL YEAR 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Assessed valuation (1) $ 6,536,577 $ 6,156,110 $ 5,585,242 $ 5,377,266 $ 5,152,666 $ 4,867,731 $ 4,709,916 $ 4,718,766 $ 4,926,130 $ 4,995,362 Conversion percentage 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% Adjusted assessed valuation 1,634,144 1,539,028 1,396,311 1,344,317 1,288,167 1,216,933 1,177,479 1,179,692 1,231,533 1,248,841 Debt limit percentage 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Debt Limit 245,122 230,854 209,447 201,647 193,225 182,540 176,622 176,954 184,730 187,326 Total net debt applicable to limit 16,885 17,839 18,753 19,637 19,950 20,004 20,048 19,333 19,963 20,573 Legal debt margin $ 228,237 $ 213,015 $ 190,694 $ 182,010 $ 173,275 $ 162,536 $ 156,574 $ 157,621 $ 164,767 $ 166,753 Total net debt applicable to the limit as a percent of debt limit 6.9% 7.7% 9.0% 9.7% 10.3% 11.0% 11.4% 10.9% 10.8% 11.0% 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) All exemptions (secured, utility, and unsecured rolls) are homeowners - $59,055 Source: San Joaquin County Auditor/Controller's Office California Municipal Statistics Inc. 150 CITY OF LODI DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT June 30, 2019 DEBT RATIOS Total Gross Debt 96,559,714 1,414 1.57% (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 151 Percentage City's Share Applicable Total Debt (1) of Debt OVERLAPPING DEBT: San Joaquin Community College District $ 198,475,000 7.579 % 15,042,420 Lodi Unified School District 145,245,000 36.004 52,294,010 San Joaquin County Certificates of Participation 81,070,000 8.28 6,712,596 Lodi Unified School District Certificates of Participation 14,170,000 36.004 5,101,767 SUBTOTAL OVERLAPPING DEBT 79,150,793 DIRECT DEBT: 16,230,000 16,230,000 City of Lodi Lease Revenue Bonds 16,884,930 100.00 16,884,930 City of Lodi - Loan payable 192,665 100.00 192,665 City of Lodi -Capital lease 331,326 100.00 331,326 SUBTOTAL DIRECT DEBT 17,408,921 TOTAL DIRECT AND OVERLAPPING DEBT(2) $ 96,559,714 2018-19 Gross Assessed Valuation $ 6,149,013,174 2018-19 Population 68,272 DEBT RATIOS Total Gross Debt 96,559,714 1,414 1.57% (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 151 CITY OF LODI PLEDGED -REVENUE COVERAGE LAST TEN FISCAL YEARS (Dollars amounts in thousands) Fiscal Year Adjusted Annual Revenues(1) Adjusted Operating Expenses(2) Net Available Revenue Principal Debt Service Interest(3) Total Coverage Electric Revenue Certificates of Participation 2019 $ 69,846 $ 58,916 $ 10,930 $ - $ 1,497 $ 1,497 7.30 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 Wastewater Certificates of Participation and Revenue Bonds 2019 $ 17,864 $ 8,301 9,563 $ 1,753 1,573 3,326 2.88 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 Water Revenue Bonds 2019 $ 15,509 $ 7,173 $ 8,336 $ 980 $ 1,368 $ 2,348 3.55 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 - Water Revenue Bonds. 152 CITY OF LODI DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Personal income is the income received by all persons from all sources. Personal income is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and personal current transfer receipts. Per capita personal income is calculated as the personal income of residents of a given area divided by the resident population of the area. In computing per capita personal income, Bureau of Economic analysis uses the Census Bureau's annual midyear population estimates. Source: State of California, Department of Finance, Demographic Research Unit and Department of Labor. 153 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 2019 13.98 68,272 0.8% 770,385 8.9% 134 $ 2,779 $ 40,707 6.1% 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% 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 Research Unit and Department of Labor. 153 CITY OF LODI PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO Employer Employees Lodi Unified School District 2,109 Pacific Coast Producers 1,350 Adventist Health Lodi Memorial * 1,270 Blue Shield of CA 901 Walmart Supercenter ** 410 City of Lodi 381 TreeHouse formerly known as Cottage Bakery 301 Costco Wholesale 256 Farmers & Merchant Bank 204 Frank c Alegre Trucking Inc 200 General Mills (3) Target - Total 7,382 Note: Principal employers are based on the best available information Source: MuniServices, LLC / an Avenu Insights & Analytics Company Results based on direct correspondence with city's local businesses. * Count includes FTE, PTE, Temporary & Seasonal Employees. ** No response from employer, previous number applied. (1) Prior year data provided by previous published CAFR. (2) Total City Labor Force provided by EDD Labor Force Data. (3) General Mills permanently closed. Current Nine Years Ago Percent Percent of Total City of Total City Labor Rank Employment Employees Rank Employment Force 1 2 3 4 5 6 7 8 9 10 154 7.13 4.56 4.29 3.04 1.39 1.29 1.02 0.86 0.69 0.68 3,301 1 1,200 2 1,360 3 850 4 285 9 457 7 700 5 336 8 494 6 165 10 11.15 % 29,600 4.05 29,600 4.59 29,600 2.87 29,600 0.96 29,600 1.54 29,600 2.36 29,600 0.00 29,600 1.14 29,600 0.00 29,600 1.67 29,600 0.56 29,600 CITY OF LODI FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY DEPARTMENT - LAST TEN FISCAL YEARS Total 391 390 393 393 396 382 377 381 440 455 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 155 Fiscal Year 2019 2018 2017 2016 2015 2014 2013 2012 2011* 2010 Department: Administration 9 9 10 10 10 10 10 12 13 31 Community Development 11 11 11 11 11 9 9 9 13 13 Electric 52 52 51 49 44 43 40 40 41 51 Financial Services - - - - - - - - - 24 Fire 53 53 54 54 57 53 53 54 64 64 Internal Services 31 31 32 31 31 31 31 29 35 Library 7 7 7 10 11 10 11 12 14 14 Parks and Recreation - - - - - - - - - 31 Parks, Recreation and Cultural Services 24 24 24 26 28 27 27 29 37 - Police 103 103 103 102 107 104 104 103 125 125 Public Works 101 101 101 100 97 95 92 93 98 102 Total 391 390 393 393 396 382 377 381 440 455 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 155 CITY OF LODI OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT LAST TEN FISCAL YEARS 156 Fiscal Year 2019 2018 2017 2016 General government: Building permits issued 2,502 2,699 2,447 2,482 Business tax certificates: Retail sales and service 3,014 2,137 2,443 2,288 Manufacturers and processors 87 75 76 78 Professions 330 294 308 316 Miscellaneous contractors, peddlers, delivery vehicles, etc. 1,986 1,232 949 1,268 Utility billing/customer service: Number of customers 24,576 24,259 26,018 26,034 Energy sales (KWH) 410,566,814 425,157,874 425,410,574 437,246,335 Peak demand (MW) 118 130.9 129 124 Public safety: Police: Major reported crimes 1,943 2,062 2,025 3,068 Total arrests 3,611 3,460 4,226 4,083 Dispatched calls for service 37,806 37,301 37,866 