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2008-01-22 - AGENDA REPORTS - ANNUAL FIN RPT (2)
Agenda Item: Li gpf / CITY OF SANTA CLARITA JOINT CITY COUNCIL/REDEVELOPMENT AGENCY AGENDA REPORT City Manager Approval: CONSENT CALENDAR Item to be presented by: Darren Hernandez DATE: January 22, 2008 SUBJECT: JUNE 30, 2007 COMPREHENSIVE ANNUAL FINANCIAL REPORT AND AUDIT COMMITTEE LETTER DEPARTMENT: Administrative Services RECOMMENDED ACTION City Council and Redevelopment Agency approve: 1. The Component Unit Financial Statements and the Redevelopment Agency State Controller Report for fiscal year ending'June 30, 2007. 2. The Comprehensive Annual Financial Report (CAFR) and Audit Committee Letter for fiscal year ending June 30, 2007. BACKGROUND The City's independent audit firm, Diehl, Evans and Company, has completed the City's and Agency's annual audit for fiscal year ending June 30, 2007. Diehl, Evans and Company conducted the audit in accordance with generally accepted auditing standards, whereby an audit plan was prepared and followed to obtain reasonable assurance the City's and Agency's financial statements were free from material misstatements. The. audit included a review, on a test basis, of documents supporting the amounts and disclosures in the financial statements. The audit also included assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. No significant findings were noted as a result of the audit. Based on the audit performed, Diehl, Evans and Company issued an unqualified audit opinion letter. This opinion reflects the best level of opinion an organization can receive on its financial statements. This letter is identified as the "Independent Auditor's Report" in the City's CAFR for fiscal year ending June 30, 2007. In accordance with professional standards, an Audit Committee Letter has been prepared by Diehl, Evans and Company to provide specific information related to the audit scope and performance. No items of concern were noted by the auditors. ALTERNATNE ACTIONS No feasible alternative action has been identified by staff. FISCAL IMPACT None. ATTACHMENTS Comprehensive Annual Financial Reports available in the City Clerk's Reading File Audit Committee Letter available in the City Clerk's Reading File Component Unit Financial Statements - RDA available in the City Clerk's Reading File Redevelopment Agency State Controller Report available in the City Clerk's Reading File City of SANTA CLARITA California Comprehensive Annual Financial Report Fiscal Year Ended - June 30, 2007 �w- ,IPA r'1 a, it 4f � 1987-2007 Celebrating 20 Years of Success CITY OF SANTA CLARITA (CALIFORNIA) COMPREHENSIVE ANNUAL FINANCIAL REPORT • WITH REPORT ON AUDIT • BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS JUNE 30, 2007 PREPARED BY THE ADMINISTRATIVE SERVICES DEPARTMENT CITY OF SANTA CLARITA, CALIFORNIA z O v C: 0 O cn m 1 O Z INTRODUCTORY SECTION CITY OF SANTA CLARITA COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS June 30, 2007 INTRODUCTORY SECTION: Table of Contents Letter of Transmittal GFOA Certificate of Achievement for Excellence in Financial Reporting Officials of the City of Santa Clarita Organizational Chart Map of the City FINANCIAL SECTION: Independent Auditors' Report Management's Discussion and Analysis Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Governmental Funds: Balance Sheet Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Proprietary Funds: Statement of Net Assets Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows Fiduciary Funds: Statement of Fiduciary Assets and Liabilities Notes to Basic Financial Statements -i- Page Number 1-2 3-15 17 18-19 20-21 23 24-25 26 27 28 29-30 31 33-68 CITY OF SANTA CLARITA COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS (CONTINUED) June 30, 2007 SUPPLEMENTARY INFORMATION: Other Governmental Funds: Page Combining Balance Sheet Number REQUIRED SUPPLEMENTARY INFORMATION: 69 Budgetary Comparison Schedules: 84-89 General Fund 70 Bridge and Thoroughfare Special Revenue Fund 71 Developer Fees Special Revenue Fund 72 Proposition C Special Revenue Fund 73 Federal Grants Special Revenue Fund 74 Note to Required Supplementary Information 75 SUPPLEMENTARY INFORMATION: Other Governmental Funds: 76-77 Combining Balance Sheet 78-83 Combining Statement of Revenues, Expenditures and Changes In Fund Balances 84-89 Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Bikeway Special Revenue Fund 90 Gas Tax Special Revenue Fund 91 Park Improvement Special Revenue Fund 92 Proposition A Special Revenue Fund 93 Special Assessment Special Revenue Fund 94 State Park Special Revenue Fund 95 TDA Special Revenue Fund 96 Traffic Safety Special Revenue Fund 97 CDGB Special Revenue Fund 98 AQMD Special Revenue Fund 99 Aid to Cities Special Revenue Fund 100 Landscape Maintenance District #1 Special Revenue Fund 101 Stormwater Utility Special Revenue Fund 102 Miscellaneous Grants Special Revenue Fund 103 BJA Law Enforcement Special Revenue Fund 104 Supplemental Law Grant Special Revenue Fund 105 HOME Special Revenue Fund 106 Library Facility Fees Special Revenue Fund 107 FAU Special Revenue Fund 108 General City Debt - Debt Service Fund 109 Redevelopment Agency Capital Projects Fund 110 Public Financing Authority Capital Projects Fund 111 CITY OF SANTA CLARITA COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS (CONTINUED) June 30, 2007 Fiduciary Funds: 121 Combining Statement of Fiduciary Assets and Liabilities 122 Schedule of Changes in Fiduciary Assets and Liabilities - All Agency Funds 123-124 Capital Assets Used in the Operation of Governmental Funds: 125 Comparative Schedules by Source 126 Schedule by Function 127 Schedule of Changes by Function 128 STATISTICAL SECTION (UNAUDITED): Description of Statistical Section Contents 129 Financial Trends: Net Assets by Component - Last Five Fiscal Years 131 Changes in Net Assets - Expenses and Program Revenues - Last Five Fiscal Years 132 Changes in Net Assets - General Revenues - Last Five Fiscal Years 133 Fund Balances of Governmental Funds - Last Ten Fiscal Years 134-135 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 136- 137 Revenue Capacity: Page Assessed Valuation and Actual Value of Taxable Property - City Number SUPPLEMENTARY INFORMATION (CONTINUED): 138-139 Internal Service Funds: 113 Combining Statement of Net Assets 114-115 Combining Statement of Revenue, Expenses and Changes in Net Assets 116-117 Combining Statement of Cash Flows 118-119 Fiduciary Funds: 121 Combining Statement of Fiduciary Assets and Liabilities 122 Schedule of Changes in Fiduciary Assets and Liabilities - All Agency Funds 123-124 Capital Assets Used in the Operation of Governmental Funds: 125 Comparative Schedules by Source 126 Schedule by Function 127 Schedule of Changes by Function 128 STATISTICAL SECTION (UNAUDITED): Description of Statistical Section Contents 129 Financial Trends: Net Assets by Component - Last Five Fiscal Years 131 Changes in Net Assets - Expenses and Program Revenues - Last Five Fiscal Years 132 Changes in Net Assets - General Revenues - Last Five Fiscal Years 133 Fund Balances of Governmental Funds - Last Ten Fiscal Years 134-135 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 136- 137 Revenue Capacity: Assessed Valuation and Actual Value of Taxable Property - City Last Ten Fiscal Years 138-139 Assessed Valuation and Actual Value of Taxable Property - Redevelopment Agency - Last Ten Fiscal Years 140-141 Assessed Value - Taxable Property by Category - Last Ten Fiscal Years 142-143 Assessed Value - Use Category Summary - Current Fiscal Year 144 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 145 Direct and Overlapping Property Tax Rates - Current Fiscal Year 146 Principal Property Taxpayers - Last Two Fiscal Years 147 Property Tax Levies, Collections and Delinquency - Last Ten Fiscal Years 149 CITY OF SANTA CLARITA COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS (CONTINUED) June 30, 2007 Page Number STATISTICAL SECTION (UNAUDITED) (CONTINUED): Debt Capacity: Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 150-151 Ratio of General Bonded Debt Outstanding - Last Ten Fiscal Years 152 Direct and Overlapping Debt 153 Legal Debt Margin Information - Last Ten Fiscal Years 154- 155 Pledged Revenue Coverage: Transit - Last Ten Fiscal Years 156 Demographic and Economic Information: Demographic and Economic Statistics - Last Ten Calendar Years 157 Principal Employers - Current Year and Two Years Ago 158 Operating Information: Full -Time and Part -Time City Employees by Function - Last Ten Fiscal Years 159 Operating Indicators by Function - Last Ten Fiscal Years 160-161 Capital Asset Statistics by Function - Last Ten Fiscal Years 162 23920 Valencia Blvd. Suite 300 Santa Clarita California 91355-2196 Website: w .santa-clarita.com December 21, 2007 Phone (661)259-2489 Fax (661)259-8125 \ J Celebrating 20 Years of Success Honorable Mayor, Mayor Pro -tem and City Councilmembers: The Comprehensive Annual Financial Report (CAFR) of the City of Santa Clarita for fiscal year ending June 30, 2007 is hereby submitted in accordance with Chapter 2.12 of the City of Santa Clarita Municipal Code. The intent of this report is to provide the City Council and the public with an understanding of the financial condition of the City of Santa Clarita as of June 30, 2007. This report consists of management's representations concerning the finances of the City of Santa Clarita. As such, management assumes full responsibility for the completeness and reliability of the information contained in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive framework of internal controls that is designed to protect the City's assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the City's financial statements. Because the cost of internal controls should not outweigh their benefits, the City's comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements are free from material misstatement. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City of Santa Clarita. State Law requires the City to prepare an annual financial report. This report fulfills that obligation. Diehl, Evans, & Company, LLP, an independent firm of certified public accountants, has issued an unqualified (`clean") opinion on the City of Santa Clarita's financial statements for the year ending June 30, 2007. The independent auditor's report is located at the front of the financial section of this report. The CAFR has been prepared in conformity with generally accepted accounting principles (GAAP) and with the financial reporting requirements prescribed by the Governmental Accounting Standards board (GASB). These reporting requirements specify that management provide a narrative introduction, overview, and analysis to accompany the financial statements in the form of a Management's Discussion and Analysis (MD&A). The MD&A, which immediately follows the independent auditor's report, complements this letter of transmittal and should be read in conjunction with it. ® -v- PRINTED ON 100% RECYCLED PAPER Also, as a recipient of federal and state financial assistance, the City is required to have a "Single Audit" performed by our independent audit firm. The Single Audit was designed to meet the special needs of the federal grantor agencies. The standards governing the Single Audit engagements require at the independent auditor report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City's separately issued Single Audit Report. CITY PROFILE The City of Santa Clarita is celebrating 20 years of success. Officially incorporated on December 15, 1987, as a General Law City, the City operates under a City Council/City Manager form of government. Located 35 miles northwest of downtown Los Angeles and 40 miles east of the Pacific Ocean, between Interstate 5 and State Highway 14, Santa Clarita forms an inverted triangle with the Santa Susana and San Gabriel mountain ranges. Encompassing the communities of Canyon Country, Newhall, Saugus, and Valencia, Santa Clarita covers approximately 52 square miles. With a population of over 177,000, the City is the 24`h largest city in the State of California, and has consistently ranked in the top five safest cities in the United States. Santa Clarita residents enjoy an expansive year-round parks and recreation network, featuring 17 beautiful parks totaling 243 acres and more than 30 miles of picturesque, multi- use, non -motorized trails. With its unique blend of rural, old west heritage, and urban sophistication, Santa Clarita established an enviable balance between quality living and growth. This February Santa Clarita was selected as a host city for the Amgen Tour of California; a world-class cycling event often referred to as the, "West Coast version of the Tour de France." The City of Santa Clarita's five City Councilmembers are elected at large to four- year overlapping terms, with elections held in April of the even number years. The position of Mayor is selected from among the Councilmembers. The governing Council is responsible, among other things, for passing ordinances, adopting the budget, and appointing committees. The City Council appoints the City Manager, who is responsible for carrying out the policies and ordinances of the Council, overseeing the day-to-day operations of the government, and appointing the various department directors. The City Council also appoints the City Attorney. The City provides, either directly or under contract, a full range of municipal services including public safety, construction, maintenance of streets and other infrastructure, public works, parks and recreation, community development, and cultural events. The City also provides services through the Santa Clarita Redevelopment Agency (RDA), and the Santa Clarita Public Financing Authority (PFA), which are blended component units of the City of Santa Clarita. The -vi- financial activities of these entities are included in this report as their activities are under the control of the City. Separate component unit reports for each entity are also available. The City operates on a fiscal year basis which begins July 1 and ends June 30. The City's Municipal Code requires the City Manager to prepare a budget and present it to the City Council each year. The budget process begins in January of each year and is carried out under the direction of the City Manager in cooperation with the various City departments. The proposed operating and capital budget is submitted by the City Manager to City Council for adoption by June 30 to take effect at the beginning of the fiscal year on July 1. Budgetary control for the City is maintained through its accounting systems. Once adopted, the budget may be amended throughout the year as necessary. Budgetary control is established at the function or program level within each fund. LOCAL ECONOMY Santa Clarita remains a great place to live and work. The City is very family - friendly with schools that consistently rank in the top 10% in California. The City was named one of 100 Best Communities for Young People by America's Promise, the nation's largest private -public partnership committed to ensuring that every child receives the "Five Promises" essential for children and young adults. Santa Clarita's employment rates and job growth remain strong. Santa Clarita enjoys a low unemployment rate of 2.7% compared to 4.4% for Los Angeles County and 4.9% for the State of California. Employment within the City encompasses construction, manufacturing, professional and technical, wholesale goods distribution, finance, real estate, administrative, hospitality services, and recreation. Another major source of activity in Santa Clarita is the many motion picture sound stages and back lots. There are over 10 studios in the area which are home to numerous movies, music videos and TV shows. The City of Santa Clarita's Film Office was awarded the Grand Prize in the Economic Development Programs category by the California Association for Local Economic Development (CALED). Residents and businesses enjoy access to three colleges within the Santa Clarita Valley, as well as close proximity to the California State University campus at Northridge. On a long-term basis, the City continues to make strides in economic development and business retention, which has already developed a strong and diverse retail base. This retail base has provided the City with its current strong financial position. Santa Clarita was named as one of the Top 25 City Retail Markets in California by the California Retail Survey. The City's continued control over expenditure growth has been and will continue to be a key factor in maintaining the City's strong financial position. -vii- LONG-TERM FINANCIAL PLANNING Santa Clarita's serene and attractive well-planned community of over 177,000 is a model City containing all elements needed for well-balanced living and working conditions. Among cities with population over 100,000, Santa Clarita has consistently ranked in the top five safest cities in the Los Angeles County and the United States. Santa Clarita's adult population over the age of 25 is highly educated. This setting of safety, along with a highly qualified population, continually attracts and retains world-class corporations. The City of Santa Clarita has experienced continuous growth since its incorporation in 1987, in economic as well as demographic measures. In 1988, the City's land area encompassed 39.4 square miles with a population of just over 147,000. As of 2007, the population has increased by 20.4% to just over 177,000, and land area has grown by 32% up to 52.04 square miles. The City directly works with private and public sectors to attract new business to the Santa Clarita Valley, assist in the retention and expansion of business already located in the Santa Clarita Valley, and to create new jobs. The continued increases in business development, land area, and demographic growth have had a direct affect on the City's revenue growth, producing overall increases in property tax revenues, property tax in -lieu of Vehicle License Fee (VLF), sales tax, and transient occupancy tax for the five-year period ending June 30, 2007. Millions 35 30 25 20 15 10 Major Tu Revenues 2002-03 2003-04 2004-05 2005-06 200607 Fiscal Year ■ Sales Taxes • Propeny Taxes O VLF ■ Transient Occupancy Taxes ■ Real Propeny Transfer Tax The City provides necessary funding for essential services and Council and community identified priorities, while taking steps to ensure the City remains in good financial health. Annually, the City prepares extended forecasts for the General Fund to determine the future impact of current actions. These forecasts indicate continued General Fund revenue growth over the next five years, -viii- primarily due to projected increases in sales, property taxes and property taxes in - lieu of VLF. This revenue growth, along with the City's balanced budget policy, will provide for continued maintenance of the General Fund balance and reserves. The City maintains a General Fund balance sufficient to provide for various identified contingencies, as well as an established operating reserve. In addition, the General Fund contributes annually to the City's facilities replacement fund, which provides for major maintenance and replacement of infrastructure and capital improvements. The City's Capital Improvement Program (CIP) is a component of the annual budget process that addresses the City's short- and long- term capital needs. Just as important, the CIP emphasizes a plan of action that effectively maintains the existing infrastructure to a sound physical standard, as well as providing new facilities to support current growth and complement new development. MAJOR MILESTONES IN 2007 This year, the City opened a critical 1.6 mile portion of the Cross Valley Connector Road, the "gap closure," providing a new eight -lane access from I-5 to the area's commerce center. The Cross Valley Connector (CVC) is the City's plan to ease traffic and is achieved by the seamless connection between the I-5/SR126 on the Westside of the City to the SR-14/Golden Valley Interchange on the East. This eight -and -a -half mile, $245 million road will provide a new way to travel across Santa Clarita Valley and ease traffic congestion valley -wide. The City of Santa Clarita was successful in receiving $20,666,000 in grants from the Metropolitan Transportation Authority 2007 Call for Projects. This additional funding will allow the City to continue its multiple projects. Phase IV of the 38 -acre Sports Complex is currently under way. This project will complete the design and construction of the 15 -acre area for state -of -the -art -skate park, an 18,000 square foot gymnasium, and an additional 80 car parking lot to serve the facilities. This project enhances the existing facilities, such as the Aquatics Center, which features a 50 -meter Olympic -sized pool, and other amenities. In July 2006, Santa Clarita's 28th annexation added 1,800 residents to the City. Residents of this community are now entitled to a higher level of services as City residents. In May 2007, the City of Santa Clarita mailed ballots to property owners asking them to vote on the creation of an Open Space Preservation District (OSPD) to enable the City to purchase and preserve various undeveloped land parcels within and surrounding the City. Subsequently, the proposed OSPD was approved by a margin of 69% ($409,974 of weighted assessment ballots) in favor and 31% ($182,672 of weighted assessment ballots) opposed. In December, the community received a tremendous birthday present from the City with the grand opening of the 32 -acre Todd Longshore Park in Canyon Country. The new parksite includes two children's play areas, restrooms, covered picnic areas, walking paths, a turf area, and a parking lot. AWARDS AND ACKNOWLEDGMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate for Excellence in Financial Reporting, to the City of Santa Clarita for its Comprehensive Annual Financial Report (CAFR) for fiscal year ending June 30, 2006. This was the eighteenth consecutive year that the City has achieved these prestigious awards. In order to be awarded a Certificate of Achievement or Certificate of Award for Outstanding Financial Reporting, a government unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. This report must satisfy GAAP and applicable legal requirements. A Certificate of Achievement and Certificate of Award for Outstanding Financial Reporting is valid for a period of one year only. We believe our current comprehensive annual financial report continues to meet the requirements of the GFOA Certificate of Achievement Program, and we are submitting it to GFOA to determine its eligibility for another certificate. This report is a joint effort by many people from many different areas of responsibility. The preparation of this report could not have been accomplished without the hard work and team effort of the Finance Division. I would like to express my appreciation to all members of the Division who assisted and contributed to its preparation, in particular, Carmen Magafta, Interim Finance Manager; Mary Ann Ruprecht, Senior Financial Analyst; Jan Downey and Joseph Lillio, Financial Analysts; Michelle Larivee, Project Technician; and Lesley Cummins, Graphics Project Technician. I would also like to thank the Mayor; Mayor Pro Tem; Councilmembers; City Manager, Ken Pulskamp; Assistant City Manager, Ken Striplin; Director of Public Works, Robert Newman; Director of Parks, Recreation and Community Services6, Rick Gould; and Director of Community Development, Paul Brotzman, for their continuing efforts in administering the financial operations of the City in a conservative and responsible manner. Sincerely, �sw< Darren Hernandez, Deputy City Manager and Director of Administrative Services DH:CM:MR:Ims FWCA 0&rr u i I a -X- Certificate of Achievement for Excellence in Financial Reporting Presented to City of Santa Clarita California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2006 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. President Executive Director xi OFFICIALS OF THE CITY OF SANTA CLARITA As of June 30, 2007 City Council Marsha McLean MAYOR Bob Kellar MAYOR PRO TEM Frank Ferry COUNCILMEMBER Laurene Weste COUNCILMEMBER Tim Ben Boydston COUNCILMEMBER City Officials Ken Pulskamp CITY MANAGER Ken Striplin ASSISTANT CITY MANAGER Carl Newton CITY ATTORNEY Sharon Dawson CITY CLERK Paul Brotzman DIRECTOR OF COMMUNITY DEVELOPMENT Darren Hernandez DEPUTY CITY MANAGER AND DIRECTOR OF ADMINISTRATIVE SERVICES Richard Gould DIRECTOR OF PARKS, RECREATION & COMMUNITY SERVICES Robert Newman DIRECTOR OF PUBLIC WORKS/CITY ENGINEER xii ) \ ) � f \ )—)—§—\ � ( � / � ( . ) g ] | � � ( � / � ( . ) � ( \ � \ a u � ) e xiv C T QZ ON •OpO-•_-_--� -�— — -� =�9 P � F a V C Y = UV e p x o •� t � � FEFN/V LI 3 it a � o �� a a � RC[KIV'cLL � N j 0 N 2 a e1 >W> W ZZ Plagsialeg of � v 70� l xiv FINANCIAL SECTION DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS MICHAEL R. LUDW, CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W. SPRAKER, CPA NITIN P. PATEL CPA ROBERT J. CALLANAN. CPA 2121 ALTON PARKWAY, SURE 100 'PHILIP H. HOLTKAAIP, CPA IRVINE, CALIFORNIA 92606-4956 'THOMAS M. PERLOWSKI. CPA HARVEY J. SCHROEDER. CPA (949) 399-0600 • FAX (949) 399-0610 KENNETH R AWES. CPA www.diehlevans.com 'A PROFESSIWIAL CORPoRATON December 17, 2007 INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of City Council City of Santa Clarita Santa Clarita, California We have audited the accompanying financial statements of the governmental activities, the business -type activity, each major fund, and the aggregate remaining fund information of the City of Santa Clarita, California, as of and for the year ended June 30, 2007, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Santa Clarita'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 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 financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activity, each major fund, and the aggregate remaining fund information of the City of Santa Clarita, California, as of June 30, 2007, 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. -1- OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330 CARLSBAD. CALIFORNIA 92008-2389 ESCONDIDO, CALIFORNIA 92025-2598 (760) 729-2343 • FAX (760) 729-2234 (760) 741-3141 • FAX (760) 741-9890 In accordance with Government Auditing Standards, we have also issued our report dated December 17, 2007 on our consideration of the City of Santa Clarita, California's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, 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. The management's discussion and analysis and the budgetary comparison schedules, identified in the accompanying table of contents, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures to the management's discussion and analysis, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this required supplementary information. However, we did not audit the management's discussion and analysis and express no opinion on it. The budgetary comparison schedules and related note have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Santa Clarita, California's basic financial statements. The introductory section, supplementary information section and statistical section as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplementary information section 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 section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. i -2- • • City of ANTA CLARITA • • itee Valencia Blvd. Phone Su -. Suit300 (661) 259-2489 Santa Clarita Fax • California 91355-2196 (661)259-8125 Website: wwwsanta-clarita.ann Celebrating 20 Years of Success MANAGEMENT'S DISCUSSION AND ANALYSIS Fiscal Year Ended June 30, 2007 This discussion and analysis of the City of Santa Clarita's financial performance provides an overview of the financial activities of the City of Santa Clarita (City) for the fiscal year ended June 30, 2007. Our analysis includes information regarding the City's overall financial position and results of operations to assist users in evaluating the City's financial position, a discussion of significant changes that occurred in funds, and information regarding significant budget variances. In addition, it describes the activities during the year for capital assets and long-term debt. We end our discussion and analysis with a description of currently known facts, decisions, and conditions that are expected to have a significant effect on the financial position or results of operations. Please read it in conjunction with the accompanying transmittal letter, the basic financial statements and the accompanying notes to those financial statements. FINANCIAL HIGHLIGHTS • The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $865.3 million. Of this amount, $89.3 million represents unrestricted net assets that may be used to meet the City's ongoing obligations to citizens and creditors. • The City's total net assets increased by 6.6%, primarily as a result of the increase in capital assets. Net assets of the business -type activities increased by $464,504, or 0.7%, and net assets of the governmental activities increased by $53.5 million, or 7.1 %. • The capital assets of the City's governmental activities increased by $44.2 million or 6.8% over last fiscal year. • As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $109.5 million. This represents an increase of $10.1 million as compared to the prior year. See independent auditors report. PRINTED ON 100% RECYCLED APER USING THIS ANNUAL REPORT The financial statements presented herein include all of the activities of the City of Santa Clarita and its component units using the integrated approach as prescribed by GASB Statement No. 34. The three components of the basic financial statements are as follows: 1) Government -Wide Financial Statements The Government -Wide Financial Statements present the financial picture of the City from the economic resources measurement focus using the accrual basis of accounting in a manner similar to a private -sector business. These statements include all assets of the City (including infrastructure) as well as all liabilities (including long-term debt). 2) Fund Financial Statements The Fund Financial Statements include statements for each of the three categories of activities: governmental, proprietary and fiduciary. For governmental activities, these fund statements tell how these services were financed in the short term, as well as what remains 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 and other funds. 3) Notes to the Basic Financial Statements The notes provide additional information necessary to enable the user to fully understand the various financial statements. In addition to the basic financial statements and notes, this report contains other supplementary information. THE CITY AS A WHOLE — GOVERNMENT -WIDE FINANCIAL STATEMENTS The Statement of Net Assets and the Statement of Activities One of the most important questions asked about the City's finances is, "Is the City as a whole better or worse off as a result of the year's activities?" The Statement of Net Assets and the Statement of Activities report information about the City as a whole, and its activities, in a way to answer this question. These statements include all assets and liabilities of the City 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 taken into account, regardless of when cash is received or paid. The statement of net assets reports all of the City's assets and liabilities, with the difference between the two reported as net assets. Net assets are one way to measure the City's financial health or financial position. Over time, increases or decreases in the City's net assets are an indication of whether its financial health is improving or deteriorating. Other things to consider are non-financial factors, such as changes in the economy due to external factors that would cause an increase or decrease in consumer spending. The statement of activities presents information relating to how the City's net assets changed during the fiscal year. All activities resulting in changes in net assets are reported when earned or incurred, regardless of the receipt or disbursement of the related transaction's cash flows. Some of the revenues and expenses reported in this statement will result in future fiscal period cash flows, such as the receipt of uncollected taxes and the payment of interest expense or compensated absences. See independent auditors report. -4- The Statement of Net Assets and the Statement of Activities (Continued) In the Statement of Net Assets and the Statement of Activities, we separate the City Activities as follows: Governmental Activities — Most of the City's basic services are reported in this category, including general administration (City Manager, City Clerk, Finance, etc.), public safety, public works, parks and recreation, community services, economic development, planning, and engineering. These activities are distinguished due to the use of property taxes, sales tax, transient occupancy tax, user fees, interest income, franchise fees, state and federal grants, contributions from other agencies, and other revenues to finance these activities. Business -Type Activities — City functions that are intended to be primarily self-supporting through the imposition of user fees and charges are reported in the business -type activity category. Business -type activities for the City consist of transit activities related to the operation of the City's local public transportation system. Component Unit Activities — The City of Santa Clarita is the primary government unit to two legally separate entities. The financial activity and data of the Santa Clarita Public Financing Authority and the Redevelopment Agency of the City of Santa Clarita have been accounted for within the funds of the City, and therefore separate component unit financial information is not presented within the financial statements. REPORTING THE CITY'S MOST SIGNIFICANT FUNDS — FUND FINANCIAL STATEMENTS A fund is a grouping of related accounts used to account for and accumulate financial information related to a specific activity or objective. Some funds are required to be established by State law and bond covenants; however, management established many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other resources. The fund financial statements provide detailed information about the most significant funds and other funds — not the City as a whole. The City's three types of funds are governmental, proprietary, and fiduciary. Governmental Funds — Most of the City's basic services are reported in governmental funds. Governmental funds financial statements focus on how money flows in and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called "modified accrual" accounting, 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 helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. Because the focus of the governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for the governmental funds with similar information presented for the governmental activities in the government -wide financial statements. Reconciliation of the Fund Financial Statements to the Government -Wide Financial Statements are provided to explain the differences created by this integrated approach. See independent auditors report. -5- Governmental Funds (Continued) The City reports governmental fund financial information within 30 governmental funds. The general fund, bridge and thoroughfare fund, developer fees fund, Proposition C fund, federal grants special revenue funds, and debt service -redevelopment agency fund are presented separately as major funds in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances. Financial data for the remaining 24 governmental funds are combined into a single, aggregated presentation. Supporting financial information on each of the other governmental funds are also provided within the report. Proprietary Funds —The City maintains two different types of proprietary funds. When the City charges customers for the services it provides, these services are generally reported in a type of proprietary fund known as an enterprise fund. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statement, but the proprietary fund statements provide more detail and additional information, such as a statement of cash flows. The City uses the transit enterprise fund to account for the activities related to transit operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses four internal service funds to account for costs related to self-insurance, computer replacement, vehicle replacement, and public facilities replacement. Proprietary funds are reported in the same way all activities are reported in the Statement of Net Assets and the Statement of Activities. The proprietary fund financial statements provide separate information for the transit enterprise fund, which is considered to be a major fund of the City. All of the internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements in the supplementary information section of this report. THE CITY AS TRUSTEE — FIDUCIARY FUND STATEMENTS Reporting the City's Fiduciary Responsibilities The City is the trustee, or fiduciary, for certain funds held for the benefit of other parties outside of the City. The City's fiduciary activities are reported in separate Statements of Fiduciary Assets and Liabilities. These activities were excluded from the City's other financial statements, because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. NOTES TO THE BASIC FINANCIAL STATEMENTS The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. OTHER INFORMATION In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the comparison of budget and actual results for the major governmental funds. Required supplementary information can be located on pages 69-75 of this report. See independent auditors report. W112 OTHER INFORMATION (CONTINUED) The combining statements referred to earlier in connection with the other governmental funds, internal service funds, and fiduciary funds are presented immediately following the required supplementary information described in the previous paragraph. Combining and individual fund statements and schedules, as well as schedules related to the capital assets used in the operation of governmental funds, can be found on pages 76-128 of this report. THE CITY AS A WHOLE The analysis below focuses on the net assets (Table 1) and changes in net assets (Table 2) of the City's governmental and business -type activities. The City's net assets may be analyzed and used as an indicator of the City's overall financial condition. The City's combined net assets increased by $53.9 million, increasing from $811.4 million to $865.3 million. As noted earlier, this increase is primarily the result of the City's valuation of the estimated historical cost of infrastructure placed in service prior to July 1, 2002. ASSETS, Current and Other Assets Capital assets TOTAL ASSETS LIABILITIES: Long Term liabilities Other liabilities TOTAL LIABILrTTES NET ASSETS, Invested in capital assets, net of related debt Restricted Unrestricted TOTAL NET ASSETS TABLE 1 CITY OF SANTA CLARITA'S NET ASSETS Governmental Activities Business -type Activities Total 2006 2007 As Restated 2007 2006 As Restated 2006 2007 As Restated S 19025,569 S 173,580,262 $ 6,102,811 $ 4,515,324 S 201,028,380 $ 178,095,586 693,803347 649,605,600 63,483,490 65,304,940 757.286,837 714,910,540 888,728,916 823,185,862 69,586,301 69,820,264 958,315,217 893,006,126 34,600,563 23,022,663 870,149 1,236,869 35,470,712 24,259,532 52,603,956 52,108,958 4,916,443 5,248.190 57,520399 57.357,148 87,204,519 75,131,621 5,786,592 6,485,059 92,991,111 81,616,680 661,210,117 614,300,517 62,246,621 63,741,429 723,456,738 678,041,946 52,576,463 62,752,301 - - 52,576,463 62,752301 87,737,817 71,001,423 1,553,088 (406324) 89,290,905 70,595,199 S 801,524,397 S 748,054,241 S 63,799,709 S 63335,205 S 865.324,106 S 811,389,446 See independent auditors report. -7- THE CITY AS A WHOLE (CONTINUED) The City's Net Assets is made up of three components: Investment in Capital Assets (Net of Related Debt), Restricted Net Assets, and Unrestricted Net Assets. As of June 30, 2007, assets exceeded liabilities by $865.3 million. The largest component of the City's net assets, 83.6%, is represented by its $723.5 million investment in capital assets (e.g., infrastructures, land, buildings and improvements, equipments, and construction in progress) less any related outstanding debt used to acquire the assets. These capital assets are used to provide services to the citizens, and therefore, are not available to finance future operations. In addition, resources necessary to repay the related debt must be provided by sources other than the capital assets, as the assets themselves cannot be used to satisfy these liabilities. An additional portion of the City's net assets, 6.1%, represents resources subject to external restrictions on how they may be used. The remaining 10.3% of unrestricted net assets, $89.3 million may be used to meet the City's ongoing obligations to citizens and creditors. Consistent with the prior year, at the end of the current fiscal year, the City is able to report positive balances in both categories of governmental and business -type net assets. Net assets for governmental activities increased by $53.5 million over the prior year, $46.9 million of which is represented by increased capital assets and reductions in their related debt. Increases in capital assets also accounted for the majority of the overall increase in net assets for business -type activities of $464,504. The unrestricted portion of the business -type activities increased by $2.0 million. Governmental Activities Revenues from governmental activities were down by $18.7 million or 10.6%. The cost of all governmental activities this year was $104.3 million, an increase of 22.2% over the past year. However, as shown in the Statement of Activities, the governmental activities expenditures were ultimately financed in part by the taxpayers, as $30.1 million in revenues were generated by service revenues received from the performance of these activities; another $26.6 million was received from government agencies and other organizations that subsidized certain programs with operating grants and contributions; and another $24.8 million in revenues was generated from capital grants and contributions. Community Development program is the only activity that generated a net revenue of $44.6 million. Overall, the City's governmental program revenues amounted to $157.3 million, which funded the expenditures and contributed an additional $53.0 million to the increase in net assets. Part of the $157.3 million program revenue are other non -program governmental revenue amounting to $76.2 million that the City realized this past year. See independent auditors report. THE CITY AS A WHOLE (CONTINUED) TABLE 2 CITY OF SANTA CLARITA'S CHANGES IN NET ASSETS Government Activities Business -type Activities 2007 2006 2006 As Restated 2007 As Restated Program Revenues: 24,225,414 14,398,408 Charges fm services S 30,086,825 S 27,594,560 Operating grants and contributions 26,641,145 23,465,852 Capital grants and contributions 24,770,306 60,971,404 General Revenues 20,988,533 - - 8,985,449 Taxes: 18,315,106 16,508,457 Property taxes, levied for general purposes 27,891,202 23,106,806 Other Taxes 41,074,451 38,702,784 Grants and contributions not restricted to specific programs 1,862,901 223,241 Other 4,970,193 1,891192 Total Revenues 157197,023 175,955,939 General government Public safety Public works Parks and recreation Community development Unallocated infrastructure depreciation Interest on long term debt Transit Total Expenses Increase in Net Assets before transfers Transfers Increase In Net Assets Net Assets - Beginning of Year, As Restated (Note 16) Net Assets - End of Year 26,029,070 24,225,414 14,398,408 13,821,626 19273,980 6,417,841 20,573,077 20,988,533 8,985,449 16,939,976 Total 2006 2007 As Restated S 5,827,778 S 4,950,584 S 35,914,603 S 32,545,144 12,616,641 3,351,941 39,257,786 26,817,793 750,200 - 25,520,506 60,971,404 - 27,891,202 23,106,806 - 41,074,451 38,702,784 - 883,615 1.862,901 1,106,856 26,367 1,050 4,996.560 1,892,342 19,220,986 9,187,190 176,518.009 185,143,129 - - 26,029,070 24125,414 - - 14,398,408 13,821,626 - - 19273,980 6,417,841 - - 20,573,077 20,988,533 - - 8,985,449 16,939,976 12,920,310 1168,939 - - 12,920,310 1268,939 2,087,949 1,669,701 - - 2,087,949 1,669,701 - - 18,315,106 16,508,457 18,315,106 16,508,457 104,268.243 85,332,030 18,315,106 16,508,457 122,583,349 101,840.487 53,028,780 90,623,909 905,880 (7,321167) 53,934,660 83302,642 441,376 (12,054,795) (441,376) 12,054,795 - - 53,470,156 78,569,114 748,054141 669,485,127 S 801524,397 S 748,054141 See independent auditors report. -9- 464,504 4,733,528 53,934,660 83302,642 63.335.205 58,601,677 811389,446 728,086,804 S 63,799,709 S 63335105 S865,324.106 S 811389,446 THE CITY AS A WHOLE (CONTINUED) Business -Type Activities Business -type activities increased the City's net assets by $464,504 for the current year. Business -type activities revenues increased by $10.0 million during the year for a total of $19.2 million in revenues, not including the $441,376 of transfers out to other governmental activities. This was largely due to $9.3 million increase in operating grants and contributions during the year. Related transit activity expenses increased by $1.8 million or 10.9% of the $18.3 million total. THE CITY'S FUNDS, AS RESTATED (Note 16) The governmental funds reported a combined fund balance at the end of the current fiscal year of $109.5 million, an increase of $10.1 million over the prior year. Approximately $83.0 million is reserved and already committed for specific restricted purposes, and approximately $26.5 million of the unreserved portion may be used to meet the City's ongoing obligations to citizens and creditors. The total governmental fund balance includes the general fund balance of $63.2 million, an increase of $24.2 million over the prior year. The general fund is the chief operating fund of the City of Santa Clarita. At the end of the current fiscal year, the $34.7 million in reserved general fund balance accounted for 41.8% of the total reserved governmental fund balance. The unreserved general fund balance of $28.5 million, which is available for spending at the City's discretion, is up by $9.5 million from prior year. The City's general fund balance has reserved $34.7 million for advances, encumbrances, deposits and prepaid items. More detailed information about the combined fund balance reserves and designations and restatement are presented in Note 11 and Note 16, respectively, to the financial statements. Other major fund balance changes are noted below: • The bridge and thoroughfare fund balance has realized a significant decrease of $13.5 million or 53.3 % from the prior year. This was mainly due to projects that were completed by June 30, 2007. The decrease in developer fees of $25.8 million or 94.4% over last year was due to the decrease in new permitting and development activity within the City. • The $1.7 million developer fees fund balance, as restated increased in the current year by $376,425 or 28.3%. Capital expenditures increased by $4.2 million and with a corresponding increase in developer fees of $4.1 million. The increase in cash, investments and advances to other funds was accounted to the increase of $165,782 in investment income to $579,736 or 40.1%. • The federal grants fund balance shows a negative balance of $375,610, compared to a positive fund balance of $649,834 in previous year. The change was due to the timing of grant -related expenditures and the related reimbursement revenues that were deferred in prior years. • New to the major fund category is the Proposition C fund. This fund has realized a significant increase in Capital Outlay of $15.3 million or 448.3% and an increase of $8.8 million or 167.7% in revenue over last fiscal year. The fund balance at the end of the year decreased by $4.6 million or 75.1 % from previous year and as mentioned earlier, this change was due to the increase in capital expenditures. See independent auditors report. -]0- THE CITY'S FUNDS, AS RESTATED (Note 16) (CONTINUED) Other major fund balance changes are noted below (continued): • Also added to the major fund category this fiscal year is the debt service fund — redevelopment agency. The ending fund balance had an increase of negative $5.7 million to $10.5 million or 120.5%. This was due to the increase in advances and transfers out to the capital projects fund — redevelopment agency. In addition to the major funds, the fund balances for the other governmental funds experienced an aggregate increase of $10.4 million, resulting in an overall 32.9% increase in other governmental funds' balances. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. The total net assets for the transit enterprise fund increased over the prior year by $2.6 million or 4.2%. This $2.6 million increase was primarily due to the increase in cash and investments and decrease in total liabilities. The unrestricted portion of the business -type activities net assets increased by $2.6 million from a deficit of $406,224 from prior year. This increase is mainly attributed to the increase in grant revenues received in the current fiscal year. The Internal Service funds net assets increased by $5.0 million or 33.1 %, ending the fiscal year with a fund balance of $20.1 million, of which $19.5 million is unrestricted. General Fund Budgetary Highlights Comparison of the fiscal year 2006-07 original (adopted) general fund budgeted expenditures and transfers of $70.1 million to the final budgeted expenditures of $84.0 million results in a net increase of $13.9 million. Included in this net increase is $13.3 million in committed purchase orders and contracts from the prior June 30 balance, as well as $541,836 of prior fiscal year operating and capital improvement projects approved for carryover into fiscal year 2006-07. The resulting beginning budget balance was equal to $84.0 million. Original Budget + Cont. Appropriations + Encumbrances - Beg. Balance+ Supplemental Changes = Final Budget $70,116,828+ $541,836+ 513,328,420= 583,987,084+ 54,827,823= $88,814,907 Comparing the beginning budget of $84.0 million with the final budget of $88.8 million indicates the general fund had supplemental budgetary appropriations of $4.8 million during the fiscal year. Included in the supplemental appropriations are the results of this year's budget review. At the mid -year budget review, the City Council approved additional appropriations for non -represented employee cost -of -living salary increases of 4.3%, as well as increased costs related to the City's contribution towards employees' health benefits. In addition, an increase of $1 million was appropriated to meet legal cost related to the Cemex opposition effort and $615,000 additional fund was appropriated to various capital projects. See independent auditors report. -11- General Fund Budgetary Highlights (Continued) During the mid -year budget review, budgeted general fund revenue had a net increased of $1.0 million. Included in the net increase is $1.5 million increase in property tax revenue due to increasing property valuation in the area. Development revenue was reduced by $870,500 due to the decrease in the demand for new housing. Building permits and licenses were directly impacted by this economic trend. At year end, the City's actual revenues are $1.5 million more than the final budgetary estimates. This increase was primarily due to the $1.6 million increase on returns of investments. Actual expenditures were less than the final budgetary estimates by over $18.0 million. This was partly due to large infrastructure commitments that were not liquidated at year end and projects that are multi-year. . CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The City's Capital Assets at the beginning of fiscal year 2006-07 was restated (Note 16) in connection with the valuation of all infrastructure placed in service prior to July 1, 2002 with correction amount of $413.9 million (net of accumulated depreciation). The City had $757.3 million (net of accumulated depreciation) invested in a broad range of capital assets. This investment in capital assets includes land, buildings and related improvements, vehicles and equipment, and infrastructures (include infrastructures placed in service prior to July 1, 2002), such as streets, bridges, traffic signals, medians, sidewalks, trails, sewers, curbs and gutters, and drainage systems. (See Table 3) TABLE3 CITY OF SANTA CLARITA'S CAPITAL ASSETS, (net of depreciation) Land Construction in progress In6astructure, net Depreciable site improvemcnis, Net Depreciable buildings and improvements, net Depreciable equipment, net TOTALS Govemmental Activities 2006 2007 As Restated S 79,279,650 $ 78,433,140 82,155,075 52,196,756 482,800,768 469,123,000 9,695,070 10,050,767 37,369.921 37,549,539 2,502,863 2,252,398 Business Type Activities 2006 Total 2006 2007 As Restated 2007 As Restated S 10,787,880 S 10,787,880 S 90,067,530 S 89,221,020 144.675 26,002,684 82,299,750 78,199,440 - - 482,800,768 469,123,000 - - 9,695,070 10,050,767 38,610,490 12,966,523 75,980,411 50,516,062 13,940,445 15,547,853 16,443,308 17,800,251 S 693,803,347 S 649,605,600 S 63,483,490 S 65,304,940 S 757,286,837 S 714,910,540 Major capital asset events during the year included: • Completion and opening of the $31 million, 1.6 mile portion of the Cross Valley Connector Road, the "gap closure", providing a new eight -lane access from Interstate 5 to the area's commerce center. See independent auditors report. -12- CAPITAL ASSETS AND DEBT ADMINISTRATION (CONTINUED) Capital Assets (Continued) • Completion of the Bouquet bridge widening, bike lane and Bouquet junction improvement, adding more travel lanes, more turning lanes and dramatically improving traffic in this busy intersection. • Construction started in August 2006 of the Todd Longshore Park. A neighborhood park on approximately 5 acres of the 32 -acre site in Canyon Country. • Significant progress in the design and road construction along Magic Mountain Parkway and the I-5 freeway. • Design for the Intelligent Transportation System is underway. This effort will add traffic detector stations at locations Citywide to enhance the City's traffic monitoring efforts with closed circuit television, a communications interface to allow for and e-mail/website communications to alert motorist of traffic conditions throughout the City. Additional information on the City of Santa Clarita's capital assets can be located in Note 3 to the financial statements on pages 48 through 50. Debt Administration At year-end, the City's total debt amounted to $37.8 million in bonds, notes, capital leases, contracts, claims payable, and compensated absences as shown in Table 4. A summary of debt activity for the year follows. TABLE 4 CITY OF SANTA CLARITA'S OUTSTANDING DEBT Governmental Activities Business -type Activities 2007 2006 2007 2006 Refunding certificates of 2007 participation, net S 16,389,028 S 17199,931 $ Certificates of participation - 710,000 Lease Revenue Bonds 13,893128 - Contmct and leases 6,675,794 1,780,826 payable 4,364,608 5,089,476 Compensated absences 1,780,826 1,574,478 s 1136,869 1,586,318 Total 2007 2006 S 16,389,028 $ 17199,931 - 710,000 13,893128 - 5,601,477 6,675,794 1,780,826 1,574,478 Claims Payable 100,000 566,632 - - 100,000 566,632 TOTALS S 36,527,690 S 25,240.517 S 1236,869 S 1,586,318 S 37,764,559 S 26,826,835 See independent auditors report. -13- CAPITAL ASSETS AND DEBT ADMINISTRATION (CONTINUED) Debt Administration (Continued) The City's governmental activities had $36.5 million in debt at year-end. Governmental Activities long-term debt increased overall by $11.3 million during the year. A summary of the activity giving rise to new increases in debt is as follows: • Compensated absences liability for that portion of unused, earned vacation compensation that is not expected to be paid within the coming fiscal year, increased by $206,348. Claims payable liability for that portion of incurred and reported claims, as well as incurred but unreported claims, which are not expected to be paid within the coming fiscal year decreased by $466,632. Additional information on the City of Santa Clarita's self-insurance can be located in Note 12 to the financial statements on pages 65 and 66. Lease revenue bonds, Series 2007 for $13.9 million were issued in connection with the acquisition of a right-of-way. Additional information on this bond can be located in Note 4A to the financial statements on page 52. The City's business -type activities debt decreased by $349,449, from $1,586,318 to $1,236,869. No new debt related to business -type activities was issued or refinanced during the current fiscal year. Debt in the business -type activities is for capital leasing of buses and other transit -related equipment. During the fiscal year ended June 30, 2007, the City was able to meet its current year debt obligation in a timely matter. State statutes limit the amount of general obligation debt a governmental entity may issue to 15% of its total assessed valuation. The debt limitation for the City as of June 30, 2007, was $2,876,569,716. Additional information on the City of Santa Clarita's debt can be located in Note 4 to the financial statements, on pages 51 through 58. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS In preparing the budget for fiscal year 2007-08, management looked at the following economic factors: Sales tax continues to be the City's largest General Fund revenue source accounting for 40.1% of the total General Fund revenue, or $34.2 million in 2007-08. The projected increase of approximately 5% is indicative of the contribution the citizens of Santa Clarita make by shopping local and keeping tax dollars in the City. The new housing market took a turn, and property sales in 2007 were not as aggressive as compared to the last two years. Total property tax revenues for Fiscal Year 2007-08 are budgeted at a conservative 5% greater than the previous year. The City has maintained a conservative approach to budgeting revenues. Budgeted general fund revenues for fiscal year 2007-08 are 1.6% greater than the original budgeted revenues of the prior year. Aside from the major areas of sales and property taxes addressed above, FEMA grant was budgeted for $1.1 million in 2007-08. Revenues for licenses and permits increased by $335,000 from the adopted prior year budget, due to anticipation of increased building permit and map filing activity. See independent auditors report. -14- ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS (CONTINUED) While the general fund revenues for fiscal year June 30, 2008, are budgeted at $82.8 million, which represents an increase of 1.9% over the prior year, the City's general fund operating and capital expenditures for the coming year are budgeted at $79.8 million, which represents an increase of 12.6% over previous year. Operational expenditures for fiscal year 2008 have increased by 8.6%, and capital expenditures increased by $3.4 million or 52.9%. The City's 2007-08 operating budget for all funds increased by $8.4 million or 8.1 % to a total of $112.4 million. The City continues to grow with new commercial and residential development, street improvements, park construction, and various other projects. The 2007-08 budgets are a reflection of the City's commitment to the residents of Santa Clarita. With the completion of "The Big Picture" process in 2004, the City now has a community developed tangible plan to provide guidance in making the strategic and budgetary decisions that bring us closer to the outlined vision for the City and those specified "Big Picture" goals. The 2007-08 budgets also continues the provision of consistent high levels of service to the community through the allocation of resources for public safety, cultural and social programs, and continued infrastructure improvements and maintenance. A copy of the City's 2007-08 budgets can be obtained by contacting the City Finance Division or visit the web at santa-clarita.com/cityhall/emolbudget. CONTACTING THE CITY'S FINANCE DIVISION 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 accountability for the money it receives. If you have questions about this report, or need additional financial information, contact the City's Finance Division, at the City of Santa Clarita, 23920 Valencia Boulevard, Suite 295, Santa Clarita, California 91355, or (661) 255-4386. See independent auditors report. -15- This page intentionally left blank. aM, CITY OF SANTA CLARITA STATEMENT OF NET ASSETS ASSETS: Cash and investments (Note 2) Receivables: Accounts Interest Intergovernmental Loans Prepaid costs Deposits Internal balances Land held for resale Deferred charges Capital assets (Note 3): Land Construction in progress Depreciable site improvements, net Depreciable buildings and improvements, net Depreciable equipment, net Depreciable infrastructure, net TOTAL ASSETS LIABILITIES: Accounts payable and accrued liabilities Accrued interest payable Due to other governments Unearned revenue Deposits Noncurrent liabilities (Notes 4 and 12): Due within one year Due in more than one year TOTAL LIABILITIES NET ASSETS: Invested in capital assets, net of related debt Restricted for capital improvements Restricted for low and moderate income housing Restricted for other special purposes Unrestricted TOTAL NET ASSETS June 30, 2007 Governmental Activities Business -type Activity Total $ 154,690,586 $ 2,241,655 $ 156,932,241 10,696,754 51,419 10,748,173 1,805,246 26,542 1,831,788 10,367,802 3,730,932 14,098,734 1,346,650 - 1,346,650 196,843 - 196,843 13,330,807 - 13,330,807 (52,263) 52,263 - 1,607,196 - 1,607,196 935,948 - 935,948 79,279,650 10,787,880 90,067,530 82,155,075 144,675 82,299,750 9,695,070 - 9,695,070 37,369,921 38,610,490 75,980,411 2,502, 863 13,940,445 16,443,308 482,800,768 - 482,800,768 888,728,916 69,586,301 958,315,217 25,770,247 3,146,905 28,917,152 507,182 29,168 536,350 621,515 1,373,650 1,995,165 15,273,192 - 15,273,192 8,504,693 - 8,504,693 1,927,127 366,720 2,293,847 34,600,563 870,149 35,470,712 87,204,519 5,786,592 92,991,111 661,210,117 62,246,621 723,456,738 18,134,924 - 18,134,924 2,229,857 - 2,229,857 32,211,682 - 32,211,682 87,737,817 1,553,088 89,290,905 $ 801,524,397 $ . 63,799,709 $ 865,324,106 See independent auditors' report and notes to basic financial statements. -17- CITY OF SANTA CLARITA STATEMENT OF ACTIVITIES For the year ended June 30, 2007 Functions/programs Expenses Governmental activities: General government $ 26,029,070 Public. safety 14,398,408 Public works 19,273,980 Parks and recreation 20,573,077 Community development 8,985,449 Unallocated infrastructure depreciation 12,920,310 Interest on long term debt 2,087,949 Total governmental activities 104,268,243 Business -type activity: Transit 18,315,106 Total $ 122,583,349 Program Revenues Charges Operating Capital for Grants and Grants and Services Contributions Contributions $ 302,075 2,131,060 3,575,546 3,895,422 20,182,722 $ 197,878 20,238 4,350,468 240,315 21,832,246 10,875,467 2,370,235 11,524,604 30,086,825 26,641,145 24,770,306 5,827,778 12,616,641 750,200 $ 35,914,603 $ 39,257,786 $ 25,520,506 General revenues: Taxes: Sales taxes Property taxes, levied for general purposes Franchise taxes Real property transfer taxes Transient occupancy taxes Unrestricted revenue in lieu of sales taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Transfers Total general revenues and transfers Change in riet assets Net assets - Beginning of year, as restated (Note 16) Net assets - End of year See independent auditors' report and notes to basic financial statements. -18- Net (Expense) Revenue and Changes in Net Assets Governmental Business -type - 23,790,825 Activities Activity Total $ (25,529,117) $ - $ (25,529,117) (12,247,110) - (12,247,110) (472,499) - (472,499) (14,067,105) - (14,067,105) 44,554,123 - 44,554,123 (12,920,310) - (12,920,310) (2,087,949) - (2,087,949) (22,769,967) - (22,769,967) 879,513. 879,513 (22,769,967) 879,513 (21,890,454) 23,790,825 - 23,790,825 27,891,202 - 27,891,202 6,248,912 - 6,248,912 1,073,774 - 1,073,774 1,804,923 - 1,804,923 8,156,017 - 8,156,017 1,862,901 - 1,862,901 4,970,193 26,367 4,996,560 441,376 (441,376) - 76,240,123 (415,009) 75,825,114 53,470,156 464,504 53,934,660 748,054,241 63,335,205 811,389,446 $ 801,524,397 $ 63,799,709 $ 865,324,106 -19- CITY OF SANTA CLARTTA BALANCESHEET GOVERNMENTAL FUNDS June 30, 2007 ASSETS Cash and investments Accounts receivable Interest receivable Prepaid costs Due from other funds Due from other governments Land held for resale Deposits Loans receivable Advances to other funds TOTAL ASSETS LIABILITIES AND FUND BALANCES $ 99,546,238 $ 24,938,176 $ 15,497,427 LIABILITIES: Accounts payable and accrued liabilities $ 20,182,440 $ 982,712 $ 168,144 Deferred revenue 7,658,191 580,611 13,622,468 Due to other governments 1,056 - - ..Deposits 8,504,693 - - Due to other funds - - - Advances from other funds - 11,574,345 - TOTAL LIABILITIES FUND BALANCES (DEFICITS): Reserved Unreserved: General fund Special revenue fund Debt service fund Capital projects fund TOTAL FUND BALANCES (DEFICITS) TOTAL LIABILITIES AND FUND BALANCES See independent auditors' report and notes to basic financial statements. -20- 36,346,380 13,137,668 13,790,612 34,699,034 21,746,208 6,673,505 28,500,824 - - (9,945,700) (4,966,690) 42 inn QC0 11 QAn GAO 1 'MK 41 G $ 99,546,238 $ 24,938,176 $ 15,497,427 Special Revenue Funds Bridge and Developer General Thoroughfare Fees $ 57,290,244 $ 24,160,592 $ 9,465,903 8,098,289 16,578 2,879 680,789 292,091 114,438 196,843 - - 2,609,790 - - 1,217,956 468,915 - 13,330,807 - - 16,121,520 - 5,914,207 $ 99,546,238 $ 24,938,176 $ 15,497,427 LIABILITIES: Accounts payable and accrued liabilities $ 20,182,440 $ 982,712 $ 168,144 Deferred revenue 7,658,191 580,611 13,622,468 Due to other governments 1,056 - - ..Deposits 8,504,693 - - Due to other funds - - - Advances from other funds - 11,574,345 - TOTAL LIABILITIES FUND BALANCES (DEFICITS): Reserved Unreserved: General fund Special revenue fund Debt service fund Capital projects fund TOTAL FUND BALANCES (DEFICITS) TOTAL LIABILITIES AND FUND BALANCES See independent auditors' report and notes to basic financial statements. -20- 36,346,380 13,137,668 13,790,612 34,699,034 21,746,208 6,673,505 28,500,824 - - (9,945,700) (4,966,690) 42 inn QC0 11 QAn GAO 1 'MK 41 G $ 99,546,238 $ 24,938,176 $ 15,497,427 $ 1,243,726 $ 673 Debt $ 3,141,783 $ 25,719,478 Special Revenue Funds (Continued) Service Fund Other Total 28,268,779 Federal Redevelopment Governmental Governmental Proposition C Grants Agency Funds Funds 8,504,693 $ 202,196 $ - $ - $ 44,146,878 $ 135,265,813 - - - 724,150 8,841,896 2,444 - - 529,662 1,619,424 - - - - 196,843 - - - - 2,609,790 3,800,635 374,780 - 4,505,516 10,367,802 - - - 1,607,196 1,607,196 - - - - 13,330,807 - - - 1,346,650 1,346,650 - - - - 22,035,727 $ 4,005,275 $ 374,780 $ - $ 52,860,052 $ 197,221,948 $ 1,243,726 $ 673 $ - $ 3,141,783 $ 25,719,478 1,230,675 374,780 - 4,802,054 28,268,779 - 8,724 - 611,735 621,515 - - - - 8,504,693 - 366,213 - 2,243,577 2,609,790 - - 10,461,382 - 22,035,727 2,474,401 750,390 10,461,382 10,799,149 87,759,982 5,110,050 50,000 - 14,723,825 83,002,622 - - - - 28,500,824 (3,579,176) (425,610) - 22,744,746 3,827,570 - - (10,461,382) - (10,461,382) - - - 4,592,332 4,592,332 1,530,874 (375,610) (10,461,382) 42,060,903 109,461,966 $ 4,005,275 $ 374,780 $ - $ 52,860,052 $ 197,221,948 -21- This page intentionally left blank. -22- CITY OF SANTA CLARITA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS June 30, 2007 Fund balances - total governmental funds $ 109,461,966 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in the funds. Those assets consist of: Land $ 79,279,650 Construction in progress 82,155,075 Site improvements, net of $4,379,072 accumulated depreciation 9,695,070 Building and improvements, net of $8,160,783 accumulated depreciation 37,369,921 Equipment, net of $4,332,766 accumulated depreciation 1,895,016 Infrastructure, net of $173,895,181 accumulated depreciation 482,800,768 Total capital assets used in governmental activities 693,195,500 Debt issuance costs are reported as an expenditure in the governmental funds in the year that the costs are incurred. On the government -wide statements, such costs are reported as deferred charges and amortized over the life of the debt. Unamortized deferred charges at June 30, 2007 are: 935,948 Certain receivables will be collected after year-end, but are not available soon enough to pay for current -period expenditures, and therefore are offset by deferred revenue in the funds. On the government -wide statements, this deferred revenue has been recognized as income. The deferred revenue amount at June 30, 2007 is: 14,845,587 Internal Service funds are used by management to charge the costs of self-insurance and capital replacements to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Assets. 20,020,268 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds. Interest on long-term debt is not accrued in governmental funds. Balances at June 30, 2007 are: Accrued interest on long-term debt (507,182) Certificates of participation, net of $370,972 unamortized discount and deferred amount $ (16,389,028) Lease revenue bonds, plus unamortized premium of $108,228 (13,893,228) Capital leases payable (36,402) Loans payable (4,328,206) Compensated absences (1,780,826) Total long-term liabilities (36,427,690) Net assets of governmental activities $ 801,524,397 See independent auditors' report and notes to basic financial statements. -23- CITY OF SANTA CLARITA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the year ended June 30, 2007 REVENUES: Taxes Licenses and permits Developer fees Investment -income Revenue from other agencies Fines and forfeitures Service charges Other revenue Overhead reimbursement TOTAL REVENUES EXPENDITURES: Current: General government Public safety Public works Parks and recreation Community development Capital outlay Debt service: Bond issuance costs Principal retirement Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES . OTHER FINANCING SOURCES (USES): Transfers in Transfers out Revenue bonds issued Bond premium TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICIT) - BEGINNING OF YEAR, . Special Revenue Funds Bridge and Developer General Thoroughfare Fees $ 65,968,889 $ - $ 4,203,933 - - - 1,529,275 4,661,868 3,104,334 1,873,545 579,736 1,175,489 - - 363,795 - - 7,989,723 - - 1,050,925 - - 1,628,579 - - 85,485,667 3,402,820 5,241,604 12,888,375 - - 13,926,613 - - 13,907,952 134,311 - 18,289,444 - - 5,919,329 - - 5,853,228 16,243,529 4,865,179 519,690 - 70,784,941 16,897,530 4,865,179 14,700,726 (13,494,710) 376,425 16,281,492 - - (6,801,179) - - 9,480,313 - - 24,181,039 (13,494,710) 376,425 AS RESTATED 39,018,819 25,295,218 1,330,390 FUND BALANCES (DEFICITS) - END OF YEAR $ 63,199,858 $ 11,800,508 $ 1,706,815 See independent auditors' report and notes to basic financial statements. -24- Debt Special Revenue Funds (Continued) Service Fund Other Total Federal Redevelopment Governmental Governmental Proposition C Grants Agency Funds Funds $ - $ - $ - $ 4,607,866 $ 70,576,755 - - - - 4,203,933 - - - 556,624 6,747,767 124,649 - - 2,244,499 7,926,763 13,900,888 84,574 - 22,139,262 37,300,213 - - - 1,555,159 1,918,954 - - - 5,473,950 13,463,673 - 1,113,377 - 564,080 2,728,382 - - - - 1,628,579 14,025,537 1,197,951 - 37,141,440 146,495,019 - - - 10,523,375 23,411,750 - 91,000 - 330,220 14,347,833 - - - 5,468,834 19,511,097 - - - 653,702 18,943,146 - - - 3,132,323 9,051,652 18,671,224 2,132,393 - 10,161,402 57,926,955 - - - 555,840 555,840 - - - 2,374,870 2,374,870 - - 372,243 851,201 1,743,134 18,671,224 2,223,393 372,243 34,051,767 147,866,277 (4,645,687) (1,025,442) (372,243) 3,089,673 (1,371,258) 29,644 - 786,645 10,370,308 27,468,089 - (2) (6,132,087) (16,947,925) (29,881,193) - - - 13,785,000 13,785,000 - - - 109,752 109,752 29,644 (2) (5,345,442) 7,317,135 11,481,648 (4,616,043) (1,025,444) (5,717,685) 10,406,808 10,110,390 6,146,917 649,834 (4,743,697) 31,654,095 99,351,576 $ 1,530,874 $ (375,610) $ (10,461,382) $ 42,060,903 $ 109,461,966 -25- CITY OF SANTA CLARITA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the year ended June 30, 2007 Net change in fund balances - total governmental funds $ 10,110,390 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capitalizable capital outlays ($53,462,851) exceeded depreciation ($14,954,671) in the current period: 38,508,180 The contribution of governmental capital assets to the Transit Enterprise fund is not reported in the governmental funds because there has been no flow of current financial resources. In the Statement of Activities, both sides of this transaction are reported as transfers: (270,520) Donations of capital assets increase net assets in the Statement of Activities, but do not appear in the governmental funds because they are not financial resources: 5,868,137 The issuance of long term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, and similar items when the debt is first issued, whereas these amounts are deferred and amortized in the Statement of Net Activities. These amounts are the net effect of these differences in the treatment of long-term debt and related items: Issuance of lease revenue bonds $ (13,785,000) Bond issuance costs 555,840 'Principal payments 2,374,870 Bond premium (109,752) Amortization of bond premium 1,524 Amortization of discount and deferred amount on refunding (29,097) Amortization of debt issuance costs (45,996) (11,037,611) Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences $ (206,350) Accrued interest (271,246) (477,596) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the governmental funds. Conversely, collection of these revenues are reported in the governmental funds, but not in the Statement of Activities since they have been recognized in previous years. 