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CAFR FY 2012-13J CITY OFL I�ANCHO PALOS VERDES CALIF OR NIA Y COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2013 CITY OF RANCHO PALOS VERDES, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2013 Prepared By: Finance & Information Technology Department Dennis McLean, Director Kathryn Downs, Deputy Director INTRODUCTORY SECTION CITY OF RANCHO PALOS VERDES COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013 TABLE OF CONTENTS INTRODUCTORY SECTION Table of Contents i -iii Letter of Transmittal iv-xiii Directory of City Officials xiv Organization Chart xv GFOA Certificate of Achievement for Excellence in Financial Reporting xvi FINANCIAL SECTION Independent Auditor's Report 3 Management Discussion and Analysis 9 Government -Wide Financial Statements Statement of Net Position 21 Statement of Activities 22 Fund Financial Statements Governmental Funds Balance Sheet 24 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 26 Statement of Revenues, Expenditures, and Changes in Fund Balances 28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 30 General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 31 Street Maintenance Special Revenue Fund Statement of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual 33 Community Development Block Grant Special Revenue Fund Statement of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual 34 i CITY OF RANCHO PALOS VERDES COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013 TABLE OF CONTENTS Proprietary Funds Statement of Net Position 35 Statement of Revenues, Expenses, and Changes in Fund Net Position 36 Statement of Cash Flows 37 Fiduciary Funds Statement of Fiduciary Net Position 38 Statement of Changes in Fiduciary Net Position 39 Notes to the Financial Statements 42 Supplementary Information Major Fund Budgetary Comparison Schedules Schedule of Revenues, Expenditures, and Change in Fund Balances - Budget and Actual Capital Improvements Capital Projects Fund 74 Non -Major Governmental Funds Combining Balance Sheet 78 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 84 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Special Revenue Funds Air Quality Management Fund 90 El Prado Fund 91 Proposition A Fund 92 Proposition C Fund 93 Measure R 94 Beautification Fund 95 Waste Reduction Fund 96 Public Safety Grants Fund 97 1972 Act Fund 98 1911 Act Fund 99 JPIA — Portuguese Bend Fund 100 Measure A Fund 101 Abalone Cove Sewer Assessment District 102 Dr. Allen and Charlotte Ginsburg Cultural Arts Building 103 Donor Restricted Contributions 104 Bikeways Fund 105 ii CITY OF RANCHO PALOS VERDES COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013 TABLE OF CONTENTS Environmental Excise Tax Fund 106 Quimby Fund 107 Capital Projects Funds City Affordable Housing In -Lieu Capital Projects Fund 108 Low -Moderate Income Housing Capital Projects Fund 109 Permanent Funds Subregion One Maintenance Fund 110 Habitat Restoration Fund 111 JPIA — Abalone Cove Fund 112 Internal Service Funds Combining Statement of Net Position 114 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position 115 Combining Statement of Cash Flows 116 STATISTICAL SECTION (Unaudited) Financial Trends Net Position by Component 119 Changes in Net Position 120 Governmental Activities Tax Revenue By Source 122 Fund Balances of Governmental Funds — Before GASB 54 123 Fund Balances of Governmental Funds — After GASB 54 124 Changes in Fund Balances of Governmental Funds 125 General Governmental Tax Revenues By Source 126 Revenue Capacity Assessed Value and Estimated Actual Value of Taxable Property 127 Property Tax Rates - Direct and Overlapping Governments 128 Principal Property Tax Payers 129 Property Tax Levies and Collections 130 Debt Capacity Direct and Overlapping Governmental Activities Debt 131 Legal Debt Margin Information 132 Demographic and Economic Information Demographic and Economic Statistics 133 Principal Sales Tax Producers 134 Principal Employers 135 Operating Information Full-time Equivalent City Government Employees by Function 136 Operating Indicators by Function 137 Capital Asset Statistics by Function 138 iii LS, RANCHO PALOS VERDES February 18, 2014 Honorable Mayor and City Council City of Rancho Palos Verdes Rancho Palos Verdes, California The Comprehensive Annual Financial Report (CAFR) of the City of Rancho Palos Verdes for the fiscal year ended June 30, 2013, is hereby submitted as mandated by both local ordinances and state statutes. These ordinances and statutes require that the City of Rancho Palos Verdes issue annually a report on its financial position and activity, and that an independent firm of certified public accountants audit this report. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner that presents fairly the financial position and results of operations of the various funds and component unit of the City of Rancho Palos Verdes. In addition, to the best of our knowledge, there are no untrue statements of material fact within the financial statements or omissions of material fact to cause the financial statements to be misleading. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The financial section of the CAFR includes management's discussion and analysis (MD&A) of the financial activity. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The financial reporting entity (the government) includes all the funds of the primary government (i.e., the City of Rancho Palos Verdes as legally defined), as well as its component unit, the Rancho Palos Verdes Joint Powers Improvement Authority. A component unit is a legally separate entity for which the primary government is financially accountable. The City provides a broad range of services, including police protection, solid waste collection, construction and maintenance of streets and other infrastructure, planning and zoning activities, recreational activities, cultural events, and general administrative services. The City of Rancho Palos Verdes is a contract city, meaning that some of these services are provided by contract with other agencies (both public and private) and some services are delivered by the City's own employees. Special districts of the County of Los Angeles provide library services, fire protection services, and sewer services. The City has excluded the County of Los Angeles, as well as the State of California and various school districts, from the financial reporting entity because they do not meet the established criteria for inclusion. iv GOVERNMENTAL STRUCTURE The City of Rancho Palos Verdes is located on a coastal peninsula overlooking the Pacific Ocean in Los Angeles County, 20 miles south of the City of Los Angeles. The City was incorporated September 7, 1973, and currently has land area of 13.6 square miles and a population of about 42,000. The City is primarily a "bedroom" community with relatively little commercial activity. The City has operated under the council-manager form of government since incorporation. Policy-making and legislative authority are vested in the governing City Council, which consists of five Council Members, including the Mayor and Mayor Pro -Tem. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees and hiring the City Manager and the City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the City's departments. The City Council is elected on a non-partisan, at -large basis. Council Members are elected to four-year staggered terms with two or three Council Members elected every two years. The City Council designates the Mayor and Mayor Pro -Tem for a one-year term. MAJOR INITIATIVES The City's staff, following specific directives of the City Council and the City Manager, has been involved in a variety of projects throughout the year. These projects reflect the City's commitment to ensuring that its citizens are able to live and work in an enviable environment. Community Development • The City together with the Palos Verdes Peninsula Land Conservancy continued management of the City's Natural Communities Conservation Plan (NCCP) Preserve, including obtaining City Council approval of the final Public Use Master Plan (PUMP) for the entire Preserve, continuing several on-going habitat restoration projects, and several trail maintenance and improvement projects. • Continued to approve the installation of various commercial antenna facilities for cellular telephones and personal communication systems on private property throughout the City. • Continued to take steps to update the City's General Plan by obtaining Planning Commission approval of the draft text for each of the General Plan Elements. Staff is currently presenting draft General Plan Land Use Map changes to the Planning Commission for review and approval. Staff anticipates that the Planning Commission will complete their review and recommend a draft of the General Plan Update to the City Council in December 2013. Staff also anticipates that the City Council will adopt the Updated General Plan in the first quarter of 2014. • Continued to ensure that the various housing programs within the Housing Element are being implemented. Additionally, staff has retained and worked with a housing consultant to prepare the next mandatory Housing Element Update, which is due to the State Department of Housing and Community Development in October 2013. v • Implemented the approved Vision Plan, a coordinated master plan consisting of program, design and linkage concepts for land located within the coastal region of the City, with: a) a $500,000 grant from the California Coastal Conservancy to complete the City's portion of the California Coastal Trail; and b) a $332,588 matching grant by the State Recreation and Parks Land and Water Conservation Fund for the Abalone Cove Shoreline Park improvement project. • Implemented the City's Trails Network Plan by improving and maintaining trails within the Palos Verdes Nature Preserve pursuant to the City Council adopted Preserve Trails Plan, and obtained an access easement as part of private development projects for the construction of the Salvation Army Trail as identified in the City's Conceptual Trails Plan. Pursuant to a grant from the California Coastal Conservancy, the City has begun construction on the City's segment of the California Coastal Trail. Lastly, the City will begin an extensive overhaul of the Trails Network Plan for trails outside of the Preserve in fall 2013. Public outreach will be included. • Prepared a Draft EIR for the Zone 2 Landslide Moratorium Ordinance revisions. The Landslide Moratorium Ordinance currently includes an exception category for the 16 Monks plaintiffs' lots, which grants them the ability to apply for Landslide Moratorium Exceptions (LMEs) to develop new homes on their lots. The Zone 2 Landslide Moratorium Ordinance revisions will expand the exception category to allow the remaining 31 vacant, non -plaintiff's lots in Zone 2 to also apply for LMEs. Staff anticipates forwarding the Final EIR and responses to comments by early 2014. • Took initial steps towards the creation of a Western Avenue Vision Plan by selecting a consultant, and identifying a work product that will serve as a visionary framework plan for a 2 -mile stretch of Western Avenue. The Vision Plan is a multi -faceted project that will develop a corridor strategy to help revitalize and redefine the identity of the Western Avenue corridor through aesthetic improvements, transit improvements and business incentives. The draft Vision Plan was presented to the City Council in July 2013, and based on feedback Staff anticipates that the City Council will adopt the Vision Plan by the end of 2013. Public Works • Conducted the Landslide Workshop with the City Council and followed up with a presentation of Landslide Mitigation Measures and reviewed the prioritized list of projects. • Obtained City Council adoption of the Americans with Disabilities Act (ADA) Master Plan. • Initiated construction of the $18 million San Ramon Canyon drainage project after acquiring the required access agreements and easements, and a $9.5 million grant from the state. • Completed the following infrastructure improvement projects: Miraleste storm drain improvements; resurfacing of Palos Verdes Drive South from Palos Verdes Drive West at Hawthorne Blvd. to Conqueror Drive, including upgraded access ramps and new sidewalks; FY11-12 Sidewalk Repair Program, with 9,000 square feet of sidewalk, curb and gutter; bluff top drainage control along Point Vicente Interpretive Center and Subregion One (adjacent to Oceanfront Estates); lining the sewer line at City Hall to extend its useful life; ADA compliant improvements to Ryan Park restrooms; and additional improvements to Palos Verdes Drive South in the landslide area to maintain drivability. vi • Coordinated with other cities on the Palos Verdes Peninsula to organize means and methods to respond to the new federal requirements for an MS4 Water Quality Permit. • Negotiated an agreement with Palos Verdes Estates, Lomita, Rolling Hills Estates, Torrance, Carson and Torrance for a regional project to screen trash at Machado Lake. • Established Skateboarding prohibitions on various streets to protect the health, safety and welfare of pedestrians, motorists and persons using skateboards and other similar non - motorized devices. • Planned and held two free document/paper shredding events for Rancho Palos Verdes residents. A total of 1,050 vehicles were served and 18.45 tons of material was shredded. Additionally, 25 tons of mulch was distributed free of charge to residents. • Initiated preparation of the Infrastructure Report Card to address the current condition of the City's infrastructure (e.g. roadways, storm drains, and sewers). • Initiated construction of the FY12-13 Sidewalk Repair Program which will replace approximately 13,000 square feet of sidewalk, curb and gutter which is primarily uplifted and damaged by overgrown street trees. • Initiated design of the FY11-12 & FY12-13 Residential Street Rehabilitation projects, which will resurface local roadways in Area 3 (neighborhoods bordered by Hawthorne Blvd and Silver Spur Rd.) and Area 5 (neighborhoods bordered by Hawthorne Blvd, Crest road and Palos Verdes Drive West). The project improvements include upgraded access ramps, microsurface seal, asphalt concrete, root pruning, sidewalk repair, and roadway signing and striping. • Initiated design of the Palos Verdes Drive East Roadway Rehabilitation and Safety Improvement Project which will resurface the roadway and improve safety conditions along Palos Verdes Drive East from Ganado Drive to the northerly City limits. • Initiated design of the Hawthorne Blvd Traffic Signal Synchronization project to coordinate and synchronize 7 signalized intersections along Hawthorne Blvd from Highridge Road to Palos Verdes Drive West. The project will also provide connectivity between City Hall, Ryan Park, and Hesse Park for improved communications and accessibility. Parks and Recreation • Coordinated numerous annual special events and recreational opportunities for the community. Annual events included the Whale of a Day Celebration, Egg-Stravaganza egg hunt, July 4th Independence Day Celebration, Shakespeare by the Sea performance, International Coastal Cleanup Day, Kids Music Fest, Meet the Goats, City's Local Authors Book Signing Event, and Breakfast with Santa. Recreational opportunities included the Paddle Tennis Tournament, Night at the Museum, Junior Ranger Program and Overnight Campout, and Coed Adult Softball League. • Recreation and Parks staff partnered with other City departments to coordinate the City's 40th Anniversary Celebrations. vii • Partnered with various organizations and agencies to offer services and programs to the community. o Palos Verdes Peninsula Unified School District to offer a week-long Writing by the Sea program for local students. o Palos Verdes Library District to offer monthly Little Critter Afternoon Tales story time fun for youngsters at Hesse Park. o County of Los Angeles to offer pet adoption events. o County of Los Angeles and Society of California Veterinary Vaccine Care to offer low- cost pet vaccination and microchip services. • Coordinated approximately 70 onsite and offsite recreation activities for REACH, the City's therapeutic program serving young adults with developmental disabilities. • Continued to coordinate and provide oversight of public and private rentals and activities at the various City facilities. These included community and private classes and parties, youth athletic league activities, film shoots, and non-profit events. • Continued to provide oversight, support, and coordination of opportunities and programs with members of the Los Serenos de Point Vicente docent organization, including public and private hikes and speaking engagements, fourth and sixth grade tour programs coordinated with the Palos Verdes Peninsula Unified School District, the WOW Program, the Junior Docent Program, and the educational Junior Docent Nature Series that airs on RPVTV Channel 33. • Provided enforcement and public education in the Palos Verdes Nature Preserve through a contract with the Mountains Recreation & Conservation Authority for ranger services, and provided interpretive activities including a Junior Ranger Program, ranger -led night hikes, and public appearances and talks. • Maintained a 24/7 Ranger Hotline for public reporting of misuse in the Palos Verdes Nature Preserve. The hotline is both a tool for law enforcement to correct violations, and a tool for the City to gain a better understanding of activities taking place in the Preserve. • Worked with the Palos Verdes Peninsula Land Conservancy and Mountains Recreation & Conservation Authority to create a Volunteer Trail Watch Program to monitor activity and provide public education in the Palos Verdes Nature Preserve. • Through the City's Gifts for Parks Program, continued to pursue donations to assist with Recreation and Parks facilities, operations, and special events; including the Fourth of July Celebration, REACH Program for young adults with developmental disabilities, and Point Vicente Interpretive Center exhibits and programs. The Los Serenos de Point Vicente docents assisted with fundraising for youth programs and scholarships, teaching aides, and exhibits for the Point Vicente Interpretive Center. Administration • RPVTV continued to offer quality programming on the City's cable channel, including rebroadcasts of the City Council and Planning Commission meetings, productions of a wide viii variety of local interest programming and offering a Video Bulletin Board featuring local community events. • Continued to work with a consultant to pursue promising grant opportunities for a variety of City projects, including public infrastructure and parks and open space. In FY12-13, the City received more than $500,000 in competitive grant awards. • Conducted an Emergency Preparedness Drill in September 2012, completed media training for City Council members, completed American Red Cross Shelter MOU"s for City Hall, Hesse Park, Ryan Park, and Ladera Linda Community Center, presented four Emergency Preparedness Committee "Beauty and the Beast" presentations to local homeowners associations, and staffed a successful 4th of July celebration booth responding to hundreds of questions asked by inquisitive attendees. • Supported City Council development of positions and consensus on the annual League of California Cities conference resolutions, which were voted on by the City Council's voting delegate at the conference held in September 2012 in San Diego. • Continued to prepare and distribute the City's quarterly newsletter—both mailed to individual households and posted on the City's website—to keep residents apprised of important news, information and events in the City. • Continued to address issues with Torrance Airport helicopter routes and actively participated in the LAX Noise Roundtable to ensure protection of our residents. • Continued to prepare the bi-monthly Border Issues Status Report, monitoring a wide range of development proposals in surrounding cities to assess their potential effects upon Rancho Palos Verdes residents. • Provided information and assisted with the compilation of comments on the March 2013 Citywide Organizational Assessment commissioned by the City Council. • Participated in negotiations leading towards the development of a Memorandum of Understanding (MOU) with the Rancho Palos Verdes Employees' Association. • Completed the voluntary acquisition with the owner of a nearly 1 -acre parcel in the active Portuguese Bend landslide area. • Issued 43 film permits in the City, collecting over $45,000 in permit and business license fees. • Created and maintained a 40th Anniversary Facebook page to promote the City's anniversary year events and share the City's history. • Completed and implemented the City's Electronic Document Management System Administrative Instruction, meeting all the Secretary of State's suggested best practices, for retention of permanent and long-term storage documents. • Continued to image the City's archival records in the Electronic Document Management System (EDMS). The imaging of all City Council permanent records (minutes, ordinances, ix and resolutions) from 1973 to the present, are expected to be complete by the end of 2013. In conjunction with this effort, initiated the use of Weblink, a portal access to EDMS. This cost-effective solution enables staff to access imaged records throughout City Hall. • Continued to work diligently to satisfy the ever increasing number of Public Records Act requests, which are up by 23% from last fiscal year. • Completed a banking services Request for Proposal process that included a thorough analysis of banking institutions, which lead to a recommendation to City Council. • Made improvements to the annual budget process, including a new annual document with additional content to improve transparency and assist the public with understanding the City's finances. • Continued the business of dissolution of the former Redevelopment Agency, including support of the Oversight Board, transfer of affordable housing assets and function to the City, preparation for numerous external reviews, and compliance with state requirements for reporting. • Initiated analysis of options for infrastructure financing in conjunction with the Public Works Department initiation of an Infrastructure Management Plan. • Prepared and delivered a community presentation regarding the City's finances to improve transparency and public information. • Initiated a modification to the City's Reserve Policy, which was adopted by the City Council, to increase funding for the Capital Improvement Projects Reserve. • Coordinated with the Public Works Department to improve the content of the annual Five - Year Capital Improvement Plan. • Supported the work of the Finance Advisory Committee, including a review of all City revenues and expenditures, the City's employee pension liability, development of a fiscal health statement for the City, and review of the annual Five -Year Financial Model. • Facilitated a comprehensive review of the City's information technology system that was performed by NexLevel. Upon completion of their review, NexLevel presented their report and recommendations to the City Council. The City continues to implement most of the recommendations made by NexLevel. • The City completed significant upgrades and updates of the entire information technology system, including desktop productivity software, internet connectivity with FIOS, updates of permit tracking and financial accounting software, updates of recently implemented unified communication software and server operating and database systems. The forthcoming migration to the Microsoft centralized system operating platform will enable most desktop software upgrades to be performed simultaneously from the control console. • The City upgraded it's free public wireless network to the Internet at the Civic Center and the Point Vicente Interpretive Center. x • Palos Verdes on the Net, the City's information technology support provider and advisor, has provided temporary access to the County's Los Angeles Region — Imagery Acquisition Consortium (LAR -IAC) for the City's Geographic Information System, (GIS). The City expects to license its own access to LAR -IAC in the future. FINANCIAL INFORMATION Internal Control. The Finance and Information Technology department of the City is responsible for establishing and maintaining an appropriate internal control structure. The internal control system is designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with Generally Accepted Accounting Principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgements by management. Budaetina Controls. The City of Rancho Palos Verdes maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions contained in the annual appropriated budgets approved by the City Council and Improvement Authority Commission. Activities of the General fund, Special Revenue funds, Capital Projects funds and Permanent funds are included in the annual appropriated budgets of the government units. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the department/function level within each fund. Formal budgetary integration is employed as a management control device. The City also maintains an encumbrance accounting system as one method of maintaining budgetary control. These encumbrances lapse at year-end, and any unexpended balance is eligible to be carried over to the following year's budget appropriations with City Council approval. Budget to Actual Comparison. The City experienced an overall $3.9 million unfavorable budget variance in the General fund for the fiscal year ended June 30, 2013. The General Fund recognized a net loss of $7.2 million on the City's loan to the former redevelopment agency due to a loan restructuring required by California redevelopment dissolution law. This extraordinary loss was partially offset with favorable revenue variances totaling $1.3 million and favorable expenditure variances totaling $1.7 million. The favorable revenue variances include a general liability insurance rebate in the amount of $563,554, and transient occupancy tax of $179,285 in excess of budgeted expectations. With the exception of an unspent $500,000 expenditure appropriation for City Council initiatives, the overall favorable expenditure variance was driven by favorable variances across most all 30 programs of the General Fund. Many of the favorable expenditure variances were permanent savings resulting from conservative budget practices and the continued careful management of resources during FY12-13. Significant Financial Events. There were no changes to financial policies that resulted in a significant impact on the June 30, 2013 financial statements. Unfunded Pension Liability. As described more fully in the Note #8 to the Financial Statements, the City contracts with the California Public Employees Retirement System (CaIPERS) for its employee pension plan. The City participates in a CaIPERS risk pool for small employers with the same benefit formula. The City does not have an individual unfunded pension liability, but does have a proportionate share of the risk pool's unfunded liability. New accounting standards xi will require the City to report this liability on the statement of net position for the year ended June 30, 2015. CaIPERS provides information to the City regarding its share of the risk pool's unfunded liability. At June 30, 2012, the City's estimated share of projected benefits, less the actuarial value of plan assets was $4,050,017. The City's estimated share of projected benefits, less the market value of plan assets was $7,873,359 at June 30, 2012. Additional information about the City's employee pension plan, including the annual contribution, is included in Note #8 to the Financial Statements. OTHER INFORMATION Independent Audit. The City requires an annual audit by independent certified public accountants. The accounting firm of Vavrinek, Trine, Day & Co., LLP conducted this year's audit. The auditors' report on the government -wide financial statements and combining and individual fund statements and schedules is included in the financial section of this report. Single Audit. As a recipient of federal, state, and county financial assistance, the City is responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management. In years when over $500,000 is expended on Federal financial assistance programs, the City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and U.S. Office of Management and Budget CircularA-133, Audits of States, Local Governments, and Non -Profit Organizations. For the year ended June 30, 2013, $427,345 was expended on Federal financial assistance programs; and therefore a Single Audit was not required. GFOA Certificate of Achievement Award. The Government Finance Officer's Association of the United States and Canada (GFOA) oversees a prestigious national award program to recognize conformance with the highest standards of report preparation. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized CAFR. This report must satisfy both Generally Accepted Accounting Principles and applicable legal requirements. The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Rancho Palos Verdes for its CAFR for the fiscal year ended June 30, 2012. This was the 20th consecutive year that the City of Rancho Palos Verdes has achieved this prestigious award. A copy of the GFOA Certificate of Achievement is included later in the introductory section of this year's CAFR. A Certificate of Achievement is valid for a period of one year only. We believe our current CAFR continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments. Completion of this report was the accomplishment by combined efforts of many individuals, especially Linda Gan-Vanderlinde, Senior Accountant, and Kathryn Downs, Deputy Director of Finance and Information Technology, who coordinated preparation of the report. I wish to acknowledge the assistance of our auditors, Vavrinek, Trine, Day & Co., LLP and the contributions of other Finance and Information Technology Department staff: Ryan Mills, Matt Waters, Jane Lin, Selena Wright, Gayle Vanoverbeck, and Jayne Mahtani. xii I would also like to recognize the City Council for their continued leadership directing the City to achieve a sound fiscal position over the last several years. We look forward to maintaining this success in the future under the leadership of the City Council. Respectfully submitted, Dennis McLean Director of Finance & Information Technology CITY OF RANCHO PALOS VERDES DIRECTORY OF CITY OFFICIALS JUNE 30, 2013 CITY COUNCIL Susan Brooks, Mayor Jerry V. Duhovic, Mayor Pro -Tem Brian Campbell, Councilman James E. Knight, Councilman Anthony M. Misetich, Councilman ADMINISTRATION AND DEPARTMENT HEADS City Manager Carolyn Lehr Deputy City Manager Carolynn Petru City Clerk Carla Morreale Director of Finance and Information Technology Dennis McLean Community Development Director Joel Rojas Interim Director of Public Works Les M. Jones II Director of Recreation and Parks Cory Linder City Attorney Richards, Watson & Gershon xiv CITY OF RANCHO PALOS VERDES ORGANIZATIONAL CHART CITIZENS OF RANCHO PALOS VERDES MAYOR AND CITY COUNCIL COMMISSIONS & COMMITTEES Planning Commission Traffic Safety Commission Finance Advisory Committee CITY MANAGER Administration Personnel/Community Outreach Risk Management CITY CLERK Records Management Public Information Elections RECREATION & PARKS Park Facilities Staffing Point Vicente Interpretive Center Special Events REACH Program PUBLIC SAFETY L.A. County Sheriff L.A. County Fire Animal Control Emergency Preparedness FINANCE & INFORMATION TECHNOLOGY Financial Reporting & Budget Accounts Payable/Receivable Payroll Purchasing Information Technology COMMUNITY DEVELOPMENT Planning/Zoning Building & Safety/Geology Code Enforcement View Restoration PUBLIC WORKS Street Maintenance Refuse/City Engineering Park/Building Maintenance Capital Projects XV COMMISSIONS & COMMITTEES Emergency Preparedness Committee Oversight Committee for the Water Quality & Flood Protection Program CITY ATTORNEY Richards, Watson & Gershon Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Rancho Palos Verdes California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2012 Executive Director/CEO xvi my 4th Celebration 10:00 a.m. - 5:00 p.m. RPV Civic Center 30940 Hawthorne Blvd, !LPN, IM GAMBLE PUPPETS ES 8 GAMES ICOPTER RIDES ING ZOO des.com/rpv Parks Make Life Better! FINANCIAL SECTION 1 A view of Catalina Island from the City's shoreline 2 Vavrinek, Trine, Day & Co., LLP Certified Public Accountants INDEPENDENT AUDITORS' REPORT The Honorable City Council of The City of Rancho Palos Verdes Rancho Palos Verdes, California Report on the Financial Statements VALUE THE DIFFERENCE We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Rancho Palos Verdes, California (City), as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 3 8270 Aspen Street Rancho Cucamonga, CA 91730 Tel: 909.466.4410 Fax: 909.466.4431 www.vtdcpa.com FRESNO • LAGUNA HILLS • PALO ALTO • PLEASANTON • RANCHO CUCAMONGA • RIVERSIDE • SACRAMENTO We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Rancho Palos Verdes, as of June 30, 2013, and the respective changes in financial position, and, where applicable, cash flows thereof, and the respective budgetary comparison for the General Fund, the Street Maintenance Special Revenue Fund, and the Community Development Block Grant Special Revenue Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As described in Note 1 to the financial statements, the City adopted Statement of Governmental Accounting Standard Board GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, effective July 1, 2012. Our opinion is not modified with respect to this matter. As described in Note 14 the City has written off $7,230,481 of the receivable due from the Successor Agency. In addition, as described in Note 5, the City has established an allowance for the remaining $12,058,578 portion of the receivable due from the Successor Agency. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 9-18 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, the supplementary information, and the statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. 4 The supplementary information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 17, 2014, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Rancho Cucamonga, California February 17, 2014 5 Ready for Pumpkin Race 6 MANAGEMENT'S DISCUSSION & ANALYSIS 7 Junior Band at City's 40th Anniversary Celebration 8 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 The Management of the City of Rancho Palos Verdes offers readers of the City of Rancho Palos Verdes' Financial Statements this narrative overview and analysis of the City's financial activities for the Fiscal Year ended June 30, 2013. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our Letter of Transmittal, which can be found on pages iv-xiii of this report. Financial Highlights The assets of the City of Rancho Palos Verdes exceed its liabilities at the close of the Fiscal Year ended June 30, 2013, by $189,852,229 (Net Position). Of this amount, $56,413,845 (Unrestricted Net Position) may be used to meet the City's ongoing obligations to its citizens and creditors. The remaining amount is invested in capital assets or is otherwise nonexpendable, and is therefore not available to meet the City's obligations. The City's Total Net Position decreased by $10,386,186. There is no trend for annual increases or decreases of Total Net Position. Each year's change is generally related to significant one-time events. The same is true for FY12-13. The City's loan to the former redevelopment agency was restructured per California redevelopment dissolution law. Accrued interest on the loan was reduced by $7.2 million. In addition, the City took depreciation of about $3.8 million on its capital assets. As of June 30, 2013, the City's Governmental Funds reported combined ending Fund Balances of $37,393,512, a decrease of $8.1 million. Once again there is no trend for annual increases and decreases of governmental fund balances, and changes are generally attributable to significant one-time events. ➢ As noted above, the City's loan to the former redevelopment agency was reduced by $7.2 million. ➢ A transfer of $8.3 million was made from the Capital Improvement Projects Fund (governmental) to the Water Quality Flood Protection Fund (business -type) to provide partial funding for the San Ramon Canyon Stabilization project. ➢ The City accumulated an additional $3.8 million of transient occupancy tax revenue to be used for future capital projects. As of June 30, 2013, unassigned fund balance for the General Fund was $14,370,257 or 82% of General Fund expenditures. About $13.9 million of this amount constitutes the City Council's General Fund Reserve (rainy day fund). Due to the City Council's reserve policy, the unassigned fund balance has historically been maintained at or above the policy threshold level of 50% of budgeted General Fund expenditures. 9 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements, which are comprised of three components: 1) Government -Wide Financial Statements; 2) Fund Financial Statements; and 3) Notes to the Financial Statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -Wide Financial Statements. The Government -Wide Financial Statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The Statement of Net Position presents information on all of the City's assets and liabilities, with the difference between the two reported as Net Position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Rancho Palos Verdes is improving or deteriorating. The Statement of Activities presents information showing how the government's net position changed during the most recent Fiscal Year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both the Government -Wide Financial Statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include general government, public safety, public works, planning, building and safety, and recreation. The City's business -type activities include only the Water Quality and Flood Protection program for renewal and maintenance of the City's storm drain facilities. The Government -Wide Financial Statements include not only the City of Rancho Palos Verdes itself (known as the Primary Government), but also a legally separate Improvement Authority for which the City of Rancho Palos Verdes is financially accountable. Financial information for this Component Unit has been included as an integral part of the primary government. The Government -Wide Financial Statements can be found on pages 21-23 of this report. 10 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Fund Financial Statements. A Fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Rancho Palos Verdes, 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 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. However, unlike the Government -Wide Financial Statements, Governmental Fund Financial Statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the Fiscal Year. Such information may be useful in evaluating a government's near-term financing requirements. 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. The Governmental Balance Sheet and Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between Governmental Funds and governmental activities. The City of Rancho Palos Verdes maintained 27 individual Governmental Funds during the Fiscal Year ended June 30, 2013. Information is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the General Fund, the Street Maintenance Fund, Community Development Block Grant Fund and the Capital Improvements Fund, all of which are considered to be major funds. Data from the other 23 Governmental Funds are combined into a single, aggregated presentation. Individual fund data for each of these Other Governmental Funds is provided in the form of combining statements elsewhere in this report. The City of Rancho Palos Verdes adopts an annual appropriated budget for each of its Governmental Funds. A budgetary comparison statement has been provided for each Governmental Fund to demonstrate compliance with this budget. The basic Governmental Fund Financial Statements can be found on pages 24- 34 of this report. 11 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Proprietary Funds. The City of Rancho Palos Verdes maintains two types of Proprietary Funds. Enterprise Funds are used to report the same functions presented as business -type activities in the Government -Wide Financial Statements. The City uses an Enterprise Fund to account for its Water Quality and Flood Protection Program. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses Internal Service Funds to account for its fleet of vehicles, computer systems, furniture and equipment, Employee Benefits, and Civic Center building replacement/improvements. Because these services predominantly benefit the governmental function, they have been included within governmental activities in the Government -Wide Financial Statements. Proprietary Fund Financial Statements provide the same type of information as the Government -Wide Financial Statements, only in more detail. These statements can be found on pages 35-37 of this report. The Proprietary Fund Financial Statements provide separate information for the Enterprise Fund and the Internal Service Funds. The Enterprise Fund is presented as a single major fund of the City, while the Internal Service Funds are combined and presented as a single, aggregated presentation in the Statement. Individual fund data for the Internal Service Funds is provided in the form of combining statements elsewhere in this report. Fiduciary Fund. The City is a fiduciary for the Successor Agency to the Rancho Palos Verdes Redevelopment Agency (the "Successor Agency"). The City is responsible for ensuring that the assets reported in the Successor Agency's private -purpose trust fund are only: 1) used to extinguish the obligations of the former RDA; or 2) transferred to another agency pursuant to state redevelopment dissolution law. All of the fiduciary activities are reported in a separate Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position. We exclude these activities from the City's Government -Wide Financial Statement because the City cannot use these assets to finance its operations. Individual Fiduciary Fund statements can be found on pages 38-39 of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the Government - Wide and Fund Financial Statements. The notes to the financial statements can be found on pages 42-72 of this report. Other information. The combining statements referred to earlier in connection with Other Governmental Funds and Internal Service Funds are presented immediately following the Notes to the Financial Statements. Combining and individual fund statements and schedules can be found on pages 74-116 of this report. 12 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Government -wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City of Rancho Palos Verdes, assets exceeded liabilities by $189,852,229 at June 30, 2013. By far, the largest portion of the City's Net Position (69%) reflects its net investment in Capital Assets (e.g. Land, Infrastructure, Buildings, and Equipment). The City uses these Capital Assets to provide services to its citizens; consequently, these assets are not available for future spending. City of Rancho Palos Verdes Net Position Net Investment in capital assets Restricted Unrestricted Total net position I$ 113,284,447 1,834,957 46,686,599 161,806,003 114,488,431 18,318,980 13,356,259 131,603,427 127, 844,690 1,750,000 1,834,957 1,750,000 67,112,110 9,727,246 3,531,615 56,413,845 70,643,725 $ 183,350,541 1 $ 28,046,226 1 $ 16,887,874 1 $ 189,852,229 1 $ 200,238,415 1 An additional portion of the City's Net Position ($1,834,957 or about 1%) represents a nonexpendable resource that is subject to external restrictions. The remaining balance of Unrestricted Net Position ($56,413,845 or about 30%) may be used to meet the government's ongoing obligations to its citizens and creditors. Total current and other assets decreased by $10.9 million. This was primarily driven by the restructuring of the City's loan to the former redevelopment agency (decreasing accrued interest by $7.2 million), establishing an allowance for this same loan receivable in the full amount of the loan ($12.1 million); partially offset by an increase of cash in the amount of $6.3 million. The cash increase was primarily due to the addition of another $5.0 million of General Fund money to the Capital Improvement Projects Fund Reserve, which has not yet been spent on projects. The net decrease to total current and other assets included an $8.3 million shift of cash from the Governmental Activities column to the Business - type Activities column, representing a funding transfer from the City's Capital Improvement Fund to the Water Quality Flood Protection Fund for the San Ramon Canyon Stabilization Project. 13 Govemmental Activities Business -type Activities Total June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 Current and other assets $ 53,347,904 $ 73,574,121 $ 13,021,140 $ 3,714,840 $ 66,369,044 $ 77,288,961 Capital assets 113,284,447 114,488,431 18,318,980 13,356,259 131,603,427 127,844,690 Total assets 166,632,351 188,062,552 31,340,120 17,071,099 197,972,471 205,133,651 Long-term liabilities outstanding 363,107 370,799 - - 363,107 370,799 Other liabilities 4,463,241 4,341,212 3,293,894 183,225 7,757,135 4,524,437 Total liabilities 4,826,348 4,712,011 3,293,894 183,225 8,120,242 4,895,236 Net Investment in capital assets Restricted Unrestricted Total net position I$ 113,284,447 1,834,957 46,686,599 161,806,003 114,488,431 18,318,980 13,356,259 131,603,427 127, 844,690 1,750,000 1,834,957 1,750,000 67,112,110 9,727,246 3,531,615 56,413,845 70,643,725 $ 183,350,541 1 $ 28,046,226 1 $ 16,887,874 1 $ 189,852,229 1 $ 200,238,415 1 An additional portion of the City's Net Position ($1,834,957 or about 1%) represents a nonexpendable resource that is subject to external restrictions. The remaining balance of Unrestricted Net Position ($56,413,845 or about 30%) may be used to meet the government's ongoing obligations to its citizens and creditors. Total current and other assets decreased by $10.9 million. This was primarily driven by the restructuring of the City's loan to the former redevelopment agency (decreasing accrued interest by $7.2 million), establishing an allowance for this same loan receivable in the full amount of the loan ($12.1 million); partially offset by an increase of cash in the amount of $6.3 million. The cash increase was primarily due to the addition of another $5.0 million of General Fund money to the Capital Improvement Projects Fund Reserve, which has not yet been spent on projects. The net decrease to total current and other assets included an $8.3 million shift of cash from the Governmental Activities column to the Business - type Activities column, representing a funding transfer from the City's Capital Improvement Fund to the Water Quality Flood Protection Fund for the San Ramon Canyon Stabilization Project. 13 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Business -type activities capital assets, other liabilities and invested in capital assets all increased by over $3 million, primarily due to the partial construction of the San Ramon Canyon Stabilization project, which is expected to be completed during 2014. Governmental Activities. Governmental Activities decreased the City's Net Position by $2,255,479, before extraordinary items. City of Rancho Palos Verdes Changes in Net Position Governmental Activities Business -type Activities Total June 30, 2013 1 June 30, 2012 June 30, 2013 1 June 30, 2012 June 30, 2013 1 June 30, 2012 Program revenues: Charges for services $ 3,802,495 $ 3,770,567 $ 1,312,989 $ 1,319,109 $ 5,115,484 $ 5,089,676 Operating contributions and grants 4,132,708 3,627,662 2,136,775 6,269,483 3,627,662 Capital contributions and grants 138,676 139,339 138,676 139,339 General revenues: Property taxes Other taxes Other 11,283,864 10,543,744 1,113,433 11,480,461 9,686,419 655,329 9,762 10,965 11,283,864 10,543,744 1,123,195 11,480,461 9,686,419 666,294 Total revenues 31,014,920 29,359,777 3,459,526 1,330,074 34,474,446 30,689,851 Expenses: Administration Public safety Public works Parks and recreation Community development Interest on long-term debt Water Quality Flood Protection 5,533,516 5,906,436 4,347,773 4,177,926 10,873,771 11,202,446 1,695,904 1,489,940 2,526,426 2,432,175 109,039 594,183 560,485 5,533,516 4,347,773 10,873,771 1,695,904 2,526,426 594,183 5,906,436 4,177,926 11,202,446 1,489,940 2,432,175 109,039 560,485 Total expenses 24,977,390 25,317,962 594,183 560,485 25,571,573 25,878,447 Net of transfer in / (out) (8,293,009) - 8,293,009- - - r ► (Decrease) / Increase in net position (2,255,479) 4,041,815 11,158,352 769,589 8,902,873 4,811,404 Extraordinary gain/(loss) (19,289,059) 23,347,942 (19,289,059)► 23,347,942 (Decrease) / Increase in net position (21,544,538) 27,389,757 11,158,352 769,589 r (10,386,186) 28,159,346 Net position - beginning of fiscal year 183,350,541 155,960,784 16,887,874 16,118,285, 200,238,415 172,079,069 Net position - end of fiscal year $ 161,806,003 S 183,350,541 $ 28,046,226 $ 16,887,874 $ 189,852,229 $ 200,238,415 As noted previously, the primary driver behind the decrease was the $8.3 million cash transfer to a Business -type Activities fund, offset by favorable General Fund variances and the accumulation of additional transient occupancy tax for future infrastructure projects. Business -type activities operating contributions and grants includes the $8.3 million transfer noted above, as does the Governmental activities public works expense. 14 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 The extraordinary Toss is due to the restructuring of the City's loan to the former redevelopment agency, as well as the establishment of an allowance for that same loan. Revenues by Source — Governmental Activities other taxes 34% charges for operating other services contributions 4°•0 12% and grants °'0 capital contributions and grants 1 °•'o property taxes 36°•o Business -Type Activities. Business -type activities increased the City's net position by about $11.2 million, primarily due to the $8.3 million cash transfer noted above for the San Ramon Canyon Stabilization project. Financial Analysis of Governmental Funds As of the end of the current Fiscal Year, the City's Governmental Funds reported combined ending Fund Balances of $37,393,512, a decrease of $8.1 million in comparison with the prior year. Approximately 95% of the combined ending Fund Balances (about $35.4 million) constitutes spendable fund balance. The combined spendable fund balance includes Measure A special revenue negative unassigned fund deficit of $197,638. The remainder of the combined ending Fund Balances is either nonspendable due to outside legal restrictions ($1.75 million), or nonspendable in form of prepaid items, inventory, and habitat restoration of $223,771. The General Fund is the chief operating fund of the City of Rancho Palos Verdes. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $14,370,257, while total Fund Balance reached $14,508,251. As a measure of the General Fund's liquidity, it may be useful to compare both Unassigned Fund Balance and Total Fund Balance to total fund uses (expenditures and transfers out). Unassigned Fund Balance represents 59% of total General Fund uses, while total Fund Balance represents 59% of that same amount. During Fiscal Year 12-13, the fund balance of the City's General Fund decreased by $5,448,998. This was due to the $7.2 million reduction in the outstanding 15 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 balance of the City's loan to the former redevelopment agency, discussed previously; offset by favorable revenue and expenditure variances. The Street Maintenance Fund Balance decreased by $142,423, primarily due to permanent expenditure savings. The Capital Improvement Projects (CIP) Fund had an ending fund balance of $11,565,617. Of this amount, $2.1 million is held for street improvement projects continued from FY12-13 to FY13-14, $0.9 million is held for park improvement projects continued from FY12-13 to FY13-14, and the remaining $8.6 million is held in reserve for emergency projects and future infrastructure projects as directed by the City Council's Reserve Policy. Financial Analysis of Proprietary Funds The City's Proprietary Funds provide the same type of information found in the Government -Wide Financial Statements, but in more detail. Unrestricted Net Position of the Enterprise Fund at the end of the year amounted to $9,727,246 Unrestricted Net Position of the Internal Service Funds at the end of the year amounted to $3,639,824. The total growth in Proprietary Fund type net position was $11,175,162 or about 84% of unrestricted Net Position. General Fund Budgetary Highlights The General Fund revenue budget was increased by a net amount of $141,930, primarily due to adjustments to variance tax revenue estimates with the Midyear Financial Review. The difference between original budgeted expenditures and the final amended budget was an increase of $114,353; and is briefly summarized as follows: ➢ An increase of $623,096 was attributable to appropriations continued from FY11-12. ➢ A decrease of $401,989 was attributable to appropriations continued to FY13-14. ➢ Other immaterial adjustments resulted in net decreases of $106,754. The City Council authorized an additional General Fund transfers of about $1.2 million for the prior year's favorable expenditure variance, as required by the City Council's Reserve Policy. The City Council also increased the budgeted transfer to the Capital Improvement Projects Fund by $400,000, in accordance with the revised estimate of transient occupancy tax revenue at Midyear. 16 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Capital Asset and Debt Administration Capital Assets. The City's investment in Capital Assets for its governmental activities as of June 30, 2013, amounts to $113,284,447 (net of accumulated depreciation). This investment in capital assets includes land, buildings, park improvements, roadways, sewer, storm drains, vehicles, computer equipment, furniture, other equipment, and construction in progress. During the current fiscal year, the City's investment in governmental capital assets decreased by about $1,203,984 or about 1%. Major capital asset events during the current Fiscal Year included the following: ➢ Depreciation of $3.6 million was recorded for the City's Capital Assets. ➢ A total of $2.4 million of construction in process was added for various projects, including $1.6 million for a residential street rehabilitation project. The Capital Assets (net of accumulated depreciation) for Business -type activities as of June 30, 2013 was $18,318,980. City of Rancho Palos Verdes Capital Assets (net of depreciation) Capital as sets not being depreciated Land Construction in progress Total capital assets not being depreciated Governmental Activities Business -type Activities Total June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 $ 39,900,962 2,561227 42,462,189 $ 39,881,992 430,056 40,312,048 $ 1,408,493 6,031,125 7,439,618 $ 1,408,493 1,516,924 2,925,417 $ 41,309,455 8,592,352 49,901,807 $ 41,290,485 1,946,980 43,237,465 Capital assets being depreciated, net Buildings Vehicles Computer equipment Furniture, fixtures and equipment Infrastructure Roadway system Sewer system Stonn drain system Park system Total capital assets being depreciated, net 6,749,954 6,953,126 32,351 58,405 129,854 117,769 87,470 78,677 44,015,361 46,448,299 7,742,114 8,198,687 9,679,983 9,930,462 2,385,171 2,390,958 6,749,954 6,953,126 32,351 58,405 129,854 117,769 87,470 78,677 44,015,361 46,448,299 - 7,742,114 8,198,687 10,879,362 10,430,842 20,559,345 20,361,304 2,385,171 2,390,958 70,822258 74,176,383 10,879,362 10,430,842 81,701,620 84,607,225 Capital Assets, net $ 113,284,447 P'$ 114,488,431 $ 18,318,980 $ 13,356,259 $ 131,603,427 $ 127,844,690 Additional information on the City's Capital Assets can be found in Note #4 on pages 55-57 of this report. Long-term debt. At the end of the current Fiscal Year, the City of Rancho Palos Verdes had total debt outstanding of $363,107 for Employee Compensated Absences. 17 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 City of Rancho Palos Verdes Outstanding Debt Governmental Activities June 30, 2013 June 30, 2012 IFmployee compensated absences 363,107 Total $ T 363,107 $ 370,798 370,798 The City's total debt decreased by $7,691 (2%) during the current Fiscal Year, due to additional accrued time off not taken by employees. State statutes limit the amount of general obligation debt a governmental entity may issue to 15 percent of its total assessed valuation. The current debt limitation for the City of Rancho Palos Verdes is $1,455,636,000. Additional information on the City's long-term debt can be found in Note #6 on page 58 of this report. Economic Factors and Next Year's Budgets and Rates Property tax revenue accounts for about 37 percent of Government -Wide revenues. Local property values remain strong, and the City's property assessments grew by 5.25% for FY13-14. The Consumer Price Index for Los Angeles County increased by 1.4% for the 12 months ended June 2013. The City's original FY13-14 General Fund expenditure budget increased by 2.6% when compared to the original FY12-13 budget. Revenue in excess of budgeted expenditures (about $5.0 million) has been programmed for capital improvement projects. Requests for Information This Financial Report is designed to provide a general overview of the financial position of the City of Rancho Palos Verdes for all those with an interest in the government's finances. Questions concerning any of the information provided in this report, or requests for additional financial information, should be addressed to the Finance and Information Technology Department at 30940 Hawthorne Boulevard, Rancho Palos Verdes, CA 90275 or finance(a�rpv.com. 18 BASIC FINANCIAL STATEMENTS 19 City Council Members kick-off the City's Easter Egg Hunt 20 CITY OF RANCHO PALOS VERDES STATEMENT OF NET POSITION June 30, 2013 ASSETS: Cash and investments Receivables: Taxes huterest Notes Due from other government agencies Inventory Prepaid costs Receivable from Successor Agency Allowance for Successor Agency receivable Capital assets, not being depreciated: Land Construction in progress Capital assets, being depreciated, net: Property and equipment Buildings and improvements hufrastructure TOTAL ASSETS LIABILITIES: Accounts payable and accrued liabilities Retentions payable Unearned revenue Deposits payable Long-term liabilities: Due within one year Due beyond one year TOTAL LIABILITIES NET POSITION: Net investment in capital assets Restricted for: Community development: Nonexpendable Unrestricted TOTAL NET POSITION See accompanying notes to financial statements. Governmental Activities $ 42,897,682 1,185,815 27,309 7,525,882 1,364,326 38,795 308,095 12,058,578 (12,058,578) 39,900,962 2,561,227 249,675 6,749,954 63,822,629 166,632,351 3,927,748 105,826 100,190 329,477 280,761 82,346 4,826,348 113,284,447 1,834,957 46,686,599 Business -type Activity Total $ 10,846,912 $ 53,744,594 1,185,815 1,913 29,222 7,525,882 2,162,315 3,526,641 38,795 10,000 318,095 12,058,578 (12,058,578) 1,408,493 41,309,455 6,031,125 8,592,352 249,675 6,749,954 10,879,362 74,701,991 31,340,120 197,972,471 3,241,210 7,168,958 52,684 158,510 100,190 329,477 280,761 82,346 3,293,894 8,120,242 18,318,980 131,603,427 1,834,957 9,727,246 56,413,845 $ 161,806,003 $ 28,046,226 $ 189,852,229 21 CITY OF RANCHO PALOS VERDES STATEMENT OF ACTIVITIES For the year ended June 30, 2013 Functions/programs Governmental Activities: Administration Public safety Public works Parks and recreation Community development Total governmental activities Business -type Activity: Water Protection Flood Control Total Primary Government Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions $ 5,533,516 $ 778,938 $ 66,597 $ 4,347,773 149,787 100,000 10,873,771 543,203 3,207,409 138,676 1,695,904 476,470 515,909 2,526,426 1,854,097 242,793 24,977,390 3,802,495 4,132,708 138,676 594,183 1,312,989 2,136,775 $ 25,571,573 $ 5,115,484 $ 6,269,483 $ 138,676 See accompanying notes to financial statements. General revenues: Taxes: Property taxes Transient occupancy tax Sales tax Franchise tax Utility user tax Other taxes Investment income Unrestricted grants, contributions and other revenues Net Transfers: Total general revenues and transfers Extraordinary item: Write down and establishment of allowance for receivable from Successor Agency (Note 14) Change in net position Net position - beginning of year Net position - end of year 22 Net (Expense) Revenue and Changes in Net Position Governmental Business -type Activities Activity Total $ (4,687,981) $ - $ (4,687,981) (4,097,986) - (4,097,986) (6,984,483) - (6,984,483) (703,525) - (703,525) (429,536) - (429,536) (16,903,511) - (16,903,511) (16,903,511) 2,855,581 2,855,581 2,855,581 (14,047,930) 11,283,864 - 11,283,864 3,790,359 - 3,790,359 1,587,726 - 1,587,726 1,906,615 - 1,906,615 2,480,967 - 2,480,967 778,077 - 778,077 184,128 9,762 193,890 929,305 - 929,305 (8,293,009) 8,293,009 - 14,648,032 8,302,771 22,950,803 (19,289,059) - (19,289,059) (21,544,538) 11,158,352 (10,386,186) 183,350,541 16,887,874 200,238,415 $ 161,806,003 $ 28,046,226 $ 189,852,229 23 CITY OF RANCHO PALOS VERDES BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2013 Special Revenue Street General Maintenance ASSETS Cash and investments $ 15,052,984 $ 1,209,133 Receivables: Taxes 1,080,362 86,035 hnterest 10,499 325 Notes - Due from other government agencies 958,710 1,491 Due from other funds 248,324 - hnventory 38,795 - Prepaid items 99,199 - Receivable from Successor Agency 12,058,578 - Allowance for Successor Agency receivable (12,058,578) - TOTAL ASSETS $ 17,488,873 $ 1,296,984 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds Retentions payable Deferred revenue Deposits payable TOTAL LIABILITIES $ 2,447,757 $ 382,511 19,503 183,885 329,477 - 2,980,622 382,511 FUND BALANCES (DEFICIT): Non -Spendable Endowment principal Reimbursement settlement agreement Prepaid items 99,199 hnventory 38,795 Habitat restoration Restricted Committed Assigned Unassigned 14,370,257 TOTAL FUND BALANCES (DEFICIT) 14,508,251 914,473 914,473 TOTAL LIABILITIES AND FUND BALANCES $ 17,488,873 $ 1,296,984 See accompanying notes to financial statements. Special Capital Revenue Projects Other Total Capital Governmental Governmental CDBG Improvements Funds Funds $ $ 12,163,704 $ 10,930,850 $ 39,356,671 19,418 1,185,815 8,961 5,411 25,196 523,819 - 523,819 58,052 342,183 1,360,436 248,324 38,795 820 100,019 12,058,578 (12,058,578) $ 581,871 $ 12,172,665 $ 11,298,682 $ 42,839,075 7,381 $ 520,725 454,108 $ 3,812,482 50,671 - 197,653 248,324 86,323 - 105,826 523,819 241,750 949,454 329,477 581,871 607,048 893,511 5,445,563 750,000 750,000 1,000,000 1,000,000 820 100,019 38,795 84,957 84,957 7,214,216 8,128,689 35,906 35,906 - 11,565,617 1,516,910 13,082,527 (197,638) 14,172,619 - 11,565,617 10,405,171 37,393,512 $ 581,871 $ 12,172,665 $ 11,298,682 $ 42,839,075 25 CITY OF RANCHO PALOS VERDES RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION June 30, 2013 Fund balances - total governmental funds $ 37,393,512 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the governmental funds balance sheet. Intergovernmental revenues earned, but not available, are deferred in the fund financial statements. The revenue is not deferred on the Statement of Activities. Long-term notes receivable are not current available resources and, therefore, do not affect the governmental fund balance. Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds. Internal service funds are used by management to charge the costs of certain activities, including equipment and building replacement and employee benefits, to individual funds. The assets and liabilities of the internal service funds are included in the Statement of Net Position. 113,034,772 849,264 7,002,063 (363,107) 3,889,499 Net position of governmental activities $ 161,806,003 See accompanying notes to financial statements. 26 Family of Fred Hesse Jr. visit Fred Hesse Jr. Community Park 27 CITY OF RANCHO PALOS VERDES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the year ended June 30, 2013 General Special Revenue Street Maintenance REVENUES: Taxes $ 21,707,157 $ - Licenses and permits 2,026,999 - Fines and forfeitures 116,532 Use of money and property 1,277,862 35,195 Charges for services 139,427 2,000 Donation - - Revenue from other agencies 44,437 980,415 Other revenues 219,539 - TOTAL REVENUES 25,531,952 1,017,610 EXPENDITURES: Current: Administration 5,400,686 Public safety 4,347,773 - Public works 3,727,956 1,859,473 Parks and recreation 1,536,790 - Coimnunity development 2,587,711 Capital outlay - TOTAL EXPENDITURES 17,600,916 1,859,473 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 7,931,036 (841,863) OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) 194,000 (6,831,258) 699,440 (6,637,258) 699,440 EXTRAORDINARY ITEM: Loss on dissolution of Redevelopment Agency (Note 14) (6,742,776) - NET CHANGE IN FUND BALANCES (5,448,998) (142,423) FUND BALANCES (DEFICIT) - BEGINNING OF YEAR, AS RESTATED 19,957,249 1,056,896 FUND BALANCES (DEFICIT) - END OF YEAR $ 14,508,251 $ 914,473 See accompanying notes to financial statements. Special Capital Revenue Projects Other Total Capital Governmental Governmental CDBG Irnprovernents Funds Funds $ - $ - $ 835,621 $ 22,542,778 - - - 2,026,999 - - - 116,532 - 44,678 24,912 1,382,647 - - - 141,427 - - 445,468 445,468 242,152 138,678 1,988,823 3,394,505 - - 521,265 740,804 242,152 183,356 3,816,089 30,791,159 - - 5,400,686 - - 4,347,773 - 1,652,346 7,239,775 - 20,000 1,556,790 - 3,510 2,591,221 209,007 2,511,671 - 2,720,678 209,007 2,511,671 1,675,856 23,856,923 33,145 (2,328,315) 2,140,233 6,934,236 9,302 6,780,000 271,700 7,954,442 - (8,293,009) (1,123,184) (16,247,451) 9,302 (1,513,009) (851,484) (8,293,009) - - - (6,742,776) 42,447 (3,841,324) 1,288,749 (8,101,549) (42,447) 15,406,941 9,116,422 45,495,061 - $ 11,565,617 $ 10,405,171 $ 37,393,512 29 CITY OF RANCHO PALOS VERDES RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the year ended June 30, 2013 Net change in fund balances - total governmental funds $ (8,101,549) Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense, or are allocated to the appropriate functional expense when the cost is below the capitalization threshold. Asset disposals are also not recognized in the governmental funds. This activity reconciled as follows: Cost of assets capitalized Depreciation expense 2,283,468 (3,482,276) Intergovernmental revenues earned, but not available are deferred in the fund financial statements. 60,201 The Rancho Palos Verdes Redevelopment Agency was dissolved as of Feburary 1, 2012. Interest accrued on the City's receivable from the former Redevelopment Agency was written off. (12,546,283) Increases in long-term notes receivable use current financial resources and are included in the expenditures of governmental funds. Repayments of long-term notes receivables provide current financial resources and are included in the revenues of governmental funds. These changes in notes receivable are not reflected in the revenues or expenses of the Statement of Activities. This amount represents the net change in the long-term notes receivable. 217,400 Compensated absences expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. 7,691 Internal service funds are used by management to charge the costs of certain activities, including equipment and building replacement and employee benefits, to individual funds. The net revenues/(expenses) of the internal service funds (excluding transfers and interest income) are reported with governmental activities. 16,810 Change in net position of governmental activities $ (21,544,538) See accompanying notes to financial statements. 30 CITY OF RANCHO PALOS VERDES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ 20,953,334 $ 21,280,212 $ 21,707,157 $ 426,945 Licenses and permits 1,962,400 1,827,400 2,026,999 199,599 Fines and forfeitures 200,200 85,200 116,532 31,332 Use of money and property 616,300 664,040 1,277,862 613,822 Charges for services 75,300 115,300 139,427 24,127 Revenue from other agencies 22,312 44,437 22,125 Other revenues 282,400 237,400 219,539 (17,861) TOTAL REVENUES 24,089,934 24,231,864 25,531,952 1,300,088 EXPENDITURES: Administration City council 143,500 143,500 137,802 5,698 City manager 1,652,400 1,718,227 1,694,526 23,701 City attorney 1,045,000 1,045,000 992,324 52,676 Community outreach 204,500 224,878 213,066 11,812 City clerk 404,450 404,750 403,468 1,282 Personnel 277,905 277,005 216,035 60,970 Finance 1,344,000 1,290,000 1,284,651 5,349 Information technology - Data 459,700 383,000 377,980 5,020 Information technology - Voice 88,400 88,400 80,834 7,566 Total Administration 5,619,855 5,574,760 5,400,686 174,074 Public safety Sheriff 4,274,000 4,174,000 4,154,039 19,961 Special programs 104,500 104,500 54,610 49,890 Animal control 88,250 88,250 49,204 39,046 Emergency preparedness 153,900 201,902 89,920 111,982 Total Public Safety 4,620,650 4,568,652 4,347,773 220,879 Public Works Public works administration Traffic management Storm water quality Building maintenance Park/Trail/Open Space maintenance Sewer maintenance Total Public Works See accompanying notes to financial statements. 2,033,525 1,960,425 1,940,470 19,955 156,000 260,300 219,000 41,300 180,800 180,800 110,201 70,599 584,200 600,200 439,752 160,448 1,164,000 1,284,000 1,005,287 278,713 63,000 88,000 13,246 74,754 4,181,525 4,373,725 3,727,956 645,769 31 CITY OF RANCHO PALOS VERDES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (continued) GENERAL FUND For the year ended June 30, 2013 Budgeted Amounts Original Final Actual Variance with Final Budget Positive (Negative) Parks and Recreation Recreation administration 708,025 588,175 529,155 59,020 Recreation facilities 446,350 470,650 469,492 1,158 Special events 68,900 121,001 109,675 11,326 PVIC 393,975 385,375 385,058 317 REACH 48,000 48,000 43,410 4,590 Total Parks and Recreation 1,665,250 1,613,201 1,536,790 76,411 Community Development Planning services 1,324,440 1,357,218 1,337,343 19,875 Building & safety 571,600 581,537 540,933 40,604 Code enforcement 214,100 213,300 198,363 14,937 View restoration/preservation 348,200 368,300 366,351 1,949 NCCP 9,280 9,280 - Geology 150,000 150,000 135,441 14,559 Total Community Development 2,608,340 2,679,635 2,587,711 91,924 Non - Departmental Misc 500,000 500,000 500,000 TOTAL EXPENDITURES 19,195,620 19,309,973 17,600,916 1,709,057 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 4,894,314 4,921,891 7,931,036 3,009,144 OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) 212,000 212,000 194,000 (18,000) (5,057,774) (6,723,368) (6,831,258) (107,890) (4,845,774) (6,511,368) (6,637,258) (125,890) EXTRAORDINARY ITEM: Loss on dissolution of Redevelopment Agency (Note 14) (6,742,776) (6,742,776) NET CHANGE IN FUND BALANCE 48,540 (1,589,477) (5,448,998) (3,859,522) FUND BALANCE - BEGINNING OF YEAR 19,957,249 19,957,249 19,957,249 FUND BALANCE - END OF YEAR $ 20,005,789 $ 18,367,772 $ 14,508,251 $ (3,859,522) See accompanying notes to financial statements. 32 CITY OF RANCHO PALOS VERDES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL STREET MAINTENANCE SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Use of money and property $ 17,160 $ 17,160 $ 35,195 $ 18,035 Charges for services 14,000 14,000 2,000 (12,000) Revenue from other agencies 1,136,400 1,136,400 980,415 (155,985) TOTAL REVENUES 1,167,560 1,167,560 1,017,610 (149,950) EXPENDITURES: Public Works Street landscape maintenance 1,584,279 1,491,919 1,321,236 170,683 Traffic signal maintenance 113,000 113,000 79,854 33,146 Portuguese Bend road maintenance 526,400 526,400 458,383 68,017 TOTAL EXPENDITURES 2,223,679 2,131,319 1,859,473 271,846 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (1,056,119) (963,759) (841,863) 121,896 OTHER FINANCING SOURCES: Transfers in 1,036,000 1,126,000 699,440 (426,560) TOTAL OTHER FINANCING SOURCES (USES) 1,036,000 1,126,000 699,440 (426,560) NET CHANGE IN FUND BALANCE (20,119) 162,241 (142,423) (304,664) FUND BALANCE - BEGINNING OF YEAR 1,056,896 1,056,896 1,056,896 - FUND BALANCE - END OF YEAR $ 1,036,777 $ 1,219,137 $ 914,473 $ (304,664) See accompanying notes to financial statements. 33 CITY OF RANCHO PALOS VERDES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT SPECIAL REVENUE FUND For the year ended June 30, 2013 Budgeted Amounts Original Final REVENUES: Revenue from other agencies $ 150,000 EXPENDITURES: Capital outlay 150,000 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers in NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See accompanying notes to financial statements (42,447) $ 302,883 238,098 64,785 $ (42,447) $ 34 Variance with Final Budget Positive Actual (Negative) $ 242,152 $ (60,731) 209,007 29,091 33,145 (31,640) - 9,302 64,785 42,447 (42,447) (42,447) 22,338 $ - 9,302 (22,338) $ (22,338) CITY OF RANCHO PALOS VERDES STATEMENT OF NET POSITION PROPRIETARY FUNDS June 30, 2013 ASSETS CURRENT ASSETS: Cash and investments Receivables: Interest Other Prepaid items TOTAL CURRENT ASSETS Business -type Governmental Activity- Activities - Water Quality Internal Flood Protection Service Enterprise Fund Funds $ 10,846,912 $ 3,541,011 1,913 2,162,315 10,000 2,113 3,890 208,076 13,021,140 3,755,090 NONCURRENT ASSETS: Capital assets, not being depreciated: Land 1408,493 Construction in progress 6,031,125 Capital assets, being depreciated: Property and equipment 1L813 1,590,378 Infrastructure 12,034,178 - Accumulated depreciation (1,166,629) (1,340,703) TOTAL NONCURRENT ASSETS 18,318,980 249,675 TOTAL ASSETS 31,340,120 4,004,765 LIABILITIES CURRENT LIABILITIES: Accounts payable and accrued liabilities 3,241,210 115,266 Retentions payable 52,684 TOTAL CURRENT LIABILITIES 3,293,894 115,266 NET POSITION Net investment in capital assets 18,318,980 249,675 Unrestricted 9327,246 3,639,824 TOTAL NET POSITION $ 28,046,226 $ 3,889499 See accompanying notes to financial statements. CITY OF RANCHO PALOS VERDES STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - PROPRIETARY FUNDS For the year ended June 30, 2013 Business -type Governmental Activity- Activities - Water Quality Internal Flood Protection Service Enterprise Fund Funds OPERATING REVENUES: Charges for services $ 1,312,989 $ 2,436,179 TOTAL REVENUES 1,312,989 2,436,179 OPERATING EXPENSES: Personnel services 147,231 1,847,520 Materials and supplies 151,577 224,851 Maintenance 48,290 234,073 Depreciation 247,085 123,880 TOTAL OPERATING EXPENSES 594,183 2,430,324 OPERATING INCOME / (LOSS) 718,806 5,855 NONOPERATING REVENUES: Other revenues 2,136375 - Interest income 9362 10,955 TOTAL NONOPERATING REVENUES 2,146,537 10,955 INCOME BEFORE TRANSFERS 2,865,343 16,810 TRANSFER IN 8,293,009 CHANGE IN NET POSITION 11,158,352 16,810 TOTAL NET POSITION - BEGINNING OF YEAR 16,887,874 3,872,689 TOTAL NET POSITION - END OF YEAR $ 28,046,226 $ 3,889499 See accompanying notes to financial statements. CITY OF RANCHO PALOS VERDES STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the year ended June 30, 2013 Business -type Governmental Activity- Activities - Water Quality Internal Flood Protection Service Enterprise Fund Funds CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from interfund services provided $ $ 2,436,179 Receipts from storm drain user fees 1,251,952 - Payments to suppliers (199,867) (462,576) Payments to employees (147,231) (1,850,447) NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES 904,854 123,156 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets (2,109,137) (122,533) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Receipts from other revenues 106,959 Transfer in from other funds 8,293,009 NET CASH PROVIDED BY NON -CAPITAL FINANCING ACTIVITIES 8,399,968 CASH FLOWS FROM INVESTING ACTIVITIES: Interest received on investments 10,512 12,428 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,206,197 13,051 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 3,640315 3,527,960 CASH AND CASH EQUIVALENTS - END OF YEAR $ 10,846,912 $ 3,541,011 RECONCILIATION OF OPERATING INCOME TO NET CASH USED BY OPERATING ACTIVITIES: Operating income Adjustments to reconcile operating income to net cash used by operating activities: Depreciation Changes in operating assets and liabilities: Increase / decrease in other receivable Increase / decrease in prepaid items Increase / decrease in accrued liabilities Increase / decrease in due to other fund NET CASH USED BY OPERATING ACTIVITIES See accompanying notes to financial statements. 