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CAFR FY 2017-18Lj RANCHO PALOS VERDES • �. z r q. a,MOT,? ,• * t WS+4.t ezw'� A r jn F �j� f 1-t�P MOIL' J �' •.• � � • �R�� s.i�. y ~ M • 'fie `' !' `�►� ��3.+i �iI�'�try,* ,y, yy � }.�,�„/� .�+. , mkk" S . �� r v ; � �., . E� ` ,v � t}d f t kt rx ! 0 f,y'., � �;� • '�'� p1. a • .t 4 c CITY OF RANCHO PALOS VERDES, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2017 Prepared By: Finance Department INTRODUCTORY SECTION This page intentionally left blank. CITY OF RANCHO PALOS VERDES, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS INTRODUCTORY SECTION Table of Contents. Letter of Transmittal.........................................................................................v-xiv Directory of Officials............................................................................................ xv Organizational Chart...........................................................................................xvi GFOA Certificate of Achievement for Excellence in Financial Reporting ...........xvii FINANCIAL SECTION Independent Auditors' Report...................................................................................1 Management's Discussion and Analysis..................................................................4 Government -Wide Financial Statements Statement of Net Position...................................................................................15 Statement of Activities........................................................................................16 Fund Financial Statements Government Funds BalanceSheet....................................................................................................18 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position.................................................................................19 Statement of Revenues, Expenditures and Changes in Fund Balances.............20 Reconciliation to the Statement of Revenues, Expenditure and Changes in Fund Balances to the Statement of Activities ................................ 21 General Fund Statement of Revenues, Expenditures and Changes in Fund Balance - Budgetand Actual............................................................................................22 Proprietary Funds Statement of Net Position...................................................................................24 Statement of Revenues, Expenditures and Changes in Fund Net Position ........25 Statementof Cash Flows....................................................................................26 Fiduciary Funds Statement of Fiduciary Net Position....................................................................27 Statement of Changes in Fiduciary Net Position.................................................28 Notes to the Financial Statements..........................................................................29 Required Supplementary Information Schedule of Proportional Share of the Net Pension Liability .................................... 61 Schedule of Contributions........................................................................................62 Supplementary Information Non -Major Governmental Funds Combining Balance Sheet........................................................................................65 Combining Statement of Revenues, Expenditures and Changes in FundBalances.......................................................................................................73 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Special Revenue Funds GasTax Fund..................................................................................................81 1972 Act Fund.................................................................................................. 82 EIPrado Fund..................................................................................................83 1911 Act Fund.................................................................................................. 84 Beautification Fund..........................................................................................85 Waste Reduction Fund.....................................................................................86 Air Quality Management Fund..........................................................................87 PropositionC Fund..........................................................................................88 PropositionA Fund...........................................................................................89 Public Safety Grants Fund...............................................................................90 MeasureR Fund..............................................................................................91 MeasureA Fund...............................................................................................92 Abalone Cove Sewer Assessment District Fund .............................................. 93 Dr. Allen and Charlotte Ginsburg Cultural Arts Building Fund .......................... 94 Donor Restricted Contributions Fund............................................................... 95 Joint Powers Improvement Authority — Portuguese Bend Fund ....................... 96 Community Development Block Grant Fund....................................................97 QuimbyFund....................................................................................................98 Environmental Excise Tax Fund.......................................................................99 Capital Projects Fund Low -Moderate Income Housing Capital Projects Fund ..................................100 Affordable Housing In -Lieu Capital Projects Fund..........................................101 Permanent Funds Habitat Restoration Fund...............................................................................102 Subregion One Maintenance Fund................................................................103 Joint Powers Improvement Authority — Abolone Cove Fund ..........................104 Capital Improvement Capital Projects Funds...............................................105 Internal Service Funds Combining Statement of Net Position.....................................................................106 Combining Statement of Revenues, Expenses and Changes in Fund NetPosition.........................................................................................................108 Combining Statement of Cash Flows.....................................................................109 FINANCIAL SECTION (Unaudited) Financial Trends Net Position by Component....................................................................................110 Changesin Net Position.........................................................................................112 Governmental Activities Tax Revenue by Source ..................................................116 Fund Balances of Governmental Funds — Before GASB 54 ...................................117 Fund Balances of Governmental Funds — After GASB 54 ......................................118 Changes in Fund Balances of Governmental Funds..............................................119 General Governmental Tax Revenues by Source..................................................121 Revenue Capacity Assessed Value of Taxable Property.....................................................................122 Assessed Value and Estimated Actual Value of Taxable Property ........................123 Property Tax Rates — Direct and Overlapping Governments .................................124 Principal Property Tax Payers................................................................................126 Property Tax Levies and Collections......................................................................127 Debt Capacity Direct and Overlapping Governmental Activities Debt............................................128 Legal Debt Margin Information...............................................................................129 Demographic and Economic Information Demographic and Economic Statistics...................................................................131 Principal Sales Tax Producers...............................................................................133 PrincipalEmployers................................................................................................134 Operating Information Full-time Equivalent City Government Employees by Function..............................135 Operating Indicators by Function...........................................................................136 Capital Asset Statistics by Function.......................................................................138 This page intentionally left blank. iv RAf CHO PALOS VERDES February 6, 2018 Honorable Mayor and City Council City of Rancho Palos Verdes Rancho Palos Verdes, California The Comprehensive Annual Financial Report (CAFR) of the City of Rancho Palos Verdes for the fiscal year ended June 30, 2017, is hereby submitted as mandated by both local ordinances and state statutes. These ordinances and statutes require that the City of Rancho Palos Verdes issue annually a report on its financial position and activity, and that an independent firm of certified public accountants audit this report. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner that presents fairly the financial position and results of operations of the various funds and component unit of the City of Rancho Palos Verdes. In addition, to the best of our knowledge, there are no untrue statements of material fact within the financial statements or omissions of material fact to cause the financial statements to be misleading. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The financial section of the CAFR includes the Independent Auditor's Report and Management's Discussion and Analysis (MD&A) of the financial activity. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The financial reporting entity (the government) includes all the funds of the primary government (i.e., the City of Rancho Palos Verdes as legally defined), as well as its component unit, the Rancho Palos Verdes Joint Powers Improvement Authority. A component unit is a legally separate entity for which the primary government is financially accountable. The City provides a broad range of services, including police protection, solid waste collection, construction and maintenance of streets and other infrastructure, planning and zoning activities, recreational activities, cultural events, and general administrative services. The City of Rancho Palos Verdes is a contract city, meaning that some of these services are provided by contract with other agencies (both public and private) and some services are delivered by the City's own employees. UT Special districts of the County of Los Angeles provide library services, fire protection services, and sewer services. The City has excluded the County of Los Angeles, as well as the State of California and various school districts, from the financial reporting entity because they do not meet the established criteria for inclusion. GOVERNMENTAL STRUCTURE The City of Rancho Palos Verdes is located on a coastal peninsula overlooking the Pacific Ocean in Los Angeles County, 20 miles south of the City of Los Angeles. The City was incorporated September 7, 1973, and currently has land area of 13.6 square miles and a population of about 42,000. The City is primarily a "bedroom" community with relatively little commercial activity. The City has operated under the council-manager form of government since incorporation. Policy-making and legislative authority are vested in the governing City Council, which consists of five Council Members, including the Mayor and Mayor Pro - Tem. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees and hiring the City Manager and the City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the City's departments. The City Council is elected on a non-partisan, at - large basis. Council Members are elected to four-year staggered terms with two or three Council Members elected every two years. The City Council designates the Mayor and Mayor Pro -Tem for a one-year term. MAJOR INITIATIVES The City's staff, following specific directives of the City Council and the City Manager, has been involved in a variety of projects throughout the year. These projects reflect the City's commitment to ensuring that its citizens are able to live and work in an enviable environment. Administration • Public Safety Action adopted to aggressively reduce burglary crime in RPV by incorporating technology, deputies, and outreach and awareness. Residential burglary rates decreased by 50% in 2016 from 2015 rates. • Lead peninsula cities to enter into a Memorandum of Understanding to implement expanded ALPR program resulting in Automated License Plate Recognition (ALPR) cameras being placed at key intersections around the Peninsula • Added a joint Surveillance and Apprehension Team (SAT) Detective • Award-winning Public Service Announcement (PSA) produced to encourage "See Something, Say Something" campaign, as well as other PSAs and segments vi • Homeowner Association (HOA) Security Grant Program developed to streamline process for placing cameras at entrances to neighborhoods and provide grants for HOAs to put additional public safety measures into place • Discounts negotiated with Ring.com, as well as a City incentive, to provide residents additional incentives to use camera technology to help prevent and solve crimes • "Look and Lock" Campaign to reduce theft from unlocked vehicles. • Multi-year Memorandum of Understanding (MOU) adopted between the City and the Rancho Palos Verdes Employee Association, fiscal year 2017 to 2020. • Completed a total of 12 full-time and 7.0 part-time personnel recruitments during the fiscal year. • Recruited accomplished executive staff including Deputy Community Development Director and City Clerk. • Creation of an Information Technology Strategic Plan (ITSP) to plan for long range technology initiatives. • Upgrade of the citywide telephone system to a more robust Cisco Unified Communications system including the integration of park site phones into the central system. • Creation of a Coyote Reporting application used by all the Peninsula City residents to report coyote sightings. • Creation of an online GIS portal providing a variety of spatially located information important to the public. • Compiled, distributed, and archived over 38 City Council agendas and meeting minutes. • Responded to over 130 Public Records Act requests (PRAs). • Conducted a community outreach effort with an opinion survey regarding a Civic Center Master Plan to 13,595 RPV residents. The Rate of Return was 17% (well above industry standards for a direct-mail campaign) with an overall consensus that a Civic Center is needed in the City. • Updated and completed City-wide Records Retention Schedule. • Worked cooperatively with Carl Warren to process 19 claims against the City. au • Received and processed 17 Subpoenas for records (and appearance). Community Development • The City together with the Palos Verdes Peninsula Land Conservancy continued management of the City's Natural Communities Conservation Plan (NCCP) Preserve through implementation of the City Council approved Public Use Master Plan (PUMP) for the entire Preserve, and continued several on-going habitat restoration and trail improvement projects. • Continued to take steps to update the City's General Plan by updating the text for the entirety of the Plan, as well as all the proposed General Plan Land Use Map changes. The technical studies used as a basis for the project is being updated, which will be used to further update the General Plan text and the CEQA analysis for review by the Planning Commission. Staff anticipates that the Planning Commission will complete their review and forward the Draft Updated General Plan to the City Council in April 2018. • Continued to ensure that the various housing programs within the Housing Element are being implemented. • The City of Rancho Palos Verdes (RPV), in partnership with the City of Los Angeles, developed a uniform strategy for the Western Avenue corridor between Summerland Ave. and Palos Verdes Drive North. The Western Avenue Corridor Street Enhancement Strategy (the Strategy) is intended to harmonize approaches to multi- modal mobility, streetscape design, landscaping, and signage to foster the development of a common set of functional concepts between the City of RPV and LA. • The City Council adopted the Energy Efficiency Chapter of the City's Emission's Reduction Action Plan (ERAP) in 2015. Since then, the Planning Division continued working with the South Bay Cities Council of Governments (SBCCOG), in the preparation of the final ERAP. Once implemented, the ERAP will present goals, measures, and sub -strategies to minimize the City's GHG emissions sources in the areas of Land -Use & Transportation, Waste, Greening and Energy Generation/ Storage. The final ERAP will be considered by the City Council in December 2017. • On January 17, 2017, the City Council adopted an ordinance expressly prohibiting the operation and advertisement of short-term rentals, which are typically considered rentals (home -sharing or vacation rental) of a residential property for a period of time less than 30 consecutive days, in the City's single-family and multi -family residential zoning districts. • On December 20, 2016, March 7, 2017, and April 4, 2017, the City Council amended the Schedule of Penalties for Administrative Citations to include a second tier fine for violations of the City's Municipal Code for advertising or operating a short-term rental viii in the City's single-family and multi -family residential zoning districts and for violating conditions of approvals. • On April 4, 2017, the City Council adopted amendments to City Council Policy No. 31 to allow homeowner's associations to install security cameras in the public right-of- way. • On February 21, 2017, the City Council adopted clearer regulations for processing minor modifications to previously approved projects. • Implemented the City's Trails Network Plan by improving and maintaining trails within the Palos Verdes Nature Preserve pursuant to the City Council adopted Preserve Trails Plan, and assisting Public Works with the construction of the Sunnyside Ridge Trail and conducting maintenance to existing trails identified in the City's Conceptual Trails Plan. • Staff continues to work on processing an extensive overhaul of the City's Trails Network Plan for trails outside of the Preserve which will be considered by the Planning Commission and the City Council in Spring 2018. • Beginning July 1, 2016, the Building and Safety Division began on-line scheduling of building inspections and inspection appointments confirmed the day before. • Beginning July 1, 2016, the Building and Safety Division began providing plan check services at the public counter. • Implemented the Peacock Management Program resulting in 150 birds being relocated to homes outside the Palos Verdes Peninsula. • Implemented the Coyote Management Plan including conducting public workshops on the Wildlife Watch program, developing a coyote app in collaboration with the Peninsula cities, participating in the SBCCOG Coyote task force, and circulating public informational brochures. • Collaborated with Public Works and the Recreation and Parks Departments on issuing City Tree permits to restore views from properties surrounding Hesse Park, Vanderlip Park and along Palos Verdes Drive South. Public Works Completed Phase 1A of the Accessibility Transition Plan Implementation Project which completed ADA improvements at the Ladera Linda Community Center, Ryan Park and PVIC. • Completed and submitted, on behalf of the Peninsula Water Management Group, the Draft Enhanced Watershed Management Program to the Los Angeles Regional Water ix Quality Control Board in accordance with Municipal Separate Storm Sewer System (MS4) permit requirements. • Initiated and completed migration of work control and asset management tracking to an automated Computerized Maintenance Management System (CMMS). Implementation and transition to the new platform (Cityworks) was completed and system testing will continue through FY16-17. • Initiated a citywide proactive full-time graffiti abatement program, complete with daily service, a real-time, web -based application for smart phones and tablets and a hotline. • Initiated final design and construction of the Sunnyside Ridge Trail Segment Project which will construct an equestrian and pedestrian trail connection between Sunnyside Ridge Road and Palos Verdes Drive East. • Initiated and completed the Mira Catalina CDBG ADA Access Ramps and Sidewalk Improvement Project which constructed ADA compliant ramps and sidewalks adjacent to Mira Catalina Elementary School, Lucania Drive, Starline Drive and Crest Road. • Initiated and completed construction of the Palos Verdes Drive West CDBG ADA Access and Sidewalk Improvement project which constructed sidewalk to connect the Point Vicente neighborhood to the Golden Cove commercial and retail area. The project also constructed two ADA access ramps and a new bus stop and shelter. • Initiated and completed the Roan Road Storm Drain Rehabilitation project which constructed 140 linear feet of new pipe from a previously rehabilitated section to the outlet into Dodson Canyon. This storm dram rehabilitation project was completed for $94,006. • Implemented crossing guard services at Ridgecrest Intermediate School, Silver Spur Elementary School and Dodson Middle School to assist with the safe passage of students during the drop-off and pick-up periods. The costs for crossing guards are shared with the Palos Verdes Peninsula Unified School District. • Initiated construction of the Hawthorne Blvd Beautification Project which replaced the existing juniper -filled median planters with 80 36" -box trees to beautify the arterial corridor. This is the first phase of a multi -phased beautification project. • Initiated and completed construction of the Grayslake Road Drainage Improvement project which rehabilitated an existing storm drain line located within a City easement adjacent to private property. • Created and adopted a Wireless Telecommunications Ordinance which regulates and standardizes the permit requirements for the installation of wireless facilities placed in the public rights-of-way. x • Create and adopted a Special Events Ordinance which regulates and establishes a permit process for managing community events which could compromise public health and safety. • Completed construction of the FY12-13 & FY13-14 Residential Street Rehabilitation projects, which resurfaced local roadways in Area 1 (neighborhoods bordered by Hawthorne Boulevard and Silver Spur Road), Area 5B (neighborhoods bordered by Hawthorne Boulevard, Crest Road, and Palos Verdes Drive West) and Area 9 (neighborhoods bordered by Western Avenue). The project improvements included upgraded access ramps, slurry seal, asphalt concrete, tree root pruning, sidewalk repair, and updated roadway signing and striping. • Initiated construction of the FY 14-15 Residential Street Rehabilitation Project, Phase 1 (concrete repairs) which will repair broken asphalt and concrete on the local roadways in Area 2. • Initiated construction of the FY15-16 Sidewalk Repair Program, which will replace approximately 20,000 square feet of sidewalk, curb and gutter that was uplifted and damaged primarily by the roots of overgrown street trees. Recreation and Recreation • Doubled the enforcement presence in the Palos Verdes Nature Preserve utilizing contracted LA County Sheriff's Department deputies beginning July 1, 2016. • Expanded the Open Space Management (OSM) Division to better manage the City's 1,400 -acre Palos Verdes Nature Preserve. • Implemented increased staffing presence and park hours at a number of facilities including Ladera Linda Park, Robert Ryan Park, and Abalone Cove Shoreline Park in order to both improve services to park visitors and improve the care and maintenance of City facilities. • Lower Hesse Park Improvement project construction design process begun, using $300,000 in grant funds received from Los Angeles County to partially fund project. • Continued progress on the Ladera Linda Park Master Plan process. • Eastview Dog Park and park enhancement project construction process initiated. • Organized 35 Volunteer Program events, providing volunteer opportunities such as park and beach cleanup, park and trial maintenance, litter and graffiti removal, park bench and picnic table painting projects, garden projects, dog park maintenance, weed eradication and native plant maintenance in City parks. • Coordinated approximately 70 onsite and offsite recreation activities for REACH, the xi City's therapeutic program serving adults with developmental disabilities living on the Peninsula and in the south bay. • Provided oversight, support, and coordination of opportunities and programs with members of the Los Serenos de Point Vicente docent organization, including public and private hikes and speaking engagements. • Partnered with the Palos Verdes Library District's Young Readers Department to offer a total of 36 Story Time programs at three City park sites. • Participated in annual Peninsula Earth Day Fair, promoting environmental education, healthy planet activities, and providing outreach for Department programs. Participated in annual PV Street Fair and Music Festival, promoting local businesses and providing outreach for Department programs. • Provided safe and clean parks and nature reserves for community enjoyment, park facilities and fields for private and non-profit rental opportunities, and recreational and educational classes for people of all ages. FINANCIAL INFORMATION Internal Control 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. 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 and Improvement Authority Commission. Activities of the General fund, Special Revenue funds, Capital Projects funds and Permanent funds are included in the annual appropriated budgets of the government units. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the department/function level within each fund. Formal budgetary integration is employed as a management control device. The City also maintains an encumbrance accounting system as one method of maintaining budgetary control. These encumbrances lapse at year-end, and xii any unexpended balance is eligible to be carried over to the following year's budget appropriations with City Council approval. Budget to Actual Comparison The City experienced an overall $5.1 million favorable budget variance in the General fund for the fiscal year ended June 30, 2017. Favorable revenue variances of $0.6 million for taxes were added to a $3.4 million favorable expenditure variance plus $1.1 million of transfers out that spread across 30 different programs. Many of the favorable expenditure variances were permanent savings resulting from conservative budget practices, savings from the vacant positions, and the continued careful management of resources during FY 2016-17. Significant Financial Events There were no changes to financial policies that resulted in a significant impact on the June 30, 2017 financial statements. Long-term Financial Planning The City utilizes two long-term planning tools that serve as a guide to best allocate resources to meet the City's needs over time. The first of which is the Five -Year Capital Improvement Program (CIP). The CIP provides efficient and effective delivery of resources for improvement and maintaining public infrastructure and facilities. The Five - Year Capital Improvement Plan is updated annually during the budget process. The second long-term planning tools is the City's Five -Year Financial Model (Model). The Model allows for creation of baseline and alternative revenue and spending forecasts, including historic and projected annual periods for the next five years. The Model also allows for testing the impact of assumptions and proposed initiatives on projected budget gaps and fund balances. OTHER INFORMATION Independent Audit The City requires an annual audit by independent certified public accountants. The accounting firm of Vavrinek, Trine, Day & Co., LLP conducted this year's audit. The auditors' report on the government -wide financial statements and combining and individual fund statements and schedules is included in the financial section of this report. Single Audit As a recipient of federal, state, and county financial assistance, the City is responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management. In years when over $750,000 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 the Uniform Guidance. For the year ended June 30, 2017, $151,737 was expended on Federal financial assistance programs; and therefore a Single Audit was not required. GFOA Certificate of Achievement Award The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Finance Reporting to the City of Rancho Palos Verdes for its CAFR for the fiscal year ended June 30, 2017. This was the 24rd consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments The preparation of this report would have not been possible without the dedication of the entire staff of the Finance Department. I would also like to acknowledge the assistance of the City's auditors, Vavrinek, Trine, Day & Co., LLP and the contributions of all the departments by providing data necessary to prepare the City's FY 2016-17 CAFR. In closing, I want to thank 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, Deborah Cull n Director of Finance xiv RANCHO PALOS VERDES COMPREHENSIVE ANNUAL FINANCIAL REPORT FY 2016-2017 CITY OFFICIALS Brian Campbell Mayor Jerry V. Duhovic Mayor Pro Tem Susan Brooks Councilwoman Ken Dyda Councilman Anthony M. Misetich Councilman CITY STAFF Doug Willmore City Manager Gabriella Yap Deputy City Manager Deborah Cullen Director of Finance Cory Linder Director of Recreation & Parks Ara Mihranian Director of Community Development Michael Throne Director of Public Works xv U) Lu 0 � w � � O � iL 0 x U 2 LL 0 § k \ ca 0 IL w uLu z §� kj k k \� 20 ■I ou -F- e \ ® § # \ I w} [ w u TU Of LL w E § 2§ \ d LL U §° k � $ 2§ ■ 2U) 2 I� E u } }�\ § w }w§ §§U §\—� � \ k � Xvi 2§ ¢w 2U) 22 I� 20 fL q w §§U Xvi Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Ranchos Palos Verdes California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2016 *4OOW A00-:%fto Executive Director/CEO xvi i This page intentionally left blank. FINANCIAL SECTION This page intentionally left blank. Ur re. I VAVRINEK, TRINE, DAY 8, CO., LLP VALUE THE 49""416 Certified Public Accountants INDEPENDENT AUDITORS' REPORT The Honorable City Council of the City of Rancho Palos Verdes Rancho Palos Verdes, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Rancho Palos Verdes, California (City), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibilityfor the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 10681 Foothill Blvd., Suite 300, Rancho Cucamonga, CA 91730 P 909.466.4410 F 909.466.4431 W vtdcpa.com Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2017, and the respective changes in financial position, and where applicable, cash flows thereof, and the statement of revenues, expenditures, and changes in fund balance — budget and actual for the general fund for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As described in Note 1 to the financial statements, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 82, Pension Issues -An Amendment of GASB Statements No. 67, No 68 and No. 73, effective July 1, 2016. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, the schedule of the proportionate share of the net pension liability, and the schedule of contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual non -major fund financial statements and budgetary comparison schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual non -major fund financial statements and budgetary comparison schedules are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual non -major fund statements and budgetary comparison schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. 2 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 6, 2018, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Rancho Cucamonga, California February 6, 2018 This page intentionally left blank. CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 MANAGEMENT'S DISCUSSION AND ANALYSIS The Management of the City of Rancho Palos Verdes offers readers of the City of Rancho Palos Verdes' Financial Statements this narrative overview and analysis of the City's financial activities for the Fiscal Year ended June 30, 2017. 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 v-xiv of this report. Financial Highlights The assets and deferred outflows of resources of the City of Rancho Palos Verdes exceed its liabilities and deferred inflows of resources at the close of the Fiscal Year ended June 30, 2017, by $222.4 million (Net Position). Of this amount, $48.2 million (Unrestricted Net Position) may be used to meet the City's ongoing obligations to its citizens and creditors. The remaining amount is invested in capital assets or is otherwise restricted, and therefore not available to meet the City's obligations. At the fiscal year ended June 30, 2017, the City's Total Net Position increased by $3.4 million. The primary factors for the increase are discussed below. As of June 30, 2017, the City's Governmental Funds reported combined ending Fund Balances of $59.8 million, an increase of $0.6 million in comparison to the prior year. The majority of the increase is attributable to the additional funds purchased through the Proposition A Exchange Program that will be used for public transit improvements in the next three years. As of June 30, 2017, unassigned fund balance for the General Fund was $15.7 million or 67% of General Fund expenditures. The $15.3 million of this amount constitutes the City Council's General Fund Reserve (rainy day fund). Due to the City Council's reserve policy, the unassigned fund balance has historically been maintained at or above the policy threshold level of 50% of annually budgeted General Fund expenditures. OVERVIEW OF THE BASIC 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. 9 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 Government -Wide Financial Statements The Government -Wide Financial Statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The Statement of Net Position presents information on all of the City's assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference between the two reported as Net Position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Rancho Palos Verdes is improving or deteriorating. The Statement of Activities presents information showing how the government's net position changed during the most recent Fiscal Year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both the Government -Wide Financial Statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include general government, public safety, public works, community development and parks and recreation. The City's business -type activities include only the Water Quality and Flood Protection program for renewal and maintenance of the City's storm drain facilities. The Government -Wide Financial Statements include not only the City of Rancho Palos Verdes itself (known as the Primary Government), but also a legally separate Joint Powers Improvement Authority for which the City of Rancho Palos Verdes is financially accountable. Financial information for this Component Unit has been included as an integral part of the primary government. The Government -Wide Financial Statements can be found on pages 15-17 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 three categories: Governmental Funds, Proprietary Funds, and Fiduciary Funds. 5 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 Governmental Funds Governmental Funds are used to account for essentially the same functions reported as governmental activities in the Government -Wide Financial Statements. However, unlike the Government -Wide Financial Statements, Governmental Fund Financial Statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the Fiscal Year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of Governmental Funds is narrower than that of the Government - Wide Financial Statements, it is useful to compare the information presented for Governmental Funds with similar information presented for governmental activities in the Government -Wide Financial Statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. The Governmental Balance Sheet and Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between Governmental Funds and governmental activities. The City of Rancho Palos Verdes maintained 27 individual Governmental Funds during the Fiscal Year ended June 30, 2017. 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 and the Capital Improvements Fund, which are considered to be major funds. Data from the other 25 Governmental Funds are combined into a single, aggregated presentation. Individual fund data for each of these Other Governmental Funds is provided in the form of combining statements elsewhere in this report. The City of Rancho Palos Verdes adopts an annual appropriated budget for each of its Governmental Funds. A budgetary comparison statement has been provided for each Governmental Fund to demonstrate compliance with this budget. The basic Governmental Fund Financial Statements can be found on pages 18-23 of this report. Proprietary Funds The City of Rancho Palos Verdes maintains two types of Proprietary Funds. Enterprise Funds are used to report the same functions presented as business -type activities in the Government -Wide Financial Statements. The City uses an Enterprise Fund to account for its Water Quality and Flood Protection Program. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses Internal Service Funds to account for its fleet of vehicles, computer systems, furniture and equipment, and Civic Center building replacement/improvements. Because these services predominantly benefit the 0 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 governmental function, they have been included within governmental activities in the Government -Wide Financial Statements. Proprietary Fund Financial Statements provide the same type of information as the Government -Wide Financial Statements, only in more detail. These statements can be found on pages 24-26 of this report. The Proprietary Fund Financial Statements provide separate information for the Enterprise Fund and the Internal Service Funds. The Enterprise Fund is presented as a single major fund of the City, while the Internal Service Funds are combined and presented as a single, aggregated presentation in the Statement. Individual fund data for the Internal Service Funds is provided in the form of combining statements elsewhere in this report. Fiduciary Fund The City is a fiduciary for the Successor Agency to the Rancho Palos Verdes Redevelopment Agency (the "Successor Agency"). The City is responsible for ensuring that the assets reported in the Successor Agency's private -purpose trust fund are only: 1) used to extinguish the obligations of the former RDA; or 2) transferred to another agency pursuant to state redevelopment dissolution law. All of the fiduciary activities are reported in a separate Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position. We exclude these activities from the City's Government -Wide Financial Statement because the City cannot use these assets to finance its operations. Individual Fiduciary Fund statements can be found on pages 27- 28 of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the Government -Wide and Fund Financial Statements. The notes to the financial statements can be found on pages 29-60 of this report. Other information The combining statements referred to earlier in connection with Other Governmental Funds and Internal Service Funds are presented immediately following the Notes to the Financial Statements. Combining and individual fund statements and schedules can be found on pages 63-109 of this report. CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City of Rancho Palos Verdes, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $222.4 million at June 30, 2017. By far, the largest portion of the City's Net Position of $154.7 million or 70% reflects its net investment in Capital Assets (e.g. Land, Infrastructure, Buildings, and Equipment). The City uses these Capital Assets to provide services to its citizens; consequently, these assets are not available for future spending. City of Rancho Palos Verdes Net Position Current and other assets Capital assets Total assets Deferred outflows of resources Long-term liabilities outstanding Other liabilities Total liabilities Deferred inflows of resources Net Investment in capital assets Restricted Unrestricted Total net position Governmental Business -type Activities Activities Total 2017 2016 2017 2016 2017 $ 75,078,443 $ 74,857,766 $ 4,771,793 $ 6,210,234 $ 79,850,236 $ 81,068,000 123,437,427 118,398,503 31,310,541 $ 31,662,640 154,747,968 150,061,143 198,515,870 193,256,269 36,082,334 37,872,874 234,598,204 231,129,143 2,804,770 1,550,506 2,804,770 1,550,506 9,746,985 7,678,051 - - 9,746,985 4,850,570 4,743,468 171,734 612,071 5,022,304 14,597,555 12,421,519 171,734 612,071 14,769,289 280,832 655,926 7,678,051 13,033,590 1 655,926 280,832 1,311,852 123,437,427 118,398,503 31,310,541 31,662,640 154,747,968 150,061,143 19,386,775 21,120,703 - - 19,386,775 21,120,703 43,618,051 42,210,124 4,600,059 5,598,163 48,218,110 47,808,287 $ 186,442,253 $ 181,729,330 $ 35,910,600 $ 37,260,803 $ 222,352,853 $ 218,990,133 A portion of the City's Net Position of $19.4 million or 9%, represents resources subject to external restrictions. The remaining balance of Unrestricted Net Position of $48.2 million or 22 % may be used to meet the government's ongoing obligations to its citizens and creditors. Total current and other assets decreased by $1.3 million in comparison to the previous year. This is mainly due to the storm drain projects in the Water Quality Flood Protection Fund. Capital assets increased by $4.7 million mainly due to the City's roadway capital projects. 0 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 Governmental Activities Governmental Activities increased the City's Net Position by $4.7 million primarily due to increased revenues and less expenses. City of Rancho Palos Verdes Changes in Net Position Expenses: Governmental Business -type Activities Administration Activities Total 2017 2016 2017 2016 2017 2016 Program revenues: 6,534,248 5,214,553 Public works 10,637,865 Charges for services $ 4,269,353 $ 2,490,951 $ 11,464 $ 1,384,897 $ 4,280,817 $ 3,875,848 Operating contributions and grants 4,195,757 2,332,320 - - 4,195,757 2,332,320 Capital contributions and grants 818,209 1,110,646 818,209 1,110,646 General revenues: Non -departmental 2,400,364 133,783 - - Property taxes 13,301,886 13,763,845 13,301,886 13,763,845 Othertaxes 11,823,625 12,390,945 - - 11,823,625 12,390,945 Other 1,719,817 2,821,865 38,246 20,662 1,758,063 2,842,527 Total revenues 36,128,647 34,910,572 49,710 1,405,559 36,178,357 36,316,131 Expenses: Administration $ 6,745,869 $ 8,061,904 6,745,869 8,061,904 Public safety 6,534,248 5,214,553 6,534,248 5,214,553 Public works 10,637,865 9,610,047 10,637,865 9,610,047 Community development 2,663,556 1,971,262 2,663,556 1,971,262 Parks and recreation 2,433,822 2,051,976 2,433,822 2,051,976 Non -departmental 2,400,364 133,783 - - 2,400,364 133,783 Water Quality Flood Protection 1,399,913 646,433 1,399,913 646,433 Total expenses 31,415,724 27,043,525 1,399,913 646,433 32,815,637 27,689,958 (Decrease) / Increase in net position 4,712,923 7,867,047 (1,350,203) 759,126 3,362,720 8,626,173 (Decrease) / Increase in net position 4,712,923 7,867,047 (1,350,203) 759,126 3,362,720 8,626,173 Net position - beginning of fiscal year 181,729,330 173,862,283 37,260,803 36,501,677 218,990,133 210,363,960 Net position - end of fiscal year $186,442,253 $181,729,330 $ 35,910,600 $ 37,260,803 $ 222,352,853 $ 218,990,133 9 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 Sources of Revenue - Governmental Activities W Other Taxes 33% w Other S% M Charges for U Property Taxes Services 37% 12% w Operating w Capital Contributions and Contributions Grants and Grants 2% 11% Expenses by Function — Governmental Activities LJ Community Development © Parks and 8%Recreation W Public Works 8% 34% w Non -departmental II (admin) - 8% h w Administration 21% M Public Safety 21% Business -Type Activities Business -type activities decreased the City's net position by $1.4 million due to expenditures related to storm drain projects in the Water Quality Flood Protection Fund. 10 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 FINANCIAL ANALYSIS OF THE GOVERNMENTAL FUNDS As of the end of the current fiscal year, the City's Governmental Funds reported combined ending Fund Balances of $59.8 million, an increase of $0.6 million in comparison to the prior year. Approximately $57.8 million or 97% of the combined ending Fund Balances constitutes spendable fund balance. The remainder of the combined ending Fund Balances are either non -spendable due to legal restrictions or non -spendable in the form of prepaid items and inventory. Additional information on the non -spendable items can be found in Note # 7 on pages 45-47 of this report. The General Fund is the chief operating fund of the City of Rancho Palos Verdes. At the end of the current fiscal year, the unassigned fund balance of the General Fund is $15.7 million, while total Fund Balance reached to $16.8 million. As a measure of the General Fund's liquidity, it may be useful to compare both Unassigned Fund Balance and Total Fund Balance to total fund uses (expenditures and transfers out). Unassigned Fund Balance represents 57% of total General Fund uses, while total Fund Balance represents 61 % of the same amount. The fund balance of the City's General Fund increased by $1.8 million. The increased amount is primarily attributable to the reduced transfers from General Fund to the Capital Improvement Projects Fund. The reduced transfers were a result of the City's Proposition A Exchange Program. The CIP Fund Balance ended the year at $27.1 million, a decrease of $2.6 million in comparison to the previous year. The majority of the decrease is due to the expenditures from the completed capital improvement projects and the reduced transfer from General Fund from the Prop A Exchange Program. Financial Analysis of Proprietary Funds The City's Proprietary Funds provide the same type of information found in the Government -Wide Financial Statements, but in more detail. Unrestricted Net Position of the Enterprise Fund at the end of the fiscal year amounted to $4.6 million. Unrestricted Net Position of the Internal Service Funds at the end of the fiscal year amounted to $2.5 million. The net position in Enterprise Fund decreased by $1.3 million due to payments for completed storm drain projects. For Internal Service Funds, the net position decreased by $633 thousand due to payments for City's new permitting system and financial software. 11 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 General Fund Budgetary Highlights The difference between original budgeted operating expenditures and the final amended budget was an increase of $4.1 million and is briefly summarized as follows: ➢ An increase of $1.5 million was attributable to Automated License Plate Recognition (ALPR) projects. ➢ An increase of $1.9 million in Non -Department from Proposition A Exchange Program for $1.3 million and $600 thousand of City Council approved settlements. ➢ An increase of $756 thousand from Public Works, Administration, Community Development, and Recreation and Parks. The increases include projects carried forward from prior year and projects approved during midyear. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets. The City's investment in Capital Assets for its Governmental activities as of June 30, 2017, amounts to $123.4 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, park improvements, roadways, sewer, storm drains, vehicles, computer equipment, furniture, other equipment, and construction in progress. During the current fiscal year, the City's investment in governmental capital assets increased by $5 million or 4%. Major capital asset events during the current fiscal year included the following: ➢ Depreciation of $3.4 million was recorded for the City's Capital Assets. ➢ A total of $8.2 million of construction in progress was added for various projects. The Capital Assets (net of accumulated depreciation) for Business -type activities as of June 30, 2017 is $31.3 million 12 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 City of Rancho Palos Verdes Capital Assets (Net of Depreciation) Additional information on the City's Capital Assets can be found in Note #4 on pages 42-43 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 $442,682 for Employee Compensated Absences. City of Rancho Palos Verdes Outstanding Debt Governmental Activities 2017 2016 Employee compensated absences $ 442,682 $ 357,504 Tota 1 $ 442,682 $ 357,504 At the fiscal year ended June 30, 2017, the City's total debt increased by $85 thousand or 24%, due to the new employee salary rates. State statutes limit the amount of general obligation debt a governmental entity may issue to 15 percent of its total assessed valuation. The current debt limitation for the City of Rancho Palos Verdes is $1,749,390,000. 13 Governmental Business -type Activities Activities Total 2017 2016 2017 2016 2017 2016 Capital assets not being depreciated Land $ 42,087,575 $ 42,087,575 $ 1,428,243 $ 1,428,243 $ 43,515,818 $ 43,515,818 Construction in progress 3,346,800 1,536,580 774,418 482,090 4,121,218 2,018,670 Total capital assets not being depreciated 45,434,375 43,624,155 2,202,661 1,910,333 47,637,036 45,534,488 Capital assets being depreciated, net Buildings 6,886,427 6,395,430 - - 6,886,427 6,395,430 Vehicles 112,788 72,318 112,788 72,318 Computer equipment 273,510 374,524 273,510 374,524 Furniture, fixtures and equipment 364,382 352,975 364,382 352,975 Infrastructure - Roadway system 51,348,663 47,598,976 51,348,663 47,598,976 Sewer system 5,845,585 6,299,321 - - 5,845,585 6,299,321 Storm drain system 8,693,616 8,944,000 29,107,880 29,752,307 37,801,496 38,696,307 Park system 4,478,081 4,736,804 4,478,081 4,736,804 Total capital assets being depreciated, net 78,003,052 74,774,348 29,107,880 29,752,307 107,110,932 104,526,655 Capital Assets, net $123,437,427 $118,398,503 $ 31,310,541 $ 31,662,640 $154,747,968 $150,061,143 Additional information on the City's Capital Assets can be found in Note #4 on pages 42-43 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 $442,682 for Employee Compensated Absences. City of Rancho Palos Verdes Outstanding Debt Governmental Activities 2017 2016 Employee compensated absences $ 442,682 $ 357,504 Tota 1 $ 442,682 $ 357,504 At the fiscal year ended June 30, 2017, the City's total debt increased by $85 thousand or 24%, due to the new employee salary rates. State statutes limit the amount of general obligation debt a governmental entity may issue to 15 percent of its total assessed valuation. The current debt limitation for the City of Rancho Palos Verdes is $1,749,390,000. 