40,390 Fire: Interior structure fire calls 70 56 51 33 Non-structural fire calls 255 235 177 154 Hazardous materials calls 87 55 90 73 Emergency medical calls 3,915 5,364 3,572 3,123 Total emergency calls 7,600 6,996 5,869 5,238 Total number of units dispatched 7,701 8,230 7,225 7,430 Public works: Miles of streets resurfaced 3 0 6 6 Fleet job orders completed 1,866 1,744 2,129 2,162 Trees planted 500 372 135 135 Water utility: New connections 290 180 205 69 Water main breaks 1 2 2 3 Wastewater utility: Average daily treatment (million gal/day) 4.6MG 4.5MG 4.65MG 4.6MG Library: Registered borrowers 67,334 63,631 64,742 60,362 Circulation of library materials 168,793 162,796 187,853 199,096 Reference, research and informational questions answered 11,296 9,852 9,695 11,109 Annual attendance at libraries 231,391 225,558 231,602 245,936 Number of programs offered 715 789 764 456 Annual attendance at programs 18,825 24,682 23,960 15,452 Public access computer usage 27,603 25,825 31,205 34,071 Community center: Community center bookings 809 595 597 758 Instructional classes 616 438 554 518 Registered students 2,546 2,695 3,010 2,744 Yearly attendance 14,220 11,011 13,925 13,925 Parks and recreation: CITY after school program 2,950/4 2,705/4 1,964/4 1,898/4 LUSD After School Program 9,867/10 12,985/13 13,016/3 12,318/13 Camps 631/3 702/3 103 67 Adult sports Program/Participation 2,045 1,990 1,895 1,976 Programs offered 14 14 14 15 Partnerships 2 2 2 2 Tournaments 7 4 6 8 Youth/Teen sports Program attendance 3,517 3,480 3,496 3,652 Programs offered 18 11 18 18 Aquatics Program attendance 18,202 26,571 28,974 28,195 Number of programs 12 8 14 14 156 CITY OF LODI OPERATING INDICATORS BY FUNCTION/PROGRAM/DEPARTMENT LAST TEN FISCAL YEARS (CONTINUED) Fiscal Year 2015 2014 2013 2012 2011 2010 2,404 2,404 1,578 1,461 2,022 1,709 2,281 2,281 2,526 2,485 2,530 2,406 23 23 78 77 76 80 323 323 362 364 371 373 1,256 1,256 1,456 1,362 1,357 1,312 25,912 25,912 23,927 23,761 23,575 25,573 438,780,911 438,780,911 435,822,465 435,655,731 421,130,329 434,200,987 134 134 122 116 116 120 2,268 2,268 2,643 3,573 2,885 2,377 3,690 3,690 3,825 4,350 4,410 4,238 35,992 35,992 50,124 46,756 52,061 51,870 32 32 67 57 56 47 143 143 209 163 121 123 65 65 58 41 69 70 3,418 3,418 3,882 3,820 3,752 3,494 3,666 3,666 5,823 5,620 5,753 5,385 5,727 5,727 7,954 7,855 7,835 7,390 6 6 6 6 6 3 2,500 2,500 1,803 1,953 2,810 3,303 135 135 131 131 8 8 8 7 8 17 16 16 14 10 8 6 4.6M G 4.6MG 5.10M G 5.5 M G 6.5 MG 6.5 M G 58,824 58,824 51,594 47,147 43,927 39,199 197,673 197,673 215,293 217,742 248,250 251,967 13,189 13,189 16,270 14,463 16,234 16,501 224,762 222,148 210,279 207,123 432 432 407 432 388 344 12,888 12,888 14,443 12,993 13,133 10,676 34,071 41,180 45,871 47,428 58,990 52,124 794 769 718 698 926 789 500 553 580 307 536 583 2,586 3,269 2,819 3,713 3,438 3,525 13,925 13,925 13,925 13,925 14,217 13,355 1,679/4 1,630/4 1,811/4 1,783/4 1,680/4 1,630/4 12,001/13 12,878/13 11,800/13 8,285/9 10,275/11 9,296/10 74 89 45 71 61 65 2,106 2,082 2,246 2,420 2,528 2,528 18 17 16 15 16 16 2 2 2 3 5 5 10 5 6 12 7 7 3,621 3,672 3,643 3,889 4,251 4,251 18 18 19 24 16 16 28,009 27,731 23,414 34,366 32,566 32,566 15 13 13 25 13 13 Source: City of Lodi 157 CITY OF LODI CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT LAST TEN FISCAL YEARS 158 Fiscal Year 2019 2018 2017 2016 General government: Total square miles 13.98 13.98 13.98 13.98 Public safety: Police: Facilities: Stations 1 1 1 1 Animal control facility 1 1 1 1 Police training facility (pistol range) 1 1 1 1 Vehicles: Marked patrol cars 21 23 23 23 Motorcycles and scooters 5 6 7 7 Animal control vehicles 2 2 2 2 Other automobiles 36 37 37 37 Fire: Facilities: Fire stations 4 4 4 4 Vehicles: Fire engines 6 6 7 6 Trucks/Trailers 5 5 8 6 Other automobiles 5 8 5 11 Public works: Miles of streets 19 190 202 202 Miles of alley ways 12 12 16 16 Traffic signals 69 69 68 67 Street lights 7,739 7,697 7,270 7,270 Parks and recreation: Parks and squares 28 28 26 26 Park acreage 367 366 361 361 Boating facilities - launch lanes 1 1 1 1 Senior center 1 1 1 1 Community Centers 1 1 1 1 Swimming pools 4 4 4 4 Baseball/softball diamonds 20 20 20 20 Tennis courts 11 11 11 11 Skateboard park 1 1 1 1 Playgrounds 20 17 20 20 Ballpark 24 24 24 24 Soccer Field 22 22 22 22 Football Field 1 1 1 1 Handball/Basketball/Volleyball Courts/ Bocce Courts 15 12 12 12 Horseshoe Pits 9 8 8 8 Library: Central library 1 1 1 1 Total items in collection 110,000 111,544 125,730 130,657 Integrated library system 1 1 1 1 Microfilm readers 0 0 0 0 Microfilm readers/printers 0 0 1 1 Self check out machines 3 3 3 3 Electric utility: Overhead lines 12kv (miles) 117 117.19 117 117 Overhead lines 60kv (miles) 14 13.56 14 14 Underground lines (miles) 129 128.36 123 121 Water utility: Water main lines 245 245 243 240 Water storage capacity (gallons) 4,100,000 4,100,000 4,100,000 4,100,000 Water wells 28 28 28 28 Water reservoirs 3 3 3 3 Water Treatment Plant 1 1 1 1 Wastewater utility: Wastewater main lines (miles) 203 203 196 196 Treatment capacity 8.5MG 8.5MG 8.5MG 8.5 MG Wastewater treatment plant 1 1 1 1 Wastewater Pump Stations 13 13 9 9 Stormwater utility: Stormwater main drain lines (miles) 130 130 128 126 Stormwater pump stations 17 17 16 16 Central parking district: Parking structure 1 1 1 1 Parking spaces 2,450 2,450 2,450 2,450 Parking lots 25 25 25 25 Source: City of Lodi Departments 158 CITY OF LODI CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM/DEPARTMENT LAST TEN FISCAL YEARS (CONTINUED) Source: City of Lodi Departments 159 Fiscal Year 2015 2014 2013 2012 2011 2010 13.98 13.98 13.98 13.98 13.92 13.92 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 23 23 23 23 23 23 7 5 5 5 5 5 2 2 2 2 2 2 37 37 37 37 37 37 4 4 4 4 4 4 6 6 6 6 7 7 6 6 6 5 5 6 11 11 11 9 8 10 202 202 202 202 202 202 16 16 16 16 16 16 67 67 67 67 67 62 7,270 7,270 7,270 7,270 7,270 7,270 26 26 26 26 26 26 361 361 361 373 373 373 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 4 4 4 4 4 4 20 20 20 24 24 24 11 11 11 11 11 11 1 1 1 1 1 1 20 20 20 22 25 25 24 24 24 24 24 24 22 22 22 22 22 22 1 1 1 1 1 1 12 12 12 10 10 10 8 8 8 8 6 6 1 1 1 1 1 1 119,554 148,287 149,243 135,113 134,804 130,530 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 117 117 133 133 133 130 14 14 14 14 13 13 118 115 159 159 157 155 236 236 236 236 236 237 4,100,000 4,100,000 4,100,000 1,100,000 1,100,000 1,100,000 28 28 28 27 27 26 3 3 3 2 2 2 0 0 0 0 0 0 196 196 196 196 196 191 8.5 MG 8.5 MG 8.5 MG 8.5 MG 8.5 MG 8.5 MG 1 1 1 1 1 1 0 0 0 0 0 0 124 124 124 124 124 124 14 14 14 14 14 14 1 1 1 1 1 1 2,450 2,450 2,453 2,453 2,453 2,453 25 25 25 25 25 25 Source: City of Lodi Departments 159 CONTINUING DISCLOSURES UNAUDITED CONTINUNING