37 $ 718,806 $ 5,855 247,085 123,880 (61,037) 82,997 28,938 (118,514) $ 904,854 $ 123,156 CITY OF RANCHO PALOS VERDES STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS June 30, 2013 Successor Agency to the Rancho Palos Verdes Redevelopment Agency Private -Purpose Trust Fund ASSETS Cash and investments $ 364,713 Receivables: Interest 161 Notes 154,940 Prepaid items 770,648 Land 166,296 TOTAL ASSETS 1,456,758 LIABILITIES: Accounts payable and accrued liabilities 233 Short-term liability: Due within one year - bond payable 135,000 Long-term liabilities: Due beyond one year - Portuguese Bend 8,606,181 Due beyond one year - Abalone Cove 3,452,397 Due beyond one year - deferred interest debt 62,294 Due beyond one year - bond payable 4,810,000 TOTAL LIABILITIES 17,066,105 NET POSITION (DEFICIT) HELD IN TRUST $ (15,609,347) See accompanying notes to financial statements. CITY OF RANCHO PALOS VERDES STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS For the year ended June 30, 2013 Successor Agency to the Rancho Palos Verdes Redevelopment Agency Private -Purpose Trust Fund ADDITIONS: Taxes $ 1,604,114 Use of money and property 1,283 TOTAL ADDITIONS 1,605,397 DEDUCTIONS: Administration Debt Interest and fiscal charges 526,951 287,396 TOTAL DEDUCTIONS 814,347 EXTRAORDINARY GAIN ON DISSOLUTION OF REDEVELOPMENT AGENCY CHANGE IN NET POSITION NET POSITION (DEFICIT) - BEGINNING OF YEAR NET POSITION (DEFICIT) - END OF YEAR See accompanying notes to financial statements 7,267,627 8,058,677 (23,668,024) (15,609,347) Park Ranger patrols the coastline 40 NOTES TO FINANCIAL STATEMENTS 41 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE #1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City of Rancho Palos Verdes (the City) conform to accounting principles generally accepted in the United States of America as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting and financial reporting principles. The following is a summary of the significant policies. A. Reporting Entity The reporting entity, "City of Rancho Palos Verdes", includes the accounts of the City and the Joint Powers Improvement Authority (the Authority).The City was incorporated on September 7, 1973, as a General Law City and operates under a Council/Manager form of government. The City sponsored the formation of a Redevelopment Agency in 1984 pursuant to the State of California Health and Safety Code Section 33000 entitled "Community Redevelopment Law" with a purpose to finance long-term capital improvements designed to eliminate physical and economic blight in a project area through stabilization of hazardous landslides. Effective February 1, 2012, pursuant to state law, the Redevelopment Agency was dissolved and its assets were transferred to a Successor Agency for the purpose of winding down the business of the former Redevelopment Agency (see Note #14). The Successor Agency is a separate legal entity that is a related organization to the City; but is not a component unit, as described more fully below. The Authority was formed on September 4, 1990, in accordance with the provisions of the Reimbursement and Settlement Agreement, dated October 27, 1987, entered into by the City, the former Redevelopment Agency, and the County of Los Angeles (County) in connection with the Horan Lawsuit. The Agreement requires funds to be set aside and expended by the Authority to maintain landslide abatement improvements installed and constructed by the former Redevelopment Agency. The criteria used in determining the scope of the reporting entity are based on the provisions of GASB Statement 61. The City of Rancho Palos Verdes is the primary government unit. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading. The City has accounted for the Authority as a "blended" component unit. The balances and transactions of the Authority are reported in separate Permanent and Special Revenue Funds; and are included in the government -wide statements. 42 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 The following specific criteria were used in determining that the Authority is a "blended" component unit: 1) The members of the City Council also act as members of the Authority Board. 2) The Authority is fiscally dependent on the City, and there is potential for the Authority to impose specific financial burdens on the City; as the City subsidizes maintenance operations performed by the Authority and the City is legally liable for facilities maintained by the Authority. Separately issued financial statements for the Authority may be obtained at the City's administrative offices. The Successor Agency does not meet the criteria for reporting as a component unit, as it is not fiscally dependent on the City. In addition, the business of the Successor Agency must be approved by an independently appointed Oversight Board and the California Department of Finance. Therefore, the balances and transactions of the Successor Agency are reported as a separate Fiduciary Fund (private purpose trust fund), and are not included in the government -wide statements. Participation in Public Entity Jointly Controlled Government The City is a member of the Palos Verdes Peninsula Transit Joint Powers Authority (the Transit Authority). The Transit Authority is comprised of three member cities and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the Authority is to study, implement, and provide a public transit system within and around the Palos Verdes Peninsula. These transit services include Palos Verdes Transit, Dial -A -Ride, and a fixed route shuttle service. Periodic deposits are paid by member Cities and are adjusted retrospectively to cover costs. Costs are prorated among all participating Cities based on population. The City does not have an equity interest in the Transit Authority; therefore, no amount has been reported in the Statement of Net Position. However, the City does have an ongoing financial interest, because the City is able to influence the operations of the Authority so that the Authority uses its resources on behalf of the City. Also, an ongoing financial responsibility exists because the Authority is dependent on continued funding from the City. The condensed financial information of the Authority has not been reproduced in this report, but is available upon request from the Authority by emailing pvtransit(a�palosverdes.com or mailing a request to P.O. Box 2656, Palos Verdes Peninsula, CA 90274. B. Description of Funds The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted 43 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 for with a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures. The following are types of funds used: Governmental Fund Types • General Fund — Used to account for all financial resources except those that are required to be accounted for in another fund. • Special Revenue Funds — Used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for specified purposes. • Capital Projects Funds — Used to account for financial resources used for the construction of specific capital projects. • Permanent Funds — Used to account for resources legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs. Proprietary Fund Types • Enterprise Fund — Used to finance and account for the acquisition, operation, and maintenance of the City's facilities and services; which are supported primarily by user charges. • Internal Service Funds — Used to account for employee benefits costs and purchases and maintenance of equipment on behalf of all City departments, as well as the accumulation of funds for replacement of certain buildings on behalf of the City. Fiduciary Fund Type • Private -Purpose Trust Fund — Used to account for property tax revenue allocated to the Successor Agency and payments of the obligations of the former Redevelopment Agency. C. Basis of Accounting/Measurement Focus Government — Wide Financial Statements The City's Government -Wide Financial Statements include a "Statement of Net Position" and a "Statement of Activities". These two statements present summaries of Governmental and Business -type Activities for the City; and do not include fiduciary activities. These statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's 44 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 assets and liabilities, including capital assets, infrastructure, and long-term debt, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned, while expenses are recognized in the period in which the liability is incurred. The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenue transactions for the City are reported in three categories: 1) Charges for Services, 2) Operating Grants and Contributions, and 3) Capital Grants and Contributions. Charges for Services include revenues from customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function. Operating Grants and Contributions include revenues restricted to meeting the requirements of a particular operating function and may include state shared revenues and grants. Capital Grants and Contributions include revenues restricted to meeting the requirements of a particular capital function and may include grants and developer fees. Taxes and other items not properly included among program revenues are reported instead as general revenues. As a general rule, the effect of interfund activity has been eliminated from the Government -Wide Financial Statements. Governmental Fund Financial Statements Governmental fund financial statements include a "Balance Sheet — Governmental Funds" and "Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds" for all major and other governmental funds. An accompanying schedule is presented to reconcile and explain the differences in fund balances as presented in these statements to the Net Position presented in the Government -Wide Financial Statements. The City has presented all major funds that met qualifications of GASB Statement No. 34. All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Under the "current financial resources" measurement focus, generally only current assets and current liabilities are reported on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balances. Revenues are recognized in the accounting period in which they become susceptible to accrual, that is, when they become both measurable and available to finance expenditures of the current period. "Measurable" means that the amount of the transaction can be determined, and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Accrued revenues include property taxes received within 60 days after year-end, taxpayer -assessed taxes such as sales taxes, and earnings on investments. Grant funds earned but not received are 45 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 recorded as a receivable, and grant funds received before the revenue recognition criteria have been met are reported as unearned revenues. Expenditures are recorded when the fund liability is incurred, if measurable, except for interest on general long-term debt that has not yet matured, which is recognized when due. The City reports the following major governmental funds The General Fund is the City's primary operating fund. It accounts for all financial resources of the City, except those that are required to be accounted for in another fund. The Street Maintenance Special Revenue Fund is used to account for state -shared highway users' tax that is restricted to use for street maintenance, right-of-way acquisition and street construction. The Community Development Block Grant Fund is used to account for Federal Grants received from the Department of Housing and Urban Development. The Capital Improvement Capital Projects Fund is used to account for funds used for the City's capital improvement projects. Proprietary Fund Financial Statements Proprietary fund types are accounted for using the "economic resources" measurement focus and accrual basis of accounting. This means that all assets and liabilities (whether current or non-current) associated with the activity are included on the balance sheet. Fund equity is presented as total net position. The operating statement of proprietary funds presents increases (revenues) and decreases (expenses) in total net position. Revenues are recognized when they are earned and expenses are recognized when the liability is incurred. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise and internal service funds are charges for services. Operating expenses for the enterprise and internal service funds include the costs of services, employee benefits, maintenance of capital assets, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The City uses the internal service funds to finance and account for goods and services provided by one City department to other City departments, including the purchase and maintenance of equipment, replacement of buildings and payment of 46 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 employee benefits. The City's internal service funds are presented in the proprietary funds financial statements. Because the principal users of the internal services are the City's governmental activities, the financial statements of the internal service funds are consolidated into the governmental activities column when presented in the government -wide financial statements. To the extent possible, the cost of these services is reported in the appropriate functional activity (administration, public safety, public works, etc.). The City reports the following major enterprise fund The Water Quality Flood Protection Fund is used to account for voter approved storm drain user fees used to repair and replace the City's storm drain facilities. Fiduciary Fund Financial Statements The fiduciary private -purpose trust fund type is accounted for using the economic resources measurement focus and accrual basis of accounting similar to the proprietary funds. The City reports the following fiduciary fund The assets and liabilities of the former Redevelopment Agency were transferred to the Successor Agency as part of the business of redevelopment dissolution. The Successor Agency private -purpose trust fund accounts for the changes in the former Redevelopment Agency's assets and liabilities until they are disposed of through dissolution. This fund also accounts for the administrative costs associated with dissolution. D. Budaetary Accounting Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for all governmental funds. All annual appropriations lapse at fiscal year-end. Budget control is maintained over all accounts, and expenditures are not allowed to exceed appropriations at the program level. Throughout the year, the City Council made several supplementing budgetary adjustments to the General fund, Special Revenue funds, Capital Projects funds, Proprietary funds and Permanent funds. These adjustments resulted in a net appropriation increase in the amount of $4,572,047. This increase was primarily a result of appropriations continued from FY11-12 in the amount of $15.6 million, appropriation of the San Ramon Canyon construction project for $17.8 million, and appropriations continued to FY13-14 in the amount of $28.7 million. Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), the City is restricted as to the amount of annual appropriations from the 47 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 proceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller, returned to the taxpayers through revised tax rates or revised fee schedules, or an excess in one year may be offset against a deficit in the following year. For the fiscal year ended June 30, 2013, based on calculations by City Management, proceeds of taxes did not exceed related appropriations. E. Capital Assets Capital assets include land, machinery and equipment (vehicles, computers, etc.), buildings and improvements, and infrastructure assets (street systems, storm drains, sewer systems, etc.). Capital assets are defined by the City as all land and buildings, vehicles, computers and equipment with an initial individual cost of more than $5,000; and improvements and infrastructure assets with costs of more than $100,000. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated or annexed capital assets are recorded at estimated market value at the date of donation or annexation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Depreciation is recorded in the Government -Wide Financial Statements on a straight-line basis over the useful life of the assets as follows: Buildings and Improvements Vehicles, Computers, and Equipment Infrastructure Assets Roadway Network Sewer Network Storm Drain Network Parks and Recreation Network F. Employee Compensated Absences 25 to 50 years 3 to 10 years 10 to 100 years 25 to 50 years 30 to 100 years 25 years City employees may receive from 10 to 20 days of vacation time each year, depending upon length of service. An employee may accumulate earned vacation time up to a maximum of two years' worth of accrued vacation leave. Upon termination, employees are paid the full value of their unused vacation time at their existing salary. City employees accrue 96 hours of sick leave each year with a maximum accrual of 720 hours. However, unused sick leave is never paid out to the employee; and therefore, the City does not accrue a liability. 48 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 The General Fund will primarily be used to liquidate the liability for compensated absences in future years. Any liability for compensated absences is only carried in the General Fund if there is unused/unpaid leave outstanding following an employee's separation. G. Investments Investments are stated at fair value (quoted market price or the best available estimate, thereof). H. Cash and Cash Eauivalents The Water Quality Flood Protection Enterprise Fund and the Internal Service Funds participate in the pooling of City-wide cash and investments. Amounts from the pool are available to these funds on demand. Therefore the cash and investments reported in these funds are considered to be cash and cash equivalents for purpose of the statement of cash flows. I. Claims and Judgments When it is probable that a claim liability has been incurred, and the amount of the loss can be reasonably estimated, the City records the estimated loss, net of any insurance coverage under its self-insurance program. Small claims and judgments are recorded as expenditures when paid. The City's self-insurance program is administered through the California Joint Powers Authority (the CJPIA), which is described at Note #9. The CJPIA is a public entity risk pool. The City records amounts deposited with CJPIA as insurance expenditures in the General Fund J. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items using the consumption method. In governmental funds, the prepaid assets recorded do not reflect current appropriable resources and thus, an equivalent portion of fund balance is reported as nonspendable. The City had a total of $318,095 ($100,019 in governmental funds, $208,076 in internal service funds and $10,000 in business type activities) of prepaid items as of June 30, 2013. K. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 49 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. L. Use of Restricted Resources When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first. When unrestricted resources (committed, assigned or unassigned) are available for use, it is the City's policy to use committed resources first, assigned resources second and finally unassigned resources. M. New Pronouncements GASB Statement No. 60 — Accounting and Financial Reporting for Service Concession Arrangements. In November 2010, the GASB improved financial reporting by addressing issues related to service concession arrangements, which are a type of public-private or public -public partnership. This statement has been implemented with the June 30, 2013 financial statements. GASB Statement No. 61 — The Financial Report Entity: Omnibus — an amendment of GASB Statements No. 14 and No. 34. In November 2010, the GASB improved financial reporting for a governmental financial reporting entity. The requirements of Statement No. 14, The Financial Reporting Entity, and the related financial reporting requirements of Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Governments, were amended to better meet user needs and to address reporting entity issues that have arisen since the issuance of those Statements. This statement has been implemented with the June 30, 2013 financial statements. GASB Statement No. 62 — Codification of Accounting and Financial Reporting Guidance Contained in Pre -November 30, 1989 FASB and AICPA Pronouncements. In December 2010, the GASB incorporated into its authoritative literature certain accounting and financial reporting guidance that is included in the following pronouncements issued on or before November 30, 1989, which does not conflict with or contradict GASB pronouncements: 1) Financial Accounting Standards Board Statements and Interpretations; Accounting Principles Board Opinions; and 3) Accounting Research Bulletins of the American Institute of Certified Public Accountants' Committee on Accounting Procedure. This statement has been implemented with the June 30, 2013 financial statements. GASB Statement No. 63 — Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. In June 2011, the GASB provided financial reporting guidance for deferred outflows of resources and deferred inflows of resources. This statement has been implemented with the June 30, 2013 financial statements. 50 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 GASB Statement No. 65 — Items Previously Reported as Assets and Liabilities. In March 2012, the GASB established accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The statement is not effective until June 30, 2014. The City has not determined its effect on the financial statements. GASB Statement No. 66 — Technical Corrections — 2012 — an amendment of GASB Statements No. 10 and No. 62. In March 2012, the GASB improved accounting and financial reporting by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre -November 30, 1989 FASB and ACIPA Pronouncements. This statement is not effective until June 30, 2014. The City has not determined its effect on the financial statements. GASB Statement No. 67 — Financial Reporting for Pension Plans — an amendment of GASB Statement No. 25. In June 2012, the GASB improved financial reporting by state and local governmental pension plans. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision -useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This statement is not effective until June 30, 2014. The City is not a pension plan provider. GASB Statement No. 68 — Accounting and Financial Reporting for Pension — an amendment of GASB Statement No. 27. In June 2012, the GASB improved accounting and financial reporting by state and local governments for pension. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision -useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This statement is not effective until June 30, 2015. The City has not determined its effect on the financial statements. GASB Statement No. 69 — Government Combinations and Disposals of Government Operations. In January 2013, the GASB established accounting and financial reporting standards related to government combinations and disposals of government operations; including a variety of transactions referred to as mergers, acquisitions, and transfers of operations. This statement is not effective until June 30, 2015. The City has not determined its effect on the financial statements. 51 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 GASB Statement No. 70 — Accounting and Financial Reporting for Nonexchange Financial Guarantees. In April 2013, the GASB improved accounting and financial reporting by state and local governments that extend and receive nonexchange financial guarantees. This statement is not effective until June 30, 2014. The City has not determined its effect on the financial statements. GASB Statement No. 71 — Pension Transition for Contributions Made Subsequent to the Measurement Date — An Amendment of GASB Statement No. 68. In November 2013, the GASB addressed an issue relating to amounts associated with contributions made by a government employer to a defined benefit pension plan after the measurement date of the government's beginning net pension liability. This statement is not effective until June 30, 2015. The City has not determined its effect on the financial statements. NOTE #2 — CASH AND INVESTMENTS Cash and investments as of June 30, 2013, are classified in the accompanying financial statements as follows: Total cash and investments Government -Wide Fiduciary Fund Statement of Statement of Fiduciary Net Position Net Position $ 53, 744, 594 $ Total 364,713 $ 54,109, 307 Cash and investments as of June 30, 2013 consist of the following: Petty Cash $ 2,500 Deposits with Financial Institution 4,215,702 Local Agency Investment Fund (LAIF) 49,891,105 Total cash and investments $ 54.109.307 Investments Authorized by the California Government Code and the City of Rancho Palos Verdes' Investment Policy The table below identifies the investment types that are authorized for the City of Rancho Palos Verdes by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk Maximum Amount or Maximum Maximum Percent of in One Authorized Investment Type Maturity Portfolio Issuer U.S. Treasury Obligations 3 years None None Negotiable Certificates of Deposit 5 years 30% None 52 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 Repurchase Agreements 7 days 15% None Money Market Mutual Funds N/A 15% 15% Local Agency Investment Fund (LAIF) N/A None None Money Market Savings/Demand Deposits N/A $5 million 15% Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, there is a greater sensitivity of its fair value to changes in market interest rates. The City manages its exposure to interest rate risk by investing with the Local Agency Investment Fund (LAIF) such that the portfolio provides cash flows and liquidity need for operations. The City's investment is represented by shares in the pool, which can be withdrawn in one business day. The average maturity of the pool is less than one year. Investment Type Local Agency Investment Fund (LAIF) $ Disclosures Relating to Credit Risk Remaining Maturity 12 Months or Less 49, 891,105 Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The City's LAIF investment is not rated. Concentration of Credit Risk The investment policy of the City of Rancho Palos Verdes contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. As of June 30, 2013, the City's investments in LAIF were exempt from concentration of credit risk disclosure. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City of Rancho Palos Verdes' investment policy do not contain legal or policy requirements 53 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits. Of the City's deposits with financial institutions, $3,932,828 was in excess of federal depository insurance limits. The uninsured deposits were held by financial institutions, which are legally required by the California Government Code to collateralize the City's deposits as noted above. Investment in Local Agency Investment Fund (LAIF) The City of Rancho Palos Verdes is a voluntary participant in LAIF that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City of Rancho Palos Verdes' investment in this pool is based upon the City of Rancho Palos Verdes' pro -rata share of the fair value provided by LAIF for the entire pool portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. LAIF is a governmental investment pool managed and directed by the Treasurer of the State of California and is not registered with the Securities and Exchange Commission. An oversight committee comprised of California State officials and various other participants provides oversight to the management of the fund. The daily operations and responsibilities of LAIF fall under the auspices of the State Treasurer's office. The City is a voluntary participant in the investment pool. NOTE #3 — INTERFUND TRANSACTIONS Interfund balances consisted of the following at June 30, 2013: 1 Due To I General Fund E Other Governmental Funds $ 197,653 u_ CDBG Fund 50,671 a) m o Total: $ 248,324 54 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 General fund cash was used to cover grant expenditures in the other Governmental Funds, as well as the CDBG Fund, until reimbursement is received from the grant agencies. Inter -fund Transfers Inter -fund transfers for the year ended June 30, 2013, consisted of the following: Transfer To General Fund Street Maintenance CDBG Capital Improvement Projects Other Governmental Funds Enterprise Funds General Fund 9,302 6,550,256 271,700 Totals: $ 6,831,258 Street Maintenance Fund $ - $ Transfer From Capital ImproN,ement Projects Fund $ - $ Other Governmental Funds $ 194,000 699,440 229,744 8,293,009 - 8,293,009 $ 1,123,184 Totals $ 194,000 699,440 9,302 6,780,000 271,700 8,293,009 $16,247,451 Transfers are used to: 1) move revenues from the fund that statute or budget requires for collection to the fund that statute or budget requires for expenditure; 2) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations or grant matching requirements; and 3) return money that was originally transferred from the General Fund to another fund, yet not used. The General Fund transferred $6,550,256 to the Capital Improvement Projects (CIP) Fund. The transfer included $4,975,256 of funding for the CIP Reserve for future infrastructure projects, as required by the City Council's Reserve Policy; and $1,575,000 of funding for the annual residential street rehabilitation program. The CIP Fund transferred $8,293,009 to the Water Quality Flood Protection Fund (Enterprise Fund), as authorized by the City Council, to provide funding for the San Ramon Canyon stabilization project. NOTE #4 — CAPITAL ASSETS AND DEPRECIATION In accordance with GASB Statement No. 34, the City has reported all capital assets including infrastructure in the Government -Wide Statement of Net Position. The City elected to use the basic reporting approach as defined by GASB Statement No. 34 for all infrastructures, whereby depreciation expense and accumulated depreciation has been recorded. The following tables present the capital assets activity for the year ended June 30, 2013. 55 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 Beginning Ending Governmental Activities Balance Increases Decreases Balance Capital assets not being depreciated: Land 39,881,992 18,970 39,900,962 Construction in progress 430,056 2,373,508 (242,337) 2,561,227 Total capital assets not being depreciated 40,312,048 2,392,478 (242,337) 42,462,189 Capital assets being depreciated: Building and improvements 9,379,539 9,379,539 Vehicles 301,919 301,919 Computer equipment 727,731 78,830 (67,837) 738,724 Furniture, fixtures and equipment 573,860 43,703 (67,828) 549,735 Infrastructure Roadway system 90,717,588 90,717,588 Sewer system 25,965,995 25,965,995 Storm drain system 13,148,416 13,148,416 Parks system 6,977,932 242,337 (370,297) 6,849,972 Total capital assets being depreciated 147,792,980 364,870 (505,962) 147,651,888 Less accumulated depreciation for: Buildings and improvements (2,426,413) (203,172) (2,629,585) Vehicles (243,514) (26,054) (269,568) Computer equipment (609,964) (66,743) 67,837 (608,870) Furniture, fixtures and equipment (495,183) (31,083) 64,001 (462,265) Infrastructure Roadway system (44,269,289) (2,432,938) (46,702,227) Sewer system (17,767,308) (456,573) (18,223,881) Storm drain system (3,217,954) (250,479) (3,468,433) Parks system (4,586,974) (139,114) 261,287 (4,464,801) Total accumulated depreciation (73,616,599) (3,606,156) 393,125 (76,829,630) Total capital assets being depreciated, net Governmental activities capital assets, net 74,176,381 (3,241,286) 114,488,429 (848,808) (112,837) 70,822,258 (355,174) 113,284,447 Depreciation expense was charged to functions/programs of the primary government as follows: Administration (depreciation of buildings) $ 203,172 Public Works (depreciation of roadways, sewers, and storm drains) 3,139,990 Recreation Services (depreciation of parks system) 139,114 Capital assets held by the City's internal service funds are charged to the various functions based on their usage of the assets 123,880 Total Depreciation Expense — Governmental Activities $3.606.156 56 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 Beginning Business -type Activities Balance Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Ending Increases Decreases Balance 1,408,493 - - 1,408,493 1,516,923 5,209,807 (695,605) 6,031,125 2,925,416 5,209,807 (695,605) 7,439,618 Capital assets being depreciated: Equipment 11,813 - - 11,813 Storm drain system 11,338,573 695,605 - 12,034,178 Total capital assets being depreciated 11,350,386 695,605 - 12,045,991 Less accumulated depreciation for: Equipment Storm drain system Total accumulated depreciation (11,813) - - (11,813) (907,731) (247,085) - (1,154,816) (919,544) (247,085) - (1,166,629) Total capital assets being depreciated, net 10,430,842 448,520 - 10,879,362 Business -type activities capital assets, net 13,356,258 5,658,327 (695,605) 18,318,980 Depreciation expense of $247,085 is included in the Water Quality Flood Protection enterprise fund. NOTE #5 — LONG-TERM NOTES RECEIVABLE Governmental Activities Special Revenue Fund Long -Term Notes Receivable $ 7,002,063 $ City Affordable Housing In -Lieu City Low -Moderate Income Housing Community Development Block Grant Subtotal: Receivable from Successor Agency (Note 14) Allowance from Successor Agency receivable Total Long -Term Notes Receivable: Affordable Housing Subtotal 523,819 $ 7,525,882 Long -Term Notes Receivable $ 1,385,165 5,616,898 523,819 7,525,882 12, 058, 578 (12, 058, 578) $ 7,525,882 In March 2009, the former Redevelopment Agency (RDA) entered into a Disposition and Development Agreement (DDA) with AMCAL Mirandela Fund LP (AMCAL). Under the DDA, the former RDA provided financial assistance to AMCAL in an amount up to $6,790,000 to develop a thirty-four unit senior housing project. The 57 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 loan accrues simple interest at a rate of 3% per annum on the amounts disbursed. The balance of notes receivable from AMCAL including accrued unpaid interest of $620,709 at June 30, 2013 was $6,875,743. In March 2011, the former RDA sold an affordable housing condominium to an individual for $350,000. In connection with the sale, the buyer issued a secured promissory note in the amount of $126,320. The note bears no interest and principal is payable upon default by the owner (or any successors' owner) under a regulatory agreement that requires the condominium to be occupied by person or families of moderate income. If no such default has occurred by February 22, 2056, the principal will be forgiven. As part of redevelopment dissolution, these two long-term notes receivable were transferred to the housing successor (the City), which elected to retain the housing assets and function of the former Redevelopment Agency. Community Development Block Grant (CDBG) As part of the City's CDBG program, the City extends loans to property owners meeting low and moderate income requirements to make repairs and improvements to their homes. These notes receivable bear no interest, and repayment is required when the title to the property is transferred or the property is re -financed. The maximum loan amount per property is $13,000. Amounts repaid are returned to the CDBG program. The total of these loans outstanding at June 30, 2013 is $523,819, which is recorded in the Community Development Block Grant special revenue fund. NOTE #6 — LONG-TERM DEBT Balance Balance Amount Due July 1, 2012 Additions Deletions June 30, 2013 in One Year Employee Compensated Absences 370,799 279,017 (286,708) 363,107 280,761 Employee Compensated Absences There is no fixed payment schedule for employee compensated absences. Based on historical trends, $280,761 estimated to be the amount that will be used and/or paid out during fiscal year 2013-14. NOTE #7 — CLASSIFICATIONS OF NET POSITION AND FUND BALANCE Government -Wide Financial Statements In the Government -Wide financial statements net position is classified in the following categories: 58 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 Net Investment in Capital Assets This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation on these assets reduces this category as does any outstanding balance on debt incurred in acquiring or constructing the capital assets. Restricted Net position This category presents external restrictions imposed by creditors, grantors, contributions or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net position This category represents the net position of the City that is not externally restricted for any project or other purpose. Fund Financial Statements The fund balances reported on the fund statements consist of the following categories: Nonspendable — Amounts that are not in a spendable form (such as inventory and prepaid expenditures) or are legally required to be maintained intact (such as the corpus of an endowment fund). Restricted — Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation. Committed — Amounts constrained to specific purposes by the City Council via a City Council resolution. To be reported as committed, amounts cannot be used for any other purpose unless the City Council adopts another resolution to remove or change the constraint. Assigned — Amounts the City Council intends to use for a specific purpose, which is expressed by the City Council via minute order. The City Council has assigned the entire fund balance of the Capital Improvement Projects fund for the future design and construction of infrastructure improvement projects. Unassigned — Amounts that are available for any purpose; these amounts are reported only in the General Fund. However, if there is a deficit fund balance to be reported in any fund, it is classified as unassigned. 59 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 The City's governmental fund balances were classified as follows at June 30, 2013: Street Capital Other General Maintenance Improvement Governmental Fund Fund CDBG Fund Funds Nonspendable: In Form (inventory and prepaid) $ 137,994 $ - $ - $ - $ 820 Legally (endowments) - - - - 1,750,000 Habitat Restoration - - - - 84,957 Restricted Public Works - 914,473 - - 6,350,368 Public Safety - - - - 20,400 Parks and Recreation - - - - 843,448 Committed Public Works - - - - 35,906 Assigned - - - 11,565,617 1,516,910 Unassigned: Rainy Day Fund 13,968,268 - - - Continued Appropriations 401,989 - - - Deficit Fund Balance - - - (197,638) Governmental Fund Balance Totals $14,508,251 $ 914,473 $ - $ 11,565,617 $ 10,405,171 Minimum Fund Balance Policies The City Council has adopted a policy, via resolution, to maintain the following minimum fund balances: ➢ Rainy Day Fund — At least fifty percent of annual operating expenditures in the General Fund; ➢ Capital Improvement Fund — A minimum of $3 million for infrastructure improvement projects; ➢ Street Maintenance Fund — A minimum of one year's appropriations for road maintenance on Palos Verdes Drive South in the landslide area; and ➢ Habitat Restoration Fund — A minimum of $50,000 for emergency use for habitat restoration purposes. NOTE #8 — PENSION AND RETIREMENT HEALTH SAVINGS PLANS Pension Plan Description The City provides a defined benefit pension plan that includes retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. The City contracts with the California Public Employee's Retirement System (CaIPERS), a cost-sharing, multi-employer public employee defined benefit pension plan administered by CaIPERS. CaIPERS provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. State statutes, within the Public Employees' Retirement Law, establish benefit provisions and other requirements. The City selects optional benefit provisions from the benefit menu by contract with 60 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 CaIPERS and adopts those benefits through local ordinance. Copies of the CaIPERS annual financial report may be obtained from the CaIPERS Executive Office at 400 P Street, Sacramento, California 95814 or downloaded from their website at www.calpers.aov. Pursuant to City Council action on October 2, 2012 to reduce pension benefits for future employees and the California Public Employees' Pension Reform Act of 2012, the City now has 3 tiers of defined pension benefits. For employees hired prior to October 2, 2012, the City participates in a Miscellaneous 2.5% at 55 Risk Pool (1St Tier). For employees hired after October 2, 2012 but before January 1, 2013 and employees hired after January 1, 2013 that have participated in a reciprocating California public employee pension plan within six months of being hired by the City, the City participates in a Miscellaneous 2% at 60 Risk Pool (2nd Tier). For all other employees hired after January 1, 2013, the City will participate in a Miscellaneous 2% at 62 Risk Pool (3rd Tier). Pension Plan Fundina Policy The contribution requirements of plan members are established by State statute and the employer contribution rate is established and amended by CaIPERS. During fiscal year 2012-13, all but one of the City's full-time employees participated in the 1st Tier of benefits as described above. One full-time employee participated in the and Tier. Beginning in September 2011, active City employees were required to contribute the full "employee" share of pension cost (8% of their annual covered salary for 1st Tier coverage, 7% for 2nd Tier coverage, and 6.25% for 3rd Tier coverage). The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The City's fiscal year 2012- 13 contribution rates for the Pension Plan were as follows. 1st Tier I2nd Tier I3rd Tier Percentage of Covered Payroll 13.91% 7.85% 6.25% As a result of having less than 100 active members as of June 30, 2003, the City was required to participate in a risk pool. The City's pooled employer contribution rate is the same as the stand-alone employer contribution rate. The City's contributions to CaIPERS for the most recent three years follow. 61 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 Annual Pension Cost Percentage of Employer Annual Pension Cost Net Pension Year Ended Contribution Contributed Obliaation June 30, 2013 $698,501 100% 0 June 30, 2012 $658,481 100% 0 June 30, 2011 $461,416 100% 0 Retirement Health Savings Plan On November 17, 2009, the City approved the establishment of a defined contribution Retirement Health Savings Plan (the "Plan") for its full-time employees. The Plan is a Health Reimbursement Arrangement ("HRA") within Sections 105 and 106 of the Internal Revenue Code. The Plan assets are managed in a non-taxable trust as described in Section 501(c)(9) of the Internal Revenue Code. The City is the Plan Administrator, and utilizes the services of a contracted financial services provider for day-to-day administration of contributions and disbursements. The City has the authority to amend the Plan's provisions and contribution requirements. The City has no obligation to make contributions to the Plan, but as part of the annual budget process the City may elect to make contributions to the Plan. Employees are required to contribute 1% of their gross wages to their account, which is owned by the employee. During fiscal year 2012-13, the City contributed a total of $68,378 to employee accounts. During the same time, employees contributed a total of $46,601 to their own accounts. The Plan assets are not an asset of the City. Therefore, only the City's expense to make contributions to the Plan has been recorded in the Employee Benefits internal service fund in the City's financial statements. NOTE #9 — LIABILITY, INSURED PROGRAMS AND WORKERS' COMPENSATION PROTECTION Description of Self -Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 122 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine -member Executive Committee. 62 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 Self -Insurance Programs of the CJPIA Each member pays an annual contribution to cover estimated losses for the coverage period. This initial funding is paid at the beginning of the coverage period. After the close of the coverage period, outstanding claims are valued. A retrospective deposit computation is then conducted annually thereafter until all claims incurred during the coverage period are closed on a pool -wide basis. This subsequent cost re -allocation among members based on actual claim development can result in adjustments of either refunds or additional deposits required. The total funding requirement for self-insurance programs is estimated using actuarial models and pre -funded through the annual contribution. Costs are allocated to individual agencies based on exposure (payroll) and experience (claims) relative to other members of the risk -sharing pool. Additional information regarding the cost allocation methodology is provided below. General Liability In the liability program claims are pooled separately between police and non -police exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs in excess of $750,000 up to the reinsurance attachment point of $5 million are distributed based on the outcome of cost allocation within the first and second loss layers. (5) Costs of covered claims from $5 million to $10 million are paid under a reinsurance contract subject to a $2.5 million annual aggregate deductible. Costs of covered claims from $10 million to $15 million are paid under two reinsurance contracts subject to a combined $3 million annual aggregate deductible. (6) Costs of covered claims from $15 million up to $50 million are covered through excess insurance policies. The overall coverage limit for each member including all layers of coverage is $50 million per occurrence. Costs of covered claims for subsidence losses are paid by reinsurance and excess insurance with a pooled sub -limit of $25 million per occurrence. This $25 million subsidence sub -limit is composed of (a) $5 million retained within the pool's SIR, (b) $10 million in reinsurance and (c) $10 million in excess insurance. The excess insurance layer has a $10 million annual aggregate. 63 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 Workers' Compensation In the workers' compensation program claims are pooled separately between public safety (police and fire) and non-public safety exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs in excess of $100,000 up to the reinsurance attachment point of $2 million are distributed based on the outcome of cost allocation within the first and second loss layers. (5) Costs of covered claims from $2 million up to statutory limits are paid under a reinsurance policy. Protection is provided per statutory liability under California Workers' Compensation Law. Employer's Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer's Liability losses from $5 million to $10 million are pooled among members. Purchased Insurance Pollution Legal Liability Insurance The City participates in the pollution legal liability insurance program (formerly called environmental insurance) which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City. Coverage is on a claims -made basis. There is a $50,000 deductible. The Authority has a limit of $50 million for the 3 -year period from July 1, 2011 through July 1, 2014. Each member of the Authority has a $10 million sub - limit during the 3 -year term of the policy. Property Insurance The City participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City property is currently insured according to a schedule of covered property submitted by the City to the Authority. City property currently has all-risk property insurance protection in the amount of $14,695,974. There is a $5,000 deductible per occurrence except for non -emergency vehicle insurance which has a $1,000 deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. 64 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 Earthauake and Flood Insurance The City purchases earthquake and flood insurance on a portion of its property. The earthquake insurance is part of the property protection insurance program of the Authority. City property currently has earthquake protection in the amount of $14,444,407. There is a deductible of 5% per unit of value with a minimum deductible of $100,000. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Crime Insurance The City purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority. Premiums are paid annually and are not subject to retrospective adjustments. Special Event Tenant User Liability Insurance The City further protects against liability damages by requiring tenant users of certain property to purchase low-cost tenant user liability insurance for certain activities on agency property. The insurance premium is paid by the tenant user and is paid to the City according to a schedule. The City then pays for the insurance. The insurance is arranged by the Authority. Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2012-13. NOTE #10 — CONTINGENCIES AND COMMITMENTS Litiaation In the normal course of operations, the City has been named as a defendant in various claims and legal actions. Generally, unfavorable results of these claims and legal actions are funded through the City's participation in California Joint Powers Insurance Authority (CJPIA, see Note #9) and, as such, the City believes that the ultimate liability for these legal actions and claims will not have a material adverse effect on the City's financial statements. The City is also a defendant in legal actions for which the potential losses would not be covered through participation in CJPIA. Legal actions that could result in an unfavorable outcome material to the City's financial statements are discussed below. 