5,804,173 Internal service funds are used by management to charge the costs of self-insurance and capital replacements to individual funds. The net revenue of internal service funds is reported with governmental activities. 4,965,003 Change in net assets of governmental activities $ 53,470,156 See independent auditors' report and notes to basic financial statements. -26- CITY OF SANTA CLARITA STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2007 ASSETS CURRENT ASSETS: Cash and investments Accounts receivable Interest receivable Due from other governments TOTAL CURRENT ASSETS NONCURRENT ASSETS: Capital assets: Land Construction in progress Buildings, net of accumulated depreciation Equipment, net of accumulated depreciation TOTAL NONCURRENT ASSETS TOTAL ASSETS LIABILITIES LIABILITIES: CURRENT LIABILITIES: Accounts payable and accrued liabilities Due to other governments Accrued interest payable Capital leases payable - current TOTAL CURRENT LIABILITIES NONCURRENT LIABILITIES: Claims payable Capital leases payable TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS: Invested in capital assets, net of related debt Unrestricted TOTAL NET ASSETS Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net Assets of business -type activities See independent auditors' report and notes to basic financial statements. -27- Business -type Government Activity - Activities - Transit Internal Enterprise Service Funds $ 2,241,655 $ 19,424,773 51,419 4,858 26,542 185,822 3,730,932 - 6,050,548 19,615,453 10,787,880 - 144,675 - 38,610,490 - 13,940,445 607,847 63,483,490 607,847 69,534,038 20,223,300 3,146,905 50,769 1,373,650 - 29,168 366,720 - 4,916,443 50,769 - 100,000 870,149 - 870,149 100,000 . 5,786,592 150,769 62,246,621 607,847 1,500,825 19,464,684 63,747,446 $ 20,072,531 52,263 $ 63,799,709 CITY OF SANTA CLARITA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the year ended June 30, 2007 NONOPERATING REVENUES (EXPENSES): Intergovernmental grants 11,201,795 - Investment income 26,367 758,273 Miscellaneous revenues 948,644 - Interest expense (69,388) - TOTAL NONOPERATING REVENUES (EXPENSES) 12,107,418 758,273 INCOME BEFORE TRANSFERS AND CAPITAL CONTRIBUTIONS 126,224 1,869,459 TRANSFERS AND CAPITAL CONTRIBUTIONS: Transfers in Business -type Government Transfers out Activity - Activities - Capital contributions Transit Internal Capital contributions from other funds Enterprise Service Funds OPERATING REVENUES: Charges for services $ 5,827,778 $ 2,737,318 Other revenue 466,202 2,676 TOTAL OPERATING REVENUES 6,293,980 2,739,994 15,078,072 OPERATING EXPENSES: TOTAL NET ASSETS - END OF YEAR Administrative 991,889 - Transportation services 12,402,864 - Services and supplies 1,870,602 1,422,109 Depreciation 3,009,819 206,699 TOTAL OPERATING EXPENSES 18,275,174 1,628,808 OPERATING INCOME (LOSS) (11,981,194) 1,111,186 NONOPERATING REVENUES (EXPENSES): Intergovernmental grants 11,201,795 - Investment income 26,367 758,273 Miscellaneous revenues 948,644 - Interest expense (69,388) - TOTAL NONOPERATING REVENUES (EXPENSES) 12,107,418 758,273 INCOME BEFORE TRANSFERS AND CAPITAL CONTRIBUTIONS 126,224 1,869,459 TRANSFERS AND CAPITAL CONTRIBUTIONS: Transfers in 46,170 3,125,000 Transfers out (758,066) - Capital contributions 750,200 - Capital contributions from other funds 270,520 - TOTAL TRANSFERS AND CAPITAL CONTRIBUTIONS 308,824 3,125,000 CHANGE IN NET ASSETS 435,048 4,994,459 TOTAL NET ASSETS - BEGINNING OF YEAR 15,078,072 TOTAL NET ASSETS - END OF YEAR $ 20,072,531 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 29,456 Change in net assets of business -type activities $ 464,504 See independent auditors' report and notes to basic financial statements. -28- CITY OF SANTA CLARITA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the year ended June 30, 2007 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers and users Receipts from interfund services provided Other operating receipts Nonoperating miscellaneous receipts Payments to suppliers Payments to employees NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Cash contributed by other governments Cash received from other funds Cash paid to other funds NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets Principal payments on financed debt Interest expense NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Investment income NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR See independent auditors' report and notes to basic financial statements. -29- Business -type Government Activity - Activities - Transit Internal Enterprise Service Funds $ 3,212,064 $ - - 2,738,070 3,170,309 2,676 948,644 - (14,715,900) (2,331,896) (989,240) - (8,374,123) 408,850 11,115,741 - 46,170 3,125,000 (758,066) - 10,403,845 3,125,000 (918,024) (298,651) (349,449) - (77,568) - (1,345,041) (298,651) 671,243 684,681 3,906,442 1,556,974 15,518,331 $ 2,241,655 $ 19,424,773 (Continued) CITY OF SANTA CLARITA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (CONTINUED) For the year ended June 30, 2007 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Depreciation Nonoperating miscellaneous revenues Change in assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in prepaid expenses Increase (decrease) in accounts payable and accrued liabilities Increase (decrease) in claims payable NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets from government See independent auditors' report and notes to basic financial statements. -30- Business -type Government Activity - Activities - Transit Internal Enterprise Service Funds $ (11,981,194) $ 1,111,186 3,009,819 206,699 948,644 - 88,393 752 44,800 - (484,585) (443,155) (466,632) $ (8,374,123) $ 408,850 $ 270,520 $ - CITY OF SANTA CLARITA STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUNDS June 30, 2007 ASSETS: Cash and investments Cash and investments with fiscal agents Interest receivable Property taxes receivable TOTAL ASSETS LIABILITIES: Accounts payable and accrued liabilities Due to bondholders TOTAL LIABILITIES Agency Funds $ 118,420 1,820,054 2,845 1,454 $ 1,942,773 $ 2,268 1,940,505 $ 1,942,773 See independent auditors' report and notes to basic financial statements. -31- This page intentionally left blank. -32- NOTES TO BASIC FINANCIAL STATEMENTS -33- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A. Reporting Entity: The City of Santa Clarita (the City), California, was incorporated on December 15, 1987, as a general law city. The City operates under a council-manager form of government and provides its citizens with a full range of municipal services, either directly or under contract with the County of Los Angeles. Such services include public safety (police and fire protection), building permit/plan approval, planning, community development, recreation, animal control and street maintenance. The Redevelopment Agency of the City of Santa Clarita (the Agency) was established in July 1991 pursuant to the State of California Health and Safety Code, Section 33000. The primary purpose of the Agency is to encourage private redevelopment of property and to rehabilitate areas suffering from economic disuse arising from inadequate street layout and street access, lack of open space, landscaping and other improvements and facilities necessary to establish and maintain the economic growth of the City. The Santa Clarita Public Financing Authority (the Authority) was established in July 1991 as a joint power of authority between the City and the Agency for the purpose of providing financing and funding of public capital improvements and the acquisition of property. The criteria used in determining the scope of the reporting entity are based on the provisions of Government Accounting Standards Board (GASB) Statement No. 14. The City of Santa Clarita is the primary government unit. Component units are those entities .which are financially accountable to the primary government, either because the City appoints a voting majority of the component unit's board, or because the component unit will provide a financial benefit or impose a financial burden on the City. The Agency and the Authority have been accounted for as "blended" component units of the City. Despite being legally separate, these entities are, in substance, part of the City's operations. Accordingly, the balances and transactions of these component units are reported within the funds of the City. The Agency's financial data and activity are reported within the debt service and capital projects fund types, and the Authority's financial data and activity are reported within the debt service and capital projects fund types. See independent auditors' report. -34- CITY OF SANTA CLARITA NOTE TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): A. Reporting Entity (Continued): The following specific criteria were used in determining that the Agency and the Authority were blended component units: • The members of the City Council also act as the governing bodies of the Agency and the Authority. • The Agency and the Authority are managed by employees of the City. Financial statements for each of the individual component units may be obtained at the City's administrative offices. B. Government -Wide and Fund Financial Statements: The government -wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Interfund services provided and used are not eliminated in the process of consolidation. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Certain indirect costs are included as part of the program expenses reported for individual functions and activities. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and the major individual enterprise fund are reported as separate columns in the fund financial statements. See independent auditors' report. -35- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation: The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the fiscal year in which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all the eligibility requirements imposed by the provider have been met. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the transit enterprise fund and of the government's internal service funds are charges to customers for services. Operating expenses for the proprietary funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, except for principal and interest on general long-term liabilities, claims and judgments, and compensated absences, which are recognized as expenditures only when payment is due. Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. See independent auditors' report. -36- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): The accounts of the City are organized and operated on the basis of funds, each of which is considered a separate accounting entity with a self -balancing set of accounts, established for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The City reports the following major governmental funds: The General Fund is the primary operating fund of the City. It is used to account for all financial resources of the City that are not required to be accounted for in another fund. The Bridge and Thoroughfare Special Revenue Fund is used to account for monies received from developers for street and highway construction through bridge and thoroughfare districts. The Developer Fees Special Revenue Fund is used to account for monies received from developers for street improvements. The Proposition C Special Revenue Fund is used to account for the City's share of the one-half percent (.5%) increased sales tax in Los Angeles County as a result of "Proposition C". This revenue is to be used for transportation related purposes. The Federal Grants Special Revenue Fund is used to account for receipts and disbursements of miscellaneous federal grant monies not accounted for in other funds. The Redevelopment Agency Debt Service Fund is used to account for debt service on loans from the City to the Redevelopment Agency. The City reports the following major enterprise fund: The Transit Entemrise Fund is used to account for the operation of the City's local public transit bus system. Additionally, the City reports the following fund types: The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for special purposes. See independent auditors' report. -37- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): The City reports the following Fund Types (Continued): The Debt Service Funds are used to account for the accumulation of resources for, and payment of, interest and principal on long-term debt. The Capital Projects Funds are used to account for financial resources used for the acquisition or construction of major capital facilities (other than those financed by the proprietary funds). The Internal Service Funds are used to account for the financing of special activities that provide services within the City. Such activities include self-insurance, computer replacement, vehicle replacement and public facilities replacement. The Agency Funds are used to account for assets held by the City as an agent and related to the debt service activity on no -commitment special assessment debt. The City has conformed to the pronouncements of the Governmental Accounting Standards Board (GASB), which are acknowledged as the primary authoritative statements of accounting principles generally accepted in the United States of America applicable to state and local governments. In accordance with GASB Statement No. 20, the City applies all applicable GASB pronouncements, as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements contradict GASB pronouncements: Financial Accounting Standards Board Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins of the Committee on Accounting Procedures. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. D. Cash and Cash Equivalents: A substantial portion of the City's investments, not held by bond trustees, are in short-term, highly liquid instruments with original maturities of three months or less, including investments in the California Local Agency Investment Fund and Los Angeles County Pooled Investment Fund totaling $32,693,956 and $1,318,858, respectively. For purposes of the statements of cash flows, all pooled cash and investments held by the enterprise and internal service funds are considered to be short-term and, accordingly, are classified as cash and cash equivalents. See independent auditors' report. -38- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): E. Investments: Investments are stated at fair value (quoted market price or best available estimate thereof). F. Capital Assets: Capital assets, which include land, site improvements, buildings and improvements, equipment and infrastructure assets, are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. General infrastructure assets consist of roads, curbs and gutters, sidewalks, medians, street trees, street signs, bus shelters, bridges, trails, traffic signals, storm drains/catch basins, sewer manholes, and sewer lines. Capital assets are defined by the City as assets withan initial cost of more than $5,000 ($25,000 for site improvements and building improvements and $100,000 for infrastructure) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Equipment 5 - 25 years Site Improvements 5 - 25 years Buildings and Improvements 5 - 50 years Infrastructure 20 - 60 years G. Inventories: Inventories are accounted for on the purchase (expenditure) method, whereby expenditures for inventory are written off as incurred. There were no significant inventories on hand at June 30, 2007. See independent auditors' report. -39- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): H. Employee Compensated Absences: It is the City's policy to permit employees to accumulate earned but unused vacation (compensated absences). All vacation pay is accrued when incurred in the government -wide and proprietary fund financial statements. Vacation pay which is expected to be liquidated in the current period with expendable available resources is reported in the governmental funds that will pay it (primarily the General Fund). Compensated absences are reported in governmental funds only if they have matured. I. Property Taxes: Property taxes are an enforceable lien on property as of January 1 of each year. Taxes are levied on each July 1 and are payable in two installments on November 1 and February 1, which become delinquent on December 10 and April 10, respectively. The County of Los Angeles bills and collects property taxes for the City. Remittance of property taxes to the City is accounted for in the City's General Fund. J. Claims and Judgments: When it is probable that a claim liability has been incurred at year end and the amount of the loss can be reasonably estimated, the City records the estimated loss, net of any insurance coverage, under its self-insurance program claims payable, which includes an estimate for incurred but not reported claims (IBNR) and is recorded in an Internal Service Fund. K. Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that effect certain reported amounts and disclosures. Specifically, the City has made certain estimates and assumptions related to the collectibility of its receivables (e.g. accounts receivable, intergovernmental receivables and loans receivable), the depreciation of its capital assets and the ultimate outcome of claims and judgments. Actual results could differ from those estimates and assumptions. See independent auditors' report. -40- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS: Cash and Investments Cash and investments at June 30, 2007, are classified in the accompanying financial statements as follows: Unrestricted assets: Cash and investments Cash and investments with fiscal agents Total Cash and Investments Government- Fiduciary Wide Fund Statement of Statement of Net Assets Net Assets $ 156,932,241 $ 118,420 1,820,054 Total $ 157,050,661 1,820,054 156,932,241 1,938,474 158,870,715 Cash and investments at June 30, 2007, consisted of the following: Cash on hand $ 3,456 Deposits with financial institutions (642,299) Investments 159,509,558 Total Cash and Investments 158,870,715 Investments Authorized by the California Government Code and the City's Investment Policy 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 trustees 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. See independent auditors' report. -41- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS (CONTINUED): Investments Authorized by the California Government Code and the City's Investment Policy (Continued) -42- Maximum NN Percentage Maximum Maximum or Amount Investment Authorized Investment Type Maturity of Portfolio* in One Issuer Local Agency Bonds 5 years None None U.S. Treasury Obligations 5 years None None State of California Obligations 5 years None None CA Local Agency Obligations 5 years None None U.S. Government Sponsored .Enterprise Securities 5 years None None Banker's Acceptances 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% None Repurchase Agreements 1 year None None Medium -Term Notes 5 years 30% None Money Market Mutual Funds 5 years 15% 10% Mortgage Pass -Through Securities 5 years 20% None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A $ 40 M None * - Excluding amounts held by bond trustees that are not subject to California Government Code restrictions. N/A - Not Applicable See independent auditors' report. -42- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS (CONTINUED): Investments Authorized by Debt Agreements Investments of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk. Maximum Percentage Maximum Maximum or Amount Investment Authorized Investment Type Maturity Allowed in One Issuer U.S. Treasury Obligations 5 years None None Money Market Mutual Funds Local Agency Investment Fund (LAIF) N/A - Not Applicable Disclosures Relating to Interest Rate Risk 5 years 15% 10% N/A $ 40 M None Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. 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 trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: See independent auditors' report. -43- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS (CONTINUED): Disclosures Relating to Interest Rate Risk (Continued) Remaining Maturity (in Months) 12 Months 13-24 25-60 Investment Type or Less Months Months Total Local Agency Investment Fund (LAIF) $ 32,693,956 $ - $ - $ 32,693,956 Los Angeles County Pooled Investment Fund (LACPIF) Federal National Mortgage Association (FNMA) Federal Home Loan Bank (FHLB) Federal Farm Credit Bank (FFCB) Federal Home Loan Mortgage Corporation (FHLMC) Medium -Term Notes United States Treasury Notes Money Market Mutual Funds Held by Bond Trustee: Local Agency Investment Fund (LAIF) Money Market Mutual Funds See independent auditors' report. -44- 1,318,858 - - 1,318,858 1,925,811 6,681,808 10,908,142 19,515,761 3,448,290 16,145,111 8,106,294 27,699,695 417,163 3,932,366 4,349,529 15,579,202 5,715,917 19,071,198 40,366,317 9,463,170 443,070 17,020,727 26,926,967 - - 2,979,851 2,979,851 1,837,888 - - 1,837,888 1,689,013 - - 1,689,013 131,723 131,723 68.087.911 $ 29.403,069 $ 62,018.578 $159.509.558 CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS (CONTINUED): Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below 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 reported by Standard and Poor's, as of year end for each investment type: The actual ratings for the Medium -Term Notes: Other: AA Total Minimum 10,063,700 Not 1,612,865 A as of Legal 9,728,671 Required to 2,105,650 Investment Type June 30, 2007 Rating_ AAA Other be Rated Not Rated LAIF $ 32,693,956 N/A $ - $ - $ - $ 32,693,956 LACPIF 1,318,858 N/A - - - 1,318,858 FNMA 19,515,761 AAA 19,515,761 - - - FHLB 27,699,695 AAA 27,699,695 - - - FFCB 4,349,529 AAA 4,349,529 - - - FHLMC 40,366,317 AAA 40,366,317 - - - Medium -Term Notes 26,926,967 A-1 2,395,062 24,531,905 - - US Treasury Notes 2,979,851 N/A - - 2,979,851 - Money Market Mutual Funds 1,837,888 N/A - - - 1,837,888 Held by Bond Trustee: LAIF 1,689,013 N/A - - - 1,689,013 Money Market Mutual Funds 131,723 N/A - 131,723 Total 159.509.558 94.326.36424.531.905 $ 2.979,851 37.671.438 The actual ratings for the Medium -Term Notes: Other: AA $ 435,542 AA- 10,063,700 A+ 1,612,865 A 585,477 A-1+ 9,728,671 A-1 2,105,650 Total Other 24.531.905 N/A - Not Applicable See independent auditors' report. -45- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS (CONTINUED): Concentration of Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer that represent 5% or more of the City's total investments are as follows: Issuer Investment Type Federal National Mortgage Association Federal Home Loan Bank Federal Home Loan Mortgage Corporation Custodial Credit Risk U.S. Government Sponsored Enterprise Securities U.S. Government Sponsored Enterprise Securities U.S. Government Sponsored Enterprise Securities Reported Amount $ 19,515,761 27,699,695 40,366,317 Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: the California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2007, the City deposits (bank balances) were insured by the Federal Depository Insurance Corporation or collateralized as required under California Law. See independent auditors' report. -46- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS (CONTINUED): Investment in State Investment Pool The City is a voluntary participant in the California Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. Each City may invest up to $40,000,000 and may also invest without limitation in special bond proceeds accounts. Investments in LAIF are highly liquid, as deposits can be converted to cash within twenty-four hours without loss of interest. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's prorata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Investment in County Investment Pool The LACPIF is a pooled investment fund program governed by the Los Angeles County Board of Supervisors and administered by the Los Angeles County Treasurer and Tax Collector. Investments in the LACPIF are highly liquid, as deposits and withdrawals can be made at anytime without penalty. LACPIF does not impose any maximum investment limit. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's prorata share of the fair value provided by LACPIF for the entire LACPIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LACPIF, which are recorded on an amortized cost basis. See independent auditors' report. -47- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 3. CAPITALASSETS: Capital asset activity for the year ended June 30, 2007, was as follows: Governmental Activities: Total accumulated depreciation Total capital assets, being depreciated, net Total governmental activities capital assets, net (177,301,264) (15,161,370) 74,698 (192,387,936) 518,975,704 13,392,918 - 532,368,622 649.605.600 65.402.943 (21.205.196) 693.803.347 (1) Certain beginning balances have been restated in connection with the valuation of infrastructure placed in service prior to July 1, 2002. See Note 16D for details. See independent auditors' report. -48- Balance at Balance at July 1, 2006, June 30, as restated (1) Additions Deletions 2007 Capital assets, not being depreciated: Land $ 78,433,140 $ 846,510 $ - $ 79,279,650 Construction in progress 52,196,756 51,163,515 (21,205,196) 82,155,075 Total capital assets, not being depreciated 130,629,896 52,010,025 (21,205,196) 161,434,725 Capital assets, being depreciated: Site improvements 13,859,142 215,000 - 14,074,142 Building and improvements 44,734,729 795,975 - 45,530,704 Equipment 7,585,226 945,235 (74,698) 8,455,763 Infrastructure 630,097,871 26,598,078 - 656,695,949 Total capital assets, being depreciated 696,276,968 28,554,288 (74,698) 724,756,558 Less accumulated depreciation for: Site improvements (3,808,375) (570,697) - (4,379,072) Building and improvements (7,185,190) (975,593) - (8,160,783) Equipment (5,332,828) (694,770) 74,698 (5,952,900) Infrastructure (160,974,871) (12,920,310) - (173,895,181) Total accumulated depreciation Total capital assets, being depreciated, net Total governmental activities capital assets, net (177,301,264) (15,161,370) 74,698 (192,387,936) 518,975,704 13,392,918 - 532,368,622 649.605.600 65.402.943 (21.205.196) 693.803.347 (1) Certain beginning balances have been restated in connection with the valuation of infrastructure placed in service prior to July 1, 2002. See Note 16D for details. See independent auditors' report. -48- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 3. CAPITALASSETS (CONTINUED): Capital Asset Activity (Continued): Business -type Activity: Balance at Balance at July 1, 2006 June 30, as restated (1) Additions Deletions 2007 Capital assets, not being depreciated: Land $ 10,787,880 $ - $ - $ 10,787,880 Construction in progress 26,002,684 73,841 (25,931,850) 144,675 Total capital assets, not being depreciated Capital assets, being depreciated: Building and improvements Equipment Total capital assets, being depreciated Less accumulated depreciation for: Building and improvements Equipment Total accumulated depreciation Total capital assets, being depreciated, net Total business -type activity, capital assets, net 36,790,564 73,841 (25,931,850) 10,932,555 15,331,049 26,560,397 - 41,891,446 26 555,931 485,981 (8,074) 27,033,838 41,886,980 27,046,378 (8,074) 68,925,284 (2,364,526) (916,430) - (3,280,956) (11,008,078) (2,093,389) 8,074 (13,093,393) (13,372,604) (3,009,819) 8,074 (16,374,349) 28,514,376 24,036,559 - 52,550,935 65.304.940 24.110.400(25.931.850) 63,483,490 (1) Certain_ beginning balances have been restated in connection with the valuation of infrastructure placed in service prior to July 1, 2002. See Note 16C for details. See independent auditors' report. CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 3. CAPITALASSETS (CONTINUED): Depreciation Expense: Depreciation expense was charged to City functions/programs as follows: Governmental Activities: General government $ 370,237 Public safety 50,575 .Public works 246,805 Parks and recreation 1,339,321 Community development 27,423 Internal service funds depreciation charged to programs 206,699 Allocated depreciation 2,241,060 Unallocated infrastructure depreciation 12,920,310 Total depreciation expense - governmental activities 15,161,370 Business -type Activity: Transit 3,009,819 Construction Commitments: The City has active construction projects as of June 30, 2007. At year-end, the City's commitments with contractors for the projects are as follows: Project Streets Medians Bridges Traffic signals Trails Drainage Total See independent auditors' report. -50- Remaining Commitment $ 30,971,556 30,344 4,726,510 500,350 145,690 281,315 36.655.765 CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 4. LONG-TERM LIABILITIES: Long-term liabilities activity for the year ended June 30, 2007, was as follows: Governmental Activities: Lease Revenue Bonds: Series 2007 Plus deferred amount for issuance premium Total Lease Revenue Bonds Certificates. of Participation: Refunding, Series 2005 Series 2001 Less deferred amounts: For issuance discounts On refunding Total Certificates of Participation Due Balance at Balance at Within July 1, June 30, One 2006 Additions Deletions 2007 Year $ - $ 13,785,000 $ - $ 13,785,000 $ 210,000 109,752 (1,524) 108,228 13,894,752 (1,524) 13,893,228 210,000 17,700,000 - (940,000) 16,760,000 970,000 710,000 - (710,000) - - (21,553) - 1,568 (19,985) - (378,516) - 27,529 (350,987) - 18,009,931 - (1,620,903) 16,389,028 970,000 Subtotal 18,009,931 13,894,752 (1,622,427) 30,282,256 1,180,000 Capital leases payable 60,479 - (24,078) 36,401 12,725 Loans payable 5,028,997 - (700,790) 4,328,207 734,402 Compensated absences (1) 1,574,478 1,136,329 (929,981) 1,780,826 - Claims payable (see Note 12) 566,632 1,427,195 (1,893,827) 100,000 Total governmental activities long-term liabilities 25,240,517 16.458.276 (5,171.103) 36,527.690 S-1.927,127 (1) The current portion of compensated absences is included in the accrued liabilities of the governmental funds. Business -type Activity: Capital leases payable 1.586,318 $ - (349.449) 1,236.869 $ 366.720 See independent auditors' report. -51- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 4. LONG-TERM LIABILITIES (CONTINUED): Governmental Activities: A. Lease Revenue Bonds - Series 2007: On January 16, 2007, the Santa Clarita Public Financing Authority issued $13,785,000 Lease Revenue Bonds, Series 2007. Concurrent with this bond issuance, the Authority entered into a lease and lease -back arrangement with the City whereby the Authority used the proceeds of the bond issuance to make a lump -sum lease payment to the City. In return, the City will make lease -back payments to the Authority sufficient to cover the principal and interest due on the Series 2007 Bonds. The property subject to the lease and lease -back arrangement is City Hall. The City used the proceeds from the lump -sum lease payment to make a valuation deposit with the Los Angeles County Superior Court in connection with the acquisition of right-of-way. Principal amounts on serial bonds mature annually each February 1 in the years 2008 through 2018 and bear interest at rates ranging from 4.0% to 5.0%. $2,495,000 term bonds mature February 1, 2033 and bear interest at 4.3%. $2,965,000 term bonds mature February 1, 2037 and bear interest at 4.375%. Interest is payable semi-annually on February 1 and August 1, commencing August 1, 2007. The term bonds maturing February 1, 2033 are subject to mandatory redemption commencing February 1, 2030. The term bonds maturing February 1, 2037 are subject to mandatory redemption commencing February 1, 2034. Bonds maturing on or after February 1, 2018 are subject to optional redemption on or after February 1, 2017. Future debt service requirements on the lease revenue bonds are as follows: Year Ending June 30, 2008 2009 2010 2011 2012 2013-2017 2018-2022 2023-2027 2028-2032 2033-2037 Total Principal $ 210,000 245,000 255,000 270,000 280,000 1,615,000 1,965,000 2,385,000 2,930,000 3,630,000 $ 13,785,000 See independent auditors' report. -52- Interest $ 612,484 577,485 566,460 555,304 541,804 2,503,420 2,150,270 1,723,063 1,179,030 489,503 10.898,823 Total $ 822,484 822,485 821,460 825,304 821,804 4,118,420 4,115,270 4,108,063 4,109,030 4,119,503 $ 24,683,823 CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 4. LONG-TERM LIABILITIES (CONTINUED): Governmental Activities (Continued): B. Refunding Certificates of Participation - Series 2005: On July 1, 2005, the Santa Clarita Public Financing Authority issued $17,700,000 in Certificates of Participation with an average interest rate of 3.4% to advance refund $17,640,000 of outstanding 1997 Series certificates with an average interest rate of 4.9%. These securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1997 series certificates. As a result, the 1997 Series certificates are considered to be defeased, and the liability for those certificates has been removed from the long-term liabilities. The defeased 1997 Series certificates have been retired. The Authority amended and restated the lease agreement with the City that was entered into simultaneously with the refunded certificates issue. The advance refunding resulted in a decrease in cash flows (difference in debt service payments between new debt and old debt of $1,466,174) and an economic gain of $925,017. Principal amounts mature annually each October 1 in the years 2006 through 2020 and bear interest at rates ranging from 3.0% to 4.0%. Interest is payable semi-annually on April 1 and October 1. The certificates maturing on or after October 1, 2016, are subject to optional prepayment on any date on or after October 1, 2015, at a price equal to the principal amount plus accrued interest to the prepayment