DISCLOSURE REQUIREMENTS FOR THE CITY OF LODI, THE LODI PUBLIC IMPROVEMENT CORPORATION AND THE LODI PUBLIC FINANCING AUTHORITY FISCAL YEAR 2018-2019 The City of Lodi has executed Continuing Disclosure Certificates associated with the various debt issues outstanding by the Electric Utility, Wastewater Utility, Water Utility, the Lodi Public Improvement Corporation and the Lodi Public Financing Authority. These Certificates were executed to satisfy provisions of Securities and Exchange Commission Rule 15c2 -12(b) (5). The material provided herein applies to the various debt issues as noted. Data for each utility is shown separately. This Bond Disclosure Section included within the City's Comprehensive Annual Financial Report (CAFR) provides the information required by the Continuing Disclosure Certificates. The CAFR, in turn, will be filed with the Municipal Securities Rulemaking Board. The CAFR may also be found on the City's website at www.lodi.gov. (This page intentionally left blank.) Annual Report for Electric Utility (Unaudited) 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, 2019, 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. 162 Annual Report for Electric Utility (Unaudited) 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, 2019 Capacity % of Source Available Annual Energy Total (MW) (1)(4) (MWh) Energy Purchased Power (1): Western NCPA Geothermal Project Hydroelectric Project Combustion Turbine Project No. 1 Capital Facilities, Unit One Lodi Energy Center Contracts and Exchanges 131 Total Total Capacity and Energy Sold at Wholesale City System Requirement for Retail Load (S) 5.4 25,006 5.6% 14.8 77,689 17.4% 26.2 88,243 19.7% 9.5 1,507 0.3% 19.6 5,827 1.3% 28.7 131,319 29.4% 31.7 117,815 26.3% 135.90 447,406 100.00% N/A 22,223.00 117.9 425,183.00 (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. 163 Annual Report for Electric Utility (Unaudited) Table 2 A table showing the average number of customers, sales, revenues and demand for the past five fiscal years (2). CITY OF LODI ELECTRIC UTILITY DEPARTMENT Consumer Sales, Revenue, and Demand Fiscal Year Fiscal Year Ended Ended June 30 June 30 Number of Customers: Residential Commercial Industrial Other Total Customers Kilowatt Hour (kWH) Sales: Residential Commercial Industrial Other Total kWH sales Revenues from Sales of Energy M. Residential Commercial Industrial Other 2019 2018 23,480 23,145 3,104 3,075 41 41 173 169 26,798 26,430 147,116, 802 155,539,509 148,133, 314 144, 244, 913 104,931,881 115,066,917 10, 384, 817 10, 306, 535 410,566,814 425,157,874 27,702,390 27,967,919 25,081,515 25,105,915 13,908,500 14,877,597 1,268,946 1,295,278 Total Revenues from Sale of Energy: 67,961,351 69,246,709 Peak Demand (MW) 117.9 130.9 (1) Excludes revenues from California Energy Commission Tax. (2) Only two year comparison shown. Will show five fiscal years when point in time is reached. 164 Annual Report for Electric Utility (Unaudited) Table 3 A table showing the average number of customers, sales, revenues and demand for the fiscal year. CITY OF LODI ELECTRIC UTILITY DEPARTMENT OUTSTANDING DEBT OF JOINT POWERS AGENCIES (Dollar Amounts in Millions) For the Fiscal Year Ended June 30, 2019 NCPA Geothermal Project Three Hydroelectric Project Capital Facilities Project Unit One Lodi Energy Center Project Combustion Turbine Transmission Project TANC (4) TOTAL* Lodi's Share of Outstanding Lodi's Outstanding Debt (1) Participation (2) Debt $ 25.00 10.28% $ 2.50 278.00 10.37% 29.60 30.00 39.50% 11.70 221.00 9.50% 37.60 - 13.39% - - 20.61% - 2.60 2.07% 0.05 $ 556.60 14.63% $ 81.45 *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 $70,200 per year. 165 Annual Report for Electric Utility (Unaudited) Table 4 A table showing a summary of operating results for the past two fiscal years. CITY OF LODI ELECTRIC SYSTEM Summary of Operating Results Ending Fiscal Year June 30 (Dollars in 000s) Actual 2019 (3) Actual 20180) Operating Revenues Beginning Reserves Itl Rate Revenue ECA Revenue Other Revenue I5� Total Operating Revenue Operating Expenses Purchased Power Non -Power Costs (z) Total Operating Expenses Net Revenue Available for Debt Service Parity Debt Service 2008 Bonds 2018 Bonds Total Net Debt Service Debt Service Coverage (4) Remaining Revenue Available for Other Purposes Non -Operating Revenue/Expenses Greenhouse gas allowance Impact Fees In -Lieu Transfer to General Fund PERS Stabilization Contribution Net Cash Flow Before Capital Expenditures Net change in Balance Sheet Accounts Capital Funded from Rates Ending Reserves lel $ 26,573 $ 26,642 63,776 65,054 4,186 4,192 4,155 3,475 72,117 72,721 37,043 39,519 14,289 16,422 51,332 55,941 20,785 16,780 - 5,298 1,497 - 1,497 5,298 13.88 3.17 19,288 11,482 94 559 245 138 (7,197) (7,159) (204) (603) 38,799 31,059 272 (1,768) (2,061) (2,718) $ 37,010 $ 26,573 Source: City of Lodi (1) As defined in the Installment Purchase Contract, this may or may not be on the same basis as Generally Accepted Accounting Principals (2) Non -power costs include cost of services provided by other departments and does not include depreciation and amortization expense. (3) Only two year comparison shown. Will show five fiscal years when point in time is reached. (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. 166 Annual Report for Wastewater Utility (Unaudited) 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 six (6) 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 fiscalyears. 6. A table showing historical revenue balances for the past five fiscal years. Reporting of Significant Events The Certificates identify sixteen (16) specific events that require special reporting. As of June 30, 2019, 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. 