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Agenda Report - March 3, 2004 I-03
AGENDA ITEM W d# . CITY OF LODI COUNCIL COMMUNICATION 7M AGENDA TITLE: REPORT TO THE COUNCIL — FINANCIAL AUDIT FOR FISCAL YEAR 2002-03 MEETING DATE: March 3, 2004 PREPARED BY: Finance Director RECOMMENDED ACTION: That the City Council receives for file the following reports and financial statements submitted by Macias, Gini & Company LLP and the Finance Department for Fiscal -Year 2002-03: • The Combined Annual Financial & Single Audit Report • Letter to the Council (SAS 61) • Report on Applying Agreed-upon Procedures BACKGROUND INFORMATION: The annual audit was conducted to assure the City Council and other interested parties that the City's financial records and reports are prepared in accordance with generally accepted accounting principles (GAAP), that internal controls are adequate to safeguard the City against loss from unauthorized use or disposition of assets and that the City has complied with all agreements and covenants to obtain grant funds and debt financing. Macias, Gini & Company LLP ("MG") has issued an "unqualified opinion" and Scott Brunner, Director of MG will be present to do the presentation and 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 Finance Department or at the Lodi Public Library for reference. Certificate of Achievement The City received a Certificate of Achievement for Excellence in Reporting from the Government Finance Officers Association of United States and Canada (GFOA) and the California Society of Municipal Finance Officers (CSMFO) for the ninth year in a row. Copies of these certificates are included in the 2002-03 Financial Report. Acknowledgments The Accounting staff of the Finance Department should be commended for their hard work and professionalism in preparing the City's Annual Financial Reports especially during the implementation of GASB Statement No. 34 and the transition to a new audit firm; it is due to their dedication to excellence and to the City that made Lodi recognized by the auditors and other professional financial organizations. FUNDING: None VM/kb Attachments -R. Au :& Vicky FAthie, inance ire or APPROVED: H. N=6 Flynn, City Managen CITY OF LODI Report to Management For the Fiscal Year Ended June 30, 2003 CITY OF LODI Report to Management For the Fiscal Year Ended June 30, 2003 Table of Contents Page(s) RequiredCommunications ................ ........................................................................................... 1-3 Schedule of Uncorrected Misstatements..........................................................................................4 February 6, 2004 To the City Council of the City of Lodi We have audited the financial statements of the City of Lodi, California (City) for the fiscal year ended June 30, 2003, and have issued our report thereon dated January 13, 2004. Professional auditing standards require that we provide you with the following information related to our audit. 1. The Auditor's Responsibility Under U.S. Generally Accepted Auditing Standards and OMB Circular A-133 As stated in our engagement letter dated July 16, 2003, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance about whether the basic financial statements are free of material misstatement and are fairly presented in accordance with U.S. generally accepted accounting standards. Because an audit is designed to provide reasonable, but not absolute assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not detected by us. In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the basic financial statements and not to provide assurance on the internal control over financial reporting. We also considered internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. As part of obtaining reasonable assurance about whether the City's basic financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of basic financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit. Also, in accordance with OMB Circular A-133, we examined, on a test basis, evidence about the City's compliance with the types of compliance requirements described in the US. Office of Management and Budget Circular A-133 Compliance Supplement applicable to each of its major federal programs for the purpose of expressing an opinion on the City's compliance with those requirements. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City's compliance with those requirements. H. Significant Accounting Policies Management has the responsibility for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the City are described in Note I to the financial statements. As described in Note 1 to the financial statements, the City changed accounting policies related to financial statement presentation and disclosures by adopting Governmental Accounting Standards Board (GASB) Statement Nos. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments; 37, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments: Omnibus; and 38, Certain Financial Statement Note Disclosures, in 2003. The City also changed accounting policies related to recognition of certain liabilities and expenditures by adopting GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements, in 2003. Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in Note 17. The City also changed accounting policies related to derivative disclosures by adopting GASB Technical Bulletin No. 2003-1, Disclosure Requirements for Derivatives Not Reported at Fair Value on the Statement of Net Assets, in 2003. During 2003, the City executed two transactions with Citigroup, which comprised 1) the termination of an existing $42 million fixed -to -floating swap maturing 2014 and 2) the execution of a new $42 million fixed -to -floating swap maturing 2009. In accordance with GASB Technical Bulletin No. 2003-1, Disclosure Requirements for Derivatives Not Reported at Fair Value on the Statement of Net Assets, the City has made the required disclosure in Note 8 to the financial statements. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. III. Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were (1) depreciation, (2) allowance for doubtful accounts, (3) compensated absences, and (4) self-insurance liability. We evaluated the key factors and assumptions used to develop those estimates in determining that they are reasonable in relation to the financial statements taken as a whole. IV. Audit Adjustments For the purposes of this report, professional standards define an audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the City's financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we posed, whether recorded or unrecorded by the City, either individually or in aggregate, indicate matters that could have a significant effect on the City's financial reporting process. 0) In addition, the attached schedule summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. V. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a fumcial accounting, reporting or auditing matter that could be significant to the basic financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. VI. Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If consultation involves applications of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. VII. issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. V11I. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing our audit. This information is intended solely for the use of the City Council and management of the City of Lodi and is not intended to be and should not be used by anyone other than these specified parties. Certified Public Accountants Sacramento, California February 6, 2004 City of I.odi Schedule of Uncorrected Misstatements .lane 30, 2603 4 O mine Unit Expense! PiE N Activi Fund Fund Account Description ptlse Aaaet liability -Equity Revenue Expenditure 1 Business -type Remaining Transit Fund Accumulated Depreciation 2,921 Business -type Remaining Transit Fund Depreciation expense - - - - (2,921) To Adjust depreciation expense per the financial statements to detailed spreadsheet. 2 Business -type Electric Electric Depreciation Expense 4,452 Business -type Electric Electric Accumulated Depreication - - - - (4,452) To adjust depreciation expense per the financial statements to detailed spreadsheet. 3 Business -type Waatewabor Wastewater Depreciation expense 1,144 - - - - Business -type Wastewater Wastewater Accumulated Depreciation _ _ _ (1,144) To adjust depreciation expense per the financial statements to detailed spreadsheet. 4 Govemmeatal----------- — Accumulated Depreciation 115,142 Governmental .-------------.»---.....- Net assets, beginmiug of year - - 351,486 - Govemmented —_---------»- Depreciation expewe (466,628) To adjust depreciation expense to actual, as this amount represents so additional year of depreciation 5 Governmental Remaining ISF Depreciation expense Governmental Remaining ISF Accumulated Depreciation - - - - 1,419 To adjust the porkers compensation claims liability to the 2002 actuarial study 7054 confidence level. 6 Governmental ------ ------ Debt Principal - 1,380 - - _ Governmental ------ ---------- Cash (1,380) - To adjust West America capital lease payment to the'debt service - principal payments' expenditure line. 7 Business -type Wastewater Wastewater Interest payable - 53,250 - - Business -type Wastewater Wastewater Net asets,beginning of year (54,477) Business -type Wastewater Wastewater Interest expense - - - - 827 To reduce interest expense and interest payable, to properly accrue interest expense at June 30, 2003. 8 Governmental General General Due from other funds (229,120) Governmental General General Advance to other funds 229,120 - Governmental Capital Outlay Reserve Capital Outlay Reserve Due to other funds 229,120 Governmental Capital Outlay Reserve Capital Outlay Reserve Advances from other funds - (229,120) - - Governmental Capital Outlay Reserve Capital Outlay Reserve Due from other fiords (763,291) Governmental Capital Outlay Reserve Capital Outlay Reserve Advance to other funds 763,291 - Governmental Remaining Streets Due to other funds - 690,291 Govemmental Remaining Strom Advances from other funds - (690,291) Governmental Remaining Hutchings Street Square Due to other funds - 73,000 Governmental Retraining Hutchings Street Square Advances from other funds - (73,000) Business -type Electric Electric Due from other funds (2,050,000) Business -type Electric Electric Advance to other funds 2,050,Wo Governmental Capital Outlay Reserve Capital Outlay Reserve Due to other funds - 2,050,000 Governments[ Capital Outlay Reserve Capital Outlay Reserve Advances from other funds - (2,050,000) Business -type Water Water Due from other funds (1,396,764) Business -type Water Water Advance to other funds 1,396,764 - Governmental Capital Ouday Reserve Capital Outlay Reserve Due to other funds _ 1,396,764 Governmental Capital Outlay Reserve Capital Outlay Rescue Advances from other funds (1,396,764) To reclass due Wfmm that are long-term in nature to advance from/to. 4 Independent Accountant's Report On Applying Agreed -Upon Procedures Related to the Article XI I -B A propdations Limit Calculation For theYear Ended June 30, 2003 Macias, Gini & Company,,., Certified Public Accountants and Management Consultants The Honorable City Council City of Lodi Lodi, Califon-ia INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON .PROCEDURES RELATED TO THE ARTICLE I1IR APPROPRIATIONS LIMIT CALCULATION We have performed the procedures enumerated below to the accompanying Appropriations LimitWork-sheet for the City of Lodi, California (City) for the year ended Julie 30, 2001 These procedures, which were agreed to by the City and the Teague of California Cities (as presented in the publication entitled greed -upon Procedures Applied to the Appropriations Limitation Prescribed by article MIT -B of the California Cofistit tions). were per.fo ed solely to assist the City in meeting the requirements of Section 1.5 of Article X1II-13 of the California Constitution. The City's management is responsible for the Appropriations Limit Worksheet. This agreed-upon procedures enaa er e,nt was conducted in accordance with attestation standards established by the American Institute of Certified public Accountants. The sufficiency of the procedures is solely the responsibility of the specified users of the report, Consequently, we retake no representation regarding the sufficiency ofthe procedures described below either for the purpose For which this report has been requested or for any caber purpose. The procedures performed and our findings were as follows; I We obtained the completed worksheets supporting the Appropriations Limit Worksheet and compared the limit and annual adjustment. factors included in. those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and. inflation options included in the aforementioned worksheets to those that were selected by a recorded vote of the City Council. Finding: No exceptions were: noted as a result of our procedures. Z, For the accompanying Appropriations Limit Worksheet, we added last year's limit to the annual adjustment amount, and compared the resulting amount to this year's limit. Finding. No exceptions were noted as a result of our procedures. 3. We compared the current year information presented in the accompanying Appropriations Limit Worksheet to the other worksheets described in No. I above. Finding. No exceptions were noted as a result of our procedures. 4. We compared the pricer year appropriations limit presented in the accompanying Appropriations Limit Work -sheet to the prior year appropriations limit adopted by the City CounciI in the prier year. Finding: No exceptions were noted as a result of our procedures. We were not engaged to, and did not conduct an examination, the objective of which would be the expression of an opinion on the accompanying Appropriations Limit Worksheet. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the lase year, as defined by Article X111- ofthe California Constitution. This report is intended solely for the inforrnation and use of the City Council and m na ei-nnnt of the City of Lodi and is not intended to be and should not be, used by anyone other than those specified parties. However, this report is a matter of public record and its distribution is not limited. Certified public Accountants Sacramento, California July 28, 2003 CITY Ot¢ . OD] APPROPRIATIONS LIMIT WORKSHEET FORTHE FISCAL YEAR ENDED JUNE 30, 2003 2001-2002 Appropriations Limit $ 56,959,824 2003 Adju.stnient factors, Population* 1.0214 Inflation" 0.9873 Total adjustment factors 1.0084 Annual adjustment 4801,070. 200703 appropriations Urnit 57,439.9894; The population factor is based on the increase within the City of Lodi * The inflation factor is based on the percentage change in California's per capita personal income. CITY OF LODI., CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPOR-) Imolpe Aouspoo; JoseuieW r t y:Aqnjj INTRODUCTORY SECTIO.1 CITY OF LORI COMPREHENSIVE HENSIV ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2003 MANAGEMENT DI CUSSI AND ANALYSIS 3 BASK FWANCIAL STATEMENTS Govemment-wide Financial Statements: Statement of Net Assets 1 Statement of Activities 14 Fund Financial Statements: 15 Balance Sheet — Governmental Fronds 18 Per-onctiiation of the Balance Sheet of Governmental Fundy to the Statement of. Net Assets 19 Statement of Revenues, Expenditures a:nd Changes in Fund .Balances — ov rnmental Funs 20 i=2econcallation of the Sta€e lent of Revenues,.:Expenditures and Changes in. Fuad Salances of Governmental Funds to the Statement of Activities 21 Statement of Net Assets -`Proprietary Funds 22 Statement of Revenues, Expenses and Changes in Net Assets —.Proprietary Funds 23 Statement of Cash Flaws — Proprietary Funds 24 Statement of Fiduciary Net Assets — Fiduciary Funds 2 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds 26 Notes to Basic Financial. Statements 27 REQUIRED SUPPLEMENTARY -INFO TION Schedule cif Funding Progress -- Pension Plan 73 Schedule of Raverives, Expenditures and Changes in Fasted Balance — Budget and Actual — General Fund 74 Notes to the Required Supplementary Information 75 F77771 CITY OF LODI COMPRE HENSIVEANNUAL FiNANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2003 TABLE OF CONTENTS -continued COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Combining Balance Sheet — Nonmajor Governmentai Funds 77 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds 78 Nonmajor, Governmental Funds - Special Revenue Funds 79 Combining Balance Sheet —Nonmajor Governmental Funds — Special Revenue Funds 81 Combining Statement of Revenues, Expenditures and Changes in Fund Balances.— Nonmajor Governmental Funds — Speciat:Revenue Funds 82 Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — Nonmajor Governmental Funds — Special Revenue Funds 83 Nonmajor Governmental Funds - Capital Project Funds 87 Combining Balance Sheet —Nonmajor Governmerrtal Funds — Capital Project Funds 88 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds — Capital Project Funds 89 Combining Statement of Fiduciary Net Assets - Private-Purposa Trust Funds 91 Combining Statement of Changes in Fiduciary Net Assets - Fiduciary Funds 92 Statement of Changes in Assets and Liabilities - Agency Funds 93 STATISTICAL TABLES (UNAUDITED) Government -wide information: Government -wide Expenses by Function - Last Ten Fiscal Years 95 Government -wide Revenues - Last Ten fiscal Years 96 Fund information: General Governmental Revenues by Source - Last Ten Fiscal Years 97 General Governmental Expenditures by Function - Lett Ten Fiscal Years 98 General Governmental TaxRevenues by Source - Last Ten Fiscal Years 99 Secured Tax Levies and Collections - Last Ten Fiscal Years 100 Assessed Full Cash Value of all Taxable Property - Last Ten Fiscal Years 101 Property Tax Rates - Direct & Overlapping Governments - Last Ten Fiscal Years 102 Special Assessment Billings and CoNections - Last T6h Fiscal Y . ears 103 Ratio of Net General Bonded Debt to Taxable. Assessed Value and.Net Bonded Debt Per Capita - Last Ten Fiscal Years 104 Computation of Direct and Overlapping General Bonded Debt - June 30,2003 105 Debt Ratios - June 30, 2003 105 Computation of Legal Debt Margin - June 30, 2003 106 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total Governmental Expenditures- Last Ten Fiscal Years 107 Revenue Bond Coverage - Last Ten Fiscal Years 108 Demographic Statistics - Last Ten Fiscal Years 109 Construction Activity - Last.Ten Fiscal Years 1.10 Bank Deposits - Last Ten Fiscal Years 11.1 an on am no as no an "a an an NO so as so 00 on an CITY OF LOCI COMPREHENSIVE: ANNUAL FI A IAL REPORT FOR THE YEAR ENDED JUNE 30, 2003 TABLE F:CONTENTS -continued Principal Employers - Jame 30, 20 3 .. 112 Prt cipal.Taxpayers - June.3 , 2001 113 Surety Bonds of Principal Officials -- June 36, 2003 114 Gann Appropriation Limitation m Last Teri Fiscal Years 115 Persannel Aut h arized - Last Tera F 1scal Years 116 Scheda 16 of Takable Sales and :Permits : y Cat ary — Last Ten Fiscal Fears 117 Sdf edule of Business Tax Receipts issued — Year ended June 347, 2003 119 Miscellaneous Statistics e June 30, 2003 120 RMWERIM Schedule of Expenditures of Federal. Awards 121 Notes to the Sched le of Expenditures of Federal Awards 122 Indepe de t Auditor's Report on Comphance and on lntemal Control Deer Financial. epofting Based on an Audit of Basic Fin andal Statements Performed in Accordance with Government Auditing Ste ndards. 123 Independent Auditors Report on Compliance with Requirements Applicable to E ach Major Program, internal Control over Compliance and Schedule of Expenditures of Federal Awards in Accordance with Circular A-133 125 Schedule of Findings and Questioned Costs 128 Status of Prior Year Findings a.nd Questioned Gusts 129 CITY COUNCIL SUSAN HITCHCOCK, Mayor EWLY HOWARD, Mayor Pro Tempore COUNCiLMEMBERS: JOHN BECKMAN LARRY HAI SEN KEITH LAND January 13, 2004 INIUMM-En [Mang CITY OF LORI CITY HALL, 221 WEST PINE STREET POBOX 3006 LODI, CALiFORNIA 95241-1910 (209) 333-6706 FAQ (2091 333-6795 H. DlXON FLYNN City Manager SUSAN BLACKTON City Clerk RAI ALL A. HAYS City Attorney The Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2003, is hereby submitted. This report is provided to present the financial position, results of operations and cash flows of the City's proprietary funds as of June 30, 2003, in conformity vvith generally accepted accounting principles. The report conforms to the highest standards of financial reporting as established by the Governmental Accounting Standards Board (GASS), 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 of Lodi. Consequently, management assumes full responsibi4ty for the completeness and reliability of all the information presented in this report- To provide a reasonable basis for making these representations, management of the City of Lodi has established comprehensiv.e internal control framework that is designed to protect the City's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity W;tb GAAP, We believe that the information is accurate in all material respects and that it is presented in a manner designed to fairly present the financial position of the City. In addition, we believe that all disclosures necessary to enable the reader to gain full understanding of the City's financial activities have been included. The CAFis presented in four sections, introductory, a financial section, a statistical section and single audit section. The introductory section includes the transmittal letter, the City's organization chart and a list of principal officials. The financial section includes the independent auditors' report, management discussion and analysis, the basic financial statements, notes to the financial statements, required supplementary schedules, and the combining and individual statements. The single audit section includes the schedule of expenditures of federal awards, notes to the schedule, and reports on compliance and internal control based on the audit of the basic financial statements and on compliance and internal control with requirements applicable to each major program in accordance with OMS Circular A-133. The statistical section includes selected financial and demographic information presented on a multi-year basis. This is the first year that the Statement No. 34 of the Governmental Accounting Standards Board 'Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Governments" {GASB 34) applies to the City's CAFR. GASB 34 requires management to provide,a narrative introduction, overview, and analysis, called: Managements Discussion and Analysis (MD&A), to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunctbn with it. The MD&A can be found immediately following the independent auditors' report. THE REPORTING ENTITY AND SERVICES PROVIDED The funds and account groups included in the CAFR are those deemed dependent upon the City and controlled by the City Coundi and reflect the U 's financial reporting entity in accordance wSB Stith G.AStatement 14, ty The City provides a wide range of municipal services including public safety (police, fire and graffiti abatement), public utilities services (electric, water and wastewater), transportation services (streets, flood control and transit) leisure, cultural and social services (parks and recreation, library and comi-ntinity center), and general government services (management, human resources administration, financial administration, building maintenance and equipment maintenance), Several municipal services are provided through other government agencies, private companies or public utility companies, including; Elementary and Secondary Schools 13 Sanitation (solid waste) and Cable Television 2 Ambulance I Gas and Telephone 2 The City is located in the San Joaquin Valley between Stockton 10 miles to the south, and Sacramento 35 miles to the north, and adjacent to US, Highway 99, The City population is 60,521 and is contained in an area of 12.616 square miles, The City has grown steadily since incorporation in I M and is projected to grow to 70,500 people by the year 2007. The City's growth is provided for in both the General Plan and the City's growth control ordinance that allows an increase in population of 2% per year until the growth limits are reached, Lodi is built on a strong and broad based agricultural industry with national and industrial markets for its commodities and products. Wines., processed foods, nuts, fruit and milk are major commodities of the Lodi area and provide the basic material for food processing and packaging. These commodities support the operations of General Mills, Guild Winery and Pacific Coast Producers to name just three companies in the business of.processing local agricultural commodities. in addition, Lodi has a wide range of small, financially sound businesses that add to the economic strength of the City. These companies range in size from 10 to 150 employees and produce a wide variety of products, services and commodities, Economic Development Lodi continues to be committed to promotingcono.r aj deveippment(Wsiness retention and attraction) and expanding the tax base to fund city services rather than increase taxes to pay for these services. The City developed long and short-terra economic development pment goals in conjunofion itis .the Chamber of Commerce that resulted in, the revitalization projects for the.downtown and Cherokee Lane areas. )n add jon to revitalization efforts, the City has adopted a number of incentives to retain and attract new bas€nesses. These incentives included infrastructure improvements, regulatory fie ibility, tax credits and utility rate incentives. MAJOR GOALS, OBJECTIVES AND PROJECTS To assist the citizens of Lodi understand where the City intends to allocate available resources, the City Council, the City Manager and Department Heads have established a hierarchy of major goals, objectives and major projects that support and re-enforce the City's mission statement. Four major City goals were established as policy direction and focal .points for the efforts of City staff. These goals include: Erasure 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 Fiscaily Sound City Organization City Council, the City Manager and Department leads established nineteen major City objectives: Maintain City's Sense of Community Provide Employee Training and Education Provide ,or a Balanced Community Evaluate Telecommunications Opportunities Enhance Access through Implementation of Information Systems Strategic Flan Provide resources to Maintain City"s Infrastructure Promote urban Forestry Promote Public Relations and Marketing Efforts Attract, retain and invest in A Quality City Work Force En ure Open and Accessible Public Meetings Encourage Public Arts, Cultural and Recreational Opportunities Pursue Efforts to be Entrepreneurial Provide Appropriate and Sufficient City Facilities Improve Customer service Develop Short and Long Range Operational Plans Continue to Use Partnerships to Advance City's Objectives Develop Effective records Management Program Provide a Balanced Budget & Adhere to Adopted Policies Promote Commerciallindustrial Base Projects represent the foundation of the planning statements for the City of Lodi. These projects are designed to acQompiish specific objectives and become the focus for organization wide effort, As discussed above, economic revitalization int€need to be an actives focal point of the City in 2002-03. The following major City projects were planned in the 2001-03 two-year budget document: 1) the construction of a neer Public Safety building; 2) construction of ars outdoor skate pari; 3) construction of the civic center Veterans Memorial; 33 design and development of the DeBenedetti Park/G-Basin; ) the renovation arid expansion of the old Public Safety Building; 5) design and development of the DeBenedetti ark1G-Basin; j development and construction of aro indoor sports center, 7) design and construction €if` n aquatics center, ) construction of a. new anir ai shelter facility; 9) �-,valuatin.g the feasibility of leasing. land for the construction f a sports com.plexI) evalu ting the reed for providing paramedic/ambulance services; and 11) the implementation of the redevelopment agency. vii During fiscal year 2002/03 these projects moved through various phases of the capital improvement project process, and some General Eland projects were then put on hold until a revenue stream is identified, The slog down in the capital development cores at a time when the cost of City services is increasirG leaving less discretionary money. However, the projects identified by the City Councfls in the past years remain a high p0wfty. New Police Building The new Police Station is ander construction and will be completed in January 2004, The cost of the project is approximately ately $17.5 million. This Widirng is designed to meet the needs of the ;police Department for the next 20 years. The project is being paid for with a grant from the State for 4 million and Certificates of Participation. The Police Building is designed to be a .54,000 square foot, two-story building to horse polio operations, including staff offices and work space, property and evidence handling ares, and storage and mechanical rooms. The facility also includes a 5,600 square foot Type 1 jail, 1,000 square foot dispatch center, and 10,000 square feet of expansion shell space for future growth. The site will also include 100 secure parking spaces for police vehicles, a sally post for prisoner transportation arra a shelter for police motorcycles. Trash enclosures and an emergency generator will also be installed on the site, Outdoor Skate Park The