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CAFR FY 2005-06CI I Y OF RANCHO PALOS VERDES CALIF OR NIA COMPREHENSIVE ANNUAL FINANCIAL REPORT H5LALYAR LI`IULU JUNE 30, 2006 CITY OF RANCHO PALOS VERDES, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2006 Prepared By: Finance Department Dennis McLean, Director of Finance & Information Technology Kathryn Downs, Deputy Director of Finance & Information Technology Cover photo of Portuguese Bend courtesy of Ms. Karen Peterson INTRODUCTORY SECTION California Poppies at Lower Hesse Park Photos by Karen Peterson CITY OF RANCHO PALOS VERDES COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2006 TABLE OF CONTENTS INTRODUCTORY SECTION: Table of Contents i -iii Letter of Transmittal iv -x Directory of City Officials xi Organization Chart xii GFOA Certificate of Achievement for Excellence in Financial Reporting xiii FINANCIAL SECTION: Independent Auditor's Report 1 Management Discussion and Analysis 3 Government -Wide Financial Statements Statement of Net Assets 11 Statement of Activities 12 Fund Financial Statements Governmental Funds Balance Sheet 14 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 16 Statement of Revenues, Expenditures, and Changes in Fund Balances 17 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 19 General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 20 Street Maintenance Special Revenue Fund Statement of Revenues, Expenditures, and Change in Fund Balance - Budget and Actual 21 Proprietary Funds Statement of Net Assets 22 Statement of Revenues, Expenses, and Changes in Fund Net Assets 23 Statement of Cash Flows 24 Notes to the Financial Statements 25 i CITY OF RANCHO PALOS VERDES COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2006 TABLE OF CONTENTS Supplementary Information Major Fund Budgetary Comparison Schedules Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Capital Improvement Projects Capital Projects Fund 44 RDA Debt Service Fund 50 Non -Major Governmental Funds Combining Balance Sheet 54 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 60 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — Special Revenue Funds Air Quality Management Fund 66 Community Development Block Grant Fund 67 El Prado Fund 68 RDA Housing Set -Aside Fund 69 Proposition A Fund 70 Proposition C Fund 71 Beautification Fund 72 Waste Reduction Fund 73 Public Safety Grants Fund 74 1972 Act Fund 75 1911 Act Fund 76 JPIA — Portuguese Bend Fund 77 Habitat Restoration Fund 78 Subregion One Maintenance Fund 79 Parks/Measure A Fund 80 Abalone Cove Sewer Assessment District 81 RPV TV Channel 33 82 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — Capital Projects Funds Bikeways Fund 83 RDA Abalone Cove Fund 84 Environmental Excise Tax Fund 85 Quimby Fund 86 Affordable Housing Fund 87 RDA Portuguese Bend Fund 88 Utility Undergrounding Fund 89 Roadway Beautification Fund 90 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual — Permanent Fund JPIA — Abalone Cove Fund 91 ii CITY OF RANCHO PALOS VERDES COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2006 TABLE OF CONTENTS Internal Service Funds Combining Statement of Net Assets 93 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets 94 Combining Statement of Cash Flows 95 STATISTICAL SECTION (Unaudited) Financial Trends 97 Revenue Capacity 104 Debt Capacity 108 Demographic and Economic Information 111 Operating Information 113 iii A view of Agua Armaga canyon Photo by Karen Peterson GOVERNMENTAL STRUCTURE, ECONOMIC CONDITION AND OUTLOOK 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. The City currently has a land area of 13.6 square miles and a population of 42,991. 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 council, which consists of five council members, including the mayor and mayor pro -tem. The governing 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 governing council, for overseeing the day-to-day operations of the government, and for appointing the heads of the government's departments. The 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 council designates the mayor and mayor pro -tem for a one-year term. Though the General fund reserves of the City increased during the fiscal year ended June 30, 2006, it is important to continue to measure the City's financial strength over time, not just on the basis of the most recent three or four years experience. The budget adopted by the City Council for the fiscal year ending June 30, 2007 presents the expectation of a decrease of General fund reserves. Potential economic downturn and the need to fund additional infrastructure renewal and maintenance will require continued conservative fiscal policies. 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 government's commitment to ensuring that its citizens are able to live and work in an enviable environment. Planning. Building. and Code Enforcement The City authorized the Palos Verdes Peninsula Land Conservancy to begin management of the City's Natural Communities Conservation Plan (NCCP) Preserve and continued its effort for acquiring open space for inclusion into the habitat preserve. The City continued to formally monitor development projects in surrounding jurisdictions (referred to as "border issues") to assess their potential impacts upon the City and its residents. The City continued to approve the installation of various commercial antenna facilities for cellular telephones and personal communication systems on private property throughout the City. The General Plan Update Steering Committee presented its recommendations to the City Council on all of the existing goals and policies of the General Plan. The General Plan Update effort was then initiated by the City Council. Staff is currently negotiating a contract with a consultant to assist Staff with the preparation of the Update. The City continued to implement its State approved Housing Element and efforts to work with the Southern California Association of Governments in preparing the Regional Transportation Plan and the Regional Housing Needs Assessment. The City oversaw the completion of the repair and rehabilitation of the Trump National golf course, which was damaged by a landslide in 1999. The City continued to work with the developer on its plans to permanently open the 18 -hole golf course to the public and expand the existing Clubhouse. Public Works The Point Vicente Interpretive Center expansion project was completed. The grand opening of the center was on July 15, 2006. The interim Barkentine & Seacove drainage project was completed, as well as numerous other citywide storm drain improvement projects. v Phase I of storm drain lining was completed, as well as numerous other lining projects throughout the City. The Pontevedre storm drain lining and pipe replacement project was completed. Recreation and Parks Recreation and Parks Staff coordinated the fabrication and installation of the Point Vicente Interpretive Center exhibits. Recreation and Parks Staff hosted the grand opening and dedication ceremony for the expanded Point Vicente Interpretive Center. Recreation and Parks Staff and the Los Serenos de Point Vicente docents hosted the annual Whale of a Day event on the Point Vicente Interpretive Center grounds. The Los Serenos de Pointe Vicente docents continued their successful docent -led hike programs at several sites throughout the City. The City arranged for the Peninsula Seniors, a local non-profit organization, to operate temporary offices and a classroom using modular trailers at Upper Point Vicente Park. The City also continued to offer the Peninsula Seniors the use of other park facilities for various events. Recreation and Parks Staff coordinated the City's annual July 4th Independence Day celebration. The City hosted two Shakespeare By The Sea drama productions at Hesse Park. Recreation and Parks Staff continued to coordinate several annual community events including the Abalone Cove Beach Clean -Up Day and Breakfast with Santa. Once again, the City has qualified for the use of Community Development Block grant funds for the REACH program for youth and young adults with developmental disabilities. Administration The City Council conducted a Tactical Planning Workshop on February 2, 2006 to review and update the City Council's goals, which were initially created in 2004. The Council refined its previous goals to include: 1) Implementing the Storm Drain Master Plan; 2) Acquiring Upper Filiorum and completing the NCCP; 3) Reducing speeding and controlling parking in residential neighborhoods; 4) Preparing an Active Recreation Plan and a Civic Center Master Plan; 5) Improving emergency services and preparedness; and 6) Bringing the Eastview area into the Palos Verdes Unified School District. On March 7th, Council adopted an ordinance regulating peddling in the City, thereby addressing safety problems associated with mobile food vendors congregating in a single area for long periods of time. In the Spring of 2006, the City's website was revamped and given a fresh new look with drop down menus to improve navigation of the site, adding the Google search engine throughout the site and a dedicated search engine for the City's Municipal Code, adding a News Watch Scroll to highlight up-to-the-minute topics of interest, and creating a Non -Emergency Service Request link. In May 2005, City Manager Les Evans announced his retirement, effective December 21, 2006, after 10 years of exemplary service to the City. On May 16th, Council appointed three Rancho Palos Verdes residents to serve Councilwoman Janice Hahn's Community Advisory board for the Ponte Vista development, a proposed 2,300 -unit condominium project on a 62 -acre site located on Western Avenue. On June 6th, the Council received a presentation from Los Angeles County Fire Chief P. Michael Freeman regarding the current level of fire service in the City. During his presentation, Chief Freeman announced the addition of paramedic services and a new pumper truck at Fire Station No. 83 located in Miraleste Plaza. vi On June 20th, Council approved a Lease Agreement with the Southern California Regional Occupational Center (SCROC) to use the City's Multimedia Cable Television Studio for video production classes. The first class was held at the studio during the 2006 fall semester. The City approved a new facility and radio antenna on the Civic Center site for the Sheriff's Disaster Communications Service (DCS) and the Palos Verdes Volunteer Alert Network (PVAN), which provides critical ham radio communications during natural disasters and other emergencies. The Council hosted two Community Leaders' Breakfast meetings in FY05-06. The fall 2005 session concerned lessons to be learned from Hurricane Katrina and the spring 2006 session highlighted the South Bay Energy Savings Center. The City continued to publish a quarterly newsletter that was distributed to all residents. In FY05-06 the newsletter featured articles on preparing for wildfire hazards, the dedication of Founders Park and the City's Multimedia Studio, the City's new traffic deputy and the grand opening of the Point Vicente Interpretive Center. The City Council continued to provide financial assistance to a variety of non-profit organizations that provide service to the community. The City Council recognized five local military personnel serving the Country through the Salute to Service program and expressed their appreciation by presenting their families with a City care package and Blue Star poster. In December 2005, the City Council approved the Emergency Preparedness Committee's recommendation to establish pre -positioned caches of critical emergency and disaster supplies in storage containers strategically placed around the City. The pre -positioned supplies will strengthen the City's ability to respond effectively within the first 72 hours following a natural or man-made disaster under extreme conditions. FINANCIAL INFORMATION The Finance 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. 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 Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. For the year ended June 30, 2006, approximately $380,000 was expended on Federal financial assistance programs; and therefore, a single audit was not required. Budgeting 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, Redevelopment Agency Board, and Improvement Authority Commission. Activities of the General fund, Special Revenue funds, Capital Projects funds, Debt Service fund and Permanent fund 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. Encumbrances lapse at year-end, and any unexpended balance is eligible to be carried over to the following year's budget appropriations with Council approval. vii General Government Functions. The following schedule presents a summary of all Governmental fund revenues for the fiscal year ended June 30, 2006 with the amount and percentage of increases or decreases in relation to prior year revenue: Increase/ Percent of (Decrease) Increase/ Amount from FY04-05 (Decrease) Taxes $ 15,320,688 $ 1,747,622 12.9% Licenses and permits 1,439,758 114,179 8.6% Fines and forfeitures 170,640 62,689 58.1% Use of money and property 7,038,201 5,732,012 438.8% Charges for services 49,389 (102,518) -67.5% Revenues from other agencies 15,510,848 7,663,030 97.6% Other revenues 155,204 (883,018) -85.1% TOTAL REVENUES $ 39,684,728 $ 14,333,996 56.5% With overall revenues increasing by over $14.3 million for the year, the City recognized large fluctuations in several of the different revenue categories. These increases and decreases are discussed below. Taxes increased by over $1.7 million when compared to FY04-05. As part of the State shared revenue restructuring, most of motor vehicle license fees (VLF) are being received as property tax in -lieu of VLF. Use of money and property increased by about $5.7 million. This category of revenue includes donations. The City received a $4.9 million donation from the Palos Verdes Peninsula Land Conservancy as part of the Portuguese Bend Open Space purchase. The remaining $0.8 million increase is primarily due to rising investment interest rates. The average interest rate earned during FY04-05 was 2.233%, and the average rate earned during FY05-06 was 3.85%. The increase of Revenues from other agencies was primarily due to grant revenue associated with the Portuguese Bend Open Space purchase. From FY04-05 to FY05-06, Other revenues decreased by almost $0.9 million. During FY04-05, the City received approximately $800,000 for sale of a residential property purchased to facilitate the San Ramon drainage project. The following schedule presents a summary of all Governmental fund expenditures for the fiscal year ended June 30, 2006, and the amount and percentage of increases and decreases in relation to prior year amounts: Increase/ Percent of (Decrease) Increase/ Amount from FY04-05 (Decrease) Administration $ 4,041,081 $ 189,646 4.9% Public safety 3,437,933 346,139 11.2% Public works 5,276,949 (1,025,006) -16.3% Parks and recreation 1,593,104 628,234 65.1% Planning, building and code enforcement 2,361,465 59,402 2.6% Pass through to other agencies 199,829 11,470 6.1% Capital outlay 20,202,412 15,290,220 311.3% Debt service 1,349,329 260,454 23.9% TOTAL EXPENDITURES $ 38,462,102 $ 15,760,559 69.4% The overall $15.8 million increase in expenditures is due to increases in several expenditure categories, as discussed below. The net decrease in Public works expenditures is primarily due to the number of engineering projects and studies performed during FY04-05 when compared to FY05-06. The FY04-05 activity in the Capital Improvement Projects fund included engineering and project management for the Point Vicente Interpretive Center, engineering for the arterial overlay project, and a number of drainage studies. VIII The increase of Parks and recreation expenditures was almost entirely due to the fabrication and installation of exhibits at Point Vicente Interpretive Center. Capital outlay expenditures increased with the purchase of the Portuguese Bend Open Space. Budget to Actual Comparison. Once again, the City experienced a favorable budget variance in the General fund for the fiscal year ended June 30, 2006. Actual General fund revenues were approximately $1.5 million greater than the amount budgeted, while expenditures and transfers out were approximately $1.9 million less than the amount budgeted. The positive variance resulted from receipt of property and utility users taxes in excess of estimates and the continued careful management of resources during FY05-06. Governmental Fund Balances. The combined fund balances of all Governmental Funds decreased by approximately $1.0 million from the prior year. The net decrease is primarily attributable to additional interest that accrued on the Redevelopment Agency advance from the General fund. Debt Administration. At June 30, 2006, the City had no general obligation debt and one tax increment bond issued during FY97-98. The schedule for repayment of this bond is included in the notes to the financial statements. Cash Management. To obtain increased flexibility in cash management, the City employs a pooled cash system. The goals of the City's investment policy are safety, liquidity, and yield, in that order. Investments are currently maintained with the State Treasurer's Local Agency Investment Fund (LAIF); however, the City's investment policy permits investments legally allowable under state law. LAIF provides high safety and liquidity and is operated specifically for local governments. The City's invested balance with LAIF as of June 30, 2006 was $38,340,407. As mentioned above, the average return on invested funds was 3.85%. Earnings are allocated to the various funds based on average cash balances. Risk Management. The City of Rancho Palos Verdes is a member of the California Joint Powers Insurance Authority (CJPIA). With 106 members, it is the largest joint powers insurance authority in California. Through the CJPIA, the City is self-insured against liability and workers' compensation claims. As protection against catastrophic loss, members fund a pool to finance large settlements. During the fiscal year ended June 30, 2006, Rancho Palos Verdes continued its proactive liability risk management role through careful monitoring of losses, working closely with the CJPIA's third -party claims adjuster, and designing and implementing programs to minimize risks and reduce losses. In addition, the City Manager's staff analyzes workers compensation issues by monitoring work conditions, and organizing and implementing safety -training programs to reduce employee exposure to hazards. OTHER INFORMATION Independent Audit. The City requires an annual audit by independent certified public accountants. The accounting firm of Vavrinek, Trine, Day & Company, 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. 