13 CITY OF RANCHO PALOS VERDES MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2017 ECONOMIC FACTORS AND NEXT YEAR BUDGETS AND RATES Property tax revenue accounts for about 37 percent of Government -Wide revenues. Local property values remain strong, and the City's property assessments grew by 4.27% for FY 2016-17. The Consumer Price Index for Los Angeles County increased by 2.2% for the 12 months ended June 2017. The City's original FY 2017-18 General Fund expenditure budget increased by 13.3% when compared to the original FY 2016- 17 budget. The majority of revenue in excess of budgeted expenditures (about $4.6 million) has been programmed for capital improvement projects. REQUESTS FOR INFORMATION This Financial Report is designed to provide a general overview of the financial position of the City of Rancho Palos Verdes for all those with an interest in the government's finances. Questions concerning any of the information provided in this report, or requests for additional financial information, should be addressed to the Finance Department at 30940 Hawthorne Boulevard, Rancho Palos Verdes, CA 90275 or finance(a)rpvca.gov. 14 This page intentionally left blank. BASIC FINANCIAL STATEMENTS This page intentionally left blank. CITY OF RANCHO PALOS VERDES, CALIFORNIA STATEMENT OF NET POSITION JUNE 30, 2017 15 Governmental Business -type Activities Activities Total ASSETS CURRENT ASSETS: Cash and investments $ 64,163,268 $ 4,765,714 $ 68,928,982 Receivables: Taxes 1,664,449 - 1,664,449 Interest 73,780 5,379 79,159 Notes 8,020,916 - 8,020,916 Other 965,725 700 966,425 Inventory 31,089 - 31,089 Prepaid items 159,216 - 159,216 TOTAL CURRENT ASSETS 75,078,443 4,771,793 79,850,236 NONCURRENT ASSETS: Receivable from Successor Agency 10,498,826 - 10,498,826 Allowance for Successor Agency receivable (10,498,826) - (10,498,826) Capital assets: Land 42,087,575 1,428,243 43,515,818 Construction in process 3,346,800 774,418 4,121,218 Capital assets, net accumulated depreciation: Property and equipment 750,680 11,813 762,493 Building and improvements 6,886,427 - 6,886,427 Infrastructure 70,365,945 29,096,067 99,462,012 TOTAL NONCURRENT ASSETS 123,437,427 31,310,541 154,747,968 TOTAL ASSETS 198,515,870 36,082,334 234,598,204 DEFFERED OUTFLOWS OF RESOURCES Deferred Outflows Related to Pensions 2,804,770 - 2,804,770 LIABILITIES CURRENT LIABILITIES: Accounts payable and accrued liabilities 3,651,969 119,315 3,771,284 Retentions payable 350,790 52,419 403,209 Unearned revenue 4,896 - 4,896 Deposits payable 521,821 - 521,821 Current portion of long-term liabilities 321,094 321,094 TOTAL CURRENT LIABILITIES 4,850,570 171,734 5,022,304 LONG-TERM LIABILITIES: Due beyond one year 121,588 - 121,588 Net Pension Liability 9,625,397 - 9,625,397 TOTAL LONG-TERM LIABILITIES 9,746,985 - 9,746,985 TOTAL LIABILITIES 14,597,555 171,734 14,769,289 DEFFERED INFLOWS OF RESOURCES Deferred Inflows Related to Pensions 280,832 - 280,832 NET POSITION Net investment in capital assets 123,437,427 31,310,541 154,747,968 Restricted Expendable 17,509,829 - 17,509,829 Nonexpendable 1,876,946 - 1,876,946 Unrestricted 43,618,051 4,600,059 48,218,110 TOTAL NET POSITION $ 186,442,253 $ 35,910,600 $ 222,352,853 15 CITY OF RANCHO PALOS VERDES, CALIFORNIA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2017 Functions/programs Expenses Governmental Activities: Administration $ 6,745,869 Public safety 6,534,248 Public works 10,637,865 Community development 2,663,556 Parks and recreation 2,433,822 Non -departmental 2,400,364 Total governmental activities 31,415,724 Program Revenues 4,269,353 4,195,757 818,209 Business -type Activity: Water Quality Flood Protection 1,399,913 11,464 Total primary government $ 32,815,637 $ 4,280,817 15 $ 4,195,757 $ 818,209 General revenues: Taxes Property taxes Transient occupancy tax Sales tax Franchise tax Utility user tax Other taxes Investment income Unrestricted grants, contributions and other revenues Total general revenues and transfers Change in net position Net position - beginning of year Net position - end of year Operating Capital Charges for Grants and Grants and Services Contributions Contributions $ 1,080,897 $ 19,282 $ - 140,414 129,324 - 274,080 4,047,151 818,209 2,065,914 - - 708,048 - - 4,269,353 4,195,757 818,209 Business -type Activity: Water Quality Flood Protection 1,399,913 11,464 Total primary government $ 32,815,637 $ 4,280,817 15 $ 4,195,757 $ 818,209 General revenues: Taxes Property taxes Transient occupancy tax Sales tax Franchise tax Utility user tax Other taxes Investment income Unrestricted grants, contributions and other revenues Total general revenues and transfers Change in net position Net position - beginning of year Net position - end of year Net Revenue (Expense) and Changes in Net Position Governmental Activities Business -type Activity Total $ (5,645,690) $ - $ (5,645,690) (6,264,510) - (6,264,510) (5,498,425) - (5,498,425) (597,642) - (597,642) (1,725,774) - (1,725,774) (2,400,364) - (2,400,364) (22,132,405) - (22,132,405) - (1,388,449) (1,388,449) (22,132,405) (1,388,449) (23,520,854) 13, 301, 886 - 13, 301, 886 5,600,866 - 5,600,866 2,462,448 - 2,462,448 1,984,878 - 1,984,878 1,775,433 - 1,775,433 365,259 - 365,259 434,244 35,274 469,518 920,314 2,972 923,286 26, 845, 328 38,246 26, 883, 574 4,712,923 (1,350,203) 3,362,720 181, 729, 330 37, 260, 803 218, 990,133 $ 186,442,253 $ 35,910,600 $ 222,352,853 16 CITY OF RANCHO PALOS VERDES, CALIFORNIA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2017 ASSETS Cash and investments Receivables: Taxes Interest Other Due from other funds Inventory Prepaid items Receivable from Successor Agency Allowance for Successor Agency receivable TOTAL ASSETS LIABILITIES Accounts payable and accrued liabilities Due to other funds Retentions payable Unearned revenue Deposits payable TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES Unavailable revenue FUND BALANCES Non -Spendable Endowment principal Reimbursement settlement agreement Prepaid items I nventory Habitat restoration Restricted Committed Assigned Unassigned TOTAL FUND BALANCES TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES Capital Projects Other Total Capital Governmental Governmental General Improvements Funds Funds $ 17,903,041 $ 27,370,767 $ 16,336,285 $ 61,610,093 1,636,910 - 27,539 1,664,449 19,817 30,782 20,223 70,822 327,775 491,490 146,460 965,725 9,720 - - 9,720 31,089 17,509,829 - 31,089 159,216 - - 159,216 10,498,826 - - 10,498,826 (10,498,826) - - (10,498,826) $ 20,087,568 $ 27,893,039 $ 16,530,507 $ 64,511,114 $ 2,627,753 448,851 $ 489,085 $ 3,565,689 9,720 9,720 9,162 341,628 - 350,790 - - 4,896 4,896 521,821 - 521,821 3,158,736 790,479 503,701 4,452,916 103,429 23,259 91,167 217,855 - 750,000 750,000 - 1,000,000 1,000,000 159,216 - 159,216 31,089 - 31,089 - - 126,946 126,946 4,660,059 12,849,770 17,509,829 963,642 - - 963,642 - 22,419,242 1,208,923 23,628,165 15,671,456 - 15,671,456 16,825,403 27,079,301 15,935,639 59,840,343 $ 20,087,568 $ 27,893,039 $ 16,530,507 $ 64,511,114 17 CITY OF RANCHO PALOS VERDES, CALIFORNIA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2017 Fund balances - total governmental funds $ 59,840,343 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the governmental funds balance sheet. 122,686,747 Receivables not available to pay for current period expenditures are reported as unavailable revenue in the funds. 217,855 Long-term notes receivable are not current available resources and, therefore, do not affect the governmental fund balance. 8,020,916 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds. (442,682) The employee pension liability and related amounts are not due and payable in the current period and, therefore, are not reported in the governmental funds: Net pension liability (9,625,397) Deferred outflows of resources related to pensions 2,804,770 Deferred inflows of resources related to pensions (280,832) Internal service funds are used by management to charge the costs of certain activities, including equipment and building replacement and employee benefits, to individual funds. The assets and liabilities of the internal service funds are included in the Statement of Net Position. 3,220,533 Net position of governmental activities $ 186,442,253 CITY OF RANCHO PALOS VERDES, CALIFORNIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Taxes Licenses and permits Revenue from other agencies Charges for services Fines and forfeitures Use of money and property Other revenues TOTAL REVENUES EXPENDITURES: Current Administration Public safety Public works Community development Parks and recreation Non -departmental Capital Outlay TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE General Capital Projects Capital Improvements Other Total Governmental Governmental Funds Funds $ 24,534,704 $ - $ 956,066 $ 25,490,770 3,044,614 - - 3,044,614 19,282 143,064 4,955,169 5,117,515 885,044 - 187,036 1,072,080 152,659 - - 152,659 107,867 191,721 115,492 415,080 515,496 - 216,702 732,198 29,259,666 334,785 6,430,465 36,024,916 5,444,581 - - 5,444,581 6,534,248 - - 6,534,248 4,087,117 - 4,997,525 9,084,642 2,663,556 - - 2,663,556 2,175, 099 - - 2,175, 099 2,400,364 - - 2,400,364 - 7,105, 523 - 7,105, 523 23,304,965 7,105,523 4,997,525 35,408,013 5,954,701 (6,770,738) 1,432,940 616,903 190,000 4,141, 397 246,000 4,577,397 (4,387,397) - (190,000) (4,577,397) (4,197,397) 4,141,397 56,000 - 1,757,304 (2,629,341) 1,488,940 616,903 FUND BALANCE - BEGINNING OF YEAR 15,068,099 29,708,642 14,446,699 59,223,440 FUND BALANCE - END OF YEAR $ 16,825,403 $ 27,079,301 $ 15,935,639 $ 59,840,343 19 CITY OF RANCHO PALOS VERDES, CALIFORNIA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2017 Net change in fund balances - total governmental funds Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense, or are allocated to the appropriate functional expense when the cost is below the capitalization threshold. Asset disposals are also not recognized in the governmental funds. This activity is reconciled as follows: Cost of assets capitalized Depreciation expense Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. 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. 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. Governmental funds report pension contributions as expenditures. However, in the Statement of Activities, pension expense is measured as the change in net pension liability and the amortization of deferred outflows and inflows related to pensions. This amount represents the net change in pension related amounts. $ 616,903 8,227,858 (3,139,797) (103,549) 188,116 (85,178) (358,472) 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 are reported with governmental activities. (632,958) Change in net position of governmental activities $ 4,712,923 CITY OF RANCHO PALOS VERDES, CALIFORNIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERALFUND FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Taxes Licenses and permits Revenue from other agencies Charges for services Fines and forfeitures Use of money and property Other revenues TOTAL REVENUES EXPENDITURES: Administration City council City manager Legal services City clerk Community outreach RPV TV Personnel Finance Information technology - data Information technology - voice Total Administration Public Safety Sheriff services Special safety programs Animal control Emergency preparedness Total Public Safety Public Works Public works administration Traffic management Storm water quality Public building maintenance Parks/trails/open space maintenance Sewer maintenance Total Public Works Budgeted Amounts Original Final $ 24,192, 800 3,010,300 832,100 121,500 53,800 403,500 28, 614, 000 125,700 767,700 940,000 557,700 81,500 228,400 402,400 1,249,500 1,119, 500 105,000 5,577,400 5,369,200 673,600 117,000 201,000 6,360,800 2,196,400 298,000 579,600 578,700 869,600 69,000 4,591,300 21 $ 24,192, 800 3,010,300 832,100 121,500 53,800 403,500 28, 614, 000 115,700 785,700 950,400 625,900 76,500 228,353 389,955 1,296,900 1,089,064 105,000 5,663,472 5,369,200 2,151,430 117,000 205,079 7,842,709 2,289,900 347,648 587,100 653,083 979,483 69,000 4,926,214 Asti i -A $24,534,704 3,044,614 19,282 885,044 152,659 107,867 515,496 Variance with Final Budget Positive ( Negative) $ 341,904 34,314 19,282 52,944 31,159 54,067 111,996 29,259,666 645,666 139,807 783,077 1,173,169 484,380 74,448 169,004 364,247 1,265,592 889,924 100,933 5,444, 581 5,451,056 821,653 99,932 161,607 6,534,248 2,175, 726 392,159 230,695 449,478 838,108 QF1 4,U87,117 (24,107) 2,623 (222,769) 141,520 2,052 59,349 25,708 31,308 199,140 4,067 218,891 (81,856) 1,329,777 17,068 43,472 1,308,461 114,174 (44,511) 356,405 203,605 141,375 68,049 839,097 CITY OF RANCHO PALOS VERDES, CALIFORNIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERALFUND FOR THE YEAR ENDED JUNE 30, 2017 Community Development Planning Building & safety services Code enforcement NCCP View restoration/preservation Geology Total Community Development Parks and Recreation Recreation administration Recreation facilities Special events Point Vicente Interpretive Center REACH Support services Total Parks and Recreation Non -departmental TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 6,024,800 1,935,290 5,954,701 4,019,411 OTHER FINANCING SOURCES (USES) Transfers in 190,000 190,000 Variance with - Transfers out (5,446,000) Final Budget Budgeted Amounts 1,058,603 Positive Original Final Actual (Negative) (USES) 1,492,800 1,547,625 1,324,425 223,200 860,700 886,800 772,017 114,783 131,600 159,900 116,264 43,636 75,000 75,000 - 75,000 336,400 345,200 302,402 42,798 150,000 150,000 148,448 1,552 3,046,500 3,164, 525 2,663,556 500,969 806,800 943,940 873,451 70,489 674,000 711,950 594,023 117,927 213,000 203,700 146,373 57,327 362,300 413,250 447,107 (33,857) 40,000 41,300 39,676 1,624 80,000 79,200 74,469 4,731 2,176,100 2,393,340 2,175, 099 218,241 837,100 2,688,450 2,400,364 288,086 22, 589, 200 26, 678, 710 23, 304, 965 3,373,745 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 6,024,800 1,935,290 5,954,701 4,019,411 OTHER FINANCING SOURCES (USES) Transfers in 190,000 190,000 190,000 - Transfers out (5,446,000) (5,446,000) (4,387,397) 1,058,603 TOTAL OTHER FINANCING SOURCES (USES) (5,256,000) (5,256,000) (4,197,397) 1,058,603 NET CHANGE IN FUND BALANCE 768,800 (3,320,710) 1,757,304 5,078,014 FUND BALANCE - BEGINNING OF YEAR 15,068,099 15,068,099 15,068,099 - FUND BALANCE - END OF YEAR $ 15,836,899 $ 11,747,389 $16,825,403 $ 5,078,014 22 CITY OF RANCHO PALOS VERDES, CALIFORNIA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2017 ASSETS CURRENT ASSETS: Cash and investments Receivables: Interest Other TOTAL CURRENT ASSETS NONCURRENT ASSETS: Capital assets, not being depreciated Land Construction in process Capital assets Property and equipment Infrastructure Accumulated depreciation TOTAL NONCURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES: Accounts payable and accrued liabilities Retentions payable TOTAL LIABILITIES NET POSITION Net investment in capital assets Unrestricted TOTAL NET POSITION 23 Business -type Governmental Activity Activities Water Quality Internal Flood Protection Service Enterprise Fund Funds $ 4,765,714 $ 2,553,175 5,379 2,958 700 - 4.771.793 2.556.133 1,428,243 774,418 11,813 2,355,333 31, 800, 576 (2,704,509) (1,604,653) 31,310,541 750,680 36,082,334 3,306,813 119,315 86,280 52,419 - 171,734 86,280 31,310,541 750,680 4,600,059 2,469, 853 $ 35, 910, 600 $ 3,220,533 CITY OF RANCHO PALOS VERDES, CALIFORNIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2017 OPERATING REVENUES: Charges for services OPERATING EXPENSES: Personnel services Materials and supplies Maintenance Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NON-OPERATING REVENUES: Other revenues Investment income TOTAL NON-OPERATING REVENUES CHANGE IN NET POSITION NET POSITION - BEGINNING OF YEAR NET POSITION - END OF YEAR 24 Business -type Governmental Activity Activities Water Quality I nternal Flood Protection Service Enterprise Fund Funds $ 35, 910, 600 $ 3,220,533 $ 11,464 $ 82,050 89,825 - - 498,751 665,661 10,695 644,427 224,726 1,399,913 734,172 (1,388,449) (652,122) 2,972 - 35,274 19,164 38,246 19,164 (1,350,203) (632,958) 37,260,803 3,853,491 $ 35, 910, 600 $ 3,220,533 CITY OF RANCHO PALOS VERDES, CALIFORNIA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2017 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from interfund services provided Receipts from storm drain user fees Payments to suppliers Payments to employees NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets CASH FLOWS FROM INVESTING ACTIVITIES: Interest received on investments NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash used by operating activities: Depreciation Changes in operating assets and liabilities: Decrease in other receivable Increase (decrease) in accrued liabilities NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 25 Business -type Governmental Activity Activities Water Quality Internal Flood Protection Service Enterprise Fund Funds $ - $ 82,050 33,825 - (1,105,998) (390,833) (89, 825) - (1,161,998) (308,783) (292,328) (175,589) 39,456 19,532 (1,414,870) (464,840) 6,180, 584 3,018,015 $ 4,765,714 $ 2,553,175 $ (1,388,449) $ (652,122) 644,427 224,726 22,361 2,417 (440,337) (54,322) $ (1,161,998) $ (308,783) CITY OF RANCHO PALOS VERDES, CALIFORNIA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUND JUNE 30, 2017 ASSETS Cash and investments Interest receivable Prepaid items TOTAL ASSETS LIABILITIES Accounts payable and accrued liabilities Short-term liabilities Due within one year - Portuguese Bend Due within one year - Abalone Cove Due within one year - bond payable Long-term liabilities Due beyond one year - Portuguese Bend Due beyond one year - Abalone Cove Due beyond one year - bond payable TOTAL LIABILITIES NET POSITION (DEFICIT) HELD IN TRUST 26 Successor Agency to the Rancho Palos Verdes Redevelopment Agency Private -Purpose Trust Fund $ 453,088 469 336,875_ 790 99,027 48,091 230,000 6,967,861 3,383,847 4,045,000 14,777,924_ $ (13,987,492) CITY OF RANCHO PALOS VERDES, CALIFORNIA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUND FOR THE YEAR ENDED JUNE 30, 2017 ADDITIONS Taxes Use of money and property TOTAL ADDITIONS DEDUCTIONS Administration Debt interest and fiscal charges TOTAL DEDUCTIONS CHANGE IN NET POSITION NET POSITION (DEFICIT) - BEGINNING OF YEAR NET POSITION (DEFICIT) - END OF YEAR 27 Successor Agency to the Rancho Palos Verdes Redevelopment Agency Private -Purpose Trust Fund $ 443,750 51,163 494.913 48,193 224,243 272,436 222,477 14, 209, 969 $ (13,987,492) NOTES TO THE FINANCIAL STATEMENTS This page intentionally left blank. CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City of Rancho Palos Verdes (the City) conform to accounting principles generally accepted in the United States of America as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting and financial reporting principles. The following is a summary of the significant policies. A. Reporting Entity The reporting entity, "City of Rancho Palos Verdes", includes the accounts of the City and the Joint Powers Improvement Authority (the Authority).The City was incorporated on September 7, 1973, as a General Law City and operates under a Council/Manager form of government. The City sponsored the formation of a Redevelopment Agency in 1984 pursuant to the State of California Health and Safety Code Section 33000 entitled "Community Redevelopment Law" with a purpose to finance long-term capital improvements designed to eliminate physical and economic blight in a project area through stabilization of hazardous landslides. Effective February 1, 2012, pursuant to state law, the Redevelopment Agency was dissolved and its assets were transferred to a Successor Agency for the purpose of winding down the business of the former Redevelopment Agency (see Note #14). The Successor Agency is a separate legal entity that is a related organization to the City; but is not a component unit, as described more fully below. The Authority was formed on September 4, 1990, in accordance with the provisions of the Reimbursement and Settlement Agreement, dated October 27, 1987, entered into by the City, the former Redevelopment Agency, and the County of Los Angeles (County) in connection with the Horan Lawsuit. The Agreement requires funds to be set aside and expended by the Authority to maintain landslide abatement improvements installed and constructed by the former Redevelopment Agency. The City of Rancho Palos Verdes is the primary government unit. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading. The City has accounted for the Authority as a "blended" component unit. The balances and transactions of the Authority are reported in separate Permanent and Special Revenue Funds; and are included in the government - wide statements. The following specific criteria were used in determining that the Authority is a "blended" component unit. 1. The members of the City Council also act as members of the Authority Board. 2. The Authority is fiscally dependent on the City, and there is potential for the Authority to impose specific financial burdens on the City; as the City subsidizes maintenance operations performed by the Authority and the City is legally liable for facilities maintained by the Authority. Separately issued financial statements for the Authority may be obtained at the City's administrative offices. 29 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. Reporting Entity (Continued) The Successor Agency does not meet the criteria for reporting as a component unit, as it is not fiscally dependent on the City. In addition, the business of the Successor Agency must be approved by an independently appointed Oversight Board and the California Department of Finance. Therefore, the balances and transactions of the Successor Agency are reported as a separate Fiduciary Fund (private purpose trust fund), and are not included in the government -wide statements. Participation in Public Entity Jointly Controlled Government The City is a member of the Palos Verdes Peninsula Transit Joint Powers Authority (the Transit Authority). The Transit Authority is comprised of three member cities and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the Authority is to study, implement, and provide a public transit system within and around the Palos Verdes Peninsula. These transit services include Palos Verdes Transit, Dial -A -Ride, and a fixed route shuttle service. Periodic deposits are paid by member Cities and are adjusted retrospectively to cover costs. Costs are prorated among all participating Cities based on population. The City does not have an equity interest in the Transit Authority; therefore, no amount has been reported in the Statement of Net Position. However, the City does have an ongoing financial interest, because the City is able to influence the operations of the Authority so that the Authority uses its resources on behalf of the City. Also, an ongoing financial responsibility exists because the Authority is dependent on continued funding from the City. The condensed financial information of the Authority has not been reproduced in this report, but is available upon request from the Authority by emailing pvtransit palosverdes.com or mailing a request to P.O. Box 2656, Palos Verdes Peninsula, CA 90274. B. Description of Funds The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self -balancing accounts that comprise its assets, liabilities, deferred outflows/inflows, 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. The financial resources accounted for in the General Fund may be used to fund any City program. • Special Revenue Funds — Used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for specified purposes. • Capital Projects Funds — Used to account for financial resources used for the construction of specific capital projects. • Permanent Funds — Used to account for resources legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs. 01 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Description of Funds (Continued) Proprietary Fund Types • Enterprise Fund — Used to finance and account for the acquisition, operation, and maintenance of the City's facilities and services; which are supported primarily by user charges. • Internal Service Funds — Used to centralize the accounting for purchases of equipment, furniture and vehicles on behalf of all City departments, and the accumulation of funds for replacement of certain buildings on behalf of the City. Fiduciary Fund Type Private -Purpose Trust Fund — Used to account for property tax revenue allocated to the Successor Agency and payments of the obligations of the former Redevelopment Agency. C. Basis of Accounting/Measurement Focus Government — Wide Financial Statements The City's Government -Wide Financial Statements include a "Statement of Net Position" and a "Statement of Activities". These two statements present summaries of Governmental and Business -type Activities for the City; and do not include fiduciary activities. These statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets, deferred outflows of resources, liabilities, and deferred inflows of resources; including capital assets, infrastructure, and long-term debt, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned, while expenses are recognized in the period in which the liability is incurred. The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenue transactions for the City are reported in three categories: 1) Charges for Services, 2) Operating Grants and Contributions, and 3) Capital Grants and Contributions. Charges for Services include revenues from customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function. Operating Grants and Contributions include revenues restricted to meeting the requirements of a particular operating function and may include state shared revenues and grants. Capital Grants and Contributions include revenues restricted to meeting the requirements of a particular capital function and may include grants and developer fees. Taxes and other items not properly included among program revenues are reported instead as general revenues. As a general rule, the effect of inter - fund activity has been eliminated from the Government -Wide Financial Statements. 31 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting/Measurement Focus (Continued) Governmental Fund Financial Statements Governmental fund financial statements include a "Balance Sheet — Governmental Funds" and "Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds" for all major and other governmental funds. An accompanying schedule is presented to reconcile and explain the differences in fund balances as presented in these statements to the Net Position presented in the Government -Wide Financial Statements. The City has presented all major funds that met qualifications of GASB Statement No. 34. All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Under the "current financial resources" measurement focus, generally only current assets and current liabilities are reported on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balances. Revenues are recognized in the accounting period in which they become susceptible to accrual, that is, when they become both measurable and available to finance expenditures of the current period. "Measurable" means that the amount of the transaction can be determined, and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Accrued revenues include property taxes received within 60 days after year-end, taxpayer -assessed taxes such as sales taxes, and earnings on investments. Grant funds earned but not received are recorded as a receivable, and grant funds received before the revenue recognition criteria have been met are reported as unearned revenues. Expenditures are recorded when the fund liability is incurred, if measurable, except for interest on general long-term debt that has not yet matured, which is recognized when due. The City reports the following major governmental funds The General Fund is the City's primary operating fund. It accounts for all financial resources of the City, except those that are required to be accounted for in another fund. The Capital Improvement Capital Projects Fund is used to account for funds used for the City's capital improvement projects. Proprietary Fund Financial Statements Proprietary fund types are accounted for using the "economic resources" measurement focus and accrual basis of accounting. This means that all assets and liabilities (whether current or non- current) associated with the activity are included on the balance sheet. Fund equity is presented as total net position. The operating statement of proprietary funds presents increases (revenues) and decreases (expenses) in total net position. Revenues are recognized when they are earned and expenses are recognized when the liability is incurred. 