outdoor skate park was completed in May 2002 and a formal dedication as held in August 2012, The City contracted with Spohn Ranch for temporary management ent the park and to provide equipment. The coast of the project to the City was approximately $540,000. Civic Center Veterans Monument This project was completed and dedicated in May 2002. The cost of the project was approximately $490,004 and will be reimbursed to the City by the Veterans Advisory Committee. This Monument ent consists of a 21.5 -foot stainless-steel obelisk, a 7 -foot granite sphere, an eternal flame and a pool outlined by blue cobalt file all under pit. The Monument is in a very visible location by City Hall and has received gide acclaim by the community. The major Capital Projects that were placed on hold dire to budget constraints facing the city in 2003-05 are: Public The Public W �►complete h - • • eBene ietti Park/G-Basin The project consists of design and development of a 40acre, youth sports complex (with lighted fields) and park within the "G -basin", which provides storm water storage in the park. This project is one of the highest unranked projects identified by the Parks and Recreation Commission and the City Council. The.esti ated coast of the project is $.1102 million, which is approximately 5 million greater than the estimate in June 2001, The project has gone through the schematic design and construction design phases. The General Fund portion of the project has been put on hold; however, the portions funded by other sources of revenue are expected to proceed. vili Indoor Sports Center This project consists of development and construction of a 40,000 square foot building to provide space for a gymnasiurri, exercise rooms, kitchen, meeting roorns and offices for community use. The estimated cost is $10,9 million and is currently in the schematic design phase. The construcNon design phase has been completed, Aquatics Center This project consists of design and construction of a recreation pool with water features, a 50 -mater competitive pool, snack bar, changing rooms, showers, parking and picnic areas. The estimated cost of the project is $7 million, which is a $4 million, increase from the estimate made in June 2001, The project passed through the design phase prior to being placed on hold. Animal Shelter Facility The Lodi Animal shelter was built in the 1960's to service a community of approximately 26,000. As most shelters built at that time, its purpose. was to be a "dog pound", i.e. a place to impound stray and vicious dogs before euthanizing them. The current shelter cannot meet the newly mandated State law or fulfill the expectations of a community eager to provide more humane animal care, The estimated cost of the project is $4 million, which is $1.5 greater than the original estimate made in June 2001. This will be an 18,000 square foot facility on a 3 -acre site, It will include kennels, isolation kennels, community classroom, a clinic, storage areas, exercise areas and areas set aside for expansion of kennels. The project completed the design phase prior to being placed on hold pending identification of a revenue source. Sports Complex The City is evaluating the feasibility of leasing land for the construction of a regional sports complex. This project has been on the drawing board since 1993 pending an environmental study and community input. The project is pr*cted to significantly increase tourism to Lodi and the Central Valley however at this time does not appear financiai)y feasible for the company wishing to lease the land Paramedics The City is evaluating the need for providing paramedic/arnbulance services. A private company currently provides this service. The City Council has approved placing paramedics on the engines at this time. Redevelopment Agency The greater parts of the historic business and residential areas of Lodi are located in the eastern third of the City. The age of the buildings and infrastructure in this area is between 40 to 90 years old. Many of the buildings reflect. the charm of the buildings constructed between the 1890s and 1930s, Many long time residents and businesses continue to live and conduct business in this area. Over the last fifteen to twenty years, private investment has shifted to the City's newer areas in the west and south areas of the City and the number of resident property ownem in the "Eastside" areas have decreased. Accordingly, this area has experienced a decline in the level of investment, prop" maintenance and relative prcperty values. The City Council is committed to maintaining the historic and economic vitality of this area and accordingly, the City has begun the steps necessary to form a Redevelopment Agency to preclude blight and decay and to encourage private investment. ix FINANCIAL INFORMATION, MANAGEMENT AND CONTROL A deiaiied understanding of the finarcia) position and operating results of the City, is provided in the following sections of this repoft. 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 poi icy as to when revenues, expenditures or expenses are recognized in the financial accounts and reported in the financial statements. The City's accounting records for general government operations are maintained on a modified accrual basis, Revenues are recorded when available and measurable. Expenditures are recorded when the services or goods are received and the liability incurred. For proprietary fund types, the City uses the accrual basis of accounting, As such, the measurement focus is on net income in addition to financial position and changes in financial position. Revenues are recognized when earned and expenses are recognized as the liability is incurred. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions, Accounting System and Budgetary Control in developing the City's accounting system, consideration is given to the adequacy of the internal controls. The objective of the City's internal accounting controls is to provide reasonable, but not absolute, assurance that the assets are safeguarded against loss from unauthorized use or disposition; and to ensure that transactions are properly recorded to permit the preparation of financial statements in accordance with generally accepted accounting principles. The concept of reasonable assurance recognizes that the cost of control should not exceed the benefits likely to be derived and that estimates and judgments are required to be made by management in evaluating these costs and benefits. In addition, the City maintains budgetary controls. The objective of these controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council, Although the City ut.i.liz.es a two-year Financial Plan format the budget is adopted annually, The City Manager is responsible for the preparation of the budget and its it 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 balances. During fiscal year 2002-03, the City Council and City Manager made several supplemental budget appropriations the majority of which relate to capital projects. Fund Balance It is the Gity's goal to target and maintain an unreserved, undesignated fund balance in the General Fund and working capital balances in the Electric, Water and Wastewater enterprise funds of at least 15% of operating expenditures. This goal allows for variations from year-toyear to account for economic and fiscal changes, The General Fund maintained a fund balance of $1,556,708 or 4.23% of operating expenditures at the end of fiscal year 2002-03, The decrease in the fund balance is of concern to the City Council and will be addressed over the next two fiscal years by a cut in expenditures, an increase in revenues, or a combination of both. Carryover Policy A two-year Financial Plan and Budget format provides the City Council and staff with the opportunity to commit operating funds to services over a two-year time frame rather than the traditional one-year period, Under a one-year budget, appropriations lapse at the end of the fiscal year and favorable budget balances are no longer available for operating expenditures. except when encumbered. under contractual agreements. The two - M us M M M WM W M M MM M MMM M Mae year Finan6ai Plan and Budget aliows for the unexpended operating budget balances to be carried forward to the second year of the Rrancial Plan provided that the fund balance exceeds the required operating reserve. Cash Managerneat The City has written investment policies that address a wide range of investments, These policies describe the.. City's ii1vestment Objectives, investment authority, ailowable investment vehicle -5, maturity terms and eligible financial instiNtions, Tey 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 wfth the City's cash flow needs. Investment reports are issued both monthly and quarterly to the Cid Manager and City Council to provide detaiied information regarding the City's investments and compliance with City policy and as required by state law. An important objective of the City's investment policy is to achieve a reasonable rate of return on public funds while minimizing ries and preserving capital. In evaluating the perfForan oe of the City's investment portfolio, investments are expected to yield a rate of return that reguiariy meets or exceeds an average rate of return on a three-month U.S. Treasury Bill. The City received an award again this fiscal year from the Municipal Treasurer's Association of the United States and Canada (MTA) for the Investment Certification Program. This award program is designed to recognize outstanding written investment pokies and to provide professional guidance and assistance in developing and improving existing investment policies in the government sector. lir addition, the Treasurer and Deputy Treasurer of the City are Certified California Municipal Treasurers (CC T). Appropriation Limitation Article X111 B of the Constitution of the State of California (Proposition 4) provides for the limitation of expenditures by state and local governmerits. Under the provisions of this article, City appropriations funded through tax sources may not exceed Fiscal Year 1979 appropriation levels exceptas 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 responsiWOes between government agencies and indebtedness incurred prior to Fiscal Year 1979. Pursuant to subsequent legislation adopted after Article 3t111 B, the City is required to annually establish and adopt its appropriations Hmit by resoLtion. For 2002-03, the City's appropriations subject to limit were $28,013,113 and the appropriation limit vies $57,439,894 a favorable variance of $29,426,781, Debt Administration At June 30, 2003, the City had outstanding Certificates of Participation of $136,007,124. These liabilities are discussed in Note 7 of the Basic Financial Statements and summarized below. The City issued a $5.0 million Certificates of Participation (1995) COP to fund its share of the improvements downtown and Cherokee Lane, These bonds were recently refunded by the issuance of the 2002 Certificates of Participation. The City also issued a $1.97 million limited obligation improvement bonds for the Central City Revitalization Assessment District on July 22, 1996. The improvement bonds of the assessment district are not general obligations of the City, The City also issued $10,12 million for the renovation of the Perforrilling Arts. Canter on August 1, 1996; the 2002 Certificates of Participation also refunded these bonds. In addition, the Electric Utility issued $43.96 millio n Certifil tate s of Participation to finance the costs of certain. improvements Xi to the distribution and transmission fadiffies of the City's electric system, These bonds were also refunded by the issuance of the 2002 Electric Systems Revenue Certificates of Participation, The Gity is also authofized to issue up to $16 million for the Environmental Abatement Program for the clean up effort of the groundwater contamination of PCE/TCE around the downtown area. On November 2002, the City issued the 2002 Revenue Certificates of Participation Series C for $21,225,000 and 2002 Series D for $22,740,000, to buy out the energy purchase agreement entered into by the City in January 2002 with Calpine. The City's debt management policy includes a commitment to monitor all forms of debt annually during the preparation of the City's Financial Plan and Budget to ensure compliance. Also, the City will generally conduct financing on a competitive basis, will seek, an investment grade rating on any direct debt and will obtain credit enhancements such as letters of credit or insurance when necessary for marketing purposes, availability and cost effectiveness. Interim Financial Reporting Monthly financial reports are prepared to present the City's financial condition and results of operations. These executive reports are organized using the "pyramid" approach, As such, the highest level of summary data is presented first, followed by progressively greater levels of detail. The reports provide current period and year to date revenues, expenditures and encumbrances for all activities and funds, including year to date estimates and variances, Single Audit The City is subject to financial and compliance reporting required by the Single Audit Act Amendments of 1996 and OMB 133, which is a requirement of all local and state governments receiving federal financial awards. 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 2002-03 were made pursuant to competitive bidding procedures as established under the City's purchasing ordinance. Contracts for construction projects were awarded pursuant to competitive bidding procedures established by the State of California for projects in excess of $5,000. Risk Management The City is self-insured for dental care, workers' compensation, general liability and unemployment insurance, General liability and workers' compensation are administered by outside agencies. The City administers unemployment insurance. Self-insurance transactions are aocourited for under the City's Claims and Benefits Fund. At June 30, 2003, the Claims and Benefits Fund had a deficit of $2,176,869. The City is implemenfing a phased deficit reduction plan recommended by an actuary to gradually eliminate the deficit in the Internal Service Fund. basic financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United is of Aiei: CERTIFICATES :f ENT The Government Finance Officers Assoc€a on of the United States and Canada t A) and the Calffornia Society of Municipal Finance Officefs (CMO), both awarded a Certificate of Achievement ent for Excellence in Financial Reporting rting t the City for its Comprehensive AnnualFinancia'! Report (CAFR) for the fiscal year ended June 30, 2002, These Certificates of Achievement are prestigious national and state awards .recognizing conformance with the highest standards for preparation of state and ictal government financial reports. In order to be awarded a Certificate of Achievement, .a governmental unit .must publish an easily readable and efficiently organized CA ' , 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 anly. The City has received aertific ate of Achiever ent for the last rine years (rascal years ended June 0, 1 3 through 2002), The incorporati€ n of the GASB 3 requirements Cha d the presentation of the financial statements this year, however, we believe our current report continues to conform to the Certlficate of Achieveme t program requirements and we are submitting it to GFOA, ACKNOWLEDGMENTS As always the pro essi€a alism, dedication and efficiency of the Finance Department Accounting staff made it possible for the timely preparation of this report and are to be commended, 1 would also like to personally thank Ruby Paiste, Accounting Manager, and Cary Wadlow, Senior Accountant, and Ty on Mardhorst, Programmer Analyst. Meeting the challenges of GASB.34 required an enormous arnount of attention to detail and many bang bard hours of work. Their work in preparing this year's CAFR was greatly appreciated. i would also like to trunk you for your continued interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. RespectfuPy subi itted, Certificate of Achievement for Excellence in Financial e Reporting Presented to CaliforniaCity of Lodi, For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2002 A Certificate of achievement for Excellence in Financial Reporting is presented by the Governn'�cen€; Finance Officers Association of the United States. and Canada to government u.nA5 and public employee retiren-ent systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government acco€ n inn and financial repwting. Certificate of Award Outstanding Financial Reporting 2001-2002 Presented to the ��Dedicated to Excellence in Municipal Financial Manage"Ieut xvi yAttorney Community Center Community .Development Electric Utility City Manager F rd } | Recreation Public w«m City Clerk Human XVI XVII" rd } | Recreation Public w«m City Clerk W1,90m4mol ADVISORY BODIES Planning Commission Library Board Recreation Commission Site Pian and Architectural Review Committee PRINCIPAL ADMINISTRATIVE OFFICERS H. Dixon Flynn Randall Hays Susan Blackston Nancy. Martinez Vicky McAthie MikePr C harle.ne Lange Joanne Na r loch Richard Pd ma Alan VaRow Konradt Barbar Jerry Adams Roger Balta iii Eastside Improvement Committee Lodi Arts Commission Youth Commission Lodi Senior Citizens'Commission City Manager City Attorney City Clerk Library Services Director Finance Dir ectorlTreasurer Fire Chief Community Center Director Human ResourcesUrecter Public Wor.ks Director Electric Utility Director Community Deveiopment Director Poiice Chief Parks & Recreation Director am 101DWICIUOPS-1368 T SVBd 191140 90;[od joloeii juawdoleAeo fi4junwwoo 101391!(1 Amin w1ogo lolabija SWM 011qnd joloeJ43 seamlas aN. uewnH jopaji(3 ialuao fqiunwwoo Atto 91.1-4 i9xislaalipo.Cl gouejloam ut joloajy] seopuss Aieiql-1 Ajolo Ain AsujagV All 1958uevq AI!O uoisepwoo 114nok uoissfwwoo s 1po-I aagwwoo juqw9Aojdwj qpjsjse�� Zge'a JGBO� SWP-PV kJar Lue4jee )PeJUON M01118ek e',UlJd Pel4OW aBue-1 attapaq'D ziald MW AVO SAVON bPA zawpeIN hauet4 U01SAOSIS Uesns SA8H He pued UUAJ-4 UOXN3 'H S83N-4-40 3AI:IVHISINIWCIV lVd]ON]Vd pleoe Ajelqq uolmwwoo 6ufuuei,4 S31CIOSAHOSMOV jaqwelN punoo puc--1 ql!a)i jaqwaVq pounoo U9SLEH idled jgqw*Vq punoo ugwX'3,se U'40f dwej_ of joAeiN PY8MOH 4W9 joAevj 003404H U8snS lloNrlolo )11110 The Finwicial Section is comprised of the Independent Auditors' °"Management BasicFinancial Statements, including the notes, required Supplementary Information, .: Supplementary Now N� 4-AG Macias, Gini& Company 4er1Pt{vtl Pa4Mc RScouniml5 cad Managem�m C+rn:ulldma The Honorable Members of'City Council City of Lodi, California INDEPENDENT AUDITOR'S REPORT `tau 4e 300 ^. tra�iear tci. C'A 9gb#6 9 16.92&4(100 0 =31 0.9Z&27S5 7:.^.e a4'o'L4, atflflAe',i Ri.feTi3 We have audited the accompanying financial statements of' he governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Lodi. California (City), as of and for the year ended June 30, 2003, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Out 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 perforin the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, tire 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, 2003, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note t, the City adopted the provisions of GASB Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysts -- For State and Local Governments; GASB Statement No. 36, Receipt Reporting for Certain Shared Nonexchange Revenues; GASB Statement No. 37, Basic Financial Statements — and Management's Discussion and Analysis —for States and Local Governments — Omnibus; GASB Statement No. 38, Certain Financial Statement Note Disclosures; GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements; and GASB Technical Bulletin 2053-1, Disclosure Requirements for Derivatives Nod Reported at Fair Value on the Statement of Net Assets during the current year. In accordance with Government Auditing Standards, we have also issued our report dated January 13, 2444 on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit perfenned in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. The management's discussion and analysis on pages 3 through 12, the s expenditures and changes in fund balance -- budget and actual -- General supplementary information required by the Goveriunental Accounting Stan of inquiries of management regarding the methods of measurement and pr information and express no opinion rain it. chedule of funding progress -- pension pian on page 73, and schedule of revenues, Fund on page 74 are not a required part of the basic financial statements but are Stand Board. We have applied certain linsited procedures, which consisted principally esentation of the required supplementary imbrication, However, we lid not audit the Our audit was performed for the purpose of damning opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual fund statements and 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 fund statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. Certified Public Accountants Sacramento, California January 13, 2004 2 MANAGEMENT'S DISCUSSION AND ANALYSIS This section of the Comprehensive Annual Financial Report is presented as discussion and analysis of the financial performance of the City of Lodi (the City) for the fiscal year ended June 30, 24103. FINANCIAL HIGHLIGHTS The assets of the City of Lodi exceeded its liabilities at the close of the 2003 fiscal year by $152,879,481 (net assets). Of this amount, $17,603,058 is a deficit (unrestricted net assets), needed to meet the City's ongoing obligations to citizens and creditors. 0 The City's total net assets increased by $26,733, As of June 30, 2003, the City's governmental funds reported combined ending fund balances of $17,948,767, a decrease of $8,496,389 in comparison with the prior yea,. Of this amount, $10,616,510 is available for spending at the City's discretion (unreserved fund balance). At the close of the fiscal year, fund balance for the general fund was $1,566,708 or 4.23 % of total general fund expenditures of $37,040,427, The City's total long-term debt increased by $ 43,284,825 (39.9%) during the current fiscal year, The key factor in this increase was the issuance of $43,965,000 in certificates of participation for the Electric Fund. This discussion and analysis are intended to serve as an introduction to the City's basic financial statements. The City's basic financial IMSM.'i ita—M cis" Financial Statements. This report also includes other supplementary information in addition to the basic financial statements. Government -wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets 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 assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows, Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave. Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through users fees and charges (business -type activities), The governmental activities of the City include general government, public protection, public works, library, and parks and recreation. The business -type activities of the City include electric operations, wastewater system, water operations and public 'transit system, 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 are available for spending, Such information may be useful in determining what financial resources are available in the near future to finance the City's programs. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities, The City maintains several individual governmental funds organized according to their type (special revenue, capital projects and debt service). Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the general fund and the capital projects fund, which are considered to be 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 a two-year budget for its general fund and special revenue funds. Budgetary comparison statements 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: M Ml M M M M M W M M =1 M M M M IM =1 = M 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 norimajor proprietary fund. internal Service fund is used to report activities that account for various employee benefits and self-insurance activities of the City. Because these activities predominantly benefit governmental rather than business-t,ype functions, they have been included within the governmental activities in the government -wide financial statements, Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. The activities of the Downtown and Cherokee Lane and the Industrial Way -Beckman special assessment districts are accounted for and reported under the fiduciary funds. The activities of the private sector trust and the Holz bequest are also accounted for under the fiduciary funds. Since the resources of this fund are not available to support the City's own programs, itis 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 Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. In addition to the basic financial statements and accompanying notes, this report presents certain required supplementary information concerning the City's progress in funding its obligation to provide pension benefits to its employees, and a schedule comparing budget to actual in the General Fund. The combining statements in connection with non -major governmental funds and fiduciary funds are presented immediately following the required supplementary information on pensions. This is the first year that the City has presented its financial statements under the new reporting model required by the Governmental Accounting Standards Board Statement No 34 (GASB 34), Basic Financial Statements - and Management's Discussion and Analysis (MD & A) — for State and Local Governments. Because this reporting model significantly changes both the recording and the presentation of financial data, the City has not restated prior fiscal years for the purpose of providing comparative information for the MD &A. In future years, when prior year information is available, a comparative analysis of government -wide data will be included in this report. As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Lodi, assets exceeded liabilities by $152,879,48lat the close of the current fiscal year. The largest portion, of the City's net assets reflects its investment In capital assets (e.g., land, buildings and improvements, machinery and equipment); less any related debt used to acquire those assets that is stilt outstanding. The City uses these capital assets to provide services to citizens, consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of ,elated debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Codi's Net Assets June 30, 2003 Assets: Current and other assets Capital assets Total assets other liabilities Total liabilities Net assets; Invested in capital assets, net of related debt Restricted Unrestricted Total net assets Governmental Business -type Activities ActivitiesTotal 24,253,428 80,895,348 $ 905,948,776 117,334,999 99,101,161 _ 216,436,152 _-- 141,588,419 179,996,509 321,584;928 37,475,374 914,269,625 951,744,999 3,955,37913,005,069 239,354 16 960 448 41430,753 327,274,694 168,705,447 LOO, 157,666 94,68000 62,751,969 157,432,649 12,810,536 239,354 13,049,890 LOO, 157,666 $ _152,879,481 An additional portion of the City's net assets, $13,049,890 (8.5%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets represents a deficit of $17,603,058. At the end of the current fiscal year, the City is able to report positive balances in two of the three categorises of net assets for the government as a whole. Unrestricted net assets are negative for both the governmental activities and the business -type activities. The deficit in unrestricted net assets in the governmental activities at the end of the year was $7,333,550 caused primarily by the accrual of compensated absences of $6,723,389 and the inclusion of the internal service fund in the governmental activities that had negative net assets of $2,176,869. Refer to pages 8-9 for analysis of the business -type activities and internal service fund negative unrestricted net assets. City of Lodi's Changes in Not assets June 30, 2003 Governmental Business -type Activities Activities Total Revenues Program revenues: Charges for services $ operating grants and contributions Capital grants and contributions General revenues: Property taxes Other taxes Grants and contributions not restricted to specific programs Other Total revenues Expenses General government Public protection Public works Library Parks and recreation Interest on long-term debt Electric Wastewater Water Transit Totalexpenses Changes in net assets before special 'items and transfers Litigation settlements Transfers Changes in net assets Net assets at beginning of year Net assets at end of year 7 3,873,478 61,457,486 $ 65,330;964 3,315,488 1,772,069 5,087,557 6,814,312 6,565;948 13,380,260 6,398,164 6,398,164 8,846,168 8,846,168 8,639,582 8,639,582 3 835 412 8,051,096 11,886,508 41;722;604 77,846,599 119,569,203 12,237,616 12.,237,616 16,631,944 2,727j811 16,631,944 10;946,025 10,946,025 1,453,769 1,796,855 1,453,769 3,989,438 3,989,438 1,214,565 1,214,565 51,387;848 51,387,848 6,141,172 6,141,172 12,879,363 12,879,363 5,388,541 5;388,541 46,473,357 75;796,924 121274,281 2,727j811 2,72T81 1 (1,770,122) 1,796,855 26,733 ANALYSIS OF CHANGES IN NET ASSETS Governmental activities. Governmental activities decreased the City's net assets by $1,770,122. The key elements of this decrease are shown in the table on the previous page. The City has not restated prior fiscal years therefore comparative analysis has not been presented, as data or the prior year is not available. Business -type activities. Business -type activities increased the City's net assets by $1,796,855. This reflects primarily the increase in utility rates combined with the decrease in bulk power costs and litigation settlements. FINANCIAL ANALYSIS OF THE CITY'S FUNDS Governmental Funds. The focus of the City of Lodi'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, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $17,948,767, a decrease of $8,496,389 in comparison with the prior year. The general fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund balance of the general fund was $639,652, while total fund balance was $1,556,708. As a measure of the general fund's liquidity, it maybe useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Fund balance represents 4,23% of total general fund expenditures. Expenditures exceeded revenues in the General Fund and transfers for capital improvements and the increased cost of medical benefits, dental, long-term disability and workers' compensation resulted in a decrease of $1,797,214 of the fund balance in the General Fund. 