167 Annual Report for Wastewater Utility (Unaudited) 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 2018-19 Service Charge Revenue by User Type % of FY 18/19 Service Charge User Type 2019 2018 2017 2016 2015 Revenue Residential 22,528 22,083 21,891 21,700 21,920 91.7% Commercial/Industrial 2,047 2,041 2,001 1,909 1,876 8.3% Total All Users 24,575 24,124 23,892 23,609 23,796 100% Source: City of Lodi 168 Annual Report for Wastewater Utility (Unaudited) 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 2018-19 User Type % of Total Annual Service Charge Revenue Single Family Residential 60% Multiple Family Residential 18% Commercial/Industrial 22% Source: City of Lodi 169 Total 100% Annual Report for Wastewater Utility (Unaudited) Table 3 A table showing the largest users by service charge revenue for the most recent fiscal year. CITY OF LODI WASTEWATER SYSTEM Largest Users by Service Charge Revenues Fiscal Year 2018-19 User Type of Business Service Charge Revenue TreeHouse Foods Specialty bakery, frozen dough $ 408,582 Lodi Unified School District K-12 adult education 342,528 City of Lodi Government 70,696 Pacific Coast Producers Private label fruit canning 48,302 Lodi Memorial Hospital Health Care 42,430 Archer Daniels Midland Agricultural processor 41,350 Blue Shield of California Health insurance 40,167 Miller Packing Company Hot dog producer 29,293 Tokay Villa Apartments Apartment complex 28,678 Casa de Lodi Mobile home park 28,522 Total top ten users $ 1,080,548 Total System $ 15,854,205 Source: City of Lodi Public Works 170 Percentage of Total Annual Service Charge Revenue 2.58% 2.16 0.45 0.30 0.27 0.26 0.25 0.18 0.18 0.18 6.82% 100.00% Annual Report for Wastewater Utility (Unaudited) Table 4 A table showing the schedule of service charges. CITY OF LODI WASTEWATER SYSTEM Schedule of Wastewater Service Charges (1) Winter water usage determined as average monthly usage from December through February IVAI Service Charge Service Charge Service Charge Service Charge (effective July 1, (effective July 1, (effective July 1, (effective July 1, 2018) 2017) 2016) 2015) For Residential Users (flat rate per month): 1 Bedroom $27.90 $27.90 $27.90 $27.22 2 Bedrooms 37.20 37.20 37.20 36.29 3 Bedrooms 46.49 46.49 46.49 45.36 4 Bedrooms 55.79 55.79 55.79 54.43 5 Bedrooms 65.09 65.09 65.09 63.51 6 Bedrooms 74.39 74.39 74.39 72.58 7 Bedrooms 83.69 83.69 83.69 81.65 For Residential Users (usage based rate per month): Monthly Usage Charge ($/CCF) (11 $2.89 $2.89 $2.89 $2.82 3/4" Meter Charge 25.40 25.40 25.40 24.78 For Commercial/Industrial Users: Moderate Strength (annual per $446.40 $446.40 $446.40 $423.61 Sewage Service Unit (SSU)) High Strength: Flow (annual per MG) 3,849.00 3,849.00 3,730.00 31674.68 BOD (annual per 1,000 lbs.) 636.00 636.00 616.00 606.41 SS (annual per 1,000 lbs.) 397.00 397.00 385.00 379.17 Grease Interceptor/Septic Holding Tank Waste within 336.00 336.00 326.00 321.00 City Limits (per 1,000 gal) Septic Holding Tank Waste Outside City Limits (per 1,000 gal.) 505.00 505.00 489.00 482.00 Disposal to Storm Drain System (per MG) Disposal to Industrial System: Flow (per MG, annual basis) 7,911.00 71666.00 7,666.00 7,553.00 BOD (per 1,000 lbs., annual basis) 166.00 161.00 161.00 159.00 Winery Waste (per 1,000 gal.) 316.00 316.00 301.04 301.04 (1) Winter water usage determined as average monthly usage from December through February IVAI Annual Report for Wastewater Utility (Unaudited) 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 and Debt Service Coverage Fiscal Years 2014-15 through 2018-19 2014-15 2015-16 2016-17 2017-18 2018-19 Operating Revenues Charges for Services Non -Operating Revenues Interest Income Other Total System Revenues Operating Expenses Personnel services Supplies, Materials and services Utilities Total Operating Expenses System Net Revenues Parity Debt Service 2004 Installment Payments 2007 Installment Payments 2012 Installment Payments 2016 Installment Payments 2017 Installment Payments Total Parity Debt Service Debt Service Coverage Non -Operating Expenses Transfers (In)/Out Total Non -Operating Expenses Net Cashflow Before Capital Expenditures Source: Financial Services Division $ 14,714,213 $ 14,959,756 $ 15,106,432 $ 14,913,543 $ 15,904,204 356,590 460,862 510,079 400,533 650,332 774,007 1,520,966 1,091,001 752,514 2,730,863 15, 844, 810 16, 941, 584 16, 707, 512 16, 066, 590 19,285,399 3,116,493 2,923,572 4,501,156 3,505,621 4,681,397 2,541,909 3,622,348 4,828,494 5,065,464 2,905,401 676,838 691,632 798,452 726,588 795,186 6,335,240 7,237,552 10,128,102 9,297,673 8,381,984 9,509,570 9,704,032 6,579,410 6,768,917 10,903,415 98,325 98,325 98,326 98,326 98,326 1,602,850 1,606,850 547,613 556,213 - 1,970,350 1,961,100 1,947,100 1,949,300 1,949,100 - - 474,109 849,150 959,150 - - - 63,450 319,915 3,671,525 3,666,275 3,067,148 3,516,439 3,326,491 2.59 2.65 2.15 1.92 3.28 1,068, 000 1,068, 000 1,101,000 1,108, 270 1,083, 710 1,068, 000 1,068, 000 1,101,000 1,108, 270 1,083, 710 $ 4,770,045 $ 4,969,757 $ 2,430,502 $ 2,144,208 $ 6,493,214 (1) FY17-18 added in 2017 Installment Payment missed in reporting. Corrected Net Cashflow Before Capital Expenditures. `tea Annual Report for Wastewater Utility (Unaudited) 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 2015 2016 2017 2018 2019 Operating 5.60 9.70 13.00 15.40 15.87 Rate Stabilization 0.50 0.50 0.50 0.50 0.50 Impact Mitigation 0.80 1.00 1.70 1.70 1.82 Capital 6.90 4.50 1.00 0.25 1.22 Total 13.80 15.70 16.20 17.85 19.41 25% Operating Reserve Goal 1.50 2.40 3.30 3.90 4.85 Source: City of Lodi 173 Annual Report for The Lodi Public Financing Authority (Unaudited) 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, 2019, 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. 174 Annual Report for The Lodi Public Financing Authority (Unaudited) Table 1 A table setting forth the approved budget and actual results for the most current fiscal year. Please refer to the Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual on page 99 of this Comprehensive Annual Financial Report. 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 2015 (1) 2016 2017 2018 2019 Revenues: Taxes Licenses and permits Intergovernmental revenues Charges for services Fines, forfeits and penalties Investment and rental income Miscellaneous revenue Total revenues Expenditures: Current: General government Public protection Public works Library Total expenditures Excess of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Sale of City property Total other financing sources (uses) Net change in fund balance Fund balance, beginning of year Fund balance, end of year $ 24,630,745 $ 25,327,203 $ 26,490,919 $ 27,422,477 $ 28,422,573 87,908 92,702 86,844 67,757 65,639 12,642,107 12,887,767 12,830,329 12,377,159 15,472,538 1,482,448 1,437,440 1,852,855 1,934,180 1,772,088 1,573,071 1,494,758 906,563 1,396,137 1,274,624 1,546,845 1,554,198 1,734,773 1,747,857 2,195,924 290,951 349,153 319,373 342,549 221,949 42,254,075 43,143,221 44,221,656 45,288,116 49,425,335 6,490,907 6,824,884 6,926,368 6,980,564 7,136,809 26,388,172 28,612,592 29,969,781 30,576,759 31,793,158 1,882,250 1,866,277 1,698,518 1,852,852 2,130,840 1,311,367 1,152,901 1,152,721 1,058,133 1,165,499 36,072,696 38,456,654 39,747,388 40,468,308 42,226,306 6,181,379 4,686,567 4,474,268 4,819,808 7,199,029 3,952,000 3,952,000 3,952,000 7,608,579 4,233,780 (7,128,586) (7,869,927) (6,705,104) (8,628,840) (7,749,000) - - - - 698 (3,176,586) (3,917,927) (2,753,104) (1,020,261) (3,514,522) 3,004,793 768,640 1,721,164 3,799,547 3,684,507 9,473,760 12,478,553 13,247,193 14,968,358 18,767,905 $ 12,478,553 $ 13,247,193 $ 14,968,357 $ 18,767,905 $ 22,452,412 175 Annual Report for The Lodi Public Financing Authority (Unaudited) 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 143. Table 4 A table showing the secured property tax collections for the past ten fiscal years. Please refer to the table shown on the Statistical Section on page 146. Table 5 A table showing the ten largest locally secured taxpayers for the fiscal year. Please refer to the table shown in the Statistical Section on page 145. 