32 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting/Measurement Focus (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 for services. Operating expenses for the enterprise and internal service funds include the costs of services, employee benefits, maintenance of capital assets, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The City uses the internal service funds to finance and account for goods and services provided by one City department to other City departments, including the purchase and maintenance of equipment, replacement of buildings and payment of employee benefits. The City's internal service funds are presented in the proprietary funds financial statements. Because the principal users of the internal services are the City's governmental activities, the financial statements of the internal service funds are consolidated into the governmental activities column when presented in the government -wide financial statements. To the extent possible, the cost of these services is reported in the appropriate functional activity (administration, public safety, public works, etc.). The City reports the following major enterprise fund The Water Quality Flood Protection Fund is used to account for voter approved storm drain user fees used to repair and replace the City's storm drain facilities. Fiduciary Fund Financial Statements The fiduciary private -purpose trust fund type is accounted for using the economic resources measurement focus and accrual basis of accounting similar to the proprietary funds. The City reports the following fiduciary fund The assets and liabilities of the former Redevelopment Agency were transferred to the Successor Agency as part of the business of redevelopment dissolution. The Successor Agency private - purpose trust fund accounts for the changes in the former Redevelopment Agency's assets and liabilities until they are disposed of through dissolution. This fund also accounts for the administrative costs associated with dissolution. D. Budgetary Accounting Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for all governmental funds. All annual appropriations lapse at fiscal year-end. Budget control is maintained over all accounts, and expenditures are not allowed to exceed appropriations at the program level. Throughout the year, the City Council made several budgetary adjustments to the General fund, Special Revenue funds, Capital Projects funds, Proprietary funds and Permanent funds. 33 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Budgetary Accounting (Continued) 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, 2017, based on calculations by City Management, the proceeds of taxes in the amount of $24.5 million did not exceed appropriation limit of $27.7 million. E. Capital Assets Capital assets include land, construction in progress, building and improvements, vehicles, computer equipment, furniture, fixtures and equipment, and infrastructure assets (street systems, storm drains, sewer systems, etc.). Capital assets are defined by the City as all land and buildings, vehicles, computers and equipment with an initial individual cost of more than $5,000; and improvements and infrastructure assets with costs of more than $100,000. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated or annexed capital assets are recorded at acquisition 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 25 to 50 years Vehicles, Computers, and Equipment 3 to 10 years Infrastructure Assets Roadway Network 10 to 100 years Sewer Network 25 to 50 years Storm Drain Network 30 to 100 years Parks and Recreation Network 25 years F. Employee Compensated Absences City employees may receive from 10 to 20 days of vacation time each year, depending upon length of service. An employee may accumulate earned vacation time up to a maximum of two years' worth of accrued vacation leave. Upon termination, employees are paid the full value of their unused vacation time at their existing salary. City employees accrue 96 hours of sick leave each year with a maximum accrual of 720 hours. However, unused sick leave is never paid out to the employee upon separation; and therefore, the City does not accrue a liability. The General Fund will primarily be used to liquidate the liability for compensated absences in future years. Any liability for compensated absences is only carried in the General Fund if there is unused/unpaid leave outstanding following an employee's separation. 34 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G. Investments Investments are reported at fair value which is the amount at which financial instruments could be exchanged in a current transaction between willing parties. All fair values are determined by external consultants. Investments are measured at fair value on a recurring basis. Recurring fair value measurements are those that Governmental Accounting Standards Board (GASB) Statements require or permit in the statement of net position at the end of each reporting period. Fair value measurements are categorized based on the valuation inputs used to measure an asset's fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. H. Cash and Investments The Water Quality Flood Protection Enterprise Fund and the Internal Service Funds participate in the pooling of City-wide cash and investments. Amounts from the pool are available to these funds on demand. Therefore the cash and investments reported in these funds are considered to be cash and cash equivalents for purpose of the statement of cash flows. I. Claims and Judgments When it is probable that a claim liability has been incurred, and the amount of the loss can be reasonably estimated, the City records the estimated loss, net of any insurance coverage under its self-insurance program. Small claims and judgments are recorded as expenditures when paid. The City's self-insurance program is administered through the California Joint Powers Authority (the CJPIA), which is described at Note #9. The CJPIA is a public entity risk pool. The City records amounts deposited with CJPIA as insurance expenditures in the General Fund and the Employee Benefits Fund. J. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items using the consumption method. In governmental funds, the prepaid assets recorded do not reflect current appropriable resources and thus, an equivalent portion of fund balance is reported as non -spendable. The City had a total of $159,216 of prepaid items as of June 30, 2017. K. 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 affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. L. Use of Restricted Resources When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first. When unrestricted resources (committed, assigned or unassigned) are available for use, it is the City's policy to use committed resources first, assigned resources second and finally unassigned resources. 35 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. Deferred Inflows and Outflows When net position is decreased by a transaction that is applicable to a future reporting period, it is the City's policy to report a deferred inflow of resources. Conversely, when net position is increased by a transaction that is applicable to a future reporting period, it is the City's policy to report a deferred outflow of resources. N. Current Accounting Pronouncements GASB Statement No. 82 — In March 2016, GASB issued Statement No. 82, Pension Issues — An Amendment of GASB Statements No. 67, No. 68, and No. 73. The objective of the Statement is to address certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. Specifically, the Statement addresses issues regarding (1) the presentation of payroll -related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. The Statement is effective for the reporting periods beginning after June 15, 2016. The City has implemented this Statement as of July 1, 2016. O. Future Accounting Pronouncements GASB Statement No. 75 — In June 2015, GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). This Statement is effective for fiscal years beginning after June 15, 2017, or the 2017-2018 fiscal year. The City has not determined the effect on the financial statements. GASB Statement No. 81 — In March 2016, GASB issued Statement No. 81, Irrevocable Split— Interest Agreements. The objective of the Statement is to improve financial reporting for irrevocable split -interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. The Statement requires that a government that receives resources pursuant to an irrevocable split -interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. Furthermore, the Statement requires that a government recognize assets representing its beneficial interests in irrevocable split -interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. The Statement requires that a government recognize revenue when the resources become applicable to the reporting period. The Statement is effective for the reporting periods beginning after December 15, 2016. The City has not determined the effect of the statement. 36 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #1– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) O. Future Accounting Pronouncements (Continued) GASB Statement No. 83 – In November 2016, GASB issued Statement No. 83, Certain Asset Retirement Obligations. This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital asset should recognize a liability based on the guidance in this Statement. This Statement also requires disclosure of information about the nature of a government's ARO, the methods and assumptions used for the estimates of the liabilities, and the estimated remaining useful life of the associated tangible capital assets. The requirements of this Statement are effective for reporting periods beginning after June 15, 2018, or the 2018-19 fiscal year. The City has not determined the effect of the Statement. GASB Statement No. 84 – In January 2017, GASB issued Statement No. 84, Fiduciary Activities. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018, or the 2019-20 fiscal year. The City has not determined the effect of this Statement. GASB Statement No. 85 – In March 2017, GASB issued Statement No. 85, Omnibus 2017. The objective of this Statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). The Statement is effective for the reporting periods beginning after June 15, 2017, or 2017-2018 fiscal year. The City has not determined the effect of the Statement. GASB Statement No. 86 – In May 2017, GASB issued Statement No. 86, Certain Debt Extinguishment Issues. The primary objective of this Statement is to improve consistency in accounting and financial reporting for in -substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources— resources other than the proceeds of refunding debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The Statement is effective for the reporting periods beginning after June 15, 2017, or 2017-2018 fiscal year. The City has not determined the effect of the Statement. 37 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) O. Future Accounting Pronouncements (Continued) GASB Statement No. 87 — In June 2017, GASB issued Statement No. 87, Leases. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments' financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right -to -use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments' leasing activities. The Statement is effective for the reporting periods beginning after December 15, 2019, or 2020-2021 fiscal year. The City has not determined the effect of the Statement. NOTE #2 — CASH AND INVESTMENTS Cash and investments as of June 30, 2017, are classified in the accompanying financial statements as follows: Government -Wide Fiduciary Fund Statement of Statement of Fiduciary Net Position Net Position Total Total cash and investments $ 68,928,982 $ 453,088 $ 69,382,070 Cash and investments as of June 30, 2017 consist of the following: Petty Cash $ 3,000 Deposits with Financial Institutions 4,743,973 Money Market Account 4,653,447 Certificates of Deposit 22,700,000 Local Agency Investment Fund (LAI F) 37,281,650 $ 69,382,070 Investments Authorized by the California Government Code and the City of Rancho Palos Verdes' Investment Policy. CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #2 — CASH AND INVESTMENTS The table below identifies the investment types that are authorized for the City of Rancho Palos Verdes by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, and concentration of credit risk. Authorized Investment Type U.S. Treasury Obligations Negotiable Certificates of Deposit Repurchase Agreements Money Market Mutual Funds Local Agency Investment Fund (LAIF) Money Market Savings/Demand Deposits Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect fair value of an investment. Generally, the longer the maturity of an investment, there is a greater sensitivity of its fair value to changes in market interest rates. The City manages its exposure to interest rate risk by investing with the Local Agency Investment Fund (LAIF) such that the portfolio provides cash flows and liquidity need for operations. The City's investment is represented by shares in the pool, which can be withdrawn in one business day. The average maturity of the pool is less than one year. Investment Type Local Agency Investment Fund (LAIF) Certificates of Deposit Money Market Account Remaining Maturity 0-12 months 12-24 months 24-36 months $ 37,281,650 $ - $ 6,250,000 6,250,000 4,653,447 - Disclosures Relating to Credit Risk 5,700,000 36-48 months 48-60 months Total $ - $ - $ 37,281,650 1,500,000 3,000,000 22,700,000 - - 4,653,447 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. LAIF 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. Violations of Investment Policy As of June 30, 2017, the City's investments in Certificate of Deposits were 33% of the portfolio which exceeded the maximum percent of the portfolio allowed by the City's investment policy of 30%. 39 Maximum Amount or Maximum Maximum Percent of in One Maturity Portfolio Issuer 3 years None None 5 years 30% None 7 days 15% None N/A 15% 15% N/A None $65 million per acct. N/A $5 million 15% Interest rate risk is the risk that changes in market interest rates will adversely affect fair value of an investment. Generally, the longer the maturity of an investment, there is a greater sensitivity of its fair value to changes in market interest rates. The City manages its exposure to interest rate risk by investing with the Local Agency Investment Fund (LAIF) such that the portfolio provides cash flows and liquidity need for operations. The City's investment is represented by shares in the pool, which can be withdrawn in one business day. The average maturity of the pool is less than one year. Investment Type Local Agency Investment Fund (LAIF) Certificates of Deposit Money Market Account Remaining Maturity 0-12 months 12-24 months 24-36 months $ 37,281,650 $ - $ 6,250,000 6,250,000 4,653,447 - Disclosures Relating to Credit Risk 5,700,000 36-48 months 48-60 months Total $ - $ - $ 37,281,650 1,500,000 3,000,000 22,700,000 - - 4,653,447 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. LAIF 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. Violations of Investment Policy As of June 30, 2017, the City's investments in Certificate of Deposits were 33% of the portfolio which exceeded the maximum percent of the portfolio allowed by the City's investment policy of 30%. 39 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #2 — CASH AND INVESTMENTS (CONTINUED) 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 City's deposits with financial institutions in excess of federal depository insurance limits were held in collateralized accounts, but not in the name of the City. The financial institutions that held the uninsured deposits are legally required by the California Government Code to collateralize the City's deposits as noted above. Investment in Local Agency Investment Fund (LAIF) The City of Rancho Palos Verdes is a voluntary participant in LAIF that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City of Rancho Palos Verdes' investment in this pool is based upon the City of Rancho Palos Verdes' pro -rata share of the fair value provided by LAIF for the entire pool portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. LAIF is a governmental investment pool managed and directed by the Treasurer of the State of California and is not registered with the Securities and Exchange Commission. An oversight committee comprised of California State officials and various other participants provides oversight to the management of the fund. The daily operations and responsibilities of LAIF fall under the auspices of the State Treasurer's office. Fair Value Classifications The City categorized its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. o CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #2 — CASH AND INVESTMENTS (CONTINUED) The City's investment in the money market account and the certificates of deposit are uncategorized with respect to the fair value hierarchy. Deposits and withdrawals in LAIF are made on the basis of $1 and not fair value. Accordingly, fair value is measured based on inputs that are uncategorized not defined as Level 1, Level 2, or Level 3t. NOTE #3 — INTERFUND TRANSACTIONS At June 30, 2017, $9,720 was owed to the General Fund from the Community Development Block Grant (CDBG) Fund to cover grant expenditures in the CDBG Fund, until reimbursement is received from the granting agency. Interfund Transfers Interfund transfers for the year ended June 30, 2017, consisted of the following: H L General Fund Capital Improvement Projects U) S Other Governmental Funds L Totals: Transfer From Other General Governmental Fund Funds Totals $ - $ 190,000 $ 190,000 4,141, 397 - 4,141, 397 246,000 - 246,000 $ 4,387,397 $ 190,000 $ 4,577,397 NOTE #3 — INTERFUND TRANSACTIONS (CONTINUED) Transfers are used to: 1) move revenues from the fund that statute or budget requires for collection to the fund that statute or budget requires for expenditure; 2) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations or grant matching requirements; and 3) return money that was originally transferred from the General Fund to another fund, yet not used. The General Fund transferred a total of $4,387,397. Of this amount, $4,141,397 was transferred to the Capital Improvement Projects (CIP) Fund as CIP Reserve for future infrastructure projects, as required by the City Council's Reserve Policy. The remaining balance of $246,000 was transferred to the Improvement Authority Abalone Cove for $38,000 and Abalone Cove Sewer District for $208,000. The General Fund received $190,000 during the year. Of this amount, $100,000 was transferred from the Public Safety Fund and another $90,000 was transferred from the Measure A Maintenance Fund. The CIP Fund received a total of $4,141,397, all from the General Fund. 41 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #4 - CAPITAL ASSETS AND DEPRECIATION In accordance with GASB Statement No. 34, the City has reported all capital assets including infrastructure in the Government -Wide Statement of Net Position. The City elected to use the basic reporting approach as defined by GASB Statement No. 34 for all infrastructures, whereby depreciation expense and accumulated depreciation has been recorded. The following tables present the capital assets activity for the year ended June 30, 2017. Governmental Activities Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Building 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 Ending Balance Increases Decreases Balance $ 42, 087, 575 $ - $ - $ 42, 087, 575 1,536,580 8,227,859 (6,417,639) 3,346,800 43,624,155 8,227,859 (6,417,639) 45,434,375 12,746,360 696,513 - 13,442,873 369,169 64,403 - 433,572 994,501 - - 994,501 765,425 111,186 - 876,611 102, 352, 661 5,721,125 - 108, 073, 786 25, 965, 995 - - 25, 965, 995 13,148,416 - - 13,148,416 6,371,095 - - 6,371,095 162, 713, 622 6,593,227 - 169, 306, 849 (6,350,930) (205,516) - (6,556,446) (296,851) (23,933) - (320,784) (619,977) (101,014) - (720,991) (412,450) (99,779) - (512,229) (54,753,685) (1,971,438) - (56,725,123) (19,666,674) (453,736) - (20,120,410) (4,204,416) (250,384) - (4,454,800) (1,634,291) (258,723) - (1,893,014) (87,939,274) (3,364,523) - (91,303,797) 74, 774, 348 3,228,704 - 78, 003, 052 $118,398,503 $11,456,563 $(6,417,639) $123,437,427 42 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #4 — CAPITAL ASSETS AND DEPRECIATION (CONTINUED) Depreciation expense was charged to functions/programs of the primary government as follows: Administration (depreciation of buildings) Public Works (depreciation of roadways, sewers, and storm drains) Parks and recreation (depreciation of parks system) Capital assets held by the City's internal service funds are charged to various functions based on their usage of the assets Total Depreciation Expense - Governmental Activities Business -type Activities Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Equipment Storm drain system Total capital assets being depreciated Less accumulated depreciation for: Equipment Storm drain system Total accumulated depreciation Total capital assets being depreciated, net Business -type activities capital assets, net Beginning Balance Increases $ 1,428,243 $ - 482,090 292,328 1,910,333 292,328 $ 205,516 2,675,558 258,723 224,726 $ 3,364,523 Ending Decreases Balance $ - $ 1,428,243 774,418 2,202,661 11,813 - - 11,813 31, 800, 576 - - 31, 800, 576 31,812,389 - - 31,812,389 (11,813) - - (11,813) (2,048,269) (644,427) - (2,692,696) (2,060,082) (644,427) - (2,704,509) 29,752,307 (644,427) - 29,107,880 $31,662,640 $ (352,099) $ - $31,310,541 Depreciation expense of $644,427 is included in the Water Quality Flood Protection enterprise fund. NOTE #5 — NOTES RECEIVABLE Notes Receivable City Affordable Housing In -Lieu $ 1,529,739 City Low -Moderate Income Housing 6,061,516 Community Development Block Grant 429,661 Subtotal: 8,020,916 Receivable from Successor Agency 10,498,827 Allowance from Successor Agency receivable (10,498,827) Total Notes Receivable: $ 8,020,916 The receivable from the Successor Agency is discussed further in Note #14. 43 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #5 — NOTES RECEIVABLE (CONTINUED) Affordable Housing In March 2009, the former Redevelopment Agency (RDA) entered into a Disposition and Development Agreement (DDA) with AMCAL Mirandela Fund LP (AMCAL). Under the DDA, the former RDA provided financial assistance to AMCAL in an amount up to $6,790,000 to develop a thirty-four unit senior housing project. The loan accrues simple interest at a rate of 3% per annum on the amounts disbursed. The balance of notes receivable from AMCAL including accrued unpaid interest of $1,320,711 at June 30, 2017 was $7,591,255. In March 2011, the former RDA sold an affordable housing condominium to an individual for $350,000. In connection with the sale, the buyer issued a secured promissory note in the amount of $126,320. The note bears no interest and principal is payable upon default by the owner (or any successors' owner) under a regulatory agreement that requires the condominium to be occupied by person or families of moderate income. If no such default has occurred by February 22, 2056, the principal will be forgiven. As part of redevelopment dissolution, these two long-term notes receivable were transferred to the housing successor (the City), which elected to retain the housing assets and function of the former Redevelopment Agency. Community Development Block Grant (CDBG) As part of the City's CDBG program, the City extends loans to property owners meeting low and moderate income requirements to make repairs and improvements to their homes. These notes receivable bear no interest, and repayment is required when the title to the property is transferred or the property is re -financed. The maximum loan amount per property is $13,000. Amounts repaid are returned to the CDBG program. The total of these loans outstanding at June 30, 2017 is $429,661. NOTE #6 — LONG-TERM DEBT Balance July 1, 2016 Employee Compensated Absences $ 357,504 Employee Compensated Absences Balance Amount Due Additions Deletions June 30, 2017 in One Year 344,489 $ (259,311) $ 442,682 $ 321,094 There is no fixed payment schedule for employee compensated absences. Based on historical trends, $321,094 is estimated to be the amount that will be used and/or paid out during the fiscal year ended June 30, 2017. CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #7 — CLASSIFICATIONS OF NET POSITION AND FUND BALANCE Government -Wide Financial Statements In the Government -Wide financial statements net position is classified in the following categories: Net Investment in Capital Assets This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation on these assets reduces this category as does any outstanding balance on debt incurred in acquiring or constructing the capital assets. Restricted Net position This category presents external restrictions imposed by creditors, grantors, contributions or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net position This category represents the difference between total net position and the two categories noted above: Net Investment in Capital Assets and Restricted Net position. Fund Financial Statements The fund balances reported on the fund statements consist of the following categories: Non -spendable — Amounts that are not in a spendable form (such as inventory and prepaid expenditures) or are legally required to be maintained intact (such as the corpus of an endowment fund). Restricted — Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation. Committed — Amounts constrained to specific purposes by the City Council via a City Council resolution or ordinance, which are considered to be equally binding. To be reported as committed, amounts cannot be used for any other purpose unless the City Council adopts another resolution to remove or change the constraint. Assigned — Amounts the City Council intends to use for a specific purpose, which is expressed by the City Council via minute order. Unassigned — Amounts that are available for any purpose; these amounts are reported only in the General Fund. However, if there is a deficit fund balance to be reported in any fund, it is classified as unassigned. 