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 assets for the Electric fund and the Wastewater fund at the end of the year amounted to $9,437,767 and $2,166,175 respectively. The deficit in unrestricted net assets in the Water Fund amounted to $19,161,527 resulting primarily from legal expenses and interest accrued relating to the Environmental Abatement Program bonds issued to finance the groundwater contamination {PCE -TGE} litigation. The deficit in the Transit fund resulted from not only overages/underfunded capital projects but also due to a reduction of overall revenue, creating shortages in the operations account as well. Staff is now working on several ways to eliminate the deficit, One of these options would be to request a loan from the Measure K Transit account. Then annual payments will be made from possible funding sources including future TDA funding, Measure K maintenance or impact fees as applicable. Eligible capital expenditures may also be reimbursed from these funds. These determinations will be made in FY 2003/04. 8 a= am NN = No 0W an on no 2M 1W The internal Service Fund is reporting a deficit in unrestricted net assets as a result of the City not fully funding its self-insurance activities. The City plans to implement the deficit reduction plan recommended by an actuary to gradually eliminate the deficit in the Internal Service Fund, Other factors concerning the finances of these funds are discussed in the City of Lodi's business -type activities General Fund Budgetary Highlights Differences between the original budget and the final amended budget of the General Fund were $ 3,047,748 increase In appropriation and can be briefly summarized as follows: 0 $1,426,258 In miscellaneous increases in general government activities * $819,471 in increases allocated to public protection 0 $317,380 in increases allocated to public works a $39,590 in increases allocated to library 0 $445,049 in increases allocated to parks and recreation Of this increase, $282,514 was from carry-over of encumbered purchases and contracts from prior fiscal year, $427,070 for various special allocations, $380,066 was for appropriations for various grants primarily the after school programs, $123,312 for the additional lease payment for the new fire truck funded by impact fees, $77,000 for cost of contract employees funded by Electric Fund, $284,010 was offset by miscellaneous revenues. The remaining balance of $1,473,776 was for the miscellaneous increases in various employee benefits i.e. medical, dental, long-term disability, workers' compensation and general liability. Significant differences between the final budget and the actual revenues and expenditures can be briefly summarized as follows: Under the intergovernmental revenues - PERS Surplus estimated revenue was $700,000 but the City has elected to use the credit to offset PIERS rate increases. allocated monthly based on cash Investment income was estimated at $462,465 and actual interest was ($14,991). Interest is balance in each fund. The decrease in investments earnings is due to low cash balances and a cash deficit at year-end. Rental income was estimated at $361,739 and the actual was $240,400. Rent for parks and recreation facilities were down caused by the reconstruction of Stockton Street — location of building rentals, Factors contributing Under the expenditures, a favorable variance between the final budget and actual expenditures was $1,484,138. Fa to this difference are the following: Full time salaries are budgeted at E (top) step and vacancies are also budgeted. The General Fund had 20 vacancies at an average annual salary of $50,000. Capital assets. The City of Lodi's investment in capital assets for its governmental and business -type activities as of Tune 30, 2003, amounts to $216,436,152 (let of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, machinery and equipment, vehicles, infrastructure and construction in progress. The total increase in the City of Lodi's investment in capital assets for the current fiscal year was 6.7% (a 6.21 % increase in governmental activities and a 7.28% increase for business -type activities) as shown in the table below. Changes in Capital Assets, Net of Depreciation Additional information on the City of Lodi's capital assets can be found in note 6 on pages 42-44 of this report. debt. 41 Of this amount 26 015 000 was for ,. i M 5program of the Water fund, and • �f. ` $86,267,301 for the Electric fund. City of Lodi's Outstanding Debt Governmental Business -type Certificates of Participation $ an as an Un En AN KM 26, 015, 000 109,992,124 136,007,124 10 SIM no No ow Business -type Governmental Activities _ Activities Total 2003 2002 2043 2042 2003 20)42 Land $ 23,799,732 $ 22,425,347 $ 5,306,754 $ 5,306,754 $ 29,106,486 $ 27,732,101 Buildings and Improvements 27,870,536 25,693,317 25,550,704 26,004,956 53,421,240 51,698,273 Machinery and Equipment 2,012,782 2,456,554 55,254,723 48,964,979 57,267,505 51,421,533 Vehicles 2,120,683 2,419,439 2,862,302 2.565,035 4,982,985 4;984,474 Infrastructure 49,468,135 40,063,588 49,068,135 40,063,588 Work of Ari 62,024 62,024 Construction in Progress 12;401,499 _17,412,056 10,126,678 9,530,172 22 527 777 26,942,228 Total $ 117,334,991 $ 110,470,301 $ 99,101161 $ 92;371,896 $===216,436,152 $ 242,842,197 Additional information on the City of Lodi's capital assets can be found in note 6 on pages 42-44 of this report. debt. 41 Of this amount 26 015 000 was for ,. i M 5program of the Water fund, and • �f. ` $86,267,301 for the Electric fund. City of Lodi's Outstanding Debt Governmental Business -type Certificates of Participation $ an as an Un En AN KM 26, 015, 000 109,992,124 136,007,124 10 SIM no No ow The City of Lodi's total bonded debt increased by $42,359,072(45%) during the current fiscai year. The key factor in this increase was a $43,965,000 revenue bonds issued for the Electric Systems or, November 2002 to buy out the Calpine energy purchase agreement entered into by the City in January 2002. The City maintains an "AAA" rating from Standard & Poor's and Fitch, Inc. The revenue bonds of the Electric Systems have been rated by these two rating agencies and given an "AAA." Additional information on the City of Lodi's long-term debt can be found in note 8 on pages 45-55 of this report. Economic factors and next year's budget and rates State and Local Economy. The State of California is facing a major financial crisis with a projected shortfall of $38 billion for the 2003-04 fiscal year. The State adopted a budget in early August 2003 that relied on $10.7 billion in deficit bonds to cover a large piece of the shortfall over five years. It also leaves the State facing a nearly $8 billion deficit in the fiscal year beginning July 1, 2004. A key credit rating agency said the State's budget fails to fix the problems that drove the State into its worst fiscal crisis by relying too heavily on one-time fixes and fails to correct an imbalance in the State's spending and revenues. funding of $1,000 or less is deferred. Programs such as the " Open Meetings Act Notices" and the Tolice Officers=iirocedural 1:5111 OT K19M5 may not be reimbursable, However, the City will be required to submit claims and may be reimbursed at a later date. The Budget in brief. The following is a summary of significant changes in the City's 2003-05 budget: General Fund 11 acted to ib,ra�c� bv 5 6% an oper me expenditures are projected to increase by 14.6%. The increase in ar three months of the VLF backfill totaling t a.aginnin /A this will be considered a loan to the State and will be repaid to t C in 206. Budget reductiobs are being � ofttgddhitl� to meet the City's operating requirements as a result of the VLF backfill gap. Staff is closely monitoring the Governot's proposed budget regarding this issue and the impact it may have on future revenues. M Electric Fund Revenues are projected to remain the same over the next two fiscal years at $53 million, The cost of bulk power has leveled off and the City does not anticipate any significant shifts in power costs at this time as it occurred in fiscal year 2002 when the City paid $52 million for power versus $32.6 million in 2004 and 2005. Operating expenditures are up approximately $2 million and are offset by existing rates and fund balance. The failed deregulation policies of the State and the run away cost of power in the spring of 2001 significantly impacted the Electric Fund, however, the "market cost adjustment' approved by the City Council in 2001 has corrected this imbalance. The Electric Fund is financially healthy at this time. Wastewater Fund Significant changes will occur in the Wastewater fund in the next two years. The State of California has imposed higher standards on the discharge of wastewater into the San Joaquin Delta. The City anticipates spending $18 million as a first step in meeting the State's discharge requirements. Accordingly, rate increases of approximately 20% per year through fiscal year 2006 were projected, Water Fund P,bvwme" -�cm is up from the $5 5 million in fiscal year 2002-03. Operating and capital expenditures are increasing to an average of $6.5 million over the next two yearsTi a in part to the Council direction to replace and upgrade water and wastewater lines in the older sections of the City and for legal expenses associated with PCE/TCE litigation. Capital projects to F7P7J77UM7*7'dF?VTTau I r time, City staff anticipates bringing rate increases back to the City Council in the next two fiscal years. Based on current projections, the fund balance is projected to decrease from $2.5 million to $350 thousand by the end of fiscal year 2004-05. izens, i taxia, 's ,yers, customers, investors and creditors with a general overview of the City 00k i MIA c M MMMMM MMM MM MIMIM MIMI on M IM M 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 Fund. The notes have an integral role in disclosing information essential to the fair presentation of the Basic Financial Statements. GOVERNMENT-WIDEFINANCIAL STATEMENTS TS ASSETS Cash and investments Restricted assets Accounts receivaWe,net Property tax receivable Interest receivable Internal balances Due from other govemmiental ageneses Advance receivables Inventory Other assets Deferred arges Capital assets, net: ondepreciable Depreciable, net TOTAL ASSETS LIABILITIES Accounts payable and accrued ilabi€sties A=ued .salaries and wages Accrued interest Deferred revenue Long-.teryn.liabilities; Due within one year Due in more than one. year TOTAL LIABILITIES NET ASSETS Invested In capital assets, net of related debt ResWcted for. Capital projects Deist service Other. purposes Unrestricted (deficit)' TOTAL MET ASSETS CITY OF LORI STATEMENT QFNET ASSETS June 30, 2003 Governmental Activities 12,439,114 6,560,245 3,544,389 4 ,208; 30 49 384 (3,513,243) 2,467,740 1,004,000 117;341 275,266 36,262.,855 67,072,136 141,636:;419 2,916;64:3 740;106 298,430 4,248,204 3g3.,2y 32j7�,170 ,753 10,960,863 1,454,722 394.,951 $ 100115706 Th- sautes to the finaac ai'statements':are. ark iutgral paz-tof this statcMe€3t. .13 Bus.l ss'type Activtiies p g1,833;IiS.9 6,938.976 4:;940,227 3,513,243 367;590 531,786 1,571,942 11,064 40,530,663 15,433,432 83;667,729 173,9.96;509 3,423,065 8,392,538 1,184,466 5,367,21'2 1 i{g1Ly9R2.,413 727jT,2�Jk4,694 62,75 9 ,969 84:,769 184,585 .. (111 269;583) 52,721,815 mm 14,272,773 25,216,444 12,4e3,364 1,208,99'0 4,989„61:1 2,835,330 1,6'15,766 1;669,463 286,332 40,530,663 51,696,287 164,739,865 321,584,R28 6,344,908 740,10.6 8,690,968 1,184,466 9,615,416 1L68,705,447 �4^.$2,192+g 9,583 157,432,649 ,432,.649 1 £9,96t3,8F 3 1,539,#1 549,5.36 7,603,6. 152,373;411 Eaqg!2€aslPre rarras PFUMARY GOVERNMENT., Gove.mmentai activities: General governtnant public protecUon Pub fttwarms .Library Parks & Recreation interest on long-term deft Total qovernmenta4 activities susiness4ype activities: Electric Wastewater Water TrAnsit T6t W business -type activ.ffles Total primary governMent CITY OF LOU STATEMENT OF ACTIVITIES Year ended June 39, 2003 Program Revenues Operating Capital C;tsarges for Grants and Grants and _!�P_e2ses Services Gontr€bufians Contnibutionz Net (Expense) Revenue and Governmental ausinass-type Activities Activities Total 12,2374616 2,354,490 11.0,038 975549 M797 539) $ (8,79.7,539) 165,631,944 540,720 754,912 802:354 (14,533"!358) (14,533,958) 10,945,025 335,175 2,08.0,841 3,908,269 (4,a2l,740) (4,621,740) 1,453,769 56,619 163,227 25'00o (1,2}8,923) (1,208,923) 3,989,438 586,474 206,470 1,103,140 (2j0931354) (2,093,354) 1,214,565 (1,214,50) 46,475i357 L873,478 3,315,488 6,814,312 470 79 470,079� 51,387,848 48,872,488 884,792 (1,630,566) (1,630,568) 6,141,172 6,760,379 44,457 1,344,824 2,008,498 2, 308;498 12,879,363 5,531,573 500 1,4656342 (5,881,948) %38A541 293,046 1,727,102 2,870,990 4 L W,4g3L 75,796.,924 61,457,486 1,77Z0696,565,94B Jt,0Q1AZ1j 001,421 122,270j281 E5,33)1964 =====jt=007,5573,360j�W (32,470,079) (6,001,421) S 38,471,500) General revenues: Taxes: Property taxes 6,398,164 6,398,164 Franchise taxes 7,624;550 7,624,650 Busijiess license tax 821,859 821,869 Transient occupancy tax 399,759 399,759 Grants and contributions not restricted to specific programs Bj639,582 8,639,582 Motor vehicle -ire lieu 3,429i824 3,429,M investme.6t earnings 266,843 6,456,761 6,725,604 Other 136,74.5 1,594,335 1,731,080 Special item -litigation settlement 2,727,811 2,727,811 Transfers 2,980,631 (2,980,631) _ Total general revenues, special items and transfers 30.,699,957 7,798,276 38,498,233 Change irk net assets (1,770,122) 1,796,855 2.61733 FUND FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS Governmentai Fund Types Governmental ental funds consist of the General Frond, special revenue funds, debt service fund and capital projects fired, 15 Proprietary funds consist of the enterprise funds and the internal service funds, Hectric Fund The City estabFished this fund in order to account for the provision of electnc services to the residents of the City, All activities necessary to provide such services are accounted for in this fund, including but not limited to, source of supply, overhead, systems maintenance, customer service, engineering, administration, capital improvements maintenance and debt service. Wastewater Fund This fund was established by the City in order to account for the provision of waste water collection and treatment services to the residents of the City. All activities necessary to provide such services - accounted for in this fund, g ,:e. Fund establishedThis fund was . . well as some customers in the County, All activities to uch services are accounted 'for in this fund, including, but not fiffited to administration, operations, distribution, improvements r debt Transit Fund !"his fund is used to account for the operations of the Dial -A -Ride and the Grapeline bus system. 1:6 lnternal Service Funds are maintained to account for the internal transfer of services between operating units of the City. The purpose of an, Internal Servlce Fund is to achieve a level of operating efficiency that may not be available if the same activities were Performed by multiple organizations. Claims and Benefits Funds The City of Lodi maintains an internal service fund to account for the following insurance and certain employee benefits: General Liability Workers' Compensation Dental Chiropractic Life/accidental insurance Medical Employee assistance program Employee recognition program Unemployment insurance Flexible spending program Long Term Disability Vision Private -purpose Trust Fund This fund is used to account for trust agreements under which the principal and income benefit individuals, private organizations or other governments. Agency Fund This fund was established to account for special assessments collected on the property tax roll by the City on behalf of the property owners within the Industrial Way Beckman Districts and the Downtown and Cherokee Lane Districts. 17 CITY OF LOD] BALANCE SHEET GOVERNMENTAL'FUNDS June 30,2 3 The notes to the financial statements are an integral part of this statement. 18 no MM am M am ME =M am M no ON SM am sm am IM M an capital Other Total Gerseral Outlay Governmental Governmental Fund 1 rias Funds Funds ASSETS Cash and investments $ 356,687 9,040,921 2,280,392 $ 11,678,000 Restricted assets 6,560,245 6,560,245 Receiva.Wes: Accounts 3,315,817 114,742 3,433,559 PrQpefty taxes F,51,%6 357,024 1,208,990 interest 32,548 15,407 48,955 Due from other funds 222,120 763,291 1,927,747 2,920,158 Due from other governrnentat agendes 165,631 450,000 1,872,109 2,487,740 Advance receivables 1,084,000 1,084,000 inventory 117,541 117,541 other assets 33,929 33,929 Total assets $ 5,073,691 17,204,029 7,295,397 $ 29,573,117 UABILITIES AND FUND BALANCES Liabilities: Accounts payable and act er liabilities $ 1,421,461 904,390 590,992 $ 2,916,843 Accrued salaries and wages 740,106 740,106 Due to other funds 1,345,416 3,675,884 1,412,101 6,433,401 Deferred revenue 450,01}0 1,084,000 1,534,000 Total liabilities 3,506,983 5,030,274 3,087,093 11,624,350 Fund balances Reserved 927,056 5,224,919 1,180,282 7,332,257 Unreserved reported in: General Fund 639,652 639,652 Special revenue funds 2,322,087 2,322,087 Capital projects funds 6,948,836 705,935 7,654,771 Total fund balances 1,566J08 12,173,755 4,208,304 17,94.8,767 Total flabilffies and fund balances $ M==� 5,073,691 17,204,029 7,295,397 $ 29,573,117 The notes to the financial statements are an integral part of this statement. 18 no MM am M am ME =M am M no ON SM am sm am IM M an CITY OF LODI RECONCILIATION OF THE BALANCE. S1 OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS June 30, 2003 Amounts reported for governmental activities in the statement of net assets are different because; Fund balances - total governmental kinds 17,948,767 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds Nondepreciable capital assets 36,262,855 Depreciable capital assets, net 81,072,136 Long-term liabilities are not due and payable in the current period and therefore are not reported in the governrriental funds as follows: Compensated absences (6,723.389) Bonds payable and other long-term debt (27,461,404) interest on long-term debt is not accrued in the funds, but rather is recognized as an expenditure when due. (298,430) Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds 1,534,000 internal service funds are used by management to charge the costs of general liability insurance, workers' compensation insurance, health benefits insurance and other insurance to individual funds. The assets of the internal service fund are included in governmental activities in the statement of net assets. (2,176,669) Net assets of governmental activities $ 100,157,666 The notes to the financial statements are an integral part of this statement. 19 CF3Y OF LODI STATEMENT OF REVENUES, EXPENDITURES AND CHANGES W FUND BALANCES GOVERNMENTALFUNDS Year ended june 30,1003 Revenues: Taxes Licenses and permits Intergovernmental revenues Charges for services Fines, forfeits and penalties Investment and rental income Miscellaneous revenue Total revenues Expenditures: Current General government Public protection Public works Library Parks and recreation Capital outlay Debt service: Interest and fiscal charges Principal payments Total al expenditures Excess of expenditures over revenues Other financing sources (uses): Transfers in Transfers out Total other fi'nancing sources (uses) Net change in fund balances Fund balances, beginning of year, as restated Fund balances, end of year Ilie notes to the financial statements are an integral part of this 20 M M M ME M M M M M M M M ME M M on W MW sm capital Other TOW General Outlay Governmental Governmental Fund Reserve Funds Funds $ 21,45 1,941 1,857,432 790,560 S 24,099,933 1,669,402 1,669,4032 4,219,391 24,840 3,14(3,906 7385,137 1,87 1,380 2,304,060 2,096,206 6,271,646 $03,09.5 803,095 223 ,390 518,580 91,563 831,533 i391605 1801950. 133,239 LS2,894 30,376,204 4,884,962 6,252,474 41,513,6540 10,874,G90 10,874,090 15,334,086 263,314 15,597,400 6,130,955 39,494 755,033 6,925,482 1,316,008 1,316,008 3,385,28.3 3,385,288 9,241,294 3,701,058 12,942,352 1,220,040 1,220,040 7LO,000 7303,220 37,040,427 9,280,788 6,669,445. 52,990,660 16,664,223) (4,395,826] (416,971) (11,477,020) 6,747,325 1,606,180 2,865j010 11,208,515 (1,880,316} {4,_318,097) (2,029,471 (8,227,884) 4,867,009�2,711,917) 825,539 2,980,631 (1,797,214) (7,107,743) 408,568 (8,496,389) 3,363,922 19,281,498 3,799,736 26,445,156 1,566,708 12,173,755 4,208,304 $ 17,948,767 20 M M M ME M M M M M M M M ME M M on W MW sm CITY OF LODI RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Year ended June 3, 2003 ArnounY5 repoted for governmenta; activities are different l ecaiuse: Net change 'p, fund balances - total governmental funds Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is aliocated over their estimated useful lives and reported as deprec:iatlon expense. Capital outlays, capital contributions and delpfeciabon expense are as foi;ows: Capitalized capqal outlays Capital contributions Depreciation expense Long-term debt proceeds, net of discounts, provide current financial resources to governmental funds, bull issuing debt proceeds increases iong-tarm liabilities in the statement of net assets. Repayment of the principal and costs of issuance are experidilures in the governmental funds, but the repayment reduces long-term liabilities in the 5tatei�nenj of net assets, and the costs of issuance increase deferred changes in the statement of net assets. Repayments of principal are as follows: Capital leases Certificates of participation principal Loan principal internal service funds are used by management to charge the costs of certain activities, such as health benefits and self-insurance, to individual funds. The net revenue (,expenses) of internal service funcis is reported with governmental activities. Deferred revenues recognized in the funds that were previously recognized in the statement of, activities 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 Change in accrued interest Change in net assets of governmental activities The riotes to the financial statements are an integral part of this stattment. 21 $ (8,496,389) 12,942,352 238,964 ,6,316,626) 201,261 730,000 78,700 (623,929) (3io'ow) (499,930) 5,4.75 {1,770,122) UTY OF LOD! STATEMENT OF NFT ASSETS PROPMETAPY FUNDS June 30,200S The Isar w the flnannW statements area integmi Pao Of1his smwmnt. 22 Goveffmienlal e Acelawfti--s-En? dee Funds Monmajor Fvt�d ASSETS owrenl assets: Cash and kwestments S 771,588 769,770 292,301 1,833,659 S 761A 94 ResYri,aed assets 16.355,648 115 Receivables: Amounts 5,530,535 628,674 2.723,966 55,840 6,938,WG 110,830 1;naros3 4,929,298 7,902 3,027 4,940,227 429 Due from over funds 2,05aw0 1,822,081 2,310,124 6,182,205 Due from uther governmertto agenclse 11,036 356,5514 367,5111( Advance 531,79e 531,786 Inventory 1,344,594 12,131 215,217 1,571;942 O&.er assets 2,67f 7,113 ____1,275 11 nAd 241339 Totai ;. rrenl assets 33,516,295 3.2,5111122 5,846,176 412,354 41,033,647 _ 1.:113,732 Noncurrent assets: Deferred Charges and other assets 40.344,567 85,08* 40,53DA5-3 �spltal assets,oet N"Xidepredable 8.101,969 5,160,1n 382,358 1,788,927 15,4,33,432 DaprerjZ4JO, net 24,W6,7�5 505,273 91,674,293117,$$:7,419 83.657,728 Total capital assets 708:7114 __25,656,453 18.258,6:49 12,469,345 99101,161 Total nancunrant easels 73 053,281 35 B5 549 1.8,256&49 12,499,345 139.631,824 TOTAL ASSETS 106,569,576 39T' 11,371 24,102,825 12,881,6(38 182,885,471 1,113,712 UA8i[LMES Curranl fiabiftes: Accounts payable and other 41abliffies 9'('79,87o 239,871 1,664,931 443,293 3,428,055 Accrued intamsi 399,088 319,500 21:554 9,727 749,869 Due to other funds 2,660,932 2.668,962 Deferred revenue 16,248 1,168,2116 1,134,456 Siff-inwreoce gability 1,583,802 Accrued compensated atseqces 339.517 187;0134 5,815 2,295 534,711 Gefficates; e parwpOon payable 4,528,947 1w,525 4,889.472 Water note payable 143,029 143,029 Noncurrent rlabjljties: Accrued interest 7,842,6612 7,1542,669 Self -Insurance Stability 1,7N,779 Accrued Compensated absences 700,793 516,040 4,516 1,221,349 Cerfificates; of parficipa5an payabis 81,736,354 9,1164,298 14,5130.000 105,302,652 Water riots payable 2,378,412 2,378,44 2 TOTAL UABILMES 88,786,6137 --10-1-503,566 27,521R,144 3,124,277 129,943,656 3,290,581 NET ASSETS Invested in capital assets. net of related debt 8,105,7136 25,441,00 15,736,203 12,469,345 62,7,51,369 Reatqzleti7 Debt serAce 84,769 84,7e3 Other purposes 154,585 154,535 Unrestricted #defidt) 9,437,767 2,106,175(2,711,92-3) TOTAL NET ASSETS (DENCTT) S 37,732,947111,607,allS 13,426,3193 9,757,422 $ 52,721,815 S 2,978. 9 The Isar w the flnannW statements area integmi Pao Of1his smwmnt. 22 CITY OF L-oo S TATF-MeNT OF REVENUES, EXPENSES AND rKANGES IN NET ASSETZ PROPRIETARY FUNDS Year ended June 30, 2003 OPERATRNG, REVENUES Charges Tof services QRERATWG EXPENSES pprsDme# servkea SsaOies, materlais and 38r*,es L)Hties Claims Dspfedalion and amolizatIon TOTAL OPERATNG EXPENSES OPERATING iNCOME {LUSS) NONOPERATING REVENUES (EXPENSES) lqvazlmmHn=ne Iniereal eximse Ram Other fevenues TOTAL NONOPERATING REVENUES (EXPENSES) WCOME (LOSS) BEFORE SPECIAL ITEM, CAPITAL CONTRIBUTIONS AND TRANSFERS Spedal selftmen� Capital c4milribulJons Transfers in Transfers out Net Operating Trensfera In (out) Gbanze In net assets NET ASSETS (OEFir-rr) - BEGINNING OF YEAR, as restated NET ASSETS (DEHC➢T) - END OF YCAR Govemm"tal AcIbAtles- mmmajor Fund al semc. Eieclnc Wastewater Water Transit TotsE Fund 413,85:72,488 ?W,5712 r5.63i 573 2 3,4346 S £1,437.4eAF $ 5,811,21� 4,1 ,705 2,091,217 476,08 80.2111 7,367,484 317,752 7,341,842 1;625,041 6,524,709 4,663,544 20,355j35 4,200,020 31,291.640 465,856 691,248 105,0" 32,551,832 (639j000) (3"371,703) (7,346,585) 6.0m 2,141,383 --A-812.77L 252,471 — — — — — — 8,17-5,875 3,65,654 4�11 551,955 5,502,172 9,007,e6l �rn5,388,641 88,450340 28,445 344,522 _1,25B,207 476,08 {5,[19.5,49 847 939) 9,431,645 64,042 4,159 (43,085) 6,456,761 6'507 (2,835,882) (639j000) (3"371,703) (7,346,585) 6.0m 237,749 9,722 252,471 3,65,654 4277'54 3,113,934 217,5$33 4,136.7675 28,445 (3,431,1Kt8 740,1195 2,476,581 224,010 4,4%,631 1,286,652 (6,907,158) (3,355,400) (4,516,273) {623,929) 2327,9i1 2,727,811 884,792 1'344'824 1.405,342 2,870,990 6,565,948 38,820 40,61.5 498,4152 577,887 55 ;8nMig) 355,81a2 0155B518) 77ala 134,2fi9 3,538, 86 3,0V3,630 3,460,,352 2,435044 (3,373,188) (341,770) 1,7%,855 (623,999) 84,322,1485 0-56,864 53,151L 099,1112 50,924,960 x,55:2,941) 17,782,907 28,607,805 52,721,915 The notes to iha fim.Dnzial stalemenI3 are an itegml part of this report. 23 Gsshflowc From f.peraling activities: Recetple from customers and,jaors Rece#s from irltiWund services pfcm&lad Cash paid to auppliers;or 4p=lls €, services Paymank-s 10 art *yeeB Peyrnems fW vftrfumd services prvyidej Net cast, ProOded by {used in) operating activitras Gash Flows fr,Urnnomspgal firram'Ang ad-Mbes: Spec,! taro-i'nigstion saltiemertt Trar3sfere in Transfers Out Net cast, provided by (used in) noncapiI21 finarr6np artivities Cash flowN frp7;n wpKaf and iiaiaied financing srAlvifias: Froceeds from Cartriicaies of Pe*cpsbon Payment Ia Calpme for energy purchase contract amerrdrne-. ?Zsusncq costs - Gsnificalas of PRrlidpirthm Acqumg= and consNmttan vf reptal assets Pass raosived from developers Capital grants received Principal paymerris on debt interest payments an del3t Net cash used in capita( and re!ated financing activities cash nawz from investing activilies! ReN of Udy property Proceeds from sales and melurl ies of investments interest on investments Net cast, provided by (used Tn) Investing acfivitles Net inzroasa (decrease) in cash and cash equivalents C%5th and cosh equwaierft at begknin"I of VSST Cast and cash equivalents gj end at year Cash flows from Operating ectivititm Operating inc=s (lass) Ad{vrtmants to rsconcile operating incomes (Ions) to net cash provided by jussd in) operafing activities: Depreciation, and amortization 01hev revenues Change in assets and fiaNliltias; (Increase) decrease in accounts necelvalbfa Decrease in advance receivaNes Decrease (4ncreasa) in restridad depos? (increase} decrease in interest receivables lruseasq in clus from alher funds Decrease {increase) In inventory Decrease (increase) in other assets fOacrease) inaease in accounts payable and other fiat ilifles `Decrease) increase in a=rvad interest Increase in due to other funds Inrramse in compensated absemas Increase in deferred revenue Net cash provided by (used 3n) oparalinq adlyZeB a Capita! confibutio"s Th. n.t,-, ?n Mt fmmcr W sWtMCM vie an ial--lgrat put at arts SVKCM"t CRY OF LOD? STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Year ended Juno 30, 2000 2,727,e21 2,727,811 38,620 40,615 43e,452 577,887 E711 15'M556 -aB,750 3_&5 512 558,51 lit' .... ...,.n,._ _L ... . ............ t_ _.I ........... 13 142640 12520201 44,538,548 237,749 3,000,wc 47,588,543 i42,4ii5.V5'j GINemmsmoi 4,55'4,547 (42,405,175) (1,438,967) 4,561,S47 {1,436,967) (3,855,40,�) Nonm*f Fund 4 159 Iqt6rnal semc-- Etaclft -WasiclAraw, Water Ttartan Total Fund 42,683r838 6,712,512 3,174,21X 1,e8S,241 S 54,259,789 S 6,028,719 275.73e 39"44/C5 3.871,703 85 275,736 �10 13 {39,202,675) 11,558.725) {1.934,143) qm2,213) (47,156,638) M257,4,29) (3; 5;897') il,1514,445; (602,653) J77,9163 17,060,851) ¢317,752) 32O,522 1,256,207 653,938 2,175 7,265 j647'934) 5,812,779 2,799,627 .51 3,4n1933053 539A913 JOS�655 2470,3 2,727,e21 2,727,811 38,620 40,615 43e,452 577,887 E711 15'M556 -aB,750 3_&5 512 558,51 lit' .... ...,.n,._ _L ... . ............ t_ _.I ........... 13 142640 12520201 44,538,548 237,749 3,000,wc 47,588,543 i42,4ii5.V5'j 75,081 4,55'4,547 (42,405,175) (1,438,967) 4,561,S47 {1,436,967) (3,855,40,�) (1,041.145) 4 159 (5,745,7,M) 6,456.761 .39,132 448,739 535,879 . . 2,a8l . 43,0155 i,033,5II8 1.$33,5176 (4,575,000) (160,0m) 38,44) (4,873,440) 835 S82 39"44/C5 3.871,703 85 _aq,623 082 �10 13 09,591 1,833508 11 860,97i)l 6,000 237,749 6,722 252,47' , 75,081 4,55'4,547 4,561,S47 64042 4 159 . . .L4_300-5 6,456.761 6J27 _j,4�31645 192 ......... _ 301791 . . 2,a8l . 43,0155 1.1 70R _,277 _ 5 5Q7 (300,000) 769,770 158,453 {355, 554) (723,364) i2l7,683? 2X23175 1,064 133.549-_ 'x.557,023. 97111377 ....... 771; 588 769,770 292 301 3 1,833.s5s 1 781.it4 (602,653) 132,724 859,753 285,780 32O,522 1,256,207 43,475,088 (5,995,495) 1 j647'934) 5,812,779 1,122,058 701,343 539A913 6T175,878 948,883 537,346 365,654 427,754 1,783,180 3,113,934 217,503 5 884792 _1,255,092 I 01B,603 lr,037 482 S 4196,569 24 M M M M M M M = M M M W M M M M M M M (3,712,WO) 75,081 472 (3m,M) (4,906,49*) 6,519 2,922 (4,897,049) 5r493 (300,000) 4387.718) {362,095} {355, 554) 41,42631x7) 430 322 1,064 (24,938) 407,946 187 (1,900) 2,290 188 755 1235.069) (602,653) 132,724 859,753 285,780 S95FB04 (120,017) (4,960) 3,782,165 410,419) 3,646,769 948,883 W'SK 106,818 178,774 756 2,2105 286,643 300,OM 300,000 5a.7,561 43,325) 2,IN 27 513,=4WI F133=Wl 109655 1 4=3=71a12 5 884792 _1,255,092 I 01B,603 lr,037 482 S 4196,569 24 M M M M M M M = M M M W M M M M M M M GH Y OF LODI FIDUCIARY FUNDS June 30,2003 Cash and Investments Receivables: Special assessments Interest TOTAL ASSETS LIABILITIES Accounts payable and other liabilities TOTAL LIABILITIES NET ASSETS The notes to the financial statements are an integral part of this statement. 25 Private -Purpose Trust Funds 544,624 $ 544,624 544,624 $ genc Fund 40,463 1,255 408,452 CITY OF LOM STATEMENT OF CHANGESFIDUCIARY NET ASSETS FIDUCIARY FUNDS Year ended June 30, 2003 ADDITIONS Investment and rental income Tots additions DEDUCTIONS Current Library Tots deductions CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR The notes to the financial statements are an integral part of this statement. 26 Private -Purpose Trust ends 6 NOTES TO THE FINANCIAL STATEMENTS CITY OF LODI Notes to Basic Financial Staternents June 30, 2003 SUMMARY OF SIGNIFICANT ACCOUNTING POLVES (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, public Protection (police and fire), public utilities, library, parks and recreation. The accounting policies of the City conform tri 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, the 1995 and 1996 Certificates of Participation to finance the Central City Revitalization Projects and the Performing Arts/ Conference Center, (refunded by the issuance of the 2002 Certificates of Participation) and the recent issuance of the 1999 Certificates of Participation to finance the Electric Systems it (refunded by the 2002 Certificates of Participation Series A). 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 Capital Outlay Reserve Fund 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 4erved by the City. On June 29, 2000, the Lodi Financing Corporation was authorized to issue Variable rate Certificates of Participation quarterly an each January 1, April 1, July 1 and October 1, beginning October 2000; provided however, that the aggregate principal amount shall not exceed Sixteen Million Dollars ($16,000,000). Total bonds issued as of June 30, 2003, were $14,500,000. These issues were intended to fund the continued commitment of the City as the lead agency in initiating and prosecuting environmental enforcement actions to compel responsible parties to investigate and clean up all actual or potentia! dangers to public health and the environment arising from or related to hazardous substance 27 CITE' OF LORI Dotes to Basic Financial Statements (continued) ,lune 30, 20 contamn nation of portions of the City's groundwater and soil located within an area approximately 600 acres and encompassing the City's central business area. The City Council is the Board of D rectors of LFC. The hands of UcC are included in the Water Fund in the accompanying basic financial statements. (b) Government -wide and fund financial statements The government -gide financial statements the statement of net assets and the statement of activities) report information on all of the non - fiduciary activities of the primary goverment and its component units. For the most part the effect of interf€and activity has been removed from nese statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately frorn 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 revenges. 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 finds, even though the latter are excluded from thegovernment-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 presentations The government -wide financial statements are reported using the economic resources measurement foes and accrual basis of accounting, as are the proprietary Band and fiduciary 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 revenges in the year for which they are levied. Granit and similar items are recognized as revenue as soon as all eligibility requirements have been met. Governmental find 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, CITY OSTM LODI Notes to Basic Financiai Statements (�'ontlnued) June 30, 2003 Property taxes, other local taxes, licenses, intergovernmental revenues, and interest associated with the current fiscal period are all considered susceptible to accruai and so have been recognized as revenues of the current fiscal period. All other revenues are considered to be measurable and avaiiabie when the City receives cash. The City reports the following major governmental funds: The General Fund is the City's primary operating fund. it accounts for ail financial resources of the City except these required to be accounted for in another fund. The Capital Outlay Reserve Fund accounts for financial rescaurces to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). The City reports the following major proprietary (enterprise) funds: The Electric Forel 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 deist service. The Wastewater Fund accounts for the provision of wastewater collection and treatment services to the residents of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, improvements and debt service. The Water Fund accounts for the provision of water to the residents of the City as well as some customers in the County. Ail 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 Fund accounts for the City's Claims and Benefits. The fiduciary Bands account for assets held in trust for other agencies. Private -purpose trust fund is used to account for trust agreements under which the principal and income benefit individuals, private organizations or other governments. 29 C17"Y OF LODI Notes to Basic Rnandial Statements (continued) June 30, 200.3 Agency fund accounts for assets held by the City as a trustee or as an agent for individuals, private organizations, related organizations andior other governmental units. Private -sector standards of accounting and financial reporting issued prior to December 1, 1989, are followed in both the government -wide and the proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the GASS. The City also has the option of the following subsequent private -sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private -sector guidance. The effect of inter -fund activity has been eliminated from the government -wide financial statements. Exceptions to this ruie 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 acbvities. Arnounts reported as program revenues include (1) charges to customers or appilcants 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 or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Proprietary funds distinguish operating revenues and expenses from nonaperafing 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 and Internal service fund are charges for customer services including: electric, wastewater, water and public transportation fees. Operating expenses for enterprise funds and 'internal service fund include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 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. ili !III IF 1 !11111 WIN I II I The City adopted the provisions of LASS Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments. This statement affects the manner in which the City records transactions and presents financial information. State and local governments have traditionally used a financial reporting model substantially different from the one used to prepare private -sector financial reports. 30 M M M M M no No M man MM M MM M M M M 0 Ty OF LOU Notes to Basic Financial Statements (continued) June 30, 2003 GASB Statement No, 34 establishes new reqvirements and a new reporting model for the annual financial reports of state and local governments, The statement was developed to make annual reports of the sate and local governments easier to understand and more useful to the people who use governmental financial information to make decisions, Management's Discussion and Analysis - AS Statement No. 34 require that financial statements be accompanied by a narrative introduction and analytical overview of the City's financial activities in the form of "management's discussion and analysis" (MD&A). This analysis is similar to the analysis provided in the annual reports of private -sector organizations. Government -Wide Financial Statements - The reporting model includes financial statements prepared using full accrual accounting for all of the City's activities, 'This approach includes not just current assets and liabilities but also capital and other long-term assets as well as long-term liabilities, Accrual accounting also reports all the revenues and costs of providing services each year, not just those received or paid in the current year or soon thereafter. Statement of et .Assets - The statement of net assets is designed to display the financial position of the primary government (government and business -type activities). The City now reports all capital assets in the government -wide statement of net assets and reports depreciation expense- the cost of "using ups capital assets - in the statement of activities, The net assets of the City are broken down into three categories ® 1) invested in capital assets, net of related debt; 2) restricted; and 3) unrestricted. Statement of Activities - The government -wide statement of activities reports expenses and revenues in a format that focuses on the cost of each of the City's functions, The expense of individual functions is compared to the revenue generated directly by function. Accordingly, the City has recorded capital and certain other long-term assets and liabilities in the statement of net assets, and has reported all revenues and the cost of providing services under the accrual basis of accounting in the statement of activities. The City adopted the provisions of GASB Statement No. 37, Basic Financial Statements ® and Management's Discussion and Analysis - for State and Local Govemments: Omnibus, This statement amends GASB No, 34 to either 1) clarify certain provisions or 2) modify other provisions that GASB believes may have unintended consequences in some circumstances. Accordingly, the City considered the effects of this statement when adopting the provisions of GASB No. 34 as previously described. 33 CITY OF LORI Notes to Basic Financial Statements (continued) June 30, 2003 9 Governmental Accounting Standards Board Statement No, 38 The sty adopted the provisions of GASB Statement No, 38, Certain Financial Statement Note Disclosures. This statement modifies, establishes, and rescinds certain financial statement disclosure requirements. Accordingly, certain footnote disclosures have been revised to conform to the provisions of GASB No. 38, 0 Governmental Accounting Standards Board Interpretation No, 6 The City adopted the provisions of GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements, This interpretation clarifies the application of standards for modified accrual recognition of certain liabiRies and expenditures in areas where differences have arisen, or could arise, in interpretation and practice. This iriterpfetation impacts the fund level financial statements (governmental funds only, not proprietary or Nduciary funds) required by GAS6 Statement No, 34 but has no direct impact an the government -wide financial statements. Accordingly, the City has not recognized the current portion of certain long-term liabilities and related expenditures in the governmental fund financial statements for amounts not considered to be due and payable as of June 30, 2003, and has restated fund balances as of July 1, 2002 to reflect the cumulative effect of the change as of that date, The City adopted the provisions of GASB Technical Bulletin No. 2003-1, Disclosure Requirements forDerivatives Not Reported at Fair Value on the Statement of Net Assets. This Technical Bulletin supersedes Technical Bulletin 94-1 and clarifies guidance on derivative disclosures, pending the results of the GASB's project on reporting and measurement of derivatives and hedging activities, This Technical Bulletin applies to derivatives that are not reported at fair value on the statement of net assets. It provides an updated definition of derivatives; it also provides disclosure requirements for the government's objective for entering into the derivative and the derivative's terms, fair value, and risk exposures, These disclosure requirements are intended to provide information to financial statement users that will enhance their understanding of the significance of derivatives to a government's net assets and will assist them in assessing the amounts, timing, and uncertainty of future cash flows, (e) 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, 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 code section 53647. Changes in fair value of investments are recognized as a component of interest and investment income. Proceeds from debt and other cash and investments held by fiscal agents by agreement are classified as restricted assets. M 9=M M M mmm am M M MM M mmm M MM CITY OF LORI Notes to Basic Financial Statements (continued) June 30, 2003 (f) Restricted Assets In the Enterprise (Electric) Fund, restricted assets represent the proceeds of the 1999 Certificates of Participation held by the trustee for the planned improvements of the city electric systems. In the Capital Outlay Reserve Fund, the restricted assets represent the proceeds of the 2002 Improvement bonds intended for the construction of the new police building. in the Water Fund, the restricted assets represent funds held by the Attorneys in connection with the PCE/TCE litigation, (9) Property Taxes San Joaquin 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 is fiened 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, 2001, upon which the 2002 levy was based, was $3,692,392,000. Secured property taxes are levied on October 1 and are due in two installments on November I 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, 2003, are recorded as receivables, net of estimated uncollectible amounts, Property taxes paid to the City by the County within 60 days of the fiscal year end are considered "available" and are, therefore, recognized as revenue. In 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 appoffloning property tax money, The cities receive 95% of the property taxes in advance from the County and the 5% remaining after reconciling the cities' balances at June 30. As part of the agreement, the County keeps the penalties and interest on the delinquent taxes. (h) Due From/Due To Other and and Internal Balances During the course of operations, numerous transactors 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." 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. 33 CITY OF LORI Notes to Basic Financial Statements (continued) June 30, 2003 (1) Transfers In the fund financial statements, interfund transfers are recorded as transfers in (out) except for transactions that are described below: Charges for services are recorded as revenues of the performing fund and expenditures of the requesting fund. Unbilted costs are recognized as an asset of the performing fund at the end of fiscal year. Reimbursements for expenditures, initially made by one fund that is properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as rather revenue in the fund that is reimbursed, Reimbursements are elim)nated for purposes of government - wide reporting. In the government -wide financial statements and in the proprietary fund type financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activibes, or proprietary fund statement of net assets. Bond premiums and discounts, as welt as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. Gain or losses occurring from advance refunding, are deferred and amortized into expense for both governmental and business -type activities. Advance receivables reported in the HOME Program & Community Development Block Grant Special Revenue Fund represent funds the City loaned to a developer for a low-income housing project. The City will receive principal and interest from the original loan in thirty years and can use it for allowable projects or to make new loans. Advance receivables reported in the Enterprise Fund (Electric) represent the City's portion of the NCPA's General Operating reserve that is refundable on demand by the City. (See Note 13.) MEGEM General fund 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. 34 CITY OF LODi Notes to Basic Financial Statements (continued) June 30, 2003 (M) Deterred Charges Deferred charges reported in the Electric Fund include costs incurred in connection with the issuance of the 2002 Certificates of Participation Series A & B amortized over 30 years. It also inciudes the buyout cost of the Calpine energy purchase contract amortized over 9.5 years. The deferred charges reported in the Wastewater Fund include costs incurred in the issuance of the 1991 Certifilaates of Participation amortizeld over 32.5 years. (n) Capital Assets Capital assets, wNch include land, 1�uildlngs and improvements, machinery and equipment, vehicles, infrastructure (e,g., streets, streetlights, traffic signats, sidewalks, and bridges), and electric lines, wastewater lines and storm drains are reported in the applicable governmental or business -type activities rdumns in the government -wide financial statements. Capital assets are defined by the City as assets with individual cost of $3,000 or more and have an estimated useful life in excess o.f two years. Such assets are recorded at historical cost. Donated capital assets are recorded at estimated fair market value at the date of donation, Capital outlay is recorded as expenditures in the general, streets, capital outlay reserve, and other governmental funds and as assets in the government -wide financial statements to the extent the City's capitalization threshold is met, The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset useful lives are not capitalized. As required by the Governmental Accounting Standards Board Statement No. 34, beginning July 1, 2002, the City has capitalized infrastructure, primarily its network of streets, as part of the capital assets shown in the governmental activities column on the govern ment-wide statement of net assets, 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: M=_ Buildings and improvements 3-40 Machinery and equipment 2-40 Vehicles 5-15 infrastructure 10-50 Accumulated vacation and vested sick leave benefits are accrued when incurred in the government -wide financial statements and the proprietary financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, M CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2003 (p) Self-insurance The City is s0 -insured for general liability, workers' compensation, dental benefits, unempbyment and long-term disability. Various City fundr, are charged premiums for the City's self-insurance liability, which is accounted for as an internal service fund, The accrued liability for estimated self- insured claims represents an estimate of the eventual loss on ciaims arising prior to year-end including claims incurred but not reported, (q) and Equity In the fund financial statements, governmental funds report reservations of fund balances for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. (r) Statement of Cash Flows A statement of Gash 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, (s) 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. 112 PRIME III Milli I I The following is a detailed -summary of cash and investments and restricted cash with fiscal agent at June 30, 2003: Pooled cash and investments: Cash on hand Demand deposits Certificates of deposit Investments Total pooled cash and investments Private Sector Fund-, Shares of stocks Total cash and investments 36 1,755 1,400,692 1,549,008 11,948,746 IMMMEM M M M M M M M M M M M M M M M M M M M CITY OF LOD Notes to Basic Financial Statements (continued) June 30, 2003 restricted cash with fiscal agent Total cash and investments and restricted cash with fiscal agent Presented in the government -wide statement of net assets Presented in the statement of fiduciary net assets: Private -purpose trust funds Agency Fund Total cash and investments Restricted assets Total (a) Cash MMMMM Mvwll� $ 14,272,773 544,624 366,733 15,184,130 25,216,444 40,400,574 The City's demand deposits and certificates of deposit at year-end are covered by either federal depository insurance or by collateral held by the custodial bank. The collateral pool of the custodial bank is equal to 110% of the uninsured deposits. (b) Investments The City has adopted an investment poi icy pursuant to Government Code Section 53601 which authorizes the City to invest in obligations of the U.S. Treasury, agencies and instrumentalities, commercial paper rated A-1 by Standard & Poor's or P-1 by Mood ys Commercial Paper Record, bankers' acceptances, repurchase agreements, money market mutual funds and the State of California Local Agency Investment Fund (LAIF). The City is not authorized to enter into reverse repurchase agreements. The City selects its investments; based on safety, liquidity and yield. The value of the pool shares in the State of California Local Agency Investment Fund (LAIF), which maybe withdrawn is determined on an amortized cost basis, which is different than the fair value of the City's portion in the poo[ The total amount invested by all public agencies in LAW on June 30, 2003 is $55,422,506,10. LAIF is managed by the State Treasurer. Included in LAIF's investment portfolio are certain derivative securities or similar products in the form of structured notes, totaling $304,000,000, and asset backed securities totaling $985,676,000. The Local Investment Advisory Board (LA18) has oversight responsibility for LAW. The LAM consists of five members as designated by State Statute, information is not available on whether the mutual funds in which the City has invested, used, held or wrote derivative products during the fiscal year ended June 30, 2003. 37 C171 -Y OF LODI Notes to Basic Financial Statements (continued) June 30, 2003 Category 1 Insured or collateralized with securities heid by the City or by its agent in the City's name. Category 2 Collateralized with securities held by the pledging financial institution's trust department or agent in the City's name, Category 3 Uncollatera4zed, (includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the City's name.) At year-end, the City's carrying amount of deposits was $2,949,700 and the bank balance was $5,065,331. Of the bank balance, $527,033 was covered by federal depository insurance or by collateral held by the City's agent in the City's name. The remaining balance of $4,538,798 was collateralized with securities held by the pledging financial institution or by its trust department or agent in the City's name. Category 1 Insured or registered, or securities held by the City or its agent in the City's name, Category 2 Uninsured and unregistered, wfth securities held by the counterparty's trust department or agent in the City's name, Category 3 Uninsured and unregistered, with securities held by the counterpas•ty or by its trust department or agent but not in the City's name. 38 M MM MM MMM M MM M M am MIM M M M M CITY OF L idI Nates to Basic Financial Statements (continued) June 30, 2003 Investments and restricted cash with fiscal agent of the City as of Jure 30, 2003 are summa.nzed b.elo : Not Subject 1 to Cate. si tt n Pooled investments: State of California Local Agency Investment Fund (LAIF) Tota pooled investments - - Investments held in trust: Shares of stocks 233,929 Restricted cash with fiscal agent, primarily Guaranteed Investment Certificates (GICs) Testa invest ents 203,929 a1,111,11,1111115 1 _____11,948,746 11, 948, 746 25,216t444 37I 161 5,5,190 11, 948,,74ro 11,948,746 25,216,444, te ,2$6fp'.$.4 7 $449,119 Revenues of the General Fund, Electric, Wastewater and Water funds are reported net of uncollectible amounts, Total uncollectible amounts related to revenues of the current period are as follows: Uncollectibles related to late charges and services 10,200 Unco4t ct€bles related to electric saes and services 169,200 Uncollectibles related to wastewater services 18,30.0 Uncollectibles rented to water saes and services 22,600 Total uncollectibles of the current fiscal year '9 220,300 UTY OF LOO Notes to basic Financial Statements (continued) June 30, 2003 (4) INTERFUND RECEIVABLES.IPAYABLES Interfund receivables and payables are as follows at June 30, 2003 Receivable Fund General Capital Outlay Reserve Other governmental Other governmental Electric Wastewater Wastewater Water Water Water Capital Outlay Reserve Other governmental Other governmental General Capital Outlay Reserve Nonmajor fund -Transit Other governmental Nonmajor fund - Transit Capital Outlay Reserve Other governmental 229,120 763,291 582,331 1,345,416 2,050,000 1,779,307 42,774 889,655 1,396,764 23,705 9,102,363 "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 $582,331 and the $1,345,416 represent cash deficits in the governmental funds. The $1,779,307 and the $889,655 represent the cash deficit in the Transit Fund. The $229,120 from the General Fund to the Capital Outlay Reserve Fund is a loan for the start up costs of a redevelopment agency. The $763,291 from the Capital Outlay Reserve to the Other governmental is a loan primarily for capital street expansion. The $2,050,000 from the Electric Fund to the Capital Outlay Reserve Fund represents loan for capital improvements, The $1,396,764 in the Water Fund is primarily the loan incurred for the construction of Fire Station #4, 40 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2003 (5) TRANSFERS Transfers for the year ended jure 313, 2003, are summarized as follows: Transfers out-, General Capital Outlay reserve Other governmen4 Electric Wastewater Water Transit 'Total Capital Outlay General Reserve $ 1,601,880 1,716,765 1,565,777 sm Governmental, —-SewerWater Transit Total 215,079 63,3E7 $ 8130,316 2,601,332 4,318,097 28,599 435,095 2,029,471 1,789,835 4,300 1U00 38,820 1 1,883,571 40,515 619,355 619,355 699,780 699,780 355,812_ 55,8°12 $ 6,747,325 1,606,180 , 2,855,010 38,820 40,615 =,===49�8,452 $ 11,786,702 During the year, various interfund transfers were made to finance expenditures, subsidize operating losses and service debt. The $1,880,316 General Fund transfers out includes transfers of $1,500,000 to the Capital Outlay Reserve Fund for the construction of the new police building and $101,880 for capital improvements, The transfer of $215,079 to Other government;sl funds includes transfer of $150,000 to the Library Fund for the integrated computer systems connection with the County and $19,000 capital it to the Library Community Room, The $4,318,097 Capital Outlay Reserve transfers out includes transfers of $1,460,147 to the General Fund from impact fees for administration costs from the 'inception of the impact fee program, $123,312 for the lease of the new fire truck, $127,200 for professional services; transfer of $1,950,040 to the Debt Service Fund for the principal, interest and fiscal charges required to service the 2002 Certificates of Participation-, transfer of $150,000 to Lodi Lake Fund and $500,000 to the Vehicle and Equipment Fund. The $1,565,777 transfers out from Other governmental to the General Fund represents the transfer of Gas tax revenues to fund the Public Works Street Maintenance Division. The $435,095 transfer to the Transit Fund is primarily the transfer from Transportation Development Act funds to support transit needs. The $1,883,571 transfer out from the Electric Fund is primarily to reimburse the General Fund for administrative cost of services. Transfers of $619,355 from Wastewater, the $699,780 from Water and the $355,812 from Transit represent primarily the cost of services reimbursement to the General Fund, 41 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2003 (6) CAPITAL ASSETS Capital assets activity of the primary government for the year -ended June 30, 2003, was as foflows: Capital assets, being depreciated', Buildings and improvements Machinery and equipment Vehicles Infrastructure Total capital assets, being depreciated Less accumulated depreciation for: Buildings and improvements Machinery and equipment Vehicles Infrastructure Total accumulated depreciation Total capital assets, being depreciated, net Governmental activities capital assets, net Balance Balance Ju0, 2002 Increases Decreases 14!jt 30, 2003 22,425,347 1,374,3$5 $ 23,799,732 62,, 024 6,9466,561 _171412�066 _gf52,024 2,401 ,099 9,837403 11¢245,11314,819 �61 36,262,855 37,777j404 3,224,623 41,002,027 6,9466,561 549,4413 (383,600)/ 7,112,401 6,975,156 733,632 7,708,788 82,5974 12,631,769 74 �791 ,443 113,658,755 17,139,464 130,614.659 12,084,087 1,047,404 13,131,491 4,490,007 609,612 5,099,619 4,555,717 1,032,388 5,5$8,105 22,096,0815 ........ . 3,627,222 25.723,308 43,225,897 626 49,542,523 70,632,897 10,922,839 38-3,6Q13 1 072,136 110,470,301 22,067,951 (15,203,261) � �117334,991 42 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2003 it sm ctivitiBalance µ_Jerre 30, 260 --increases .. Decreases Capital assets, not being depreciated-, Land 5,306,754 Construction in progress � � � 53.p 772 3,927,360 3,:330 834i Total capital assets, not being depreciated �a,�3��� � �, z7>3��� � 3,33a,6�4� Capital assets, being depreciated: uiidings and iMprovenl8nts Machinery and equipment Vehicles 'Total capital assets, being depreciates Less accumulated depreciation tor; Buildings and improvements Machinery and equipment Vehicles Total accumulated depreciation Total capital assets, being depreciated, net Business -type activities capital assets, net Governmental activities 32,119,789 353,664 72, 798, 384 8,11a0,639 1,900,695 25,734,300 179,722,799 9,$45,801 55,306,754 _� 7fl�72�,576 15,433,432 32,47:3,453 80,x,023 _._.524 12Ci,�36�3.t�b0 6,114,833 807,916 6,922,74.9 23,633,405 1,900,695 25,734,300 3,23 3,991 —µ- 04.231 3,743,222 33 1X7,229 1,213,042 _ _ _ - _ 36,400 271 ___77,53419-70 6,132,759 63,667,729 _... _._.... _....92,371896 10,060,179 {3,336,854) $ 99,101,161 General government Public praatection Public works Library Parks and recreation Total depreciation expense , governmental activities 43 $ 725,767 1,186,747 3,784,068 10,537 637,607 CITY OF LOD Notes to Basic Financial Statements (continued) June 30, 2003 Business -type activities Electric $ 872,689 Wastewater 1,099,312 Water 701,343 Transit 539,698 Total depreciation expense - business -type activities $ 3,213.042 (7) Operating Leases The City is obligated under various operating leases for the use of buildings and office space, Total costs for such leases were $96,679 for the year ended June 30, 2003. Future rninirnum lease payments required by lease agreernent5 that have initial or remaining noncancellable lease terms of one year or rnore as of June 30, 2003, are as follows: (8) Long -Term Obligations The following is a summary of debt transactions of the City for the year ended June 30, 2003: interest Rates June 30, 2002 Governmental activities: Compensated absences $ 6,223,459 2002 Certificates of Participation 10-5.0% 26,745,000 Note payable 5.0% 245,000 44 Amounts Due Within Additions Reductions JuneOne Year 30,2003 1,910,365 (1,410,435) 6,723,389 $ 1,910,365 (730,000) 26,01.5,000 48.5,000 245,000 Loan payable ca0a'l .eases Se!Nnsurance liability Governmeri421 actMty i, ongAeml Business -type activities: Compensated absences California Safe Grinkirig Water Note Payable CeflificMes of Participation: 1991 ceftfficates of participation Less deferred amounts: Fw issuance discounts Net CITY OF LODI Notes to Basic Rnancial Staternents (continued) June 30, 2003 4.0% 621,600 (78,790) 542,900 81,848 5.3_5.39% 859,765 (2131,261) 658,504 187,189 $ 37,427,624 4 (4,004,196) $ 37,475,374 248,204 3.41% 4Z-6.6% 2000 Environmuntal Abatement Certificates of PaTticipation —variabie 2002 Certificates of Parftipation A & 8 Less deferred arnounts: From refunding Net 2002 Certificates of Parbeipabon C & 0 Add deferred amounts'. For issuance premium Total ToW Certificates of Participation Business -type activity long-term liabilities Variabie. 1,469,4 17 . 684711 248,068) $ 2,150,0 623,548 �,44D 567.910 430251 44,588,548 910 2,215,6,36 7,588,548 14,475 _340,17 14,475) 9,370,348jL 45 -5 g,224,823 160,525 14500,000 54.Y Sp,t Gil (3,600,000) 50,460,000 2,600,000 (8,027,296) 286,M7�740609�_ _____1286,689 1 46,032,704 313L 42,719,391 20313 311 1.54-5,25% 43,965,000 (975,000) 42,990,000 2,150,0 623,548 f6L.,638 567.910 65,636 44,588,548 910 2,215,6,36 7,588,548 4 499,475 109992,124 4,68G,472 71032 350 48,123,259 4,885 85, �984 194„269,625 5,367,212 45 CITY OF l OD! Notes to Basic Financial l tatements (continued) June 30, 2003 Internal service funds predornina tly serve the governmental funds, Accordingly., long-term liabilities for them are included as pad of the above totais for governmental activities. At year-end 3,2S0,581 of i to m service funds self-insurance liability was included in the above amounts. Also, for the governmental activities, compensated absences are generally liquidated by the general fund. Coag -term debt payable at June 30, 2003, comprised the following individual issues: California Safe Drinking Water Note Payable 'The City entered into a contract on October 16, 1991, with the State of California Department of Water Resources to assist the City in financing the construction of water wells enabling the City to meet safe drinking water standards established by the State. The original amount of the note was $3,129,627.51 and is secured by the project and a pledge of user fees collected by the Water Enterprise Fund, Semiannual payments of 114,006, are payable each October 1 and April 1 through 2016. Annual deist seMce requirements to maturity of water note payable are as follows: Fiscal Year Ending lusir�ess�i?eoi�tias June 30, Primo Interest 2004 143,029 64,946 2495 148,287 79,690 2006 1� 53�g, 2p2fgidp.�q, 7 2007 i 5p8,488 9�74,758 ap4Sp, pPaS ,48p4�.dep 2008 163, 10 �b//+jd� 64,166/ 2309-2013 906,353 231,533 2014-2017 646,25466,277_ e Total 2,521,441 $ 670,660 Note Payable The City issued $245,000 promissory note to James E.!!lean and Carol mean, as trustees of the dames E. Dean Family Trust, for the purchase of 307 W. Elm Street property, which is the site of the new Public Safety Building. Interest is payable quarterly and principal is dare on April 1, 2007. 4 OMM alum 8"M now MW MM Mo CITY OF LODI Fiscal Year Governmental Activities Ending Governmental Activities Jude 3 ,riztcipaf _ interest 2004 $ 12,250 2005 12,259 2006 12,250 2007 245,000 9,18888. Total 245,00 45 938 No MW an IM Loan Payable The City: entered into an agreement and issued a promissory ory note to Sart Joaquin County Council of Gove€v tints, a joint powers agency.actin as the` an Joaquin County Transportation Authority, in the arnou t of $840,04 0 on Febtuary 5, 199.9 for the purpose of funding the Kettleman Lane[SR 99 Interchange projeet. The balance remaining as of Jere 30, 2003, is $542,900, Interest and principal is due and payable annually and matures on Juty 1, 2009, Annual debt service requirements ents to maturity of loan payable are as fellows: Fiscal Year Ending Governmental Activities J!Lne 30, 'r t i.. a€ _., Interest 2004 81,848 21,716 2005 85,12-2 18,442 2006 88,527 15,03 7 2007 92,€168 11,495 2005 95,751 7,813 2009 9 54 3,983 "oral 542,900 78,487 Caftificates of Participlation $11;170,000 Certificates of Participation (1991 Wastewater Treatment Plant Expansion Refunding Project) were sold in December 1991 for the repayment of the 1988 Wastewater Treatment Plant Expansion traject at a iower interest rate with ap roxi ats# , $1,400,000 of additional proceeds. Principal is payable annually ort August.1 in amounts from $100,000 to $760,000 with final payment due A g gt 1, 2026. EN CITY OF LORI Notes to Basic Financial Statements (continued) June 30, 2003 $26,745,000 Certificates of Participation (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 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 Street Square Conference and Performing Arts Center. Principal is payable annually on October I in amounts from $730,000 to $1,600,000 with final payment due October 1, 2031. $46,760,000 2002 Variable Rate Demand Series A and $8,400,000 2002 Taxable Series B Electric System Revenue Certificates of Participation were sold in January 2002. The proceeds of the 2002A Certificates of Participation were used to advance refund the 1999 Electric System Certificates of Participation Series A and the 1999 Series B Capital Appreciation certificates. The 1999 Series A and Series B Revenue Certificates of Participation were sold on August 18, 1999, to provide funds to finance the costs of certain improvements to the distribution and transmission facilities of the City's Electric System. As of June 30, 2003, the outstanding balance of the advanced refunded certificates is $431957,682. The proceeds of the 200213 Certificates were deposited in the Rate Stabilization Fund and applied to certain power purchase costs of the C4. Principal for Series A is payable annually beginning 2011 to 2032 in amounts ranging from $1,175,000 to $ 3,460,000. Series B is payable annually beginning 2002 to 2006 in amounts ranging from $1,100,000 to $3,600,000. The interest rate on the 20020 Certificates is determined based on the "Weekly Rate Index' for weekly interest rate periods, "Weekly Rate Index " is defined as The Bond Market Association Municipal Index as of the most recent date for which such index is published. $14,500,000 Variable rate Certificates of Participation were issued for the Environmental Abatement Program of which $3,0 million were issued during the 2003 fiscal year. Interest on the Certificates accrue at a variable rate determined by a per annum interest rate equal to the three- month LIBOR RATE (London Inter8ank Offered Rate) plus 20 percentage points, but in no event shall the variable rate exceed 30 percent per annum. There is no set repayment schedule for both principal and interest for this issue, therefore this issue has not been included in the debt service schedule on page 53. $21,226,000 Revenue Certificates of Participation 2002 Series C and $22,740,000 Revenue Certificates of Participation Series D were issued to buy out the energy purchase agreement with Calpine, In February 2001, the City entered into an. energy purchase agreement (the Original Agreement) with Calpine Energy Services L.P. (Calpine) to purchase 25 MW of energy at $65/mwh for a ten-year period beginning January 1, 2002 Since the execution of the Original Agreement, actions of the State in connection with the energy market conditions, including the initiation of conservation programs, and other factors, have resulted in lower electric bad requirements and reduced energy costs throughout the State. As a result, the City's need for the energy purchased under the 0 ddin l Agreement to serve its load has been reduced. The Original Agreement was amended on September 4, 2002; and was divided into three parts. The City sold its interests in the energy purchased under the Original Agreement to Calpine and nets the payments due from the City with respect to its purchase of such energy against the payments due from Calpine with respect to its purchase of the City's rights to such energy, On November 21, 2002; the City issued $21,225,000 Revenue Certificates of ParUcipation 2002 Sedes C and $22,740,000 Revenue Certificates of Participation 2002 Taxable Series D to buy out the amended contract in the amount of $42,406,175. M mterest Rate Swaps Objective-. As a means to Iower its borrowing costs, the City executed a forward floating -to -floating ("Basis") swap in connection with its existing $42,000,000 Electric System Certificates of Participation, 1999 Series A and B. The intention of the swap was to provide protection against rising short-term interest rates since the City's net payment increases as rates rise. Terms - Under the swap, the City pays Salomon Smith Barney a variable payment computed at The Bond Market Association Municipal Swap Index"m (BMA) and received a variable payment computed as 74,25% of the London Interbank Offered Rate (LIBOR), The swap has a notional amount of $42 million and the associated fixed rate bonds had a $42 million primcipal amount at the time the swap was executed. The swap begins on July 15, 2003 and matures on September 29, 2014, Since the swap does not begin until July IS, there were no applicable rates as of June 30, 2003. Fair Value-. As of june 30, 2003, the swap had a fair value of ($11,141,400). The fair value was estimated using the zero-coupon method. This method calculates the future payments reqtjked by the swalp; assuming that the current forward rates by the yield curve correctly anticipate future spot rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon rate bonds due on the date of each future net settlement on the swaps. Credit Risk. As of June 30, 2003, the City was not exposed to credit risk because the swap had a negative fair value. However, should interest rates change and the fair value of the swap become positive, the City would be exposed to credit risk in the amount of the swap's fair value. The counterparty was rated Aa l by Moody's Investors Service, AA- by Standard & Poor's, and AA+ by Fitch Ratings, To mitigate the potential for credit risk, the counterparty is required to post collateral should the fair value exceed certain thresholds, In the event of a downgrade of the counterparty below AAA by Standard & Po&s, the threshold amount is $10 million- Basis illion- Basis is As noted above, the swap exposes the City to basis risk should the relationship between LIBOR and BMA converge. If a change occurs that results in the mtes' rnovirig to convergence, the expected cost savings of the swap nlay not be realized. 49 CITY OF LODI Notes to Besid Firianc!61 StateMents (continued) June 30, 2003 Termination Risk: The swap contract uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy. The Schedule to the Master Agreement includes an "additional termination event.' That is, the swap may be terminated by the City if the counterparty's credit rating falls below BBB- as determined by Fitch or BBB- as determined by Standard oor's. Also, if at the time of an early termination of the swap, if the swap has a neptive fair value, the City would be liable to the counterparty for a payment equal to the swap°s fair value. 2002 $46.8 Million Step -Up Coupon Swap Objective. in connection with its issuance of $46,760,000 of Electric System Revenue Certificates of Participation 2002 Variable Rate Demand Series A, the City entered into a swap transaction with Salomon Smith Barney in January 2002. The intention of the swap was to change the City's variable interest rate on the bonds to a synthetic fixed rate that steps up over time. The swap was structured with step-up coupons in order to provide the City with lower debt service in the earlier years of the transaction. Terms, Under the swap, the City pays Salomon Smith Barney a fixed rate with an initial coupon of 2,503%, Beginning July 1, 2005 the swap coupon steps up to 3,749% and then to 4,945% on July 1, 2010 until maturity. In exchange, the City receives an initial variable rate equal to %65% of the 1 -month London Interbank Offered Rate (LIBOR), Beginning January 1, 2004 the percent of LIBOR received lay.the City steps up to 60,56% anO then to 62,92% of LIBOR on January 1, 2006 until maturity. The 4.945% coupon in the final period reflects the above -market fixed rate required to offset the first two periods' below-market fixed rates of 2.503% and 3.749% respectively. The effective at -market fixed rate for the entire swap term equals 3,851® or appr oximately 6171 % of LIBOR, The notional amount of the swap matches the notional amount of the bonds outstanding in each year. The bonds' variable-rate coupons are based on The and Market Association Municipal Swap Index TM (SMA). The bonds and related swap mature on July 1, 2032. As of June 30, 2003, rates were as follows: Terms Rates Interest rate swap. - Fixed payment to counterparty Fixed 2.503% Variable payment from counter pAq_ 59-65% ofUBOR Net interest rate swap payments 1.71611, 50 am am n on on NMI Im Im ow on we CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2003 Fair Value; As of June 30, 2003, the swap had a fair value of ($8,064,000). The negative fair value of the swap is a result of the decline in interest rates since the inception date of the swap. The fair value was estimated using the zero-coupon method. This method calculates the future payments required by the swap: assuming that the current forward rates by the yield curve correctly anticipate future spot rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon rate bonds due on the date of each future net settlement on the swaps, Credit Risk: As of June 30, 2003, the City was not exposed to credit risk because the swap had a negative fair value. However, should interest rates change and the fair value of the swap become positive, the City would be exposed to credit risk in the amount of the swap's fair value. The counterparty was rated Aal by Moody's Investors Service, AA- by Standard & Poor's, and AA+ by Fitch Ratings. To mitigate the potential for credit risk, the counterparty is required to post collateral should the fair value exceed certain thresholds. In the event of a downgrade of the counterparty befow AAA by Standard & Poor's, the threshold amount is $10 million. Basis Risk: As noted above, the swap exposes the City to basis risk should the relationship between LIBOR and BMA converge, changing the synthetic rate ora the bonds. If a change occurs that results in the rates' moving to convergence, the expected cost savings of the swap may not be realized, Termination Risk., The swap contract uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy. The Schedule to the Master Agreement includes an "additional termination event." That is, the swap may be terminated by the City if the counterparty's credit rating falls below Baa3 as determined by Moody's Investor Service or BBB- as determined by Standard & Poor's. If the swap were terminated, the bonds would no longer carry a synthetic fixed interest rate. Also, if at the time of an early termination of the swap, if the swap has a negative fair value, the City would be liable to the counterparty for a payment equal to the swap's fair value. 2003 $42 Million Fixed-to-Floatling Swap Objeefive, On April 16, 20133 the City executed two transactions with Citibank, which comprised 1) the termination of an existing $42 million fixed -to -floating swap maturing 2014 and 2) the execution of a new $42 million fixed -to -floating swap maturing 2009, The C4 initially entered into a swap in September 1,999 in order to convert its fixed-rate Certificates, into synthetic variable-rate debt. The fixed -receiver rate on the swap was 5.11%. Since interest rates had declined substantially since the City entered into the swap, the City received: a net payment from Citibank to terminate the swap in the amount of $4,743,00& The C4 executed a new $42 rnifflon fixed4oAoafing swap to manage 'merest rate volatility in its liability portfolio. 51 CITY OF LORI Notes to Basic Financial Statements (continu . ed) June 30, 2003 Terms. Under the swap, the City receives a fixed rate of 4.00% and pays The Bond Market Association Municipal Swap Index -r"' (BMA) +100 bps. The swap has a notional amount of $42 rniflion and matures on January 15, 20W As of June 30, 2003, rates were as follows-, Terms Rates Interest rate swap: Variable payment to counterparty BMA + 100 bps 2.14% Fixed.Rffm.ent from counterparty Fixed Net interest rate swap.payments Fair Value - As of June 30, 2003, the swap had a fair vaitie of $1,232,500. The fair value was estimated using the zero-coupon method, This method calculates the future payments required by the swap; assuming that the current forward rates by the yield curve correctly anticipate future spot rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon rate bonds due on the date of each future net ettlement on the swaps, Credit Risk: Since the swap had a positive fair market value, the City is exposed to credit risk in the amount of the swap's fair value. The counterparty was rated Aal by Moody's Investors Service, AA- by Standard & Poor's, and AAs- by Fitch Ratings, To mitigate the potential for credit risk, the counterparty is required to post collateral should the fair value exceed certain thresholds. In the event of a downgrade of the counterparty below AAA by Standard & d'oor's, the threshold amount is $10 million. Basis Risk, The swap does not expose the City to basis risk since the swap is not based on the LIBOR index. If a change occurs that results in BMA increasing, the expected savings of the swap may not be realized. Termination Risk. The swap contract uses the Internationaf Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy. The Schedule to the Master Agreement includes an "addlfionW termination event' That is, the swap may be terminated by the City if the counterparly`s credit rating Wis below B813- as determined by Fitch or 13813- as determined by Standard & Pooft. If the swap were terminated, the bonds would no longer carry a synthetic fixed interest rate. Also, if at the time of an early termination of the swap, if the swap has a negative fair value, the Ofty would be liable to the counterparty for a payment equal to the swap's fair value. CITY OF LODI Notes to Basic Financia.1 Statements (continued) June 307, 2003 Annual debt sewice requirements to maturity for certificates of participation are as follows: Fiscal Year Ending —Governmental Activities Jure 303,Pr1ci�i - 2002 Electric Certificates of Participation Series A 2004 Fiscal Year Variable -Rate Bands Interest Rate 5030,000 Ending Jure 30.3 prjn�!Pal Interest a �, Net Total 20034 1,140,547 97 3,460 772,943$ 1,170,40_3 2005 31050,000 397;460 772,943 1,170,403 2046 2019-2.0323 397,460 772,943 1,170,403 20037 2,264,500 397,460 1,355.,.572 1,753,€332 20036 $ 261015'000 3971460 1,365,572 1,753,032 2009-2013 2,415,0300 1,967,04 7,796,797 12,160,846 2014-201B 7,245,000 1,736,953 3,366,030 17,349,983 20119-2023 9,360,00 1,386.,182 6,678;125 17,424,307 20124-2023 12,0395,000 932,302 4,491,499 17,518,301 2629-'2032 _ 15,645,000 346,.142 ______L,667,587 17,656,729 466760 000 6,355,926 34,034,0311 69,149,93.9 Annual debt sewice requirements to maturity for certificates of participation are as follows: Fiscal Year Ending —Governmental Activities Jure 303,Pr1ci�i - _ In.trest 2004 486,000$ 1,166,447 2006 5030,000 1,171,672. 20036 5203,03130 1,156,372 2067 535,0300 1,140,547 20019 555,000 1,123,642 2009-2013 31050,000 5,N6,104 2014-20316 3,740,000 4,569,058 2019-2.0323 4,700,000 3,573,113 2024-2428 5,960,000 2,264,500 20329-203.2— _ _ -__ 5,950,0300 Total $ 261015'000 22,0394£70 5 53 Business-tvoe Activities Princi i Interest 4,925,0003 3;649,633 3,480,000 3,794,798 2,5."'x. 5.00 3,472,4735, 2,515,000 3,.970,554 5;465,000 3,8.35;.329 22,3703,000 17,905,156 19,2703,03001 12,963,604 11,945,0300 9:3579407 `f(4gy86 ,0[0�1y00 -_.......- B e5/2,716g@,2/s56 '9 'jpi�d$ rg�q'$G$k6L4d;''}P pq¢��,....__...-..:...._ �'�py__.�m�_e. $ 103, 014+, 4.F,00 $ �gy2,013, 66, 930, 144 66,930,144 CITY O.F LODI Notes to Basic Financial Statements (continued) June 30, 2003 5011�� The City has entered into lease agreements for financing the acquisition of two fire trucks. These lease agreernents qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of 1heeption date. The assets acquired through capital leases are as follows, Asset: Vehicles Less accumulated depreciation Total Activities $1,424,086 1,408� $ 842,678 The present values of future minimum capital lease payments as of June 30, 2003, are as follows: Fiscal Years End. 1 2004 $ 217,514 2005 131,345 2006 131,345 2007 131,345 2008 131,345 Total: minimum lease payments 742,894 Less amounts representing interest (84,390) Present value of minirnum capital lease payments $ 658,504 Special Assessment District Debt CITY OF L DI Dotes to Basic Financial Statements (continued) Jure 30, 2903 The City of Lodi has teat its name to the City of Lodi Industrial Development Authority for the purpose of issuing the following industrial development bonds- Minton Corporation $5,000,000; Dart Corporation $8,000,000; Wallace Computer Services 3,000,000; and Luster -Cat Nameplate Corporation 3,000,000. These bonds are special obligation bonds only, Payable solei out f tine band revenues car other.sour s of the above companies and are not a pledge of the general credit of the City. The City is not obligated for the redemption or administration of these industrial development bands. The f€ Houving is a summary of reserved, unreserved -designated and unreserved -undesignated fund balances at June 30, 2693: Reserved Fund Balance and/or Retained Earnings Reserved represents that portion that is legaify segregated for specific purposes and is not avaiiabie for discretionari appropriation. Unreserved -Designated Fend Balance Designated represents that portion for which the City has rade tentative plans. 55 Capital Other General Outlay es rve Governmental Total Reserved ffor-- Library 472,675 $ 472,675 Encumbrances 336,840 5,224,919 1,180,282 6,742;941 Inventory � 117,541. — -- - 117,541 Total Reserved 927,056 5,224,919 1,160,282 7,332,257 Unreserved -designated for: Specific projects andprograms---6,948,336 _ L,028,022:: 9,9768856 Total Designated 6,946,636 3,028,022 9,976,853 Unreserved .. undesignated mm 639=552 633,652 Total Fund balances 1,566,708 12,173,755. 4,20 ,304 17,948,767 Reserved Fund Balance and/or Retained Earnings Reserved represents that portion that is legaify segregated for specific purposes and is not avaiiabie for discretionari appropriation. Unreserved -Designated Fend Balance Designated represents that portion for which the City has rade tentative plans. 55 W CITY OF LODI Nates to Basic Financ€al Statements (continued) June 30, 2003 Unreserved -Undesignated Fund Balance Undesignated represents that portion which is available for budgeting in future periods. The City of Lodi contributes to the California PublicEmployees' Retirement System (PERS); an agent multiple -employer public employee defined benefit pension pian. PERS provides retirement and disability benefits, annual asst -of -fixing adjustments, and death benefits to plan members and beneficiaries. PERS acts a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance, Copses of PERS' annual financial report may be obtained from their Executive Office- 400 P Street, Sacramento, CA 95814. Participants are required to contribute 7% (9% for safety employees) of their annual covered safary. The City makes the contributions required of City employees on their behalf and for their account. The City is required to contribute at ars actuarially determined rate; the current rate is 0.0% for miscellaneous employees, 0.0% for fire employees and 11.371% for police employees, of annual covered payroll. The contribution requirements of plan members and the City are established and may be amended by PERS. S. For fiscal 2003, the City's annual pension cost of $542,458 for PERS was equal. to the City's required and actual contributions. The required contribution was determined as part of the June 30, 2000, actuarial valuation using the entry age normal actuarial cast method. The actuarial assumptions included (a) 5..25% investment rate of return (net of administrative expenses) (b) 'projected annual salary increases that vary by age, length of service, and type of employment (o) 175% payroll gmwth, and (d) 3,50% inflation, The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of inyestrnentover a three-year period (smoothed market value). PERS unfunded actuarial liability is being amortized as a level percentage of projected payroll an a closed basis. Amortization of remaining period varies: (a) safety pofi€de pians over 20 years (b) safety fire plan over 20 yeas, and c) miscellaneous Talars over 17 years as of the valuatbn date. 56 No ME ME an MM No MR am 6M IMM sm M M an so on M rM CITY OF LODI Notes to Sasic: Financial Statements (continued) June 3f1, 2003 The City provides no post -employment benefits for its employees. However, employees hired prior to July I e 1994, who retire after ten years: of service, may elect to convert accumulated sick leave time to establish an individual medical insurance account. Depending on the bargaining unit of the employee, the value of the insurance account shall be determined by the following optionT a) Option I- "Bank" The number of accumulated hours shall be reduced by 16-2/3% and the remaining balance converted into days- The days are then. multiplied by the current monthly premium being paid for the employee and, if applicable, his/her dependents. Fifty percent of that amount will be placed into an account to be used by the City to pay medical insurance premiums for the employee and, if applicable, his/her dependents. For each year of employment over ten years, 2.5% ill be added to the 50% used in determining the account amount. Total premiums shall be paid from the account until its depletion', at which time the bensfit ceases, b) Option It — "Conversion" The number of accumulated hours is multiplied by 50% and converted into days, The City pays one month's premium for employee and dependents for each day. For each year of employment in excess of ten years, 2,5% is added to the 50%, The employee must pay any increase ir, premiums. C) Option III — loc"h-Out" A refiring empfoyee wiff be able to choose a cash pay-off of accumulated sick lave at the rate of 31D% of base pay per hour. d) Option IV — "Service Credit" A retiring ernployee*h be able to convert unused sick leave to service credit for CALLS retirement purposes, 0 Annual Percentage Net Fiscal Year Pension of APC Pepsi Ended Cost (APC) Contributed Obligation 6130101 543 100% $0 6130/02 569 100% $0. 