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, 2005. This was the thirteenth 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. ix Acknowledgments. Completion of this report was the accomplishment by combined efforts of many individuals, especially 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 & Company, LLP and the contributions of other Finance Department staff: Gary Gyves, Jane Lin, Teresa Takaoka, Gayle Vanoverbeck, Selena Wright, and Nancy Vitez. 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 x The tide pools near Sacred Cove Photo by Holly Starr CITY OF RANCHO PALOS VERDES DIRECTORY OF CITY OFFICIALS JUNE 30, 2006 CITY COUNCIL Steve Wolowicz, Mayor Tom Long, Mayor Pro -Tem Larry Clark, Councilman Peter Gardiner, Councilman Douglas Stern, Councilman ADMINISTRATION AND DEPARTMENT HEADS City Manager Les Evans Assistant City Manager/City Clerk Carolynn Petru Director of Finance & Information Technology Dennis McLean Director of Planning, Building and Code Enforcement Joel Rojas Interim Director of Public Works Ray Holland Director of Recreation and Parks Ron Rosenfeld City Attorney Richards, Watson & Gershon xi 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/Budget Personnel/Community Outreach Risk Management CITY CLERK Records Management Public Information Elections RECREATION & PARKS Park Facilities 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 Accounts Payable/Receivable Payroll Purchasing Information Technology PLANNING & BUILDING Planning/Zoning Building & Safety/Geology Code Enforcement View Restoration PUBLIC WORKS Street Maintenance Refuse/City Engineering Park/Building Maintenance Capital Projects XII COMMISSIONS & COMMITTEES Emergency Preparedness Committee Equestrian Committee Open Space Planning Parks & Recreation Task Force CITY ATTORNEY Richards, Watson & Gershon 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, 2005 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. President 4.eA0,7 Executive Director An indoor Sea Cliff exhibit at Point Vicente Interpretive Center Photo by Holly Starr FINANCIAL SECTION The trail at Lower Hesse Park Photo by Karen Peterson Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The other supplementary information listed in the table of contents, including the introductory section, combining schedules and additional budgetary comparison schedules, and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining schedules and additional budgetary comparison schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and the statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. VOVV1AAtel Rancho Cucamonga, California October 6, 2006 2 MANAGEMENT'S DISCUSSION & ANALYSIS CITY OF RANCHO PALOS VERDES Management's Discussion and Analysis June 30, 2006 As management of the City of Rancho Palos Verdes, we offer readers of the City of Rancho Palos Verdes' financial statements this narrative overview and analysis of the financial activities of the City of Rancho Palos Verdes for the fiscal year ended June 30, 2006. 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 -x 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, 2006, by $142,681,935 (net assets). Of this amount, $18,962,628 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. The City's total net assets increased by $18,924,733. This increase is primarily attributable to the acquisition of the Portuguese Bend Open Space. As of June 30, 2006, the City's governmental funds reported combined ending fund balances of $22,902,484, a decrease of $1,035,381 in comparison with the prior year. The decrease in combined ending fund balances is primarily attributable to an additional funding transfer to the Water Quality Flood Protection enterprise fund. Approximately $8,928,973 (unreserved fund balance) is available for spending at the government's discretion. The combined unreserved fund balance includes the RDA Debt Service negative fund balance of $13,741,108. As of June 30, 2006, unreserved undesignated fund balance for the General fund was $13,649,076 or 77% of total General fund expenditures and transfers out. The City's total debt decreased by $189,465 (2.33%) during the current fiscal year. The decrease was primarily attributable to partial payment of the RDA deferred interest payable. 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 assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether 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 assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). 3 CITY OF RANCHO PALOS VERDES Management's Discussion and Analysis June 30, 2006 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 newly established 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 Redevelopment Agency and a legally separate Improvement Authority for which the City of Rancho Palos Verdes is financially accountable. Financial information for these component units has been included as an integral part of the primary government. The government -wide financial statements can be found on pages 11-13 of this report. 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 four categories: governmental funds, enterprise 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. Both 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 maintains 30 individual governmental funds. 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, the Capital Improvements fund and the RDA Debt -Service fund, all of which are considered to be major funds. Data from the other 26 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non - major 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 14-19 of this report. 4 CITY OF RANCHO PALOS VERDES Management's Discussion and Analysis June 30, 2006 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 of Rancho Palos Verdes 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 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. The proprietary fund financial statements provide separate information for the enterprise fund, which is considered a major fund of the City of Rancho Palos Verdes. Conversely, all three internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in 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 25-47 of this report. Other information. The combining statements referred to earlier in connection with non -major 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 54-95 of this report. Government -wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Rancho Palos Verdes, assets exceeded liabilities by $142,681,935 at June 30, 2006. By far the largest portion of the City's net assets (78 percent) reflects its investment in capital assets (e.g. land, infrastructure, buildings, and equipment). The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. City of Rancho Palos Verdes Net Assets 5 Governmental Activities Business -type Activities Total June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005 Current and other assets $ 40,591,912 $ 40,568,511 $ 3,086,278 $ 2,000,086 $ 43,678,190 $ 42,568,597 Capital assets 109,990,753 94,023,353 1,311,395 - 111,302,148 94,023,353 Total assets 150,582,665 134,591,864 4,397,673 2,000,086 154,980,338 136,591,950 Long-term liabilities outstanding 7,950,314 8,139,779 - - 7,950,314 8,139,779 Other liabilities 4,060,625 4,694,969 287,464 - 4,348,089 4,694,969 Total liabilities 12,010,939 12,834,748 287,464 - 12,298,403 12,834,748 Invested in capital assets 109,990,753 94,023,353 1,311,395 - 111,302,148 94,023,353 Restricted 12,417,159 12,074,484 - - 12,417,159 12,074,484 Unrestricted 16,163,814 15,659,279 2,798,814 2,000,086 18,962,628 17,659,365 Total net assets $ 138,571,726 $ 121,757,116 $ 4,110,209 $ 2,000,086 $ 142,681,935 $ 123,757,202 5 CITY OF RANCHO PALOS VERDES Management's Discussion and Analysis June 30, 2006 An additional portion of the City's net assets ($12,417,159 or 8.7 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($18,962,628 or 13.2 percent) may be used to meet the government's ongoing obligations to citizens and creditors. Governmental activities. Governmental activities increased the City's net assets by $16,814,610, thereby accounting for 89 percent of the total growth in the net assets of the City. City of Rancho Palos Verdes Changes in Net Assets Program revenues: Charges for services Operating contributions and grants Capital contributions and grants General revenues: Property taxes Other taxes Other Transfers Governmental Activities June 30, 2006 Business -type Activities Total 1 June 30, 2005 June 30, 20061June 30, 2005 June 30, 2006 1 June 30, 2005 $ 1,659,787 3,893,921 17,299,613 ( 9,621,452 5,725,737 1,790,166 2,109,492 $ 1,585,438 $ 2,728,278 4,524,094 ( 5,840,302 9,028,554 1,876,802 2,000,000 47,255 86 2,109,492 2,000,000 $ 1,659,787 $ 1,585,438 3,893,921 2,728,278 17,299,613 4,524,094 9,621,452 5,725,737 1,837,421 5,840,302 9,028,554 1,876, 888 Total revenues 37, 881,184 23,583,468 2,156,747 2,000,086 40,037,931 25,583,554 Expenses: Administration Public safety Public works Parks and recreation Planning, building and code enforcement Interest on long-term debt Water Quality Flood Protection 4,350,356 3,436,993 9,289,599 1,659,262 4,054,729 3,078,631 9,488,478 1,064,699 2,060,148 2,223,025 270,216 272,603 46,624 4,350,356 3,436,993 9,289,599 1,659,262 4,054,729 3,078,631 9,488,478 1,064, 699 2,060,148 2,223,025 270,216 272,603 46,624 Total expenses 21,066,574 20,182,165 46,624 - 21,113,198 20,182,165 Increase in net assets 16,814,610 3,401,303 2,110,123 2,000,086 18,924,733 5,401,389 Net assets - beginning of fiscal year (as restated) 121,757,116 118,355,813 2,000,086 - 123,757,202 118,355,813 Net assets - end of fiscal year (as restated) $ 138,571,726 $ 121,757,116 $ 4,110,209 $ 2,000,086 $ 142,681,935 $ 123,757,202 Key elements of this increase are as follows: ➢ The difference in the method of accounting for capital assets in the governmental funds versus the statement of activities accounts for an increase of $15,960,000 in net assets. The increase in capital assets is primarily attributable to the Portuguese Bend Open Space purchase. ➢ The difference in the method of accounting for interest income in the governmental funds versus the Statement of Activities accounts for an increase in excess of approximately $877,509 in net assets. Unpaid accrued interest income is deferred in the governmental funds since it is not available. ➢ The excess of Internal Service fund revenues over expenses of $421,563. The net revenues and expenses of Internal Service funds are reported with governmental activities in the Statement of Activities. 6 CITY OF RANCHO PALOS VERDES Management's Discussion and Analysis June 30, 2006 Revenues by Source — Governmental Activities other taxes 14% other 4% charges for services 4% operating contributions and grants 10% property taxes 24% capital contributions and grants 44% As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $22,902,484, a decrease of $1,035,381 in comparison with the prior year. Approximately 39 percent of the combined ending fund balances ($8,928,973) constitute unreserved fund balance, which is available for spending at the City's discretion. An additional portion of unreserved fund balance in the amount of $4,494,526 has been designated for continuing appropriations. The combined unreserved fund balance includes the RDA Debt Service negative fund balance of $13,369,973. The remainder of the combined ending fund balances is reserved to indicate that it is not available for new spending because it has already been committed 1) to reserve the principal balance of loans made to the City's Redevelopment Agency ($6,072,354), and 2) for a variety of other restricted purposes ($3,406,631) includes unreserved designation. The General fund is the chief operating fund of the City of Rancho Palos Verdes. At the end of the current fiscal year, unreserved fund balance of the General fund was $13,649,076, while total fund balance reached $20,689,971. As a measure of the General fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures and transfers out. Unreserved fund balance represents 77 percent of total General fund expenditures, while total fund balance represents 117 percent of that same amount. During the current fiscal year, the fund balance of the City's General fund decreased by $214,707. The key factor in this decline is attributable an additional funding transfer to the Water Quality Flood Protection enterprise fund and the continued careful management of resources during FY05-06. The debt service fund has a negative fund balance of $13,369,973. The Redevelopment Agency's debt to the City is recorded in the debt service fund; however, because there are currently no assets to extinguish that debt, the fund carries a negative fund balance. The net decrease in the debt service fund balance during the current year was $891,880, which primarily represents accumulated interest on the advance from the City to the Redevelopment Agency. 7 CITY OF RANCHO PALOS VERDES Management's Discussion and Analysis June 30, 2006 Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. Unrestricted net assets of the Enterprise fund at the end of the year amounted to $2,798,814. The fund was established during FY04-05 with an initial General fund equity transfer of $2,000,000. Unrestricted net assets of the Internal Service funds at the end of the year amounted to $4,885,750. The total growth in net assets was $421,563. General Fund Budgetary Highlights The difference between the original budget and the final amended budget was an increase of $1,361,515; and can be briefly summarized as follows: A decrease of $876,105 was attributable to appropriations continued to FY06-07. An increase of approximately $675,270 was attributable to appropriations continued from FY04-05. Additional funds of $644,279 were approved for exhibits at Point Vicente Interpretive Center. Additional funds of $220,000 were approved for consultant engineering for a variety of city projects. Additional funds of $200,103 were required for general liability insurance. Additional funds of $112,520 were approved for additional litigation services. Additional funds of $81,748 were required for increased traffic enforcement. Additional funds of $60,380 were required for the Mira Vista speed humps. Additional funds of $52,338 were approved for the disaster communications facility. Additional funds of $50,000 were approved for the landslide moratorium geologic study. Other immaterial increases totaled approximately $140,982. Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for its governmental activities and business -type activities as of June 30, 2006, amounts to $109,990,753 and $1,311,395, respectively (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 capital assets increased by 18 percent. Major capital asset events during the current fiscal year included the following: ➢ Depreciation of $3.15 million was recorded for the City's capital assets. ➢ The Portuguese Bend Open Space was acquired at a cost of $17.1 million. ➢ Construction of the Point Vicente Interpretive Center was completed at a cost of $2.1 million. 8 CITY OF RANCHO PALOS VERDES Management's Discussion and Analysis June 30, 2006 City of Rancho Palos Verdes Capital Assets (net of depreciation) Governmental Activities June 30, 2006 Business -type Activities Total I June 30, 2005 June 30, 2006 ! June 30, 2005 June 30, 2006 !June 30, 2005 Land $ 32,132,781 $ 15,058,724 Buildings 7,336,611 2,051,039 Park improvements 1,735,870 1,826,444 Roadways 46,273,578 48,269,545 Sewer system 10,723,020 11,178,129 $ 1,302,902 Storm drain system 10,919,853 10,975,375 Vehicles 48,137 15,574 Computer equipment 186,881 153,575 Furniture and other equipment 113,883 172,352 Construction in Progress 520,139 4,322,596 8,493 $ 32,132,781 $ 15,058,724 7,336,611 2,051,039 1,735,870 1,826,444 46,273,578 48,269,545 12, 025, 922 11,178,129 10, 919, 853 10, 975, 375 48,137 15,574 186,881 153,575 113,883 172,352 528,632 4,322,596 Total $ 109,990,753 $ 94,023,353 $ 1,311,395 $ 111,302,148 $ 94,023,353 Additional information on the City's capital assets can be found in note 4 on pages 36-38 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 $7,950,314. Of this amount, $7,719,211 is a liability of the Redevelopment Agency. City of Rancho Palos Verdes Outstanding Debt RDA Tax Increment Bond RDA Deferred Interest Payable Employee compensated absences Governmental Activities June 30, 2006 1 June 30, 2005 $ 5,435,000 $ 2,284,211 231,103 5,450,000 2,468,906 220,873 Total $ 7,950,314 $ 8,139,779 The City's total debt decreased by $189,465 (2.3 percent) during the current fiscal year, due to partial payment of the RDA deferred interest payable. 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 $962,539,428. Additional information on the City's long-term debt can be found in note 5 on pages 38-40 of this report. Economic Factors and Next Year's Budgets and Rates ➢ Local property values remain strong; therefore, property tax revenue (approximately 24 percent of City-wide revenues) remains unaffected by the downturn in the economy. This factor was considered in preparing the City's budget for FY06-07. 9 CITY OF RANCHO PALOS VERDES Management's Discussion and Analysis June 30, 2006 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 Department, 30940 Hawthorne Boulevard, Rancho Palos Verdes, CA 90275. 