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ACFR FY 2009-2010C n u CITY OF POWAY CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2010 OL City of Poway Poway, California Comprehensive Annual Financial Report For the year ended June 30, 2010 PREPARED BY THE CITY OF POWAY, CALIFORNIA FINANCE DIVISION rl� City of Poway Basic Financial Statements For the year ended June 30, 2010 Table of Contents Page INTRODUCTORY SECTION Tableof Contents ......................................................................................................................... ..............................1 Letterof Transmittal ................................................................................................................. ............................... v PrincipalOfficials ................................................................................................................... ............................... xvi OrganizationalChart ............................................................................................................ ............................... xvii GFOA Certificate of Achievement for Excellence in Financial Reporting ........................ ..........................xviii FINANCIAL SECTION IndependentAuditors' Report ................................................................................................ ..............................1 ' Proprietary Fund Financial Statements: Statementof Net Assets ...................................................................................... ............................... 32 Statement of Revenues, Expenses and Changes in Fund Net Assets ........... ............................... 33 Statementof Cash Flows ..................................................................................... ............................... 34 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Assets .................................................................... ............................... 36 Notes to Basic Financial Statements ............................................................................. ............................... 37 Management's Discussion and Analysis (Required Supplementary Information) .... ............................... 3 Basic Financial Statements: ' Government - Wide Financial Statements: Statementof Net Assets ............................................................................................... .............................16 Statement of Activities and Changes in Net Assets ................................................. .............................18 Fund Financial Statements: Governmental Fund Financial Statements: BalanceSheet ... ............................... .................................................................. ............................... 24 Reconciliation of Governmental Funds Balances Sheet to the ' Government -Wide Statement of Net Assets .............................................. ............................... Statement of Revenues, Expenditures 26 andChanges in Fund Balances .................................................................... ............................... 28 Reconciliation of Governmental Statement of Revenues, Expenditures, ' and Changes in Fund Balances to the Government -Wide Statement of Activities and Changes in Net Assets .................................................... ............................... 30 ' Proprietary Fund Financial Statements: Statementof Net Assets ...................................................................................... ............................... 32 Statement of Revenues, Expenses and Changes in Fund Net Assets ........... ............................... 33 Statementof Cash Flows ..................................................................................... ............................... 34 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Assets .................................................................... ............................... 36 Notes to Basic Financial Statements ............................................................................. ............................... 37 J City of Poway Basic Financial Statements 1 For the year ended June 30, 2010 Table of Contents, Continued Page 1 FINANCIAL SECTION, Continued ' Required Supplementary Information: BudgetaryInformation .............................................................................................. ............................... 76 Budgetary Comparison Schedule - General Fund ................................................ ............................... 77 1 Budgetary Comparison Schedule - Low /Moderate Income Housing Special Revenue Fund...... 78 DefinedBenefit Pension Plans .................................................................................. ............................... 79 Supplementary Information: 1 Non -Major Governmental Funds: 1 CombiningBalance Sheet .......................................................................................... ............................... 86 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................ 92 Non -Major Special Revenue Funds: City of Poway RDA Debt Service Fund ..................................................... ............................... 97 1 FireProtection ............................................................................................ ............................... 98 800 MHz Communication System .............................................................. ............................... GasTax .............................................................................. ............................... ............................100 99 1 StreetImprovement ........................................................ ............................... ............................101 DrainageSpecial .............................................................. ............................... ............................102 MaintenanceDistricts .................................................... ............................... ............................103 1 MiscellaneousGrants ...................................................... ............................... ............................104 Community Development Block Grant ....................... ............................... ............................105 TransportationDevelopment Act ................................. ............................... ............................106 1 PropositionA Special ..................................................... ............................... ............................107 Royal Mobilehome Park Administration ..................... ............................... ............................108 Traffic Congestion AB 2928 ...................................................................... ............................... 109 1 BetteBendixen ................................................................ ............................... ............................110 PowayRoad Beautification ............................................ ............................... ............................111 Poway Valley Senior Center Endowment .................... ............................... ............................112 1 OldPoway Park Tree ...................................................... ............................... ............................113 Poway Public Arts Special Revenue Fund ................... ............................... ............................114 KumeyaayEndowment ................................................. ............................... ............................115 ' PowayFine Arts Center ................................................. ............................... ............................116 SeniorVolunteer Patrol .................................................. ............................... ............................117 Prop 1B Transportation Bond Special Revenue Fund ............................... ............................118 Storm Water Management Special Revenue Fund ..... ............................... ............................119 Fire Equipment Trust Special Revenue Fund .............. ............................... ............................120 Public Art Trust Special Revenue Fund ....................... ............................... ............................ 121 ' Regional Arterial Mitigation Special Revenue Fund .. ............................... ............................122 FireProtection Impact Fees ............................................ ............................... ............................123 BEGINProgram ............................................................... ............................... ............................124 MaryPatricia Ross ....................................................................................... ............................... 125 1 LibraryPermanent .......................................................... ............................... ............................126 ii 1 ' Page City of Poway ' Basic Financial Statements Changes in Net Assets for Primary Government - Current and Prior Four Years ......... ............................145 For the year ended June 30, 2010 ' Table of Contents, Continued ' Page ' FINANCIAL SECTION, Continued Changes in Net Assets for Primary Government - Current and Prior Four Years ......... ............................145 Non -Major Governmental Funds, Continued: Fund Balances, Governmental Funds - Last Ten Fiscal Years ............ ............................... ............................146 ' City Debt Service Fund ................................................... ............................... ............................127 Assessed Value of Taxable Property General Property Tax - Last Ten Fiscal Years ...... ............................150 Park Improvement Capital Project Fund ..................... ............................... ............................128 Direct and Overlapping Property Tax Rates General Property Tax - Last Ten Fiscal Years ....................152 Municipal Improvement Capital Project Fund ........... ............................... ............................129 ' Assessed Value of Taxable Property Redevelopment Tax Increment Internal Service Funds: Redevelopment Property Tax Levies and Collections - Last Ten Fiscal Years ............... ............................156 Combining Statement of Net Assets .......................................... ............................... ............................132 General Property Tax Levies and Collections - Last Ten Fiscal Years ............................. ............................157 ' Combining Statement of Revenues, Expenses and Changes in Net Assets ........ ............................133 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years .............................. ............................160 Combining Statement of Cash Flows ........................................ ............................... ............................134 Direct and Overlapping Debt as of June 30, 2009 ................................. ............................... ............................161 I Agency Funds: Statement of Fiduciary Net Assets ............................................. ............................... ............................136 Combining Statement of Changes in Assets and Liabilities ... ............................... ............................137 tIndependent Auditors' Report on Internal Control Over Financial Reporting and on Compliance (Including the Provisions Contained in the Guidelines ' for Compliance Audits) and Other Matters based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ....... ............................139 .J C STATISTICAL SECTION Net Assets by Component - Current and Prior Four Years ................ ............................... ............................142 Changes in Net Assets for Governmental Activities - Current and Prior Four Years ... ............................143 Changes in Net Assets for Business -Type Activities - Current and Prior Four Years ... ............................144 Changes in Net Assets for Primary Government - Current and Prior Four Years ......... ............................145 Fund Balances, Governmental Funds - Last Ten Fiscal Years ............ ............................... ............................146 Changes in Fund Balances, Governmental Funds - Last Ten Fiscal Years ...................... ............................148 Assessed Value of Taxable Property General Property Tax - Last Ten Fiscal Years ...... ............................150 Direct and Overlapping Property Tax Rates General Property Tax - Last Ten Fiscal Years ....................152 Principal Secured Property Tax Payers General Property Tax - Current Year and Nine Years Ago ................................................. ............................... ............................153 Assessed Value of Taxable Property Redevelopment Tax Increment Property Tax - Last Ten Fiscal Years ............................................... ............................... ............................154 Redevelopment Property Tax Levies and Collections - Last Ten Fiscal Years ............... ............................156 General Property Tax Levies and Collections - Last Ten Fiscal Years ............................. ............................157 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years .............. ............................... ............................158 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years .............................. ............................160 Direct and Overlapping Debt as of June 30, 2009 ................................. ............................... ............................161 Legal Debt Margin Information - Last Ten Fiscal Years ...................... ............................... ............................162 lll City of Poway ' Basic Financial Statements For the year ended June 30, 2010 Table of Contents, Continued t Pa.e STATISTICAL SECTION, Continued Pledged Revenue Coverage - Last Ten Fiscal Years ............................ ............................... ............................ 164 Demographic and Economic Statistics - Last Ten Calendar Years .... ............................... ............................165 ' Principal Employers - Current and Prior Three Years ........................ ............................... ............................166 Full- Time - Equivalent City Employees by Function - Last Six Fiscal Years ..................... ............................167 Operating Indicators - Current and Prior Three Years ........................ ............................... ............................168 ' Capital Assets Statistics - Current and Prior Three Years ................... ............................... ............................169 n 11 iv 11 I u u 117 I DON HIGGINSON, Mayor JIM CUNNINGHAM, Deputy Mayor MERRILEE BOYACK, Councilmember DAVE GROSCH, Councilmember JOHN MULLIN, Councilmember December 22, 2010 CITY OF POWAY Honorable Mayor and Members of the City Council Poway, California This Comprehensive Annual Financial Report (CAFR) is prepared in order to provide you and the community with a report of the financial transactions of the City of Poway, for the year ended June 30, 2010. Responsibility for the accuracy, completeness, and fairness of the report rests with the City. We believe that the data, as presented, is accurate in all material aspects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the City, as measured by the financial activity of its various fund types; and that all disclosures necessary to enable the reader to gain the maximum understanding of the City's financial affairs have been included. The significant accounting policies of the City are described in the Notes to Financial Statements. These accounting policies have been approved by the City's independent certified public accountants, and are in conformance with the recommendations of the American Institute of Certified Public Accountants and the Governmental Accounting Standards Board (GASB). This report is prepared following the guidelines set forth by the Government Finance Officers Association of the United States and Canada and the California Society of Municipal Finance Officers. In accordance with the above - mentioned guidelines, the report is divided into three sections: Introductory Section - including this letter of transmittal, the City's organizational chart, and the list of principal officers. 2. Financial Section - including the independent report from the City's certified public accountants, management's discussion and analysis, basic financial statements, notes to financial statements, and required supplementary information. 3. Statistical Section - including other pertinent unaudited financial tables and information that presents historical trends, demographics, and miscellaneous data about the City. Management's Discussion and Analysis (MD &A) immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD &A complements this letter of transmittal and should be read in conjunction with it. City Hall Located at 13325 Civic Center Drive Mailing Address: P.O. Box 789, Poway, California 92074 -0789 www.poway.org Annual Financial Report December 22, 2010 Page vi The Reporting Entity and Its Services Included within the City's financial statements is the financial information of the Poway Redevelopment Agency and the Poway Public Financing Authority. Although the entities are legally separate from the City, their financial operations are closely related. Their activities are included with the activities of the City, because the City Council serves as the Board of Directors and is able to impose its will on both entities. There is, therefore, a financial benefit/burden relationship. This financial presentation is in accordance with GASB Codification, Section 2100. The City of Poway was incorporated December 1, 1980, under the general laws of the State of California. The City operates under a Council- Manager form of government and provides the following services: public safety (law enforcement, fire suppression /paramedics), community services, development services, public works, general administrative services, and capital improvements. The Poway Redevelopment Agency was established April 26, 1983, pursuant to the State of California Health and Safety Codes, Section 33000, entitled "Community Redevelopment Law." Its purpose is to eliminate blighted areas by encouraging the development of residential, commercial, industrial, recreational, and public facilities. The Poway Public Financing Authority is a joint powers authority organized pursuant to the State of California Government Code, Section 6500. The authority exists under a Joint Exercise of Power Agreement dated October 8, 1991, between the City of Poway and the Poway Redevelopment Agency. Its purpose is to assist in financing and refinancing projects for the benefit of the City and the Agency. History Poway, from Indian words meaning "where the waters meet," first gained prominence in the 1800s as an important link in Southern California's stagecoach network. Today the City is a thriving, civic - spirited community, located in the coastal foothills of San Diego County, just twenty miles north of downtown San Diego and three miles east of Interstate 15. The City of Poway flourishes with a family- oriented population of 52,056 and covers 39 square miles with elevations ranging from 450 to 2,250 feet above sea level. Poway is a full - service general -law city governed by a council of five members -at -large serving staggered four -year terms. In 1990, the City had its first mayor directly elected by the voters. The City absorbed existing special districts as of February 1, 1981. The City provides water, sewage collection, fire, paramedic, parks and recreation, planning and building, street maintenance, and redevelopment services. Law enforcement services are contracted through the San Diego County Sheriffs Department, and wastewater treatment is provided by the City of San Diego. Poway is predominately a single- family community that has the lowest crime rate in the County. The Poway Unified School District is a top performer in the State and nation, and is a source of great pride for the City. As part of San Diego County, Poway has a relatively dry climate with frost -free temperatures over 300 days per year, and rainfall of about 10 inches, which falls principally between October and April. The average daytime temperature in Poway is about 74° F. Poway has been popularly dubbed the "City in the Country." Poway has set aside over 65 percent of total land use as open space, nearly 3,000 acres of dedicated public open space, 568 acres of developed parkland featuring community parks and centers, and 82 miles of riding and hiking trails. Vi 0 0 0 n u Annual Financial Report ' December 22, 2010 Page vii ' Poway has the third highest median household income in San Diego County, at $105,420 for 2010. Home lots are often larger than in most other areas, with a median sales price of $486,250 in June 2010. Like many areas of the country, especially in Southern California, the June 2010 median sales ' price represents a 30.2% increase from the June 2009 median sales price of $373,500 but is comparable to the June 2008 median sales price of $455,000. While Poway has not been immune to the national downturn in housing prices, Poway's property tax base has not been materially affected as ' of this date. Economic Condition and Outlook ' The global recession has had a profound effect on the City's financial outlook. Although the national economy is showing signs of recovery, unemployment rates remain high and sales tax revenues in Poway remain relatively flat. We continue to be concerned with the State's ability to balance its budget ' and its overall financial condition. The State raid of $13.7 million of Poway redevelopment funds in FY 2009 -10, and another take of $2.8 million in FY 2010 -11, has effectively stalled our redevelopment plans for several years. ' In light of these challenges, we have taken necessary steps over the last few years to strengthen the General Fund to adapt to what we believed would be a slow economic recovery. The City has made strategic cuts to the General Fund totaling $3.7 million over the last two years. Additional budgetary ' savings were achieved when employees began paying 3% of salary toward their pension costs in FY 2009 -10, saving the City $520,000 across all funds. Furthermore, Council authorized the use of the $1.4 million Pension Stabilization Fund in February 2010, along with another $230,000 from ' undesignated General Fund Reserves, to pay down the Safety Services unfunded pension liability. This will net about $330,000 in savings to the General Fund operating budget for each of the next five years. ' Through strategic financial management, the City has also been able to preserve essential community services and public infrastructure. The City plans to assess and evaluate its budget quarterly and will make additional adjustments as necessary to ensure a sustainable budget. ' Economic Development: Poway's local economy is based primarily on general consumer goods, automobile and transportation related sales, and business and industry. In recent years, new retail development in the Poway Business Park has generated growth in our sales tax base. While ' automobile sales have traditionally led the way, with the development of the Business Park, other sectors such as business and industry and general consumer goods have helped to diversify the City's sales tax base. While diversification has helped, the slowdown in the larger economy, including ' automobile sales, is still reflected in the City's sales tax revenue. Declines in local sales tax revenues are generally thought to have "bottomed out" and expectations are for moderate gains in local allocations over the next few years. ' The Business Park now represents approximately 8.9 million square feet of developed space, with an average overall vacancy rate of 5.7 %, which is among the lowest in San Diego County through the second quarter of 2010. The Park is comprised of approximately 532 businesses, with a workforce of ' more than 18,000 people. Next year, we expect the Business Park will see little new development activity as developers, lenders, and business owners seek to weather the recession while looking for continued signs of economic recovery. ' Though the recession has impacted many businesses, the Poway Business Park is well positioned to be a strong growth center for San Diego County in the years ahead. We have seen early signs of this trend with a prominent defense contractor continuing to expand its operations in the Park. Also, Vii Annual Financial Report December 22, 2010 Page viii In -N -Out Burger is currently under construction in the Business Park and is expected to be complete in 2011. Additionally, Sysco Foods, currently located in the Park, plans to expand their business operations by 100,000 square feet in the year ahead. Partnering with the Chamber of Commerce, the City has reinvested in the "Poway: Your First Choice" campaign to promote the importance of shopping locally. As part of the campaign, the City co- sponsored movie ads that promote shopping in Poway as well as the Poway Road of Cars. In addition, community discount cards are available through the Chamber that enable patrons to secure discounts from participating businesses, which has proven to be another successful outreach method. Major Accomplishments Public Safety: The City of Poway remains one of the safest cities in San Diego County. Public safety is managed by the Department of Safety Services through two entities: contract law enforcement with the County of San Diego Sheriff's Department and the City's Fire Department. Poway Sheriff deputies continued their aggressive zero - tolerance policy enforcement toward gang - related crimes. Deputies conducted detailed documentation of known gang members and partnered with the District Attorney's Office to ensure gang - related crimes are prosecuted by the District Attorney's Gang Unit. During the last year, traffic - related deaths, injury, and property damage collisions were reduced through increased traffic enforcement operations. Deputies analyzed crash data and altered work schedules by placing more deputies on duty to conduct enforcement operations during the times when collisions were most likely to occur. Poway Sheriff deputies continued their partnership with the Poway Unified School District by providing School Resource Officers and increased student interaction. Several community outreach education presentations on the abuse of OxyContin and other related drugs were conducted. Deputies offered monthly Smart Start driver safety education presentations targeting new and future - licensed teenage drivers and their parents /guardians. In 2009, the Poway Fire Department responded to 3,764 emergency responses with approximately 70% of the incidents as Emergency Medical Services (EMS) related. New fire station - alerting communication systems were installed in each of its three fire stations resulting in improved incident notification and firefighter reaction to calls for response. The Department introduced new automated handheld devices for initiating and processing patient treatment information and ambulance billing. This new equipment is carried on all first responder units including engines, ambulances, and a ladder truck. A new fire engine designed for response to vegetation fires was purchased and placed into service at Fire Station #1. The new truck replaces an aging vehicle and is equipped with the latest technology to support firefighters who combat vegetation fires. The Department completed the replacement and upgrade of 33% of the Mobile Data Computers (MDC) in use on fire apparatus. These new MDCs operate at a faster speed and improve emergency incident management, response mapping, and resource allocation. The Department replaced two aging EKG heart monitors used by paramedics with the latest in advanced life- saving equipment. Disaster Preparedness: The City of Poway continues to improve its Emergency Planning and Disaster Preparedness activities. These improvements build upon the effectiveness of the Emergency Operations Plan by maintaining up -to -date information available in the City's Emergency Operations Center (EOC). New computers, display boards, video - conferencing technology, and aircraft down- viii 7 U u u 0 C C Annual Financial Report December 22, 2010 Page ix linking capabilities were installed in the EOC. The City remains committed to training employees, minimizing our risk to the effects of disasters, and providing educational opportunities to community members. Staff received refresher training on the use of WebEOC, AlertSanDiego emergency notification system, Disaster Service Worker, and care and shelter operations. The City also completed the implementation of a Care and Shelter program with three local faith -based organizations. This $80,000 Red Cross grant program includes the prepositioning of supplies and training congregation members to be Care and Shelter workers. When combined with the City's Community Park Care and Shelter facility, over 2,400 evacuees may be able to seek temporary care and shelter within Poway. Poway's Community Emergency Response Team (CERT) consists of 63 members divided into three separate groups. During the last year, Poway CERT participated in eight training sessions, three community education events, and two County -wide drills. To protect the lives of firefighters, and to provide for greater structure protection, the City continued administering the Wildfire Defensible Space Program (WDSP). This program requires 100 feet of defensible space be cleared around habitable structures within the Wildfire Urban Interface Area. Staff continues to work with residents to ensure that the amount of flammable vegetation is significantly reduced on properties. Community Services: The Department continues to develop new partnership opportunities with local non - profit organizations to provide services within the community. For example, a local church assumed responsibility for the Spring Egg Hunt, and the Community Band Festival was spearheaded by the Pomerado Community Band. The Community Services Department plays a key role in the City's disaster preparedness efforts, and is working in conjunction with Safety Services and the American Red Cross to develop and implement an expanded Emergency Shelter Program, enlisting the services of several local churches, and training their members to operate emergency shelters as- needed. The City hosted 19 community -wide events, such as Christmas in the Park and the Summer Concert Series; 21 smaller- scaled events that showcased the City's unique facilities and park settings; and weekly family- oriented freestyle skate events for those 14 and under at the Poway Skate Park. Access to programs and facilities were improved through enhanced web content, online ticketing capabilities, and automated Skate Park access, which also increased safety. Further operational analysis is underway to identify additional areas for greater cost savings and possible opportunities for revenue generation. Redevelopment: Efforts began in 2009 to identify a qualified buyer for the City -owned Poway Royal Estates Mobilehome Park. In 2010, the City sold the Park to Hometown America for $38.3 million. As a requirement of the sale, Hometown will complete an extensive list of Park repairs and renovations and honor lease terms for existing residents for as long as they reside in the Park. The close of escrow occurred in July of FY 2010 -11. In an effort to revitalize the auto district located at the east end of Poway Road, the Redevelopment Agency purchased the vacant Chrysler dealership on Poway Road in 2010. In turn, the Agency facilitated a ground lease to Poway Toyota, which will enable Toyota to terminate its lease and expand operations on the Agency -owned property and the two adjacent parcels purchased by Toyota. Toyota will invest an estimated $10.1 million to purchase the land and expand business operations in Poway. Lowe's Home Improvement Store has purchased the current Poway Toyota and previously vacated Poway Chevrolet sites. Lowe's has submitted plans proposing to build a new 150,000 square -foot Lowe's home improvement store on the 11 -acre site. Once complete, the total private investment associated with this project will total well over $30 million. These changes will improve the long -term viability of the business community at the eastern end of Poway Road. ix Annual Financial Report December 22, 2010 Page x Redevelopment Services continues to solicit restaurant operators to develop a full - service restaurant on the 1.23 -acre Agency -owned site adjacent to the Hampton Inn & Suites hotel in the Poway Business Park. The goal is to create synergy between the hotel and the restaurant that will serve guests, and create a regional dining destination. Development Services: On June 1, 2010, the City Council approved an update to the Transportation Element of the General Plan. This Element had not had a major update since 1991, and staff had been working on this update for approximately 3 years. The updated Element has downsized several road sections, changed the roadway level of service threshold, and modified the City -wide bicycle element. The Wildfire Defensible Space Program (WDSP) has been very successful since its implementation in 2009. Originally, a total of 921 properties were identified as needing brush clearance. To date, all but six of the properties are in compliance with the requirements of the program. Staff continues to monitor the non - compliant properties and four out of the six properties are expected to be in compliance by the end of November 2010. Currently, there are several strategies being developed and implemented that would enhance the ongoing administration, monitoring, and reporting of the WDSP. Two of the key strategies currently underway are: (1) development of a special permitting module and entering of all the data in the electronic tracking system; and (2) prioritization of the properties that would require annual inspections (such as those in the high fire hazard areas) and other properties that may be inspected on a biennial basis. Technology Upgrades: The City's website was redesigned in November 2009 to improve navigation and give more prominence to online applications. The enhancements included improved search functionality on the home page, style templates to enhance the design, and additional tools that facilitate updates and maintain consistency across the web pages. The Poway Center for the Performing Arts' website was upgraded in January 2010 and migrated to the same content