45 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #7— CLASSIFICATIONS OF NET POSITION AND FUND BALANCE (CONTINUED) The City's governmental fund balances were classified as follows at June 30, 2017: Nonspendable: In Form (inventory and prepaid) Legally Habitat Restoration Restricted Public Works Committed Public Works City Administration Public Safety Community Development Recreation and Parks Assigned Public Works Community Development Continued Appropriations Unassigned: Unrestricted Fund Balance Continued Appropriations Governmental Fund Balance Totals Capital Other General Improvement Governmental Fund Fund Funds $ 190,305 $ - $ - - - 1,750,000 - - 126,946 - 4,660,059 12, 849, 770 40,117 30,363 - - 827,457 - - 63,305 - - 2,400 - - - 22, 098, 585 479,385 - - 729,538 - 320,657 - 15, 256, 456 - 415,000 - - $16,825,403 $ 27, 079, 301 $ 15, 935, 639 Non -spendable Fund Balance • General Fund assets include $31,089 of inventory held for resale at the Point Vicente Interpretive Center gift shop, and $159,216 of prepayments for expenditures related to the fiscal year ended June 30, 2017. • The fund balance of the Improvement Authority's Abalone Cove Fund includes a $1,000,000 non -spendable fund balance, as required by a Reimbursement and Settlement Agreement dated October 27,1987 in connection with the Horan Lawsuit (discussed further in Note #14). • The fund balance of the Subregion One Maintenance Fund includes a $750,000 non -spendable endowment, as required by the developer agreement for the Subregion One tract. • Beginning with the fiscal year ended June 30, 2006, the City's Natural Communities Conservation Plan requires an endowment in the Habitat Restoration Fund to be funded at the rate of $10,000 annually (plus interest) for fifty (50) years, to provide for maintainance of habitat in the future. The balance of $126,946 represents 10 years of annual $10,000 contributions plus interest earnings. 9.9 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #7— CLASSIFICATIONS OF NET POSITION AND FUND BALANCE (CONTINUED) Restricted Fund Balance • The balances of the City's Special Revenue Funds, including California Highway User Tax apportionments in the Gas Tax Fund, are constrained to use for specific purposes by other governmental agencies. • The $4,660,059 balance of the Capital Improvement Fund is restricted for ongoing improvements for streets, buidling, parks, trails and open space, and Portuguese Bend's dewatering wells project. Committed Fund Balance • The $963,642 balance of the General Fund is committed for ongoing projects approved by the City Council. These projects can only be redesignated to other projects by City Council. Assigned Fund Balance • The $22,098,585 balance of the Capital Improvement Projects Fund has been assigned for the planning, design and construction of infrastructure projects. • The $479,385 balance of the Beautification Fund has been assigned for beautification projects within the City's right-of-way, as well as the promotion of recycling and beautification programs. • Balances totaling $729,538 within the Low -Moderate Income Housing Fund and the Affordable Housing In -Lieu Fund have been assigned for the provision of affordable housing within the City. Unassigned Fund Balance • City Council Policy No. 41 — Reserve Policies, adopted via resolution, requires the City to maintain a minimum General Fund balance of at least fifty percent of annual operating expenditures. This reserve serves as a Rainy Day Fund with a balance of $15,256,456 at June 30, 2017. • City Council approved to carry forward $415,000 of FY 2016-17 General Fund appropriations to FY 2017-18. Statement of Net Position The City's Net Position at June 30, 2017 includes restricted amounts totaling $19,386,775. The restrictions are itemized in the following table, and are noted above, in the discussion of governmental fund balances. Improvement Authority non -spendable balance $ 1,000,000 Subregion One maintenance non -spendable endowment 750,000 Natural Communities Conservation Plan non -spendable endowment 126,946 Capital Improvement Fund 4,660,059 Other Governmental Funds restricted balances 12,849,770 Total Restricted portion of Net Position $ 19,386,775 47 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #8— PENSION AND RETIREMENT HEALTH SAVINGS PLANS Pension Plan Description All qualified permanent and probationary employees are eligible to participate in the City of Rancho Palos Verdes Employee Pension Plan, a cost-sharing multiple -employer defined benefit pension plan administered by the California Public Employees Retirement System (CalPERS). The CalPERS Plan consists of a miscellaneous pool and a safety pool (referred to as "risk pools"), which are comprised of individual employer miscellaneous and safety rate plans, respectively. The risk pools are included within the Public Employees' Retirement Fund C (PERF C). Benefit provisions under the Plan are established by State statute and may be amended by City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provision, assumption and membership information. Copies of the reports can be found on the CalPERS website. Benefits Provided CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non -duty disability benefits after 10 years of service. The death benefit is one of the following: The Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law. The Public Employees' Pension Reform Act of 2013 (PEPRA) requires new benefits and member contributions for new members as defined by PEPRA, that are hired after January 1, 2013. These PEPRA members in pooled plans are reflected in the new Miscellaneous and Safety risk pools created by the CalPERS Board in response to the passage of PEPRA, beginning with the June 30, 2013, risk - pool valuations. The Plan's provisions and benefits in effect at June 30, 2017, are summarized in the following table. Hire Date Formula Benefit vesting schedule Benefit payments Retirement age Monthly benefits, as a % of annual salary Required employee contribution rates Required employer contribution rates Classic Tier 1 Prior to January 1, 2013 2.5% at 55 5 years of service monthly for life 55 2.50% 8% 10.069% .; Miscellaneous Classic Tier 2 New Members Prior to October 2, On or after 2012 January 1, 2013 2.0% at 60 2.0% at 62 5 years of service 5 years of service monthly for life monthly for life 60 62 2.00% 2.00% 7% 6.25% 7.159% 6.555% CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #8— PENSION AND RETIREMENT HEALTH SAVINGS PLANS (CONTINUED) Contribution Description Section 20814(c) of the California Public Employees' Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Miscellaneous Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Contributions to the pension plan from the City were $910,177 for the year ended June 30, 2017. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions The City reported a net pension liability for its proportionate share of the net pension liability of the Miscellaneous Plan as of June 30, 2017, in the amount of $9,625,397. The City's net pension liability for the Miscellaneous Plan is measured as the proportionate share of the net pension liability of the collective cost-sharing plan. The City's net pension liability of the Plan is measured as of June 30, 2016, and the total pension liability for the Miscellaneous Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2015, rolled forward to June 30, 2016, using standard update procedures. The City's proportion of the net pension liability was based on a projection of the City's long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City's proportionate share of the net pension liability for the Miscellaneous Plan as of the June 30, 2015 and 2016 measurement dates was as follows: Proportion - June 30, 2015 0.11130% Proportion - June 30, 2016 Change - Increase (Decrease) 0.11120% -0.00010% For the year ended June 30, 2017, the City recognized pension expense of $1,268,650. At June 30, 2017, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources: City contributions subsequent to the measurement date Difference between actual contributions and proportionate share of contributions Net difference between projected and actual earnings on pension plan investments Differences between Expected and actual experience Changes of Assumptions Total we Deferred Outflows Deferred Inflows of Resources of Resources $ 910,177 $ 410,073 1,461,638 - 22,882 280,832 $ 2,804,770 $ 280,832 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #8— PENSION AND RETIREMENT HEALTH SAVINGS PLANS (CONTINUED) The amount of $910,177 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows or resources related to pensions will be recognized as pension expense as follows: Year Ended June 30, 2018 $ 506,326 2019 449,457 2020 292,568 2021 365,410 $ 1,613,761 Actuarial Assumptions The total pension liabilities in the June 30, 2015 actuarial valuation was determined using the following actuarial assumptions. Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions: Discount Rate Inflation Projected Salary Increase Mortality (1) Depending on age, service, and type of employment. June 30, 2015 June 30, 2016 Entry -Age Normal Cost Method 7.65% 2.75% 3.3% - 14.2% (1) Derived using CaIPERS' Membership Data All other actuarial assumptions used in the June 30, 2015, valuation were based on the results of an actuarial experience study for the period from 1997 to 2011, including updates to salary increase, mortality and retirement rates. The Experience Study report can be obtained at CaIPERS' website. Discount Rate The discount rate used to measure the total pension liability was 7.65 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that the City's contributions will be made at rates equal to the difference between actuarially determined contributions rates and the employee rate. Based on those assumptions, each pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 6711 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #8— PENSION AND RETIREMENT HEALTH SAVINGS PLANS (CONTINUED) In determining the long-term expected 7.65 percent rate of return on pension plan investments, CaIPERS took into account both short and long-term market return expectations as well as the expected pension fund cash flows. Based on the expected benefit payments of the Public Employees' Retirement Fund, CaIPERS indicated that a 19 year horizon was ideal in determining the level equivalent discount rate assumption. Using historical returns of all the funds' asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The target allocation and best estimates of arithmetic real rates of return for each major asset class are the same for the Plan. These geometric rates of return are net of administrative expenses and are summarized in the following table: Asset Class Global Equity Global Fixed Income Inflation Sensitive Private Equity Real Estate Infrastructure and Forestland Liquidity Total 'An expected inflation of 2.5% used for this period 2 An expected inflation of 3.0% used for this period Sensitivitv of the Net Pension Liabilitv to Cha in the Discount Rate The following presents the City's proportionate share of the net pension liability, calculated using the discount rate of 7.65 percent, as well as what the City's proportionate share of net pension liability would be if it were calculated using a discount rate that is 1 -percentage point lower (6.65 percent), or 1 - percentage point higher (8.65 percent), than the current rate: Discount Rate -1 % Current Discount Rate Discount Rate +1 % (6.65%) (7.65%) (8.65%) $ 14,644,614 $ 9,625,397 $ 5,493,161 Pension Plan Fiduciary Net Position Detailed information about the Plan's fiduciary net position is available is a separately issued CaIPERS financial report. 51 Real 2 Rate Target Return Return Allocation Years 1-10 Years 11+ 51% 5.25% 5.71% 19% 0.99 2.43 6% 0.45 3.36 10% 6.83 6.95 10% 4.50 5.13 2% 4.50 5.09 2% (0.55) (1.05) 100% in the Discount Rate The following presents the City's proportionate share of the net pension liability, calculated using the discount rate of 7.65 percent, as well as what the City's proportionate share of net pension liability would be if it were calculated using a discount rate that is 1 -percentage point lower (6.65 percent), or 1 - percentage point higher (8.65 percent), than the current rate: Discount Rate -1 % Current Discount Rate Discount Rate +1 % (6.65%) (7.65%) (8.65%) $ 14,644,614 $ 9,625,397 $ 5,493,161 Pension Plan Fiduciary Net Position Detailed information about the Plan's fiduciary net position is available is a separately issued CaIPERS financial report. 51 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #8— PENSION AND RETIREMENT HEALTH SAVINGS PLANS (CONTINUED) Retirement Health Savinas Plan On November 17, 2009, the City approved the establishment of a defined contribution Retirement Health Savings Plan (the "Plan") for its full-time employees. The Plan is a Health Reimbursement Arrangement ("HRA") within Sections 105 and 106 of the Internal Revenue Code. The Plan assets are managed in a non-taxable trust as described in Section 501(c)(9) of the Internal Revenue Code. The City is the Plan Administrator, and utilizes the services of a contracted financial services provider for day-to-day administration of contributions and disbursements. The City has the authority to amend the Plan's provisions and contribution requirements. The City has no obligation to make contributions to the Plan, but as part of the annual budget process the City may elect to make contributions to the Plan. Employees are required to contribute 1 % of their gross wages to their account, which is owned by the employee. During the fiscal year ended June 30, 2017, the City contributed a total of $79,028 to employee accounts. The Plan assets are not an asset of the City. Therefore, only the City's expense to make contributions to the Plan has been recorded in the General Fund in the City's financial statements. NOTE #9 — LIABILITY, WORKERS' COMPENSATION, AND PURCHASED INSURANCE Description of Self -Insurance Pool Pursuant to Joint Powers Aareement The City of Rancho Palos Verdes is a member of the CALIFORNIA JOINT POWERS INSURANCE AUTHORITY (Authority). The Authority is composed of 118 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine -member Executive Committee. Self -Insurance Programs of the CJPIA Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and prior. Retrospective adjustments are scheduled to continue indefinitely on coverage years 2012-13 and prior, until all claims incurred during those coverage years are closed, on a pool -wide basis. This subsequent cost re- allocation among members, based on actual claim development, can result in adjustments of either refunds or additional deposits required. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustment. The total funding requirement for self-insurance programs is estimated using actuarial models and pre - funded through the annual contribution. Costs are allocated to individual agencies based on exposure (payroll) and experience (claims) relative to other members of the risk -sharing pool. Additional information regarding the cost allocation methodology is provided below. 52 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #9 — LIABILITY, WORKERS' COMPENSATION, AND PURCHASED INSURANCE (CONTINUED) General Liability In the liability program claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs from $750,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers. For 2016-17 the Authority's pooled retention is $2 million per occurrence, with reinsurance to $20 million, and excess insurance to $50 million. The Authority's reinsurance contracts are subject to the following additional pooled retentions: (a) $2.5 million annual aggregate deductible in the $3 million excess of $2 million layer, (b) $3 million excess of $2 million layer, and (c) $2.5 million annual aggregate deductible in the $5 million excess of $5 million layer. The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Costs of covered claims for subsidence losses have a sub -limit of $30 million per occurrence. Workers' Compensation In the workers' compensation program claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs from $100,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers. For 2016-17, the Authority's pooled retention is $2 million per occurrence, with reinsurance to statutory limits under California Workers' Compensation Law. Employer's Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer's Liability losses from $5 million to $10 million are pooled among members. 53 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #9 — LIABILITY, WORKERS' COMPENSATION, AND PURCHASED INSURANCE (CONTINUED) Purchased Insurance Pollution Leaal Liabilitv Insurance The City of Rancho Palos Verdes participates in the pollution legal liability insurance program which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of Rancho Palos Verdes. Coverage is on a claims -made basis. There is a $50,000 deductible. The Authority has a limit of $50 million for the 3 -year period from July 1, 2014 through July 1, 2017. Each member of the Authority has a $10 million sub -limit during the 3 -year term of the policy. Property Insurance The City of Rancho Palos Verdes participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City of Rancho Palos Verdes property is currently insured according to a schedule of covered property submitted by the City of Rancho Palos Verdes to the Authority. City of Rancho Palos Verdes property currently has all-risk property insurance protection in the amount of $15,769,557. There is a $5,000 deductible per occurrence except for non -emergency vehicle insurance which has a $2,500 deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Earthquake and Flood Insurance The City of Rancho Palos Verdes purchases earthquake and flood insurance on a portion of its property. The earthquake insurance is part of the property protection insurance program of the Authority. City of Rancho Palos Verdes property currently has earthquake protection in the amount of $15,494,310.There is a deductible of 5% per unit of value with a minimum deductible of $100,000. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Crime Insurance The City of Rancho Palos Verdes purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority. Premiums are paid annually and are not subject to retrospective adjustments. Special Event Tenant User Liability Insurance The City of Rancho Palos Verdes further protects against liability damages by requiring tenant users of certain property to purchase low-cost tenant user liability insurance for certain activities on agency property. The insurance premium is paid by the tenant user and is paid to the City of Rancho Palos Verdes according to a schedule. The City of Rancho Palos Verdes then pays for the insurance. The insurance is arranged by the Authority. Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2016-17. 54 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #10 — 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 #9) and, as such, the City believes that the ultimate liability for these legal actions and claims will not have a material adverse effect on the City's financial statements. The City is also a defendant in legal actions for which the potential losses would not be covered through participation in CJPIA. NOTE #11 — PROPERTY TAXES Under California law, property taxes are assessed and collected by the counties up to one percent of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City accrues only those taxes, which are received from the county within sixty days after year-end. Lien date Levy date Due date Collection dates NOTE #12 — UNAVAILABLE REVENUES January 1 June 30 November 1 and February 1 December 10 and April 10 The unavailable revenues in the fund financial statements of the City of Rancho Palos Verdes as of June 30, 2017 are presented in the following table. Revenue Measurable but Not Available (beyond 60 days): General Fund Capital Improvements Other Governmental Funds Total Unavaible Revenues $ 103,429 23,259 91,167 $ 217,855 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #13 — OTHER REQUIRED FUND DISCLOSURES The following budget program had expenditures in excess of the budget for the year ended June 30, 2017, as follows: General Fund Program Budget Expenditures Excess City Council $ 115,700 $ 139,807 $ 24,107 Legal Services 950,400 1,173,169 222,769 Sheriff Services 5,369,200 5,451,056 81,856 Traffic Management 347,648 392,159 44,511 Point Vicente Interpretive Center 413,250 447,107 33,857 NOTE #14 — SUCCESSOR AGENCY Under the Dissolution Act, each California redevelopment agency (each a "Dissolved RDA") was dissolved as of February 1, 2012. A Successor Agency was created for each Dissolved RDA which is the sponsoring community of the Dissolved RDA unless it elected not to serve as the Successor Agency. On September 6, 2011, the City elected to serve as the Successor Agency of the Rancho Palos Verdes Redevelopment Agency. The Dissolution Act allowed the sponsoring community that formed the Dissolved RDA to elect to assume the housing functions and take over the certain housing assets of the Dissolved RDA. The City elected on February 21, 2012 to serve as the Housing Successor Agency. After the date of dissolution, the housing assets, obligations, and activities of the Dissolved RDA have been transferred and are reported in a special revenue fund in the financial statements of the City (City Low -Moderate Income Housing Fund). All other assets, obligations, and activities of the Successor Agency are reported in a fiduciary fund (private -purpose trust fund) in the financial statements of the City. The County Auditor -Controller is charged with establishing a Redevelopment Property Tax Trust Fund (the "RPTTF") for each Successor Agency and depositing into the RPTTF for each six-month period the amount of property taxes that would have been redevelopment property tax increment had the redevelopment agency not been dissolved. The deposit in the RPTTF fund is to be used to pay to the Successor Agency's enforceable obligations for the upcoming six-month period. The process of making RPTTF deposits to be used to pay enforceable obligations of the dissolved RDA will continue until all enforceable obligations have been paid in full and all non -housing assets of the dissolved RDA have been liquidated. Non -Liquid Assets The following non -liquid assets are included in the records of the Successor Agency. Notes receivable from: Prepaid Item 56 336,875 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #14 — SUCCESSOR AGENCY (CONTINUED) Prior to redevelopment dissolution, the County of Los Angeles pursuant to a Memorandum of Understanding dated November 1, 1997 (discussed below) impounded property tax increment allocated to the former redevelopment agency for payment of debt owed to the County. The balance of the impounded tax increment not yet applied to debt at June 30, 2017 is $336,875. Debt Summary Due to City: Portuguese Bend $ Abalone Cove Due to County: Balance July 1, 2016 Additions Deletions Balance Amounts Due June 30, 2017 in One Year 7,063,370 $ 121,471 $ (117,953) $ 7,066,888 $ 99,027 3,429,963 68,324 (66,348) 3,431,939 48,091 Tax Increment Bond 4,475,000 (200,000) 4,275,000 230,000 Totals $ 14,968,333 $ 189,795 $ (384,301) $14,773,827 $ 377,118 Consolidated Loan from City The City entered into an agreement to provide the former Redevelopment Agency (RDA) operating funds and staff assistance, supplies, technical and other services and facilities of the City as the RDA required in carrying out its function under the community redevelopment law. The former RDA was to repay the resulting indebtedness, plus interest, from incremental property tax revenues arising from the project area, as such revenue became available. Pursuant to redevelopment dissolution law, loans from cities to redevelopment agencies made more than two years after formation of the redevelopment agency are not recognized obligations. Therefore, the Consolidated Loan from the City has been previously disallowed on the Successor Agency's Recognized Obligation Payment Schedule (ROPS). However, AB1484 provides a method to secure recognition of the City's Consolidated Loan as an obligation of the Successor Agency. Upon completion of various independent reviews and transfers of funds to Los Angeles County, the Successor Agency received a "Finding of Completion" on April 26, 2013. On December 11, 2013, the Oversight Board made a finding that the Consolidated Loan from the City was made for legitimate redevelopment purposes. As required by dissolution law, twenty percent of the amount available will be deposited into the City's Low -Moderate Income Housing Fund. On September 22, 2015, Governor Brown signed legislation that became effective immediately. The legislation requires accrued interest on city loans to be recalculated using a simple interest rate of 3%. Previously, accrued interest on the City's loan was calculated using historical Local Agency Investment Fund (LAIF) rates. At June 30, 2017, using the simple interest rate of 3%, the loan balance is $10,498,826. June 30, 2017 Principal Interest Balance Portuguese Bend $ 4,049,044 $ 3,017,844 $ 7,066,888 Abalone Cove 2,277,459 1,154,479 3,431,938 Allowance from Successor Agency Receivable (6,326,503) (4,172,323) (10,498,826) Totals: $ - $ - $ - 57 CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #14 — SUCCESSOR AGENCY (CONTINUED) Due to the uncertainty of Redevelopment Property Tax Trust Fund revenue available for future loan repayments, the City's loan receivable of $10,498,826 has been completely offset with an allowance for uncollectable amounts on the City's financial statements. Tax Increment Bond and Deferred Interest Payable In July 