10 L BASIC FINANCIAL STATEMENTS Shoreline trail at Ocean Front Estates Photo by Karen Peterson GOVERNMENT -WIDE STATEMENTS A shoreline trail at Fisherman's Access Scenic Turnout Photo by Karen Paterson CITY OF RANCHO PALOS VERDES STATEMENT OF NET ASSETS JUNE 30, 2006 Governmental Business -type Activities Activities ASSETS Cash and cash equivalents $ 36,081,094 Receivables: Taxes 969,913 Interest 412,958 Notes 768,658 Other 1,179,239 Prepaid costs 477,658 Land held for development 702,392 Capital assets Non -depreciable: Land 32,132,781 Construction in progress 520,139 Depreciable, net of accumulated depreciation: Property and equipment 348,901 Buildings and improvements 7,336,611 Infrastructure 69,652,321 Total Assets 150,582,665 LIABILITIES Accounts payable and accrued liabilities Interest payable Retentions payable Unearned revenue Deposits Noncurrent liabilities: Due within one year Due in more than one year Total Liabilities NET ASSETS Invested in capital assets Restricted for: Community development: Expendable Non -expendable Public safety Public works Recreation services Unrestricted Total Net Assets See accompanying notes to financial statements. 2,725,718 20,799 19,350 112,593 1,182,165 $ 3,070,981 $ 15,297 8,493 1,302,902 4,397,673 287,464 187,027 7,763,287 12,010,939 287,464 109,990,753 1,311,395 7,894,673 1,000,000 68,534 3,436,111 17,841 16,163,814 2,798,814 $ 138,571,726 $ 4,110,209 11 Total 39,152,075 969,913 428,255 768,658 1,179,239 477,658 702,392 32,132,781 528,632 348,901 7,336,611 70,955,223 154,980,338 3,013,182 20,799 19,350 112,593 1,182,165 187,027 7,763,287 12,298,403 111,302,148 7,894,673 1,000,000 68,534 3,436,111 17,841 18,962,628 $ 142,681,935 CITY OF RANCHO PALOS VERDES STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2006 Governmental Activities: Administration Public safety Public works Parks and recreation Planning, building and code enforcement Interest on long-term debt Total Governmental Activities Business -type Activities: Water Protection Flood Control Total Primary Government Charges for Expenses Services $ 4,350,356 $ 3,436,993 9,289,599 1,659,262 2,060,148 270,216 Program Revenues Operating Capital Contributions Contributions and Grants and Grants 34,914 223,838 37,274 45,221 1,318,540 21,066,574 1,659,787 46,624 $ 5,476 123,442 3,756,697 8,306 $ 17,299,613 3,893,921 $ 17,299,613 $ 21,113,198 $ 1,659,787 $ 3,893,921 $ 17,299,613 General Revenues: Taxes: Property tax, levied for general purpose Property tax, Redevelopment Agency tax increment Transient occupancy tax Franchise tax Sales tax In lieu sales tax (unrestricted) Motor vehicle in lieu tax (unrestricted) Utility user tax Other taxes Investment income Other Transfers Total General Revenues and Transfers Change in Net Assets Net Assets at Beginning of Year Net Assets at End of Year See accompanying notes to financial statements. 12 Net Revenue (Expense) and Change in Net Assets Governmental Business -type Activities Activities $ (4,309,966) (3,089,713) 11,803,985 (1,614,041) (733,302) (270,216) Total $ (4,309,966) (3,089,713) 11,803,985 (1,614,041) (733,302) (270,216) 1,786,747 1,786,747 $ (46,624) (46,624) 1,786,747 8,784,142 837,310 31,463 1,454,356 1,111,013 242,936 329,518 2,190,514 365,937 997,383 792,783 (2,109,492) 15,027,863 16,814,610 121,757,116 $ 138,571,726 $ (46,624) 1,740,123 8,784,142 837,310 31,463 1,454,356 1,111,013 242,936 329,518 2,190,514 365,937 47,255 1,044,638 792,783 2,109,492 2,156,747 17,184,610 2,110,123 18,924,733 2,000,086 123,757,202 4,110,209 $ 142,681,935 13 Wildflowers in the Agua Armaga Canyon Photo by Karen Peterson FUND FINANCIAL STATEMENTS CITY OF RANCHO PALOS VERDES GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2006 ASSETS Cash and cash equivalents Receivable Taxes Interest Other Due from other funds Prepaid items Advances to other funds Land held for development Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable and accrued liabilities Due to other funds Retentions payable Deferred revenue Advances to Redevelopment Agency Deposits Total Liabilities FUND BALANCES Reserved for: Reimbursement settlement agreement Prepaid costs Advances to other funds Land development Housing set-aside Unreserved: Designated for continuing appropriations Unreserved, undesignated and reported in: General fund Special revenue funds Capital projects funds Permanent funds Debt service fund Total Fund Balances Total Liabilities and Fund Balances See accompanying notes to financial statements. 14 General $ 15,977,009 919,041 189,130 526,527 387,365 92,436 13,688,479 Special Revenue Street Maintenance $ 878,600 2,373 57,710 Capital Projects Capital Improvements $ 2,857,663 $ 31,779,987 $ 938,683 $ $ 2,102,565 $ 19,350 7,785,936 1,182,165 11, 090, 016 92,436 6,072,354 876,105 13, 649, 076 20, 689, 971 140,057 $ 140,057 89,056 709,570 798,626 $ 31,779,987 $ 938,683 $ 22,586 70,176 2,950,425 151,232 151,232 2,799,193 2,799,193 2,950,425 Debt Service Other Governmental RDA Funds Totals $ 11,388,318 $ 31,101,590 50,872 969,913 146,884 360,973 524,826 1,179,239 387,365 $ 371,135 14,087 477,658 13,688,479 702,392 702,392 $ 371,135 $ 12,827,379 $ 48,867,609 $ 186,125 $ 2,579,979 $ 52,629 334,736 387,365 19,350 321,851 8,107,787 13,688,479 13,688,479 1,182,165 13,741,108 842,712 25,965,125 1,000,000 1,000,000 371,135 14,087 477,658 6,072,354 702,392 702,392 1,226,581 1,226,581 730,172 4,494,526 13,649,076 5,905,041 6,614,611 2,077,413 2,077,413 328,981 328,981 (13,741,108) (13,741,108) (13,369,973) 11,984,667 22,902,484 $ 371,135 $ 12,827,379 $ 48,867,609 15 The Whale Mural at Point Vicente Interpretive Center Photo by Holly Starr CITY OF RANCHO PALOS VERDES GOVERNMENTAL FUNDS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2006 Fund Balances of Governmental Funds $ 22,902,484 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets of governmental activities are not financial resources and, therefore, are not reported in the governmental funds. 109,641,852 Interest accrued on the advance receivable in the General Fund is not paid by the owing funds and, therefore, is recorded as deferred revenue and added to the balance of the advance. The statement of net assets reports on the full accrual basis and does not defer currently unavailable revenues. 7,616,125 Intergovernmental revenues earned, but not available are deferred in the fund financial statements. The revenue is not deferred on the Statement of Activities. 379,069 Interest expenditures are recognized when due, and therefore, interest payable is not recorded in the governmental funds. (20,799) Long-term notes receivable are not current available resources and, therefore, are not reported in the governmental funds. 768,658 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds. (7,950,314) 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 assets. 5,234,651 Net Assets of Governmental Activities $ 138,571,726 See accompanying notes to financial statements. 16 CITY OF RANCHO PALOS VERDES GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES ANC CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2006 General REVENUES Taxes $ 13,753,348 Licenses and permits 1,439,758 Fines and forfeitures 170,640 Use of money and property 1,121,940 Charges for services 48,109 Revenue from other agencies 540,143 Other revenues 105,200 Total Revenues 17,179,138 EXPENDITURES Current: Administration Public safety Public works Parks and recreation Planning, building and code enforcement Pass through to other agencies Capital outlay Debt service: Principal Interest and fiscal charges Total Expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources (Uses): Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year See accompanying notes to financial statements. 4,025,930 3,437,933 1,982,555 1,593,104 2,360,986 Special Revenue Street Maintenance $ 25,434 $ 1,280 1,045,269 1,071,983 1,617,751 13,400,508 1,617,751 3,778,630 (545,768) 190,158 728,873 (4,183,495) (3,993,337) 728,873 (214,707) 183,105 20,904,678 615,521 $ 20,689,971 $ 798,626 17 Capital Projects Capital Improvements 4,966,704 12,165, 867 17,132, 571 20,067,138 20,067,138 (2,934,567) 3,790,161 (472,000) 3,318,161 383,594 2,415,599 $ 2,799,193 Debt Service Other Governmental RDA Funds Totals $ 669,404 $ 897,936 $ 15,320,688 1,439, 758 170,640 924,123 7,038,201 49,389 1,759,569 15,510,848 50,004 155,204 669,404 3,631,632 39,684,728 12,126 3,025 4,041,081 3,437,933 1,676,643 5,276,949 1,593,104 479 2,361,465 199,829 199,829 135,274 20,202,412 199,695 199,695 1,149,634 1,149,634 1,561,284 1,815,421 38,462,102 (891,880) 1,816,211 1,222,626 279,931 4,989,123 (2,591,635) (7,247,130) (2,311,704) (2,258,007) (891,880) (495,493) (1,035,381) (12,478,093) 12,480,160 23,937,865 $ (13,369,973) $ 11,984,667 $ 22,902,484 18 CITY OF RANCHO PALOS VERDES RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES ANC CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2006 Net Change in Fund Balances - Total Governmental Funds $ (1,035,381) Amounts reported for governmental activities in the Statement of Activities differs from the amounts reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances 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 recgonized in the governmental funds. This activity is reconciled as follows: Cost of assets capitalized 19,464,895 Depreciation expense (2,948,718) Asset disposals (less accumulated depreciation) (556,177) Unpaid accrued interest income is deferred in the governmental funds since it is not available. This income is accrued in the Statement of Activities. 877,509 Intergovernmental revenues earned, but not available are deferred in the fund financial statements. The revenue is not deferred on the Statement of Activities. 185,865 Interest expenditures are recognized when due, and therefore, interest payable is not recorded in the governmental funds. This amount represents the net change in interest payable. 1,909 Increases in long-term notes receivable use current financial resources and are included in the expenditures, of governmental funds. Repayments of long-term notes receivable 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. 213,680 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. (10,230) Principal payments on debt are recorded as expenditures in the funds. The expenditure is not recognized in the Statement of Activites since it reduces the liability reported on the Statement of Net Assets. Principal payments consisted of the following: RDA Tax Increment Bond 15,000 RDA Deferred Interest Payable 184,695 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. 421,563 Change in Net Assets of Governmental Activities $16,814,610 See accompanying notes to financial statements. 19 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, 2006 REVENUES Taxes Licenses and permits Fines and forfeitures Use of money and property Charges for services Revenue from other agencies Other revenues Total Revenues EXPENDITURES Current: Administration Public safety Public works Parks and recreation Planning, building and code enforcement Total Expenditures Excess of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Budgeted Amounts Original Final $11,957,700 1,491,300 100,000 652,650 54,800 359,100 105,200 Actual Amounts Variance with Final Budget - Positive (Negative) $ 12,775,544 $ 13,753,348 $ 977,804 1,331,300 1,439,758 108,458 100,000 170,640 70,640 957,650 1,121,940 164,290 54,800 48,109 (6,691) 359,100 540,143 181,043 105,200 105,200 14,720,750 15,683,594 17,179,138 1,495,544 3,717,400 4,151,365 4,025,930 125,435 3,363,400 3,499,935 3,437,933 62,002 2,206,000 2,403,521 1,982,555 420,966 1,173,000 1,740,220 1,593,104 147,116 2,627,880 2,654,154 2,360,986 293,168 13,087,680 14,449,195 13,400,508 1,048,687 1,633,070 1,234,399 3,778,630 2,544,231 201,800 216,800 190,158 (26,642) (2,643,201) (5,022,967) (4,183,495) 839,472 (2,441,401) (4,806,167) (3,993,337) 812,830 (808,331) (3,571,768) (214,707) 3,357,061 20,904,678 20,904,678 20,904,678 $20,096,347 $ 17,332,910 $ 20,689,971 $ 3,357,061 See accompanying notes to financial statements. 20 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, 2006 REVENUES Use of money and property Charges for services Revenue from other agencies Total Revenues Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 9,900 $ 9,900 $ 25,434 $ 15,534 15,000 15,000 1,280 (13,720) 796,000 906,000 1,045,269 139,269 820,900 930,900 1,071,983 141,083 EXPENDITURES Current: Public works 1,798,000 2,133,944 1,617,751 516,193 Excess (Deficiency) of Revenues Over Expenditures (977,100) (1,203,044) (545,768) 657,276 OTHER FINANCING SOURCES (USES) Transfers in 898,500 1,003,500 728,873 (274,627) Net Change in Fund Balance (78,600) (199,544) 183,105 382,649 Fund Balance, Beginning of Year 615,521 615,521 615,521 Fund Balance, End of Year $ 536,921 $ 415,977 $ 798,626 $ 382,649 See accompanying notes to financial statements. 21 CITY OF RANCHO PALOS VERDES STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2006 ASSETS Current Assets Cash and cash equivalents Receivables: Interest Total Current Assets Noncurrent Assets Capital assets: Construction in progress Property and equipment Infrastructure Accumulated depreciation Total Noncurrent Assets Total Assets LIABILITIES Current Liabilities Accounts payable and accrued liabilities Total Liabilities NET ASSETS Invested in capital assets Unrestricted Total Net Assets See accompanying notes to financial statements. 22 Water Quality Flood Protection Enterprise Fund Governmental Activities - Internal Service Funds $ 3,070,981 $ 4,979,504 15,297 51,985 3,086,278 5,031,489 8,493 1,161,074 1,329,492 (26,590) (812,173) 1,311,395 348,901 4,397,673 5,380,390 287,464 145,739 287,464 145,739 1,311,395 348,901 2,798,814 4,885,750 $ 4,110,209 $ 5,234,651 CITY OF RANCHO PALOS VERDES STATEMENT OF REVENUE, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2006 OPERATING REVENUES Charges for services Total Operating Revenues OPERATING EXPENSES Personnel services Professional services Material and supplies Maintenance Depreciation Total Operating Expenses Operating Income (Loss) NONOPERATING REVENUES Interest income Total Non Operating Revenues Income Before Transfers TRANSFERS IN Change in Net Assets Net Assets, Beginning of Year Net Assets, End of Year See accompanying notes to financial statements. 23 Water Quality Flood Protection Enterprise Fund $ 20,034 26,590 46,624 (46,624) 47,255 47,255 631 2,109,492 2,110,123 2,000,086 $ 4,110,209 Governmental Activities - Internal Service Funds $ 1,799,966 1,799,966 1,172,979 66,164 251,973 205,889 1,697,005 102,961 170,087 170,087 273,048 148,515 421,563 4,813,088 $ 5,234,651 CITY OF RANCHO PALOS VERDES STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2006 CASH FLOWS FROM OPERATING ACTIVITIES Internal activity - payments from other funds Payments to suppliers NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in CASH FLOWS FROM INVESTING ACTIVITIES Interest received on investments NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, Beginning of Year CASH AND CASH EQUIVALENTS, End of Year RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation Decrease in other receivables Decrease in prepaid items Decrease in accounts payable NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES See accompanying notes to financial statements. 24 Water Quality Flood Protection Enterprise Fund Governmental Activities - Internal Service Funds $ 1,801,250 $ (20,034) (1,484,371) (20,034) (1,050,521) 2,109,492 31,958 1,070,895 2,000,086 316,879 (213,289) 148,515 149,288 401,393 4,578,111 $ 3,070,981 $ 4,979,504 $ (46,624) $ 102,961 26,590 205,889 1,284 1,043 5,702 $ (20,034) $ 316,879 L NOTES TO FINANCIAL STATEMENTS The trail at Lower Hesse Park Photo by Karen Peterson CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 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, the Rancho Palos Verdes Redevelopment Agency (the RDA) 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 RDA was formed in 1984 pursuant to the State of California Health and Safety Code, Section 33000 entitled "Community Redevelopment Law". Its purpose is to finance long-term capital improvements designed to eliminate physical and economic blight in a project area through stabilization of hazardous landslides. 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 RDA and the County of Los Angeles (the 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 RDA. The criteria used in determining the scope of the reporting entity are based on the provisions of GASB Statement 14. The City of Rancho Palos Verdes is the primary government unit. Component units are those entities which are financially accountable to the primary government, either because the City appoints a voting majority of the component unit's Board, or because the component unit will provide a financial benefit or impose a financial burden on the City. The City has accounted for both the RDA and the Authority as "blended" component units. Despite being legally separate, the RDA and the Authority are so intertwined with the City, it is in substance, part of the City's operations. Accordingly, the balances and transactions of the RDA are reported as separate funds in the Special Revenue, Debt Service, and Capital Projects Funds. The balances and transactions of the Authority are reported as separate funds in a Permanent Fund and a Special Revenue Fund. The following specific criteria were used in determining that the RDA and the Authority are "blended" component units: 1) The members of the City Council also act as the governing body of both the RDA and the Authority. 2) The City, the RDA and the Authority are financially interdependent. The City makes loans to the RDA for use on redevelopment projects. Available property tax revenues of the RDA will be used to repay the loans from the City. It is not anticipated that tax increment revenues will be available to repay the loans any time in the immediate future. 3) Employees of the City manage both the RDA and the Authority. 