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, 2019 Bargaining Units Employee Paid* City's Share of Employees % Total Employee Share Council appointees 10.00% 0% 10.00% Executive management 10.00% 0% 10.00% Confidential mid -management 10.00% 0% 10.00% Confidential 10.00% 0% 10.00% Fire mid -management 12.00% 0% 12.00% Fire 12.00% 0% 12.00% Mid -management 10.00% 0% 10.00% General services 9.00% 0% 9.00% Maintenance and operators 10.00% 0% 10.00% IBEW 7.00% 0% 7.00% Police mid -management 12.00% 0% 12.00% Police 12.00% 0% 12.00% Dispatchers 10.00% 0% 10.00% *PEPRA Miscellaneous Employees 9.75% 0% 9.75% *PEPRA Safety Employees 11.25% 0% 11.25% 176 Annual Report for Water Utility (Unaudited) The Lodi Water Utility has Continuing Disclosure requirements 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, 2019. 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 sixteen (16) specific events that require special reporting. As of June 30, 2019, 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 events that would require disclosure under the provisions of the Certificates. 177 Annual Report for Water Utility (Unaudited) Table 1 A table setting forth the City's number of accounts and revenues by user type for the past ten fiscal years. CITY OF LODI WATER SYSTEM Number of Accounts and Revenues by User Type Year Ending December 31 Commercial / Industrial / Municipal Number of Accounts Revenue Residential Number of Accounts Revenue 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 2018 2,903 3,170,623 22,464 10,213,988 Source: City of Lodi. 178 Annual Report for Water Utility (Unaudited) Table 2 A table showing the largest users by service charge revenues for the most recent fiscal year. CITY OF LODI WATER SYSTEM Largest Users by Service Charge Revenues Fiscal Year 2018-19 User Type of Business Service Charge Revenue Percentage of Total Annual Service Charge Revenue City of Lodi Government $ 484,915 3.62% Lodi Unified School District K-12, adult education 382,317 2.86% Pacific Coast Producers Private label fruit canning 160,516 1.20% Lodi Memorial Hospital Health care 65,454 0.49% Treehouse Foods Specialty bakery, frozen dough 52,500 0.39% Casa de Lodi Mobile home park 24,866 0.19% All State Packers Crop preparation 24,530 0.18% Sweetener Products Sweetener distribution 22,338 0.17% Lodi Wine & Business Center Tourism center 20,651 0.15% Tokay Villa Apartment complex 19,314 0.14% Subtotal Top Ten Users $ 1,247,401 9.39% TOTAL SYSTEM $ 13,344,473 100.00% 179 Annual Report for Water Utility (Unaudited) Table 3 A table showing a schedule of selected rates effective January 1, 2019. CITY OF LODI WATER SYSTEM Selected Rates Effective January 1, 2019 Flat Rates ($/month) Single Family Residential Unit ($/month) 1 Bedroom $ 33.66 2 Bedroom $ 40.43 3 Bedroom $ 48.45 Metered Water Rates Service Charge ($/month) Single Family Residential Up to 3/4" Meter $ 22.42 Multi -Family and Non -Residential 1" Meter $ 35.20 11/2" Meter $ 66.88 2" Meter $ 105.08 Water Usage rates ($/CCF) Single Family Residential Tier 1 - 0 to 10 CCF/month $ 0.99 Tier 2 - 11 to 50 CCF/month $ 1.32 Tier 3 - Over 50CCF/month $ 1.64 Multi -Family and Non -Residential All Water Usage $ 1.18 Source: City of Lodi. 180 Annual Report for Water Utility (Unaudited) 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 2014-15 through 2018-19 2014-15 2015-16 2016-17 2017-18 2018-19 Gross Revenues Water Sales (1) $ 12,722,619 $ 12,161,186 $ 12,473,676 $ 13,005,023 $ 13,344,473 Investment Earnings 87,211 166,791 132,364 99,018 448,331 Water Impact Mitigation Fees 20,299 332,765 206,847 362,481 528,885 Meter Retrofit Installation Charges 56,052 76,103 19,255 21,577 33,347 Other Revenues (2) 483,710 287,839 1,011,756 932,652 1,095,363 Total Gross Revenues 13,369,891 13,024,684 13,843,898 14,420,751 15,450,399 Operating and Maintenance Expenses Personnel Services 2,316,305 2,515,542 2,998,026 2,833,892 3,014,211 Supplies, Materials and Services(') 2,139,014 3,008,676 3,468,229 3,220,625 3,339,632 Utilities 579,774 496,316 453,488 518,271 537,561 Administrative Overhead 780,000 780,000 813,000 820,560 821,900 Total O & M Expenses 5,815,093 6,800,534 7,732,743 7,393,348 7,713,304 Net Revenue Available for Debt Service 7,554,798 6,224,150 6,111,155 7,027,403 7,737,095 Debt Service 2010 Bonds (3) 2,356,141 2,351,580 2,308,061 2,305,611 2,307,111 Total Net Debt Service 2,356,141 2,351,580 2,308,061 2,305,611 2,307,111 Debt Service Coverage (4) Debt Service Coverage 3.21 2.65 2.65 3.05 3.35 Debt Service Coverage (excluding impact mitigation fees) 3.20 2.51 2.56 2.89 3.12 Net Remaining Revenues Available for Capital 5,198,657 3,872,570 3,803,094 4,721,792 5,429,984 Capital Improvement Projects Meter Retrofit Program (5) 4,841,932 1,606,734 4,589,636 4,068,588 652,540 Other Water System Improvements 267,902 9,097 330,380 114,412 436,433 Total Capital Improvement Projects 5,109,834 1,615,831 4,920,016 4,183,000 1,088,973 Net Change in Reserve 88,823 2,256,739 (1,116,922) 538,792 4,341,011 Water Enterprise Fund X61 Beginning Cash Balance 7,027,567 6,755,522 6,270,786 4,558,222 4,450,028 Ending Cash Balance 6,755,522 6,270,786 4,558,222 4,450,028 8,846,454 Source: City of Lodi. 181 Annual Report for Water Utility (Unaudited) 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. (2) Includes rent, sales of City property, discounts, water reimbursements, and damage to property, water tap fees, Groundwater Pollution Remediation reimbursements, also known as 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 Services. (5) Annual capital costs of transition to water meters. Program expected to be completed in Fiscal Year 2020-21. (6) 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. (7) Correction to Supplies, Materials and Services. FY17 previously included depreciation. 