6130103 543 100% $0 The City provides no post -employment benefits for its employees. However, employees hired prior to July I e 1994, who retire after ten years: of service, may elect to convert accumulated sick leave time to establish an individual medical insurance account. Depending on the bargaining unit of the employee, the value of the insurance account shall be determined by the following optionT a) Option I- "Bank" The number of accumulated hours shall be reduced by 16-2/3% and the remaining balance converted into days- The days are then. multiplied by the current monthly premium being paid for the employee and, if applicable, his/her dependents. Fifty percent of that amount will be placed into an account to be used by the City to pay medical insurance premiums for the employee and, if applicable, his/her dependents. For each year of employment over ten years, 2.5% ill be added to the 50% used in determining the account amount. Total premiums shall be paid from the account until its depletion', at which time the bensfit ceases, b) Option It — "Conversion" The number of accumulated hours is multiplied by 50% and converted into days, The City pays one month's premium for employee and dependents for each day. For each year of employment in excess of ten years, 2,5% is added to the 50%, The employee must pay any increase ir, premiums. C) Option III — loc"h-Out" A refiring empfoyee wiff be able to choose a cash pay-off of accumulated sick lave at the rate of 31D% of base pay per hour. d) Option IV — "Service Credit" A retiring ernployee*h be able to convert unused sick leave to service credit for CALLS retirement purposes, 0 M MMMIVIMAI�- � 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 C4 is self-insured as discussed in the following paragraphs for which liabilities are recorded in the Internal Service Fund, The City is self-insured for general liability up to the first $500,000 per occurrence with claims from $500,000 to $15,000,000 per occurrence and in the aggregate insured through the California Joint Powers Risk Management Authority, (See note 14) 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. (see note 14)e The City is fully self-insured for dental, unemployment and long-term disability 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 Hability of $3290,581 at June 30, 2003, for all self-insured claims in the Internal Service Fund that includes an amount for incurred but not reported claims. The liability amount is used on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for clairns be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. In the opinion of the City, the amounts accrued are adequate to cover claims incurred but not reported in addition to known claims, Changes in the self-insurance liability for fiscal years ended June 30, 2003 and 2002 are as follows: FY 01-02 $ 3,576,629 FY 02-03 $ 2,733,000 Current -Year Claims and Changes Claim fn Estimates Effm—ents 7680211 (1,611,840) 2,141,383 (1,583,802) 58 N= M Em M M M (13) Participation in Joint Ventures sm = = = IMI I= CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2003 1= I= I= an ME I= REEMOSSEEMEEMEM= 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. 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 rate 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 Participants original Project Entitlement Percentage Share. General Orserat[ng 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 NCPXs individually financed operating plants, projects and programs; provides each member with flexibility and unilateral control over the determination of what they will fund, hove 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. 1W CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2003 As of June 30, 2003, the City's balance in the NCPA General Operating Reserve, which has been credited with annual interest earnings and settlements, is approximately $531,800. The NGPA members and their percentage share at June 30, 2002, which is the most recent available data, are as follows: Hydra Combustion Multiple Geoth.eOnal Electric Turbine Cap a[Transmission P roject t �ect Pr at #11� _±rq� Facliffies; e _1Eq- Alameda 16-8825 10,00 13,092 19.00 34x3590 Biggs 9.2270 0.4682 Gridley 1.3360 0,7103 Healdsburg 3,6740 1.66 1500 6.6068 Lodi 10.2800 10.37 34.780 39, 50 18.4861 Lompoc 3.6810 2,30 3.500 SM 6,6194 Palo Alto 22,92 11.0736 Plumas-Sierra Rural Electric Cooperative 0,7010 1,69 1,090 1.4647 Roseville 7,8830 12,00 13.584 36,50 14.1756 Santa Clara 44M05 37.02 25.000 Turlock Irrigation District 6.3305 Ukiah 5.6145 2.04 5,454 10.0963 Bulk power purchased by the City through NCPA arnounted to $30,772,425 during the year ended June 30, 2003 and is reflected in utffities expense in the electric enterprise fund. NCPA ggptherma- Prc�ec1_t A purchase power agreement with NCPA obligates the City for 2 10,28% share of the operating costs and debt service of two of NCPA's 110 - megawatt steam powered plants, Project Number 2 and Project Number 3. Outstanding long-term debt related to this project was approximately $302 million at June 30, 2002, As a result of high plant generation of NCPA and others in the same area, the Geothermal Project experienced greater than anticipated declines in steam production on its ieasehold propertiesand the unit cost of the geothermal power. is higher than: or4.naly. planned.. NCPA has taken several other steps to further slow the decline of the steam field. In April 1996, the conversion of one turbine unit to to pressure operation was ME Caiaveras Hvdroelectric Protect 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 Districts requirements for the subsequent 50 years, subject to regulatory approval. Under a power purchase agreement the City is obligated to pay 10.37% of the debt service and operating costs. At June 30, 2002, approximately $506 million in long-term debt used to finance this project was outstanding. NCPA Combustion Turbine Pro"ect L_ In October 1984, NCPA financed a five -unit, 125 -megawatt combustion turbine project. The project, built in three member cities, began full commercial operation in June 1986, providing reserve and peak power. Under the NCPA power agreement, the City is obligated to pay 34.78% of the debt service and operating costs. At June 30, 2002 approximately $31 million in long -terra debt was outstanding. Transmission Protect The project was undertaken to meet certain obligations of NCPA under the NCPA/PG & E Interconnection Agreement. The project includes an ownership interest in PG, & E's 230 Castle Rock to Lakeville Substation Transmission Line in -Sonoma County, additional firm transmission rights in that Transmission Line, and a central scheduling and dispatch facility in service at the NCPA headquarters in Roseville, California. Under a power purchase agreement, the City is obligated to pay 18.4861% of the debt service and operating costs. At June 30, 2002, approximately $7 million in long-term debt was outstanding, Ku i rsiW Facilities P The Project consists of two separate components: 0) A 49.9 megawatt combustion turbine, "Unit One", located in Lodi, California and owned and operated by the NCPA- (2) Improvements to the electric system owned and operated by the City of Lodi. Each of these components is supported by separate and unrelated member participation agreements. Under a power purchase agreement. the City is obligated to pay 39,5% of the debt service and operating costs, At June 30, 2002, approximately $144 million in long-term debt was outstanding. 61 CITY OF .ODI Notes to Basic Financial Statements (continued) June 30, 2003 The following are the most recent available audited condensed financial statements of NCPA: Current assets $ 67,981,000 Restricted assets 281,630,000 Electric plant, net 531,1n,000 Other assets and deferred charges 27 2,713LOOO Total assets $ 1,153,449,000 0EaU;Wn,ZML MOM a-M-Expenstv Year ended June 30, 2002 Sales to participants for resale $ 273,734,000 Operating expenses (220,720,000) Other revenues (expenses) (53,892,000) Future recoverable costs 13,240,000 Net revenues before refunds 12,382,000 Refunds to participants (3,536,000) Net revenues 8,826,000 Accumulated net revenues, beginning of year 9,489,000 Accumulated net revenues, end of year $ 18,315,000 Liabilities and Gapitalization Current portion of long-term debt $ 50,000,000 Other current liabilities 35,990,000 Other liabilities and deferred credits 114,675,000 Long-term debt 934,469,000 Accumulated net revenues 18,315,000 Total liabilities and capitalization�l 15�1�449�O�OO �VMIFWITM S" Year ended June 30, 2002 Net cash provided by operating activities $ 89,721,000 Net cash provided by investing activities (22,016,000) Net cash used in capital and related financing activities (136,907,000) Net cash used in noncapital and related financing activities . . . . q4;174,0001 increase in cash and cash equivalents (83,376,000) Cash and cash: equivalents, beginning of year 15L,413,000 Cash and cash equivalents end of year $ 68L037,000 At June 30, 2002, NCPA's total outstanding brig -term debt was $984,469,000 at an average interest rate of 5%. The current portion of long-term debt at June 30, 2002, W2S $50,000,000. Complete financial information for NCPA may be obtained at thefoliowing administration office; Northern California Power Agency 180 Cirby Way Roseville, CA 95678 62 am go an am M no MM NM ME MW NMI CITY OF LORI Notes to Basic Financial Statements (continued) June 30, 2003 The Transmission Agency of Northern California (TALC} was organized under the California Government Code pursuant to a joint powers agreement entered into by fifteen Northern California utilities including the City of Lodi. The purpose of TANC is to provide electric transmission or other facilities for the use of its members through its authority to acquire, construct, finance, operate and maintain facilities for electric power transmission, The joint powers agreement provides that the costs of TANC's activities can be financed or recovered through assessment of its members or user charges through transmission contracts with its members. Each TANG member has agreed to pay a pro rata share of the costs to operate TAMC and has the right to participate in future project agreements. The joint power agreement remains in effect until debt obligations and interest thereon have been paid, unless otherwise extended by the members, Increase in Non-defauffina Prosect Participant' s 0[igiinnagpEfrofectEntitlementjE�ercent � 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. TANC is a participant and also the Project Manager of the California -Oregon Transmission Project (Project), a 339 -mile long, 500 -kilovolt alternating current transmission project between Southern Oregon and Central California, As a Project Manager, TANC is responsible for the overall direction and coordination of all project development, construction work, operations and maintenance and for general and administrative support, The project was declared comrnercialiy operable on March 24, 1993 and provides a third transmission path or 'intertie', between the electric systems of the Pacific Northwest and these in California. The major environmental requirements for the Project have been successfully rn et and completed. In connection with its participation in the Project, TALC has an entitlement percentage in Project transfer capability and construction cost sharing of 85.2557%. TALC has incurred costs for Project construction of approximately $445.4 million as of June 30, 2002. These costs have been capitalized by TANC since they are expected to be recovered through reimbursement from Project participants and the successful operation of the Projects transmission lines. The Project agreement among the participating members provides that each member agrees to make P2yMentS, from its revenues. to TAMC for Project costs incurred and for the paym6nt of debt service. Under the TAMC joint powers agreement, the City is obligated to pay 1,89% of its debt service and operating costs. At June 30, 2002, approximately $361 million in 6ong4erm debt was outstanding of which $6.3 million is considered current. 63 CITY OF LODI . . . . . . . . . . . . . . . . . . . . . . . . ..... The following are the most recent available audited condensed financial statements of TANG� BALANCE SHEET June 30, 2002 Assets Electric Utility Plant, net Restricted Assets Current Assets Noncurrent assets and deferred charges Total Assets Capitalization and Liabilities Total members' equity Accumulated other comprehensive income Long-term debt Total capitalization Current liabilities Noncurrent liability and deferred credit Total capitalization and liabilities STATEMENT OF INCOME For the Year Ended June 30, 2002 Revenuesffi Opera ting revenues interest income Total revenues 64 sum ffim N Em a = 357,854,894 17,866,098 38,660,618 609.1037 4TU75,847 356,017,135 101,126,043 21,432,669 478,57U47 $ 44,030,962 _13,216,120 $ 57,24L,082 RPREMEWN ORMEM ffama am NM mn MW an MW am 10M 10M so am W CITY OF LODI Notes to Basic 'Finaricj6j Statem6nt� (continued) June 30, 2003 Costs and expenses General and other operating costs 11,115,234 Interest and other financing costs 28,485,855 Loss on: interest swap valuation 7,637,281 Depreciation and amortization 1.0,280,2L3 Total costs and expenses 57,51. Net loss (271,541) Members' equity, beginning of year 615697 Members'equity, end of year 344.156 Total equity 344;1 Complete financial information for TAIC may be obtained at the fo0owing administration office-. Transmission Agency of Northern California 3100 Zinfandel Drive, Suite 600 Sacramento, CA 95670 Membership in Insurance: Pools The City is a member, along with twenty-three other public agencies, of California Joint Powers Risk Management Authority (CJPRMA) organized under a Joint Powers Agreement pursuant to the California Governmaot Code for the purpose of sharing the risk of catastrophic general liability, automobile liability and public officials' errors and omissions losses because adequate. insurance is not availabi in th com . merci . al . nsura . nce market, CJPRMA has a twenty-one member Board of Directors, incluftig a director from the, City of Lodi, The and members elect officers of CJP 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 retrospectively five years after the end of the current program year, The City periodically pays deposits to the CJ A. These deposits are recorded as expenditures in the year paid, as they are a reasonable estimate of the actual cost of the program, During the year ended June 30, 2003, deposits of $268 197 were paid to UPRIVIA. 55 CITY. OF. LODI Notes to Basic Financial Statements (continued) June 30, 2003 Balance Sheet Statement of Revenues, Expenses and Retained Earnings June 30, 2002 Year Ended June 30, 2002 Total Assets, primarily investments $ 61,449,095 Total Revenues $ 8,583,389 Liabilities Total Expenses (21,172,694) Reserve for losses, Liability program $ 37,887,215 Operating Income (12,589,305) Reserve for losses, Worker's Compensation program 57,670 Accounts payable 68,061 Investment Income 6,576,084 Accrued liabilities 1304.3 Net Income (6,0i3,221) Total liabilities 38,026j089 Fund Equity Retained Earnings, beginning of year 34,688,892 Retained earnings 23,423,006 Refunds to members (6,25.2,665) Total Liabilities and Equity $ 61,44.9,095 Retained earnings, end of year $ 23,423,006 TheDarticipants and their percentage shares at June 30, 2002, are as follows. City of Alameda 3.68%, CCCMRMIA 4,96%, Chico 1.62%, Central tral San Joaquin Valley Risk Management Authority 14.99%, Fairfield 2.91%, Fremont 6.16%, Livermore 2.5011/0, Lad! 2.20%, Manteca 1.47%, NCCSIF 2,79%, Petaluma 1.70%, Redding 3.93%, Redwood Empire Municipal Insurance Fund 5.71%, Roseville 3.30%, San Leandro 2.99%, San R's' eel 2.54%, Santa Barbara Area Joint Powers Insurance Authority 0.72%, Santa Rosa 5.50%, Small Cities Organized Risk Effort 2,011/o, Stockton 7.84 %, Sunnyvale 6.23%, Vacaville 2,17%, Vallejo 3.33%, and `holo County Public Agencies Risk Management Insurance Authority 8.76%. The City, along with twenty-five other public agencies, is a member of the Local Agency Workers' Compensation Excess Joint Powers Authority (LA WCX), which was formed July 1992, for the purpose of sharing the risk of workers' compensation losses. All members are self-insured up to $250,000 per occurrence. LAWGX members pool resources to pay claims from $250,000 to $500,000 per occurrence and then use group purchasing power to obtain excess coverage through a commercial insurance company up to statutory limits. 66 CITY OF LODI Notes to Basic Financial Statements (continued) June 30, 2003 The most recent condensed audited financial statement information of LAWCX follows: Balance Sheet June 30, 2002 Total Assets, primarily investments Liabilities: Accounts Payable Claims liabilities - Known Claims Claims liabilities ® Incurred But Not Reported Claims liabilities - for Linallocated Loss Adjustment Expense Total liabilities none moda MEN Statement of Revenues, Expenses and Retained Deficit Year Ended Juna 30, 2002 5,239jJ21 Total Revenues $ 2,3211,575 16$238 Total Expenses 2,687,791 3,747,908 Net Loss 182,996 6,634,933 Retained Deficit: �,39Retained Deficit, beginning of year Total Liabilities and Equity $ 5,239,12:1 Retained Deficit, end of year The City paid $112,727 in deposits to LAWCX during the fiscal year ended June 30, 2003, (3,431,608) mm� (6:5,779 1 (1,395,6:12) The participants at June 30, 2002, are as follows. City of Alameda, Albany, AMSJPAT Brisbane, Central San Joaquin Valley Risk Mg Authority, Clovis Desert Hot Springs, East Bay Regional Park District, Emeryville, Management of Emeryville Services Authority, Fremont, Livermore, Lodi, Los Gatos, Merced, Morgan Hill, Newark, PAR AC, Piedmont, Roseville, Small Cities Org. Risk Effort (SCORE), South Lake Tahoe, Sunfine Transit Agency, Union City, Vacaville, Vallejo and Vector Control JPA, The City, along with thirty other public agencies is a member of California Transit Insurance Pool (CaITIP), a joint powers insurance authority which was formed for the purpose of sharing the risk of property damage, bodily injury, personal injury and public officials errors and omissions losses for pubfic transit systems. Liability protection coverage €s provided under two programs- ErMrg�m applies to members who choose to utilize CaITIP's adjuster and /or those with a $0 deductjble. E=rqrn, It applies to members with self-insured retentions who choose to provide their own adjusting services, 67 CITY OF LORI Notes to Basic RnanciW Statements (continued) June 30, 2003 CaITIP purchases excess insurance over its $500,000 retention up to $20 million per occ urre nce. Each member is provided with $5 million in excess of the pooled retention and has the option to choose one or both of two additional layers for the full $20 million. CaITIP also provides physical damage coverage to its members. This coverage pro gra. m is optional for all members and offers damage or loss protection for transit, staff and maintenance vehicles to transit operators. CaITIP self -insures 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 th . e C9IT( P's adjuster. The schedule below reflects the liability protection coverage at April 30, 2002, which is the most recent available data, for each of CaITIP's member agencies. Agtncy Arcata Mad River Transit System Azusa Butte County Transit System Central Contra Costa Transit Authority City of Auburn City of Lodi Transit System City of Vacaville Culver City Municipal Bus Lines Dixon El Dorado County Transit Folsom Golden Empire Transit District Humboldt Transit Authority Livermore/Amador Valley Transit Lincoln Mendocino Transit Authority Monterey -Salinas Transit Morongo Basin Transit Authority Napa County Transportation Authoiity Nevada County Transit Placer County Transit Riverside Transit Agency San Luis Obispo Regional Transit Authority 11M Riatenflon Prefunded 25,000 25,.0 00 50,000 250,000 Prefunded 25,000 250,000 Prefunded Prefunded 250;000 250,000 50,000 Prefunded 250,000 25,000 250,000 Prefunded Prefunded 25,010 100,000 25,000 P refunded 20 20 20 20 5 20 20 5 20 10 6 5 20 10 5 5 10 20 10 10 20 20 10 ME On so an imam MMIN"MOMMOMMOM am am an CITY OF LODI Notes to Basic Financial Statements: (continued) June 30, 2003 Santa Cruz Metropolitan Transit District 11 250,000 20 Santa Rosa County Transit 11 100,000 20 Siskiyou County Transit I Prefunded 20 South Coast Area Transit l Prefunded 20 Vallejo Transit I 25,000 20 Westem Contra Costa County Transit Author4 Il 100,000 20 whittler 11 6'00b 20 Yolo County Transportation District I Prefunded 20 The most recent condensed audited financial information ofCaMP as of April 30, 2002, is disclosed as follows: Balance Sheet Statement of Revenues, Expenses and Retained Eamings. April 30, 2061 Year Ended April 30, 2002 Total Assets, primarily cash and investments $ 11,385,304 Total Revenues $ 3,574,558 Total Expenses (30005,535) Total Liabilities $ 8,102,421 Net income 569,0.23 Retained earnings 3,282,883 Retained earnings, beginning of year 2,713,860 Total Uabilifies and Retained Earnings $ 11,385,304 Retained earnings, end of year $ 3,282,883 The City paid $47,505 in deposits to CaITIP during the fiscal year ended June 30, 2003. There have been no reductions in. insurance coverage frorn the prior year and there were no insurance settlements in excess of insurance coverage in any of the last three years, (16) Deficit in Fund Equity Internal Service Fund - _Claims and Benefits - A deficit in fund equity at June 30, 2003, in the amount of $2,176,869 in the Internal Service Fund is due to the self-insurance liability to cover both incurred and incurred -but -not -reported (ll NR) clairns. The City plans to implement the deficit reduction plan recommended by an actuary to gradually eliminate the deficit in the Internal Service Fund. 1� . Yc�iter Fu�:pd - A deficit in fund equity at June 30, 26 03, in the amount of $3,426,319 in the Water Fund is primarily due to the accrued interest on the Env - T-ronmental Abatement Certificates of Participation. The City plans on increasing the rates in 2004 hot ohly to e0minate this defidt but also to 4eplace and upgrade water lines in the alder sections of the City, 69 MY OF LODI Notes to Basic Financial Statements (continued) June 30, 2003 Litigation and claims - The City is a defendant in various lawsuits and is a party to various claims including environmental exposure, The C4 Attorney estimates that the potential claims against the City resulting from such litigation would not materially affect the financial condition of the City. However, the City has been advised that its former outside counsel believes the City owes them approximately $6 million in attorney fees. The City has been unable to confirm this amount. The City is assessing its obligations, if any, it may have at this time. Even if it is determined that the City owes these fees, it appears that at least a porton of that obligation would be met by the City's insurance carrier, which has to date already paid some of the firm's fees and there is a process for the payment of more. However, those fees covered are only for the defense end of the case, not the prosecution. The City has been unable at this time to assess what percentage of these fees are billable to its insurance carrier since its new counsel has only been involved in the case since mid-January 2004, However, the City Council has retained another outside counsel to assess those bills in question. As the ultimate outcome of this matter cannot be determined at this time, no liability has been recorded for any additional attorney fees owed. Arbitrage Earnings Rebate Liabiflty - 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, Current] y, arbitrage earnings must be rebated to the United States Treasury every five years from the date of August 18, 1999, for the Electric System Certificates of Participation, The City has recorded an arbitrage liability of $154,586 as of June 30, 2003 that is included in the Electric Fund's accounts payable and other liabilities. 70 Ift Ism sm an so CITY. OF LODI. Notes to Basic Financial Statements (continued) June 30, 2003 R.107-� The City's beginning fund balances have been restated to reflect the cumulative effect of the implementation of GASB Interpretation No. 6. The impact of GASB Interpretaflon No6 was to reduce the current portion of certain long-term liabififiese and only recognize expenditures in the governmental fund financial statements for those liabilities considered to be due and payable as of June 30, 2002. Fund Balances, Fund Balances at June 30, 2002, as previously reported General governmental fund types,. and Total fund balances as of June 30, 2002, as previously reported $ 3,063,922 GASB Interpretation No. 6 adjustment: Reduction in current portion of long-term liabilities not considered due and payable — 300000 Fund balances; at June 30, 2002, as restated -governmental fund types $ =m=2,363,922 The Water Fund and the Transit fund beginning net assets have been adjusted as follows: Net assets, beginning of year as previously reported in Enterprise funds Adjustment to net assets: Accrued interest on the Environmental Abatement Program Certificates of Participation not recorded in prior years Unreaia'ed accrued revenua in Transit fund Net assets, as restated, beginning of year 71 Water Fund Transit Fund 3,905,719 10,6 19, 1 2 (3,858,870) CITY OF LODI Notes to asic Financial Statements (continued) June 30, 2003 Ifflummmommam California Statewide Communities Development Authoft Water and Wastewater Revenue Bonds On October 7, 2003, the City of Lodi along with the City of Fort Bragg issued $9,855 million 2003 Series 3 revenue bonds through the California Statewide Communities Devefopment Authority (the 'Authority') pooted financing program. The City of Lodi's portion is $5.0 million for the upgrade of its wastewater facilities. The Authority's Water and Wastewater Pooled Financing Program is available to California water and wastewater agencies to facilitate the financing or refinancing of capital improvements, The program is available to California cities and special districts that operate water or wastewater enterprises. The Authority is authorized pursuant to Chapter 5 of Division 7 of Title I of the California Government Code to issue bonds to finance and refinance water and wastewater public capital improvements of local agencies located throughout California. Woodbridge Irrigation District Bonds On October 8, 2003, the City lent its name to the Woodbridge Irrigation District (the "District") in the procurement of $11.745 million 2003 Revenue Certificates of Participation, to provide funds to finance the costs of construction of a new diversion dam on the Mokelumne River and related facilities of the water district. A significant portion of the Districts sources of payment for the 2003 Certificates are expected to be derived from at to be received by the District from the City of Lodi pursuant to an Agreement for purchase of Water from the Woodbridge irrigation District by the City of Lodi, dated May 13, 2003 (the "Lodi Water Sales Agreemerif'). 72 Hamm now Actuarial Valuation Date 6/30/00 6/30/01 6/30/02 Actuarial Asset Value (A) 136,603 140,463 130,903 Required Supplethentary'Infor.m.a.flon June 30,2003 (in thousands of dollars) Entry Age Actuarial Accrued 1-jability A 113,757 125,752 134,344 73 Unfunded Unfunded (Overfunded) (Overfunded) Actuarial Actuarial Accrued Funded Liability Ratio [(B) - (A)] [(A) / (B)l P (22,8461 120% (14,711) 112% 3,441 97% Unfunded (Overfunded) Actuarial Liability as Covered Percentage of Payroll Covered P2Yr0ll P fl(B) — (A)j1(G)} 19,585 (116,65%) 21,446 (68.60%) 23,361 14.73% CITY OF LODI" SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GEKKRAL:fLWD.... Year ended June 3012003 REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Fines, forfeits and penalties Investment and rental income Miscellaneous revenue Total revenues EXPENDITURE General government Public protection Public works Library Parks and recreation Total expenditures DEFICIENCY OF REVENUES UNDER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Other sources and uses Total l outer financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE, beginning of year,. restated FUND BALANCE, end of year Variance with Original Final Actual Firgai uti �# $ 21,421,852 21,421,852 21,451,941 $ 30,089 1051554 1,655,564 1,669,402 13 ' 8 48 6,106,112 3 42191391 (6771012) 1,793,015 1,793,015 1,871,380 78,365 854, 227 i �'p08 x3,385,288 �'y4�7$,d�{'q,4 G02-59 1. _ 9242104 1824,�704 221,3190 (602,a14) 88,105 98A22 L391605 41,183 31,533,360 31,543,677 30t316,264 (15167,4732, 10,151,700 11,677,958 %874,000 703,663 14,752,704 15,572,175 s 15,334,086 233,€369 6,106,112 6,423,432 6,130,955 292,537 1y,363,062 1g,.