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2012-02-28 - AGENDA REPORTS - ANNUAL FIN RPT AUDIT LETTER (2)
CONSENT CALENDAR DATE: SUBJECT: DEPARTMENT Agenda Item: 5 CITY OF SANTA CLARITA AGENDA REPORT City Manager Approval Item to be presented by February 28, 2012 Darren Hernandez JUNE 30, 2011 COMPREHENSIVE ANNUAL FINANCIAL REPORT AND AUDIT COMMITTEE LETTER Administrative Services RECOMMENDED ACTION City Council approve: 1. The Component Unit Financial Statements and the Redevelopment Agency State Controller Report for fiscal year ending June 30, 2011. 2. The Comprehensive Annual Financial Report (CAFR) and Audit Committee Letter for fiscal year ending June 30, 2011. BACKGROUND The City's independent audit firm, Caporicci & Larson, Inc., has completed the City's and Agency's annual audit for fiscal year ending June 30, 2011. Caporicci & Larson, Inc., 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. In previous years, the Redevelopment Agency of the City of Santa Clarita approved the audit of the Redevelopment Agency financial statements and State Controller Report. With the dissolution of the Redevelopment Agency, Council will approve these financial statements and State Controller Report in its capacity as the Successor Agency of the Redevelopment Agency of the City of Santa Clarita. The Comprehensive Annual Financial Report reflects the City's strong financial condition with continued growth of the General Fund balance. Based on the audit performed, Caporicci & Larson, Inc., issued an unqualified "clean" audit opinion letter. The opinion reflects the best level an organization can receive on its financial statements. The letter is identified as the "Independent Auditor's Report" in the City's CAFR for fiscal year ending June 30, 2011. In accordance with professional standards, an Audit Committee Letter has been prepared by Caporicci & Larson, Inc., to provide specific information related to the audit scope and performance. No items of concern were noted by the auditors. ALTERNATIVE ACTIONS No feasible alternative action has been identified by staff. FISCAL IMPACT None. ATTACHMENTS RDA Financial Statements FYI 0-11 available in the City Clerk's Reading File RDA State Controller's Report FYI 0-11 available in the City Clerk's Reading File FY 2010-11 Comprehensive Annual Financial Report available in the City Clerk's Reading File Audit Committee Letter FYI 0-11 available in the City Clerk's Reading File i C&L Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants February 7, 2012 To the Honorable Mayor, Members of City Council and Management of the City of Santa Clarita Santa Clarita, California We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Santa Clarita (City) for the year ended June 30, 2011, and have issued our report therein dated February 7, 2012. Professional standards require that we provide you with the following information related to our audit. Our Responsibilities under U.S. Generally Accepted Auditing Standards and Government Auditing Standards As stated in our engagement letter dated May 23, 2011, our responsibility, as described by professional standards, is to express opinions about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion 'on the financial statements and not to provide assurance on the internal control over financial reporting. As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit. We are responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures specifically to identify such matters. Planned Scope and Timing of the Audit We performed the audit according to the planned scope previously communicated to you. www.c-lcpa.com To the Honorable Mayor, Members of City Council and Management of the City of Santa Clarita Santa Clarita, California Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. Accounting estimates are an integral part of the financial statements prepared by management and are based on 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: • Investments Valuation • Pension Plan Obligations • Accrual for Workers' Compensation and General Liabilities • Accumulated depreciation • Other Post Employment Benefits The disclosures in the financial statements are transparent, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their significance to the financial statement users. The most sensitive disclosures affecting the financial statements were: • Summary of Significant Accounting Policies • Cash and Investments • Capital Assets including depreciation • Long -Term Debt • Pension Plan Obligation • Other Post Employment Benefits • Commitments and Contingencies • Subsequent Events Difficulties Encountered in Performing the Audit We encountered no difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. Please refer to the attachment included with the management representation letter signed by management for the listing of the adjustments. To the Honorable Mayor, Members of City Council and Management of the City of Santa Clarita Santa Clarita, California Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting or auditing matter, whether or not resolved to our satisfaction that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated February 7, 2012. A copy of the signed management representation letter is attached for your review. Management Consultations 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 auditor's 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. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. This information is intended solely for the use of the City and management of the City and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, MCI Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants Irvine, California REDEVELOPMENT AGENCIES FINANCIAL TRANSACTIONS REPORT COVER PAGE Santa Clarita Redevelopment Agency Fiscal Year: 20:11 ID Number: 13981983600 Certification: I hereby certify that, to the best of my knowledge and belief, the report forms fairly reflect the financial transactions of the agency in accordance with the requirements as prescribed by the California State Controller. Fiscal Officer Deputy City Manager Signatu Title Darren Hernandez Name (Please Print) Date 12-28-11 Per Health and Safety Code section 33080, this report is due within six months after the end of the fiscal year. The report is to include two (2) copies of the agency's component unit audited financial statements and the report on the Status and Use of the Low and Moderate Income Housing Fund (HCD report). To meet the filing requirements, all portions must be received by the California State Please complete, sign, and mail this cover page to either address below. Mailing Address: Express Mailing Address: State Controller's Office State Controller's Office Division of Accounting and Reporting Division of Accounting and Reporting. Local Government Reporting Section Local Govemment Reporting Section P. O. Box 842850 3301 C Street, Suite 700 Sacramento, CA 94250 Sacramento, CA 95896 Supplement to the Annual Report of Community Redevelopment Agencies Redevelopment Agency ID Number, 13981983600 Name of Redevelopment Agency: Santa Clarita Redevelopment Agency Mark the appropriate box below to indicate the ending date of your agency's fiscal year. Report data for that period only. r: September 2010 1J December 2010 June 2011 Return this form to the California State Controller's Office. 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O Q •p rn O c N c m 3 JLL c LL O U O O w w X d ~ £ ~ E N Gr d cma. c d 'y0 'y0 } a+ C O d l0 Go cu N R m 9 t0 h G la O. R O �' li d LL a Q Q N O F- 0 F t § § k 2 §} . of e: o) � _{ - Co LO� c w � CN ' f + + « o: . - | )3o CL$U- ; § \ /}. ( co q C:) C) I �'A ! g § 2 2 0 )} )} • x ■J2 W }.OD �w 2 /o m � \} ■ - of n} of ^ 0 : § , 2. C cli |\04 2 ${ m � CN-: ; 4- . U. . � § k c ` ' E � %\ + ^ § ; o; : � /} 7 }� U- 7 . CL C . . . . . | ' . Q a & M 0 LL 0 IL c @ /\.0 / k Im (o ;c sIL ' ) o ��� . , $ 5 J • E k m$ CL w a CL LU w o w J a Ix 0 J § § k 2 Redevelopment Agency of -the pity of Santa Clarita Santa Clarita, California f, Basic Financial Statements and Independent Auditors' Reports For the year ended June 30, 2011 C&L Capocicci & 'Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants Redevelopment Agency of the City of Santa Clarita Basic Financial Statements For the year ended June 30; 2011 1 Table of 'Contents Page IndependentAuditors' Report.........................................................................:.......................................:..............1 Basic Financial Statements: Government -Wide Financial Statements: Statementof Net Assets...:............................................................................................................................ 6 Statement of Activities and Changes in Net Assets.................................................................................. 7 Fund Financial Statements: Governmental Funds: BalanceSheet.........................................................................................................................................10 Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets.................................:.................................................................................11 Statement of Revenues, Expenditures and Changes in Fund Balances........................................12 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government -Wide Statement of Activities and Changes in Net Assets..............................................................................................................13 Notes to Basic Financial Statements................................................................................................................15 Supplementary Information: Computation of Low -Moderate Income Housing Capital Projects Fund -Excess Surplus 2010....... 39 Independent Auditors' Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards................................................................................ 43 Independent Auditors' Report on Compliance................................................................................................. 45 11 i 0 C&L Caporicci & Larson, Inc. ASubsidiary of Marcum LLP CertifzedPublic Accountants INDEPENDENT AUDITORS' REPORT To 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 (Agency), a component unit of the City of Santa Clarita, California (City), as of and for the fiscal year ended June 30, 2011, which collectively comprise the Agency's basic financial statements as listed in the table of contents. These basic financial statements are the responsibility of the Agency's management. Our responsibility is, to express an opinion on these basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As described in Note 1 to the basic financial statements, these basic financial statements present only the Agency and are not intended to present fairly the financial position and results of operations of the City in conformity with accounting principles generally accepted in the United States of America. In our opinion, the basic 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, 2011, and the respective changes in financial position for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. As explained further in note 12 to the basic financial statements, the California State Legislature has enacted legislation that is intended to provide for the dissolution of redevelopment agencies in the State of California. The effects of this legislation are uncertain pending the result of certain lawsuits that have been initiated to challenge the constitutionality of this legislation. The Agency adopted the provisions of Governmental Accounting Standards Board ("GASB") Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, as of July 1, 2010. www.c-lcpa.com To the Board of Directors of the Redevelopment Agency of the City of Santa Clarita Santa Clarita, California Page 2 In accordance with Government Auditing Standards, we have also issued our report dated December 23, 2011, on our consideration of the Agency's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements. 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 Agency has not presented a Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not required to be part of, the basic financial statements: Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency's basic financial statements. The accompanying Supplementary Information is presented for purpose of additional analysis and is no required part of the -basic financial statements. The Supplementary Information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion on the Supplementary Information. Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants Irvine, California December 23, 2011 1 1 i 1 1 1 1 1 1 1 i 1 1 1 1 BASIC FINANCIAL STATEMENTS 3 This page intentionally left blank. t GOVERNMENT -WIDE -FINANCIAL. STATEMENTS v 1 Redevelopment Agency of the City of Santa Clarita Statement of Net Assets June 30, 2011 Governmental Activities ASSETS Current assets: Cash and investments Cash and investments with fiscal agents $ 9,679,744 1,165,418 Receivables: Accounts 110,406 Tax increment 5,018 Interest 26,198 Total current assets 10,986,784 Noncurrent assets: Deferred charges 1,236,699 Capital assets 3,628,587 Total noncurrent assets 4,865,286 Total assets 15,852,070 LIABILITIES Current liabilities: Accounts payable and accrued liabilities 249,246 Accrued interest payable 440,776 Due to other governments 426,428 Deposits payable 9,438 Long term debt - due within one year 560,000 Total current liabilities 1,685,888 Noncurrent liabilities: Advance from the City of Santa Clarita 17,616,138 Long term debt - due in more than one year 36,935,684 Total noncurrent liabilities 54,551,822 Total liabilities 56,237,710 NET ASSETS Invested in capital assets, net of related debt 3,628,587 Restricted for: Low and moderate income housing 9,169,821 Redevelopment projects 35,413,716 Total restricted 48,212,124 Unrestricted (deficit) (88,597,764) Total net assets (deficit) $ (40,385,640) See accompanying Notes to Basic Financial Statements. 6 � Redevelopment Agency of the City of Santa Clarita Statement of Activities and Changes in Net Assets For the year ended June 30, 2011 PROGRAM EXPENSES: Community development - redevelopment Interest expense Total governmental expenses GENERAL REVENUES: Tax increment Investment earnings Service charges Total general revenues Transfers from the City of Santa Clarita Transfers to the City of Santa Clarita Change in net assets NET ASSETS (DEFICITS): Beginning of year End of year See accompanying Notes to Basic Financial Statements. 7 Governmental Activities $ 1,519,088 3,099,846 4,618,934 2,539,523 276,353 84,389 2,900,265 63,810 (17,366,748) (19,021,607) (21,364,033) $ (40,385,640) FUND FINANCIAL STATEMENTS Redevelopment Agency of the City 'of Santa Clarita Balance Sheet Governmental Funds June 30, 2011 Debt Service Funds Capital Projects Funds Total Low -Moderate Low -Moderate Governmental Redevelopment Income Housing Redevelopment Income Housing Funds ASSETS Cash and investments $ 28,323 $ 9,272 $ 756,645 $ 8,885,504 $ 9,679,744 Cash and investments with fiscal agents 896,539 268,879 - - 1,165,418 Receivables: - - 3,709 18,685 22,394 Accounts - - 82,621 27,785 110,406 Tax increment - 5,018 - 5,018 Interest - 4,339 21,859 26,198 Total assets $ 924,862 $ 278,151 $ 848,623 $ 8,935,148 $ 10,986,784 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ - $ $ 233,891 $ 15,355 $ 249,246 Due to other governments - 426,428 - 426,428 Deferred revenues - - 3,709 18,685 22,394 Deposits payable - - 9,438 9,438 Total liabilities - 664,028 43,478 707,506 Fund Balances: Restricted 924,862 278,151 - 8,891,670 10,094,683 Assigned - - 184,595 - 184,595 Total fund balances 924,862 278,151 184,595 8,891,670 10,279,278 Total liabilities and fund balances $ 924,862 $ 278,151 $ 848,623 $ 8,935,148 $ 10,986,784 See accompanying Notes to Basic Financial Statements. 10 Redevelopment Agency of the City of Santa Clarita Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets June 30, 2011 Total Fund Balances - Total Governmental Funds $ 10,279,278 Amounts reported for governmental activities in the Statement of Net Assets were different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. Non -depreciable 3,628,587 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 $ (17,616,138) Tax allocation bonds payable (37,645,000) ' Less: Unamortized net bond discount 149,316 (55,111,822) Debt issuance costs are reported as expenditures in the governmental funds in the year that the costs are incurred. On the Statement of Net Assets, such costs are reported as deferred charges and amortized over the life of the debt. Unamortized deferred charges at June 30, 1020 are: 1,236,699 Interest on long-term liabilities is not accrued in the governmental funds. On the statement of net assets g such costs are reported as interest payable. (440,776) A portion of interest receivable is not available to pay for current period expenditures and, therefore, are deferred in the governmental funds. 22,394 Net Assets of Governmental Activities $ (40,385,640) See accompanying Notes to Basic Financial Statements. 11 Redevelopment Agency of the City of Santa Clarita Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2011 REVENUES: Tax increment Investment income Service charges Total revenues EXPENDITURES: Current: General government Community development: Administration Professional services Tax increment passed through to other agencies Capital outlay Debt service: Bond issuance costs Principal retirement Interest Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers: In Out Repayment of City Advances Transfers in from the City of Santa Clarita Transfers out to the City of Santa Clarita Total other financing sources (uses) Net change in fund balances FUND BALANCES: Beginning of year End of year Debt Service Funds Capital Projects Funds Total Low -Moderate Low -Moderate Governmental Redevelopment Income Housing Redevelopment Income Housing Funds $ - $ - $ 2,031,618 $ 507,905 $ 2,539,523 113 37 221,938 54,265 276,353 - - 2,000 82,389 84,389 113 37 2,255,556 644,559 2,900,265 - 29,393 28,817 58,210 - 347,132 182,697 529,829 - 443,957 713 444,670 - 482,728 - 482,728 - 5,618,169 420,241 6,038,410 1,751 1,750 113 37 3,651 420,000 125,000 - 545,000 2,630,923 410,256 - - 3,041,179 3,052,674 537,006 6,921,492 632,505 11,143,677 (3,052,561) (536,969) (4,665,936) 12,054 (8,243,412) 9,485,498 537,006 - 2,850,000 12,872,504 - (12,335,498) (537,006) (12,872,504) (6,432,824) (6,432,824) - 63,810 - 63,810 - - (17,366,748) - (17,366,748) 3,052,674 537,006 (29,638,436) 2,312,994 (23,735,762) 113 37 (34,304,372) 2,325,048 (31,979,174) 924,749 278,114 34,488,967 6,566,622 42,258,452 $ 924,862 $ 278,151 $ 184,595 $ 8,891,670 $ 10,279,278 See accompanying Notes to Basic Financial Statements. 12 1 t 1 Redevelopment Agency of the City of Santa Clarita Reconciliation of the Governmental Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government -Wide Statement of Activities and Changes in Net Assets For the year ended June 30, 2011 Net Change in Fund Balances - Total Governmental Funds $ (31,979,174) Amounts reported for governmental activities in the Statement of Activities were different because: Governmental funds report capital outlay as expenditures. However, in the Statement of Activities the cost of these assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount of capital outlay additions not being depreciated in the current period. 6,038,410 The issuance of long-term liabilities provides current financial resources to governmental funds while the repayment of the principal of long-term liabilities consumes the current financial resources 'of governmental funds. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas the amounts are deferred and amortized in the Statement of Activities. The net effect of these differences in the treatment of long-term liabilities and related items is as follows: Amortization of bond discount $ (5,530) Amortization of bond issuance costs (AR F47) . (44,177) Repayment of debt principal was an expenditure in governmental funds, but the repayment reduced long- term liabilities in the Government -Wide Statement of Net Assets: Principal retirement 545,000 The Agency repaid, advances from the City which is not reported as a liability in the governmental funds. 6,432,824 Interest expense on long-term debt was reported in the Government -Wide Statement of Activities and Changes in Net Assets, but it did not require the use of current financial resources. Therefore, interest " expense was not reported as an expenditure in the governmental funds. The reconciling amount was the change in accrued interest from the prior year. 1,250 Investment income in the Statement of Activities that does not provide current financial resources is not reported as revenue in the governmental funds (15,740) Change in Net Assets of Governmental Activities $ (19,021,607) See accompanying Notes to Basic Financial Statements. 13 1 1 1 I 1 1 1 1 1 1 1 i 1 i t 1 1 1 NOTES TO BASIC FINANCIAL STATEMENTS 15 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the Redevelopment Agency of the City of Santa Clarita (Agency), a component unit of the City of Santa Clarita, California, (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the Agency's accounting policies are described below. A. The Financial Reporting Entity The Agency was established on November 29, 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. 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. GASB Statement No. 14, The Financial Reporting Entity, defines the reporting entity as the primary government and those component units for which the primary government is, or has the potential to be, financially accountable. Financial accountability is defined as appointment of a voting majority of the component unit's Board and either (a) the primary government has the ability to impose its will or (b) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government. Since the City Council of the City also serves as the Board of Directors of the Agency,. the City, in effect, has the ability to influence and control operations. Therefore, the City has oversight responsibility for the Agency. Accordingly, in applying the criteria of GASB Statement No. 14, the financial. statements of the Agency are included in the City's Comprehensive Annual Financial Report. The Agency has the same fiscal year as the City. The Comprehensive Annual Financial Report of the City can be obtained from the Finance Department of the City. B. Basis of Accounting and Measurement Focus The accounts of the Agency are organized on the basis of funds, each of which is considered a. separate accounting entity with its own self -balancing set of accounts that comprise its assets, liabilities, fund balance, revenues and expenditures. These funds are established for the purpose of carrying out specific activities or certain objectives in accordance with specific regulations, restrictions or limitations. Government resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. 16 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued ' B. Basis of Accounting and measurement Focus, Continued Government - Wide Financial Statements 1 The Agency's Government -Wide Financial Statements include a Statement of Net A sets and a Statement of Activities and Changes in Net Assets. These statements present summaries of governmental activities for the Agency accompanied by a total column. The Agency does not have any business -type activities, therefore only governmental activities are reported. These basic financial statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of'the Agency's assets and liabilities, including capital assets. and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of ' Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. The following interfund activities have been eliminated: Due from and to other funds Transfers in and out Governmental Fund Financial Statements Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non -major funds. The Agency has presented all of its funds as major. All governmental funds are accounted for on a spending or current financial resources measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the Agency, are increment property tax, interest revenue, and other revenue. Expenditures are recorded in the accounting period in which the related fund liability is incurred. Deferred revenues arise when potential revenues do not meet both the "measurable' and "available" criteria for recognition in the current period. Deferred revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the deferred revenue is removed from the balance sheet and revenue is recognized. 17 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued The reconciliations of the Fund Financial Statements to the Government -Wide Financial Statements are provided to explain the differences created by the integrated approach of GASB Statement No. 34. The Agency reports all of its governmental funds as major funds: Redevelopment Debt Service Fund - is used to account for the resources accumulated and payments made for principal and interest on long-term liabilities. Low -Moderate Income Housing Debt Service Fund - is used to account for the restricted financial resources accumulated and payments made for principal and interest on long-term liabilities associated with low and moderate income housing activities. 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. Low -Moderate Income Housing Capital Projects Fund - is used to account for the restricted financial resources to be used to increase the supply of available low and moderate income housing in the area. C. Cash and Investments The Agency pools cash resources from all funds with the City in order to facilitate the management of cash and achieve the goal of obtaining the highest yield with the greatest safety and least risk. Cash in excess of current requirements is invested in various interest-bearing accounts and other investments for varying terms. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid money market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which has invested a portion of the pooled funds in structured notes and asset- backed securities. LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these investments are subject to market risk as to change in interest rates. Cash equivalents are considered amounts in demand deposits and short-term investments with a maturity date within three months of the date acquired by the Agency and are presented as "Cash and Investments" in the accompanying basic financial statements. 18 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Cash and Investments, Continued Because the Agency pools its cash with the City, certain disclosure requirements in accordance with GASB 1 Statement No. 40, Deposit and Investment Risk Disclosures (an amendment of GASB Statement No. 3), if applicable, for deposit and investment risks are specified in the City's financial statements for the following areas: Interest Rate Risk Credit Risk Overall • Custodial Credit Risk Concentration of Credit Risk ' ➢ Foreign Currency Risk D. Cash and Investments with Fiscal Agents Cash and investments with fiscal agents are restricted for. the redemption of bonded debt and for acquisition and construction of capital projects. E. Land Held for Resale Land held for resale is recorded at the lower of acquisition cost or market value, but not greater than net realizable value. Reported amounts are fully reserved, which indicates that they do not constitute available spendable resources. F. Capital Assets Government -Wide Financial Statements Capital assets, which include land, site improvements, buildings and improvements, equipment and infrastructure assets, are reported in the government -wide financial statements. Purchased or constructed capital assets are recorded at historical cost or estimated historical cost. Donated capital assets are valued at the fair market value of the asset on the date on which they were contributed. The costs of normal maintenance and repairs that do not add value to the assets or materially extend the life are not capitalized. Capital assets are defined as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of one year. Depreciation is charged to operations using the straight-line method of idepreciation over the estimated useful lives of the assets as follows: Site improvements 5-25 years Equipment 5-25 years Buildings and improvements 5-50 years Infrastructure 20-60 years Fund Financial Statements. The fund financial statements do not present capital assets. As such, capital assets are. shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets. 19 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued G. Deferred Charges Deferred charges represent capitalized costs incurred in connection with the issuance of long-term liabilities. These costs are amortized over the life of the debt on a straight-line basis. H. 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, 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 Low -Moderate Income Housing 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 Land 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. L Long -Term Debt Government -Wide Financial Statements Long-term debt and other financed obligations are reported as liabilities in the Government -Wide Financial Statements. Bonds premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of applicable premium or discount. Fund Financial Statements The fund financial statements do not present long-term debt. Consequently, long-term debt is shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets. J. Risk Management The Agency participated in the City's self-insurance programs for workers' compensation and liability losses. Excess insurance is purchased to protect the City from losses above the self-insured retention. At no time during the past three years have insurance claims exceeded insurance coverage. 20 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued K Use of Estimates 1 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. L. Net Assets In the government -wide financial statements, net assets are classified in the following categories: Invested in Capital Assets, Net of Related Debt - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets. Restricted Net Assets - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments. Unrestricted Net Assets - This amount is net assets that do not meet the definition of "invested in capital ' assets, net of related debt" or "restricted net assets." Fund Financial Statements - In the Governmental Fund Financial Statements, fund balances are classified in the following categories: Nonspendable - Items that cannot be spent because they are not in spendable form, such as prepaid items and inventories, items that are legally or contractually required to be maintained intact, such as principal of an endowment or revolving loan funds. . Restricted - Restricted fund balances encompass the portion of net fund resources subject to externally enforceable legal restrictions. This includes externally imposed restrictions by creditors, such as through debt covenants, grantors, contributors, laws or regulations of other governments, as well as restrictions imposed by law through constitutional provisions or enabling legislation. Committed - Committed fund balances encompass the portion of net fund resources, the use of which is constrained by limitations that the government imposes upon itself at its highest level of decision .making, normally the governing body, and that remain binding unless removed in the same manner. The RDA Board of Directors is considered the highest authority for the RDA. Assigned - Assigned fund balances encompass the portion of net fund resources reflecting the government's intended use of resources. Assignment of resources can be done by the highest level of decision making or by a committee or official designated for that purpose. The RDA Board has authorized the City Manager and the Director of Finance for that purpose. Unassigned - This category is for any balances that have no restrictions placed upon them. 1 21 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued M. Spending Policy Government -Wide Financial Statements When an expense is incurred for purposes for which both restricted and unrestricted resources are available, the Agency's policy is to apply restricted resources first. Governmental Fund Financial Statements When expenditures are incurred for purposes for which all restricted, committed, assigned and unassigned fund balances are available, the RDA's policy is to apply in the. following order, except for instances wherein an ordinance specifies the fund balance: ➢ Restricted ➢ Committed ➢ Assigned ➢ Unassigned 2. CASH AND INVESTMENTS A. Cash and Investments The Agency had the following cash and investments at June 30,2011: Cash and Investments Cash and Investments with Fiscal Agents Total $ 9,679,744 1,165,418 $ 10,845,162 The Agency's funds are pooled with the City's cash and investments in order to generate optimum interest income. Restricted cash and investments held with fiscal agents in the City's debt service funds are restricted for the payment of principal and interest on tax allocation bonds. B. 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. ox 1 Maximum Maximum Percentage Investment Maximum or Amount of in One Authorized Investment Type Maturity Portfolio * Issuer U.S. Treasury Obligations 5 years None None Money Market Mutual Funds 5 years 15% 10% Local Agency Investment Fund (LAIF) Not Applicable. $50M None ox 1 I Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30,2011 1 1 t 2. CASH AND INVESTMENTS, Continued C. Investments Authorized by the California Government code and the City's And Agency's Investment Policy The Agency, as a component unit of the City, follows the investment policy adopted by the City. Funds of the City and Agency, other than bond proceeds held in restricted accounts, may be invested in any instrument allowable under current legislation of the State of California (Government Code Section 53600 et sec.) so long as the investment is appropriate and consistent with this Investment Policy taking into consideration the City's and Agency's investment objectives. The table also identifies certain provisions of the California Government Code (or the City's investment policy) 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. Maximum Authorized Investment Type Local Agency Bonds U.S. Treasury Obligations State of California Obligations CA Local Agency Obligations U.S. Government Sponsored Enterprise Securities Banker's Acceptances Commercial Paper Negotiable Certificates of Deposit Repurchase Agreements Medium -Term Notes Money Market Mutual Funds Mortgage Pass -Through Securities Los Angeles County Pooled Investment Funds Local Agency Investment Fund (LAIF) Maximum Maturity 5 years 5 years 5 years 5 years 5 years 180 days 270 days 5 years 1 year 5 years 5 years 5 years Not Applicable Not Applicable Percentage or Amount of Portfolio * None None None None None 40% 25% 30% None 30% 15% 20% None $50M Maximum Investment in One Issuer None None None None None 30% 10% None None None 10% None None None *Excluding amounts held by bond trustees that are not subject to California Government Code restrictions D. Interest Rate Risk As a means of limiting its exposure to fair value losses arising from interest rate changes, the City's and Agency's investment policy (Policy) limits investments to a maximum maturity of five years from the date of purchase. 