25 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued The financial statements for both the RDA and the Authority may be obtained at the City's administrative offices. Participation in Public Entity Joint Powers Authority The City is a member of the Palos Verdes Peninsula Transit Joint Powers Authority. The Transit Authority is comprised of four 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 Assets. 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 from the Authority. B. Accounting and Reporting Policies The City has conformed to the pronouncements of the GASB, which are the primary authoritative statements of accounting principles generally accepted in the United States of America applicable to state and local governments. In accordance with GASB Statement No. 20, the City applies all applicable Financial Accounting Standards Board (FASB) pronouncements, as well as those of its predecessors, issued on or before November 30, 1989, unless any such pronouncements contradict GASB pronouncements. The City also applies all FASB Statements and Interpretations issued after November 30, 1989, except those that conflict with or contradict GASB pronouncements. C. 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 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. • Debt Service Fund — The debt service fund of the RDA is used to account for property tax increment revenue and related interest income. Disbursements from this fund consist mainly of principal and interest on RDA indebtedness. 26 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued • Capital Projects Funds — Used to account for financial resources used for the construction of specific capital projects. • Permanent Fund — 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 Type • Enterprise Funds — 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 the financing of goods or services provided by one department of the City to other departments on a cost -reimbursement basis. D. Basis of Accounting/Measurement Focus Government — Wide Financial Statements The City's Government -Wide Financial Statements include a Statement of Net Assets and a Statement of Activities and Changes in Net Assets. These statements present summaries of Governmental Activities for the City. These statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets and infrastructure as well as long-term debt, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. 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. The types of transactions reported as program revenues 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. Internal balances in the Governmental -wide statements have been eliminated as prescribed by GASB Statement No. 34. 27 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Governmental Fund Financial Statements Governmental fund financial statements include a Balance Sheet and Statement of Revenue, Expenditures, and Changes in Fund Balances for all major governmental funds and aggregated non - major funds. An accompanying schedule is presented to reconcile and explain the differences in fund balances as presented in these statements to the net assets presented in the Government -Wide Financial Statements. The City has presented all major funds that met qualifications of GASB Statement No. 34. In addition, the City has presented the Street Maintenance Special Revenue Fund as a major fund because the City believes the financial position and activities of this fund are significant to the City as a whole. All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included 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 (see Note #10), taxpayer -assessed taxes such as sales taxes, and earnings on investments. Grant funds earned but not received are recorded as a receivable, and grant funds received before the revenue recognition criteria have been met are reported as deferred revenues. Expenditures are recorded when the fund liability is incurred, if measurable, except for immature interest on general long-term debt, which is recognized when due. The City reports the following major governmental funds The General Fund is the government'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 highway users tax used for street maintenance, right-of-way acquisition and street construction. The Capital Improvement Capital Projects Fund is used to account for the funds used for the City's capital improvement projects. The RDA Debt Service Fund is used to account for the accumulation of resources and for the payment of principal and interest on the RDA's debt and other long-term obligations. 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. Their reported fund equity presents total net assets. The operating statement of the proprietary funds present increases (revenues) and decreases (expenses) in total net assets. Revenues are recognized when they are earned and expenses are recognized when the liability is incurred. 28 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued 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 to customers for sales and services. Operating expenses for the enterprise and internal service funds include the costs of sales and services, the costs of 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'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 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. The City uses the internal service funds to finance and account for goods and services provided by one City department to other City department including the purchase and maintenance of equipment, replacement of buildings and employee benefits. E. Budgetary Accounting Annual budgets are adopted on a basis consistent with GAAP for all governmental funds. All annual appropriations lapse at fiscal year-end. Throughout the year, the City Council made several supplementing budgetary adjustments to the General fund, Special Revenue funds, Capital Projects funds, Proprietary funds and the Permanent fund. These adjustments resulted in a net appropriation increase in the amount of $25,176,847. This increase resulted primarily from amounts carried over from FY04-05 as continuing appropriations and the Portuguese Bend open space purchase. 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 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, 2006, based on calculations by City Management, proceeds of taxes did not exceed related appropriations. F. Advances to Other Funds Long-term inter -fund advances are recorded as a receivable in the advancing governmental fund and as a liability in the fund receiving the advance. Accrued unpaid interest is deferred in the advancing governmental fund and the principal portion of the advance is reported as a reservation of fund balance. 29 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued G. Capital Assets Capital assets, which include land, machinery and equipment (vehicles, computers, etc.), buildings and improvements, and infrastructure assets (street systems, storm drains, sewer systems, etc.), are reported in Governmental Activities column of the Government -Wide Financial Statements. 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 H. 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 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. There is no fixed payment schedule for employee compensated absences. At June 30, 2006, vested accrued vacation and compensatory time amounted to $231,103. I. Investments The City has adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No 31, "Accounting and Financial Reporting for Certain Investments and External Pools", which require governmental entities to report certain investments at fair value in the balance sheet and recognize the corresponding change in the fair value of investments in the year in which the change occurred. In accordance with GASB Statement No. 31, the City has adjusted certain investments to fair value (when material). Investments are included within the Financial Statement classifications of "Cash and Cash Equivalents" and are stated at fair value, (see Note #2). 30 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued J. Cash and Cash Eauivalents For purposes of the statement of cash flows of the proprietary funds, all cash and investments with an original maturity of 90 days or less are considered to be cash and cash equivalents. As explained in Note #2, the City pools investment funds for maximum return. A substantial portion of these investments is held in the State Treasurer's Local Agency Investment Pool, which is highly liquid. The City has no non-cash investing, capital, or financing activities to be reported on the statement of cash flows. K. 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. At June 30, 2006, in the opinion of the City Attorney, the City had no material claims, which require loss provisions in the financial statements. 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 #8. The CJPIA is a public entity risk pool, which is accounted for under the provisions of GASB Statement 10. Claim losses recorded in the CJPIA include both current claims and Incurred But Not Reported claims (IBNR). The City records amounts deposited with CJPIA as insurance expenditures in the General Fund when paid. These deposits are subject to retrospective adjustment. Favorable claims experience result in a refund of deposits from the CJPIA and such refunds, if any, are recorded as a reduction of insurance expenditures in the year received. Adverse claims experience result in the payment of additional deposits and such deposits, if any, are recorded as insurance expenditures when paid. L. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that effect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. M. 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, and then unrestricted resources as they are needed. N. New Pronouncements GASB Statement No. 42 - In November 2003, the GASB issued Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries. This statement requires governments to measure, recognize, and disclose the effects of capital asset impairments in their financial statements when it occurs. This statement also clarifies and establishes accounting requirements for insurance recoveries, including those associated with capital asset impairment. This statement became effective for 2005-06 and did not have a significant impact on the financial statements. 31 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued GASB Statement No. 43 - In April 2004, the GASB issued Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. This statement establishes accounting and financial reporting standards for plans that provide postemployment benefits other than pension benefits (known as other postemployment benefits or OPEB). This statement is not effective until June 30, 2007. This statement does is not expected to have a significant impact on the financial statements of the City. GASB Statement No. 44 - In May 2004, the GASB issued Statement No. 44, Economic Condition Reporting: The Statistical Section -an amendment of NCGA Statement No. 1. This Statement amends the portions of NCGA Statement 1, Governmental Accounting and Financial Reporting Principles, that guide the preparation of the statistical section. The statistical section presents detailed information, typically in ten-year trends, that assists users in utilizing the basic financial statements, notes to basic financial statements, and required supplementary information to assess the economic condition of a government. This statement became effective for 2005-06 and has resulted in changes to the content and presentation of the statistical section. GASB Statement No. 45 - In June 2004, the GASB issued Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. This Statement establishes standards for the measurement, recognition, and display of OPEB expense/expenditures and related liabilities (assets), note disclosures, and, if applicable, required supplementary information (RSI) in the financial reports of state and local governmental employers. This statement is not effective until June 30, 2008. The City has not determined its effect on the financial statements. GASB Statement No. 46 — In December 2004, the GASB issued Statement No. 46, Net assets Restricted by Enabling Legislation, an amendment of GASB No. 34. This statement clarifies that a legally enforceable enabling legislation restriction is one that a party external to a government can compel a government to honor. Accordingly, it clarifies the determination of restricted net assets within the statement of net assets. This statement became effective for 2005-06 and did not have a significant impact on the financial statements. GASB Statement No. 47 — In June 2005, the GASB issued Statement No. 47, Accounting for Termination Benefits. This statement establishes accounting standards for termination benefits. This statement became effective for 2005-06 and did not have a significant impact on the financial statements. NOTE #2 — CASH AND INVESTMENTS Cash and investments as of June 30, 2006, are classified in the accompanying financial statements as follows: Governmental Funds Proprietary Funds: Enterprise Fund Internal Service Funds 32 $ 31,101,590 3,070,981 4,979,504 $ 39,152,075 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #2 — CASH AND INVESTMENTS, Continued Cash and investments as of June 30, 2006 consist of the following: Cash $ 811,668 Investments 38,340,407 $ 39,152,075 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. The table also identifies certain provisions of the California Government Code that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maximum Authorized Maximum Amount or Percent Investment Investment Type Maturity of Portfolio in One Issuer Local Agency Bonds 5 years None None U.S. Treasury Obligations 5 years None None U.S. Agency Securities 5 years None None Banker's Acceptances 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% None Repurchase Agreements 7 days 15% None Reverse Repurchase Agreements 92 days 20% of base value None Medium -Term Notes 5 years 30% None Mutual Funds N/A 20% 10% Money Market Mutual Funds N/A 15% 5% Mortgage Pass -Through Securities 5 years 20% None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A None None JPA Pools (other investment pools) N/A None None Money Market Savings/Demand Deposits N/A $1 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, the greater the sensitivity of its fair value to changes in market interest rates. The City's only investment is with the Local Agency Investment Fund (LAIF) managed by the California State Treasurer. 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. 33 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #2 — CASH AND INVESTMENTS, Continued Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The 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, except for money market funds, which may not exceed five percent per issuer. The City's LAIF investment represents 100 percent of the City's portfolio. 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 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. The amount of the City of Rancho Palos Verdes' deposits with financial institutions in excess of federal depository insurance limits that was held in collateralized accounts where the collateral is not held specifically in the name of the City, as described above, was $535,444 at June 30, 2006. Investment in State Investment Pool 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 reported in the accompanying financial statements at amounts based upon the City of Rancho Palos Verdes' pro -rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. LAIF is a governmental investment pool managed and directed by the California State Treasurer and is not registered with the Securities and Exchange Commission. An oversight committee, comprised of California State officials and various participants, provide 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. 34 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #3 — INTERFUND TRANSACTIONS Inter -fund Balances Inter -fund balances consisted of the following at June 30, 2006: Due to the General Fund from: RDA Debt Service Fund $ 52,629 Nonmajor Governmental Funds: CDBG Special Revenue Fund 41,136 Measure A Special Revenue Fund 293,600 Total Non -major Governmental Funds 334,736 Total Due to the General Fund $ 387,365 General fund monies were used to cover an RDA Debt Service fund negative cash balance for expenditures incurred. Funds were also advanced to non -major funds to cover grant expenditures until reimbursement is received from the grant agency. Inter -fund Advances The General Fund has advanced the RDA Debt Service Fund amounts as described below: Advances to the Redevelopment Agency Balance Balance July 1, 2005 Additions Deletions June 30, 2006 $ 12,717,430 $ 971,049 $ 13,688,479 The City has entered into an agreement to provide the RDA operating funds and staff assistance, supplies, technical and other services and facilities of the City as the RDA requires in carrying out its function under the community redevelopment law. The RDA will repay the resulting indebtedness, plus interest, from incremental property tax revenues arising from the project area, as such revenue becomes available. As of June 30, 2006, no revenue was available to the RDA to repay the advances due to the City, nor are sufficient revenues expected to be available to repay advances in the immediate future. Variable interest was accrued at a rate of 6.85 percent during the fiscal year ended June 30, 2006. Of the $13,688,479 remaining indebtedness, $10,713,255 relates to the Portuguese Bend portion of the RDA, while $2,975,224 relates to the Abalone Cove portion. During the year ended June 30, 2006, accrued interest of $686,779 was added to the balance of the advance to the Portuguese Bend Fund, while principal of $93,540 and accrued interest of $190,730 was advanced to the Abalone Cove Fund. No interest has ever been paid by the RDA on these advances; therefore, the interest component of the advance has been recorded as deferred revenue in the General Fund of the City. 35 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #3 — INTERFUND TRANSACTIONS, Continued Inter -fund Transfers Inter -fund transfers for the year ended June 30, 2006 consisted of the following: Transfer To Transfer From Capital Nonmajor General Improvement Governmental Fund Projects Funds Total General Fund $ 190,158 $ 190,158 Street Maintenance $ 225,050 503,823 728,873 Capital Improvement Projects 1,941,022 1,849,139 3,790,161 Nonmajor Governmental Funds 279,931 279,931 WQ Flood Enterprise 1,637,492 $ 472,000 2,109,492 Internal Service Funds 100,000 48,515 148,515 Total $ 4,183,495 $ 472,000 $ 2,591,635 $ 7,247,130 Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and (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. 