management system as the main Poway website. This has made it efficient for staff to maintain the information and reduce hosting costs. In December 2009, Development Services implemented an application tracking system that allows staff to track the status, progress, and history of all projects, permits, and code compliance cases in one easily accessible place. This application provides greater efficiency since information is now easily located in one database available to staff in several departments, and the data is accessible through standard and custom reports. Paper documents are now scanned and attached to the electronic record for enhanced recordkeeping. Future enhancements will include online access to permit and project information so customers can check the status of their projects and staff can access and input data using mobile units in the field. The Information Technology staff has also successfully upgraded the City's server infrastructure and moved to virtual servers this year. In January 2010, the City successfully virtualized 24 production servers at City Hall and implemented a centralized Storage Area Network (SAN) appliance which reduced the electricity consumption and the amount of physical hardware in the data center. Enhancements planned for the next fiscal year include upgrades to the server hardware at the Public Works facility. Another technology focus has been the continued development of the City's Geographic Information System (GIS). The most important GIS enhancement this fiscal year was the completion of the Water and Wastewater Data Conversion project. The City now has detailed, easily accessible utility information that allows for analysis of existing infrastructure and provides staff with the information needed for maintenance and emergency repairs. Additional GIS layers currently being worked on include: street signs, street lights, street signals, and storm drain facilities. x C J k C C r 7 H I I Annual Financial Report December 22, 2010 Page xi Energy Efficient Initiatives: A comprehensive energy audit of 45 City -owned and operated facilities was recently completed. The audit reports identify and prioritize energy efficiency improvement projects, including the replacement of HVAC equipment, interior and exterior lighting fixtures, and the installation of energy monitoring equipment to measure and verify energy savings. Additionally, the audit identified sites best suited for the installation of renewable energy technologies to expand on -site renewable energy generation capacity and reduce the City's energy consumption. Post - assessment activities include indentifying and applying for available energy efficiency incentives, rebates, and finance opportunities to implement energy and renewable energy improvements. The environmental programs division is also working on several project activities utilizing the Energy Efficiency and Conservation Block Grant (EECBG) funds received through the American Recovery and Reinvestment Act (ARRA). Major On -Going Initiatives Housing: Despite the tight lending market, 23 of The Meadows homes have sold or are in escrow, and expected to close in the coming months. This affordable for -sale housing development, which includes 33 homes, is located on Metate Lane and York Avenue. Homes at The Meadows are available to low - and moderate - income households and include a variety of "green" energy efficient elements including photovoltaic systems, dual pane windows, low -flow toilets, tankless water heaters, energy efficient appliances, and drought - tolerant landscaping. The 71 -unit affordable apartment complex known as Brighton Place, located on Brighton Avenue near Midland Road, was awarded a 9% tax credit allocation from the State of California. The tax credits will attract the needed equity investment to support construction commencement in FY 2011. The project will feature a Craftsman style two -story design with ample open space and on -site resident services. Construction is scheduled to begin in late 2010, and will complement the overall Old Poway Park area revitalization effort. Extensive improvements to Midland Road and construction of the Train Depot at Old Poway Park were completed in FY 2010. Design of Monte Vista, a 62 -unit affordable multi - family development located on Monte Vista Road near Pomerado Hospital is also underway. The site, situated on 2.5 acres, will have underground parking with almost 50% of the site dedicated to open space for use by residents. The project will include townhomes designed in a contemporary architectural style that will enhance the surrounding uses. Monte Vista will offer onsite resident services and will include numerous "green" energy features. The Redevelopment Agency, in partnership with local non - profit housing developer Community HousingWorks, rehabilitated the 52 -unit Oak Knoll Villas apartment complex on Oak Knoll Road. With the help of a loan from the Redevelopment Agency, rents for this development were permanently converted to affordable rents for low- income households. The renovated apartment complex ' complements the City's Oak Knoll area revitalization efforts already underway. The revitalization work includes sewer and road improvements along with the undergrounding of utilities along Oak Knoll Road. Working with Poway Family Housing Partners, L.P., the Redevelopment Agency acquired a 52 -unit apartment complex adjacent to Oak Knoll Villas on Oak Knoll Road during FY 2010. Renovations to this development are expected to be underway during FY 2011, and will include interior and exterior improvements along with improvements to the private driveway adjacent to the apartment complex geared toward improving safety for pedestrians and vehicles. Once complete, units will be available to low- income households. Xi Annual Financial Report December 22, 2010 Page xii Water: Following several years of historically dry conditions and reduced availability of water deliveries from Northern California for environmental reasons, for the first time in nearly two decades, the Metropolitan Water District (MWD) announced forthcoming mandatory water reductions in Spring 2009. As a result, the City of Poway's water supply was reduced by 8% effective July 1, 2009. This reduction was based on a three -year average of City -wide water use for fiscal years 2004 -05, 2005 -06, and 2006- 07. Exceeding this mandatory water reduction would result in steep financial penalties attached to the City's cost to purchase water. To achieve the necessary water use savings, the City of Poway implemented mandatory water use restrictions focused primarily on landscape irrigation, significantly expanded public education, and launched new programs to help customers with their efforts to reduce water use. The focus was creating "long -term, sustainable change in the way water users think about and use our limited water supply." These programs were created and coordinated by a small group of employees temporarily reassigned for one year from multiple City departments in April 2009. During FY 2010, wholesale water costs continued to rise dramatically. A 40% increase in the cost of raw water required the City to adjust rates to cover its costs. Simultaneously, the City Council approved a block rate structure to encourage conservation by water customers. These efforts, combined with above average rainfall and cooler temperatures, yielded tremendous water conservation success. Overall water use in Poway during Fiscal Year 2009 -10 decreased by more than 30% compared to two years ago in FY 2007 -08. Residents and businesses are to be commended for their efforts to use water as efficiently as possible. Poway's future water supply remains uncertain. While weather conditions have improved, a La Nina is predicted for 2010 -2011, which means warm, dry weather. Restrictions on water deliveries from Northern California remain, indefinitely. New California legislation approved during FY 2009 -10 calls for 20% conservation by 2020. The cost of raw water is expected to continue to increase. In the water industry, water conservation is commonly discussed as the cheapest source of new water. These factors combined means that a focus on water - efficiency must be part of the City's long -term outlook. Capital Improvement Projects (CIP): There are 18 CIP projects that are either under construction or are substantially complete. Some of the major projects are street improvements on Oak Knoll Road, Poway Midland Railroad Train Depot, High Valley Pump Station, St. Andrews Sewer Pump Station, Veterans Park, and the FY 2009 -10 Street Overlay. There is currently one project, the High Valley Waterline Replacement project, which is in the pre - construction phase. This project has a construction cost estimate of $980,000. There are 19 CIP projects totaling approximately $6.1 million that are in various stages of design. It is expected that construction on most of these will begin within the next two years. Some of the major projects currently being designed are Valle Verde Traffic Calming and Solera Way Sidewalk, the Arbolitos Sports Field Renovation and Lights, the Clearwell Redundant Pipeline, and the Sewer Master Plan Update. Technology: Projects that started this fiscal year and will continue into next year include the Employee Self Service Application and the deployment of Microsoft Sharepoint. The Employee Self Service application will allow staff to electronically enter hours for payroll reporting and then receive pay and benefit information electronically. It allows employees to review and update personal information such as home address and emergency contact information. These enhancements will reduce the time spent preparing, delivering, and processing timecards and pay stubs. The Sharepoint project will be xii I1 7 Ir] 1 7 7 r 0 I _� Annual Financial Report December 22, 2010 Page xiii implemented in November 2010, as a replacement to the City's current intranet site. Sharepoint provides exceptional content management capabilities and will also be a collaborative tool that is fully integrated with the Microsoft Office Suite. Accounting System and Budgetary Control The City's accounting records for governmental fund types and the Agency funds are maintained on the modified accrual basis of accounting. The modifications to the accrual basis of accounting are described in the Notes to Financial Statements. The accounting records for proprietary funds (water and sewer) and the internal service funds are maintained on the full accrual basis of accounting. Accordingly, revenues are recognized in the accounting period earned, and expenses are recognized in the period incurred. In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding (1) the safeguarding of assets against loss from unauthorized use or disposition, and (2) the reliability of financial records for preparing financial statements and maintaining accountability of assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived. The evaluation of this cost/benefit relationship requires estimates and judgments by management. All internal control evaluations occur within the above framework. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Financial transactions are continuously updated in the City's computerized financial reporting system, and all managers have instant access to the current budget information for which they are responsible. These financial reports compare the budgeted figures to the recorded transactions and compute the resulting variance. These reports form the basis of the budgetary control system that allows for the timely review and continuous assessment of the financial position and results of operations. Additionally, an encumbrance system is employed as an extension of the formal budget integration. The estimated purchase order amounts are encumbered prior to releasing the order to a vendor. Purchase orders which would result in an overrun of balances at the functional level, are normally not released until budget transfers are approved by the City Manager or additional appropriations are authorized by the City Council. Open encumbrances are reported as annual reservations of fund balances at year -end. The level of budgetary control (the level on which expenditures may not legally exceed appropriations) is the individual fund level. Financial reports that are available for management and legislative review include quarterly reports of investments, Capital Improvement Projects, as well as first and third quarter budget status reports. At the end of six months, a midyear report is distributed, which assesses the City's financial position and results of operations and projects activity for the remainder of the fiscal year. The interim report forms ' the basis for the budget projections for the upcoming fiscal year's budget. A budget review committee, consisting of five Council- designated citizens, reviews the City's financial operations and budget controls twice each year. After the Fiscal Year 2007 -08 and 2008 -09 two -year budget, the City ' resumed adopting a one -year budget for Fiscal Year 2009 -10. This decision was made because volatility of the economy makes it difficult to predict revenues and expenses further out with confidence. ' The City's investment policy is reviewed annually for changes in State regulations and is approved by the City Council. Since Fiscal Year 1996 -97, the City has utilized a professional investment xiii Annual Financial Report December 22, 2010 Page xiv management company to assist in the investment of its funds. The investment management company actively monitors the portfolio and advises the City of various investment strategies that assist the City in meeting its stated investment goals of (1) safety of principal, (2) liquidity, and (3) return on investment. Risk Management The City of Poway is a member of the California Joint Powers Insurance Authority (Authority), a consortium of approximately 122 public entities. The Authority's governing board consists of one member from each participating entity and is responsible for the selection of management as well as budgeting and finance. Insurance activities are financed by charges to members, and no long -term debt has been incurred. The Authority changed its deposit funding model over the next three to five years to build up to a 75% funding level. As part of this transition, the Authority has evaluated every member's claims experience to assign a pro -rata portion of the Authority's unfunded liability. Poway's share of the funding requirement is estimated to be a little more than $1 million between the General Liability and the Worker's Compensation pools. At June 30, 2010, for general liability, the City is self- insured for each loss to the extent of $30,000. Losses between $30,001 and $10,000,000 are shared by the participating entities. Costs of covered claims between $10,000,001 and $50,000,000 are paid by excess insurance. As for workers' compensation, the City is responsible for the first $50,000 of each claim. Costs between $50,001 and $2,000,000 are shared by the participating entities. Costs between $2,000,001 and $200,000,000 are paid by excess insurance purchased by the Authority. The Authority does maintain reserves, which are regularly reviewed by an independent third party. Because of the low deductible amounts of the self - insurance program, the City does not maintain reserves or a sinking fund for its unpaid claims and judgments. They are expended as they occur, and the City intends to pay all of its unpaid claims and judgments from available resources. Independent Audit The Government Code of the State of California requires general law cities such as Poway to be audited annually by independent certified public accountants selected by the City Council. This requirement has been met and the auditors' independent report is included in this report. Also, please refer to the Management Discussion and Analysis section for an in -depth review of this year's Financial Statements. GFOA Certificate of Achievement for Excellence in Financial Reporting The Government Finance Officers Association of the United States and Canada (GFOA) has awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Poway, California, for its comprehensive annual financial report for the fiscal year ended June 30, 2009. In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, a government must publish an easily readable, efficiently organized Comprehensive Annual Financial Report whose contents conform to program standards. Such reports 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 report conforms to the program requirements, and we are submitting it to the GFOA to determine its eligibility for the certificate. xiv G i H Annual Financial Report December 22, 2010 Page xv Acknowledgments Preparation of the City's Comprehensive Annual Financial Report is an undertaking of the Administrative Services Department. Special credit is due to Andrew White, Finance Manager; Maria Weston, Senior Accountant; and the entire Finance Division staff. Their yearlong hard work and dedication have made this report possible. We also thank the City Council for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. Respectfully submitted - Penny Riley City Manager xv rench it of Administr ive Services City Council Mayor Don Higginson Deputy Mayor Carl Kruse Council: Merrilee Boyack Jim Cunningham John Mullin Appointed Officials City Manager Penny Riley Assistant City Manager Tina White City Attorney Lisa Foster City Clerk Linda Troyan Administrative Personnel Director of Administrative Services/Treasurer Steve Didier Director of Development Services Robert Marais Director of Public Works Leah Browder Director of Redevelopment Services & Community Services Dena Fuentes Director of Safety Services Mark Sanchez xvi CITY OF POWAY ORGANIZATION CHART citizens City Council Planning Commission Redevelopment Agency City Manager/ Executive Director Administrative I I Community I I Development Services Services Services 1. Human Resources 1. Leisure Services 1. Planning 2. Customer Services 2. Lake Operations 2. Building 3. Finance 3. Aquatics Center Inspection 4. Information 4. Performing Arts 3. Capital Projects Technology Center 4. Land 5. Support Services 5. Old Poway Park Development 6, Risk Management 6. Library 5. Engineering 7. Capital Management 7. Interpretive Center Inspection 8. Drainage Maintenance 6. Traffic 9. Facilities Maintenance Engineering City Clerk I I City Attorney Public I I Redevelopment Works Services 1. Fleet Maintenance 1. Redevelopment 2. Water Supply Services 3. Sewer Pumping & 2. Redevelopment Disposal 3. Economic 4. Water Distribution Development 5. Wastewater Collection 4. Housing Program 6. Maintenance Control 7. Street Maintenance 8. Drainage Maintenance 9. Facilities Maintenance 10. Trails & Open Space 11. Park & Landscape Maint. 12. Storm Water Mgmt 13. Reclaimed Water 14. Special District Admin. Council Committees Safety Services 1. Fire Suppression 2. Fire Prevention 3. Paramedics 4. Law Enforcement Certificate of Achievement for Excellence in Financial Reporting Presented to City of Poway Califomia For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2009 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. Xviii 11 I E I J I I I I I I I I I [I I I I I I C81 Caporicci & Larson, Inc. A Subsidiary ofMarcum LLP Certified Public Accountants INDEPENDENT AUDITORS' REPORT To the Honorable Mayor and Members of the City Council of the City of Poway Poway, California 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 Poway, California (City), as of and for the year ended June 30, 2010, which collectively comprise the City's 1 basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. ' We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we ' plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not 1 for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the basic 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, 2010, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. ' In accordance with Government Auditing Standards, we have also issued our report dated December 22, 2010 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. taw-W.c- 1cpa.com To the Honorable Mayor and Members of the City Council ' of the City of Poway Poway, California Page 2 The accompanying Management's Discussion and Analysis, budgetary information, budgetary comparison schedules and Schedule of Funding Progress of Defined Benefit Pension Plans as listed in ' the table of contents, are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the Required Supplementary Information. However, we did not audit the information and express no opinion on the Required Supplementary 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 accompanying Supplementary Information is presented for purpose of additional analysis and is not a required part of the basic financial statements. The Supplementary Information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken 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 express no opinion on them. & , , � t..a -, lw� Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants San Diego, California December 22, 2010 it 0 k MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Poway (City), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2010. It should be read in conjunction with the accompanying transmittal letter beginning on page i and the accompanying basic financial statements. All amounts, unless otherwise indicated, are expressed in thousands of dollars. FINANCIAL HIGHLIGHTS • The City's net assets decreased by 1 % to $136,615 as a result of this year's operations. • During the year, the City's expenses exceeded taxes, other governmental revenues and business activity revenues by $1,391. • The total revenues from all sources were $124,984. • The total cost of all City programs was $126,375. • Governmental net assets were $57,506. • The General Fund reported excess expenditures over revenues and other financing uses of $1,342. • Actual revenues received in the General Fund were more than the final budget by $1,531 while actual expenditures were $3,741 less than final budget before other financing sources and uses. • At the end of the fiscal year, unreserved fund balance for the General Fund was $31,725 or 87% of total General Fund expenditures (excluding other financing uses). USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The three components of the financial statements are: (1) Government -wide financial statements, which include the Statement of Net Assets and the Statement of Activities. These statements provide information about the activities of the City as a whole. (2) Fund financial statements describe how City services are financed in the short term as well as what resources are available for future spending. Fund financial statements also report the City's operations in more detail than the government -wide statements by providing information about the City's most significant funds. (3) Notes to the financial statements. Reporting the City as a Whole The Statement of Net Assets and the Statement of Activities (Government -wide) A frequently asked question regarding the City's financial health is whether the years activities contributed positively to the overall financial well -being. The Statement of Net Assets and the Statement of Activities report information about the City as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private - sector companies. All of the current year's revenues and expenses are accounted for regardless of when cash is received or paid. These two statements report the City's net assets and changes thereto. Net assets, the difference between assets and liabilities, are one way to measure the City's financial health, or financial position. Over time, increases or decreases in net assets are an indicator of whether the financial health is improving or deteriorating. However, it is important to consider other nonfinancial factors such as changes in the City's property tax base or condition of the City's roads to accurately assess the overall health of the City. 3 The Statement of Net Assets and the Statement of Activities present information about the following: Governmental activities - All of the City's basic services are considered to be governmental ' • ty g activities, including general government, public safety, public works, and community services. Property taxes, sales taxes, motor vehicle license fees and franchise fees finance most of these , activities. • Proprietary activities /Business -type activities - The City charges a fee to customers to cover all or most of the cost of the services provided. The City's Water and Sewer systems are reported in this , category. • Component unit - The City's governmental activities include the blending of one separate legal entity: the Poway Redevelopment Agency. Although legally separate, this "component unit" is important because the City is financially accountable for it. Reporting the City's Most Significant Funds ' Fund Financial Statements The fund financial statements provide detailed information about the most significant funds - not the City as a whole. Some funds are required to be established by State law and by bond covenants. However, management establishes many other funds that aid in the administration of resources for particular , purposes or to meet legal responsibilities associated with the usage of certain taxes, grants, and other money. The City's two kinds of funds, governmental and proprietary, use different accounting approaches as explained below. ' • Governmental funds - Most of the City's basic services are reported in governmental funds. Governmental funds focus on how resources flow in and out with the balances remaining at year- ' end that are available for spending. These funds are reported using an accounting method called modified accrual, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short -term view of the City's general ' government operations and the basic services it provides. Governmental fund information shows whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. We describe the relationship (or differences) between governmental activities ' (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds through a reconciliation in Note 1 in the Notes to Basic Financial Statements. • Proprietary funds - When the City charges customers for the services it provides, these services are ' generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. The City as Trustee ' Reporting the City's Fiduciary Responsibilities I The City is the trustee, or fiduciary, for certain amounts held on behalf of developers, property owners, and others. These fiduciary activities are reported in separate Statements of Fiduciary Net Assets and Changes in Fiduciary Net Assets. The City is responsible for ensuring that the assets are used for their intended purposes. Therefore, fiduciary activities are excluded from the City's other financial statements because the assets cannot be used to finance operations. I !7 r. THE CM AS A WHOLE Our analysis focuses on the net assets (Table 1) and changes in net assets (Table 2) of the City's governmental and business activities. Governmental Activities Table 1 City of Poway Net Assets (in Thousands) Business Activities Total 2010 2009 2010 2009 2010 2009 Assets: Current and other assets $ 154,240 $ 175,442 $ 37,862 $ 37,257 $ 192,102 $ 212,699 Capital assets 199,065 195,035 44,889 40,696 243,954 235,731 Total assets 353,305 370,477 82,751 77,953 436,056 448,430 Liabilities: Long -term debt outstanding 287,225 294,554 1,662 1,883 288,887 296,437 Other liabilities 8,574 11,520 1,980 2,467 10,554 13,987 Total liabilities 295,799 306,074 3,642 4,350 299,441 310,424 Net assets: Invested in capital assets, net of debt 46,412 36,714 43,226 39,128 89,638 75,842 Restricted 78,370 99,252 280 280 78,650 99,532 Unrestricted (67,275) (71,563) 35,602 34,195 (31,673) (37,368) Total net assets $ 57,506 $ 64,403 $ 79,109 $ 73,603 $ 136,615 $ 138,006 The City's combined net assets for the fiscal year ended June 30, 2010, were $136,615. The City has chosen to account for its water and sewer operations as enterprise funds, which is shown as Business Activities on Table 1. The City's net assets for governmental activities decreased 10.7% from $64,403 to $57,506. The following is an explanation of the governmental activity changes between fiscal years as shown in Table 1: • Current and other assets decreased $21,202, or 12.1 % principally due to a decrease in cash and investments. The decrease was related to a $13.7 million Supplemental Educational Revenue Augmentation Fund ( SERAF) payment required by the state and expenditures on capital projects. • Capital assets increased $4,030 (net of depreciation and disposition) as detailed in Table 4. Additions were made for construction in progress for various City projects including the Oak Knoll Widening project and Machinery and Equipment for the purchase of fire apparatus. • Governmental long -term debt decreased $7,329. The decrease is primarily due to the scheduled principal payments. (See Table 5 for additional detail.) • Other liabilities decreased by a net $2.9 million. The decrease was related to reduced payments by the Redevelopment Agency for tax sharing and owner participation payments because of the $13.7 million SERAF payment that was previously mentioned. 5 Invested in capital assets net of debt increased $9.7 to the amortization of debt and additions not funded by debt. Restricted net assets decreased by $20,882, or 21.0 %, again due to the SERAF payment, expenditures on capital projects and a reclassification of General Fund net assets that had previously been reported as restricted and have now been moved to unrestricted. Unrestricted net assets, the part of net assets that can be used to finance day - to-day operations without constraints established by debt covenants or other legal requirements, increased by $4.3, or 6.0 %, primarily due to current year operations and the above mentioned reclassification of General Fund net assets to unrestricted. Governmental Activities The cost of all Governmental activities this year was $100,626 as shown on Table 2 and 2.1. Of this cost, $10,858 was paid for by those who directly benefited from the programs, $8,862 was subsidized by grants received from other governmental organizations for both capital and operating activities, and $74,009 was financed through general City revenues. Overall governmental program revenues, including intergovernmental aid and fees for services were $19,720. Items of significance within Table 2 are: Revenues: • Charges for services decreased by 8.1% primarily due to decrease in Public Safety fines and penalties and a non - recurring payment from the County related to law enforcement services, Public Works decreased because the prior year included a one time payment of $324 which should have been included in the grants category and a decrease in Community Services, however, there was no large individual item that made up that decrease. • Grants and contributions increased by 11.7% primarily because of increased funding for street maintenance. • The General Revenue category decreased 0.4% primarily due to decreases in sales tax and investment earnings. Expenses: • General Government Expenses increased $683 or 3.0 %. The increase was the net result of reduced administrative expenditures and an increase in spending on projects for which financial assistance was provided, but that were not capitalized. • The Public Safety line increased by 1.3 %. There were no significant changes in this category. • Public Works had a 12.3% increase in expenses. This increase was due to an increase in street maintenance expenditures. • The Development Services department decreased by $802, or 15.4 %. The decrease was caused because of reduced staffing and the reduced use of outside consultants. • Community Services increased by $9,018 or 55.7 %. The increase was the net result of the Supplemental Educational Augmentation Revenue Fund payment and the related reduction in tax shift and tax increment payments. • Interest and fiscal charges decreased by 10.3 %. The previous fiscal year included the payment of approximately $1.5 million of accrued but not recorded interest on several interfund loans. '7 d r Table 2 City of Poway Changes in Net Assets (in Thousands) Governmental Business Activities Activities 2010 2009 2010 2009 Revenues: Program revenues Total 2010 2009 Charges for services $ 10,858 $ 11,809 $ 26,533 $ 25,367 $ 37,391 $ 37,176 Operating grants 471 148 (471) (148) - - and contributions 7,615 5,826 - - 7,615 5,826 Capital grants (6,897) 2,687 5,506 6,152 (1,391) 8,839 and contributions 1,247 2,110 4,226 - 5,473 2,110 General revenues: 57,506 $ 64,403 $ 79,109 $ 73,603 $ 136,615 $ 138,006 Property taxes 51,527 51,191 - - 51,527 51,191 Other taxes 12,472 12,934 - - 12,472 12,934 Other 9,539 10,486 967 7,642 10,506 18,128 Total revenues 93,258 94,356 31,726 33,009 124,984 127,365 Expenses: General government 23,948 23,261 23,948 23,261 Public safety 19,475 19,228 19,475 19,228 Public works 12,596 11,214 12,596 11,214 Development Svcs 4,424 5,226 4,424 5,226 Community Svcs 25,214 16,196 25,214 16,196 Interest and charges 14,969 16,692 14,969 16,692 Water 18,226 18,698 18,226 18,698 Sewer 7,523 8,011 7,523 8,011 Total expenses 100,626 91,817 25,749 26,709 126,375 118,526 Change in net assets before transfers (7,368) 2,539 5,977 6,300 (1,391) 8,839 Transfers 471 148 (471) (148) - - Change in net assets after transfers (6,897) 2,687 5,506 6,152 (1,391) 8,839 Net assets - 7/1 64,403 61,716 73,603 67,451 138,006 129,167 Net assets - 6/30 $ 57,506 $ 64,403 $ 79,109 $ 73,603 $ 136,615 $ 138,006 Fiscal Year 2010 Governmental Activities (Graphic representation of Table 2 in percentages) Capital erating rants 8% Other 1% J Community Services 25% Development Services 4% Interest on Long Term Debt 15% Net Cost of Governmental Activities The City's programs include: General Government, Public Safety, Public Works, and Community Services. Each program's net cost (total cost less revenues generated by the activities) is presented on Table 2.1. The net cost shows the extent to which the City's general taxes support each of the City's programs. Table 2.1 Net Cost of Governmental Activities (in Thousands) Total Cost Program Net Cost of Services Revenues of Services 2010 2009 2010 2009 2010 2009 General government $ 23,948 $ 23,261 $ 1,037 $ 819 $ (22,911) $ (22,442) Public safety 19,475 19,228 2,323 2,792 (17,152) (16,436) Public works 12,596 11,214 9,196 8,943 (3,400) (2,271) Development services 4,424 5,226 1,635 1,716 (2,789) (3,510) Community services 25,214 16,196 5,529 5,475 (19,685) (10,721) Interest and fiscal chgs 14,969 16,692 - - (14,969) (16,692) Totals $ 100,626 $ 91,817 $ 19,720 $ 19,745 $ (80,906) $ (72,072) 8 $30,000 $20,000 $10,000 $0 ($10,000) ($20,000) ($30,000) Total Cost of Services, Program Revenues & Net Cost Governmental Activities (in Thousands) Total resources available during the year to finance