1991, the former Redevelopment Agency received $10,000,000 in loan proceeds (the Loan) from the County of Los Angeles (the County) upon the County's issue of Abalone Cove Improvement Bonds 2651-M pursuant to a Reimbursement and Settlement Agreement (the Agreement), dated October 27, 1987 in connection with the Horan Lawsuit. The Loan was made for the purpose of abating the Abalone Cove landslide. The settlement Loan was secured by property assessment liens in the Abalone Cove project area. As stipulated by the parties to the Agreement, a portion of the Loan proceeds was used to repay a tax allocation and revenue anticipation promissory note issued to the County in the principal amount of $1,450,000, plus accrued interest equal to $179,244. A second portion of the proceeds was used to repay expenses advanced by the County in the amount of $135,614. A third portion was used to repay certain loans from the City to the former Redevelopment Agency in the amount of $787,340. Per the terms of the Agreement, $1,000,000 of the proceeds was deposited in the Abalone Cove Permanent Fund of the Joint Powers Improvement Authority. The remainder of the proceeds was accounted for in the former Redevelopment Agency's Abalone Cove Fund. Concurrent with the execution of the Agreement, the County deeded its title in the Abalone Cove Beach Park to the former Redevelopment Agency. As part of the Agreement, the former Redevelopment Agency was required to transfer 17 percent of tax increment revenue to the Consolidated Fire Protection District of the County and 50.9 percent of tax increment revenue for debt repayment to the County. In accordance with the Agreement, the former Redevelopment Agency was to pay the Loan principal plus interest at 7.7654 percent over a 30 -year period that began in 1992. However, these debt payments were to be deferred 10 years until the fiscal year ended June 30, 2002. As part of the deferral arrangement, the accrued interest from the inception of the Loan through June 30, 2002, in the amount of $7,314,944, was scheduled for payment over a 20 -year period beginning in the fiscal year ended June 30, 2002 with no additional interest. The remaining balance of $10,274,119 was scheduled for payment to the County over a 20 -year period beginning in the fiscal year ended June 30, 2002, with interest at 7.7654 percent. CITY OF RANCHO PALOS VERDES, CALIFORNIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 NOTE #14 — SUCCESSOR AGENCY (CONTINUED) On November 1, 1997, the City, the former Redevelopment Agency and the County of Los Angeles entered into a Memorandum of Understanding (MOU) agreeing to restructure the repayment schedule of the debt owed to the County by the former Redevelopment Agency. In accordance with the terms of the MOU, the $10,000,000 loan principal owed to the County was cancelled. As consideration for the loan cancellation, the former Redevelopment Agency made a lump sum payment to the County in the amount of $4,545,000 and issued a $5,455,000 tax increment bond to the County (the bond). Of the $4,545,000 lump sum payment, $2,000,000 was paid from tax increment revenue and interest earnings accumulated in the Debt Service Fund. The remaining $2,545,000 was funded by a combination of a loan from the General Fund of the City to the Agency for $1,545,000 and a net operating transfer from the Agency's Abalone Cove Capital Projects Fund to the Debt Service Fund of $1,000,000. The private property liens resulting from the formation of the bond assessment district in connection with the Reimbursement and Settlement Agreement in 1987 were discharged in accordance with the terms of the MOU. The bond was issued as a conduit through the Improvement Authority to the County. No issuance costs were incurred. Future allocations of property tax to the Successor Agency will fund the payment of the bond debt and the deferred interest from the original Loan until paid in full. The principal of the bond began maturing in installments each December 2nd, commencing December 2, 2004. Interest accrues at a rate of 5 percent per annum and is payable in arrears each June 2nd and December 2nd. Additionally, both the accrued interest and deferred interest on the $10,000,000 Loan previously owed the County was retroactively recalculated from the Loan origination date at a rate of approximately 5 percent compared to 7.7654 percent per the original Agreement. The recalculated deferred interest was $3,111,400. In accordance with the MOU, the recalculated deferred interest does not accrue additional interest. As of June 30, 2014, the balance of the deferred interest debt has been completely repaid. The California Department of Finance has approved the Tax Increment Bond and Deferred Interest Payable as obligations of the Successor Agency. The debt service schedule below summarizes all fixed principal and interest payments for the term of the bond. Because the payback period for the deferred interest amount will fluctuate depending on the availability of excess property tax revenue, no amounts have been included in the following schedule for repayment of the deferred interest. Year Ending June 30, 2018 2019 2020 2021 2022 2023-2026 2027-2028 Principal $ 230,000 255,000 280,000 310,000 345,000 1,245,000 338,375 1,583,375 1,610,000 125,000 1,735,000 I nterest Total $ 208,000 $ 438,000 195,875 450,875 182,500 462,500 167,750 477,750 151,375 496,375 Totals $4,275,000 $1,368,875 $5,643,875 59 This page intentionally left blank. REQUIRED SUPPLEMENTARY INFORMATION This page intentionally left blank. CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY LAST TEN YEARS* AS OF THE FISCAL YEAR ENDING JUNE 30, 2017 Proportion of the net pension liability Proportionate share of the net pension liability 2017 2016 2015 0.11120% 0.11130% 0.09183% $ 9,625,397 $ 7,637,567 $ 5,714,320 Covered payroll" $ 5,997,450 $ 5,673,471 $ 5,609,006 Proportionate share of the net pension liability as a percentage of covered -employee payroll 160.49% 134.62% Plan fiduciary net position as a percentage of the total pension liability 74.06% 78.40% Note to Schedule: * - Fiscal year 2015 was the first year of implementation, therefore, only three years are shown. '- In Fiscal year 2017 the City adopted GASB 82, which required the restatement of covered payroll to include only pensionable earnings. 61 101.88% 79.82% CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF CONTRIBUTIONS LAST TEN YEARS* AS OF THE FISCAL YEAR ENDING JUNE 30, 2017 2017 2016 2015 Actuarially determined contribution $ 910,177 $ 830,645 $ 725,496 Contributions in relation to the actuarially determined contribution (910,177) (830,645) (725,496) Contribution deficiency (excess) $ - $ - $ - Covered payroll" $ 6,124,374 $ 5,997,450 $ 5,673,471 Contributions as a percentage of covered -employee payroll 14.86% 13.85% 12.79% * - Fiscal year 2015 was the first year of implementation, therefore, only three years are shown. *`- In Fiscal year 2017 the City adopted GASB 82, which required the restatement of covered payroll to include only pensionable earnings. 62 SUPPLEMENTARY INFORMATION This page intentionally left blank. Special Revenue 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. Gas Tax Fund — to account for state -shared highway users' tax that is restricted to use for street maintenance, right-of-way acquisition and street construction. 1972 Act Landscaping and Lighting District (1972 Act) — to account for revenues and costs associated with the City's landscaping and lighting district. EI Prado — to account for taxes collected to maintain and service existing and proposed improvements to the common area of the EI Prado neighborhood. 1911 Act Lighting District (1911 Act) — to account for revenue and costs associated with a lighting district transferred to the "city -side" landscape and lighting district from the County in 1995. 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 program. Air Quality Management — to account for AB2766 fees received to fund programs to reduce air pollution from motor vehicles. Proposition C — to account for sales taxes received from the County and used to support public transit and related services. Proposition A — to account for the City share of an additional one-half percent sales tax designated to fund certain public transportation oriented projects. 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. Measure R — to account for the half -cent sales tax approved by the Los Angeles County voters in November 2008 to meet transportation needs, including maintenance and improvement of arterial streets, traffic control, bikeway and pedestrian improvements, and public transit. Measure A — to account of the voter approved 1992 and 1996 Measure A funds and other state and county grants used for the acquisition of open space and park improvements. Abalone Cove Sewer Assessment District — to account for property assessments used to partially pay for operation and maintenance of the Abalone Cove sewer system. Dr. Allen and Charlotte Ginsburg Cultural Arts Building — to account for a private donation to be used for either construction of a building at the Upper Point Vicente Civic Center to be used for dancing and other cultural activities, or for the purchase of open space within the City for habitat conservation and passive recreational purposes. 63 This page intentionally left blank. Donor Restricted Contributions — to account for donations received to construct or acquire recreational facilities within the City. Joint Powers Improvement Authority — Portuguese Bend — to account for maintenance and repairs of landslide abatement improvements in the Portuguese Bend Project area. Community Development Block Grant — to account for federal grants received from the Department of Housing and Urban Development. Quimby — to account for developer paid fees or the dedication of land for park and recreation purposes. Environmental Excise Tax — to account for taxes received in connection with new construction within the City. Bikeways — to account for state funds that are used for the construction of bikeways and pedestrian facilities. Capital Projects Fund Descriptions Capital Projects Funds are used to account for financial resources used for the acquisition or construction of major capital facilities. Affordable Housing In -Lieu — to account for developer fees paid in -lieu of providing affordable housing in conjunction with new development as required by the Affordable Housing Chapter of the City's Municipal Code (Chapter 17.11). Low -Moderate Income Housing — to account for low & moderate income housing assets that were transferred to the City after electing to retain the housing assets and function of the former redevelopment agency, which was dissolved on January 31, 2012. Permanent Fund Descriptions Permanent Funds are used to account for resources legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City's programs. Habitat Restoration — to account for fees paid by developers for conservation easements to be used exclusively for habitat restoration efforts on City owned property. The Habitat Restoration Fund to be funded at the rate of $10,000 annually (plus interest) for fifty (50) years, to provide for maintenance of habitat in the future. Sub -region One Maintenance — to account for monies used to maintain public improvements and habitat areas dedicated to the City upon completion of the Sub -region One residential development project also known as Oceanfront Estates. As part of the development agreement, the City received a $750,000 non -expendable deposit. The interest earnings contribute to the maintenance of the public open space. Joint Powers Improvement Authority — Abalone Cove — to account for monies received as part of a July 1991 Reimbursement and Settlement Agreement with the County of Los Angeles. As part of this Agreement, the Authority received a $1,000,000 non -expendable deposit. The interest earnings are used to pay for maintenance and repair of Abalone Cove landslide abatement improvements. CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS AS OF THE FISCAL YEAR ENDING JUNE 30, 2017 Special Revenue Funds LIABILITIES Accounts payable $ Gas Tax 1972 Act EI Prado ASSETS - - - Cash and investments $ 593,580 $ 41,069 $ 27,546 Receivables: 348,153 20,186 87 Taxes - 6,505 80 Interest 730 123 31 Other 2,498 - - TOTAL ASSETS $ 596,808 $ 47,697 $ 27,657 LIABILITIES Accounts payable $ 348,153 $ 20,186 $ 87 Due to other funds - - - Unearned revenues - - - TOTAL LIABILITIES 348,153 20,186 87 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - - - FUND BALANCES Non -Spendable: Endowment principal - - - Reimbursement settlement agreement - - - Habitat restoration - - - Restricted 248,655 27,511 27,570 Assigned - - - TOTAL FUND BALANCES 248,655 27,511 27,570 TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES $ 596,808 $ 47,697 $ 27,657 65 Continued Special Revenue Funds •• Waste Air Quality 1911 Act Beautification Reduction Management Proposition C $ 2,029,369 $ 478,851 $ 448,532 $ 98,523 $ 422,808 20,954 - - - - 2,321 534 512 105 606 - - 16,400 13,971 - $ 2,052,644 $ 479,385 $ 465,444 $ 112,599 $ 423,414 $ 1,342 $ - $ 9,192 $ 28,284 $ 10,548 1,342 - 9,192 28,284 10,548 2,051,302 456,252 84,315 412,866 - 479,385 - - - 2,051,302 479,385 456,252 84,315 412,866 $ 2,052,644 $ 479,385 $ 465,444 $ 112,599 $ 423,414 •• CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS AS OF THE FISCAL YEAR ENDING JUNE 30, 2017 Special Revenue Funds Me Public Safety Proposition A Grants Measure R ASSETS Cash and investments $ 2,234,663 $ 71,727 $ 1,958,699 Receivables: Taxes - - - Interest 2,415 108 2,326 Other - - - TOTALASSETS $ 2,237,078 $ 71,835 $ 1,961,025 LIABILITIES Accounts payable $ 10,878 $ - $ - Due to other funds - - - Unearned revenues - - - TOTAL LIABILITIES 10,878 - - DEFERRED INFLOWS OF RESOURCES Unavailable revenue - - - FUND BALANCES Non -Spendable: Endowment principal - - - Reimbursement settlement agreement - - - Habitat restoration - - - Restricted 2,226,200 71,835 1,961,025 Assigned - - - TOTAL FUND BALANCES 2,226,200 71,835 1,961,025 TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES $ 2,237,078 $ 71,835 $ 1,961,025 Me •: Continued Special Revenue Funds Dr. Allen and Abalone Charlotte Cove Ginsburg Donor Sewer Cultural Arts Restricted Measure A District Building Contributions $ 110,409 $ 177,082 $ 86,248 $ 882,992 95 151 96 986 60,121 3,320 - - $ 170,625 $ 180,553 $ 86,344 $ 883,978 60,120 - - - 110,505 180,553 86,344 883,978 110,505 180,553 86,344 883,978 $ 170,625 $ 180,553 $ 86,344 $ 883,978 •: CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS AS OF THE FISCAL YEAR ENDING JUNE 30, 2017 •• Special Revenue Funds Joint Powers Improvement Authority Community Portuguese Development Bend Block Grant Quimby ASSETS Cash and investments $ 240,367 $ - $ 2,365,724 Receivables: Taxes - - - Interest 568 - 2,716 Other - 43,997 - TOTAL ASSETS $ 240,935 $ 43,997 $ 2,368,440 LIABILITIES Accounts payable $ 27,497 $ 3,230 $ 11,850 Due to other funds - 9,720 - Unearned revenues - - TOTAL LIABILITIES 27,497 12,950 11,850 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - 31,047 - FUND BALANCES Non -Spendable: Endowment principal - - - Reimbursement settlement agreement - - - Habitat restoration - - - Restricted 213,438 - 2,356,590 Assigned - - - TOTAL FUND BALANCES 213,438 - 2,356,590 TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES $ 240,935 $ 43,997 $ 2,368,440 •• Continued Special Revenue Funds Total Special Environmental Revenue Excise Tax Funds $ 302,090 $ 12,570,279 27,539 334 14,757 - 140,307 $ 302,424 $ 12,752,882 $ - $ 471,247 9,720 480,967 - 91,167 302,424 11,701,363 - 479,385 302,424 12,180,748 $ 302,424 $ 12,752,882 70 CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS AS OF THE FISCAL YEAR ENDING JUNE 30, 2017 ASSETS Cash and investments Receivables: Taxes Interest Other TOTALASSETS LIABILITIES Accounts payable Due to other funds Unearned revenues TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES Unavailable revenue FUND BALANCES Non -Spendable: Endowment principal Reimbursement settlement agreement Habitat restoration Restricted Assigned TOTAL FUND BALANCES TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES 71 Capital Projects Funds Total Low -Moderate Affordable Capital Income Housing Projects Housing In -Lieu Funds $ 140,691 $ 592,939 $ 733,630 142 662 804 $ 140,833 $ 593,601 $ 734,434 4,896 - 4,896 4,896 - 4,896. 135,937 593,601 729,538 135,937 593,601 729,538 $ 140,833 $ 593,601 $ 734,434 72 Permanent Funds Joint Powers Total Subregion Improvement Total Other Habitat One Authority Permanent Governmental Restoration Maintenance Abalone Cove Funds Funds $ 1,208,056 $ 761,278 $ 1,063,042 $ 3,032,376 $ 16,336,285 - - - - 27,539 1,348 855 2,459 4,662 20,223 6,153 - - 6,153 146,460 $ 1,215,557 $ 762,133 $ 1,065,501 $ 3,043,191 $ 16,530,507 $ - $ 5,303 $ 12,535 $ 17,838 $ 489,085 - - - - 9,720 - - - - 4,896 - 5,303 12,535 17,838 503,701 - - - - 91,167 - 750,000 - 750,000 750,000 - - 1,000,000 1,000,000 1,000,000 126,946 - - 126,946 126,946 1,088,611 6,830 52,966 1,148,407 12,849,770 - - - - 1,208,923 1,215,557 756,830 1,052,966 3,025,353 15,935,639 $ 1,215,557 $ 762,133 $ 1,065,501 $ 3,043,191 $ 16,530,507 72 CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS AS OF THE FISCAL YEAR ENDING JUNE 30, 2017 73 Special Revenue Funds Gas Tax 1972 Act EI Prado 1911 Act REVENUES: Taxes $ - $ 260,037 $ 2,402 $ 632,874 Revenue from other agencies 815,191 - - - Charges for services - - - - Use of money and property 6,870 545 180 13,292 Other revenues 17,653 - - - TOTAL REVENUES 839,714 260,582 2,582 646,166 EXPENDITURES: Public Works 1,939,780 264,902 237 459,442 Community Development - - - - TOTAL EXPENDITURES 1,939,780 264,902 237 459,442 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (1,100,066) (4,320) 2,345 186,724 OTHER FINANCING SOURCES (USES): Transfers in - - - - Transfers out - - - - TOTAL OTHER FINANCING SOURCES USES - - - - NET CHANGE IN FUND BALANCE (1,100,066) (4,320) 2,345 186,724 FUND BALANCE - BEGINNING OF YEAR 1,348,721 31,831 25,225 1,864,578 FUND BALANCE - END OF YEAR $ 248,655 $ 27,511 $ 27,570 $ 2,051,302 73 Continued Special Revenue Funds 74 Waste Air Quality Beautification Reduction Management Proposition C - 33,973 54,963 645,099 - 187,036 - - 3,268 3,144 613 3,835 3,268 224,153 55,576 648,934 - 231,579 78,285 539,740 - 231,579 78,285 539,740 3,268 (7,426) (22,709) 109,194 3,268 (7,426) (22,709) 109,194 476,117 463,678 107,024 303,672 $ 479,385 $ 456,252 $ 84,315 $ 412,866 74 CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS AS OF THE FISCAL YEAR ENDING JUNE 30, 2017 Special Revenue Funds Public Safety Proposition A Grants Measure R REVENUES: Taxes $ - $ - $ - Revenue from other agencies 2,451,681 129,324 483,294 Charges for services - - - Use of money and property 8,012 603 13,110 Otherrevenues - - - TOTAL REVENUES 2,459,693 129,927 496,404 EXPENDITURES: Public Works 623,585 - 169,952 Community Development - - - TOTAL EXPENDITURES 623,585 - 169,952 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 1,836,108 129,927 326,452 OTHER FINANCING SOURCES (USES): Transfers in - - - Transfers out - (100,000) - TOTAL OTHER FINANCING SOURCES USES - (100,000) - NET CHANGE IN FUND BALANCE 1,836,108 29,927 326,452 FUND BALANCE - BEGINNING OF YEAR 390,092 41,908 1,634,573 FUND BALANCE - END OF YEAR $ 2,226,200 $ 71,835 $ 1,961,025 75 Continued Special Revenue Funds 76 Dr. Allen and Abalone Charlotte Cove Ginsburg Donor Sewer Cultural Arts Restricted Measure A District Building Contributions $ - $ 54,836 $ - $ 192,598 - - - 7,736 786 587 5,966 - - - 10,500 200,334 55,622 587 16,466 - 163,614 - 9,760 - 163,614 - 9,760 200,334 (107,992) 587 6,706 - 208,000 - - (90,000) - - - (90,000) 208,000 - - 110,334 100,008 587 6,706 171 80,545 85,757 877,272 $ 110,505 $ 180,553 $ 86,344 $ 883,978 76 CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS AS OF THE FISCAL YEAR ENDING JUNE 30, 2017 Special Revenue Funds Joint Powers Improvement Authority Community Portuguese Development Bend Block Grant Quimby REVENUES: Taxes $ - $ - $ - Revenue from other agencies - 142,317 - Charges for services - - Use of money and property 1,937 - 16,505 Other revenues - - 50,929 TOTAL REVENUES 1,937 142,317 67,434 EXPENDITURES: Public Works 69,989 142,317 80,551 Community Development - - - TOTAL EXPENDITURES 69,989 142,317 80,551 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (68,052) - (13,117) OTHER FINANCING SOURCES (USES): Transfers in - - - Transfers out - - - TOTAL OTHER FINANCING SOURCES USES - - - NET CHANGE IN FUND BALANCE (68,052) - (13,117) FUND BALANCE - BEGINNING OF YEAR 281,490 - 2,369,707 FUND BALANCE - END OF YEAR $ 213,438 $ - $ 2,356,590 77 Continued Special Revenue Funds $ 302,424 $ 12,180,748 aQ Total Special Environmental Revenue Excise Tax Funds $ - $ 950,149 - 4,948,440 - 187,036 1,899 88,888 95,991 175,073 97,890 6,349,586 75 4,773,808 75 4,773,808 97,815 1,575,778 - 208,000 - (190,000) - 18,000 97,815 1,593,778 204,609 10,586,970 $ 302,424 $ 12,180,748 aQ CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS AS OF THE FISCAL YEAR ENDING JUNE 30, 2017 REVENUES: Taxes Revenue from other agencies Charges for services Use of money and property Other revenues TOTALREVENUES EXPENDITURES: Public Works Community Development TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES USES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Capital Projects Funds Total Low -Moderate Affordable Capital Income Housing Projects Housing In -Lieu Funds $ 5,917 $ - $ 5,917 763 4,034 4,797 36,860 - 36,860 43,540 4,034 47,574 43,540 4,034 47,574 43,540 4,034 47,574 92,397 589,567 681,964 $ 135,937 $ 593,601 $ 729,538 79 :1 Permanent Funds Joint Powers Total Subregion Improvement Total Other Habitat One Authority Permanent Governmental Restoration Maintenance Albalone Cove Funds Funds $ - $ - $ - $ - $ 956,066 6,729 - - 6,729 4,955,169 - - - - 187,036 8,682 5,307 7,818 21,807 115,492 4,769 - - 4,769 216,702 20,180 5,307 7,818 33,305 6,430,465 140,825 35,107 47,785 223,717 4,997,525 140,825 35,107 47,785 223,717 4,997,525 (120,645) (29,800) (39,967) (190,412) 1,432,940 - - 38,000 38,000 246,000 - - - - (190,000) - - 38,000 38,000 56,000 (120,645) (29,800) (1,967) (152,412) 1,488,940 1,336,202 786,630 1,054,933 3,177,765 14,446,699 $ 1,215,557 $ 756,830 $ 1,052,966 $ 3,025,353 $ 15,935,639 :1 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GAS TAX SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Revenue from other agencies Use of money and property Other revenues TOTAL REVENUES EXPENDITURES: Public Works Street landscape maintenance Traffic signal maintenance Portuguese Bend road maintenance TOTAL EXPENDITURES NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR 1,571,000 2,053,383 1,919,224 Variance with 16,000 16,000 20,556 Final Budget Budgeted Amounts - Positive Original Final Actual (Negative) $ 823,000 $ 823,000 $ 815,191 $ (7,809) 4,600 4,600 6,870 2,270 15,000 15,000 17,653 2,653 842,600 842,600 839,714 (2,886) 1,571,000 2,053,383 1,919,224 134,159 16,000 16,000 20,556 (4,556) 48,500 48,500 - 48,500 1,635,500 2,117, 883 1,939,780 178,103 (792,900) (1,275,283) (1,100,066) 175,217 1,348,721 1,348,721 1,348,721 - $ 555,821 $ 73,438 $ 248,655 $ 175,217 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL 1972 ACT SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Taxes Use of money and property TOTAL REVENUES EXPENDITURES: Public Works NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 260,000 $ 260,000 $ 260,037 $ 37 260,200 260,200 260,582 382 241,500 273,720 264,902 8,818 18,700 (13,520) (4,320) 9,200 31,831 31,831 31,831 - $ 50,531 $ 18,311 $ 27,511 $ 9,200 RM CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL EL PRADO SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 [.3Q Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ 2,200 $ 2,200 $ 2,402 $ 202 Use of money and property 100 100 180 80 TOTAL REVENUES 2,300 2,300 2,582 282 EXPENDITURES: Public Works 800 800 237 563 NET CHANGE IN FUND BALANCE 1,500 1,500 2,345 845 FUND BALANCE - BEGINNING OF YEAR 25,225 25,225 25,225 - FUND BALANCE - END OF YEAR $ 26,725 $ 26,725 $ 27,570 $ 845 [.3Q CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL 1911 ACT SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Taxes $ 550,000 $ 550,000 $ 632,874 $ 82,874 Use of money and property 5,600 5,600 13,292 7,692 TOTAL REVENUES 555,600 555,600 646,166 90,566 EXPENDITURES: Public Works 405,900 405,900 459,442 (53,542) NET CHANGE IN FUND BALANCE 149,700 149,700 186,724 37,024 FUND BALANCE - BEGINNING OF YEAR 1,864,578 1,864,578 1,864,578 - FUND BALANCE - END OF YEAR $ 2,014,278 $ 2,014,278 $ 2,051,302 $ 37,024 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL BEAUTIFICATION SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Use of money and property $ 900 $ 900 $ 3,268 $ 2,368 NET CHANGE IN FUND BALANCE 900 900 3,268 2,368 FUND BALANCE - BEGINNING OF YEAR 476,117 476,117 476,117 - FUND BALANCE - END OF YEAR $ 477,017 $ 477,017 $ 479,385 $ 2,368 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL WASTE REDUCTION SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 1:3:1 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 26,000 $ 26,000 $ 33,973 $ 7,973 Use of money and property 1,600 1,600 3,144 1,544 Charges for services 180,500 180,500 187,036 6,536 TOTAL REVENUES 208,100 208,100 224,153 16,053 EXPENDITURES: Public Works 278,600 292,697 231,579 61,118 NET CHANGE IN FUND BALANCE (70,500) (84,597) (7,426) 77,171 FUND BALANCE - BEGINNING OF YEAR 463,678 463,678 463,678 - FUND BALANCE - END OF YEAR $ 393,178 $ 379,081 $ 456,252 $ 77,171 1:3:1 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL AIR QUALITY MANAGEMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 EXPENDITURES Public Works 50,000 50,000 Variance with NET CHANGE IN FUND BALANCE 300 300 Final Budget FUND BALANCE - BEGINNING OF YEAR Budgeted Amounts 107,024 Positive FUND BALANCE - END OF YEAR Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 50,000 $ 50,000 $ 54,963 $ 4,963 Use of money and property 300 300 613 313 TOTAL REVENUES 50,300 50,300 55,576 5,276 EXPENDITURES Public Works 50,000 50,000 78,285 (28,285) NET CHANGE IN FUND BALANCE 300 300 (22,709) (23,009) FUND BALANCE - BEGINNING OF YEAR 107,024 107,024 107,024 - FUND BALANCE - END OF YEAR $ 107,324 $ 107,324 $ 84,315 $ - [401 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL PROPOSITION C SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 -M Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 646,900 $ 