65 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE #11 — PROPERTY TAXES Under California law, property taxes are assessed and collected by the counties up to one percent of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City accrues only those taxes, which are received from the county within sixty days after year-end. Lien date Levy date Due date Collection dates NOTE #12 — DEFERRED REVENUES January 1 June 30 November 1 and February 1 December 10 and April 10 The deferred revenues in the fund financial statements of the City of Rancho Palos Verdes as of June 30, 2013 consisted of the following: General Fund: Advance balance on Federal Grant - NCCP $ 100,190 Revenue Earned but Not Available (beyond 60 days) 83,695 Subtotal: 183,885 Other Governmental Funds: Long -Term Note Receivable Offset (loans expended when made) 523,819 Revenue Earned but Not Available (beyond 60 days) 241,750 Subtotal: 765,569 Total Deferred Revenues: $ 949,454 NOTE #13 — OTHER REQUIRED FUND DISCLOSURES The following funds had deficit fund balances as of June 30, 2013: Other Governmental Funds: Measure A Special Revenue Fund $ 197,638 The City plans to finance the fund deficits through future revenues and transfers from other funds. NOTE #14 — SUCCESSOR AGENCY Under the Dissolution Act, each California redevelopment agency (each a "Dissolved RDA") was dissolved as of February 1, 2012. A Successor Agency was created for each Dissolved RDA which is the sponsoring community of the Dissolved RDA unless it elected not to serve as the Successor Agency. On September 6, 2011, 66 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 the City elected to serve as the Successor Agency of the Rancho Palos Verdes Redevelopment Agency. The Dissolution Act allowed the sponsoring community that formed the Dissolved RDA to elect to assume the housing functions and take over the certain housing assets of the Dissolved RDA. The City elected on February 21, 2012 to serve as the Housing Successor Agency. After the date of dissolution, the housing assets, obligations, and activities of the Dissolved RDA have been transferred and are reported in a special revenue fund in the financial statements of the City (City Low - Moderate Income Housing Fund). All other assets, obligations, and activities of the Successor Agency are reported in a fiduciary fund (private -purpose trust fund) in the financial statements of the City. The County Auditor -Controller is charged with establishing a Redevelopment Property Tax Trust Fund (the "RPTTF") for each Successor Agency and depositing into the RPTTF for each six-month period the amount of property taxes that would have been redevelopment property tax increment had the redevelopment agency not been dissolved. The deposit in the RPTTF fund is to be used to pay to the Successor Agency's enforceable obligations for the upcoming six-month period. The process of making RPTTF deposits to be used to pay enforceable obligations of the Dissolved RDA will continue until all enforceable obligations have been paid in full and all non -housing assets of the Dissolved RDA have been liquidated. Non -Liquid Assets The following non -liquid assets are included in the records of the Successor Agency: Note receivable from: Portuguese Bend Club Homeowners Association $154,940 Prepaid item 770,648 Land 166,296 Total Non -Liquid Assets $1.091.884 In 1999, the former Redevelopment Agency extended a $750,000 construction loan to the Portuguese Bend Club Homeowners Association. The note is non-interest bearing, and is to be repaid in 180 equal installments beginning in July 2001. The Association is scheduled to continue making monthly payments of $4,167 through August 2016, and the balance of the note receivable at June 30, 2013 is $154,940. Prior to redevelopment dissolution, the County of Los Angeles pursuant to a Memorandum of Understanding dated November 1, 1997 (discussed below) impounded property tax increment allocated to the former redevelopment agency for payment of debt owed to the County. The balance of the impounded tax increment 67 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 not yet been applied to debt at June 30, 2013 is $753,143, which is included in the prepaid amount reported above. The former Redevelopment Agency owned a number of parcels in the landslide area of the City. Parcels totaling approximately 124 acres which are identified as Abalone Cove Shoreline Park and adjacent open space were transferred from the County of Los Angeles at no cost. The remaining parcels which provide right-of-way access into the landslide area were originally purchased at a total cost of $166,296. Debt Summary Balance Balance Amounts Due July 1, 2012 Additions Deletions June 30, 2013 in One Year Due to City: Portuguese Bend $ 14,510,123 $ 26,511 $ (5,930,453) $ 8,606,181 Abalone Cove 4,778,936 10,635 $ (1,337,174) 3,452,397 Due to County: Tax Increment Bond 5,065,000 (120,000) 4,945,000 135,000 Deferred Interest Payable 434,904 (372,610) 62,294 Totals r$ 24,788,963 $ 37,146 $ (7,760,237) $ 17,065,872 $ 135,000 Consolidated Loan from City The City entered into an agreement to provide the former Redevelopment Agency (RDA) operating funds and staff assistance, supplies, technical and other services and facilities of the City as the RDA required in carrying out its function under the community redevelopment law. The former RDA was to repay the resulting indebtedness, plus interest, from incremental property tax revenues arising from the project area, as such revenue became available. Pursuant to redevelopment dissolution law, loans from cities to redevelopment agencies made more than two years after formation of the redevelopment agency are not recognized obligations. Therefore, the Consolidated Loan from the City has been previously disallowed on the Successor Agency's Recognized Obligation Payment Schedule (ROPS). However, AB1484 provides a method to secure recognition of the City's Consolidated Loan as an obligation of the Successor Agency. Upon completion of various independent reviews and transfers of funds to Los Angeles County, the Successor Agency received a "Finding of Completion" on April 26, 2013. On December 11, 2013, the Oversight Board made a finding that the Consolidated Loan from the City was made for legitimate redevelopment purposes. Although the amount cannot be estimated at this time, City Management expects that RPTTF revenue will likely become available to begin repayment of the City's Consolidated Loan during the fiscal year ended June 30, 2015. California Health and Safety Code Section 34191.4(b)(2) outlines the terms for restructuring city loans to former redevelopment agencies as follows: "the accumulated interest on the remaining principal amount of the loan shall be 68 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 recalculated from origination at the interest rate earned by funds deposited into the Local Agency Investment Fund." Management's position is to apply the historical Local Agency Investment Fund (LAIF) rate over the life of the loan (e.g. a 2011 rate used to calculate 2011 interest), resulting in a balance of $12,058,578 at June 30, 2013. 30 -Jun -13 Principal Interest Balance Portuguese Bend $ 4,320,552 $4,285,629 $ 8,606,181 Abalone Cove 2,422,224 1,030,173 3,452,397 Allowance from Successor Agency Receivable (6,742,776) (5,315,802) (12,058,578) Totals: $ - $ - $ The California Department of Finance (DOF) has provided information on its website regarding the recalculation of accrued interest for city loans to redevelopment agencies. The DOF's position appears to include application of a recent LAIF rate (the earnings rate for the quarter during which the Oversight Board makes a finding that the loan was made for legitimate redevelopment purposes, in this case the quarter ended December 31, 2013) to the entire life of the loan. If the Consolidated Loan from the City is recalculated using the DOF interpretation, the balance at June 30, 2013 would be approximately $7.0 million, including only about $0.3 million of accrued interest. As mentioned above, City Management does not currently have enough information to estimate the amount of RPTTF revenue that may become available in the future to repay the Consolidated Loan from the City. Los Angeles County manages the distribution of RPTTF, which is complicated by a 1997 Memorandum of Understanding between the City, the County, and the former Redevelopment Agency (discussed in detail below). City Management expects to work with the County during 2014 to clarify distribution terms, so that future distributions may be reasonably estimated and a schedule of repayment may be established for the Consolidated Loan from the City. Due to the inability to estimate future repayments, as well as the differing interpretations between the DOF and City Management for the calculation of accrued interest, the City's loan receivable of $12,058,578 has been completely offset with an allowance for uncollectable amounts on the City's financial statements. As further information becomes available, the allowance for uncollectable amounts may be adjusted in future periods, potentially resulting in a recognized net receivable for the City. Principal Interest Total City's Consolidated Loan at June 30, 2012 $ 6,742,776 $ 12,546,283 $ 19,289,059 Write-off of accrued interest during fiscal year end June 30, 2013 (7,267,627) (7,267,627) Interest accrued during fiscal year end June 30, 2013 37,146 37,146 City's Consolidated Loan at June 30, 2013 $ 6,742,776 $ 5,315,802 $ 12,058,578 Allowance for Successor Agency receivable $ (12,058,578) 69 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 Tax Increment Bond and Deferred Interest Payable In July 1991, the former Redevelopment Agency received $10,000,000 in loan proceeds (the Loan) from the County of Los Angeles (the County) upon the County's issue of Abalone Cove Improvement Bonds 2651-M pursuant to a Reimbursement and Settlement Agreement (the Agreement), dated October 27, 1987 in connection with the Horan Lawsuit. The Loan was made for the purpose of abating the Abalone Cove landslide. The settlement Loan was secured by property assessment liens in the Abalone Cove project area. As stipulated by the parties to the Agreement, a portion of the Loan proceeds was used to repay a tax allocation and revenue anticipation promissory note issued to the County in the principal amount of $1,450,000, plus accrued interest equal to $179,244. A second portion of the proceeds was used to repay expenses advanced by the County in the amount of $135,614. A third portion was used to repay certain loans from the City to the former Redevelopment Agency in the amount of $787,340. Per the terms of the Agreement, $1,000,000 of the proceeds was deposited in the Abalone Cove Permanent Fund of the Joint Powers Improvement Authority. The remainder of the proceeds was accounted for in the former Redevelopment Agency's Abalone Cove Fund. Concurrent with the execution of the Agreement, the County deeded its title in the Abalone Cove Beach Park to the former Redevelopment Agency. As part of the Agreement, the former Redevelopment Agency was required to transfer 17 percent of tax increment revenue to the Consolidated Fire Protection District of the County and 50.9 percent of tax increment revenue for debt repayment to the County. In accordance with the Agreement, the former Redevelopment Agency was to pay the Loan principal plus interest at 7.7654 percent over a 30 -year period that began in 1992. However, these debt payments were to be deferred 10 years until the fiscal year ended June 30, 2002. As part of the deferral arrangement, the accrued interest from the inception of the Loan through June 30, 2002, in the amount of $7,314,944, was scheduled for payment over a 20 -year period beginning in the fiscal year ended June 30, 2002 with no additional interest. The remaining balance of $10,274,119 was scheduled for payment to the County over a 20 -year period beginning in the fiscal year ended June 30, 2002, with interest at 7.7654 percent. On November 1, 1997, the City, the former Redevelopment Agency and the County of Los Angeles entered into a Memorandum of Understanding (MOU) agreeing to restructure the repayment schedule of the debt owed to the County by the former Redevelopment Agency. In accordance with the terms of the MOU, the $10,000,000 loan principal owed to the County was cancelled. As consideration for the loan 70 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 cancellation, the former Redevelopment Agency made a lump sum payment to the County in the amount of $4,545,000 and issued a $5,455,000 tax increment bond to the County (the bond). Of the $4,545,000 lump sum payment, $2,000,000 was paid from tax increment revenue and interest earnings accumulated in the Debt Service Fund. The remaining $2,545,000 was funded by a combination of a loan from the General Fund of the City to the Agency for $1,545,000 and a net operating transfer from the Agency's Abalone Cove Capital Projects Fund to the Debt Service Fund of $1,000,000. The private property liens resulting from the formation of the bond assessment district in connection with the Reimbursement and Settlement Agreement in 1987 were discharged in accordance with the terms of the MOU. The bond was issued as a conduit through the Improvement Authority to the County. No issuance costs were incurred. Future allocations of property tax to the Successor Agency will fund the payment of the bond debt and the deferred interest from the original Loan until paid in full. The principal of the bond began maturing in installments each December 2nd, commencing December 2, 2004. Interest accrues at a rate of 5 percent per annum and is payable in arrears each June 2nd and December 2nd. Additionally, both the accrued interest and deferred interest on the $10,000,000 Loan previously owed the County was retroactively recalculated from the Loan origination date at a rate of approximately 5 percent compared to 7.7654 percent per the original Agreement. The recalculated deferred interest was $3,111,400. In accordance with the MOU, the recalculated deferred interest does not accrue additional interest. As of June 30, 2013, a total of $3,049,106 in accumulated tax increment has been applied against this balance, including $372,610 applied during fiscal year 2012-13. The remaining balance at June 30, 2013, was $62,294. The accumulated amount of property tax increment withheld by the County prior to dissolution, in excess of amounts applied to principal and interest payments is recorded in the Successor Agency Fund as a prepaid item at June 30, 2013. The California Department of Finance has approved the Tax Increment Bond and Deferred Interest Payable as obligations of the Successor Agency. The debt service schedule below summarizes all fixed principal and interest payments for the term of the bond. Because the payback period for the deferred interest amount will fluctuate depending on the availability of excess property tax revenue, no amounts have been included in the following schedule for repayment of the deferred interest. 71 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 Year Ending June 30, Principal Interest Total 2014 $ 135,000 $ 243,875 $ 378,875 2015 155,000 236,625 391,625 2016 180,000 228,250 408,250 2017 200,000 218,750 418,750 2018 230,000 208,000 438,000 2019-2023 1,570,000 830,750 2,400,750 2024-2028 2,475,000 330,125 2,805,125 Totals $4,945,000 $ 2,296,375 $ 7,241,375 NOTE #15 — RESTATEMENT OF BEGINNING FUND BALANCE As described in Note 5, the former Redevelopment Agency (RDA) entered into a Disposition and Development Agreement (DDA) with AMCAL Mirandela Fund LP (AMCAL) in 2009. As part of this transaction, $2,990,000 was previously reported in fund balance. In order to reflect the long-term nature of the transaction, this amount has been removed from the City Affordable Housing In -Lieu Fund, a nonmajor capital projects fund as of July 1, 2012. FUND BALANCE: City Affordable Housing In -Lieu Fund Beginning of year as previously reported $ 3,491,189 Prior year fund balance related to the note receivable (2,990,000) Beginning of year, as restated $ 501,189 72 SUPPLEMENTARY INFORMATION 73 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CAPITAL IMPROVEMENTS CAPITAL PROJECTS FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 250,000 $ 4,085,167 $ 138,678 $ (3,946,489) Use of money and property 42,300 42,300 44,678 2,378 TOTAL REVENUES 292,300 4,127,467 183,356 (3,944,111) EXPENDITURES: Capital Outlay Infrastructure administration 20,000 23,541 16,530 7,011 Street improvements 1,850,000 1,833,394 1,833,394 - Parks/Trails/Open Space improvements 768,000 890,721 637,315 253,406 Sewer improvements - - - - Building improvement 55,000 5,000 24,432 (19,432) TOTAL EXPENDITURES 2,693,000 2,752,656 2,511,671 240,985 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (2,400,700) 1,374,811 (2,328,315) (3,703,126) OTHER FINANCING SOURCES: Transfers in 5,311,125 8,657,300 6,780,000 (1,877,300) Transfers out - (8,293,009) (8,293,009) - TOTAL OTHER FINANCING SOURCES (USES) 5,311,125 364,291 (1,513,009) (1,877,300) NET CHANGE IN FUND BALANCE 2,910,425 1,739,102 (3,841,324) (5,580,426) FUND BALANCE - BEGINNING OF YEAR 15,406,941 15,406,941 15,406,941 - FUND BALANCE - END OF YEAR $ 18,317,366 $ 17,146,043 $ 11,565,617 $ (5,580,426) 74 CITY OF RANCHO PALOS VERDES JUNE 30, 2013 NONMAJOR GOVERNMENTAL FUNDS Special Revenues Fund Descriptions Special Revenue Funds are used to account for taxes and other revenues set aside in accordance with law or administrative regulation for a specific purpose. Air Quality Management — to account for AB2766 fees received to fund programs to reduce air pollution from motor vehicles. El Prado — to account for taxes collected to maintain and service existing and proposed improvements to the common area of the El Prado neighborhood. Proposition A — to account for the City share of an additional one-half percent sales tax designated to fund certain public transportation orientated projects. Proposition C — to account for sales taxes received from the County and used to support public transit and related services. Measure R — to account for the half -cent sales tax approved by the Los Angeles County voters in November 2008 to meet transportation needs, including maintenance and improvement of arterial streets, traffic control, bikeway and pedestrian improvements, and public transit. Beautification — to account for monies received for the City's recycling program used for community improvement, grants and promotion of recycling. Waste Reduction — to account for AB939 fees received for state mandated waste reduction and recycling plans and programs. Public Safety Grants — to account for federal grant funds for local law enforcement supplemental services, AB3229 funds used for additional law enforcement services and public safety technology equipment. 1972 Act Landscaping and Lighting District (1972 Act) — to account for revenues and costs associated with the City's landscaping and lighting district. 1911 Act Lightinq District (1911 Act) — to account for revenue and costs associated with a lighting district transferred to the "city -side" landscape and lighting district from the County in 1995. Joint Powers Improvement Authority - Portuguese Bend — to account for maintenance and repairs of landslide abatement improvements in the Portuguese Bend Project area. 75 CITY OF RANCHO PALOS VERDES JUNE 30, 2013 NONMAJOR GOVERNMENTAL FUNDS Measure A — to account for the voter approved 1992 and 1996 Measure A funds and other state and county grants used for the acquisition of open space and park improvements. Abalone Cove Sewer Assessment District — to account for property assessments used to partially pay for operation and maintenance of the Abalone Cove sewer system. Dr. Allen and Charlotte Ginsbura Cultural Arts Building (Ginsbura Cultural Art Bldg) — to account for a private donation to be used for either construction of a building at the Upper Point Vicente Civic Center to be used for dancing and other cultural activities, or for the purchase of open space within the City for habitat conservation and passive recreational purposes. Donor Restricted Contributions — to account for donations received to construct or acquire recreational facilities within the City. Bikeways — to account for state funds that are used for the construction of bikeways and pedestrian facilities. Environmental Excise Tax — to account for taxes received in connection with new construction within the City. Quimby — to account for developer paid fees or the dedication of land for park and recreation purposes. Capital Proiects Fund Descriptions Capital Projects Funds are used to account for financial resources used for the acquisition or construction of major capital facilities. Affordable Housing In -Lieu — to account for developer fees paid in -lieu of providing affordable housing in conjunction with new development as required by the Affordable Housing Chapter of the City's Municipal Code (Chapter 17.11). Low -Moderate Income Housing — to account for low & moderate income housing assets that were transferred to the City after electing to retain the housing assets and function of the former redevelopment agency, which was dissolved on January 31, 2012. 76 CITY OF RANCHO PALOS VERDES JUNE 30, 2013 NONMAJOR GOVERNMENTAL FUNDS Permanent Fund Descriptions Permanent Funds are used to account for resources legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City's programs. Subregion One Maintenance — to account for monies used to maintain public improvements and habitat areas dedicated to the City upon completion of the Subregion One residential development project also known as Oceanfront Estates. As part of the development agreement, the City received a $750,000 non -expendable deposit. The interest earnings contribute to the maintenance of the public open space. Habitat Restoration — to account for fees paid by developers for conservation easements to be used exclusively for habitat restoration efforts on City owned property. Joint Powers Improvement Authority - Abalone Cove — to account for monies received as part of a July 1991 Reimbursement and Settlement Agreement with the County of Los Angeles. As a part of this Agreement, the Authority received a $1,000,000 non -expendable deposit. The interest earnings are used to pay for maintenance and repair of Abalone Cove landslide abatement improvements. 77 CITY OF RANCHO PALOS VERDES COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS June 30, 2013 Special Revenue Funds Air Quality Management El Prado Proposition A Proposition C ASSETS Cash and investments $ 138,992 $ 18,789 $ 601,852 $ 1,591,338 Receivables: Taxes - 201 - Interest 72 10 288 1,025 Notes - - - Other 13,234 - - Prepaid items - - - Advance to other funds - - - TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deferred revenue TOTAL LIABILITIES FUND BALANCES: Non -Spendable Endowment principal Reimbursement settlemeni agreement Prepaid items $ 152,298 $ 19,000 $ 602,140 $ 1,592,363 $ $ 291,149 291,149 Receivable from Successor Agenc) - - - Long teen receivable - - - Habitat restoration - - - Restricted 152,298 19,000 310,991 1,592,363 Corrnnitted - - - Assigned Unassigned TOTAL FUND BALANCES 152,298 19,000 310,991 1,592,363 TOTAL LIABILITIES AND FUND BALANCES $ 152,298 $ 19,000 $ 602,140 $ 1,592,363 Special Revenue Funds (Continued; Public Waste Safety Measure R Beautification Reduction Grants 1972 Act $ 805,227 $ 1,002,898 $ 362,399 $ 20,335 $ 64,175 5,753 422 672 206 65 134 22,822 $ 805,649 $ 1,003,570 $ 385,427 $ 20,400 $ 70,062 $ $ 439 $ 19,268 $ $ $ 439 19,268 805,649 366,159 20,400 70,062 1,003,131 805,649 1,003,131 366,159 20,400 70,062 $ 805,649 $ 1,003,570 $ 385,427 $ 20,400 $ 70,062 (Continued) CITY OF RANCHO PALOS VERDES COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS (CONTINUED) June 30, 2013 ASSETS Cash and investments Receivables: Taxes Interest Notes Other Prepaid items Advance to other funds TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deferred revenue TOTAL LIABILITIES FUND BALANCES: Non -Spendable Endowment principal Reimbursement settlemeni agreement Prepaid items Receivable from Successor Agenc) Long tern receivables Habitat restoration Restricted Corrnnitted Assigned Unassigned TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES 1911 Act Special Revenue Funds Joint Powers Improvement Authority Portuguese Bend $ 1,752,829 $ 12,003 1,011 $ 1,765,843 $ 56,237 $ 56,237 1,709,606 1,709,606 $ 1,765,843 $ 367,436 367,436 Measure A 15 241,750 $ 241,765 $ 44,479 Abalone Cove Sewer Assessment District $ 42,993 1,461 25 1,424 $ 1,424 366,012 197,653 241,750 439,403 $ 8,573 8,573 35,906 (197,638) 366,012 (197,638) 35,906 367,436 $ 241,765 $ 44,479 Special Revenue Funds (Continued; Dr. Allen and Charlotte Total Ginsburg Donor Special Cultural Restricted Environmental Revenue Arts Building Contributions Bikeways Excise Tax Quimby Funds $ 138,812 $ 843,219 $ 58,479 $ 448,602 $ 29,487 $ 8,287,862 - 19,418 78 229 31 249 18 4,550 2,544 280,350 $ 138,890 $ 843,448 $ 61,054 $ 448,851 $ 29,505 $ 8,592,180 $ $ $ - $ - $ $ 377,090 - 197,653 - 241,750 - 816,493 138,890 843,448 138,890 843,448 61,054 448,851 29,505 61,054 448,851 6,934,288 35,906 1,003,131 (197,638) 29,505 7,775,687 $ 138,890 $ 843,448 $ 61,054 $ 448,851 $ 29,505 $ 8,592,180 (Continued) CITY OF RANCHO PALOS VERDES COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS (CONTINUED) June 30, 2013 Capital Projects Funds Total City City Capital Affordable Low -Moderate Projects Housing In -Lieu Incorne Housing Funds ASSETS Cash and investments $ 501,091 $ 12,408 $ 513,499 Receivables: Taxes Interest 280 3 283 Notes - Other - Prepaid items 820 820 Advance to other funds - TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deferred revenue TOTAL LIABILITIES $ 502,191 $ 12,411 $ 514,602 $ - $ FUND BALANCES: Non -Spendable Endowment principal Reimbursement settlemeni agreement Prepaid items 820 Receivable from Successor Agenc) Long teen receivable Habitat restoration Restricted Corrnnitted Assigned 501,368 12,411 Unassigned TOTAL FUND BALANCES 502,188 12,411 TOTAL LIABILITIES AND FUND BALANCES $ 502,191 $ 12,411 $ 820 513,779 514,599 514,602 Permanent Funds Joint Powers Total Subregion Improvement Total Other One Habitat Authority Permanent Governmental Maintenance Restoration Abalone Cove Funds Funds $ 799,987 $ 217,840 $ 1,111,662 $ 2,129,489 $ 10,930,850 - - - 19,418 455 122 1 578 5,411 - 61,833 - 61,833 342,183 - - - 820 $ 800,442 $ 279,795 $ 1,111,663 $ 2,191,900 $ 11,298,682 $ 8,741 $ 65,154 $ 3,120 $ 77,015 $ 454,108 - - - 197,653 - - - 241,750 8,741 65,154 3,120 77,015 893,511 750,000 750,000 750,000 - 1,000,000 1,000,000 1,000,000 - - - 820 - 84,957 84,957 84,957 41,701 129,684 108,543 279,928 7,214,216 - - - 35,906 - - - 1,516,910 - - - (197,638) 791,701 214,641 1,108,543 2,114,885 10,405,171 $ 800,442 $ 279,795 $ 1,111,663 $ 2,191,900 $ 11,298,682 CITY OF RANCHO PALOS VERDES COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS For the year ended June 30, 2013 Special Revenue Funds Air Quality Management El Prado Proposition A Proposition C REVENUES: Taxes $ - $ 2,207 $ - $ Revenue from other agencies 50,806 - 662,802 551,623 Use of money and property 305 49 912 4,795 Donation - Other revenues 60,000 TOTAL REVENUES 51,111 2,256 723,714 556,418 EXPENDITURES: Current: Administration Public safety - Public works 30 583,144 Coimnunity development - Parks and recreation Capital Outlay Debt Service Debt service - principal Debt service - interest TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out TOTAL OTHER FINANCINC SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICIT) BEGINNING OF YEAR FUND BALANCES (DEFICIT) - END OF YEAR 30 583,144 51,111 2,226 140,570 556,418 - (305,866) - (305,866) 51,111 2,226 140,570 250,552 101,187 16,774 170,421 1,341,811 $ 152,298 $ 19,000 $ 310,991 $ 1,592,363 84 Special Revenue Funds (Continued) Public Waste Safety Measure R Beautification Reduction Grants 1972 Act $ - $ - $ $ - $ 260,328 411,838 - 58,829 100,000 - 1,885 3,263 902 212 414 147,999 216,581 - 413,723 151,262 276,312 100,212 260,742 20,614 157,114 - 69,682 20,614 157,114 - 69,682 413,723 130,648 119,198 100,212 191,060 (193,000) (22,000) (100,000) (199,077) (193,000) (22,000) (100,000) (199,077) 413,723 (62,352) 97,198 212 (8,017) 391,926 1,065,483 268,961 20,188 78,079 $ 805,649 $ 1,003,131 $ 366,159 $ 20,400 $ 70,062 (Continued) CITY OF RANCHO PALOS VERDES COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS For the year ended June 30, 2013 REVENUES: Taxes Revenue from other agencies Use of money and property Donation Other revenues TOTAL REVENUES EXPENDITURES: Current: Administration Public safety Public works Community development Parks and recreation Capital Outlay