+3y116 �g1g,323, !72 e , 942; 'i3'C1 y [� 0,587 79 �'p08 x3,385,288 �'y4�7$,d�{'q,4 G02-59 1. _ 35,476,518 38,524,566 37,040,427 1,484J39 84J39 (3,943,456) (6,980,88% (6,664,223) 316,666 5,.027,627 6,747,325 6,747,325 (2:,859$405) (1,330,316) (1,660,316) 4,106 722 4,867,003 4,867,009. 162,264 (2,113,8613) (1,797,214) 316,666 5,038„7.2.1 1363,922 .,.. .,._ . 3,3663,922 5,20,9:5 1,250,€42 1,566,766 316,666 The mote to the required supplementary information is an integral part of this schedule. 0 CITY OF LODI Notes to the Required Supplementary Information June 30, 2003 The City adopts an annual budget for the general and special revenue funds, These budgets are prepared in accordance with generally acc . ept6d accounting prftlpl6s. As part of the City's internal controls, the City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with the.legal provisions embodied in the annual appropriated budget approved:by the City Council. The accompanying financial statements present budget and actual data only of funds for which an annual budget was adopted. The budgets that emphasize the major programs and capital project plans extending over a number of years. Due to the long-term nature of these projects, "annuar' budget and actual comparisons are not considered me aningful. Formal budgetary integration is not employed for Debt Service Funds since effectiVe budgetary control is alternatively achieved' through the bond indenture provisions. Accordingly, no budgetary information is included in the accompanying financial statements for capital projects and debt service funds. The City Council follows the following procedures in establishing the budgetary data reflected in the accompanying financial statements: Original Budget On or prior to the first regular Council meeting in June of each year, the City Manager submits to the City Council a proposed Two-year Financial Plan and Budget for two fiscal years commencing July I . The budget includes proposed expenditures and the means of financing them. Budgeted revenues are adopted by the City Council at the time the budget is approved. Budgeted revenues are modified when the tax base changes, when fees are modified or when new revenue sources are identified. Public hearings are conducted during. meetings of the City Council to obtain citizens' comments. Prior to July 1, the budget is legally enacted through passage of a resolution. Final Budget The final budgetary data presented in the basic financial statements reflects the following changes to the original budget. Budgeted expenditures represent original appropriations adjusted by budget transfers and appropriation amendments. The legal level of budgetary control (that is, the level at which expenditures can not legally exceed the appropriated N CITY OF L DI Dotes to the Required Supple r entar -lnformati€ n (continued) June 30f 2003 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 c t: are approved by Council at the fund level. The City Manager may transfer. appropriations from one activity to another within a depart entthout approval from the �€ City Council. All Cather approphafion adjustments during the year, whether transfers, increases or decreases, require City Council approval. Under a two-year budget, all operating appropriations lapse at the end of the second year except for funds that are encumbered. 7 Wo= Effam MONK Room mm Wma mine some slow OWN MIND salon soon MEN @Not son Bill moos 11001 COMENNING AND [NEVIDUALL FUND STATEMENTS ANQ SQHEPULES MW gnaw mom. MOMINNIMEMMOM no No 61 ..ENT.AL FUN..DS MW an aw ME Nonmajor Governmental Funds include: Special Revenue Funds. account for the proceeds of specific revenue sources that are restricted by law or administrative action to expenditures for specified purposes, other than those for major capital projects; Debt Service Fund account for the accumulation of resources for the repayment of principal and interest on general long-term debt, - Capital Project Funds account for the financial resources to be used for the acquisition or construction of major capital facilities, other than those financed by proprietary funds; CITY OF LODI 664�11§iwi91412 1 T June 30, �003 Assets Cash andinve-stments Receivables: Accounts Interest Due from other funds Due frorn other governmental agencies Advance receivables Total assets Uabffltles and _Faid ftlaaces Liabilities, - Accounts payable and other liabilitles Due• to: other funds Def . efred mvenus Total liabilities Fund Balances -. Reserved for encumbrances Unreserved -designated Total fund balances Total liabilities and fund balances 77 Special Capital Revenue PLO� Total $ 1,500,314 780,078 $ 2,280,392 114,742 114,742 15204 1,203 16,407 1,927,747 1,927,747 1,872, 199 1,8721.69 1,084.;000 1,184,000 $ ,399=,=374 896,023 $ 7,29537 $ 569,526 21,466 $ 590,992 1,339,101 73,000 1,41.21,101 --i,992 . 627 94,466 3,0137,093 1,084,660 95,622 1,180,282 2,322,087 __105,935 3,024,022. 3,406,,747 _1018557 4,208,304 $ 6,:399,374 896,023 $ 7j2 95,397 CITY OF LOO] COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS Year ended June 30, 2003 Special Debt Capital Revenue Serice— v Proiec . t . s Total Revenues- Taxes $i 6th 790,560 Intergovernmental revenues 3340,9W 3j140,906 C'narges for services 2,096.,2 06 2,0961206 Investment and rental income 89,464 2,099 91,563 Miscellaneous revenue 40,278 92,961 133.,23:9. Total revenues 6,157,414 95j060 6,252i474 Expenditures: Current-, General government Public protection 263,314 263,314 Public works 755,033 755,E133 Capital outlay 2,905,489 795,569 3,701'068 Debt service-. Interest and fiscal charges 1,220 040 1,220,040 Principal payments . Z30,000 730,000 Total eyditures pen 31923,836 1,950,040 61689j445 Excess (deficiency) of reveoues over (under) expenditures 2,233,578 (1,9�O40 416;971 Other financing sources (Utes): Transfers in 9,891 1,950,040 695,079 2,855,010 Tt-ansfers out 2jD2%471) Total other finandng sources (uses) (119901580) 1,960040 675,079 825,539 Net change in fund Warims 233,998 174,570 408,668 Fund balances, beginning of year 3,172,74S 626,987 3,799,73.6 Fund balances, end of year 3,406,747 801,557 S 4,2Q8,304 walliffigNIA magnum 00300M A� 78 Eno WN some Bill Mill slow SIR MAIN loll moll INION .,'' NMI" ME Im MENOWNE Imsm OMMM sm SMENSM Em am ME 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 seffing illegal drugs and the State of California auto theft prosecution moneys, Streets Fund This fund was established to account for the following: Gas Tax To account for revenues and expenditures apportioned to the C4 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. Master Storm Drain To account for the funding of construcbon or modification of the City's storm drain system. Measure K Sales Tax To account for revenues and expenditures appotoned to the City for sales tax collections under Measure K. Expenditures for administration, maintenance and construction must be for street -related projects. Intermodal Surface Transportation Efficiency Act (ISTEA) To account for revenues from the federal highway administration for prograrns including surface, transportation program (STP) for streets and roads, congestion Mitigation and air quality program (CM AQ)and:haz6rd elimination safety (HES) for street lighting projects, Transportation Fund 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 114% of the 6% sales tax levied statewide for local transportation purposes. Funding for this program was provided during the 1971 legisiaLive session with the enactment of the Transportation Development Art, which extended the 6% sales tax to include purchases of gasoline. Revenues ailorAted to the City of Lodi under this program are dNided 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. 79 HOME P . _ e.raj,�:entsjodavejonj a enjim.. itand # 9 ASSETS Cash and Investments Receivables: Interest Due from other funds Due from other governmental agencies Advance receivables TOTAL ASSETS UASiUTIES AND FUND BALANCES UABILITIES Accounts payable and other 4abilffles Due to other funds Deferred revenue TOTAL LIABILMES cITYOFL0Q1 COMBINING BALANCE SHE5T NORMAJOR GOVERNMENTAL F Total 1,500,314 15,204 1,027,147 1,872,103 1,084=0 ,39% 374 $ 12,487 537,540 7,105 12,394 569,626 756,770 582,331 1;339;'101 12,407 1,294,310 7,105 1,678,725 2,9x2;627 FUNO BALANCES Fund balances: Reserved for encumbrances 1,084;660 1:084,WQ Unreserved -designated for specific projects and programs 136 8,384 __1 2 ,087 TOTAL FUND BALANCES 388,567 3,011 796 6,364 3,406,747 TOTAL UABILITIES AND FUND BALANCES 401,054 1.3A89 1,678,725, $ 639 s 74 81 Community Public Dev . alopment Safe! StreetsTansportaflon _1M Black Gmts $ 343,811 1,14:3;27`3 13,224 1,261 13,678 265 1,927,747 55,982 1,221,402 534,725 1,084,000 �40 1, �O5 4 4,306,106 13,489 1,678,725 Total 1,500,314 15,204 1,027,147 1,872,103 1,084=0 ,39% 374 $ 12,487 537,540 7,105 12,394 569,626 756,770 582,331 1;339;'101 12,407 1,294,310 7,105 1,678,725 2,9x2;627 FUNO BALANCES Fund balances: Reserved for encumbrances 1,084;660 1:084,WQ Unreserved -designated for specific projects and programs 136 8,384 __1 2 ,087 TOTAL FUND BALANCES 388,567 3,011 796 6,364 3,406,747 TOTAL UABILITIES AND FUND BALANCES 401,054 1.3A89 1,678,725, $ 639 s 74 81 EE.;� REVENUES Taxes tntergovernmental revenues Charges for services Ifivestment and rental income Miscellaneous revenue Total revenues EXPENDITURES Current Public protection Public works Capital outlay Total expenditures EXCESS (DEFICIENCY). OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total otheT, financirtg sources (uses) NET CHANGE lN FUND BALANCES FUND BALANCES, beginning of year FUND BALANCES, eeid rf year Year ended June 30, 2003 82 OROWOM WMI63M x1maten *WHEN= FAMM NNOW MEN= Boom kom No= ON= 991M sm am ffinm mom kum HOME Program & Commuritty Publir Development Streets Transp _qrtation Block Grants Total $ 790,560 S 790,560 363,253 1,891,337 36,645 649,671 3, 140,906 2,096,206 2,096;2.06 6,891 80,307 2,266 89,464 40,278 -.40,27.8 370,144 44899,688 849,671 6 ,157,414 263,314 263,314 24,664 730,169 755,033 '[9,373 2,69Q992 75,622 9 Q2 115 2205,489 282,687 2,715,856 75,622 849,671 3,19123,836 87,457 2.,182.832�,71 1 2,233,578 (77x6711 _jL601,9981 229,802 _,M.471 67,780 1 601,998 29,802 1999,680 19,677 580,834 (366,513) 233,998 368,890 2,430,962 372,897 3,1.72,749 �88.5167 3, 11,796 6,384 $ 3,406,747 82 OROWOM WMI63M x1maten *WHEN= FAMM NNOW MEN= Boom kom No= ON= 991M sm am ffinm mom kum REVENUES Intergovernmental revenues Investment and rental income Total Revenue EXPENDITURES Current Public protection Capital outlay Total Expenditures EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING OF YEAR FUND BALANCE, .END OF YEAR 83 PUBLIC SAFETY FINAL BUDGET ACTUAL VARIANCE $ 207,390 363,253 155,863 31,106 6,891 (24,214) 236,496 370,144 131,649 466,151 263,314 202,837 195373 19,373 485,524 282,687 202,837 (247,029) 87,457 334,486 9,891 9,891 (77;671) (77,671) (87,780) (67,780) (.314,809) 114,677 334,466 358,990 368,890 1. 5430.$ 3.88 567 73Z486 :CITYPF LODI WDGETAND-ACTUAL NONMAJOR GOVERNNIENTAL FUNDS —SPECIAL REVENUE FUNDS Year -ended June 30,2003 REVENUES Taxes Intergovernmental revenues Charges for services Investment and rental income Miscellaneous revenue Total Revenue EXPENDITURES Current Public works Capital outlay Total Expenditures EXCESS OF REVENUE OVER EXPENDITURES OTHER FINANCING USES Transfers out Total other financing uses $ 795,690 5,769,575 829,000 157,935 7,552,200 M�W � 790,560 1,891,337 2,096.206 80,307 40,278 4,M,688 W= � (5,131} (31878,238) 1,267,206 (77,628) 40,278 (2,653,512) 24,864 24,864 4,833,376 2,690,992 2,142,383 4,858.239 2,716,956 2,142,383 2,693,961 2,182,632 (511,129) I'a91,963 2,430.962 $ 3,5221.925 M 580,834 2,450,962 'TO, _15-6 E� (511,129) REVENUES Taxes Intergovern mental revenues investment and rentai income Total Revenue EXPENDITURES Current Public works Capital outlay Total Expenditures EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCING USES Transfers out Total other financing uses NET CHANGE IN FUND.13ALANCE FUND BALANCE, BEGENG OF YEAR FUND BALANCE, END OF YEAR 85 2 FINAL BUDGET ACTUAL VARIANCE 2,000,000 36,645 (1,963,355) 2,2663 2,266 2,060,000 38,911 ---Ll 14,680 14,680 961.007 75,622 20,3.65 110,637 75,622 35,065 11689,313 1) (1,926,024) (329'802) (329,802) (329,802) 1..„55 ,511 0166,51a) 372,897 372,897 3234108 6, ('x,9MO24) CRY-OF-10DI: SCHEDULE,im, allPGET ANOACTUAL NONMAJOR GOVERNMENTAL FUNDS - SPEQAL REVENUE FUNDS Year-eiided June 30,2003 HOME PROGRAM and COMMUNrrY DEVELOPMENT BLOCK GRANTS FINAL BUDGET ACTUAL VARIANCE REVENUES Taxes $ Intergovernmental revenues 2,L92,087. 849A71 __j1, 142,416) Total Revenue 2,992,087 849,671 (2x142,41L) EXPENDITURES Current Public works 2,872,585 730,169 2,142,416 Capital outlay 1.1.9,502 119,502 Total Expenditures 2Q92,087 849,6 . 71 2,142,416 NET CHANGE IN FUND BALANCE FUND BALANCE, BEGIWNG OF YEAR FUND BALANCE., END OF YEAR 86 - mom& mama. EM sm ONE= slow am M" am MM an sm M Vehicle and Equipment Fund This fund was established to account for the financing and replacement of vehicles and equipment for all funds of the City vwith the exception of the Enterprise Funds, Financing is primarily provided through operating transfers from other funds, interest earnings and sales of surplus property. Library Fund This fund is used to account for the acquisition, construction and instaflation of capital facilities for the Library. Subdivision Fund This fund is used to account for construction and instailatfon projects dealing with subdivision work for others. Hutchins Street Square Fund When the old Lodi High School burnt down, the City purchased the property and renamed it Hutchins Street Square. The Old Lodi High Site Foundation was established and this organization organizes events to raise money for the capital restoration of Hutchins Street Square. Lodi Lake Fund This fund was established to account for moneys charged for activffies held at Lodi Lake. The Council designated the moneys to be used for Lodi Lake capital projects, 97 ASSETS Cash and investments Reoeivabies: Accounts interest TOTAL ASSETS LfAefLITIES Accounts payable and other liabftes Due to other funds TOTAL LIABILMES FUND BALANCES Fund baiam--s: Reserved foo- encumbrances Uhreserved-designated for specific projects and pnagrams TOTAL FUND BALANCES TOTAL UABILfTIES AND FUND BALANCES .CITY. OF Low COMBINING BALANCE SHEET Vehide and Hutchins Lodi Library Subdivision Streetjq�_ �re Lake Total $ 149,108 161,663 300,339 3:577 165,491 $ 780,078 41,742 73,000 1114,742 555 643 1 f; p 1652 ,.11 300ing T. 76 577 166,139 $ 896023 20,829 86 551 $ 21,466 73 Wo 73.nnn 20,829 86 73;O00 561 94jE. 94,074 1,548 95,622 75g; 47 160,484300,339_ 3577 __L65,598 705, 35 170,02i 162,032 300,339 3 877 �62,1 18 300,339 76577 166,139 1196.1123 soxwo Mmma IMMEM SHOW 111910M SM . M mom MM MW a" Im VM NONO FUNDS - tAAIAL PRWidt FUNDS Yow ended Juno 30,2003 8f4 Hutchins Vehicts and street. Lodi a -e ik-- Total REVENUES Investment and rental income $ 94 2,005 2,099 Misceffaneous revenue 50,710 Total revenues W71 026,094 19:258 EXPENDITURES CuTrent Capital ouffay 6305 126,356. 795,569 Total expeAdItures 585,548 83,665 126,358 EXCESS (DEFICIENCYY OF REVENUE OVER (UNDER) EXPENDITURES (700,509) OTHER FINANCM SOURCES (USES) Transfers in 550,079 169,000 176,4300 895,079 Transfers out MAE L Total other finandng sources fuses) 530,079 169,MO T 176;000 &75,1379 NET CMANGfN FUND BALANCES (4,759) 110,429 06,900 174,570 FUND BALANCE$, BEGWNWO OF YEAR 174,780 51,503 3W3119.. 3,577 �,6,9 a 026,887 FUND BALANCES, END OF YEAR 021 182,032 300,$139 3,577 '65,886 $ 8f4 Agency Fund This fund was established to account for special assessments collected on the property tax rail by the City on behalf of the property owners within the Industrial Way Beckman Districts and the Downtown and Cherokee Lane Districts. GRIMM MEN= simm am" TRUST PRIVATE -PURPOSE . FUNDS > w! :f 2003 Is CITY OI COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS Year ended June 30, 2003 ADDITIONS Investment and rental income Total additions DEDUCTIONS Current Library Total deductions CHANGE IN NET ASSETS ET ASSETS, E I' l INN OF YEAR NET ASSETS, Elly OF YEAR P[i te-(wase rrust Fund (g rate Hutchins Street Sector Square Bequest Intel 6 6 64&749 - -- 64,749 4,749 64,749 (64,749) 6 (64,743) 698,973 394 60,9,3 67 644,224 4 _ - -- - 544,624 2 Casio and investments Special assessment receivable Interest receivable TOTAL ASSETS Ai=unts payable and ether liabilities TOTAL LIABILITIES r; .. . endedAG ENCY FUN DS Year 424,719 IM 16,267 4€ 8,452 Special Assessments Balance Balance 7/1102 Additions Deductions 6130/03 380,249 215,217 228,733 $ 366,733 40,894 40,463 40894 4€ ,463 3,576 1,256 3,576 1,256 424,719 256,93 273,203 406,452 424,719 16,267 408,452 424,719 IM 16,267 4€ 8,452 STATIST UNAUDITED mums IMMM MW amm so WMI no MM no moo so on sm ow CITY OF LOD5 GOVERNMENT -WIDE. EXPENSES BY FUNCTION LAST TEN FISCAL YEARS �Are curds €rt Thousands) €raterest On Fiscal General Public Public Paries & Long-term i eae Gm rerriraxerei Pr t -batt Works ____Library Recreation Debt Electric waotewater Water Transit Total 2€1 2-33 12,233 $ 16,632 16,446 $ 1,454 $ 3,989 $ 1,215 1,1,388 $ 6,14f 12,675 $ 5,389 $ *0,565 Nose: Itzfhrtnzt4rsn is available beginning in fxacad year 2W--, wh" the City inlplE unented GASB 34 'Basic Financial Statements - and h+€anagenie tt Discussions and Analysis - fat State and Lcca a€ GGvernnitat?." SOURCE: Cily Finance. Depth awAt ag NoW iniurrrotian is avegable beTinning 4r� fiscal year 2OG3, when the City IM;)Ie,rner ted GASS 34 "Baste F>:,2rscla€ Stateme^4s anr; Maninage Tres ft Discussion and Ar+alysis for State and Corgi Govern m8rEts." SOURCE City Nuance De.PiF3dment 96 CITY OF: LORI . GOVER€ MENT- iiia € UPS . LAST TEN FISCAL YEARS (Amounts in Thousands.) Charges Operating Capital Special item FlsrM for Grants and Grants acid Motor Investment Litigation Year Services contfibutions contAbutions Taxes Vehicle In -Lieu Earaings Other Settlement Total 2002-03 $ 65,331 $ 13,727 $ 13,386 $ 23,884 $ 3,4348 $ 5,726 $ 1 0761 $ 2,728 $ 130,967 NoW iniurrrotian is avegable beTinning 4r� fiscal year 2OG3, when the City IM;)Ie,rner ted GASS 34 "Baste F>:,2rscla€ Stateme^4s anr; Maninage Tres ft Discussion and Ar+alysis for State and Corgi Govern m8rEts." SOURCE City Nuance De.PiF3dment 96 ...... .... . ... .. ... .. ... . ..... ...... .. .... gum now WAW mm am un oft 4W mm Mm mm GfTYOF L00.1. GSNSRAL GOVERNMENTAL REVENUES BY SOURCE LAST TEN FISCAL YEARS (Amountz in Thousands) Gamra; GovammnW Pevsnuez inaluds Ganera#, apqcial: Revorius, Debt samm and caoltsl Projects Funds. Ex6udlm Due to change in accounttr3g f6r refuse rov4m4. "Dula to $n-fieu taxes ftom Srftrprliss FurAs. 97 charges Use of piscei LIcensest Inter - for Fines, ForfeW Money Misc, ye�r permlis Governmental 8'amices penaldes Pica of ReVenue Total 1M-94 -ia-xes $ 12,579 $ 507 4;7`a$ 2,1W $ 407 $ 1,157 199 $ 21,705 1994-95 16,209 634 S,928 2,517 406 sm 201 26,703 1995w% 17,070 842 8,642 2,428 421 1,063 140 26,606 194W97 17,029 1,012 6,m 1'm 453 1,218 80 28,014 1997-98 17,700 1,183 8,291 2,071 562 1,060 524 306W1 1998-89 18,594 1,267 8,493 3,74 878 982 243 34,33 . i IM -M 19,501 1,406 9,054 4,611 714 982 764 37,332 2000-W 2119% 1,692 11,641 4,249 785 1,wo 383 42,W 2001-02 23,043 1,464 22,000 31888 we 1,234 1,349 53,784 2002-03 24,100 1'm 7,386 6,272 am 832 451 41,514 Gamra; GovammnW Pevsnuez inaluds Ganera#, apqcial: Revorius, Debt samm and caoltsl Projects Funds. Ex6udlm Due to change in accounttr3g f6r refuse rov4m4. "Dula to $n-fieu taxes ftom Srftrprliss FurAs. 97 20,00 t15'ow 16.Wo 14,00D ZOW 0 CITY OF LODI GENERAL GOVERNMENTAL RXPtND1TUR$S BY MNCTION LAST TEN FISCAL YEARS M 9gg9-94 1994-95 IM -95 1996-57 1991-9O I9981W I999-00 2613-01 2001-02 =-03 E:Ganerat Government M Public Protection 0 Public Vs O*S M Library 0 Faft & Recrastloi m Debt serytr's C� Capital Outlay FISCA General pubHe Public ftrks & Debt COPU yA_ arks _Sovernment 9'8 .4 5 4,296 S S 881 $ 2,3G7 S 405 S 2,2m S 24,949 1,211 10.4(9 4,382 9% 2,2ag w 2,662 26,246 5,217 10,172 6,0112 954 2,I96 5w 5,578 30,xl 5,662 11,0% 5,749 1,012 2"312 m 10,510 37,763 7,068 10,896 4,810 069 zm 1,288 -a,$85 453,5M 7,2-n 41,225 5j51 1'020 2>230 1,282 6,840 34,797 7,813 1'An 5,039 1 p4o 2,670 1,282 6,426 35,694 6,692 13,1911 6,312 $.184 zm 1,286 I2,645 45,677 2QW-02 8,967 5,741 1,168 2,M 1.m 17.948 61,489 2042wm 10,874 #6'597 6,926 1,316 5,386 1'96o 12'942 52'm Gamraf Gvwnm ",I EitpendMeas ftfitdor, tier, 4, 8 6a Rev*mue, OEM &fvme epi 050at pMjveft r:Urh1g Excludes E"ndab�& Trusts, SOURGR C4 Fharfoa Oapstme4t Due W rhangs in t=mn&ig fir reftfse experdb, ea. $10'aw $9,0W $6,0W $7,0W MOW $5= $4,WO sum $2,OW figmu son 610= I P93-94 1994-95 1995-98 199"7 1997-98 IM -99 lew-00 2WU1 2001-132 2=-03 mpropwty w sates & Use E3 Transient Occupancy 13 Franchise Documsrttary Trandw 0 Motor Vah . In Lieu 0 Public Protection Buslfiess 1-laariza a In Uau FraacMsa Fiscal Sales Transient Documentary motor veh e Public ausinegs Pn Lieu Year �ft a use _2SSSgncy_ •247 Franchiso Transfar in Lieu Protection License Franc se -i2kl �1 199344 4'M 5221. $ sm $ 68 S 1,972 $ 98 92 $ 13,156 199.4 -55 4,0/7 5,320 248 506 so 1,885 149 169 5,300 17,722 i995-96 4,206 5,783 278 sm 76 2pm 154 470 5,413 ISMS 19 97 4,225 51950 249 524 66 2,144 154 541 5'340 19,201 Is97-98 4,374 8,206 278 586 77 2,478 180 593 5,546 20,31 IF ISWSS 4,517 0,523 305 616 119 2,221 180 612 5,627 20,722 1999-00 4,932 ?'0M 318 975 lie 3,008 196 658 5,721 22 717 7000-01 5,327 6,028 390 820 'sem 3,051 242 73e 6,015 24,762 20 1-02 5,641 6,300 439 931 172 3;276 231 7157 6,569 26,346 2002-03 6,11141 8,709 400 TM 207 3,43ri 247 822 6,895 27,631 (1) G8nerat governmental tax fevanQes are included to taxes, ficansos and "0s' fntorgovernmwtet revenues and mlsovAsneous mvanue oftha W%12ionsrtl Fund .30URCEcity Finglice Dtpo"nt w rr 1994 4855 1996 1 ISM i m 20M 2001 2W2 2003 -.o-- Tax Levy — Tax Colleefflons SOURCE: Courty Aucftr-CopftPsei mm Of Total. coffections -iE�Llpv . 112,3% �M.0% 95.9% 96.2% 99.8% 98.4% S7.3% 9&8% M10% 92,7% TOW Current year's percent at Eminfluw TOW Natal Tax Tax calkeia'A's Tax Tax year to Tax ipy CaHeCftna —soillgwons 1994 $ 3,M --i2ii—aclions 3'A61 961% s 824 $ 085 1595 3.670 3,51e 95,816 3,525 1996 3,781 3,815 95,6% 3A15 1 3; 27 3,652 96.2% 3=. 1996 4,444 4,433 59..8% 4,433 1 9 4,553 4,578 96.4% 4,578 2000 5,056 4,917 973% 4,017 M 5,1w sJfs S&M 5,118 2002 5,757 5,840 9&M 5,640 2003 5,832 5,4M 921% 5,408 SOURCE: Courty Aucftr-CopftPsei mm Of Total. coffections -iE�Llpv . 112,3% �M.0% 95.9% 96.2% 99.8% 98.4% S7.3% 9&8% M10% 92,7% an an I= am: ow mm Im min an an as an ASSESSED FULL CASH VALUE OF ALL TAXABLE PROPERrY LAST TtM F=AL YEARS fAmourft in Thcwsanda) Fiscal Secured mineral utmy Uns=ured Tak Less NM Tax -year IM -94 5 2205,937 $ i2 S 2,736 t 107,1$1 S 2,415.636 193.4-95 2,353,069 3,504 1t5,16o 2,471,753 154,632 2.307,161 lgas-95 2,4 27,757 3,%G 125,W i 2,556t326 170,899 2. x,429 198697 2,463,536 3,557 126,07 2;583.WD 172,945 2;426;069 I9S7�8 2,5.16,47a 3,699 1213,396 2,6413,573 176,660 2,472,073 Me -99 2,574,62.2 3;826 146,395 2,724,793 17.5;836 2.544.968 15991M 2,7 7,343 31525 993,299 2,874,167 1M,294 2,890,873 2G3D-C t 2,M.201 mm 177.040 3,00,725 105,473 2;375,252 20GI Z2 3,M,037 3,379 M1679 3,2N,994 195,252 3.1%,742 2002M3 3,39'9-,945 3,352 2077,16 3,,%2,392 200,957 3,391,435 Fiscal pamonm Lets Piet Assessed '�ear Land 99M-94 6313,421 $ 1,576,675 9 200,740 $ 2,415,636 $ 128,A86 199445 663,227 1, 554 199;562 2,471:753 964,592 2,W7,161 1995-,16 MMIS 1,054,642 210,370 2,556,323 170,289 2,3a5,429 19%.97 70%2sa 9,513,877 209,827 21501= 172,945 2,42a,055 t"748 728,9M 1,705,W8 214,03e 2,648,573 176,506 2,472,073 199649 7, -mm 1,748,387 2,724;Tga 179835 2,544,955 9384.00 787,249 1,847,600 2.874,167 163,244 Z$90,a7-1 2000-01 632,768 1,982, 245,269 3,M,72n 166,471 2.875,0 2 2061*2 689.262 2,9144,121 NUN 1 3,258, 4 190,262 3,46,,742 2002-03 9eo'16B 2,386,667 256,339 3A92I392 20007 3,3qi,435 Sot=o: San joaqtic, Counq Asssssots Offts iW CITY OF Loof 10 '41 0y -: SOURCE: Sari JozgWn Cou uditordr-ontro;lors Office ms id -loot Basic Fiscal Coins -hide 1.0428 U140 1 1.0300 199344 1.0=, 0.014a im i.. 0.0126 1" 6-gs 1,0wo M123 199"7 1, 0. 1997-99 1.. `;. 0. , . . 1990-99 I'M 0. I -tom 1,0M o . 2000-01 1 .0= Ifo.... 2 2-03 f , : . SOURCE: Sari JozgWn Cou uditordr-ontro;lors Office ms id -loot AH r 0.024 0: 34 1.0428 U140 0.0034 1.0300 C nma 0,0034 1.0188 0;0022 0e%1034 ",toss 0:0019 0: 1.0053 0.0ml o.0034 1,0035 0.. 0.-4 tom O.t32 0. i.2 0.0m C,owo 1. 0.0487 0. I,W? Fiscal Year 1953-94 1994-95 1985-96 1997-93 mow "M low CiTY OF LODI SPECIAL ASSESSMENT BUINGS AND COLLECTIONS LAST TEN FISCAL YEARS (Amounts in Thousands) current Assess ments Dua 52 49 51 125 SOURCE: City Fhance Depadment Current Assessments 52 48 50 125 M Total CoRection, As Percent of Cuirre"t Assessments Due Total OutstandIng Current an4 Winquent Assessme lofa,0510 - M00% (3, T/® CIMOF LODI RATIO OF NET GENERAL BONDED DEBT "fMTOU56�-XV-0 !AWN LAST TEN FISCAL YEARS (Amount:s in Thousands) SOURCE: 0ty F`snartce Depaftment 104 Debt payab;e Gross Gross From met Percent of Net Net Fiscaf Assessed Bonded Enterprise Bonded Bonded Debt to Bonded Debt Year ation Value Debt Revenue Debt Assessed Value a Its 1993-94 54 2,415,837 10,840 10,270 570 13.4236% 10.58 1994-95 56 2,471,754 11,379 10,174 1,205 0,0488% 21,91 1995-96 54 2,556,328 16,M 1C1,078 5,000 0,1956°%® 92.69 1896-97 55 2,693,0131 24,948 9,978 14,970 0.6773% 272,18 1997-98 M 2,648,573 24.372 9,872 14,500 0.5475% 258.93 199a-93 57 2,724T 743 23,776 9,752 14,014 0,51431/6 245.89 19913-00 58 2,874,167 23,146 5:636 13,510 0.4700% 232.93 2000-01 59 3,060,725 72,911 59,930 12,981 0 424€'% 220.02 2001-02 59 31298,994 101,675 74,9311 26,745 Ci 35037% 453L31 2002.03 0 3,592,332 143,748 117,733 26,015 0},7242% 433.58 SOURCE: 0ty F`snartce Depaftment 104 DIRECT DEBT: CERTWICATE 0;: PARTFC]PATION OVERLAPPING DEBT: NONE Totai am an am an no am an on me m . a m imp CITY. OF LORI COMPUTATION OF DIRECT AND OVERLAPPING GENERAL BONDED DEBT June 30, M63 TOW City's share COP of Debt 26,015.GM 26,o15,000 $ 26,015,00 $ 26,015,000 Raft of Dract Ovedspp"ng Debt t� Assessi5d FuPi Cash Value = 26,015r000 t 3,5S2,3q2,000 Dire --t and Ovvappng Debt Per Cipits =26,015,000 MO,521 Taxable Assessed Ftili Cash Valoes Par Cspfta = 3,5S2,392,000150,521 SGURCE: City Froan ce Depadment 105 0.72% $436 $5'a,356 CITY OF LODI COMPUTATI Assessed Full Cash Value as of June 30, 2003 (1) Debt Limit - 15 Percent of Assessed Full Cash Value (2) Amount of Debt Applicable to Debt Limit LEGAL DEBT MARGIN (1I Assessed Value before exemptions applicable to 2002-03 Tax Rail (2) Section 43605 California Government Code SOURCE: San Joaquin County Aud-tor/C ntrollet's Offloe '0 City Finance- Department N *Zero balances occured in 1996-97 due to general obligation bonds paid off in 1995-96. SOURCE; City Finance Department 107 ITT OF LORI TIO OF ANNUAL. T SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENOITURES LASTTEN FISCAL YEARS (Amounts In Thousands) Total Percent of Total General Debt Service Fiscal Debt Govemmental to Governmental Year Princi Ll Interest SezvIce Expand tures 1930-94 $ 165 $ 15 180 24,949 172% 1994-95 114 6 122 25,246 0.46©18 1995-96 116 4 122 303,461 03.40% 1996-97 37,763 1997-96 47€3 818 1,268 45,565 2.€33% 1596-99 465 797 1,282 34,797 3,68% 1999-00 505 777 1,2€32 35,694 3-59% 20006-41 530 755 1,285 45,877 2;601% 2001-02 555 679 1.234 51,469 1.40% 20302-€33 730 1,220; 1,950 52,931 3.68% *Zero balances occured in 1996-97 due to general obligation bonds paid off in 1995-96. SOURCE; City Finance Department 107 Net Direct Fiscal Gross Operating Year Reverme Exponse. 1993-94 $ 3,454,258 2,030,828 1994-95 3,596,313 2,489,307 1995-96 3'339,8i5 3,301,761 191�fi-97 3,444,597 2;663,Qt7 1997-98 3,946,058 2,913,969 1998-99 3,935,MG 2.957,162 1999-00 3,874,750 3,146,931 2000-01 4,697,052 4,336,384 2001-02 4,138,729 4,807,716 2002-03 6,760,379 4,"80x,114 SOUPCE: City of Lodi Fhance DepartmerA, S63'6l a Net Revenue Avallablo Current f1scat Yeaes For De.bt Debt $enfice Requirements S em ce Interest Tow $ 1,428,00 3 1 KWO $ 705,690 805,59(! 1.77 1,107,Wr5 110,000 700,355 810,355 i.37 37,564 110,000 06,357 806,357 0,05 sv,sao 215,'3 sas'plis S63'6l a 0.72 1,032,089 120,000 682,218 802,218 1,29 977,844 125,MG 675,030 800,030 1,22 727,1$i9 140,000 666,770 806,770 0,90 360,668 M5,000 658,070 803,070 0.45 (668,987) 150;000 648,920 7915,920 (:3:84} 2,311€},265 160,000 639,000 799TOOO 298 108 M City Population K San Joaquin Cau* Population W9 Population Son Joaquin popw.abon Fd nk In Size F€scai squee city Nment County Percent of caflu6mia Year Miles2of �T, Gou vises 1993-94 12.14 --!W21-afjon 53,0W 0.2% 521,WG --!sVM__ 10. . 2% 124 1994-96 12,32 53,575 1A% 530,700 10.1' 121 1s9B 96 1132 5,4,473 13% 529,30D 10.3% 81 199&97 12,32 54,8m 0,6% 535,420 10.2% 123 1097-98 12, 2 55,700 116% 545,2m 10.2% 124 1998-99 12.32 66,9w 2.2% 554,,4 10 103% 124 1S99-00 1150 57 1.8-046,600 10,2% 125 2WD-01 12,60 5e'soc 1.2% 583,700 1010% 120 2001-02 1162 59A31 1 A% 596,000 lok% 129 2002-03 110 6015M 1,8% 633,5w 9.9% 184 SOURCE: Staft of C916cmia, Depa4mwt d Finsams, Demographir Rasoh UMt ary Fmance DGPffftment Budget W9 E994 1995 1998 MI tM IM 20M =1 2062 A,n Fiscal Building Permits Percent Year Issued e . 1994 995 10,1911/0 1995 994 - ..10% 1996 1464 47.28% 1997 1466 1.50% 199.8 1632 fs 1939 IM 7,17% 2006 156 6,12111 2001 2275 22.58% 2092 2090 -8.13% 2603 2492 19.23% SOURCE, City Community Development Department 110 EsUrnated Valuation Percent (in thousands) h n e. 31,317 73,91" 44,661 42:4 29101.9 -35.34% 5€,452 97,96% 59.4790 4. 7°A 74,012 23.79% 771613 4:37 104,360. 