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 1 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. 23 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 2. CASH AND INVESTMENTS, Continued D. Interest Rate Risk, Continued At June 30, 2011, the Agency had the following investment maturities: Investment Type Cash and Investments: US Treasury Securities Federal Agencies Money Market Local Agency Investment Fund Total Cash and Investments with Fiscal Agents: Money Market Total E. Credit Risk Fair Value $ 999,510 3,999,120 75,298 4,605,816- 9,679,744 Investment Maturities (In Years) Less than 1 $ 999,510 3,999,120 75,298 4,605,816 9,679,744 1,165,418 1,165,418 $ 10,845,162 $ 10,845,162 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 Agency'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: Credit Quality Distribution for Securities with Credit Exposure as a Percentage of Total Investments 24 Moody's S&P's % of Investments Credit Credit with Interest Investment Type Rating Rating Rate Risk US Treasury Securities AAA AAA 9.22% Federal Agencies AAA AAA .36.87% Money Market Not Rated Not Rated 11.44% . Local Agency Investment Fund Not Rated Not Rated 42.47% Total 100.00% 24 1 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 2. CASH AND INVESTMENTS, Continued F. 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. Investments in any one issuer that represent 5 % or more of the Agency's total investments are As follows: 1 Reported % of Total Issuer Investment Type Amount Investments Federal National Mortgage U.S. Government Sponsored - Association Enterprise Securities $ 999,890 25.00% Federal Home Loan Bank U.S. Government Sponsored Enterprise Securities 999,930 25.00% ' Federal Home Loan Mortgage U.S. Government Sponsored Corporation Enterprise Securities -999,570 25.00% Federal Farm Credit Bank U.S. Government Sponsored ' Enterprise Securities 999,730 25.00% G. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial P rY 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 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 1 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 Agency deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2011, the Agency's deposits (bank balances) were - insured by the Federal Depository Insurance Corporation or collateralized as required under California Law. L! 25 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 2. CASH AND INVESTMENTS, Continued H. Investment in State Investment Pool The Agency is a participant in LAIF which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The Agency may invest up to $50,000,000 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 Agency's investments with LAIF at June 30, 2011, included a portion of the pool funds invested in Structured Notes and Asset -Backed Securities: Structured Notes: ' debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one.or more indices and/or. that have embedded forwards or options. Asset -Backed Securities: generally mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables. As of June 30, 2011, the Agency has investments in LAIF, which had invested 5.42% of the pool investment funds in Structured Notes and . Asset -Backed. The LAIF fair value factor of 1.001643776 was used to calculate the fair value of the investments in LAIF. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. 3. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS. Interfund transfers: Transfers Out Capital Projects Fund: Redevelopment Agency Low -Moderate Income Housing Totals Transfers were primarily made for the purpose of making debt service payments, transferring the 20% set- aside for the tax increment monies and to reimburse bond funds for a property purchase. The transfers from the debt service funds to the capital projects funds provide funding for the Agency's redevelopment activities. The transfers from the capital projects funds to the debt service funds provide funding for debt service. 26 Transfers In Debt Service Fund Capital Projects Redevelopment Low -Moderate Low -Moderate Agency Income Housing Income Housing Total $ 9,485,498 $ - $ 2,850,000 $ 12,335,498 - 537,006 - 537,006 $ 9,485,498 $ 537,006 $ 2,850,000 $ 12,872,504 Transfers were primarily made for the purpose of making debt service payments, transferring the 20% set- aside for the tax increment monies and to reimburse bond funds for a property purchase. The transfers from the debt service funds to the capital projects funds provide funding for the Agency's redevelopment activities. The transfers from the capital projects funds to the debt service funds provide funding for debt service. 26 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 3. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS, Continued Transfers to and from the City of Santa Clarita: Transfers in / (Out) Capital Projects Debt Service Redevelopment Redevelopment ' Purpose Agency Agency Bond Proceeds $ (16,603,312) $ Repayment of Advances - (6,432,824) Land held for Resale (763,436) - . Pass Thru Payments 63,810 Net Transfers with the City. of Santa Clarita $ (17,302,938) $ (6,432,824) The transfers involving the City were for.unspent bond funds for the Public Library Fund for construction of the Old Town Newhall Library, transferring of land to the City, repayment of advances and various pass thru payments. The Agency had the following long-term liabilities at June 30, 2011: Classification Balance Balance Due Within Due in More July 1, 2010 Additions Reductions June 30, 2011 One Year Than One Yeaj $ 29,460,000 $ - $ (420,000) $ 29,040,000 $ 435,000 $28,605,000 8,730,000 - (125,000) 8,605,000 125,000 8,480,000 4. CAPITAL ASSETS (149,316) 17,616,138 Tax Allocation Bonds - Housing Set -Aside $ 62,084,116 $ Less deferred amounts: $ 55,111,822 $ Capital assets of the Agency for the year ended June 30, 2011 are presented in the table below. . ' Totals Balance Balance July 1, 2010 Additions Deletions Transfers June 30, 2011 Capital assets, not being depreciated: ' Land $ 11,209,461 $ 1,747,217 $ $ (12,956,678) $ Construction in progress 4,623,327 4,291,193 - (5,285,933) 3,628,587 Total Capital assets $ 15,832,788 $ 6,038,410 $ - $ (18,242,611) $ 3,628,587 1 5. LONG TERM LIABILITIES The Agency had the following long-term liabilities at June 30, 2011: Classification Balance Balance Due Within Due in More July 1, 2010 Additions Reductions June 30, 2011 One Year Than One Yeaj $ 29,460,000 $ - $ (420,000) $ 29,040,000 $ 435,000 $28,605,000 8,730,000 - (125,000) 8,605,000 125,000 8,480,000 Tax Allocation Refunding Bonds - Series 2008 (149,316) 17,616,138 Tax Allocation Bonds - Housing Set -Aside $ 62,084,116 $ Less deferred amounts: $ 55,111,822 $ Issuance discount for 2008 Tax Allocation Bond Bonds Advances payable Totals (154,846) 24,048,962 - 5,530 105,572 (6,538,396) (149,316) 17,616,138 - (149,316) - 17,616,138 $ 62,084,116 $ 105,572 $ (7,077,866) $ 55,111,822 $ '560,000 $54,551,822 27 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 5. LONG TERM LIABILITIES, Continued Tax Allocation Refunding Bonds, Series 2008 On June 12, 2008,. the Agency issued the Santa Clarita Redevelopment Agency Tax Allocation Bonds, Series 2008 (2008 Bonds) in the amount of $29,860,000. Proceeds of the 2008 Bonds will be used to finance certain redevelopment projects of the Agency, fund a debt service reserve account, and pay for costs of the bond issuance. The bonds were issued at a net discount of $165,906, which will be .amortized and recognized as interest expense over the life of the debt on a straight-line basis for government -wide financial statement purposes. This bond issue is comprised of $12,065,000 serial bonds maturing annually on October 1 through 2028 and three term bonds (totaling $17,795,000) maturing on October 1, 2032, October 1, 2037, and October 1, 2042 that are payable in annual sinking fund installments commencing October 1, 2029. Interest.on the 2008 Bonds is payable semi-annually on October 1 and April 1 at rates ranging from 4.00% to 4.75% for the: serial bonds and 4.75% to 5.00% for the term bonds. The total principal and interest remaining to be paid on the Bonds is $56,617,118 as of June 30, 2011. For the current year, principaland interest paid on the Bonds was $1,783,748 and -property tax increment net revenues were $2,031,618. The Bonds required 88% of net property tax .increment revenues. The outstanding balance of the Bonds was $29,040,000 at June 30, 2011. The annual debt service requirements on these bonds are as follows: Year Ending June 30, Principal Interest 2012 $ 435,000 2013 450,000 2014 470,000 2015 490,000 2016 510,000 2017-2021 2,870,000 2022-2026 3,510,000 2027-2031 4,390,000 2032-2036 5,545,000 2037-2041 7,040,000 2042-2043 .3,330,000 Total $ 29,040,000 28 $ 1,346,648 1,328,948 1,310,548 1,291,348 1,271,348 6,027,350 5,360,143 4,454,894 3,274,450 1,742,941 168,500 Total $ 1,781,648 1,778,948 1,780,548 1,781,348 1,781,348 8,897,350 8,870,143 8,844,894 8,819,450 8,782,941 3,498,500 $ 27,577,118 $ 56,617,118 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 5. LONG TERM LIABILITIES, Continued Tax Allocation Bonds - Housing Set -Aside In June 2008, the Agency issued the Santa Clarita Redevelopment Agency Housing Set -Aside Tax Allocation Bonds, Series 2008 (Housing Set -Aside Bonds) in the amount of $8,850,000. *Proceeds of the Housing Set -Aside Bonds will be used to finance low and moderate income housing projects and programs, fund a reserve fund, and pay for costs of the bond issuance. The bonds were issued at a net discount of $5,241. The bond issue is comprised of $3,550,000 serial bonds maturing annually on October 1 through 2028 and three term bonds (totaling $5,300,000) maturing on October 1 , 2032, October 1, 2037, and October 1, 2042 that are payable in annual sinking fund installments commencing October 1, 2029. Interest on the ' Housing Set -Aside Bonds is payable semi-annually on October 1 and April 1 at rates ranging from 4.00% to 4.875% for the serial bonds and 5.00% for the term bonds. - 1 1 1 n The total principal and interest remaining to be paid on the Bonds is $16,928,746 as of June 30, 2011. For the current year, principal and interest paid on the Bond's was $535,256 and property tax increment net revenues were $507,905. The Bonds required 105% . of net property tax increment revenues. The outstanding balance of the Bonds was $8,605,000 at June 30, 2011. The annual debt service requirements on the Housing Set -Aside Bonds are as follows: Year Ending Total June 30, Principal 2012 $ 125,000 2013 135,000 2014 140,000 2015 145,000 2016 150,000 2017-2021 .840,000 2022-2026 1,030,000 2027-2031 1,295,000 2032-2036 1,650,000 2037-2041 2,100,000 2042-2043 995,000 Total $ 8,605,000 Interest Total $ 405,256 $ 530,256 400,056 535,056 394,556 534,556 388,856 533,856 382,956 532,956 1,818,269 2,658,269 1,622,322 2,652,322 1,352,350 2,647,350 987,500 2,637,500 521,250 2,621,250 50,375 1,045,375 $ 8,323,746 $ 16,928,746 The following is a summary of the unamortized premiums and discounts outstanding at June 30, 2011: ' Balance July 1, 2010 Additions Deletions $ (154,846) $ - $ 5,530 t Amortization expense was $5,530 for June 30, 2011. 29 Balance lune 30.2011 $ (149,316) Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 5. LONG TERM LIABILITIES, Continued Bond Issuance Costs The following is a summary of bond issuance costs at June 30,2011: Balance Balance July 1, 2010 Additions Deletions June 30, 2011 2008 Tax Allocation Bonds $ 1,275,346 $ - $ (38,647) $ 1,236,699 Amortization expense for the year ended June 30, 2011 was $36;647. Advances from the City On June 1, 2008, various advances for prior redevelopment projects were refinanced and consolidated into one note. The new note matures June 1, 2043 and bears simple interest calculated on an annual basis at a fixed rate of 6.8%. There is no fixed payment schedule for this note; however, all outstanding principal and accrued interest are due at maturity. The amount outstanding at June 30, 2011 is $12,610,103 including accrued interest of $255,487. On December 11, 2009, a new advance from the City was loaned to the RDA for downtown rehabilitation project work. The new note matures June 1, 2043 and bears simple interest calculated on a monthly basis at a variable rate based on the average monthly yield of the City's overall investment portfolio. There is no fixed payment schedules for this note; however, all outstanding principal and accrued interest are due at maturity. The amount outstanding at June 30, 2011 is $2,644,897 including accrued interest of $94,897. On June 1, 2011, an additional advance from the City was completed to the RDA for -downtown t rehabilitation projects. The new note matures June 1, 2043 and bears simple interest calculated on a monthly basis at a variable rate based on the average monthly yield of the City's overall investment portfolio. There is no fixed payment schedules for this note; however, all outstanding principal and accrued interest are due at maturity. The amount outstanding at June 30, 2011 is $2,361,138 including accrued interest of $51,252. Advances June 2008 note $ 12,610,103 December 2009 note 2,644,897 June 2010 note 2,361,138 Total advances $ 17,616,138 F 1 30 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 6. 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, 2011, the Agency's required pass through payments totaled $531,551. As of June 30, 2011, the Agency owed $426,428 to various entities. 7. LAND HELD FOR RESALE ' During the year ended June 30 2011 the Agency transferred land to the City for its use in the amount of $763,436. 8. RISK MANAGMENT ' 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, 2011, $40,000 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 on 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. The City's workers' compensation coverage is also administered by SDRMA. The City is under statutory workers' compensation coverage and claims are handled by SDRMA up to a limit of $5,000,000 per occurrence. The annual member contribution is $542,541 for the Property/ Liability Program and $382,953 for the Workers' Compensation Program (based on estimated wages). Members are subject to dividends and ' assessments but no such dividends have been declared, nor have any assessments been levied for the year ended June 30, 2011. Additionally, there are no known refunds or credits due to SDRMA. 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, 2011. 1 1 31 Redevelopment Agency of the City of Santa Clarita . Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 8. SELF INSURANCE, Continued SDRMA has provided its unaudited financial report for the year ended June 30, 2011, which can be obtained from SDRMA, 1112 I Street, Suite 300, Sacramento, California 95814. Summary information on SDRMA is as follows: Year ended 1 June 30, 2011 Unaudited Total Revenues $ 27,211,265 Total Expenses $ 21,368,769 Total Assets $ 98,027;782 Total Liabilities $ 47,095,572 Total Equity $ 50,932,210 9. CLASSIFICATION OF FUND BALANCES The City has adopted the provisions of GASB Statement No. 54 Fund Balance and Governmental Fund Type Definitions. GASB 54 establishes Fund Balance classifications based largely upon the extent to which a government is bound to observe constraints imposed .upon the use of the resources reported in governmental funds. The Governmental Fund statements conform to this new classification as presented below. Debt Service Funds Capital Projects Funds Low -Moderate Low -Moderate Redevelopment Income Housing Redevelopment Income Housing Total Restricted Debt Service $ 924,862 $ 278,151 $ - $ - $ 1,203,013 Low/Moderate housing projects - - - 8,891,670 8,891,670 Total restricted 924,862 278,151 - 8,891,670 10,094,683 Assigned Street Improvement Projects - - 184,595 - 184,595 - Total assigned - - 184,595 - 184,595 Total fund balances $ 924,862 $ 278,151 $ 184,595 $ 8,891,670 $ 10,279,278 32 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 10. DEFICIT NET ASSETS Government -Wide Financial Statements Deficit Unrestricted, net assets $ (40,385,640) Total net assets $ (40,385,640) The negative amounts in unrestricted net assets were primarily caused by the recording of long-term debt. It is anticipated that the deficit will be eliminated in future years from the receipt of tax increment revenues and the sale of other Agency assets. 11. COMMITMENTS AND CONTINGENCIES The Agency had the following commitments as of June 30, 2011, as a result of the Agency entering into agreements to fund various projects and other activities as follows: Commitments and contracts for construction projects and capital assets: SCRRA Fencing Project $ . 83,269 Newhall Streetscape 53,520- Newhall 3,520Newhall Traffic Circle 177,661 Downtown Revitalization 55,691 Total $ 370,141 There are various claims and legal actions pending against the Agency for which no provision has been ' made in the accompanying basic financial statements. In the opinion of Agency management, liabilities arising from these claims and legal actions, if any, will not have an adverse material effect on the financial position of the Agency. The Agency has received Federal grants for specific purposes that are subject to review and audit by the Federal government. Although such audits could result in expenditure disallowance under grant terms, any required reimbursements are not expected to be material. The Agency's Low Moderate Income Housing Fund has accumulated ted excess surplus fund balances as defined by the California Health and Safety Code. The Agency is required to develop a plan to eliminate ' the excess surplus within the time frame allowed by the California Health and Safety Code. If the Agency does not eliminate the excess surplus within the required time frame, significant penalties could be assessed, including transferring such excess surplus to the County Housing Authority and/or California Department of Housing and Community Development. 33 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 12. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPEMENT AGENCIES On June 29, 2011, the Governor of the State of California signed Assembly Bills X1 26 and 27 as part of the State's budget package. Assembly Bill X1 26 requires each California redevelopment agency to suspend nearly all activities except to implement existing contracts, meet already -incurred obligations, preserve its assets and prepare for the impending dissolution of the agency. Assembly Bill X1 27 provides a means for redevelopment agencies to continue to exist and operate by . means of a Voluntary Alternative Redevelopment Program. Under this program, each city would adopt an ordinance agreeing to make certain payments to the County Auditor Controller in fiscal year 2011-12 and annual payments each fiscal year thereafter. Assembly Bill X1 26 indicates that the city "may use any available funds not otherwise obligated for other uses" to make this payment. The City of Example intends to use available monies of its redevelopment agency for this purpose and the City and Agency have approved a reimbursement agreement to accomplish that objective. The amounts to be paid after fiscal .year 2012-13 have yet to be determined by the state legislature. Assembly Bill X1 26 directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by Assembly Bill X126. In the event that Assembly Bill X1 26 is upheld, the interagency receivable recognized by funds of the City that had previously loaned or advanced funds to the redevelopment agency may become uncollectible resulting in a loss recognized by such funds. The City might additionally be impacted if reimbursements previously paid by the redevelopment agency to the City for shared administrative services are reduced or eliminated. The League of California Cities and the California Redevelopment Association (CRA) filed ala ' wsuit on July 18, 2011 on behalf of cities, counties and redevelopment agencies petitioning the California Spreme Court to overturn Assembly Bills X1 26 and 27 on the grounds that these bills violate the California Constitution. On August 11, 2011, the California Supreme Court issued a stay of all of Assembly Bill X1 27 and most of Assembly Bill X1 26. The California Supreme Court stated in its order that "the briefing schedule is designed to facilitate oral argument as early as possible in 2011, and a decision before -January 15, 2012." A second order issued by the California Supreme Court on August 17, 2011 indicated that certain provisions of Assembly Bills X1 26 and 27 were still in effect and not affected by its previous stay, including requirements to file an appeal of the. determination of the community remittance payment by August 15, the requirement to adopt an Enforceable Obligations Payment Schedule ("EOPS") by August 29, 2011, and the requirement to prepare a preliminary draft of the initial Recognized Obligation Payment Schedule ("ROPS") by September 30, 2011. Because the stay provided by Assembly Bill X1 26 only affects enforcement, each agency must adopt an Enforceable Obligation Payment Schedule and draft Recognized Obligation Payment Schedule prior to September 30, as required by the statute. Enforceable obligations include bonds, loans and payments required by the federal or State government; legally enforceable payments required in connection with agency employees such as pension payments and unemployment payments, judgments or settlements; legally binding and enforceable agreements or contracts; and contracts or agreements necessary for the continued administration or operation of the agency that are permitted for purposes set forth in AB1X 26. 34 Redevelopment Agency of the City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 12. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPEMENT AGENCIES, Continued On October 11, 2011, City Ordinance No. 11-17 was adopted, indicating that the City will comply with the Voluntary Alternative Redevelopment Program in order to permit the continued. existence and operation of the agency, in the event Assembly Bills X1 26 and/or 27 are upheld as constitutional. The initial payment by the City is estimated to be $477,093 with one half due on January 15, 2012 and the other half due May 15, 2012. Thereafter, an estimated $112,257 will be due annually. The amounts to be.paid after fiscal year 2012- 13 have yet to be determined by the State Legislature. The semi-annual payments will be due on January 15 and May 15 of each year and would increase or decrease with changes in tax increment. Additionally, an increased amount would be due to schools if any "new debt" is incurred. Assembly Bill. X1 27 allows a one- year reprieve on the agency's obligation to contribute 20% of tax increment to the low -and -moderate - income housing fund so as to permit the Agency to assemble sufficient funds to make its initial payments. Failure to make these payments would require agencies to be terminated under the provisions of ABX126. Management believes that the Agency will have sufficient funds to pay its obligations as they become due during the fiscal year ending June 30, 2012. The nature and extent of the operation of redevelopment agencies in the State of California beyond that time frame are dependent upon the outcome of litigation surrounding the actions of the state. In the event that Assembly Bills X1 26 and/or 27 are specifically found by the courts to be unconstitutional, there is a possibility that future legislative acts may create new challenges to the ability of redevelopment agencies in the State of California to continue in view of the California State Legislature's stated intent to eliminate California redevelopment agencies and to reduce their funding. 35 SUPPLEMENTARY INFORMATION 37 Redevelopment Agency of the City of Santa Clarita Computation of the Low -Moderate Income Housing Capital Projects Fund - Excess Surplus For the year ended July 1, 2010 OPENING FUND BALANCE, JULY 1, 2010 $ 6,566,621 LESS: Unspent bond proceeds (2,926,820) Encumbrances (535,256) Available Low/Moderate Income Housing Funds 3,104,545 LIMITATION (GREATER OF $1,000,000 OR FOUR YEARS SET-ASIDE): Set-aside for last four years: Prior Year 1- 2010 $ 785,596 Prior Year 2 - 2009 800,529 Prior Year 3 - 2008 738,730 Prior Year 4 - 2007 629,316 Total set-aside for last four years $ 2,954,171 Base limitation $ 1,000,000 Greater amount 2,954,171 COMPUTED EXCESS SURPLUS $ 150,374 39 This page intentionally left blank. 40 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS 41 C &L Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants INDEPENDENT AUDITORS' REPORT ON INTERNAL.CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To 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 (Agency), a component unit of the City of Santa Clarita, California (the "City"), as of and for the year ended June 30, 2011, as listed in the table of contents, and have issued our report thereon dated December 23, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and.. the standard`s 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 in order to determine 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 deficiency in internal control exists when the design or operation of a control does not allow management .or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency's financial statements are free of material. misstatement, 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. 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. www.c-lcpa.com To the Board of Directors of the Redevelopment Agency of the City of Santa Clarita Santa Clarita, California Page 2 This report is intended solely for the information and use of management, the Board of Directors, others within the entity, and the 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. Caporicci & Larson, Inc. . A Subsidiary of Marcum LLP Certified Public Accountants Irvine, California December 23, 2011 44 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE 1 To the Board of Directors of the Redevelopment Agency of the City of Santa Clarita Santa Clarita, California 1 Compliance ' We have audited the Redevelopment Agency of the City of Santa Clarita (Agency's), compliance with the California Health and Safety Code as required by Section 33080.1 for the year ended June 30, 2011. Compliance with the requirements referred to above is the responsibility of the Agency's management. Our responsibility is to express an opinion on the Agency's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the 1 United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Guidelines for Compliance Audits of California Redevelopment Agencies, June 2011, issued by the State Controller and as interpreted in the Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies, August 2011, issued by ' the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. Those standards require that we plan'and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a material effect on the Agency has occurred. An audit includes examining, on a test basis, evidence about the Agency's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our ' audit does not provide a legal determination of the Agency's compliance with those requirements. In our opinion, the Agency complied, in all material respects, with the compliance requirements referred to above that are applicable for the year ended June 30, 2011. Internal Control Over Compliance Management of the Agency is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit, we considered the Agency's internal control over compliance to determine the auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis. www.c-lcpa.com 1 C&L Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants INDEPENDENT AUDITORS' REPORT ON COMPLIANCE 1 To the Board of Directors of the Redevelopment Agency of the City of Santa Clarita Santa Clarita, California 1 Compliance ' We have audited the Redevelopment Agency of the City of Santa Clarita (Agency's), compliance with the California Health and Safety Code as required by Section 33080.1 for the year ended June 30, 2011. Compliance with the requirements referred to above is the responsibility of the Agency's management. Our responsibility is to express an opinion on the Agency's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the 1 United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Guidelines for Compliance Audits of California Redevelopment Agencies, June 2011, issued by the State Controller and as interpreted in the Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies, August 2011, issued by ' the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. Those standards require that we plan'and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a material effect on the Agency has occurred. An audit includes examining, on a test basis, evidence about the Agency's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our ' audit does not provide a legal determination of the Agency's compliance with those requirements. In our opinion, the Agency complied, in all material respects, with the compliance requirements referred to above that are applicable for the year ended June 30, 2011. Internal Control Over Compliance Management of the Agency is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit, we considered the Agency's internal control over compliance to determine the auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis. www.c-lcpa.com To the Board of Directors of the. Redevelopment Agency of the City of Santa Clarita Santa Clarita, California Page 2 Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies, or material weaknesses in internal control over compliance. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, the Board of Directors, others within the entity, and the 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. Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants Irvine, California December 23, 2011 . 46 t CITY OF SANTA CLARITA (CALIFORNIA) COMPREHENSIVE ANNUAL FINANCIAL REPORT 1 I FOR THE FISCAL YEAR ENDED JUNE 30, 2011 1 PREPARED BY THE DEPARTMENT OF ADMINISTRATIVE SERVICES CITY OF SANTA CLARITA, CALIFORNIA City of Santa Clarita Comprehensive Annual Financial Report For the year ended June 30, 2011 Table of Contents PMpe INTRODUCTORY SECTION Letterof Transmittal................................................................................................................................................. i GFOA Certificate of Achievement for Excellence in Financial Reporting ........................................................vii Officialso the City of Santa Clarita....................................................................................................................... viii OrganizationChart....................................................................................................................................................ix Mapof the City of Santa Clarita.............................................................................................................................. x FINANCIAL SECTION IndependentAuditors' Report...............................................................................................................................1 Management's Discussion and Analysis (Unaudited)......................................................................................3 Basic Financial Statements: Government -wide Financial Statements: Statementof Net Assets...............................................................................................................................19 Statementof Activities................................................................................................................................. 