182 THE A MEMBER OF PUN GRC UP Alliri►al ACCOUNTANTS & ADVISORS GLOBAL City of Lodi Presentation to the City Council Agenda Item: H-01 For the Fiscal Year Ended June 30, 2019 February 19, 2020 www.PunGroup.com THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 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 A MEMBER OF AwimXGLOBAL PAI THE A MEMBER OF PUN GRC UP Alliri►al ACCOUNTANTS & ADVISORS GLOBAL Scope of Work www.PunGroup.com THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 Scope of Work • Financial Statement Audit Comprehensive Annual Financial Report (Complete) Compliance Audit Single Audit — Federal Expenditures Audit (Finalizing) Agreed Upon Procedures GANN Limit (Complete) A MEMBER OF AwimXGLOBAL Federal Transit Administration, National Transit Database Uniform System of Accounts (Complete) THE A MEMBER OF PUN GRC UP Alliri►al ACCOUNTANTS & ADVISORS GLOBAL AU -C 260 Required Communications www.PunGroup.com THE PUN GROUP RCC"OUN I -ANTS & ADVISORS AU -C 260 Required Communications • Audit Responsibilities • Significant Findings from Audit • Accounting Policies, Significant Estimates and Disclosures A MEMBER OF AkkiiaaXGLOBAL • 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 13 — Deficit in Net Position • Note 15 — Commitments and Contingencies 0 Note 16 — Prior Period Adjustments THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 AU -C 260 Required Communications (Continued) • Difficulties Encountered in Performing the Audit A MEMBER OF AkkimXGLOBAL • Corrected / Uncorrected Audit Adjustments — Representation Letter • 29 Adjusting Journal Entries Posted Post -Closing • Proposed but Unposted Adjustments (Slides 33-37) • Disagreements with Management - None • Consultations with Other Independent Accountants — None • Other Audit Findings or Issues • Reportable Conditions in Internal Controls — Reported within Single Audit • Other Matters —Auditors' Responsibility • Required Supplementary Information • Supplementary Information THE A MEMBER OF PUN GRC UP Alliri►al ACCOUNTANTS & ADVISORS GLOBAL Audit Responsibilities www.PunGroup.com THE PUN Gf-OUP RCC"OUN I -ANTS & ADVISORS A MEMBER OF AkkiiaaXGLOBAL Management Responsibilities • Responsible for preparation of 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 error or fraud • Prevent and detect fraud THE PUN Gf-OUP RCC"OUN I -ANTS & ADVISORS Auditors' Responsibilities A MEMBER OF AkkiiaaXGLOBAL • Perform the audit in conformity with Auditing Standards: • Generally Accepted in the United States of America • 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 risk of material misstatements in financial statement and consider 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 are reportable conditions THE A MEMBER OF PUN GRC UP Alliri►al ACCOUNTANTS & ADVISORS GLOBAL Approach to the City of Lodi Audit www.PunGroup.com THE PUN GROUP AC COUN FAIN l4 & ADVISORS The Pun Group's Audit Approach A MEMBER OF AnimXGLOBAL Planning 1,Interim Year End > Financial Audit Reporting Closeout Phases: Initial Planning / Entrance Meetings (May/June) Meet with City's Management to update City policies and procedures, establish any specific requirements Management may have, identification of unique transactions, implementation of new GASB pronouncements, and develop the audit work plan for the engagement. Interim (June) Assess accounting policies adopted by the City, obtain an understanding of the City and its operating environment, review internal controls on all significant transaction classes, perform walkthroughs and/or tests of internal control, perform preliminary analytical procedures, develop initial risk assessment, evaluate Single Audit compliance (if needed), identify any audit issues, and prepare confirmation correspondence. Also establish expectations including responsibilities and assignments for the year-end audit and hold a progress status meeting at the end of the Interim phase. Year -End (October/November) Conduct audit procedures on account balances in the general ledger, finish confirmation procedures, search for unrecorded liabilities, perform substantive analytical review procedures, complete work on compliance over Federal awards, and conclude fieldwork. Exit conference held at the end of the Year -End phase and communicate audit progress to management. Reporting (December) Review and prepare audit reports and perform quality control procedures over financial statements and audit work in accordance with the Quality Control Standards issued by the AICPA and GALAS. Audit Closeout (January/February) Written reportable conditions (prior year and current year) are presented in draft to management for review, response, and corrective action. At the City's request, the Engagement Partner and Manager will present the audit to the City's governing body. 12 THE A MEMBER OF PUN GRC UP Alliri►al ACCOUNTANTS & ADVISORS GLOBAL Overview of the Financial Statements www.PunGroup.com THE PUN GROUP RCC"OUN I -ANTS & ADVISORS Comprehensive Annual Financial Report Introductory Section (Unaudited) • Letter of Transmittal • Certificate of Achievement for Excellence in Financial Reporting • Organization Chart • Directory of Officials and Advisory Bodies • Basic Financial Statements A MEMBER OF AkkiiaaXGLOBAL • 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 (Limited Procedures) • GASB 68 Schedules on Pensions • GASB 75 Schedules on OPEB • Budgetary Comparison Schedules — General Fund and Streets Fund THE PUN GROUP ►d• L0M! u r MON MSI H9 M [i.7 A MEMBER OF AkkimXGLOBAL Comprehensive Annual Financial Report (Continued) • Supplementary Information • Combining and Individual Fund Statements and Schedules — Non -major Funds • Statistical Section (Unaudited) • Financial Trends • Revenues Capacity • Debt Capacity • Demographic Information • Operating Information • Continuing Disclosures (Unaudited) • Annual Report for: • Electric Utilities • Wastewater Utilities • Lodi Public Financing Authority • Water Utilities THE PUN GROUP RCCOUN FANTS &C ADVISORS City of Lodi Government -Wide Financial Statements Summary Statement of Net Position June 30, 2019 Assets Deferred Outflows of Resources Liabilities Deferred Inflows of Resources Net Position: Net investments in capital assets Restricted Unrestricted Total Net Position A MEMBER OF AkkiiaaXGLOBAL Governmental Business -Type Activities Activities Total $ 203, 481,174 $ 345, 689, 716 $ 549,170, 890 19, 965, 907 10, 970, 407 30, 936, 314 193, 383, 262 178, 099, 713 371, 482, 975 3,204,039 343,129 3,547,168 116,151,450 129,858,469 246,009,919 25,750,892 20,402,223 46,153,115 (115, 042, 563) 27, 956, 589 (87, 085, 974) $ 26, 859, 779 $ 178, 217, 281 $ 205, 077, 060 THE PUN GROUP RCCOUN FANTS &C ADVISORS City of Lodi Government -Wide Financial Statements Summary Statement of Activities For the Year Ended June 30, 2019 Expenses Program Revenues Charges for Services Operating Grants and Contributions Capital Grants and Contributions Total Program Revenues Net Cost of Services General Revenues Transfers Governmental Business -Type Activities Activities A MEMBER OF AkkiiaaXGLOBAL Total $ 63, 694, 896 $ 95, 738, 806 $ 159, 433, 702 5,666,801 97, 426, 034 103, 092, 835 7,968,497 8,260,984 16,229,481 6,861,267 2,092,051 8,953,318 20,496,565 107,779,069 128,275,634 (43,198, 331) 12, 040, 263 46, 633, 046 3,905,811 4,233,780 (4,233,780) (31,158,068) 