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 Assets. The City elected to use the basic reporting approach as defined by GASB Statement No. 34 for all infrastructure, whereby depreciation expense and accumulated depreciation has been recorded. The following tables present the capital assets activity for the year ended June 30, 2006. 36 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #4 — CAPITAL ASSETS AND DEPRECIATION, Continued Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Buildings and improvements Vehicles Computer equipment Furniture, fixtures and equipment Infrastructure Roadway system Sewer system Storm drain system Parks system Total capital assets being depreciated Less accumulated depreciation for: Buildings and improvements Vehicles Computer equipment Furniture, fixtures and equipment Infrastructure Roadway system Sewer system Storm drain system Parks system Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Beginning Balance $ 15,058,724 4,322,596 19,381,320 3,197,989 177,069 387,255 383,461 77, 079, 026 25,755,463 12,455,398 5,575,075 125,010,736 (1,146,950) (161,495) (233,680) (211,109) (28,809,481) (14, 577, 334 ) (1,480,023) (3,748,631) (50,368,703) 74,642,033 $ 94,023,353 Increases Decreases Ending Balance $17,074,057 $ 32,132,781 2,284,096 $ (6,086,553) 520,139 19,358,153 (6,086,553) 32,652,920 6,013,760 48,515 141,550 23,224 179,535 6,406,584 (172,011) (15,952) (108,244) (81,693) (1,995,967) (455,109) (235,057) (90,574) (3,154,607) 3,251,977 $ 22,610,130 (611,185) 8,600,564 225,584 528,805 406,685 77,079,026 25,755,463 12,634,933 5,575,075 (611,185) 130,806,135 55,008 (1,263,953) (177,447) (341,924) (292,802) (30,805,448) (15,032,443) (1,715,080) (3,839,205) 55,008 (53,468,302) (556,177) 77,337,833 $ (6,642,730) $109,990,753 Depreciation expense was charged to functions/programs of the primary government as follows: Administration Public works, including depreciation of general infrastructure assets Recreation services Capital assets held by the City's internal service funds are charged to the various functions based on their usage of the assets Total Depreciation Expense - Governmental Activities 37 $ 172,011 2,686,133 90,574 205,889 $ 3,154,607 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #4 — CAPITAL ASSETS AND DEPRECIATION, Continued Beginning Business -type Activities Balance Increases Capital assets not being depreciated: Construction in progress $ 8,493 Total capital assets not being depreciated - 8,493 Capital assets being depreciated: Infrastructure Storm drain system Total capital assets being depreciated Less accumulated depreciation for: Infrastructure Storm drain system Total accumulated depreciation 1,329,492 1,329,492 Ending Decreases Balance $ 8,493 8,493 1,329,492 1,329,492 (26,590) (26,590) (26,590) - (26,590) Total capital assets being depreciated, net - 1,302,902 Governmental activities capital assets, net $ - $ 1,311,395 $ - 1,302,902 - $ 1,311,395 Depreciation expense of $26,590 is included in the Water Quality Flood Protection enterprise fund. NOTE #5 — LONG-TERM DEBT RDA Tax Increment Bond RDA Deferred Interest Payable Employee compensated absences Totals A. Balance July 1, 2005 $ 5,450,000 2,468,906 220,873 $ 8,139,779 Balance Amount Due Additions Deletions June 30, 2006 in 2007 $ 15,000 $ 5,435,000 $ 25,000 184,695 2,284,211 $ 165,085 154,855 231,103 162,027 $ 165,085 $ 354,550 $ 7,950,314 $ 187,027 RDA Tax Increment Bond and Deferred interest Payable In July 1991, the RDA 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 RDA in the amount of $787,340. 38 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #5 — LONG-TERM DEBT, Continued Per the terms of the Agreement, $1,000,000 of the proceeds was deposited in the Abalone Cove Maintenance Nonexpendable Trust Fund of the Joint Powers Improvement Authority. The remainder of the proceeds was accounted for in the RDA's Abalone Cove Fund. Concurrent with the execution of the Agreement, the County deeded its title in the Abalone Cove Beach Park to the RDA. As part of the Agreement, the RDA is 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 RDA 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 ending 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 ending June 30, 2002, with interest at 7.7654 percent. On November 1, 1997, the City, RDA and County of Los Angeles entered into a Memorandum of Understanding (MOU) agreeing to restructure the repayment schedule of the debt owed the County by the RDA. In accordance with the terms of the MOU, the $10,000,000 loan principal owed the County was cancelled. As consideration for the loan cancellation, the RDA 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 RDA 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 RDA bond was issued as a conduit through the Improvement Authority to the County. No issuance costs were incurred. One hundred percent of net future tax increment revenue will fund the payment of the RDA bond debt and the deferred interest from the original Loan until paid in full. In December 1997, the County began withholding payment of the Agency's net tax increment revenue (net of the 17 percent payment to the County Fire Protection District and the 20 percent housing set- aside amount) to offset the annual principal and interest charges. The principal of the RDA bond will mature 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 is $3,111,400. In accordance with the MOU, the recalculated deferred interest does not accrue additional interest. As of June 30, 2006, a total of $827,189 in accumulated tax increment has been applied against this balance, including $184,695 applied during fiscal year 2005-06. The remaining balance at June 30, 2006, was $2,284,211. The accumulated amount of tax increment withheld over the scheduled principal and interest payment made during the life of the RDA bond is recorded in the Debt Service Fund as a prepaid item at June 30, 2006. 39 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #5 — LONG-TERM DEBT, Continued After payment of the deferred interest, the RDA may elect to further defer payment to the County of the 50.9 percent of tax increment revenue in order to extinguish any other indebtedness of the RDA. This deferral would allow the tax increment to be available for the repayment of loans made to the RDA by the City (Note #3). In the event the deferral is elected, the debt owed the City is fully extinguished and no other RDA indebtedness exists, the RDA will transfer all subsequent tax increment revenue to the County to fund prior deferrals of, and current payments of, the 50.9 percent of tax increment revenue required to be paid per the Settlement Agreement. The debt service schedule below summarizes all fixed principal and interest payments for the term of the RDA bond. Because the payback period for the deferred interest amount will fluctuate depending on the availability of excess tax increment revenues, no amounts have been included in the following schedule for repayment of the deferred interest. Year Ended Tax Allocation Bond June 30 Principal Interest Total 2007 $ 25,000 $ 271,125 $ 296,125 2008 40,000 269,500 309,500 2009 55,000 268,125 323,125 2010 65,000 265,125 330,125 2011 85,000 260,375 345,375 2012-2016 690,000 1,214,750 1,904,750 2017-2021 1,275,000 972,875 2,247,875 2022-2026 2,085,000 557,875 2,642,875 2027-2028 1,115,000 56,875 1,171,875 $ 5,435,000 $ 4,136,625 $ 9,571,625 B. Employee Compensated Absences There is no fixed payment schedule for employee compensated absences. Based on historical trends, $162,027 is estimated to be the amount that will be used and/or paid out during FY 05-06. NOTE #6 — CLASSIFICATIONS OF NET ASSETS AND FUND BALANCE In the Government -Wide financial statements net assets are classified in the following categories: Invested in Capital Assets This category groups all capital assets, including infrastructure, into one component of net assets. Accumulated depreciation on these assets reduces this category. Restricted Net Assets 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 Assets This category represents the net assets of the City that are not externally restricted for any project or other purpose. 40 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #6 — CLASSIFICATIONS OF NET ASSETS AND FUND BALANCE, Continued In the Fund Financial Statements the City has established "reserves" to segregate portions of fund balance which are not appropriable for expenditure in future periods, or which are legally set aside for a specific future use. In addition, fund balance may be designated to indicate tentative plans for financial resource utilization of unreserved fund balance in a future period. The City's governmental funds reserves and designations at June 30, 2006 are presented below, followed by explanations of the nature and purpose of each reserve and designation. Reserved: Reimbursement settlement agreement Advances to other funds Prepaid costs Land held for development Housing set-aside Steet Capital RDA Debt Other General Maintenance Improvement Service Governmental Fund Fund Fund Fund Funds $ 6,072,354 92,346 $ 371,135 $ 1,000,000 14,087 702,392 1,226,581 Total Reserved $ 6,164,700 $ - $ - $ 371,135 $ 2,943,060 Designated: Continuing appropriations $ 876,105 $ 89,056 $ 2,799,193 $ $ 730,172 A. Designated for Encumbrances and Continuing Appropriations These designations are maintained for current year budget appropriations that are formally carried over into the subsequent fiscal year. B. Reserved for Reimbursement Settlement Agreement This reserve has been established under the legal requirements of the Reimbursement Settlement Agreement (see Note #5). C. Reserved for Advances to Other Funds This reserve represents the long-term portion of loans from the City's General Fund to the RDA less $7,616,125 recorded as deferred revenue (see Note #11). D. Reserved for Prepaid Items This reserve is provided to indicate that the asset carrying value is not available to spend to meet expenditures of the current year. E. Reserved for Land Held for Development These funds are reserved for land purchased by the City to be sold or otherwise used for the development of low and moderate -income housing. 41 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #6 — CLASSIFICATIONS OF NET ASSETS AND FUND BALANCE, Continued F. Reserved for Housing Set -Aside These funds are reserved for low and moderate -income housing as restricted by law or administrative action. The City has also designated $38,848 of net assets of the Water Quality Flood Protection Enterprise Fund for future projects. NOTE #7 — PENSION PLAN Plan Description The City's defined benefit pension plan provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. The Plan is part of the Public Agency portion of the California Public Employees Retirement System (CaIPERS), an agent multiple - employer plan administrated by CaIPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. 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 CaIPERS and adopts those benefits through local ordinance. The CaIPERS issues a separate comprehensive annual financial report. Copies of the CaIPERS annual financial report may be obtained from the CaIPERS Executive Office — 400 P Street, Sacramento, California, 95814. Funding Policy A contribution of 7 percent of annual covered salary is required for each active plan member. For local miscellaneous members, the City pays the full 7 percent contribution for all the full-time positions, while part-time employees must contribute the 7 percent from earnings. Additionally, the City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CaIPERS Board of Administration. The required employer contribution rate for FY 05-06 was 12.452 percent for local miscellaneous members. The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by CaIPERS. Annual Pension Cost For FY05-06, the City's actual and contributed pension cost was $590,591. The required contribution for FY05-06 was determined as part of the June 30, 2003 actuarial valuation using the entry age normal actuarial cost method with the contributions determined as a percent of pay. The actuarial assumptions included (a) 7.75 percent investment rate of return (net of administrative expenses); (b) projected salary increases that vary by duration of service ranging from 3.25 percent to 14.45 percent; and (c) payroll growth of 3.25 percent. Both (a) and (b) include an inflation component of 3.0 percent. The actuarial value of the Plan's assets was determined using a technique that smoothes the effect of short-term volatility in the market value of investments over a two to five year period depending on the size of investment gains and/or losses. The Plan's un -funded actuarial accrued liability (or excess assets) is being amortized as a level percentage of projected payroll expenditures on a closed basis. 42 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #7 — PENSION PLAN, Continued Three -Year Trend Information for Plan: Annual Pension Cost (APC) $ 267,684 411,412 590,591 Fiscal Year Ending 6/30/2004 6/30/2005 6/30/2006 Percentage of APC Contributed 100% 100% 100% Schedule of Funding Status of Plan (Required Supplementary Information): Valuation Date Actuarial Value of Assets 6/30/2003 $ 2,372,879,034 6/30/2004 2,460,944,656 6/30/2005 2,588,713,000 Entry Age Normal Accrued Liability $ 2,596,966,545 2,746,095,668 2,891,460,651 Unfunded (Overfunded) Liability $ 224,087,511 285,151,012 302,747,651 Funded Ratio Annual Covered Payroll 91.4% $ 725,020,458 89.6% 743,691,970 89.5% 755,046,679 Net Pension Obligation $ 0 $ 0 $ 0 UAAL as a % of Payroll 30.9% 38.3% 40.1% 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. Mandated pooling is effective with the June 30, 2003 valuation which determines the contribution rate for 2005-2006. The 2005-2006 is the first year under pooling, and therefore, the City's pooled employer contribution rate is the same as the stand-alone employer contribution rate. This is because the difference between the pool's normal cost and the stand-alone normal cost will be phased out over five years, beginning with 2006-2007. For 2005-2006, 100 percent of the difference between the pool's normal costs and the stand-alone normal cost is reflected in the development of the City's pooled employer contribution rate. For 2006-2007, only 80 percent of the difference will be reflected; for 2007-2008, 60 percent will be reflected, and so on, until it is fully subject to the pool's normal costs for 2010-2011 and beyond. NOTE #8 — INSURANCE Description of Self -Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the California Joint Powers Insurance Authority (CJPIA). The CJPIA is comprised of 112 California public entities and is organized under a joint powers agreement pursuant to California Government Code section 6500 et seq. The purpose of the CJPIA is to arrange and administer programs for the pooling of self-insured losses and to purchase excess insurance or reinsurance, and to arrange for group -purchased insurance for property and other coverage. The CJPIA pool 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 9 -member Executive Committee. The accounting methods used by the CJPIA are more fully described at Note #1-K. 43 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #8 — INSURANCE, Continued Self -Insurance Programs of the CJPIA • General Liability Each member government pays a primary deposit to cover estimated losses for a fiscal year (claims year). Six months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Costs are spread to members as follows: the first $30,000 of each occurrence is charged directly to the member; costs from $30,001 to $750,000 are pooled based on a member's share of costs under $30,000; costs from $750,001 to $15,000,000 are pooled based on payroll. Costs of covered claims above $15,000,000 are currently transferred to an excess insurance policy. The protection for each member is $50,000,000 per occurrence and $50,000,000 annual aggregate. • Workers' Compensation Workers' Compensation. The City also participates in the workers' compensation pool administered by the Authority. Members retain the first $50,000 of each claim. Claims are pooled separately between public safety and non-public safety. Loss development reserves are allocated by pool and by loss layer ($0 to $100,000 allocated by retained amount and $100,000 to $2,000,000 by payroll). Losses from $50,000 to $100,000 and the loss development reserve associated with losses up to $100,000 are pooled based on the member's share of losses under $50,000. Losses from $100,000 to $2,000,000 and loss development reserves associated with losses from $100,000 to $2,000,000 are pooled based on payroll. Costs from $2,000,000 to $150,000,000 are transferred to an excess insurance policy. Costs in excess of $150,000,000 are pooled among the Members based on payroll. Administrative expenses are paid from the Authority's investment earnings. Purchased Insurance • Environmental Insurance The City participates in the pollution legal liability and remediation legal liability insurance, which is available through the CJPIA. 