20 ' Fund Financial Statements: Governmental Fund Financial Statements: ' Balance Sheet..........................................................................................................................................24 Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets.....................................................................27 ' Statement of Revenues, Expenditures and Changes in Fund Balances.............................................................................................................28 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government -Wide Statement of Activities and Changes in Net Assets...................................................................30 1 Proprietary Fund Financial Statements: Statementof Net Assets........................................................................................................................33 Statement of Revenues, Expenses and Changes in Fund Net Assets.............................................34 ' Statement of Cash Flows.......................................................................................................................35 Fiduciary Fund Financial Statements: Statementof Net Assets........................................................................................................................39 Notes to Basic Financial Statements...............................................................................................................41 City of Santa Clarita Comprehensive Annual Financial Report For the year ended June 30, 2011 Table of Contents, Continued Page FINANCIAL SECTION, Continued Required Supplementary Information (Unaudited)..................................................................................79 Notes to Required Supplementary Information......................................................................................80 Budgetary Comparison Schedule: GeneralFund..........................................................................................................................................81 Bridge and Thoroughfare Special Revenue Fund.............................................................................82 Developer Fees Special Revenue Fund...............................................................................................83 Open Space Preservation District Special Revenue Fund................................................................84 Defined Benefit Pension Plan..................................................................:..................................................85 Other Post Employment Benefits..............................................................................................................86 Supplementary Information: Non -Major Governmental Funds: CombiningBalance Sheet............................................................................................................................88 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ...........................94 Description of Nonmajor Governmental Funds......................................................................................99 Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Bikeway Special Revenue Fund...........................................................................................................101 Gas Tax Special Revenue Fund............................................................................................................102 Proposition A Special Revenue Fund.................................................................................................103 Park Dedication Special Revenue Fund..............................................................................................104 Special Assessment Special Revenue Fund........................................................................................105 State Park Special Revenue Fund........................................................................................................106 TDASpecial Revenue Fund.................................................................................................................107 Traffic Safety Special Revenue Fund...................................................................................................108 CDGBSpecial Revenue Fund...............................................................................................................109 AQMDSpecial Revenue Fund.............................................................................................................110 Landscape Maintenance District # 1 Special Revenue Fund ...........................................................111 Stormwater Utility Special Revenue Fund.........................................................................................112 Miscellaneous Grants Special Revenue Fund....................................................................................113 Federal Urban Aid Special Revenue Fund.........................................................................................114 BJA Law Enforcement Special Revenue Fund...................................................................................115 Supplemental Law Grant Special Revenue Fund..............................................................................116 HOMESpecial Revenue Fund.............................................................................................................117 Library Facility Fees Special Revenue Fund......................................................................................118 Public Education and Government Special Revenue Fund.............................................................119 Proposition C Special Revenue Fund..................................................................................................120 Federal Grants Special Revenue Fund................................................................................................121 Measure R Special Revenue Fund.............................................................................................:.........122 Public Library Special Revenue Fund.................................................................................................123 Tourism Marketing District Special Revenue Fund..........................................................................124 11 City of Santa Clarita Comprehensive Annual Financial Report For the year ended June 30, 2011 Table of Contents, Continued .Page FINANCIAL SECTION, Continued Internal Service Funds: Combining Statement of Net Assets..........................................................................................................126 Combining Statement of Revenues, Expenses and Changes in Net Assets .........................................127 Combining Statement of Cash Flows........................................................................................................128 Fiduciary Funds: Combining Statement of Fiduciary Assets and Liabilities.....................................................................130 Schedule of Changes in Fiduciary Assets and Liabilities - All Agency Funds ...................................131 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 .......................................135 STATISTICAL SECTION (Unaudited) NetAssets by Component........................................................................................................................................139 Changesin Net Assets..............................................................................................................................................140 Fund Balances of Governmental Funds.................................................................................................................142 Changes in Fund Balances of Governmental Funds............................................................................................144 Assessed Value and Actual Values of Taxable Property.....................................................................................146 Assessed Value and Actual Values of Taxable Property - Redevelopment Agency.......................................148 AssessedValue - Taxable Property........................................................................................................................150 Assessed Value - Use Category Summary............................................................................................................152 Direct and Overlapping Property Tax Rates.........................................................................................................153 PrincipalProperty Tax Payers.................................................................................................................................155 Property Tax Levies and Collections......................................................................................................................157 Ratiosof Outstanding Debt by Type......................................................................................................................158 Ratio of General Bonded Debt Outstanding.......................................................................................................,...160 Directand Overlapping Debt..................................................................................................................................161 LegalDebt Margin Information..............................................................................................................................162 Pledged- Revenue Coverage..................................................................................................................................164 Demographic and Economic Statistics...................................................................................................................165 PrincipalEmployers..................................................................................................................................................166 Full -Time and Part -Time City Employees by Function.......................................................................................167 OperatingIndicators by Function...........................................................................................................................168 Capital Asset Statistics by Function........................................................................................................................169 Ranking on Effective Buying Income (EBI)...........................................................................................................170 Ranking on Per Capita Market Value.....................................................................................................................171 Ranking on Total Direct Debt, Overall Debt %, & Overall Debt Per Capita.....................................................172 ' City df SANTA GLARITA 1 23920 Valencia Boulevard • Suite 300 • Santa Clarita, California 91355-2196 Phone: (661) 259-2489 • FAX: (661) 259-8125 ' unm.santa-clarita.com February 7, 2012 Honorable Mayor, Mayor Pro Tem, and City Councilmembers: The Comprehensive Annual Financial Report (CAFR) of the City of Santa Clarita for fiscal year ended 1 June 30, 2011 is hereby submitted, in accordance with Chapter 2.12 of the City of Santa Clarita Municipal Code. This report provides the City Council and the public with an understanding of the financial condition of the City of Santa Clarita as of June 30, 2011. ' 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. Caporicci & Larson, Certified Public Accountants, an independent firm of certified public accountants, ' has issued an unqualified ("clean") opinion on the financial statements of the City of Santa for the year ended June 30, 2011. 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. Also, as a recipient of federal and state financial assistance, the City q is required to have a "Single g 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 that 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. 1 CITY PROFILE The City of Santa Clarita was incorporated on December 15, 1987 as a General Law City, and operates under a City Council/City Manager form of government. Located minutes from Bob Hope Airport in Burbank, 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 55 square miles. With a population of 176,971, the City is the 24th largest city in the State of California and the fourth largest in Los Angeles County. Santa Clarita residents enjoy an expansive year-round parks and recreation network, featuring 23 beautiful park facilities totaling more than 250 acres, and more than 60 miles of picturesque trails and paseos designed for commuting and recreational use, including walking, riding, jogging, and skating. With its unique blend of rural, old west heritage, and urban sophistication, this fast-growing City has established an enviable balance between quality living and growth. Santa Clarita has attracted regional and national sports events like the Amgen Tour of California, Tributefest, Volcom Skate Park event, Southern California Junior Olympics Swim Meet, LA Underwater Hockey Nationals, and the Triple Crown Softball Tournament. The City of Santa Clarita's five City Councilmembers are elected at large to four-year overlapping terms, with elections held bi-annually. The position of Mayor is selected from among the Councilmembers. The City Council is responsible, among other things, for passing ordinances, adopting the budget, setting policy, and appointing committees. The City Council appoints the City Manager, who is responsible for implementing the policies of the Council, overseeing the day-to-day operations of City government, and for appointing and managing the various Department Heads. 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 financial activities of these entities are included on 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 by 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 category level within each fund. LOCAL ECONOMY The City of Santa Clarita is one of Southern California's most desirable places to live and to do business. City officials pride themselves on the organization's ability to balance the needs of locally based companies with those of the community, resulting in an unmatched quality of life. �u ' Recovery from the recession continues at a slow pace and is expected to hold at this rate through 2012. The City has a 100 percent track record for adopting a balanced, on-time budget, with ample reserves and contingency funds. Fiscal Year 10-11 was successful and stable for the City thanks to prudent ' fiscal planning. Santa Clarita boasts one of the lowest unemployment rates in Los Angeles County at 8.2 percent, ' compared to 13.3 for Los Angeles County and 12.4 percent for the state of California (as of July 2011). Targeted employment sectors in Santa Clarita include aerospace, manufacturing, biomedical, entertainment, and technology. Princess Cruises renewed it's lease this year. We also welcomed scores of new retailers in the last year to the 180,000 square foot expansion of Westfield Valencia Town Center at The Patios. Several new companies either expanded within or relocated to Santa Clarita, including Quallion, a custom battery manufacturer, and Palyon Medical, which moved from 1 New York to Santa Clarita. Retail vacancy rates continue to hold at a low six to seven percent, while industrial vacancies remain at ' less than two percent. The largest area of potential growth in the City is in the area of office space, with Santa Clarita holding at about a 20 percent vacancy rate (however several leases for available space are currently underway and that number may decrease by early 2012). The City's entertainment industry was strong in FY 10-11 with an economic impact of $18.7 million to local businesses from location filming. Santa Clarita is home to more than 20 sounds stages and 10 ' movie ranches and hundreds of film related businesses. Five -network television shows, including CBS's "NCIS," ABC Family's "Make it or Break it" and "Switched at Birth," FX's "Justified," TBS' "The Wedding Band," and TNT's "Franklin and Bash" base in Santa Clarita and regularly film on ' location in the City. Tourism continues to be one of the City of Santa Clarita's largest economic generators contributing more than $2.1 million to the general fund from Transient Occupancy Tax (T.O.T.) in FY 10-11. The first year of the Tourism Marketing District (TMD), a collaborative assessment program and partnership between the City and five local hotels, proved successful with $379,855 collected in ' support of increased marketing and promotion of Santa Clarita as a tourism destination. TMD dollars are a vital component of the area's continued attraction of events and visitors, which translate to dollars spent in the community and at local businesses. The following events were attracted as part of ' the City's increased event attraction efforts:•USL Women's Championship Games, SCV Magic Soccer Tournament, Santa Clarita Soccer Showdown, All American Bowl, and Superstates Chess Championship. ' The City of Santa Clarita continues to use business attraction and retention programs like the Santa Clarita Enterprise Zone Program to support business by providing tax incentives to companies located within the zone. To date, Santa Clarita Enterprise Zone has resulted in 4,506 job hired, 877 new job created, and the participating 314 businesses have a potential savings of $168 million as a result of the program. Santa Clarita recognizes the important role education plays in the success of the community. The City is home to three premier colleges, including California Institute of the Arts (CalArts), College of the Canyons, and The Masters College. These colleagues offer world-class instruction and programming to prepare students to become the next generation of business professionals and leaders. LONG -TERM FINANCIAL PLANNING Santa Clarita is one of California's model cities, boasting the essential elements needed for well- balanced living and total wellbeing. Santa Clarita remains one of the safest cities in California among cities with populations exceeding 150,000. In fact, 2011 was one of the safest years on record with the lowest annual crime rate since incorporation. Santa Clarita is home to a well-educated population, with more than 65 percent of adults over age 25 and older having attained some college or higher, as compared to Los Angeles County, which averages 54 percent. The City of Santa Clarita has experienced steady growth since its inception in 1987 and City officials work directly with the private and public sectors to attract new businesses to the Santa Clarita Valley. This year the City was successful in attracting Quallion and Palyon, while Princess Cruises signed a 15 -year lease renewal, maintaining its position as the City's largest employer. Through the Enterprise Zone, the City's new job growth totals 877. The City of Santa Clarita is focused on retaining existing companies and encouraging their growth within the City, while working to attract new business, thereby creating new jobs for residents. Santa Clarita has set an aggressive goal of creating two jobs for every household, providing increased opportunities for residents to work close to home. The slight recovery in our economy has directly affected the City's revenue growth, producing increases in sales tax and Transient Occupancy Tax (TOT), while property tax, property tax in -lieu of Vehicle License Fee (PT -VLF), and real property transfer tax have remained relatively flat for Fiscal Year 10-11. Millions Major Tax Revenues 35 ® Sales Taxes 2519, 2 © Property Taxes 20 ❑ PT -VLF El Transient Occupancy 15 Taxes ® Real Property Transfer 10 _. Tax - 5 0 2006-07 2007-08 2008-09 2009-10 2010-11 Fiscal Year The City provides necessary funding for essential services for City 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 a stable General Fund over the next few years, primarily due to projected marginal increases in sales, property taxes, and property taxes in lieu of VLF. However, because the iv ' City of Santa Clarita has practiced smart growth in successful times, the City is well prepared for these times when revenue projections do not include growth. ' 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 FISCAL YEAR 2010-2011 1 ❖ In July 2011, the City hosted the grand opening of the new Santa Clarita Public Library, transitioning the Canyon Country, Newhall and Valencia branches from Los Angeles County to City operation. The City infused the branches with more than $900,000 in new books and media, ' upgraded facilities, extended operating hours and added new technology. The three branches serve approximately 20,000 people per week. ❖ The City of Santa Clarita continued to place a high priority on revitalization of Old Town Newhall. Construction of the Newhall Library progressed with the topping out ceremony and 50 -year time capsule dedication in August. Monthly events, including the Farmer's Market, SENSES block ' party, and Art Walk attracted thousands to the area each week, while five Main Street businesses participated in the Building Improvement Grant (BIG) program, which allocated funds for renovating storefronts and for other aesthetic building improvements. ❖ The City's investment in infrastructure and green offerings for residents continued with the opening of the first community garden project at Central Park. The garden includes 80 plots for residents and local groups to grow fresh vegetables and fruits, with surplus supplies donated to the SCV Food Pantry. Senator Barbara Boxer joined the City at a dedication for the new Federally - funded solar panel project now at the City's Transit Maintenance Facility, which provides 97 ' percent of the energy needed to power the facility. AWARDS AND ACKNOWLEDGMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting, to the City of Santa Clarita for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2010. This was the ' twenty-second consecutive year the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement for Excellence in 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 for Excellence in 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 staff of the Finance Division, in particular Carmen Magana, Finance Manager, and Clint Osorio, Susan Cromsigt, Mary Ann Ruprecht, Jan Downey, Eric Herrera, Financial Analysts. I would like to express my appreciation to all members of the Division who assisted and contributed to its preparation. 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 Service Rick Gould, and Director of Community Services Paul Brotzman, for their continuing efforts in administering the financial operations of the City in a conservative and responsible manner. Sincerely, Darren Hernandez, Deputy City Manager DH:cm Vi For-itsGoinprehensive.Atitival Financial -Report ,fort the Fiscal`Year'.Ended .- :1ii;ne.X 2010- A Certificate>of Aclueiement for Excellence in Financial Reporting is presented by the Gevernnient Finance Officers Association of t17e fTJnited ta`tes:ancl;.Canada to government units_and public employee retirement systems, whose comprehensive annual financial reports .CtU Its) acliieve.tl e highest standar6.in'goiterninenf accounting; and financial: reporting:. President: Executive I?ireetor vii OFFICIALS OF THE CITY OF SANTA CLARITA As of June 30, 2011 City Council Marsha McLean MAYOR Laurie Ender MAYOR PRO TEM Laurene Weste COUNCILMEMBER Bob Kellar COUNCILMEMBER Frank Ferry COUNCILMEMBER City Officials Ken Pulskamp CITY MANAGER Ken Striplin ASSISTANT CITY MANAGER Darren Hernandez DEPUTY CITY MANAGER Joseph Montes CITY ATTORNEY Paul Brotzman DIRECTOR OF COMMUNITY DEVELOPMENT Richard Gould DIRECTOR OF PARKS, RECREATION & COMMUNITY SERVICES Robert Newman DIRECTOR OF PUBLIC WORKS/CITY ENGINEER k� { � ) ± (—)—\—\ § ) ) § _ * § k—)—k—/ ° / � � E & ± � m E & ± k—)—k—/ ° / � \ ] u )—\—\—)—�—(—§ \ \ ) 2 A K--•--- m I , m , w off€ _ `-� c➢_ I `l, OLPNYON ROPO /I LL�g r__ ass 3aLL 0 I I v eb i - - - �rri I I 09 oz 2 , z 9_ $ 20 ° e j �• , g S ,e I� i I OP N bOM ryV9ll3N6bN O y �as� A'! i_• Q i } m 5• a0,0 �T � QY VENUE J �{[ VKEEY S10.EEi j hO 0I9 ° bpry0s i rc i "y Q % 4m Q 3 sr id e,. lays,aleg of Ott � E y� J e s`> _ C&L ' Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants INDEPENDENT AUDITORS' REPORT To the Honorable Mayor and Members of the City Council of the City of Santa Clarita Santa Clarita, California We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Santa Clarita, California (City), as of and for the year ended June 30, 2011, which collectively comprise the City's basic ' financial statements as listed in the table of contents. These basic financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. ' In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2011, 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. ' The accompanying financial statements have been prepared assuming that the Redevelopment Agency, a component unit of the City, will continue as a going concern. As discussed in note 16 to the financial statements, on December 29, 2011, the Supreme Court of the State of California upheld the enforceability of legislation that provides for the dissolution of California redevelopment agencies. The full impacts of this most recent development are not known at this time. These recent legislative and judicial actions raise substantial doubt about the ability of the Redevelopment Agency and all redevelopment agencies in the State of California to continue as going concerns. The financial statements do not reflect any adjustments 1 that might result from the outcome of this uncertainty. wwwc-lcpa.com To the Honorable Mayor and Members of the City Council of the City of Santa Clarita Santa Clarita, California Page 2 The Agency adopted the provisions of Governmental Accounting Standards Board ("GASB") Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, as of July 1, 2010. In accordance with Government Auditing Standards, we have also issued our report dated February 7, 2012 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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 read in conjunction with this report in considering the results of our audit. Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and Budgetary Information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants Irvine, California February 7, 2012 I MANAGEMENT'S DISCUSSION AND ANALYSIS IFiscal Year Ended June 30, 2011 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, 2011. 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 $895 million. Of this amount, $67.9 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 1.74%, primarily as a result of the increase in non -depreciable assets. Net assets of the business -type activities increased by $8,184,785, or 12.08%, and net assets of the governmental activities increased by $7.1 million, or 0.88%. ' • The capital assets of the City's governmental activities increased by $39 million, or 5.3% over last fiscal year. ' • As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $100 million. This represents a decrease of $40 million as compared to the prior ' year. • Within Governmental Funds, the General Fund reported a fund balance of $83.6 million, an increase ' of $5.9 million over the prior year. ' 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). 1 See independent auditors report. 3 USING THIS ANNUAL REPORT (CONTINUED) 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. REPORTING 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. 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. See independent auditors report. , 4 REPORTING THE CITY AS A WHOLE - GOVERNMENT -WIDE FINANCIAL STATEMENTS 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 ifunds 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 1 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 is provided to explain the differences created by this integrated approach. The City reports governmental fund financial information within 35 governmental funds. The general ' fund, bridge and thoroughfare fund, developer fees fund, open space preservation district special revenue fund, capital projects -redevelopment agency fund, 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 30 governmental funds are combined into a single, aggregated presentation. Supporting financial information on each of the other governmental funds is 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. See independent auditors report. 5 REPORTING THE CITY'S MOST SIGNIFICANT FUNDS - FUND FINANCIAL STATEMENTS 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 79-86 of this report. 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 can be found on pages 87-132 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 $15.3 million, increasing from $879.2 million to $894 million. See independent auditors report. C. THE CITY AS A WHOLE CONTINUED 1 TABLE 1 CITY OF SANTA CLARITA'S NET ASSETS Governmental Activities Business -type Activities Total Unrestricted 67,397,688 63,218,255 503,446 (176,196) 67,901,134 63,042,059 TOTAL NET ASSETS $ 818,665,253 $ 811,527,464 $ 75,920,314 $ 67,735,529 $ 894,585,567 $ 879,262,993 The City's Net Assets are made up of three components: Investment in Capital Assets (Net of Related Debt), Restricted Net Assets, and Unrestricted Net Assets. ' As of June 30, 2011, assets exceeded liabilities by $894 million. The largest component of the City's net assets, 81.1%, is represented by its $793 million investment in capital assets (e.g., infrastructure, land, ' buildings and improvements, equipment, and construction in progress) less any related outstanding debt used to acquire the assets. One of the largest additions to the City's capital assets for fiscal year 2010-2011 is land. The City purchased a total of $21.1 million in land in fiscal year 2010-11. Another large addition to the City's capital assets for fiscal year 2010-11 is infrastructure. For fiscal year 2010-11, the total addition to infrastructure is $30.8 million. 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 1 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, 3.75%, represents resources subject to external restrictions on how they may be used. The remaining 7.59% of unrestricted net assets, $67.9 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 $7.1 million over the prior year, $4.6 million of which is represented by a decrease in long term liabilities. Decrease in liabilities accounted for the majority of the overall increase in net assets for See independent auditors report. 7 2011 2010 2011 2010 2011 2010 ASSETS: Current and Other Assets $211,188,970 $236,495,818 $ 3,152,010 $ 6,848,160 $ 214,340,798 $ 243,343,978 Capital assets 776,222,079 737,167,870 75,416,686 68,160,029 851,638,947 805,327,899 TOTAL ASSETS 987,411,049 973,663,668 78,568,696 75,008,189 1,065,979,745 1,048,671,877 LIABILITIES: Long Term Liabilities 77,429,075 82,018,862 - - 77,429,075 82,018,862 Other Liabilities 91,316,721 80,117,362 2,648,382 7,272,660 93,965,103 87,390,022 TOTAL LIABILITIES 168,745,796 162,136,224 2,648,382 7,272,660 171,394,178 169,408,884 NET ASSETS: Invested in capital assets, ' net of related debt 717,613,095 657,644,168 75,416,868 67,911,725 793,029,963 725,555,893 Restricted 33,654,470 90,665,041 - - 33,654,470 90,665,041 Unrestricted 67,397,688 63,218,255 503,446 (176,196) 67,901,134 63,042,059 TOTAL NET ASSETS $ 818,665,253 $ 811,527,464 $ 75,920,314 $ 67,735,529 $ 894,585,567 $ 879,262,993 The City's Net Assets are made up of three components: Investment in Capital Assets (Net of Related Debt), Restricted Net Assets, and Unrestricted Net Assets. ' As of June 30, 2011, assets exceeded liabilities by $894 million. The largest component of the City's net assets, 81.1%, is represented by its $793 million investment in capital assets (e.g., infrastructure, land, ' buildings and improvements, equipment, and construction in progress) less any related outstanding debt used to acquire the assets. One of the largest additions to the City's capital assets for fiscal year 2010-2011 is land. The City purchased a total of $21.1 million in land in fiscal year 2010-11. Another large addition to the City's capital assets for fiscal year 2010-11 is infrastructure. For fiscal year 2010-11, the total addition to infrastructure is $30.8 million. 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 1 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, 3.75%, represents resources subject to external restrictions on how they may be used. The remaining 7.59% of unrestricted net assets, $67.9 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 $7.1 million over the prior year, $4.6 million of which is represented by a decrease in long term liabilities. Decrease in liabilities accounted for the majority of the overall increase in net assets for See independent auditors report. 7 business -type activities of $8.1 million. The unrestricted portion of the business -type activities increased by $679,642. Governmental Activities Revenues from governmental activities were up by $18 million or 13.5%, due primarily to several Capital Grants and Contributions that were received in FY10-11. The cost of all governmental activities this year was $138 million, a decrease of 1.06% over the past year. As shown in the Statement of Activities, the governmental activities expenditures were ultimately financed in part by the taxpayers, as $23.9 million in revenues were generated by service revenues received from the performance of these activities; another $14 million was received from government agencies and other organizations that subsidized certain programs with operating grants and contributions; and another $31.3 million in revenues was generated from capital grants and contributions. Public Works and Community Development programs were the only activities that generated net revenues of $15.4 million and $8.5 million, respectively. Overall, the City's governmental program and general revenues amounted to $150 million, which funded the expenditures and resulted in a $7.1 million increase in net assets. Part of the $150 million program and general revenue is other non - program governmental revenue amounting to $81.6 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 Program Revenues: Charges for services Operating grants and contributions Capital grants and contributions General Revenues Taxes: Property taxes, levied for general purposes Other Taxes Grants and contributions not restricted to specific programs Other Total Revenues General government Public safety Public works Parks and recreation Community development Unallocated infrastructure depreciation Interest on long term debt Transit Total Expenses Increase/ Decrease in Net Assets before transfers Transfers Increase/ Decrease In Net Assets Net Assets - Beginning of Year Net Assets - End of Year See independent auditors report. Government Activities Business -type Activities 2011 2010 2011 2010 $ 23,913,817 $ 25,647,587 14,090,686 16,224,269 31,325,725 15,249,634 24,996,219 25,126,278 39,587,975 37,534,705 Total 2011 2010 $ 6,573,879 $ 3,181,614 $ 30,487,696 $ 28,829,201 6,913,534 10,260,579 21,004,220 26,484,848 13,043,418 - 44,369,143 15,249,634 24,996,219 25,126,278 39,587,975 37,534,705 812,475 896,708 - - 812,475 896,708 16,220,333 12,254,308 (27,303) 82,554 16,193,030 12,336,862 150,947,230 132,933,489 26,503,528 13,524,747 177,450,758 146,458,236 47,048,462 32,116,335 - - 47,048,462 32,116,335 21,280,904 17,912,704 - - 21,280,904 17,912,704 25,799,166 26,758,527 - - 25,799,166 26,758,527 11,281,552 27,835,763 - - 11,281,552 27,835,763 11,547,650 13,831,341 - - 11,547,650 13,831,341 16,392,901 15,545,626 - - 16,392,901 15,545,626 4,650,566 5,476,918 - - 4,650,566 5,476,918 - - 24,127,043 23,348,708 24,127,043 23,348,708 138,001,201 139,477,214 24,127,043 23,348,708 162,128,244 162,825,922 12,946,029 (6,543,725) 2,376,485 (9,823,961) (5,808,300) (7,477,547) 5,808,300 7,477,547 15,322,514 (16,367,686) (7,137,789) (14,021,272) 8,184,785 (2,346,414) 15,322,514 (16,367,686) 811,527,464 825,548,736 67,735,529 70,081,943 879,262,993 895,630,679 $ 818,665,253 $ 811,527,464 $ 75,920,314 $ 67,735,529 $ 894,585,567 $ 879,262,993 9 THE CITY AS A WHOLE (CONTINUED) Business -Type Activities Business -type activities increased the City's net assets by $8.1 million for the current year. Business -type activities revenues increased by $12.9 million during the year for a total of $26.5 million in revenues, not including the $5.8 million of transfers in from other governmental activities. This was largely due to an increase of $13 million in capital grants and contributions. The majority of this increase is due to funding from the American Recovery and Reinvestment Act. Related transit activity expenses increased by $811,156. THE CITY'S FUNDS The governmental funds reported a combined fund balance at the end of the current fiscal year of $100 million, a decrease of $40 million over the prior year. Approximately $33.6 million is restricted and already committed for specific restricted purposes, and approximately $67.9 million 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 $83.6 million, an increase of $5.9 million over the prior year. The general fund is the chief operating fund of the City of Santa Clarita. Of the total fund balance of $83.6 million, the City has set aside $12,356,339 in order to meet retiree health benefits obligation as set forth by GASB 45. The unassigned general fund balance of $46.9 million is available for spending at the City's discretion. More detailed information about the City's classification of fund balances are presented in Note 10 to the financial statements. Other major fund balance changes are noted below: • The bridge and thoroughfare fund balance has realized a decrease of $14.6 million from the prior year. This unusual and large decrease in fund balance is due to the recording of liability from developer fee credits. These credits are issued to developers when a particular project has been completed in which developers have contributed portions of bridges and thoroughfares in conjunction with a particular project. • The developer fees fund balance decreased in the current year by $2.3 million. This is due primarily to an increase in deferred revenues from developers. • The Open Space Preservation District fund realized a decrease of $6.6 million this fiscal year. The purpose of this fund is to accelerate vacant land acquisition in and around the City. The total fund balance for the current year is $10.8 million. • Presented separately in the major funds category is the debt service fund - redevelopment agency and the capital projects fund - redevelopment agency. The total fund balance for the current year for the debt service fund - redevelopment agency is a negative $16.6 million and $184,595 for the capital projects fund - redevelopment agency. See independent auditors report. 10 THE CITY'S FUNDS (CONTINUED) Other major fund balance changes are noted below (continued): In addition to the major funds, the fund balances for the other governmental funds experienced an aggregate increase of $5.6 million. 