governmental operations were $158,132 consisting of Net Assets at July 1, 2009, of $64,403, Program Revenues of $19,720, General Revenues of $73,538 and $471 of Transfers. Total Governmental Activities during the year were $100,626; thus Net Assets decreased by $6,894 to $57,506. As noted elsewhere the material large unusual item that contributed to this decrease was the Redevelopment Agency's $13.7 million Supplemental Educational Revenue Augmentation Fund payment. As discussed previously, sales tax and investment earnings decreases also contributed to the reduction in Net Assets. Business -Type Activities Net assets of the Proprietary Funds (Business -Type activities) at June 30, 2010, as reflected in Table 1 were $79,109. As shown in Table 2, program revenues were $30,759, while the cost of providing all Proprietary (Business -Type) Activities this year was $25,749 resulting in an increase of $5,010. The additional $496 of other revenues and transfers resulted in a Net Assets increase of $5,506 or 7.5 %. Table 2.2 Net Cost of Business Activities (in Thousands) Total Cost Program Net Cost of Services Revenue of Services 2010 2009 2010 2009 2010 2009 Water $ 18,226 $ 18,698 $ 21,918 $ 16,715 $ 3,692 $ (1,983) Sewer 7,523 8,011 8,841 8,652 1,318 641 Totals $ 25,749 $ 26,709 $ 30,759 $ 25,367 $ 5,010 $ (1,342) Total Cost of Services, Program Revenues & Net Cost — Business Activities (in thousands) $25,000 $20,000 $15,000 $10,000 $5,000 $0 Water Sewer 9 Major Funds Budgetary Highlights General Fund: ' The final appropriations for the City's General Fund at year -end were $3,741 more than actual expenditures prior to other financing uses. The largest component of the budget to actual variance was principally in the Capital Outlay category where several projects were budgeted but are not yet complete. All of the ependiture categories were under budget primarily due the City's across the board efforts to control ' expenditures. Part of the General Government category under budget was also due to the continued refinement of the city -wide cost allocation model which resulted in a revised allocation of general government expenses across a broader range of funds. Lower than expected overtime costs in Fire Suppression also contributed to the Public Safety category's under budget variance. Actual revenues compared favorably to the final budget resulting in a $1,531 positive variance (excluding other financing sources). The major variances were in Taxes, Intergovernmental, Use of Money and Property and Other Revenue. The City had budgeted conservatively in the Taxes Category for both Property and Sales Taxes, and both revenue sources outperformed the City's expectations. The Intergovernmental category primarily was higher because of additional disaster reimbursements. Interest rates continued to remain at near historic lows so the Use of Money and Property category did end up under budget. The Other Revenue category exceeded its budget because of an insurance payment for reimbursement of Witch Creek Fire losses. During the fiscal year the City continued to produce quarterly budget updates in addition to its ' traditional midyear budget update in order enhance focus on the City's financial position and the current factors that were affecting that position. Housing Special Revenue Fund: The slight decrease in this fund's fund balance is due to expenditures on various affordable housing projects including rehabilitation work on the Oak Knoll Villas apartment complex that was purchased in fiscal year 2007 -08 and Meadows Affordable Housing project that developed 33 for -sale affordable homes for low and moderate income buyers. City of Poway Redevelopment Agency Debt Service Fund: The largest factor that contributed to the decrease in this fund's fund balance was the Agency's $13.7 ' million share of state's $1.7 billion shift of redevelopment funds to the Supplemental Educational Revenue Augmentation Fund ( SERAF). Because the SERAF payment was considered in the calculation of the Agency's tax sharing and owner participation payments there was a reduction of expenses. The net of this activity resulted in the $6.7 million decrease in fund balance. The Agency is required to shift $2.8 million to the SERAF in fiscal year 2010 -11. Further shifts of this nature will not be allowed because of the November ' 2010 voter approval of Proposition 22 which protects these revenues from future take - aways. Redevelopment Area Capital Project Funds: I The significant decrease in this fund's fund balance is because there was no new significant funding, such as from the issuance of tax allocation bonds, and the proceeds from previous bond funds continued to be I spent on projects. Other Governmental funds: There was no unusual activity in the Other Governmental grouping of funds during the fiscal year. The Storm Water Management Fund's negative fund balance was reduced by approximately 25% and is expected to recoup the remainder of its negative fund balance over the next several years. , 10 1 7 CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The capital assets of the City are those assets that are used in the performance of City functions. Capital Assets include land, buildings, park facility improvements, infrastructure, equipment and vehicles. Construction in Progress from governmental activities increased by $6.0 due to the purchase of new fire apparatus $1.0, park improvements $2.7 and various infrastructure projects $2.3. Improvements from business activities increased by $5.0 due to additions for water and sewer pipeline projects. Depreciation on capital assets is recognized in the Government -Wide financial statements. (See Table 4 & Note III, C to the financial statements) Table 4 City- of Poway Capital Assets at Year -End et of Depreciation) 17a Thousands) s) Governmental Business Activities Activities Taal 2010 200i 2010 2009 Land 72,902 $ 71,520 $ 77 77 72,979 71,597 Buildings 40,654 49,247 5,954 6,420 46,608 47,667 Improvements 5,173 5,410 31,132 26,054 36,305 51,464 lnfrastucture 00,651 63,1`152 - - 60,651 63,6152 Equip & Vehicles 7,342 6,902 986 1,019 0,328 7,929 Construction in Prog 12,344 6,303 6,739 7,126 19,083 13,429 $ 199,1 $ 195,034 $ 44,588 $ 40,&% $ 243,954 $ 235,730 Debt At year -end, the City had $287,226 in governmental -type debt and $1,663 in Proprietary debt. During the year no bonds were refunded so, therefore, the decrease in bond balances were due to scheduled principal payments and premium/ discount amortizations. The Loans Payable balance increased because accrued interest related to the operating covenant with AZ Poway, LLC (dba Mossy Nissan) was greater than the payment made under the covenant. Finally, the Compensated Absences balance decreased as employees used more time off for compensated absences than was accrued, but again there was no unusual activity related to the decrease. See the Notes to the Basic Financial Statements, number 5, Long -term Debt for additional information. r Table 5 CHI of Poway Outstanding Debt at Year -End an Thousands) Governmental Business Activities Activities 2010 2009 2010 2009 $ 234,987 $ 240,801 - - 48,454 50,068 - - - - $ 1,381 $ 1,565 2,401 2;283 - - 1,384 11402 252 315 Total .; 48,454 40. 1,666 2009 240,801 50,068 1,568 2,283 1,717 $ 287,2261 $ 294,554 $ 1,663 $ 1,883 $ 258,889 $ 296,437 11 Tax Allocation Bonds ' Certificates of Participation Revenue Bonds Loans Payable Cornnp Absences Total r Table 5 CHI of Poway Outstanding Debt at Year -End an Thousands) Governmental Business Activities Activities 2010 2009 2010 2009 $ 234,987 $ 240,801 - - 48,454 50,068 - - - - $ 1,381 $ 1,565 2,401 2;283 - - 1,384 11402 252 315 Total .; 48,454 40. 1,666 2009 240,801 50,068 1,568 2,283 1,717 $ 287,2261 $ 294,554 $ 1,663 $ 1,883 $ 258,889 $ 296,437 11 NEXT YEAR'S BUDGET AND ECONOMIC FACTORS In considering the City Budget for fiscal year 2010 -2011, the City Council and management continued to be cautious because of the continued slow housing market, lower sales tax receipts primarily related to automobile sales and a continued concern over the State's long -term budget situation. General Fund revenue is expected to decrease approximately 3.3% from the fiscal year 2009 -2010 revenue budget. This decrease mainly occurred because of budgeted decreases for Sales Taxes, Development Fees and Safety Services Fees. General Fund expenditures are budgeted to decrease 2.9 %. Many of the reductions began during fiscal year 2009 -2010 with additional decreases included in the fiscal year 2010 -11 budget. While there were no individually significant items both the Development Services and Safety Services departments were able to reduce their budgets. The reduction in the Development Services department budget correlates with the departments decreased revenues, and the reduction in the Safety Services department budget was primarily based on fiscal year 2009 -10 savings that were considered when preparing the fiscal year 2010 -11 budget. The City continues to monitor the local, state and national economic situation and while it does not currently anticipate any necessary significant changes to the budget, but it is prepared to address those situations if they arise. CONTACTING THE CITY'S FINANCIAL MANAGEMENT I k C� This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with ' a general overview of the City's finances and to show the City's fiduciary responsibility for the funds it receives. If you have questions about this report or need additional financial information, contact the City's , Finance Department, at the City of Poway, 13325 Civic Center Drive, Poway, California 92064 or online: http://www.ci.poway.org 7 H l 12 1 i n I BASIC FINANCIAL STATEMENTS 13 This page intentionally left blank. 14 l F k GOVERNMENT -WIDE FINANCIAL STATEMENTS 15 City of Poway Statement of Net Assets June 30, 2010 16 Primary Government Governmental Business -Type Activities Activities Total ASSETS Current assets: Cash and investments $ 97,187,789 $ 22,145,665 $ 119,333,454 Cash and investments with fiscal agents 22,974,561 280,450 23,255,011 Receivables: Taxes 3,443,207 - 3,443,207 Accounts 1,086,514 4,805,221 5,891,735 Interest 479,053 - 479,053 Due from other governments and agencies 2,024,131 - 2,024,131 Prepaid items 33,811 - 33,811 Inventories 94,085 1,527,612 1,621,697 Total current assets 127,323,151 28,758,948 156,082,099 Noncurrent assets: Lease receivable 11,250 - 11,250 Notes receivable 34,427,496 - 34,427,496 Internal balances (8,069,477) 8,069,477 - Loans to Business Park Fiduciary Fund - 1,000,000 1,000,000 Deferred charges, net 547,183 34,329 581,512 Capital assets: Nondepreciable assets 85,245,979 6,816,229 92,062,208 Depreciable assets, net 113,819,364 38,072,369 151,891,733 Total capital assets 199,065,343 44,888,598 243,953,941 Total noncurrent assets 225,981,795 53,992,404 279,974,199 Total assets 353,304,946 82,751,352 436,056,298 16 City of Poway Statement of Net Assets, Continued June 30, 2010 LIABILITIES Current liabilities: Accounts payable Accrued liabilities Accrued interest payable Deposits Long -term debt - due within one year Total current liabilities Noncurrent liabilities: Long -term debt - due in more than one year Total noncurrent liabilities Total liabilities NET ASSETS Investments in capital assets, net of related debt Restricted for: Special revenue: Streets Drainage Maintenance districts Poway Royal Grants Miscellaneous Affordable housing Debt service Capital improvement projects Permanent: Expendable Nonexpendable Total restricted Unrestricted Total net assets See accompanying Notes to Basic Financial Statements. 17 Primary Government Governmental Business -Type Activities Activities Total $ 5,948,467 $ 1,914,844 $ 7,863,311 923,450 - 923,450 1,701,853 12,692 1,714,545 - 52,412 52,412 7,704,221 250,881 7,955,102 279,520,973 1,411,705 280,932,678 279,520,973 1,411,705 280,932,678 295,798,964 3,642,534 299,441,498 46,412,443 43,226,012 89,638,455 3,324,782 - 3,324,782 2,468,446 - 2,468,446 6,168,813 - 6,168,813 4,235,407 - 4,235,407 2,203,472 - 2,203,472 1,114,766 - 1,114,766 17,638,926 - 17,638,926 17,856,756 280,450 18,137,206 22,377,070 - 22,377,070 321,127 - 321,127 660,000 - 660,000 78,369,565 280,450 78,650,015 (67,276,026) 35,602,356 (31,673,670) $ 57,505,982 $ 79,108,818 $ 136,614,800 City of Poway Statement of Activities and Changes in Net Assets For the year ended June 30, 2010 See accompanying Notes to Basic Financial Statements. 18 Program Revenues Charges Operating Capital Total for Grants and Grants and Program Functions/Programs Expenses Services Contributions Contributions Revenues Primary government: Governmental activities: General government $ 23,947,500 $ 91,745 $ 945,753 $ - $ 1,037,498 Public safety 19,475,481 2,131,729 190,915 - 2,322,644 Public works 12,595,756 4,479,896 4,711,968 4,097 9,195,961 Development services 4,423,865 1,332,714 302,467 - 1,635,181 Community services 25,213,955 2,821,718 1,464,374 1,242,458 5,528,550 Interest and fiscal charges 14,969,311 - - - - Total governmental activities 100,625,868 10,857,802 7,615,477 1,246,555 19,719,834 Business -Type activities: Water 18,226,463 17,881,695 - 4,036,248 21,917,943 Sewer 7,522,634 8,651,681 - 189,389 8,841,070 Total business -type activities 25,749,097 26,533,376 - 4,225,637 30,759,013 Total primary government $ 126,374,965 $ 37,391,178 $ 7,615,477 $ 5,472,192 $ 50,478,847 See accompanying Notes to Basic Financial Statements. 18 City of Poway Statement of Activities and Changes in Net Assets, Continued For the year ended June 30, 2010 Net (Expense) Revenue and Changes in Net Assets 19 Primary Government Governmental Business -Type Functions/Programs Activities Activities Total Primary government: Governmental activities: General government $ (22,910,002) $ - $ (22,910,002) Public safety (17,152,837) - (17,152,837) Public works (3,399,795) - (3,399,795) Development services (2,788,684) - (2,788,684) Community services (19,685,405) - (19,685,405) Interest and fiscal charges (14,969,311) - (14,969,311) Total governmental activities (80,906,034) - (80,906,034) Business -Type activities: Water - 3,691,480 3,691,480 Sewer - 1,318,436 1,318,436 Total business -type activities - 5,009,916 5,009,916 Total primary government (80,906,034) 5,009,916 (75,896,118) General revenues- Taxes: Property taxes 51,526,758 - 51,526,758 Sales taxes 9,833,390 - 9,833,390 Motor vehicle license taxes 150,641 - 150,641 Transit occupancy taxes 367,434 - 367,434 Franchise taxes 1,491,231 - 1,491,231 Other taxes 629,589 - 629,589 Total taxes 63,999,043 - 63,999,043 Investment earnings 8,287,516 463,177 8,750,693 Miscellaneous 1,251,844 503,595 1,755,439 Transfers 470,498 (470,498) - Total general revenues and transfers 74,008,901 496,274 74,505,175 Change in net assets (6,897,133) 5,506,190 (1,390,943) Net assets - beginning of year 64,403,115 73,602,628 138,005,743 Net assets - end of year $ 57,505,982 $ 79,108,818 $ 136,614,800 19 This page intentionally left blank. 20 u 7 J I I FUND FINANCIAL STATEMENTS 1 Governmental Fund Financial Statements Proprietary Fund Financial Statements ' Fiduciary Fund Financial Statements I 0 u u 11 u' n This page intentionally left blank. 1 1 22 1 Ll 1 C 7 L GOVERNMENTAL FUND FINANCIAL STATEMENTS 23 City of Poway Balance Sheet Governmental Funds June 30, 2010 ASSETS Cash and investments Receivables: Taxes Notes Accounts Interest Lease Due from other funds Due from other governments Prepaid items Inventories, at cost Advances to other funds Restricted assets: Cash and investments with fiscal agents Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued liabilities Due to other funds Deferred revenue Advances from other funds Total liabilities Fund Balances: Reserved Unreserved: Designated for: General fund Special revenue funds Capital projects funds Undesignated Special revenue funds Total fund balances Total liabilities and fund balances Major Funds Low and City of Poway 562,639 Moderate Redevelopment Redevelopment Income Housing Agency Area Special Revenue Debt Service Capital Project General Fund Fund Fund $ 30,539,160 $ 17,392,598 $ 2,706,936 144,267 27,243 - 362,981 130,540 442,083 - 864,871 - 497,370 - 33,811 - 94,085 - 4,305,762 - 8,856,659 $ 13,820,547 562,639 14,427 26,720,000 7,680,253 33,688 3,229 73 569,511 - $ 39,874,302 $ 17,667,405 $ 57,643,573 $ 22,087,967 $ 2,551,493 $ 28,479 $ 923,450 - 26,913 - 4,647,709 17,638,926 2,108,439 $ 575,242 26,720,000 - YJ, /VY,J /J J /J,LYL 13,938,600 10,145,626 31,724,737 - - - 11,367,099 36,372,446 17,638,926 13,938,600 21,512,725 See accompanying Notes to Basic Financial Statements. 24 Other Total Governmental Governmental 21,042,293 $ 91,651,257 14,938 3,443,207 - 34,427,496 592,993 1,086,514 53 479,053 11,250 11,250 - 864,871 957,177 2,024,131 - 33,811 - 94,085 3,737,676 8,043,438 1;504,047 22,974,561 $ 27,860,427 $ 165,133,674 442,042 $ 5,705,695 - 923,450 864,871 864,871 37,819 26,784,732 1,236,381 16,112,915 2,581,113 50,391,663 10,960,747 57,331,608 - 31,724,737 8,405,474 8,405,474 - 11,367,099 5,913,093 5,913,093 25,279,314 114,742,011 ZP L /,00U,411 zrl 1bJ,133,b /4 25 City of Poway Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets June 30, 2010 Total Fund Balances - Total Governmental Funds Amounts reported for governmental activities in the Statement of Net Assets were different because: Capital assets used in governmental activities were not financial resources and therefore were not reported in governmental funds. Nondepreciable Depreciable, net of accumulated depreciation Total capital assets Deferred charges, such as bond issuance costs from issuing debt, were expenditures in the fund financial statements but were deferred and subject to capitalization and amortization on the Government -Wide Statement of Net Assets. i 1 $ 114,742,011 , Long -term liabilities were not due and payable in the current period and therefore were not reported in the governmental funds. Long -term liabilities - due within one year (7,704,221) Long -term liabilities - due in more than one year (net of $30,798 reported in Internal Service Fund) (279,490,175) Total long -term liabilities (287,194,396) Interest payable on long -term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in Governmental Funds Balance Sheet. (1,701,853) Deferred revenues recorded in governmental fund financial statements resulting from activities in which revenues were earned but funds were not available were recognized as revenues in the Government -Wide Financial Statements. Internal service funds were used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds were included in governmental activities in the Government -Wide Statement of Net Assets. Net Assets of Governmental Activities See accompanying Notes to Basic Financial Statements. 26 $ 57,505,982 1 1 1 1 1 , 85,245,979 113,819,364 199,065,343 547,183 ' Long -term liabilities were not due and payable in the current period and therefore were not reported in the governmental funds. Long -term liabilities - due within one year (7,704,221) Long -term liabilities - due in more than one year (net of $30,798 reported in Internal Service Fund) (279,490,175) Total long -term liabilities (287,194,396) Interest payable on long -term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in Governmental Funds Balance Sheet. (1,701,853) Deferred revenues recorded in governmental fund financial statements resulting from activities in which revenues were earned but funds were not available were recognized as revenues in the Government -Wide Financial Statements. Internal service funds were used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds were included in governmental activities in the Government -Wide Statement of Net Assets. Net Assets of Governmental Activities See accompanying Notes to Basic Financial Statements. 26 $ 57,505,982 1 1 1 1 1 u J d This page intentionally left blank. 27 City of Poway Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2010 See accompanying Notes to Basic Financial Statements. 28 Major Funds Low and City of Poway Moderate Redevelopment Redevelopment Income Housing Agency Area Special Revenue Debt Service Capital Projects General Fund Fund Fund REVENUES: Taxes $ 23,841,209 $ - $ 39,377,603 $ - Licenses and permits 433,517 - - - Intergovernmental 483,838 - - - Charges for services 1,013,569 - - - Fines and forfeitures 750,551 - - Use of money and property 2,010,788 349,507 3,227,619 741,722 Developer fees 3,436,091 - - - Assessment levied - - - Other revenues 965,071 326,391 - 888,453 Total revenues 32,934,634 675,898 42,605,222 1,630,175 EXPENDITURES: Current: General government 1,491,779 1,141,648 - 3,422,921 Public safety 18,812,864 - - - Public works 2,395,310 - - - Development Services 4,475,943 - - - Community services 4,431,417 - - - Capital outlay 5,036,287 7,037,128 - 12,267,894 Debt service: Principal - - 6,335,000 - Interest and fiscal charges - - 13,902,459 - Tax increment reimbursement - - 2,380,740 - Tax shift - - 13,700,882 - Total expenditures 36,643,600 8,178,776 36,319,081 15,690,815 REVENUES OVER (UNDER) EXPENDITURES (3,708,966) (7,502,878) 6,286,141 (14,060,640) OTHER FINANCING SOURCES (USES): Proceeds from loans - - 161,049 - Transfers in 4,038,976 7,881,168 2,190,372 6,999,555 Transfers out (1,671,709) (1,741,327) (15,329,768) - Total other financing sources (uses) 2,367,267 6,139,841 (12,978,347) 6,999,555 NET CHANGE IN FUND BALANCE (1,341,699) (1,363,037) (6,692,206) (7,061,085) FUND BALANCES: Beginning of year 37,714,145 19,001,963 20,630,806 28,573,810 End of year $ 36,372,446 $ 17,638,926 $ 13,938,600 $ 21,512,725 See accompanying Notes to Basic Financial Statements. 28 Other Total Governmental Governmental $ 4,193,036 $ 67,411,848 - 433,517 2,510,167 2,994,005 2,126,705 3,140,274 - 750,551 5,850,392 12,180,028 275,487 3,711,578 1,886,300 1,886,300 48,747 2,228,662 16,890,834 94,736,763 - 6,056,348 153,516 18,966,380 7,548,371 9,943,681 - 4,475,943 4,617,566 9,048,983 3,298,530 27,639,839 815,000 7,150,000 1,041,307 14,943,766 - 2,380,740 - 13,700,882 (583,456) (19,569,799) - 161,049 1,577,690 22,687,761 (1,199,412) (19,942,216) (205,178) (16,663,205) 25,484,492 131,405,216 $ 25,279,314 $ 114,742,011 29 City of Poway Reconciliation of the Governmental Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government -Wide Statement of Activities and Changes in Net Assets For the year ended June 30, 2010 Net Change in Fund Balances - Total Governmental Funds Amounts reported for governmental activities in the Statement of Activities were different because: Governmental funds report capital outlay as expenditures. However, in the Government -Wide Statement of Activities and Changes in Net Assets, the cost of those assets was allocated over their estimated useful lives as depreciation expense. This is the amount of capital assets recorded in the current period. Depreciation was reported in the Government -Wide Statement of Activities and Changes in Net Assets, but they did not require the use of current financial resources. Therefore, depreciation and amortization expense was not reported as expenditures in governmental funds. Compensated absences were reported in the Government -Wide Statement of Activities and Changes in Net Assets, but it did not require the use of current financial resources. Therefore, compensated absences were not reported as expenditures in governmental funds. This amount represent the change in compensated absences from prior year. Issuance costs from issuing debt were expenditures at the fund level but were deferred and subject to capitalization and amortization on the statement of net assets. Amortization of bond issuance costs Proceeds from long -term debt provide current financial resources to governmental funds, but issuing debt increases long -term liabilities in the Government -Wide Statement of Net Assets. Repayment of bond principal was an expenditure in governmental funds, but the repayment reduces long -term liabilities in the Government - Wide Statement of Net Assets. Proceeds from loans Repayment of contract and notes payable Principal payment Amortization on bond premium was reported in the Government -Wide Statement of Activities and Changes in Net Assets, but it did not require the use of current financial resources. Therefore, amortization was not reported as expenditures in governmental funds. 2003 Tax Allocation Bonds 2007 Tax Allocation Bonds 2003 Certificates of Participation 2005 Certificates of Participation Interest expense on long -term debt was reported in the Government -Wide Statement of Activities and Changes in Net Assets, but they did not require the use of current financial resources. This amount represents the change in accrued interest from prior year. Prior year accruals Current year accruals Revenues in the statement of activities that did not provide current financial resources are not reported as revenues in the funds. Internal service funds were used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net revenue of the internal service funds was reported with governmental activities. Change in Net Assets of Governmental Activities See accompanying Notes to Basic Financial Statements. 30 $ (16,663,205) 10,429,748 (6,399,098) 15,840 (23,834) (161,049) 43,238 7,150,000 194,994 63,572 9,425 9,642 1,676,308 (1,701,853) (25,545) (751,400) (789,461) $ (6,897,133) i 1 1 1 J I I u PROPRIETARY FUND FINANCIAL STATEMENTS 31 City of Poway Statement of Net Assets Proprietary Funds June 30, 2010 ASSETS Current assets: Cash and investments Cash and investments with fiscal agents Receivables: Accounts Inventories Total current assets Noncurrent assets: Advances to other funds Advances to Fiduciary Fund - Business Park Deferred charges Capital assets: Nondepreciable Depreciable Less accumulated depreciation Total net capital assets Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Deposits Accrued interest payable Long -term debt due within one year Total current liabilities Noncurrent liabilities: Long -term debt due in more than one year Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for debt service Unrestricted Total net assets Major Funds Water Sewer Governmental Activities Internal Total Service Fund $ 6,251,971 $ 15,893,694 $ 22,145,665 $ 5,536,532 280,450 - 280,450 - 3,187,953 1,617,268 4,805,221 - 1,516,305 11,307 1,527,612 - 11,236,679 17,522,269 28,758,948 5,536,532 2,606,354 5,463,123 8,069,477 - - 1,000,000 1,000,000 - 34,329 - 34,329 - 6,121,791 694,438 6,816,229 - 50,103,624 34,083,152 84,186,776 - (30,370,276) (15,744,131) (46,114,407) - 25,855,139 19,033,459 44,888,598 - 28,495,822 25,496,582 53,992,404 - 39,732,501 43,018,851 82,751,352 5,536,532 1,850,972 63,872 1,914,844 242,772 52,412 - 52,412 - 12,692 - 12,692 - 243,219 7,662 250,881 - 2,159,295 71,534 2,230,829 242,772 1,378,368 33,337 1,411,705 30,798 1,378,368 33,337 1,411,705 30,798 3,537,663 104,871 3,642,534 273,570 24,233,552 18,992,460 43,226,012 - 280,450 - 280,450 - 11,680,836 23,921,520 35,602,356 5,262,962 $ 36,I94,838 $ 42,913,980 $ 79,108,818 $ 5,262,962 See accompanying Notes to Basic Financial Statements. 32 City of Poway Statement of Revenues, Expenses and Changes in Net Assets Proprietary Funds For the year ended June 30, 2010 OPERATING REVENUES: Charges for services Connection fees Other Total operating revenues OPERATING EXPENSES: Personnel services Maintenance and operations Cost of purchased water Depreciation Total operating expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES): Interest revenue Interest expense and fiscal charges Total nonoperating revenues (expenses) INCOME (LOSS) BEFORE CONTRIBUTED CAPITAL AND TRANSFERS CONTRIBUTED CAPITAL AND TRANSFERS: Contributed capital Transfers out Total contributed capital and transfers Change in net assets NET ASSETS: Beginning of year End of year See accompanying Notes to Basic Financial Statements. 33 Governmental Activities Major Funds Internal Water Sewer Total Service Fund $ 17,846,328 $ 8,540,567 $ 26,386,895 $ 2,610,905 35,367 111,114 146,481 - 30,548 473,047 503,595 4,166 17,912,243 9,124,728 27,036,971 2,615,071 3,418,119 683,414 4,101,533 365,802 4,846,914 5,965,449 10,812,363 871,557 8,750,338 - 8,750,338 - 1,211,092 873,771 2,084,863 - 18,226,463 7,522,634 25,749,097 1,237,359 (314,220) 1,602,094 1,287,874 1,377,712 199,720 355,417 555,137 107,874 (91,960) - (91,960) - 107,760 355,417 463,177 107,874 (206,460) 1,957,511 1,751,051 1,485,586 4,036,248 189,389 4,225,637 - (288,759) (181,739) (470,498) (2,275,047) 3,747,489 7,650 3,755,139 (2,275,047) 3,541,029 1,965,161 5,506,190 (789,461) 32,653,809 40,948,819 73,602,628 6,052,423 $ 36,194,838 $ 42,913,980 $ 79,108,818 $ 5,262,962 City of Poway Statement of Cash Flows Proprietary Funds For the year ended June 30, 2010 CASH FLOWS FROM OPERATING ACTIVITIES: Cash receipts from customers Cash paid to employees for services Cash paid to suppliers for goods or services Others Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers out Net cash provided (used) by noncapital financing activities Governmental Activities Major Funds Internal Water Sewer Total Service Fund $ 17,074,377 $ 8,593,335 $ 25,667,712 $ 2,615,237 (3,672,768) (743,582) (4,416,350) (368,451) (13,595,584) (6,126,715) (19,722,299) (662,594) 948,399 473,047 1,421,446 - 754,424 2,196,085 2,950,509 1,584,192 (288,759) (181,739) (470,498) (2,275,047) (288,759) (181,739) (470,498) (2,275,047) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: (58,346) (872,826) 166 Contributed capital 4,036,248 189,389 4,225,637 Acquisitions to capital assets (5,569,534) (707,616) (6,277,150) - Principal paid on long -term debt 53,040 40,999 94,039 - Payment of interest and fees (93,622) - (93,622) 107,874 Net cash provided (used) by capital and related financing activities (1,573,868) (477,228) (2,051,096) 107,874 CASH FLOWS FROM INVESTING ACTIVITIES: Interest income Net cash provided (used) by investing activities Net increase (decrease) in cash and investments CASH AND INVESTMENTS: Beginning of year End of year RECONCILIATION OF CASH AND INVESTMENTS TO THE STATEMENT OF NET ASSETS Cash and investments Cash with investments with fiscal agents Total cash and investments RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Changes in operating assets and liabilities: Accounts receivable Inventories Deferred charges Advances to other funds Accounts payable Deposits Compensated absences Total adjustments Net cash provided (used) by operating activities 199,720 355,417 555,137 - 199,720 355,417 555,137 (908,483) 1,892,535 984,052 (582,981) 7,440,904 14,001,159 21,442,063 6,119,513 $ 6,532,421 $ 15,893,694 $ 22,426,115 $ 5,536,532 6,251,971 15,893,694 22,145,665 5,536,532 280,450 - 280,450 - $ 6,532,421 $ 15,893,694 $_22,426 ,115 $ 5,536,532 $ (314,220) $ 1,602,094 $ 1,287,874 $ 1,377,712 1,211,092 873,771 2,084,863 - (814,480) (58,346) (872,826) 166 328,299 (1,741) 326,558 - 6,436 6,436 - 917,851 - 917,851 - (333,067) (159,525) (492,592) 208,963 7,162 - 7,162 (254,649) (60,168) (314,817) (2,649) 1,068,644 593,991 1,662,635 206,480 $ 754,424 $ 2,196,085 $ 2,950,509 $ 1,584,192 J J I C' 7 L I See accompanying Notes to Basic Financial Statements. 34 ' n FIDUCIARY FUND FINANCIAL STATEMENTS ' Agency funds are used to account for assets held by the City as an agent for individuals, private organizations, other governments, and /or other funds. u P 7 L L n U n LJ 1 35 City of Poway Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2010 ASSETS Cash and investments Receivables: Taxes Accounts Interest Cash and investments with fiscal agent Total assets LIABILITIES Accounts payable Deposits Due to bondholders Advances from City of Poway Total liabilities See accompanying Notes to Basic Financial Statements. 36 Agency $ 9,433,300 3,069 1,000,000 48,032 3,203,097 $ 13,687,498 $ 227,601 4,078,813 8,381,084 � 15,biS' /,4yiS � NOTES TO BASIC FINANCIAL STATEMENTS n 0 r 7 k", i u II 11 37 City of Poway Notes to Basic Financial Statements For the year ended June 30, 2010 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of Poway, California, (City) have been prepared in conformity ' with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing ' governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below. A. Financial Reporting Entity i The City was incorporated December 1, 1980, under the general laws of the State of California. The City ' operates under a Council- Manager form of government and provides the following services: public safety (police - through the County of San Diego, and fire), community services, engineering services, planning services, public works, general administrative services, and capital improvements. ' As required by generally accepted accounting principles in the United States, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the ' City appoints a voting majority of that organization's governing body and either the City is able to impose its will on that organization or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be , financially accountable for an organization if that organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of , their relationship with the City are such that their exclusion would cause the City's financial statements to be misleading or incomplete. Component units for which the City is considered financially accountable are described below: ' Poway Redevelol ment Agency The Poway Redevelopment Agency (Agency) was established on April 26, 1983 pursuant to the ' State of California Health and Safety Code, Section 33000 entitled "Community Redevelopment Law ". Its purpose is to eliminate blighted areas by encouraging the development of residential, commercial, industrial, recreational and public facilities. The Agency was included within the scope of the reporting entity of the City because its governing body is composed in its entirety of council members of the City. Separate financial statements can be obtained from the Poway Finance ' Department located at Poway City Hall. Poway Public Financing Authority 1 The Poway Public Financing Authority (Authority) is a joint powers authority organized pursuant to the State of California Government Code, Section 6500. The Authority exists under a joint ' Exercise of Power Agreement dated October 8, 1991, between the City and the Agency. Its purpose is to assist in financing and refinancing projects for the benefit of the City and the Agency. Separate financial statements are not prepared. ' 38 1 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 i 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued ' B. Basis of Accounting and Measurement Focus The accounting policies of the City conform to generally accepted accounting principles in the United States for local governmental units. 