646,900 $ 645,099 $ (1,801) Use of money and property 2,200 2,200 3,835 1,635 TOTAL REVENUES 649,100 649,100 648,934 (166) EXPENDITURES: Public Works 18,000 956,672 539,740 416,932 NET CHANGE IN FUND BALANCE 631,100 (307,572) 109,194 416,766 FUND BALANCE - BEGINNING OF YEAR 303,672 303,672 303,672 - FUND BALANCE - END OF YEAR $ 934,772 $ (3,900) $ 412,866 $ 416,766 -M CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL PROPOSITION A SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 :• Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 779,900 $ 2,454,900 $ 2,451,681 $ (3,219) Use of money and property 1,400 1,400 8,012 6,612 TOTAL REVENUES 781,300 2,456,300 2,459,693 3,393 EXPENDITURES: Public Works 638,300 815,136 623,585 191,551 NET CHANGE IN FUND BALANCE 143,000 1,641,164 1,836,108 194,944 FUND BALANCE - BEGINNING OF YEAR 390,092 390,092 390,092 - FUND BALANCE - END OF YEAR $ 533,092 $ 2,031,256 $ 2,226,200 $ 194,944 :• CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL PUBLIC SAFETY GRANTS SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 411 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 100,000 $ 100,000 $ 129,324 $ 29,324 Use of money and property 200 200 603 403 TOTAL REVENUES 100,200 100,200 129,927 29,727 OTHER FINANCING SOURCES (USES): Transfers out - - (100,000) (100,000) NET CHANGE IN FUND BALANCE 100,200 100,200 29,927 (70,273) FUND BALANCE - BEGINNING OF YEAR 41,908 41,908 41,908 - FUND BALANCE - END OF YEAR $ 142,108 $ 142,108 $ 71,835 $ (70,273) 411 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL MEASURE R SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 �91 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ 485,100 $ 485,100 $ 483,294 $ (1,806) Use of money and property 4,500 4,500 13,110 8,610 TOTAL REVENUES 489,600 489,600 496,404 6,804 EXPENDITURES: Public Works - - 169,952 (169,952) NET CHANGE IN FUND BALANCE 489,600 489,600 326,452 (163,148) FUND BALANCE - BEGINNING OF YEAR 1,634,573 1,634,573 1,634,573 - FUND BALANCE - END OF YEAR $ 2,124,173 $ 2,124,173 $1,961,025 $ (163,148) �91 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL MEASURE A SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Revenue from other agencies Use of money and property TOTAL REVENUES 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 Positive Original Final Actual (Negative) $ 90,000 $ 90,000 $ 192,598 $ 102,598 - - 7,736 7,736 90,000 90,000 200,334 110,334 - - (90,000) (90,000) 90,000 90,000 110,334 20,334 171 171 171 $ 90,171 $ 90,171 $ 110,505 $ 20,334 92 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ABALONE COVE SEWER ASSESSMENT DISTRICT SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Taxes Use of money and property TOTAL REVENUES EXPENDITURES: Public Works EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR �0Xj Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 55,100 $ 55,100 $ 54,836 $ (264) 300 300 786 486 55,400 55,400 55,622 222 249,400 249,400 163,614 85,786 (194,000) (194,000) (107,992) 86,008 208,000 208,000 208,000 - 14,000 14,000 100,008 86,008 80,545 80,545 80,545 - $ 94,545 $ 94,545 $ 180,553 $ 86,008 �0Xj CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL DR. ALLEN AND CHARLOTTE GINSBURG CULTURAL ARTS BUILDING SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Use of money and property $ 300 $ 300 $ 587 $ 287 NET CHANGE IN FUND BALANCE 300 300 587 287 FUND BALANCE - BEGINNING OF YEAR 85,757 85,757 85,757 - FUND BALANCE - END OF YEAR $ 86,057 $ 86,057 $ 86,344 $ 287 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL DONOR RESTRICTED CONTRIBUTIONS SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Use of money and property Other revenue TOTAL REVENUES EXPENDITURES: Public Works NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Budgeted Amounts Original Final $ 2,800 $ 2,800 Variance with Final Budget Positive Actual (Negative) $ 5,966 $ 3,166 10,500 10,500 2,800 2,800 16,466 13,666_ 5,000 480,209 9,760 470,449 (2,200) (477,409) 6,706 484,115 877,272 877,272 877,272 - $ 875,072 $ 399,863 $ 883,978 $ 484,115 M1 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL JOINT POWERS IMPROVEMENT AUTHORITY PORTUGUESE BEND SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Use of money and property EXPENDITURES: Public Works NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 1,100 $ 1,100 $ 1,937 $ 837 114,900 114,900 69,989 44,911 (113,800) (113,800) (68,052) 45,748 281,490 281,490 281,490 - $ 167,690 $ 167,690 $ 213,438 $ 45,748 0i:1 CITY OF RANCHO PALOS VERDES, CALIFORNIA 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, 2017 REVENUES: Revenue from other agencies EXPENDITURES: Public Works NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 192,400 $ 192,400 $ 142,317 $ (50,083) 192,400 343,000 142,317 200,683 - (150,600) - 150,600 $ - $ (150,600) $ 01M $ 150,600 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL QUIMBY ACT SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Use of money and property Other revenues TOTAL REVENUES EXPENDITURES: Public Works NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Budgeted Amounts Original Final $ 5,900 $ 5,900 Variance with Final Budget Positive Actual (Negative) $ 16,505 $ 10,605 50,929 50,929 5,900 5,900 67,434 61,534_ 575,000 1,002,575 80,551 922,024 (569,100) (996,675) (13,117) 983,558 2,369,707 2,369,707 2,369,707 - $1,800,607 $1,373,032 $2,356,590 $ 983,558 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ENVIRONMENTAL EXCISE TAX SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2017 061 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Use of money and property $ 1,200 $ 1,200 $ 1,899 $ 699 Other revenues 22,000 22,000 95,991 73,991 TOTAL REVENUES 23,200 23,200 97,890 74,690 EXPENDITURES: Public Works - - 75 (75) NET CHANGE IN FUND BALANCE 23,200 23,200 97,815 74,615 FUND BALANCE - BEGINNING OF YEAR 204,609 204,609 204,609 - FUND BALANCE - END OF YEAR $ 227,809 $ 227,809 $ 302,424 $ 74,615 061 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LOW -MODERATE INCOME CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Taxes Use of money and property Other revenues NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR Budgeted Amounts Original Final $ 44,300 $ 44,300 100 100 Variance with Final Budget Positive Actual (Negative) $ 5,917 $ (38,383) 763 663 36,860 36,860 44,400 44,400 43,540 (860) 92,397 92,397 92,397 - $ 136,797 $ 136,797 $ 135,937 $ (860) CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL AFFORDABLE HOUSING IN -LIEU CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2017 101 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Use of money and property $ 1,900 $ 1,900 $ 4,034 $ 2,134 NET CHANGE IN FUND BALANCE 1,900 1,900 4,034 2,134 FUND BALANCE - BEGINNING OF YEAR 589,567 589,567 589,567 - FUND BALANCE - END OF YEAR $ 591,467 $ 591,467 $ 593,601 $ 2,134 101 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HABITAT RESTORATION PERMANENT FUND FOR THE YEAR ENDED JUNE 30, 2017 102 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies $ - $ - $ 6,729 $ 6,729 Use of money and property 4,900 4,900 8,682 3,782 Other revenues - - 4,769 4,769 TOTAL REVENUES 4,900 4,900 20,180 15,280 EXPENDITURES: Public Works 166,500 166,500 140,825 25,675 NET CHANGE IN FUND BALANCE (161,600) (161,600) (120,645) 40,955 FUND BALANCE - BEGINNING OF YEAR 1,336,202 1,336,202 1,336,202 - FUND BALANCE - END OF YEAR $ 1,174,602 $ 1,174,602 $ 1,215,557 $ 40,955 102 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL SUBREGION ONE PERMANENT FUND FOR THE YEAR ENDED JUNE 30, 2017 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Use of money and property $ 2,700 $ 2,700 $ 5,307 $ 2,607 EXPENDITURES: Public Works 44,800 44,800 35,107 9,693 NET CHANGE IN FUND BALANCE (42,100) (42,100) (29,800) 12,300 FUND BALANCE - BEGINNING OF YEAR 786,630 786,630 786,630 - FUND BALANCE - END OF YEAR $ 744,530 $ 744,530 $ 756,830 $ 12,300 K1193 CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL JOINT POWERS IMPROVEMENT AUTHORITY ABALONE COVE PERMANENT FUND FOR THE YEAR ENDED JUNE 30, 2017 REVENUES: Use of money and property EXPENDITURES: Public Works EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR `[ITS Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 3,400 $ 3,400 $ 7,818 $ 4,418 74,600 74,600 47,785 26,815 (71,200) (71,200) (39,967) 31,233 38,000 38,000 38,000 - (33,200) (33,200) (1,967) 31,233 1,054,933 1,054,933 1,054,933 - $ 1,021,733 $ 1,021,733 $ 1,052,966 $ 31,233 `[ITS CITY OF RANCHO PALOS VERDES, CALIFORNIA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL CAPITAL IMPROVEMENTS CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2017 `[11.'7 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Revenue from other agencies 987,500 987,500 $ 143,064 $ (844,436) Use of money and property 66,900 66,900 191,721 124,821 TOTAL REVENUES 1,054,400 1,054,400 334,785 (719,615) EXPENDITURES: Capital Outlay Infrastructure administration 270,000 288,223 128,045 160,178 Street improvements 4,917,500 13,934,497 6,243,571 7,690,926 Parks/trails/open space improvements 225,000 663,870 231,640 432,230 Sewer improvements 200,000 200,000 198,900 1,100 Building improvements 305,000 799,473 58,783 740,690 Storm water quality improvements 460,000 1,056,442 242,135 814,307 Landslide improvements 525,000 75,643 2,449 73,194 TOTAL EXPENDITURES 6,902,500 17,018,148 7,105,523 9,912,625 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (5,848,100) (15,963,748) (6,770,738) 9,193,010 OTHER FINANCING SOURCES (USES): Transfers in 5,200,000 5,200,000 4,141,397 (1,058,603) NET CHANGE IN FUND BALANCE (648,100) (10,763,748) (2,629,341) 8,134,407 FUND BALANCE - BEGINNING OF YEAR 29,708,642 29,708,642 29,708,642 - FUND BALANCE - END OF YEAR $29,060,542 $18,944,894 $27,079,301 $ 8,134,407 `[11.'7 CITY OF RANCHO PALOS VERDES, CALIFORNIA JUNE 30, 2017 INTERNAL SERVICE FUND 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 of replacement equipment, furniture and vehicles of all City departments. Employee Benefits — to account for employee benefit costs for all employees charged to various City departments. 01191 CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2017 ASSETS CURRENT ASSETS: Cash and investments Receivables: Interest TOTAL CURRENT ASSETS NONCURRENT ASSETS: Capital assets Property and equipment Accumulated depreciation TOTAL ASSETS LIABILITIES CURRENT LIABILITIES: Accounts payable and accrued liabilities NET POSITION Net investment in capital assets Unrestricted TOTAL NET POSITION Equipment Employee Replacement Benefits Totals $ 2,553,175 $ - $2,553,175 2,958 - 2,958 2,556,133 - 2,556,133 2,355,333 - 2,355,333 (1,604,653) - (1,604,653) 3,306,813 - 3,306,813 86,280 - 86,280 750,680 - 750,680 2,469,853 - 2,469,853 $ 3,220,533 $ - $3,220,533 107 CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2017 OPERATING REVENUES: Charges for services OPERATING EXPENSES: Materials and supplies Maintenance Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NON-OPERATING REVENUES: Investment income CHANGE IN NET POSITION NET POSITION - BEGINNING OF YEAR NET POSITION - END OF YEAR Equipment Employee Replacement Benefits Totals $ 82,050 $ - $ 82,050 445,423 53,328 498,751 10,695 - 10,695 224,726 - 224,726 680,844 53,328 734,172 (598,794) (53,328) (652,122) 19,164 - 19,164 (579,630) (53,328) (632,958) 3,800,163 53,328 3,853,491 $ 3,220,533 $ - $3,220,533 `1116Q CITY OF RANCHO PALOS VERDES, CALIFORNIA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2017 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts four interfund services provided Payments to suppliers NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets CASH FLOWS FROM INVESTING ACTIVITIES: Interest received on investments NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash used by operating activities: Depreciation Decrease in other receivables Decrease in prepaid items Increase (decrease) in accrued liabilities NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Equipment Replacement $ 82,050 $ (390,833) (308,783) (175, 589) 19,532 (464,840) 3,018,015 Employee Benefits Totals $ 82,050 (390,833) (308,783) (175,589) 19,532 - (464,840) 3,018,015_ $ 2,553,175 $ - $ 2,553,175 $ (598,794) $ (53,328) $ (652,122) 224,726 - 224,726 - 2,417 2,417 - 170,518 170,518 65,285 (119,607) (54,322) $ (308,783) $ - $ (308,783) 109 STATISTICAL SECTION Governmental activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position Business -type activities Net investment in capital assets Restricted Unrestricted Total business -type activities net position Primary government Net investment in capital assets Restricted Unrestricted Total primary government net position City of Rancho Palos Verdes Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 2008 2009 2010 $ 109,376 $ 107,867 $ 115,331 1,000 1,000 1,000 2011 2012 $ 115,145 $ 114,488 1,750 1,750 110 30,471 31,277 31,855 39,066 67,112 $ 140,847 $ 140,144 $ 148,186 $ 155,961 $ 183,351 $ 5,599 $ 12,477 $ 12,458 $ 12,753 $ 13,356 7,740 2,108 2,825 3,365 3,532 $ 13,339 $ 14,585 $ 15,283 $ 16,118 $ 16,888 $ 114,975 $ 120,344 $ 127,789 $ 127,898 $ 127,845 1,000 1,000 1,000 1,750 1,750 38,211 33,385 34,680 42,431 70,644 $ 154,186 $ 154,729 $ 163,469 $ 172,079 $ 200,238 110 City of Rancho Palos Verdes Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 111 2013 2014 2015 2016 2017 Governmental activities Net investment in capital assets $ 113,284 $ 114,427 $ 119,450 $ 118,399 $ 123,437 Restricted 1,835 11,792 11,647 21,120 19,387 Unrestricted 46,687 46,679 42,208 42,210 43,618 Total governmental activities net position $ 161,806 $ 172,898 $ 173,305 $ 181,729 $ 186,442 Business -type activities Net investment in capital assets $ 18,319 $ 29,557 $ 31,168 $ 31,663 $ 31,311 Restricted - - - - - Unrestricted 9,727 5,317 5,334 5,598 4,600 Total business -type activities net position $ 28,046 $ 34,874 $ 36,502 $ 37,261 $ 35,911 Primary government Net investment in capital assets $ 131,603 $ 143,984 $ 150,618 $ 150,062 $ 154,748 Restricted 1,835 11,792 11,647 21,120 19,387 Unrestricted 56,414 51,996 47,542 47,808 48,218 Total primary government net position $ 189,852 $ 207,772 $ 209,807 $ 218,990 $ 222,353 111 Expenses Governmental activities: Administration Public safety Public works Community development Parks and recreation Non -departmental Interest on long-term debt Total governmental activities expenses Business -type activities: Water Quality Flood Protection Total primary government expenses Program Revenues Governmental activities: Charges for services: Administration Public safety Public works Community development Parks and recreation Non -departmental Operating grants and contributions Capital grants and contributions Total governmental activities program revenues 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 Net (expense)/revenue Governmental activities Business -type activities Total primary government net expense General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes Transient occupancy tax Sales taxes Franchise taxes Utility user taxes Othertaxes Investment income Other Transfers Extraordinary item Total governmental activities City of Rancho Palos Verdes Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 2008 2009 2010 2011 2012 $ 4,724 $ 6,357 $ 7,824 $ 5,997 $ 5,906 4,044 4,233 4,242 4,335 4,178 9,026 10,555 13,633 10,389 11,202 2,441 2,697 2,550 2,622 2,432 1,396 1,605 1,826 1,391 1,490 - - 320 - - 270 268 265 260 109 21,901 25,715 30,660 24,994 25,318 301 437 580 489 560 $ 22,202 $ 26,152 $ 31,240 $ 25,483 $ 25,878 $ 538 $ 555 $ 681 $ 654 $ 747 316 267 229 261 194 1,002 422 1,356 622 684 1,760 1,643 1,764 1,714 1,644 483 483 896 457 503 3,570 2,963 6,633 3,689 3,628 1,472 642 7,179 5 139 9,141 6,975 18,738 7,402 7,538 1,222 1,578 1,264 1,312 1,319 1,222 1,578 1, 264 1,312 1,319 $ 10,363 $ 8,553 $ 20,002 $ 8,714 $ 8,857 $ (12,760) $ (18,740) $ (11,922) $ (17,592) $ (17,780) 921 1,141 684 823 759 $ (11,839) $ (17,599) $ (11,238) $ (16,769) $ (17,022) $ 10,935 $ 11,462 $ 11,431 $ 11,854 $ 11,480 26 85 1,955 2,640 3,349 1,056 1,053 1,246 1,548 1,449 1,599 1,709 1,711 1,825 1,881 2,329 2,267 2,395 2,407 2,333 794 605 712 814 674 1,555 631 207 318 604 300 225 307 271 52 (4,719) - - - - - - - - 23,348 13,875 18,037 19,964 21,677 45,170 112 City of Rancho Palos Verdes Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 113 2008 2009 2010 2011 2012 Business -type activities: Investment income 283 105 14 13 11 User Fees - - - - - Other - - - - - Transfers 4,719 - - - - Total business -type activities 5,002 105 14 13 11 Total primary government $ 18,877 $ 18,142 $ 19,978 $ 21,690 $ 45,181 Change in Net Position Governmental activities $ 1,115 $ (703) $ 8,042 $ 4,085 $ 27,390 Business -type activities 5,923 1,246 698 836 770 Total primary government net expense $ 7,038 $ 543 $ 8,740 $ 4,921 $ 28,159 113 Expenses Governmental activities: Administration Public safety Public works Community development Parks and recreation Non -departmental Interest on long-term debt Total governmental activities expenses Business -type activities: Water Quality Flood Protection Total primary government expenses Program Revenues Governmental activities: Charges for services: Administration Public safety Public works Community development Parks and recreation Non -departmental Operating grants and contributions Capital grants and contributions Total governmental activities program revenues 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 Net (expense)/revenue Governmental activities Business -type activities Total primary government net expense General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes Transient occupancy tax Sales taxes Franchise taxes Utility user taxes Othertaxes Investment income Other Transfers Extraordinary item Total governmental activities City of Rancho Palos Verdes Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) �AIrR� 2014 2015 2016 2017 $ 5,534 $ 7,530 $ 7,127 $ 8,062 $ 6,746 1,588 4,348 1,758 4,429 2,463 4,670 1,998 5,215 2,045 6,534 2,481 10,874 1,973 9,377 1,775 10,692 1,589 9,610 1,179 10,638 184 2,526 122 1,927 434 2,072 4,146 1,971 2,608 2,664 (8,293) 1,696 (458) 1,369 - 1,669 - 2,052 - 2,434 (4,641) - 27,499 35 26,845 191 134 2,400 24,978 24,667 26,421 27,044 31,416 594 659 1,423 646 1,400 $ 25,572 $ 25,326 $ 27,844 $ 27,690 $ 32,816 $ 779 $ 120 $ 108 $ 318 $ 1,081 150 42 43 179 140 543 169 432 159 274 1,854 1,772 2,058 958 2,066 476 18 144 781 708 - - - 96 - 4,133 2,506 2,274 2,332 4,196 139 2,912 1,230 1,111 818 8,074 7,539 6,289 5,934 9,283 1,313 1,361 1,369 1,385 12 2,137 - - - - - 6,115 1,213 - - 3,450 7,476 2,582 1,385 12 $ 11,524 $ 15,015 $ 8,871 $ 7,319 $ 9,295 $ (16,904) $ (17,128) $ (20,132) $ (21,110) $ (22,133) 2,856 6,817 1,159 738 (1,388) $ (14,048) $ (10,311)$ (18,973) $ (20,372) $ (23,521) $ 11,284 $ 11,991 $ 12,452 $ 13,764 $ 13,302 3,790 4,250 4,812 5,197 5,601 1,588 1,642 1,758 2,104 2,463 1,907 1,998 2,045 2,045 1,985 2,481 2,510 1,973 1,866 1,775 778 1,589 1,564 1,179 365 184 94 122 214 434 929 4,146 3,231 2,608 920 (8,293) - (458) - - (19,289) - - - - (4,641) 28,220 27,499 28,977 26,845 114 City of Rancho Palos Verdes Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 115 2013 2014 2015 2016 2017 Business -type activities: Investment income 10 11 10 21 35 User Fees - - - - - Other - - - - - Transfers 8,293 - 458 - 3 Total business -type activities 8,303 11 468 21 38 Total primary government $ 3,662 $ 28,231 $ 27,967 $ 28,998 $ 26,883 Change in Net Position Governmental activities $ (21,545) $ 11,092 $ 7,367 $ 7,868 $ 4,713 Business -type activities 11,159 6,828 1,627 759 (1,350) Total primary government net expense $ (10,386) $ 17,920 $ 8,994 $ 8,627 $ 3,363 115 This page intentionally left blank. City of Rancho Palos Verdes Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 1: Most of the Motor Vehicle In Lieu Tax is received as Property Tax beginning in 2006. 116 Transient Utility Fiscal Property Occupancy Sales Franchise Users Other Year Tax Tax Tax Tax Tax Taxes Total 2008 10,935 26 1,056 1,599 2,329 794 16,739 2009 11,462 85 1,053 1,709 2,267 605 17,181 2010 11,431 1,955 1,246 1,711 2,395 712 19,450 2011 11,854 2,640 1,548 1,825 2,407 814 21,088 2012 11,480 3,349 1,449 1,881 2,333 674 21,166 2013 11,284 3,790 1,588 1,907 2,481 778 21,828 2014 11,991 4,250 1,642 1,998 2,510 1,589 23,980 2015 12,452 4,812 1,758 2,044 1,973 1,564 24,603 2016 13,764 5,197 2,104 2,045 1,866 1,179 26,155 2017 13,302 5,601 2,463 1,985 1,775 365 25,491 1: Most of the Motor Vehicle In Lieu Tax is received as Property Tax beginning in 2006. 116 General Fund Reserved Designated Unreserved, Undesignated Non -Spendable Committed Unassigned Total General Fund All other Governmental Funds Reserved Designated Special Revenue Funds Capital Projects Funds Permanent Fund Debt Service Fund Unreserved, Undesignated, reported in: Special Revenue Funds Capital Projects Funds Permanent Fund Debt Service Fund Non -Spendable Special Revenue Funds Debt Service Fund Capital Projects Funds Permanent Fund Restricted Special Revenue Funds Capital Projects Funds Permanent Fund Committed Special Revenue Funds Capital Projects Funds Permanent Fund Assigned Special Revenue Funds Capital Projects Funds Permanent Fund Unassigned Special Revenue Funds Debt Service Fund Capital Projects Funds Permanent Fund Total all other Governmental Funds Note: The City implemented GASB 54 in 2011 City of Rancho Palos Verdes Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) 2008 2009 2010 2011 2012 $ 6,645 $ 6,314 $ 7,166 $ - $ - 1,278 1,333 1,462 - - 12,171 10,440 10,745 - - - - - 7,515 7,493 - - - 11,385 12,464 $ 20,094 $ 18,087 $ 19,373 $ 18,900 $ 19,957 $ 2,724 $ 3,672 $ 6,361 $ - $ - 1,896 411 85 - - 4,347 6,442 7,494 - - 7,494 7,910 6,058 - - 1,908 3,373 1,240 - - 371 362 333 - - (15,990) (16,823) (17,797) - - - - - 4,818 3,066 - - - 573 - - - - 1,750 1,750 - - - 7,952 8,187 - - - 313 - - - - 319 226 11,650 15,407 (126) (108) (19,687) - $ 2,750 $ 5,347 $ 3,774 $ 7,562 $ 28,528 117 General Fund Reserved Designated Unreserved, Undesignated Non -Spendable Committed Unassigned Total General Fund All other Governmental Funds Reserved Designated Special Revenue Funds Capital Projects Funds Permanent Fund Debt Service Fund Unreserved, Undesignated, reported in: Special Revenue Funds Capital Projects Funds Permanent Fund Debt Service Fund Non -Spendable Special Revenue Funds Debt Service Fund Capital Projects Funds Permanent Fund Restricted Special Revenue Funds Capital Projects Funds Permanent Fund Committed Special Revenue Funds Capital Projects Funds Permanent Fund Assigned Special Revenue Funds Capital Projects Funds Permanent Fund Unassigned Special Revenue Funds Debt Service Fund Capital Projects Funds Permanent Fund Total all other Governmental Funds Note: The City implemented GASB 54 in 2011 City of Rancho Palos Verdes Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) 2013 2014 2015 2016 2017 $ 138 $ 144 $ 598 $ 564 $ 190 - - - 802 964 14,370 15,474 16,055 13,702 15,671 $ 14,508 $ 15,618 $ 16,653 $ 15,068 $ 16,825 1,835 1,845 1,855 1,866 1,877 7,849 8,445 8,362 9,757 11,702 - - - 3,000 4,660 280 1,502 1,492 1,312 1,148 36 58 55 353 - - - - 3,467 - - 794 572 476 479 13,084 18,535 21,078 23,902 23,149 (198) (116) (59) - - $ 22,885 $ 31,063 $ 33,355 $ 44,133 $ 43,015 118 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) Revenues Taxes Licenses and permits Fines and forfeitures Use of money and property Charges for services Donation Revenues from other agencies Other Revenues Total Revenues Expenditures Administration Public Safety Public Works Parks and Recreation Community Development Non -Departmental Pass Through to other agencies Capital Outlay Debt Service Principal Interest Total Expenditures Excess of Revenues over (under) Expenditures Other Financing Sources (uses) Sales of capital assets Transfers in Transfers out Total Other Financing Sources (uses) Extraordinary Gain (Loss) Net change in Fund Balances Cost of Assets Capitalized Debt Services as a percentage of Non -Capital Expenditures 2008 2009 2010 2011 2012 $ 17,062 $ 17,573 $ 19,844 $ 21,419 $ 21,867 1,914 1,755 1,954 1,933 1,806 260 214 179 210 159 2,108 1,240 1,601 1,560 1,350 60 163 81 73 149 4,647 3,575 10,180 3,162 3,421 1,563 467 4,806 229 259 27,614 24,987 38,645 28,586 29,011 4,411 4,915 5,720 5,503 5,726 4,044 4,233 4,242 4,335 4,178 5,768 7,075 6,896 7,875 7,616 1,281 1,354 1,702 1,257 1,479 2,496 2,723 2,604 2,784 2,484 - - 320 - - 169 187 - - - 3,112 2,459 14,567 2,557 3,155 316 350 419 423 464 1,370 1,101 886 887 498 22,967 24,397 37,356 25,621 25,599 4,647 590 1,289 2,965 3,412 - - - 350 - 3,158 5,815 4,616 8,944 8,226 (7,924) (5,815) (6,192) (8,944) (7,856) (4,766) - (1,576) 350 371 - - - - 18,240 $ (119) $ 590 $ (287) $ 3,315 $ 22,023 119 2,764 1,895 10,866 3,180 2,865 8.3% 6.4% 4.9% 5.8% 4.2% 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) Revenues Taxes Licenses and permits Fines and forfeitures Use of money and property Charges for services Donation Revenues from other agencies Other Revenues Total Revenues Expenditures Administration Public Safety Public Works Parks and Recreation Community Development Non -Departmental Pass Through to other agencies Capital Outlay Debt Service Principal Interest Total Expenditures Excess of Revenues over (under) Expenditures Other Financing Sources (uses) Sales of capital assets Transfers in Transfers out Total Other Financing Sources (uses) Extraordinary Gain (Loss) Net change in Fund Balances Cost of Assets Capitalized Debt Services as a percentage of Non -Capital Expenditures 2013 2014 2015 2016 2017 $ 22,543 $ 23,981 $ 24,603 $ 25,725 $ 25,491 2,027 1,951 2,515 2,383 3,045 117 128 135 180 153 1,383 846 653 750 415 141 323 427 558 1,072 445 - - - 3,395 5,301 3,794 3,443 5,117 741 3,068 2,377 1,668 732 30,791 35,598 34,504 34,707 36,025 5,401 5,792 5,135 6,183 5,445 4,348 4,492 4,761 5,215 6,534 7,240 7,611 8,042 7,961 9,084 1,557 1,573 1,819 2,042 2,175 2,591 2,640 2,870 2,619 2,664 - 35 190 238 2,400 2,721 4,113 8,697 1,344 7,106 23,857 26,256 31,514 25,602 35,408 6,934 9,342 2,990 9,105 617 7,954 10,424 13,525 11,784 4,577 (16,247) (10,479) (13,188) (11,784) (4,577) (8,293) (55) 337 - - (6,743) - - - - $ (8,102) $ 9,287 $ 3,327 $ 9,105 $ 617 120 2,022 4,820 8,490 2,398 8,228 0.0% 0.0% 0.0% 0.0% 0.0% City of Rancho Palos Verdes General Governmental Tax Revenues By Source Last Ten Fiscal Years (Modified Accrual Basis of Accounting) (Amounts expressed in thousands) Source: City General Ledger 1: Most of the Motor Vehicle In Lieu Fees are received as property tax beginning in 2006. 