50, 538, 857 Changes in Net Position $ 7,668,495 $ 11,712,294 $ 19,380,789 THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 City of Lodi General Fund Summary Balance Sheet June 30, 2019 Assets Liabilities Deferred Inflows of Resources Fund Balance: Restricted Commited Unassigned Total Fund Balance $ 29, 658, 636 $ 67424,621 6915603 10, 716, 555 563,374 11,172,483 $ 2274521412 A MEMBER OF AkkimXGLOBAL THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 A MEMBER OF AwimXGLOBAL City of Lodi General Fund Summary Statement of Revenues, Expenditures and Changes in Fund Balance For the Year Ended June 30, 2019 Revenues: Taxes Charges for services Licenses, permits, fines, fees Intergovernmental revenues Other Total revenues Expenditures: General governments Public protection Public Works Library Total expenditures Proceeds from Property Sale Net Transfers In (Out) Changes in Fund Balance $ 42,709,089 1,772,088 1,340,263 1,186,022 2,417,873 49,425,335 7,136,809 31,743,158 2,180,840 1,165,499 42,226,306 698 3,515,220) $ 3,684,507 THE A MEMBER OF PUN GRC UP Alliri►al ACCOUNTANTS & ADVISORS GLOBAL Key Financial Indicators and Pension & OPEB Information www.PunGroup.com THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 $16,000,000 $15,000,000 $14,000,000 $13,000,000 $12,000,000 $11,000,000 $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 A MEMBER OF AwimXGLOBAL City of Lodi Sales Tax For the Last Five Fiscal Years Ended June 30, By Fiscal Year f►W1 10�4131 411Wi481R: 411101 THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 City of Lodi Governmental Activities Net Cost of Services to Tax Revenues For the Fiscal Year Ended June 30, 2019 Expenses $ 637694,896 Less: Program Revenues Net Cost of Services Tax Revenues (20,496,565) 43,198,331 42,709,089 Ratio 101.15% A MEMBER OF AwimXGLOBAL THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 City of Lodi General Fund Reserves Available Fund Balance to Annual Expenditures As of and for the Fiscal Year Ended June 30, 2019 Unassigned Fund Balance $ 11,172,483 Annual Expenditures 42,226,306 General Fund Reserves Ratio 2018 $ 9,735,786 1MIA•: 1: A MEMBER OF AwimXGLOBAL Change 14.8% 4.3% �[I11IY� THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 City of Lodi GASB 68 — The Pension Standard Net Pension Liablity@ 7.15% Discount Rate Funded Ratio June 30, 2019 Miscellaneous A MEMBER OF AwimXGLOBAL Safety Total $ 58,379,934 $ 77,905,917 $ 136,285,851 70.37% AU A Sensitivity Analysis: Net Pension Liability @ 6.15% (-1 %) $ 83,800,072 $ 104,835,584 $ 188,635,656 Net Pension Liability @ 8.15% (+1 %) $ 37,299,772 $ 55,833,152 $ 93,132,924 Source: Footnote 8 to CAFR & RSI THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 City of Lodi GASB 75 — The OPEB Standard June 30, 2019 Net OPEB Liablity @ 3.66% Discount Rate Funded Ratio Sensitivity Analysis: Net OPEB Liability @ 2.66% (-1 %) Net OPEB Liability @ 4.66% (+1 %) Source: Footnote 9 to CAFR & RSI Total $ 33,422,021 3.31% $ 37,208,508 $ 30,218,615 A MEMBER OF AwimXGLOBAL THE A MEMBER OF PUN GRC UP Alliri►al ACCOUNTANTS & ADVISORS GLOBAL Single Audit Report www.PunGroup.com THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 City of Lodi Summary Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2019 Total Federal Expenditures $ 4,577,911 Major Program: 20.507 Federal Transit Cluster $ 1,400,000 Total Tested 30.58% A MEMBER OF AkkimXGLOBAL THE A MEMBER OF PUN GRC UP Alliri►al ACCOUNTANTS & ADVISORS GLOBAL Audit Result www.PunGroup.com THE PUN Gf-OUP RCC"OUN I -ANTS & ADVISORS Audit Result • Financial Statements A MEMBER OF AkNoXGLOBAL • 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 Single Audit (In Review) • Reportable conditions in internal control over financial reporting • Instance of Noncompliance Procurement Policy (Repeat Finding) — No Questioned Costs Procurement, Suspension, and Debarment - $402,000 Questioned Costs THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 Audit Result (Continued) GANN Limit NTD No exceptions were found A MEMBER OF AkkimXGLOBAL No exceptions were found to agreed upon procedures THE PUN GROUP RCCOUN FANTS &C ADVISORS A MEMBER OF AkkiiaaXGLOBAL Summary of Findings and Recommendations - 2019 Section II — Financial Statement Findings 2019-001 Internal Control over Financial Reporting • Accuracy in financial statement preparation and accounting close process • Pooled cash bank reconciliation not timely and contained significant unreconciled differences • Missing approval for review of cash receipts batches in 21 of 25 selected for testing • Missing approvals for review of payroll timecards in 10 of 25 selected for testing 2019-002 Capital Assets Accounting ($1.3 million T) • Multi-year funded capital project placed in service in prior years were not capitalized 2019-003 Valuation of Electric Utility Underground Lines • Replacement cost used to value underground lines when generally accepted accounting principles requires actual cost ($3.9 million ($2.1 million prior year T )) 2019-004 Cybersecurity Risk Mitigation and Exposure • Enhance risk assessment procedures and ensure NIST or other frameworks are used to include the areas of identification, protection, detection, responsiveness and recovery 2019-005 Accounting for Sick Leave Conversion Bank ($8.5 million T) • Ensure all commitments for long-term liabilities related to employee benefits are identified and accounted for in the government -wide financial statements THE PUN GROUP ►210 L0M! u r MON MSI H9 M [i.7 A MEMBER OF AkkimXGLOBAL Summary of Findings and Recommendations - 2019 (continued) Section III — Federal Award Findings 2019-006 Procurement Policy (Repeat Finding of 2018-001) • Update purchasing policies and procedures to bring it into compliance with the requirements of Uniform Guidance and document decision to extend date of compliance with 2 CFR par 200 (effective beginning July 1, 2018) 2019-007 Procurement, Suspension and Debarment • Verification of contractor suspension or debarment in the Federal General Services Administration System for Award Management did not occur or was not documented 32 THE PUN GROUP ►da Lam! u r MON MVMI H9 M 061 Summary of Unposted Audit Adjustments Governmental Activities A MEMBER OF AwimXGLOBAL 33 Financial Statement Effect—Overstatement(Understatment) Change in Description (Nature) Factual (F), Work- Total Fund Fund of Audit Difference Judgmental (J), Posted/ paper Assets/Deferred Total Liabilities/ Balance/Net Revenues/ Expenses/ Balance/ Net AD or Projected P Cause Unposted Ref. Outflows Deferred Inflows Position Trsfrs In Trsfrs Out Position Management posts the full net OPEB liability to the internal service fund when under Allocation of OBEB GAAP, it should be Liability Among Related