date, without premium. Future debt service requirements on the certificates are as follows: Year Ending June 30, 2008 2009 2010 2011 2012 2013-2017 2018-2021 Total See independent auditors' report. Principal $ 970,000 1,000,000 1,030,000 1,060,000 1,090,000 5,995,000 5,615,000 16,760,000 -53- Interest $ 561,751 532,201 501,752 470,401 438,151 1,632,018 455,665 4,591,939 Total $ 1,531,751 1,532,201 1,531,752 1,530,401 1,528,151 7,627,018 6,070,665 21,351,939 CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 4. LONG-TERM LIABILITIES (CONTINUED): Governmental Activities (Continued): C. Certificates of Participation - Series 2001: On November 16, 2001, the Santa Clarita Public Financing Authority issued $3,200,000 in Certificates of Participation for the purpose of acquiring parkland. The certificates represent direct undivided fractional interests in the lease payments to be made by the City under a lease agreement with the Authority for the use of the acquired parkland. The certificates were prepaid in full on November 1, 2006. D. Capital Leases Payable: (1) September 2002, the City entered into a lease with an option to purchase agreement in the amount of $58,097 for the lease of a tractor through John Deere Credit. The lease expired, and the City exercised its option on September 1, 2006. (2) In August 2005, the City entered into a lease with an option to purchase agreement in the amount of $41,016 for the lease of a copier. Payments of $812 are due monthly through August 2010. Future lease payment requirements are as follows: Year Ending June 30, Principal Interest Total 2008 $ 8,069 $ 1,677 $ 9,746 2009 8,652 1,094 9,746 2010 9,278 468 9,746 2011 1,610 14 1,624 Total $ 27,609 See independent auditors' report. -54- $ 3,253 $ 30,862 CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 4. LONG-TERM LIABILITIES (CONTINUED): Governmental Activities (Continued): D. Capital Leases Payable (Continued): (3) In April 2006, the City entered into a lease with an option to purchase agreement in the amount of $13,829 for the lease of a copier. Payments of $427 are due monthly through April 2009. Future lease payment requirements are as follows: Year Ending June 30, 2008 2009 Total Principal $ 4,656 4,136 $ 8.792 Interest $ 468 134 $ 602 Total $ 5,124 4,270 $ 9,394 The remaining assets acquired through existing capital leases are as follows: Assets: Equipment $ 565,115 Less: accumulated depreciation _507,403) Total assets, net 57,712 E. Loans Payable: (1) In December 1999, the City entered into a loan agreement with the Secretary of Housing and Urban Development in the amount of $2,000,000. The purpose of this loan was to provide financing for the installation of curbs, gutters and sidewalks in the West Newhall area. Payments are due semi-annually, commencing on August 1, 2001, and continuing through August 1, 2014. Future CDBG grant funding will be used to repay the loan. In August 2002, the City entered into a loan agreement with the Secretary of Housing and Urban Development in the amount of $1,150,000. The purpose of this loan was to provide financing for the construction of improvements to Scherzinger Lane. Payments are due semi-annually, commencing on February 1, 2003, and continuing through August 1, 2017. Future CDBG grant funding will be used to repay the loan. See independent auditors' report. -55- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 4. LONG-TERM LIABILITIES (CONTINUED): Governmental Activities (Continued): E. Loans Payable: (1) (Continued): In August 2002, the City entered into a loan agreement with the Secretary of Housing and Urban Development in the amount of $350,000. The purpose of this loan was to assist the Boys and Girls Club in financing the construction of a new gymnasium. Payments are due semi-annually, commencing on February 1, 2003, and continuing through August 1, 2017. Future CDBG grant funding will be used to repay the loan. Future loan payment requirements are as follows: Year Ending June 30, 2008 2009 2010 2011 2012 2013-2017 2018 Principal $ 230,000 230,000 230,000 230,000 230,000 940,000 100,000 Interest $ 129,524 116,159 102,494 88,424 73,949 152,761 2,885 Total $ 359,524 346,159 332,494 318,424 303,949 1,092,761 102,885 Total $ 2.190,000 666,196 2.856.196 (2) On April 8, 2002, the City entered into a lease purchase agreement with the Santa Clarita Public Financing Authority to finance the purchase of real property that was developed as an employee parking lot for the City. The Authority assigned all of its rights under the lease purchase agreement to Zions First National Bank. In consideration of this assignment, Zions First National Bank advanced the City $1,200,000. The lease purchase agreement calls for interest at a rate of 4.79% per annum on the unpaid balance. Principal and interest are payable to Zions First National Bank semi-annually, commencing on October 8, 2002, and continuing through April 8, 2012. The asset acquired with the loan proceeds is reported in the governmental activities' capital assets as land (not being depreciated). See independent auditors' report. -56- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 4. LONG-TERM LIABILITIES (CONTINUED): Governmental Activities (Continued): E. Loans Payable: (2) (Continued): Future payment requirements are as follows: Year Ending June 30, 2008 2009 2010 2011 2012 Total Principal $ 121,746 127,647 133,835 140,322 147,124 $ 670.674 Interest $ 30,684 24,783 18,595 12,108 5,306 $ 91,476 Total $ 152,430 152,430 152,430 152,430 152,430 $ 762,150 (3) On October 3, 2003, the City entered into a seven year fixed rate lease/leaseback transaction for certain capital transfer facilities with the Santa Clarita Public Financing Authority. The Authority assigned all of its rights under the leaseback transaction to Zions First National Bank. In consideration of this assignment, Zions First National Bank loaned the Authority $2,590,955, which the Authority used to pay the up -front rental payment due to the City. This amount was used to prepay, in full, the note payable to Price Enterprise, Inc. The balance of the proceeds were used to pay for delivery costs. The lease/leaseback transaction calls for the City to make semi-annual payments of principal and interest to Zions First National Bank, commencing on May 1, 2004. Interest is fixed at a rate of 3.64%. Future payment requirements are as follows: Year Ending June 30, 2008 2009 2010 2011 Total F. Compensated Absences: Principal $ 382,656 411,994 442,137 230,746 $ 1,467,533 Interest $ 50,035 35,844 20,570 4,200 $ 110,649 Total $ 432,691 447,838 462,707 234,946 1,578,182 There is no fixed payment schedule for earned but unpaid compensated absences. See independent auditors' report. -57- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 4. LONG-TERM LIABILITIES (CONTINUED): Business -type Activity: A. Capital Leases Payable: (1) In January 1998, the City entered into a lease with an option to purchase agreement in the amount of $1,539,232 for the lease of four buses. Such agreement carries interest at 5.2%, payable annually on January 22 through 2009. Future lease payment requirements are as follows: Year Ending June 30, 2008 2009 Total Principal $ 150,810 158,636 $ 309,446 Interest $ 16,060 8,234 $ 24,294 Total $ 166,870 166.870 333,740 (2) In December 1998, the City entered into a lease with an option to purchase agreement in the amount of $2,335,964 for the lease of six buses. Such agreement carries interest at 4.77%, payable annually on December 31 through 2010. Future lease payment requirements are as follows: Year Ending June 30, 2008 2009 2010 2011 Total Principal $ 215,910 226,209 237,000 248,304 $ 927,423 Interest $ 44,238 33,939 23,148 11,844 $ 113,169 Total $ 260,148 260,148 260,148 260,148 $ 1,040,592 The remaining assets acquired through existing capital leases are as follows: Assets: Equipment $ 4,992,821 Less: accumulated depreciation (4,661,459) Total assets, net $ 331,362 See independent auditors' report. -58- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 5. LOANS RECEIVABLE: The City has provided deferred -payment rehabilitation loans to qualified homeowners in connection with CDBG and HOME rehabilitation programs. The loans receivable balance totaling $1,346,650 at June 30, 2007, has been offset by deferred revenue in the other governmental funds, since these loans are not available to finance current expenditures. 6. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS: The composition of interfund balances as of June 30, 2007, is as follows: Due To/From Other Funds: Receivable Fund Payable Fund Amount General Federal Grants Special Revenue $ 366,213 Other Governmental Funds 2.243.577 2.609.790 The interfund payables balance represents routine and temporary cash flow assistance from the General Fund until the amounts receivable from other governments are collected to reimburse eligible expenditures. Advances From/To Other Funds: Receivable Fund Payable Fund Amount General Bridge and Thoroughfare Special Revenue $ 6,184,326 Redevelopment Agency Debt Service 9,937,194 Developer Fees Bridge and Thoroughfare Special Revenue Special Revenue 5,390,019 Redevelopment Agency Debt Service 524,188 22.035.727 Advances between the funds are to fund capital projects. Amounts will be reimbursed to the receivable fund through future developer fees and tax increment revenues. See independent auditors' report. -59- 0 CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (CONTINUED): Interfund Transfers: Transfer In to Fund Transfers Out of Fund Amount General Federal Grants Special Revenue $ 2 Other Governmental Funds 15,523,424 Transit Enterprise 758,066 Proposition C Special Revenue Other Governmental Funds 29,644 Redevelopment Agency Other Governmental Funds 786,645 Debt Service Other Governmental Funds General 3,676,179 Redevelopment Agency Debt Service 6,132,087 Other Governmental Funds 562,042 Transit Enterprise Other Governmental Funds 46,170 Internal Service Funds General 3,125,000 30,639,259 Transfers provide funding for capital projects, capital acquisitions and debt service. 7. INDIVIDUAL FUND DISCLOSURES: A. Deficit Fund Balances: Funds which have a deficit fund balance at June 30, 2007, are as follows: Major Funds: Federal Grants Special Revenue $ 375,610 Redevelopment Agency Debt Service 10,461,382 Other Governmental Funds: State Park Special Revenue 319,967 Aid to Cities Special Revenue 30 Miscellaneous Grants Special Revenue 1,772,178 Sewer Maintenance Special Revenue 18,930 BJA Law Enforcement Special Revenue 18,560 The City plans to remove these deficits through transfers from the General Fund, receipt of developer fees, receipt of tax increment revenues and receipt of deferred grant revenues from other governmental agencies. See independent auditors' report. -60- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 7. INDIVIDUAL FUND DISCLOSURES (CONTINUED): B. Expenditures Exceeding Appropriations: For the year ended June 30, 2007, expenditures exceeded appropriations in the following programs/functions (the legal level of budgetary control) of the respective funds: Excess Program/Function Expenditures Major Fund: Bridge and Thoroughfare Special Revenue Public works $ 4,774 Debt service 519,690 Other Governmental Funds: Proposition A Special Revenue Public works 31,389 Miscellaneous Grants Special Revenue General government 6,107 HOME Special Revenue Community development 81,656 8. DEFINED BENEFIT PENSION PLAN: Plan Description: The City of Santa Clarita contributes to the California Public Employees' Retirement System (Ca1PERS), an agent multiple -employer public employee defined benefit pension plan. Ca1PERS provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. Ca1PERS 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 Ca1PERS' annual financial report may be obtained from their executive office: 400 P Street, Sacramento, CA 95814. Funding Policy: Participants are required to contribute 8% of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. The City is required to contribute at an actuarially determined rate; the rate for the year ended June 30, 2007, was 11.443% for non -safety employees. The contribution requirements of plan members and the City are established and may be amended by Ca1PERS. See independent auditors' report. -61- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 8. DEFINED BENEFIT PENSION PLAN (CONTINUED): Annual Pension Cost: For 2007, the City's annual pension cost of $4,279,569 for Ca1PERS was equal to the City's required and actual contribution. The required contribution was determined as part of the June 30, 2004, actuarial valuation using the entry age normal actuarial cost method The contributions were determined as a level percent of payroll over an average remaining period of fifteen years from the valuation date. The actuarial assumptions included (a) a 7.75% investment rate of return (net of administrative expenses), (b) projected annual salary increases of 3.25% to 14.45%, depending on age, service and type of employment, (c) an inflation rate of 3.00%, (d) a payroll growth rate of 3.25%, and (e) individual salary growth based on a merit scale that varies by duration of employment, coupled with an assumed annual inflation component of 3.00% and an annual production growth of 0.25%. The actuarial value of CaIPERS' assets was determined using techniques that smooth the effect of short-term volatility in the market value of investments over a three-year period (smoothed market value). Initial unfunded liabilities are amortized over a closed period that depends on the plan's date of entry into Ca1PERS. Subsequent plan amendments are amortized as a level percentage of pay over a closed 20 -year period. Gains and losses that occur in the operation of the plan are amortized over a rolling period, which results in an amortization of 6% of unamortized gains and losses each year. If the plan's accrued liability exceeds the actuarial value of plan assets, then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a 30 -year amortization period. Three -Year Trend Information for Ca1PERS ($ Amounts in Thousands) Fiscal Annual Pension Year Cost (APC) 2005 $ 2,394 2006 3,578 2007 4,280 See independent auditors' report. -62- Percentage of APC Contributed 100% 100% 100% Net Pension Obligation CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS . (CONTINUED) June 30, 2007 8. DEFINED BENEFIT PENSION PLAN (CONTINUED): Annual Pension Cost (Continued): Entry Age Normal Actuarial Accrued Valuation Liability Date (AAL) (A) Schedule of Funding Progress ($ Amounts in Thousands) Unfunded AAL Actuarial (UAAL)/ Value of (Excess Funded Assets Assets) Ratio (B) (A -B) (B/A) UAALasa % of Covered Covered Payroll PaMoll ll _ (C) [(A-B)/C] 6/30/04 $ 38,485 $ 31,567 $ 6,918 82.0 % $ 19,144 36.1 % 6/30/05 44,138 36,024 8,114 81.6 % 19,842 40.9 % 6/30/06 50,463 42,487 7,976 84.2 % 21,669 36.8 % 9. POST EMPLOYMENT BENEFITS: In addition to the retirement benefits described in Note 8, the City provides post-retirement health care benefits, in accordance with a City resolution, to all employees who retire from the City on or after attaining age 50 with 5 years CalPERS credited service. The City pays the cost of the retirees' enrollment, including the enrollment of family members, in a health benefits plan to a maximum of $913 per month. The City funds these amounts on a pay-as-you-go basis. For the .year ended June 30, 2007, there were 30 eligible participants for which the City paid $196,181 for medical insurance premiums. 10. DEFERRED COMPENSATION PLAN/DEFINED CONTRIBUTION PLAN: The City has established Deferred Compensation/Defined Contribution plans for certain classifications of management under Internal Revenue Service Code Section 401(a). City participation in contributions to the plans is mandatory. The City is obligated to contribute amounts ranging from $2,000 to $15,500 per participant per year. Employee contributions to certain plans are voluntary. During' the year ended June 30, 2007, there were 26 participants in the plans. The City contributions totaled $74,998, and employees' contributions totaled $50,663. See independent auditors' report. CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 11. RESERVES AND DESIGNATIONS OF FUND BALANCES: A city may set up "reserves" of fund equity to segregate fund balances or net assets which are not appropriable for expenditure in future periods, or which are legally set aside for a specific future use. Fund "designations" of unreserved fund balances also may be established to indicate tentative plans for financial resource utilization in a future period. The City's reserves and designations at June 30, 2007, are tabulated below, followed by explanations as to the nature and purpose of each reserve and designation. Reserves: Encumbrances Prepaid costs Deposits Debt service Land held for resale Low/moderate income housing Advance to other funds Total Reserves Designations: Self-insurance Special revenue purposes Capital improvements Total Designations Special Revenue Funds Bridge Other General and Developer Proposition Federal Governmental Fund Thoroughfare Fees C Grants Funds $ 7,338,266 $ 21,746,208 $ 1,213,505 $ 5,110,050 $ 50,000 $ 10,583,383 196,843 - - - - - 13,330,807 - - - - - - - - - - 313,848 1,607,196 - - - - 2,219,398 13,833,118 - 5,460,000 - - - $ 34.699.034 21.746.208 6.673.5055.110.050 $ 50,00014,723.825 $ 220,616 $ - $ - - $ - $ - - - - - - 28,821,870 4,592,332 $ 33.414.202 A. Reserved for Encumbrances - Amounts reserved for encumbrances are commitments for materials and services on purchase orders and contracts which are unperformed. B. Reserved for Prepaid Costs - This reserve is for prepaid costs since they are not available as a resource to meet expenditures of the current year. C. Reserved for Deposits - This reserve is for deposits since they are not available as a resource to meet expenditures of the current year. See independent auditors' report. -64- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 11. RESERVES AND DESIGNATIONS OF FUND BALANCES (CONTINUED): D. Reserved for Debt Service - These reserves represent amounts accumulated in accordance with a bond indenture or similar covenant. E. Reserved for Land Held for Resale - This reserve is for land held for resale by the Agency since it is not available as a resource to meet expenditures of the current year. F. Reserved for Low/Moderate Income Housing - This reserve is for amounts set-aside from tax increment money received by the Agency for the purpose of spending on projects that benefit low/moderate income households. G. Reserved for Advances to Other Funds - This reserve is established to reflect the advances to the Redevelopment Agency, so they will not be considered as current funds available. H. Designated for Self-insurance - This designation is held to cover any shortfalls in the Self-insurance Internal Service Fund. I. Designated for Special Revenue Purposes - These funds are designated for specific special revenue purposes, as restricted by law or administrative action. J. Designated for Capital Improvements - These funds are designated to provide for new capital additions, as determined by the City Council. 12. SELF INSURANCE: The City joined Special Districts Risk Management Authority (SDRMA) in the fall of 2005. SDRMA is a self insurance risk pool that serves as a not-for-profit public agency to its members. Through SDRMA the City currently holds a $500 general liability deductible. All general liability claims above $500 and up to a limit of $10,000,000 are handled by SDRMA. On June 30, 2007, $100,000 was accrued by the City for general liability claims that were received prior to the partnership with SDRMA. While the ultimate amounts of losses that occurred prior to SDRMA are dependent of future developments, based upon information provided from the City Attorney, outside counsel and others involved with the administration of the programs, the City's management believes that the aggregate accrual is adequate to cover such losses. Settled claims have not exceeded any of these coverage amounts in any of the last three fiscal years, and there were no reductions in the City's insurance coverage during the year ended June 30, 2007. See independent auditors' report. -65- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 12. SELF INSURANCE (CONTINUED): Changes in the reported liability since June 30, 2004, resulted in the following: Liability as of June 30, 2005. Claims and changes in estimates during the year ended June 30, 2006 Claims payments during the year ended June 30, 2006 Liability as of June 30, 2006 Claims and changes in estimates during the year ended June 30, 2007 Claims payments during the year ended June 30, 2007 Liability as of June 30, 2007 13. SEGMENT INFORMATION: $ 1,148,067 (2,078,478) 1,497,043 566,632 1,427,195 (1,893,827) $ 100,000 Net working capital (deficit) of the Transit Enterprise System at June 30, 2007, was as follows: Current assets $ 6,050,548 Current liabilities payable from current assets (4,916,443) Net working capital (deficit) 1,134,105 14. NO COMMITMENT DEBT: 1915 Act Limited Obligation Improvements Bonds A. On September 2, 1992, $879,432 of 1915 Act Limited Obligation Improvement Bonds for the Golden Valley Road Improvement Assessment District were issued. The 1915 Golden Valley Road Bonds are not a general obligation of the City, and neither the faith and credit nor the taxing power of the City is pledged to the payment of the bonds. The source of debt service is from the property assessments within the district. The principal amount of debt outstanding at June 30, 2007, was $595,000. B. On January 13, 2001, $790,000 of 1915 Act Limited Obligation Improvement Bonds for the Vermont Drive/Everett Drive Improvement Assessment District were issued. The 1915 Vermont Drive/Everett Drive Bonds are not a general obligation of the City, and neither the faith and credit nor the taxing power of the City is pledged to the payment of the bonds. The source of debt service is from the property assessments within the district. The principal amount of the debt outstanding at June 30, 2007, was $620,000. See independent auditors' report. CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 14. NO COMMITMENT DEBT (CONTINUED): Community Facilities District No. 2002-1 Special Tax Bonds On October 29, 2002, $17,370,000 of Special Tax bonds were issued for Community Facilities District No. 2002-1. The Special Tax bonds are not a general obligation of the City, and neither the faith and credit nor the taxing power of the City is pledged to the payment of these bonds. The source of debt service is from property assessments within the district. The principal amount of debt outstanding at June 30, 2007, was $17,280,000. 15. SANTA CLARITA WATERSHED RECREATION AND CONSERVANCY AUTHORITY: In June 1992, the City entered into a joint powers agreement with the Santa Monica Mountains Conservancy to create the Santa Clarita Watershed Recreation and Conservancy Authority (the Authority). The purpose of the Authority is to acquire, develop and conserve additional park and open space lands, including water -oriented recreation and conservation projects. The governing board consists of two representatives from the Conservancy and two from the City. Upon termination of the agreement, personal property and funds will be returned to the originating party. Any real property owned by the Authority shall be conveyed to the City unless the Authority deems otherwise. The City has an ongoing financial responsibility and an ongoing financial interest in the Authority; however, it does not have an equity interest. Financial statements of the Authority may be obtained at the City's administrative offices. 16. RESTATEMENT OF NET ASSETS/FUND BALANCES: A. Beginning net assets of the governmental activities have been increased by $2,005,763 to include in -lieu sales and use tax revenue that should have been recognized as of June 30, 2006. B. Beginning fund balance of the General Fund and Developer Fees Special Revenue Fund have been decreased by $776,576 and $148,079, respectively, as a result of reclassifying previously recognized interest income that did not meet the availability criteria as deferred revenue. C. Beginning net assets of the Transit Enterprise Business Activity has been increased by $2,113,465 as a result of the City correcting the estimated useful lives of certain capital assets and recomputing accumulated depreciation as of July 1, 2006. See independent auditors' report. -67- CITY OF SANTA CLARITA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 16. RESTATEMENT OF NET ASSETS/FUND BALANCES: D. Beginning net assets of the governmental activities have been increased by $411,751,273 as a result of the City's valuation of the estimated historical cost of infrastructure placed in service prior to July 1, 2002 and certain adjustments and reclassifications of other capital assets. Beginning balances of capital assets and related accumulated depreciation have been adjusted as follows: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Balance at July 1, 2006, Balance at as originally Valuation July 1, 2006 reported Adjustments Reclassification as restated $ 72,109,140 $ 6,324,000 $ 52,196,756 - 124,305,896 6,324,000 Site improvements 12,080,329 2,123,170 Building and improvements 42,779,328 1,611,044 Equipment 7,585,226 - Infrastructure 72,009,252 558,088,619 Total capital assets, being depreciated 134,454,135 561,822,833 Less accumulated depreciation for: Site improvements (3,495,888) (339,707) Building and improvements (9,780,855) 2,622,885 Equipment (5,332,828) - Infrastructure (2,296,133) (158,678,738) Total accumulated depreciation (20,905,704) (156,395,560) Total capital assets, being depreciated, net Total governmental activities capital assets, net See independent auditors' report. 113,548,431 405,427,273 $ 78,433,140 52,196,756 130.629.896 (344,357) 13,859,142 344,357 44,734,729 - 7,585,226 - 630,097,871 696.276.968 27,220 (3,808,375) (27,220) (7,185,190) (5,332,828) (160,974,871) (177,301,264) 518,975,704 $237.854,327 $ 411.751.273 $ - 649.605,600 REQUIRED SUPPLEMENTARY INFORMATION CITY OF SANTA CLARITA BUDGETARY COMPARISON SCHEDULE GENERAL FUND For the year ended June 30, 2007 EXPENDITURES: Current: General government Public safety Public works Parks and recreation Community development Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR, AS RESTATED FUND BALANCE - END OF YEAR 11,770,255 13,755;148 12,888,375 866,773 Variance with 14,397,750 13,926,613 471,137 14,338,524 Final Budget 13,907,952 Budgeted Amounts 20,102,997 Positive 1,813,553 Original Final Actual (Negative) REVENUES: 15,477,867 5,853,228 9,624,639 Taxes $ 65,083,400 $ 66,761,511 $ 65,968,889 $ (792,622) Licenses and permits 5,184,420 4,730,520 4,203,933 (526,587) Investment income 1,490,160 1,488,660 3,104,334 1,615,674 Revenue from other agencies 447,540 579,540 1,175,489 595,949 Fines and forfeitures 331,500 331,500 363,795 32,295 Service charges 8,412,810 8,076,640 7,989,723 (86,917) Other revenue 237,000 386,879 1,050,925 664,046 Overhead reimbursement 1,673,000 1,673,000 1,628,579 (44,421) TOTAL REVENUES 82,859,830 84,028,250 85,485,667 1,457,417 EXPENDITURES: Current: General government Public safety Public works Parks and recreation Community development Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR, AS RESTATED FUND BALANCE - END OF YEAR 11,770,255 13,755;148 12,888,375 866,773 14,388,940 14,397,750 13,926,613 471,137 14,338,524 17,036,685 13,907,952 3,128,733 18,333,477 20,102,997 18,289,444 1,813,553 4,929,232 8,044,460 5,919,329 2,125,131 6,356,400 15,477,867 5,853,228 9,624,639 70,116,828 88,814,907 70,784,941 18,029,966 12,743,002 (4,786,657) 14,700,726 19,487,383 3,308,220 3,308,220 16,281,492 12,973,272 (22,660,395) (20,198,395) (6,801,179) 13,397,216 (19,352,175) (16,890,175) 9,480,313 26,370,488 (6,609,173) (21,676,832) 24,181,039 45,857,871 39,018,819 39,018,819 39,018,819 - $ 32,409,646 $ 17,341,987 $ 63,199,858 $ 45,857,871 See independent auditors' report and note to required supplementary information. -70- CITY OF SANTA CLARITA BUDGETARY COMPARISON SCHEDULE BRIDGE AND THOROUGHFARE SPECIAL REVENUE FUND REVENUES: Developer fees Investment income TOTAL REVENUES EXPENDITURES: Current: Public works Capital outlay Debt service: Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR For the year ended June 30, 2007 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 4,802,000 $ 5,802,000 $ 1,529,275 $ (4,272,725) 172,800 172,800 1,873,545 1,700,745 4,974,800 5,974,800 3,402,820 (2,571,980) 122,605 129,537 134,311 (4,774) 1,932,000 39,087,051 16,243,529 22,843,522 519,690 (519,690) 2,054,605 39,216,588 16,897,530 22,319,058 2,920,195 (33,241,788) (13,494,710) 19,747,078 25,295,218 25,295,218 25,295,218 $ 28,215,413 $ (7,946,570) $ 11,800,508 $ 19,747,078 See independent auditors' report and note to required supplementary information. -71- CITY OF SANTA CLARITA BUDGETARY COMPARISON SCHEDULE DEVELOPER FEES SPECIAL REVENUE FUND For the year ended June 30, 2007 REVENUES: Developer fees Investment income TOTAL REVENUES EXPENDITURES: Capital outlay EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR, AS RESTATED FUND BALANCE - END OF YEAR Budgeted Amounts Original Final $ 1,960,000 $ 7,436,285 180,000 180,000 2,140,000 7,616,285 1,960,000 7,086,285 180,000 530,000 Variance with Final Budget Positive Actual (Negative) $ 4,661,868 $ (2,774,417) 579,736 399,736 5,241,604 (2,374,681) 4,865,179 2,221,106 376,425 (153,575) 1,330,390 1,330,390 1,330,390 - $ 1,510,390 $ 1,860,390 $ 1,706,815 $ (153,575) See independent auditors' report and note to required supplementary information. -72- CITY OF SANTA CLARITA BUDGETARY COMPARISON SCHEDULE PROPOSITION C SPECIAL REVENUE FUND REVENUES: Investment income Revenue from other agencies TOTAL REVENUES EXPENDITURES: Capital outlay EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR For the year ended June 30, 2007 See independent auditors' report and note to required supplementary information. -73- Variance Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 72,000 $ 72,000 $ 124,649 $ 52,649 3,631,171 29,266,022 13,900,888 (15,365,134) 3,703,171 29,338,022 14,025,537 (15,312,485) 3,500,000 28,769,509 18,671,224 10,098,285 203,171 568,513 (4,645,687) (5,214,200) - - 29,644 29,644 (209,670) (399,897) - 399,897 (209,670) (399,897) 29,644 429,541 (6,499) 168,616 (4,616,043) (4,784,659) 6,146,917 6,146,917 6,146,917 - $ 6,140,418 $ 6,315,533 $ 1,530,874 $ (4,784,659) See independent auditors' report and note to required supplementary information. -73- CITY OF SANTA CLARITA BUDGETARY COMPARISON SCHEDULE FEDERAL GRANTS SPECIAL REVENUE FUND For the year ended June 30, 2007 REVENUES: Revenue from other agencies Other revenue TOTAL REVENUES EXPENDITURES: Current: Public safety Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE (DEFICIT) - END OF YEAR - 91,255 91,000 255 1,078,000 4,301,450 2,132,393 2,169,057 1,078,000 4,392,705 2,223,393 2,169,312 950,000 35,809 (1,025,442) (1,061,251) (2) (2) - 950,000 35,807 (1,025,444) (1,061,251) 649,834 649,834 649,834 - $ 1,599,834 $ 685,641 $ (375,610) $ (1,061,251) See independent auditors' report and note to required supplementary information. -74- Variance Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 2,028,000 $ 2,087,890 $ 84,574 $ (2,003,316) - 2,340,624 1,113,377 (1,227,247) 2,028,000 4,428,514 1,197,951 (3,230,563) - 91,255 91,000 255 1,078,000 4,301,450 2,132,393 2,169,057 1,078,000 4,392,705 2,223,393 2,169,312 950,000 35,809 (1,025,442) (1,061,251) (2) (2) - 950,000 35,807 (1,025,444) (1,061,251) 649,834 649,834 649,834 - $ 1,599,834 $ 685,641 $ (375,610) $ (1,061,251) See independent auditors' report and note to required supplementary information. -74- CITY OF SANTA CLARITA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION June 30, 2007 1. BUDGETS AND BUDGETARY ACCOUNTING: The City follows these procedures in establishing the budgetary data reflected in the fmancial statements: 1) The annual budget adopted by' the City Council provides for the general operation of the City. It includes proposed expenditures and the means of financing them. 2) The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. Actual expenditures may not exceed budgeted appropriations at the functional or program level. The City Manager is authorized to transfer budgeted amounts at the program level. The City has the following programs accounted for through its governmental funds: general government, public safety, public works, parks and recreation, community development, capital outlay and debt service expenditures. 3) Annual budgets for the governmental funds are adopted on a basis substantially consistent with accounting principles generally accepted in the United States of America. Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. No budgetary comparison is presented for the Sewer Maintenance Special Revenue Fund, Redevelopment Agency Debt Service Fund and Public Financing Authority Debt Service Fund. 4) Formal budgetary integration is employed as a management control device. Commitments for materials and services, such as purchase orders and contracts, are recorded during the year as encumbrances to assist in controlling expenditures. Appropriations at year-end lapse, and then re -appropriated amounts are added to the following year's budgeted appropriations. At June 30, 2007, governmental fund balances have been reserved for encumbrances carried forward. See independent auditors' report. -75- OTHER GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. Bikeway - To account for monies received from the State of California restricted for bicycle and pedestrian facilities available under Article 3 of Transportation Development Act (SB821). Gas Tax - To account for monies received and expended from the state and county gas tax allocation restricted to fund various street highway improvements including maintenance. Park Improvement - To account for monies received from developers restricted to fund the acquisition and development of new park land space. . Proposition A - As "Proposition A" increased sales tax in Los Angeles County by one-half percent (.5%), this fund accounts for financial activity relative to the City's share of these monies. "Proposition A" revenue is to be used for transportation -related purposes. Special Assessment - To account for monies received for small assessment districts. State Park - To account for grant monies received from the State of California Department of Parks and Recreation for construction or improvements of park lands within the City. TDA (Transportation Development Act) - To account for monies received from the State of California under Article 8 of the TDA. These funds may be used for local streets and road expenditures when the City's unmet transportation needs have been satisfied. Traffic Safety - To account for monies received from vehicle code fines. This fund is used to finance law enforcement expenditures. CDBG (Community Development Block Grant) - To account for Federal entitlements under the Housing and Community Development Act of 1974, as amended. The City Council annually allocates CDBG Funds to various programs. AQMD (Air Quality Management District) - To account for revenues and expenditures for Air Quality Management. Aid to Cities - To account for receipts and disbursements associated with County Aid to cities grant. Landscape Maintenance District #1 - To account for receipts and disbursements related to a landscape district. -76- OTHER GOVERNMENTAL FUNDS (CONTINUED) SPECIAL REVENUE FUNDS (CONTINUED) Stormwater Utility - To account for receipts and disbursements related to stormwater and run-off programs. Miscellaneous Grants - To account for receipts and disbursements for non-federal miscellaneous grants. Sewer Maintenance - To account for monies received from developers as sewer frontage fees to be used to fund sewer maintenance projects. BJA Law Enforcement - To account for receipts and disbursements for the BJA law enforcement grant. Supplemental Law Grant - To account for receipts and disbursements for the supplemental law grant. HOME - To account for receipts and disbursements for the activity for the HOME grant program. Library Facilities Fees - To account for receipts and disbursements for the library facilities. FAU (Federal Aid Urban) - To account for receipts and disbursements of Federal grant funds for infrastructure capital improvements. DEBT SERVICE FUNDS The Debt Service Funds are used to account for the accumulation of resources for, and payment of, interest and principal on general long-term debt. General City Debt - To account principal and interest payments on the City's general long-term obligations. Public Financing Authority - To account for principal and interest payments on the 1991 Revenue Bonds issued by the Santa Clarita Public Financing Authority. CAPITAL PROJECTS FUNDS The Capital Projects Funds are used to account for the acquisition or construction of the City's major capital facilities, other than those financed by proprietary funds. Redevelopment Agency - To account for the construction of all capital projects located within the project area financed by the Redevelopment Agency. Public Financing Authority - To account for the construction of all capital projects that utilize public financing authority funds. -77- CITY OF SANTA CLARITA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS ASSETS Cash and investments Accounts receivable Interest receivable Due from other governments Land held for resale Loans receivable TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Deferred revenue Due to other governments Due to other funds TOTAL LIABILITIES FUND BALANCES (DEFICITS): Reserved: Encumbrances Debt service Land held for resale Low/moderate income housing Unreserved: Designated for special revenue purposes Designated for capital improvements Undesignated TOTAL FUND BALANCES (DEFICITS) TOTAL LIABILITIES AND FUND BALANCES See independent auditors' report. June 30, 2007 Special Revenue Funds Park Bikeway Gas Tax Improvement Proposition A $ 376,336 $ 2,365,426 $ 4,312,167 $ 7,184,252 - 26,916 - - 4,550 28,597 52,132 86,854 - - 289,133 - $ 380,886 $ 2,420,939 $ 4,653,432 $ 7,271,106 $ - $ 293,683 $ 416,096 $ 28,533 250,060 11,048 308,563 33,556 250,060 304,731 724,659 62,089 - 1,339,936 3,141,473 44,329 130,826 776,272 787,300 7,164,688 130,826 2,116,208 3,928,773 7,209,017 $ 380,886 $ 2,420,939 $ 4,653,432 $ 7,271,106 -78- Special Revenue Funds (Continued) Special State Traffic Assessment Park TDA Safety CDBG AQMD $ 6,498,035 $ 9 $ - $ 80,667 $ 211,005 $ 504,042 150,357 - _ - 78,558 - 557 975 2,551 6,094 - 337,562 - 86,220 63,998 51,300 - - - - 137,206 - $ 6,726,950 $ 337,571 $ 557 $ 167,862 $ 414,760 $ 561,436 $ 235,478 $ 27,397 $ - $ - $ 77,726 $ 147 30,351 320,089 215 377 138,191 2,354 - 26,215 - _ _ _ - 283,837 141 - _ _ 265,829 657,538 356 377 215,917 2,501 425,531 101,530 - - 300,839 6,035,590 - 201 167,485 - 558,935 - (421,497) - - (101,996) - 6,461,121 (319,967) 201 167,485 198,843 558,935 $ 6,726,950 $ 337,571 $ 557 $ 167,862 $ 414,760 $ 561,436 (Continued) -79- CITY OF SANTA CLARITA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS (CONTINUED) June 30,'2007 ASSETS Cash and investments Accounts receivable Interest receivable Due from other governments Land held for resale Loans receivable TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Deferred revenue Due to other governments Due to other funds TOTAL LIABILITIES FUND BALANCES (DEFICITS): Reserved: Encumbrances Debt service Land held for resale Low/moderate income housing Unreserved: Designated for special revenue purposes Designated for capital improvements Undesignated TOTAL FUND BALANCES (DEFICITS) TOTAL LIABILITIES AND FUND BALANCES See independent auditors' report. Special Revenue Funds (Continued) Landscape Aid to Maintenance Cities District #1 $ - $ 11,016,319 - 248,414 - 133,182 - 277,892 Stormwater Miscellaneous Utility Grants $ 2,817,267 $ - 228,716 - 34,059 - - 3,246,401 $ - $ 11,675,807 $ 3,080,042 $ 3,246,401 $ - $ 896,936 $ 184,345 $ 886,750 51,454 13,159 2,334,230 30 - - 1,797,599 30 948,390 197,504 5,018,579 84,165 358,711 3,690,960 10,643,252 2,523,827 - (30) - - (5,463,138) (30) 10,727,417 2,882,538 (1,772,178) $ - $ 11,675,807 $ 3,080,042 $ 3,246,401 -80- Special Revenue Funds (Continued) $ - $ 7,046 $ 49,721 15,636 44,530 18,930 34,196 94,251 13,473 40,078 $ 243 $ - 1,209,444 115 131,526 - 1,341,213 115 S,8 25,936 - (18,930) (32,033) (39,500) - _ _ (18,930) (18,560) 578 7,558 25,936 - $ - $ 15,636 $ 94,829 $ 1,348,771 $ 26,051 $ - (Continued) -81- Library Sewer BJA Law Supplemental Facility Maintenance Enforcement Law Grant HOME Fees FAU $ - $ - $ 93,696 $ - $ 24,530 $ - - - - 1,953 1,224 - - - 1,133 - 297 - - 15,636 - 137,374 - _ - - - 1,209,444 $ - $ 15,636 $ 94,829 $ 1,348,771 $ 26,051 $ - $ - $ 7,046 $ 49,721 15,636 44,530 18,930 34,196 94,251 13,473 40,078 $ 243 $ - 1,209,444 115 131,526 - 1,341,213 115 S,8 25,936 - (18,930) (32,033) (39,500) - _ _ (18,930) (18,560) 578 7,558 25,936 - $ - $ 15,636 $ 94,829 $ 1,348,771 $ 26,051 $ - (Continued) -81- CITY OF SANTA CLARITA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS (CONTINUED) June 30, 2007 Special Revenue Funds (Continued) Debt Service Funds See independent auditors' report. -82- General Public City Financing Total Debt Authority Total ASSETS Cash and investments $ 35,483,751 $ - $ 313,848 $ 313,848 Accounts receivable 657,580 - - - Interest receivable 429,539 - - - Due from other governments 4,505,516 - - - Land held for resale - - - - Loans receivable 1,346,650 - - - TOTAL ASSETS $ 42,423,036 $ - $ 313,848 $ 313,848 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities $ 3,104,101 $ - $ - $ - Deferred revenue 4,763,372 - - - Due to other governments 26,215 - - - Due to other funds 2,243,577 - - - TOTAL LIABILITIES 10,137,265 - - - FUND BALANCES (DEFICITS): Reserved: Encumbrances 9,541,025 - - - Debt service - - 313,848 313,848 Land held for resale - - - - Low/moderate income housing - - - - Unreserved: Designated for special revenue purpose 28,821,870 - - - Designated for capital improvements - - - - Undesignated (6,077,124) - - - TOTAL FUND BALANCES (DEFICITS) 32,285,771 - 313,848 313,848 TOTAL LIABILITIES AND FUND BALANCES $ 42,423,036 $ - $ 313,848 $ 313,848 See independent auditors' report. -82- $ 37,682 $ Capital Project Funds $ 3,141,783 Total - 38,682 Public 585,520 Other Redevelopment Financing - - Governmental Agency Authority Total Funds $ 8,281,860 $ 67,419 $ 8,349,279 $ 44,146,878 66,570 - 66,570 724,150 100,123 - 100,123 529,662 - - - 4,505,516 1,607,196 - 1,607,196 1,607,196 - - - 1,346,650 $ 10,055,749 $ 67,419 $ 10,123,168 $ 52,860,052 $ 37,682 $ - $ 37,682 $ 3,141,783 38,682 - 38,682 4,802,054 585,520 - 585,520 611,735 - - - 2,243,577 661,884 - 661,884 10,799,149 1,042,358 - 1,042,358 10,583,383 - - - 313,848 1,607,196 - 1,607,196 1,607,196 2,219,398 - 2,219,398 2,219,398 - - - 28,821,870 4,524,913 67,419 4,592,332 4,592,332 - - - (6,077,124) 9,393,865 67,419 9,461,284 42,060,903 $ 10,055,749 $ 67,419 $ 10,123,168 $ 52,860,052 -83- CITY OF SANTA CLARI TA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS For the year ended June 30, 2007 EXPENDITURES: Current: General government - - - - Public safety - - - - Public works - 2,543,206 - 31,389 Parks and recreation - - - - Community development - - - - Capital outlay 142,758 1,337,799 2,886,626 252,185 Debt service: Bond issuance costs - - - - Principal retirement - - - - Interest and fiscal charges - - - - TOTAL EXPENDITURES 142,758 3,881,005 21886,626 283,574 EXCESS OF REVENUES OVER Special Revenue Funds (UNDER) EXPENDITURES (24,061) Park (1,114,153) 2,801,791 Bikeway Gas Tax Improvement Proposition A REVENUES: Transfers in - 250,000 - Taxes $ - $ - $ 1,461,287 $ - Developer fees 15,568 - - - Investment income 30,389 132,121 311,186 396,903 Revenue from other agencies 72,740 4,205,773 - 2,688,462 Fines and forfeitures - - - - Service charges - - - - Other revenue - 12,575 - - TOTAL REVENUES 118,697 4,350,469 1,772,473 3,085,365 EXPENDITURES: Current: General government - - - - Public safety - - - - Public works - 2,543,206 - 31,389 Parks and recreation - - - - Community development - - - - Capital outlay 142,758 1,337,799 2,886,626 252,185 Debt service: Bond issuance costs - - - - Principal retirement - - - - Interest and fiscal charges - - - - TOTAL EXPENDITURES 142,758 3,881,005 21886,626 283,574 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (24,061) 469,464 (1,114,153) 2,801,791 OTHER FINANCING SOURCES (USES): Transfers in - 250,000 - - Transfers out - {285,577) - - Revenue bonds issued - - - - Bond premium - - - - TOTAL OTHER FINANCING SOURCES (USES) - (35,577) - - NET CHANGE IN FUND BALANCES (24,061) 433,887 (1,114,153) 2,801,791 FUND BALANCES (DEFICITS) - BEGINNING OF YEAR 154,887 1,682,321 5,042,926 4,407,226 FUND BALANCES (DEFICITS) - END OF YEAR $ 130,826 $ 2,116,208. $ 3,928,773 $ 7,209,017 See independent auditors' report. -84- Special Revenue Funds (Continued) Special State Traffic Assessment Park TDA Safety CDBG AQMD 318,062 - _ 347,585 9 63,442 55,130 26,865 22,434 - 430,383 - - 1,056,849 253,318 - - - 1,555,159 - - 3,083,818 - _ _ - _ 843 - - - 10,169 - 3,750,308 430,392 63,442 1,610,289 1,093,883 275,752 2,187,124 791,490 - - - - 13,955 - 204,787 - _ _ _ - - - 720,480 - 177,468 - - - - 600 230,000 - - - - 142,476 - 3,156,082 204,787 - - 1,092,956 14,555 594,226 225,605 63,442 1,610,289 927 261,197 42,471 (11,444) (1,275) (46,170) (1,533,994) - (29,645) 31,027 (1,275) (46,170) (1,533,994) - (29,645) 625,253 224,330 17,272 76,295 927 231,552 5,835,868 (544,297) (17,071) 91,190 197,916 327,383 $ 6,461,121 $ (319,967) $ 201 $ 167,485 $ 198,843 $ 558,935 (Continued) -85- CITY OF SANTA CLARITA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS (CONTINUED) For the year ended June 30, 2007 REVENUES: Taxes Developer fees Investment income Revenue from other agencies Fines and forfeitures Service charges Other revenue TOTAL REVENUES EXPENDITURES: Current: General government Public safety Public works Parks and recreation Community development Capital outlay Debt service: Bond issuance costs Principal retirement Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Revenue bonds issued Bond premium TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICITS) - BEGINNING OF YEAR FUND BALANCES (DEFICITS) - END OF YEAR See independent auditors' report. Special Revenue Funds (Continued) Landscape Aid to Maintenance Stormwater Miscellaneous Cities District #1 utility Grants 243 542,005 122,611 - - 9,127,269 - 3,128,091 - 2,390,132 - - - 486,714 243 9,669,274 2,512,743 3,614,805 7,951,844 384,407 - 2,061,220 27,574 - 448,915 403,673 109,871 3,919,196 - 8,355,517 2,555,498 4,395,685 243 1,313,757 (42,755) (780,880) 398,265 - (4,783) (56,625) (39,372) - (4,783) (56,625) 358,893 - (4,540) 1,257,132 316,138 (780,880) 4,510 9,470,285 2,566,400 (991,298) $ (30) $ 10,727,417 $ 2,882,538 $ (1,772,178) -86- • Special Revenue Funds (Continued) Library Sewer BJA Law Supplemental Facility • Maintenance Enforcement Law Grant HOME Fees FAU • $ - $ - $ - $ - $ - $ - ' - - - 222,994 - • - 82 7,638 5,483 6,815 797 - 20,156 292,010 593,085 - 271,126 _ - - 51,059 - _ 20,238 299,648 649,627 229,809 271,923 • - 31,895 298,325 • - - - 877,896 - _ " - - - 271,126 • - 31,895 298,325 877,896 - 271,126 • - (11,657) 1,323 (228,269) 229,809 797 • - 1,616 _ _ - _ • - - - - (222,994) (34,649) • - 1,616 - - (222,994) (34,649) - (10,041) 1,323 (228,269) 6,815 (33,852) • (18,930) (8,519) (745) 235,827 19,121 33,852 $ (18,930) $ (18,560) $ 578 $ 7,558 $ 25,936 $ - • (Continued) -87- CITY OF SANTA CLARITA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS (CONTINUED) For the year ended June 30, 2007 Special Revenue Funds OTHER FINANCING SOURCES (USES): Transfers in (Continued) Transfers out Debt Service Funds Revenue bonds issued - - - - Bond premium General Public FINANCING SOURCES (USES) (1,574,176) 27,866 3,518,003 3,545,869 City Financing Total Debt Authority Total REVENUES: Taxes $ 1,461,287 $ - $ - $ - Developer fees 556,624 - - - Investment income 2,071,738 - 3,386 3,386 Revenue from other agencies 22,139,262 - - - Fines and forfeitures 1,555,159 - - - Service charges 5,473,950 - - - Other revenue -561,360 - - - TOTAL REVENUES 33,819,380 - 3,386 3,386 EXPENDITURES: Current: General government 10,523,375 - - - Public safety 330,220 - - - Public works 5,468,834 - - - Parks and recreation 653,702 - - - Community development 1,598,376 - - - Capital outlay 9,501,302 - - - Debt service: Bond issuance costs - - 555,840 555,840 Principal retirement 230,000 24,078 2,120,792 2,144,870 Interest and fiscal charges 142,476 3,788 704,937 708,725 TOTAL EXPENDITURES 28,448,285 27,866 3,381,569 3,409,435 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 5,371,095 (27,866) (3,378,183) (3,406,049) OTHER FINANCING SOURCES (USES): Transfers in 692,352 27,866 3,518,003 3,545,869 Transfers out (2,266,528) - - - Revenue bonds issued - - - - Bond premium - - - - TOTAL OTHER FINANCING SOURCES (USES) (1,574,176) 27,866 3,518,003 3,545,869 NET CHANGE IN FUND BALANCES 3,796,919 - 139,820 139,820 FUND BALANCES (DEFICITS) - BEGINNING OF YEAR 28,488,852 - 174,028 174,028 FUND BALANCES (DEFICITS) - END OF YEAR $ 32,285,771 $ - $ 313,848 $ 313,848 See independent auditors' report. -88- - 10,523,375 - - 330,220 - - 5,468,834 - - - 653,702 1,533,947 - 1,533,947 3,132,323 660,100 - 660,100 10,161,402 - - - 555,840 2,374,870 - - - 851,201 2,194,047 - 2,194,047 34,051,767 1,122,129 Capital Project Funds 1,124,627 Total Public - Other Redevelopment Financing (13,894,752) Governmental Agency Authority Total Funds $ 3,146,579 $ - $ 3,146,579 $ 4,607,866 - - - 556,624 166,877 2,498 169,375 2,244,499 - - - 22,139,262 - - - 1,555,159 - - - 5,473,950 2,720 - 2,720 564,080 3,316,176 2,498 3,318,674 37,141,440 - 10,523,375 - - 330,220 - - 5,468,834 - - - 653,702 1,533,947 - 1,533,947 3,132,323 660,100 - 660,100 10,161,402 - - - 555,840 2,374,870 - - - 851,201 2,194,047 - 2,194,047 34,051,767 1,122,129 2,498 1,124,627 3,089,673 6,132,087 - 6,132,087 10,370,308 (786,645) (13,894,752) (14,681,397) (16,947,925) - 13,785,000 13,785,000 13,785,000 - 109.,752 109,752 109,752 5,345,442 - 5,345,442 7,317,135 6,467,571 2,498 6,470,069 10,406,808 2,926,294 64,921 2,991,215 31,654,095 $ 9,393,865 $ 67,419 $ 9,461,284 $ 42,060,903 -89- ,r CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL BIKEWAY SPECIAL REVENUE FUND REVENUES: Developer fees Investment income Revenue from other agencies TOTAL REVENUES EXPENDITURES: Capital outlay EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 Budgeted Amounts Original Final $ 309,000 $ 425,706 25,200 25,200 413,223 523,046 388,000 497,846 142,758 355,088 25,223 25,200 (24,061) (49,261) 154,887 154,887 154,887 - $ 180,110 $ 180,087 $ 130,826 $ (49,261) -90- Variance Final Budget Positive Actual (Negative) $ 15,568 $ (410,138) 30,389 5,189 72,740 600 118,697 (404,349) 388,000 497,846 142,758 355,088 25,223 25,200 (24,061) (49,261) 154,887 154,887 154,887 - $ 180,110 $ 180,087 $ 130,826 $ (49,261) -90- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GAS TAX SPECIAL REVENUE FUND REVENUES: Investment income Revenue from other agencies Other revenue TOTAL REVENUES EXPENDITURES: Current: Public works Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 2,712,975 3,237,887 2,543,206 Variance 1,210,000 2,285,713 1,337,799 Final Budget Budgeted Amounts 3,922,975 Positive Original Final Actual (Negative) $ 54,000 $ 54,000 $ 132,121 $ 78,121 3,766,785 4,280,497 4,205,773 (74,724) 13,000 13,000 12,575 (425) 3,833,785 4,347,497 4,350,469 2,972 2,712,975 3,237,887 2,543,206 694,681 1,210,000 2,285,713 1,337,799 947,914 3,922,975 5,523,600 3,881,005 1,642,595 (89,190) (1,176,103) 469,464 1,645,567 250,000 250,000 250,000 - (269,620) (269,620) (285,577) (15,957) (19,620) (19,620) (35,577) (15,957) (108,810) (1,195,723) 433,887 1,629,610 1,682,321 1,682,321 1,682,321 - $ 1,573,511 $ 486,598 $ 2,116,208 $ 1,629,610 -91- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PARK IMPROVEMENT SPECIAL REVENUE FUND REVENUES: Taxes Investment income TOTAL REVENUES EXPENDITURES: Capital outlay EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 Budgeted Amounts Original Final $ 4,188,000 $ 4,191,500 172,800 172,800 4,360,800 4,364,300 Actual $ 1,461,287 Variance Final Budget Positive (Negative) $ (2,730,213) 1,772,473 (2,591,827) 4,188,000 6,786,280 2,886,626 3,899,654 172,800 (2,421,980) (1,114,153) 1,307,827 5,042,926 5,042,926 5,042,926 - $ 5,215,726 $ 2,620,946 $ 3,928,773 $ 1,307,827 -92- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PROPOSITION A SPECIAL REVENUE FUND REVENUES: Investment income Revenue from other agencies TOTAL REVENUES EXPENDITURES: Current: Public works Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 31,850 31,850 31,389 Variance 390,000 1,235,864 252,185 Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 72,000 $ 72,000 $ 396,903 $ 324,903 6,544,470 6,672,696. 2,688,462 (3,984,234) 6,616,470 6,744,696 3,085,365 (3,659,331) 31,850 31,850 31,389 461 390,000 1,235,864 252,185 983,679 421,850 1,267,714 283,574 984,140 6,194,620 5,476,982 2,801,791 (2,675,191) (6,321,770) (7,800,335) - 7,800,335 (127,150) (2,323,353) 2,801,791 5,125,144 4,407,226 4,407,226 4,407,226 - $ 4,280,076 $ 2,083,873 $ 7,209,017 $ 5,125,144 -93- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SPECIAL ASSESSMENT SPECIAL REVENUE FUND REVENUES: Developer fees Investment income Service charges Other revenue MUM WRAM21120M EXPENDITURES: Current: General government Public works Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 Budgeted Amounts Original Final $ - $ 307,248 186,192 186,192 3,225,710 3,214,734 3,411,902 3,708,174 2,095,715 2,414,033 997,000 897,000 4,122,715 3,915,033 (710,813) (206,859) 2,187,124 226,909 791,490 105,510 177,468 426,532 3,156,082 758,951 594,226 801,085 3,420 3,420 42,471 39,051 (6,710) (6,710) (11,444) (4,734) (3,290) (3,290) 31,027 34,317 (714,103) (210,149) 625,253 835,402 5,835,868 5,835,868 5,835,868 - $ 5,121,765 $ 5,625,719 $ 6,461,121 $ 835,402 -94- Variance Final Budget Positive Actual (Negative) $ 318,062 $ 10,814 347,585 161,393 3,083,818 (130,916) 843 843 3,750,308 42,134 2,187,124 226,909 791,490 105,510 177,468 426,532 3,156,082 758,951 594,226 801,085 3,420 3,420 42,471 39,051 (6,710) (6,710) (11,444) (4,734) (3,290) (3,290) 31,027 34,317 (714,103) (210,149) 625,253 835,402 5,835,868 5,835,868 5,835,868 - $ 5,121,765 $ 5,625,719 $ 6,461,121 $ 835,402 -94- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL STATE PARK SPECIAL REVENUE FUND REVENUES: Investment income Revenue from other agencies TOTAL REVENUES EXPENDITURES: Current: Parks and recreation Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE For the year ended June 30, 2007 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ - $ - $ 9 $ 9 383,660 534,831 430,383 (104,448) 383,660 534,831 430,392 (104,439) 183,660 233,278 204,787 28,491 200,000 283,824 - 283,824 383,660 517,102 204,787 312,315 - 17,729 225,605 207,876 - - (1,275) (1,275) - 17,729 224,330 206,601 FUND BALANCE (DEFICIT) - BEGINNING OF YEAR (544,297) (544,297) (544,297) FUND BALANCE (DEFICIT) - END OF YEAR $ (544,297) $ (526,568) $ (319,967) $ 206,601 See independent auditors' report. -95- CITY OF SANTA CLARTTA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL REVENUES: Investment income Revenue from other agencies TOTAL REVENUES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE (DEFICIT) - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. TDA SPECIAL REVENUE FUND For the year ended June 30, 2007 Budgeted Amounts Original Final 5,663,340 5,663,340 5,663,340 5,663,340 Variance Final Budget Positive Actual (Negative) $ 63,442 $ 63,442 - (5,663,340) 63,442 (5,599,898) (5,663,340) (5,680,411) (46,170) 5,634,241 (17,071) 17,272 34,343 (17,071) (17,071) (17,071) - $ (17,071) $ (34,142) $ 201 $ 34,343 -96- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TRAFFIC SAFETY SPECIAL REVENUE FUND For the year ended June 30, 2007 See independent auditors' report. -97- Variance Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES: Investment income $ 36,000 $ 36,000 $ 55,130 $ 19,130 Fines and forfeitures 2,250,000 2,250,000 1,555,159 (694,841) TOTAL REVENUES 2,286,000 2,286,000 1,610,289 (675,711) OTHER FINANCING USES: Transfers out (2,250,000) (2,250,000) (1,533,994) 716,006 NET CHANGE IN FUND BALANCE 36,000 36,000 76,295 40,295 FUND BALANCE - BEGINNING OF YEAR 91,190 91,190 91,190 - FUND BALANCE - END OF YEAR $ 127,190 $ 127,190 $ 167,485 $ 40,295 See independent auditors' report. -97- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL REVENUES: Investment income Revenue from other agencies Other revenue TOTAL REVENUES EXPENDITURES: Current: Community development Debt service: Principal retirement Interest and fiscal charges TOTAL EXPENDITURES CDBG SPECIAL REVENUE FUND For the year ended June 30, 2007 804,227 1,456,500 Variance 230,000 230,000 Final Budget Budgeted Amounts 142,476 Positive Original Final Actual (Negative) $ - $ - $ 26,865 $ 26,865 1,171,800 1,171,800 1,056,849 (114,951) - - 10,169 10,169 1,171,800 1,171,800 1,093,883 (77,917) 804,227 1,456,500 720,480 736,020 230,000 230,000 230,000 - 142,476 142,476 142,476 - 1,176,703 1,828,976 1,092,956 736,020 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (4,903) (657,176) 927 658,103 FUND BALANCE - BEGINNING OF YEAR 197,916 197,916 197,916 - FUND BALANCE - END OF YEAR $ 193,013 $ (459,260) $ 198,843 $ 658,103 See independent auditors' report. IMM CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AQMD SPECIAL REVENUE FUND REVENUES: Investment income Revenue from other agencies TOTAL REVENUES EXPENDITURES: Current: Public works Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 18,000 21,407 13,955 7,452 - 611 . 600 11 18,000 22,018 14,555 7,463 271,616 267,598 261,197 (6,401) - - (29,645) (29,645) 271,616 267,598 231,552 (36,046) 327,383 327,383 327,383 - $ 598,999 $ 594,981 $ 558,935 $ (36,046) WSM Variance Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 23,040 $ 23,040 $ 22,434 $ (606) 266,576 266,576 253,318 (13,258) 289,616 289,616 275,752 (13,864) 18,000 21,407 13,955 7,452 - 611 . 600 11 18,000 22,018 14,555 7,463 271,616 267,598 261,197 (6,401) - - (29,645) (29,645) 271,616 267,598 231,552 (36,046) 327,383 327,383 327,383 - $ 598,999 $ 594,981 $ 558,935 $ (36,046) WSM CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AID TO CITIES SPECIAL REVENUE FUND For the year ended June 30, 2007 REVENUES: Investment income OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE (DEFICIT) - END OF YEAR See independent auditors' report. Budgeted Amounts Original Final Variance Final Budget _ Positive Actual (Negative) $ 243 $ 243 (4,783) (4,783) - - (4,540) (4,540) 4,510 4,510 4,510 - $ 4,510 $ 4,510 $ (30) $ (4,540) -100- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LANDSCAPE MAINTENANCE DISTRICT #1 SPECIAL REVENUE FUND For the year ended June 30, 2007 EXPENDITURES: Current: General government 9,021,100 9,842,938 7,951,844 1,891,094 Capital outlay 395,000 781,507 403,673 377,834 TOTAL EXPENDITURES 9,416,100 10,624,445 Variance 2,268,928 EXCESS OF REVENUES OVER Final Budget Budgeted Amounts (UNDER) EXPENDITURES Positive (1,307,456) Original Final Actual (Negative) REVENUES: Investment income $ 338,400 $ 338,400 $ 542,005 $ 203,605 Revenue from other agencies 8,018,340 8,978,589 9,127,269 148,680 TOTAL REVENUES 8,356,740 9,316,989 9,669,274 352,285 EXPENDITURES: Current: General government 9,021,100 9,842,938 7,951,844 1,891,094 Capital outlay 395,000 781,507 403,673 377,834 TOTAL EXPENDITURES 9,416,100 10,624,445 8,355,517 2,268,928 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (1,059,360) (1,307,456) 1,313,757 2,621,213 OTHER FINANCING USES: Transfers out (36,310) (36,310) (56,625) (20,315) NET CHANGE IN FUND BALANCE (1,095,670) (1,343,766) 1,257,132 2,600,898 FUND BALANCE - BEGINNING OF YEAR 9,470,285 9,470,285 9,470,285 - FUND BALANCE - END OF YEAR $ 8,374,615 $ 8,126,519 $ 10,727,417 $ 2,600,898 See independent auditors' report. -101- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL STORMWATER UTILITY SPECIAL REVENUE FUND REVENUES: Investment income Service charges TOTAL REVENUES EXPENDITURES: Current: General government Public works Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 493,910 568,044 384,407 Variance 2,315,435 2,458,394 2,061,220 Final Budget Budgeted Amounts 373,724 Positive Original Final Actual (Negative) $ 82,800 $ 82,800 $ 122,611 $ 39,811 2,512,201 2,512,201 2,390,132 (122,069) 2,595,001 2,595,001 2,512,743 (82,258) 493,910 568,044 384,407 183,637 2,315,435 2,458,394 2,061,220 397,174 79,500 373,724 109,871 263,853 2,888,845 3,400,162 2,555,498 844,664 (293,844) (805,161) (42,755) 762,406 451,580 451,580 398,265 (53,315) (36,310) (36,310) (39,372) (3,062) 415,270 415,270 358,893 (56,377) 121,426 (389,891) 316,138 706,029 2,566,400 2,566,400 2,566,400 - $ 2,687,826 $ 2,176,509 $ 2,882,538 $ 706,029 -102- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MISCELLANEOUS GRANTS SPECIAL REVENUE FUND For the year ended June 30, 2007 REVENUES: Revenue from other agencies Otherrevenue TOTAL REVENUES EXPENDITURES: Current: General government Public works Parks and recreation Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE (DEFICIT) - BEGINNING OF YEAR FUND BALANCE (DEFICIT) - END OF YEAR See independent auditors' report. Variance Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 189,373 $ 7,877,684 $ 3,128,091 $ (4,749,593) - 152,413 486,714 334,301 189,373 8,030,097 3,614,805 (4,415,292) - - 12,875 - 12,875 32,894 32,894 27,574 5,320 156,479 705,012 448,915 256,097 - 7,103,670 3,919,196 3,184,474 189,373 7,854,451 4,395,685 3,458,766 175,646 (780,880) (956,526) (991,298) (991,298) (991,298) - $ (991,298) $ (815,652) $ (1,772,178) $ (956,526) -103- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL BJA LAW ENFORCEMENT SPECIAL REVENUE FUND For the year ended June 30, 2007 REVENUES: Investment income Revenue from other agencies TOTAL REVENUES EXPENDITURES: Current: Public safety EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES: Transfers in NET CHANGE IN FUND BALANCE Budgeted Amounts Original Final 70,286 70,286 Variance Final Budget Positive Actual (Negative) $ 82 $ 82 20,156 (50,130) 20,238 (50,048) - 45,991 31,895 14,096 - 24,295 (11,657) (35,952) - - 1,616 1,616 - 24,295 (10,041) (34,336) FUND BALANCE (DEFICIT) - BEGINNING OF YEAR (8,519) (8,519) (8,519) - FUND BALANCE (DEFICIT) - END OF YEAR $ (8,519) $ 15,776 $ (18,560) $ (34,336) See independent auditors' report. -104- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SUPPLEMENTAL LAW GRANT SPECIAL REVENUE FUND REVENUES: Investment income Revenue from other agencies TOTAL REVENUES EXPENDITURES: Current: Public safety EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE (DEFICIT) - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 Variance Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ - $ - $ 7,638 $ 7,638 334,628 292,010 (42,618) 334,628 299,648 (34,980) 338,403 298,325 (3,775) 1,323 5,098 (745) (745) (745) - $ (745) $ (4,520) $ 578 $ 5,098 -105- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HOME SPECIAL REVENUE FUND REVENUES: Investment income Revenue from other agencies Otherrevenue TOTAL REVENUES EXPENDITURES: Current: Community development EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 Budgeted Amounts Original Final $ . 7,200 $ 7,200 592,000 600,000 599,200 607,200 796,240 796,240 877,896 (81,656) (197,040) (189,040) (228,269) (39,229) 235,827 235,827 235,827 - $ 38,787 $ 46,787 $ 7,558 $ (39,229) -106- Variance Final Budget Positive Actual (Negative) $ 5,483 $ (1,717) 593,085 (6,915) 51,059 51,059 649,627 42,427 796,240 796,240 877,896 (81,656) (197,040) (189,040) (228,269) (39,229) 235,827 235,827 235,827 - $ 38,787 $ 46,787 $ 7,558 $ (39,229) -106- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LIBRARY FACILITIES FEES SPECIAL REVENUE FUND REVENUES: Developer fees Investment income TOTAL REVENUES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 Variance Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ - $ - $ 222,994 $ 222,994 2,520 2,520 6,815 4,295 2,520 2,520 229,809 227,289 - - (222,994) (222,994) 2,520 2,520 6,815 4,295 19,121 19,121 19,121 $ 21,641 $ 21,641 $ 25,936 $ 4,295 -107- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FAU SPECIAL REVENUE FUND REVENUES: Investment income Revenue from other agencies TOTAL REVENUES EXPENDITURES: Capital outlay EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Transfers out NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 -108- Variance Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 720 $ 720 $ 797 $ 77 460,028 731,154 271,126 (460,028) 460,748 731,874 271,923 (459,951) 480,000 751,126 271,126 480,000 (19,252) (19,252) 797 20,049 - - (34,649) (34,649) (19,252) (19,252) (33,852) (14,600) 33,852 33,852 33,852 - $ 14,600 $ 14,600 $ - $ (14,600) -108- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL CITY DEBT - DEBT SERVICE FUND EXPENDITURES: Debt service: Principal retirement Interest and fiscal charges TOTAL EXPENDITURES OTHER FINANCING SOURCES: Transfers in NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 Budgeted Amounts Original Final Variance with Final Budget Positive Actual (Negative) $ 24,078 $ 24,078 $ 24,078 $ 3,788 3,788 3,788 - 27,866 27,866 27,866 - 27,866 27,866 27,866 - -109- CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL REDEVELOPMENT AGENCY CAPITAL PROJECTS FUND For the year ended June 30, 2007 REVENUES: Taxes Investment income Otherrevenue TOTAL REVENUES EXPENDITURES: Current: General government Community development Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. Budgeted Amounts Original Final $ 2,200,000 $ 2,644,568 54,000 54,000 2,254,000 2,698,568 Actual $ 3,146,579 166,877 Variance with Final Budget Positive (Negative) $ 502,011 112,877 3,316,176 617,608 5,000 5,000 - 5,000 1,017,870 6,558,845 1,533,947 5,024,898 - 1,041,108 660,100 381,008 1,022,870 7,604,953 2,194,047 5,410,906 1,231,130 (4,906,385) 1,122,129 6,028,514 6,132,087 6,132,087 (500,000) (500,000) (786,645) (286,645) (500,000) (500,000) 5,345,442 5,845,442 731,130 (5,406,385) 6,467,571 11,873,956 2,926,294 2,926,294 2,926,294 - $ 3,657,424 $ (21480,091) $ 9,393,865 $ 11,873,956 - 110 - CITY OF SANTA CLARITA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PUBLIC FINANCING CAPITAL PROJECTS FUND REVENUES: Investment income OTHER FINANCING SOURCES (USES): Transfers out Revenue bonds issued Bond premium TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR See independent auditors' report. For the year ended June 30, 2007 -111- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ - $ - $ 2,498 $ 2,498 - - (13,894,752) (13,894,752) - - 13,785,000 13,785,000 - - 109,752 109,752 - - 2,498 2,498 64,921 64,921 64,921 - $ 64,921 $ 64,921 $ 67,419 $ 2,498 -111- This page intentionally left blank. - 112 - INTERNAL SERVICE FUNDS The Internal Service Funds are used to account for goods or services provided by a central service department to other City departments. Self -Insurance - To account for the financing of the City's self-insurance program. Computer Replacement - To account for the financing of the replacement of the City's computer equipment. Vehicle Replacement - To account for the financing of the replacement of the City's automotive equipment. Public Facilities Replacement - To account for the financing of the replacement of the City's public facilities. - 113- CITY OF SANTA CLARITA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS ASSETS CURRENT ASSETS: Cash and investments Accounts receivable Interest receivable TOTAL CURRENT ASSETS NONCURRENT ASSETS: Capital assets: Equipment Less: accumulated depreciation TOTAL NONCURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES: Accounts payable and accrued liabilities NONCURRENT LIABILITIES: Claims payable TOTAL LIABILITIES NET ASSETS Invested in capital assets, net of related debt Unrestricted TOTAL NET ASSETS See independent auditors' report. June 30, 2007 -114- 21,462 29,307 100,000 - 121,462 29,307 - 246,894 3,937,724 1,237,890 $ 3,937,724 $ 1,484,784 Computer Self -Insurance Replacement $ 4,054,328 $ 1,252,060 4,858 - - 15,137 4,059,186 1,267,197 - 894,975 - (648,081) - 246,894 4,059,186 1,514,091 21,462 29,307 100,000 - 121,462 29,307 - 246,894 3,937,724 1,237,890 $ 3,937,724 $ 1,484,784 Public Vehicle Facilities Replacement Replacement Totals $ 2,580,476 $ 11,537,909 $ 19,424,773 - - 4,858 31,197 139,488 185,822 2,611,673 11,677,3 97 19,615,453 1,333,006 - 2,227,981 (972,053) - (1,620,134) 360,953 - 607,847 2,972,626 11,677,397 20,223,300 50,769 100,000 150,769 360,953 - 607,847 2,611,673 11,677,397 19,464,684 $ 2,972,626 $ 11,677,397 $ 20,072,531 SIT CITY OF SANTA CLARITA COMBINING STATEMENT OF REVENUES, EXPENSES AND AND CHANGES IN NET ASSETS - INTERNAL SERVICE FUNDS For the year ended June 30, 2007 OPERATING REVENUES: Charges for services Other revenue TOTAL OPERATING REVENUES OPERATING EXPENSES: Services and supplies Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME NONOPERATING REVENUES: Investment income TOTAL NONOPERATING REVENUES INCOME BEFORE TRANSFERS TRANSFERS: Transfers in CHANGE IN NET ASSETS TOTAL NET ASSETS - BEGINNING OF YEAR TOTAL NET ASSETS - END OF YEAR See independent auditors' report. -116- Computer Self -Insurance Replacement $ 1,961,223 $ 385,415 - 2,676 1,961,223 388,091 1,187,235 234,004 - 62,511 1,187,235 296,515 773,988 91,576 - 75,570 - 75,570 773,988 167,146 125,000 - 898,988 167,146 3,038,736 1,317,638 $ 3,937,724 $ 1,484,784 Public Vehicle Facilities Replacement Replacement $ 390,680 $ - 390,680 - Totals $ 2,737,318 2,676 2,739,994 870 - 1,422,109 144,188 - 206,699 145,058 - 1,628,808 245,622 - 1,111,186 147,053 535,650 758,273 147,053 535,650 758,273 392,675 535,650 1,869,459 - 3,000,000 3,125,000 392,675 3,535,650 4,994,459 2,579,951 8,141,747 15,078,072 $ 2,972,626 $ 11,677,397 $ 20,072,531 -117- CITY OF SANTA CLARITA COMBINING STATEMENT OF CASH FLOWS ALL INTERNAL SERVICE FUNDS For the year ended June 30, 2007 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from interfund services provided Other operating receipts Payments to suppliers NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Cash received from other funds CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets CASH FLOWS FROM INVESTING ACTIVITIES: Investment income NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income Depreciation Change in assets and liabilities: (Increase) decrease in accounts receivable Increase (decrease) in accounts payable and accrued liabilities Increase (decrease) in claims payable NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES See independent auditors' report. - 118 - Self -Insurance Computer Replacement $ 1,961,975 $ 385,415 - 2,676 (1,672,518) (238,007) 289,457 150,084 125,000 - (168,463) 71,323 414,457 52,944 3,639,871 1,199,116 $ 4,054,328 $ 1,252,060 $ 773,988 $ 91,576 - 62,511 752 (18,651) (4,003) (466,632) - $ 289,457 $ 150,084 Public Vehicle Facilities Replacement Replacement Totals $ 390,680 $ - $ 2,738,070 - - 2,676 (10,267) (411,104) (2,331,896) 380,413 (411,104) 408,850 3,000,000 3,125,000 (130,188) - (298,651) 135,785 464,135 671,243 386,010 3,053,031 3,906,442 2,194,466 8,484,878 15,518,331 $ 2,580,476 $ 11,537,909 $ 19,424,773 $ 245,622 $ - $ 1,111,186 144,188 - 206,699 752 (9,397) (411,104) (443,155) (466,632) $ 380,413 $ (411,104) $ 408,850 -119- This page intentionally left blank. -120- FIDUCIARY FUNDS AGENCY FUNDS The Agency Funds are used to account for assets held by the City as an agent for individuals. Assessment District No. 92-2 - To account for monies held to account for debt service requirements of Assessment District No. 92-2. Assessment District No. 99-1 - To account for monies held to account for debt service requirements of Assessment District No. 99-1. Community Facilities District No. 2002-1 - To