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 $10.6 million or 15.7%. This $10.6 million increase was primarily due to the decrease in total liabilities. The unrestricted portion of the business -type activities net assets increased by $3.1 million from prior year. The Internal Service funds net assets increased by $15.5 million or 85.7%. The ending fund balance for Internal Service funds is $28.8 million, of which $20.6 million is unrestricted. General Fund Budgetary Highlights Comparison of the fiscal year 2010-11 original (adopted) general fund budgeted expenditures and transfers of $78.5 million to the final budgeted expenditures of $92.4 million results in a net increase of $13.8 million. Included in this net increase is $438,130 in committed purchase orders and contracts from the prior June 30 balance, as well as $348,468 of prior fiscal year operating and capital improvement projects approved for carryover into fiscal year 2010-11. The resulting beginning budget balance was equal to $79.3 million. Original Budget + Cont. Appropriations + Encumbrances = Beg. Balance + Supplemental Changes = Final Budget $78,585,983 + $348,468+ $438,130 = $79,372,581+ $13,104,556= $92,477,137 Comparing the beginning budget of $78.5 million with the final budget of $92.4 million indicates the general fund had supplemental budgetary appropriations of $13,104,556 during the fiscal year. Included in the supplemental appropriations are the results of this year's budget review. During the mid -year budget review, budgeted general fund revenue had a net increase of $1,477,984. Included in the net increase is $865,000 in Sales Tax and $200,000 in Transient Occupancy Tax. At year end, the City's actual revenues are $3.4 million more than the final budgetary estimates. Actual expenditures were less than the final budgetary estimates by over $5.6 million. See independent auditors report. 11 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The City had $851.6 million (net of accumulated depreciation) invested in a broad range of capital assets. This investment in capital assets includes land, buildings and related improvements, vehicles and equipment, and, infrastructure (including infrastructure placed in service prior to July 1, 2002), such as streets, bridges, traffic signals, medians, sidewalks, trails, sewers, curbs and gutters, and drainage systems. (See Table 3) TABLE 3 CITY OF SANTA CLARITA'S CAPITAL ASSETS, (net of depreciation) Land Construction in progress Infrastructure, net Depreciable site improvements, net Depreciable buildings and improvements, net Depreciable equipment, net TOTALS Governmental Activities Business Type Activities Total .$ 68,160,029 2011 2010 2011 2010 2011 2010 $ 123,614,634 $ 101,976,048 $ 15,087,880 $ 15,087,880 $138,702,514 $117,063,928 6,477,297 1,387,798 6,957,970 1,744,885 13,435,267 3,132,683 588,536,627 574,110,439 - - 588,536,627 574,110,439 21,024,498 21,951,041 34,381,092 35,381,200 2,187,930 2,361,344 $ 776,222,078 $ 737,167,870 Major capital asset events during the year included: 1,465,214 1,536,390 34,858,148 17,047,657 35,741,494 14,049,380 $ 75,416,869 .$ 68,160,029 22,489,712 23,487,431 69,239,240 71,122,694 19,235,587 16,410,724 $ 851;638,947 $ 805,327,899 • Public Library Acquisitions. The City recently integrated and assumed operations for the libraries located in Newhall, Canyon Country, and Valencia. The Valencia library includes a building and a parking lot consisting of about 71,000 square feet and was valuated at $4,720,000. The Newhall library is located on a 13,500 square foot lot and was valuated at $580,000. • On-going construction of the Old Town Newhall Library. The Old Town Newhall Library is currently in construction and will be opening in 2012. • Open Space Preservation - The City's Open Space Preservation District is charged with acquisition, preservation, improvement, servicing, financing, and maintenance of the City's open space land. ' For FY2010-11, the District contributed $7.5 million in order to purchase the Wildwood, Haskell, and Elsmere properties. Additional information on the City of Santa Clarita's capital assets can be located in Note 4 to the financial statements on pages 57 through 59. See independent auditors report. 12 CAPITAL ASSETS AND DEBT ADMINISTRATION (CONTINUED) Debt Administration At year-end, the City's total debt amounted to $82 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. W.-: RZI! CITY OF SANTA CLARITA'S OUTSTANDING DEBT Governmental Activities Business -type Activities Total 2011 2010 2011 2010 2011 2010 Refunding Certificates of Participation, net $ 12,394,795 $ 13,422,653 $ $ $ 12,394,795 $ 13,422,653 Tax Allocation Bonds 37,495,684 38,035,154 37,495,684 38,035,154 Certificates of Participation 15,525,000 15,525,000 15,525,000 15,525,000 Lease Revenue Bonds 12,898,596 13,172,254 - 12,898,596 13,172,254 Contract and Leases Payable 1,413,786 2,016,628 248,304 1,413,786 2,264,932 Compensated Absences 2,625,890 2,529,495 - 2,625,890 2,529,495 Claims Payable 40,000 50,000 - 40,000 50,000 TOTALS $ 82,393,751 $ 84,751,184 $ $ 248,304 $ 82,393,751 $ 84,999,488 The City's governmental activities had $82.4 million in debt at year-end. Governmental Activities long- term debt decreased overall by $2.4 million during the year. The City's business -type activities debt was completely eliminated during FY2010-2011. 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, 2011, the City was able to meet its current year debt obligation in a timely manner. 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, 2011, was $3,228,957,739. Additional information on the City of Santa Clarita's debt can be located in Note 5 to the financial statements, on pages 60 through 67. See independent auditors report. 13 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS The City's budget continues to be faced with threats of takeaways from the State. Our long history of conservative and strategic budget practices has allowed the City to roll with the punches and maintain a balanced budget during every year of the Great Recession without layoffs or drastic cuts in services. Revenues have stabilized and we are seeing some increases. • General fund sales tax revenue continues to be the largest revenue source to operate general governmental functions, accounting for 34.1% or $26.5 million. This is 5.4% higher than what was budgeted in FY 2010-11. o Property tax revenues accounts for 31.8% or $24.7 million in 2011-12. This is a slight increase of 1.3%. The County Assessor's office makes changes to the City's property tax roll daily to reflect transfers in ownership, new construction, assessment appeals, parcel splits and other dynamic changes. Budgeted general fund revenues for fiscal year 2011-12 is $72.3 million, 2.1% higher than the budget revenues of the prior year. The City's general fund operating and capital expenditures for the coming year are budgeted at $72.3 million, a 6.3% increase from prior year. Operational expenditures increased by 2.8% or $1,924,000 and capital expenditures increased from $106,000 to $674,600 or 536.4%. The City's 2011-12 operating budget for ALL funds increased by 5.9% or $7.2 million. The City remains dedicated to service excellence, teamwork and creativity. Instead of layoffs, the City implemented a hiring freeze which resulted in 43 full-time vacant or eliminated positions. This represents an 11 % decrease in the City's workforce. Despite the budget cuts, City staff continues to do more with less, find creative ways to maintain services revered by our community, and provide award winning programs. The 2011-12 budget remains to be a reflection of the City's commitment to the residents of Santa Clarita. This is consistent with the City's long tradition of ensuring that programming for Santa Clarita's youth and children is a priority to help promote growth and curb teen crimes. A copy of the City's 2011-12 budget can be obtained by contacting the City Finance Division or visit the web at santa- clarita.com/cityhall/ departments/ cmo/ citybudget. See independent auditors report. 14 BASIC FINANCIAL STATEMENTS 15 16 iGOVERNMENT -WIDE FINANCIAL STATEMENTS 17 18 City of Santa Clarita Statement of Net Assets June 30, 2011 ASSETS Current assets: Cash and investments Cash and investments with fiscal agent Receivables: Accounts Interest Taxes Prepaid costs Due from other governments Loans receivable Due from fiduciary funds Internal balances Non-current assets: Deferred charges Deposits Capital assets: Nondepreciable assets Depreciable assets, net Total capital assets, net Total assets LIABILITIES Current liabilities: Accounts payable and accrued liabilities Unearned revenue Due to other governments Deposits payable Interest payable Compensated absences payable Noncurrent liabilities: Compensated absences payable Other postemployment benefits payable 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 Special revenues Redevelopment projects Low and moderate income housing Special assessments Total restricted assets Unrestricted Total net assets See accompanying Notes to Basic Financial Statements. 19 Governmental Business -type 18,475,497 Activities Activities Total $ 184,610,505 $ - $ 184,610,505 1,165,418 - 1,165,418 886,263 - 886,263 840,170 - 840,170 7,929,747 - 7,929,747 595,875 - 595,875 5,548,838 8,057,296 13,606,134 2,143,653 - 2,143,653 80,632 - 80,632 4,905,468 (4,905,468) - 2,479,201 - 2,479,201 3,200 - 3,200 130,091,931 22,045,849 152,137,780 646,130,148 53,371,019 699,501,167 776,222,079 75,416,868 851,638,947 987,411,049 78,568,696 1,065,979,745 15,872,844 2,602,653 18,475,497 13,293,483 - 13,293,483 426,428 - 426,428 43,584,180 - 43,584,180 980,935 - 980,935 271,468 45,729 317,197 2,354,422 - 2,354,422 12,194,175 - 12,194,175 2,338,786 - 2,338,786 77,429,075 - 77,429,075 168,745,796 2,648,382 171,394,178 717,613,095 75,416,868 793,029,963 3,452,815 - 3,452,815 5,151,207 5,151,207 184,595 - 184,595 9,169,821 - 9,169,821 15,696,032 - 15,696,032 33,654,470 - 33,654,470 67,397,688 503,446 67,901,134 $ 818,665,253 $ 75,920,314 $ 894,585,567 City of Santa Clarita Statements of Activities and Changes in Net Assets For the Year Ended June 30, 2011 General Revenues: Taxes: Sales taxes Property taxes, levied for general purposes Franchise taxes Transient occupancy taxes Property transfer tax Unrestricted revenue in lieu of sales taxes Grant and contributions not restricted to specific programs Business license Unrestricted investment earnings Miscellaneous revenue Transfers Total general revenues and transfers Changes in net assets Net assets - beginning of year Net assets - end of year See accompanying Notes to Basic Financial Statements. 20 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Governmental activities: General government $ 47,048,462 $ 398,181 $ 45,864 $ - Public safety 21,280,904 2,305,608 62,039 - Public works 25,799,166 4,929,602 11,074,198 25,263,073 Parks and recreation 11,281,552 4,220,977 140,362 821,663 Community development 11,547,650 12,059,509 2,768,223 5,240,989 Unallocated infrastructure depreciation 16,392,901 - - - Interest and fiscal charges 4,650,566 - - - Total governmental activities 138,001,201 23,913,877 14,090,686 31,325,725 Business -type activities: Transit 24,127,043 6,573,879 6,913,534 13,043,418 Total $ 162,128,244 $ 30,487,756 $ 21,004,220 $ 44,369,143 General Revenues: Taxes: Sales taxes Property taxes, levied for general purposes Franchise taxes Transient occupancy taxes Property transfer tax Unrestricted revenue in lieu of sales taxes Grant and contributions not restricted to specific programs Business license Unrestricted investment earnings Miscellaneous revenue Transfers Total general revenues and transfers Changes in net assets Net assets - beginning of year Net assets - end of year See accompanying Notes to Basic Financial Statements. 20 .Net (Expense) Revenue and Changes in Net Assets Governmental Business -type Activities Activities Total $ (46,604,417) $ - $ (46,604,417) (18,913,257) - (18,913,257) 15,467,707 - 15,467,707 (6,098,550) - (6,098,550) 8,521,071 - 8,521,071 (16,392,901) - (16,392,901) (4,650,566) - (4,650,566) (68,670,913) - (68,670,913) - 3,006,922 2,403,788 2,403,788 (68,670,913) 2,403,788 (66,267,125) 27,701,757 27,701,757 24,996,219 24,996,219 6,697,241 6,697,241 2,106,521 2,106,521 3,082,456 - 3,082,456 3,006,922 - 3,006,922 812,475 - 812,475 309,136 - 309,136 3,756,112 (27,303) 3,728,809 9,148,163 - 9,148,163 (5,808,300) 5,808,300 - 75,808,702 5,780,997 81,589,699 7,137,789 8,184,785 15,322,574 811,527,464 67,735,529 879,262,993 $ 818,665,253 $ 75,920,314 $ 894,585,567 21 22 IFUND FINANCIAL STATEMENTS 23 City of Santa Clarita Balance Sheet Governmental Funds June 30, 2011 ASSETS Cash and investments Cash and investments with fiscal agents Receivable: Accounts Interest Taxes Prepaid costs Due from other funds Due from other governments Deposits Notes and loans receivable Advances to other funds Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities Deferred revenue Due to other governments Deposits payable Due to other funds Advances from other funds Total liabilities Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances (deficit) Total liabilities and fund balances See accompanying Notes to Basic Financial Statements. Special Revenue Funds Open Space Bridge and Developer Preservation General Thoroughfare Fees District $ 64,178,073 $ 16,215,640 $ 8,444,019 $ 10,735,195 553,813 300 1,008 6,537 349,963 92,938 48,425 25,816 6,800,671 - - 71,859 595,875 - - 8,191,168 - 344,971 - - 200 - - 3,000 23,249,986 23,008,021 5,805,131 - $ 104,264,720 $ 39,316,899 $ 14,298,583 $ 10,842,407 $ 5,575,314 $ 106,669 $ 3,431,259 $ 1,624 7,549,489 79,445 12,360,764 22,068 7,449,698 36,125,044 - - 24,550,522 - - 20,574,501 60,861,680 15,792,023 23,692 23,845,861 23,008,021 5,805,131 - - - - 10,818,715 12,356,339 - - - 572,781 - - - 46,915,238 (44,552,802) (7,298,571) - 83,690,219 (21,544,781) (1,493,440) 10,818,715 $ 104,264,720 $ 39,316,899 $ 14,298,583 $ 10,842,407 24 Debt Capital Service Fund Projects Fund Nonmajor Total Redevelopment Redevelopment Governmental Governmental Agency Agency Funds Funds $ 28,323 $ 756;645 $ 64,366,166 $ 164,724,061 896,539 - 268,879 1,165,418 - 82,621 240,351 884,630 ' = 4,339 234,452 755,933 5,018 1,052,199 7,929,747 - - - 595,875 - 8,191,168 5,203,867 5,548,838 - - - 3,200 _ 2,143,653 2,143,653 = 52,063,138 $ 924,862 $ 848,623 $ 73,509,567 $ 244,005,661 i $ _ $ 233,891 $ 6,623,292 $ 15,972,049 3,709 7,176,012 27,191,487 - 426,428 - 426,428 - - 9,438 43,584,180 3,205,068 3,205,068 17,616,138 10,806,376 52,973,036 17,616,138 664,028 27,820,186 143,352,248 - - - 52,659,013 924,862= 45,461,495 57,205,072 12,356,339 - 184,595 3,452,815 4,210,191 (17,616,138) - (3,224,929) (25,777,202) (16,691,276) 184,595 45,689,381 100,653,413 $ 924,862 $ 848,623 $ 73,509,567 $ 244,005,661 1 25 26 City of Santa Clarita Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets June 30, 2011 Total Fund Balances - Total Governmental Funds $ 100,653,413 Amounts reported for governmental activities in the Statement of Net Assets are different because: Government- Less Capital assets used in governmental activities are not financial resources and therefore Wide Statement Internal Service are not reported in governmental funds. Those assets consist of: of Net Assets Funds Non -depreciable $ 130,091,931 $ 7,669,393 Depreciable, net of accumulated depreciation 646,130,148 534,431 Total capital assets $ 776,222,079 $ 8,203,824 768,018,255 Bond issuance costs from issuing debt were expenditures in the fund financial statements. However, they were deferred and subject to capitalization and amortization in the Government -Wide Financial Statements: Deferred charges, net of accumulated amortization 2,479,201 Certain revenues in the governmental funds are deferred because they are not collected within the prescribed time period after year-end. However, these revenues are included in the government -wide statements. Change in deferred revenue and unearned revenue 13,898,004 OPEB obligations are not a current liability. Therefore are not included in the governmental fund financials. (12,194,175) Government- Less Liabilities were not due and payable in the current period. Therefore, they were not Wide Statement Internal Service ' reported in the governmental funds: of Net Assets Funds Loans payable - current $ (373,786) $ - Long-term debt - due within one year (1,965,000) - Compensated absences - noncurrent (2,354,422) Loans payable - noncurrent (1,040,000) - Long-term debt - noncurrent (76,710,000) - Deferred discount/ premiums 360,925 - Claims payable (40,000) (40,000) $ (82,122,283) $ (40,000) (82,082,283) Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in the governmental funds. (980,935) Internal service funds are used by management to charge the costs of certain activities to 1 individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Government -Wide Statement of Net Assets. 28,873,773 Net assets of governmental activities $ 818,665,253 I See accompanying Notes to Basic Financial Statements. 27 City of Santa Clarita Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2011 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 REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances FUND BALANCES: Beginning of year End of year See accompanying Notes to Basic Financial Statements. General $ 62,853,088 $ 3,675,424 2,199,220 295,052 499,227 6,640,459 108,997 3,398,704 79,670,171 Special Revenue Funds Open Space Bridge and Developer Preservation Thoroughfare Fees District $ - $ 1,748,211 53,110 182,593 - 607,838 126,982 80,777 - - 2,000 835,184 - - 1,496,132 309,575 1,830,988 11,479,882 - 7,772,528 18,384,968 - 2,464,946 - 12,915,033 14,324,789 - 18,928,383 - 5,379,024 - - - 1,854,691 224,547 230,746 - 4,200 - - - 67,322,236 16,179,480 2,689,493 7,772,528 12,347,935 (14,683,348) (2,379,918) (5,941,540) 13,939,098 2,000,000 - (20,354,337) (2,000,000) (18,499) (713,661) (6,415,239) - (18,499) (713,661) 5,932,696 (14,683,348) (2,398,417) (6,655,201) 77,757,523 (6,861,433) 904,977 17,473,916 $ 83,690,219 $ (21,544,781) $ (1,493,440) $ 10,818,715 28 Debt Capital Service Fund Projects Fund Nonmajor Total Redevelopment Redevelopment Governmental Governmental Agency Agency Funds Funds 1 $ _ $ 2,031,618 $ 5,841,965 $ 72,474,882 3,675,424 - - 47,073 282,776 113 221,938 561,630 3,798,498 ' 19,485,648 19,780,700 - - 1,392,273 1,891,500 2,000 16,963,813 23,608,272 = 3,342,256 4,286,437 - - - 3,398,704 113 2,255,556 47,634,658 133,197,193 - 29,393 22,931,794 42,213,597 - - 380,680 21,230,594 - 6,970,505 34,210,327 - - 2,924,936 21,853,319 1,751 2,600,907 3,593,683 11,575,365 - 4,291,193 14,941,454 21,311,885 - - 1,037,665 1,037,665 420,000 - 1,595,472 2,246,218 2,630,923 - 1,123,907 3,759,030 3,052,674 6,921,493 55,500,096 159,438,000 (3,052,561) (4,665,937) (7,865,438) (26,240,807) 9,485,498 63,811 25,381,445 50,869,852 (29,702,246) (11,925,633) (64,714,376) 9,485,498 (29,638,435) 13,455,812 (13,844,524) 6,432,937 (34,304,372) 5,590,374 (40,085,331) (23,124,213) 34,488,967 40,099,007 140,738,744 $ (16,691,276) $ 184,595 $ 45,689,381 $ 100,653,413 29 City of Santa Clarita Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government -Wide Statement of Activities and Changes in Net Assets For the Year Ended June 30, 2011 Net change in fund balance - total governmental funds: $ (40,085,331) Amounts reported for governmental activities in the Statement of Activities are different because: Acquisition of capital assets was reported as expenditures in the governmental funds. However, in the Government - Wide Statement of Activities and Changes in Net Assets, the cost of those assets was allocated over the estimated useful lives as depreciation expense. This amount does not include internal service fund activity of $178,588. The following was the amount of capital assets recorded in the current period: Capital outlay 41,221,265 Developer contributions that were made during the year in the form of land dedication and donations did not constitute revenues that were available and were not recorded in the governmental funds. They were recorded in the Government -Wide Statement of Activites and Changes in Net Assets as Capital Contributions: 34,067,386 Depreciation expense on capital assets was reported in the Government -Wide Statement of Activities and Changes in Net Assets, but it did not require the use of current financial resources. Therefore, depreciation expense was not reported as an expenditure in the governmental funds. The adjustment is the difference between the depreciation expense of the governmental activities in the amount of $19,502,651 and the depreciation expense of the internal service funds in the amount of $301,810. (19,200,841) Amortization expense was reported in the Government -Wide Statement of Activities and Changes in Net Assets, but it did not require the use of current financial resources. Therefore, amortization expense was not reported as an expenditure in the governmental funds: Amortization of bond premiums and discounts (34,014) Amortization of deferred charges (68,765) Proceeds from long-term debt provided current financial resources to governmental funds, but issuing debt increased long-term liabilities in the Government -Wide Statement of Net Assets. Repayment of bond principal was an expenditure in the governmental funds, but the repayment reduced long-term liabilities in the Government -Wide Statement of Net Assets. Principal payments on bonds, COP's, loans and capital leases 2,480,630 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. The following amount represents the change from the prior year: Compensated absences 175,073 Accrued interest 14,496 Other post employment benefits (4,680,000) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenue 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. (17,080,725) 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. 10,328,615 Change in net assets of governmental activities $ 7,137,789 See accompanying Notes to Basic Financial Statements. 30 1 PROPRIETARY FUND FINANCIAL STATEMENTS 31 32 City of Santa Clarita Statement of Net Assets Proprietary Funds June 30, 2011 ASSETS Current assets: Cash and investments Receivables: Accounts Interest Due from other governments Advances to other fund Total current assets Noncurrent assets: Capital assets: Land Construction in progress Site improvements, net of accumulated depreciation Building, net of accumulated depreciation Equipment, net of accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable and accrued liabilities Due to other funds Compensated absences payable Total current liabilities Noncurrent liabilities: Claims payable Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets Unrestricted Total net assets See accompanying Notes to Basic Financial Statements. 33 Business -Type Government Activity Activities Transit Internal Enterprise Service Fund $ - $ 19,886,444 - 1,633 - 84,237 8,057,296 - 15,087,880 7,669,393 6,957,969 - 1,465,214 34,858,147 - 17,047,658 534,431 75,416,868 8,203,824 83,474,164 29,086,036 2,602,653 172,263 4,905,468 - 45,729 - 7,553,850 172,263 40,000 - 40,000 7,553,850 212,263 75,416,868 8,203,824 City of Santa Clarita Statement of Revenues, Expenses and Changes in Net Assets Proprietary Funds For the Year Ended June 30, 2011 Business -Type Government Activity Activities Transit Internal Enterprise Service Fund OPERATING REVENUES: Charges for services $ 3,958,415 $ 2,793,778 Other revenues 2,615,464 1,620,488 Total operating revenue 6,573,879 4,414,266 OPERATING EXPENSES: Administrative and personnel services 1,912,182 239,943 Transportation services 16,622,555 - Service and supplies 1,778,575 1,754,511 Depreciation 3,813,731 301,810 Total operating expenses 24,127,043 2,296,264 OPERATION INCOME (LOSS) (17,553,164) 2,118,002 , NONOPERATING REVENUES (EXPENSES): Intergovernmental grants 6,913,534 - Investment income (27,303) 174,389 Total nonoperating revenues (expenses) 6,886,231 174,389 INCOME (LOSS) BEFORE TRANSFERS (10,666,933) 2,292,391 TRANSFERS AND CAPITAL CONTRIBUTIONS: Transfers in 5,971,230 8,036,224 Transfers out (162,930) - , Capital contributions 13,043,418 - Total transfers and capital contributions 18,851,718 8,036,224 Changes in net assets 8,184,785 10,328,615 NET ASSETS: Beginning of the year 67,735,529 18,545,158 End of the year $ 75,920,314 $ 28,873,773 See accompanying Notes to Basic Financial Statements. 34 City of Santa Clarita Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers and users Other operating expenses or operating receipts Payment to suppliers Payments to employees Net cash provided by (used for) 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 (used for) noncapital financing activities 8 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of capital assets Q Principal payments on financed debt Net cash provided by (used for) capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Interest received Net cash provided by (used for) by investing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year a RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income to net cash provided by (used for) operating activities: Depreciation expense Change in assets and liabilities: 8 Increase (decrease) in accounts receivable Increase (decrease) in due from other governments Increase (decrease) in prepaid expenses Increase (decrease) in accounts payable and accrued liabilities Increase (decrease) in due to other funds Increase (decrease) in claims payable Increase(decrease)in compensated absences a Increase (decrease) in deferred revenues Net cash provided (used) by operating activities O See accompanying Notes to Basic Financial Statements. 35 Business -Type Government Activity Activities Transit Internal Enterprise Service Fund 4,905,468 - $ 4,010,678 $ 2,793,778 2,224,437 1,620,488 (22,808,424) (8,856,415) (1,866,453) (239,943) (18,439,762) (4,682,092) 6,913,534 - 5,971,230 8,017,230 (162,930) - 12,721,834 8,017,230 1,972,848 (100,992) (248,304) - 1,724,544 (100,992) 4,816 222,746 4,816 222,746 (3,988,568) 3,456,892 3,988,568 16,429,552 $ - $ 19,886,444 $ (17,553,164) $ 2,118,002 3,813,731 301,810 52,263 - (5,282,086) - 542,541 (4,407,294) (7,634,445) 4,905,468 - - (10,000) 45,729 - (14,409) - $ (18,439,762) $ (4,682,092) 36 FIDUCIARY FUND FINANCIAL STATEMENTS 37 38 City of Santa Clarita Q Statement of Fiduciary Net Assets Fiduciary Fund June 30, 2011 Agency Funds ASSETS Cash and investments $ 106,031 Cash and investments with fiscal agent 1,794,031 Taxes receivable 6,490 OInterest receivable 522 Total assets $ 1,907,074 LIABILITIES Accounts payable and accrued liabilities $ 7,193 Due to other funds 80,632 Deferred revenues 447 Due to bondholders 1,818,802 ATotal liabilities $ 1,907,074 See accompanying Notes to Basic Financial Statements. 39 40 NOTES TO BASIC FINANCIAL STATEMENTS 41 City of Santa Clarita Notes to Basic Financial Statements For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of Santa Clarita, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below. A. Financial Reporting Entity The City 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. As required by GAAP, these basic financial statements present the City and its component units for which the City is considered to be financially accountable. GASB Statement No. 14, The Financial Reporting Entity, defines component units as legally separate entities that meet any one of the following tests: 1. The City appoints the voting majority of the board of the potential component unit and: e is able to impose its will on the component unit and/or ♦ is in a relationship of financial benefit or burden with the potential component unit. 2. The potential component unit is fiscally dependent upon the City. 3. The financial statements of the City would be misleading if data from the potential component unit was omitted. Management determined that the following component units should be blended based on the criteria above: The Redevelopment Agency of the City of Santa Clarita (Agency) was established in July 1991, pursuant to the State of California Health and Safety Code, Section 33000. The Agency is governed by the members of the City Council. The Agency's primary purpose 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 Agency's financial data and activity are reported within the debt service and capital projects fund types of the City. The Agency's basic financial statements can be obtained at the City's administrative offices. The Santa Clarita Public Financing Authority (Authority) was established in July 1991 as a joint powers 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 Authority's financial data and activity are reported within the debt service and capital projects fund types of the City. The Authority's basic financial statements can be obtained at the City's administrative offices. 42 City f C ty o Santa Clarity Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 8 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus The accounting policies of the City conform to GAAP in the United States for local governmental units. The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self - balancing accounts that comprise its assets, liabilities, fund balance, revenues and expenditures or expenses, as,. appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purpose of which they are to be spent and means by which spending activities are controlled. a Government - Wide and Fund Financial Statements The City's government -wide financial statements include a Statement of Net Assets and a Statement of Activities and Changes in Net Assets. These statements present summaries of governmental and business -type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. These basic financial statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of a accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Certain types of transactions are reported as program revenues for the City in three categories: • Charges for services • Operating grants and contributions • Capital grants and contributions Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the business -type activities, which are Dpresented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business -type activities have not been eliminated. The following interfund activities have been eliminated: • Due to and from other funds • Advances to and from other funds • Transfers in and out 43 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued 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 Statements No. 20, for the government -wide and proprietary fund financial statements, 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. The City has elected not to follow subsequent private -sector guidance. Governmental Fund Financial Statements Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non -major funds aggregated. The City has presented all major funds that meet the required criteria. An accompanying schedule is presented to reconcile and explain the differences in net assets as presented in these statements to the net assets presented in the government -wide financial statements. The City reports the following major governmental funds: 0 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 Open Space Preservation District Special Revenue Fund is used to account for monies received from assessments for the costs of acquiring open space lands, parks, and parkland in accordance with the ' City's programs. The Redevelopment Agency Debt Service Fund is used to account for debt service on loans from the , City to the Redevelopment Agency. The Redevelopment Agency Capital Projects Fund is used to account for the Agency's construction of all capital projects located within the project area that are not financed with housing set-aside funds. Proprietary Fund Financial Statements Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual ' basis of accounting. Accordingly; all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets ' present increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. ' 44 City of Santa Clarita ' Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 ' 1. .SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Operating revenues in the proprietary funds are those revenues that are generated from the primary ' operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. The City reports the following major enterprise fund: ' The Transit Enterprise Fund is used to account for the operation of the City's local public transit bus system. ' Fiduciary Fund Financial Statements Fiduciary fund financial statements include a Statement of Net Assets. The City's fiduciary funds represent agency funds. Fiduciary fund types are accounted for according to the nature of the fund. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Agency funds are accounted for using the accrual basis of accounting. The City reports the following agency funds:. 1 The Assessment District No. 92-2 Fund is 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 Assessment District No. 99-1 Fund is 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. t The Assessment District No. 2002-1 Fund is 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. Fund Types reported by the City 1 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. 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. 45 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Cash and Cash Equivalents and Investments The City pools its available cash for investment purposes. The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with investments and displayed as Cash and Investments. For purposes of the statement of cash flows of the proprietary fund types, cash and cash equivalents include all investments, as the City operates an internal cash management pool which maintains the general characteristics of a demand deposit account. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. Investments are presented at fair value except as noted below. The fair value of participants' position in the investment pools is the same as the value of the investment pools' shares and investment income, which includes changes in fair value (i.e., realized and unrealized gains or losses). Money market funds (such as short-term, highly liquid debt instruments including bankers' acceptances and securities (notes, bills, and bonds of the U.S. government and its agencies), and participating interest -earnings investment contracts (such as negotiable certificates of deposit, certificates of deposit, and repurchase agreements) that have a remaining maturity at the time of purchase of one year or less, are carried at amortized cost which approximates market value. The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which has invested a portion of the pool funds in structured notes and asset- backed securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these structured notes and asset-backed securities are subject to market risk as to change in interest rates. The City also participates in the Los Angeles County Pooled Investment Fund. In accordance with GASB Statement No. 40, Deposit and Investment Risk Disclosures (an amendment of GASB No. 3), certain disclosure requirements, if applicable, are provided for deposit and investment risk in the following areas: ➢ Interest Rate Risk ➢ Credit Risk e Overall e Custodial Credit Risk Concentration of Credit Risk ➢ Foreign Currency Risk 46 1 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 ' 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued D. Interfund Transactions Activity between funds that are representative of lending/ borrowing arrangements outstanding at the ' end of the fiscal year are referred to as "due to/from other funds" (i.e., current portion of interfund loans) or "advances from/to other funds" (i.e., noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and business -type activities are reported in ' the governmental -wide financial statements as "internal balances." E. Prepaids ' Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. F. Capital Assets Government -Wide Financial Statements 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 with an 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 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 costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset 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 Fund Financial Statements The fund financial statements do not present capital assets. As such, capital assets are shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the Government - Wide Statement of Net Assets. G. Land Held for Resale 1 Land held for resale is carried at cost. An amount equal to the carrying value of land is reserved in fund balance because such assets are not available to finance the City's current operations. 