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 by providing a separate set of self - balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and means by which spending activities are controlled. ' Government - Wide and Fund Financial Statements The City's Government -Wide Financial Statements include a Statement of Net Assets and a Statement of Activities and Changes in Net Assets. These statements present summaries of governmental and business -type activities for the City accompanied by a total column. These basic financial statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as infrastructure assets, and long -term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. ' Certain types of transactions are reported as program revenues for the City in three categories: • Charges for services ' . Operating grants and contributions • Capital grants and contributions ' Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the business- , type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business -type activities have not been eliminated. The following interfund activities have been eliminated: • Due to and from other funds • Advances to and from other funds • Transfers in and out The City applies all applicable GASB pronouncements (including all NCGA Statements and ' Interpretations currently in effect) as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) of the committee on Accounting Procedure. The City applies all applicable FASB Statements and Interpretations issued after November 30,1989, except those that conflict with or contradict GASB pronouncements. ' 39 City of Poway ' Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued 1 Governmental Fund Financial Statements Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, ' Expenditures and Changes in Fund Balances for all major governmental funds and non -major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in fund balances as presented in these statements to the net assets presented in the government -wide financial statements. The City has presented all major funds that met those qualifications. All governmental funds are accounted for on a spending or "current financial resources" measurement ' focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balances. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. ' Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year -end) are recognized when due. The primary revenue sources, which have been treated as , susceptible to accrual by the City, are real and personal property tax, other local taxes, franchise fees, forfeitures and penalties, motor license fees, rents and concessions, interest revenue, and state and federal grants and subventions. Expenditures are recorded in the accounting period in which the ' related fund liability is incurred. Deferred revenues arise when potential revenues do not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are , met or when the government has a legal claim to the resources, the deferred revenue is removed from the balance sheet and revenue is recognized. The Reconciliation of the Fund Financial Statements to the Government -Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. The City reports the following major governmental funds: ' The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The Low and Moderate Income Housing Special Revenue Fund is used to account for funds , restricted for low and moderate income housing financial activity. The City of Poway Redevelopment Agency Debt Service Fund is used to account for the accumulation of resources for, and the payment of principal, interest, and related costs of the debt. The Redevelopment Agency Capital Project Fund is used to account for the financial resources to be used for the acquisitioned construction of major capital facilities (other than those financed by proprietary funds). 40 , i C H i G City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Proprietary Fund Financial Statements Proprietary fund financial statements include a Statement of Net Assets, a Statement of Revenues, Expenses and Changes in Net Assets, and a Statement of Cash Flows for all proprietary funds. A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the government -wide financial statements. Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Change in Fund Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as nonoperating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses. The City reports the following major proprietary funds: The Water Enterprise Fund is used to account for the provision of water services to the residents of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to administration, operations, maintenance, financing and related debt service, and billing and collection. The Sewer Enterprise Fund is used to account for the provision of sewer services to the residents of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to administration, operations, maintenance, financing and related debt service, and billing and collection. Fiduciary Fund Financial Statements Fiduciary fund financial statements include a Statement of Net Assets. The City's fiduciary funds represent agency funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. 41 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration. Encumbrances outstanding at year -end are reported as reservations of fund balances and do not constitute GAAP basis expenditures or liabilities because the commitments will be honored during the subsequent year. The commitments will be re- appropriated and honored in the subsequent year. D. Cash, Cash Equivalents and Investments The City pools its available cash for investment purposes. The City considers pooled cash and highly liquid investments held with financial institutions, a fiscal agent, and in a pooled account with the State, to be cash equivalents. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which has invested a portion of the pooled funds in structured notes and asset - backed securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset - Backed Securities are subject to market risk as to change in interest rates. In accordance with GASB Statement No. 40, Deposit and Investment Risk Disclosures (an amendment of GASB Statement No. 3), the City adheres to certain disclosure requirements, if applicable for deposit and investment risk are specified for the following areas: Interest Rate Risk Credit Risk Overall Custodial Credit Risk Concentration of Credit Risk Foreign Currency Risk The cash flow statements require presentation of "cash and cash equivalents." For the purposes of the statement of cash flows, the City considers all proprietary fund pooled cash and investments as "cash and cash equivalents," as such funds are available to the various funds as needed. With respect to cash and investments with fiscal agents, the City considers all investments with an original maturity of less than three months to be cash equivalents. 42 r l City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued ' E. Interfund Transactions Activity between funds that are representative of lending/ borrowing arrangements outstanding at the ' end of the fiscal year are referred to as "due to /from other funds' (i.e., current portion of interfund loans). Any residual balances outstanding between the governmental activities and business -type activities are reported in the governmental -wide financial statements as "interfund balances." F. Inventories Inventories within the various fund types consist of water, materials and supplies which are valued at cost on a first -in, first -out basis. Reported expenditures reflecting the purchase of supplies have been restated to reflect the consumption method of recognizing inventory- related expenditures. A reservation of fund balance has been reported in the governmental funds to show that inventories do not constitute "available spendable resources," even though they are a component of net current assets. G. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, streets, sidewalks, medians and storm drains), are reported in the applicable governmental or business -type activities in the Government -Wide Financial Statements. City policy has set the capitalization threshold for reporting capital assets at $5,000. Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not available. Donated assets are valued at their estimated fair market value on the date donated. Depreciation is recorded on a straight -line basis over estimated useful lives of the assets as follows: Buildings 10 -50 years Buildings improvements 10 -100 years Furniture and Equipment 5 -20 years Infrastructure 20 -50 years In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Government, which requires the inclusion of infrastructure capital assets in local governments' basic financial statements. In accordance with GASB Statement No. 34, the City has included the value of all infrastructure in its Basic Financial Statements. The City defines infrastructure as the basic physical assets that allow the City to function. These assets include streets, bridges, sidewalks, drainage systems, and lighting systems, etc. Each major infrastructure system can be divided into subsystems. For example the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, landscaping and land. These subsystems are not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest on construction - related debt incurred during the period of construction for business -type and proprietary fund assets is capitalized as a cost of the constructed assets. Capital assets acquired under capital lease are capitalized at the net present value of the total lease payments. 43 City of Poway ' Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued H. Capital Assets, Continued ' For infrastructure systems, the City elected to use the "Basic Approach" as defined by GASB Statement No. 34 for infrastructure reporting. The City commissioned an appraisal of City owned infrastructure , and property as of June 30, 2006. This appraisal determined the original costs, which are defined as the actual cost to acquire new property in accordance with market prices at the time of first construction/ acquisition. Original costs were developed in one of three ways: (1) historical records; ' (2) standard unit costs appropriate for the construction/ acquisition date; or (3) present cost indexed by a reciprocal factor of the price increase from the construction/ acquisition date to the current date. The accumulated depreciation, defined as the total depreciation from the date of construction/ acquisition to ' the current date on a straight line, unrecovered cost method was computed using industry accepted life expectancies for each infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation from the original cost. ' Capital Assets Acquired Under Lease Purchase Contracts The long -term principal portion of debt on non - proprietary capital assets acquired through lease purchase contracts is accounted for in the government -wide financial statements as "capital lease ' obligations." A capital asset is recorded at the net present value of total lease payments in the government -wide financial statements. L Compensated Absences ' Government -Wide Financial Statements For governmental and business -type activities, compensated absences are recorded as incurred and the ' related expenses and liabilities are reported. Fund Financial Statements In governmental funds, compensated absences are recorded as expenditures in the years paid, as it is the City's policy to liquidate any unpaid compensated absences at June 30 from future resources, rather than currently available financial resources. In proprietary funds, compensated absences are expensed to the various funds in the period they are earned, and such fund's share of the unpaid liability is recorded as a long -term liability of the fund. Vested or accumulated compensated absences are recorded in proprietary funds as an expense and liability of those funds as the benefits accrue to employees. J. Long -Term Debt Government -Wide Financial Statements Long -term debt and other long -term obligations are reported as liabilities in the appropriate activities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of applicable premium or discount. Issuance costs are reported as deferred charges. Fund Financial Statements The governmental fund financial statements do not present long -term debt but are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets. 44 u I I ' City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued ' K. Net Assets ' Government -Wide Financial Statements Invested in Capital Assets, Net of Related Debt - This amount consists of capital assets net of accumulated ' depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. ' Restricted Net Assets - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments. Unrestricted Net Assets - This amount is all net assets that do not meet the definition of "invested in capital assets, net of related debt" or "restricted net assets." 0 Fund Financial Statements Reservations represent those portions of fund equity which are not appropriable for expenditure or which are legally segregated for specific future use. Designated fund balances represent tentative plans for future use of financial resources. Undesignated fund balance indicates that portion of the fund balance which is available for appropriation in future periods. L. Use of Restricted and Unrestricted Net Assets When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the City's policy is to apply restricted net assets first. M. Use of Estimates The preparation of the basic financial statements in conformity with generally accepted accounting principles in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the disclosure of contingent assets and liabilities at the date of the basic financial statements and the related reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management believes that the estimates are reasonable. 2. CASH, CASH EQUIVALENTS AND INVESTMENTS The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds. This pooled cash is invested by the City Treasurer to enhance earnings. The pooled interest earned is allocated to the funds based on average month -end cash balances of the various funds. 11 45 City of Poway Notes to Basic Financial Statements, Continued ' For the year ended June 30, 2010 2. CASH, CASH EQUIVALENTS AND INVESTMENTS, Continued 2010: ' The following is a summary of cash and investment at June 30, Government -Wide Statement of Net Assets ' Fiduciary Funds Governmental Business -Type Statement of Activities Activities Net Assets Total ' Cash and investments $ 97,187,789 $ 22,145,665 $ 9,433,300 $ 128,766,754 Cash and investments with fiscal agents 22,974,561 280,450 Total $ 120,162,350 $ 22,426,115 3,203,097 26,458,108 $ 155,224,862 , $ 12,636,397 Cash, cash equivalents, and investments consisted of the following at June 30, 2010: Cash on hand $ 7,650 Demand deposits 4,338,144 ' Investments 150,879,068 Total cash and investments $ 155,224,862 ' A. Cash Deposits I The carrying amounts of the City's demand deposits were $4,338,144 at June 30, 2010. Bank balances at June 30, 2010, were $4,525,318 which were fully insured or collateralized with securities held by the I pledging financial institutions in the City's name as discussed below. The California Government Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in ' this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name. The market value of pledged securities must equal at least 110% of the City's cash deposits. California ' law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City's total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements. The City follows the practice of pooling cash and investments of all funds, except for funds required to ' be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the ' period -end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. 46 1 ' City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 R 0 7 2. CASH, CASH EQUIVALENTS AND INVESTMENTS, Continued B. Investments The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy. Authorized Maximum Investment Type Maturity Maximum Maximum Percentage of Investment in Portfolio* One Issuer U.S. Treasury Obligation 5 years None None U.S. Agency Securities 5 years 75% 25% Bankers' Acceptances 180 days 40% 5% Medium -Term and Corporate Notes 5 years 30% 5% Money Market Mutual Funds N/A 20% 10% Mortgage Backed Securities 5 years 20% None Asset Back Securities 5 years 20% None Commercial Paper 270 days 25% 3% Negotiable Certificates of Deposit 5 years 30% 5% Local Agency Investment Fund (LAIF) N/A None None County of San Diego Investment Pool N/A None None CalTRUST Joint Powers Authority N/A None None * Excluding amounts held by bond trustee that are not subject to California Government Code restriction. C. Investment Authorized by Debt Agreements Investment of debt proceeds held by bond trustee are governed by provisions of the debt agreement, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk. C 1 47 Maximum Maturity 1 year N/A 5 years 30years N/A Maximum Percentage of Portfolio* None None 75% None None Maximum Investment in One Issuer 30% None 25% None None Authorized Investment Type ' Repurchase Agreements Money Market Mutual Funds U.S. Agency Securities ' Investment Contracts Local Agency Investment Fund (LAIF) C 1 47 Maximum Maturity 1 year N/A 5 years 30years N/A Maximum Percentage of Portfolio* None None 75% None None Maximum Investment in One Issuer 30% None 25% None None City of Poway ' Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 2. CASH, CASH EQUIVALENTS AND INVESTMENTS, Continued D. Risk Disclosures ' Interest Rate Risk , Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in the market interest rates. One of the ways that the City manages its exposure to ' interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. ' Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: ' Remaining Maturity 12 Months 13 to 24 25 to 60 More than ' Investment Type Amounts or Less Months Months 60 Months U.S. Treasuries $ 2,215,593 $ - $ 2,215,593 $ - $ U.S. Agencies 5,060,146 1,006,239 4,053,907 - CalTrust Investment Pool 49,314,049 49,314,049 - US Instrumentalities 28,527,345 9,075,599 11,588,009 7,863,737 = Medium -Tenn and Corporate Notes 10,304,300 3,966,110 3,188,334 3,149,856 - ' Local Agency Investment Fund (LAIF) 28,753,063 28,753,063 San Diego County Investment Pool 30,824 30,824 - - - LOI Bond AD #2001 -1 165,640 19,885 21,028 70,621 54,106 ' Certificates of Deposit 50,000 50,000 - - - Held by bond trustee: Money Market Funds 12,672,181 12,672,181 - - Investment Contracts 11,073,932 - - 11,073,932 ' Federal Home Loan Mortgage Corporation 2,711,995 - 2,711,995 - - $ 150,879,068 $ 104,887,950 $ 23,778,866 $ 11,084,214 $ 11,128,038 ' 11 48 11 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 2. CASH, CASH EQUIVALENTS AND INVESTMENTS, Continued D. Risk Disclosures, Continued Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The following presentation is the minimum rating required by (where applicable) the California Government Code, the City's investment policy, or debt agreements, and the actual rating as of year end for each investment type: Concentration of Credit Risk The City's Policy states that not more than 20% of the portfolio shall be invested in any one entity or any one instrument to protect the City from concentration of credit risk, with the following exceptions: U.S. Treasury Obligations and investments pools (State of California - Local Agency Investment Fund and California Asset Management Program). In addition, purchases of commercial paper must not exceed 20% of the value of the portfolio at any time and single issuer holdings must not exceed 3 percent per issuer. The City is in compliance with these provisions of the Policy. The following is a chart of City's investment portfolio: Investment Reported Trustee/Custodian Type Amount Union Bank Investment Type Amounts Minimum Rating Ezempt AAA /Aaa A + /Al AA + /Aa2 A + /A2 A /A2 AA /Aa2 AA - /A2 AA /NR ' U.S. Treasuries $ 2215,593 Aaa $ $ 2,215593 $ $ - $ $ - $ - $ - $ 11,073,932 U.S. Agencres 5,060,146 Aaa _ 5,060,146 _ _ _ CalTrust Investment Pool 49,314,049 Aaa - - - - - - - - 49,314099 US InswmenGlities 28527,395 Aaa - 28527,345 ' MediumTerm and Corporate Notes 10,304 -W Al 1046,369 1,082,513 3,099,091 1,998,255 1053,800 1,020014 1,004,258 lace) Agency Investment Fund (I.AIF) 28,753,063 N/A 28,753,063 - - - - - - - - San Diego County Investment Pool 30,824 30124 - - - - - - - - ' 1A1 Bond AD #200 -1 165,640 165,640 Certificates of Deposit 50,000 50000 Held by bond trustee: Moray Market Funds 12,672,181 12,672,181 ' Investment Contracts 11073,932 11073,932 Federal National Mortgage Corporation 2,711,995 2,711,995 - - - - - ■ $ 150,879068 $ 55,407,635 $ 36,899,453 $ 1,082513 $ 3,099,091 $ 1,998,255 $ 1053,800 $ 1,02D,014 $ 1009,258 $ 49314,049 Concentration of Credit Risk The City's Policy states that not more than 20% of the portfolio shall be invested in any one entity or any one instrument to protect the City from concentration of credit risk, with the following exceptions: U.S. Treasury Obligations and investments pools (State of California - Local Agency Investment Fund and California Asset Management Program). In addition, purchases of commercial paper must not exceed 20% of the value of the portfolio at any time and single issuer holdings must not exceed 3 percent per issuer. The City is in compliance with these provisions of the Policy. The following is a chart of City's investment portfolio: Investment Reported Trustee/Custodian Type Amount Union Bank US. Treasuries $ 2,215,593 Union Bank U.S. Agencies 5,060,146 Union Bank CalTrust Investment Pool 49,314,049 Union Bank Corporates 10,304,300 State Treasurer Office LAIF 28,753,063 FSA Capital Investment Contract 11,073,932 49 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 2. CASH, CASH EQUIVALENTS AND INVESTMENTS, Continued E. Investment in Local Agency Investment Funds The City invests in the Local Agency Investment Fund (LAIF), a State of California investment pool. LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available. The City valued its investments in LAIF as of June 30, 2010, at fair value. The fair value is calculated by multiplying the account balance with LAIF times a fair value factor of 1.001643776 which is determined by LAIF. This fair value factor was determined by dividing total value by all LAIF participants total cost. The City's investments with Local Agency Investment Funds (LAIF) at June 30, 2010, included a portion of the pooled funds invested in Medium -Term and Short -Term Structured Notes and Asset - Backed Securities. These investments included the following: Structured Notes are debt securities (other than asset - backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and /or that have embedded forwards or options. Asset - Backed Securities the bulk of which are mortgage- backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables. As of June 30, 2010, the City had $28,753,063 invested in LAIF, which had invested 5.42% of the pooled investment funds in short -term and medium -term Structured Notes and Asset - Backed Securities. F. Investment in San Diego County Investment Pool The City is a voluntary participant in the County Treasury Pool (County Pool) which is regulated under the oversight of the Treasurer of the County of San Diego. The fair value of the City's investment in the County Pool is reported in the accompanying financial statements based upon the City's pro -rata share of the fair value provided by the County Pool for the entire portfolio. The balance available for withdrawal is based on the accounting records maintained by the Pool. Included in the County Pool's investment portfolio are collateralized and negotiable certificates of deposit, floating rate securities issued by federal agencies and corporations, money market funds, repurchase agreements and commercial paper. At June 30, 2010, the City had $30,824 invested in the San Diego County Investment Pool. 50 7 U I� J r r C L C C C 0 I I I I I City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 3. INTERFUND TRANSACTIONS A. Due To and Due From Other Funds As of June 30, 2010, balances were as follows: _Due to other funds Governmental Activities: Non -major Governmental Funds Total Due from other funds General Fund Total $ 864,871 $ 864,871 $ 864,871 $ 864,871 These balances resulted from loans to cover negative cash balances as of June 30, 2010. B. Advances To and Advances From Other Funds Advances to other funds Governmental Activities: General Fund Non -major Governmental Funds Business -Type Activities: Water Sewer Total $ 3,301,457 $ 1,004,305 $ - $ 4,305,762 3,720,100 17,576 - 3,737,676 2,606,354 - - 2,606,354 5,248,623 214,500 1,000,000 6,463,123 $ 14,876,534 $ 1,236,381 $ 1,000,000 $ 17,112,915 The advances were primarily used for the following: The City Council authorized various Ioans to the Redevelopment Agency totaling $14,876,534 and to other Non -major Governmental funds totaling $1,263,381 at various interest rates. The terms of the loans are indefinite. Accrued interest on the loans of $3,690,937 and $1,053,486 respectively, are not reflected in the accompanying basic financial statements as payment is contingent upon the availability of tax increment. Interest is recorded when it becomes payable from available spendable resources. The City's Sewer Fund loaned to the Parkway Business Center CFD No. 88-1 - Bond Deposit Fiduciary Agency Fund $1,000,000. Interest on this loan is paid on an annual basis and the outstanding principal balance will be paid with the final assessment in 2014 -2015. 51 Advances from other funds City of Poway Redevelopment Agency Non -major Fiduciary Debt Service Governmental Agency Fund Funds Funds Total $ 3,301,457 $ 1,004,305 $ - $ 4,305,762 3,720,100 17,576 - 3,737,676 2,606,354 - - 2,606,354 5,248,623 214,500 1,000,000 6,463,123 $ 14,876,534 $ 1,236,381 $ 1,000,000 $ 17,112,915 The advances were primarily used for the following: The City Council authorized various Ioans to the Redevelopment Agency totaling $14,876,534 and to other Non -major Governmental funds totaling $1,263,381 at various interest rates. The terms of the loans are indefinite. Accrued interest on the loans of $3,690,937 and $1,053,486 respectively, are not reflected in the accompanying basic financial statements as payment is contingent upon the availability of tax increment. Interest is recorded when it becomes payable from available spendable resources. The City's Sewer Fund loaned to the Parkway Business Center CFD No. 88-1 - Bond Deposit Fiduciary Agency Fund $1,000,000. Interest on this loan is paid on an annual basis and the outstanding principal balance will be paid with the final assessment in 2014 -2015. 51 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 3. INTERFUND TRANSACTIONS, Continued C. Transfers To and From Other Funds Transfers for the year ended June 30, 2010, were as follows: Transfers Out Low and City of Poway Moderate Redevelopment Income Housing Agency Non -major Water Sewer Internal Special Revenue Debt Service Governmental Enterprise Enterprise Service Transfers In -� General Fund Fund Funds Fund Fund Funds Total General Fund $ 773,982 $ - $ - $ 750,367 $ 173,300 $ 66,280 $ 2,275,047 $ 4,038,976 Low and Moderate Income Housing Special Revenue Fund - 7,881,168 - 7,881,168 City of Poway Redevelopment Agency Debt Service Fund 1,741,327 - 449,045 2,190,372 Redevelopment Area Capital Projects Fund - 6,999,555 - 6,999,555 Non -major Governmental Funds 897,727 449,045 115,459 115,459 - 1,577,690 Total $ 1,671,709 $ 1,741,327 $ 15,329,768 $ 1,199,412 $ 288,759 $ 181,739 $ 2,275,047 $ 22,687,761 Transfers are primarily used for the following: ➢ Move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them; ➢ Move receipt restricted to the debt service from the funds collecting the receipts, to the debt service fund as debt service payments become due. ➢ Move available funds to capital project funds for approved projects. ➢ Move available funds to new funds, or closed funds, at the direction of the Council. 52 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 4. CAPITAL ASSETS A. Government -Wide Financial Statements The following is a summary of capital assets for governmental activities: Non - depreciable Assets: Land Construction in progress Total non - depreciable assets Depreciable Assets: Buildings Improvements other than buildings Infrastructure Machinery and equipment Total depreciable assets, at cost Less accumulated depreciation: Buildings Improvements other than buildings Infrastructure Machinery and equipment Total accumulated depreciation Total depreciable assets, net Total governmental activities Balance Balance July 1, 2009 Additions Deletions Reclassification June 30, 2010 $ 71,519,985 $ 1,381,933 $ $ - $ 72,901,918 6,302,990 7,715,556 (1,674,485) 12,344,061 77,822,975 9,097,489 - (1,674,485) 85,245,979 (108,600,535) (6,399,098) 150,000 - (114,849,633) 117,211,718 64,966,094 - - 1,326,096 66,292,190 6,309,047 - - 6,309,047 139,659,298 - - 145,936 139,805,234 14,877,814 1,332,259 (150,000) 202,453 16,262,526 225,812,253 1,332,259 (150,000) 1,674,485 228,668,997 (23,718,648) (1,919,710) - - (25,638,358) (899,392) (236,572) - - (1,135,964) (76,006,637) (3,147,414) - - (79,154,051) (7,975,858) (1,095,402) 150,000 - (8,921,260) (108,600,535) (6,399,098) 150,000 - (114,849,633) 117,211,718 (5,066,839) - 1,674,485 113,819,364 $ 195,034,693 $ 4,030,650 $ - $ - $ 199,065,343 Governmental activities depreciation expenses for capital assets for the year ended June 30, 2010 are as follows: General government $ 1,534,519 Public safety 881,221 Public works 3,538,770 Community services 444,588 Total depreciation expense $ 6,399,098 53 The following is a summary of capital assets for business -type activities: City of Poway Notes to Basic Financial Statements, Continued , For the year ended June 30, 2010 Balance Balance 4. CAPITAL ASSETS, Continued July 1, 2009 A. Government -Wide Financial Statements, Continued ' The following is a summary of capital assets for business -type activities: ' Balance Balance July 1, 2009 Additions Deletions Reclassification June 30, 2010 ' Non - depreciable Assets: Land $ 76,797 $ - $ - $ - $ 76,797 Construction in progress 7,125,892 6,277,150 - (6,663,610) 6,739,432 ' Total non - depreciable assets 7,202,689 6,277,150 - (6,663,610) 6,816,229 Depreciable Assets: ' Buildings 21,076,441 - - - 21,076,441 Improvements other than buildings 53,536,924 - - 6,510,829 60,047,753 Machinery and equipment 2,909,801 - - 152,781 3,062,582 , Total depreciable assets, at cost 77,523,166 - - 6,663,610 84,186,776 Less accumulated depreciation: Buildings (14,655,783) (465,737) - - (15,121,520) , Improvements other than buildings (27,483,227) (1,432,574) - - (28,915,801) Machinery and equipment (1,890,534) (186,552) - - (2,077,086) ' Total accumulated depreciation (44,029,544) (2,084,863) - - (46,114,407) Total depreciable assets, net 33,493,622 (2,084,863) - 6,663,610 38,072,369 Total business -type activities $ 40,696,311 $ 4,192,287 $ - $ - $ 44,888,598 , Business -type activities depreciation expenses for capital assets for the year ended June 30, 2010 are as , follows: Water $ 1,211,092 Sewer 873,771 Total depreciation expense $ 2,084,863 ' B. Fund Financial Statements I The fund financial statements do not present general government capital assets but are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets. 11 r ' City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 5. LONG -TERM DEBT IThe following is a summary of long -term debt for the year ended June 30, 2010: 0 ' Governmental Activities: Tax Allocation Bonds Certificates of Participation ' Notes payable Compensated absences Total governmental activities ' Business -Type Activities: Revenue Bonds Compensated absences Total business -type activities Classification Balance Debt Debt Balance Due Within Due in more July 1, 2009 Issued Retired June 30, 2010 One Year than One Year $ 240,800,638 $ $ (5,813,566) $ 234,987,072 $ 5,775,000 $ 229,212,072 50,068,163 - (1,614,067) 48,454,096 1,670,000 46,784,096 2,282,701 161,049 (43,238) 2,400,512 - 2,400,512 1,402,003 244,196 (262,685) 1,383,514 259,221 1,124,293 $ 294,553,505 $ 405,245 $ (7,733,556) $ 287,225,194 $ 7,704,221 $ 279,520,973 $ 1,568,547 $ - $ (187,976) $ 1,380,571 $ 198,177 $ 1,182,394 314,817 26,032 (58,834) 282,015 52,704 229,311 $ 1,883,364 $ 26,032 $ (246,810) $ 1,662,586 $ 250,881 $ 1,411,705 IA. Governmental Activities Long -Term Debt ' Tax Allocation Bonds Tax Allocation Bonds at June 30, 2010, consisted of the following: I� ' 2000 Tax allocation bonds Amount Due 2001 Tax allocation bonds ' 2003 Tax allocation bonds Within Bond premium July 1, 2009 Additions 2007 Tax allocation bonds June 30, 2010 Bond premium One Year Total Tax Allocation Bonds $ (1,355,000) $ 7,980,000 11 Amount Due Amount Due Balance Balance Within More Than July 1, 2009 Additions Deletions June 30, 2010 One Year One Year $ 9,335,000 $ - $ (1,355,000) $ 7,980,000 $ 1,425,000 $ 6,555,000 73,025,000 - (550,000) 72,475,000 580,000 71,895,000 129,900,000 - (3,620,000) 126,280,000 3,740,000 122,540,000 2,529,189 - (194,994) 2,334,195 - 2,334,195 24,680,000 - (30,000) 24,650,000 30,000 24,620,000 1,331,449 - (63,572) 1,267,877 - 11267,877 $ 240,800,638 $ - $ (5,813,566) $ 234,987,072 $ 5,775,000 $ 229,212,072 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 5. LONG -TERM DEBT, Continued A. Governmental Activities Long -Term Debt, Continued Tax Allocation Bonds, Continued 2000 Tax Allocation Bonds In March 2000, the Agency issued the 2000 Tax Allocation Refunding Bonds in the amount of $39,915,000. The bonds were issued on a subordinate basis to the portion of the Agency's previously issued $21,595,000 Paguay Redevelopment Project, Tax Allocation Refunding Bonds, Series 1990A, of which $5,855,000 were not refunded and $4,305,000 are currently outstanding. The bonds consisted of serial bonds of $9,940,000 maturing from 2000 to 2011 in semi - annual installments of $45,000 to $785,000 and term bonds of $29,975,000 maturing in 2033. Interest is paid semiannually on June 15 and December 15 at rates ranging from 3.75% to 5.75 %. Bonds maturing on or after June 11, 2011 are subject to optional redemption in whole or in part on any interest payment date. Bonds maturing on June 15, 2033 are subject to mandatory redemption on each interest payment date beginning June 15, 2027. The outstanding balance of the bonds at June 30, 2010 was $7,980,000. The Agency has pledged a portion of future property tax increment revenue to repay the 2000 Tax Allocation Refunding Bonds. The bonds required 7% of property tax increment revenue. Total principal and interest remaining on the bond is $14,841,919 payable through 2033. The annual requirements to amortize the bonds outstanding at June 30, 2010, are as follows: u I I n 56 1 ' Year Ending June 30, Principal Interest Total 2011 $ 1,425,000 $ 424,987 $ 1,849,987 ' 2012 740,000 352,862 1,092,862 2013 - 334,362 334,362 2014 - 334,362 334,362 ' 2015 - 334,362 334,362 2016 -2020 - 1,671,810 1,671,810 2021 -2025 - 1,671,813 1,671,813 ' 2026 -2030 2,865,000 1,433,905 4,298,905 20313 -2033 2,950,000 303,456 3,253,456 Total $ 7,980,000 $ 6,861,919 $ 14,841,919 ' 56 1 ' City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 5. LONG -TERM DEBT, Continued ' A. Governmental Activities Long -Term Debt, Continued ' Tax Allocation Bonds, Continued 2001 Tax Allocation Bonds ' In July 2001, the Agency issued the 2001 Tax Allocation Bonds in the amount of $76,395,000 for the purpose of refinancing the Agency's outstanding Paguay Redevelopment Project, Subordinate Tax Allocation Bonds of 1999, financing certain improvements, including low and moderate income housing ' improvements in the Paguay Redevelopment Project Area, funding an escrow for future capital improvement, funding a reserve account and paying the bond issuance cost. The bonds bear interest from 3% to 5.25%, payable semi - annually on June 15 and December 15 through 2033. Payments of the ' bonds collateralized by a pledge of tax revenues to be received by the Agency. The bonds maturing on or after June 15, 2012 are subject to redemption prior to maturity at the option of the Agency. The outstanding balance of the bonds at June 30, 2010 was $72,475,000. 