account for monies held to account for debt service requirements of Community Facilities District No. 2002-1. -121 - CITY OF SANTA CLARITA COMBINING STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUNDS June 30, 2007 See independent auditors' report. -122- Agency Funds Community Assessment Assessment Facilities District District District No. 92-2 No. 99-1 No. 2002-1 Totals ASSETS: Cash and investments $ 74,083 $ 27,072 $ 17,265 $ 118,420 Cash and investments with fiscal agents 68,424 61,360 1,690,270 1,820,054 Interest receivable 1,258 1,587 - 2,845 Property taxes receivable 1,127 327 - 1,454 TOTAL ASSETS $ 144,892 $ 90,346 $ 1,707,535 $ 1,942,773 LIABILITIES: Accounts payable and accrued liabilities $ 1,328 $ 940 $ - $ 2,268 Due to bondholders 143,564 89,406 1,707,535 1,940,505 TOTAL LIABILITIES $ 144,892 $ 90,346 $ 1,707,535 $ 1,942,773 See independent auditors' report. -122- CITY OF SANTA CLARITA SCHEDULE OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES ALL AGENCY FUNDS For the year ended June 30, 2007 Balance Balance July 1, June 30, 2006 Additions Deletions 2007 ASSESSMENT DISTRICT NO. 92-2 ASSETS: $ 39,473 $ - $ 12,401 $ 27,072 Cash and investments $ 58,097 $ 15,986 $ - $ 74,083 Cash and investments with fiscal agents 68,237 187 - 68,424 Interest receivable 800 458 - 1,258 Property taxes receivable 3,686 - 2,559 1,127 TOTAL ASSETS $ 130,820 $ 16,631 $ 2,559 $ 144,892 LIABILITIES: Accounts payable and accrued liabilities $ 377 $ 951 $ - $ 1,328 Due to bondholders 130,443 13,121 - 143,564 TOTAL LIABILITIES $ 130,820 $ 14,072 $ - $ 144,892 ASSESSMENT DISTRICT NO. 99-1 ASSETS: Cash and investments $ 39,473 $ - $ 12,401 $ 27,072 Cash and investments with fiscal agents 62,784 - 1,424 61,360 Interest receivable 358 1,229 - 1,587 Property taxes receivable 6,930 - 6,603 327 TOTAL ASSETS $ 109,545 $ 1,229 $ 20,428 $ 90,346 LIABILITIES: Accounts payable and accrued liabilities $ 169 $ 771 $ - $ 940 Due to bondholders 109,376 - 19,970 89,406 TOTAL LIABILITIES $ 109,545 $ 771 $ 19,970 $ 90,346 (Continued) See independent auditors' report. -123- CITY OF SANTA CLARITA SCHEDULE OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES ALL AGENCY FUNDS (CONTINUED) COMMUNITY FACILITIES DISTRICT NO. 2002-1 ASSETS: Cash and investments Cash and investments with fiscal agents TOTAL ASSETS LIABILITIES: Due to bondholders TOTAL LIABILITIES TOTAL - ALL AGENCY FUNDS ASSETS: Cash and investments Cash and investments with fiscal agents Interest receivable Property taxes receivable TOTAL ASSETS LIABILITIES: Accounts payable and accrued liabilities Due to bondholders TOTAL LIABILITIES See independent auditors' report. For the year ended June 30, 2007 Balance July 1, 2006 Additions $ 15,169 $ 2,096 $ 1,685,274 $ 4,996 $ 1,700,443 $ 7,092 1,424 1,820,054 $ 1,700,443 $ 7,092 $ 1,700,443 $ 7,092 Balance June 30, Deletions 2007 $ - $ 17,265 1,690,270 $ - $ 1,707,535 $ 1,707,535 $ - $ 1,707,535 $ 112,739 $ 18,082 $ 12,401 $ 118,420 1,816,295 5,183 1,424 1,820,054 1,158 1,687 - 2,845 10,616 - 9,162 1,454 $ 1,940,808 $ 24,952 $ 22,987 $ 1,942,773 $ 546 $ 1,722 $ - $ 2,268 1,940,262 20,213 19,970 1,940,505 $ 1,940,808 $ 21,935 $ 19,970 $ 1,942,773 -124- CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS - 125 - CITY OF SANTA CLARITA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS COMPARATIVE SCHEDULES BY SOURCE (1) June 30, 2007 and 2006 GOVERNMENTAL FUNDS CAPITAL ASSETS: Land Site improvements Buildings and improvements Equipment Infrastructure Construction in progress TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS INVESTMENT IN GOVERNMENTAL FUNDS ASSETS BY SOURCE: Donation of fixed assets from the County of Los Angeles, at estimated fair market value Other donations General fund TOTAL INVESTMENT IN GOVERNMENTAL FUNDS CAPITAL ASSETS 2007 2006 $ 79,279,650 $ 78,433,140 14,074,142 13,859,142 45,530,704 44,734,729 6,227,782 5,655,896 656,695,949 630,097,871 82,155,075 52,196,756 $ 883,963,302 $ 824,977,534 $ 12,448,203 $ 12,448,203 44,713,880 38,845,743 826,801,219 773,683,588 $ 883,963,302 $ 824,977,534 (1) This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the Statement of Net Assets. See independent auditors' report. -126- CITY OF SANTA CLARITA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION (1) June 30, 2007 (1) This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the Statement of Net Assets. See independent auditor's report. -127- Buildings Construction Site and in Function Land Improvements Improvements Equipment Infrastructure Progress Total General government $ 20,294,139 $ 628,339 $ 9,425,142 $ 2,179,746 $ $ 50,491 $ 32,577,857 Public safety - - 481,405 27,623 - 509,028 Public works 14,919,648 267,715 1,131,179 2,824,874 - 19,143,416 Parks and recreation 38,290,369 13,178,088 34,492,978 889,584 3,537,893 90,388,912 Community development 5,775,494 305,955 656,695,949 78,566,691 741,344,089 Total $ 79,279,650 $ 14,074,142 $ 45,530,704 $ 6,227,782 $656,695,949 $ 82,155,075 $ 883,963,302 (1) This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the Statement of Net Assets. See independent auditor's report. -127- CITY OF SANTA CLARITA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION Function General government Public safety Public works Parks and recreation Community development Total See independent auditors' report. For the year ended June 30, 2007 Governmental Governmental Funds Funds Capital Assets Capital Assets July 1, 2006 Additions Deletions June 30, 2007 $ 32,340,815 $ 237,042 $ - $ 32,577,857 509,028 - - 509,028 18,604,455 587,945 48,984 19,143,416 86,465,395 3,923,517 - 90,388,912 687,057,841 54,311,962 25,714 741,344,089 $ 824,977,534 $ 59,060,466 $ 74,698 $ 883,963,302 -128- Q H STATISTICAL SECTION (Unaudited) This part of the City of Santa Clarita's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the government's overall financial health. CONTENTS Page Financial Trends These tables contain trend information that may assist the reader in 131-137 the City's current financial performance by placing it in historical perspective. Revenue Capacity These tables contain information that may help in assessing the 138-149 viability of the City's most significant revenue sources, the property and sales taxes. Debt Capacity These tables present information that may assist the reader in 150-156 analyzing the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information These tables offer demographic and economic indicators to help the 157-158 reader understand the environment within which the City's financial activities take place. Operating Information These tables contain service and infrastructure indicators that can 159-162 inform one's understanding how the information in the City's financial statements relate to the services the City provides and the activities it performs. 129- 130- CITY OF SANTA CLARITA NET ASSETS by COMPONENT "i Last Five Fiscal Years Ended June 30, 2007 (accrual basis of accounting) Business -type Activities Investment in capital assets. net of related debt S 62.246.621 S 63.741.429 $ 57.378,860 S 38.827.474 S 28.679.875 Restricted for: Debt Service - - - - 567.140 Unrestricted 1.553.088 (406.224) (890.648) (1.959.972) (1.092.404) Total business -type activities net assets S 63.799.709 S 63.335.205 S 56.488.212 % 36.867.502 S 28.154.611 Primary Government FISCAL YEAR Investment in capital assets. 05-06 net of related debt 06-07 As Restated 04-05 03.04 02.03 Governmental Activities 52,576,463 62.7.52,301 41.540,800 40.362,986 42.389.520 Investment in capital assets, 89.298905 70.595.199 52.466.674 47.702349 31.5.52.959 net of related debt $ 661,210.117 $ 614.300.517 S 160.829,971 $ 110924.177 S 90.486.961 Restricted for: Capital Projects 18,134.924 32,030,928 14.530,809 14,679,895 11.707,084 Debt Service - 174,028 347 49 53 Specific Projects and Programs 34.441.539 30547,345 27.009,644 25.683.042 30,115.243 Total Restricted 52.576,463 62,752,301 41.540.800 40.362,986 41,822,380 Unrestricted 87.737.817 71.001.423 53.357.322 49.662.321 32,645.363 Total governmental activities net assets S 801524.397 $ 748.054.241 5 255..728.093 S 200,949.484 S 164.954.704 Business -type Activities Investment in capital assets. net of related debt S 62.246.621 S 63.741.429 $ 57.378,860 S 38.827.474 S 28.679.875 Restricted for: Debt Service - - - - 567.140 Unrestricted 1.553.088 (406.224) (890.648) (1.959.972) (1.092.404) Total business -type activities net assets S 63.799.709 S 63.335.205 S 56.488.212 % 36.867.502 S 28.154.611 Primary Government Investment in capital assets. net of related debt 723.456.738 678.041.946 218,208.831 149.751.651 119.166.836 Restricted 52,576,463 62.7.52,301 41.540,800 40.362,986 42.389.520 Unrestricted 89.298905 70.595.199 52.466.674 47.702349 31.5.52.959 Total Primary Government Net Assets S 865.324.106 S 811,389.446 S 312.216.305 $ 237.816986 $ 193.109.315 Note: (1) Accounting standards require that net assets be reported in three components in the financial statements: invested in capital assets, net of related debt, restricted, and unrestricted. Net assets are considered restricted only when (1) an external party, such as the State of California or the federal government, places a restriction on how the revenues may be used, or (2) enabling legislations is enacted by the City. (2) City of Santa Clarim implemented GASB 34 reporting module for the fiscal year ended June 30, 2003. Fiscal Year 2005-06 balance was restated as a result of the City's valuation of the estimated historical cost of infrastructure placed in service prior to July I, 2002. See Notes to Basic Financial Statements #16. Source: City of Santa Clarim, Administrative Services Department - Finance Division 131 - CITY OF SANTA CLARITA CHANGES in NET ASSETS Last Five Fiscal Years Ended June 30, 2007 itt (accrual basis of accounting) FISCAL YEAR 0607 05-06 04-05 03.04 0243 Expenses Governmental Activities General government Public safely Public works Parks and recreation Community development Unlocated infrastructure depreciation Interest on long-term debt Total governmental activites expenses: Business -type Activities Transit Total business -type activities expenses: Total primary government expenses: Program Revenues Governmental Activities Charges for services: General government Public safety Public works Parks and recreation Community development Operating grants and contributions Capital grants and contributions Total governmental activities program revenues: Business -type Activities Charges for services: Transit Operating grants and contributions Capital grants and contributions Total business -type activities program revenues: Total primary government revenues: S 26.029.070 S 24.225.414 S 9.930.958 S 10,645,351 $ 9,033,093 14398.408 13.82L626 12,437,170 12,113,853 12.107.145 19.273,980 6.417,841 11,754.949 8,859,452 8.971,939 20.573.077 20,988.533 17.637,475 15,370,145 14515,769 8,985,449 16.939,976 22,371,678 20,482573 34,837,564 12,920.310 1,268.939 701.261 243.369 82.564 2.087.949 1.669.701 1.560,223 1,608577 1,896.652 104.268.243 85.332.030 76393.714 69.323.320 81.444,726 18.315,106 16.508.457 15,239.173 14,557,850 15.272,143 18.315,106 16508.457 15,239,173 14.557A50 15.272,143 $ 122 583349 $ 101.840,487 S 91.631887 $ 83.981.170 4 96.716,869 $ 302,075 S 186.171 $ 377.202 S 325.190 $ 268.054 2,131.060 2,032.652 1.921.796 1,143,772 1.146.070 3,575,546 2,512.093 2,423,865 2,697.751 2,675,812 3.895.422 3.794,662 3.874,109 3.133.880 2,960.491 20,182,722 19.068.982 20,127,873 20,740,859 16.554.860 26.641.145 23,465.852 21.301.21.5 18503.221 19.239,884 24.770,306 60.971,404 34.503,830 12.239,868 11236.601 81.498.276 112.031,816 84.529.890 58,784,541 56,081,772 5.827.778 4.950-194 5.224.575 4,581.799 4.362.529 12,616.641 3,351,941 15,834,845 8.937.213 2,232,947 750.200 - 19,194,619 8.302.525 21,059,420 13,519,012 6,595,476 S 100.692.89.5 S 120.334,341 S 105.589.310 S 72303553 $ 62.677248 Note:(]) City of Santa Clarita implemented GASB 34 reporting module for the fiscal year ended June 30. 2003. Source: City of Santa Clarita. Administrative Services Department - Finance Division 132 - CITY OF SANTA CLARITA CHANGES in NET ASSETS Last Five Fiscal Years Ended June 30, 2007 O1 (accrual basis of accounting) Net Revenues (expenses): Governmental activities Business -type activities Total net revenues (expenses): General Revenue and Other Changes in Net Assets Govemmental activities Taxes: Sales taxes Property taxes, levied for general purposes Franchise taxes Real property transfer taxes Transient occupancy taxes Unrestricted revenue in lieu of motor vehicle taxes Unrestricted revenue in lieu of sales taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Transfers Total governmental activities Business -type activities Grants and contributions not restricted to specific programs Unrestricted investment earnings Transfers Total business -type activities: Total primary government: Change in Net Assets Governmental activities Business -type activities Total primary government: FISCAL YEAR 06-07 05-06 04-05 03.04 02.03 $ (22,769.967) $ 26,699.786 $ 8,136.176 $ (10338.779) $ (25,362,954) 879,513 (8.205.932) 5,820247 (1.038.838) (8.676,667) $ (21.890.454) S 18.493.854 S 13.956,423 S (11.577.617) $ (34.039.621) $ 23,790,825 $ 22,204,192 $ 22,674,470 S 27,329,574 $ 24,337,912 27,891,202 23.106,806 9,023,363 9,452,945 8.323,522 6.248,912 5.560,153 5,314,454 5,131.964 4,863519 1.073374 1344,534 1,611,216 1,327,924 920,676 1.804,923 1.824,394 1,632.137 1,458,388 1,186,141 - 603,990 10,224,572 10216.165 9,141,858 8,156.017 6,965,521 7,328,638 - - 1.862.901 223,241 872,475 1.279.029 939,559 4.970,193 1.891.292 1,663,699 655,106 1,710,373 441,376 (12.054.795) (13,702,591) (9,737.217) (8.734.050) 76,240,123 51 M9.328 46,642.433 47,113,878 42.689,510 $ 53,470,156 $ 78,569,114 $ .54,778,609 $ 36.575.099 $ 17.326,556 464.504 4333.528 19.620.710 8.716,179 124.833 $ 53.934.660 S 83302.642 $ 74399.319 S 45,291,278 S 17.451.389 Note: (1) City of Santa Clarita implemented GASB 34 reporting module for the fiscal year ended June 30. 2003. Source: City of Santa Clarita, Administrative Services Department - Finance Division 131- 883,615 93.334 - - 26.367 1.050 4.538 17,800 67,450 (441,376) 12.054.795 13.702.591 9,737.217 8,734.050 (415.009) 12.939.460 13,800.463 9355.017 8.801.500 $ 75.825,114 S 64,808,788 $ 60.442.896 S 56.868,895 $ 51.491,010 $ 53,470,156 $ 78,569,114 $ .54,778,609 $ 36.575.099 $ 17.326,556 464.504 4333.528 19.620.710 8.716,179 124.833 $ 53.934.660 S 83302.642 $ 74399.319 S 45,291,278 S 17.451.389 Note: (1) City of Santa Clarita implemented GASB 34 reporting module for the fiscal year ended June 30. 2003. Source: City of Santa Clarita, Administrative Services Department - Finance Division 131- CITY OF SANTA CLARITA FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years Ended June 30, 2007 (modified accrual basis of accounting) General Fund Reserved Unreserved Total general fund: All Other Governmental Funds Reserved Unreserved: Special revenue fund Debt service funds Capital projects fund Total all other governmental funds: FLSCAL YEAR 05.06 n' 06-07 As Restated 04.05 03-04 $ 34.699.034 $ 20.786,040 $ 15,638,513 S 12.042.182 28.500.824 18.232.779 30.780.939 23.109.773 S 63.199.858 S 39.018.819 3 46.419.452 S 3S. U I )SS $ 48.303.588 S 80.399,389 $ 30,388,825 $ 41363.581 3.827.570 (15,073,824) 2,843,589 (867,508) (10,461,382) (4,743,697) (4,402,225) (3.944.409) 4.592.332 (249.111) (698.632) (100327) S 46.262.108 S 60332.757 (+ 28,111957 5 36.651.137 FUND BALANCES Fiscal Year Ended June 30, 2007 O All Olhm Governmental Funds 4].16°io ■General Fund 57.744" Note: (1) Balance as restated, see Notes to Basic Financial Statements #16B. Source: City of Santa Clarks, Administrative Services Department - Finance Division 04 - FISCAL YEAR 02-03 01-02 00-01 99.00 98-99 97-98 $ 1034,615 $ 21.368.003 $ 16.330.098 $ 13.412,456 $ 10,014,361 $ 5.448-591 12.927.211 3.168.903 12.209.902 11.948,231 12,033.130 12.669.207 S 26.96L826 S 24.536.906 S 28,540,000 $ 25.360,687 $ 22.047.491 $ 18.117.798 $ 9,203,674 $ 10,852,416 $ 8,426,033 $ 18,574.159 $ 10,850,020 $ 7,489,110 30,014,266 34,078558 30.758,147 22.571.066 28,197598 21,757.719 (4,082,126) (4,066,749) 0 0 0 0 (196.889) 437.307 228.777 474.522 54.467 595.885 $ 34.938,925 5 41 301,532 S 39311957 S 41,019.747 S 39.1112.085 S 29.842-714 FUND BALANCES ALL OTHER GOVERNMENTAL FUNDS Last Ten Fiscal Years 70 550.33 60 50 541.62 $41.30 0 00 $39.10 536.65 546.26 S39. 1 3 30 534.93 $29.04 20 $29.13 10 0 97-98 9&99 99-00 0&01 01-02 02-03 03-00 0405 OS 06 06-07 Fiscal Year 115 - CITY OF SANTA CLARITA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years Ended June 30, 2007 (modified accrual basis of accounting) Revenues: Taxes Licenses and permits Developer fees Investment income Revenue from other agencies Fines and forfeitures Service charges Other revenues Total Revenues Expenditures: Current: General government Public safety Public works Parks and recreation Community development Capital outlays Debt service: Principal Interest, professional services, and fiscal charges Total Expenditures Excess of Revenues over (under) Expenditures Other Financing Sources (Uses) Revenue bonds issued/issuance premium Proceeds of long-term debt Escrow payment, costs of bonds issuance- and others Transfers -in Transfers -out Total Other Financing Sources (Uses) Net change in fund balances Fund balances (deficit) - Beginning of Year, as restated Fund balances (deficit) - End of Year Debt service as percentage of non capital expenditures FISCAL YEAR 2007 2006 2005 2004 $ 70,576.755 S 66.164,485 $53,763,779 $ 43,940,454 4,203,933 6.907.826 5,127,705 5,303,309 6.747,767 28,028.933 11,963.054 7,570,352 7,926,763 2,881,133 3,148,731 919,858 37.300,213 38,526,364 33,089,887 36,119,851 1918,954 1,904,273 1.803,686 1,051.371 13.463,673 13.081,649 13,339,462 12,580.933 4,356,961 12.651,674 2.408.463 3367,800 146.495.019 170.146.337 124.644.767 111,253.928 23,41 1.750 24,668,150 11.217,783 12.436.244 14.347.833 13.658,723 12,429,192 12,102441 19,511,097 6.802.081 8.901.359 8.692,908 18.943.146 17.376,609 15.964.949 14,226,090 9.051.652 17.164,505 22.531,795 21,039.274 57,926.955 49,435.744 35.096,683 19.251,357 2,374.870 1.367.359 2.060.319 4.332.159 2.298.974 2,878.536 1.570,581 1,760,134 147.866.277 133.351,707 109,772.661 93, 840.607 (1,371,258) 36,794,630 14.872,106 17.413,321 13,894.752 (1) - - - 17,700.000 - - - (17,225,304) - 2,590,955 27,468089 7.865,612 8,157,999 8,278.692 (29.881.193) (19A09.716) (20.282.188) (18.380.627) 11.481,648 (11.069.408) (12.124,189) (7.510,980) 10.110.390 25.725.222 2.747.917 9.902.341 99.351.576 (3) 74.5.51.009 71.803,092 61.900.751 5109.461.966 $100,276.231 574.551,009 S 71.803.092 5.20'h 5.06% 4.86%5 8.IT4 NOTE: (I) On January 16, 2007 the Santa Clarita Public Financing Authority issued S 13,785,000 Lease Revenue Bonds, Series 2007, for the acquisition of right-of-way. (2) Balance as restated, see Notes to Basic Financial Statements N 16. 136- MCAL YEAR 2003 2002 2001 2000 1999 1998 $39,813,089 $35.589,227 $34,053.282 $ 30.320,166 S 28,072551 525.458,489 3,512.857 3,407.091 2.759.637 3,341,660 2585,580 2.221.696 7,857.087 17,016.274 16,295503 7,916,830 3.615.156 3.994532 3,788,121 4.165,144 6.303,050 3,439,177 3.233,903 2.496,976 31,157.062 30.209,371 30,133.734 25,047.788 28.861,626 33342,420 1.041,945 1.008,466 972.443 1,019,370 1.197.794 486,654 18,095,424 17,089,401 15,489.302 15.219.587 17.836,700 12.341,056 2309.846 1.948.808 1.298.924 859.511 1.326.809 613.849 107.575,431 110.433.782 107,305.875 87,164,089 86,730.119 80.955.672 9,282,089 9,778,478 8.768.573 8,156,391 11,411,885 10529,658 12,124,427 11,264.808 11.386.290 10,386.922 11.178500 10,853.375 8,823,785 8.112,935 7,450.660 6.785.186 3,075.346 2.062.058 11546,673 10,492,037 9,052,687 8.769-545 9.103,012 10.600,566 23,900.882 16.450.228 13566.023 10,978,733 8.458,402 6596,733 33,179.578 46,917,311 43.364,800 27,909,694 19,584,815 19.208,993 1,496.087 533,279 176.061 29.161 26,755 202,227 1.958.388 1598.807 1.547.7.51 1.501.752 1.434.523 3.283.328 102.311.909 105,147.883 95.312.845 74-517,384 64.273,238 63.336,938 5.263,522 5,285,899 11.993.030 12,646,705 22.456,881 17.618,734 1,558,097 4,400,000 - - - 19.670,000 1558.097 4.400.000 - - - 19,670,000 - - - 487.227 (18557.562) 7,662,207 9550,514 2,989.329 3,927,765 3,740,077 3,246,218 (18,421513) (18.120,682) (11391.270) (16.392.428) (13.495,185) (10,375.163) (7.643.112) 229,832 (8.601.944 (12.464.663) (9.267,881) 13.653.493 (I.179 590) 5.515,711 3391.089 182.042 13,189.000 11 '72."7 65.838,438 64.722.707 61.331.618 61.149-576 47.960,576 36,35&349 $61.900.751 $65.838.438 $64.722,707 $ 61.331.618 $ 61.149576 $47.960512 S.IXP;, 3.66'% 3.32% 3.289E 3.27% 7.90% Source: City of Santa Clarita, Administmdve Services Department - Finance Division 137- 2001-02 2,759,375 327,081 187,242 3,273,698 4,337,350,843 6,540,398,513 95,719,580 (188,756,582) 10,784,712,354 2002-03 2,743,160 314,910 180,275 3,238,345 4,742,666,578 7,042,138,889 91,308,887 (183,110,538) CITY OF SANTA CLARITA 2003-04 5,301,621 43,969,100 205,876 49,476,597 5,312,201,652 7,688,524,882 79,538,536 (187,628,805) 12,892,636,265 2004-05 5,420,327 11,091,534 256,894 ASSESSED VALUATION... and ACTUAL VALUE OF TAXABLE PROPERTY 8,136,867,187 73,449,031 (194,782,110) 14,083,967,360 2005-06 2,098,608 10,833,957 239,620 13,172,185 7,440,682,741 8,947,087,936 89,939,825 (211,472,197) Last Ten Fiscal Years 2006-07 2,156981 8,312,011 197,013 10,666,005 8,556,960,792 9,766,997,767 104,509,489 (253946,364) 18,174,521,684 STATE ASSESSED LOCALLY ASSESSED • SECURED -UTILITY SECURED • Fiscal IMPROVE- PERSONAL IMPROVE- PERSONAL OTHER Year LAND MENTS PROPERTY TOTAL LAND MENTS PROPERTY EXEMPTIONS TOTAL . • 1997-98 $ 1,819,284 S 472,998 S 222,034 $ 2,514,316 $ 2,933,257,798 S 4,707,571 229 8 93,420,724 $ (159,924,883) $ 7,574,324,868 1998-99 1,932,727 558,165 270,790 2,761,682 3,293,436,525 5,288454,498 81,080,379 (119,145,230) 8,543,826,172 1999-00 1,733,140 323,181 185,010 2,241,331 3,549,417,695 5,661,843,960 91,953,388 (121,319,796) 9,181,895,247 • 2000-01 2,961,227 298,757 171,028 3,431,012 3,945,586,755 6,169,813,280 91,784,122 (155,105,480) 10,052,078,677 _ 2001-02 2,759,375 327,081 187,242 3,273,698 4,337,350,843 6,540,398,513 95,719,580 (188,756,582) 10,784,712,354 2002-03 2,743,160 314,910 180,275 3,238,345 4,742,666,578 7,042,138,889 91,308,887 (183,110,538) 11,693,003,816 2003-04 5,301,621 43,969,100 205,876 49,476,597 5,312,201,652 7,688,524,882 79,538,536 (187,628,805) 12,892,636,265 2004-05 5,420,327 11,091,534 256,894 16,768,755 6,068,433,252 8,136,867,187 73,449,031 (194,782,110) 14,083,967,360 2005-06 2,098,608 10,833,957 239,620 13,172,185 7,440,682,741 8,947,087,936 89,939,825 (211,472,197) 16,266,238,305 2006-07 2,156981 8,312,011 197,013 10,666,005 8,556,960,792 9,766,997,767 104,509,489 (253946,364) 18,174,521,684 ASSESSED VALUATION by CATEGORIES (foul Secured and Unsecured) Fiscal Year Ended June 30, 2007 (1) Assessed valuation is based on 100% of full value in accordance with Section 135 of the California Revenue and Taxation Code. Source: HdL Coren & Cone, County of Los Angeles, Auditor -Controller Office, Combined Tax Rolls 2006/07 138- 20.000 16.000 16,000 14,000 2,000 10,000 6.000 6,000 4,000 2000, 0 TOTAL ASSESSED VALUATION (Taxable Values) Last Ten Fiscal fears $7.98 N -M 116-00 0001 01"02 0243 03-04 04-06 06-06 0647 Flecel Year (2) Direct Rate includes Redevelopment Agency areas. -139- LOCALLY ASSESSED TOTALS HOME. UNSECURED BEFORE 7:AXABIJ. % TOTAL OWNER IMPROVE- PERSONAL OTHER OTHER ASSESSED [NCR. DIRECT PROPERTY MENTS PROPERTY EXEMPTIONS TOTAL EXEMPTIONS VALUE (DECR.) RATE (2) TAX RELIEF $ 213,637,868 S 241,026,869 $ (129,200) $ 454,535,537 S 8,191,428,804 $ 8,031,374,721 1.59% 0.05701% $ 184,451,569 261,802,791 288,487,295 (1,355,411) 548,934,675 9,216,023,170 9,095,522,529 13.25%. 0.03903% 201,615,429 282,745,700 319,794,318 - 602,540,018 9,907,996,392 9,786,676,596 7.60% 0.05794% 199,793,885 240,385,121 369,315,436 (87,800) 609,612,757 10,820,315,726 10,665,122,446 8.98% 0.05824% 199,566,151 273,022,487 407,191,186 (639,000) 679,574,673 11,656,956,307 11,467,560,725 7.52% 0.06100% 199,815,494 281,002,279 422,950,745 (95,000) 703,858,024 12,583,305,723 12,400,100,185 8.13%a 0.06192% 199,128,847 254,085,173 411,805,661 (1,135,000) 664,755,834 13,795,632,501 13,606,868,696 9.73% 0.06279sA 199,643,032 242,047,848 399,549,912 (76,000) 641,521,760 14,937,115,985 14,742,257,875 8.34% 0.06432% 205,852,669 216,098,046 453,406,084 (9,513,134) 659,990,996 17,160,386,817 16,939,401,486 14.90% 0.06909%. 206,658,586 255,417,833 482,574,856 (7,299,585) 7301693,104 19,177,126.742 18,915,880,793 11.67% 0.08039% 206,464,204 20.000 16.000 16,000 14,000 2,000 10,000 6.000 6,000 4,000 2000, 0 TOTAL ASSESSED VALUATION (Taxable Values) Last Ten Fiscal fears $7.98 N -M 116-00 0001 01"02 0243 03-04 04-06 06-06 0647 Flecel Year (2) Direct Rate includes Redevelopment Agency areas. -139- CITY OF SANTA CLARITA REDEVELOPMENT AGENCY (') ASSESSED VALUATION ("and ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years STATE ASSESSED SECURED (UTILITY) IIS( :AL IMPROVE- PERSONAL YEAR LAND MENTS PROPERT)" TOTAI 1997-98 (1) NOT ACTIVE LOCALLY ASSESSED SECURED IMPROVE- PERSONAL OTHER LAND MENTS PROPERTY EXEMPTIONS TOTAL NOT ACTIVE 1998-99 $68,944 S 51,759 S 29,632 S 150,335 $115,222,237 S 127,657,072 $4,474,912 S (4,120,954) $243,233,267 1999-00 47,103 35,364 20,244 102,711 119,628,829 131,911,448 3,855,740 (1,609,625) 253,786,392 2000-01 43,544 32,692 18,715 94,951 129,489,221 136,444,009 4,069,074 (1,624,719) 268,377,585 2001-02 47,672 35,789 20,489 103,950 142,657,899 145,596,895 3,810,222 (2,524,574) 289,540,442 2002-03 45,897 34,458 19,726 100,081 149,325,297 149,506,716 5,028,543 (2,575,054) 301,285,502 2003-04 52,416 39,351 22,527 114,294 161,106,889 159,691,365 3,806,986 (4,148,124) 320,457,116 2004-05 65,404 49,101 28,109 142,614 180,810,905 166,935,237 2,314,234 (5,083,826) 344,976,550 2005-06 61,007 45,801 26,219 133,027 273,260,130 176,564,344 2,435,378 (4,859,824) 447,400,028 2006-07 50,158 37,657 21,558 109,373 295,792,467 185,299,271 2,545,972 (5,085,710) 478,552,000 SECURED ASSESSED VALUATION (before other exemptions) Fiscal Year 2006-07 _ 0.53% IMPROVEMENTS 38.31% (1) -The Redevelopment Agency of the City of Santa Clarita was established on November 28, 1989, pursuant to the State of California Health and Safety Code, Section 33000. However, the Agency was not active until fiscal year 1998-99 and the Base Year was calculated in fiscal year 1996-97, which included the Homeowners Tax Relief of that year. (2) -Assessed valuation is based on 100% of full value in accordance with Section 135 of the California Revenue and Taxation Code. Source: County of Los Angeles, Auditor-Controller/Tax Division 140- LOCALLY ASSESSED UNSECURED IMPROVE- PERSONAL OTHER MENTS PROPERTY EXEMPTIONS TOT:AI. NOT ACTIVE TOTALS S 12,239,116 S (3,000) HOME- TOIAIS TAXABLE OWNER BEFORE ASSESSED VALUE PROPERTY BASE) FAR B,1SF, YEAR VALUE GROWTH TAX RELIEF NOT ACTIVE $4,972,866 S 12,239,116 S (3,000) S 17,208,982 $260,592,584 $(266,351,517) $ (5,758,933) S - S 1,870,400 4,143,500 14,484,623 - 18,628,123 272,517,226 (266,351,517) 6,165,709 11,924,642 1,860,600 3,796,012 16,424,155 (10,000) 20,210,167 288,682,703 (266,351,517) 22,331,186 16,165,477 1,895,600 4,515,557 14,923,310 (15,000) 19,423,867 309,068,259 (266,351,517) 42,716,742 20,385,556 1,918,000 5,983,748 19,053,059 (30,000) 25,006,807 326,392,390 (266,351,517) 60,040,873 17,324,131 1,890,000 6,272,382 19,035,089 (33,000) 25,274,471 345,845,881 (266,351,517) 79,494,364 19,453,491 1,923,600 6,326,173 22,151,970 (33,000) 28,445,143 373,564,307 (266,351,517) 107,212,790 27,718,426 2,161,147 5,901,959 23,034,914 (91,000) 28,845,873 476,378,928 (266,351,517) 210,027,411 102,814,621 2,053,943 26,593,269 25,569,962 (16,300) 52,146,931 530,808,304 (26051,517) 264,456,787 54,429,376 1,971567 UNSECURED ASSESSED VALUATION (before other Exemption) Fiscal Year 2006-07 141 - CITY OF SANTA CLARITA ASSESSED VALUE - TAXABLE PROPERTY Last Ten Fiscal Years CATEGORY 06-07 FISCAL YEAR 05-06 04-05 03-04 Residential $ 13,962,275,972 $ 12,569,640,999 $ 11,097,987,787 $ 10,221,634,945 Commercial 1,836,340,797 1,588,835,810 1,258,389,787 1,132,585,601 Industrial 1,148,469,489 980,395,598 833,455,573 817,508,597 Irrigated 29,374,674 28,272,540 4,351,050 3,962,743 Dry farm 49,088,244 48,512,253 45,145,241 43,542,990 Recreational 90,435,287 94,916,719 84,727,948 94,694,674 Institutional 94,705,673 91,312,643 80,606,769 113,908,577 Government 194,922 190,000 - 493,814 Miscellaneous 795,449 779,859 764,577 667,091 Vacantland 656,660,955 554,551,820 440,215,418 280,744,871 SBE Nommitary 10,666,005 13,172,185 16,768,755 49,476,597 Possessory Int. 222,654,730 205,526,182 201,323,600 153,302,360 Unsecured 730,697,804 659,990,996 641,526,760 664,760,834 Unknown 83,525,492 103,303,882 36,994,610 29,585,002 TOTALS: $ 18.915.885,493 $ 16,939,401,486 $ 14,742,257,875 $ 13,606,868,696 14,000 12,000 10,000 18,000 s 6,00o 4,000 2,000 0 ASSESSED VALUE -TAXABLE PROPERTY Last Ten Fiscal Years 97.98 98.99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 Fiscal Year Source: HdL Coren & Cone, Los Angeles County Assessor 2006/07 Combined Tax Rolls. 142- 97-98 42- l Residential !Commercial llnduetdel l Vacantland 3AII others 98-99 $ 9,373,657,630 $ 8,630,320,972 $ 7,948,529,358 $ 7,306,570,760 $ 6,927,181,010 $ 5,976,914,437 1,043,922,879 955,529,671 879,942,873 797,649,082 742,166,572 707,935,635 735,063,812 691214,978 660,288,367 597,514,771 466,678,700 480,527,856 3,933,315 5,798,245 3,871,007 5,055,001 4.342,301 4,983,960 29,655,961 34,074,195 38,041,655 47,333,049 32,069,164 35,437,462 60,212,317 46,322,531 42,015,479 41,371,556 30,749,352 30,851,136 102,142,853 82,619,342 96,186,317 105,635,607 83,480,361 60,331,318 484,173 474,673 465,377 456,265 698,422 964,979 7,591,441 2,697,123 79823,618 7,687,998 7,774,167 7,221,888 212,233,528 228,265,224 260,536,412 179,422,468 161,050,965 175,763,513 3,238,345 3,273,698 3,431,012 2,241,331 2,241,331 2,506,816 109,259,714 75,116,757 73,906,800 77,224,408 72,702,286 78,372,927 703,858,024 679,574,673 609,612,757 602,540,018 548,934,675 454,535,537 14,846,193 30.278.643 40,471,414 15,974,282 15,453,223 15,027,257 $ 12,400,100,185 $ 11.467,560,725 $ 10,665,122,446 $ 9,786,676,596 $ 9,095,522,529 $ 8,031,374,721 Notes: In 1978 the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of I % based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum of 2%). With few exceptions, property is only reassessed as a result of new construction activity or at the time it is sold to a new owner. At that point, the property is reassessed based upon the added value of the construction or at the purchase price (market value) or economic value of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitation just mentioned. -143- CITY OF SANTA CLARITA ASSESSED VALUE - USE CATEGORY SUMMARY Fiscal Year 2006-07 TOTALS: 50,061 $ 19,177,131,442 100.00% $ 261,245,949 S 18,915,885,493 100.000% ASSESSED VALUE by USE CATEGORY Fiscal Year 2006-07 NET TAXABLE VALUE by USE CATEGORY Fiscal Year 2006-07 Source: HdL Coren & Cone, Los Angeles County Assessor 2006/07 Combined Tax Rolls. 144- NET 44- NET ASSESSED TAXABLE CATEGORY PARCELS VALUE PERCENT EXEMPTIONS VALUE PERCENT Residential 45,534 S 14,005,282,490 73.03% 5 43,006,518 S 13,962,275,972 73.812% Commercial 770 1,841,752,417 9.60% 5,411.620 1,836,340,797 9.708% Industrial 560 1,149,523,793 5.99% 1,054,304 1,148,469,489 6.071% Irrigated 10 29,374,674 0.15% - 29,374,674 0.155% Dry farm 131 49,088,244 0.26% - 49,088,244 0.260% Recreational 52 97,087,937 0.51% 6,652,650 90,435,287 0.478% Institutional 88 291,828,510 1.52% 197,122,837 94,705,673 0.501% Government 3 194,922 0.001% - 194,922 0.001% Miscellaneous 13 795,449 0.004% - 795,449 0.004% Vacantland 2,874 657,359,390 3.43% 698,435 656,660,955 3.471% SBE Nonunitary (169) 10,666,005 0.06% - 10,666,005 0.056% Possessory Int. (2,147) 222,654,730 1.16% - 222,654,730 1.177% Unsecured (6,564) 737,997,389 3.85% 7,299,585 730,697,804 3.863% Unknown 26 83,525,492 0.44% - 83,525,492 0.442% TOTALS: 50,061 $ 19,177,131,442 100.00% $ 261,245,949 S 18,915,885,493 100.000% ASSESSED VALUE by USE CATEGORY Fiscal Year 2006-07 NET TAXABLE VALUE by USE CATEGORY Fiscal Year 2006-07 Source: HdL Coren & Cone, Los Angeles County Assessor 2006/07 Combined Tax Rolls. 144- NET 44- CITY OF SANTA CLARITA DIRECT and OVERLAPPING PROPERTY TAX RATES (rate per $100 of assessed value) Last Ten Fiscal Years CASTAIC LOS LAKE COUNTY COUNTY Fiscal ANGELES WATER SCHOOL SANITATION FLOOD Year GENERAL COUNTY AGENCY DISTRICTS DISTRICTS CONTROL TOTAL 1997-98 1.000000 0.001584 0.060900 0.023831 0.000975 0.002147 1.089437 1998-99 1.000000 0.001564 0.060786 0.028022 0.003126 0.003544 1.097042 1999-00 1.000000 0.001314 0.060614 0.026663 0.001015 0.001519 1.091125 2000-01 1.000000 0.001314 0.060614 0.000298 0.000498 0.001552 1.064276 2001-02 1.000000 0.001128 0.123017 0.041235 0.000561 0.001073 1.167014 2002-03 1.000000 0.001033 0.106227 0.069731 0.000487 0.000881 1.178359 2003-04 1.000000 0.000992 0.066000 0.079461 0.000328 0.000462 1.147243 2004-05 1.000000 0.000923 0.056169 0.064493 0.000321 0.000245 1.122151 2005-06 1.000000 0.000795 0.049327 0.064422 0.000000 0.000049 1.114593 2006-07 1.000000 0.000660 0.040000 0.060360 0.000000 0.000050 1.101070 DIRECT and OVERLAPPING PROPERTY TAX RATES Fiscal Year 2006-07 1.200000 1.000000 GENERAL 0.800000 0.600000 0.400000 0.200000 0.000000 LA COUNTY CASTAIC LAKE SCHOOL WATER AGENCY DISTRICTS SANITATION DISTRICTS FLOOD CONTROL Source: HdL Coren & Cone, Los Angeles County Assessor 2006-07 Tax Rate Table 145- CITY OF SANTA CLARITA DIRECT and OVERLAPPING PROPERTY TAX RATES (rate per $100 of assessed value) One Year Detail of Rates producing Revenue for City and Associated Redevelopment Agencies City General Fund Direct Rales RDA Incremental Rate Tom] Direct Rata Castaic Lake Water Agency (302.01) City Share representative and based upon the direct Children's Institutional Tuition Fund (400.21) Prop. 13 and overlapping rates for the largest Consolidated Fire Protection District of LA Co. (007.30) of 1% General Fund tax rates area (TRA) by net 0.00032 plus applicable 0.02364 Roll Year per Prop. 13 Debt Rates Total City Rates voter approved debt 0.00996 overlapping rates are applied only to the 0.14051 incremental property values. In 1978. Total Prop. 13 Rale: 1.00000 voter approved bonds. 200607 0.079870 0.000000 0.079870 1.040729c 0.080399r • • Agency 200607 • City of Santa Clarita Tax District 1 (249.01) 0.05735 Notes: General fund tax rates are Castaic Lake Water Agency (302.01) 0.05779 representative and based upon the direct Children's Institutional Tuition Fund (400.21) 0.00283 and overlapping rates for the largest Consolidated Fire Protection District of LA Co. (007.30) 0.16341 General Fund tax rates area (TRA) by net County School Service Fund Newhall (581.06) County School Service Han William S. Han (757.06) County School Services (400.15) Development Center Handicapped Minor Newhall (581.07) Educational Augmentation Fund Impound (400.01) Educational Revenue Augmentation Fund(ERAF) (400.00) Greater LA Co. Vector Control (061.80) LA County Library (003.01) LA County Fire - Ffw (007.311 LA County Flood Control Improvement District (030.10) LA County Flood Control Maintenance (030.70) LA County General (001.05) 0.00801 taxable value. Total Direct Rate is the 0.00034 weighted average of all individual direct 0.00143 rates applied by the government preparing 0.00088 the statistical section information. 