47 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued H. Long Term Debt Government -Wide Financial Statements Long-term debt and other financed obligations are reported as liabilities in the government -wide and proprietary fund financial statements. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable premium or discount. Issuance costs are reported as deferred charges. Fund Financial Statements The fund financial statements do not present long-term debt. As such, long-term debt is shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the Government - Wide Statement of Net Assets. L 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 and proprietary funds only if they have matured. J. Claims Payable 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. 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 after 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. 48 City of Santa Clarita ' Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued 1 L. Net Assets and Fund Balances Government -Wide Financial Statements - In the government -wide financial statements, net assets are ' classified in the following: Invested in Capital Assets, Net of Related Debt - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets. ' Restricted Net Assets - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments. Unrestricted Net Assets - This amount is all net assets that do not meet the definition of "invested in capital assets, net of related debt" or "restricted net assets." Fund Financial Statements - In the Governmental Fund Financial Statements, fund balances are classified in the following categories: Nonspendable - Items that cannot be spent because they are not in spendable form, such as prepaid items and inventories, items that are legally or contractually required to be maintained intact, such as principal of an endowment or revolving loan funds. Restricted - Restricted fund balances encompass the portion of net fund resources subject to externally enforceable legal restrictions. This includes externally imposed restrictions by creditors, such as through debt covenants, grantors, contributors, laws or regulations of other governments, as well as restrictions imposed by law through constitutional provisions or enabling legislation. Committed - Committed fund balances encompass the portion of net fund resources, the use of which is constrained by limitations that the government imposes upon itself at its highest level ' of decision making, normally the governing body, and that remain binding unless removed in the same manner. The City Council is considered the highest authority for the City. Assam - Assigned fund balances encompass the portion of net fund resources reflecting the government's intended use of resources. Assignment of resources can be done by the highest level of decision making or by a committee or official designated for that purpose. The City Council has authorized the Deputy City Manager for that purpose. Unassigned - This category is for any balances that have no restrictions placed upon them. 49 City of Santa Clarita Notes to Basic Financial Statements, Continued ' For the year ended June 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued I M. Spending Policy I Government -Wide Financial Statements and the Proprietary Fund Financial Statements When an expense is incurred for purposes for which both restricted and unrestricted net assets are ' available, the City's policy is to apply restricted net assets first. Governmental Fund Financial Statements When expenditures is incurred for purposes for which all restricted, committed, assigned and unassigned fund balances are available, the City's policy is to apply in the following order, except for instances wherein an ordinance specifies the fund balance: ➢ Restricted ➢ Committed ➢ Assigned ➢ Unassigned N. Estimates I The preparation of the basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the disclosure of contingent assets and liabilities at the date of the basic financial statements and the related reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management believes that the estimates are reasonable. O. Unearned and Deferred Revenue Government -Wide Financial Statements - Unearned revenue is recognized for transactions for which revenue has not yet been earned. Unearned revenue includes monies received in advance from the fiscal agents on the amounts deposited in the reserve funds for various bonds and prepaid charges for services. Fund Financial Statements - Deferred revenue represents money received during the current or previous years that has not been earned or is not considered available to finance expenditures of the current period. 50 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 2. CASH AND INVESTMENTS A. Cash and Investments Cash and investments at June 30, 2011, are classified in the accompanying financial statements as follows: Cash and investments consisted of the following at June 30, 2011: Cash and cash equivalents: Cash on hand $ 3,950 Deposits with financial institutions (35,232) Total cash and cash equivalents (31,282) Investments: Government -Wide Statement of Net Assets US Treasury Securities 23,240,482 Federal Agencies 108,589,011 Fiduciary Funds 9,956,374 Certificates of Deposit Governmental Business -Type Statement of 34,646,453 Local Agency Investment Fund Activities Activities Total Net Assets Total Cash and investments $ 184,610,505 $ $ 184,610,505 $ 106,031 $ 184,716,536 Cash and investments with fiscal agent 1,165,418 1,165,418 1,794,031 2,959,449 Total $ 185,775,923 $ $ 185,775,923 $ 1,900,062 $ 187,675,985 Cash and investments consisted of the following at June 30, 2011: Cash and cash equivalents: Cash on hand $ 3,950 Deposits with financial institutions (35,232) Total cash and cash equivalents (31,282) Investments: US Treasury Securities 23,240,482 Federal Agencies 108,589,011 Money Markets 9,956,374 Certificates of Deposit 1,010,215 Corporate Securities 34,646,453 Local Agency Investment Fund 5,833,890 L.A. County Pool (LACPIF) 1,471,393 Total investments 184,747,818 Total cash and investments $ 184,716,536 The carrying amounts of the City's demand deposits were $(35,232) at June 30, 2011. Bank balances before reconciling items were $308,053 at that date, the total amount of which was collateralized or insured with securities held by the pledging financial institutions in the City's name. The overdraft of demand deposits is due to timing differences. 51 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 2. CASH AND INVESTMENTS, Continued B. 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. Authorized Investment Type Maximum Maturity Local Agency Bonds 5 years U.S. Treasury Obligations 5 years State of California Obligations 5 years CA Local Agency Obligations 5 years U.S. Government Sponsored Enterprise Securities 5 years Banker's Acceptances 180 days Commercial Paper 270 days Negotiable Certificates of Deposit 5 years Repurchase Agreements 1 year Medium -Term Notes 5 years Money Market Mutual Funds 5 years Mortgage Pass -Through Securities 5 years Los Angeles County Pooled Investment Fund (LACPIF) Not Applicable Local Agency Investment Fund (LAIF) Not Applicable Maximum Percentage or Maximum Amount of Investment in Portfolio * One Issuer None None None None None None None None None None 40% 30% 25% 10% 30% None None None 30% None 15% 10% 20% None None None $ 50 M None * - Excluding amounts held by bond trustees that are not subject to California Government Code restrictions 52 1 City of Santa Clarita Notes to Basic Financial Statements, Continued '. For the year ended June 30, 2011 2. CASH AND INVESTMENTS, Continued C. 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 Maximum Percentage Investment Maximum or Amount of in One Authorized Investment Type Maturity Portfolio * Issuer U.S. Treasury Obligations 5 years None None Money Market Mutual Funds 5 years 15% 10% ' Local Agency Investment Fund (LAIF) Not Applicable $50M None D. Disclosures Relating to Interest Rate Risk As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy (Policy) limits investments to a maximum maturity of five years from the date of purchase. 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. ■ At June 30, 2011, the City had the following investment maturities: ' Investment Type Fair Value Less than 1 Investment Maturities (In Years) 1 to 2 2 to 3 3 to 4 4 to 5 US Treasury Securities $ 23,240,482 $ 12,240,486 $ 1,075,386 $ 1,598,438 $ 1,612,853 $ 6,713,319 Federal Agencies 108,589,011 64,414,215 19,164,737 14,271,453 5,157,949 5,580,657 Money Market 9,956,374 9,956,374 - - Certificates of Deposit 1,010,215 1,010,215 - - - - Corporate Securities 34,646,453 11,628,600 4,334,578 10,268,306 7,222,870 1,192,099 Local Agency Investment Fund 5,833,890 5,833,890 - - - - L.A. County Pool (LACPIF) 1,471,393 1,471,393 - - - - Total $ 184,747,818 $ 106,555,173 $ 24,574,701 $ 26,138,197 $ 13,993,672 $ 13,486,075 53 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 2. CASH AND INVESTMENTS, Continued E. 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: Credit Quality Distribution for Securities with Credit Exposure as a Percentage of Total Investments 54 Moody's S&P's % of Investments Credit Credit Sub- with Interest Investment Type Rating Rating Total Rate Risk US Treasury Securities AAA AAA 12.58% Federal Agencies AAA AAA - 58.78% Money Market Not Rated Not Rated - 5.39% Certificates of Deposit Not Rated Not Rated - 0.55% Local Agency Investment Fund Not Rated Not Rated - 3.16% L.A. County Pool (LACPIF) Not Rated Not Rated - 0.79% Corporate Securities: Bank of America AAA AAA 4.71% - Bank of New York AA3 A+ 3.42% - Blackrock Inc. Al A+ 2.92% - Berkshire Hathaway AA2 AA+ 3.43% - Cheveron Corp. AA1 AA 3.42% - John Deere Capital Corp. A2 A 0.58% - Walt Disney Company A2 A 2.46% - Ebay Inc. A2 A 3.44% - General Electric AA2 AA+ 19.54% - Goldman Sachs AAA AAA 4.67% - Hewlette-Packard Company A2 A 2.25% - HSBC USA Inc. AAA AAA 0.73% - IBM Corp. AA3 A+ 2.28% - JP Morgan Chase Al A 9.77% - Lehman Brothers Not Rated Not Rated 1.50% - Morgan Stanley A2 A 3.74% - Northern Trust Corp. Al AA- 2.66% - Pepsico Inc. AA3 A- 3.48% - Pfizer Al AA 2.57% - US Bankcorp AAA AAA 8.15% - Wachovia Al AA- 5.85% - Wal-Mart AA2 AA 4.57% - Wells Fargo Company AA3 AA- 3.84% Subtotal 18.75% Total 100.00% 54 City of Santa Clarita 1 Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 ' 2. CASH AND INVESTMENTS, Continued F. 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 Reported Amount % of Total Investments Federal National Mortgage U.S. Government Sponsored Association Enterprise Securities $ 22,216,588 14.79% Federal Home Loan Bank U.S. Government Sponsored Enterprise Securities 30,454,868 20.27% Federal Home Loan Mortgage U.S. Government Sponsored ' Corporation Enterprise Securities 22,754,028 15.15% Federal Farm Credit Bank U.S. Government Sponsored 1 Enterprise Securities 13,428,651 8.94% G. Custodial Credit Risk 1 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, 2011, the City deposits (bank balances) were insured by the Federal Depository Insurance Corporation or collateralized as required under California Law. 1 55 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 2. CASH AND INVESTMENTS, Continued H. Investment in State Investment Pool The City is a participant in LAIF which 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 $50,000,000 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 City's investments with LAIF at June 30, 2011, included a portion of the pool funds invested in Structured Notes and Asset -Backed Securities: Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options. Asset -Backed Securities: generally mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables. As of June 30, 2011, the City had $5,833,890 invested in LAIF, which had invested 5.42% of the pool investment funds in Structured Notes and Asset -Backed securities. The LAIF fair value factor of 1.001576470 was used to calculate the fair value of the investments in LAIF from their amortized cost basis. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. L 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 prorated 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 LCPIF, which are recorded on an amortized cost basis. As of June 30, 2011, the City had $1,471,393 invested in LACPIF. The LACPIF fair value factor of 1.000423588 was used to calculate the fair value of the investments in LACPIF from their amortized cost basis. 56 City of Santa Clarita i Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 ' 3. 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 $2,143,653 at June 30, 2011, has been offset by deferred revenue in other governmental funds, since these loans are not available to finance current expenditures. 1 4. CAPITAL ASSETS A. Government -Wide Financial Statements ' At June 30, 2011, the City's capital assets consisted of the following: Governmental Business -Type Activities Activities Total Non -depreciable assets: 1 Land $ 123,614,634 $ 15,087,880 $ 138,702,514 Construction -in -progress 6,477,297 6,957,970 13,435,267 Total non -depreciable assets 130,091,931 22,045,850 152,137,781 Depreciable assets: Site improvements 29,141,818 1,894,765 31,036,583 Building and improvements 46,537,031 41,483,799 88,020,830 Equipment ' 11,427,789 41,065,856 52,493,645 Infrastructure 821,903,999 - 821,903,999 Total depreciable assets 909,010,637 84,444,420 993,455,057 Less accumulated depreciation: Site improvements (8,117,320) (429,551) (8,546,871) Building and improvements (12,155,939) (6,625,651) (18,781,590) Equipment (9,239,858) (24,018,200) (33,258,058) Infrastructure (233,367,372) - (233,367,372) Total accumulated depreciation (262,880,489) (31,073,402) (293,953,891) Total depreciable assets, net 646,130,148 53,371,018 699,501,166 Total capital assets, net $ 776,222,079 $ 75,416,868 $ 851,638,947 57 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 4. CAPITAL ASSETS, Continued A. Government -Wide Financial Statements, Continued The following is a summary of changes in the capital assets for governmental activities during the fiscal year: Non -depreciable assets: Land Construction -in -progress Total non -depreciable assets Depreciable assets: Site improvements Building and improvements Equipment Infrastructure Total depreciable assets Less accumulated depreciation: Site improvements Building and improvements Equipment Infrastructure Total accumulated depreciation Total depreciable assets, net Governmental activities capital assets, net Governmental Activities Balance Balance July 1, 2010 Additions Deletions June 30, 2011 $ 101,976,048 $ 21,638,586 $ $ 123,614,634 1,387,798 5,089,499 6,477,297 103,363;846 26,728,085 130,091,931 28,903,244 238,574 29,141,818 46,537,031 - 46,537,031 10,656,677 771,112 11,427,789 791,084,910 30,819,089 821,903,999 877,181,862 31,828,775 909,010,637 (6,952,203) (1,165,117) (8,117,320) (11,155,831) (1,000,108) (12,155,939) (8,295,333) (944,525) (9,239,858) (216,974,471) (16,392,901) (233,367,372) (243,377,838) (19,502,651) (262,880,489) 633,804,024 12,326,124 646,130,148 $ 737,167,870 $ 39,054,209 $ $ 776,222,079 Depreciation expense was charged to functions/ programs of governmental activities for the fiscal year ended June 30, 2011 as follows: Governmental Activities General government Public safety Public works Parks and recreation Community development Internal service funds depreciation charged to programs Allocated depreciation Unallocated infrastructure depreciation Total depreciation expense - governmental activities 58 $ 526,321 50,310 .294,360 1,922,718 14,231 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1 4. CAPITAL ASSETS, Continued A. Government -Wide Financial Statements, Continued The following is a summary of changes in the capital assets for business -type activities during the fiscal year: Business -Type Activities Balance Balance July 1, 2010 Additions Deletions June 30, 2011 Non -depreciable assets: Land $ 15,087,880 $ - $ $ 15,087,880 Construction -in -progress 1,744,885 _ 5,213,085 6,957,970 Total non -depreciable assets 16,832,765 5,213,085 22,045,850 Depreciable assets: Site improvements 1,894,765 1,894,765 Building and improvements 41,483,799 - - 41,483,799 Equipment 35,208,371 5,857,485 41,065,856 Total depreciable assets 78,586,935 5,857,485 = 84,444,420 Less accumulated depreciation: Site improvements (358,375) (71,176) (429,551) Building and improvements (5,742,305) _ (883,346) (6,625,651) Equipment (21,158,991) (2,859,209) (24,018,200) Total accumulated depreciation (27,259,671) (3,813,731) (31,073,402) 1 Total depreciable assets, net 51,327,264 2,043,754 53,371,018 Business -type activities capital assets, net $ 68,160,029 $ 7,256,839 $ $ 75,416,868 Depreciation expense for business -type activities for the fiscal year ended June 30, 2011 was charged as follows: Transit Total depreciation expense 59 $ 3,813,731 $ 3,813,731 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 5. LONG-TERM DEBT The following is a summary of long-term debt transactions of the City for the year ended June 30, 2011 Balance July 1, 2010 Additions Governmental Activities: Lease Revenue Bonds: Series 2007 $ 13,075,000 $ Plus deferred amount for issuance Classification Balance Due Within Due More Deletions June 30, 2011 One Year Than One Year - $ (270,000) $ 12,805,000 $ 280,000 $ 12,525,000 premium 97,254 - (3,658) 93,596 - 93,596 Total Lease Revenue Bonds 13,172,254 - (273,658) 12,898,596 280,000 12,618,596 50,000 - (10,000) 40,000 - 40,000 $ 84,751,184 Certificates of Participation: $ 82,393,751 $ 2,610,254 $ 79,783,497 Refunding, Series 2005 13,760,000 - (1,060,000) 12,700,000 1,090,000 11,610,000 Series 2007 15,525,000 - - 15,525,000 35,000 15,490,000 Less deferred amounts: For issuance discounts (337,347) - 32,142 (305,205) - (305,205) Total Certificates of Participation 28,947,653 - (1,027,858) 27,919,795 1,125,000 26,794,795 Tax Allocation Bonds: Series 2008 Housing Set -Aside Less deferred amounts: For issuance discounts Total Tax Allocation Bonds Capital leases payable Loans payable Compensated absences Claims payable Total Governmental Activities 29,460,000 8,730,000 (154,846) 38,035,154 (420,000) 29,040,000 435,000 28,605,000 (125,000) 8,605,000 125,000 8,480,000 = 5,530 (149,316) - (149,316) (539,470) 37,495,684 560,000 36,935,684 1,624 - (1,624) - - - 2,015,004 - (601,218) 1,413,786 373,786 1,040,000 2,529,495 1,478,679 (1,382,284) 2,625,890 271,468 2,354,422 50,000 - (10,000) 40,000 - 40,000 $ 84,751,184 $ 1,478,679 $ (3,836,112) $ 82,393,751 $ 2,610,254 $ 79,783,497 Lease Revenue Bonds - Series 2007 On January 16, 2007, the 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-ways. 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 2037 and bear interest at 4.375%. Interest is payable semi-annually on February 1 and August 1 of each year. City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 5. LONG-TERM DEBT, Continued Governmental Activities, Continued Lease Revenue Bonds - Series 2007, Continued 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. The total principal and interest remaining to be paid on the Bonds is $21,148,259 as of June 30, 2011. For the current year, principal and interest paid on the Bonds was $825,304 and property tax increment net revenues were $24,996,219. The Bonds required 3.3% of net revenues. The outstanding balance of the Bonds was $12,805,000 at June 30, 2011. The annual debt service requirements on these bonds are as follows: Year Ending June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 2037 Total Principal $ 280,000 295,000 310,000 325,000 335,000 1,890,000 2,295,000 2,810,000 3,475,000 790,000 $ 12,805,000 Interest $ 541,804 527,804 513,054 500,654 243,827 2,225,869 1,816,075 1,299,051 640,558 34,563 $ 8,343,259 Total $ 821,804 822,804 823,054 825,654 578,827 4,115,869 4,111,075 4,109,051 4,115,558 824,563 $ 21,148,259 The following is a summary of the unamortized premiums and discounts outstanding at June 30, 2011: Balance Balance July 1, 2009 Additions Deletions June 30, 2010 $ 97,254 $ - $ (3,658) $ 93,596 IAmortization expense was $3,658 for June 30, 2011. 61 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 5. LONG-TERM DEBT, Continued Governmental Activities, Continued Refunding Certificates of Participation - Series 2005 On July 1, 2005, the 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. 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. The annual debt service requirements on these bonds are as follows: Year Ending June 30, 2012 2013 2014 2015 2016 2017-2021 Total Certificates of Participation - Series 2007 Principal $ 1,090,000 1,125,000 1,160,000 1,195,000 1,235,000 6,895,000 $ 12,700,000 Interest $ 438,151 404,223 368,085 329,359 287,581 698,434 $ 2,525,833 Total $ 1,528,151 1,529,223 1,528,085 1,524,359 1,522,581 7,593,434 $ 15,225,833 On December 12, 2007, the Authority issued $15,525,000 in Certificates of Participation to provide financing for the costs of acquiring open space lands, parks, and parkland in accordance with the City's open space, park and parkland programs, purchase a reserve fund surety and fund the costs of delivery of the Certificates. The Certificates are backed by lease payments to be made by the City to the Authority for the use and occupancy of the Aquatic Center and Sports Complex. The Certificates were issued at a discount of $80,479, which will be amortized and recognized as interest expense over the life of the debt on a straight-line basis for government -wide financial statement purposes. This issuance is comprised of $6,000,000 serial certificates maturing annually on October 1 from 2011 to 2028 and two term certificates (totaling $9,525,000) maturing on October. 1, 2033 and October 1, 2037 that are payable in annual sinking fund installments commencing October 1, 2029. Interest on the certificates is payable semi-annually on October 1 and April 1 at rates ranging from 4.00% to 4.60% for the serial certificates and 4.75% for the term certificates. 62 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1 5. LONG-TERM DEBT, Continued Governmental Activities, Continued Certificates of Participation - Series 2007, Continued The annual debt service requirements on these bonds are as follows: Year Ending June 30, Principal Interest Total 2012 $ 35,000 $ 712,951 $ 747,951 2013 60,000 711,051 771,051 2014 90,000 708,051 798,051 2015 120,000 703,851 823,851 ' 2016 150,000 698,451 848,451 2017-2021 1,280,000 3,363,450 4,643,450 2022-2026 2,290,000 2,991,331 5,281,331 1 2027-2031 3,585,000 2,328,473 5,913,473 2032-2036 5,255,000 1,291,406 6,546,406 2037-2038 2,660,000 128,488 2,788,488 1 Total $ 15,525,000 $ 13,637,503 $ 29,162,503 The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the bonds. This difference is considered to be a deferred loss on refunding. The deferred Ioss on refunding, reported in the basic financial statements as a deduction from long-term debt, is amortized on a straight-line method over 20 years. The following is a summary of unamortized deferred loss on refunding outstanding at June 30, 2011 for both, the Series 2005 and 2007 Certificates: Balance Balance July 1, 2010 Additions Deletions June 30, 2011 $ (337,347) $ - $ 32,142 $ (305,205) j Amortization expense was 32142 for June 30 2011. p $ J , Tax Allocation Bonds - Series 2008 On June 12, 2008, the Agency issued the Santa Clarita Redevelopment Agency Tax Allocation Bonds, Series 2008 (2008 Bonds) in the amount of $29,860,000. Proceeds of the 2008 Bonds will be used to finance certain redevelopment projects of the Agency, fund a debt service reserve account, and pay for costs of the bond issuance. The bonds were issued at a net discount of $165,906, which will be amortized and recognized as interest expense over the. life of the debt on a straight-line basis for governent-wide financial statement reporting purposes. This bond issue is comprised of $12,065,000 serial bonds maturing annually commencing October 1, 2011 through 2028, and three term bonds (totaling $17,795,000) maturing on October 1, 2032, October 1, 2037, and October 1, 2043 that are payable in annual sinking fund installments commencing October 1, 2029. Interest on the 2008 Bonds is payable semi-annually on October 1 and April 1 at rates ranging from 4.00% to 4.75% for the serial bonds and 4.75% to 5.00% for the term bonds. 63 City of Santa Clarita. Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 5. LONG-TERM DEBT, Continued Governmental Activities, Continued Tax Allocation Bonds - Series 2008, Continued The total principal and interest remaining to be paid on the Bonds is $56,617,118 as of June 30, 2011. For the current year, principal and interest paid on the Bonds was $1,783,748 and property tax increment net revenues were $2,031,618. The Bonds required 88% of net property tax increment revenues. The outstanding balance of the Bonds was $29,040,000 at June 30, 2011. The annual debt service requirements on these bonds are as follows: Year Ending June 30, Principal 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 2037-2041 2042-2043 Total $ 435,000 450,000 470,000 490,000 510,000 2,870,000 3,510,000 4,390,000 5,545,000 7,040,000 3,330,000 Tax Allocation Bonds - Housing Set -Aside Interest $ 1,346,648 $ 1,328,948 1,310,548 1,291,348 1,271,348 6,027,350 5,360,143 4,454,894 3,274,450 1,742,941 168,500 Total 1,781,648 1,778,948 1,780,548 1,781,348 1,781,348 8,897,350 8,870,143 8,844,894 8,819,450 8,782,941 3,498,500 $ 29,040,000 $ 27,577,118 $ 56,617,118 On June 2008, the Agency issued the Santa Clarita Redevelopment Agency Housing Set -Aside Tax Allocation Bonds, Series 2008 (Housing Set -Aside Bonds) in the amount of $8,850,000. Proceeds of the Housing Set -Aside Bonds will be used to finance low and moderate income housing projects and programs, fund a reserve fund, and pay for costs of the bond issuance. The bonds were issued at a net discount of $5,241. The bond issue is comprised of $3,550,000 serial bonds maturing annually on October 1 through 2028 and three term bonds (totaling $5,300,000) maturing on October 1 , 2032, October 1, 2037, and October 1, 2043 that are payable in annual sinking fund installments commencing October 1, 2029. Interest on the Housing Set -Aside Bonds is payable semi-annually on October 1 and April 1 at rates ranging from 4.00% to 4.875% for the serial bonds and 5.00% for the term bonds. The total principal and interest remaining to be paid on the Bonds is $16,928,746 as of June 30, 2011. For the current year, principal and interest paid on the Bonds was $535,256 and property tax increment net revenues were $507,905. The Bonds required 105% of net property tax increment revenues. The outstanding balance of the Bonds was $8,605,000 at June 30, 2011. 64 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 5. LONG-TERM DEBT, Continued Governmental Activities, Continued Tax Allocation Bonds - Housing Set -Aside, Continued The annual debt service requirements on the Housing Set -Aside Bonds are as follows: Year Ending June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 2037-2041 2042-2043 Total Principal Interest Total $ 125,000 $ 405,256 $ 530,256 135,000 400,056 535,056 140,000 394,556 534,556 145,000 388,856 533,856 150,000 382,956 532,956 840,000 1,818,269 2,658,269 1,030,000 1,622,322 2,652,322 1,295,000 1,352,350 2,647,350 1,650,000 987,500 2,637,500 2,100,000 521,250 2,621,250 995,000 50,375 1,045,375 $ 805,000 $ 8,323,746 $ 16,928,746 The following is a summary of the unamortized discount outstanding at June 30, 2011 for both, the Series 2008 and the Housing set -Aside Tax Allocation Bonds: Balance Balance July 1, 2010 Additions Deletions June 30, 2011 $ (154,846) $ - $ 5,530 $ (149,316) Amortization expense was $5,530 for June 30, 2011. Loans Payable HUD Loans 1999 West Newhall Boys and Girls Club Scherzinger Lane Total HUD Loans 2002 City Parkng Lot 2003 Costco Total Balance Balance Due within Due in more July 1, 2010 Additions Deletions June 30, 2011 one year than one year $ 700,000 $ - $ (130,000) $ 570,000 $ 130,000 $ 440,000 611,000 - (77,000) 534,000 77,000 457,000 189,000 - (23,000) 166,000 23,000 143,000 1,500,000 - (230,000) 1,270,000 230,000 1,040,000 284,258 - (140,472) 143,786 143,786 - 230,746 - (230,746) - - - $ 2,015,004 $ - $ (601,218) $ 1,413,786 $ 373,786 $ 1,040,000 65 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 5. LONG-TERM DEBT, Continued Governmental Activities, Continued Loans Payable, Continued HUD Loans 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. The interest rate on this loan is fixed at 7.49%. The amount outstanding at June 30, 2011 is $570,000. 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. The interest rate on this loan is fixed at .56%. The amount outstanding at June 30, 2011 is $534,000. 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. The interest rate on this loan is fixed at .56%. The amount outstanding at June 30, 2011 is $166,000. Future loan payment requirements for the HUD loans are combined as follows: Year Ending June 30, 2012 2013 2014 2015 2016 2017-2018 Total Principal Interest - Total $ 230,000 $ 73,949 $ 303,949 230,000 59,184 289,184 230,000 44,056 274,056 280,000 26,697 306,697 100,000 14,220 114,220 200,000 11,496 211,496 $ 1,270,000 $ 229,602 $ 1,499,602 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 1 5. LONG-TERM DEBT, Continued Governmental Activities, Continued Loans Payable, Continued 2002 Cie Parking Lot Loan 1 On April 8, 2002, the City entered into a lease purchase agreement with the 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). The amount outstanding at June 30, 2011 is $143,786. ' Future payment requirements are as follows: Year Ending June 30, Principal Interest Total 2012 $ 143,786 $ 5,307 $ 149,093 Total $ 143,786 $ 5,307 $ 149,093 2003 Costco Loan T On October 3, 2003, the City entered into a seven year fixed rate lease/leaseback transaction for certain capital transfer facilities with the 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%. The loan was paid off during the year ended June 30, 2011. Compensated absences There is no fixed payment schedule for earned but unpaid compensated absences 1 67 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 6. INTERFUND TRANSACTIONS Due To/Due From - At June 30, 2011, the City had the following short-term interfund receivables and payables. w SNon -Major Governmental Funds Transit - Enterprise Fund Fiduciary Fund A Total Due From Other Funds General Total $ 3,285,699 $ 3,285,699 4,905,469 4,905,469 80,632 80,632 $ 8,191,168 $ 8,191,168 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. Long -Term Advances - At June 30, 2011, the City had the following interfund long-term advances: Advances between funds are to fund capital projects. Repayments will be funded through future developer fees and tax increment revenues. 68 Advances To Other Funds Major Funds Internal Service Bridge and v General Thoroughfare Developer Fees Self Insurance Total x Governmental Funds: Bridge and Thoroughfare $ 518,987 $ 23,008,023 $ 113,614 $ 909,898 $ 24,550,522 w W u RDA Debt Service 11,924,620 - 51691,518 - 17,616,138 u Public Library - NonMajor 10,806,376 - - - 10,806,376 Q Total $ 23,249,983 $ 23,008,023 $ 5,805,132 $ 909,898 $ 52,973,036 Advances between funds are to fund capital projects. Repayments will be funded through future developer fees and tax increment revenues. 68 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 6. INTERFUND TRANSACTIONS, Continued Transfers - At June 30, 2011, the City had the following transfers: Transfers Out 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, 2011, are as follows: Deficit Fund Fund Balance Major Funds: Open Space $ (21,544,781) Redevelopment Other , Redevelopment Agency Debt Service Fund (16,691,276) Other Governmental Funds: Preservation Bridge & Agency Capital Governmental Transit Enterprise (10,507) Federal Grants General Fund Developer Fees District Thoroughfare Projects Fund Funds Fund Total Transfers In General Fund $ 9,535,577 $ 18,499 $ $ - $ 763,436 $ 3,471,586 $ 150,000 $ 13,939,098 Bridge and Thoroughfare - - 2,000,000 - - - 2,000,000 Redevelopment Agency Debt Service Fund - 9,485,498 - 9,485,498 Redevelopment Agency Capital Projects Fund - - 63,811 63,811 Other Governmental Funds 2,782,536 713,661 19,453,312 2,419,004 12,930 25,381,443 Transit Enterprise - - - 5,971,232 - 5,971,232 Internal Service Funds 8,036,224 - - - - - 8,036,224 Total $ 20,354,337 $ 18,499 $ 713,661 $ 2,000,000 $ 29,702,246 $ 11,925,633 $ 162,930 $ 64,877,306 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, 2011, are as follows: Deficit Fund Fund Balance Major Funds: Bridge and Thoroughfare $ (21,544,781) Developer fee (1,493,440) Redevelopment Agency Debt Service Fund (16,691,276) Other Governmental Funds: State Park (879,033) Miscellaneous Grants (564,353) Federal Aid Urban (10,507) Federal Grants (1,771,036) 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 government. agencies. 69 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 7. INDIVIDUAL FUND DISCLOSURES, Continued I B. Expenditures In Excess Of Appropriations I For the year ended June 30, 2011, expenditures exceeded appropriations in the following programs/ functions (legal level of budgetary control) of the respective funds: Funds General Fund Community Development Bridge and Thoroughfare Special Revenue Public Works Developer Fees Community Development Non -Major Governmental Funds: Special Assessment Special Revenue Capital Outlay Stormwater Utility Special Revenue General Government BJA Law Enforcement Special Revenue Public Safety Public Library Special Revenue Capital Outlay 8. DEFINED BENEFIT PENSION PLAN Plan Description: Excess Expenditures Appropriations Expenditures over Appropriations $ 4,329,634 $ 4,615,588 $ 285,954 591,195 14,388,284 13,797,089 - 2,464,946 2,464,946 402,046 498,388 96,342 12,000 42,783 30,783 - 113,115 113,115 - 3,142,427 3,142,427 The City contributes to the California Public Employees' Retirement System (Ca1PERS), an agent multiple - employer public employee defined benefit pension plan. CAPERS provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. CalPERS 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 hired before April 9, 2011 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. Participants hired on or after April 9, 2011 are required to contribute 7% of their annual covered salary. The employee makes the contributions required for their account. The City is required to contribute at an actuarially determined rate; the rate for the year ended June 30, 2011, was 11.65% for non -safety employees. The contribution requirements of plan members and the City are established and maybe amended by Ca1PERS. 70 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 8. DEFINED BENEFIT PENSION PLAN, Continued Annual Pension Cost: For 2011, the City's annual pension cost of $4,922,978 for Ca1PERS was equal to the City's required and actual contribution. The required contribution was determined as part of the June 30, 2007, 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 twenty-two 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%. The actuarial value of Ca1PERS' assets was determined using techniques that smooth the effect of short-term volatility in the market value of investments over a fifteen -year period (smoothed market value). Initial unfunded liabilities are amortized over a closed period that depends on the plan's date of entry into CaIPERS. 