1 The Agency has pledged a portion of future property tax increment revenue to repay the 2001 Tax Allocation Bonds. The bonds required 17% of property tax increment revenue. Total principal and ' interest remaining on the bond is $125,256,959 payable through 2033. The annual requirements to amortize the bonds outstanding at June 30, 2010, are as follows: ' Year Ending June 30, Principal Interest Total ' 2011 $ 580,000 $ 3,712,424 $ 4,292,424 2012 1,360,000 3,678,455 5,038,455 2013 2,200,000 3,608,461 5,808,461 ' 2014 2,295,000 3,507,415 5,802,415 2015 2,410,000 3,395,149 5,805,149 2016 -2020 11,670,000 15,112,104 26,782,104 ' 2021 -2025 13,855,000 11,858,362 25,713,362 2026 -2030 24,945,000 6,773,027 31,718,027 2031 -2033 13,160,000 1,136,562 14,296,562 ' Total $ 72,475,000 $ 52,781,959 $ 125,256,959 L 1 57 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 5. LONG -TERM DEBT, Continued A. Governmental Activities Long -Term Debt, Continued Tax Allocation Bonds, Continued 2003 Tax Allocation Bonds In October 2003, the Agency issued the 2003 Series A Tax Allocation Bonds in the amount of $150,300,000 for the purpose of refinancing the outstanding 1993 Tax Allocation Refunding Bonds in the amount of $94,740,000, paying approximately $10,983,000 owed under two owner participation agreements related to the properties located in the City's business parks, with one being paid in full, providing financing for certain improvements in the Paguay Redevelopment Area, funding a reserve account and paying the bond issuance costs. The bonds bear interest from 2.0% to 5.25% and are pay- able semi - annually on June 15 and December 15 through 2033. Payment of the bonds is collateralized by a pledge of tax revenues to be received by the Agency.The bonds maturing on or after June 15, 2028 are subject to redemption prior to maturity at the option of the Agency. The outstanding balance of the bonds at June 30, 2010 was $126,280,000. The Agency has pledged a portion of future property tax increment revenue to repay the 2003 Tax Allocation Bonds. The bonds required 40% of property tax increment revenue. Total principal and interest remaining on the bond is $203,144,265 payable through 2033. The annual requirements to amortize the bonds outstanding at June 30, 2010, are as follows: Year Ending Amortization of June 30, Principal Interest Total Bond Premium 2011 $ 3,740,000 $ 6,294,900 $ 10,034,900 $ 191,162 2012 4,050,000 6,155,050 10,205,050 186,915 2013 4,465,000 6,003,300 10,468,300 182,307 2014 4,695,000 5,824,950 10,519,950 176,891 2015 5,010,000 5,614,300 10,624,300 170,494 2016 -2020 28,975,000 23,884,126 52,859,126 725,307 2021 -2025 37,625,000 15,346,139 52,971,139 466,028 2026 - 2030 22,895,000 6,356,625 29,251,625 193,037 2031 -2033 14,825,000 1,384,875 16,209,875 42,054 Total $ 126,280,000 $ 76,864,265 $ 203,144,265 $ 2,334,195 58 F-J u I u 7 L u n ' City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 1 5. LONG -TERM DEBT, Continued ' A. Governmental Activities Long -Term Debt, Continued ' Tax Allocation Bonds, Continued 2007 Tax Allocation Bonds t In February 2007, the Agency issued the 2007 Tax Allocation Bonds in the amount of $24,965,000 for the purpose of refinancing a portion of the 2000 Tax Allocation Refunding Bonds, originally issued in the principal amount of $39,915,000, of which $36,610,000 is currently outstanding (and of which ' $12,450,000 will remain outstanding upon issuance of the Bonds), finance and refinance certain improvements in the Paguay Redevelopment Project Area and paying the bond issuance cost. The bonds bear interest from 3.5% to 4.125% and are payable semi - annually on June 15 and December 15 ' through 2033. Payment of the bonds is collateralized by a pledge of tax revenues to be received by the Agency. The bonds maturing on or before June 15, 2017 are not subject to call and optional redemption prior to maturity. Bonds maturing on or after December 15, 2017 are subject to redemption prior to ' maturity at the option of the Agency. The outstanding balance of the bonds at June 30, 2010 was $24,650,000. ' The Agency has pledged a portion of future property tax increment revenue to repay the 2007 Tax Allocation Bonds. The bonds required 5% of property tax increment revenue. Total principal and interest remaining on the bond is $49,119,038 payable through 2033. ' The to the bonds at June 30, 2010, are as follows: annual requirements amortize outstanding Year Ending ' June 30, Principal Interest Total Bond Premium 2011 $ 30,000 $ 1,225,830 $ 1,255,830 $ 63,517 2012 30,000 1,224,780 1,254,780 63,463 ' 2013 30,000 1,223,708 1,253,708 63,408 2014 30,000 1,222,628 1,252,628 63,352 2015 30,000 1,221,525 1,251,525 63,294 ' 2016 -2020 190,000 6,087,934 6,277,934 315,449 2021 - 2025 225,000 6,046,914 6,271,914 313,323 2026 -2030 12,035,000 5,138,969 17,173,969 266,279 ' 2031 -2033 12,050,000 1,076,750 13,126,750 55,792 Total $ 24,650,000 $ 24,469,038 $ 49,119,038 $ 1,267,877 I J fl 1 59 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 5. LONG -TERM DEBT, Continued A. Governmental Activities Long -Term Debt, Continued Certificates of Participation Certificates of Participation at June 30, 2010, consisted of the following: 1995 Certificates of Participation 2003 Certificates of Participation Bond premium 2005 Certificates of Participation Bond premium Total certificates of participation 1995 Certificates of Participation r $ 51,602,984 $ - $ (1,614,067) $ 48,454,096 $ 1,670,000 $ 46,784,096 ' In September 1995, the City issued the 1995 Refunding Certificates of Participation in the amount of $31,770,000 to defease the City's outstanding 1991 Certificates of Participation - Capital Improvement Project - Poway Royal Mobilehome Park. The original bonds were issued to purchase the Poway Royal Mobilehome Park. The 1995 Refunding Certificates of Participation consisted of $3,895,000 serial certificates maturing from 1996 to 2008 in semi - annual installments of $10,000 to $360,000 and term certificates of $6,335,000, $6,405,000 and $15,135,000 maturing in 2015, 2020, and 2028, respectively. Interest is payable semi - annually on February 1 and August 1 at rates ranging from 3.65% to 6.15 %. Certificates maturing on or after February 1, 2006 are subject to optional prepayment in whole or in part on any interest payment date on or after August 1, 2005. Certificates maturing on August 1, 2015, 2020, and 2028 are subject to mandatory prepayment by lot on any interest payment date beginning February 1, 2009, 2016 and 2021, respectively. At June 30, 2010, the outstanding balance of the 1995 Refunding Certificates of Participation was $26,720,000. The City has pledged a portion of future property tax increment revenue to repay the 1995 Refunding Certificates of Participations. Total principal and interest remaining on the certificates is $44,568,536 payable through 2029. The annual debt service requirements for the 1995 Refunding Certificates of Participation outstanding at June 30, 2010, are as follows: Year Ending Amount Due Amount Due Balance Interest Balance Within More Than June 30, 2009 Additions Deletions June 30, 2010 One Year One Year $ 27,500,000 $ - $ (780,000) $ 26,720,000 $ 825,000 $ 25,895,000 15,645,000 - (370,000) 15,275,000 385,000 14,890,000 142,183 - (9,425) 132,758 - 132,758 6,705,000 - (445,000) 6,260,000 460,000 51800,000 75,980 - (9,642) 66,338 - 66,338 r $ 51,602,984 $ - $ (1,614,067) $ 48,454,096 $ 1,670,000 $ 46,784,096 ' In September 1995, the City issued the 1995 Refunding Certificates of Participation in the amount of $31,770,000 to defease the City's outstanding 1991 Certificates of Participation - Capital Improvement Project - Poway Royal Mobilehome Park. The original bonds were issued to purchase the Poway Royal Mobilehome Park. The 1995 Refunding Certificates of Participation consisted of $3,895,000 serial certificates maturing from 1996 to 2008 in semi - annual installments of $10,000 to $360,000 and term certificates of $6,335,000, $6,405,000 and $15,135,000 maturing in 2015, 2020, and 2028, respectively. Interest is payable semi - annually on February 1 and August 1 at rates ranging from 3.65% to 6.15 %. Certificates maturing on or after February 1, 2006 are subject to optional prepayment in whole or in part on any interest payment date on or after August 1, 2005. Certificates maturing on August 1, 2015, 2020, and 2028 are subject to mandatory prepayment by lot on any interest payment date beginning February 1, 2009, 2016 and 2021, respectively. At June 30, 2010, the outstanding balance of the 1995 Refunding Certificates of Participation was $26,720,000. The City has pledged a portion of future property tax increment revenue to repay the 1995 Refunding Certificates of Participations. Total principal and interest remaining on the certificates is $44,568,536 payable through 2029. The annual debt service requirements for the 1995 Refunding Certificates of Participation outstanding at June 30, 2010, are as follows: Year Ending June 30, Principal Interest Total 2011 $ 825,000 $ 1,584,976 $ 2,409,976 2012 870,000 1,535,772 2,405,772 2013 930,000 1,483,778 2,413,778 2014 975,000 1,428,553 2,403,553 2015 1,040,000 1,370,244 2,410,244 2016 -2020 6,225,000 5,828,813 12,053,813 2021 -2025 8,360,000 3,690,600 12,050,600 2026 -2029 7,495,000 925,800 8,420,800 Total $ 26,720,000 $ 17,848,536 $ 44,568,536 60 d L C 7 L City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 5. LONG -TERM DEBT, Continued A. Governmental Activities Long -Term Debt, Continued Certificate of Participation, Continued 2003 Certificates of Participation In January 2003, the City issued 2003 Certificates of Participation in the amount of $17,655,000 for the construction of a City office building. The 2003 Certificates of Participation consisted of $5,930,000 serial certificates maturing from 2004 through 2011 in annual installment of $350,000 to $515,000 and term certificates of $3,005,000, $3,830,000 and $4,890,000 maturing in 2023, 2028 and 2033, respectively. Interest is payable semi - annually on July 1 and January 1 at rates ranging from 3.00% to 5.00 %. Certificates maturing on or after January 1, 2018 are subject to optional redemption in whole or in part, on or after January 1, 2017. Certificates maturing on January 1, 2033 are subject to mandatory redemption, without premium, on January 1, 2019. At June 30, 2010, the outstanding balance of the 2003 Certificates of Participation was $15,275,000. Year Ending June 30, Principal Interest Total Bond Premium 2011 $ 385,000 $ 745,015 $ 1,130,015 $ 9,241 2012 400,000 731,540 1,131,540 9,074 2013 410,000 716,740 1,126,740 8,890 2014 430,000 700,750 1,130,750 8,692 2015 445,000 683,550 1,128,550 8,479 2016 - 2020 2,595,000 3,052,949 5,647,949 37,869 2021 -2025 3,315,000 2,337,250 5,652,250 28,990 2026 -2030 4,220,000 1,422,500 5,642,500 17,645 2031 -2033 3,075,000 312,500 3,387,500 3,878 Total $ 15,275,000 $ 10,702,794 $ 25,977,794 $ 132,758 2005 Certificates of Participation In April 2005, the City issued 2005 Refunding Certificates of Participation in the amount of $8,245,000 to refund and defease the City's outstanding 1995 Certificates of Participation and the 1996 Certificates of Participation. The original 1995 Certificates of Participation were used for several projects such as the City's pool and Performing Arts Center, while the 1996 Certificates of Participation were used to build the City's Sheriff Substation. The 2005 Refunding Certificates of Participation consisted of $6,830,000 serial certificates maturing from 2005 through 2020 in annual installments of $305,000 to $610,000 and term certificates of $1,415,000 maturing in 2026. Interest is payable semi - annually on February 1 and August 1 at rates ranging from 3.00% to 4.50 %. Certificates maturing on or after August 1, 2016 are subject to optional redemption in whole or in part, on any date beginning August 1, 2015. Certificates maturing on August 1, 2026 are subject to mandatory redemptions in part of August 1 of each year beginning August 1, 2021. At June 30, 2010, the outstanding balance of the 2005 Certificates of Participation was $6,260,000. 61 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 5. LONG -TERM DEBT, Continued A. Governmental Activities Long -Term Debt, Continued ' Certificates of Participation, Continued ' 2005 Certificates of Participation, Continued Year Ending ' June 30, Principal Interest Total Bond Premium 2011 $ 460,000 $ 254,113 $ 714,113 $ 9,019 ' 2012 480,000 233,538 713,538 8,289 2013 505,000 214,531 719,531 7,614 2014 520,000 194,625 714,625 6,908 2015 540,000 171,113 711,113 6,073 ' 2016 -2020 2,135,000 533,741 2,668,741 18,943 2021 -2025 1,105,000 243,853 1,348,853 8,655 2026 -2027 515,000 23,513 538,513 837 ' Total $ 6,260,000 $ 1,869,027 $ 8,129,027 $ 66,338 Notes Payable Notes P a y able at June 30, 2010, consisted of the following: Amount Due Amount Due ' Balance Balance Within More Than June 30, 2009 Additions Deletions June 30, 2010 One Year One Year Mossy Nissan $ 2,282,701 $ 161,049 $ (43,238) $ 2,400,512 $ - $ 2,400,512 ' Total notes payable $ 2,282,701 $ 161,049 $ (43,238) $ 2,400,512 $ - $ 2,400,512 The Agency entered into an Owner Participation Agreement with AZ Poway LLC (dba Mossy Nissan) that went into effect upon issuance of the certificate of completion for the Mossy Nissan automobile dealership on July 11, 2003. The Agency purchased an operating covenant for $1,900,000 that accrues interest at the rate of 7% per annum. Annual payment of the operating covenant is based on 50% of the net new sales in effect until (i) the purchase price and accrued interested is paid in full, or (ii) the fifteenth annual payment is made. The operating covenant is deemed paid in full after the fifteenth ' annual payment is made, and all remaining balances, including accrued interest, are forgiven. The balance outstanding at June 30, 2010 was $2,400,512. u 62 1 ' City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 5. LONG -TERM DEBT, Continued ' B. Business -Type Activities Long -Term Debt ' Revenue Bonds Revenue Bonds at June 30, 2010, consisted of the following: 1995 Revenue Bonds ' In November 1995, the Poway Public Financing Authority issued the 1995 Revenue Bonds in the amount of $3,380,000 to provide funds to construct certain water facility improvements. The bonds consist of $2,190,000 serial bonds maturing from 1996 to 2010 in annual installments of $105,000 to $200,000 and $1,190,000 term bonds maturing in 2015. Interest is payable semi - annually on May 1 and November 1 with rates ranging from 3.70% to 5.75 %. Bonds maturing on or after November 1, 2006 are subject to optional redemption prior to maturity, in whole or in part, on any date on or after November 1, 2005. The term bonds are subject to mandatory ' redemption in part on November 1, 2011 to 2015 in the amounts ranging from $215,000 to $265,000. At June 30, 2010, the outstanding balance of the 1995 Revenue Bonds was $1,390,000. ' The City has pledged a portion of future water revenue to repay the 1998 Revenue Bonds. Total principal and interest remaining on the bond is $1,631,302 payable through 2016. IThe annual requirements to amortize the bonds outstanding at June 30, 2010 are as follows: n 11 Year Ending Total June 30, Principal Amount Due Amount Due 2012 Balance 2013 Balance Within More Than 2015 June 30, 2008 Additions Deletions June 30, 2009 One Year One Year 1995 Revenue Bonds $ 1,580,000 $ - $ (190,000) $ 1,390,000 $ 200,000 $ 1,190,000 Bond discounts (11,453) - 2,024 (9,429) - (9,429) Total contract payable $ 1,746,327 $ - $ (187,976) $ 1,380,571 $ 200,000 $ 1,180,571 1995 Revenue Bonds ' In November 1995, the Poway Public Financing Authority issued the 1995 Revenue Bonds in the amount of $3,380,000 to provide funds to construct certain water facility improvements. The bonds consist of $2,190,000 serial bonds maturing from 1996 to 2010 in annual installments of $105,000 to $200,000 and $1,190,000 term bonds maturing in 2015. Interest is payable semi - annually on May 1 and November 1 with rates ranging from 3.70% to 5.75 %. Bonds maturing on or after November 1, 2006 are subject to optional redemption prior to maturity, in whole or in part, on any date on or after November 1, 2005. The term bonds are subject to mandatory ' redemption in part on November 1, 2011 to 2015 in the amounts ranging from $215,000 to $265,000. At June 30, 2010, the outstanding balance of the 1995 Revenue Bonds was $1,390,000. ' The City has pledged a portion of future water revenue to repay the 1998 Revenue Bonds. Total principal and interest remaining on the bond is $1,631,302 payable through 2016. IThe annual requirements to amortize the bonds outstanding at June 30, 2010 are as follows: n 11 Year Ending Total June 30, Principal 2011 $ 200,000 2012 215,000 2013 225,000 2014 235,000 2015 250,000 2016 265,000 Total $ 1,390,000 Interest Total Bond Discount $ 70,800 $ 270,800 $ (1,823) 59,538 274,538 (1,755) 47,438 272,438 (1,755) 34,788 269,788 (1,755) 21,450 271,450 (1,755) 7,288 272,288 (586) $ 241,302 $ 1,631,302 $ (9,429) City of Poway Notes to Basic Financial Statements, Continued ' For the year ended June 30, 2010 5. LONG -TERM DEBT, Continued C. Defeasance of Lon&Term Debt ' In February 2007, the City refunded a portion of the 2000 Tax Allocation Refunding Bonds in the amount of $39,915,000 with the $24,965,000 2007 Tax Allocation Refunding Bonds. The net proceeds of ' $25,999,413 were used to purchase direct obligations for which the full faith and credit of the United States are pledged. These securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments of the refunded debt. As a result, a portion of these bonds ' were considered defeased and removed from the City's long -term debt. At June 30, 2010, the outstanding balance of the non - defeased portion 2000 Tax Allocation Refunding Bonds was $7,980,000, and the outstanding balance of the defeased portion was $24,160,000. ' These bonds were refunded to reduce total debt service by $3,597,684 over the next 27 years and to obtain an economic gain (difference between the present value of the debt service payments on the old ' and new debt) of $1,866,640. 6. ASSESSMENT DISTRICT AND COMMUNITY FACILITIES DISTRICTS BONDS ISSUES I CommuniW Facilities District Special Refunding Bonds In November 1998, the City issued $26,090,000 in Special Refunding Bonds, Series A and B to refund the ' outstanding portion of the $32,800,000 South Poway Community Facilities District No. 1 1987 Special Tax Refunding Bonds. In April 2004, the City issued $3,775,000 in Special Tax Refunding Bonds to refund the outstanding portion of the $26,090,000 South Poway Community Facilities District No. 1 1998 Special Tax ' Refunding Bonds, Series B. In May 1998, the City issued $35,445,000 in Special Tax Refunding Bonds to refund the outstanding portion of the $30,000,000 and $8,000,000 Community Facilities District No. 88 -1 (Parkway Business Centre) Special Tax Bonds, Series 1990, respectively. In December 2009 the City issued ' $16,545,000 in Special Tax Refunding Bonds to refund the outstanding portion of the $33,445,000 Community Facilities District No. 88-1 (Parkway Business Centre) Special Tax Refunding Bonds Series 1998. The bonds are authorized pursuant to the Mello -Roos Community Facilities Act of 1982 and are secured by ' and payable from the proceeds of annual special assessment taxes levied and collected on the property within the District. The Bonds are not general or special obligations of the City. The City is acting as agent only for the property owners in collecting the special assessments and forwarding the collections to the ' fiscal agents. Neither faith and credit nor the taxing power of the City is pledged to the payment of these bonds. At June 30, 2010, the outstanding balances of the November 1998, April 2004 and December 2009 issuances were $2,125,000, $260,000, and $16,545,000, respectively. ' Integrated Financing Assessment District No. 96 -1 Limited Obligation Improvement Bonds In June 19%, the City issued $586,470 Integrated Financing Assessment District No. 96-1 (High Valley ' Roads) Limited Obligation Improvement Bonds to finance the cost of acquisition and construction of certain public infrastructure improvement benefiting properties within the boundaries of the assessment district. The bonds are authorized pursuant to the Improvement Bond Act of 1915 and are secured by and payable ' from the proceeds of annual special assessment taxes levied and collected on the property within the District. The Bonds are not general or special obligations of the City. The City is acting as agent only for the property owners in collecting the special assessments and forwarding the collections to the fiscal agents. ' Neither faith and credit nor the taxing power of the City is pledged to the payment of these bonds. At June 30, 2010, the outstanding balance of the bonds was $290,000. 6 i ' City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 6. ASSESSMENT DISTRICT AND COMMUNITY FACILITIES DISTRICTS BONDS ISSUES, CONTINUED Old Coach Water Line Assessment District No. 2001 -01 Limited Obligation Improvement Bonds ' In July 2001, the City issued $290,350 Old Coach Water Line Assessment District No. 2001 -01 Limited Obligation Improvement Bonds to finance the cost of acquisition and construction of certain public infrastructure improvement benefiting properties within the boundaries of the assessment district. The bonds are authorized pursuant to the Improvement Bond Act of 1915 and are secured by and payable from the proceeds of annual special assessment taxes levied and collected on the property within the District. The ' Bonds are not general or special obligations of the City. The City is acting as agent only for the property owners in collecting the special assessments and forwarding the collections to the fiscal agents. Neither faith and credit nor the taxing power of the City is pledged to the payment of these bonds. At June 30, 2010, ' the outstanding balance of the bonds was $165,641. 7. RETIREMENT BENEFITS A. California Public Employees' Retirement Plan (PERS) ' Plan Description The City contributes to the California Public Employees' Retirement System (PERS), an agent multiple- , employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost -of- living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State ' of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may be obtained from their Executive Office located at 400 P Street, Sacramento, California 95814. Funding Policy ' Active members are required by State statute to contribute 7% if a Miscellaneous member, and 9% if a Safety member, of their annual covered salary. The City pays 4% employee contributions for all Miscellaneous employees and 6% for Safety employees (Fire, Fire Management, and the Fire Chief), ' which amounted to $764,802 for the year ended June 30, 2010. The City's employer required contribution rate was 11.621% for Miscellaneous employees and 23.557% for Safety employees for the fiscal year. I 1 65 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 7. RETIREMENT BENEFITS, Continued A. California Public Employees' Retirement Plan (PERS), Continued Annual Pension Cost For 2009 -2010, the City's annual pension cost of $2,501,404 for PERS was equal to the City's required and actual contributions. The required contribution was determined as part of the June 30, 2007, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 7.75% investment rate of return (net of administrative expenses), (b) projected salary increases range from 3.25% to 14.45% for miscellaneous employees and 3.25% to 14.45% for safety employees depending on age, service, and type of employment, and (c) 3.25% per year cost -of- living adjustments. Both (a) and (b) included an inflation component of 3 %. The actuarial value of PERS assets was determined using techniques that smooth the effects of short -term volatility in the market value of investments over a three year period. PERS unfunded actuarial accrued liability (or surplus) is being amortized as a level percentage of projected payroll on a closed basis. The amortization period at June 30, 2007, was 30 years for miscellaneous employees and 30 years for safety employees for prior and current service unfunded liability. THREE -YEAR TREND INFORMATION FOR PERS ($ Amounts in Thousands) Most Recent Actuarial Study - Schedule of Funding Progress ($ Amounts in Thousands) Safety Miscellaneous Total Actuarial Actual Actuarial Actuarial Annual Annual Annual Percentage of Pension Cost Pension Cost Pension Cost APC Net Pension Fiscal Year (APC) (APC) (APC) Contributed Obligation 6/30/2008 $ 1,026 $ 1,397 $ 2,423 100% $ - 6/30/2009 1,119 1,488 2,607 100% - 6/30/2010 1,097 1,404 2,501 100% - Most Recent Actuarial Study - Schedule of Funding Progress ($ Amounts in Thousands) Miscellaneous Employees Group 6/30/2009 $ 59,494 $ 69,735 $ (10,241) Overfunded (Unfunded) Actuarial Liability as Percentage of Funded Covered Covered Ratio Payroll Payroll I� r 0 11 C 85.3% $ 12,754 (80.30)% ' Public Safety The City's safety plan becomes part of a CalPERS Risk Pool for employers with less than 100 active plan members. As part of Employees Group a cost sharing multiple - employer defined benefits plan, disclosures of the schedule of funding progress is not required. The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, presented multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. 66 Overfunded Entry Age (Unfunded) Actuarial Actual Actuarial Actuarial Valuation Asset Accrued Accrued Date Value Liability (AAL) Liability Miscellaneous Employees Group 6/30/2009 $ 59,494 $ 69,735 $ (10,241) Overfunded (Unfunded) Actuarial Liability as Percentage of Funded Covered Covered Ratio Payroll Payroll I� r 0 11 C 85.3% $ 12,754 (80.30)% ' Public Safety The City's safety plan becomes part of a CalPERS Risk Pool for employers with less than 100 active plan members. As part of Employees Group a cost sharing multiple - employer defined benefits plan, disclosures of the schedule of funding progress is not required. The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, presented multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. 66 ' City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 7. RETIREMENT BENEFITS, Continued B. Public Agency Retirement Services (PARS) Plan Description The City sponsors the PARS Retirement Enhancement Plan. The plan provides a benefit equal to the 2.7% at 55 plan factor, less the CAPERS 2% at 55 plan factors for all years of City service and prior ' CalPERS service. Sample rates are as follows: Net Net Net Age Factor Age Factor Age Factor 50 1.426% 55 2.000% 60 2.262% 51 1.522% 56 2.052% 61 2.314% ' 52 1.628% 57 2.104% 62 2.366% 53 1.742% 58 2.156% 63 2.418% 54 1.866% 59 2.210% 64+ 2.418% ' Funding Policy ' The City's funding policy is to contribute the annual required contribution. The annual required contribution equals the sum of: ➢ Normal cost ' ➢ Amortization of the unfunded actuarial accrued liability Annual Pension Cost ' For the year ended June 30, 2010, the City's annual required contribution is $1,027,244. The required contribution was based on the July 1, 2008 actuarial valuation using the entry age normal actuarial cost ' method. The actuarial assumptions included (a) 7.0% investment return (net of administrative expenses), (b) the CalPERS 1997 - 2002 Experience Study table for Males and Females, (c) projected annual payroll increases of 3.25% a year plus merit, and (d) cost -of -living adjustment of 2% per year. Both (a) and (c) included an inflation component of 3.5 %. The unfunded actuarial accrued liability is ' being fresh started and amortization payments are increasing by 3.25% per year over 20 years, with 14 remaining at June 30, 2010. ' THREE -YEAR TREND INFORMATION FOR PARS ($ Amounts in Thousands) Annual Percentage of Pension Cost APC Net Pension Fiscal Year (APC) Contributed Obligation 6/30/2008 $ 818 100% $ - ' 6/30/2009 1,083 100% = 6/30/2010 1,027 100% I 1 67 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 7. RETIREMENT BENEFITS, Continued B. Public Agency Retirement Services (PARS), Continued Most Recent Actuarial Study - Schedule of Funding Progress ($ Amounts in Thousands) Overfunded (Unfunded) Overfunded Actuarial Entry Age (Unfunded) Liability as Actuarial Actual Actuarial Actuarial Percentage of Valuation Asset Accrued Accrued Funded Covered Covered Date Value Liability Liability Ratio Payroll Payroll Miscellaneous Employees Group 6/30/2009 $ 2,409 $ 9,755 $ (7,346) 24.7% $ 12,112 (60.65)% C. Defined Contribution Pension Plan The City provides pension benefits for all of its part -time employees through a defined contribution plan. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The plan is administered as part of the Public Agency Retirement System (PARS). All part -time employees are eligible to participate from the date of employment. Federal legislation requires contributions of at least 7.5% to a retirement plan, and City Council resolved to match the employees' contribution of 3.75% for employees hired prior to July 1, 1996. Employees hired after July 1, 1996 pay 7.5% of the contributions. The City's contributions for each employee (and interest earned by the accounts) are fully vested immediately. For the year ended June 30, 2010, the City's payroll covered by the plan was $617,386. The City made employer contributions of $475 (0.0769% of current covered payroll), and employees contributed $45,829 (7.4232% of current covered payroll). 8. REHABILITATION LOAN PROGRAM The City has made various non - interest bearing loans to property owners for the rehabilitation of property within the City. In accordance with the Affordable Housing Rehabilitation Loan Program, ten percent of each loan is forgiven each year on the loan anniversary. A portion of the loans are repayable only upon the sale of the property within ten years of the loan origination date or upon the death of the current property owner. Due to the contingent repayment schedule of these loans, the Agency records an expenditure when a loan is made and no receivable is included in the accompanying basic financial statements. The balance of the loans outstanding at June 30, 2010 was $18,295. 9. TAX INCREMENT REIMBURSEMENT EXPENDITURES The tax increment reimbursement expenditures are comprised of pass through payments to other taxing agencies such as the County of San Diego and owner participation agreement payments to developers that funded public improvements within the project area. 68 1 i 0 7 LI ' City of Poway ]rtes to Basic Financial Statements, Continued. I" or the year ended June 30, 2010 10. OTHER REQUIRED DISCLOSURES tA. Government -Wide Financial Statements At June 30, 2010, the unrestricted net assets had a deficit balance of $(67,276,026) for governmental activities because long -term debt is in excess of assets owned by the City. The deficit is caused by pass through payments and other non - capitalizable expenditures from bond proceeds. ' B. Fund Financial Statements At June 30, 2010, the following fund had a deficit fund balance: ' Funds Deficit Non -major Governmental Funds: Storm Water Management (147,169) ' 11. RISK MANAGEMENT ' The City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 122 California public entities and is organized under a joint powers agreement pursuant to California Government Code Section 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 coverage. The Authority's pool began covering claims of its members in 1978. Each member government has an elected official as its ' representative on the Board of Directors. The Board operates through a 9- member Executive Committee. The audited Financial Statements can be obtained from City of Poway. ' A. General Liabilities Each member government pays a primary deposit to cover estimated losses for a fiscal year (claim year). Six months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit ' computation is then made for each open claims year. Limit: $50 million combined single limit per occurrence. B. Workers' Compensation The City also participates in the workers compensation pool administered by the Authority. Each ' member pays a primary deposit to cover estimated losses for a fiscal year (claims year). Six months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Limit: Statutory benefits and $10 million employers' liability. ' C. Environmental Insurance The City also participates in the pollution legal liability and remediation legal liability insurance that is administered by the Authority. This policy covers sudden and gradual pollution of scheduled property, streets and storm drains owned by the City. Limit: $10 million per member, $50,000 per occurrence self - insured retention. ' 69 City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 11. RISK MANAGEMENT, Continued D. Property Insurance The City participates in the all -risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. The City's property is currently insured according to a schedule of covered property submitted by the City to the Authority. Total all -risk property insurance coverage is $155,572,152. There is a $5,000 per loss deductible except for earthquake which has a 5% deductible and flood which has a $100,000 per occurrence deductible. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. E. Fidelity Bonds The City purchases blanket fidelity bond 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 retroactive adjustments. At June 30, 2010, no liability was recorded in the accompanying basic financial statements. 