34.490k 69;693 -33.23% 92,615 33.18% CITY OF LODI BANK DEPOSITS LAST TEN FISCAL YEARS (Amounts in Millions) 1909 IM 1991 1992 19M 1994 1995 19% 1997 IM F 9 BANKS 0 SAVINGS & LOANS M CREDIT UNIONS . . . ................. .. .. . .. . . .... .... Fiscal SAVINGS GREM Year SANKS LOANS UNIONS IM 422,.M 282.339 14111 199 540,546 297,501 12,813 1691 6 1.,67 r 1 12,465 1S92 649,252 t 9 756 13'M 1993 SW,342 valold 15,4136 1994 627,132 186,159 IS, $% 1995 $43,109 16s,275 lrpn 1 996 682x223 121,183 15,721 1997 6s6ow 118,2oo 16,694 IM 726,210 113,433 17,729 Source. calffornta Swe Depafftner�t Of eankhg- Licenshig & StOstim Ssc6on stag page LS Me most pewee t data "abk, H1 — Employer A#yltr. Ejp!�sss_ Lodi Unfed SCbWl D'StL Education ZBOO Lodi Memo�iai Hospital Heafth Care 1,945 Generat Milfs Camels and Food fixes 550 Pffic Coast Producers cannery Sm City of Lodi Government 457 Alaf-mart Generai Merchant 330 CertainTeed PVC Pipe Manufacturar 113 Target Generat Merchant 200 Malley Industries Trailer Hitches 335 Farmers and Merchints Bank Banking 162 SOURCE Clfy of Lards Communky Davaiopmant Department so am M sm No No an me "M sm go 60 an ow am Property Ownt. General Mitts, Eric. Pacific Coast Producers Certaintead Corporation Dart Container Corporahon K! n, Video Cabie Company Edmund N. Richmond wal Mart Stores Wallace Computer service CITY OF LODI PRNLIPAL TAXPAYERS JUNE 30,2001* Land Use Food Processtng Manufacturing Manufacturing Warehousing communications tndustriat Department Store Warehousing int4riake Materlei Handing, lnc Endustrial Dayton Hudson Corporation Department Store (1) Local Secured Assessed Valuation: 2,880,201,262 Source: San Joaquin County Assessor's Of ;e Inforrhafion on 01s page is the most rac en! data avaifaNe. M Assessed Valuation 171,116,463 59,325,814 15,531,735 13,486,"6 12,363,403 11,852,374 10,893,m 10,854,aO2 10,837,238 10,504,046 2,06% 0.54% 0,47% 0.43% 0.41% (). 3 a 0A 028"/b 11,35% CITY OF LOD] SURETY BONDS OF PRINCIPAL OFFICIALS City Manager Deputy City Manager City Attorney City Clerk PuWc Works Director Police Chief Fire Chief Finenoe Director Co cc ty Devaiopment Okectoq Elecldc Utj%tes Director Cor mur-ity Center DirecFor Pants and Recreation Director Human Rosources Director City ernpicyses are covered by a commerdai fdeft bond amounting to a maximum of $500,000 per loss. SOURCS: City of Lodi .a4 $500,001) 500,()00 500,000 500,000 500,M 500,090 500,000 500,000 5�30,ow SKOOG SM,000 500,000 500,000 on no ow No No NOR ow I . w mm ME so 0 . m an No on on CITY OF LODI GANN APPROPRIATION LIMITATION Last Ten Fiscat Ysars FISCAL LIMIT GPI Cyr POPULATION GROWTH APPROPRfArON BUDGET SUBJECT YEAR BASE INCOME GROWTH FACTOR LIMITATION TO LIMIT VARIANCE 1993-94 34,027,028 1,0272 1,0213 1.0491 35,897,755 15,6463,590 19,051,165 1994-95 35,697,755 1.0071 9.0157 1.0229 36,515,234 17,292,960 19,222,274 1995-96 36,515,234 1,0470 1.0131 1.0609 38,739,012 i6,683,360 20,155,652 1996-IJ7 38,739,012 1,9467 1.0168 1.0643 41,229,332 19,243,566 21,9551'7624 1997-98 41,229,332 '.01467 1.0070 11.064G 43,456,825 20,0 6,975 23,359,850 1998-99 43,456,825 1,0536 1.0120 1,r)420 45,785,303 20,491,80S 25,293,494 1999-00 4,5,785,303 1,0453 1.0194 1.0656 48,787,849 20,907,397 27,980,452 21700-01 48.787,849 1,0491 1.0129 1. '26 51,843,597 22,462,923 29,360,674 2091-02 51,84-3,50 1..071.6vio 1,0987 56,1353A24 25,610,753 31,349,071 2002-03 56,959,824 OL9873 1.0214 1 rOO84 57;439,894 2.8,013,113 29,426,781 SOURCE C€ty Finance D8partmeat Its Q Parks .. Recreabon 0 Police Department 11 Public Works DepattmeM DEPARTMENT 1993.94 1994 1999-96 1 -97 19974M 1998-99 1999-00 2M-01 2€14142 200243 lc€sra2r�ara#€�ta 22 -17 21 24 26 36 32 34 34 37 community Nvolopment 11 11 13 14 14 15 15 17 17 19 OecMas U00ty 46 n 39 43 44 44 49 47 56 52 Financortme� 39 35 35 34 34 32 34 34 35 ata Far. .... e t 48 47 48 49 48 49 56 52 55 68 Ubrwy 15 15 15 14 14 14 14 14 14 15 Pwks & Rocroaton 29 26 27 26 27 26 28 29 29 34 pot ' .. ?teem 1€34 W4 m 112 112 11.3 113 114 B5 5 l I i S WAa Woft Depaftment as 86 87 92 94 .. M lis_ 110 Tdat 394 379 39i 467 413 418 4.29 444 467 489 SOURCE: C1W cit 1_ €; tImn ft%nt €16 CITY OF LOM SCHEDULE OF TAXABLE SALES AND PERMTS BY CATEGORY LAST TEN YEARS (Amounts in Thou"nds) 1933 994 1995 956 107 1999 2000- 2002 2003* SALES (IN THOUSANDS OF DOLLARS]l: AppaW Stores $ 6,467 6,106 5,970 5,651 5,633 5,0211 $ 4,778 S 4,458 $ 5,417 5,696 Ganaraf Merchandise Stores 60,764 731?15.5 78,420 84,977 105,423 111,930 120,M2 m,263 131,371 144,M Drug Stores 13,184 13,673 13,295 13,411 22 21 23 24 21 Food Stores r;3,033 28,682 33,237 34,029 34,247 34,344 37,328 42,977 43,271 44,448 Packaged Liquor Stores 6,041 5,932 5,664 6,150 47 1511 53 59 61 60 Esting & 0riT*JrQ Pres 39,161 39,714 43E770 44 598 45,345 46,316 49,803 52,860 59,594 68,092 Home Furnishings .& Appliances 16,038 149327 12,39.6 12:908 12;135 17,319 22.254 17,9138 15'ese 19,252 BuiIciing Materials & Farm Toot 37,639 34,250 31,801 31,858 29,865 32,424 39,369 47,467 46;048 41,772 Atew Dealers & Supplies 85'917 93,199 103,241 102,768 101,933 i06i53i 123,667 141,640 1W,102 201,628 Service Stations 31,221 30,5ig 34,348 35,025 351746 29,203 36,491 46,794 45, 13o 43,212 Other Retail Stores 25;666 x,.547 X792 4 343:5112 3� 45,6$3 17j0k 48,753 16 is Total Retaii Stores 355;031 366,722 392,403401,867 197 410,091 428,776 491,664 523,126 562,081 617,060 AR Other Ouffels .96,921 2 ��94 4�449 1".00 615 3�4$3 143,47 54�5�1) .4 16 1 117-.. 4 456 IL TOTAL 929 459,318 $ 48603 17,667 540,751 $ 2,229 624,871 S 677,716 1 71111117 111,516 PERMITS: Apparel Storer. 32 25 23 22 29 28 28 25 is 23 General Merchandise Storer, 14 15 13 13 22 21 23 24 21 Drug Stores 9 9 8 Food Stores 44 47 45 45 47 1511 53 59 61 60 Packaged Liquor Stores 8 7 7 7 Eathg & Drinking Places i32 136 144 146 146 151 151 148 180 165 Home Purnishings &Appliances 44 46 46 41 47 43 53 55 63 64 StAdihg Mate0aiz & Farm Too 38 35 29 30 26 22 22 23 24 26 Auto Dealefs & Supplies 58 63 62 66 78 al 77 63 83 80 Service Stations 18 19 20 19 17 16 15 15 16 is Other Retail Stores 182 136 201 197 205 229 256 268 Total Rwlaq Stores 577 5,98 599 594 615 642 680 703 743 756 Afl other outlets 929 12 18 9 )069 5 82 E112 524 TOTAL 15 06 1524 1511 1542 1515 1511 115516 1585 1655 i65o , Firsg three quarters are acts W. the fourth quartw is an estimate. SOURCE: State Board of Equaiizatio-nj State of Cafffomma w CITY OF LODI SCHEDULE OF TAXABLE SALES LAST TEN YEARS i SMtC i CQVd afEqUaMfiM 416-445-3192 Jeff Rcynoldg or Dave Hayes 118 916-455-6199 Im ME mm Im an I= CITY OF LODI SCHEDULE OF BUSINESS TAX RECEIPTS ISSUED YEARENDEDJUNE 30, 2003 TYPE OF BUSMESS 34 PERCENT Mining Located in Lodi: 0.00% Construction Agftufture, Forestry and Fishing 129 3.98% Mining D 0.00 . % constmotion 293 9.03% mznu?aGtwing 88 2.71% Tmnspotion and Pub4c UtMie5 42 1.29% Wholesale trade 87 2MY* pet,0 trade 6813 2W. 6% Rnanw, insurance and Rea{ Estate 265 V7% Services 1,660 5 1. 180% Tota! a, 244 103;0 Located outside Lodi: AgricWture, Forestry and Fishing 34 3.57"/o Mining 0 0.00% Construction 677 60:55% TrOnsportBijon and Public Utithies 12 1.26% Whoiemge trade 42 4.416% Rotaitirade 40 4.20% Finame, Inseam rsca end Feat Estate 35 1661/10 203 21 Sol/t, Total 100,00% Grand Total 4,197 SOURCE: C€tyFinan rePecords 119 CITY OF LORI MISCELLANIEOUS.STATfSTICS JUNE W, 2001 120 POPULATiON ELECTRIC UTILITY Population 60,521 Number of Customers 24A34 Assessed Value $3.4b Energy Sales (KM) 36,66C,340 Buiiding PermAs issued 2,090 Peak Dema nd(Mvv) 110.5 Date of Incerwation December 5, 1 q06 Form of Government Goure-managef PARKS & RECREATION Employees 467 Parks Dovobped 25 Area 12,616 Acres Parks Developed 293 Parks UntLaveloped 5 FIRE PROTECTION Acres Parks Undeveloped 98.5 Number of Stations 4 Community Center 1 Number of Firefighters 44 SWmMing Pools 3 Nurvabsf of, at -serve. FirefQMeTs Cs Tennis Courts 14 Number of Calfs Answered 4,333 Boat R imp I Playgrounds 17 POUCE PROTECTION So Parks Various 26 Number of Stations I Soccer Fields 37 Number of Polics, Officers 78 Fodball Field: I Number off Reserve Officers 4 gat dbal tfflasketbafl/VolleybaPl Courts 7 Number of Support pwsonnei 37 Horseshoe Pits 10 Number of COs Answered 41,2132 pijSL1(,1 VqORKS EDUCATION Miles of Streets 100.8 Eierneiitary Schools (public} 277 Miles of Alley Ways 16 Middle Schools 7 Number of Street Lights 6,033 High SGtloos (public) 5 Number of Traffic Signals 53 Eiamentary S,�hools Enrollment (puNio) 14,127 MWcffe Sthoo4s Enrofiment (public) 4,112 VVATERPWASTEINATER Ht h sciloofs Enro(tmellt (public) 8,643 Milles of Water Mains 212 Miles Of Wastewater l -use's 174 K-8 Schools (pdvate) 6 Number of Wastewatar Treatment Plants I High Schwis "Pe'vate) 2 Avwaqe Daily Tmatmen, 6,$ MG K-8 Ennz%ii-erlt jpfivate) 1,427 maximqrn aa3y capacity 8.5-f High Sc tool qvoiiment (private) 333 HOSPITALS Number,31 Hoapitais N I umbar of Patient Beds 181 120 ... . . ...... . .. . ......... sm Federal Grantor Pass-through Grantor or Direct CFA Grant/Project P _.frogram Title Number Number xp enditules _ U.S. Department of Housing and Urban Development Passed through San Joaquin County Depart nein of Planning and Bufiding Inspection Community Development Block GranttFntiflernemt Granm 2002-2003 Program Year 14.228 NIA $ 215,851 2001-2002 Progmrn Year 14.22.8 N/A 355,967 2000-2001 Program Year 14.228 NIA 184,302 1999-20M Program Year 14M8 N/A 71,363 1998-1999 Program Year 14.228 NIA 21,749 1995-1996 Program Year 14,228 WA 439 ToW Community Development Block Grant/Enfitlement Grants 849,671 Total US, Dcepartmcnt of Housing and Urban Development 849,671 !U,S, Department of Justice Direct: LocxE Law Enforcement Block Grant 16.592 2011-L13-;8 -1235 73,961 Local Law Enforcement Bltxk Grant 16.592 2002 -LB -BX -0591 1,5,91 Total Local Law Enforcement Block Grant 75,552 Passed through State Office of Criminal Justice Planning: Byrne Formula Grant Program 16.579 DC97080190 83,672 Total U.S. Deparnent of Justice 159,224 LL& Department of Traiwportation Passed through California Department of Transportation Highway Plpnning and Construction 20.205 TS21 241,716 Highway Planaing and Construction 20.205 CML -51.54((127) I_,55960l Totai Highway Planning and Constriction 1801 Fed.erai Transit Formula Gr -Arun 2MI-2002 PTogram Year 20,507 N)A 24,830 2t -2001 Program Year 20.507 �A 246.001 T+ital Fe&rat Transit Formula Grant 270,831 "Potai u,s. Depa?.tmff m of Tratnportatskm 2,072rI48 Total ftdera€ awards 3,081,043 See accompariying note - to the schedule of expenditures of federal awards M CITY OF LODI 1�:. I � —4 15 a-, FOR THE FISCAL YEAR ENDED JUNE 30, 2003 The accompanying Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year ended June, 30, 2003, presents the activity of all federal award programs of the City of Lodi, California (City), The City reporting entity is defined in Note I of the City's basic financial statements, All federal awards received directly from federal agencies, as well as federal awards passed through other government agencies, are included in the SEFA. The accompanying SEFA is presented using the modified accrual basis of accounting for grants accounted for in governmental fund types and the full accrual basis of accounting for grants accounted for in proprietary fund types, as described in Note I of the City's basic financial statements. NOTE 3— CATALOG OF FEDERAL DOMESTIC ASSISTANCE The CFDA numbers included in the accompanying SEFA were determined based cosi the program nal e, review of grant contract information and Office of Management and Budget's Catalog of Federal Domestic Assistanceo Of the federal expenditures presented in the schedule, the City provided fi-,deral awards to subrecipient,, as follows - Federal prc� rare Con-imupity Development Block Grand Entitle rnent Grants Highway Planning and Construction Federal Annount provided CFD A Number to Subree ients 122 14,228 S 272,938 20,205 S 1,559,601 an WE am so The Honorable Members of City Council City of Lodi, California .3000 S Street Suite 300 Sacralneato,("A 95916 916.928.4600 9 6 9 4' IS . 2 7 5s v!,€?, iv %Vw. "IRC i ftsv, !n ix am We have audited the financial statements of the governmental activities, the business -type activities, each major end and the aggregate remaining fund informatioo of the City of Lodi, California (City), as of and for the fiscal year ended June 30, 2003, which collectively comprise the City's basic financial statements and have issued our report thereon dated January 13, 2004. Our report included an explanatory paragraph discussing the City's implementation of new accounting principles issued by the Governmental Accounting Standards Board, We conducted our audit in accordance with auditing standards generally accepted in the United States of Ati erica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. CdiiTliance As part of obtaining reasonable assurance about whether the City's basic financial statements are free of material misstatement, we performed tests of its compliance with cerin provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of basic financial statement aniounts, However, providing an opinion on compliance with those provisions lWas not an objective of our audit and, accordingly, we do not express such an opinion., 'Ihe results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City,s internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the basic financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal Control over fmancial reporting would not fiecessarily disclose all.matters in the intern control over financiai reporting that might be tnaterial weaknesses. A material. weakness is a condition in which the design or operation of one 123 or more of the internal control co ponenN does not red€ ze to a relatively low level the risk that misstatements in amounts th t . would be material in relation to the basic financial statements is being audited may occur'and not be detected Within a timely period by employees in the normal course of performing their assigned functions. We noted rite matters involving. the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the City Council, management, federal and state grantor agencies and pans-throu b entities and is notintended to be and should not be used by anyone caller than hese specified parties, qetclap�;!� mup Certified Public Accountants Sacramento, California January 13, 2004 124 on Im as Ino N = -1000 S strf"et Sicramenlo. CA 95816 91 6.928,4600 916 928.2755 FAN INDEPENDEN17 AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM, INTERNAL CONTROL OVER COMPLIANCE AND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS IN ACCORDANCE WITH OMB CIRCULAR A-133 The Honorable Members of City Council City of Lodi, California Compliance We have audited the compliance of the City of Lodi, California (City), with the types of compliance requirements described in the U. S. Office of It and Budget (OMR) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for tile fiscal year ended June 30, 2003, The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City's managernent. Our responsibility is to express an opinion on the City's compliancebasedon our audit.. We conducted our audit of compliance in accordance with auditing standards generally accepted in the lJnited States of America; the standard's applicable to financial audits contaifted in Government Auditing Standar&, issued by the Comptroller General of the United States; and OME Circ ular A-133, Audits of States, Loca.ICJ-overnments, cirri Nora -Pro fitOrganizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal prograin occurred, An audit includes examining, on a test basis, evidence a4out the City's compliance with those requirements and performing such other procedures as we considered necessary in the eircumstances. We believe that our audit provides a reasonaNe hasis for our opiniom Our audit does not provide a legal determination on the City's compliance with those require lents. In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable to each of its rnaw:Jor federal award programs for the fiscal year ended June 30, 2003. 125 Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which. tate design or operation of one or more of the internal control components does not reduce to a relatively icer level the risk that nonwrnpl ance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within: a timely period by employees in the normal course of performing their assigned functions. Ie hated no matters involving the internal control over compliance and its operations that we consider to be material weaknesses. Schedule of Expenditures of Federal Awards We have audited the financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining find information of the City, as of and for the fiscal year ended ,lune 30, 2003, which collectively comprise the City`s basic financial. statements and have issued our report thereon dated January 13, 2004, Our report included ati explanatory paragraph discussing the City's implementation of new accounting principles issued by tete Governmental Accounting Standards Board. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying Schedule of expenditures of Federal swards is presented for purposes cif additional nal analysis, as required by OM8 Circular A-1.33, and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial st terne is taken as a wholes. This report is intended solely for the information and use of the City Council, management, f6deral and state grantor agencies and pass-through entities and is not intended to be, and should not be used by anyone other than these specified parties. tl VLS, GI'K;. Certified Public Accountants Sacramento, California January 13, 2004 on ... . . ... ...... . an on am No Wn an WE sm own MEN so= now . M am . am MOWN Section I — Summary of Auditor's Results Financial Statements: Type of auditor's report issued: Unqualified Internal control over financial reporting: ® Material weaknesses identified? No * Reportable conditions identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? NO Federal Awards: Internal control over Major programs. * Material weaknesses identified? No * Reportable conditions identified that are not considered to be material w�uknesses? None reported Type of auditor's report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? No 127 CITY OF LODI mmc&Azzl� j4�jvvd� FOR THE FISCAL YEAR ENDED JUNE 30, 2003 Identifir-ation of mkjor programs. CFDA #14.228 Community Development Block Grant/Entitlement Grants CFD A #20,205 Highway Planning and Construction Dollar threshold used to distinguish between type A and type E programs: $300,000 Auditee qualified as low-risk auditee? No am EM Section III - Federal Award Findiqgs,!Vq����. 128 .... .. . ....... .. Finding o. 2-0 - Federal Transit Fonnula Gr°errtts (20.507) - Reporting g In accordance with OMB Circular A-133, grantees are responsible for maintaining internal control over federal programs that provides reasonable assurance that they are managing federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of their federal programs. In accordance with the March 2001 A-133 Compliance Supplement, the following is the control objective for reporting - To provide reasonable assurance that reports of Federal awards submitted to the Federal awarding agency or pass-through entity iaaclrade all activity of the reporting period, are supported by underlying accounting or performance records, and are fairly presented in accordance with program requirements. In the course of performing control testwork for the Federal Transit Formula Grant, we noted Haat one individual was responsible for preparing and submitting itting the City's Financial States Reports, These reports were not reviewed by another party before they were submitted to the awarding agency. Recommendation To help ensure that the City's required federal reports are submitted accurately, we recommend that a review be performed by a party i deptndent of the preparer°. The performance of a. review of all reports prior to submission to the federal awarding agency will help ensure the accuracy of the reports, Straits The City has established that future submittals of the Financial. Status Reports will be reviewed by both Public Works and Finance prior to submission, FIECC t ED BAR _ 1]04 t �pC�t �;�1v cif L CITY OF LODI Report to Management For the Fiscal Year Ended June 30, 2003 CTTY OF LODI Report to Management For the Fiscal Year Ended ,lane 30, 2003 Table of Contents Page(s) RequiredCommunications.......................................................................................................... 1-3 Schedule of Uncorrected Misstatements .................. .....4 I ;L *!G �-- Macias, Gini & Company Catillied ►u611cAccaunlanf, and Mbnagorn—I Caafullanl. February 6, 2004 To the City Council of the City of Lodi 3927 Lennanc 17riw Suite 200 Sacramonto, CA 95834-1922 91 h•928.4htltl 916•928-27551nx www.nlaClasgini_com We have audited the financial statements of the City of Lodi, California (City) for the fiscal year ended June 30, 2003, and have issued our report thereon dated January 13, 2004. Professional auditing standards require that we provide you with the following information related to our audit. I. The Auditor's Responsibility Under U.S. Generally Accepted Auditing Standards and OMB Circular A-133 L..: As stated in our engagement letter dated July 16, 2003, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, J — assurance about whether the basic financial statements are free of material misstatement and are fairly presented in accordance with U.S. generally accepted accounting standards. Because an L— audit is designed to provide reasonable, but not absolute assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements - may exist and not detected by us. L In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our -� opinions on the basic financial statements and not to provide assurance on the internal control over financial reporting. We also considered internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A- 133. As part of obtaining reasonable assurance about whether the City's basic financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of basic financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit. Also, in accordance with OMB Circular A-133, we examined, on a test basis, evidence about _ the City's compliance with the types of compliance requirements described in the U.S. Office of Management and Budget Circular A-133 Compliance Supplement applicable to each of its major federal programs for the purpose of expfessing an opinion on the City's compliance with those requirements. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City's compliance with those requirements. ;L - Offices located throughout California L- . I I .-. .II II. Significant Accounting Policies Management has the responsibility for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the City are described in Note I to the financial statements. As described in Note 1 to the financial statements, the City changed accounting policies related to financial statement presentation and disclosures by adopting Governmental Accounting Standards Board (GASB) Statement Nos. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments; 37, Basic Financial Statements - and Management's Discussion and Analysis -- for State and Local Governments: Omnibus; and 38, Certain Financial Statement Note Disclosures, in 2003. The City also changed accounting `— policies related to recognition of certain liabilities and expenditures by adopting GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in L Governmental Fund Financial Statements, in 2003. Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in Note 17. The City also changed accounting policies related to derivative disclosures by adopting GASB Technical Bulletin No. 2003-1, Disclosure Requirements for Derivatives Not Reported at Fair Value on the Statement of Net Assets, in 2003. L— During 2003, the City executed two transactions with Citigroup, which comprised 1) the termination of an existing $42 million fixed -to -floating swap maturing 2014 and 2) the execution of a new $42 million fixed -to -floating swap maturing 2009. In accordance with GASB Technical Bulletin No. 2003-1, Disclosure Requirements for Derivatives Not Reported at Fair Value on the Statement of Net Assets, the City has made the required disclosure in Note 8. to the financial statements. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. III. Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management k— and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive �— because of their significance to the financial. statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were (1) depreciation, (2) allowance for doubtful accounts, (3) compensated absences, and (4) self-insurance liability. We evaluated the key factors and assumptions used to develop those estimates in determining that they are reasonable in relation to the financial statements taken as a whole. IV. Audit Adjustments For the purposes of this report, professional standards define an audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the City's financial reporting process (that is, cause future -- financial statements to be materially misstated). In our judgment, none of the adjustments we posed, whether recorded or unrecorded by the City, either individually or in aggregate, indicate matters that could have a significant effect on the City's financial reporting process. 2 L In addition, the attached schedule summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. V. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting or auditing matter that could be significant to the basic financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. VI. Consultations with Other Independent Accountants In some cases, management may decide to consult with. other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If consultation involves applications of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on. those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no `- such consultations with other accountants. VII, Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and _ our responses were not a condition to our retention. VIII. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing our audit. This information is intended solely for the use of the City Council and management of the City of Lodi and is not intended to be and should not be used by anyone ocher than these specified parties. Certified Public Accountants Sacramento, California February G, 2004 3 City of Lodi L_ Schedule of Uncorrected Affsstatements June 30. 2003 i 1 --•�� opinion Vnit Expense .. - PJE N _ Activity Fund Fund Account Dese tion Asset _ Liability Equity Revenue _ Expendittn 1 Business -type Remaining Transit Fund Accumulated Depreciation 2,921 Buaness-type Remaining Transit Fund Depreciation expense - - - - (2,921) - �----- ' To adjust deprecation expt:nse per the financial statements to detailed aprwdslrat. 2 Business -type Electric Electric Depreciation Expense 4,452 Busines3-type M=tric Electric Accumulated Depreicatiaa (4,452) To adjust depreciation expense per the financial statements to detailed spreadshW- 3 Business -type Wastewater Wastewater Depreciation expense 1,144 �--+ Business -type Waswwatet Wastewater Accumulated Depreciation - - - - (1,144) To adjust depreciation expense per the financial statements to deeded spreadsheet I 4 Governmental — — ---- Accumulated Depreciation 115,142 Net assets. hegirmingofyear - 351,486 Governmental - — »— Depreciation expense - (466,628) t` To adjust depreciation expense to actual, as this amount represents an additional year of depreciation - 5 Governmental Remaining ISF Depreciation expense - (1,419) _ Governmental Remaining ISF Accumulated Depreciation - - - 1,419 i To adjust the workers compensation claims liability to the 2002 actuarial study 70% confidence level . 6 Governmental ------ ------- -- Debt Principal 1,380 Governmental -- — — -- ----•--- Cash (1,380) , To adjust West Anxrica capital kale payment to the'debi service - principal payments expenditure line. �----' 7 Business -type Wastewater Wastewater interest payable - 53,250 - Business -type Wastewater Wastewater Net assets, beginningofyear (54,077) - Business -type Wastewater Wastewater Interest expense - - - - - 827 - To reduce interest expense and interest payable, to properly accrue interest expense at lune 30, 2003- 8 Governmental General General Due fivnt other funds (229,120) - Governmental General 4 ' General Advance to other funds 229,120 - -. - - L~ Governmental Capital Outlay R.04'. Capital Outlay Reserve Due to other funds - - 229,120 - - - - Governmental Capital Omrlay Re", Capuaf Outlay Reserve Advances from other funds - (229,120). 1i Governmental Capital Outlay Reserve Capital Outlay Reserve Due from other funds (763,291) - - - - - Governmental CapiWl Outlay Reserve Capital Outlay Reserve Advance to other funds 763,291 - - - Governmental Remaining Streets Due to other funds 690,291 Governmental Remaining Streets Advances from other beads - (69n,291) Govemmmul Remaining Hutchings Street Square Due to other funds - 73,000 - - - ' Governmental Remaining Hutchings Street Square Advances Born caber funds (73,000) Business -type Electric Electric Due from other fonds (2,050,000) - 8usiness-type Mecoic Electric Advance to other Ponds 2,050,000 - - - - Govemnremal Capital Outlay Restive Capital Outlay Reserve Due to other fins - 2,0501000 Governmental Capital Outlay Reserve Capital Outlay Reserve Advances from other fluids - (2,050,000) - - - - - BUffhWsFtype Water Water Due from other foods (1,396,764) Business type Water Water Advance to other funds 1,396.764- ✓~ Governmental Capital OullayReserve Capital Outlay Reserve Due to other funds 1,396,764 Governmental Capital Outlay Reserve Capital Outlay Reserve Advances from other funds (1,396,764) To reclass due Whom that are long -tam in nature to advance 6ondto. i Imo' 4