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 plans 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 PERS Funded Status and Funding Progress: Percentage of APC Net Pension Contributed Obligation 100% $ - 100% - 100% - As of June 30, 2010, the most recent actuarial valuation date available, the plan was 81.4% funded. The actuarial accrued liability for benefits was $90.2 million, and the actuarial value of assets was $73.5 million, resulting in an unfunded actuarial accrued liability (UAAL) of $16.7 million. The covered payroll (annual payroll of active employees covered by the. plan) was $25.5 million, and the ratio of the UAAL to the covered payroll was 65.5%. Additional plan trend information for the prior two years is provided in tabular format in the Required Supplementary Information section. 71 Annual Pension Cost Fiscal Year (APC) 6/30/2009 $ 5,060,293 6/30/2010 5,036,747 6/30/2011 4,922,978 Funded Status and Funding Progress: Percentage of APC Net Pension Contributed Obligation 100% $ - 100% - 100% - As of June 30, 2010, the most recent actuarial valuation date available, the plan was 81.4% funded. The actuarial accrued liability for benefits was $90.2 million, and the actuarial value of assets was $73.5 million, resulting in an unfunded actuarial accrued liability (UAAL) of $16.7 million. The covered payroll (annual payroll of active employees covered by the. plan) was $25.5 million, and the ratio of the UAAL to the covered payroll was 65.5%. Additional plan trend information for the prior two years is provided in tabular format in the Required Supplementary Information section. 71 City an 1 rita C ty of Santa C a Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 9. POST EMPLOYMENT HEALTH BENEFITS I Plan Description. City retirees, spouses and eligible dependents, receive health plan coverage through the Ca1PERS Health Plan (Plan). The Plan is a defined benefit plan. The Plan provides medical and dental insurance benefits to eligible retirees and their spouses and dependents. A separate financial report is not issued. Eligibility. City employees are eligible who have a service retirement from the City at age 50 with five or more years of service are eligible to receive postemployment medical benefits. Employees who have a disability retirement or retire directly from the City are also eligible. Participants as of July 1, 2010 Total Active employees 359 Retirees 44 Total 403 Funding Policy. The contribution requirements are established and amended by the City. The required contribution is based on projected pay-as-you-go financing requirements. For fiscal year 2011, the City contributed $384,000 to the plan. For fiscal year 2010-2011, the City contributed, on an individual basis, for employees and retirees up to the following amounts: Retirees Employees Unrepresented $12,199 $13,128 SEIU Local 347 $12,199 $13,128 Annual OPEB Cost and Net OPEB Obligation. The City's annual Other Postemployment Benefit (OPEB) cost (expense) is calculated based on the Annual Required Contribution of the Employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excesses) over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB Obligation to the Plan: Total Annual required contribution $ 5,329,000 Interest on net OPEB obligation 311,000 Adjustment to annual required contribution (576,000) Annual OPEB cost (expense) 5,064,000 Contributions made (384,000) Increase in net OPEB obligation 4,680,000 Net OPEB obligation - beginning of year 7,514,175 Net OPEB obligation - end of year $ 12,194,175 72 City of Santa Cl ri to Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 9. POST EMPLOYMENT HEALTH BENEFITS, Continued The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2011 was as follows: Fiscal Annual % of Annual Net Year OPEB Annual OPEB Cost OPEB Ended Cost Contribution Contributed Obligation 6/30/2010 $ 4,141,291 $ 328,089 7.9% $ 7,514,175 6/30/2011 5,064,000 384,000 7.6% 12,194,175 Funded Status and Funding Progress. As of July 1, 2010, the most recent actuarial valuation date, the plan was zero percent funded. The Actuarial Accrued Liability for benefits was $41,425,000, and the actuarial value of assets was $0, resulting in an UAAL of $41,425,000. The covered payroll (annual payroll of active employees covered by the plan) was $25,094,000 and the ratio of UAAL to the covered payroll was 165.08%. The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the Actuarial Accrued Liabilities for benefits. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend rate. Amounts determined ' regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on J P gP p the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2010, actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions include a 4.25% investment rate of return which is based on the expected return on funds invested by Ca1PERS, and an annual healthcare cost trend rate of 9.70% initially and reduced by decrements of 0.6%to an ultimate rate of 5.0% thereafter. The actuarial assumption for inflation was 3.00%, and the aggregate payroll increase was 3.25% used in the actuarial valuation. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as level percentage of projected payroll on an open basis. The remaining amortization period at July 1, 2010, was 28 years. 73 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 10. CLASSIFICATION OF FUND BALANCES The City has adopted the provisions of GASB Statement No. 54 Fund Balance and Governmental Fund Type Definitions. GASB 54 establishes Fund Balance classifications based largely upon the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. The Governmental Fund statements conform to this new classification as presented below. Nonspendable Prepaid items Advances to other funds Total nonspendable Restricted Open space preservation Air quality Special assessments Drainage Landscape maintenance Public library Tourism marketing Debt service Affordable housing Other purposes Total restricted Committed OPEB Total committed Assigned Other purposes Public financing Capital projects Total assigned Unassigned Total fund balances 74 Open Space Debt Service Capital Projects Non -Major General Bridge and Developer Preservation Redevelopment Redevelopment Governmental Fund Thoroughfare Fees District Agency Agency Funds Total $ 595,875 $ - $ - $ $ $ $ $ 595,875 23,249,986 23,008,021 5,805,131 52,063,138 23,845,861 23,008,021 5,805,131 52,659,013 - - - 10,818,715 10,818,715 - 50,298 50,298 4,877,317 4,877,317 6,084,830 61084,830 18,574,260 18,574,260 2,821,114 2,821,114 238,680 238,680 924,862 278,151 1,203,013 - 8,891,670 8,891,670 - - 3,645,175 3,645,175 - 10,818,715 924,862 45,461,495 57,205,072 12,356,339 - - - 12,356,339 12,356,339 12,356,339 572,781 184,595 - 757,376 - - 457,292 457,292 - - 2,995,523 2,995,523 572,781 184,595 3,452,815 4,210,191 46,915,238 (44,552,802) (7,298,571) - (17,616,138) - (3,224,929) (25,777,202) $ 83,690,219 $ (21,544,781) $ . (1,493,440) $ 10,818,715 $ (16,691,276) $ 184,595 $ 45,689,381 $ 100,653,413 74 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 11. 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 $16,500 per participant per year. Employee contributions to certain plans are voluntary. During the year ended June 30, 2011, there were 922 participants in the plans. The City contributions totaled $189,533, and employees' contributions totaled $1,979,818. 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, 2011, $40,000 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 on 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. The City's workers' compensation coverage is also administered by SDRMA. The City is under statutory workers' compensation coverage and claims are handled by SDRMA up to a limit of $5,000,000 per occurrence. The annual member contribution is $542,541 for the Property/ Liability Program and $382,953 for the Workers' Compensation Program (based on estimated wages). Members are subject to dividends and assessments but no such dividends have been declared, nor have any assessments been levied for the year ended June 30, 2011. Additionally, there are no known refunds or credits due to SDRMA. 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, 2011. iChanges in the reported claims liability since June 30, 2009 resulted in the following: Liability as of June 30, 2009 $ 50,000 Claims and changes in estimates during the year ended June 30, 2010 - Claims and payments during the year ended June 30, 2010 - Liability as of June 30, 2010 $ 50,000 Claims and changes in estimates during the year ended June 30, 2011 (10,000) Claims and payments during the year ended June 30, 2011 Liability as of June 30, 2011 $ 40,000 75 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 12. SELF INSURANCE, Continued SDRMA has published its own financial report for the year ended June 30, 2011, which can be obtained from SDRMA, 1112 I Street, Suite 300, Sacramento, California 95814. Summary information on SDRMA is as follows: 13. NO COMMITMENT DEBT 1915 Act Limited Obligation Improvements Bonds A. On September 2, 1992, $879,432 of 1915 Act Limited Obligation Improvement Bonds (1915 Golden Valley Road Bonds) for the Golden Valley Road Improvement Assessment District (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 the debt service is from the property assessments within the Assessment District. The principal amount of debt outstanding at June 30, 2011, was $455,000. B. On January 13, 2001, $790,000 of 1915 Act Limited Obligation Improvement Bonds (1915 Vermont Drive/Everett Drive Bonds) for the Vermont Drive/Everett Drive Improvement Assessment District (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 the debt service is from the property assessments within the Assessment District. The principal amount of the debt outstanding at June 30, 2011, was $535,000. 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 (Community Facilities District). 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 the bonds. The source of the debt service is from the property assessments within the Community Facilities District. The principal amount of the debt outstanding at June 30, 2011, was $16,830,000. 76 Year ended June 30, 2011 Total Revenues $ 42,293,914 Total Expenses $ 36,497,656 Total Assets $ 98,259,108 Total Liabilities $ 47,375,526 Total Equity $ 50,882,582 13. NO COMMITMENT DEBT 1915 Act Limited Obligation Improvements Bonds A. On September 2, 1992, $879,432 of 1915 Act Limited Obligation Improvement Bonds (1915 Golden Valley Road Bonds) for the Golden Valley Road Improvement Assessment District (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 the debt service is from the property assessments within the Assessment District. The principal amount of debt outstanding at June 30, 2011, was $455,000. B. On January 13, 2001, $790,000 of 1915 Act Limited Obligation Improvement Bonds (1915 Vermont Drive/Everett Drive Bonds) for the Vermont Drive/Everett Drive Improvement Assessment District (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 the debt service is from the property assessments within the Assessment District. The principal amount of the debt outstanding at June 30, 2011, was $535,000. 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 (Community Facilities District). 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 the bonds. The source of the debt service is from the property assessments within the Community Facilities District. The principal amount of the debt outstanding at June 30, 2011, was $16,830,000. 76 City of Santa Clarita i Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 14. SANTA CLARITA WATERSHED RECREATION AND CONSERVANCY AUTHORITY In June 1992, the City entered into a joint powers agreement with the Santa Monica Mountains Conservancy (Conservancy) to create the Santa Clarita Watershed Recreation and Conservancy Authority (the Watershed Authority). The purpose of the Watershed 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. The City performs administrative functions for the Watershed Authority, and may, at the Authority's request, make annual contributions. For the year ended June 30, 2011, the City did not make any contributions. Financial statements of the Watershed Authority may be obtained at the City's administrative offices. Condensed financial information as of June 30, 2011 is presented below: Year ended 1 June 30, 2011 Total Revenues $ 141 ' Total Expenditures $ 13,584 Total Assets $ 5,642,932 Total Liabilities $ - Total Equity $ 5,642,932 15. COMMITMENTS AND CONTINGENCIES The City has active construction projects as of June 30, 2011. At year-end, the City's commitments with contractors for infrastructure projects are as follows: ' Project Commitment Roads $ 366,557 Bridges 1,121,058 Signals 763,134 Medians 21,530 Total commitments $ 2,272,279 The City has received Federal grants for specific purposes that are subject to review and audit by the Federal government. Although such audits could result in expenditure disallowance under grant terms, any required reimbursements are not expected to be material. In addition, the City is a defendant in certain other legal actions arising in the normal course of operations. In the opinion of management and legal counsel, any liability resulting from these actions will not result in a material adverse effect on the City's financial position. As ofune 30 2011 in the opinion of Ci management, there were n additional J p City mana g o add oval outstanding matters that ' would have a significant effect on the financial position of the funds of the City. 77 City of Santa Clarita Notes to Basic Financial Statements, Continued For the year ended June 30, 2011 16. SUBSEQUENT EVENTS Soledad Transit Center and Metrolink Commuter Rail Station Sites The case involving the Soledad Transit Center and Metrolink Commuter Rail Station sites was settled in fiscal year 2010-2011. The total cost of the parking rights was paid by the City but a grant award has since been approved and now received in the amount of $2,449,600 from the Federal Transit Administration to help mitigate the cost of the parking rights acquisition. Recent Changes in Legislation Affecting California Redevelopment Agencies On December 29, 2011, the Supreme Court of the State of California upheld the enforceability of legislation that provides for the dissolution of California redevelopment agencies, but struck down the Assembly Bill X1 27 which would have provided a means for redevelopment agencies to continue to exist and operate by means of a Voluntary Alternative Redevelopment Program. Assembly Bill X1 26 signed into law as part of the State's budget package on June 29, 2011, requires each California redevelopment agency to suspend nearly all activities except to implement existing contracts, meet already -incurred obligations, preserve its assets, prepare for the impending dissolution of the agency, and transfer all of its assets to a successor agency that is governed by an oversight board representing the various taxing jurisdictions in the community. Assembly Bill X1 26 also required each agency to adopt an Enforceable Obligation Payment Schedule and draft a Recognized Obligation Payment Schedule prior to September 30, 2011. Enforceable obligations include bonds, loans and payments required by the federal or State government; legally enforceable payments required in connection with agency employees such as pension payments and unemployment payments, judgments or settlements; legally binding and enforceable agreements or contracts; and contracts or agreements necessary for the continued administration or operation of the agency that are permitted for purposes set forth in Assembly Bill X1 26. Only the amount of tax revenues necessary to fund the payments reflected on the Enforceable Obligation Payment Schedule will be allocated to the successor agencies. Assembly Bill X1 26 directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency as defined in Assembly Bill X1 26. The full impacts of this most recent development and its impact on other funds of the City are not known at this time. The financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. 78 � REQUIRED SUPPLEMENTARY � INFORMATION (Unaudited) 79 City of Santa Clarita Required Supplementary Information (Unaudited) For the year ended June 30, 2011 1. BUDGETARY INFORMATION Annual budgets are adopted on a basis consistent with generally accepted accounting principles in the United States for all governmental funds. All annual appropriations lapse at fiscal year end. On or before the last day in January of each year, all operational units submit requests for appropriations to the City Manager for budget preparation purposes. Before April 30, the proposed budget is presented to the City Council for review. The City Council holds public hearings and a final budget must be prepared and adopted no later than June 30. The appropriated budget is prepared by fund, function, and department. The City's department heads, with approval of the City Manager, may make transfers of appropriations within a department and between functions within a fund. The legal level of budgetary control (i.e. the level at which expenditures may not legally exceed appropriations) is the fund level. Under encumbrance accounting, purchase orders, contracts and other commitments for expenditures are recorded to reserve that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of formal budgetary accounting. Since encumbrances do not yet constitute expenditures or liabilities, encumbrances outstanding at year-end are reported as reservations of fund balances. Unexpended appropriations lapse at year-end. Following are the budget comparison schedules for the General Fund and all major special revenue funds. City of Santa Clarita Required Supplementary Information (Unaudited), Continued For the year ended June 30, 2011 1. BUDGETARY INFORMATION, Continued Budget Comparison Schedule - General Fund Fund balance, July 1, 2010 Resources (inflows): Taxes Licenses and permits Use of money and property Revenue from other agencies Fines and forfeitures Service charges Other revenue Overhead reimbursement Transfers in Amount available for appropriation Charges to appropriations (outflows): Current: General government Public safety Public works Parks and recreation Community development Debt service: Principal retirement Interest and fiscal charges Transfers out Total charges to appropriations Fund balance, June 30, 2011 Budgeted Amounts Actual Original Final Amounts $ 77,757,523 $ 77,757,523 $ 77,757,523 Variance with Final Budget Positive/ (Negative) 59,344,666 60,360,201 62,853,088 2,492,887 3,296,318 3,272,818 3,675,424 402,606 1,484,200 1,550,000 2,199,220 649,220 274,894 301,318 295,052 (6,266) 1,170,535 1,157,785 499,227 (658,558) 5,183,990 5,599,391 6,640,459 1,041,068 37,060 56,060 108,997 52,937 3,350,731 3,350,731 3,398,704 47,973 4,699,530 13,288,249 13,939,098 650,849 156,599,447 166,694,076 171,366,792 4,672,716 14,139,050 14,251,147 11,479,882 2,771,265 19,391,462 19,391,416 18,384,968 1,006,448 13,614,384 13,859,316 12,915,033 944,283 19,361,939 19,769,341 18,928,383 840,958 4,155,074 4,329,634 5,379,024 (1,049,390) 230,746 230,746 230,746 - 4,200 4,200 4,200 - 6,818,410 20,651,337 20,354,337 297,000 77,715;265 92,487,137 87,676,573 4,810,564 $ 78,884,182 $ 74,206,939 $ 83,690,219 $ 9,483,280 81 City of Santa Clarita Required Supplementary Information (Unaudited), Continued For the year ended June 30, 2011 1. BUDGETARY INFORMATION, Continued Budget Comparison Schedule - Bridge and Thoroughare Special Revenue Fund 82 Variance with Budgeted Amounts Actual Final Budget Original Final Amounts Positive /(Negative) Fund balance, July 1, 2010 $ (6,861,433) $ (6,861,433) $ (6,861,433) $ - Resources (inflows): Developer fees 475,000 145,000 53,110 (91,890) Investment income 766,750 710,750 607,838 (102,912) Other revenue 1,573,118 1,573,118 835,184 (737,934) Transfers in - 2,000,000 2,000,000 - Amount available for appropriation (4,046,565) (2,432,565) (3,365,301) (932,736) Charges to appropriations (outflows): Current: Public works 209,659 591,195 14,324,789 (13,733,594) Capital outlay 3,562,780 6,599,281 1,854,691 4,744,590 Transfers out - 2,000,000 2,000,000 - Total charges to appropriations 3,772,439 9,190,476 18,179,480 (8,989,004) Fund balance, June 30, 2011, deficit $ (7,819,004) $ (11,623,041) $ (21,544,781) $ (9,921,740) 82 City of Santa Clarita Required Supplementary Information (Unaudited), Continued For the year ended June 30, 2011 1. BUDGETARY INFORMATION, Continued Budget Comparison Schedule — Developer Fees Special Revenue Fund 83 Variance with Budgeted Amounts Actual Final Budget Original Final Amounts Positive/ (Negative) Fund balance, July 1, 2010 $ 904,977 $ 904,977 $ 904,977 $ - Resources (inflows): Developer fees 121,000 157,615 182,593 24,978 Investment income 225,000 175,000 126,982 (48,018) Amount available for appropriation 1,250,977 1,237,592 1,214,552 (23,040) Charges to appropriations (outflows): Current: Community development - - 2,464,946 (2,464,946) Capital outlay 860,768 907,511 224,547 682,964 Transfers out - 18,499 18,499 - Total charges to appropriations 860,768 926,010 2,707,992 (1,781,982) Fund balance, June 30, 2011, deficit $ 390,209 $ 311,582 $ (1,493,440) $ (1,805,022) 83 City of Santa Clarita Required Supplementary Information (Unaudited), Continued For the year ended June 30, 2011 1. BUDGETARY INFORMATION, Continued Budget Comparison Schedule — Open Space Preservation District Special Revenue Fund Fund balance, July 1, 2010 Resources (inflows): Taxes Investment income Service charges Amount available for appropriation Charges to appropriations (outflows): Current: General government Transfers out Total charges to appropriations Fund balance, June 30, 2011 Budgeted Amounts Original Final $ 17,473,916 $ 17,473,916 1,681,500 81,000 1,681,500 84,000 19,236,416 19,239,416 239,337 Variance with Actual Final Budget Amounts Positive/ (Negative) $ 17,473,916 $ - 1,748,211 66,711 80,777 (3,223) 2,000 2,000 19,304,904 65,488 239,337 7,969,314 7,772,528 196,786 713,652 713,652 713,661 (9) 952,989 8,682,966 8,486,189 196,777 $ 18,283,427 $ 10,556,450 $ 10,818,715 $ 262,265 84 City of Santa Clarita Required Supplementary Information (Unaudited), Continued For the year ended June 30, 2011 2. DEFINED BENEFIT PENSION PLAN PUBLIC EMPLOYEE RETIREMENT SYSTEMS (PERS) SCHEDULE OF FUNDING PROGRESS ($ Amount in Thousands) Miscellaneous Employees * Based on most recent actuarial valuation 85 (A) (B) (C) (D) (E) (F) (Unfunded) (Unfunded) Actuarial Entry Age Actuarial Liability as Actuarial Actuarial Actuarial Accrued Funded Annual Percentage of Valuation Value of Accrued Liability Ratio Covered Covered Payroll Date* Assets (AVA) Liability [(B) -(A)] [(A)/(B)] Payroll [(C)/(E)] 6/30/2008 $ 58,058 $ 68,977 $ 10,919 84.17% $ 24,725 44.16% 6/30/2009 65,525 81,604 16,079 80.30% 25,835 62.24% 6/30/2010 73,450 90,181 16,731 81.45% 25,461 65.71% * Based on most recent actuarial valuation 85 City of Santa Clarita Required Supplementary Information (Unaudited), Continued For the year ended June 30, 2011 3. OTHER POST EMPLOYMENT BENEFITS REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress for the City's Plan * Only two valuation dates are available. 86 Unfunded (Unfunded) Actuarial Actuarial Actuarial Liability as Actuarial Actuarial Accrued Accrued Funded Percentage of Valuation Asset Liability Liability Ratio Covered Covered Payroll Date* Value Entry Age [(B) -(A)] [(A)/(B)] Payroll [(C)/(E)] 7/1/2006 $ - $ 24,046,000 $ (24,046,000) 0.0% $ 21,200,000 -113.42% 7/1/2010 - 41,425,000 (41,425,000) 0.0% 25,094,000 165.08% * Only two valuation dates are available. 86 SUPPLEMENTARY INFORMATION 87 City of Santa Clarita Combining Balance Sheet Non -Major Governmental Funds June 30, 2011 Special Revenue Funds ■ Park Special ' Bikeway Gas Tax Proposition A Dedication Assessment ASSETS ' Cash and investments $ 94,972 $ 1,172,621 $ 985,889 $ 1,128,813 $ 5,069,614 Cash and investments with fiscal agents - - - - - Receivables: Accounts - 11,734 - - 44,383 Interest 545 6,725 5,962 6,474 29,074 Taxes - - - - 169,557 Due from other governments 3,626 - Due from other funds - - Notes and loans receivable - - - Total assets $ 99,143 $ 1,191,080 $ 991,851 $ 1,135,287 $ 5,312,628 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ 6,800 $ 156,579 $ 1,744 $ 52,845 $ 410,458 Deferred revenue 76,113 5,748 5,096 5,534 24,853 Deposits payable - - - - - Due to other governments - Due to other funds Advances from other funds ' Total liabilities 82,913 162,327 6,840 58,379 435,311 Fund Balances (Deficit): Restricted 16,230 1,028,753 985,011 1,076,908 4,877,317 Assigned - - - - - Unassigned - - - - - Total fund balances (deficit) 16,230 1,028,753 985,011 1,076,908 4,877,317 Total liabilities and fund balances $ 99,143 $ 1,191,080 $ 991,851 $ 1,135,287 $ 5,312,628 Svecial Revenue Funds 89 Landscape State Traffic Maintenance Stormwater Miscellaneous Federal Aid Park TDA Safety CDBG AQMD District #1 Utility Grants Urban $ 53,688 $ 586,462 $ $ $ 2,931 $ 19,210,993 $ 6,062,783 $ $ - 498 41,177 112,146 3,363 - 17 110,171 34,769 - - 100,399 - - 677,345 - 904,452 413,025 101,952 50,800 - 369,206 10,507 - - - 143,853 - - - - - $ 958,140 $ 1,002,850 $ 100,399 $ 246,303 $ 53,748 $ 20,039,686 $ 6,209,698 $ 369,206 $ 10,507 ' $ 20,739 $ 973,042 $ - $ 65,377 $ 3,435 $ 1,371,249 $ 95,147 $ 117,234 $ - 904,452 29,808 - 143,853 15 94,177 29,721 590,551 10,507 911,982 100,399 37,073 - 225,774 10,507 1,837,173 1,002,850 100,399 246,303 3,450 1,465,426 124,868 933,559 21,014 - - - - 50,298 18,574,260 6,084,830 - - (879,033)_ - - (564,353) (10,507) _ _ (879,033) 50,298 18,574,260 6,084,830 (564,353) (10,507) $ 958,140 $ 1,002,850 $ 100,399 $ 246,303 $ 53,748 $ 20,039,686 $ 6,209,698 $ 369,206 $ 10,507 89 City of Santa Clarita Combining Balance Sheet; Continued Non -Major Governmental Funds June 30, 2011 Special Revenue Funds LIABILITIES AND Library Public BJA Law Supplemental Facilities Education and $ 4,215 $ $ - $ Enforcement Law Grant HOME Fees Government ASSETS - - - - Due to other governments Cash and investments $ 25,650 $ $ $ - $ 447,113 Cash and investments with fiscal agents - Total liabilities 30,831 10,682 1,999,800 - Receivables: Restricted 26,121 - - Accounts - - - 1,224 - Interest 155 Total fund balances (deficit) - 2,564 Taxes - $ 514,300 - 64,623 Due from other governments 31,147 10,682 - Due from other funds - - - Notes and loans receivable - - 1,999,800 Total assets $ 56,952 $ 10,682 $ 1,999,800 $ 1,224 $ 514,300 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ 4,215 $ $ - $ $ 1,193 Deferred revenue 26,616 1,999,800 2,192 Deposits payable - - - - Due to other governments Due to other funds 10,682 - Advances from other funds - - Total liabilities 30,831 10,682 1,999,800 3,385 Fund Balances (Deficit): Restricted 26,121 - - 1,224 510,915 Assigned - - - Unassigned - - Total fund balances (deficit) 26,121 1,224 510,915 Total liabilities and fund balances $ 56,952 $ 10,682 $ 1,999,800 $1,224 $ 514,300 90 j 1 1 Special Revenue Funds Debt Service Funds Tourism Redevelopment Public Federal Public Marketing Agency Financing Proposition C Grants Measure R Library Disctirct Total Low/Mod Authority Total $ 466,208 $ $ $ 16,465,622 $ 213,446 $ 51,986,805 $ 9,272 $ 457,292 $ 466,564 - - - - 268,879 - 268,879 - - 1,404 - 212,566 - - - 2,674 8,876 1,224 212,593 - - ' - - 40,275 1,052,199 - - 896,649 2,411,821 5,203,867 - ' - - 2,143,653 - - - $ 1,365,531 $ 2,411,821 $ $ 16,475,902 $ 254,945 $ 60,811,683 $ 278,151 $ 457,292 $ 735,443 $ 343,106 $ 96,960 $ - $ 2,840,825 $ 15,219 $ 6,576,167 $ - $ - $ - 1,022,412 2,177,246 7,587 1,046 7,157,327 - 1,908,651 - 3,205,068 - ' - - 10,806,376 10,806,376 1,365,518 4,182,857 - 13,654,788 16,265 27,744,938 = 13 - 2,821,114 238,680 36,291,674 278,151 - 278,151 - - - - - 457,292 457,292 - (1,771,036) - _ (3,224,929) - - 13 (1,771,036) 2,821,114 238,680 33,066,745 278,151 457,292 735,443 $ 1,365,531 $ 2,411,821 $ $ 16,475,902 $ 254,945 $ 60,811,683 $ 278,151 $ 457,292 $ 735,443 91 City of Santa Clarita Combining Balance Sheet, Continued Non -Major Governmental Funds June 30, 2011 ASSETS Cash and investments Cash and investments with fiscal agents Receivables: Accounts Interest Taxes Due from other governments Due from other funds Notes and loans receivable Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities Deferred revenue Deposits payable Due to other governments Due to other funds Advances from other funds Total liabilities Fund Balances (Deficit): Restricted Assigned Unassigned Total fund balances (deficit) Total liabilities and fund balances Capital Projects Funds $ 3,027,098 $ 8,885,504 $ 195 $ 11,912,797 $ 64,366,166 - - - - 268,879 27,785 27,785 240,351 21,859 21,859 234,452 - - 1,052,199 5,203,867 - - 2,143,653 $ 3,027,098 $ 8,935,148 $ 195 $ 11,962,441 $ 73,509,567 $ 31,770 $ 15,355 $ $ 47,125 $ 6,623,292 - 18,685 18,685 7,176,012 9,438 9,438 9,438 3,205,068 10,806,376 31,770 43,478 75,248 27,820,186 - 8,891,670 - 8,891,670 45,461,495 2,995,328 - 195 2,995,523 3,452,815 (3,224,929) 2,995,328 8,891,670 195 11,887,193 45,689,381 $ 3,027,098 $ 8,935,148 $ 195 $ 11,962,441 $ 73,509,567 OYJ Total General Redevelopment Public Nonmajor Capital Agency Financing Governmental Projects Low/Mod Authority Total Funds $ 3,027,098 $ 8,885,504 $ 195 $ 11,912,797 $ 64,366,166 - - - - 268,879 27,785 27,785 240,351 21,859 21,859 234,452 - - 1,052,199 5,203,867 - - 2,143,653 $ 3,027,098 $ 8,935,148 $ 195 $ 11,962,441 $ 73,509,567 $ 31,770 $ 15,355 $ $ 47,125 $ 6,623,292 - 18,685 18,685 7,176,012 9,438 9,438 9,438 3,205,068 10,806,376 31,770 43,478 75,248 27,820,186 - 8,891,670 - 8,891,670 45,461,495 2,995,328 - 195 2,995,523 3,452,815 (3,224,929) 2,995,328 8,891,670 195 11,887,193 45,689,381 $ 3,027,098 $ 8,935,148 $ 195 $ 11,962,441 $ 73,509,567 OYJ 93 City of Santa Clarita Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non -Major Governmental Funds For the Year Ended June 30, 2011 94 Special Revenue Funds Park Special Bikeway Gas Tax Proposition A Dedication Assessment REVENUES: Taxes $ - $ $ $ $ 3,801,847 Developer fees - Investment income 391 (81) 3,134 19,791 85,172 ' Revenue from other agencies 3,955 5,031,375 2,435,782 - - Fines and forfeitures - - - - - Service charges - 65,769 257,237 Other revenue - 10,056 - 1,029 75,835 Total revenues 4,346 5,041,350 2,438,916 86,589 4,220,091 EXPENDITURES: Current: General government - - - - 3,045,584 Public safety - - - - Public works 3,466,124 40,774 973,019 Parks and recreation - - - Community development - - - - - Capital outlay 16,084 1,138,820 55,416 318,555 498,388 Debt service: Bond issuance costs - - - - - Principal retirement Interest and fiscal charges - Total expenditures 16,084 4,604,944 96,190 318,555 4,516,991 REVENUES OVER (UNDER) EXPENDITURES (11,738) 436,406 2,342,726 (231,966) (296,900) OTHER FINANCING SOURCES (USES): Transfers in 220,930 - - 1,200,010 Transfers out (305,240) (1,359,086) (1,227,550) Total other financing sources (uses) (84,310) (1,359,086) - (27,540) NET CHANGE IN FUND BALANCE (11,738) 352,096 983,640 (231,966) (324,440) FUND BALANCE: Beginning of year 27,968 676,657 1,371 1,308,874 5,201,757 End of year $ 16,230 $ 1,028,753 $ 985,011 $ 1,076,908 $ 4,877,317 94 1 Special Revenue Funds 1 Landscape State Traffic Maintenance Stormwater Miscellaneous Federal Aid Park TDA Safety CDBG AQMD District #1 Utility Grants Urban $ $ $ $ $ - $ 760,489 $ 81,967 $ - $ (11,465) 7,114 15 295,549 88,389 904,359 1,876,181 - 25,467 206,695 - - 450,482 - 1,392,273 - - _ _ = = _ 13,539,847 2,728,030 _ 309,986 - - - 1,437,273 5,741 7,308 1,738,994 ' 904,359 1,864,716 1,399,387 1,462,740 206,710 14,601,626 2,905,694 2,189,476 309,986 - - - - - 8,832,915 42,783 - - - - - - - 66,283 - 3,984 55,023 2,141;651 40,882 1,004,948 1 = = = 1,919,988 = - - 1,462,557 - - - - 105,422 413,026 - - 4,064,066 174,695 461,357 (170,339) 1,110,370 417,010 - 1,462,557 55,023 12,896,981 2,359,129 2,488,510 (170,339) (206,011) 1,447,706 1,399,387 183 151,687 1,704,645 546,565 299,034 480,325 - - - - - 32,660 - _ (1,447,706) (1,399,387)_ (108,889) (1,717,098). (13,370) ' (1,447,706) (1,399,387) (108,889) (1,717,098) 19,290 _ _ ' (206,011) 183 42,798 (12,453) 565,855 (299,034) 480,325 (673,022) - (183) 7,500 18,586,713 5,518,975 (265,319) (490,832) $ (879,033) $ $ $ - $ 50,298 $ 18,574,260 $ 6,084,830 _LL64,353) $ (10,507) 95 City of Santa Clarita Combining Statement of Revenues, Expenditures and Changes in Fund Balances, Continued Non -Major Governmental Funds For the Year Ended June 30, 2011 EXPENDITURES: Current: General government - - 190,343 Public safety 113,115 201,282 - Public works - - Parks and recreation - - Community development - 455,335 - Capital outlay - - - Debt service: Bond issuance costs Principal retirement - Interest and fiscal charges - - - Total expenditures 113,115 201,282 455,335 190,343 REVENUES OVER (UNDER) EXPENDITURES 26,121 (1) 19,286 47,521 129,165 OTHER FINANCING SOURCES (USES): Transfers in 2,078 - Transfers out - (41,099) Total other financing sources (uses) 2,078 - - (41,099) NET CHANGE IN FUND BALANCE 28,199 (1) 19,286 6,422 129,165 FUND BALANCE: Beginning of year (2,078) 1 (19,286) (5,198) 381,750 End of year $ 26,121 $ - $ - $ 1,224 $ 510,915 96 Special Revenue Funds Library Public BJA Law Supplemental Facilities Education and Enforcement Law Grant HOME Fees Government REVENUES: Taxes $ $ $ $ - $ 313,195 Developer fees 47,073 - Investment income 1,475 2,024 - 448 6,313 Revenue from other agencies 137,761 199,257 474,621 - - Fines and forfeitures - - - - Service charges Other revenue - - Total revenues 139,236 201,281 474,621 47,521 319,508 EXPENDITURES: Current: General government - - 190,343 Public safety 113,115 201,282 - Public works - - Parks and recreation - - Community development - 455,335 - Capital outlay - - - Debt service: Bond issuance costs Principal retirement - Interest and fiscal charges - - - Total expenditures 113,115 201,282 455,335 190,343 REVENUES OVER (UNDER) EXPENDITURES 26,121 (1) 19,286 47,521 129,165 OTHER FINANCING SOURCES (USES): Transfers in 2,078 - Transfers out - (41,099) Total other financing sources (uses) 2,078 - - (41,099) NET CHANGE IN FUND BALANCE 28,199 (1) 19,286 6,422 129,165 FUND BALANCE: Beginning of year (2,078) 1 (19,286) (5,198) 381,750 End of year $ 26,121 $ - $ - $ 1,224 $ 510,915 96 ' Special Revenue Funds Debt Service Funds Tourism Redevelopment Public Federal Public Marketing Agency Financing Proposition C 1 Grants Measure R Library District Total Low/Mod Authority Total $ $ $ - $ - $ 376,562 $ 5,334,060 $ $ $ - - 47,073 - (5,329) 688 10,396 3,293 507,317 37 1 38 3,899,043 2,355,187 1,485,483 - - 19,485,648 - - - 1,392,273 1 - - - - - 16,900,869 - - - - 45,000 3,321,236 - 3,893,714 2,400,187 1,486,171 10,396 379,855 46,988,476 37 1 38 - - - 10,650,167 141,175 22,902,967 - - - - - 380,680 - 3,030 246,018 = - 6,970,505 1 _ 2,924,936 = _ _ - 1,070,353 - - 2,988,245 1,750 1,750 2,331,120 2,204,984 - 3,142,427 - 14,754,021 - - - - - - - - - 1,037,665 1,037,665 _ _ _ _ _ 125,000 1,470,472 1,595,472 = 410,256 713,651 1,123,907 2,334,150 3,521,355 - 13,792,594 141,175 50,921,354 537,006 3,221,788 3,758,794 1,559,564 (1,121,168) 1,486,171 13,782,198 238,680 3,932,878 536,969 3,221,78 3,758,756 - - 16,603,312 - 18,058,990 537,006 3,221,788 3,758,794 (1,569,380) _ (1,486,171) - (10,674,976) - - ' (1,569,380) (1,486,171) 16,603,312 _ 7,384,014 537,006 3,221,788 3,758,794 ' (9,816) (1,121,168) 2,821,114 238,680 3,451,136 37 1 38 9,829 (649,868) 29,615,609 278,114 457,291 735,405 $ 13 $ (1,771,036) $ $ 2,821,114 $ 238,680 $ 33,066,745 $ 278,151 $ 457,292 $ 735,443 97 City of Santa Clarita Combining Statement of Revenues, Expenditures and Changes in Fund Balances, Continued Non -Major Governmental Funds For the Year Ended June 30, 2011 98 Capital Projects Funds Total General Redevelopment Public Nonmajor Capital Agency Financing Governmental Projects Low/Mod Authority Total Funds REVENUES: Taxes $ $ 507,905 $ $ 507,905 $ 5,841,965 Developer fees - - 47,073 Investment income - 54,265 10 54,275 561,630 Revenue from other agencies - - - 19,485,648 Fines and forfeitures - - 1,392,273 Service charges 1,575 61,369 62,944 16,963,813 Other revenue - 21,020 21,020 3,342,256 Total revenues 1,575 644,559 10 646,144 47,634,658 EXPENDITURES: Current: General government 28,817 10 28,827 22,931,794 Public safety - - - 380,680 Public works - 6,970,505 Parks and recreation - - 2,924,936 Community development - 603,688 603,688 3,593,683 Capital outlay 187,433 - 187,433 14,941,454 Debt service: Bond issuance costs - - 1,037,665 Principal retirement 1,595,472 Interest and fiscal charges - - 1,123,907 Total expenditures 187,433 632,505 10 819,948 55,500,096 REVENUES OVER (UNDER) EXPENDITURES (185,858) 12,054 - (173,804) (7,865,438) OTHER FINANCING SOURCES (USES): Transfers in 2,850,000 713,661 3,563,661 25,381,445 Transfers out (537,006) (713,651) (1,250,657) (11,925,633) Total other financing sources (uses) - 2,312,994 10 2,313,004 13,455,812 NET CHANGE IN FUND BALANCE (185,858) 2,325,048 10 2,139,200 5,590,374 1 FUND BALANCE: Beginning of year 3,181,186 6,566,622 185 9,747,993 40,099,007 End of year $ 2,995,328 $ 8,891,670 $ 195 $ 11,887,193 $ 45,689,381 98 NONMAJOR GOVERNMENTAL 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 Dedication - To account for monies received from developers restricted to fund the acquisition and development of new park land space. 