12. JOINT VENTURE The City is a member of the Regional Solid Waste Association Joint Powers Authority (JPA). The JPA was formed on September 1, 1997 by the Cities of Del Mar, Encinitas, National City, Poway, Solana Beach and Vista to provide stable, long -term, cost effective options for all aspects of regional solid waste disposal. Each member provides a proportionate percentage of revenue to cover all costs related to the obligations and liabilities of the JPA when they become due and payable. In the event of dissolution of the JPA, any money or assets in possession of the Regional Solid Waste Association after the payment of all liabilities, costs, expenses and charges shall be distributed to the member agencies in proportion to their contributions determined as of the time of termination. The activities of the JPA are supervised by a board consisting of one elected member of the legislative body of each of the member agencies. The City of Escondido joined the JPA as a special contract party for the purpose of working on Regional Household Hazardous Waste issues. Summarized audited information of the JPA for the fiscal year ended June 30, 2010 is as follows: Total assets $ 318,983 Total liabilities $ 9,990 Fund equity $ 308,993 Total revenues $ 263,586 Total expenses $ 239,076 Net increase in fund equity $ 24,510 City's share of the JPA's assets and liabilities are not available. Separate financial statements of the JPA are available at the City of Poway. 70 C i� u n 'J i 7 L I I F City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 13. PROPERTY TAXES Property taxes are levied on March 1 and are payable in two installments: November 1 and February 1 of each year. Property taxes become delinquent on December 10 and April 10, for the first and second installments, respectively. The lien date is January 1. The County of San Diego, California (County) bills and collects property taxes and remits them to the City according to a payment schedule established by the County. The County is permitted by State law to levy taxes at 1 % of full market value (at time of purchase) and can increase the property tax rate no more than 2% per year. The City receives a share of this basic tax levy proportionate to what it received during the years 1980 -1981. Property tax revenue is recognized in the fiscal year for which the taxes have been levied, provided the taxes are received within 60 days after the end of the fiscal year. Property taxes received after this date are not considered available as a resource that can be used to finance the current year operations of the City and, therefore, are not recorded as revenue until collected. No allowance for doubtful accounts was considered necessary. 14. CONTINGENT LIABILITIES AND COMMITMENTS A. Litigation The City is a defendant in certain legal actions arising in the normal course of operations. The accompanying basic financial statements reflect a liability for the probable amounts of loss associated with these claims. B. Grants The City participates in a number of programs that are fully or partially funded by grants received from federal, state, and county governments. Expenditures financed by grants are subject to audit by the appropriate grantor agency. If expenditures are disallowed due to non - compliance with grant program regulations, the City may be required to reimburse the grantor agency. As of June 30, 2010, significant amounts of grant expenditures have not been audited by the grantor agencies, but the City believes that disallowed expenditures, if any, based on subsequent audits will not have a material effect on any of the individual governmental funds or the City's overall financial position. C. Construction Various construction projects were in progress at June 30, 2010 with an estimated cost to complete of approximately $27,972,621 in all fund types. 71 City of Poway ' Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 15. COMMITMENTS UNDER DEVELOPER AGREEMENTS On April 1, 1999, the Agency entered into an Owner Participation Agreement with a developer with regard ' to certain parcels of real estate located in the Project Area within the boundaries of Community Facilities District (CFD) No. 88 -1. In order to provide for the funding of certain public improvements associated with ' the project, the Agency shall pay the developer on each annual payment date, an amount equal to gross property tax increment allocated to and received by the Agency with respect to the site, less the housing set - aside and the County and City administrative charges for the previous fiscal year ending June 30 preceding ' the annual payment date. On June 22,1999, the Agency entered into an Owner Participation Agreement with a developer with regard to certain parcels of real estate located in the Project Area. In order to provide for the funding of certain ' public improvements associated with the project, the Agency shall pay the developer on each annual payment date, an amount equal to gross property tax increment allocated to and received by the Agency with respect to the site, less the housing set -aside and the County and City administrative charges for the ' previous fiscal year ending June 30 preceding the annual payment date. 16. RELATED PARTY TRANSACTION ' During the fiscal year 2005-06, the City issued a Housing Loan to the City Manager in the amount of ' $500,000 for the home purchase within the City limit. The loan is secured by a note and deed of trust on the property in the amount of $500,000. The term of the loan shall be for thirty years. The interest rate on the loan is established at a fixed rate of 2.50% APR, payable bi- weekly through payroll deductions. The loan is ' interest only for the first year then a level payment over the next 29 years. The outstanding loan balance was paid in full as of June 30, 2010. 0 n 72 1 1 ' City of Poway Notes to Basic Financial Statements, Continued For the year ended June 30, 2010 1 17. RESERVATION AND DESIGNATION OF FUND BALANCES 1 Major Funds Low and Moderate Income Housing City of Poway Redevelopment Other 1 General Special Revenue RDA Debt Area Capital Governmental Fund Fund Service Fund Projects Fund Fund Total 1 Reserved for: Encumbrances $ 186,808 $ 202,250 $ $ 1,442,242 $ 342,406 $ 2,173,706 Prepaid items 33,811 - 33,811 Inventories 94,085 94,085 Deposits 27,243 = 27,243 1 Notes receivable = _ 7,680,253 7,680,253 Advances to other funds 4,305,762 3,737,676 8,043,438 Debt service - - 13,938,600 3,918,156 17,856,756 Low and moderate income housing 17,436,676 - _ - 17,436,676 1 Capital projects = 2,962,509 2,962,509 Total reserved 4,647,709 17,638,926 13,938,600 9,122,495 10,960,747 56,308,477 Unreserved: 1 Designated for: City facilities 3,772,838 - - - - 3,772,838 State of California Economic downturn 3,121,321 3,121,321 Special projects 1,214,986 1,214,986 1 Street maintenance 4,507,818 = _ _ = 4,507,818 Capital projects - 12,390,230 8,405,474 20,795,704 Miscellaneous 19,107,774 - - 19,107,774 1 Total unreserved, designated 31,724,737 12,390,230 8,405,474 52,520,441 Undesignated for: Special revenue funds - - 5,913,093 5,913,093 1 Total unreserved, undesignated - - 5,913,093 5,913,093 Total fund balances $ 36,372,446 $ 17,638,926 $ 13,938,600 $ 21,512,725 $ 25,279,314 $ 114,742,011 1 18. SUBSEQUENT EVENTS 1 State Budget Crisis In 2009, the State of California enacted legislation authorizing a two -year takeaway of Redevelopment 1 Agency funds. The fiscal year 2009 -2010 payment was $13,700,882 and it is anticipated another $2,820,770 will need to be paid in fiscal year 2010 -2011. This action was litigated by the California Redevelopment Association and other parties. This lawsuit challenges the constitutionality of ABX 4 -26 and seeks to 1 prevent the State from taking redevelopment funds for non - redevelopment purposes. Poway Royal Mobile Home Park 1 On July 12, 2010, the City of Poway sold the Poway Royal Mobile Home Park to Hometown Poway Royal Estates LLC for $38,300,000. As such the 1995 Certificates of Participation were fully paid off in conjunction with their August 1, 2010 debt service payment. Additionally the lease between the City and the Agency 1 was terminated at the time of the sale. In addition the City received a twenty year $10,000,000 note receivable. Interest at five percent per annum is due on July 12th of each year with the entire principal balance being due on July 12, 2030. 1 73 This page intentionally left blank. 74 0 n F L 0 J n REQUIRED SUPPLEMENTARY 75 INFORMATION City of Poway Required Supplementary Information For the year ended June 30, 2010 1. BUDGETARY INFORMATION The City prepares its budgets on the basis of estimated expenditures and, accordingly, the budget amounts included in the accompanying financial statements are presented on a basis consistent with generally accepted accounting principles. The City Manager's Proposed Budget is reviewed by the City's Budget Review Committee (Committee), whose members are appointed by the City Council. The Committee then prepares recommendations for consideration by the City Council when the budget is adopted at a public hearing each June. No budget expenditures can be disbursed without proper appropriations. Once the budget is adopted, no additional fund appropriations can be authorized without the Council's approval. The level of budget control (the level on which expenditures may not legally exceed appropriations) is the individual fund level. The City Manager can authorize budget transfers between departments without additional appropriations. The City holds a mid -year budget review meeting. During the meeting, all the budget expenditures are reviewed and projections for the whole year are made. Therefore, any necessary changes are submitted for approval by the City Council with a resolution. Annual appropriated budgets are adopted for the general, special revenue (except for the Performing Arts Center Trust), the permanent funds, and one debt service fund. Budgets are adopted on a basis consistent with generally accepted accounting principles. Budgeted amounts are as originally adopted and as further amended by the City Council. Capital improvement projects budgets are adopted upon project approval and remaining project balances are carried forward to subsequent fiscal years until the project's completion. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders and contracts) outstanding at year -end are reported as reservations of fund balances and do not constitute expenditures or liabilities. The commitments will be reappropriated and honored in the subsequent year. 76 h 0 l d 7 7 11 77 City of Poway Required Supplementary Information, Continued For the year ended June 30, 2010 1. BUDGETARY INFORMATION, Continued ' The following is the budget comparison schedules for the General Fund and all major special revenue funds. 'Budget Comparison Schedule, General Fund ' Budgeted Amount Original Final Actual Variance REVENUES: Taxes $ 22,979,240 $ 22,979,240 $ 23,841,209 $ 861,969 Licenses and permits 402,610 402,610 433,517 30,907 Intergovernmental 266,890 266,890 602,192 335,302 Charges for services 1,053,530 1,053,530 1,013,569 (39,961) Fines and forfeitures 761,000 761,000 750,551 (10,449) Use of money and property 2,089,560 2,089,560 1,892,434 (197,126) Developer fees 3,413,710 3,413,710 3,436,091 22,381 ' Other revenue 436,880 436,880 965,071 528,191 Total revenues 31,403,420 31,403,420 32,934,634 1,531,214 ' EXPENDITURES: Current: General government 3,704,381 6,126,478 5,241,469 885,009 ' Public safety 19,461,170 19,475,470 18,812,864 662,606 Public works 2,609,129 2,647,629 2,395,310 252,319 Development services 4,740,058 4,767,148 4,475,943 291,205 Community services 4,936,831 4,956,831 4,422,418 534,413 Capital outlay 21757,180 2,410,845 1,295,596 1,115,249 Total expenditures 38,208,749 40,384,401 36,643,600 3,740,801 REVENUES OVER (UNDER) EXPENDITURES (6,805,329) (8,980,981) (3,708,966) 5,272,015 ' OTHER FINANCING SOURCES (USES): Transfers in 2,210,040 5,498,649 4,038,976 (1,459,673) Transfers out (2,329,295) (3,103,277) (1,671,709) 1,431,568 Total other financing sources (uses) (119,255) 2,395,372 2,367,267 (28,105) ' Net change in fund balance $ (6,924,584) $ (6,585,609) (1,341,699) $ 5,243,910 FUND BALANCES: ' Beginning of year 37,714,145 End of year $ 36,372,446 11 77 City of Poway Required Supplementary Information, Continued For the year ended June 30, 2010 1. BUDGETARY INFORMATION, Continued Budget Comparison Schedule, Low and Moderate Income Housing Special Revenue Fund Budgeted Amount Original Final Actual Variance REVENUES: Interest and rental Otherrevenue Total revenues EXPENDITURES: General government Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCES: Beginning of year End of year $ 395,410 $ 395,410 $ 349,507 $ (45,903) 30,000 30,000 326,391 296,391 425,410 425,410 675,898 250,488 1,155,336 1,155,336 1,141,648 13,688 18,680,046 18,680,046 7,037,128 11,642,918 19,835,382 19,835,382 8,178,776 11,656,606 (19,409,972) (19,409,972) (7,502,878) 11,907,094 7,449,890 7,449,890 7,881,168 431,278 (1,784,610) (1,784,610) (1,741,327) 43,283 5,665,280 5,665,280 6,139,841 474,561 $ (13,744,692) $ (13,744,692) (1,363,037) $ 12,381,655 78 19,001,963 $ 17,638,926 City of Poway Required Supplementary Information, Continued For the year ended June 30, 2010 2. DEFINED BENEFIT PENSION PLANS A. California Public Employees' Retirement Plan (PERS) A schedule of funding progress for the year ended June 30, 2010 including the past three actuarial valuations is presented below. Miscellaneous Employees Group Public Safety Employees Group ($ Amounts in Thousands) The City's safety plan becomes part of a Ca1PERS Risk Pool for employers with less than 100 active plan members. As part of a cost sharing multiple - employer defined benefits plan, disclosures of the schedule of funding progress is not required. B. Public Agency Retirement Services (PARS) A schedule of funding progress for the year ended June 30, 2010 including the past three actuarial valuations is presented below. Miscellaneous Employees Group Actuarial Valuation Date 6/30/2004 $ 6/30/2007 6/30/2009 ($ Amounts in Thousands) Overfunded Overfunded Entry Age (Unfimded) Entry Age (Unfunded) Actuarial Actual Actuarial Actuarial Valuation Asset Accrued Accrued Date Value Liability Liability 6/30/2007 $ 51,942 $ 58,792 $ (6,850) 6/30/2008 56,126 63,279 (7,153) 6/30/2009 59,494 69,735 (10,241) The City's safety plan becomes part of a Ca1PERS Risk Pool for employers with less than 100 active plan members. As part of a cost sharing multiple - employer defined benefits plan, disclosures of the schedule of funding progress is not required. B. Public Agency Retirement Services (PARS) A schedule of funding progress for the year ended June 30, 2010 including the past three actuarial valuations is presented below. Miscellaneous Employees Group Actuarial Valuation Date 6/30/2004 $ 6/30/2007 6/30/2009 ($ Amounts in Thousands) Overfunded Entry Age (Unfimded) Actual Actuarial Actuarial Asset Accrued Liability as Value Liability Percentage of Funded Covered Covered Ratio Payroll Payroll 88.3% $ 12,901 (53.10)% 88.7% 12,891 (55.49)% 85.3% 12,754 (80.30)% The City's safety plan becomes part of a Ca1PERS Risk Pool for employers with less than 100 active plan members. As part of a cost sharing multiple - employer defined benefits plan, disclosures of the schedule of funding progress is not required. B. Public Agency Retirement Services (PARS) A schedule of funding progress for the year ended June 30, 2010 including the past three actuarial valuations is presented below. Miscellaneous Employees Group Actuarial Valuation Date 6/30/2004 $ 6/30/2007 6/30/2009 ($ Amounts in Thousands) 79 Overfunded Entry Age (Unfunded) Actual Actuarial Actuarial Asset Accrued Accrued Value Liability Liability - $ 4,821 $ (4,821) 1,336 7,799 (6,463) 2,409 9,755 (7,346) 79 Overfunded (Unfunded) Actuarial Liability as Percentage of Funded Covered Covered Ratio Payroll Payroll 17.1% $ 11,691 (49.08)% 17.1% 13,167 (49.08)% 24.7% 12,112 (60.65)% This page intentionally left blank 80 'J i 7 7 i d 7 0 SUPPLEMENTARY INFORMATION 81 This page intentionally left blank. 82 n u u Fj I F, NON -MAJOR GOVERNMENTAL FUNDS ' SPECIAL REVENUE FUNDS: Fire Protection Fund - Used to account for revenues received from the Fire Protection Special Tax. Voters ' approved this special tax in June 1997. It is used to pay for a portion of the costs of fire protection within the City of Poway. ' 800 MHz Regional Communication System Fund - Used to account for revenues received from the 800 MHz Regional Communication System Special Tax. Voters approved this special tax in June 1998. It is used to ' pay for the City's share of the County -wide radio backbone system, and a portion of the annual maintenance expenses. ' Gas Tax Fund - Used to account for revenues received and expenditures made for street maintenance. Financing is provided by the City's share of State gasoline taxes made pursuant to the California State Constitution and authorized by the State Legislature. ' Street Improvement Fund - Used to account for revenues received and expenditures made for street improvements. Financing is provided primarily from developer's traffic mitigation fees. City Ordinance No. ' 80 authorized the collection and the segregation of the funding. Drainage Fund - Used to account for operations of the flood control and drainage division. Financing is provided by developer's drainage fees and flood zone fees from the County. Poway Municipal Code Section ' 16.72 requires the segregation of the funding. ' Maintenance Districts Fund - Used for lighting, landscape and maintenance. Costs of the districts are estimated and property owners are assessed their proportionate share based on an engineer's report. The assessments are collected via the tax rolls. ' Miscellaneous and Grants Fund - Used to account for grants from various agencies used for operations and maintenance, and to account for specific in -lieu fees from developers. Financing for grants is provided by ' the State, County and Federal Government. Such grants provide for payment of all current operating costs and may be used only for specified purposes. ' Community Development Block Grant Fund - Used to account for revenues received and expenditures made for community development and housing assistance. Financing is provided under agreement with the county whereby the City is a secondary recipient with funds made available from the U.S. Department of ' Housing and Urban Development under the Housing and Community Development Acts of 1974 and 1977. Transportation Development Act Fund - Used to account for revenues received and expenditures made for ' transportation development, transit and related studies. Funding is provided to the City as secondary recipient under agreements with the county and with the San Diego Association of Governments. 1 83 NON -MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS, Continued: Proposition A Fund - To account for the San Diego County special Proposition A one -half (1/2) cent transportation sales tax which became effective July 1, 1988. All revenues of this fund must be expended for certain transportation- related purposes. Royal Mobilehome Park Administration Fund - Used to account for revenues received and expenditures made in the administration of the Royal Mobilehome Park. Traffic Congestion AB2928 Fund - Used to account for revenues received and expenditures made under the State's Traffic Congestion Relief grant, AB 2928. These funds must be used for street and highway pavement maintenance, rehabilitation and reconstruction of necessary associated facilities such as drainage and traffic control devices. Bette Bendixen Fund - Used to account for money provided by private donors restricted to maintenance of riding and hiking trails. Poway Road Beautification Fund - Used to account for money provided by donors restricted to beautification efforts along Poway Road. Poway Valley Senior Center Endowment Fund - Used to account for money provided by the City to the Poway Valley Senior Citizens Corporation restricted for on -going needs of the Senior Center. Interest may be expended at the organization's direction while expenditures from principal require City Council approval. Old Poway Park Tree Fund - Used to account for money provided by a settlement restricted to adding trees in Old Poway Park. Poway Public Arts Center Fund - Used to account for funds set aside to further public art in Poway. Kumeyaay Endowment Fund - Used to account for funds that have been set aside to offer education about the Kumeyaay Indians and eventually build a Kumeyaay Indian Interpretive Center. Poway Fine Arts Center Fund - Used to account for funds set aside for the creation of a fine arts center. Senior Volunteer Patrol Fund - Used to account for funds set aside to purchase supplies and equipment. Prop 1B Transportation Bond Fund - Used to account for revenues received and expenditures made under the State's Prop 1B Transportation Bond Fund. These funds must be used for projects that will assist in reducing local traffic congestion and further deterioration, improving traffic flows, or increasing traffic safety. 84 I 0 H_ i NON -MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS, Continued: Storm Water Management Fund - Used to account for revenues received and expenditures made for the City's storm water pollution prevention program. Fire Equipment Trust Fund - Used to account for funds that have been set -aside to purchase equipment used by the City's Fire Department. Public Art Trust Fund - Used to account for funds that have been set -aside to purchase public art for the City of Poway. Regional Arterial Traffic Mitigation -Used to account for new fees required by SANDAG. Fire Protection Impact Fees - Used to account for revenues received and expenditures made for fire protection improvements. Financing is provided primarily from developer fees. BEGIN Program - The Building Equity and Growth in Neighborhoods program (BEGIN) is funded by the California Department of Housing and Community Development to provide down payment assistance to low and moderate income first -time home buyers of newly constructed homes. DEBT SERVICE FUNDS: Used to account for accumulation of resources for the payment of interest and principal of long -term debt. PERMANENT FUNDS: Mary Patricia Ross Trust Fund - Used to account for revenue and expenses provided by a private estate to finance community park and recreation purposes. The principal must be maintained intact until 2006. Interest income must also be used to finance such recreational purposes. ' Library Fund - Used to account for a donation to the City which is to be held in perpetual trust. The income from the principal is to be used for library supplies and service. 1 CAPITAL PROTECTS FUNDS: Park Improvement Fund - Used to account for the financing and construction of park facilities throughout the City. Municipal Improvement Fund - Used to account for financing and construction of major capital facilities other than those financed by the proprietary funds. Major capital projects include construction of government buildings, including City Hall, fire station and warehouse facilities. 1 85 City of Poway Combining Balance Sheet Non -Major Governmental Funds June 30, 2010 86 Special Revenue Funds 800 MHz Fire Communication Gas Street Protection System Tax Improvement Drainage ASSETS Cash and investments $ - $ 31,094 1,083,784 $ 425,577 $ 531,753 Cash and investments with fiscal agents - - - - - Receivables: Taxes 3,075 31 - - 4,202 Accounts - - 1,925 - - Interest - 53 - - - Lease - - - - - Due from other governments and agencies - - 81,847 - - Advances to other funds - - - 1,642,944 2,094,732 Total assets $ 3,075 $ 31,178 $ 1,167,556 $ 2,068,521 $ 2,630,687 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ 8,915 $ 40,739 - $ 15,072 Due to other funds - 10,574 - - - Deferred revenue - - - - - Advances from other funds - - - 723,147 Total liabilities - 19,489 40,739 723,147 15,072 Fund Balances: Reserved for: Encumbrances - - 190,833 - 980 Advances to other funds - - - 1,642,944 2,094,732 Debt service - - - - - Capital projects - - - - - Total reserved - - 1K833 1,642,944 2,095,712 Unreserved: Designated: Special revenue funds - - - - - Total unreserved, designated - - - - - Undesignated 3,075 11,689 935,984 (297,570) 519,903 Total fund balances 3,075 11,689 1,126,817 1,345,374 2,615,615 Total liabilities and fund balances $ 3,075 $ 31,178 $ 1,167,556 $ 2,068,521 $ 2,630,687 86 Special Revenue Funds Royal Community Transportation Mobilehome Traffic Poway Maintenance Miscellaneous Development Development Park Congestion Bette Road Districts Grants Block Grant Act Proposition A Administration AB 2928 Bendixen Beautification $ 6,287,048 $ 2,162,895 $ 19,475 $ 593,437 $ 172,517 $ 4,107,293 $ 338,119 $ 21,077 $ 10,367 7,630 - - - - - - 5,601 48,560 - - - 211,570 - - - - - - - 11,250 - - - - 445,762 136,406 - - - 130,364 - - $ 6,300,279 $ 2,657,217 $ 155,881 $ 593,437 $ 172,517 $ 4,330,113 $ 468,483 $ 21,077 $ 10,367 $ 131,466 $ 88,785 $ 19,475 $ 5,150 - $ 94,706 - - - - 327,141 136,406 - - - - - - 37,819 - - - - - - - 131,466 453,745 155,881 5,150 - 94,706 - - - 65 139,263 4,965 - - - - - - - - - - - - 468,483 21,077 10,367 65 139,263 4,965 - - - 468,483 21,077 10,367 6,168,748 2,064,209 - - 172,517 - - - - 6,168,748 2,064,209 - - 172,517 - - - - - (4,965) 588,287 - 4,235,407 - - - 6,168,813 2,203,472 - 588,287 172,517 4,235,407 468,483 21,077 10,367 $ 6,300,279 $ 2,657,217 $ 155,881 $ 593,437 $ 172,517 $ 4,330,113 $ 468,483 $ 21,077 $ 10,367 (Continued) 87 City of Poway Combining Balance Sheet Non -Major Governmental Funds, Continued June 30, 2010 88 Special Revenue Funds Poway Valley Poway Poway Senior Center Old Poway Public Arts Kumeyaay Fine Arts Endowment Park Tree Center Endowment Centers ASSETS Cash and investments $ 442,571 $ 5,995 $ 53,566 $ 15,514 $ 3,130 Cash and investments with fiscal agents - - - - - Receivables: Taxes - - - - - Accounts - - - - - Interest - - - - - Lease - - - - - Due from other governments and agencies - - - - - Advances to other funds - - - - - Total assets $ 442,571 $ 5,995 $ 53,566 $ 15,514 $ 3,130 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ - $ - $ - $ - Due to other funds - - - - - Deferred revenue - - - - - Advances from other funds - - - - - Total liabilities - - - - - Fund Balances: Reserved for: Encumbrances - - - - - Advances to other funds - - - - - Debt service - - - - - Capital projects 442,571 5,995 53,566 15,514 3,130 Total reserved 442,571 5,995 53,566 15,514 3,130 Unreserved: Designated: Special revenue funds - - - - - Total unreserved, designated - - - Undesignated - - - - - Total fund balances 442,571 5,995 53,566 15,514 3,130 Total liabilities and fund balances $ 442,571 $ 5,995 $ 53,566 $ 15,514 $ 3,130 88 $ 37,734 $ - $ - $ - $ - $ - $ - 228,766 - - - - 161,984 - 206,006 - - - - 472,506 - - 161,984 - 6,300 - - - - - - - - - - - 91,787 3,733 814 88,353 6,300 - - 91,787 3,733 814 88,353 36,703 - (153,469) 8,925 29,124 - - - - 36,703 - (147,169) 8,925 29,124 91,787 3,733 814 88,353 $ 36,703 $ $ 325,337 $ 8,925 $ 29,124 $ 91,787 $ 3,733 $ 162,798 $ 88,353 (Continued) 89 Permanent Special Revenue Funds Funds Regional Fire Senior Prop1B Arterial Protection Mary Volunteer Transportation Storm Water Fire Equipment Public Art Traffic Impact BEGIN Patricia Patrol Bond Management Trust Trust Mitigation Fees Program Ross Trust $ 36,703 $ - $ - $ 8,925 $ 29,124 $ 91,787 $ 3,733 $ - $ 88,353 - - 325,337 - - - - - - - - - - - 162,798 - $ 36,703 $ - $ 325,337 $ 8,925 $ 29,124 $ 91,787 $ 3,733 $ 162,798 $ 88,353 $ 37,734 $ - $ - $ - $ - $ - $ - 228,766 - - - - 161,984 - 206,006 - - - - 472,506 - - 161,984 - 6,300 - - - - - - - - - - - 91,787 3,733 814 88,353 6,300 - - 91,787 3,733 814 88,353 36,703 - (153,469) 8,925 29,124 - - - - 36,703 - (147,169) 8,925 29,124 91,787 3,733 814 88,353 $ 36,703 $ $ 325,337 $ 8,925 $ 29,124 $ 91,787 $ 3,733 $ 162,798 $ 88,353 (Continued) 89 City of Poway Combining Balance Sheet Non -Major Governmental Funds, Continued June 30, 2010 LIABILITIES AND Permanent Debt Service Capital Projects Funds Fund Funds Liabilities: Total Accounts payable Other $ - $ - $ Debt Service Park Municipal Governmental Library Fund Improvement Improvement Funds ASSETS - - - Cash and investments $ 892,774 $ 2,414,109 $ 1,167,844 $ 3,729 $ 21,042,293 Cash and investments with fiscal agents - 1,504,047 - - 1,504,047 Receivables: - - Fund Balances: Taxes - - - - 14,938 Accounts - - - - 592,993 Interest - - - - 53 Lease - - - - 11,250 Due from other governments and agencies - - - - 957,177 Advances to other funds - - - - 3,737,676 Total assets $ 892,774 $ 3,918,156 $ 1,167,844 $ 3,729 $ 27,860,427 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ $ - $ - $ - $ 442,042 Due to other funds - - - 864,871 Deferred revenue - - - 37,819 Advances from other funds - - 307,228 - 1,236,381 Total liabilities - - 307,228 - 2,581,113 Fund Balances: Reserved for: Encumbrances - - - - 342,406 Advances to other funds - - - - 3,737,676 Debt service - 3,918,156 - - 3,918,156 Capital projects 892,774 - 860,616 3,729 2,962,509 Total reserved 892,774 3,918,156 860,616 3,729 10,960,747 Unreserved: Designated: Special revenue funds - - - - 8,405,474 Total unreserved, designated - - - - 8,405,474 Undesignated - - - - 5,913,093 Total fund balances 892,774 3,918,156 860,616 3,729 25,279,314 Total liabilities and fund balances $ 892,774 $ 3,918,156 $ 1,167,844 $ 3,729 $ 27,860,427 (Concluded) "1 j n n 0 This page intentionally left blank. 91 City of Poway Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non -Major Governmental Funds For the year ended June 30, 2010 92 Special Revenue Funds 800 MHz Fire Communication Gas Street Protection System Tax Improvement Drainage REVENUES: Taxes $ - $ - $ 849,322 $ - $ 714,729 Intergovernmental - - - - - Charges for services 629,589 135,271 - - 20,689 Development fees - - - 58,395 7,701 Assessment levied - - - - - Use of money and property - 499 8,043 7,586 7,109 Other revenues - - 7,092 - - Total revenues 629,589 135,770 864,457 65,981 750,228 EXPENDITURES: - Current: Public safety - 153,516 - - - Public works - - 303,651 - 595,452 Community services - - - - - Capital outlay - - - - 1,129,653 Debt service: Principal - - - - - Interest and fiscal charges - - - - - Total expenditures - 153,516 303,651 - 1,725,105 REVENUES OVER (UNDER) EXPENDITURES 629,589 (17,746) 560,806 65,981 (974,877) OTHER FINANCING SOURCES (USES): Transfers in - _ - - _ Transfers out (628,932) - - Total other financing sources (uses) (628,932) - - REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES 657 (17,746) 560,806 65,981 (974,877) FUND BALANCES: Beginning of year 2,418 29,435 566,011 1,279,393 3,590,492 End of year $ 3,075 $ 11,689 $ 1,126,817 $ 1,345,374 $ 2,615,615 92 Special Revenue Funds Maintenance Districts Miscellaneous Grants Community Development Block Grant Transportation Development Act Proposition A Royal Mobilehome Park Administration Traffic Poway Congestion Bette Road AB 2928 Bendixen Beautification $ 296,795 $ - $ - $ - $ 2,332,190 $ - $ - $ $ - 856,871 239,170 5,000 - - 464,666 - - 183,873 - - - - - - 1,886,300 - - - - - - - 109,899 39,863 - 11,189 650 4,810,007 2,752 398 196 28,246 - - - 3,109 - - - 2,321,240 1,080,607 239,170 16,189 2,332,840 4,813,116 467,418 398 196 2,163,674 - - - 2,254,136 - - - - 4,617,566 - - - 10,139 720,270 239,170 62,096 - - 201,395 - - 2,173,813 720,270 239,170 62,0% 2,254,136 4,617,566 201,395 - - 147,427 360,337 - (45,907) 78,704 195,550 266,023 398 196 305,730 - - - - - - - (102,901) - - - - - - 305,730 (102,901) - - - - - - - 453,157 257,436 - (45,907) 78,704 195,550 266,023 398 1% 5,715,656 1,946,036 - 634,194 93,813 4,039,857 202,460 20,679 10,171 $ 6,168,813 $ 2,203,472 $ - $ 588,287 $ 172,517 $ 4,235,407 $ 468,483 $ 21,077 $ 10,367 (Continued) 93 City of Poway Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non -Major Governmental Funds, Continued For the year ended June 30, 2010 94 Special Revenue Funds Poway Valley Poway Poway Senior Center Old Poway Public Arts Kumeyaay Fine Arts Endowment Park Tree Center Endowment Centers REVENUES: Taxes $ - $ - $ - $ _ $ _ Intergovernmental _ _ _ Charges for services - _ _ Development fees - - _ Assessment levied _ _ _ Use of money and property 8,374 113 1,014 294 59 Other revenues _ _ _ Total revenues 8,374 113 1,014 294 59 EXPENDITURES: Current: Public safety - _ _ _ _ Public works _ _ _ Community services - _ _ _ _ Capital outlay _ _ _ _ - Debt service: Principal _ _ _ - _ Interest and fiscal charges _ _ _ _ - Total expenditures _ _ _ _ _ REVENUES OVER (UNDER) EXPENDITURES 8,374 113 1,014 294 59 OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES 8,374 113 1,014 294 59 FUND BALANCES: Beginning of year 434,197 5,882 52,552 15,220 3,071 End of year $ 442,571 $ 5,995 $ 53,566 $ 15,514 $ 3,130 94 1 778,756 1,452,702 - - - - - - 1,405 - - - - - 934,402 - 1,405 778,756 1,452,702 - - - - 934,402 - 9,320 (776,827) (111,546) 169 851 11,765 3,733 814 1,673 - - 163,151 - - - - - - 163,151 - - - - - 9,320 (776,827) 51,605 169 851 11,765 3,733 814 1,673 27,383 776,827 (198,774) 8,756 28,273 80,022 - - 86,680 $ 36,703 $ - $ (147,169) $ 8,925 $ 29,124 $ 91,787 $ 3,733 $ 814 $ 88,353 (Continued) 95 Permanent Special Revenue Funds Funds Regional Fire Senior Prop1B Arterial Protection Mary Volunteer Transportation Storm Water Fire Equipment Public Art Traffic Impact BEGIN Patricia Patrol Bond Management Trust Trust Mitigation Fees Program Ross Trust - - - - - 10,058 - 934,402 - - - 1,341,156 - - - - - - - - - - 3,676 - - 725 1,929 - 169 551 1,707 57 814 1,673 10,000 - - - 300 - - - - 10,725 1,929 1,341,156 169 851 11,765 3,733 935,216 1,673 778,756 1,452,702 - - - - - - 1,405 - - - - - 934,402 - 1,405 778,756 1,452,702 - - - - 934,402 - 9,320 (776,827) (111,546) 169 851 11,765 3,733 814 1,673 - - 163,151 - - - - - - 163,151 - - - - - 9,320 (776,827) 51,605 169 851 11,765 3,733 814 1,673 27,383 776,827 (198,774) 8,756 28,273 80,022 - - 86,680 $ 36,703 $ - $ (147,169) $ 8,925 $ 29,124 $ 91,787 $ 3,733 $ 814 $ 88,353 (Continued) 95 City of Poway Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non -Major Governmental Funds, Continued For the year ended June 30, 2010 EXPENDITURES: Current: Public safety Permanent Debt Service Capital Project - 153,516 Fund Fund Fund - - 7,548,371 Community services - Total - - 4,617,566 Capital outlay Other - - Debt Service Park Municipal Governmental Library Fund Improvement Improvement Funds REVENUES: - 815,000 - - Taxes $ - $ - $ $ - $ 4,193,036 Intergovernmental - - - - 2,510,167 Charges for services - - - 2,126,705 Development fees - - 21,842 - 275,487 Assessment levied - - - - 1,886,300 Use of money and property 17,118 795,860 21,673 71 5,850,392 Other revenues - - - - 48,747 Total revenues 17,118 795,860 43,515 71 16,890,834 EXPENDITURES: Current: Public safety - - - - 153,516 Public works - - - - 7,548,371 Community services - - - - 4,617,566 Capital outlay - - - - 3,298,530 Debt service: Principal - 815,000 - - 815,000 Interest and fiscal charges - 1,041,307 - - 1,041,307 Total expenditures - 1,856,307 - - 17,474,290 REVENUES OVER (UNDER) EXPENDITURES 17,118 (1,060,447) 43,515 71 (583,456) OTHER FINANCING SOURCES (USES): Transfers in - 1,108,809 - - 1,577,690 Transfers out (18,534) (449,045) - - (1,199,412) Total other financing sources (uses) (18,534) 659,764 - - 378,278 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (1,416) (400,683) 43,515 71 (205,178) FUND BALANCES: Beginning of year 894,190 4,318,839 817,101 3,658 25,484,492 End of year $ 892,774 $ 3,918,156 $ 860,616 $ 3,729 $ 25,279,314 (Concluded) 96 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual City of Poway RDA Debt Service Fund For the year ended June 30, 2010 97 Budgeted Amount Variance with Original Final