0.13377 The percentages presented in the columns 0.08255 above do not sum across rows. RDA rate 0.00032 is based on the largest RDA tax rate area 0.02364 (TRA) and includes only rate(s) from 0.00323 indebtedness adopted prior to 1989 per 0.00176 California State statute. RDA direct and 0.00996 overlapping rates are applied only to the 0.14051 incremental property values. In 1978. LA County Accum Cap Outlay (001.20) 0.00009 California voters passed Proposition 13 Newhall Scholl District (581.01) 0.08:W9 which set the property tax at a 1.00% fixed Santa Clarita Community College (814.04) 0.03744 amount. This 1.00% is shared by all the Santa Clarim Street Light Maintenance #2 (249.32) 0.02253 taxing agencies for which the subject Santa Clarita Valley Sanitation Dist. La Co. 0.02503 property resides within. In addition to Valencia Areawide Landscape TI A S.C. 0.01924 1.00% fixed amount, property owners are William S. Han Elementary School Fund (757.07) 0.04289 charged taxes as a percentage of assessed William S. Hart Union High !757.02) 0.08151 property values for the payment of any Total Prop. 13 Rale: 1.00000 voter approved bonds. Castaic Lake Water Agency (302.01) 0.04000 Detention Facilities 1987 Debt Services (001.53) 0.00066 William S. Hart Un.Hsd Debt Services (757.51) 0.00579 LA Co. Flood Control Storm Drainage Debt Services#4 (030.60) 0.00005 Newhall Elementary School District Debt Services 1999 Ser. B (581.53) 0.01505 Newhall Elementary School District Debt Services 1999 Ser. A (581.52) 0.01168 Santa Clarita Community College Debt Services 2001 Ser. 2005 (814.50) 0.00571 Santa Clarita Community College Debt Services 2005 Refunding Bonds (814.53) 0.00336 Santa Clarita Community College Debt Services 2001 Ser. 2003 (814.52) 0.00301 Santa Clarita Community College Debt Services 2001 Ser. 2002 (814.51) 0.00136 William S. Han Unified Debt Services (757.52) 0.01440 Total Tax Rate 0.10107 Source: HdL Coren & Cone. Los Angeles County Assessor 2006/07 Tax Rate Table 146- CITY OF SANTA CLARITA PRINCIPAL PROPERTY TAXPAYERS Last Two Fiscal Years Ended June 30, 2007 FISCAL YEAR 2066-07 FISCAL YEAR 2005-06 PERCENT of PERCENT of Number TOTAL TOTAL CITY Number TOTAL TOTAL CITY of ASSESSED ASSESSED of ASSESSED ASSESSED OWNER/TAXPAYER Parcels VALUE VALUE Parcels VALUE VALUE Valencia Town Center Newhall Land and Farming Company Prado Town Center West LLC Casden Santa Clarita LLC Sam's Real Estate Business Trust/WalMan Princess Cruise Inc. EQR Valencia LLC EQR Town Center LLC Henry Mayo Newhall Memorial Lexington Lion Clarita Limited Partnership CPF Promenade LLC EQR Essex Place Financing Limited Total All Others Total Assessed Valuation 30 $ 272.336,100 1.42 % 30 S 227.588,430 1.33 % 140 105,075,200 0.55 142 124.754.967 0.73 8 79,879,058 0.42 8 48,696,944 0.28 25 76,499,9.59 0.40 25 74,999,960 0.44 5 63.157,630 0.33 - - - 4 59,355,111 0.31 7 60.186,928 0.35 217 55,970,730 0.29 217 54,881,437 0.32 3 51.689,867 0.27 3 50,687.860 0.30 1 .50,298,045 0.26 - - - - - - 6 48,643,800 0.28 - - - 16 63,386.867 0.37 - - - 2 48.610.900 0.28 814.261.700 4.25 % 802,438,093 4.68 % 18.362.869.742 95.75 16.357.948.724 95.32 S 19.177.131.442 100.001/1 S 17.160386,817 100.00% NOTE: The amounts shown above include assessed value data for both the City and the Redevelopment Agency. Prior years' information are not available at this time. SOURCE: HdL Coren & Cone, LA County Assessor 2006/07 Combined Tax Rolls 147- CITY OF SANTA CLARITA PROPERTY TAX LEVIES, TAX COLLECTIONS, AND DELINQUENCY Last Ten Fiscal Years FISCAL TAXES DELINQUENT PERCENT NIR LEVIED COLLECTIONS AMOUNT DELINQUENCY 1997-98 $ 4,024.490 $ 3X900.198 $ 124.292 3.09% 1998-99 4,695,918 4,560,128 135,790 2.89% 1999-00 6,652,430 6,456.536 195,894 2.94% 2000-01 7,188,685 6.993,761 194.924 2.71%r 2001.02 7,741.409 7.542204 199.205 2.579E 2002-03 8.494.397 8.274,896 219,501 2.58% 2003.04 9,271,388 9.066.213 205,175 2.21% 2004-05 10,118,983 9,878,450 240.533 2.389E 2005-06 11.593,852 11.292.337 301.515 2.60% 2006-07 12.804.630 12.317,614 487.016 3.80% TAX COLLECTIONS & DELINQUENCY - LAST TEN FISCAL YEARS 14.000.000 [3$12,317,6148$12,8W.630 12000.000 10,000.000 6.000,000 6,000.000 ,000.00 2 0 _ ■ 2,000,000 LL[1w0 199796 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 FISCALYEAR ■LEVIES OCOLLECTIONS ■ DELINQUENT AMOUNT NOTE: Article X111 -A of the Constitution of the State of California adopted by the electorate in June 1978, precludes the City from a local property tax levy. All general-purpose property taxes are levied by the County and allocated to other governmental entities on a predetermined formula. Source: County of LA. Department of Auditor -Controller - 149 - CITY OF SANTA CLARITA RATIO OF OUTSTANDING DEBT by TYPE Last Ten Fiscal Years GOVERNMENTAL ACTIVITIES FISCAL CERTIFICATES CAPITAL YEAR OF PARTICIPATION (I) LOANS NOTES BONDS (2) LEASES CLAIMS TOTAL 1997-98 S 19.670.000 $ - $ - $ 2,966,233 $ - $71.327 $ - $ 22,707.560 1998-99 19.670,000 - - 3,059.483 - 464,572 - 23,194.055 1999-00 19,670,000 - 2,000,000 3,019.844 • 394,878 - 25,084,722 2000-01 19,670.000 3,200.000 1.870,000 2.859,195 - 322.347 27,921.542 2001-02 19,475,000 3,200,000 2,940.000 2,665,846 - 262,056 - 28,542,902 2002-03 18,975,000 2,665,000 4.213,913 2,507371 - 183,909 - 28,545,193 2003-04 18,335,000 2,040,000 6,333,828 - - 103,275 813,432 27,625,535 2004-05 17.640,000 1.390,000 5.698.192 - - 23,798 1.148,067 25,900,057 2005-06 17.700,000 710,000 5,029,113 - - 12.211 1.010.299 24.461.623 2006.07 16.760,000 - 4.328207 - 13.785.000 36.401 10(1,000 35.009.608 NOTES: (1) In 1991 the Santa Clarita Public Financing Authority issued $22,940,000 aggregate principal amount of Local Agency (Redevelopment) Revenue Bonds Series 1991. Simultaneously with the receipt of the Bond proceeds, the Authority acquired $22.940.000 Certificates of Participation issued by the Santa Clarita Redevelopment Agency, of which the proceeds were transferred to the City to finance and/or refinance the design, acquisition, improvement or construction of land. the City Hall Building and certain road improvements, and to refinance certain debt. The Agency leased back the facilities to the City for lease payments to be made by the City to Financing Authority equal to the principal and interest due on the principal and interest due on the revenue bonds. At this point of time. the RDA was not active. -The 1991 Series certificates were later refunded in fiscal year 1997-98 by the Certificates of Participation Series 1997 of $19,670,000. As a result, the 1991 Series certificates are considered to he defeased and the liability for those certificates were removed from the general long-term debt. -On July I, 2005, the Santa Clarita Public Financing Authority issued $17.700.000 in Certificates of advance refund $17,640.000 of outstanding 1997 Series certificates. As a result, the 1997 Series were considered defeased and the liability for those certificates were reproved from the long-term liability. -In November 2001, the Authority issued $3.200.000 in Certificates of Participation for the acquisition of parkland. (2) On January 16. 2007, the Santa Clarita Public Financing Authority issued $13.785,000 Lease Revenue Bonds, Series 2007 for the acquisition of right-of-way. SOURCES: City of Santa Clarita. Administrative Services Department - Finance Division County of Los Angeles Auditor -Controller. _150- BUSINESS -TYPE ACTIVITIES MASTER LEASE LEASE PERCENTAGE of TOTAL TAXABLE DEBT PRIMARY ASSESSED PER OBLIGATIONS PAYABLE TOTAL GOVERNMENT VALUE CAPITA S 799,115 $ 4,232.362 S 5.031,477 $ 27,739,037 0.3517 193 550.092 6,062.682 6.612,774 29.806.829 0.33% 203 284.106 5,378,351 5,662.457 30,747,179 0.31% 203 - 4,656,704 4.656,704 32.578,246 0.31% 210 - 3,897,133 3,897,133 32,440,035 0.2817 205 - 3,088.996 3,088,996 31,634,189 0.26% 194 - 2.236.624 2,236.624 29,862,159 0.2271 181 - 1,919.312 1,919,312 27,819,369 0.1917 167 - 1,586.319 1.586.319 26.047.942 0.15% 156 - 1.236.869 1.236.869 36.246.477 0.19% 20i OUTSTANDING DEBT per CAPITA Last Ten Fiscal Years 250 $205 $2n5 $194 200$210 $203 $203 $193 $181 $15 150 $167 100 50 0 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 Fk. i ) .. 151 CITY OF SANTA CLARITA RATIO OF GENERAL BONDED DEBT OUTSTANDING Last Ten Fiscal Years PERCENTAGE OUTSTANDING GENERAL BONDED DEBT of TAXABLE DEBT FISCAL REVENUE CERTIFICATES of ASSESSED PER YEAR POPULATION (1) BONDS PARTICIPATION TOTAL VALUE CAPITA 1997.98 143,836 $ - S 19.670,000 S 19,670.(K)O 0.248, S 137 1998-99 146,979 - 19,670,000 19,670.000 0.22% 134 1999.00 151,260 - 19,670,000 19,670,000 0.20% 130 2000-01 155,124 - 22,870,000 22,870,000 0.21% 147 2001-02 158,289 - 22,675,000 22,675,000 0.20% 143 2002-03 162,875 - 21,640,000 21,640,000 0.17% 133 2003-04 164,916 - 20,375,000 20,37.5,000 0.15% 124 2004.05 166.958 - 19,030,000 19.030,000 0.13%: 114 2005.06 167,412 - 18,410,000 18,410,0(X) 0.11 %r 110 200607 177,158 13,893.228 16.760.000 30,653,228 0.16(7 173 GENERAL BONDED DEBT OUTSTANDING per CAPITA Last Ten Fiscal Years 200 150 1110 $110 50 0 97-98 98-99 99-00 00-01 01.02 02-03 03-04 04-05 05-06 06-07 Fiscal Year SOURCE: (1) Slate of California, Finance Department - 152 - CITY OF SANTA CLARITA DIRECT AND OVERLAPPING BONDED DEBT June 30, 2007 2006-07 Assessed Valuation: $18.651.428.706 (Net of Redevelopment Agency Incremental Value of 5264.456.787) 2006-07 Population: 177,158 Percent City's Share Total Debt Applicable of Debt 06/30/2007 To City 06/30/2007 OVERLAPPING TAX AND OVERLAPPING BONDED DEBT: Los Angeles County Flood Control District $ 113,560,000 2.328 % $ 2,643,677 Newhall County Water District - I.D. No. 2 (Sewer and Water issues) 285,000 59.055-62.666 173,543 Santa Clarita Community College District 154,398,152 59.558 91,956,451 William S. Han Union High School District 148,161,106 59.548 88,226,975 William S. Han Union High School District - Community Facilities District No. 87-1 3,337,172 100.000 3,337,172 William S. Hart Union High School District - Community Facilities District No. 89-1 1,161,452 100.000 1,161,452 William S. Hart Union High School District - Community Facilities District No. 90-1 780,000 70.348 548,714 Los Angeles County Community College and Unified School Districts 7,510,080,000 0.0001 7,510 Castaic Union School District 11,929,067 21.840 2,605,308 Newhall Scbool District 33,475,000 58.083 19,443,284 Saugus Union School District 91,923,679 69.242 63,649,794 Sulphur Springs Union School District 13,300,000 67.783 9,015,139 City of Santa Clarita Community Facilities District No. 2002-1 17,280,000 100.000 17,280,000 City of Santa Clarita 1915 Act Bonds 1,235,000 100.000 1,235,000 Los Angeles County Regional Park and Open Space Assessment District 304,235,000 2.299 6,994,363 Total Overlapping Tax and Assessment Debt 308,278,382 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Los Angeles County General Fund Obligations 1,084,851,959 2.299% 24,940,747 Los Angeles County Pension Obligations 546,849,147 2.299 12,572,062 Los Angeles County Superintendent of Schools - Certificates of Participation 19,817,270 2.299 455,599 Los Angeles County Sanitation District No. 32 Authority 39,372,693 61.647 24,272,084 Los Angeles County Sanitation District No. 23 Authority 4,379,088 0.202 8,846 Santa Clarita Community College District - Certificates of Participation 28,675,000 59.558 17,078,257 William S. Hart Union High School District - Certificates of Participation 19,025,000 59.548 11,329,007 Castaic Union School District - Certificates of Participation 22,398,600 21.840 4,891,854 Newhall School District - Certificates of Participation 4,951,400 58.083 2,875,922 Saugus Union School District - Certificates of Participation 1,230,000 69.242 851,677 Sulphur Springs Union School District - Certificates of Participation 34,365,000 67.783 23,293,628 Los Angeles Unified School District - Certificates of Participation 395,744,823 0.0001 396 City of Santa Clarita - Certificates of Participation 30,545,000 100.000 30,545,000 Total Direct and Overlapping General Fund Debt 153,115,079 COMBINED TOTAL DEBT S 461,393,461 OI 111 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and non -bonded capital lease obligations. Ratios to 2006-07 Assessed Valuation Per Capita Total Overlapping Tax and Assessment Debt ................................................. 1.63% $ 1,740.13 Combined Direct Debt (530,545,000)....................................................... 0.16% S 172.42 Combined Total Debt............................................................................ 2.47% $ 2,604.42 STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/2007: $0 Source: California Municipal Services 153- CITY OF SANTA CLARITA LEGAL DEBT MARGIN INFORMATION Last Ten Fiscal Years Assessed valuation Conversion percentage Adjusted assessed valuation Debt limit percentage Debt limit Total net debt applicable to limit: General obligation bonds Legal debt margin Total debt applicable to the limit as a percentage of debt limit FISCAL YEAR 06-07 05-06 04-05 03-04 $ 19,177,131,442 $ 17,160,386,817 $ 14,937,115,985 $ 13,795,632,501 25% 25% 4,794,282,861 4,290,096,704 3,734,278,996 3,448,908,125 15% 15% 15% 15% 719,142,429 643,514,506 560,141,849 517,336,219 S 719,142,429 S 643,514-506 S 560.141,849 S 517,336,219 0% 0% 0% Section 43605 of 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% market value. Effective with 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 current full valuation perspective to the 25% level that was in effect at the time the legal debt margin was enacted by the State of California for local governments located within the State. Source: City of Santa Clarita, Administrative Services Department - Finance Division -154- FISCAL YEAR 02-03 01-02 00-01 99.00 98-99 97-98 S 12,583,305,723 S 11,656,956,307 S 10,820,315,726 S 9,907,996,392 $ 9,216,023,170 S 8,191,428,804 25% 25% 25% 25% 25% 25% 3,145,826,431 2,914,239,077 2,705,078,932 2,476,999,098 2,304,005,793 2,047,857,201 15% 15% 15% 15% 15% 15% 471,873,965 437,135,862 405,761,840 371,549,865 345,600,869 307,178,580 S 471,873,965 S 437,135,862 S 405-761,840 S 371,549,865 S 345,600,869 S 307,178,580 0% 0% 0% 0% 0% 0% LEGAL DEBT MARGIN Last Ten Fiscal Years 97-98 98-99 99-00 00-01 01-02 02-03 03-M 04-05 05.06 06-07 FISCAL YEAR 155 - CITY OF SANTA CLARITA PLEDGED -REVENUE COVERAGE Last Ten Fiscal Veers NOTES: (1) Includes Other revenues, Transfers -in, and Capital contributions (2) Includes Transfersout and Other expenses Sources: City of Santa Clarita, Administrative Services Department - Finance Division -156- 7RANSH LESS NET Fiscal TRANSIT OPERATING AVAILABLE DEBT SERVICE Sear REVENUES (1) EXPENSES (2) REVENI'ES Principal Interest COVERAGE 1997-98 $ 10,817,708 S 9,015,434 $ 1,802,274 $ 1,118,140 $ 246,650 12.62% 1998-99 10,906,892 9,268,960 1,637,932 754,667 287,604 9.56% 1999-00 12,108,910 10,217,313 1,891,597 950,317 351,533 10.75% 2000-01 21,469,569 11,636,514 9,833,055 1,005,753 445,170 6.76% 2001-02 25,041,599 12,582,811 12,458,788 759,571 228,698 3.95% 2002-03 15,714,048 13,167,728 2,546,320 808,137 192,799 6.37% 2003-04 24,171,361 13,693,876 10,477,485 852,372 135,063 4.09% 2004-05 35,677,983 14,037,109 21,640,874 317,312 102,395 1.18% 2005-06 22,041,436 17,242,035 4,799,401 332,993 86,230 1.90% 2006-07 19,468,288 19,033,240 435,048 349,449 69,388 2.15% NOTES: (1) Includes Other revenues, Transfers -in, and Capital contributions (2) Includes Transfersout and Other expenses Sources: City of Santa Clarita, Administrative Services Department - Finance Division -156- CITY OF SANTA CLARITA DEMOGRAPHIC and ECONOMIC STATISTICS Last Ten Calendar Years 700 600 500 400 300 200 100 0 CITY OF SANTA CLARITA POPULATION -PERCENT CHANGE Last Ten Years .82% 0I 1998 1999 2001) 2001 2002 2003 2004 2005 2006 2007 YEAR Source: ( I) State of California. Finance Department (2) U.S. Department of Commerce, Bureau of Economic Analysis (BEA) Personal Income and Unemployment rates are for the regional area, Los Angeles. The City of Santa Clarita's related information is not available. (3) State of California, Department of Employment Development (EDD) (4) Annual data is not available; average figures for first 10 months of the calendar year were utilized. 157- AVERAGE AVERAGE PER CITY OF ANNUAL LOS ANGELES ANNUAL CAPITA SANTA CLARITA PERCENTAGE COUNTY PERCENTAGE PERSONAL UNEMPLOYMENT YEAR POPULATION (1) INCREASE POP(ILATION11r INCREASE INCOME (2) RATE (3) 1998 143,836 1.51% 9.225,788 0.86% $ 27.220 6.60% 1999 146.979 2.19% 9,330,116 1.13% 27.973 5.90% 2000 151,260 2.91% 9.487,409 1.69% 29.232 5.40% 2001 155,124 2.55% 9,653,900 1.75% 30,503 5.70% 2002 158.289 2.04% 9,817,400 1.69% 30,828 6.80% 2003 162.875 2.90% 9,966,200 1.52% 31,452 7.00% 2004 164,916 1.25% 10.107,451 1.42% 33,179 6.50% 2005 166,958 1.24% 10,166.417 0.58% 35,188 5.30% 2(8)6 167.412 0.27% 10,245,572 0.78% 36,917 4.20% 2007 177.158 5.82% 10,331,939 0.84% 39,066 (4) 2.70% 700 600 500 400 300 200 100 0 CITY OF SANTA CLARITA POPULATION -PERCENT CHANGE Last Ten Years .82% 0I 1998 1999 2001) 2001 2002 2003 2004 2005 2006 2007 YEAR Source: ( I) State of California. Finance Department (2) U.S. Department of Commerce, Bureau of Economic Analysis (BEA) Personal Income and Unemployment rates are for the regional area, Los Angeles. The City of Santa Clarita's related information is not available. (3) State of California, Department of Employment Development (EDD) (4) Annual data is not available; average figures for first 10 months of the calendar year were utilized. 157- NOTE: (I)Non-governmental employers SOURCE: 2007 Santa Clarita Valley - Real Estate and Economic Outlook 158- CITY OF SANTA CLARITA PRINCIPAL EMPLOYERS (I' Last Three Fiscal Years Ended June 30, 2007 • 2007 2006 2005 • PERCENT PERCENT PERCENT • NUMBER of NUMBER of NUMBER of Of TOTAL of TOTAL of TOTAL . ENIPLO) ER EMPLOYEES EMPLOYMENT EMPLOYEES EMPLOYMENT EMPLOYEES EMPLOYMENT . Six Flag Magic Mountain 2,165 9.18% 3,878 19.09% 3,878 19.56%0 Princess Cruises 2,100 8.90% 1,850 9.11% 1,577 7.95%0 Henry Mayo Newhall Memorial Hospital 1,133 4.80% 1,355 6.67% 1,240 6.25%. H.R. Textron 845 3.58% 688 3.39% 662 3.34% The Master's College 748 3.17% 741 3.65% 755 3.81%0 Specialty Laboratories 725 3.07% 700 3.45% 670 3.38%• Arvato Services 586 2.48% 505 2.49% 474 2.39% California Institute of Arts 500 2.12% 510 2.51% 515 2.60%0 Aerospace Dynamics 420 1.78% 437 2.15% 435 2.19%9 Fanfare Media Works 407 1.73% 407 2.00% 490 2.47%• Total 9,629 40.81% 11,071 54.50% 10,696 53.95% All Others 13,963 59.19% 9,243 45.500/. 9,131 46.05%0 Total employment in Santa Clarita 1110 23,592 100.00% 20,314 100.00% 19,827 100.00% 0 NOTE: (I)Non-governmental employers SOURCE: 2007 Santa Clarita Valley - Real Estate and Economic Outlook 158- CITY OF SANTA CLARITA FULL-TIME and PART-TIME CITY EMPLOYEES by FUNCTION Last Ten Fiscal Years FISCAL YEAR Function 06-07 05-06 04-05 03-04 02-03 01-02 00-01 99-00 98-99 97-98 General government 86.00 96.00 79.00 78.00 78.00 75.00 68.50 64.50 62.00 60.75 Public safety 111 - - - - - - - - - - Public works 133.50 115.00 146.00 138.00 150.00 150.50 138.00 134.00 119.00 104.00 Community development 33.00 36.00 20.00 20.00 20.00 19.00 18.00 18.00 17.00 17.50 Parks and Recreation 108.00 106.00 101.00 99.00 84.00 80.00 80.00 73.00 65.75 56.00 Transit II.(X) 8.00 8.00 8.00 7.00 7.00 7.00 8.00 7.00 7.00 Totals 371.50 361.00 354.00 343.00 339.00 331.50 311.50 297.50 270.75 235.25 CITY OF SANTA CLARITA - EMPLOYEES Last Ten Fiscal Years 400.00 339.00 343M 354.00 361.00 371.50 350.00 311.50 331.50 29750 300.00 24515 270.75 250.00 200.00 150.00 100.00 50.00 0.00 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 Fiscal Year (Ii Police and Fire services have been provided by the County Source: City of Santa Clarita, Administrative Services Department - Finance Division 159- CITY OF SANTA CLARITA OPERATING INDICATORS by FUNCTION Last Ten Fiscal Years Function Police: Parking citation issued (1) Parking revenue collected Public works: Street resurfacing (miles) Parks and recreation: Number of recreation classes Number of facility rentals (times) Transit. Number of customers served (2) FISCAL YEAR 06-07 05.06 04.05 03-04 02-03 4,587 6,042 5,960 5,040 3,893 $334,927 $27,257 $10.427 $10,324 $7,011 15.4 16.5 12.5 7.5 6.5 2,535 2,357 2,443 2,469 2,267 19,645 19,435 17,739 15,005 12,765 3.733,299 3,718,640 3,527,000 3,429.913 3,006,739 NOTE: (1) The City of Santa Clarita contracts Los Angeles County, Sheriff Department for its Police services. The number of citation issued and money collected are within the City's boundaries. (2) Number of customers served include those outside of the City boundaries. Source: City of Santa Clarita, Administrative Services Department - Finance Division FISCAL YEAR 01-02 00.01 99-00 98-99 97-98 3,674 3,322 NOTAVAILABLE $6.239 $5,762 NOT AVAILABLE 6.5 6.5 5.5 5.5 4.0 1,929 1,874 1,479 1,534 1,350 11,505 10,245 8,985 8,500 7,924 2,991,605 2,964,613 2,384,919 2,235,079 2,185,360 161 - CITY OF SANTA CLARITA CAPITAL ASSET STATISTICS by FUNCTION • Last Ten Fiscal Years • FISCAL YEAR Function 06-07 05-06 04-05 03-04 02-03 01-02 00.01 99-10 98.99 97.98 • • Public works: . Streets (miles) 496 496 462 462 452 452 452 426 426 423 Streetlights(1) 14.000 13.200 13.000 12.000 12,000 11,647 11,647 - - - • Traffic signals (City Jurisdiction) 166 167 165 158 151 141 134 129 118 112 • Traffic signals (Joint -Jurisdiction 4 5 5 4 2 2 2 - - - • Parks and recreation: Number of parks 19 18 17 16 16 15 13 12 12 11 . Community centers I I - - - - - - - - • Transit: • Stations 4 4 4 4 4 4 3 3 2 2 • • • • NOTE: (1) -All of the above referred street lights aretwere owned and maintained by Edison Company. • The Highway Safety Lights (HSL) are the streetlights attached to traffic signals (200) and those are the • City owned and maintained through a contract with the County. The City took over the streetlights from County in 1998 and the City Engineering division established the inventory reports since 2001. • Source: City of Santa Clarita, Administrative Services Department - Finance Division • - 162 - • • 23920 Valencia Boulevard Suite 300 Santa Clarita, Califomia 91355 santa-daritaxom DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS 2121 ALTON PARKWAY, SUITE 100 IRVINE, CALIFORNIA 92606-0956 (949) 399-0600 9 FAX (949) 399-0610 www.diehlevans.com The Honorable City Council of the City of Santa Clarita Santa Clarita, California December 17, 2007 MICHAEL R LUDIN, CPA CRAIG W. SPRAKER CPA N1TIN P. PATEL, CPA ROBERT J. CALLANAN, CPA 'PHILIP H. HOLTKAMP. CPA 'THOMAS M. PLRLAWSKI'CPA 'HARVEY J. SCHROEDER, CPA KFINETH R ANE -S, CPA 'A PROFESSIONAL CORPORATION We have audited the financial statements of the City of Santa Clarita, California for the year ended June 30, 2007, and have issued our report thereon dated December 17, 2007. Professional. standards require that we provide you with the following information related to our audit. Our Responsibility under Auditing Standards Generally Accepted in the United States of America and Government Auditing Standards Our responsibility as described by professional standards is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement and are fairly presented in accordance with accounting principles generally accepted in the United States of America. Because an audit is designed to provide reasonable, but not absolute assurance and because we did not perform a detailed examination of all transactions, there is a. risk that material misstatements may exist and not be detected by us. As part of our audit, we considered the internal control of the City of Santa Clarita. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the City of Santa Clarita's compliance with certain provisions of laws, regulations, contracts and grants. However, the objective of our tests was not to provide an opinion on compliance with such provisions. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. We will advise management about the appropriateness of accounting policies and their application. The significant accounting policies of the City are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended June 30, 2007. We noted no transactions entered into by the City of Santa Clarita during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. -1- OTHER OFFICES AT: 2%5 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330 CARISHAD, CALIFORNIA 92008-2389 ESCONDIDO, CALIFORNIA 92025-2598 (760) 729-2343 • FAX (760) 729-2234 (760) 741-3141 • FAX (760) 741-9890 Accounting, Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based upon management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were as follows: a. Management's estimate of the fair market value of investments is based on market values provided by outside sources. b. The estimated useful lives for capital assets are based on industry standards. c. The estimated historical cost of infrastructure capital assets placed in service prior to July 1, 2002 is based on a valuation study performed by an outside source. We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole. Audit Adjustments For purposes of this letter, professional standards define an audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the City of Santa Clarita's financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by he City of Santa Clarita, either individually or in the aggregate, indicate matters that could have a significant effect on the City of Santa Cl.arita's financial reporting process. Disagreements With Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. Consultation With Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditors' opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. -2- Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards generally accepted in the United States of America, with management each year prior to retention as the City's auditors. These discussions occurred in the normal course of our professional relationship, and our responses were not a condition to our retention. Difficulties Encountered in Performingthe Audit We encountered no significant difficulties in dealing with management in performing our audit. This information is intended solely for the use of the City Council and management of the City of Santa Clarita and is not intended to be and should not be used by anyone other than these specified. parties. -3- DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS 0 MICHAEL R. LUDIN, CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W. SPRAKER. CPA NITIN P. PATEL. CPA ROBERT). CALLANAN, CPA 2121 ALTON PARKWAY, SUITE 100 `PHILIP H. HOLTKAMP. CPA `THOMAS M. PERLOWSKI, CPA IRVINE, CALIFORNIA 926064956 'HARVEY J. SCHROEDER, CPA (949) 399-0600 • FAX (949) 399-0610 KENNETH R. AMES, CPA www.diehlevans.com •A PROFESSIONAL CORPORATION. December 21, 2007 C INDEPENDENT ACCOUNTANTS' COMPILIATION REPORT Board of Directors Santa Clarita Redevelopment Agency Santa Clarita, California We have compiled the accompanying Financial Transactions Report and Supplement to the Annual Report of the Santa Clarita Redevelopment Agency (Report) for the 2006-2007 fiscal year included in the accompanying prescribed form. Our compilation is limited to presenting in the form prescribed by the California State Controller's office information that is the representation of management. We have not audited or reviewed the accompanying Report and, accordingly, do not express an opinion or any other form of assurance on it. The Report is presented in accordance with the requirements of the California State Controller's office, which differ from accounting principles generally accepted in the United States of America. Accordingly, the Report is not designed for those who are not informed about such differences. OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330 CARLSBAD, CALIFORNIA 92008-2389 ESCONDIDO. 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O 0) I N HCD � -_69 t O Q% O ER O fH O 69 O ; EFJ O Ki O EA L AOS c acs N N LL m e uos 6s 6 � u ':V 6 'V> V R N O ° 2 C N !L o ° � J C Q 6 � � m 64 � � � � co am ,-a O ;000 LO f0 d toc 7 Ln r� 6 +� LL 69 5 N Efl ': iA fR VA EA 60 , 00 O - V (O - Efl It t7 IL c coco �. N LL � #Lri C N N d N y Cp a v N d I� V m U O O 0 y a N W N U N s 0) =O c ,��', O= N C O cyD O N E CD ° m`' C_ p c 3 N O m N d rn c a m N C y N y N c C N w w go 0] C 7 J cco a ° 3 c LL U 0 0 0 m X O N F- aci E F- aci ° 0)c m N Ql Ol •A C 10 C 10 O V a C C `_ � C _N V U OS 07 a A N �- N °' xcc O LL IL a d d Q Q (n 2 O H O H F- N L_ O t 0 � ■ � v 2 ■ � c 4 ■ — Q § C 2 § C U x M U) M a =)k 2 2 § J Ot 2 / / a 0 c � Q § k c ■ r ■ LL k E5 0. o 0 k 2 ■ � JCL k � |\ 2 �& $ ] � 2 )>k 4) LL o 0 ) C \ moo 0 ° e 2 ■ _ E $ 0 k k j m x ■ . E w ■�2 * Q 8ƒ E 7 0 2ƒ 5 wBw J a wo w \ § 7 K / CL / §2 _ \ �$ k w $ & . . i 2 & .2 'R @) �;r 2 �c2 f2 . . . 2/ / 0 .:\ .LO ,m 0,0 ) i\ . D U - >o 0C a '/ & 2 22 , 2 § to : )U. In ; \k / Q 4 k M . c Cli 9U— JCL k � |\ 2 �& $ ] � 2 )>k 4) LL o 0 ) C \ moo 0 ° e 2 ■ _ E $ 0 k k j m x ■ . E w ■�2 * Q 8ƒ E 7 0 2ƒ 5 wBw J a wo w \ § 7 K / CL 0 r - O C L N C m L m C .Q E O U m E E N �n m L. m CL x w V C m m' E O 0 _C O C m E m w m N O 0 N A } t0 V N LL N m oD rn to 69 C a� N C H O C m a :ol O N O to n9 6 0 orn m 6s � 7 O um -O w N N N C C � w � ~ C ~ C A C m � m `f C d C ` C X G X Fm- O g N r (D rn co 0- E E E U) N 7 V c N X W 5 C 0 co c m V) E U N C C I 1 1 1 1 1 I 1 I I 1 1 1 I 1 1 I 1 DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS 11 1 1 1 1 1 1 1 1 1 1 1 i 1 1 1 1 1 1 1 REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA COMPONENT UNIT FINANCIAL STATEMENTS WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS JUNE 30, 2007 REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA TABLE OF CONTENTS June 30, 2007 Page Number . Independent Auditors' Report 1 - 2 Management's Discussion and Analysis 3 -7 Basic Financial Statements: Statement of Net Assets g Statement of Activities 9 Balance Sheet - Governmental Funds 10 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 11 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Redevelopment Capital Projects Fund 12 Notes to Basic Financial Statements 13-22 Supplementary Information: Computation of Set -Aside Capital Projects Fund's Excess Surplus 23 Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 24-25 November 26, 2007 INDEPENDENT AUDITORS' REPORT The Board of Directors of the Redevelopment Agency of the City of Santa Clarita ' Santa Clarita, California We have audited the accompanying financial statements of the governmental activities and each major fund of the Redevelopment Agency of the City of Santa Clarita, California (a component unit of the City of Santa Clarita, California) (the Agency), as of and for the year ended June 30, 2007, which collectively comprise the Agency's basic financial statements, as listed in the table of contents. These ' financial statements are the responsibility of the Agency'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 Controller 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 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 basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Agency as of ' June 30, 2007, and the respective changes in financial position thereof and the respective budgetary comparison for the Redevelopment Capital Projects major governmental fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. 1 1 .OTHER OFFICES AT: -1- 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92008-2389 (760) 729-2343 • FAX (760) 729-2234 613 W. VALLEY PARKWAY, SUITE 330 ESCONDIDO. CALIFORNIA 92025-2598 (760) 741-3141 • FAX (760) 741-9890 DIEHL, EVANS & COMPANY, .LLP CERTIFIED :PUBLIC ACCOUNTANTS & CONSULTANTS MICHAEL R LUDIN, CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS - CRAIG W. SPRAKER, CPA NITIN P. PATEL. CPA ROBERT J. CALLANAN, CPA 2121 ALTON PARKWAY, SUITE 100 'PHILIP H. HOLTKAMP. CPA IRVINE, CALIFORNIA 92606956 'THOMAS M. PERLOWSKI, CPA (949) 399-0600 • FAX (949) 399-0610 'HARVEY J. SCHROEDER. CPA KENNETH R. AMES, CPA www.diehlevans.com 'A PROFESSIONAL CORPORATION November 26, 2007 INDEPENDENT AUDITORS' REPORT The Board of Directors of the Redevelopment Agency of the City of Santa Clarita ' Santa Clarita, California We have audited the accompanying financial statements of the governmental activities and each major fund of the Redevelopment Agency of the City of Santa Clarita, California (a component unit of the City of Santa Clarita, California) (the Agency), as of and for the year ended June 30, 2007, which collectively comprise the Agency's basic financial statements, as listed in the table of contents. These ' financial statements are the responsibility of the Agency'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 Controller 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 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 basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Agency as of ' June 30, 2007, and the respective changes in financial position thereof and the respective budgetary comparison for the Redevelopment Capital Projects major governmental fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. 1 1 .OTHER OFFICES AT: -1- 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92008-2389 (760) 729-2343 • FAX (760) 729-2234 613 W. VALLEY PARKWAY, SUITE 330 ESCONDIDO. CALIFORNIA 92025-2598 (760) 741-3141 • FAX (760) 741-9890 In accordance with Government Auditing Standards, we have also issued our report dated November 26, 2007 on our consideration of the Agency's internal control over financial reporting and 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 1 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. The management's discussion and analysis on pages 3 through 7 is not a required part of the basic financial statements, but is supplementary information required by accounting principles generally accepted in the United States of America. 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 it. Our audit was conducted for the purpose of forming opinions on the financial statements that 1 collectively comprise the Agency's basic financial statements. The computation of the excess surplus of the set-aside Capital Projects Fund is presented for additional analysis and is not a required part of the basic financial statements. This 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. //� 11 REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2007 Our discussion and analysis of the City of Santa Clarita Redevelopment Agency's (the Agency) financial performance for the fiscal year ended June 30, 2007 provides a comparison of current -year to ' prior -year ending results based on the government -wide statements, an analysis on the Agency's overall financial position, results of operations to assist users in evaluating the Agency's financial position, and a discussion of significant changes that occurred in funds. In addition, it describes the activities during the year for capital assets and long-term debt. We end our discussion and analysis with a description of currently known facts, decisions, and conditions that are expected to have a significant effect on the financial position or results of operations. Please read it in conjunction with the Agency's financial statements. FINANCIAL HIGHLIGHTS • The Agency's tax increment revenues increased by $316,904, or 11.20% over theP revious fiscal year. a• The change in the Agency's net assets deficit totaled $778 557 resulting in a net reduction g(deficit) g on m the deficit of 43.08%. ' USING THIS ANNUAL REPORT This annual report consists of a series of financial statements in three components as follows: 1.) Government -Wide -Financial Statements: The "Statement of Net Assets" and "Statement of Activities" provide information about the 1 activities of the Agency as a whole and present a long-term view of the Agency's finances. 2.) Fund Financial Statements: j, The fund statements tell how the Agency's services were financed in the short term, as well as what remains for future spending. Fund financial statements also report the Agency's operation in more detail than the government -wide statements by providing information about each of the Agency's funds. 