'Proposition A - As "Pro osition A" increased sales tax in Los Angeles Count b one-half percent .5% this fund P P g Y Y P ( )� 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. Landscape Maintenance District #1 - To account for receipts and disbursements related to a landscape district. Stormwater Utility- To account for receipts and disbursements related to stormwater and run-off programs. P p gr 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. 1 99 NONMAJOR GOVERNMENTAL FUNDS Federal Aid Urban - To account for receipts and disbursements associated with Federal Urban Aid. 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. Public Education and Government - To account for the 1% PEG Capital Grant funds received from video service providers pursuant to Digital Infrastructure and Video Competition Act of 2006. Proposition C - 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. Federal Grants - To account for receipts and disbursements of miscellaneous federal grant monies not accounted for in other funds. Measure R - To account for the 1/2 cent sales tax revenues that Los Angeles County voters approved in November 2008 to meet the transportation needs of Los Angeles County. Public Library - To account for receipts and disbursements associated with the City of Santa Clarita Public Library. Tourism Marketing District - To account for receipts and disbursements associated with promoting local businesses and tourism in the City of Santa Clarita through the Tourism Marketing District. 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. Redevelopment Agency Low/Mod To account for principal and interest payments on the Housing Set -Aside Tax Allocation Bonds, Series 2008. Public Financing Authority To account for principal and interest payments on the 1991 Revenue Bonds issued by the Santa Clarita Public Financing Authority. 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. General Capital Projects - To account for major capital improvement projects not accounted for in other funds. Redevelopment Agency Low/Mod - To account for the 20% set-aside of tax increment revenues, bond proceeds and other revenues to be used for development of low and moderate income housing. Public Financing Authority - To account for the construction of all capital projects that utilize public financing authority funds. 100 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Bikeway Special Revenue Fund For the Year Ended June 30, 2011 Variance from Final Budget Original Final Positive/ Budget Budget Actual (Negative) REVENUES: Investment income $ 3,000 $ 1,500 $ 391 $ (1,109) Revenue from other agencies 106,824 106,824 3,955 (102,869) Total revenues 109,824 108,324 4,346 (103,978) EXPENDITURES: Capital outlay 121,824 131,856 16,084 115,772 Total expenditures 121,824 131,856 16,084 115,772 NET CHANGE IN FUND BALANCE $ (12,000) $ (23,532) (11,738) $ 11,794 FUND BALANCE: Beginning of year 27,968 End of year i $ 16,230 i i 1 1 101 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Gas Tax Special Revenue Fund For the Year Ended June 30, 2011 l REVENUES: Investment income Revenue from other agencies Other revenue Total revenues EXPENDITURES: Current: Public works Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE: Beginning of year End of year Original Final Budget Budget $ 37,500 4,519,497 Variance from , Final Budget Positive/ Actual (Negative) $ 30,000 $ (81) $ (30,081) , 5,448,916 5,031,375 (417,541) - 10,056 10,056 5,478,916 5,041,350 3,933,508 3,979,850 3,466,124 1,360,000 2,188,333 1,138,820 5,293,508 6,168,183 4,604,944 (736,511) (689,267) 436,406 220,930 220,930 220,930 (305,650) (305,650) (305,240) (84,720) (84,720) (84,310) $ (821,231) $ (773,987) 352,096 102 676,657 $ 1,028,753 (437,566) 513,726 1,049,513 1,563,239 1,125,673 410 410 $ 1,126,083 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Proposition A Special Revenue Fund For the Year Ended June 30, 2011 REVENUES: Investment income Revenue from other agencies Total revenues EXPENDITURES: Current: Public works Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE: Beginning of year End of year 41,910 41,910 40,774 Variance from 1,590,000 1,638,352 55,416 Final Budget Original Final 96,190 Positive/ Budget Budget Actual (Negative) $ 3,000 $ 2,250 $ 3,134 $ 884 2,387,608 2,427,481 2,435,782 8,301 2,390,608 2,429,731 2,438,916 9,185 41,910 41,910 40,774 1,136 1,590,000 1,638,352 55,416 1,582,936 1,631,910 1,680,262 96,190 1,584,072 758,698 749,469 2,342,726 1,593,257 (758,698) (1,096,037) (1,359,086) (263,049) (758,698) (1,096,037) (1,359,086) (263,049) $ - $ (346,568) 983,640 $ 1,330,208 103 4) ya5,uii City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Park Dedication Special Revenue Fund For the Year Ended June 30, 2011 104 Variance from Final Budget Original Final Positive/ Budget Budget Actual (Negative) REVENUES: Investment income $ 30,000 $ 25,000 $ 19,791 $ (5,209) Service charges - - 65,769 65,769 Other revenue - - 1,029 1,029 Total revenues 30,000 25,000 86,589 61,589 EXPENDITURES: Capital outlay 449,000 673,472 318,555 354,917 Total expenditures 449,000 673,472 318,555 354,917 REVENUES OVER (UNDER) EXPENDITURES (419,000) (648,472) (231,966) 416,506 OTHER FINANCING SOURCES (USES): Transfers out - - - - Total other financing sources (uses) - - - - I NET CHANGE IN FUND BALANCE $ - $ - (231,966) $ (231,966) FUND BALANCE: Beginning of year 1,308,874 End of year $ 1,076,908 104 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Assessment Special Revenue Fund For the Year Ended June 30, 2011 Variance from Final Budget Original Final Positive/ 1 Budget Budget Actual (Negative) REVENUES: Taxes $ 3,573,911 $ 3,573,911 $ 3,801,847 $ 227,936 Investment income 113,100 95,600 85,172 (10,428) Sefvice charges 286,320 246,320 257,237 10,917 Other revenue - - 75,835 75,835 Total revenues 3,973,331 3,915,831 4,220,091 304,260 ' EXPENDITURES: Current: General government 3,639,058 3,644,008 3,045,584 598,424 Public works 1,246,900 1,308,900 973,019 335,881 Capital outlay 678,902 402,046 498,388 (96,342) Total expenditures 5,564,860 5,354,954 4,516,991 837,963 REVENUES OVER (UNDER) EXPENDITURES (1,591,529) (1,439,123) (296,900) 1,142,223 OTHER FINANCING SOURCES (USES): Transfers in 1,858,283 1,754,142 1,200,010 554,132 Transfers out (1,886,390) (1,781,683) (1,227,550) 554,133 Total other financing sources (uses) (28,107) (27,541) (27,540) 1,108,265 ' NET CHANGE IN FUND BALANCE $ (1,619,636) $ (1,466,664) (324,440) $ 1,142,224 FUND BALANCE: Beginning of year 5,201,757 End of year $ 4,877,317 105 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual State Park Special Revenue Fund For the Year Ended June 30, 2011 106 Variance from Final Budget Original Final Positive/ Budget Budget Actual (Negative) REVENUES: Revenue from other agencies $ 415,080 $ 1,974,576 $ 904,359 $ (1,070,217) Total revenues 415,080 1,974,576 904,359 (1,070,217) EXPENDITURES: Current: Parks and recreation 265,080 1,016,020 1,004,948 11,072 Capital outlay 150,000 285,315 105,422 179,893 Total expenditures 415,080 1,301,335 1,110,370 190,965 REVENUES OVER (UNDER) EXPENDITURES - 673,241 (206,011) (879,252) OTHER FINANCING SOURCES (USES): Transfers in - - - - Total other financing sources (uses) - - - - NET CHANGE IN FUND BALANCE $ - $ 673,241 (206,011) $ (879,252) FUND BALANCE (DEFICIT): Beginning of year (673,022) End of year $ (879,033) 106 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual TDA Special Revenue Fund For the Year Ended June 30, 2011 Variance from Final Budget Original Final Positive/ Budget Budget Actual (Negative) REVENUES: Investment income $ 300 $ - $ (11,465) $ (11,465) Revenue from other agencies 11,024,311 8,734,713 1,876,181 (6,858,532) Total revenues 11,024,611 8,734,713 1,864,716 (6,869,997) EXPENDITURES: Current: Public works 3,985 3,985 3,984 1 Capital outlay 5,815,867 5,906,343 413,026 5,493,317 Total expenditures 5,819,852 5,910,328 417,010 5,493,318 REVENUES OVER (UNDER) EXPENDITURES 5,204,759 2,824,385 1,447,706 (1,376,679) OTHER FINANCING SOURCES (USES): Transfers in - - - - Transfers out (5,204,729) (1,583,937) (1,447,706) 136,231 Total other financing sources (uses) (5,204,729) (1,583,937) (1,447,706) 136,231 NET CHANGE IN FUND BALANCE $ 30 $ 1,240,448 - $ (1,240,448) FUND BALANCE: Beginning of year - End of year $ - 1 1 107 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, 2011 Variance from , Final Budget Original Final Positive/ Budget Budget Actual (Negative) REVENUES: Investment income $ 15,000 $ 10,000 $ 7,114 $ (2,886) Fines and forfeitures 1,500,000 1,500,000 1,392,273 (107,727) Total revenues 1,515,000 1,510,000 1,399,387 (110,613) OTHER FINANCING SOURCES (USES): Transfers out (1,515,000) (1,514,260) (1,399,387) 114,873 Total other financing sources (uses) (1,515,000) (1,514,260) (1,399,387) 114,873 NET CHANGE IN FUND BALANCE $ - $ (4,260) - $ 4,260 FUND BALANCE: Beginning of year - End of year $ - 108 f i ' City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual CDBG Special Revenue Fund For the Year Ended June 30, 2011 Variance from Final Budget Original Final Positive/ Budget Budget Actual (Negative) REVENUES: Investment income $ - $ - $ - $ - ' Revenue from other agencies 128,635 292,763 25,467 (267,296) Other revenue 1,430,435 1,465,354 1,437,273 (28,081) ' Total revenues 1,559,070 1,758,117 1,462,740 (295,377) EXPENDITURES: Current: Community development 1,454,526 1,788,089 1,462,557 325,532 ' Total expenditures 1,454,526 1,788,089 1,462,557 325,532 NET CHANGE IN FUND BALANCE $ 104,544 $ (29,972) 183 $ 30,155 FUND BALANCE (DEFICIT): Beginning of year (183) End of year $ - 109 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual AQMD Special Revenue Fund For the Year Ended June 30, 2011 REVENUES: Investment income Revenue from other agencies Total revenues EXPENDITURES: Current: Public works Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE: Beginning of year End of year 110 Variance from Final Budget Original Final Positive/ Budget Budget Actual (Negative) $ 150 $ 100 $ 15 $ (85) 202,900 206,367 206,695 328 , 203,050 206,467 206,710 243 32,639 106,545 55,023 51,522 32,639 106,545 55,023 51,522 170,411 99,922 151,687 51,765 (170,411) (109,822) (108,889) 933 , (170,411) (109,822) (108,889) 933 $ - $ (9,900) 42,798 $ 52,698 7,500 $ 50,298 110 City of Santa Clarita i 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, 2011 Variance from Final Budget Original Final Positive/ ' Budget Budget Actual (Negative) REVENUES: Taxes $ 711,532 $ 711,532 $ 760,489 $ 48,957 Investment income 300,000 300,000 295,549 (4,451) Service charges 13,210,141 13,242,181 13,539,847 297,666 Other revenue - - 5,741 5,741 Total revenues 14,221,673 14,253,713 14,601,626 347,913 EXPENDITURES: Current: General government 10,983,630 11,031,271 8,832,915 2,198,356 -Capital outlay 5,410,833 6,579,401 4,064,066 2,515,335 Total expenditures 16,394,463 17,610,672 12,896,981 4,713,691 REVENUES OVER (UNDER) EXPENDITURES (2,172,790) (3,356,959) 1,704,645 5,061,604 ' OTHER FINANCING SOURCES (USES): Transfers out (1,717,098) (1,717,098) (1,717,098) - Total other financing sources (uses) (1,717,098) (1,717,098) (1,717,098) - NET CHANGE IN FUND BALANCE $ (3,889,888) $ (5,074,057) (12,453) $ 5,061,604 FUND BALANCE: Beginning of year 18,586,713 ' End of year $ 18,574,260 f ' 111 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Stormwater Utility Special Revenue Fund For the Year Ended June 30, 2011 112 Variance from Final Budget Original Final Positive/ Budget Budget Actual (Negative) ' REVENUES: Taxes $ 75,320 $ 75,320 $ 81,967 $ 6,647 Investment income 75,000 80,000 88,389 8,389 Service charges 2,623,500 2,623,500 2,728,030 104,530 Other revenues - - 7,308 7,308 Total revenues 2,773,820 2,778,820 2,905,694 126,874 EXPENDITURES: Current: General government 12,000 12,000 42,783 (30,783) Public works 2,401,838 2,436,656 2,141,651 295,005 Capital outlay 75,000 177,550 174,695 2,855 Total expenditures 2,488,838 2,626,206 2,359,129 267,077 ' REVENUES OVER (UNDER) EXPENDITURES 284,982 152,614 546,565 393,951 OTHER FINANCING SOURCES (USES): , Transfers in 32,660 32,660 32,660 - Transfers out (16,390) (14,320) (13,370) 950 Total other financing sources (uses) 16,270 18,340 19,290 950 NET CHANGE IN FUND BALANCE $ 301,252 $ 170,954 565,855 $ 394,901 FUND BALANCE: Beginning of year 5,518,975 End of year $ 6,084,830 112 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, 2011 EXPENDITURES: Current: Public safety - 111,029 66,283 Variance from Public works 45,000 164,432 40,882 Final Budget Parks and recreation Original Final 1,919,988 Positive/ Capital outlay Budget Budget Actual (Negative) REVENUES: 1,600,758 3,886,996 2,488,510 1,398,486 Revenues from other agencies $ 583,964 $ 1,263,750 $ 450,482 $ (813,268) Other revenue 1,016,048 2,697,962 1,738,994 (958,968) Total revenues 1,600,012 3,961,712 2,189,476 (1,772,236) EXPENDITURES: Current: Public safety - 111,029 66,283 44,746 Public works 45,000 164,432 40,882 123,550 Parks and recreation 165,850 1,939,798 1,919,988 19,810 Capital outlay 1,389,908 1,671,737 461,357 1,210,380 Total expenditures 1,600,758 3,886,996 2,488,510 1,398,486 NET CHANGE IN FUND BALANCE (746) 74,716 (299,034) (373,750) FUND BALANCE (DEFICIT): Beginning of year (265,319) End of year $ (564,353) 113 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual ' Federal Urban Aid Special Revenue Fund For the Year Ended June 30, 2011 REVENUES: Service charges Total revenues EXPENDITURES: Current: Capital outlay Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE (DEFICIT): Beginning of year End of year Original Final Budget Budget $ 1,822,495 $ 1,822,495 $ 1,822,495 1,822,495 1,822,495 1,822,495 Variance from Final Budget Positive/ Actual (Negative) 309,986 $ (1,512,509) 309,986 (1,512,509) 1,822,495 (170,339) 1,992,834 , 1,822,495 (170,339) 1,992,834 $ - $ - 480,325 $ 480,325 ' (490,832) ' $ (10,507) 114 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, 2011 ' Variance from Final Budget Original Final Positive/ ' Budget Budget Actual (Negative) REVENUES: Investment income $ $ - $ 1,475 $ 1,475 _ Revenues from other agencies 189,101 137,761 (51,340) Total revenues - 189,101 139,236 (49,865) EXPENDITURES: Current: Public safety 113,115 (113,115) Total expenditures - - 113,115 (113,115) ' REVENUES OVER (UNDER) EXPENDITURES - 189,101 26,121 63,250 ' OTHER FINANCING SOURCES (USES): Transfers in - 2,078 2,078 - ' Total other financing sources (uses) - 2,078 2,078 - NET CHANGE IN FUND BALANCE $ - $ 191,179 28,199 $ 63,250 ' FUND BALANCE (DEFICIT): Beginning of year (2,078) End of year t $ 26,121 i i '. 115 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Supplemental Law Grant Special Revenue Fund For the Year Ended June 30, 2011 116 Variance from Final Budget Original Final Positive/ Budget Budget Actual (Negative) , REVENUES: Investment income $ - $ 1,000 $ 2,024 $ 1,024 Revenues from other agencies - 322,116 199,257 (122,859) Total revenues - 323,116 201,281 (121,835) EXPENDITURES: Current: Public safety - 314,902 201,282 ' 113,620 Total expenditures - 314,902 201,282 113,620 REVENUES OVER (UNDER) EXPENDITURES - 8,214 (1) (235,455) OTHER FINANCING SOURCES (USES): , Transfers in - - - - Total other financing sources (uses) - - - - t NET CHANGE IN FUND BALANCE $ - $ 8,214 1 $ 235,455 FUND BALANCE: Beginning of year 1 End of year $ - , 116 City of Santa Clarita 1 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual HOME Special Revenue Fund For the Year Ended June 30, 2011 Variance from Final Budget Original Final Positive/ ' Budget Budget Actual (Negative) REVENUES: ' Revenues from other agencies $ - $ 531,980 $ 474,621 $ (57,359) Total revenues - 531,980 474,621 (57,359) EXPENDITURES: Current: Community development - 512,693 455,335 57,358 ' Total expenditures 512,693 455,335 57,358 ' NET CHANGE IN FUND BALANCE $ - $ 19,287 19,286 $ (1) FUND BALANCE (DEFICIT): Beginning of year (19,286) End of year $ _ 117 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Library Facilities Fees Special Revenue Fund For the Year Ended June 30, 2011 Variance from , Final Budget Original Final Positive/ Budget Budget Actual (Negative) ' REVENUES: Developer fees $ - $ - $ 47,073 $ 47,073 t Investment income 1,500 1,000 448 (552) Total revenues OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE (DEFICIT): Beginning of year End of year 1,500 1,000 47,521 46,521 (35,173) (41,099) (5,926) ' - (35,173) (41,099) (5,926) $ 1,500 $ (34,173) 6,422 $ 40,595 ' 118 (5,198) $ 1,224 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Public Education and Government Special Revenue Fund For the Year Ended June 30, 2011 Variance from Final Budget Original Final Positive/ ' Budget Budget Actual (Negative) REVENUES: ' Taxes $ 350,000 $ 350,000 $ 313,195 $ (36,805) Investment income 4,500 5,000 6,313 1,313 Total revenues 354,500 355,000 319,508 (35,492) EXPENDITURES: Current: General government 173,065 253,065 190,343 62,722 Total expenditures 173,065 253,065 190,343 62,722 NET CHANGE IN FUND BALANCE $ 181,435 $ 101,935 129,165 $ (98,214) FUND BALANCE: Beginning of year 381,750 End of year $ 510,915 119 City of Santa Clarity Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Proposition C Special Revenue Fund For the Year Ended June 30, 2011 REVENUES: Investment income Revenue from other agencies Total revenues EXPENDITURES: Current: Public works Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE: Beginning of year End of year Original Final Budget Budget $ 3,000 $ 1,500 $ 2,931,350 6,408,827 2,934,350 6,410,327 Variance from Final Budget Positive/ Actual (Negative) ' (5,329) $ (6,829) ' 3,899,043 (2,509,784) 3,893,714 (2,516,613) 1 3,030 33,030 3,030 30,000 ' 1,028,392 3,729,041 2,331,120 1,397,921 1,031,422 3,762,071 2,334,150 1,427,921 1,902,928 2,648,256 1,559,564 (1,088,692) (1,878,928) (2,686,584) (1,569,380) (1,117,204) (1,878,928) (2,686,584) (1,569,380) (1,117,204) $ 24,000 $ (38,328) (9,816) $ 28,512 9,829 ' $ 13 120 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Federal Grants Special Revenue Fund For the Year Ended June 30, 2011 Original Final Budget Budget REVENUES: Revenues from other agencies $ 1,476,208 Service charges 133,000 Other revenue - Total revenues 1,609,208 EXPENDITURES: Current: Public works Community development Capital outlay Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE (DEFICIT): Beginning of year End of year Variance from Final Budget Positive/ Actual (Negative) $ 4,723,173 $ 2,355,187 $ (2,367,986) 133,000 - (133,000) 81,154 45,000 (36,154) 4,937,327 2,400,187 (2,537,140) - 375,023 77,896 1,070,678 1,609,208 2,844,579 1,687,104 4,290,280 (77,896) $ 647,047 121 246,018 129,005 1,070,353 325 2,204,984 639,595 3,521,355 768,925 (1,121,168) $ (1,768,215) (649,868) $ (1,771,036) City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Measure R Special Revenue Fund For the Year Ended June 30, 2011 122 Variance from Final Budget Original Final Positive/ Budget Budget Actual (Negative) ' REVENUES: Investment income $ 7,500 $ 500 $ 688 $ 188 Revenues from other agencies 1,485,344 1,485,344 1,485,483 139 Total revenues 1,492,844 1,485,844 1,486,171 327 OTHER FINANCING SOURCES (USES): Transfers out (1,492,844) (1,485,804) (1,486,171) 367 Total other financing sources (uses) (1,492,844) (1,485,804) (1,486,171) 367 NET CHANGE IN FUND BALANCE $ - $ 40 - $ 694 FUND BALANCE: Beginning of year - End of year $ - 122 City of Santa Clarita ' Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Public Library Special Revenue Fund For the Year Ended June 30, 2011 ' Variance from Final Budget Original Final Positive/ ' Budget Budget Actual (Negative) REVENUES: ' Investment income $ $ $ 10,396 $ 10,396 _ Revenue from other agencies _ Total revenues - - 10,396 10,396 EXPENDITURES: Current: General government 10,773,559 10,650,167 123,392 Capital outlay - - 3,142,427 (3,142,427) Total expenditures - 10,773,559 13,792,594 (3,019,035) REVENUES OVER (UNDER) EXPENDITURES - (10,773,559) (13,782,198) (3,008,639) OTHER FINANCING SOURCES (USES): Transfers in - 16,603,312 16,603,312 - Total other financing sources (uses) - 16,603,312 16,603,312 - ' NET CHANGE IN FUND BALANCE $ - $ 5,829,753 2,821,114 $ (3,008,639) FUND BALANCE: ' Beginning of year - End of year $ 2,821,114 123 City of Santa Clarita Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Tourism Marketing District Special Revenue Fund For the Year Ended June 30, 2011 124 Variance from Final Budget Original Final Positive/ Budget Budget Actual (Negative) , REVENUES: Taxes $ 400,000 $ 400,000 $ 376,562 $ (23,438) Investment income - 3,000 3,293 ' 293 Total revenues 400,000 403,000 379,855 (23,145) EXPENDITURES: Current: General government 400,000 400,000 141,175 ' 258,825 Total expenditures 400,000 400,000 141,175 258,825 NET CHANGE IN FUND BALANCE $ - $ 3,000 238,680 $ (281,970) FUND BALANCE: Beginning of year - End of year $ 238,680 E 124 ' IN'TERNAL 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 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. 125 City of Santa Clarita Combining Statement of Net Assets Internal Service Funds June 30, 2011 ASSETS Current assets: Cash and investments Receivables: Accounts Interest Advances to other fund Total current assets Noncurrent assets: Capital assets: Land Equipment, net of accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable and accrued liabilities Total current liabilities Noncurrent liabilities: Claims payable Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets Unrestricted Total net assets Public Computer Vehicle Facilities Self -Insurance Replacement Replacement Replacement Total $ 5,197,615 $ 1,718,813 $ 3,930,073 $ 9,039,943 $ 19,886,444 1,633 - - - 1,633 - 9,857 22,538 51,842 84,237 909,898 - - - 909,898 6,109,146 1,728,670 3,952,611 9,091,785 20,882,212 5,000,000 - - 2,669,393 7,669,393 17,313 191,789 325,329 - 534,431 5,017,313 191,789 325,329 2,669,393 8,203,824 11,126,459 1,920,459 4,277,940 11,761,178 29,086,036 116,285 11,601 - 44,377 172,263 116,285 11,601 - 44,377 172,263 40,000 - - - 40,000 40,000 - - - 40,000 156,285 11,601 - 44,377 212,263 5,017,313 191,789 325,329 2,669,393 8,203,824 5,952,861 1,717,069 3,952,611 9,047,408 20,669,949 $ 10,970,174 $ 1,908,858 $ 4,277,940 $ 11,716,801 $ 28,873,773 126 City of Santa Clarita Combining Statement of Revenues, Expenses and Changes in Net Assets Internal Service Funds For the Year Ended June 30, 2011 OPERATING REVENUES: Charges for services Other revenues Total operating revenues OPERATING EXPENSES: Administrative and personnel services Services and supplies Depreciation Total operating expenses OPERATING INCOME NONOPERATING REVENUES (EXPENSES): Investment income Total nonoperating revenues (expenses) INCOME BEFORE TRANSFERS TRANSFERS: Transfers in Total other financing sources (uses) CHANGE IN NET ASSETS NET ASSETS: Beginning of year End of year Public Computer Vehicle Facilities Self -Insurance Replacement Replacement Replacement Total $ 2,039,610 $ 408,168 $ 346,000 $ - $ 2,793,778 - - - 1,620,488 1,620,488 2,039,610 408,168 346,000 1,620,488 4,414,266 223,721 1,610,342 6,702 - 90,545 154,388 - 6,349 140,720 16,222 47,275 - 239,943 1,754,511 301,810 1,840,765 244,933 147,069 63,497 2,296,264 198,845 163,235 198,931 1,556,991 2,118,002 18,505 26,385 66,959 62,540 174,389 18,505 26,385 66,959 62,540 174,389 217,350 189,620 265,890 1,619,531 2,292,391 5,036,224 - - 3,000,000 8,036,224 5,036,224 - - 3,000,000 8,036,224 5,253,574 189,620 265,890 4,619,531 10,328,615 5,716,600 1,719,238 4,012,050 7,097,270 18,545,158 $ 10,970,174 $ 1,908,858 $ 4,277,940 $ 11,716,801 $ 28,873,773 127 City of Santa Clarita Combining Statement of Cash Flows All Internal Service Funds For the Year Ended June 30, 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from interfund services provided Receipts from other services provided Payments to employees Payments to suppliers Net cash provided by (used for) operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Cash received from other funds Net cash provided by (used for) noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets Net cash provided (used for) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Interest received Net cash provided (used for) by investing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income to (loss) to net cash provided by (used for) operating activities: Depreciation expense Change in assets and liabilities: Increase (decrease) in prepaid expenses Increase (decrease) in account payable and accrued liabilities Increase (decrease) in claims payable Total adjustments Net cash provided (used) by operating activities Public Computer Vehicle Facilities Self -Insurance Replacement Replacement Replacement Total $ 2,039,610 $ 408,168 $ 346,000 $ - $ 2,793,778 - - - 1,620,488 1,620,488 (223,721) - (16,222) (239,943) (5,987,223) (171,232) (6,349) (2,691,611) (8,856,415) (4,171,334) 236,936 339,651 (1,087,345) (4,682,092) 5,017,230 - 3,000,000 8,017,230 5,017,230 - - 3,000,000 8,017,230 - (38,756) (62,236) (100,992) $ 1,556,991 $ 2,118,002 - (38,756) (62,236) - (100,992) - 301,810 53,193 28,571 73,312 67,670 222,746 53,193 28,571 73,312 67,670 222,746 (80,687) - 899,089 226,751 350,727 1,980,325 3,456,892 4,298,526 1,492,062 3,579,346 7,059,618 16,429,552 $ 5,197,615 $ 1,718,813 $ 3,930,073 $ 9,039,943 $ 19,886,444 $ 198,845 $ 163,235 $ 198,931 $ 1,556,991 $ 2,118,002 6,702 154,388 140,720 - 301,810 542,541 - - - 542,541 ' (4,909,422) (80,687) - (2,644,336) (7,634,445) (10,000) - - - (10,000) (4,370,179) 73,701 140,720 (2,644,336) (6,800,094) $ (4,171,334) $ 236,936 $ 339,651 $ (1,087,345) $ (4,682,092) 128 AGENCY FUNDS The Agency Funds are used to account for assets held by the City as an agency 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. 129 City of Santa Clarita Combining Statement of Fiduciary Assets and Liabilities Fiduciary Funds June 30, 2011 130 Community Assessment Assessment Facilities District District District No. 92-2 No. 99-1 No. 2002-1 Total ASSETS Cash and investments $ 57,873 $ 33,158 $ 15,000 $ 106,031 Cash and investments with fiscal agent 63,900 60,225 1,669,906 1,794,031 Receivables: Accounts 3,435 3,055 - 6,490 Interest 332 190 - 522 Total assets $ 125,540 $ 96,628 $ 1,684,906 $ 1,907,074 LIABILITIES ' Accounts payable and accrued liabilities $ 51 $ 7,142 $ - $ 7,193 Due to other funds - - 80,632 80,632 Deferred revenues 284 163 - 447 Due to bondholders 125,205 89,323 1,604,274 1,818,802 Total liabilities $ 125,540 $ 96,628 $ 1,684,906 $ 1,907,074 , 130 City of Santa Clarita Schedule of Changes in Fiduciary Assets and Liabilities All Agency Funds For the Year Ended June 30, 2011 Balance at Balance at July 1, 2010 Additions Deletions June 30, 2011 ' ASSESSMENT DISTRICT NO. 92-2 ASSETS ' Cash and investments $ 106,667 $ $ 48,794 $ 57,873 Cash and investments with fiscal agent 63,900 _ 63,900 Receivables: Accounts 5,729 - 2,294 3,435 Interest 861 529 332 Total assets $ 177,157 $ - $ 51,617 $ 125,540 ' LIABILITIES Accounts payable and accrued liabilities $ 104 $ - $ 53 $ 51 Deferred revenues 284 284 Due to bondholders 177,053 - 51,848 125,205 Total liabilities $ 177,157 $ 284 $ 51,901 $ 125,540 ' ASSESSMENT DISTRICT NO. 99-1 ASSETS ' Cash and investments $ 82,817 $ $ 49,659 $ 33,158 Cash and investments with fiscal agent 60,225 _ 60,225 Receivables: Accounts 6,615 3,560 3,055 ' Interest 668 = 478 190 Total assets $ 150,325 $ - $ 53,697 $ 96,628 LIABILITIES Accounts payable and accrued liabilities $ 9,314 $ - $ 2,172 $ 7,142 ' Due to other funds 300 - 300 - Deferred revenues - 163 - 163 Due to bondholders 140,711 - 51,388 89,323 Total liabilities $ 150,325 $ 163 $ 53,860 $ 96,628 131 City of Santa Clarita Schedule of Changes in Fiduciary Assets and Liabilities All Agency Funds For the Year Ended June 30, 2011 132 Balance at Balance at . July 1, 2010 Additions Deletions June 30, 2011 COMMUNITY FACILITIES ' DISTRICT NO. 2002-1 ASSETS ' Cash and investments $ 92,903 $ - $ 77,903 $ 15,000 Cash and investments with fiscal agent 1,669,419 487 - 1,669,906 Receivables: , Interest 693 - 693 Total assets $ 1,763,015 $ 487 $ 78,596 $ 1,684,906 LIABILITIES Accounts payable and accrued liabilities $ - $ - $ - $ - Due to other funds 311 80,321 - ' 80,632 Due to bondholders 1,762,704 - 158,430 1,604,274 Total liabilities $ 1,763,015 $ 80,321 $ 158,430 $ 1,684,906 ' TOTAL - ALL AGENCY FUNDS ' ASSETS Cash and investments $ 282,387 $ - $ 176,356 $ 106,031 ' Cash and investments with fiscal agent 1,793,544 487 - 11794,031 Receivables: Accounts 12,344 - 5,854 6,490 ' Interest 2,222 - 1,700 522 Total assets $ 2,090,497 $ 487 $ 183,910 $ 1,907,074 . LIABILITIES ' Accounts payable and accrued liabilities $ 9,418 $ - $ 2,225 $ 7,193 Due to other funds 611 80,321 300 80,632 Deferred revenues - 447 - 447 Due to bondholders 2,080,468 - 261,666 1,818,802 Total liabilities $ 2,090,497 $ 80,768 $ 264,191 $ 1,907,074 , 132 � REPORT ON INTERNAL CONTROL OVER ' FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS 133 This page intentionally left blank. 134 C&L Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of the City Council of the City of Santa Clarita Santa Clarita, California ' We have audited theaccompanying fi - e nancial statements of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of the City of Santa Clarita, California (City), as of and for the year ended June 30, 2011, and have issued our report thereon dated February 7, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. ' Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the ' financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. www.c-lcpa.com To the Honorable Mayor and Members of the City Council of the City of Santa Clarita Santa Clarita, California Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain 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. 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 instance of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the City Council, management, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. r Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants Irvine, California February 7, 2012 136 137 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 1 Financial Trends These tables contain trend information that may assist the reader in the City's 139-152 current financial performance by placing it in historical perspective. Revenue Capacity These tables contain information that may help in assessing the viability of the 153-157 ' City's most significant revenue sources, the property and sales taxes. ' Debt Capacity These tables present information that may assist the reader in analyzing the 158-164 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 reader 165-166 ' understand the environment within which the City's financial activities take place. ' Operating Information These tables contain service and infrastructure indicators that can inform one's 167-168 understanding how the information in the City's financial statements relate to the ' services the City provides and the activities it performs. Key Data and Ratios Ranking 169-172 These tables. present various municipalities within the State of California and are ranked in order using key data and ratios. The key data and ratios are essential operating indicators used to determine a municipality's overall financial health and credit worthiness. 