Actual Final Budget Fund balance, July 1, 2009 $ 20,630,806 $ 20,630,806 $ 20,630,806 $ - Resources (inflows): Tax increment 37,249,430 37,249,430 39,377,603 2,128,173 Use of money and property 3,537,890 3,537,890 3,227,619 (310,271) Proceeds from bonds and loans 160,620 160,620 161,049 429 Transfers in 2,233,655 2,233,655 2,190,372 (43,283) Amount available for appropriation 43,181,595 43,181,595 44,956,643 1,775,048 Charges to appropriation (outflows): Debt service: Principal 6,335,000 6,335,000 6,335,000 - Interest and fiscal charges 14,860,470 14,860,470 13,902,459 958,011 Tax increment reimbursement 6,864,410 6,864,410 2,380,740 4,483,670 Tax shift - 13,700,882 13,700,882 - Transfers out 15,737,795 16,212,205 15,329,768 (882,437) Total charges to appropriations 43,797,675 57,972,967 51,648,849 4,559,244 Excess of resources over (under) charges to appropriations (616,080) (14,791,372) (6,692,206) 6,334,292 Fund balance, June 30, 2010 $ 20,014,726 $ 5,839,434 $ 13,938,600 $ 6,334,292 97 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Fire Protection Special Revenue Fund For the year ended June 30, 2010 ' ' Budgeted Amounts Actual Variance with ' Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 2,418 $ 2,418 $ 2,418 $ - Resources (inflows): Charges for services 600,000 600,000 629,589 29,589 ' Amount available for appropriation 600,000 600,000 629,589 29,589 Charges to appropriations (outflows): ' Transfers out 600,000 600,000 628,932 (28,932) Total charges to appropriations 600,000 600,000 628,932 (28,932) ' Excess of resources over (under) charges to appropriations - - 657 657 , Fund balance, June 30, 2010 $ 2,418 $ 2,418 $ 3,075 $ 657 98 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 800 MHz Communication System Special Revenue Fund For the year ended June 30, 2010 Fund balance, July 1, 2009 Resources (inflows): Charges for services Use of money and property Amount available for appropriation Charges to appropriations (outflows): Public safety Debt service: Principal Interest and fiscal charges Total charges to appropriations Excess of resources over (under) charges to appropriations Fund balance, June 30, 2010 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget $ 29,435 $ 29,435 $ 29,435 $ - 134,000 134,000 135,271 1,271 1,000 1,000 499 (501) 135,000 135,000 135,770 770 76,000 76,000 153,516 (77,516) 91130 9,130 - 91130 78,580 78,580 - 78,580 163,710 163,710 153,516 10,194 (28,710) (28,710) (17,746) 10,964 $ 725 $ 725 $ 11,689 $ 10,964 99 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Gas Tax Special Revenue Fund For the year ended June 30, 2010 100 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 566,011 $ 566,011 $ 566,011 $ - Resources (inflows): Taxes 819,130 819,130 849,322 30,192 Use of money and property 5,450 5,450 8,043 2,593 Other revenue - - 7,092 7,092 Amount available for appropriation 824,580 824,580 864,457 9,685 Charges to appropriations (outflows): Public works 1,004,833 2,067,633 303,651 1,763,982 Total charges to appropriations 1,004,833 2,067,633 303,651 1,763,982 Excess of resources over (under) charges to appropriations (180,253) (1,243,053) 560,806 1,773,667 Fund balance, June 30, 2010 $ 385,758 $ (677,042) $ 1,126,817 $ 1,773,667 100 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Street Improvement Special Revenue Fund For the year ended June 30, 2010 101 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 1,279,393 $ 1,279,393 $ 1,279,393 $ - Resources (inflows): Developers fee 90,210 90,210 58,395 (31,815) Use of money and property 8,320 8,320 7,586 (734) Amount available for appropriation 98,530 98,530 65,981 (32,549) Charges to appropriations (outflows): Capital outlay - - - - Total charges to appropriations - - - - Excess of resources over (under) charges to appropriations 98,530 98,530 65,981 (32,549) Fund balance, June 30, 2010 $ 1,377,923 $ 1,377,923 $ 1,345,374 $ (32,549) 101 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Drainage Special Revenue Fund For the year ended June 30, 2010 102 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 3,590,492 $ 3,590,492 $ 3,590,492 $ - Resources (inflows): Taxes 665,060 665,060 714,729 49,669 Charges for services 19,440 19,440 20,689 1,249 Developer fees 33,600 33,600 7,701 (25,899) Use of money and property 28,910 28,910 7,109 (21,801) Amount available for appropriation 747,010 747,010 750,228 3,218 Charges to appropriations (outflows): Public works 629,746 629,746 595,452 34,294 Capital outlay 1,276,542 1,276,542 1,129,653 146,889 Total charges to appropriations 1,906,288 1,906,288 1,725,105 181,183 Excess of resources over (under) charges to appropriations (1,159,278) (1,159,278) (974,877) 184,401 Fund balance, June 30, 2010 $ 2,431,214 $ 2,431,214 $ 2,615,615 $ 184,401 102 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Maintenance Districts Special Revenue Fund For the year ended June 30, 2010 103 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 5,715,656 $ 5,715,656 $ 5,715,656 $ - Resources (inflows): Taxes 315,010 315,010 296,795 (18,215) Assessment levied 1,885,650 1,885,650 1,886,300 650 Use of money and property 144,780 144,780 109,899 (34,881) Other revenue - - 28,246 28,246 Transfers in 305,860 305,860 305,730 (130) Amount available for appropriation 2,651,300 2,651,300 2,626,970 (24,330) Charges to appropriations (outflows): Community services 2,936,238 2,936,238 2,163,674 772,564 Capital outlay - 49,271 10,139 39,132 Total charges to appropriations 2,936,238 2,985,509 2,173,813 811,696 Excess of resources over (under) charges to appropriations (284,938) (334,209) 453,157 787,366 Fund balance, June 30, 2010 $ 5,430,718 $ 5,381,447 $ 6,168,813 $ 787,366 103 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Miscellaneous Grant Special Revenue Fund For the year ended June 30, 2010 104 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 1,946,036 $ 1,946,036 $ 1,946,036 $ - Resources (inflows): Intergovernmental 353,600 353,600 856,871 503,271 Developer fees 71,000 71,000 183,873 112,873 Use of money and property 47,220 47,220 39,863 (7,357) Amount available for appropriation 471,820 471,820 1,080,607 608,787 Charges to appropriations (outflows): Capital outlay 1,278,224 2,245,409 720,270 1,525,139 Transfers out 100,000 100,000 102,901 (2,901) Total charges to appropriations 1,378,224 2,345,409 823,171 1,522,238 Excess of resources over (under) charges to appropriations (906,404) (1,873,589) 257,436 2,131,025 Fund balance, June 30, 2010 $ 1,039,632 $ 72,447 $ 2,203,472 $ 2,131,025 104 ' ' City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Community Development Block Grant Special Revenue Fund For the year ended June 30, 2010 ' Budgeted Amounts Actual Variance with Original Final Amounts Final Budget ' Fund balance, July 1, 2009 $ - $ - $ - $ - Resources (inflows): ' Intergovernmental 341,250 341,250 239,170 (102,080) Amount available for appropriation 341,250 341,250 239,170 (102,080) ' Charges to appropriations (outflows): Capital outlay 485,092 485,092 239,170 245,922 ' Total charges to appropriations 485,092 485,092 239,170 245,922 Excess of resources over (under) ' charges to appropriations (143,842) (143,842) - 143,842 Fund balance, June 30, 2010 $ (143,842) $ (143,842) $ - $ 143,842 1 ' 105 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Transportation Development Act Special Revenue Fund For the year ended June 30, 2010 106 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 634,194 $ 634,194 $ 634,194 $ - Resources (inflows): Intergovernmental 5,000 5,000 5,000 Use of money and property 15,000 15,000 11,189 (3,811) Amount available for appropriation 20,000 20,000 16,189 (3,811) Charges to appropriations (outflows): Capital outlay 457,961 457,961 62,096 395,865 Total charges to appropriations 457,961 457,961 62,096 395,865 Excess of resources over (under) charges to appropriations (437,961) (437,961) (45,907) 392,054 Fund balance, June 30, 2010 $ 196,233 $ 196,233 $ 588,287 $ 392,054 106 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Proposition A Special Revenue Fund For the year ended June 30, 2010 107 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 93,813 $ 93,813 $ 93,813 $ - Resources (inflows): Taxes 1,309,000 2,276,600 2,332,190 55,590 Use of money and property 5,450 5,450 650 (4,800) Amount available for appropriation 1,314,450 2,282,050 2,332,840 50,790 Charges to appropriations (outflows): Public works 1,529,350 2,496,950 2,254,136 242,814 Total charges to appropriations 1,529,350 2,496,950 2,254,136 242,814 Excess of resources over (under) charges to appropriations (214,900) (214,900) 78,704 293,604 Fund balance, June 30, 2010 $ (121,087) $ (121,087) $ 172,517 $ 293,604 107 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Royal Mobilehome Park Administration Special Revenue Fund For the year ended June 30, 2010 108 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 4,039,857 $ 4,039,857 $ 4,039,857 $ - Resources (inflows): Use of money and property 4,928,670 4,928,670 4,810,007 (118,663) Other revenue - - 3,109 3,109 Amount available for appropriation 4,928,670 4,928,670 4,813,116 (115,554) Charges to appropriations (outflows): Community services 4,779,510 4,874,510 4,617,566 256,944 Total charges to appropriations 4,779,510 4,874,510 4,617,566 256,944 Excess of resources over (under) charges to appropriations 149,160 54,160 195,550 141,390 Fund balance, June 30, 2010 $ 4,189,017 $ 4,094,017 $ 4,235,407 $ 141,390 108 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Traffic Congestion AB 2928 Special Revenue Fund For the year ended June 30, 2010 109 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 202,460 $ 202,460 $ 202,460 $ - Resources (inflows): Intergovernmental 483,370 483,370 464,666 (18,704) Use of money and property 1,360 1,360 2,752 1,392 Amount available for appropriation 484,730 484,730 467,418 (17,312) Charges to appropriations (outflows): Capital outlay 483,370 483,370 201,395 281,975 Total charges to appropriations 483,370 483,370 201,395 281,975 Excess of resources over (under) charges to appropriations 1,360 1,360 266,023 264,663 Fund balance, June 30, 2010 $ 203,820 $ 203,820 $ 468,483 $ 264,663 109 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Bette Bendixen Special Revenue Fund For the year ended June 30, 2010 ' Budgeted Amounts Actual Variance with ' Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 20,679 $ 20,679 $ 20,679 $ - Resources (inflows): Use of money and property 550 550 398 (152) ' Amount available for appropriation 550 550 398 (152) Charges to appropriations (outflows): Capital outlay 20,457 20,457 - 20,457 Total charges to appropriations 20,457 20,457 - 20,457 , Excess of resources over (under) charges to appropriations (19,907) (19,907) 398 20,305 Fund balance, June 30, 2010 $ 772 $ 772 $ 21,077 $ 20,305 110 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Poway Road Beautification Special Revenue Fund For the year ended June 30, 2010 111 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 10,171 $ 10,171 $ 10,171 $ - Resources (inflows): Use of money and property 270 270 196 (74) Amount available for appropriation 270 270 196 (74) Excess of resources over (under) charges to appropriations 270 270 196 (74) Fund balance, June 30, 2010 $ 10,441 $ 10,441 $ 10,367 $ (74) 111 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Poway Valley Senior Center Endowment Special Revenue Fund For the year ended June 30, 2010 112 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 434,197 $ 434,197 $ 434,197 $ - Resources (inflows): Use of money and property 11,450 11,450 8,374 (3,076) Amount available for appropriation 11,450 11,450 8,374 (3,076) Charges to appropriations (outflows): Capital outlay 303,822 303,822 - 303,822 Total charges to appropriations 303,822 303,822 - 303,822 Excess of resources over (under) charges to appropriations (292,372) (292,372) 8,374 300,746 Fund balance, June 30, 2010 $ 141,825 $ 141,825 $ 442,571 $ 300,746 112 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Old Poway Park Tree Special Revenue Fund For the year ended June 30, 2010 Fund balance, July 1, 2009 Resources (inflows): Use of money and property Amount available for appropriation Excess of resources over (under) charges to appropriations Fund balance, June 30, 2010 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget $ 5,882 $ 5,882 $ 160 160 160 160 160 160 $ 6,042 $ 6,042 $ 113 5,882 $ - 113 (47) 113 (47) 113 (47) 5,995 $ (47) City of Poway ' Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Poway Public Arts Center Special Revenue Fund For the year ended June 30, 2010 ' Fund balance, July 1, 2009 Resources (inflows): Use of money and property Amount available for appropriation Charges to appropriations (outflows): Capital outlay Total charges to appropriations Excess of resources over (under) charges to appropriations Fund balance, June 30, 2010 Budgeted Amounts Actual Variance with ' Original Final Amounts Final Budget $ 52,552 $ 52,552 $ 52,552 $ 1,390 1,390 1,014 (376) ' 1,390 1,390 1,014 (376) ' 20,000 20,000 - 20,000 20,000 20,000 - 20,000 , (18,610) (18,610) 1,014 19,624 ' $ 33,942 $ 33,942 $ 53,566 $ 19,624 114 ' ' City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Kumeyaay Endowment Special Revenue Fund For the year ended June 30, 2010 ' Budgeted Amounts Actual Variance with Original Final Amounts Final Budget ' Fund balance, July 1, 2009 $ 15,220 $ 15,220 $ 15,220 $ - Resources (inflows): ' Use of money and property 410 410 294 (116) Amount available for appropriation 410 410 294 (116) Charges to appropriations (outflows): Capital outlay 6,963 6,963 - 6,963 ' Total charges to appropriations 6,963 6,963 - 6,963 Excess of resources over (under) ' charges to appropriations (6,553) (6,553) 294 6,847 Fund balance, June 30, 2010 $ 8,667 $ 8,667 $ 15,514 $ 6,847 ' 115 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Poway Fine Arts Center Special Revenue Fund For the year ended June 30, 2010 Fund balance, July 1, 2009 Resources (inflows): Use of money and property Amount available for appropriation Excess of resources over (under) charges to appropriations Fund balance, June 30, 2010 Budgeted Amounts Original Final $ 3,071 $ 3,071 80 80 80 $ 3,151 $ 116 80 80 80 Actual Variance with Amounts Final Budget $ 3,071 $ - 59 (21) 59 (21) 59 3,151 $ 3,130 $ (21) (21) City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Senior Volunteer Patrol Special Revenue Fund For the year ended June 30, 2010 117 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 27,383 $ 27,383 $ 27,383 $ - Resources (inflows): Use of money and property 410 410 725 315 Other revenue - - 10,000 10,000 Amount available for appropriation - - 10,725 10,725 Charges to appropriations (outflows): Capital outlay 15,525 37,090 1,405 35,685 Total charges to appropriations 15,525 37,090 1,405 35,685 Excess of resources over (under) charges to appropriations (15,525) (37,090) 9,320 (24,960) Fund balance, June 30, 2010 $ 11,858 $ (9,707) $ 36,703 $ (24,960) 117 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Prop 1B Transportation Bond Special Revenue Fund For the year ended June 30, 2010 , ' Budgeted Amounts Actual Variance with ' Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 776,827 $ 776,827 $ 776,827 $ Resources (inflows): Intergovernmental 775,650 775,650 - (775,650) ' Use of money and property - - 1,929 1,929 Amount available for appropriation - - 1,929 1,929 ' Charges to appropriations (outflows): Public works Capital outlay 755,650 10,610 755,650 - 778,756 - 23,106 - ' Total charges to appropriations 766,260 755,650 778,756 23,106 Excess ' of resources over (under) charges to appropriations (766,260) (755,650) (776,827) 25,035 Fund balance, June 30, 2010 $ 10,567 $ 21,177 $ - $ 25,035 ' t 118 ' City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Storm Water Management Special Revenue Fund For the year ended June 30, 2010 Fund balance, July 1, 2009 Resources (inflows): Charges for services Interfund loans Transfers in Amount available for appropriation Charges to appropriations (outflows): Public works Total charges to appropriations Excess of resources over (under) charges to appropriations Fund balance, June 30, 2010 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget $ (198,774) $ (198,774) $ (198,774) $ - 1,342,260 1,342,260 1,341,156 (1,104) 666,440 666,440 - (666,440) 189,435 189,435 163,151 (26,284) 2,198,135 2,198,135 1,504,307 (693,828) 1,777,627 1,777,627 1,452,702 (324,925) 1,777,627 1,777,627 1,452,702 (324,925) 420,508 420,508 51,605 (1,018,753) $ 221,734 $ 221,734 $ (147,169) $ (1,018,753) 119 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Fire Equipment Trust Special Revenue Fund For the year ended June 30, 2010 120 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 8,756 $ 8,756 $ 8,756 $ - Resources (inflows): Use of money and property 200 200 169 (31) Amount available for appropriation 200 200 169 (31) Charges to appropriations (outflows): Capital outlay 8,630 8,630 - (8,630) Total charges to appropriations 8,630 8,630 - (8,630) Excess of resources over (under) charges to appropriations (8,430) (8,430) 169 (8,661) Fund balance, June 30, 2010 $ 326 $ 326 $ 8,925 $ (8,661) 120 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Public Art Trust Special Revenue Fund For the year ended June 30, 2010 Fund balance, July 1, 2009 Resources (inflows): Use of money and property Otber revenue Amount available for appropriation Excess of resources over (under) charges to appropriations Fund balance, June 30, 2010 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget $ 28,273 $ 28,273 $ 28,273 $ - 750 750 551 (199) - - 300 300 750 750 851 101 750 750 851 101 $ 29,023 $ 29,023 $ 121 29,124 $ 101 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Regional Arterial Traffic Mitigation Special Revenue Fund For the year ended June 30, 2010 Fund balance, July 1, 2009 Resources (inflows): Intergovernmental Use of money and property Amount available for appropriation Excess of resources over (under) charges to appropriations Fund balance, June 30, 2010 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget $ 80,022 $ 80,022 $ 80,022 $ - 40,000 40,000 10,058 (29,942) 330 330 1,707 1,377 40,330 40,330 11,765 (28,565) 40,330 40,330 11,765 (28,565) $ 120,352 $ 120,352 $ 91,787 $ (28,565) 122 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Fire Protection Impact Fees For the year ended June 30, 2010 123 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ - $ - $ - $ - Resources (inflows): Development fees 4,850 4,850 3,676 (1,174) Use of money and property - - 57 57 Amount available for appropriation 4,850 4,850 3,733 (1,117) Excess of resources over (under) charges to appropriations 4,850 4,850 3,733 (1,117) Fund balance, June 30, 2010 $ 4,850 $ 4,850 $ 3,733 $ (1,117) 123 City of Poway ' Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual BEGIN Program For the year ended June 30, 2010 ' Fund balance, July 1, 2009 Resources (inflows): Intergovernmental Use of money and property Amount available for appropriation Charges to appropriations (outflows): Capital outlay Total charges to appropriations Excess of resources over (under) charges to appropriations Fund balance, June 30, 2010 ' Budgeted Amounts Actual Variance with Original Final Amounts Final Budget ' - - 934,402 934,402 - - 814 814 ' - - 935,216 935,216 1,545,000 1,545,000 934,402 (610,598) 1,545,000 1,545,000 934,402 (610,598) ' (1,545,000) (1,545,000) 814 1,545,814 ' $ (1,545,000) $ (1,545,000) $ 814 $ 814 ' 124 ' ' City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Mary Patricia Ross Trust Permanent Fund For the year ended June 30, 2010 Budgeted Amounts Actual Variance with ' Original Final Amounts Final Budget ' Fund balance, July 1, 2009 $ 86,680 $ 86,680 $ 86,680 $ - Resources (inflows): ' Use of money and property 2,290 2,290 1,673 (617) Amount available for appropriation 2,290 2,290 1,673 (617) Excess of resources over (under) charges to appropriations 2,290 2,290 1,673 (617) ' Fund balance, June 30, 2010 $ 88,970 $ 88,970 $ 88,353 $ (617) 1 ' 125 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Library Permanent Fund For the year ended June 30, 2010 126 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 894,190 $ 894,190 $ 894,190 $ - Resources (inflows): Use of money and property 20,040 20,040 17,118 (2,922) Amount available for appropriation 20,040 20,040 17,118 (2,922) Charges to appropriations (outflows): Transfers out 90,040 90,040 18,534 71,506 Total charges to appropriations 90,040 90,040 18,534 71,506 Excess of resources over (under) charges to appropriations (70,000) (70,000) (1,416) 68,584 Fund balance, June 30, 2010 $ 824,190 $ 824,190 $ 892,774 $ 68,584 126 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual City Debt Service Fund For the year ended June 30, 2010 127 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund balance, July 1, 2009 $ 4,318,839 $ 4,318,839 $ 4,318,839 $ - Resources (inflows): Use of money and property 825,730 825,730 795,860 (29,870) Transfers in 1,085,965 1,085,965 1,108,809 22,844 Amount available for appropriation 1,911,695 1,911,695 1,904,669 (7,026) Charges to appropriations (outflows): Debt service: Principal 815,000 815,000 815,000 - Interest and fiscal charges 1,047,490 1,047,490 1,041,307 6,183 Transfers out 449,045 449,045 449,045 - Total charges to appropriations 2,311,535 2,311,535 2,305,352 6,183 Excess of resources over (under) charges to appropriations (399,840) (399,840) (400,683) (843) Fund balance, June 30, 2010 $ 3,918,999 $ 3,918,999 $ 3,918,156 $ (843) 127 City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Park Improvement Capital Project Fund For the year ended June 30, 2010 Fund balance, July 1, 2009 Resources (inflows): Development fees Use of money and property Amount available for appropriation Excess of resources over (under) charges to appropriations Fund balance, June 30, 2010 Budgeted Amounts Original Final $ 817,101 $ 817,101 91,240 91,240 27,270 27,270 118,510 118,510 118,510 118,510 $ 935,611 $ 128 Actual Variance with Amounts Final Budget $ 817,101 $ - 935,611 $ 21,842 (69,398) 21,673 (5,597) 43,515 (5,597) 43,515 (5,597) 860,616 $ (5,597) City of Poway Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Municipal Improvement Capital Project Fund For the year ended June 30, 2010 Fund balance, July 1, 2009 Resources (inflows): Use of money and property Amount available for appropriation Excess of resources over (under) charges to appropriations Fund balance, June 30, 2010 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget $ 3,658 $ 3,658 $ 3,658 $ - 100 100 71 (29) 100 100 71 (29) 100 100 71 (29) $ 3,758 $ 3,758 $ 3,729 $ (29) 129 This page intentionally left blank. 130 n I I INTERNAL SERVICE FUND 1 Vehicle Maintenance Fund - Used to account for the cost of operating a maintenance facility for automotive ' equipment used by other City departments. Such costs to other departments are billed on a direct cost basis. The Vehicle Maintenance Fund is responsible for financing replacement vehicles, as necessary. i k l 1 C 1 131 City of Poway Statement of Net Assets Internal Service Fund - Vehicle Maintenance Fund June 30, 2010 ASSETS Current assets: Cash and investments $ 5,536,532 Total current assets 5,536,532 Total assets 5,536,532 LIABILITIES Current liabilities: Accounts payable 242,772 Compensated absences 30,798 Total current liabilities 273,570 Total liabilities 273,570 NET ASSETS Unrestricted 5,262,962 Total net assets $ 5,262,962 132 City of Poway Statement of Activities and Changes in Net Assets Internal Service Fund - Vehicle Maintenance Fund For the year ended June 30, 2010 OPERATING REVENUES: Charges for services $ 2,610,905 Other 4,166 Total operating revenues 2,615,071 OPERATING EXPENSES: Personnel services 365,802 Maintenance and operations 871,557 Total operating expenses 1,237,359 OPERATING INCOME (LOSS) 1,377,712 NONOPERATING REVENUES: Interest revenue 107,874 Total nonoperating revenues 107,874 INCOME (LOSS) BEFORE TRANSFERS 1,485,586 TRANSFERS: Transfers out (2,275,047) Total transfers (2,275,047) Changes in net assets (789,461) NET ASSETS: Beginning of year 6,052,423 End of year $ 5,262,962 133 City of Poway Statement of Cash Flows Internal Service Fund - Vehicle Maintenance Fund For the year ended June 30, 2010 CASH FLOWS FROM OPERATING ACTIVITIES: Cash receipts from users $ 2,615,237 Cash payments to employees for services (368,451) Cash payments to suppliers of goods or services (662,594) Net cash provided (used) by operating activities 1,584,192 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers out (2,275,04 Net cash provided (used) by noncapital financing activities (2,275,047) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 107,874 Net cash provided (used) by capital and related financing activities 107,874 Net increase in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Changes in operating assets and liabilities: Accounts receivable Accounts payable Compensated absences Total adjustments Net cash provided (used) by operating activities 134 (582,981) 6,119,513 $ 5,536,532 $ 1,377,712 166 208,963 (2,649) 206,480 $ 1,584,192 iJ I d 7 Ll J 7 FIDUCIARY FUNDS AGENCY FUNDS The agency funds are used to account for assets held by the City as an agent. Agency funds include the following: Developer Deposits Fund - Used to account for the collection and payments of development deposits from and on behalf of the collective and individual developers. South Poway CID No. 1 Bond Deposits Fund - Used to account for debt service payments CFD No. 1 Bond Deposits collected through property tax assessments remitted to fiscal agent - trustee for payment on bonds. Parkway Business Center CFD No. 88 -1 Bond Deposits Fund - Used to account for debt service payments CFD No. 88 -1 Bond Deposits collected through property tax assessments remitted to fiscal agent - trustee for payment on bonds. High Valley Roads AD No. 96 -1 Bond Deposits Fund - Used to account for debt service payments AD No. 96- 1 Bond Deposits collected through property tax assessments remitted to fiscal agent - trustee for payment on bonds. Old Coach Waterline AD No. 01 -1 Bond Deposits Fund - Used to account for debt service payments AD No. 01 -1 Bond Deposits collected through property tax assessments remitted to fiscal agent - trustee for payment on bonds. 135 City of Poway Combining Statement of Fiduciary Net Assets All Agency Funds June 30, 2010 136 South Parkway High Old Coach Poway Business Valley Water CID No.1 Center Road Line Developer Bond CFD No. 88-1 AD No. %-1 AD No. 01 -1 Total Deposits Deposits Bond Deposits Bond Deposits Bond Deposits Agency Fund Fund Fund Fund Fund Funds ASSETS Cash and investments $ 4,302,179 $ 1,021,023 $ 3,995,283 $ 55,580 $ 59,235 $ 9,433,300 Receivables: Taxes - - - 345 2,724 3,069 Accounts - - 1,000,000 - - 1,000,000 Interest - 26,669 21,363 - - 48,032 Cash and investments with fiscal agents - 1,484,731 1,664,616 53,750 - 3,203,097 Total assets $ 4,302,179 $ 2,532,423 $ 6,681,262 $ 109,675 $ 61,959 $ 13,687,498 LIABILITIES Accounts payable $ 223,366 $ $ - $ 4,235 $ - $ 227,601 Deposits 4,078,813 - - - - 4,078,813 Due to bondholders - 2,532,423 5,681,262 105,440 61,959 8,381,084 Advances from City of Poway - - 1,000,000 - - 1,000,000 Total liabilities $ 4,302,179 $ 2,532,423 $ 6,681,262 $ 109,675 $ 61,959 $ 13,687,498 136 n City of Poway Combining Statement of Changes in Assets and Liabilities All Agency Funds For the year ended June 30, 2010 137 (Continued) Balance Balance July 1, 2009 Additions Deletions June 30, 2010 Developer Deposits Fund Assets: Cash and investments $ 4,285,579 $ 1,540,666 $ (1,524,066) $ 4,302,179 Total assets $ 4,285,579 $ 1,540,666 $ (1,524,066) $ 4,302,179 Liabilities: Accounts payable $ 151,558 $ 1,441,355 $ (1,369,547) $ 223,366 Deposits 4,134,021 99,311 (154,519) 4,078,813 Total liabilities $ 4,285,579 $ 1,540,666 $ (1,524,066) $ 4,302,179 South Poway CFD No.1 Bond Deposits Fund Assets: Cash and investments $ 1,499,392 $ 1,764,957 $ (2,243,326) $ 1,021,023 Interest receivable 26,505 26,669 (26,505) 26,669 Cash and investments with fiscal agent 1,597,109 2,258,900 (2,371,278) 1,484,731 Total assets $ 3,123,006 $ 4,050,526 $ (4,641,109) $ 2,532,423 Liabilities: Accounts payable $ - $ 2,298,328 $ (2,298,328) $ - Due to bondholders $ 3,123,006 $ 1,752,198 $ (2,342,781) $ 2,532,423 Total liabilities $ 3,123,006 $ 4,050,526 $ (4,641,109) $ 2,532,423 Parkway Business Center CFD No. 88-1 Bond Deposits Fund Assets: Cash and investments $ 3,206,910 $ 3,566,677 $ (2,778,304) $ 3,995,283 Accounts receivable 1,000,000 - - 1,000,000 Interest receivable 83,074 21,363 (83,074) 21,363 Cash and investments with fiscal agent 3,675,986 2,829,547 (4,840,917) 1,664,616 Total assets $ 7,965,970 $ 6,417,587 $ (7,702,295) $ 6,681,262 Liabilities: Accounts payable $ 11,377 $ 2,848,364 $ (2,859,741) $ - Due to bondholders 6,954,593 3,569,223 (4,842,554) 5,681,262 Advances from City of Poway 1,000,000 - - 1,000,000 Total liabilities $ 7,965,970 $ 6,417,587 $ (7,702,295) $ 6,681,262 137 (Continued) City of Poway Combining Statement of Changes in Assets and Liabilities All Agency Funds, Continued For the year ended June 30, 2010 Balance Balance High Valley Roads AD No. 96-1 Bond Deposits Fund Assets: Cash and investments $ 52,580 $ 55,807 $ (52,807) $ 55,580 Taxes receivable 138 345 (138) 345 Cash and investments with fiscal agents 53,759 49,054 (49,063) 53,750 Total assets $ 106,477 $ 105,206 $ (102,008) $ 109,675 Liabilities: Accounts payable $ 4,235 $ 53,289 $ (53,289) $ 4,235 Due to bondholders 102,242 51,917 (48,719) 105,440 Total liabilities $ 106,477 $ 105,206 $ (102,008) $ 109,675 Old Coach Waterline AD No. 2001 -1 Bond Deposits Fund Assets: Cash and investments $ 59,607 $ 29,083 $ (29,455) $ 59,235 Taxes receivable - 2,724 - 2,724 Total assets $ 59,607 $ 31,807 $ (29,455) $ 61,959 Liabilities: Due to bondholders $ 59,607 $ 31,807 $ (29,455) $ 61,959 Total liabilities $ 59,607 $ 31,807 $ (29,455) $ 61,959 All A envy Funds Assets: Cash and investments $ 9,104,068 $ 6,957,190 $ (6,627,958) $ 9,433,300 Taxes receivable 138 3,069 (138) 3,069 Accounts receivable 1,000,000 - - 1,000,000 Interest receivable 109,579 48,032 (109,579) 48,032 Cash and investments with fiscal agents 5,326,854 5,137,501 (7,261,258) 3,203,097 Total assets $ 15,540,639 $ 12,145,792 $ (13,998,933) $ 13,687,498 Liabilities: Accounts payable $ 167,170 $ 6,641,336 $ (6,580,905) $ 227,601 Deposits 4,134,021 99,311 (154,519) 4,078,813 Due to bondholders 10,239,448 5,405,145 (7,263,509) 8,381,084 Advances from City of Poway 1,000,000 - - 1,000,000 Total liabilities $ 15,540,639 $ 12,145,792 $ (13,998,933) $ 13,687,498 (Concluded) 138 C &L ' Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants ' INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE (INCLUDING THE PROVISIONS CONTAINED IN THE GUIDELINES FOR COMPLIANCE AUDITS) AND OTHER ' MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ' To the Honorable Mayor and Members of the City Council of the City of Poway Poway, California We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Poway, ' California (City), as of and for the year ended June 30, 2010, which collectively comprise the City's basic financial statements as listed in the table of contents. 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. ' Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our ' opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. C 1 Ll G A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. w-w wx-kpa.com To the Honorable Mayor and Members of the City Council of the City of Poway Poway, California Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provision of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Such provisions included those provisions of laws, regulations, contracts, and grant agreements and other matters. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management and City Council and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited. Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants San Diego, California December 22, 2010 140 7 7 7 I L F d C 7 STATISTICAL SECTION This part of the City of Poway's comprehensive annual financial report presents detailed information as context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents Financial Trends These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the government's most significant local revenue sources. Debt Capacity These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 141 City of Poway Net Assets by Component, Current and Prior Four Years (accrual basis of accounting) Governmental activities Invested in capital assets, net of related debt Restricted Unrestricted - as restated Total governmental activities net assets Business -type activities 11 I � Year Ended Year Ended Year Ended Year Ended Year Ended Tune 30, 2010 June 30, 2009 Tune 30, 2008 Iune 30, 2007 June 30, 2006 283,938 283,534 Unrestricted $ 46,412,443 $ 36,713,773 $ 28,805,157 $ 21,675,540 $ 16,728,005 78,369,565 99,252,462 101,384,182 99,518,581 98,416,094 (67,276,026) (71,563,120) (68,473,402) (70,862,504) (78,799,982) 57,505,982 64,403,115 61,715,937 50,331,617 36,344,117 Invested in capital assets, net of related debt 43,508,027 39,127,764 34,657,630 35,055,052 36,472,213 Restricted 280,450 280,469 281,531 283,938 283,534 Unrestricted 35,320,341 34,194,395 32,511,666 30,112,939 25,587,312 Total business -type activities net assets 79,108,818 73,602,628 67,450,827 65,451,929 62,343,059 Primary government Invested in capital assets, net of related debt 89,920,470 75,841,537 63,462,787 56,730,592 53,200,218 Restricted 78,650,015 99,532,931 101,665,713 99,802,519 98,699,628 Unrestricted (31,955,685) (37,368,725) (35,961,736) (40,749,565) (53,212,670) Total primary government net assets 136,614,800 138,005,743 129,166,764 115,783,546 98,687,176 Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003. The City implemented the retroactive reporting of infrastructure in fiscal year 2007. The City is reporting its ten year history with the implentation of GASB 44 in fiscal year 2006. 142 r Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003. The City implemented the retroactive reporting of infrastructure in fiscal year 2007. The City is reporting its ten year history with the implentation of GASB 44 in fiscal year 2006. 