121 Transient Utility Fiscal Property Occupancy Sales Franchise Users Other Year Tax Tax Tax Tax Tax Taxes Total 2008 10,898 26 1,077 1,599 2,329 1,133 17,062 2009 11,462 85 1,060 1,709 2,267 990 17,573 2010 11,431 1,955 1,158 1,711 2,395 1,194 19,844 2011 11,854 2,640 1,518 1,825 2,407 1,175 21,419 2012 11,480 3,349 1,452 1,881 2,333 1,372 21,867 2013 11,284 3,790 1,589 1,907 2,481 1,492 22,543 2014 11,991 4,250 1,642 1,998 2,510 1,590 23,981 2015 12,452 4,812 1,758 2,044 1,973 1,564 24,603 2016 13,764 5,197 2,104 2,045 1,866 1,179 26,155 2017 13,302 5,601 2,463 1,985 1,775 365 25,491 Source: City General Ledger 1: Most of the Motor Vehicle In Lieu Fees are received as property tax beginning in 2006. 121 City of Rancho Palos Verdes Assessed Value of Taxable Property Last Ten Fiscal Years (In thousands of dollars) Fiscal Year Residential Commercial Industrial Other Unsecured End Property Property Property Property Property 2008 7,919,953 170,149 3,211 453,446 26,546 2009 8,235,780 270,956 3,275 491,235 46,858 2010 8,333,042 263,157 3,341 598,539 49,628 2011 8,362,052 396,195 3,333 570,551 45,258 2012 8,596,777 390,497 3,358 564,763 70,284 2013 8,843,139 402,533 3,425 581,160 48,147 2014 9,190,789 475,510 3,493 660,569 46,962 2015 9,492,704 486,378 3,509 679,241 45,906 2016 10,094,704 501,636 3,580 695,738 44,300 2017 10,770,321 531,536 3,634 506,899 24,986 Source: 2010-2013 & 2006-07 County Assessor data, MuniServices, LLC *Assessed values have been revised from prior CAFR publications to comply with GASB No. 44 standards and on-going consistency in reporting methodologies. (1) Total Direct Tax Rate is represented by TRA 001-224. This percentage is City's shared portion within 1 % of County's general levy. (2) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. Based on these calculations a factor was extrapolated and applied to current assessed values. (3) The Factor used to calculate Estimated Actual Value was calculated for 2006-07 and applied to prior years for historical purposes. 122 This page intentionally left blank. City of Rancho Palos Verdes Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (In thousands of dollars) Source: *Assessed values have been revised from prior CAM publications to comply with GASB No. 44 standards and on-going consistency in reporting methodologies. (1) Total Direct Tax Rate is represented by TRA 001-224. This percentage is City's shared portion within 1% of County's general levy. (2) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. Based on these calculations a factor was extrapolated and applied to current assessed values. (3) The Factor used to calculate Estimated Actual Value was calculated for 2006-07 and applied to prior years for historical purposes. 123 City Estimated Assessed Fiscal Less Taxable Direct Actual Factor of Value as a Year Tax -Exempt Assessed Tax Taxable Taxable Percentage of End Property Value Rate (1) Value (2) Assessed Value (3) Actual Value 2008 151,225 8,422,080 0.063728 $ 11,208,525 1.33085 75.14% 2009 154,969 8,893,135 0.063728 $ 11,835,429 1.33085 75.14% 2010 236,925 9,010,782 0.063728 $ 9,515,593 1.05602 94.69% 2011 158,388 9,219,001 0.063728 $ 9,067,313 0.98355 101.67% 2012 157,307 9,468,372 0.063728 $ 10,683,820 1.12837 88.62% 2013 174,167 9,704,237 0.063728 $ 11,390,239 1.17374 85.20% 2014 153,434 10,223,889 0.063728 $ 13,967,877 1.36620 73.20% 2015 151,709 10,556,029 0.063728 $ 13,571,675 1.28568 77.78% 2016 155,138 11,184,820 0.063728 $ 15,366,477 1.37387 72.79% 2017 174,779 11,662,598 0.063728 $ 17,011,415 1.45863 68.56% Source: *Assessed values have been revised from prior CAM publications to comply with GASB No. 44 standards and on-going consistency in reporting methodologies. (1) Total Direct Tax Rate is represented by TRA 001-224. This percentage is City's shared portion within 1% of County's general levy. (2) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. Based on these calculations a factor was extrapolated and applied to current assessed values. (3) The Factor used to calculate Estimated Actual Value was calculated for 2006-07 and applied to prior years for historical purposes. 123 City of Rancho Palos Verdes Property Tax Rates - Direct and Overlapping Governments Last Ten Fiscal Years CITY DIRECT RATE All other direct rates: LA COUNTY GENERAL LA COUNTY ACCUM CAP OUTLAY CONSOL. FIRE PRO.DIST OF LA CO. LA CO. FIRE-FFW LA CO.FL.CON.DR.IMP.DIST.MAINT. LA CO FLOOD CONTROL MAINT PALOS VERDES LIBRARY DIST MAINT LA CO WEST VECTOR CONTROL DIST. CO SANITATION DIST NO 5 OPERAT WTR REPLENISHMENT DIST OF SO CAL ERAF EDUCATIONAL AUG FD IMPOUND COUNTY SCHOOL SERVICES CHILDREN'S INSTIL TUITION FUND LA CITY COMM COLLEGE DIST LA COMM COLL CHILDREN'S CTR FD PALOS VERDES PENINSULA USD CO.SCH.SERV.FD-LOS ANGELES DEV.CTR.HDCPD MINOR -LA UNIF. TOTAL 2007-08 2008-09 2009-10 2010-11 2011-12 0.063728 COUNTY 0.063728 0.063728 0.063728 0.063728 0.441223 PALOS VERDES PEN USD 0.441223 0.441223 0.441223 0.441223 0.000110 COMMNTY COLLEGE 0.000110 0.000110 0.000110 0.000110 0.169715 PALOS VERDES LIB 0.169715 0.169715 0.169715 0.169715 0.006910 FLOOD CONTROL 0.006910 0.006910 0.006910 0.006910 0.002597 METRO WATER DIST 0.002597 0.002597 0.002597 0.002597 0.014699 TOTAL 0.014699 0.014699 0.014699 0.014699 0.043470 TOTAL TAX RATE 0.043470 0.043470 0.043470 0.043470 0.000319 0.000319 0.000319 0.000319 0.000319 0.017499 0.017499 0.017499 0.017499 0.017499 0.000181 0.000181 0.000181 0.000181 0.000181 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.001369 0.001369 0.001369 0.001369 0.001369 0.002717 0.002717 0.002717 0.002717 0.002717 0.029214 0.029214 0.029214 0.029214 0.029214 0.000302 0.000302 0.000302 0.000302 0.000302 0.196986 0.196986 0.196986 0.196986 0.196986 0.008085 0.008085 0.008085 0.008085 0.008085 0.000876 0.000876 0.000876 0.000876 0.000876 1.000000 1.000000 1.000000 1.000000 1.000000 Debt Service Rates COUNTY 0.000000 0.000000 0.000000 0.000000 0.000000 PALOS VERDES PEN USD 0.019760 0.020177 0.021642 0.022493 0.022511 COMMNTY COLLEGE 0.008794 0.022115 0.023112 0.040310 0.035296 PALOS VERDES LIB 0.006854 0.006801 0.006618 0.006719 0.006359 FLOOD CONTROL 0.000000 0.000000 0.000000 0.000000 0.000000 METRO WATER DIST 0.004500 0.004300 0.004300 0.003700 0.003700 TOTAL 0.039908 0.053393 0.055672 0.073222 0.067866 TOTAL TAX RATE 1.039908 1.053393 1.055672 1.073222 1.067866 124 City of Rancho Palos Verdes Property Tax Rates - Direct and Overlapping Governments Last Ten Fiscal Years CITY DIRECT RATE All other direct rates: LA COUNTY GENERAL LA COUNTY ACCUM CAP OUTLAY CONSOL. FIRE PRO.DIST OF LA CO. LA CO. FIRE-FFW LA CO.FL.CON.DR.IMP.DIST.MAINT. LA CO FLOOD CONTROL MAINT PALOS VERDES LIBRARY DIST MAINT LA CO WEST VECTOR CONTROL DIST. CO SANITATION DIST NO 5 OPERAT WTR REPLENISHMENT DIST OF SO CAL ERAF EDUCATIONAL AUG FD IMPOUND COUNTY SCHOOL SERVICES CHILDREN'S INSTIL TUITION FUND LA CITY COMM COLLEGE DIST LA COMM COLL CHILDREN'S CTR FD PALOS VERDES PENINSULA USD CO.SCH.SERV.FD-LOS ANGELES DEV.CTR.HDCPD MINOR -LA UNIF. TOTAL 2012-13 2013-14 2014-15 2015-16 2016-17 0.063728 COUNTY 0.063728 0.063728 0.063728 0.063728 0.441223 PALOS VERDES PEN USD 0.441223 0.441223 0.441223 0.441223 0.000110 COMMNTY COLLEGE 0.000110 0.000110 0.000110 0.000110 0.169715 PALOS VERDES LIB 0.169715 0.169715 0.169715 0.169715 0.006910 FLOOD CONTROL 0.006910 0.006910 0.006910 0.006910 0.002597 METRO WATER DIST 0.002597 0.002597 0.002597 0.002597 0.014699 0.014699 0.014699 0.014699 0.014699 0.043470 0.043470 0.043470 0.043470 0.043470 0.000319 0.000319 0.000319 0.000319 0.000319 0.017499 0.017499 0.017499 0.017499 0.017499 0.000181 0.000181 0.000181 0.000181 0.000181 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.001369 0.001369 0.001369 0.001369 0.001369 0.002717 0.002717 0.002717 0.002717 0.002717 0.029214 0.029214 0.029214 0.029214 0.029214 0.000302 0.000302 0.000302 0.000302 0.000302 0.196986 0.196986 0.196986 0.196986 0.196986 0.008085 0.008085 0.008085 0.008085 0.008085 0.000876 0.000876 0.000876 0.000876 0.000876 1.000000 1.000000 1.000000 1.000000 1.000000 Debt Service Rates COUNTY 0.000000 0.000000 0.000000 0.000000 0.000000 PALOS VERDES PEN USD 0.024102 0.023109 0.023289 0.023433 0.023197 COMMNTY COLLEGE 0.048750 0.044541 0.040174 0.035755 0.035956 PALOS VERDES LIB 0.006441 0.006118 0.005854 0.005630 0.000000 FLOOD CONTROL 0.000000 0.000000 0.000000 0.000000 0.000000 METRO WATER DIST 0.003500 0.003500 0.003500 0.003500 0.003500 TOTAL 0.082793 0.077268 0.072817 0.068318 0.062653 TOTAL TAX RATE 1.082793 1.077268 1.072817 1.068318 1.062653 Source: 2010-2015 County Assessor data, MuniServices, LLC Source: 2008-2009 & 2006 and prior: data is provided from previously published CAFR's. City has no separate debt service rate, direct rate is 100% operating. Table has been updated to reflect City TRA 0-149, which includes Palos Verdes Pennisula Unified School District. Debt Service Rates updated back to 2007-08 due to data availability 125 Taxpayer Long Point Dev LLC PPC Villas Rpv LLC P V Victoria Apts LLC Terraces Subsidiary LLC CPT Vista Catalina LLC Western Riviera Investors Golden Cove LLC VHPS LLC Belmont Village Rpv LP Ocean View Drive Inc. Taylor Morrison Of California Johnson Eric C Wlp Westmont Plaza LLC Mulligan Michael Gina California Water Service Co American Golf, Inc Victoria Apts Thornecrest LLC Palos Verdes Terrace Ltd. Xcx Bear LLC Bruning Fred W AA Homes LLC Amdan Investment LLC Lessee Maleenont Voravat Wang Lisa Ppc Palos Verdes LLC Vh Property Corp Rahn Patricia J Et Al Tridiamond LLC Ruffin Phillip G 3200 Pv Drive West Llc Braun William Wil Gal Labarba James G Co Tr Ae Mission Group LLC Imbach Scott A & Diane Y Trs Rpv Equities Llc Cox Cable Communication Of Pal Kim Goon Gtr Foster Robert D & Gina D Chung Paul Y Total Top 25 Taxpayers $ 967,329,328 City of Rancho Palos Verdes Principal Property Tax Payers Last Fiscal Year and Nine Years Ago Total Taxable Value $ 11,662,597,545 Source: Los Angeles County Assessor data, MuniServices, LLC 126 8.29% 100.00% 2007-08 Percentage of Taxable Total City Taxable Value ($) Rank Value (%) 64,550,700 3 0.77% 44,998,711 2016-17 0.53% 27,393,598 6 Percentage of Taxable 7 Total City Taxable Value ($) Rank Value (%) 466,364,772 1 4.00% 69,395,348 2 0.60% 51,061,782 3 0.44% 42,545,651 4 0.36% 37,119,207 5 0.32% 31,814,171 6 0.27% 29,592,698 7 0.25% 28,801,309 8 0.25% 26,462,033 9 0.23% 19,100,372 10 0.16% 19,039,718 11 0.16% 17,755,902 12 0.15% 15,325,913 13 0.13% 15,128,317 14 0.13% 13,324,159 15 0.11% 12,750,170 16 0.11% 8,463,685 17 0.07% 8,451,915 18 0.07% 8,291,741 19 0.07% 7,903,721 20 0.07% 7,878,225 21 0.07% 7,781,493 22 0.07% 7,767,076 23 0.07% 7,623,512 24 0.07% 7,586,438 25 0.07% Total Taxable Value $ 11,662,597,545 Source: Los Angeles County Assessor data, MuniServices, LLC 126 8.29% 100.00% 2007-08 Percentage of Taxable Total City Taxable Value ($) Rank Value (%) 64,550,700 3 0.77% 44,998,711 4 0.53% 27,393,598 6 0.33% 22,321,260 7 0.27% 18,769,084 8 0.22% 8,629,158 13 0.10% 10,380,951 11 0.12% 7,480,416 15 0.09% 7,327,403 16 0.09% 86,414,600 1 1.03% 70,725,148 2 0.84% 33,864,000 5 0.40% 12,825,010 9 0.15% 11,500,000 10 0.14% 9,885,714 12 0.12% 7,850,000 14 0.09% 6,153,943 17 0.07% 5,864,791 18 0.07% 5,800,000 19 0.07% 5,689,190 20 0.07% 5,625,354 21 0.07% 5,532,900 22 0.07% 5,340,237 23 0.06% 5,308,564 24 0.06% 5,222,820 25 0.06% $ 495,453,552 5.88% 8,422,055,521 100.00% Fiscal Year 2008 2009 2010* 2011* 2012 2013 2014 2015 2016 2017 Total Tax Levy for Fiscal Year 5,351 6,116 5,447 5,597 5,777 5,951 6,287 6,487 6,813 7,093 City of Rancho Palos Verdes Property Tax Levies and Collections Last Ten Fiscal Years (amounts expressed in thousands) Collected within the Percentage Fiscal Year of the Levy of Levy Percentage Collections in Amount of Levy Subsequent Years 5,316 99.35% 10 5,734 93.75% 8 4,917 90.27% 8 5,462 97.59% 0 5,656 97.91% 0 5,844 98.20% 0 6,193 98.50% 0 6,396 98.60% 0 6,716 98.58% 0 7,009 98.82% 0 Source: County Assessor Data * Includes 1 % secured apportionment only 127 Total Collections to Date Percentage Amount of Levy 5,325 99.52% 5,742 93.88% 4,925 90.42% 5,462 97.59% 5,656 97.91% 5,844 98.20% 6,193 98.50% 6,396 98.60% 6,716 98.58% 7,009 98.82% This page intentionally left blank. City of Rancho Palos Verdes Direct and Overlapping Governmental Activities Debt Current Year CITY OF RANCHO PALOS VERDES 2016-17 Assessed Valuation: $11,734,105,201 (1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and non -bonded capital lease obligations. Ratios to 2016-17 Assessed Valuation: Direct Debt 0.00% Total Direct and Overlapping Tax and Assessment Debt 0.94% Gross Combined Total Debt 1.11% Net Combined Total Debt 1.11% Source: 2016-17 California Municipal Statistical Co. 128 Total Debt City's Share of DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT 6/30/2017 % Applicable (1) Debt 6/30/17 Metropolitan Water District 74,905,000 0.454% 340,069 Los Angeles Community College District 3,847,880,000 1.571% 60,450,195 Los Angeles Unified School District 9,815,110,000 0.184% 18,059,802 Palos Verdes Unified School District 65,322,853 47.183% 30,821,282 City of Rancho Palos Verdes 0 100.000% 0 Los Angeles County Regional Park and Open Space Assessment District 38,895,000 0.873% 339,553 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $110,010,901 OVERLAPPING GENERAL FUND DEBT: Los Angeles County General Fund Obligations $1,996,576,065 0.873% $17,430,109 Los Angeles County Superintendent of Schools Certificates of Participation 7,204,988 0.873% $62,900 Los Angeles County Sanitation District No. 5 Authority 23,288,051 10.580% $2,463,876 Los Angeles County South Bay Cities Sanitation District Authority 3,969,369 4.175% $165,721 Los Angeles Unified School District Certificates of Participation 239,440,000 0.184% $440,570 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $20,563,176 Less: Los Angeles Unified School District QZABs supported by investment fund 18,000 TOTAL NET OVERLAPPING GENERAL FUND DEBT $20,545,176 TOTAL DIRECT DEBT $0 TOTAL GROSS OVERLAPPING DEBT $130,574,077 TOTAL NET OVERLAPPING DEBT $130,556,077 GROSS COMBINED TOTAL DEBT $130,574,077 (2) NET COMBINED TOTAL DEBT $130,556,077 (1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and non -bonded capital lease obligations. Ratios to 2016-17 Assessed Valuation: Direct Debt 0.00% Total Direct and Overlapping Tax and Assessment Debt 0.94% Gross Combined Total Debt 1.11% Net Combined Total Debt 1.11% Source: 2016-17 California Municipal Statistical Co. 128 City of Rancho Palos Verdes Legal Debt Margin Information Last Ten Fiscal Years (Amounts expressed in thousands) Fiscal Year 129 2008 2009 2010 2011 2012 Debt Limit $ 1,274,916 $ 1,345,594 $ 1,351,617 $ 1,382,850 $ 1,420,256 Total Net Debt applicable to limit - - - - - Legal Debt Margin $ 1,274,916 $ 1,345,594 $ 1,351,617 $ 1,382,850 $ 1,420,256 Total Net Debt applicable to the limit as a percentage of Debt Limit 0% 0% 0% 0% 0% 129 City of Rancho Palos Verdes Legal Debt Margin Information Last Ten Fiscal Years (Amounts expressed in thousands) Fiscal Year 130 2013 2014 2015 2016 2017 Debt Limit $ 1,455,636 $ 1,533,583 $ 1,583,404 $ 1,677,723 $ 1,749,390 Total Net Debt applicable to limit - - - - - Legal Debt Margin $ 1,455,636 $ 1,533,583 $ 1,583,404 $ 1,677,723 $ 1,749,390 Total Net Debt applicable to the limit as a percentage of Debt Limit 0% 0% 0% 0% 0% Total Taxable Value $ 11,662,598 Debt Limit (15% of total taxable value) 1,749,390 Debt applicable to limit - Legal Debt Margin $ 1,749,390- 130 City of Rancho Palos Verdes Demographic and Economic Statistics Last Ten Fiscal Years Source: MuniServices, LLC The California Department of Finance demographics estimates now incorporate 2010 Census counts as the benchmark. 1.) Population Projections are provided by the California Department of Finance Projections. 2.) Income Data is provided by the U.S. Census Bureau, 2010 American Community Survey. 3.) Unemployment Data is provided by the EDD's Bureau of Labor Statistics Department. "*Student Enrollment reflects the total number of students enrolled in the Palos Verdes Unified School District. Other school districts within the City are not included. 131 Per Capita *"Public Fiscal Personal Personal Median School Year Population (1) Income (2) Income (2) Age Enrollment 2007-08 42,964 2,549,698,580 59,345 44.4 11,976 2008-09 42,720 2,262,493,920 52,961 43.4 12,033 2009-10 42,642 2,250,346,266 52,773 44.9 11,900 2010-11 41,766 2,425,936,344 58,084 44.3 11,928 2011-12 41,897 2,561,016,971 61,127 47.6 11,840 2012-13 42,114 2,618,143,152 62,168 47.8 11,873 2013-14 42,358 2,564,205,491 60,537 47.6 11,700 2014-15 42,564 2,593,892,724 60,941 48.9 11,632 2015-16 43,041 2,461,988,241 57,201 49.6 11,499 2016-17 42,884 2,569,293,654 59,913 49.5 11,428 Source: MuniServices, LLC The California Department of Finance demographics estimates now incorporate 2010 Census counts as the benchmark. 1.) Population Projections are provided by the California Department of Finance Projections. 2.) Income Data is provided by the U.S. Census Bureau, 2010 American Community Survey. 3.) Unemployment Data is provided by the EDD's Bureau of Labor Statistics Department. "*Student Enrollment reflects the total number of students enrolled in the Palos Verdes Unified School District. Other school districts within the City are not included. 131 City of Rancho Palos Verdes Demographic and Economic Statistics Last Ten Fiscal Years Source: MuniServices, LLC The California Department of Finance demographics estimates now incorporate 2010 Census counts as the benchmark. 1.) Population Projections are provided by the California Department of Finance Projections. 2.) Income Data is provided by the U.S. Census Bureau, 2010 American Community Survey. 3.) Unemployment Data is provided by the EDD's Bureau of Labor Statistics Department. *"Student Enrollment reflects the total number of students enrolled in the Palos Verdes Unified School District. Other school districts within the City are not included. 132 County City City Fiscal Unemployment Unemployment County Population Year Rate (%) (3) Rate (%) (3) Population (1) (% of County) 2007-08 7.2% 2.5% 10,275,914 0.42% 2008-09 7.5% 2.5% 10,301,658 0.41% 2009-10 11.6% 4.0% 10,355,053 0.41% 2010-11 11.9% 4.1% 9,858,989 0.42% 2011-12 11.1% 3.8% 9,884,632 0.42% 2012-13 11.0% 3.7% 9,958,091 0.42% 2013-14 7.6% 2.5% 10,041,797 0.42% 2014-15 7.1% 3.4% 10,136,559 0.42% 2015-16 6.7% 3.2% 10,241,335 0.42% 2016-17 5.2% 2.5% 10,241,278 0.42% Source: MuniServices, LLC The California Department of Finance demographics estimates now incorporate 2010 Census counts as the benchmark. 1.) Population Projections are provided by the California Department of Finance Projections. 2.) Income Data is provided by the U.S. Census Bureau, 2010 American Community Survey. 3.) Unemployment Data is provided by the EDD's Bureau of Labor Statistics Department. *"Student Enrollment reflects the total number of students enrolled in the Palos Verdes Unified School District. Other school districts within the City are not included. 132 City of Rancho Palos Verdes Principal Sales Tax Producers Last Fiscal Year and Nine Years Ago 2016-17 2007-08 Taxpayer Business Type Taxpayer Business Type 7 -Eleven Food Stores Food Markets 7 -Eleven Food Stores Food Markets Admiral Risty Restaurant Restaurants A & H Motors Auto Sales - Used America's Tire Auto Parts/Repair Admiral Risty Restaurant Restaurants Asaka Japanese Cuisine Restaurants America's Tire Auto Parts/Repair Audio Visual Services Group Light Industry Asaka Japanese Cuisine Restaurants Avenue Italy Restaurants California Turf Support Light Industry Blue Crab Seafood & Steakhouse Restaurants Carl's Jr. Restaurants Restaurants Carl's Jr. Restaurants Restaurants Centinela Feed & Pet Supplies Miscellaneous Retail Centinela Feed & Pet Supplies Miscellaneous Retail Chevron Service Stations Service Stations Chevron Service Stations Service Stations Coco's Restaurants Restaurants Coco's Restaurants Restaurants EI Pollo Loco Restaurants Green Hills Mortuary & Memoria Miscellaneous Other Good Night Mattress Furniture/Appliance IHop Restaurants Restaurants Green Hills Mortuary & Memoria Miscellaneous Other Jack In The Box Restaurants Restaurants IHop Restaurants Restaurants Los Verdes Country Club Restaurants Installation Company Furniture/Appliance Marie Callender's Restaurant Restaurants Jack In The Box Restaurants Restaurants Marshall's Stores Apparel Stores Los Verdes Country Club Restaurants Mobil Service Stations Service Stations Mobil Service Stations Service Stations O'Reilly Auto Parts Auto Parts/Repair O'Reilly Auto Parts Auto Parts/Repair Ralph's Grocery Company Food Markets Ralph's Grocery Company Food Markets Smart & Final Food Markets Rolling Hills Plastics Light Industry Terranea Resort Restaurants Smart & Final Food Markets Trader Joe's Food Markets Trader Joe's Food Markets Trump National Golf Club Miscellaneous Retail Trump National Golf Club Miscellaneous Retail Western Tobacco Miscellaneous Retail Waterfront Equipment Tech Heavy Industry Source: SBOE data, MuniServices, LLCTop Sales Tax Producers listed in alphabetical order. 133 Employer Palos Verdes Peninsula Unified School District Terranea Resort Hotel' Marymount College Trump National Golf Club' Belmont Corp Ltd ( Belmont Village of Rancho) Canterbury City of Rancho Palos Verdes" Ralphs Store #720 American Golf Corp ( Los Verdes Golf Course) Green Hills Memorial Park Keller Williams Realty Trader Joe's Subtotal of Principal Employers Total City Employment City of Rancho Palos Verdes Principal Employers Current Year and Three Years Ago 2017 Source: MuniServices, LLC Results provided by EDD Labor Force Data. Includes full time and part time employees. Trader Joe's Store's (#57 & #233) chooses to no longer participate. 2014 Percentage of Total City Employees Rank Employment 1,444 1 7.48% 1,226 2 6.35% 203 3 1.05% 186 4 0.96% 165 5 0.85% 141 6 0.73% 116 7 0.60% 104 8 0.54% 72 9 0.37% 71 10 0.37% Source: MuniServices, LLC Results provided by EDD Labor Force Data. Includes full time and part time employees. Trader Joe's Store's (#57 & #233) chooses to no longer participate. 2014 83 80 163 88 3,728 19.32% 3,820 19,300 21,800 134 9 0.38% 0.00% 10 0.37% 5 0.75% 8 0.40% 17.52% Percentage of Total City Employees Rank Employment 1,970 1 9.04% 730 2 3.35% 220 4 1.01% 260 3 1.19% 111 7 0.51% 115 6 0.53% 83 80 163 88 3,728 19.32% 3,820 19,300 21,800 134 9 0.38% 0.00% 10 0.37% 5 0.75% 8 0.40% 17.52% This page intentionally left blank. Function General Government Recreation Part -Time Total City of Rancho Palos Verdes Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years 2008 2009 2010 2011 2012 2013 55 58 53 54 52 53 10 11 16.5 18 16.5 16 65 69 69.5 72 68.5 69 Source: City Budget documents and Payroll records 135 2014 2015 54 60 22 25 76 85 2016 2017 62 62 29 29 91 91 City of Rancho Palos Verdes Operating Indicators by Function Last Ten Fiscal Years 136 2008 2009 2010 2011 2012 Function Administration Employee Resignations 8 4 9 5 8 Workers Compensation Claims 4 2 5 3 3 Liability Claims 16 13 13 14 11 Budget Adjustments 26 18 21 17 11 Business Licenses Issued 1,709 1,819 1,629 1,891 1,294 Web Site Page Views (1) 701,004 3.8 mil 2.9 mil 2.8mil 3.Omil Public Safety Part I Crime Rates (per 10,000 population) 123 102 110 143 131 Public Works Solid Waste Diversion Rates (2) 4.7lbs/person/day 4.1 lbs/person/day 4.2lbs/person/day 4.2lbs/person/day 4.2lbs/person/day Pavement Rating DNA 85 85 85 85 Parks and Recreation Park Events 692 825 690 580 582 Class Meetings at Parks 2,772 2,708 2,398 2,313 1,587 Docent Led Nature Hikes 91 105 103 105 104 Community Development Building Permits Processed 1,692 1,404 1,243 1,432 1,221 Plan Checks 247 226 154 161 161 Municipal Code Violations Closed 216 339 138 371 321 Source: City Departments DNA: Data Not Available (1): The City launched a new website and with it, the methodology used to count total page views was modified. (2): A new system of measuring AB939 compliance was implemented in 2008 with the passage of SB1016. This changed the previous diversion calculation method to the new disposal -based indicator - the per capita disposal rate. The per capita disposal target is based on the average of 50 percent of generation in 2003 through 2006, expressed in terms of per capital disposal. 136 City of Rancho Palos Verdes Operating Indicators by Function Last Ten Fiscal Years 137 2013 2014 2015 2016 2017 Function Administration Employee Resignations 7 14 10 6 6 Workers Compensation Claims 3 1 3 2 8 Liability Claims 14 9 11 28 6 Budget Adjustments 24 15 15 18 48 Business Licenses Issued 1,868 1,997 2,134 2,012 1,939 Web Site Page Views (1) 3.1 mil 3.3mil 426,772' 403,704 536,568 Public Safety Part I Crime Rates (per 10,000 population) 149 107 134 106 Not available at this time Public Works Solid Waste Diversion Rates (2) 2.87lbs/person/day 2.84lbs/person/day 3.15lbs/person/day 3.08lbs/person/day 2.46lbs/person/day Pavement Rating 84 82 82 84 84 Parks and Recreation Park Events 765 631 639 810 829 Class Meetings at Parks 1,202 1,233 1,400 1,025 1,030 Docent Led Nature Hikes 121 109 103 94 108 Volunteer Events (3) 35 Volunteers (3) 764 Volunteer Hours (3) 2,486 Open Space Mgmt. Public Contacts (3) 23,101 Open Space Mgmt. Rules Enforced (3) 1,367 Open Space Mgmt. Maintenance / Projects (3) 782 Community Development Building Permits Processed 1,403 1,492 1,558 1,758 1,665 Plan Checks 268 264 255 289 289 Municipal Code Violations Closed 312 392 358 505 432 Source: City Departments DNA: Data Not Available (1): The City launched a new website and with it, the methodology used to count total page views was modified. (2): A new system of measuring AB939 compliance was implemented in 2008 with the passage of SB1016. This changed the previous diversion calculation method to the new disposal -based indicator - the per capita disposal rate. The per capita disposal target is based on the average of 50 percent of generation in 2003 through 2006, expressed in terms of per capital disposal. (3) Began tracking this indicator in 2017. 137 City of Rancho Palos Verdes Capital Asset Statistics by Function Last Ten Fiscal Years 138 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 Function Administration Computer Workstations 91 92 101 92 88 93 98 114 138 140 Public Safety (1) Public Works Street Miles 143 143 143 143 144 141 141 149 149 149 Traffic Signals 16 16 16 16 18 15 15 15 15 15 Parks and Recreation Parks 16 16 15 15 15 15 16 16 16 16 Community Development Vehicles Used for Inspections 5 5 5 5 5 5 4 4 4 2 Source: City Capital Asset Records DNA: Data Not Available (1): Public safety services are contracted with other agencies. The City does not own any public safety capital assets. 138