Debt Service Debt service - principal Debt service - interest TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out TOTAL OTHER FINANCINC SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCE (DEFICIT) BEGINNING OF YEAR FUND BALANCES (DEFICIT) - END OF YEAR Special Revenue Funds 1911 Act $ 524,670 $ 4,774 529,444 420,517 Joint Powers Iinproveinent Authority Portuguese Bend 49,712 Measure A 100,000 47 100,047 Abalone Cove Sewer Assessment District $ 48,416 121 1,241 49,778 63,843 420,517 49,712 - 63,843 108,927 (49,712) 100,047 (14,065) - 106,000 - 10,700 (69,705) (232,000) - 106,000 (232,000) 10,700 56,288 (131,953) (3,365) 309,724 (65,685) 39,271 $ 366,012 $ (197,638) $ 35,906 (69,705) 39,222 1,670,384 $ 1,709,606 86 Special Revenue Funds (Continued) Dr. Allen and Charlotte Total Ginsburg Donor Special Cultural Restricted Environmental Revenue Arts Building Contributions Bikeways Excise Tax Quimby Funds $ - $ $ - $ $ - $ 835,621 - 52,740 - 1,988,639 410 1,144 39 1,221 84 20,577 - 445,468 - - - 445,468 - 9,750 33,105 - 468,677 410 446,612 62,529 34,326 84 3,758,981 20,000 9,973 - - 1,374,629 - 20,000 20,000 9,973 - - 1,394,629 (19,590) 436,639 62,529 34,326 84 2,364,352 - - - 116,700 - (1,536) - (1,123,184) - (1,536) - (1,006,484) (19,590) 436,639 60,993 34,326 84 1,357,868 158,480 406,809 61 414,525 29,421 6,417,819 $ 138,890 $ 843,448 $ 61,054 $ 448,851 $ 29,505 $ 7,775,687 (Continued) CITY OF RANCHO PALOS VERDES COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS (CONTINUED) For the year ended June 30, 2013 Capital Projects Funds Total City City Capital Affordable Low -Moderate Projects Housing In -Lieu Incorne Housing Funds REVENUES: Taxes $ - $ - $ Revenue from other agencies Use of money and property 1,407 3 Donation Other revenues 3,102 12,408 TOTAL REVENUES 4,509 12,411 EXPENDITURES: Current: Administration Public safety Public works Community development Parks and recreation Capital Outlay Debt Service Debt service - principal Debt service - interest 1,410 15,510 16,920 3,510 3,510 TOTAL EXPENDITURES 3,510 3,510 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 999 12,411 13,410 OTHER FINANCING SOURCES (USES) Transfers in Transfers out TOTAL OTHER FINANCINC SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICIT) BEGINNING OF YEAR, AS RESTATEE FUND BALANCES (DEFICIT) - END OF YEAR 999 12,411 13,410 501,189 501,189 $ 502,188 $ 12,411 $ 514,599 Permanent Funds Joint Powers Total Subregion Improvement Total Other One Habitat Authority Permanent Governmental Maintenance Restoration Abalone Cove Funds Funds 2,260 - $ - $ - $ 835,621 184 - 184 1,988,823 658 7 2,925 24,912 - - 445,468 37,079 - 37,079 521,265 2,260 37,921 7 40,188 3,816,089 49,118 134,321 94,278 277,717 1,652,346 - - 3,510 - - 20,000 49,118 134,321 94,278 277,717 1,675,856 (46,858) (96,400) (94,271) (237,529) 2,140,233 65,000 90,000 - 155,000 271,700 - - - (1,123,184) 65,000 90,000 - 155,000 (851,484) 18,142 (6,400) (94,271) (82,529) 1,288,749 773,559 221,041 1,202,814 2,197,414 9,116,422 $ 791,701 $ 214,641 $ 1,108,543 $ 2,114,885 $ 10,405,171 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AIR QUALITY MANAGEMENT SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 50,000 $ 50,000 $ 50,806 $ 806 Use of money and property 490 490 305 (185) TOTAL REVENUES EXPENDITURES: Public works 50,490 50,490 51,111 621 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 50,490 50,490 51,111 621 OTHER FINANCING USES: Transfers out (60,000) (60,000) 60,000 NET CHANGE IN FUND BALANCE (9,510) (9,510) 51,111 60,621 FUND BALANCE - BEGINNING OF YEAR 101,187 101,187 101,187 FUND BALANCE - END OF YEAR $ 91,677 $ 91,677 $ 152,298 $ 60,621 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL EL PRADO SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ 1,900 $ 1,900 $ 2,207 $ 307 Use of money and property 80 80 49 (31) TOTAL REVENUES 1,980 1,980 2,256 276 EXPENDITURES: Public works 1,000 1,000 30 970 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 980 980 2,226 1,246 FUND BALANCE - BEGINNING OF YEAR 16,774 16,774 16,774 FUND BALANCE - END OF YEAR $ 17,754 $ 17,754 $ 19,000 $ 1,246 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PROPOSITION A SPECIAL REVENUE FUND For the year ended June 30, 2013 Budgeted Amounts Original Final Actual Variance with Final Budget Positive (Negative) REVENUES: Revenue from other agencies $ 586,200 $ 586,200 $ 662,802 $ 76,602 Other revenues 60,000 60,000 60,000 Use of money and property 490 490 912 422 TOTAL REVENUES 646,690 646,690 723,714 77,024 EXPENDITURES: Public works 595,200 583,200 583,144 56 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 51,490 63,490 140,570 77,080 FUND BALANCE - BEGINNING OF YEAR 170,421 170,421 170,421 FUND BALANCE - END OF YEAR $ 221,911 $ 233,911 $ 310,991 $ 77,080 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PROPOSITION C SPECIAL REVENUE FUND For the year ended June 30, 2013 Budgeted Amounts Original Final Actual Variance with Final Budget Positive (Negative) REVENUES: Revenue from other agencies $ 489,000 $ 489,000 $ 551,623 $ 62,623 Use of money and property 10 10 4,795 4,785 TOTAL REVENUES 489,010 489,010 556,418 67,408 OTHER FINANCING USES: Transfers out (490.000) (1,796.927) (305,866) 1,491,061 NET CHANGE IN FUND BALANCE (990) (1,307.917) 250,552 1,558.469 FUND BALANCE - BEGINNING OF YEAR 1,341.811 1.341.811 1,341.811 FUND BALANCE - END OF YEAR $ 1,340.821 $ 33,894 $ 1,592.363 $ 1,558.469 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MEASURE R SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 364,500 $ 364,500 $ 411,838 8 47,338 Use of money and property 10 10 1,885 1,875 TOTAL REVENUES 364,510 364,510 413,723 49,213 OTHER FINANCING USES: Transfers out (200,000) (564,000) 564,000 NET CHANGE IN FUND BALANCE 164,510 (199,490) 413,723 613,213 FUND BALANCE - BEGINNING OF YEAR 391,926 391,926 391,926 FUND BALANCE - END OF YEAR $ 556,436 $ 192,436 $ 805,649 $ 613,213 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL BEAUTIFICATION SPECIAL REVENUE FUND For the year ended June 30, 2013 REVENUES: Other revenues Use of money and property TOTAL REVENUES EXPENDITURES: Public works EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES Budgeted Amounts Original Final Actual Variance with Final Budget Positive (Negative) $ 280,000 $ 132,000 $ 147,999 $ 15,999 2,060 2,060 3,263 1,203 282,060 134,060 151,262 17202 95,600 20,100 20,614 (514) 186,460 113,960 13 0, 64 8 16,688 OTHER FINANCING USES: Transfers out (443,000) (666,690) (193,000) 473,690 NET CHANGE IN FUND BALANCE (256,540) (552,730) (62,352) 490,378 FUND BALANCE - BEGINNING OF YEAR 1,065,483 1,065,483 1,065,483 FUND BALANCE - END OF YEAR $ 808,943 $ 512,753 $ 1,003,131 $ 490,378 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL WASTE REDUCTION SPECIAL REVENUE FUND For the year ended June 30, 2013 Budgeted Amounts Original Final Actual Variance with Final Budget Positive (Negative) REVENUES: Revenue from other agencies $ 47,500 $ 47,500 $ 58,839 $ 11,329 Other revenues 158,800 158,800 216,581 57,781 Use of money and property 1,040 1,040 902 (138) TOTAL REVENUES 207,340 207,340 276,312 68,972 EXPENDITURES: Public works EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 183,050 183,050 157,114 25,936 24,290 24,290 119,198 94,908 OTHER FINANCING USES: Transfers out (52,000) (52,000) (22,000) 30,000 NET CHANGE IN FUND BALANCE (27,710) (27,710) 97,198 124,908 FUND BALANCE - BEGINNING OF YEAR 268,961 268,961 268,961 FUND BALANCE - END OF YEAR $ 241,251 $ 241,251 $ 366,159 $ 124,908 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PUBLIC SAFETY GRANTS SPECIAL REVENUE FUND For the year ended June 30, 2013 Budgeted Amounts Original Final Actual Variance with Final Budget Positive (Negative) REVENUES: Revenue from other agencies $ 100,000 $ 100,000 $ 100,000 $ Use of money and property - 212 212 TOTAL REVENUES 100,000 100,000 100,212 212 EXPENDITURES: Public safety EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 19,600 19,600 100,000 80,400 100,212 19,812 OTHER FINANCING USES: Transfers out (100,000) (100,000) (100,000) NET CHANGE IN FUND BALANCE (19,600) 212 19,812 FUND BALANCE - BEGINNING OF YEAR 20,188 20,188 20,188 FUND BALANCE - END OF YEAR $ 20,188 $ 588 $ 20,400 $ 19,812 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL 1972 ACT SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ 258,000 $ 258,000 $ 260,328 $ 2,328 Use of money and property 390 390 414 24 TOTAL REVENUES 258,390 258,390 260,742 2,352 EXPENDITURES: Public works 73,000 73,000 69,682 3,318 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 185,390 185,390 191,060 5,670 OTHER FINANCING USES: Transfers out (200,000) (200,000) (199,077) 923 NET CHANGE IN FUND BALANCE (14,610) (14,610) (8,017) 6,593 FUND BALANCE - BEGINNING OF YEAR 78,079 78,079 78,079 FUND BALANCE - END OF YEAR $ 63,469 $ 63,469 $ 70,062 $ 6,593 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL 1911 ACT SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ 440,000 $ 440,000 $ 524,670 $ 84,670 Use of money and property 7,300 7,300 4,774 (2,526) TOTAL REVENUES 447,300 447,300 529,444 82,144 EXPENDITURES: Public works EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 445,900 445,900 420,517 25,383 1,400 1,400 108,927 107,527 OTHER FINANCING USES: Transfers out (113,000) (203,000) (69,705) 133,295 NET CHANGE IN FUND BALANCE (111,600) (201,600) 39,222 240,822 FUND BALANCE - BEGINNING OF YEAR 1,670,384 1,670,384 1,670,384 FUND BALANCE - END OF YEAR $ 1,558,784 $ 1,468,784 $ 1,709,606 $ 240,822 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL JOINT POWERS IMPROVEMENT AUTHORITY PORTUGUSE BEND SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Use of money and property $ 1,100 $ 1,100 $ $ (1,100) EXPENDITURES: Public works 143,400 118,400 49,712 68,688 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (142,300) (117,300) (49,712) 67,588 OTHER FINANCING SOURCES: Transfers in 106,000 106,000 106,000 NET CHANGE IN FUND BALANCE (36,300) (11,300) 56,288 67,588 FUND BALANCE - BEGINNING OF YEAR 309,724 309,724 309,724 FUND BALANCE - END OF YEAR $ 273,424 $ 298,424 $ 366,012 $ 67,588 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MEASURE A SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 100,000 $ 250,000 $ 100,000 $ (150,000) Use of money and property 170 170 47 (123) TOTAL REVENUES 100,170 250,170 100,047 (150,123) OTHER FINANCING USES: Transfers out (100,000) (250,000) (232,000) 18,000 NET CHANGE IN FUND BALANCE 170 170 (131,953) (132,123) FUND BALANCE - BEGINNING OF YEAR (65,685) (65,685) (65,685) FUND BALANCE (DEFICIT) - END OF YEAR $ (65,515) $ (65,515) $ (197,638) $ (132,123) CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ABALONE COVE SEWER ASSESSMENT DISTRICT SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ 46,600 $ 46,600 $ 48,416 $ 1,816 Other revenues - - 1,241 1,241 Use of money and property 100 100 121 21 TOTAL REVENUES 46,700 46,700 49,778 3,078 EXPENDITURES: Public works 64,000 69,900 63,843 6,057 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (17,300) (23,200) (14,065) 9,135 OTHER FINANCING SOURCES: Transfers in 10,700 10,700 10,700 - NET CHANGE IN FUND BALANCE (6,600) (12,500) (3,365) 9,135 FUND BALANCE - BEGINNING OF YEAR 39,271 39,271 39,271 - FUND BALANCE - END OF YEAR $ 32,671 $ 26,771 $ 35,906 $ 9,135 102 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL DR. ALLEN AND CHARLOTTE GINSBURG CULTURAL ARTS BUILDING SPECIAL REVENUE FUND For the year ended June 30, 2013 REVENUES: Use of money and property TOTAL REVENUES EXPENDITURES: Park and recreation EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 790 $ 790 $ 410 $ (380) 790 790 410 (380) - 20,000 20,000 790 (19,210) (19,590) (380) 158,480 158,480 158,480 - $ 159,270 $ 139,270 $ 138,890 $ (380) 103 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL DONOR RESTRICTED CONTRIBUTIONS SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Donation $ $ - $ 445,468 $ 445,468 Use of money and property 2,040 2,040 1,144 (896) TOTAL REVENUES 2,040 2,040 446,612 444,572 EXPENDITURES: Public works 9,973 9,973 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR 2,040 (7,933) 436,639 444,572 406,809 406,809 406,809 $ 408,849 $ 398,876 $ 843,448 $ 444,572 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL BIKEWAYS SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 25,000 $ 51,204 $ 53,740 $ 1,536 Other revenues 9,750 9,750 Use of money and property - 39 39 TOTAL REVENUES 25,000 60,954 62,529 1,575 OTHER FINANCING USES: Transfers out (25,051) (61,015) (1,536) 59,479 NET CHANGE IN FUND BALANCE (51) (61) 60,993 61,054 FUND BALANCE - BEGINNING OF YEAR 61 61 61 FUND BALANCE - END OF YEAR $ 10 $ $ 61,054 $ 61,054 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ENVIRONMENTAL EXCISE TAX SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Other revenues $ $ - $ 33,105 $ 33,105 Use of money and property 1,770 1,770 1,221 (549) TOTAL REVENUES 1,770 1,770 34,326 32,556 EXPENDITURES: Public works 61,800 61,800 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 1,770 (60,030) 34,326 94,356 OTHER FINANCING USES: Transfers out (50,000) (50,000) 50,000 NET CHANGE IN FUND BALANCE (48,230) (110,030) 34,326 144,356 FUND BALANCE - BEGINNING OF YEAR 414,525 414,525 414,525 FUND BALANCE - END OF YEAR $ 366,295 $ 304,495 $ 448,851 $ 144,356 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL QUIMBY SPECIAL REVENUE FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Other revenues Use of money and property 84 84 TOTAL REVENUES 84 84 EXPENDITURES: Park and recreation 29,000 29,000 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (29,000) 84 29,084 FUND BALANCE - BEGINNING OF YEAR 29,421 29,421 29,421 FUND BALANCE - END OF YEAR $ 29,421 $ 421 $ 29,505 $ 29,084 CITY OF RANCHO PALOS VERDES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AFFORDABLE HOUSING IN -LIEU CAPITAL PROJECTS FUND For the year ended June 30, 2013 REVENUES: Other revenues Use of money and property TOTAL REVENUES EXPENDITURES: Community development EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ $ $ 3,102 $ 3,102 4,160 4,160 1,407 (2,753) 4,160 4,160 4,509 349 3,510 3,510 4,160 650 999 349 501,189 501,189 501,189 $ 505,349 $ 501,839 $ 502,188 $ 349 CITY OF RANCHO PALOS VERDES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LOW -MODERATE INCOME HOUSING CAPITAL PROJECTS FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Other revenues $ $ $ 12,408 $ 12,408 Use of money and property 3 3 TOTAL REVENUES EXPENDITURES: Community development EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR 12,411 12,411 12,411 12,411 $ $ $ 12,411 $ 12,411 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SUBREGION ONE MAINTENANCE PERMANENT FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Use of money and property $ 3,800 $ 3,800 $ 2,260 $ (1,540) EXPENDITURES: Public works 70,000 70,000 49,118 20,882 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (66,200) (66,200) (46,858) 19,342 OTHER FINANCING SOURCES: Transfers in 65,000 65,000 65,000 - NET CHANGE IN FUND BALANCE (1,200) (1,200) 18,142 19,342 FUND BALANCE - BEGINNING OF YEAR 773,559 773,559 773,559 - FUND BALANCE - END OF YEAR $ 772,359 $ 772,359 $ 791,701 $ 19,342 110 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HABITAT RESTORATION PERMANENT FUND For the year ended June 30, 2013 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ $ $ 184 $ 184 Other revenues - 37,079 37,079 Use of money and property 1,130 1,130 658 (472) TOTAL REVENUES 1,130 1,130 37,921 36,791 EXPENDITURES: Public works 131,000 134,321 134,321 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (129,870) (133,191) (96,400) 36,791 OTHER FINANCING SOURCES: Transfers in 90,000 90,000 90,000 NET CHANGE IN FUND BALANCE (39,870) (43,191) (6,400) 36,791 FUND BALANCE - BEGINNING OF YEAR 221,041 221,041 221,041 FUND BALANCE - END OF YEAR $ 181,171 $ 177,850 $ 214,641 $ 36,791 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL JOINT POWERS IMPROVEMENT AUTHORITY ABALONE COVE PERMANENT FUND For the year ended June 30, 2013 REVENUES: Use of money and property EXPENDITURES: Public works EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 5,900 $ 5,900 $ 7 $ (5,893) 49,900 109,900 94,278 15,622 (44,000) (104,000) (94,271) 9,729 1,202,814 1,202, 814 1,202,814 $ 1,158,814 $ 1,098,814 $ 1,108,543 $ 9,729 CITY OF RANCHO PALOS VERDES JUNE 30, 2013 INTERNAL SERVICE FUNDS DESCRIPTIONS The Internal Service Funds are used to finance and account for goods and services provided by one City department to other City departments on a cost - reimbursement basis, including depreciation. Equipment Replacement — to account for purchases, replacement and maintenance of certain equipment items on behalf of all City departments. Building Replacement — to account for the accumulation of funds transferred from the General Fund for replacement of certain buildings on behalf of the City. Employee Benefits — to account for employee benefit costs for all employees charged to various City departments. 113 CITY OF RANCHO PALOS VERDES COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS June 30, 2013 ASSETS Equipment Building Employee Replacement Replacement Benefits Totals CURRENT ASSETS: Cash and investments $ 2,581,381 $ 944,753 $ 14,877 $ 3,541,011 Receivables: Interest 1,525 530 58 2,113 Other - - 3,890 3,890 Prepaid items 53,557 - 154,519 208,076 TOTAL CURRENT ASSETS 2,636,463 945,283 173,344 3,755,090 NONCURRENT ASSETS: Capital assets: Property and equipment 1,590,378 - 1,590,378 Accumulated depreciation (1,340,703) - (1,340,703) TOTAL NONCURRENT ASSETS 249,675 - - 249,675 TOTAL ASSETS 2,886,138 945,283 173,344 4,004,765 LIABILITIES CURRENT LIABILITIES: Accounts payable and accrued liabilities 48,615 4,678 61,973 115,266 Due to other fund - - TOTAL CURRENT LIABILITIES 48,615 4,678 61,973 115,266 NET POSITION Net investment in capital assets 249,675 - 249,675 Unrestricted 2,587,848 940,605 111,371 3,639,824 TOTAL NET POSITION $ 2,837,523 $ 940,605 $ 111,371 $ 3,889,499 114 CITY OF RANCHO PALOS VERDES COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - INTERNAL SERVICE FUNDS For the year ended June 30, 2013 Equipment Building Employee Replacement Replacement Benefits Totals OPERATING REVENUES: Charges for services $ 568,604 $ - $ 1,867,575 $ 2,436,179 OPERATING EXPENSES: Personnel services - 1,847,520 1,847,520 Materials and supplies 219,840 5,011 224,851 Maintenance 234,073 - 234,073 Depreciation 123,880 - 123,880 TOTAL OPERATING EXPENSES 577,793 5,011 1,847,520 2,430,324 OPERATING INCOME / (LOSS) (9,189) (5,011) 20,055 5,855 NONOPERATING REVENUES: Other revenues - Investment income 7,773 2,609 573 10,955 TOTAL NONOPERATING REVENUES 7,773 2,609 573 10,955 INCOME LOSS BEFORE TRANSFERS (1,416) (2,402) 20,628 16,810 TRANSFER OUT - CHANGE IN NET POSITION (1,416) (2,402) 20,628 16,810 TOTAL NET POSITION - BEGINNING OF YEAR 2,838,939 943,007 90,743 3,872,689 TOTAL NET POSITION - END OF YEAR $ 2,837,523 $ 940,605 $ 111,371 $ 3,889,499 115 CITY OF RANCHO PALOS VERDES COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the year ended June 30, 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from interfiind services provided Payments to suppliers Payments to employees NET CASH PROVIDED / (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Receipts from other revenues Transfer to other funds NET CASH USED BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Interest received on investments NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: Operating income / (loss) Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation Changes in operating assets and liabilities: Increase / decrease in prepaid items Increase / decrease in accrued liabilities Increase / decrease in due to other fund NET CASH USED BY OPERATING ACTIVITIES Equipment Replacement Building Replacement $ 568,604 $ (462,245) 106,359 (122,533) Employee Benefits Totals - $ 1,867,575 $ 2,436,179 (331) - (462,576) (1,850,447) (1,850,447) (331) 11,999 2,680 (4,175) 2,349 2,585,556 942,404 $ 2,581,381 $ 944,753 $ 17,128 123,156 (122,533) (2,251) 12,428 14,877 13,051 3,527,960 14,877 $ 3,541,011 $ (9,189) $ (5,011) $ 20,055 $ 5,855 123,880 123,880 (22,215) 105,212 82,997 13,883 4,680 10,375 28,938 - (118,514) (118,514) $ 106,359 $ (331) $ 17,128 $ 123,156 STATISTICAL SECTION 117 STATISTICAL SECTION This part of the City of Rancho Palos Verdes' comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue source, property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the city's ability to issue additional debt in the future. The City does not have general bond indebtedness or debt issued with pledged revenue. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information These schedules contain services and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 119 127 131 133 136 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 118 City of Rancho Palos Verdes Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Governmental activities Net investment in capital assets $ 92,499 $ 94,023 $ 109,991 $ 109,746 $ 109,376 $ 107,867 $ 115,331 $ 115,145 $ 114,488 $ 113,284 Restricted 11,586 12,075 12,417 12,163 1,000 1,000 1,000 1,750 1,750 1,835 Unrestricted 14,271 15,659 16,024 17,823 30,471 31,277 31,855 39,066 67,112 46,687 Total governmental activities net position $ 118,356 $ 121,757 $ 138,432 $ 139,732 $ 140,847 $ 140,144 $ 148,186 $ 155,961 $ 183,351 $ 161,806 Business -type activities Net investment in capital assets $ - $ - $ 1,311 $ 2,158 $ 5,599 $ 12,477 $ 12,458 $ 12,753 $ 13,356 $ 18,319 Restricted - - - - - - Unrestricted - 2,000 2,799 5,258 7,740 2,108 2,825 3,365 3,532 9,727 Total business -type activities net position $ - $ 2,000 $ 4,110 $ 7,416 $ 13,339 $ 14,585 $ 15,283 $ 16,118 $ 16,888 $ 28,046 Primary government Net investment in capital assets $ 92,499 $ 94,023 $ 111,302 $ 111,904 $ 114,975 $ 120,344 $ 127,789 $ 127,898 $ 127,845 $ 131,603 Restricted 11,586 12,075 12,417 12,163 1,000 1,000 1,000 1,750 1,750 1,835 Unrestricted 14,271 17,659 18,823 23,081 38,211 33,385 34,680 42,431 70,644 56,414 Total primary government net position $ 118,356 $ 123,757 $ 142,542 $ 147,148 $ 154,186 $ 154,729 $ 163,469 $ 172,079 $ 200,238 $ 189,852 119 City of Rancho Palos Verdes Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Expenses Governmental activities: Administration $ 3,499 $ 4,055 $ 4,350 $ 4,953 $ 4,724 $ 6,357 $ 7,824 $ 5,997 $ 5,906 $ 5,534 Public safety 3,024 3,079 3,437 3,751 4,044 4,233 4,242 4,335 4,178 4,348 Public works 7,462 9,488 9,290 9,969 9,026 10,555 13,633 10,389 11,202 10,874 Parks and recreation 948 1,065 1,659 1,439 1,396 1,605 1,826 1,391 1,490 1,696 Community development 2,296 2,223 2,060 2,631 2,441 2,697 2,550 2,622 2,432 2,526 Non -departmental - - - - - - 320 - - - lnterest on long-term debt 273 272 270 271 270 268 265 260 109 - Total governmental activities expenses 17,502 20,182 21,066 23,014 21,901 25,715 30,660 24,994 25,318 24,978 Business -type activities: Water Quality Flood Protection - - 47 271 301 437 580 489 560 594 Total primary government expenses $ 17,502 $ 20,182 $ 21,113 $ 23,285 $ 22,202 $ 26,152 $ 31,240 $ 25,483 $ 25,878 $ 25,572 Program Revenues Governmental activities: Charges for services: Administration $ 69 $ 62 $ 35 $ 29 $ 538 $ 555 $ 681 $ 654 $ 747 $ 779 Public safety 165 163 224 332 316 267 229 261 194 150 Public works 217 131 37 185 1,002 422 1,356 622 684 543 Parks and recreation 6 41 45 51 483 483 896 457 503 476 Community development 1,363 1,188 1,319 1,599 1,760 1,643 1,764 1,714 1,644 1,854 Operating grants and contributions 2,836 2,728 3,894 4,200 3,570 2,963 6,633 3,689 3,628 4,133 Capital grants and contributions 37 4,524 17,299 317 1,472 642 7,179 5 139 139 Total governmental activities program revenues 4,693 8,837 22,853 6,713 9,141 6,975 18,738 7,402 7,538 8,074 Business -type activities: Charges for services: Water Quality Flood Protection - - - 1,188 1,222 1,578 1,264 1,312 1,319 1,313 Operating grants and contributions - - - - - - - - 2,137 Capital grants and contributions - - - - - - - - - Total business -type activities program revenues - - - 1,188 1,222 1,578 1,264 1,312 1,319 3,450 Total primary government program revenues $ 4,693 $ 8,837 $ 22,853 $ 7,901 $ 10,363 $ 8,553 $ 20,002 $ 8,714 $ 8,857 $ 11,524 Net (expense)/revenue Governmental activities $ (12,809) $ (11,345) $ 1,787 $ (16,301) $ (12,760) $ (18,740) $ (11,922) $ (17,592) $ (17,780) $ (16,904) Business -type activities - - (47) 917 921 1,141 684 823 759 2,856 Total primary government net expense $ (12,809) $ (11,345) $ 1,740 $ (15,384) $ (11,839) $ (17,599) $ (11,238) $ (16,769) $ (17,022) $ (14,048) 120 City of Rancho Palos Verdes Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes $ 5,706 $ 5,840 $ 9,621 $ 10,235 $ 10,935 $ 11,462 $ 11,431 $ 11,854 $ 11,480 $ 11,284 Transient occupancy tax - 28 31 32 26 85 1,955 2,640 3,349 3,790 Sales taxes 1,205 1,276 1,214 1,381 1,056 1,053 1,246 1,548 1,449 1,588 Franchise taxes 1,275 1,307 1,454 1,512 1,599 1,709 1,711 1,825 1,881 1,907 Utility user taxes 1,851 1,901 2,191 2,271 2,329 2,267 2,395 2,407 2,333 2,481 Other taxes 2,867 4,545 727 331 794 605 712 814 674 778 Investment income 331 594 997 1,615 1,555 631 207 318 604 184 Other 2,481 1,255 762 2,101 300 225 307 271 52 929 Transfers - (2,000) (2,109) (2,017) (4,719) - - - - (8,293) Extraordinary item - - - - - - - 23,348 (19,289) Total governmental activities 15,716 14,746 14,888 17,461 13,875 18,037 19,964 21,677 45,170 (4,641) Business -type activities: Investment income - - 48 51 283 105 14 13 11 10 User Fees - - - - - - - - - Other - - - 320 - - - - - - Transfers - 2,000 2,109 2,017 4,719 - - - - 8,293 Total business -type activities - 2,000 2,157 2,388 5,002 105 14 13 11 8,303 Total primary government $ 15,716 $ 16,746 $ 17,045 $ 19,849 $ 18,877 $ 18,142 $ 19,978 $ 21,690 $ 45,181 $ 3,662 Change in Net Position Governmental activities $ 2,907 $ 3,401 $ 16,675 $ 1,160 $ 1,115 $ (703) $ 8,042 $ 4,085 $ 27,390 $ (21,545) Business -type activities - 2,000 2,110 3,305 5,923 1,246 698 836 770 11,159 Total primary government net expense $ 2,907 $ 5,401 $ 18,785 $ 4,465 $ 7,038 $ 543 $ 8,740 $ 4,921 $ 28,159 $ (10,386) 121 Fiscal Property Year Tax 2004 $ 5,706 2005 5,840 2006 9,621 2007 10,235 2008 10,935 2009 11,462 2010 11,431 2011 11,854 2012 11,480 2013 11,284 City of Rancho Palos Verdes Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Transient Utility Occupancy Sales Franchise Users Other Tax Tax Tax Tax Taxes $ $ 1,205 $ 1,275 $ 1,851 $ 2,867 28 1,276 1,307 1,901 4,545 31 1,214 1,454 2,191 727 32 1,381 1,512 2,271 331 26 1,056 1,599 2,329 794 85 1,053 1,709 2,267 605 1,955 1,246 1,711 2,395 712 2,640 1,548 1,825 2,407 814 3,349 1,449 1,881 2,333 674 3,790 1,588 1,907 2,481 778 1: Most of the Motor Vehicle In Lieu Tax is received as Property Tax beginning in 2006. 