143 ' City of Poway Changes in Net Assets for Governmental Activities Current and Prior Four Years (accrual basis of accounting) ' Year Ended Year Ended Year Ended Year Ended Year Ended June 30, 2010 Tune 30, 2009 June 30, 2008 June 30, 2007 June 30, 2006 Functional expenses: ' General Government $ 23,947,500 $ 23,261,446 $ 18,616,222 $ 14,559,177 $ 15,689,334 Public Safety 19,475,481 19,227,914 19,039,199 18,121,264 17,313,198 Public Works 12,595,756 11,213,841 10,607,352 9,100,534 13,023,698 Development Services 4,423,865 5,226,071 5,367,148 4,978,301 ' Community Services 25,213,955 16,195,999 18,329,674 16,964,745 19,510,067 Interest and fiscal charges 14,969,311 16,692,399 17,038,330 19,697,044 16,986,839 ' Total functional expenses 100,625,868 91,817,670 88,997,925 83,421,065 82,523,136 Program revenues: Charges for services: ' General Government 91,745 105,084 133,893 176,938 173,484 Public Safety 2,131,729 2,413,197 2,068,632 2,181,971 2,104,975 Public Works 4,479,896 4,868,530 4,327,217 4,011,644 3,512,623 Development Services 1,332,714 1,388,448 1,522,060 1,451,489 ' Community Services 2,821,718 3,033,466 2,935,862 2,894,396 3,908,179 Interest and fiscal charges - - - - - Operating grants and contributions 7,615,477 5,826,044 6,478,997 6,103,045 6,198,885 ' Capital grants and contributions 1,246,555 2,110,463 5,128,657 2,940,273 3,088,436 Total program revenues 19,719,834 19,745,232 22,595,318 19,759,756 18,986,582 ' Total governmental activities (80,906,034) (72,072,438) (66,402,607) (63,661,309) (63,536,554) General revenues: ' Taxes: Property taxes 51,526,758 51,190,712 50,669,452 48,048,249 45,725,853 Sales taxes 9,833,390 10,325,455 12,904,265 13,032,518 13,918,879 Motor vehicle license tax 150,641 173,673 225,353 273,727 392,240 ' Transient occupancy tax 367,434 247,787 206,323 202,767 190,097 Franchise taxes 1,491,231 1,590,066 1,497,724 1,588,677 1,399,524 Other Taxes 629,589 597,880 598,965 596,868 609,982 Total taxes 63,999,043 64,125,573 66,102,082 63,742,806 62,236,575 ' Investment earnings 8,287,516 9,879,153 10,639,352 10,569,205 8,508,647 Miscellaneous 1,251,844 607,387 714,405 3,349,606 2,894,418 Sale of capital assets - - - - (11,262) ' Transfers 470,498 147,503 331,088 (12,808) 460,810 Total general revenues and transfers 74,008,901 74,759,616 77,786,927 77,648,809 74,089,188 Change in Net Assets $ (6,897,133) $ 2,687,178 $ 11,384,320 $ 13,987,500 $ 10,552,634 Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003. The City implemented the retroactive reporting of infrastructure in fiscal year 2007. The City is reporting its ten year history with the implentation of GASB 44 in fiscal year 2006. 143 City of Poway Changes in Net Assets for Business -Type Activities Current and Prior Four Years (accrual basis of accounting) Program revenues: Charges for services: Water Sewer Captial grants and contributions Total program revenues Total business -type activities General revenues: Property taxes Investment earnings Contributed capital Miscellaneous Sale of capital assets Transfers Total general revenues and transfers Change in Net Assets 17,881,695 YearEnded YearEnded YearEnded YearEnded YearEnded 8,651,968 June 30, 2010 Tune 30, 2009 Tune 30, 2008 June 30, 2007 Tune 30, 2006 Functional expenses: 63,604 66,840 26,533,376 25,366,539 25,247,025 Water $ 18,226,463 $ 18,697,576 $ 17,534,682 $ 17,371,707 $ 16,009,205 Sewer 7,522,634 8,011,470 7,743,880 7,970,848 8,730,098 Total functional expenses 25,749,097 26,709,046 25,278,562 25,342,555 24,739,303 Program revenues: Charges for services: Water Sewer Captial grants and contributions Total program revenues Total business -type activities General revenues: Property taxes Investment earnings Contributed capital Miscellaneous Sale of capital assets Transfers Total general revenues and transfers Change in Net Assets 17,881,695 16,714,571 16,806,379 16,637,705 15,181,771 8,651,681 8,651,968 8,440,646 7,943,890 7,479,071 - - - 63,604 66,840 26,533,376 25,366,539 25,247,025 24,645,199 22,727,682 784,279 (1,342,507) (31,537) (697,356) (2,011,621) - - - - 309,296 463,177 1,987,778 2,283,493 3,038,852 1,157,563 4,225,637 4,720,039 - - - 503,595 933,994 78,030 754,566 738,337 (470,498) (147,503) (331,088) 12,808 (4K810) 4,721,911 7,494,308 2,030,435 3,806,226 1,744,386 $ 5,506,190 $ 6,151,801 $ 1,998,898 $ 3,108,870 $ (267,235) Note: The City is reporting its ten year history with the implentation of GASB 44 in fiscal year 2006. 144 City of Poway Changes in Net Assets for the Primary Government Current and Prior Four Years (accrual basis of accounting) Program revenues: Governmental Activities YearEnded YearEnded YearEnded YearEnded YearEnded Business -Type Activities Tune 30, 2010 Tune 30, 2009 Tune 30, 2008 Tune 30, 2007 Tune 30, 2006 Functional expenses: 46,253,210 45,111,771 47,842,343 44,404,955 41,714,264 Governmental Activities $ 100,625,868 $ 91,817,670 $ 88,997,925 $ 83,421,065 $ 82,523,136 Business -Type Activities 25,749,097 26,709,046 25,278,562 25,342,555 24,739,303 Total functional expenses 126,374,965 118,526,716 114,276,487 108,763,620 107,262,439 Program revenues: Governmental Activities 19,719,834 19,745,232 22,595,318 19,759,756 18,986,582 Business -Type Activities 26,533,376 25,366,539 25,247,025 24,645,199 22,727,682 Total program revenues 46,253,210 45,111,771 47,842,343 44,404,955 41,714,264 Net (expense)/revenue: Governmental Activities (80,906,034) (72,072,438) (66,402,607) (63,661,309) (63,536,554) Business -Type Activities 784,279 (1,342,507) (31,537) (697,356) (2,011,621) Total net (expense) /revenue (80,121,755) (73,414,945) (66,434,144) (64,358,665) (65,548,175) General revenues: Governmental Activities 73,538,403 74, 612, 113 77 ,455,839 77,661,617 73,628,378 Business -Type Activities 5,192,409 7,641,811 2,361,523 3,793,418 1,895,900 Total general revenues 78,730,812 82,253,924 79,817,362 81,455,035 75,524,278 Transfers: Governmental Activities 470,498 147,503 331,088 (12,808) 460,810 Business -Type Activities (470,498) (147,503) (331,088) 12,808 (460,810) Total transfers _ _ General revenues and transfers: Governmental Activities 74,008,901 74,759,616 77,786,927 77,648,809 74,089,188 Business -Type Activities 4,721,911 7,494,308 2,030,435 3,806,226 1,435,090 Total general revenues and transfers 78,730,812 82,253,924 79,817,362 81,455,035 75,524,278 Change in Net Assets: Governmental Activities (6,897,133) 2,687,178 11,384,320 13,987,500 10,552,634 Business -Type Activities 5,506,190 6,151,801 1,998,898 3,108,870 (576,531) Total change in net assets $ (1,390,943) $ 8,838,979 $ 13,383,218 $ 17,096,370 $ 9,976,103 Note: The City is reporting its ten year history with the implentation of GASB 44 in fiscal year 2006, 145 City of Poway Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) General Fund Reserved Unreserved: Designated Undesignated Total General Fund All Other Governmental Funds Reserved Unreserved: Designated: Special revenue funds Debt service funds Capital projects funds Undesignated: Special revenue funds Debt service funds Capital projects funds Total all Other Governmental Funds Total Fund Balance June 30, 2010 2009 2008 2007 2006 $ 4,647,709 $ 5,561,391 $ 8,478,531 $ 7,538,564 $ 7,389,245 31,724,737 32,152,754 31,160,911 30,375,251 27,539,942 $ 36,372,446 $ 37,714,145 $ 39,639,442 $ 37,913,815 $ 34,929,187 $ 51,660,768 $ 62,868,328 $ 55,650,435 $ 43,663,739 $ 39,477,985 146 7,760,635 20,795,704 24,840,402 32,578,654 43,037,658 - 5,913,093 5,982,341 4,676,562 5,278,620 6,014,938 _ _ _ - 37,769,191 $ 78,369,565 $ 93,691,071 $ 92,905,651 $ 91,980,017 $ 91,022,749 $ 114,742,011 $ 131,405,216 $ 132,545,093 $ 129,893,832 $ 125,951,936 146 June 30, 2005 2004 2003 2002 2001 7,885,013 7,581,391 6,907,055 16,683,177 17,681,990 25,115,075 21,827,076 12,325,729 21,258,117 20,173,503 - - 8,556,645 - - 33,000,088 29,408,467 27,789,429 37,941,294 37,855,493 35,478,892 44,761,898 51,282,639 49,060,668 38,197,024 8,816,961 8,175,996 8,613,436 8,133,105 7,370,213 7,795,241 7,804,756 6,898,403 5,207,265 4,571,924 42,511,597 55,342,242 44,896,736 60,711,652 13,366,748 94,602,691 116,084,892 111,691,214 123,112,690 63,505,909 127,602,779 145,493,359 139,480,643 161,053,984 101,361,402 147 City of Poway Changes In Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Note: The City implemented GAS13 34 beginning with the fiscal year ended June 30, 2003. Prior to that time, interfund loans where treated as "Other Financing Sources" and classified as "Proceeds from issuance of debt" in the fund receiving the loan. 148 Year Ended June 30, 2010 2009 2008 2007 Revenues Taxes $ 67,411,848 $ 66,062,646 $ 68,817,462 $ 63,810,241 Licenses and permits 433,517 422,948 328,159 330,755 Intergovernmental 2,994,005 2,889,804 3,971,720 4,336,767 Charges for services 3,140,274 2,954,967 2,676,329 4,419,664 Fines and forfeitures 750,551 852,535 803,552 720,949 Use of money and property 12,180,028 14,862,137 15,516,351 16,120,443 Developer Fees 3,711,578 3,897,877 3,780,128 4,509,741 Assessment levied 1,886,300 1,873,179 1,892,326 1,868,567 Other revenues 2,228,662 1,013,135 2,568,693 1,389,762 Total revenues 94,736,763 94,829,228 100,354,720 97,506,889 Expenditures Current: General government 6,056,348 6,733,135 7,252,320 9,614,109 Public safety 18,966,380 18,673,036 18,528,701 17,897,811 Public works 9,943,681 8,566,157 8,009,622 6,556,796 Development services 4,475,943 5,279,297 5,420,200 5,028,405 Community services 9,048,983 9,741,990 12,593,136 11,877,425 Capital outlay 27,639,839 17,981,861 18,354,376 14,205,962 Debt service: Principal 7,150,000 6,855,000 6,560,000 6,470,000 Interest and fiscal charges 14,943,766 16,732,005 17,077,417 17,896,630 Debt Issuance Costs - - - - Tax shift 13,700,882 - - - Tax increment reimbursements 2,380,740 6,205,709 5,515,447 4,889,025 Total expenditures 114,306,562 96,768,190 99,311,219 94,436,163 Excess of revenues over (under) expenditures (19,569,799) (1,938,962) 1,043,501 3,070,726 Other Financing Sources (Uses) Proceeds from issuance of debt 161,049 154,734 151,285 148,273 Refunding bond activity -net - - - (184,586) Proceeds from sale of capital assets - - - - Transfers in (out) net 2,745,545 644,351 1,456,475 907,483 Total other financing sources 2,906,594 799,085 1,607,760 871,170 Net change in fund balance $ (16,663,205) $ (1,139,877) $ 2,651,261 $ 3,941,896 Debt service as a percentage of noncapital expenditures 21.3°% 25.8% 26.2% 29.1% Note: The City implemented GAS13 34 beginning with the fiscal year ended June 30, 2003. Prior to that time, interfund loans where treated as "Other Financing Sources" and classified as "Proceeds from issuance of debt" in the fund receiving the loan. 148 Year Ended June 30, 2006 2005 2004 2003 2002 2001 $ 62,042,614 $ 55,406,112 $ 47,368,683 $ 43,439,827 $ 39,575,352 $ 35,840,942 296,935 288,716 296,984 295,471 305,685 309,652 5,796,558 4,637,517 5,445,572 8,313,394 6,183,143 6,026,700 7,557,159 7,607,467 7,449,929 8,452,248 8,192,172 7,851,665 732,633 273,322 251,834 176,291 202,598 239,369 13,459,180 13,535,451 8,152,189 11,924,593 12,584,448 10,735,796 489,210 536,404 1,243,389 1,208,015 591,230 855,799 1,845,859 1,835,519 1,816,524 1,825,528 1,754,096 1,750,613 1,157,139 2,525,614 1,473,492 2,007,778 3,000,545 957,898 93,377,287 86,646,122 73,498,596 77,643,145 72,389,269 64,568,434 9,552,247 11,114,009 10,668,972 10,178,866 8,918,157 8,407,234 16,563,059 17,304,746 15,588,991 13,866,595 12,905,831 11,324,004 11,338,373 4,865,184 3,966,484 4,246,773 3,817,814 3,702,963 11,884,718 10,671,636 7,569,324 7,373,691 6,579,853 6,666,018 18,802,010 31,981,651 31,743,517 32,096,700 22,972,729 17,733,164 5,875,000 6,706,720 7,875,000 14,192,769 9,288,293 6,821,853 17,101,983 16,482,351 15,477,533 18,455,993 15,095,386 11,805,570 - 255,302 2,765,590 - 1,708,370 7,790 1,674,851 2,549,564 1,357,911 780,349 - - 3,831,350 2,380,488 29,865,057 5,678,795 4,928,042 6,176,365 96,623,591 104,311,651 126,878,379 106,870,531 86,214,475 72,644,961 (3,246,304) (17,665,529) (53,379,783) (29,227,386) (13,825,206) (8,076,527) 149,563 8,499,883 156,029,702 17,856,218 80,781,467 5,975,575 - (9,301,120) (99,094,350) - (8,005,801) - - 232,168 1,110,603 14,600,000 - - 1,445,898 506,234 1,346,544 658,650 640,108 1,388,450 1,595,461 (62,835) 59,392,499 33,114,868 73,415,774 7,364,025 $ (1,650,843) $ (17,728,364) $ 6,012,716 $ 3,887,482 $ 59,590,568 $ (712,502) 26.4% 27.3% 19.9% 38.9% 38.6% 33.9% 149 City of Poway Assessed Value of Taxable Property , Last Ten Fiscal Years Fiscal Year Assessed Value ' Ended Personal Net Taxable June 30, Land Improvments Property Total Exemptions Value ' 2001 1,717,864,538 2,606,932,440 139,125,104 4,463,922,082 (132,332,496) 4,331,589,586 2002 1,921,113,526 2,857,873,316 162,481,953 4,941,468,795 (118,250,152) 4,823,218,643 2003 2,128,867,560 3,119,821,315 200,414,378 5,449,103,253 (145,945,106) 5,303,158,147 ' 2004 2,338,197,043 3,315,524,886 190,767,595 5,844,489,524 (171,519,517) 5,672,970,007 2005 2,611,610,220 3,535,334,922 187,042,681 6,333,987,823 (214,007,737) 6,119,980,086 2006 2,991,468,898 3,840,250,821 245,308,882 7,077,028,601 (217,368,560) 6,859,660,041 , 2007 3,230,084,121 4,191,380,246 278,291,264 7,699,755,631 (229,216,072) 7,470,539,559 2008 3,525,237,590 4,412,172,141 272,804,881 8,210,214,612 (229,932,712) 7,980,281,900 2009 3,647,796,486 4,472,160,193 254,000,489 8,373,957,168 (244,967,192) 8,128,989,976 2010 3,640,861,781 4,548,446,929 288,729,686 8,478,038,396 (261,984,967) 8,216,053,429 ' In 1978 the voters of the State of California passed Proposition 13 which resulted in dramatic tax reform as it relates to ' property tax collections. Proposition 13 established a property tax of 1% based upon the assessed value of the property being taxed. Each year the assessed value of property may be increased by an "inflation factor" that may not exceed 2 %. With few exceptions, property is only re- assessed at the time that it is sold to a new owner. At that point the new assessed value is fixed at the purchase price of the property. Due to the nature of Proposition 13, over time the assessed value base ' has become significantly undervalued when compared to the true market value of the property. Because the true market value is not tied to any type of annual valuation process, there is no reliable means of determining the market value of the parcels within the City and therefore this amount is not disclosed. Source: San Diego County Assessors Office �i 150 1 Change Estimated Total From Tax Direct Prior Year Revenues Tax Rate 1277% 5,155,309 0.211% 11.35% 5,616,359 0.211% 9.95% 5,954,586 0.211% 6.97% 6,399,317 0.211% 7.88% 6,895,981 0.211% 12.09% 7,615,898 0.211% 8.91% 8,358,741 0.211% 6.82% 8,939,836 0.211% 1.86% 9,117,319 0.211% 1.07% 9,024,247 0.211% 151 City of Poway Direct and Overlapping Property Tax Rates Last Ten Fiscal Years Total 1% Property Tax Rate 1.000% 1.000% 1.000% 1.000% 1.000% 1.000 1.000% 1.000 1.000% 1.000% In 1978, California voters passed Proposition 13 which resulted in dramatic tax reform as it relates to property tax. Proposition 13 set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. Because the rate is fixed at 1.00%, the rate for each taxing agency shares within the 1.00% does not change materially from year -to -year. Rates over the one percent are for voter approved bond indebtedness Source: San Diego County Assessors Office 152 Overlapping Rates Poway Educational Palomar Fiscal Year City Unified Revenue Community Ended Direct School San Diego Augmentation College All June 30, Rate District County Fund District Other 2001 0.211% 0.389% 0.167% 0.118% 0.067% 0.047% 2002 0.211% 0.389% 0.167% 0.118% 0.067% 0.047% 2003 0.211% 0.389% 0.167% 0.118% 0.067% 0.047% 2004 0.211% 0.389% 0.167% 0.118% 0.067% 0.047% 2005 0.211% 0.389% 0.167% 0.118% 0.067% 0.047% 2006 0.211% 0.389% 0.167% 0.118% 0.067% 0.047% 2007 0.211% 0.389% 0.167% 0.118% 0.067% 0.047% 2008 0.211% 0.389% 0.167% 0.118% 0.067% 0.047% 2009 0.211% 0.389% 0.167% 0.118% 0.067% 0.047% 2010 0.211% 0.389% 0.167% 0118% 0.067% 0.047% Rates for Voter Approved Bond Indebtedness Total 1 %, Poway Total Fiscal Year Property Unified Property Ended Tax City School All Tax June 30, Rate Rate District Other Rate 2001 1.000% 0.013% 0.000% 0.009% 1.022% 2002 1.000% 0.010% 0.000% 0.009% 1.019% 2003 1.000% 0.010% 0.000% 0.007% 1.018% 2004 1.000% 0.000% 0.052% 0.007% 1.059% 2005 1.000% 0.007% 0.047% 0.006% 1.060% 2006 1.000% 0.007% 0.043% 0.023% 1.072% 2007 1.000% 0.000% 0.046% 0.022% 1.069 2008 1.000% 0.000% 0.045% 0.032% 1.077% 2009 1.000% 0.000% 0.047% 0.035% 1.082% 2010 1.000% 0.000% 0.055% 0.031% 1.086% Total 1% Property Tax Rate 1.000% 1.000% 1.000% 1.000% 1.000% 1.000 1.000% 1.000 1.000% 1.000% In 1978, California voters passed Proposition 13 which resulted in dramatic tax reform as it relates to property tax. Proposition 13 set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. Because the rate is fixed at 1.00%, the rate for each taxing agency shares within the 1.00% does not change materially from year -to -year. Rates over the one percent are for voter approved bond indebtedness Source: San Diego County Assessors Office 152 City of Poway Principal Secured Property Tax Payers Current Year and Nine Years Ago Source: San Diego County Assessors Office 153 2010 2001 Taxable % of Total Taxable % of Total Assessed City Assessed Assessed City Assessed Secured Value Rank Secured Value Secured Value Rank Secured Value Slough Poway I LLC $107,626,000 1 1.27% - - Sorento West Properties 98,320,391 2 1.16% $ - - PDP Pomerado LLC 71,061,721 3 0.84% - - PR Stowe LLC 40,508,901 4 0.48% - - Costco Wholesale Corporation 36,032,725 5 0.43% - - Government Employees Insurance Company 35,286,922 6 0.42% 39,375,888 1 0 Sysco Food Services 35,179,588 7 0.41% 22,969,000 3 0.51% Toray Membrane USA Inc 35,075,350 8 0.41% - Fairfield Township LLC 34,411,912 9 0.41% - - Poway Crossings Investors LLC 31,900,500 10 0.38% - - Pacific Star -Poway LLC - - 23,755,778 2 0.53% Western Silver Oaks Partners LP - - 21,312,719 4 0.48% Burnham Pacific Operating Partnership - - 20,884,000 5 0.47% Regency Centers LP - - 20,035,681 6 0.45% First American Title Insurance Co. - - 19,696,986 7 0.44% Toppan Electronics Inc. - - 17,959,786 8 0.40% Braemar Properties LP - - 14,210,528 9 0.32% K -Tube Corp - - 13,316,705 10 0.30% $ 525,404,010 6.20% $ 213,517,071 5.06% Source: San Diego County Assessors Office 153 City of Poway Assessed Value of Taxable Property Redevelopment Tax Increment Property Tax Last Ten Fiscal Years Fiscal Year Assessed Value Ended Personal Base Year June 30, Land Improvments Property Total Exemptions Values 2001 756,883,325 1,224,291,373 96,599,318 2,077,774,016 (18,937,627) (186,287,869) 2002 874,897,982 1,373,748,814 116,806,955 2,365,453,751 (14,732,381) (186,287,869) 2003 984,697,076 1,545,545,528 167,042,477 2,697,285,081 (26,741,073) (186,287,869) 2004 1,069,060,617 1,644,074,499 157,368,510 2,870,503,626 (40,683,262) (186,287,869) 2005 1,190,799,171 1,756,732,835 145,512,135 3,093,044,141 (51,334,639) (186,287,869) 2006 1,366,315,823 1,923,849,526 205,148,011 3,495,313,360 (54,732,751) (186,287,869) 2007 1,455,401,981 2,087,221,327 219,066,696 3,761,690,004 (61,891,980) (186,287,869) 2008 1,590,220,327 2,198,461,319 212,387,349 4,001,068,995 (66,618,692) (186,287,869) 2009 1,666,217,121 2,208,050,046 191,508,808 4,065,775,975 (66,638,280) (186,287,869) 2010 1,698,144,577 2,286,610,454 213,648,005 4,198,403,036 (68,141,344) (186,287,869) In 1978 the voters of the State of California passed Proposition 13 which resulted in dramatic tax reform as it relates to property tax collections. Proposition 13 established a property tax of 1 % based upon the assessed value of the property being taxed. Each year the assessed value of property may be increased by an "inflation factor" that may not exceed 2 %. With few exceptions, property is only re- assessed at the time that it is sold to a new owner. At that point the new assessed value is fixed at the purchase price of the property. Due to the nature of Proposition 13, over time the assessed value base has become significantly undervalued when compared to the true market value of the property. Because the true market value is not tied to any type of annual valuation process, there is no reliable means of determining the market value of the parcels within the City and therefore this amount is not disclosed. Source: San Diego County Assessors Office 154 155 Change Estimated Total Net Taxable From Tax Direct Value Prior Year Revenues Tax Rate 1,872,548,520 20.51% 19,213,050 1.026% 2,164,433,501 15.59% 22,171,626 1.024% 2,484,256,139 14.78% 25,377,236 1.022% 2,643,532,495 6.41% 26,732,816 1.011% 2,855,421,633 8.02% 29,031,365 1.017% 3,254,292,740 13.97% 33,064,572 1.016% 3,513,510,155 7.97% 35,445,525 1.009% 3,748,162,434 6.68% 37,854,271 1.010% 3,812,849,826 1.73% 38,500,704 1.010% 3,943,973,823 3.44°% 39,822,711 1.010% 155 City of Poway Redevelopment Property Tax Levies and Collections Last Ten Fiscal Years Within The Year of Levy Collections Fiscal Year Current Ended Secured June 30, Tax Levy 2001 19,154,296 2002 22,075,411 2003 25,285,115 2004 26,637,504 2005 28,914,339 2006 32,938,833 2007 35,319,838 2008 37,650,893 2009 38,031,377 2010 39,609,344 Source: San Diego County Assessors Office Current Percent Secured of Levy Collected Collected 18,918,099 98.77% 21,850,407 98.98% 25,033,065 99.00% 26,397,127 99.10% 28,583,331 98.86°% 32,397,596 98.36% 34,426,834 97.47% 36,657,780 97.36°% 37,099,651 97.55% 38,592,272 97.43% 156 From Prior Years' Total Levies Collections 347,741 370,732 383,654 419,490 387,359 494,520 629,698 930,938 1,465,939 1,495,015 19,265,840 22,221,139 25,416,719 26,816,617 28,970,690 32,892,116 35,056,532 37,588,718 38,565,590 40,087,287 City of Poway General Property Tax Levies and Collections Last Ten Fiscal Years Source: San Diego County Assessors Office 157 Collections From Prior Years' Levies Total Collections 208,718 13,750,226 Within The Year of Levy 14,132,237 Fiscal Year Current Current Percent Ended Secured Secured of Levy June 30, Tax Levy Collected Collected 2001 13,683,327 13,541,508 98.96% 2002 14,105,425 13,958,405 98.96% 2003 14,461,370 14,250,473 98.54% 2004 14,539,338 14,432,902 99.27% 2005 15,074,377 14,925,461 99.01% 2006 15,924,752 15,669,141 98.39% 2007 16,494,681 16,171,714 98.04% 2008 17,034,013 16,641,698 97.70% 2009 17,295,459 16,805,480 97.17% 2010 16,665,674 16,276,757 97.67% Source: San Diego County Assessors Office 157 Collections From Prior Years' Levies Total Collections 208,718 13,750,226 173,832 14,132,237 213,119 14,463,592 250,896 14,683,798 124,804 15,050,265 153,982 15,823,123 269,763 16,441,477 329,517 16,971,215 378,562 17,184,041 490,668 16,767,426 City of Poway Ratios of Outstanding Debt by Type Last Ten Fiscal Years ' 1 Governmental Activities Fiscal Year Tax Certificates Ended Allocation of Capital Loan General ' June 30, Bonds Participation Leases Payable Obligation 2001 148,375,000 53,075,000 245,775 42,206 2,390,000 ' 2002 214,455,000 51,915,000 199,638 41,416 1,955,000 2003 211,895,000 58,740,000 150,674 40,572 1,500,000 2004 260,910,000 57,410,000 98,711 1,939,667 1,025,000 2005 256,350,000 55,395,000 43,565 2,120,310 525,000 t 2006 251,675,000 54,195,000 - 2,169,647 - 2007 247,395,000 52,810,000 - 2,201,788 - 2008 242,280,000 51,365,000 - 2,250,467 - ' 2009 236,940,000 49,850,000 - 2,282,702 2010 231,385,000 48,255,000 - 2,400,513 - Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Source: City of Poway Finance Department ' 1 158 ' Business -type Activities 159 Total Percentage Revenue Capital Contract Primary of Personal Per Bonds Leases Payable Government Income Capita 2,805,000 102,751 5,407 207,041,139 12.45% 4,218 2,675,000 83,462 5,407 271,329,923 15.74% 5,464 2,540,000 62,993 5,407 274,934,646 15.49% 5,517 2,400,000 41,268 5,407 323,830,053 16.85% 6,396 2,250,000 18,213 5,407 316,707,495 15.64% 6,250 2,095,000 - - 310,134,647 14.36% 6,136 1,930,000 - - 304,336,788 13.48% 5,987 1,760,000 - - 297,655,467 12.57% 5,825 1,580,000 - - 290,652,702 1219% 5,685 1,390,000 - - 283,430,513 11.98% 5,445 159 City of Poway Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Fiscal Year Ended June 30, Outstanding General Bonded Debt Tax Allocation Bonds Percent of Assessed Per Value (a) Capita 2001 148,375,000 3.32% 3,023 2002 214,455,000 434% 4,319 2003 211,895,000 3.89% 4,252 2004 260,910,000 4.46% 5,153 2005 256,350,000 4.05% 5,059 2006 251,675,000 3.56% 4,980 2007 247,395,000 3.21% 4,867 2008 242,280,000 2.95% 4,741 2009 236,940,000 2.83% 4,634 2010 231,385,000 2.73% 4,445 Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements (a) Assessed value has been used because the actual value of taxable property is not readily available in California. Source: City of Poway Finance Department 160 i 1 1 1 1 1� 1 1 1 1 1 1 1 1 1 1 1 1 u Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long -term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Source: California Municipal Statistics, Inc. ' 161 City of Poway Direct and Overlapping Debt As of June 30, 2010 2009 -10 Assessed Valuation: $ 8,294,272,220 Redevelopment Incremental Valuation: 3,943,373,823 Adjusted Assessed valuation: $ 4,350,898,397 Estimated Share Debt % of Overlapping OVERLAPPING TAX AND ASSESSMENT DEBT: Outstanding Applicable (a) Debt ' Metropolitan Water District $ 264,220,000 0238% $ 628,844 Poway Unified School District Facilities Improvement Dist No. 2002 -1 177,834,320 25.993% 46,224,475 Poway Unified School District Facilities Improvement Dist No. 2007 -1 98,996,943 26.730% 26,461,883 Palomar Community College District 149,845,000 5.574% 8,352,360 Escondido Union High School District 90,536,275 0.111% 100,495 San Pasqual Union High School District 901,351 2.816% 25,382 Palomar Pomerado Hospital District 417,623,319 8.482% 35,422,810 South Poway Community Facilities District No.1 2,385,000 100.000% 2,385,000 City of Poway Community Facilities District No. 88-1 16,545,000 100.000% 16,545,000 Poway Unified School District Community Improvement Dist No.1 44,935,000 0.391% 175,696 City of Poway 1915 Act Bonds 455,640 100.000% 455,640 ' TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $ 1,264,277,848 $ 136,777,585 OVERLAPPING GENERAL FUND DEBT: ' San Diego County General Fund Obligations $ 415,240,000 1.249% $ 5,186,348 San Diego County Pension Obligations 853,514,739 1.249% 10,660,399 San Diego County Superintendent of Schools General Fund Obligations 21,187,500 1.249% 264,632 Palomar Community College District Certificates of Participation 6,890,000 5.574% 384,049 Escondido Union High School District Certificates of Participation 9,690,000 0.111% 10,756 Poway Unified School District Certificates of Participation 127,465,490 15.166% 19,331,416 TOTAL OVERLAPPING GENERAL FUND DEBT $ 1,433,987,729 $ 35,837,600 ' DEBT $ 2,698,265,577 $ 172,615,185 (b) TOTAL OVERLAPPING DIRECT GENERAL FUND DEBT: City of Poway Certificates of Participation 48,255,000 100.000% 48,255,000 TOTAL DIRECT AND OVERLAPPING DEBT $ 2,746,520,577 $ 220,870,185 Ratio to 2009 -10 Assessed Valuation: Total Overlapping Tax and Assessment Debt 1.65% ' Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($48,255,000) 1.11% Combined Total Debt 5.08% State School Building Aid id Repayable as of 6/30/10: $ - Notes: (a) Percentage of overlapping agency's assessed valuation located within boundaries of the city. ' (b) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non - bonded capital lease obligations. Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long -term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Source: California Municipal Statistics, Inc. ' 161 City of Poway Legal Debt Margin Information Last Ten Fiscal Years FISCAL YEAR 2008 4,310,588,610 $ 25% 2007 4,035,420,029 25% 1,077,647,153 1,008,855,007 15% 15% 161,647,073 151,328,251 Legal debt margin 0.00% 0.00% 0.00% 0.00% The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981 -82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state. Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Source: City of Poway Finance Department San Diego County Assessors Office 162 2010 2009 Assessed valuation $ 4,350,898,397 $ 4,394,570,216 $ Conversion percentage 25°% 25% Adjusted assessed valuation 1,087,724,599 1,098,642,554 Debt limit percentage 15% 15% Debt limit 163,158,690 164,796,383 Total net debt applicable to limit: General obligation bonds - _ 2008 4,310,588,610 $ 25% 2007 4,035,420,029 25% 1,077,647,153 1,008,855,007 15% 15% 161,647,073 151,328,251 Legal debt margin 0.00% 0.00% 0.00% 0.00% The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981 -82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state. Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Source: City of Poway Finance Department San Diego County Assessors Office 162 163 FISCAL YEAR 2006 2005 2004 2003 2002 2001 $ 3,683,578,609 $ 3,341,441,046 $ 3,106,118,400 $ 2,894,214,986 $ 2,734,305,211 $ 2,514,417,338 25% 25% 25% 25% 25% 25% 920,894,652 835,360,262 776,529,600 723,553,747 683,576,303 628,604,335 15% 15% 15% 15% 15% 15% 138,134,198 125,304,039 116,479,440 108,533,062 102,536,445 94,290,650 - 243,728 491,401 466,036 790,018 1,095,502 0.00% 0.19% 0.42% 0.43% 0.77% 1.16% 163 City of Poway Pledged Revenue Coverage Last Ten Fiscal Years Tax Allocation Bonds Fiscal Year 1.96 13,788,952 Debt Service Ended Tax 17,498,444 1.58 June 30, Increment Principal Interest 17,413,271 2.07 17,414,556 2001 $ 20,881,799 $ 2,340,000 $ 8,334,392 $ 2002 23,503,772 2,370,000 11,418,952 2003 26,247,819 2,560,000 11,571,940 2004 27,665,286 6,545,000 10,953,444 2005 30,428,470 4,560,000 13,740,175 2006 34,109,857 4,675,000 12,781,669 2007 36,011,865 5,085,000 12,328,271 2008 38,256,892 5,115,000 12,299,556 2009 38,940,302 5,340,000 12,068,451 2010 39,377,603 5,555,000 11,877,545 Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Source: City of Poway Finance Department 164 Total Coverage 10,674,392 1.96 13,788,952 1.70 14,131,940 1.86 17,498,444 1.58 18,300,175 1.66 17,456,669 1.95 17,413,271 2.07 17,414,556 2.20 17,408,451 2.24 17,432,545 2.26 City of Poway Demographic and Economic Statistics Last Ten Calendar Years Source: Population - State of California Department of Finance Personal Income - State of California Department of Finance Employment Information - State of California Employment Development Department 165 Per Capita Calendar Personal Personal Labor Unemployment Year Population Income Income Force Rate 2001 49,082 1,663,192,652 33,886 25,600 2.4% 2002 49,658 1,724,076,102 34,719 26,200 3.0% 2003 49,833 1,775,051,460 35,620 26,400 3.2% 2004 50,632 1,922,243,880 37,965 26,900 2.8% 2005 50,675 2,025,072,272 39,962 27,300 2.5% 2006 50,542 2,159,204,782 42,721 27,400 2.4% 2007 50,830 2,258,376,900 44,430 28,000 2.7% 2008 51,103 2,367,911,010 46,336 28,600 3.5% 2009 51,126 2,383,664,395 46,623 28,100 6.1% 2010 52,056 2,365,377,680 45,439 28,000 6.3% Source: Population - State of California Department of Finance Personal Income - State of California Department of Finance Employment Information - State of California Employment Development Department 165 City of Poway Principal Employers Current Year and Four Years Prior Employer 2010 Percent of Number of Total Employees Rank Employment General Atomics Aeronautical Systems 2,392 1 8.54% Poway Unified School District 1,341 2 4.79% Geico Direct 1,250 3 4.46°% Pomerado Hospital 776 4 277°% Cohu Inc. 626 5 2.24% Sysco Food Services of SD 455 5 1.63% Core Logic Credco 400 7 1.43°% Digirad Corporation 358 6 1.28°% Walmart 345 8 1.23°% Neal Electric Corporation 309 9 1.10% HNR Framing Delta Design, Inc. Disguise, Inc Cor -O -Van Total 8,252 Total City Labor Force 28,000 Source: City of Poway Economic Development Division -by employer State of California Employment Development Department -total employment Note: Information on Principal Employers from nine years back is not available so information from the year 2006 will be used for the comparison until 2016. 166 29.47% 2006 Percent of Number of Total Emplovees Rank Emplovment 758 5 2.77°% 1,800 1 6.57°% 750 6 2.74% 500 8 1.82°% 935 4 3.41% 375 10 1.37°% 1,200 2 4.38°% 1,000 3 3.65°% 600 7 2.19°% 400 9 1.46% 7,560 27.59°% 27,400 City of Poway Full- time - Equivalent City Employees by Function Last Six Fiscal Years Function 2010 2009 2008 2007 2006 2005 2004 General government 40.00 35.00 37.00 38.00 38.00 40.00 40.00 Public Safety (a) 54.00 57.00 57.00 57.00 57.00 58.00 56.00 Public works 83.00 92.00 92.00 90.00 90.00 84.00 80.00 Redevelopment Services 9.00 9.00 9.00 10.00 10.00 11.00 11.00 Community Services 20.00 27.00 28.00 29.00 28.00 28.00 27.00 Development Services 29.00 37.00 36.00 37.00 37.00 36.00 35.00 235.00 257.00 259.00 261.00 260.00 257.00 249.00 Notes: Amounts shown are the number of positions approved in each operating budget for the fiscal year. (a) Law enforcement services are provided through contract with the County of San Diego Sheriff. The City is reporting its ten year history starting with the implentation of GASB 44 in fiscal year 2006, and in this instance was able to add an additional two years. Source: City of Poway Human Resources Division 167 City of Poway Operating Indicators Current and Prior Four Years Function 2010 2009 2008 2007 2006 General government: Business registrations issued 1,192 942 1,240 1,071 792 Vendor payments processed 7,804 8,936 10,230 10,562 10,782 Public Safety: Arrests made 1,334 1,015 1,052 981 1,898 Fire emergency responses 3,691 3,711 3,907 3,460 3,602 Safety Inspections 1,606 2,104 4,827 4,024 3,196 Development Services: Building permits issued (1) 1,144 1,157 1,441 2,740 3,048 Building inspections 6,580 7,417 9,280 11,264 11,163 Culture and recreation: Performing arts center attendance 61,214 68,993 74,420 64,728 67,004 Library- number of volumes in collection 125,977 124,977 124,977 124,977 120,628 Library- number of volumes borrowed 638,494 562,865 545,279 492,501 390,974 Athletic field permts issued 148 144 140 124 214 Highways and streets: Roads resurfaced in square feet 290,877 600,000 600,000 200,000 16,000 Roads slurry sealed in square feet 4,369,503 4,980,000 5,000,000 5,000,000 5,000,000 Pot holes repaired /work orders (2) 193 147 46 36 35 Water: Residential water customers 12,492 12,458 12,588 12,556 12,530 Commercial water customers 514 514 510 514 511 Average daily consumption (million /gallons) 9.57 11.61 12.82 13.83 13.37 Sewer: Residential sewer customers 11,225 11,191 11,175 11,180 11,322 Commercial sewer customers 774 770 771 755 532 Average daily treatment (million/ gallons) 3.15 3.43 3.24 3.25 3.42 Source: City of Poway Operating Departments The City is reporting its ten year history starting with the implentation of GASB 44 in fiscal year 2006. (1) In Fiscal Year 2007 -08 the Development Services Department changed the method used to count the number of permits issued which led to the large decrease from the previous year. (2) In Fiscal Year 2008 -09 the Public Works Department began reporting pot holes fixed rather than pot holes work orders. 168 City of Poway Capital Assets Statistics Current and Prior Four Years FnneHnn 2010 2009 2008 2007 2006 Public Safety: Number of fire stations 3 3 3 3 3 Number of sheriff stations 1 1 1 1 1 Public works: Total number of streetlights 3,045 3,045 3,026 2,889 2,874 Signal controlled intersections 55 55 55 55 53 Health and welfare Senior center facilities 1 1 1 1 1 Culture and recreation Number of Libraries 1 1 1 1 1 Number of Performing Arts Centers 1 1 1 1 1 Number of Parks 18 18 18 18 18 Acres of developed parks 568 568 568 568 568 Number of reserves/ preserves 2 2 2 2 2 Acres of reserves/ preserves 2,400 2,400 2,400 2,400 2,400 Miles of trails 82 82 82 82 82 Highways and streets Miles of roadway 152 152 152 152 152 Water Miles of water lines 253 253 253 253 253 Water storage capacity (billon /gallons) 1.11 1.11 1.11 1.11 1.11 Sewer Miles of sewer lines 175 175 175 175 175 Miles of storm sewers 64 64 64 64 64 Source: City of Poway Operating Departments The City is reporting its ten year history starting with the implentation of GASB 44 in fiscal year 2006. 169