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 CJPIA has a limit of $50,000,000 for the 3 -year period from July 1, 2005 through June 30, 2008. Each member of the CJPIA has a $10,000,000 limit during the 3 -year term of the policy. • Property Insurance The City participates in the all-risk property protection program of the CJPIA. Several insurance companies underwrite this insurance protection. The City's property is currently insured according to a schedule of covered property submitted by the City to the CJPIA. Total all-risk property insurance coverage is $9,998,902. There is a $5,000 per loss deductible. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. 44 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #8 — INSURANCE, Continued • Earthquake 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 CJPIA. The City's property currently has earthquake protection in the amount of $9,304,688. There is a deductible of 5 percent of value with a minimum deductible of $100,000. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. Adequacy of Protection During the past three fiscal (claims) years none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage in the year ended June 30, 2006. As previously described in Note #1-K, the City has no material claims, which would require loss provisions in the financial statements. NOTE #9 — CONTINGENCIES AND COMMITMENTS Litigation 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 #8) 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. The likelihood of an unfavorable outcome or the amount of potential losses cannot be reasonably estimated by the City for these claims at this time. In the event of an unfavorable outcome the losses would likely be material to the City's financial statements. Storm Drain Failures During the winter storms of fiscal year 2004-05 emergency repairs were required to fix sinkholes along the City's border with the City of Los Angeles. The sink holes were created as a result of failures in the storm drain system. One sinkhole was repaired by the City at a cost of approximately $650,000. The City received reimbursement from the Federal Emergency Management Agency in the amount of approximately $634,000 related to the repairs; however, it is unclear whether the final costs will be allowable under FEMA guidelines. If the costs are not allowed, the funding would have to be returned. Other sinkholes were repaired by Caltrans at a cost estimated to be as high as $10 million. It is unclear whether Caltrans will seek reimbursement from the City, or in what amount, in connection with these repairs. The City is working with FEMA, the Federal Highway Administration (FHWA), Caltrans, and the City and County of Los Angeles to resolve the issues of responsibility for repair and funding sources. The repairs of the sinkholes also brought to light issues with other storm drains in the area. The City's share of costs for preventative and/or emergency repairs, if required, is unknown. 45 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #9 — CONTINGENCIES AND COMMITMENTS, Continued Excess Surplus The Redevelopment Agency's Low/Moderate Income Housing Fund has accumulated excess surplus fund balance as defined by the California Health and Safety Code. The Agency is required to develop a plan to eliminate the excess surplus within the time frame allowed by the Health and Safety Code. If the Agency does not eliminate the excess surplus in the required time frame significant penalties could be assessed, including transferring such excess surplus to the County Housing Authority and/or the California Department of Housing and Community Development. NOTE #10 — 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 #11 — DEFERRED REVENUES March 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, 2006 consisted of the following: Source Accrued Interest from Long -Term Advances to the Redevelopment Agency Advance on Federal Grant Revenue earned but not available Total Deferred Revenues 46 General Fund Non -major Governmental Funds $ 7,616,125 112,593 57,218 $ 321,851 $ 7,785,936 $ 321,851 CITY OF RANCHO PALOS VERDES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 NOTE #12 — LAND HELD FOR DEVELOPMENT On March 21, 2000, the City purchased approximately 20 acres of land to be used for an affordable housing project. The total cost of the land was $702,392. The City has recorded the cost of the land as an asset in the special revenue fund that purchased the property (Housing Set -Aside fund). A developer has submitted an application for a senior condominium housing project, with an affordable housing component, which includes the City owned parcel and a neighboring private parcel. If approved, the City anticipates transferring the City's land to the developer for construction of the housing project. The City will recognize a gain or loss on the disposal of the land at the time a disposition and development agreement is finalized. The fund balance in the Housing Set -Aside fund has been reserved for an amount equal to the purchase price of the land. NOTE #13 — OTHER REQUIRED FUND DISCLOSURES The following fund had deficit fund balance as of June 30, 2006: RDA Debt Service Fund $ 13,369,973 Parks/Measure A Fund $ 255,638 The City plans to finance this deficit through future revenues to the funds. The following fund had expenditure in excess of the budget for the year ended June 30, 2006, as follows: Budget Expenditures Excess RDA Debt Service Fund $ 1,378,963 $ 1,561,284 $ 182,321 47 L SUPPLEMENTARY INFORMATION CITY OF RANCHO PALOS VERDES JUNE 30, 2006 MAJOR FUND BUDGETARY COMPARISON SCHEDULES Budgetary comparison statements are presented as part of the basic financial statements for the General fund and the major Special Revenue fund as provided for by GASB Statement No. 34. The budgetary comparison schedules for the remaining major funds are presented to aid in additional analysis and are not a required part of the basic financial statements. 48 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CAPITAL IMPROVEMENTS CAPITAL PROJECTS FUNE FOR THE YEAR ENDED JUNE 30, 2006 REVENUES Use of money and property Revenue from other agencies Total Revenues EXPENDITURES Capital outlay Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Budgeted Amounts Original Final $ 9,600 $ 4,904,401 12,049,677 Actual Amounts $ 4,966,704 12,165, 867 9,600 16,954,078 17,132,571 2,221,676 20,427,399 20,067,138 (2,212,076) (3,473,321) (2,934,567) 2,185,049 2,706,323 (472,000) 2,185,049 2,234,323 3,318,161 (27,027) (1,238,998) 383,594 2,415,599 2,415,599 2,415,599 3,790,161 (472,000) Variance with Final Budget - Positive (Negative) $ 62,303 116,190 178,493 360,261 538,754 1,083,838 1,083,838 1,622,592 $ 2,388,572 $ 1,176,601 $ 2,799,193 $ 1,622,592 49 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL RDA DEBT SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2006 REVENUES Taxes EXPENDITURES Current: Administration Pass through to other agencies Debt Service Principal Interest and fiscal charges Total Expenditures Net Change in Fund Balance Fund Balance, Beginning of Year, as restated Fund Balance, End of Year Budgeted Amounts Original Final $ 615,800 14,500 130,900 15,000 980,000 1,140,400 (524,600) (12,478,093) $(13,002,693) 50 Variance with Final Budget - Actual Positive Amounts (Negative) $ 615,800 $ 669,404 $ 53,604 14,500 12,126 2,374 199,829 199,695 (184,695) 1,149, 634 1,561,284 (182,321) 199,829 15,000 1,149, 634 1,378,963 (763,163) (891,880) (128,717) (12,478,093) (12,478,093) $(13,241,256) $(13,369,973) $ (128,717) CITY OF RANCHO PALOS VERDES JUNE 30, 2006 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. Community Development Block Grant (CDBG) — to account for Federal Grants received from the Department of Housing and Urban Development (HUD). El Prado — to account for taxes collected to maintain and service existing and proposed improvements. Redevelopment Aaencv (RDA) — Housing Set -Aside — to account for the portion of Redevelopment tax increment monies which is a requirement under California Redevelopment Law, Section 33334, to be set-aside for the development of low and moderate income housing. Proposition A — to account for the City's 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. 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 Liahtina District — to account for revenues and costs associated with the City's landscaping and lighting district. 1911 Act Liahtina District — to account for revenue and costs associated with a lighting district transferred to the "city-wide" landscape and lighting district from the County in 1995. Joint Powers Improvement Authority (JPIA) — Portuguese Bend — to account for maintenance and repairs of landslide abatement improvements in the Portuguese Bend Project area. Habitat Restoration — to account for fees paid by developers for conservation easements to be used exclusively for future habitat restoration efforts on City owned property. 51 CITY OF RANCHO PALOS VERDES JUNE 30, 2006 NONMAJOR GOVERNMENTAL FUNDS Special Revenues Fund Descriptions. Continued 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. 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. Capital Proiects Funds Descriptions Capital Projects Funds are used to account for financial resources used for the acquisition or construction of major capital facilities. Bikeways — to account for State funds used for the construction of bikeways and/or pedestrian facilities. Redevelopment Aaencv (RDA) — Abalone Cove — to account for landslide abatement in the Abalone Cove Project Area. Environmental Excise Tax — to account for taxes received in connection with new construction within the City. Quimby — to account for funds from the payment of fees or the dedication of land for park and recreation purposes. Affordable Housing. — to account for in -lieu fees by developers for the City to construct low and moderate income housing. Redevelopment Aaencv (RDA) — Portuguese Bend — to account for monies used for landslide abatement in the Portuguese Bend Project Area. Utility Underaroundina — to account for the accumulation of monies transferred from the General fund, to be used for relocating utility poles and lines on arterial roadways underground, and provide residents assistance with utility undergrounding in residential areas of the City. Roadway Beautification — to account for the accumulation of monies transferred from the General and Recycling funds to be used for landscape improvements along the City's roadways. 52 CITY OF RANCHO PALOS VERDES JUNE 30, 2006 NONMAJOR GOVERNMENTAL FUNDS Permanent Fund Description 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. Joint Powers Improvement Authority (JPIA) — 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 deposit of nonexpendable principal. The interest earnings are used to pay for maintenance and repair of Abalone Cove landslide abatement improvements. 53 CITY OF RANCHO PALOS VERDES NON -MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2006 ASSETS Cash and cash equivalents Receivable Taxes Interest Other Prepaid items Land held for development Total Assets LIABILITIES AND FUND BALANCES Special Revenue Funds Air Quality Management CDBG El Prado $ 31,732 799 13,611 $ 41,099 8,192 $ 5,979 136 62 $ 46,142 $ 49,291 $ 6,177 LIABILITIES Accounts payable and accrued liabilities $ 8,150 $ 49 Due to other funds 41,136 Deferred revenue Total Liabilities - 49,286 49 FUND BALANCES Reserved for: Reimbursement settlement agreement Prepaid items Land development Housing set-aside Unreserved: Designated for continuing appropriations Unreserved, undesignated and reported in: Special revenue funds Capital projects funds Permanent funds $ 46,142 8,192 (8,187) 6,128 Total Fund Balances 46,142 5 6,128 Total Liabilities and Fund Balances $ 46,142 $ 49,291 $ 6,177 54 CONTINUED ON NEXT PAGE Special Revenue Funds Redevelopment Agency - Housing Proposition Proposition Waste Set -Aside A C Beautification Reduction $ 1,310,505 $ 925,562 $ 1,315,351 $ 951,457 $ 475,024 2,043 14,033 9,263 15,599 10,162 5,794 70,823 23,416 702,392 $ 2,028,973 $ 934,825 $ 1,330,950 $ 1,032,442 $ 504,234 $ 479 $ 665 $ 65 $ 5,829 $ 57,235 479 665 65 5,829 57,235 $ 702,392 1,226,581 99,521 97,621 45,252 934,160 $ 1,330,885 928,992 401,747 2,028,494 934,160 1,330,885 1,026,613 446,999 $ 2,028,973 $ 934,825 $ 1,330,950 $ 1,032,442 $ 504,234 55 CITY OF RANCHO PALOS VERDES NON -MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET (CONTINUED) JUNE 30, 2006 ASSETS Special Revenue Funds Public Safety Grants 1972 Act 1911 Act Cash and cash equivalents $ 66,725 $ 59,595 $ 1,449,623 Receivable Taxes 12,700 35,270 Interest 1,809 3,511 15,758 Other Prepaid items Land held for development Total Assets $ 68,534 $ 75,806 $ 1,500,651 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable and accrued liabilities $ 3,056 $ 40,953 Due to other funds Deferred revenue Total Liabilities 3,056 40,953 FUND BALANCES Reserved for: Reimbursement settlement agreement Prepaid items Land development Housing set-aside Unreserved: Designated for continuing appropriations $ 45,816 Unreserved, undesignated and reported in: Special revenue funds 22,718 72,750 1,459,698 Capital projects funds Permanent funds Total Fund Balances 68,534 72,750 1,459,698 Total Liabilities and Fund Balances $ 68,534 $ 75,806 $ 1,500,651 56 CONTINUED ON NEXT PAGE Special Revenue Funds Joint Powers Improvement Abalone Cove Authority - Sewer Portuguese Habitat Subregion One Assessment RPV TV Bend Restoration Maintenance Measure A District Channel 33 $ 262,932 $ 305,298 $ 728,382 $ 62,168 $ 2,397 723 3,249 3,720 8,074 $ 774 652 54 16,838 359,039 $ 266,181 $ 325,856 $ 736,456 $ 359,813 $ 63,543 $ 2,451 $ 10,353 $ 27,494 $ 9,277 $ 14,724 $ 293,600 321,851 10,353 27,494 9,277 615,451 14,724 53,200 285,914 27,879 202,628 12,448 727,179 (255,638) 20,940 2,451 255,828 298,362 727,179 (255,638) 48,819 2,451 $ 266,181 $ 325,856 $ 736,456 $ 359,813 $ 63,543 $ 2,451 57 CITY OF RANCHO PALOS VERDES NON -MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET (CONTINUED) JUNE 30, 2006 Capital Projects Funds Redevelopment Agency - Abalone Environmental ASSETS Bikeways Cove Excise Tax Quimby Cash and cash equivalents $ 25,554 $ 5,351 $ 216,099 $ 11,929 Receivable Taxes Interest 279 58 9,090 5,912 Other Prepaid items Land held for development Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable and accrued liabilities Due to other funds Deferred revenue Total Liabilities FUND BALANCES Reserved for: Reimbursement settlement agreement Prepaid items Land development Housing set-aside Unreserved: Designated for continuing appropriations Unreserved, undesignated and reported in: Special revenue funds Capital projects funds Permanent funds Total Fund Balances Total Liabilities and Fund Balances $ 25,833 $ 5,409 $ 225,189 $ 17,841 $ 25,833 $ 5,409 $ 225,189 $ 17,841 25,833 5,409 225,189 17,841 $ 25,833 $ 5,409 $ 225,189 $ 17,841 58 Capital Projects Funds Redevelopment Agency - Affordable Portuguese Housing Bend $ 1,065,810 $ 381,731 11,573 4,109 5,895 Utility Roadway Undergrounding Beautification Permanent Fund Joint Powers Improvement Authority - Abalone Cove $ 248,143 $ 84,950 $ 1,396,021 $ 2,693 4,693 15,164 $ 1,077,383 $ 391,735 $ 250,836 $ 89,643 $ 1,411,185 $ $ 1,077,383 1,077,383 $ 1,077,383 $ 561 561 5,895 385,279 $ 391,174 391,735 $ $ 7,235 $ - 7,235 1,000,000 74,969 250,836 $ 89,643 250,836 89,643 1,403,950 250,836 $ 89,643 $ 1,411,185 $ 59 328,981 Total Non -major Governmental Funds 11, 388, 318 50,872 146,884 524,826 14,087 702,392 12,827,379 186,125 334,736 321,851 842,712 1,000,000 14,087 702,392 1,226,581 730,172 5,905,041 2,077,413 328,981 11,984,667 12,827,379 CITY OF RANCHO PALOS VERDES NON -MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2006 Special Revenue Funds Air Quality Management CDBG El Prado REVENUES Taxes $ 1,659 Use of money and property $ 2,001 191 Revenue from other agencies 66,123 $ 167,042 Other revenues Total Revenues 68,124 167,042 1,850 EXPENDITURES Current: Administration Public works 7,819 268 Planning, building and code enforcement Capital outlay 135,274 Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): 7,819 135,274 268 60,305 31,768 1,582 Transfers in 65,979 Transfers out (48,515) (31,763) Total Other Financing Sources (Uses) (48,515) 34,216 Net Change in Fund Balances 11,790 65,984 1,582 FUND BALANCES, Beginning of Year 34,352 (65,979) 4,546 FUND BALANCES, End of Year $ 46,142 $ 5 $ 6,128 60 CONTINUED ON NEXT PAGE Special Revenue Funds Redevelopment Agency - Housing Proposition Proposition Waste Set -Aside A C Beautification Reduction $ 167,906 45,707 $ 28,223 $ 47,548 $ 305,835 $ 51,089 689,198 606,462 68,568 213,613 717,421 654,010 305,835 119,657 501,949 2,944 131,780 153,670 479 479 501,949 2,944 131,780 153,670 213,134 215,472 651,066 174,055 (34,013) (15,698) (218,602) (38,000) - (15,698) (218,602) - (38,000) 213,134 199,774 432,464 174,055 (72,013) 1,815,360 734,386 898,421 852,558 519,012 $ 2,028,494 $ 934,160 $ 1,330,885 $ 1,026,613 $ 446,999 61 CITY OF RANCHO PALOS VERDES NON -MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (CONTINUED: YEAR ENDED JUNE 30, 2006 Special Revenue Funds Public Safety Grants 1972 Act 1911 Act REVENUES Taxes $ 253,950 $ 432,812 Use of money and property $ 5,834 10,044 49,807 Revenue from other agencies 100,000 Other revenues Total Revenues 105,834 263,994 482,619 EXPENDITURES Current: Administration Public works 56,664 282,412 Planning, building and code enforcement Capital outlay Total Expenditures - 56,664 282,412 Excess (Deficiency) of Revenues Over (Under) Expenditures 105,834 207,330 200,207 Other Financing Sources (Uses): Transfers in Transfers out (100,000) (275,805) Total Other Financing Sources (Uses) (100,000) (275,805) Net Change in Fund Balances 5,834 (68,475) 200,207 FUND BALANCES, Beginning of Year 62,700 141,225 1,259,491 FUND BALANCES, End of Year $ 68,534 $ 72,750 $ 1,459,698 62 CONTINUED ON NEXT PAGE Special Revenue Funds Joint Powers Improvement Abalone Cove Authority - Sewer Portuguese Habitat Subregion One Parks/ Assessment RPV TV Bend Restoration Maintenance Measure A District Channel 33 $ 41,609 $ 11,992 $ 53,959 $ 28,521 $ 2,093 1,885 $ 5,476 16,838 45,338 11,992 70,797 28,521 