allocated to the funds Funds P that benefit Unposted 5700 Impact on: Governmental Activities 9,358,166 -9,317,101 41,044 -41,044 Aggregate Non -Major ISF - Fleet -668,440 665,507 -2,933 2,933 ERP Impairment The ERP system was capitalized but certain components are no longer used after moving to the cloud, costs associated with it should not have been J capitalized. Unposted 4430.01 -931,576 -931,576 -931,576 $ 931,576 $ 8,689,726 $ 8,651,594 $ 931,576 $ 38,111 $ 969,687 Less audit adjustments subsequently booked $ 931,576 $ 8,689,726 1 $ 8,651,594 $ 931,576 $ 38,111 1 $ 969,687 Net unadjusted AD—current year (iron curtain method) 33 THE PUN GROUP ►210 Lam! 10 r nI `► r MVMI H9 M 061 Summary of Unposted Audit Adjustments Business Type Activities A MEMBER OF AwimXGLOBAL 34 Financial Statement Effect—Overstatement(Understatment) Change in Description (Nature) Factual (F), Work- Total Fund Fund of Audit Difference Judgmental (J), Posted/ paper Assets/Deferred Total Liabilities/ Balance/Net Revenues/ Expenses/ Balance/ Net AD or Projected P Cause Unposted Ref. Outflows Deferred Inflows Position Trsfrs In Trsfrs Out Position Management used prior replacement cost (from 2012) for underground line valuation instead of actual cost and was not tracking installation data for linear feet causing math errors in the valuation computation. Entry is to adjust prior period impact for estimated amounts based on current replacment Electric Underground cost discounted using Posted Line Valuation J, P construction indices. AJE#27 4435.1 $ 3,985,376 $ 2,056,860 $ 1,928,516 $ 1,928,516 Management posts the full net OPEB liability to the internal service fund when under Allocation of OBEB GAAP, it should be Liability Among Related allocated to the funds Funds P that benefit 5700 Impact on: Business Type Activities Unposted -9,358,145 9,317,101 -41,044 41,044 $ 3,985,376 $ 9,358,145 $ 7,260,241 $ $ 1,969,560 $ 1,969,560 $ 3,985,376 1 1 $ 2,056,860 $ 1,928,516 1 $ 1,928,516 Less audit adjustments subsequently booked $ $ 9,358,145 $ 9,317,101 1 $ 1 $ 41,044 $ 41,044 Net unadjusted AD—current year (iron curtain method) 34 THE PUN GROUP ►210 Lam! 10 r nI `► r MOW H9 M 061 Summary of Unposted Audit Adjustments Enterprise Funds - Electric Utility A MEMBER OF AwimXGLOBAL 35 Financial Statement Effect—Overstatement(Understatment) Change in Description (Nature) Factual (F), Work- Total Fund Fund of Audit Difference Judgmental (J), Posted/ paper Assets/Deferred Total Liabilities/ Balance/Net Revenues/ Expenses/ Balance/ Net AD or Projected P Cause Unposted Ref. Outflows Deferred Inflows Position Trsfrs In Trsfrs Out Position Electric Underground Management used Line Valuation prior replacement cost (from 2012) for underground line valuation instead of actual cost and was not tracking installation data for linear feet causing math errors in the valuation computation. Entry is to adjust prior period impact for estimated amounts based on current replacment cost discounted using Posted J, P construction indices. AJE#27 4435.1 $ 3,985,376 $ 2,056,860 $ 1,928,516 $ 1,928,516 Allocation of OBEB Management posts the Liability Among Related full net OPEB liability to Funds the internal service fund when under GAAP, it should be allocated to the funds P that benefit 5700 Impact on: Electric Unposted -4,344,863 4,325,797 -19,066 19,066 $ 3,985,376 $ 4,344,863 $ 2,268,937 $ - $ 1,947,582 $ 1,947,582 39853761 01 2,056,8601 1,928,516 -1,928,516 Less audit adjustments subsequently booked $ - 1 $ 4,344,863 $ 4,325,797 1 $ 1 $ 19,066 $ 19,066 Net unadjusted AD—current year (iron curtain method) 35 THE PUN GROUP ►de Lam! 10 r nI `► r MSI H9 M 061 Summary of Unposted Audit Adjustments Enterprise Funds - Water and Wastewater A MEMBER OF AwimXGLOBAL Description (Nature) of Audit Difference AD Factual (F), Judgmental (J), or Projected P Cause Work- paper Ref. Financial Statement Effect—Overstatement(Understatment) Posted/ Unposted Total Assets/Deferred Outflows Total Liabilities/ Deferred Inflows Fund Balance/Net Position Revenues/ Trsfrs In Expenses/ Trsfrs Out Change in Fund Balance/ Net Position Allocation of OBEB Liability Among Related Funds P Management posts the full net OPEB liability to the internal service fund when under GAAP, it should be allocated to the funds that benefit 5700 Impact on: Water -2,339,541 2,329,275 -10,266 10,266 Less audit adjustments subsequently booked Net unadjusted AD—current year (iron curtain method) $ $ 2,339,541 $ 2,329,275 1$ - $ 10,266 $ 10,266 i $ 1 $ 2,339,541 $ 2,329,275 1 $ 1 $ 10,266 $ 10,266 Allocation of OBEB Liability Among Related Funds P Management posts the full net OPEB liability to the internal service fund when under GAAP, it should be allocated to the funds that benefit 5700 Impact on: Wastewater -2,339,541 2,329,275 -10,266 10,266 Less audit adjustments subsequently booked Net unadjusted AD—current year (iron curtain method) $ - $ 2,339,541 $ 2,329,275 1$ - $ 10,266 $ 10,266 $ - $ 2,339,541 $ 2,329,275 $ - $ 10,266 $ 10,266 36 THE PUN GROUP ►210 L0M! u r MON MVMI H9 M 061 A MEMBER OF AwimXGLOBAL Summary of Unposted Audit Adjustments Enterprise Funds — Transit & Aggregate Non -Major Description (Nature) of Audit Difference AD Factual (F), Judgmental (J), or Projected P Cause Work- paper Ref. Financial Statement Effect—Overstatement(Understatment) Posted/ Unposted Total Assets/Deferred Outflows Total Liabilities/ Deferred Inflows Fund Balance/Net Position Revenues/ Trsfrs In Expenses/ Trsfrs Out Change in Fund Balance/ Net Position Allocation of OBEB Liability Among Related Funds P Management posts the full net OPEB liability to the internal service fund when under GAAP, it should be allocated to the funds that benefit 5700 Impact on: Transit Unposted -334,200 332,754 -1,446 1,446 Less audit adjustments subsequently booked Net unadjusted AD—current year (iron curtain method) $ $ 334,200 $ 332,754 $ $ 1,446 $ 1,446 1 $ $ 334,2001 $ 332,754 $$ 1,446 $ 1,446 Allocation of OBEB Liability Among Related Funds P Management posts the full net OPEB liability to the internal service fund when under GAAP, it should be allocated to the funds that benefit 5700 Impact on: Aggregate Non -Major ISF - Fleet Unposted -668,440 665,507 -2,933 2,933 Less audit adjustments subsequently booked Net unadjusted AD—current year (iron curtain method) $ $ 668,440 $ 665,507 $ $ 2,933 $ 2,933 $ i $ 668,440 $ 665,507 1 $ i $ 2,933 $ 2,933 37 THE PUN GROUP ►d• L• M! u r MON MSI •]9 M [i.7 A MEMBER OF AwimXGLOBAL Contact• • Vanessa I. Burke, CPA, CPFO, Engagement Partner 2121 North California Boulevard Walnut Creek, California 94596 P: (925) 974-3394 1 F: (949) 777-8850 1 vanessa.burke@pungroup.com Walnut Creek, California 94596 P: (925) 974-3394 1 F: (949) 777-8850 1 paul.phangureh@pungroup.com