122 1 Total $ 12,904 14,897 15,238 15,762 16,739 17,181 19,450 21,088 21,166 21,828 City of Rancho Palos Verdes Fund Balances of Governmental Funds Last Seven Fiscal Years - Before GASB 54 (modified accrual basis of accounting) (amounts expressed in thousands) 2004 2005 2006 2007 2008 2009 2010 General Fund Reserved $ 6,639 $ 6,021 $ 6,165 $ 6,586 $ 6,645 $ 6,314 $ 7,166 Designated - 675 876 786 1,278 1,333 1,462 Unreserved, Undesignated 14,066 14,209 13,649 14,376 12,171 10,440 10,745 Total General Fund $ 20,705 $ 20,905 $ 20,690 $ 21,748 $ 20,094 $ 18,087 $ 19,373 All other Governmental Funds Reserved $ 7,229 $ 3,147 $ 3,315 $ 2,396 $ 2,724 $ 3,672 $ 6,361 Designated Special Revenue Funds - 615 744 1,849 1,896 411 85 Capital Projects Funds - 2,416 2,799 3,158 4,347 6,442 7,494 Permanent Fund - 75 65 - - Debt Service Fund - - - - - Unreserved, Undesignated, reported in: Special Revenue Funds 5,040 5,902 6,615 6,426 7,494 7,910 6,058 Capital Projects Funds 2,430 3,320 2,077 1,869 1,908 3,373 1,240 Permanent Fund 418 426 329 325 371 362 333 Debt Service Fund (12,070) (12,793) (13,741) (14,873) (15,990) (16,823) (17,797) Total all other Governmental Funds $ 3,047 $ 3,033 $ 2,213 $ 1,215 $ 2,750 $ 5,347 $ 3,774 City of Rancho Palos Verdes Fund Balances of Governmental Funds Last Three Fiscal Years - After GASB 54 (modified accrual basis of accounting) (amounts expressed in thousands) 2011 2012 2013 General Fund Non -Spendable $ 7,515 $ 7,493 $ 138 Restricted - - - Committed - - - Assigned - - - Unassighed 11,385 12,464 14,370 Total General Fund $ 18,900 $ 19,957 $ 14,508 All other Governmental Funds Non -Spendable Special Revenue Funds $ 4,818 $ 3,066 $ - Debt Service Fund 573 - - Capital Projects Funds - - - Permanent Fund 1,750 1,750 1,835 Restricted Special Revenue Funds 7,952 8,187 7,849 Capital Projects Funds 313 - - PennanentFund 319 226 280 Committed Special Revenue Funds - - 36 Capital Projects Funds - - - Permanent Fund - - - Assigned Special Revenue Funds - - - Capital Projects Funds 11,650 15,407 13,084 Permanent Fund - - - Unassigned Special Revenue Funds (126) (108) (198) Debt Service Fund (19,687) - - Capital Projects Funds - - - Permanent Fund - - - Total all other Governmental Funds $ 7,562 $ 28,528 $ 22,885 124 City of Rancho Palos Verdes Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual basis of Accounting) (Amounts expressed in thousands) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Revenues Taxes $ 12.081 $ 13.573 $ 15.238 $ 16.453 $ 17.062 $ 17.573 $ 19.844 $ 21.419 $ 21.867 $ 22.543 Licenses and permits 1,310 1,326 1,440 1,763 1,914 1,755 1,954 1,933 1,806 2,027 Fines and forfeitures 102 108 171 237 260 214 179 210 159 117 Use of money and property 733 1,306 7,038 3,480 2,108 1,240 1,601 1,560 1,350 1,383 Charges for services 379 152 49 61 60 163 81 73 149 141 Donation - - - - - 445 Revenues from other agencies 3.453 7.848 15.511 4.118 4.647 3.575 10.180 3.162 3.421 3.395 Other Revenues 2,363 1,038 155 201 1,563 467 4,806 229 259 741 Total Revenues 20.421 25.351 39.602 26.313 27.614 24.987 38.645 28.586 29.011 30.791 Expenditures Administration 3,328 3,852 4,041 4,607 4,411 4,915 5,720 5,503 5,726 5,401 Public Safety 3.039 3.092 3.438 3.751 4.044 4.233 4.242 4.335 4.178 4.348 Public Works 4,801 6,302 5,277 6,864 5,768 7,075 6,896 7,875 7,616 7,240 Parks and Recreation 946 965 1.593 1.319 1.281 1.354 1.702 1.257 1.479 1.557 Community Development 2,362 2,302 2,361 2,681 2,496 2,723 2,604 2,784 2,484 2,591 Non -Departmental - - - - - - 320 Pass Through to other agencies 156 188 200 152 169 187 - Capital Outlay 368 4.912 20.202 3.124 3.112 2.459 14.567 2.557 3.155 2.721 Debt Service Principal 184 200 248 316 350 419 423 464 - Interest 805 905 1,150 1,390 1,370 1,101 886 887 498 - Total Expenditures 15.805 22.702 38.462 24.136 22.967 24.397 37.356 25.621 25.599 23.857 Excess of Revenues over (under) Expenditures 4.616 2.649 1.140 2.177 4.647 590 1.289 2.965 3.412 6.934 Other Financing Sources (uses) Sales of capital assets - - - - - 350 Transfers in 1.844 6.180 4.989 4.489 3.158 5.815 4.616 8.944 8.226 7.954 Transfers out (1,844) (8,180) (7,247) (6,606) (7,924) (5,815) (6,192) (8,944) (7,856) (16,247) Bond Proceeds - - - - - Advances to the Redevelopment Agency - - - - Total Other Financing Sources (uses) - (2.000) (2.258) (2.117) (4.766) - (1.576) 350 371 (8.293) Extraordinary Gain (Loss) - - - - - - - - 18.240 (6.743) Net change in Fund Balances $ 4.616 $ 649 $ (1.118) $ 60 $ (119) $ 590 $ (287) $ 3.315 $ 22.023 $ (8.102) Cost of Assets Capitalized 379 4.623 19.465 2.800 2.764 1,895 10,866 3,180 2,865 2,022 Debt Services as a percentage of Non -Capital Expenditures 5.2% 6.0% 7.1% 7.7% 8.3% 6.4% 4.9% 5.8% 4.2% 0.0% 125 Fiscal Property Year Tax 2004 $ 5,706 2005 8,494 2006 9,576 2007 10,385 2008 10,898 2009 11,462 2010 11,431 2011 11,854 2012 11,480 2013 11,284 City of Rancho Palos Verdes General Governmental Tax Revenues By Source Last Ten Fiscal Years (Modified Accrual Basis of Accounting) (Amounts expressed in thousands) Transient Utility Occupancy Sales Franchise Users Other Tax Tax Tax Tax Taxes Total $ - $ 1,205 $ 1,275 $ 1,851 $ 2,044 $ 12,081 28 1,009 1,307 1,901 834 13,573 31 995 1,299 2,191 1,146 15,238 32 1,020 1,511 2,272 1,233 16,453 26 1,077 1,599 2,329 1,133 17,062 85 1,060 1,709 2,267 990 17,573 1,955 1,158 1,711 2,395 1,194 19,844 2,640 1,518 1,825 2,407 1,175 21,419 3,349 1,452 1,881 7,333 1,372 21,867 3,790 1,589 1,907 2,481 1,492 77,543 Source: City General Ledger 1: Most of the Motor Vehicle In Lieu Fees are received as property tax beginning in 2006. 126 City of Rancho Palos Verdes Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (In thousands of dollars) City Estimated Assessed Fiscal Less Taxable Direct Actual Factor of Value as a Year Residential Commercial Industrial Other Unsecured Tax -Exempt Assessed Tax Taxable Taxable Percentage of End Property Property Property Property Property Property Value Rate (1) Value (2) Assessed Value (3) Actual Value 2004 $ 6,137,760 $ 74,753 $ 1,660 $ 179,867 $ 22,889 $ 73,701 $ 6,416,930 0.063728 $ 8,539,971 1.33085 75.14% 2005 * 6,530,448 76,445 1,691 317,463 22,222 218,193 6,730,076 0.063728 8,956,722 1.33085 75.14% 2006 * 7,034,406 88,691 3,086 365,175 21,561 218,916 7,294,003 0.063728 9,707,224 1.33085 75.14% 2007 7,548,956 111,338 3,148 513,876 20,378 226,598 7,971,098 0.063728 10,608,336 1.33085 75.14% 2008 7,919,953 170,149 3,211 453,446 26,546 151,225 8,422,080 0.063728 11,208,525 1.33085 75.14% 2009 8,235,780 270,956 3,275 491,235 46,858 154,969 8,893,135 0.063728 11,835,429 1.33085 75.14% 2010 8,333,042 263,157 3,341 598,539 49,628 236,925 9,010,782 0.063728 9,515,593 1.05602 94.69% 2011 8,362,052 396,195 3,333 570,551 45,258 158,388 9,219,001 0.063728 9,067,313 0.98355 101.67% 2012 8,596,777 390,497 3,358 564,763 70,284 157,307 9,468,372 0.063728 10,683,820 1.12837 88.62% 2013 8,843,139 402,533 3,425 581,160 48,147 174,167 9,704,237 0.063728 11,390,239 1.17374 85.20% Source: 2010-2013 & 2006-07 County Assessor data, MuniServices, LLC *Assessed values have been revised from prior CAFR publications to comply with GASB No. 44 standards and on-going consistency in reporting methodologies. (1) Total Direct Tax Rate is represented by TRA 001-224. This percentage is City's shared portion within 1% of County's general levy. (2) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. Based on these calculations a factor was extrapolated and applied to current assessed values. (3) The Factor used to calculate Estimated Actual Value was calculated for 2006-07 and applied to prior years for historical purposes. 127 City of Rancho Palos Verdes Property Tax Rates - Direct and Overlapping Governments Last Ten Fiscal Years 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 CITY DIRECT RATE 0.063728 0.063728 0.063728 0.063728 0.063728 0.063728 0.063728 0.063728 0.063728 0.063728 All other direct rates: LA COUNTY GENERAL 0.230926 0.230926 0.230926 0.230926 0.230926 0.230926 0.230926 0.230926 0.230926 0.230926 LA COUNTY ACCUM CAP OUTLAY 0.000112 0.000112 0.000112 0.000112 0.000112 0.000112 0.000112 0.000112 0.000112 0.000112 CONSOL. FIRE PRO.DIST OF LA CO. 0.172592 0.172592 0.172592 0.172592 0.172592 0.172592 0.172592 0.172592 0.172592 0.172592 LA CO. FIRE-FFW 0.006814 0.006814 0.006814 0.006814 0.006814 0.006814 0.006814 0.006814 0.006814 0.006814 LA CO.FL.CON.DR.IMP.DIST.MAINT. 0.001693 0.001693 0.001693 0.001693 0.001693 0.001693 0.001693 0.001693 0.001693 0.001693 LA CO FLOOD CONTROL MAINT 0.009580 0.009580 0.009580 0.009580 0.009580 0.009580 0.009580 0.009580 0.009580 0.009580 PALOS VERDES LIBRARY DIST MAINT 0.018010 0.018010 0.018010 0.018010 0.018010 0.018010 0.018010 0.018010 0.018010 0.018010 LA CO WEST VECTOR CONTROL DIST. 0.000190 0.000190 0.000190 0.000190 0.000190 0.000190 0.000190 0.000190 0.000190 0.000190 CO SANITATION DIST NO 5 OPERAT 0.011975 0.011975 0.011975 0.011975 0.011975 0.011975 0.011975 0.011975 0.011975 0.011975 RANCHO PV LIGHTING MAINT DIST 0.005187 0.005187 0.005187 0.005187 0.005187 0.005187 0.005187 0.005187 0.005187 0.005187 WTR REPLENISHMENT DIST OF SO CAL 0.000171 0.000171 0.000171 0.000171 0.000171 0.000171 0.000171 0.000171 0.000171 0.000171 ERAF 0.075956 0.075956 0.075956 0.075956 0.075956 0.075956 0.075956 0.075956 0.075956 0.075956 EDUCATIONAL AUG FD IMPOUND 0.145328 0.145328 0.145328 0.145328 0.145328 0.145328 0.145328 0.145328 0.145328 0.145328 COUNTY SCHOOL SERVICES 0.001392 0.001392 0.001392 0.001392 0.001392 0.001392 0.001392 0.001392 0.001392 0.001392 CHILDREN'S INSTIL TUITION FUND 0.002763 0.002763 0.002763 0.002763 0.002763 0.002763 0.002763 0.002763 0.002763 0.002763 LA CITY COMM COLLEGE DIST 0.029709 0.029709 0.029709 0.029709 0.029709 0.029709 0.029709 0.029709 0.029709 0.029709 LA COMM COLL CHILDREN'S CTR FD 0.000307 0.000307 0.000307 0.000307 0.000307 0.000307 0.000307 0.000307 0.000307 0.000307 LA UNIFIED SCHOOL DIST 0.218730 0.218730 0.218730 0.218730 0.218730 0.218730 0.218730 0.218730 0.218730 0.218730 C0.SCH.SERV.FD-L0S ANGELES 0.000012 0.000012 0.000012 0.000012 0.000012 0.000012 0.000012 0.000012 0.000012 0.000012 DEV.CTR.HDCPD MINOR -LA UNIF. 0.001234 0.001234 0.001234 0.001234 0.001234 0.001234 0.001234 0.001234 0.001234 0.001234 LA CHILDRENS CENTER FD 0.003589 0.003589 0.003589 0.003589 0.003589 0.003589 0.003589 0.003589 0.003589 0.003589 TOTAL 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 Debt Service Rates COUNTY 0.000990 0.000920 0.000800 0.000600 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 UNIFIED SCHOOLS 0.091910 0.103820 0.103840 0.106800 0.143100 0.145000 0.151809 0.186954 0.168187 0.175606 COMMNTY COLLEGE 0.019860 0.018100 0.014300 0.021400 0.008780 0.022120 0.023112 0.040310 0.035296 0.048750 PALOS VERDES LIB 0.008960 0.008520 0.007810 0.007300 0.013700 0.006800 0.006618 0.006719 0.006359 0.006441 FLOOD CONTROL 0.000470 0.000240 0.000050 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 METRO WATER DIST 0.006100 0.005800 0.005200 0.004700 0.004500 0.004300 0.004300 0.003700 0.003700 0.003500 TOTAL 0.128290 0.137400 0.132000 0.140800 0.170080 0.178220 0.185839 0.237683 0.213542 0.234297 TOTAL TAX RATE 1.128290 1.137400 1.132000 1.140800 1.170080 1.178220 1.185839 1.237683 1213542 1.234297 Source: 2010-2013 & 2006-07 County Assessor data, MuniServices, LLC Source: 2008-2009 & 2006 and prior: data is provided from previously published CAFR's. Los Angeles County Auditor/Controller TRA 001-224 City has no separate debt service rate, direct rate is 100% operating 128 City of Rancho Palos Verdes Principal Property Tax Payers Last Fiscal Year and Nine Years Ago 2012-13 2003-04 Percentage of Percentage of Taxable Total City Taxable Taxable Total City Taxable Taxpayer Value ($) Rank Value (%) Value ($) Rank Value (%) Long Point Development LLC 332,528,555 1 3.43% PPC Villas RPV LLC 65,373,910 2 0.67% P V Victoria Apts LLC 55,973,088 3 0.58% VHPS LLC 48,585,846 4 0.50% Terraces Rancho Palos Verdes 36,12L534 5 0.37% Western Riviera Investors 29,917,298 6 0.31% Golden Cove LLC 27,890,262 7 0.29% BVF II Madison LLC 23,530,658 8 0.24% Terranea Resort Spa 23,175,177 9 0.24% Belmont Village RPV LP 22,847,959 10 0.24% Johnson Eric C 16,265,647 11 0.17% Tridiamond LLC 13,679,983 12 0.14% American Golf Inc. 10,976,847 13 0.11% Sadeghi Fatolah Flora 10,823,000 14 0.11% Vanderlip Investment Co 10,406,330 15 0.11% California Water Service Co 9,111,363 16 0.09% First Citizens Bank Trust Co 8,670,000 17 0.09% Palos Verdes Terrace LTD 7,815,491 18 0.08% Briles Richard & Keanna 7,546,482 19 0.08% Bruning Fred W 7,425,000 20 0.08% Kariger Brian P 7,188,636 21 0.07% Wang Lisa 7,150,000 22 0.07% Amdan Investment LLC Lessee 6,550,000 23 0.07% Labarba James G 6,255,759 24 0.06% Gerts Igor Anna 6,090,000 25 0.06% Ocean Trails L P 63,807,638 1 1.01°0 VRPV LLC Et Al 50,189,800 2 0.79% P V Victoria Apts LLC 48,551,011 3 0.77% RPV Associates LLC 28,877,571 4 0.46% Western Riviera Investors 25,348,216 5 0.40% York Long Point Assoc 18,488,986 6 0.29% Top Terraces Inc. 12,692,880 7 0.20% Gardner Theodore R 9,213,251 8 0.15% American Golf Inc. 8,462,000 9 0.13% California Water Service Co 8,062,850 10 0.13% Kim Goon G 6,759,570 I I 0.11°0 Braun William 6,720,000 12 0.11% Donahue Schriber Reality Group 6,061,618 13 0.10% Labarba James G 5,425,238 14 0.09% Chung David W 5,090,960 15 0.08% MVI Corp 4,938,852 16 0.08% Foster Robert D & Gina D 4,917,174 17 0.08% Briles Richard & Keanna 4,775,435 18 0.08% Bradford Edward T & Paullee G 4,627,394 19 0.07% Knollbrook LTD 4,585,366 20 0.07% Ganezer Max & Florence 4,573,026 21 0.07% Hoffman John C & Paula J 4,556,788 22 0.07% Moshfeghi Mehran 4,336,670 23 0.07% Yeong Yae Kim 4,275,840 24 0.07% Levine Irving 4,238,243 25 0.07% Total Top 25 Taxpayers $ 801,898,825 8.26% $ 349,576,377 5.51% Total Taxable Value $ 9,704,237,000 100.00% $ 6,340,159,309 100.00% Source: Los Angeles County Assessor data, MuniServices, LLC 129 City of Rancho Palos Verdes Property Tax Levies and Collections Last Nine Fiscal Years (amounts expressed in thousands) Collected within the Total Tax Fiscal Year of the Levy Total Collections to Date Fiscal Levy for Percentage Collections in Percentage Year Fiscal Year Amount of Levy Subsequent Years Amount of Levy 2005 $ 4,284 $ 4,001 93.40% $ 144 $ 4,145 96.76% 2006 4,643 4,506 97.06% 36 4,542 97.83% 2007 5,078 4,799 94.51% 10 4,809 94.70% 2008 5,351 5,316 99.35% 10 5,326 99.53% 2009 6,116 5,734 93.76% 8 5,742 93.88% 2010* 5,447 4,917 90.27% 8 4,925 90.42% 2011* 5,597 5,462 97.59% 9 5,471 97.74% 2012 5,777 5,656 97.91% 9 5,665 98.06% 2013 5,951 5,844 98.20% 9 5,853 98.35% Source: County Assessor Data and City General Ledger * Includes 1% secured apportionment only The detailed information presented in this table was not obtained by the City for fiscal years prior to 2005, and is therefore unavailable. 130 City of Rancho Palos Verdes Direct and Overlapping Governmental Activities Debt Current Year DIRECT DEBT: City of Rancho Palos Verdes DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Los Angeles County Flood Control District Metropolitan Water District Los Angeles Community College District Los Angeles Unified School District Palos Verdes Unified School District Palos Verdes Library District Los Angeles County Regional Park and Open Space Assessment District SUBTOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND DEBT: Los Angeles County General Fund Obligations Los Angeles County Superintendent of Schools Certificates of Participation Los Angeles County Sanitation District No. 5 Authority Los Angeles County South Bay Cities Sanitation District Authority Los Angeles Unified School District Certificates of Participation SUBTOTAL GROSS OVERLAPPING GENERAL FUND DEBT Less: Los Angeles County General Fund Obligations supported by landfill revenues Los Angeles Unified School District QZABs supported by investment fund SUBTOTAL NET OVERLAPPING GENERAL FUND DEBT Total Debt 6/30/2013 Total Debt 6/30/2013 % Annlicable (11 $19,770,000 0.922% 165,085,000 0.466°o 3,712,555,000 1.641% 0 10,945,695,000 0.195% 77,661,570 47.684% 4,580,000 50.198% 142,870,000 0.898°-o City's Share of % Annlicable (11 Debt 6/30/13 100.000°-o - $1,729,437,327 10,377,239 46,698,184 7,956,403 395,161,434 0.898% 0.898% 10.727% 4.426% 0.195% TOTAL DIRECT DEBT GROSS COMBINED SUBTOTAL OVERLAPPING DEBT NET COMBINED SUBTOTAL OVERLAPPING DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT City's Share of Debt 6/30/13 $182,279 769,296 60,923,028 21,344,105 37,032,143 2,299,068 1,282,973 123,832,892 $15,530,347 93,188 5,009,314 352,150 770.565 $21,755,564 49,317 9,851 21,696,396 $0 $145,588,456 $145,529,288 $145,588,456 (2) $145,529,288 (1) The percentage of overlapping debt applicable to the City is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the City divided by the district's total taxable assesed value. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and non -bonded capital lease obligations. 2012-13 Assessed Valuation: 9,704,237,000 Ratios to 2012-13 Assessed Valuation: Direct Debt Total Direct and Overlapping Tax and Assessment Debt Ratios to Adiusted Assessed Valuation: Gross Combined Total Debt Net Combined Total Debt Source: 2012-13 California Municipal Statistical Co. 131 0.00% 1.28% 1.50% 1.50% City of Rancho Palos Verdes Legal Debt Margin Information Last Ten Fiscal Years (Amounts expressed in thousands) Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Debt Limit $ 962,539 $ 1,021,177 $ 1,105,647 $ 1,195,665 $ 1,274,916 $ 1,345,594 $ 1,351,617 $ 1,382,850 $ 1,420,256 $ 1,455,636 Total Net Debt applicable to limit Legal Debt Margin $ 962,539 $ 1,021,177 $ 1,105,647 $ 1,195,665 $ 1,274,916 $ 1,345,594 $ 1,351,617 $ 1,382,850 $ 1,420,256 $ 1,455,636 Total Net Debt applicable to the limit as a percentage of Debt Limit 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 132 Total Taxable Value (see page 127) $ 9,704,237 Debt Limit (15% of total taxable value) Debt applicable to limit Legal Debt Margin 1,455,636 $ 1,455,636 City of Rancho Palos Verdes Demographic and Economic Statistics Last Ten Fiscal Years Per Capita **Public County City City Fiscal Personal Personal Median School Unemployment Unemployment County Population Year Population (l) Income (2) Income (2) Age (4) Enrollment Rate (%) (3) Rate (%) (3) Population (1) (% of County) 2003-04 42,810 1,981,846,140 46.294 44.7 - - - 2004-05 43,525 2,219,905,575 51.003 43.4 - - 1.5% 2005-06 42,991 2,192,669,973 51.003 43.4 - - 1.5% 2006-07 43,092 2,197,821,276 51.003 43.4 - 1.5% - 2007-08 42,964 2,549,698,580 59,345 44.4 1 L976 7.2% 2.5% 10,275,914 0.42% 2008-09 42,720 2,262,493,920 52.961 43.4 12,033 7.5% 2.5% 10,30L658 0.41% 2009-10 42,642 2,250,346,266 52.773 44.9 1 L900 11.6% 4.0% 10,355,053 0.41% 2010-11 41,766 2,425,936,344 58.084 44.3 1 L928 11.9% 4.1% 9,858,989 0.42% 2011-12 41,897 2,561,016,971 61.127 47.6 11,840 11.1% 3.8% 9,884,632 0.42% 2012-13 42,114 2,618,143,152 62.168 47.8 11,873 11.0% 3.7% 9,958,091 0.42% Source: MuniServices, LLC The California Department of Finance demographics estimates now incorporate 2010 Census counts as the benchmark. 1.) Population Projections are provided by the California Department of Finance Projections. 2.) Income Data is provided by the U.S. Census Bureau, 2010 American Community Survey. 3.) Unemployment Data is provided by the EDD's Bureau of Labor Statistics Department. **Student Enrollment reflects the total number of students enrolled in the Palos Verdes Unified School District. Other school districts within the City are not included. 133 2012-13 Taxpayer 7 -Eleven Food Stores Admiral Risty Restaurant America's Tire Asaka Japanese Cuisine Carl's Jr. Restaurant Centinela Feed & Pet Supplies Inc Chevron Service Stations Coco's Restaurants El Pollo Loco Good Night Mattress Green Hills Memorial Park Green Hills Mortuary Hughes Markets IHOP Restaurants Jack In The Box Restaurants Los Verdes Country Club Marie Callender Restaurant Marshalls Mobil Service Stations O'Reilly Auto Parts Smart & Final Swank Audio Visuals Terranea Resort Trader Joe's Trump National Golf Club City of Rancho Palos Verdes Principal Sales Tax Producers Last Fiscal Year and Nine Years Ago Business Type Food Markets Restaurants Auto Parts/Repair Restaurants Restaurants Miscellaneous Retail Service Stations Restaurants Restaurants Furniture/Appliance Miscellaneous Other Miscellaneous Other Food Markets Restaurants Restaurants Restaurants Restaurants Apparel Stores Service Stations Auto Parts/Repair Food Markets Electronic Equipment Restaurants Food Markets Miscellaneous Retail Source: SHOE data, MuniServices, LLC Top Sales Tax Producers listed in alphabetical order. 2003-04 Taxpayer Admiral Risty Restaurant America's Tire Ampak Enterprises California Do It Center Carl's Jr. Restaurant Chevron Service Stations Coco's Restaurants El Pollo Loco Fedex Office G S Peeke Green Hills Memorial Park Green Hills Mortuary Hughes Markets IHOP Restaurants Jack In The Box Restaurants Los Verdes Country Club Marie Callender Restaurant Mobil Service Stations New York Food & Catering O'Reilly Auto Parts Pacific Crown Service Station Smart & Final The Brixey Corporation Trader Joe's Trump National Golf Club 134 Business Type Restaurants Auto Parts/Repair Light Industry Bldg.Matls-Retail Restaurants Service Stations Restaurants Restaurants Miscellaneous Retail Miscellaneous Other Miscellaneous Other Miscellaneous Other Food Markets Restaurants Restaurants Restaurants Restaurants Service Stations Restaurants Auto Parts/Repair Service Stations Food Markets Office Equipment Food Markets Miscellaneous Retail City of Rancho Palos Verdes Principal Employers Current Year and Three Years Ago 2013 2010 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment Palos Verdes Peninsula Unified School District 1,970 1 9.47% Terranea Resort Hotel 730 2 3.51% Trump National (1) 260 3 1.25% Marymount College 320 4 1.06% Keller Williams Realty 163 5 0.78% Canterbury 115 6 0.55°-o Belmontcorp LTD 111 7 0.53% Trader Joe's 88 8 0.42% Ralphs 83 9 0.40% Green Hills Memorial Park 80 10 0.38% Palos Verdes Peninsula Unified School District 1970 1 9.90% Terranea Resort Hotel 730 2 3.67% Trump National 300 3 1.51% Marymount College 195 4 0.98% Ralphs 115 5 0.58% Keller Williams Realty 112 6 0.56% Belmontcorp Ltd 94 7 0.47% Green Hills Memorial Park 85 8 0.43% American Golf Corp 70 9 0.35% Trader Joe's 54 10 0.27% Subtotal of Principal Employers 3,820 18.37% 3,725 18.72% Total City Employment (2) 20,800 19,900 Source: MuniServices, LLC Results based on direct correspondence with city's local businesses. (1) Includes full time and part time employees. (2) Total City Employment provided by EDD Labor Force Data. 135 City of Rancho Palos Verdes Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Function General Government 45 45 47 50 55 58 53 54 52 53 Recreation Part -Time 10 10 10 10 10 11 17 18 17 16 Total 55 55 57 60 65 69 70 72 69 69 Source: City Budget documents and Payroll records 136 City of Rancho Palos Verdes Operating Indicators by Function Last Ten Fiscal Years 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Function Administration Employee Resignations 5 4 4 4 8 4 9 5 8 7 Workers Compensation Claims 2 3 4 2 4 2 5 3 3 3 Liability Claims 14 18 31 14 16 13 13 14 11 14 Budget Adjustments 27 36 48 32 26 18 21 17 11 24 Business Licenses Issued 2,102 1,909 1,801 1,837 1,709 1,819 1,629 1,891 1,294 1,868 Web Site Page Views 133,481 224,777 1.3 mil 1.6 mil 701,004 3.8 mil 2.9 mil 2.8mil 3.0mil 3.lmil Public Safety Part I Crime Rates (per 10,000 population) 122 101 120 139 123 102 110 138 127 150 Public Works Solid Waste Diversion Rates (1) 61% 59% 55% 56% 4.71bs/person/day 4.1 lbs/person/day 4.21bs/person/day 4.21bs/person/day 4.21bs/person/day 2.871bs/person/day Pavement Rating 89 89 82 82 DNA 84.5 84.5 84.5 84.5 84.3 Parks and Recreation Park Events 825 780 937 770 692 825 690 580 582 765 Class Meetings at Parks 2,935 2,893 2,856 2,647 2772 2708 2398 2313 L587 L202 Docent Led Nature Hikes 80 65 62 98 91 105 103 105 104 121 Community Development Building Permits Processed 1,399 1,233 1,382 1,244 1,692 1,404 1,243 1,432 1,221 1,403 Plan Checks 186 208 163 164 247 226 154 161 161 268 Municipal Code Violations Closed 214 180 159 162 216 339 138 371 321 312 Source: City Departments DNA: Data Not Available (1): A new system of measuring AB939 compliance was implemented in 2008 with the passage of SB 1016. This changed the previous diversion calculation method to the new disposal -based indicator - the per capita disposal rate. The per capita disposal target is based on the average of 50 percent of generation in 2003 through 2006, expressed in terms of per capital disposal. 137 City of Rancho Palos Verdes Capital Asset Statistics by Function Last Ten Fiscal Years 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Function Administration Computer Workstations DNA 81 81 85 91 92 101 92 88 93 Public Safety (1) Public Works Street Miles 143 143 143 143 143 143 143 143 144 141 Traffic Signals 15 15 15 15 16 16 16 16 18 15 Parks and Recreation Parks 15 15 16 16 16 16 15 15 15 15 Community Development Vehicles Used for Inspections 3 3 3 3 5 5 5 5 5 5 Source: City Capital Asset Records DNA: Data Not Available (1): Public safety services are contracted with other agencies. The City does not own any public safety capital assets. 138