47,431 43,494 5,476 3,025 133,405 149,772 99,947 51,817 133,405 149,772 99,947 - 51,817 3,025 (121,413) (78,975) (71,426) 47,431 (8,323) 2,451 116,000 76,752 10,700 (359,061) 116,000 76,752 - (359,061) 10,700 (5,413) (2,223) (71,426) (311,630) 2,377 2,451 261,241 300,585 798,605 55,992 46,442 $ 255,828 $ 298,362 $ 727,179 $ (255,638) $ 48,819 $ 2,451 63 CITY OF RANCHO PALOS VERDES NON -MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (CONTINUED: YEAR ENDED JUNE 30, 2006 Capital Projects Redevelopment Agency - Abalone Environmental Bikeways Cove Excise Tax Quimby REVENUES Taxes Use of money and property $ 946 $ 199 $ 112,788 $ 28,981 Revenue from other agencies Other revenues Total Revenues 946 199 112,788 28,981 EXPENDITURES Current: Administration Public works Planning, building and code enforcement Capital outlay 373 Total Expenditures 373 Excess (Deficiency) of Revenues Over (Under) Expenditures 573 199 112,788 28,981 Other Financing Sources (Uses): Transfers in Transfers out (624,452) (532,511) Total Other Financing Sources (Uses) - (624,452) (532,511) Net Change in Fund Balances 573 199 (511,664) (503,530) FUND BALANCES, Beginning of Year 25,260 5,210 736,853 521,371 FUND BALANCES, End of Year $ 25,833 $ 5,409 $ 225,189 $ 17,841 64 Permanent Capital Projects Fund Joint Powers Redevelopment Improvement Total Agency - Authority - Non-major Affordable Portuguese Utility Roadway Abalone Governmental Housing Bend Undergrounding Beautification Cove Funds $ 897,936 $ 39,041 $ 13,728 $ 9,089 $ 15,831 $ 53,315 924,123 1,759,569 50,004 50,004 39,041 63,732 9,089 15,831 53,315 3,631,632 3,025 17,671 86,152 1,676,643 479 135,274 - 17,671 - - 86,152 1,815,421 39,041 46,061 9,089 15,831 (32,837) 1,816,211 10,500 279,931 (347,228) (2,591,635) - - - (347,228) 10,500 (2,311,704) 39,041 46,061 9,089 (331,397) (22,337) (495,493) 1,038,342 345,113 241,747 421,040 1,426,287 12,480,160 $ 1,077,383 $ 391,174 $ 250,836 $ 89,643 $ 1,403,950 $ 11,984,667 65 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AIR QUALITY MANAGEMENT SPECIAL REVENUE FUNE FOR THE YEAR ENDED JUNE 30, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property $ 1,100 $ 1,100 $ 2,001 $ 901 Revenue from other agencies 52,000 52,000 66,123 14,123 Total Revenues 53,100 53,100 68,124 15,024 EXPENDITURES Current: Public works 8,000 8,000 7,819 181 Excess (Deficiency) of Revenues Over Expenditures 45,100 45,100 60,305 15,205 OTHER FINANCING SOURCES (USES) Transfers out (34,000) (54,000) (48,515) 5,485 Net Change in Fund Balance 11,100 (8,900) 11,790 20,690 Fund Balance, Beginning of Year 34,352 34,352 34,352 Fund Balance, End of Year $ 45,452 $ 25,452 $ 46,142 $ 20,690 66 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2006 REVENUES Revenue from other agencies EXPENDITURES Capital outlay Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Budgeted Amounts Actual Original Final Amounts Variance with Final Budget - Positive (Negative) $ 221,800 $ 221,800 $ 167,042 $ (54,758) 190,000 269,000 135,274 190,000 269,000 135,274 31,800 (47,200) 31,768 (31,800) (31,800) (79,000) (65,979) (65,979) $ (65,979) $ (144,979) 67 65,979 (31,763) 133,726 133,726 78,968 65,979 37 65,984 144,984 (65,979) $ 5 $ 144,984 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, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 1,200 $ 1,200 $ 1,659 $ 459 Use of money and property 100 100 191 91 Total Revenues 1,300 1,300 1,850 550 EXPENDITURES Current: Public works 900 900 268 632 Net Change in Fund Balance 400 400 1,582 1,182 Fund Balance, Beginning of Year 4,546 4,546 4,546 Fund Balance, End of Year $ 4,946 $ 4,946 $ 6,128 $ 1,182 68 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL RDA HOUSING SET-ASIDE SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 153,900 $ 153,900 $ 167,906 $ 14,006 Use of money and property 25,900 25,900 45,707 19,807 Total Revenues 179,800 179,800 213,613 33,813 EXPENDITURES Current: Planning, building and code enforcement 50,000 479 479 Total Expenditures 50,000 479 479 Net Change in Fund Balance 129,800 179,321 213,134 33,813 Fund Balance, Beginning of Year 1,815,360 1,815,360 1,815,360 Fund Balance, End of Year $ 1,945,160 $ 1,994,681 $ 2,028,494 $ 33,813 69 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, 2006 REVENUES Use of money and property Revenue from other agencies Total Revenues EXPENDITURES Current: Public works Excess of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers out Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 16,000 $ 16,000 $ 28,223 $ 12,223 600,000 600,000 689,198 89,198 616,000 616,000 717,421 101,421 507,200 510,222 501,949 8,273 108,800 105,778 215,472 109,694 (16,000) (16,000) (15,698) 302 92,800 89,778 199,774 109,996 734,386 734,386 734,386 $ 827,186 $ 824,164 $ 934,160 $ 109,996 70 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, 2006 REVENUES Use of money and property Revenue from other agencies Total Revenues EXPENDITURES Current: Public works Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers out Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Budgeted Amounts Original Final $ 12,900 $ 12,900 500,000 500,000 512,900 3,000 509,900 (460,500) 49,400 898,421 $ 947,821 71 512,900 3,000 Actual Amounts $ 47,548 606,462 654,010 2,944 509,900 651,066 Variance with Final Budget - Positive (Negative) $ 34,648 106,462 141,110 56 141,166 (218,602) (218,602) 291,298 432,464 141,166 898,421 898,421 $ 1,189,719 $1,330,885 $ 141,166 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, 2006 Budgeted Amounts Original Final REVENUES Use of money and property $ 242,450 $ 242,450 EXPENDITURES Current: Public works Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year 231,300 133,679 11,150 108,771 852,558 852,558 Actual Amounts Variance with Final Budget - Positive (Negative) $ 305,835 $ 63,385 131,780 174,055 852,558 1,899 65,284 $ 863,708 $ 961,329 $ 1,026,613 $ 65,284 72 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, 2006 REVENUES Use of money and property Revenue from other agencies Total Revenues EXPENDITURES Current: Public works Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING USES Transfers out Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Budgeted Amounts Original Final $ 36,100 60,000 96,100 $ 36,100 60,000 Actual Amounts $ 51,089 68,568 96,100 119,657 150,400 185,148 153,670 (54,300) (89,048) (34,013) Variance with Final Budget - Positive (Negative) $ 14,989 8,568 23,557 31,478 55,035 (50,000) (100,000) (38,000) 62,000 (104,300) (189,048) (72,013) 117,035 519,012 519,012 519,012 $ 414,712 $ 329,964 $ 446,999 $ 117,035 73 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PUBLIC SAFETY GRANTS SPECIAL REVENUE FUNE FOR THE YEAR ENDED JUNE 30, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property $ 400 $ 400 $ 5,834 $ 5,434 Revenue from other agencies 100,000 100,000 100,000 Total Revenues 100,400 100,400 105,834 5,434 OTHER FINANCING SOURCES (USES) Transfers out (100,000) (100,000) (100,000) Net Change in Fund Balance 400 400 5,834 5,434 Fund Balance, Beginning of Year 62,700 62,700 62,700 Fund Balance, End of Year $ 63,100 $ 63,100 $ 68,534 $ 5,434 74 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, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 325,000 $ 325,000 $ 253,950 $ (71,050) Use of money and property 3,400 3,400 10,044 6,644 Total Revenues 328,400 328,400 263,994 (64,406) EXPENDITURES Current: Public works 58,200 58,200 56,664 1,536 Excess of Revenues Over Expenditures 270,200 270,200 207,330 (62,870) OTHER FINANCING SOURCES (USES) Transfers out (285,000) (285,000) (275,805) 9,195 Net Change in Fund Balance (14,800) (14,800) (68,475) (53,675) Fund Balance, Beginning of Year 141,225 141,225 141,225 Fund Balance, End of Year $ 126,425 $ 126,425 $ 72,750 $ (53,675) 75 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, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 375,000 $ 375,000 $ 432,812 $ 57,812 Use of money and property 28,200 28,200 49,807 21,607 Total Revenues 403,200 403,200 482,619 79,419 EXPENDITURES Current: Public works 369,400 369,400 282,412 86,988 Net Change in Fund Balance 33,800 33,800 200,207 166,407 Fund Balance, Beginning of Year 1,259,491 1,259,491 1,259,491 Fund Balance, End of Year $1,293,291 $ 1,293,291 $ 1,459,698 $ 166,407 76 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL JPIA - PORTUGUESE BEND SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2006 REVENUES Use of money and property EXPENDITURES Current: Public works Excess (Deficiency) of Revenues Over Expenditures Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 5,900 $ 5,900 $ 11,992 $ 6,092 92,400 208,500 133,405 75,095 (86,500) (202,600) (121,413) 81,187 OTHER FINANCING SOURCES (USES) Transfers in 91,500 91,500 116,000 24,500 Net Change in Fund Balance 5,000 (111,100) (5,413) 105,687 Fund Balance, Beginning of Year 261,241 261,241 261,241 Fund Balance, End of Year $ 266,241 $ 150,141 $ 255,828 $ 105,687 77 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HABITAT RESTORATION SPECIAL REVENUE FUNE FOR THE YEAR ENDED JUNE 30, 2006 REVENUES Use of money and property Revenue from other agencies Total Revenues EXPENDITURES Capital outlay Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES Transfers in Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 1,900 $ 1,900 $ 53,959 $ 52,059 100,000 16,838 (83,162) 1,900 101,900 70,797 (31,103) 100,000 149,772 14 9, 772 (98,100) (47,872) (78,975) (31,103) 76,752 76,752 76,752 Net Change in Fund Balance (21,348) 28,880 (2,223) (31,103) Fund Balance, Beginning of Year 300,585 300,585 300,585 Fund Balance, End of Year $ 279,237 $ 329,465 $ 298,362 $ (31,103) 78 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SUBREGION ONE MAINTENANCE SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property $ 20,200 $ 20,200 $ 28,521 $ 8,321 EXPENDITURES Current: Public works 50,000 102,000 99,947 2,053 Net Change in Fund Balance (29,800) (81,800) (71,426) 10,374 Fund Balance, Beginning of Year 798,605 798,605 798,605 Fund Balance, End of Year $ 768,805 $ 716,805 $ 727,179 $ 10,374 79 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PARKS/MEASURE A SPECIAL REVENUE FUNE FOR THE YEAR ENDED JUNE 30, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property $ 1,500 $ 1,500 $ 2,093 $ 593 Revenue from other agencies 41,000 181,000 45,338 (135,662) Total Revenues 42,500 182,500 47,431 (135,069) OTHER FINANCING SOURCES (USES) Transfers out (55,500) (359,061) (359,061) Net Change in Fund Balance (13,000) (176,561) (311,630) (135,069) Fund Balance, Beginning of Year 55,992 55,992 55,992 Fund Balance, End of Year $ 42,992 $ (120,569) $ (255,638) $ (135,069) 80 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ABALONE COVE SEWER ASSESSMENT DISTRICT SPECIAL REVENUE FUN( FOR THE YEAR ENDED JUNE 30, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 40,000 $ 40,000 $ 41,609 $ 1,609 Use of money and property 300 300 1,885 1,585 Total Revenues EXPENDITURES Current: Public works Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year 40,300 40,300 43,494 3,194 49,600 51,817 51,817 (9,300) (11,517) (8,323) 3,194 10,700 10,700 10,700 1,400 (817) 2,377 3,194 46,442 46,442 46,442 $ 47,842 $ 45,625 $ 48,819 $ 3,194 81 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL RPV TV CHANNEL 33 SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property $ 5,476 $ 5,476 EXPENDITURES Current: Administration $ 3,025 3,025 Net Change in Fund Balance (3,025) 2,451 5,476 Fund Balance, Beginning of Year Fund Balance, End of Year $ $ (3,025) $ 2,451 $ 5,476 82 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL BIKEWAYS CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2006 REVENUES Use of money and property EXPENDITURES Current: Public works Budgeted Amounts Original Final $ 373 Net Change in Fund Balance (373) Fund Balance, Beginning of Year $ 25,260 $ 25,260 Fund Balance, End of Year $ 25,260 $ 24,887 $ Actual Amounts $ 946 83 Variance with Final Budget - Positive (Negative) $ 946 373 573 946 25,260 25,833 $ 946 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL RDA ABALONE COVE CAPITAL PROJECTS FUNE FOR THE YEAR ENDED JUNE 30, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property $ 199 $ 199 Net Change in Fund Balance 199 199 Fund Balance, Beginning of Year $ 5,210 $ 5,210 5,210 Fund Balance, End of Year $ 5,210 $ 5,210 $ 5,409 $ 199 84 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ENVIRONMENTAL EXCISE TAX CAPITAL PROJECTS FUN( FOR THE YEAR ENDED JUNE 30, 2006 Budgeted Amounts Original Final REVENUES Use of money and property $ 201,800 $ 58,800 OTHER FINANCING USES Transfers out Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Actual Amounts Variance with Final Budget - Positive (Negative) $ 112,788 $ 53,988 (624,452) (624,452) 201,800 (565,652) (511,664) 53,988 736,853 736,853 736,853 $ 938,653 $ 171,201 $ 225,189 $ 53,988 85 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL QUIMBY CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2006 Budgeted Amounts Original Final REVENUES Use of money and property $ 12,800 $ 12,800 OTHER FINANCING SOURCES (USES) Transfers out Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Actual Amounts $ 28,981 (532,511) (532,511) 12,800 (519,711) (503,530) 521,371 521,371 521,371 Variance with Final Budget - Positive (Negative) $ 16,181 16,181 $ 534,171 $ 1,660 $ 17,841 $ 16,181 86 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AFFORDABLE HOUSING CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property $ 49,500 $ 49,500 $ 39,041 $ (10,459) Net Change in Fund Balance 49,500 49,500 39,041 (10,459) Fund Balance, Beginning of Year 1,038,342 1,038,342 1,038,342 Fund Balance, End of Year $ 1,087,842 $ 1,087,842 $ 1,077,383 $ (10,459) 87 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL RDA PORTUGUESE BEND CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2006 REVENUES Use of money and property Other revenues Total Revenues EXPENDITURES Current: Public works Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 7,400 $ 7,400 $ 13,728 $ 6,328 5,000 5,000 50,004 45,004 12,400 12,400 63,732 51,332 24,500 24,500 17,671 6,829 Net Change in Fund Balance (12,100) (12,100) 46,061 58,161 Fund Balance, Beginning of Year 345,113 345,113 345,113 Fund Balance, End of Year $ 333,013 $ 333,013 $ 391,174 $ 58,161 88 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL UTILITY UNDERGROUNDING CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2006 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property $ 6,000 $ 6,000 $ 9,089 $ 3,089 Net Change in Fund Balances 6,000 6,000 9,089 3,089 Fund Balance, Beginning of Year 241,747 241,747 241,747 Fund Balance, End of Year $ 247,747 $ 247,747 $ 250,836 $ 3,089 89 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ROADWAY BEAUTIFICATION CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2006 REVENUES Use of money and property Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 1,900 $ 1,900 $ 15,831 $ 13,931 OTHER FINANCING SOURCES (USES) Transfers out (347,228) (347,228) Net Change in Fund Balances 1,900 (345,328) (331,397) 13,931 Fund Balance, Beginning of Year 421,040 421,040 421,040 Fund Balance, End of Year $ 422,940 $ 75,712 $ 89,643 $ 13,931 90 CITY OF RANCHO PALOS VERDES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL JPIA - ABALONE COVE PERMANENT FUND FOR THE YEAR ENDED JUNE 30, 2006 REVENUES Use of money and property Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 33,600 $ 33,600 $ 53,315 $ 19,715 EXPENDITURES Current: Public works 108,400 123,131 86,152 36,979 Excess (Deficiency) of Revenues Over Expenditures (74,800) (89,531) (32,837) 56,694 OTHER FINANCING SOURCES (USES) Transfers in 10,500 10,500 Net Change in Fund Balance (74,800) (89,531) (22,337) 67,194 Fund Balance, Beginning of Year 1,426,287 1,426,287 1,426,287 Fund Balance, End of Year $ 1,351,487 $ 1,336,756 $ 1,403,950 $ 67,194 91 CITY OF RANCHO PALOS VERDES JUNE 30, 2006 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 on behalf of all City departments. 92 CITY OF RANCHO PALOS VERDES INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET ASSETS JUNE 30, 2006 Equipment Building Employee Replacement Replacement Benefits Totals ASSETS Current Assets Cash and cash equivalents $ 2,894,854 $ 1,600,733 $ 483,917 $ 4,979,504 Receivables Interest 30,530 17,379 4,076 51,985 Total Current Assets 2,925,384 1,618,112 487,993 5,031,489 Noncurrent Assets Capital assets Property and equipment Accumulated depreciation Total Noncurrent Assets Total Assets LIABILITIES Current Liabilities Accounts payable and accrued liabilities 1,161,074 1,161,074 (812,173) (812,173) 348,901 - - 348,901 3,274,285 1,618,112 487,993 5,380,390 84,151 38,375 23,213 145,739 NET ASSETS Invested in capital assets 348,901 348,901 Unrestricted 2,841,233 1,579,737 464,780 4,885,750 Total Net Assets $ 3,190,134 $ 1,579,737 $ 464,780 $ 5,234,651 93 CITY OF RANCHO PALOS VERDES INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS FOR THE YEAR ENDED JUNE 30, 2006 OPERATING REVENUES Charges for services Equipment Building Employee Replacement Replacement Benefits Totals $ 449,266 $ 1,350,700 $ 1,799,966 Total Operating Revenues 449,266 - 1,350,700 1,799,966 OPERATING EXPENSES Personnel services 1,172,979 1,172,979 Material and supplies 66,164 66,164 Maintenance 195,088 $ 56,885 251,973 Depreciation 205,889 205,889 Total Operating Expenses 467,141 56,885 1,172,979 1,697,005 Operating Income (Loss) (17,875) (56,885) 177,721 102,961 NONOPERATING REVENUES Interest income 103,643 59,173 7,271 170,087 Income (Loss) Before Transfers 85,768 2,288 184,992 273,048 TRANSFERS IN 48,515 100,000 148,515 Change in Net Assets 134,283 102,288 184,992 421,563 Net Assets, Beginning of Year 3,055,851 1,477,449 279,788 4,813,088 Net Assets, Ending of Year $ 3,190,134 $ 1,579,737 $ 464,780 $ 5,234,651 94 CITY OF RANCHO PALOS VERDES INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2006 CASH FLOWS FROM OPERATING ACTIVITIES Internal activity - payments from other funds Payments to suppliers NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in CASH FLOWS FROM INVESTING ACTIVITIES Interest received on investments NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, Beginning of Year Equipment Building Employee Replacement Replacement Benefits Totals $ 449,266 $1,351,984 $ 1,801,250 (196,195) $ (119,760) (1,168,416) (1,484,371) 253,071 (119,760) 183,568 (213,289) 48,515 100,000 91,899 180,196 52,558 32,798 4,831 316,879 (213,289) 148,515 149,288 188,399 401,393 2,714,658 1,567,935 295,518 4,578,111 CASH AND CASH EQUIVALENTS, End of Year $ 2,894,854 $ 1,600,733 $ 483,917 $ 4,979,504 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Decrease in other receivables Decrease in prepaid items Increase (decrease) in accounts payable $ (17,875) $ (56,885) $ 177,721 $ 102,961 205,889 65,057 (62,875) 1,284 1,043 3,520 205,889 1,284 1,043 5,702 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 253,071 $ (119,760) $ 183,568 $ 316,879 95 L STATISTICAL SECTION 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. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 96 97 104 108 111 113 City of Rancho Palos Verdes Net Assets by Component Last Five Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2002 2003 2004 2005 2006 Governmental activities Invested in capital assets, net of related debt $ 93,636 $ 94,895 $ 92,499 $ 94,023 $ 109,991 Restricted 10,327 10,661 11,586 12,075 12,417 Unrestricted 13,666 13,004 14,271 15,659 16,164 Total governmental activities net assets $ 117,629 $ 118,560 $ 118,356 $ 121,757 $ 138,572 Business -type activities Invested in capital assets, net of related debt $ 1,311 Restricted Unrestricted $ 2,000 2,799 Total business -type activities net assets $ 2,000 $ 4,110 Primary government Invested in capital assets, net of related debt $ 93,636 $ 94,895 $ 92,499 $ 94,023 $ 111,302 Restricted 10,327 10,661 11,586 12,075 12,417 Unrestricted 13,666 13,004 14,271 17,659 18,963 Total primary government net assets $ 117,629 $ 118,560 $ 118,356 $ 123,757 $ 142,682 97 City of Rancho Palos Verdes Changes in Net Assets Last Five Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2002 2003 2004 2005 2006 Expenses Governmental activities: Administration $ 3,069 $ 3,294 $ 3,499 $ 4,055 $ 4,350 Public safety 2,898 3,094 3,024 3,079 3,437 Public works 7,283 7,954 7,462 9,488 9,290 Parks and recreation 687 809 948 1,065 1,659 Planning, building and code enforcement 1,916 2,170 2,296 2,223 2,060 Interest on long-term debt 273 273 273 272 270 Total governmental activities expenses 16,126 17,594 17,502 20,182 21,066 Business -type activities: Water Quality Flood Protection 47 Total primary government expenses $ 16,126 $ 17,594 $ 17,502 $ 20,182 $ 21,113 Program Revenues Governmental activities: Charges for services: Administration $ 157 $ 87 $ 69 $ 62 $ 35 Public safety 433 235 165 163 224 Public works 78 252 217 131 37 Parks and recreation 10 8 6 41 45 Planning, building and code enforcement 979 1,202 1,363 1,188 1,319 Operating grants and contributions 6,877 2,971 2,836 2,728 3,894 Capital grants and contributions 706 131 37 4,524 17,299 Total governmental activities program revenues 9,240 4,886 4,693 8,837 22,853 Business -type activities: Charges for services: Water Quality Flood Protection Operating grants and contributions Capital grants and contributions Total business -type activities program revenues - - - - - Total primary government program revenues $ 9,240 $ 4,886 $ 4,693 $ 8,837 $ 22,853 Net (expense)/revenue Governmental activities $ (6,886) $ (12,708) $ (12,809) $ (11,345) $ 1,787 Business -type activities - - - - (47) Total primary government net expense $ (6,886) $ (12,708) $ (12,809) $ (11,345) $ 1,740 98 City of Rancho Palos Verdes Changes in Net Assets Last Five Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2002 2003 2004 2005 2006 General Revenues and Other Changes in Net Assets Governmental activities: Taxes Property taxes $ 5,253 $ 5,335 $ 5,706 $ 5,840 $ 9,621 Franchise taxes 1,139 1,087 1,275 1,307 1,454 Sales taxes 1,093 1,003 1,205 1,276 1,354 Utility user taxes 1,812 1,832 1,851 1,901 2,191 Other taxes 2,744 3,495 2,867 4,545 727 Investment income 814 371 331 594 997 Other (67) 517 2,481 1,283 793 Transfers (2,000) (2,109) Total governmental activities 12,788 13,640 15,716 14,746 15,028 Business -type activities: Investment income 48 Transfers 2,000 2,109 Total business -type activities - - - 2,000 2,157 Total primary government $ 12,788 $ 13,640 $ 15,716 $ 16,746 $ 17,185 Change in Net Assets Governmental activities Business -type activities Total primary government net expense $ 5,902 $ 932 $ 2,907 $ 3,401 $ 16,815 - - - 2,000 2,110 $ 5,902 $ 932 $ 2,907 $ 5,401 $ 18,925 99 City of Rancho Palos Verdes Governmental Activities Tax Revenues By Source Last Five Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Utility Fiscal Property Franchise Sales Users Other Year Tax Tax Tax Tax Taxes Total 2002 $ 5,253 $ 1,139 $ 1,093 $ 1,812 $2,744 $ 12,041 2003 5,335 1,087 1,003 1,832 3,495 12,752 2004 5,706 1,275 1,205 1,851 2,867 12,904 2005 5,840 1,307 1,276 1,901 4,545 14,869 2006 9,621 1 1,454 1,354 2,191 727 ' 15,347 1: Most of the Motor Vehicle In Lieu tax is received as property tax beginning in 2006. 100 City of Rancho Palos Verdes Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 General fund Reserved or designated $ 3,560 $ 5,231 $ 6,050 $ 6,367 $ 6,317 $ 6,571 $ 6,854 $ 6,639 $ 6,696 $ 7,040 Unreserved, undesignated 3,534 3,918 5,701 6,791 7,043 7,234 9,607 14,066 14,209 13,567 Total general fund $ 7,094 $ 9,149 $11,751 $13,158 $13,360 $13,805 $16,461 $20,705 $20,905 $20,607 All other governmental funds Reserved or designated $ 19,062 $ 15,415 $ 16,009 $ 18,291 $ 16,512 $ 11,256 $ 7,584 $ 7,229 $ 6,178 $ 6,933 Unreserved, undesignated, reported in: Special revenue funds 3,771 4,629 4,768 4,283 4,697 4,753 5,012 5,040 5,902 6,615 Capital projects funds 332 1 534 2,430 3,320 2,077 Permanent fund 443 2 460 418 426 329 Debt service fund (10,477) 3 (10,915) (12,070) (12,793) (13,741) Total all other governmental funds $ 22,833 $ 20,044 $ 20,777 $ 22,574 $ 21,209 $ 6,307 $ 2,675 $ 3,047 $ 3,033 $ 2,213 0 1: Prior to 2002, all Capital Projects fund balances were designated for future projects. 2: Prior to 2002, the Permanent fund was reported as a Fiduciary fund. 3: Prior to 2002, the balance of long-term debt was recorded in an account group instead of the Debt Service fund. 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) Fiscal Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Revenues Taxes $ 8,832 $ 8,922 $ 9,002 $ 9,530 $10,309 $10,677 $11,046 $12,081 $13,573 $15,321 Licenses and permits 798 890 1,292 1,090 1,164 1,245 1,463 1,310 1,326 1,440 Fines and forfeitures 93 115 140 157 139 117 115 102 108 171 Use of money and property 1,664 1,701 1,555 1,704 1,971 1,153 804 733 1,306 7,038 Charges for services 337 176 218 203 197 217 205 379 152 49 Revenues from other agencies 10,674 4,900 4,341 3,655 4,816 8,170 4,318 3,453 7,848 15,511 Other revenues 546 649 687 2,137 882 563 554 2,363 1,038 155 Total Revenues 22,944 17,353 17,235 18,476 19,478 22,142 18,505 20,421 25,351 39,685 Expenditures Administration 1,597 1,669 1,689 1,846 3,052 2,915 3,092 3,328 3,852 4,041 Public Safety 2,637 2,533 2,658 2,662 2,733 2,898 3,094 3,039 3,092 3,438 Public Works 3,970 4,143 4,156 5,552 4,972 7,449 5,292 4,801 6,302 5,277 Parks and recreation 551 711 633 597 596 669 786 946 965 1,593 Planning, building and code enforcement 1,361 1,559 1,882 1,647 1,778 1,950 2,194 2,362 2,302 2,361 Pass through to other agencies 67 79 78 85 91 102 137 156 188 200 Capital outlay 9,283 4,333 3,504 2,157 7,015 8,246 3,893 368 4,912 20,202 Debt service Principal 10,000 184 200 Interest 367 638 893 985 1,128 930 836 805 905 1,150 Total expenditures 19,833 25,665 15,493 15,531 21,365 25,159 19,324 15,805 22,702 38,462 Excess of revenues over (under) expenditures 3,111 (8,312) 1,742 2,945 (1,887) (3,017) (819) 4,616 2,649 1,223 Other financing sources (uses) Transfers in 4,370 10,358 2,593 3,687 5,013 4,294 1,676 1,844 6,180 4,989 Transfers out (4,426) (10,463) (2,593) (4,469) (5,165) (4,877) (1,833) (1,844) (8,180) (7,247) Bond Proceeds 5,455 Advances to the Redevelopment Agency 617 2,246 1,301 982 855 Total other financing sources (uses) 561 7,596 1,301 200 703 (583) (157) (2,000) (2,258) Net change in fund balances $ 3,672 $ (716) $ 3,043 $ 3,145 $ (1,184) $ (3,600) $ (976) $ 4,616 $ 649 $ (1,035) Debt services as a percentage of noncapital expenditures 3.5% 49.9% 7.4% 7.4% 7.9% 5.5% 5.4% 5.2% 6.1% 7.4% City of Rancho Palos Verdes General Governmental Tax Revenues By Source Last Seven Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) Utility Fiscal Property Franchise Sales Users Other Year Tax Tax Tax Tax Taxes Total 2000 $ 4,357 $ 972 $ 1, 024 $ 1, 550 $ 1, 627 $ 9,530 2001 4,629 1,087 1,101 1,764 1,728 10,309 2002 4,972 1,139 1,093 1,812 1,661 10,677 2003 5,335 1,087 1,003 1,832 1,789 11,046 2004 5,706 1,275 1,205 1,851 2,044 12,081 2005 8,494 ' 1,307 1,009 1,901 862 13,573 2006 9,576 1,299 1,078 2,191 1,177 15,321 Source: City general ledger 1: Most of the Motor Vehicle In Lieu fees are received as property tax beginning in 2006. 103 Fiscal Year Real Property Residential Commercial Property Property City of Rancho Palos Verdes Assessed Value and Estimated Actual Value of Taxable Property Last Two Fiscal Years (in thousands of dollars) Other Property Personal Property Less Tax Exempt: Real Other Fixtures Property Property 2005 $ 6,439,116 $ 75,593 $ 357,347 $ 3,146 $ 388 2006 6,959,150 89,220 386,619 3,348 1,076 Source: HdL Coren & Cone, Los Angeles County Assessor Combined Tax Rolls Note: Tax rates are per $100 of assessed value 0 .p Total Total Direct Taxable Tax Assessed Value Rate Value $ 64,688 $ 3,054 $ 6,807,847 $ 0.064 $ 6,971,959 67,742 688 7,370,983 0.064 7,535,086 Taxable Value as a Percentage of Assessed Value 97.6% 97.8% Fiscal General Year Levy Los Angeles County 2005 $ 1.00000 $ 0.00092 2006 1.00000 0.00080 City of Rancho Palos Verdes Property Tax Rates Direct and Overlapping Governments Last Two Fiscal Years Flood Control District $ 0.00025 0.00005 Metropolitan Water District Library District $ 0.00580 $ 0.00852 0.00520 0.00781 Source: HdL Coren & Cone, Los Angeles County Assessor Combined Tax Rolls Note: Tax rates are per $100 of assessed value. 0 Ol Community College District $ 0.01810 0.01429 School Districts Total Direct & Overlapping Rates $ 0.10366 $ 1.13724 0.10370 1.13184 City of Rancho Palos Verdes Principal Property Taxpayers Current Year (amounts expressed in thousands) Taxpayer PPC Villas RPV LLC VH Property Corporation PV Victoria Apartments LLC Riviera Investors Western, Et. Al. Long Point Development LLC Belmont Village RPV Tridiamond LLC Patricia J. Rahn VHPS LLC Eric C. & Susanne K. Johnson Trust Totals Assessed Value Rank $ 52,142 1 45,955 2 43,253 3 26,334 4 19,210 5 17,456 6 14,246 7 13,188 8 13,143 9 10,145 10 $ 255,071 Percentage of Total Assessed Value 0.69% 0.61% 0.57% 0.35% 0.25% 0.23% 0.19% 0.18% 0.17% 0.13% 3.39% Source: HdL Goren & Cone, Los Angeles County Assessor Combined Tax Rolls 106 City of Rancho Palos Verdes Property Tax Levies and Collections Last Two 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% $ 139 $ 4,140 96.65% 2006 4,643 4,506 97.06% - $ 4,506 97.06% Source: County of Los Angeles Department of Auditor -Controller and City general ledger Fiscal Year 2001 2002 2003 2004 2005 2006 0 co City of Rancho Palos Verdes Ratios of Outstanding Debt by Type Last Six Fiscal Years (amounts expressed in thousands, except per capita amount) RDA Tax Increment Bond $ 5,455 5,455 5,455 5,455 5,450 5,435 Governmental Activities RDA Deferred Interest Payable $ 3,111 3,111 3,111 3,111 2,469 2,284 Employee Compensated Absences $ 134 163 191 194 221 231 Total Primary Government $ 8,700 8,729 8,757 8,760 8,140 7,950 Percentage of Personal Income 0.47% 0.46% 0.46% 0.45% 0.41% 0.41% Per Capita $ 211.45 207.82 206.91 204.63 187.02 184.92 City of Rancho Palos Verdes Direct and Overlapping Governmental Activities Debt Current Year (amounts expressed in thousands) Governmental Unit Los Angeles County Detention Facilities 1987 Los Angeles County Flood Control Storm Drain Bonds No. 4 Palos Verdes Library District Refunding Bonds 1998 West Basin Metropolitan Water District 1111 * Los Angeles City Community College 2003 Series A Los Angeles City Community College 2003 Series B & C Los Angeles City Community College 2001 Series A Los Angeles City Community College 2004 Series B Los Angeles City Community College 2005 Series A Refunding Los Angeles Unified School District 2006 Los Angeles Unified School District 2004 Series A Los Angeles Unified School District 2004 Series B Los Angeles Unified School District 2004 Series C Los Angeles Unified School District 2004 Series D Los Angeles Unified School District 2002 Refunding Los Angeles Unified School District 2004 Series A Refunding Los Angeles Unified School District 2004 Series E Los Angeles Unified School District 2005 Series A Refunding Los Angeles Unified School District 2002 Series A Los Angeles Unified School District 1997 Series A Los Angeles Unified School District 1997 Series B Los Angeles Unified School District 1997 Series C Los Angeles Unified School District 1997 Series D Los Angeles Unified School District 1997 Series E Los Angeles Unified School District 1997 Series F Palos Verdes Peninsula USD Series 2005 Palos Verdes Peninsula USD Series 2000 A Palos Verdes Peninsula USD Series 2000 B Palos Verdes Peninsula USD Series 2000 C Total direct and overlapping debt Debt Outstanding $ 8,395 1,080 10,575 182,369 30,935 85,370 120,290 28,500 434,110 816,710 72,630 49,015 48,370 16,895 254,085 219,125 400,000 467,675 494,125 136,080 45,320 45,745 54,945 387,680 1,968,065 20,055 945 3,560 47,276 Estimated Percentage Applicable 0.996% 1.012% 49.448% 1.075% 1.650% 1.650% 1.650% 1.650% 1.650% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 0.205% 46.809% 46.809% 46.809% 46.809% Estimated Share of Overlapping Debt 84 11 5,229 1,960 510 1,409 1,985 470 7,163 1,674 149 100 99 35 521 449 820 959 1,013 279 93 94 113 795 4,035 9,388 442 1,666 22,129 63,673 Source: HdL Coren & Cone, L.A. Acounty Assessor and Audiotr Combined 2005/06 Lien Date Tax Rolls Note: This information reflects debt which is being repaid through voter-apporved property tax indebtedness. It excludes mortgage revenue, tax allocation bonds, interim financing obligations, non -bonded capital leas obligations and certificates of participation. 109 City of Rancho Palos Verdes Legal Debt Margin Information Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Debt limit $643,504 $652,585 $691,696 $759,196 $804,357 $855,291 $902,133 $962,539 $ 1,021,177 $ 1,105,647 Total net debt applicable to limit - - - - - Legal debt margin $643,504 $652,585 $691,696 $759,196 $804,357 $855,291 $902,133 $962,539 $ 1,021,177 $ 1,105,647 Total net debt applicable to the limit as a percentage of debt limit 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Total taxable value (see page 103) Debt limit (15% of total taxable value) Debt applicable to limit Legal debt margin 0 $ 7,370,983 1,105,647 $ 1,105,647 Fiscal Year 2001 2002 2003 2004 2005 2006 Population 41,145 42,002 42,322 42,810 43,525 42,991 City of Rancho Palos Verdes Demographic and Economic Statistics Last Six Fiscal Years Per Personal Capita Income Personal (000's) Income $ 1,904,767 $ 46,294 1,944,441 46,294 1,959,255 46,294 1,981,846 46,294 2,014,946 46,294 1,990,225 46,294 Median Age 44.7 44.7 44.7 44.7 44.7 44.7 Education Level in Years of Formal Schooling DNA DNA DNA DNA DNA DNA School Enrollment DNA DNA DNA DNA DNA DNA Source: U.S. Census Bureau, State Controller 1: This data available with the 2000 U.S. Census. The data will not be updated until 2010 2: Unemployment rate obtained from Sperling's Best Places (an Internet data service) DNA: Data not available Unemployment Rate DNA DNA DNA DNA DNA 5.7% City of Rancho Palos Verdes Principal Employers Current Year Employer Palos Verdes Peninsula Unified School District Marymount College Salvation Army Los Angeles Unified School District Trump National Golf Course Los Verdes Golf Course Ralph's Grocery Store Source: City staff DNA: Data not available 112 Employees Rank DNA DNA DNA DNA DNA DNA DNA DNA DNA DNA DNA DNA DNA DNA Percentage of Total City Employment DNA DNA DNA DNA DNA DNA DNA City of Rancho Palos Verdes Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years Full-time Equivalent Employees as of June 30 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Function General government 37 39 41 41 41 42 45 45 45 47 Recreation part-time 10 10 10 10 10 10 10 10 10 10 Total 47 49 51 51 51 52 55 55 55 57 Source: City budget documents and payroll records w City of Rancho Palos Verdes Operating Indicators by Function Last Six Fiscal Years Fiscal Year 2001 2002 2003 2004 2005 2006 Function Administration Employee Resignations 5 4 - 5 4 4 Workers compensation claims 3 3 2 2 3 4 Liability claims 8 14 14 14 18 31 Budget Adjustments 27 35 30 27 36 48 Business licenses issued 1,624 1,600 1,961 2,102 1,909 1,801 Web site page views 30,624 88,888 119,104 133,481 DNA DNA Public safety Crime rates (per 10,000 population) 123 138 122 124 DNA DNA Public works Solid waste diversion rates 46% 51% 57% DNA DNA DNA Pavement rating 88 80 80 89 DNA DNA Parks and recreation Park events 1,030 1,022 915 825 DNA DNA Class meetings at parks 1,601 1,774 2,134 2,935 DNA DNA Docent led nature hikes 51 54 45 80 DNA DNA Planning, building and code enforcement Building permits processed DNA 1,264 1,327 1,399 1,331 1,533 Plan checks DNA 121 150 186 214 176 Municipal code violations closed DNA 138 203 214 DNA DNA Source: City departments DNA: Data not available City of Rancho Palos Verdes Capital Asset Statistics by Function Last Six Fiscal Years Fiscal Year 2001 2002 2003 2004 2005 2006 Function Administration Computer workstations DNA DNA DNA DNA 81 81 Public safety' Public works Street miles 143 143 143 143 143 143 Traffic signals 13 14 15 15 15 15 Parks and recreation Parks Planning, building and code enforcement Vehicles used for inspections 14 15 15 15 15 16 3 3 3 3 3 3 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. L