3.) Notes to Basic Financial Statements: The notes provide additional information necessary to enable the user to fully understand the ' various financial statements. See independent auditors' report. -3- REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2007 IREPORTING THE AGENCY AS A WHOLE - Government -wide Financial Statements The Statement of Net Assets and the Statement of Activities One of the most important questions asked about the Agency's finances is, "Is the Agency as a whole better or worse off as a result of the year's activities?" The "Statement of Net Assets" and the "Statement of Activities" report information about the Agency as a whole and about its activities in a way to answer this question. These statements include all assets and liabilities of the Agency 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 taken into account, regardless of when cash is received or paid. These two statements report the Agency's net assets and changes. Net assets are the difference between assets and liabilities, which is one way to measure the Agency's financial health or financial position. Over time, increases or decreases in the Agency's net assets are an indication of whether its financial health is improving or deteriorating. You will need to consider other nonfinancial factors, however, such as changes in the Agency's tax base and the effects of changes in statutory requirements to assess the overall health of the Agency. The "Statement of Net Assets" and the "Statement of Activities and Changes in Net Assets" presents information distinguished by function type. The Agency's basic service of community development is principally supported by tax increment revenues and investment income and, therefore, all related ' activities are considered to be within the governmental activities function. REPORTING THE AGENCY'S FUNDS - Fund Financial Statements Fund Financial Statements The fund financial statements provide detailed information about the Agency's funds. A fund is a grouping of related accounts used to account for and accumulate financial information related to a specific activity or objective. Some funds are required to be established by state law and bond covenants; however, management established other funds to help it control and manage money for particular purposes or to show it is meeting legal responsibilities for using certain taxes, grants, and 1 other resources. The Agency has only governmental type funds. ISee independent auditors' report. -4- REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) ' June 30, 2007 1 REPORTING THE AGENCY'S FUNDS - Fund Financial Statements (Continued) Governmental Funds The Agency's basic services are reported within three governmental funds. Governmental funds financial statements focus on how money flows in and out of those funds and the balances left at year-end that are available for spending. These funds are reported using the modified accrual basis of accounting, 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 Agency's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to ' finance the Agency's programs. The differences between the results of the governmental fund financial statements and those of the government -wide financial statements are explained in a reconciliation following each governmental fund financial statement. GOVERNMENT -WIDE FINANCIAL ANALYSIS The following is a condensed version of the statements of net assets for the fiscal years ended June 30, 2007 and 2006.. ' TABLE 1 Net Assets Governmental Activities 2007 2006 Assets: Current assets $ 10,055,749 $ 3,398,161 Liabilities: Long-term liabilities outstanding 10,461,382 4,743,697 Other liabilities 623,202 461,856 Total Liabilities 11,084,584 5,205,553 Net Assets (Deficit): Restricted 2,279,701 1,538,539 Unrestricted (3,308,536) (3,345,931) ' Total Net Assets (Deficit) (1,028,835) (1,807,392) See independent auditors' report. -5- REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA rMANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2007 GOVERNMENT -WIDE FINANCIAL ANALYSIS (CONTINUED) The Agency's net assets are comprised of two components: restricted net assets and unrestricted net assets. As of June 30, 2007, restricted net assets realized an overall improvement in net asset position, with the restricted assets exceeding related liabilities by an additional $741,162. Unrestricted net ' assets realized an increase in net asset position of $37,395. Restricted net assets are subject to external restrictions and must be used to satisfy the Agency's requirements for compliance related to low- and moderate -income housing. The unrestricted net asset deficit is representative of the Agency's funding, through the support of advances from the City of Santa Clarita, of those operational and program expenditures that exceed the amount of tax increment revenues and other income. The cost of the Agency's activities for 2007 was $2,566,290, which represents an increase of $1,142,165 from the previous year. This increase was primarily the result of approximately $165,000 of additional pass-through payments, $315,000 of professional services for consultation and ' implementation of the specific redevelopment plan and $660,000 for the downtown Newhall restripe capital project. Agency activities are funded by tax increment revenues and advances from the City of ' Santa Clarita. The following is a condensed version of the changes in net assets for the fiscal years ended June 30, 2007 and 2006. TABLE 2 Changes in Net Assets Governmental Activities 2007 2006 1 REVENUES: Tax increment $ 3,146,579 $ 2,829,675 Investment earnings 195,548 34,664 Other income 2,720 - Total Revenues 3,344,847 2,864,339 I EXPENSES: Community development expenses 2,194,047 1,158,856 Interest expense 372,243 265,269 Total Expenses 2,566,290 _ 1,424,125 CHANGE IN NET ASSETS $ 778.557 1.440.214 See independent auditors' report. -6- t 1 1 1 1 t 1 1 1 1 1 1 1 REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2007 CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The Agency does not own any capital assets. Debt At year-end, the Agency had $10,461,382 in advances payable to the City of Santa Clarita, California, up from $4,743,697 in fiscal year 2006. The increase of $5,717,685 is attributable to additional interest of $372,243 and additional principal advances of $6,132,087, less principal and accrued interest payments of $786,645, to the City of Santa Clarita, California during fiscal. year 2007. Additional information regarding the Agency's debt is located in the notes to the basic financial statements. CONTACTING THE AGENCY'S FINANCIAL DIVISION This financial report is designed to provide a general overview of the Agency's finances and to show the Agency's accountability for the money it receives. If you have questions about this report, or need additional financial information, contact the City's Administrative Services Department, at the City of Santa Clarita, 23920 Valencia Boulevard, Suite 295, Santa Clarita, California 91355, or (661) 255-4920. See independent auditors' report. -7- t BASIC FINANCIAL STATEMENTS 1 1 1 t t L' Ll t t REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA ' STATEMENT OF NET ASSETS June 30, 2007 ' ASSETS: Cash and investments (Note 2) Receivables: Tax increment Interest Land held for resale TOTAL ASSETS LIABILITIES: Accounts payable and accrued liabilities Due to other,governments (Note 4) Noncurrent liabilities: Advances from the City of Santa Clarita (Note 3) TOTAL LIABILITIES NET ASSETS (DEFICIT): Restricted for: Low and moderate income housing Unrestricted (deficit) TOTAL NET ASSETS (DEFICIT) r ' See independent auditors' report and notes to basic financial statements. -8- Governmental Activities $ 8,281,860 66,570 100,123 1,607,196 10,055,749 37,682 585,520 10,461,382 11;084,584 2,279,701 (3,308,536) $ (1,028,835) 1 1 1 1 1 1 1 1 1 1 1 1 REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA STATEMENT OF ACTIVITIES For the year ended June 30, 2007 PROGRAM EXPENSES: Community development - redevelopment Interest expense TOTAL PROGRAM EXPENSES GENERAL REVENUES: Tax increment Investment earnings Other revenue TOTAL GENERAL REVENUES CHANGE IN NET ASSETS NET ASSETS (DEFICIT) - BEGINNING OF YEAR NET ASSETS (DEFICIT) - END OF YEAR See independent auditors' report and notes to basic financial statements. -9- Governmental Activities $ 2,194,047 372,243 2,566,290 3,146,579 195,548 2,720 3,344,847 778,557 (1,807,392) $ (1,028,835) 1 1 1 1 1 1 1 1 REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2007 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities $ Debt Redevelopment Set -Aside Total Due to other governments Service Capital Capital Governmental Deferred revenue Fund Projects Fund Projects Fund Funds ASSETS - 651,425 10,459 661,884 Cash and investments $ - $ 6,042,545 $ 2,239,315 $ 8,281,860 Receivables: - 992,514 49,844 1,042,358 Tax increment - 53,256 13,314 66,570 Interest - 73,051 27,072 100,123 Land held for resale - 1,607,196 - 1,607,196 TOTAL ASSETS $ - $ 7,776,048 $ 2,279,701 10,055,749 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities $ - $ 37,682 $ - 37,682 Due to other governments - 585,520 - 585,520 Deferred revenue - 28,223 10,459 38,682 TOTAL LIABILITIES - 651,425 10,459 661,884 FUND BALANCES (DEFICITS): Reserved for encumbrances - 992,514 49,844 1,042,358 Reserve for land held for resale - 1,607,196 - 1,607,196 Reserved for low/moderate income housing - - 2,219,398 2,219,398 Unreserved, reported in: Capital projects funds - 4,524,913 - 4,524,913 TOTAL FUND BALANCES (DEFICITS) - 7,124,623 2,269,242 9,393,865 TOTAL LIABILITIES AND FUND BALANCES $ - $ 7,776,048 $ 2,279,701 Amounts reported for governmental activities in the statement of net assets are different because: Long-term liabilities applicable to government activities are not due and payable in the current period and, therefore, are not reported in the governmental funds. The Agency's long-term liabilities are: Advances from the City of Santa Clarita (10,461,382) A portion of interest receivable is not available to pay for current period expenditures and, therefore, are deferred in the governmental funds. 38,682 Net assets (deficit) of governmental activities $ (1,028,835) See independent auditors' report and notes to basic financial statements. -10- J 1 1 1 fi i REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the year ended June 30, 2007 REVENUES: Tax increment Investment income (loss) Otherrevenue TOTAL REVENUES EXPENDITURES: Current: Community development: Administration Professional services Tax increment passed through to other agencies Capital outlay Debt service: Principal Interest TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from City of Santa Clarita advances Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES Debt Redevelopment Set -Aside Total Service Capital Capital Governmental Fund Projects Fund Projects Fund Funds $ - $ 2,517,263 $ 629,316 $ 3,146,579 - 65,490 101,387 166,877 - 2,720 - 2,720 - 2,585,473 730,703 3,316,176 - 369,149 - 369,149 - 351,099 - 351,099 - 813,699 - 813,699 - 660,100 - 660,100 786,645 - - 786,645 372,243 - - 372,243 1,158,888 2,194,047 - 3,352,935 (1,158,888) 391,426 730,703 (36,759) 6,504,330 - - 6,504,330 786,645 6,132,087 - 6,918,732 (6,132,087) (786,645) - (6,918,732) 1,158,888 5,345,442 - 6,504,330 - 5,736,868 730,703 6,467,571 FUND BALANCES AT BEGINNING OF YEAR - 1,387,755 1,538,539 FUND BALANCES AT END OF YEAR $ - $ 7,124,623 $ 2,269,242 Amounts reported for governmental activities in the statement of activities are different because: The issuance of long-term debt provides current financial resources to governmental funds, while repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has an effect on net assets: Principal payments $ 786,645 Advances from the City of Santa Clarita (6,504,330) Investment income in the statement of activities that does not provide current financial resources is not reported as revenue in the governmental funds. Change in net assets in governmental activities See independent auditors' report and notes to basic financial statements. -11- (5,717,685) 28,671 $ 778,557 u k 1 t 1 11 1 1 REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL REDEVELOPMENT CAPITAL PROJECTS FUND REVENUES: Tax increment Investment income Other revenue TOTAL REVENUES EXPENDITURES: Current: Community development Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out For the year ended June 30,.2007 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 1,760,000 $ 2,115,654 $ 2,517,263 $ 401,609 7,200 7,200 65,490 58,290 2,720 2,720 1,767,200 2,122,854 2,585,473 462,619 1,017,670 6,558,645 1,533,947 5,024,698 - 991,264 660,100 331,164 NET CHANGE IN FUND BALANCE 249,530 1,017,670 7,549,909 2,194,047 5,355,862 1,387,755 1,387,755 - 749,530 (5,427,055) 391,426 5,818,481 - - 6,132,087 6,132,087 (500,000) (500,000) (786,645) (286,645) TOTAL OTHER FINANCING SOURCES (USES) (500,000) (500,000) 5,345,442 5,845,442 NET CHANGE IN FUND BALANCE 249,530 (5,927,055) 5,736,868 11,663,923 FUND BALANCE - BEGINNING OF YEAR 1,387,755 1,387,755 1,387,755 - FUND BALANCE - END OF YEAR $ 1,637,285 $ (4,539,300) $ 7,124,623 $ 11,663,923 See independent auditors' report and notes to basic financial statements. -12- 1 1 J 1 1 1 NOTES TO BASIC FINANCIAL STATEMENTS t 1 J w 1 REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2007 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A. Reporting Entity: The Redevelopment Agency of the City of Santa Clarita, California (the Agency) was established on November 28, 1989, pursuant to the State of California Health and Safety Code, Section 33000. The primary purpose of the Agency is to encourage private redevelopment of property and to rehabilitate areas suffering from economic disuse arising from inadequate street layout and street access, lack of open space, landscaping and other improvements and facilities necessary to establish and maintain the economic growth of the City of Santa Clarita (the City). On February 22, 1994, the Board of Directors of the Agency passed Ordinance No. 94-3, which adopted the Agency's redevelopment plan (the Plan). The Plan was formed pursuant to applicable provisions of the Community Redevelopment Law (Section 33000 of the Health and Safety Code) and the Community Redevelopment Financial Assistance and Disaster Project Law (Section 34000 of the Health and Safety Code) to reconstruct areas destroyed or damaged by the Northridge Earthquake on January 17, 1994. On February 28, 1996, the Superior Court of the State of California for the County of Los Angeles invalidated the Plan. A new plan was adopted by the City's Board of Directors on July 8, 1997 by Ordinance No. 97-12. The Agency is a component unit of the City, as the City Council acts as director of the Agency, designates management and has full accountability for the Agency's fiscal matters. B. Basis of Presentation: The Agency has adopted the provisions of GASB Statement No. 34 (Statement 34) of the Governmental Accounting Standards Board, "Basic Financial Statements - and Management's Discussion and Analysis - For State and Local Governments. " Statement 34 established standards for external financial reporting for all state and local governmental entities which includes a statement of net assets, a statement of activities and the inclusion of a management's discussion and analysis section that provides an analysis of the Agency's overall financial position and changes in financial position. See independent auditors' report. -13- ' REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) ' June 30, 2007 ' 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): B. Basis of Presentation (Continued): The classification of net assets is reported in three components - invested in capital assets, net of related debt; restricted; and unrestricted. These classifications are defined as follows: • Invested in capital assets, net of related debt - This component of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of invested in capital 1 assets, net of related debt. Rather, that portion of the debt is included in the same net assets component as the unspent proceeds. ' • Restricted - This component of net assets consists of constraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws and/or regulations of other governments, or constraints imposed by law through constitutional provisions or enabling legislation. • Unrestricted net assets - This component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." Government -wide Financial Statements: The government -wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the activities of the Agency. For the most part, the effect ' of interfund activity has been removed from these statements. The governmental activities of the Agency are supported by tax increment revenues. tThe "Statement of Activities" demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to ' customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; and 2), grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. tFor the year ended June 30, 2007, the Agency did not have any program revenues. Tax increment and other items not properly included among program revenues are reported instead as general revenues. ' See independent auditors' report. -14- ' REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 i1. SUMMARY�OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): B. Basis of Presentation (Continued): Fund Financial Statements: The accounting system of the Agency is organized and operated on the basis of separate funds g p P each of which is considered to be a separate accounting entity. Each fund is accounted for by 1 providing a separate set of self -balancing accounts that constitute its assets, liabilities, fund equity, revenues, and expenditures. Major individual governmental funds are reported as separate columns in the fund financial statements. The Agency reports the following major governmental funds: ' The Debt Service Fund is used to account for the resources accumulated and payments made for principal and interest on long-term debt. ' The Redevelopment Capital Projects Fund is used to account for financial resources to be used for the administration of the Agency's redevelopment activities and the improvement of ' blighted areas within the project area, except those resources required to be accounted for in another fund. The Set -Aside Capital Project Fund is used to account for restricted financial resources to be used to increase the supply of available low- and moderate -income housing in the area. C. Measurement Focus and Basis of Accounting: Measurement Focus: "Measurement focus" is a term used to describe which transactions are recorded within the various financial statements. "Basis of accounting" refers to when transactions are recorded, ' regardless of the measurement focus applied. The government -wide "Statement of Net Assets" and the "Statement of Activities" are reported ' using the economic resources measurement focus. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the government are reported. ISee independent auditors' report. -15- ' REDEVELOPMENT AGENCY OF THE . CITY OF SANTA CLARITA, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 ' 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): C. Measurement Focus and Basis of Accounting (Continued): The governmental fund financial statements are reported using the current financial resources -measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balances (net current assets) are considered a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. When both restricted and unrestricted resources are available for use, it is the Agency's policy to use restricted resources first; then use unrestricted resources as they are needed. Basis of Accounting: ' The government -wide "Statement of Net Assets" and "Statement of Activities" are reported using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned, and expenses are recorded when the liability is incurred or economic ' asset used, regardless of the timing of related cash flows. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Private -sector standards of accounting and financial reporting issued prior to December 1, 1989, are generally followed in the government -wide financial statements to the extent that those standards do not conflict or contradict guidance of the Governmental Accounting Standards Board. The governmental fund financial statements are reported on the modified accrual basis of accounting. Under this basis of accounting, revenues are recognized when measurable and available. "Measurable" means knowing or being able to reasonably estimate the amount; ' "available" means collectible within the current period, or soon enough thereafter to pay current liabilities. For this purpose, the government considers tax increment revenues levied and investment earnings to be available if they are collected within 60 days of the end of the ' current fiscal period. See independent auditors' report. -16- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): ' D. Encumbrances: Encumbrance accounting is employed in the major governmental funds. Encumbrances (e.g., purchase orders, contracts) outstanding at year-end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent year. E. Cash and Investments: 11 The Agency's cash and investments are pooled for investment purposes with those of the City. Investments are stated at fair value (quoted market price or the best available estimate thereof). F. Capital Assets and Depreciation: Capital assets, which consist of furniture, fixtures and equipment, are reported in the government -wide financial statements. "Capital assets" are defined by the Agency as assets with an initial cost of more than $5,000 and an estimated life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. The Agency has no capital assets as of June 30, 2007. See independent auditors' report. -17- REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): ' D. Encumbrances: Encumbrance accounting is employed in the major governmental funds. Encumbrances (e.g., purchase orders, contracts) outstanding at year-end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent year. E. Cash and Investments: 11 The Agency's cash and investments are pooled for investment purposes with those of the City. Investments are stated at fair value (quoted market price or the best available estimate thereof). F. Capital Assets and Depreciation: Capital assets, which consist of furniture, fixtures and equipment, are reported in the government -wide financial statements. "Capital assets" are defined by the Agency as assets with an initial cost of more than $5,000 and an estimated life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. The Agency has no capital assets as of June 30, 2007. See independent auditors' report. -17- F1 t 1 'J REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): G Property Taxes and Tax Increment Financing: The Agency's primary source of revenue comes from property taxes, referred to in the accompanying financial statements as "tax increment revenue." The assessed valuation of all property. within each project area was determined on the date of adoption of the project area. Except for certain amounts provided by law (see Note 4), property taxes related to the incremental increase in assessed values after the adoption of the project area have been allocated to the Agency, while all property taxes on the "frozen" assessed valuation as of the . adoption date have been allocated to the City and other districts. The Agency is required. by law to set aside 20% of gross tax increment revenues allocated to it for the purpose of increasing, improving or preserving the community's supply of low- and moderate -income housing. The Agency accounts for these monies in the Set -Aside Capital Projects Fund. The entire fund balance of this fund is reported as a reservation. Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on July 1 and are payable in two installments on November 1 and February 1 and become delinquent after December 10 and April 10. The County bills and collects the property taxes for the Agency. H. Self -Insurance Programs: The Agency participates in the self-insurance programs of the City. Disclosures relating to the self-insurance programs can be found in the City's Comprehensive Annual Financial Report. I. Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that effect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. See independent auditors' report. -18- ' REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA ' NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 1 2. CASH AND INVESTMENTS: ' The Agency's cash and investments are entirely pooled with those of the City, and the Agency has adopted the City's investment policy. Investment Authorized by the California Government Code and the Agency's Investment Policy The table below identifies the investment types that are authorized for the Agency by the California Government Code (or the Agency's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the Agency's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. Maximum Percentage Maximum Maximum or Amount Investment Authorized Investment Type Maturity of Portfolio* in One Issuer Local Agency Bonds 5 years None None ' U.S. Treasury Obligations 5 years None None State of California Obligations 5 years None None ' CA Local Agency Obligations 5 years None None U.S. Government Sponsored Enterprise Securities Banker's 5 years None None Acceptances 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% None Repurchase Agreements 1 year None None Medium -Term Notes 5 years 30% None Money Market Mutual Funds 5 years 15% 10% Mortgage Pass -Through Securities 5 years 20% None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A $ 40 M None ' * - Excluding amounts held by bond trustee that are not subject to California Government Code restrictions. N/A - Not Applicable See independent auditors' report. -19- ' REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) ' June 30, 2007 ' 2. CASH AND INVESTMENTS (CONTINUED): Disclosures Relating to Interest Rate Risk: Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the Agency manages its exposure to interest rate risk is by purchasing a combination of shorter- 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. ' Disclosures Relating to Credit Risk: Generally, credit risk in 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. ' Concentration of Credit Risk The investment policy of the Agency contains no limitations on the amount that can be invested in ' any one issuer beyond that stipulated by the California Government Code. Custodial Credit Risk ' Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits, or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction (e.g., broker-dealer), a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code 1 and the Agency's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits. The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure the Agency's deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. The Agency had no cash deposits with depository financial institutions during the year ended June 30, 2007. See independent auditors' report. -20- 2. CASH AND INVESTMENTS (CONTINUED): Additional Information: Information regarding the exposure of the City's cash and investment pool to interest rate risk, credit risk, concentration of credit risk and custodial risk is available in the City's Comprehensive Annual Financial Report. 3. ADVANCES FROM THE CITY OF SANTA CLARITA: Advances payable and accrued interest to the City were as follows for the year ended June 30, 2007: ' Accrued Loans Interest Total .Balance at June 30, 2006 $ 3,157,368 $ 1,586,329 $ 4,743,697 Additions 6,132,087 372,243 6,504,330 Payments to City (126,339) (660,306) (786,645) ' Balance at June 30, 2007 9,163,116 1,298,266 10,461,382 Interest at an annual rate of prime minus one percent (7.25% for the year ended June 30, 2007) is ' charged on the advances. There is no fixed payment schedule for these advances. However, the Agency is required to use 25% of the current -year tax increment revenue for payments on the advances in accordance with the terms of the advances. ' 4. DUE TO OTHER GOVERNMENTS: Pursuant to California Health and Safety Code Section 33607.5, the Agency is required to make statutory payments to taxing entities that were affected by the adoption of the Agency's redevelopment plan. The payments to the affected taxing entities are to be allocated between each taxing entity in proportion to the share of property taxes each entity receives in the year the funds are allocated. The Agency is currently required to make annual payments equal to 20% of the gross tax increment received. Beginning in the eleventh fiscal year that tax increments are received, the Agency will be required to pay an additional 16.8% of gross tax increment revenue based on the increase in assessed value over the tenth fiscal year. Beginning in the thirty-first fiscal year, the Agency will be required to pay an additional 11.2% of gross tax increment revenue ' based on the increase in assessed value over the thirtieth fiscal year. In addition to these statutory payments, the Agency is required to make additional payments to certain affected taxing entities pursuant to separate agreements. For the fiscal year ended June 30, 2007, the Agency's required pass through payments totaled $813,699. As of June 30, 2007, the Agency still owed $585,520 of this amount to other governments.. ISee independent auditors' report. -21- REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA ' NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 2. CASH AND INVESTMENTS (CONTINUED): Additional Information: Information regarding the exposure of the City's cash and investment pool to interest rate risk, credit risk, concentration of credit risk and custodial risk is available in the City's Comprehensive Annual Financial Report. 3. ADVANCES FROM THE CITY OF SANTA CLARITA: Advances payable and accrued interest to the City were as follows for the year ended June 30, 2007: ' Accrued Loans Interest Total .Balance at June 30, 2006 $ 3,157,368 $ 1,586,329 $ 4,743,697 Additions 6,132,087 372,243 6,504,330 Payments to City (126,339) (660,306) (786,645) ' Balance at June 30, 2007 9,163,116 1,298,266 10,461,382 Interest at an annual rate of prime minus one percent (7.25% for the year ended June 30, 2007) is ' charged on the advances. There is no fixed payment schedule for these advances. However, the Agency is required to use 25% of the current -year tax increment revenue for payments on the advances in accordance with the terms of the advances. ' 4. DUE TO OTHER GOVERNMENTS: Pursuant to California Health and Safety Code Section 33607.5, the Agency is required to make statutory payments to taxing entities that were affected by the adoption of the Agency's redevelopment plan. The payments to the affected taxing entities are to be allocated between each taxing entity in proportion to the share of property taxes each entity receives in the year the funds are allocated. The Agency is currently required to make annual payments equal to 20% of the gross tax increment received. Beginning in the eleventh fiscal year that tax increments are received, the Agency will be required to pay an additional 16.8% of gross tax increment revenue based on the increase in assessed value over the tenth fiscal year. Beginning in the thirty-first fiscal year, the Agency will be required to pay an additional 11.2% of gross tax increment revenue ' based on the increase in assessed value over the thirtieth fiscal year. In addition to these statutory payments, the Agency is required to make additional payments to certain affected taxing entities pursuant to separate agreements. For the fiscal year ended June 30, 2007, the Agency's required pass through payments totaled $813,699. As of June 30, 2007, the Agency still owed $585,520 of this amount to other governments.. ISee independent auditors' report. -21- 1 1 1 1 1 1 1 1 1 1 1 REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2007 5. INTERFUND TRANSFERS: Transfers In Debt Redevelopment Service Capital Fund Proiects Fund Total Transfers Out Redevelopment Capital Projects Fund $ 786,645 $ - $ 786,645 Debt Service Fund - 6,132,087 6,132,087 $ 786,645 6,132,087 $ 6,918,732 The transfer to the Debt Service Fund provides funding for the repayment of advances from the City. The transfer to the Redevelopment Capital Projects Fund provides funding for the Agency's redevelopment activities. See independent auditors' report. -22- t SUPPLEMENTARY INFORMATION u 1 1 1 ' REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA ' COMPUTATION OF SET-ASIDE CAPITAL PROJECTS FUND'S - EXCESS SURPLUS July 1, 2006 OPENING FUND BALANCE - JULY 1, 2006 LESS: Encumbrances AVAILABLELOW/MODERATE INCOME HOUSING FUNDS LIMITATION (GREATER OF $1,000,000 OR FOUR YEARS SET-ASIDE): Set-aside for last four years: 2001-2016 2004-2005 2003-2004 2002-2003 ' TOTAL SET-ASIDE FOR LAST FOUR YEARS Base limitation GREATER AMOUNT ' COMPUTED EXCESS SURPLUS - JULY 1, 2006 ' See independent auditors' report. -23- 1 $ 565,935 332,994 208,145 149,150 $ 1,256,224 $ 1,000,000 $ 1,538,539 (49,844) 1,488,695 1,256,224 $ 232,471 DIEHL EVANS & COMPANY LLP CERTIFIED' PUBLIC ACCOUNTANTS & CONSULTANTS ' MICHAEL R LUDIN, CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W. SPRAKER, CPA NITIN P. PATEL, CPA ROBERTI.CALLANAN.CPA ' 2121 ALTON PARKWAY, SUITE 100 'PHILIP H. HOLTKAMP, CPA 'THOMAS M. PERLOWSKI, CPA IRVINE, CALIFORNIA 92606-4956 •HARVEY J. SCHROEDER, CPA (949) 399-0600 • FAX (949) 399-0610 KENNETH R. AMES, CPA www.diehievans.com •A PROFESSIONAL CORPORATION November 26, 2007 ' INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED tIN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ' The Board of Directors of the Redevelopment Agency of the City of Santa Clarita ' Santa Clarita, California ' We have audited the financial statements of the governmental activities and each major fund of the Redevelopment Agency of the City of Santa Clarita, California (the Agency), a component unit of the City of Santa Clarita, California (the City), as of and for the year ended June 30, 2007, which ' collectively comprise the Agency's basic financial statements and have issued our report thereon dated November 26, 2007. 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 Agency's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or ' employees, in the normal course of performingtheir assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Agency's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that ' there is more than a remote likelihood that a misstatement of the Agency's financial statements that is more than inconsequential will not be prevented or detected by the Agency's internal control. -24- OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330 CARLSBAD, CALIFORNIA 92008-2389 ESCONDIDO, CALIFORNIA 92025-2598 (760) 729-2343 • FAX (760) 729-2234 (760) 741-3141 • FAX (760) 741-9890 1 J rl 1 i 1 1 1 1 1 1 1 1 1 Internal Control Over Financial Reporting (Continued) A material- weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Agency's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether the financial statements of the Agency are free of material misstatements, we performed tests of its compliance with certain provisions 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 include those provisions of laws and regulations identified in the Guidelines for Compliance Audits of California Redevelopment Agencies, issued by the State Controller's Office and as interpreted in the Suggested Auditing Procedures for Accompanying Compliance Audits of California Redevelopment A eg ncies, issued by the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. 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 or other matters that are required to be reported under Government Auditing_ Standards. The report is intended for the information and use of the Board of Directors and management of the Redevelopment Agency of the City of Santa Clarita, California and the California State Controller's Office, Division of Accounting and Reporting and is not intended to be, and should not be, used by anyone other than these specified parties. -25- I 25-