137 138 City of Santa Clarita ' Net Assets by Component (1) Last Six Fiscal Years Ended June 30, 2011 (accrual basis of accounting) Business -type Activities Investment in capital assets, net of related debt $ 75,416,868 $ 67,911,725 $ 66,963,851 $ 63,526,242 $ 62,246,621 $ 63,741,429 Restricted for: Debt Service - - - - - - Unrestricted 2,953,046 (176,196) 3,118,092 2,957,611 1,553,088 (406,224) Total business -type activities net assets $ 78,369,914 $ 67,735,529 $ 70,081,943 $ 66,483,853 $ 63,799,709 $ 63,335,205 Primary Government FISCAL YEAR 1 Investment in capital assets, 05-06 10-11 09-10 08-09 07-08 06-07 As Restated Governmental Activities Restricted 33,654,470 90,665,041 97,664,312 107,644,883 52,576,463 Investment in capital assets, 1 Unrestricted 70,350,734 63,042,059 99,587,958 69,207,512 89,290,905 net of related debt $ 717,613,095 $ 657,644,168 $ 629,621,722 $ 672,306,820 $ 661,210,117 $ 614,300,517 Restricted for: ' Capital Projects 3,452,815 4,769,573 4,769,573 45,993,804 18,134,924 32,030,928 Debt Service - - - 632,680 - 174,028 Specific Projects and Programs 30,201,655 85,895,468 92,894,739 61,018,399 34,441,539 30,547,345 ' Total Restricted 33,654,470 90,665,041 97,664,312 107,644,883 52,576,463 62,752,301 Unrestricted 67,397,688 63,218,255 96,469,866 66,249,901 87,737,817 71,001,423 Total governmental activities net assets $ 818,665,253 $ 811,527,464 $ 823,755,900 $ 846,201,604 $ 801,524,397 $ 748,054,241 Business -type Activities Investment in capital assets, net of related debt $ 75,416,868 $ 67,911,725 $ 66,963,851 $ 63,526,242 $ 62,246,621 $ 63,741,429 Restricted for: Debt Service - - - - - - Unrestricted 2,953,046 (176,196) 3,118,092 2,957,611 1,553,088 (406,224) Total business -type activities net assets $ 78,369,914 $ 67,735,529 $ 70,081,943 $ 66,483,853 $ 63,799,709 $ 63,335,205 Primary Government Investment in capital assets, net of related debt 793,029,963 725,555,893 696,585,573 735,833,062 723,456,738 678,041,946 Restricted 33,654,470 90,665,041 97,664,312 107,644,883 52,576,463 62,752,301 Unrestricted 70,350,734 63,042,059 99,587,958 69,207,512 89,290,905 70,595,199 Total Primary Government Net Assets $ 897,035,167 $ 879,262,993 $ 893,837,843 $ 912,685,457 $ 865,324,106 $ 811,389,446 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 Clarita 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 1, 2002. See Notes to Basic Financial Statements #16. ' Source: City of Santa Clarita, Administrative Services Department - Finance Division ' 139 City of Santa Clarita Changes in Net Assets Last Six Fiscal Years Ended June 30, 2011(1 (accrual basis of accounting) Expenses Governmental Activities General government Public safety Public works Parks and recreation Community development Unallocated 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: FISCAL YEAR 10-11 09-10 08-09 07-08 06-07 05-06 $ 39,934,727 $ 32,116,335 $ 32,279,630 $ 27,488,731 $ 26,029,070 $ 24,225,414 13,992,096 17,912,704 17,489,870 16,482,917 14,398,408 13,821,626 27,069,631 26,758,527 48,514,645 30,549,888 19,273,980 6,417,841 14,642,911 27,835,763 32,747,618 21,817,251 20,573,077 20,988,533 3,495,405 13,831,341 9,761,681 9,257,881 8,985,449 16,939,976 16,392,901 15,545,626 14,405,047 13,128,617 12,920,310 1,268,939 4,650,566 5,476,918 5,725,201 3,127,998 2,087,949 1,669,701 120,178,237 139,477,214 160,923,692 121,853,283 104,268,243 85,332,030 24,107,603 23,348,708 22,299,379 21,506,317 18,315,106 16,508,457 24,107,603 23,348,708 22,299,379 21,506,317 18,315,106 16,508,457 $ 144,285,840 $ 162,825,922 $ 183,223,071 $ 143,359,600 $ 122,583,349 $ 101,840,487 $ 398,181 $ 396,651 $ 621,624 $ 2,737,355 $ 302,075 $ 186,171 2,305,608 2,194,038 1,898,022 2,291,100 2,131,060 2,032,652 4,353,454 3,162,052 260,524 355,817 3,575,546 2,512,093 4,220,977 3,956,933 3,849,699 3,875,539 3,895,422 3,794,662 21,629,411 15,937,913 35,138,334 26,341,684 20,182,722 19,068,982 17,948,333 16,224,269 25,079,906 22,600,793 26,641,145 23,465,852 13,327,687 15,249,634 23,636,779 39,003,536 24,770,306 60,971,404 64,183,651 57,121,490 90,484,888 97,205,824 81,498,276 112,031,816 5,868,119 3,181,614 3,299,263 3,216,239 5,827,778 4,950,584 20,695,533 10,260,579 13,653,177 11,876,720 12,616,641 3,351,941 - - - 617,421 750,200 - 26,563,652 13,442,193 16,952,440 15,710,380 19,194,619 8,302,525 $ 90,747,303 $ 70,563,683 $ 107,437,328 $ 112,916,204 $ 100,692,895 $ 120,334,341 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 140 City of Santa Clarita Changes in Net Assets Last Six Fiscal Years Ended June 30, 2011(1) ' (accrual basis of accounting) Net Revenues (expenses): Governmental activities Business -type activities Total net revenues (expenses): General Revenue and Other Changes in Net Assets Governmental 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 10-11 09-10 08-09 07-08 06-07 05-06 $ (55,994,586) $ (82,355,724) $ (70,438,804) $ (24,647,459) $ (22,769,967) $ 26,699,786 2,456,049 (9,906,515) (5,346,939) (5,795,937) 879,513 (8,205,932) $ (53,538,537) $ (92,262,239) $ (75,785,743) $ (30,443,396) $ (21,890,454) $ 18,493,854 $ 27,701,757 $ 24,511,238 $ 27,751,506 $ 29,076,388 $ 23,790,825 $ 22,204,192 24,996,219 25,126,278 27,212,480 24,482,930 .27,891,202 23,106,806 6,697,241 6,407,923 6,704,074 6,028,903 6,248,912 5,560,153 3,082,456 4,564,687 4,816,638 836,824 1,073,774 1,544,534 2,106,521 2,050,857 2,260,708 2,433,651 1,804,923 1,824,394 - - 1,015,413 - - 603,990 18,605,462 7,383,175 6,215,803 8,490,865 8,156,017 6,965,521 812,475 896,708 - 11252,281 1,862,901 223,241 3,756,112 4,871,133 6,020,940 4,566,884 4,970,193 1,891,292 (5,808,300) (7,477,547) (8,006,128) (8,431,120) 441,376 (12,054,795) 81,949,943 68,334,452 73,991,434 68,737,606 76,240,123 51,869,328 - - - - - 883,615 (27,303) 82,554 48,961 48,961 26,367 1,050 5,808,302 7,477,547 8,006,128 8,431,120 (441,376) 12,054,795 5,780,999 7,560,101 8,055,089 8,480,081 (415,009) 12,939,460 $ 87,730,942 $ 75,894,553 $ 82,046,523 $ 77,217,687 $ 75,825,114 $ 64,808,788 $ 25,955,357 $ (14,021,272) $ 3,552,630 $ 44,090,147 $ 53,470,156 $ 78,569,114 8,237,048 (2,346,414) 2,708,150 2,684,144 464,504 4,733,528 $ 34,192,405 $ (16,367,686) $ 6,260,780 $ 46,774,291 $ 53,934,660 $ 83,302,642 . 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 1 141 City of Santa Clarita Fund Balances of Governmental Funds Last Ten Fiscal Years Ended June 30, 2011 (modified accrual basis of accounting) Note: (1) Balance as restated, see Notes to Basic Financial Statements #16B. Source: City of Santa Clarita, Administrative Services Department - Finance Division 142 FISCAL YEAR 10-11 09-10 08-09 07-08 General Fund ' Reserved $ 19,546,015 $ 32,617,139 $ 34,920,547 Unreserved 58,211,508 41,674,470 31,153,879 Nonspendable $ 23,845,861 ' Restricted Committed 12,356,339 Assigned 572,781 Unassigned 46,915,238 Total general fund $ 83,690,219 $ 77,757,523 $ 74,291,609 $ 66,074,426 All Other Governmental Funds Reserved $ 51,195,454 $ 70,667,494 $ 51,972,970 Unreserved: Special revenue funds 2,109,198 (7,048,095) 28,377,796 Debt service fund (24,048,962) (17,004,471) (15,873,835) Capital projects fund 33,725,531 34,502,270 38,050,255 Nonspendable Restricted $ 57,205,072 Committed Assigned 3,637,410 Unassigned (43,879,288) Total all other governmental funds $ 16,963,194 $ 62,981,221 $ 81,117,198 $ 102,527,186 FUND BALANCES Fiscal Year Ended June 30, 2011 O All Other Governmental Funds 16.85% B General Fund 83.15% 1 Note: (1) Balance as restated, see Notes to Basic Financial Statements #16B. Source: City of Santa Clarita, Administrative Services Department - Finance Division 142 FISCAL YEAR ! 05-06 06-07 As Restated 04-05 03-04 02-03 01-02 $ 34,699,034 $ 20,786,040 $ 15,638,513 $ 12,042,182 $ 14,034,615 $ 21,368,003 ' 28,500,824 18,232,779 30,780,939 23,109,773 12,927,211 3,168,903 $ 63,199,858 $ 39,018,819 $ 46,419,452 $ 35,151,955 $ 26,961,826 $ 24,536,906 $ 48,303,588 $ 80,399,389 $ 30,388,825 $ 41,563,581 $ 9,203,674 $ 10,852,416 3,827,570 (7,159,062) 2,843,589 (867,508) 30,014,266 34,078,558 (10,461,382) (4,743,697) (4,402,225) (3,944,409) (4,082,126) (4,066,749) 4,592,332 (249,111) (698,632) (100,527) (196,889) 437,307 $ 36,151,718 $ 68,247,519 $ 28,131,557 $ 36,651,137 $ 34,938,925 $ 41,301,532 FUND BALANCES ALL OTHER GOVERNMENTAL FUNDS Last Ten Fiscal Years ' 120 1.00 so 1.1 ! 0 .2 60 4 6 40 828 20 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Fiscal Year 143 City of Santa Clarita Changes In Fund Balances Of Governmental Funds Last Ten Fiscal Years Ended June 30, 2011 (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 2011 2010 2009 2008 $ 72,474,882 $ 80,714,829 $ 87,659,599 $ 88,088,786 3,675,424 4,093,250 3,697,218 5,256,748 282,776 3,053,363 15,763,070 22,290,808 3,798,498 5,485,925 10,749,728 8,287,441 19,780,700 33,881,145 28,882,884 24,247,611 1,891,500 1,936,318 1,759,371 2,121,570 23,608,272 10,812,521 8,375,771 9,931,041 7,685,141 7,234,923 5,077,400 3,368,879 133,197,193 147,212,274 161,965,041 163,592,884 42,213,597 27,951,510 27,250,056 25,965,196 21,230,594 17,862,129 17,439,295 16,342,979 34,210,327 20,594,575 42,937,168 25,977,763 21,853,319 20,048,430 20,126,412 20,156,343 11,575,365 10,849,942 7,095,386 7,583,236 21,311,885 46,183,268 41,826,511 44,906,802 2,246,218 2,611,372 2,072,341 1,927,198 4,796,695 5,411,152 5,279,549 4,632,979 159,438,000 151,512,378 164,026,718 147,492,496 (26,240,807) (4,300,104) (2,061,677) 16,100,388 $ 100,653,413 $ 140,738,744 $ 155,408,807 $ 168,601,612 5.10% 7.62% 6.02% 6.39% 144 1 - 54,235,000 - (226,682) 50,869,852 18,953,115 12,150,426 43,112,541 (64,714,376) (28,930,662) (23,281,554) (54,668,661) (13,844,524) (9,977,547) (11,131,128) 42,452,198 (40,085,331) (14,277,651) (13,192,805) 58,552,586 140,738,744 155,016,395 168,601,612 110,049,026 $ 100,653,413 $ 140,738,744 $ 155,408,807 $ 168,601,612 5.10% 7.62% 6.02% 6.39% 144 1 FISCAL YEAR 2007 2006 2005 2004 2003 2002 $ 70,576,755 $ 66,164,485 $ 53,763,779 $ 43,940,454 $ 39,813,089 $ 35,589,227 4,203,933 6,907,826 5,127,705 5,303,309 3,512,857 9,778,478 6,747,767 28,028,933 11,963,054 7,570,352 7,857,087 17,016,274 7,926,763 2,881,133 3,148,731 919,858 3,788,121 4,165,144 37,300,213 38,526,364 33,089,887 36,119,851 31,157,062 30,209,371 1,918,954 1,904,273 1,803,686 1,051,371 1,041,945 1,008,466 13,463,673 13,081,649 13,339,462 12,580,933 18,095,424 17,089,401 4,356,961 12,651,674 2,408,463 3,767,800 2,309,846 1,948,808 146,495,019 170,146,337 124,644,767 111,253,928 107,575,431 107,026,691 23,411,750 24,668,150 11,217,783 12,436,244 9,282,089 9,778,478 14,347,833 13,658,723 12,429,192 12,102,441 12,124,427 11,264,808 19,511,097 6,802,081 8,901,359 8,692,908 8,823,785 8,112,935 18,943,146 17,376,609 15,964,949 14,226,090 11,546,673 10,492,037 9,051,652 17,164,505 22,531,795 21,039,274 23,900,882 16,450,228 57,926,955 49,435,744 35,096,683 19,251,357 33,179,578 46,917,311 2,374,870 1,367,359 2,060,319 4,332,159 1,496,087 533,279 2,298,974 2,878,536 1,570,581 1,760,134 1,958,388 1,598,807 147,866,277 133,351,707 109,772,661 93,840,607 102,311,909 105,147,883 (1,371,258) 36,794,630 14,872,106 17,413,321 5,263,522 1,878,808 13,894,752 - - - 1,558,097 4,400,000 - 17,700,000 - 1,558,097 4,400,000 - (17,225,304) - 2,590,955 - 27,468,089 7,865,612 8,157,999 8,278,692 7,662,207 9,550,514 (29,881,193) (19,409,716) (20,282,188) (18,380,627) (18,421,513) (18,120,682) 11,481,648 (11,069,408) (12,124,189) (7,510,980) (7,643,112) 229,832 10,110,390 25,725,222 2,747,917 9,902,341 (2,379,590) 2,108,640 99,351,576 74,551,009 71,803,092 61,900,751 65,838,438 64,722,707 $ 109,461,966 $ 100,276,231 $ 74,551,009 $ 71,803,092 $ 63,458,848 $ 66,831,347 5.20% 5.04% 4.73% 8.24% 4.21% 3.66% Source: City of Santa Clarita, Administrative Services Department - Finance Division 145 City of Santa Clarita Assessed Valuation (1) and Actual Value of Taxable Property Last Ten Fiscal Years STATE ASSESSED LOCALLY ASSESSED SECURED -UTILITY SECURED Fiscal IMPROVE- PERSONAL IMPROVE- PERSONAL OTHER Year LAND MENTS PROPERTY TOTAL LAND MENTS PROPERTY EXEMPTIONS TOTAL 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 2,156,981 8,312,011 197,013 10,666,005 8,556,960,792 9,766,997,767 104,509,489 (253,946,364) 18,174,521,684 2007-08 1,515,305 6,727,866 - 8,243,171 9,899,005,161 10,912,016,138 98,107,607 (214,371,451) 20,694,757,455 2008-09 1,750,395 2,264,780 4,015,175 9,416,163,697 11,115,441,327 105,296,475 (323,630,904) 20,313,270,595 2009-10 1,750,395 2,264,780 4,015,175 9,160,567,699 11,280,024,994 112,335,544 (330,372,395) 20,222,555,302 2010-11 1,431,971 2,264,780 3,696,751 9,097,382,703 11,485,773,659 107,089,927 (372,583,638) 20,317,662,651 ASSESSED VALUATION by CATEGORIES (Total Secured and Unsecured) Fiscal Year Ended June 30, 2011 PERSONAL PROPERTY 3.04% Note:. (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 2010/11 146 LAND 42.21% 25,000 20,000 -_y 15,000 Sol- IS 10,000 5,000 TOTAL ASSESSED VALUATION (Taxable Values) Last Ten Fiscal Years 0 $21,493■ $21,262;16 $21,113'' $21,168 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Fiscal Year (2) Direct Rate includes Redevelopment Agency areas. 147 LOCALLY ASSESSED TOTALS HOME - UNSECURED BEFORE TAXABLE °/a TOTAL OWNER IMPROVE- PERSONAL OTHER OTHER ASSESSED INCR. DIRECT PROPERTY MENTS PROPERTY EXEMPTIONS TOTAL EXEMPTIONS VALUE (DECR.) RATE (2) TAX RELIEF 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% 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% 0.06279% 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) 730,693,104 19,177,126,742 18,915,880,793 11.67% 0.08039% 206,464,204 264,708,723 558,804,055 (32,916,267) 790,596,511 21,740,884,855 21,493,597,137 13,63% 0.08327% 220,192,568 359,543,253 600,420,921 (15,127,698) 944,836,476 21,600,880,848 21,262,122,246 -1.08% 0.08313% 224,731,598 ' 346,874,191 553,829,644 (13,331,377) 887,372,458 21,457,647,247 21,113,942,935 -0.70% 0.07432% 223,277,279 314,286,482 548,430,090 (15,137,342) 847,579,230 21,526,384,928 21,168,938,632 0.26% 0.07392/ 220,496,294 25,000 20,000 -_y 15,000 Sol- IS 10,000 5,000 TOTAL ASSESSED VALUATION (Taxable Values) Last Ten Fiscal Years 0 $21,493■ $21,262;16 $21,113'' $21,168 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Fiscal Year (2) Direct Rate includes Redevelopment Agency areas. 147 City of Santa Clarita Redevelopment Agency (1) Assessed Valuation (2) and Actual Value of Taxable Property Last Ten Fiscal Years STATE ASSESSED LOCALLY ASSESSED SECURED (UTILITY) SECURED FISCAL IMPROVE- PERSONAL IMPROVE- PERSONAL OTHER YEAR LAND MENTS PROPERTY TOTAL LAND MENTS PROPERTY EXEMPTIONS 2001-02 47,672 35,789 20,489 103,950 142,657,899 145,596,895 3,810,222 (2,524,574) 2002-03 45,897 34,458 19,726 100,081 149,325,297 149,506,716 5,028,543 (2,575,054) 2003-04 52,416 39,351 22,527 114,294 161,106,889 159,691,365 3,806,986 (4,148,124) 2004-05 65,404 49,101 28,109 142,614 180,810,905 166,935,237 2,314,234 (5,083,826) 2005-06 61,007 45,801 26,219 133,027 273,260,130 176,564,344 2,435,378 (4,859,824) 2006-07 50,158 37,657 21,558 109,373 295,792,467 185,299,271 2,545,972 (5,085,710) 2007-08 335,974,647 205,086,767 2,346,546 (4,630,171) 2008-09 - - - - 348,100,511 217,393,278 2,064,527 (3,754,719) 2009-10 343,043,150 214,695,279 1,775,246 (3,779,814) 2010-11 319,869,014 213,093,295 1,850,279 (3,196,475) SECURED ASSESSED VALUATION (before other exemptions) Fiscal Year 2010-11 ® PERSONAL (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 148 LOCALLY ASSESSED TOTALS HOME - UNSECURED TOTALS TAXABLE OWNER IMPROVE- PERSONAL OTHER BEFORE ASSESSED VALUE PROPERTY TOTAL MENTS PROPERTY EXEMPTIONS TOTAL BASE YEAR BASE YEAR VALUE GROWTH TAX RELIEF 289,540,442 4,515,557 14,923,310 (15,000) 19,423,867 309,068,259 (266,351,517) 42,716,742 20,385,556 1,918,000 301,285,502 5,983,748 19,053,059 (30,000) 25,006,807 326,392,390 (266,351,517) 60,040,873 17,324,131 1,890,000 320,457,116 6,272,382 19,035,089 (33,000) 25,274,471 345,845,881 (266,351,517) 79,494,364 19,453,491 1,923,600 344,976,550 6,326,173 22,151,970 (33,000) 28,445,143 373,564,307 (266,351,517) 107,212,790 27,718,426 2,161,147 447,400,028 5,901,959 23,034,914 (91,000) 28,845,873 476,378,928 (266,351,517) 210,027,411 102,814,621 2,053,943 478,552,000 26,593,269 25,569,962 (16,300) 52,146,931 530,808,304 (266,351,517) 264,456,787 54,429,376 1,971,567 538,777,789 28,204,577 48,299,529 (217,300) 76,286,806 615,064,595 (266,351,517) 348,713,078 84,256,291 2,034,432 563,803,597 39,771,667 48,437,084 (77,000) 88,131,751 651,935,348 (266,351,517) 385,583,831 36,870,753 2,002,848 555,733,861 34,102,838 46,361,945 (84,500) 80,380,283 636,114,144 (266,351,517) 369,762,627 (15,821,204) 1,921,661 531,616,113 21,240,432 62,307,206 (84,500) 83,463,138 615,079,251 (266,351,517) 348,727,734 (21,034,893) 1,871,456 UNSECURED ASSESSED VALUATION (before other Exemption) Fiscal Year 2010-11 149 City of Santa Clarita Assessed Value- Taxable Property Last Ten Fiscal Years 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 ASSESSED VALUE - TAXABLE PROPERTY 01-02 02-03 03-04 04-05 OP. 11 116y--07 07-08 08-09 09-10 10-11 Source: HdL Coren & Cone, Los Angeles County Assessor 2010/11 Combined Tax Rolls. 150 ®Series1 ASeries2 OSeries3 OSeries4 OSeries5 FISCAL YEAR CATEGORY 10-11 09-10 08-09 07-08 06-07 Residential $ 15,239,936,469 $ 15,093,632,637 $ 16,491,425,500 $ 16,165,919,271 $ 13,962,275,972 Commercial 2,820,296,027 2,729,669,423 2,541,908,257 2,081,576,763 1,836,340,797 Industrial 1,463,696,151 1,451,053,867 1,420,480,569 1,293,080,539 1,148,469,489 Irrigated 3,004,749 3,630,743 3,559,558 3,489,768 29,374,674 Dry farm - 49,088,244 Recreational 121,791,852 121,511,353 119,459,165 114,868,032 90,435,287 Institutional 127,363,481 125,868,861 136,418,924 130,907,129 94,705,673 Government 205,173 206,850 201,629 197,676 194,922 Miscellaneous 841,034 843,038 810,312 795,449 Vacant land 308,820,538 636,182,476 664,562,300 664,792,342 656,660,955 SBE Nommitary 3,573,175 3,573,175 1,073,171 8,243,171 10,666,005 Possessory Int. 136,599,828 150,671,347 158,723,783 239,115,623 222,654,730 Unsecured 887,372,458 944,836,476 871,039,834 790,596,511 730,697,804 Unknown 83,525,492 TOTALS: $ 21,113,500,935 $ 21,261,680,246 $ 22,408,852,690 $ 21,493,597,137 $ 18,915,885,493 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 ASSESSED VALUE - TAXABLE PROPERTY 01-02 02-03 03-04 04-05 OP. 11 116y--07 07-08 08-09 09-10 10-11 Source: HdL Coren & Cone, Los Angeles County Assessor 2010/11 Combined Tax Rolls. 150 ®Series1 ASeries2 OSeries3 OSeries4 OSeries5 I Notes: In 1978 the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of ' property may be increased by an "inflation factor" (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. 151 FISCAL YEAR 05-06 04-05 03-04 02-03 01-02 $ 12,569,640,999 $ 11,097,987,787 $ 10,221,634,945 $ 9,373,657,630 $ 8,630,320,972 1,588,835,810 1,258,389,787 1,132,585,601 1,043,922,879 955,529,671 980,395,598 833,455,573 817,508,597 735,063,812 693,214,978 ' 28,272,540 4,351,050 3,962,743 3,933,315 5,798,245 48,512,253 45,145,241 43,542,990 29,655,961 34,074,195 94,916,719 84,727,948 94,694,674 60,212,317 46,322,531 91,312,643 80,606,769 113,908,577 102,142,853 82,619,342 190,000 1 493,814 484,173 474,673 779,859 764,577 667,091 7,591,441 2,697,123 554,551,820 440,215,418 280,744,871 212,233,528 228,265,224 13,172,185 16,768,755 49,476,597 3,238,345 3,273,698 205,526,182 201,323,600 153,302,360 109,259,714 75,116,757 659,990,996 1 641,526,760 664,760,834 703,858,024 679,574,673 103,303,882 36,994,610 29,585,002 14,846,193 30,278,643 $ 16,939,401,486 $ 14,742,257,875 $ 13,606,868,696 $ 12,400,100,185 $ 11,467,560,725 ' I Notes: In 1978 the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of ' property may be increased by an "inflation factor" (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. 151 City of Santa Clarita Assessed Value- Use Category Summary Fiscal Year 2010-11 CATEGORY PARCELS ASSESSED VALUE PERCENT EXEMPTIONS NET TAXABLE VALUE PERCENT Residential 51,487 $ 15,300,624,219 71.31% $ 60,687,750 $ 15,239,936,469 72.181% Commercial 906 2,897,981,195 13.51% 77,685,168 2,820,296,027 13.358% Industrial 688 1,466,312,197 6.83% 2,616,046 1,463,696,151 6.933% Irrigated 6 3,004,749 0.01% - 3,004,749 0.014% Recreational 34 124,589,872 0.58% 2,798,020 121,791,852 0.577% Institutional 89 312,458,712 1.46% 185,095,231 127,363,481 0.603% Government 5 206,358 0.001% 1,185 205,173 0.001% Miscellaneous 10 841,034 0.004% - 841,034 0.004% Vacant land 782 308,827,730 1.44% 7,192 308,820,538 1.463% SBE Nonunitary (12) 3,573,175 0.02% - 3,573,175 0.017% Possessory Int. (2,134) 138,082,171 0.64% 1,482,343 136,599,828 0.647% Unsecured (6,593) 900,703,835 4.20% 13,331,377 887,372,458 4.203% Unknown TOTALS: 54,007 $ 21,457,205,247 100.00% $ 343,704,312 $ 21,113,500,935 100.000% ASSESSED VALUE by USE CATEGORY Fiscal Year 2010-11 O Industrial 6.83% O Commercia ® All Others 13.51 % 8.35% Residential 71.31% NET TAXABLE VALUE by USE CATEGORY Fiscal Year 2010-11 O Industrial I 6.93 % Comm ®A►1 Oth 13.36% Source: HdL Coren & Cone, Los Angeles County Assessor 2010/11 Combined Tax Rolls. 152 ers 7.53% Residential 72.18% 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 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 2007-08 1.000000 0.000000 0.040000 0.074050 0.000000 0.000000 1.114050 2008-09 1.000000 0.000000 0.040000 0.077110 0.000000 0.000000 1.117110 ' 2009-10 1.000000 0.000000 0.060750 0.089815 0.000000 0.000000 1.150565 2010-11 1.000000 0.000000 0.070600 0.086830 0.000000 0.000000 1.157430 DIRECT and OVERLAPPING PROPERTY TAX RATES 1.200000 Fiscal Year 2010-11 1.000000 GENERAL 1 0.800000 0.600000 0.400000 0.200000 0.000000 LA COUNTY Source: HdL Coren & Cone, Los Angeles County Assessor 2010-11 Tax Rate Table 153 FLOOD CONTROL 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 Rates City Share of 1% Roll Year per Prop. 13 Debt Rates Total City Rates 2010-11 0.099110 0.000000 0.099110 Agency 2010-11 City of Santa Clarita Tax District 1 (249.01) 0.05730 Castaic Lake Water Agency (302.01) 0.05780 Children's Institutional Tuition Fund (400.21) 0.00283 Consolidated Fire Protection District of LA Co. (007.30) 0.16340 County School Service Fund Newhall (581.06) 0.00801 County School Service Hart William S. Hart (757.06) 0.00034 County School Services (400.15) 0.00143 Development Center Handicapped Minor Newhall (581.07) 0.00088 Educational Augmentation Fund Impound (400.01) 0.13380 Educational Revenue Augmentation Fund(ERAF) (400.00) 0.08260 Greater LA Co. Vector Control (061.80) 0.00032 LA County Library (003.01) 0.02360 LA County Fire - Ffw (007.31) 0.00323 LA County Flood Control Improvement District (030.10) 0.00176 LA County Flood Control Maintenance (030.70) 0.00996 LA County General (001.05) 0.14050 LA County Accum Cap Outlay (001.20) 0.00009 Newhall Scholl District (581.01) 0.08350 Santa Clarita Community College (814.04) 0.03740 Santa Clarita Street Light Maintenance #2 (249.32) 0.02250 Santa Clarita Valley Sanitation Dist. La Co. 0.02500 Valencia Areawide Landscape T1A S.C. 0.01924 William S. Hart Elementary School Fund (757.07) 0.04290 William S. Hart Union High (757.02) 0.08150 Total Prop. 13 Rate: 1.00000 Castaic Lake Water Agency (302.01) 0.07060 William S. Hart Un.Hsd Debt Services (757.51) 0.01126 Newhall Elementary School District Debt Services 1999 Ser. B (581.53) 0.02019 Newhall Elementary School District Debt Services 1999 Ser. A (581.52) 0.01357 Santa Clarita Community College Debt Services 2001 Ser. 2005 (814.54) 0.00648 Santa Clarita Community College Debt Services 2006 Ser. 2007 (814.55) 0.00675 Santa Clarita Community College Debt Services 2005 Refunding Bonds (814.53) 0.00421 Santa Clarita Community College Debt Services 2001 Ser. 2003 (814.52) 0.00292 Santa Clarita Community College Debt Services 2001 Ser. 2002 (814.51) 0.00080 William S. Hart Unified Debt Services 2001 Ser. B (757.52) 0.01545 William S. Hart Unified Debt Services 2008 Ser. A (757.53) 0.00521 Total Tax Rate 0.15743 Source: HdL Coren & Cone, Los Angeles County Assessor 2010/11 Tax Rate Table 154 RDA Incremental Rate Total Direct Rate Prop. 13 plus applicable voter approved debt 1.07060% 0.07392% Notes: General fund tax rates are representative and based upon the direct and overlapping rates for the largest General Fund tax rates area (TRA) by net taxable value. Total Direct Rate is the weighted average of all individual direct rates applied by the government preparing the statistical section information. The percentages presented in the columns above do not sum across rows. RDA rate is based on the largest RDA tax rate area (TRA) and includes only rate(s) from indebtedness adopted prior to 1989 per California State statute. RDA direct and overlapping rates are applied only to the incremental property values. In 1978, California voters passed Proposition 13 which set the property tax at a 1.00% fixed amount. This 1.00% is shared by all the taxing agencies for which the subject property resides within. In addition to 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. City of Santa Clarita Principal Property Taxpayers Current Fiscal Year and Two Fiscal Years Ago 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 2010/11 Combined Tax Rolls 155 FISCAL YEAR 2010-11 FISCAL YEAR 2009-10 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 19 $ 311,406,350 1.47 % 34 $ 305,092,765 1.45 % VTC Business Center 10 152,985,350 0.72 10 152,997,448 0.72 EQR Valencia LLC 218 94,754,176 0.45 218 94,981,666 0.45 Casden Santa Clarita. LLC 25 80,989,935 0.38 25 81,182,347 0.38 Walmart Real Estate Business Trust 9 75,681,373 0.36 9 76,315,398 0.36 Rreef America Reit II Corporation 2 75,552,864 0.36 2 75,547,858 0.36 Prado Town Center West LLC 263 72,078,250 0.34 264 72,547,938 0.34 Time Warner NY Cable LLC 12 72,006,584 0.34 DSEA River Oaks LLC 7 54,889,561 0.26 ERP Operating LP 3 54,459,300 0.26 C -Native Exchange I LLC Time Warner 0.00 12 79,450,107 0.38 Gateway Village 0.00 1 62,100,000 0.29 PK I Granary Square LP 0.00 3 60,740,698 0.29 Total 568 1,044,803,743 4.95 % 1,060,956,225 5.03 % All Others 2008,697,192 95.05 21,348,722,978 95.27 Total Assessed Valuation $ 21,113,500,935 100.00 % $ 22,409,679,203 100.29 % 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 2010/11 Combined Tax Rolls 155 156 City of Santa Clarita Property Tax Levies, Tax Collections, and Delinquency Last Ten Fiscal Years FISCAL TAXES DELINQUENT PERCENT YEAR LEVIED COLLECTIONS AMOUNT DELINQUENCY 2001-02 7,741,409 7,542,204 199,205 2.57% 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 2.38% 2005-06 11,593,852 11,292,337 301,515 2.60% 2006-07 12,804,630 12,317,614 487,016 3.80% 2007-08 14,483,825 13,754,184 729,641 5.04% 2008-09 11,925,285 11,361,604 563,681 4.73% 2009-10 14,202,626 13,711,940 490,686 3,45% 2010-11 11,254,346 10,982,028 272,318 2.42% 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 NOTES: 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Article XIII -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 157 City of Santa Clarita Ratio of Outstanding Debt by Type Last Ten Fiscal Years GOVERNMENTAL ACTIVITIES FISCAL CERTIFICATES TAX ALLOCATION CAPITAL YEAR OF PARTICIPATION (1) (31 LOANS NOTES BONDS (2) BONDS (4) (5) LEASES TOTAL 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 2,507,371 - - 183,909 28,545,193 2003-04 18,335,000 2,040,000 6,333,828 - - - 103,275 26,812,103 2004-05 17,640,000 1,390,000 5,698,192 - - - - 23,798 24,751,990 2005-06 17,700,000 710,000 5,029,113 - - - 12,211 23,451,324 2006-07 16,760,000 - 4,328,207 - 13,785,000 - - 36,401 34,909,608 2007-08 15,790,000 15,525,000 3,593,734 - 13,575,000 29,860,000 8,850,000 23,676 87,217,410 2008-09 14,790,000 15,525,000 2,823,907 - 13,330,000 29,860,000 8,850,000 11,370 85,190,277 2009-10 13,760,000 15,525,000 2,017,793 - 13,075,000 29,460,000 8,730,000 1,624 82,569,417 2010-11 12,700,000 15,525,000 1,413,786 - 12,805,000 29,040,000 8,605,000 - 80,088,786 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 be defeased and the liability for those certificates were removed from the general long-term debt. -On July 1, 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 removed 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. (3) On December 1, 2007, the Santa Clarita Public Financing Authority issued $15,525,000 in Certificates of Participation for the acquisition of open space and parkland. (4) On June 1, 2008, the Santa Clarita Redevelopment Agency issued $29,860,000 in Non Housing Tax Allocation Bonds to fund certain redevelopment projects within the Newhall Redevelopment Project area. (5) On June 1, 2008, the Santa Clarita Redevelopment Agency issued $8,850,000 in Low/Mod Housing Tax Allocation Bonds to fund certain redevelopment Housing projects within the Newhall Redevelopment Project area. Sources: City of Santa Clarita, Administrative Services Department - Finance Division 158 1 159 1 PERCENTAGE BUSINESS -TYPE ACTIVITIES of OUTSTANDING MASTER TOTAL TAXABLE DEBT DEBT TO LEASE LEASE PRIMARY ASSESSED PER PERSONAL OBLIGATIONS PAYABLE TOTAL GOVERNMENT VALUE CAPITA INCOME - 3,897,133 3,897,133 32,440,035 0.28% 204.94 4% 3,088,996 3,088,996 31,634,189 0.26% 194.22 4% - 2,236,624 2,236,624 29,048,727 0.21% 176.14 3% 1 - 1,919,312 1,919,312 26,671,302 0.18% 159.75 3% 1,586,319 1,586,319 25,037,643 0.15% 149.56 2% - 1,236,869 1,236,869 36,146,477 0.19% 205.76 3% - 870,149 870,149 88,087,559 0.41% 500.41 6% 485,304 485,304 85,675,581 0.40% 483.63 5% -. 248,304 248,304 82,817,721 0.39% 467.50 5% - - - 80,088,786 0.38% 454.22 5% OUTSTANDING DEBT per CAPITA Last Ten Fiscal Years 600 500 -- ._.-------- - --- _ ----- $ 00$4`- $484 $468 400 _._ --- -- _ .- -- --- - ' 300 -- 200__ $205 $194 $176 $206 $160 --$150. - --- -- - — 100 ----------- 0 1 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Fiscal Year t 1 1 159 City of Santa Clarita Ratio of General Bonded Debt Outstanding Last Ten Fiscal Years 350 300 250 200 150 100 50 0 GENERAL BONDED DEBT OUTSTANDING per CAPITA Last Ten Fiscal Years 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Fiscal Year Source: (1) State of California, Finance Department 160 43 PERCENTAGE OUTSTANDING GENERAL BONDED DEBT of TAXABLE DEBT FISCAL REVENUE CERTIFICATES of ASSESSED PER YEAR POPULATION (1) BONDS PARTICIPATION TOTAL VALUE CAPITA 2000-01 155,124 22,870,000 22,870,000 0.23% 147 2001-02 158,289 - 22,675,000 22,675,000 0.21% 143 2002-03 162,875 - 21,640,000 21,640,000 0.19% 133 2003-04 164,916 - 20,375,000 20,375,000 0.16% 124 2004-05 166,958 - 19,030,000 19,030,000 0.14% 114 2005-06 167,412 - 18,410,000 18,410,000 0.12°% 110 2006-07 175,676 13,893,228 16,760,000 30,653,228 0.18% 174 2007-08 176,030 13,575,000 31,315,000 44,890,000 0.24% 255 2008-09 177,150 13,330,000 30,315,000 43,645,000 0.20% 246 2009-10 177,641 13,075,000 29,285,000 42,360,000 0.20% 238 2010-11 176,320 12,805,000 28,225,000 41,030,000 0.19% 233 350 300 250 200 150 100 50 0 GENERAL BONDED DEBT OUTSTANDING per CAPITA Last Ten Fiscal Years 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Fiscal Year Source: (1) State of California, Finance Department 160 43 City of Santa Clarita Direct and Overlapping Bonded Debt June 30, 2011 2010-11 Assessed Valuation: $21,113,942,935 (Net of Redevelopment Agency Incremental Value of $370540,995 2010-11 Population: 176,320 Percent City's Share Total Debt Applicable of Debt 06/30/2011 To City (1) 06/30/2011 OVERLAPPING TAX AND OVERLAPPING BONDED DEBT: Los Angeles County Flood Control District $ 53,795,000 2.282 % $ 1,227,602 Santa Clarita Community College District 143,643,269 62.086 89,182,360 William S. Hart Union High School District 245,090,872 62.076 152,142,610 William S. Hart Union High School District - Community Facilities District No. 87-1 1,915,000 100.000 1,915,000 William S. Hart Union High School District - Community Facilities District No. 89-1 1 590,000 100.000 590,000 William S. Hart Union High School District - Community Facilities District No. 90-1 645,000 100.000 645,000 Los Angeles County Community College and Unified School Districts 15,132,995,000 0.00002 3,026 1 Castaic Union School District 8,501,013 26.786 2,277,081 Newhall School District 27,255,000 57.511 15,674,623 Saugus Union School District 49,006,256 73.921 36,225,914 Saugus Union School District Community Facilities District No. 2006-2, Improvement Area No. 1 7,785,000 100.000 7,785,000 Sulphur Springs Union School District 7,418,941 71.863 5,331,474 City of Santa Clarita Open Space and Parkland Assessment District 15,525,000 100.000 15,525,000 City of Santa Clarita Community Facilities District No, 2002-1 16,830,000 100.000 16,830,000 City of Santa Clarita 1915 Act Bonds 985,000 100.000 985,000 Los Angeles County Regional Park and Open Space Assessment District 197,285,000 2.269 4,476,397 Total Overlapping Tax and Assessment Debt 350,816,087 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Los Angeles County General Fund Obligations 1,496,977,755 2.269 % 33,966,425 Los Angeles County Superintendent of Schools - Certificates of Participation 12,204,890 2.269 276,929 Los Angeles County Sanitation District No. 23 Authority 3,641,568 0.164 5,972 Los Angeles County Sanitation District No. 32 Authority 32,741,598 64.320 21,059,396 Santa Clarita Community College District - Certificates of Participation 34,555,000 62.086 21,453,817 William S. Hart Union High School District - Certificates of Participation 6,000,000 62.076 3,724,560 Castaic Union School District - Certificates of Participation 4,180,000 26.786 1,119,655 Newhall School District - Certificates of Participation 3,840,000 57.511 2,208,422 Saugus Union School District - Certificates of Participation 29,015,000 73.921 21,448,178 Sulphur Springs Union School District - Certificates of Participation 24,427,492 71.863 17,554,329 Los Angeles Unified School District - Certificates of Participation 1 492,042,567 0.00002 98 Total Overlapping General Fund Debt 122,817,781 City of Santa Clarita - Certificates of Participation 25,505,000 100.000 25,505,000 Total Direct General Fund Debt 25,505,000 Total Direct and Overlapping General Fund Debt 148,322,781 Less: Los Angeles County General Fund Obligations supported by landfill revenues 404,005 COMBINED GROSS TOTAL DEBT $ 498,734,863 (2) (1) Percentage of overlapping agency's assessed valuation located within boundaries of the City (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and non -bonded capital lease obligations. Ratios to 2010-11 Assessed Valuation Per Capita Total Overlapping Tax and Assessment Debt................................................................... 1.66% $1,989.66 Ratios to Adjusted 2010-11 Assessed Valuation Combined Direct Debt ($41,030,000)............................................................................ 0.20% 232.70 CombinedGross Total Debt........................................................................................ 2.40% $2,828.58 STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/2011: $0 Source: HdL 161 City of Santa Clarita Legal Debt Margin Information Last Ten Fiscal Years FISCAL YEAR 10-11 09-10 08-09 07-08 Assessed valuation $ 21,526,384,928 $ 21,457,647,247 $ 21,600,880,848 $ 21,740,884,855 Conversion percentage 25% 25% 25% 25% Adjusted assessed valuation 5,381,596,232 5,364,411,812 5,400,220,212 5,435,221,214 Debt limit percentage 15% 15% 15% 15% Debt limit 807,239,435 804,661,772 810,033,032 815,283,182 Total net debt applicable to limit: General obligation bonds - - - - Legal debt margin $ 807,239,435 $ 804,661,772 $ 810,033,032 $ 815,283,182 Total debt applicable to the limit as a percentage of debt limit 0% 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 162 t FISCAL YEAR 06-07 05-06 04-05 03-04 02-03 01-02 1 $ 19,177,131,442 $ 17,160,386,817 $ 14,937,115,985 $ 13,795,632,501 $ 12,583,305,723 $ 11,656,956,307 25% 25% 25% 25% 25% 25% ' 4,794,282,861 4,290,096,704 3,734,278,996 3,448,908,125 3,145,826,431 2,914,239,077 15% 15% 15% 15% 15% 15% 719,142,429 643,514,506 560,141,849 517,336,219 471,873,965 437,135,862 $ 719,142,429 $ 643,514,506 $ 560,141,849 $ 517,336,219 $ 471,873,965 $ 437,135,862 0% 0% 0% 0% 0% 0% LEGAL DEBT MARGIN Last Ten Fiscal Years 900 800 700 600 500 O_ 400: 300 200 100 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 FISCAL YEAR 163 City of Santa Clarita Pledged -Revenue Coverage Last Ten Fiscal Years TRANSIT NOTE: (l) Includes Other revenues, Transfers -in, and Capital contributions (2) Includes Transfers -out and Other expenses 164 LESS NET Fiscal TRANSIT OPERATING AVAILABLE DEBT SERVICE Year REVENUES (1) EXPENSES (2) REVENUES Principal Interest COVERAGE 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% 2007-08 24,888,921 22,204,777 2,684,144 366,720 60,298 1.72% 2008-09 26,612,418 23,014,324 3,598,094 384,846 42,172 1.60% 2009-10 21,179,438 23,525,855 (2,346,417) 236,999 23,149 1.23% 2010-11 32,507,582 24,270,533 8,237,048 248,304 11,844 0.80% NOTE: (l) Includes Other revenues, Transfers -in, and Capital contributions (2) Includes Transfers -out and Other expenses 164 City of Santa Clarita Demographic and Economic Statistics Last Ten Calendar Years 6.00% ' 5.00% 4.00% 3.00% 2.00% YEAR Sources: (1) State of California, Finance Department, as of 4/1/2010 (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) 165 AVERAGE AVERAGE PER CITY OF ANNUAL LOS ANGELES ANNUAL CAPITA TOTAL SANTA CLARITA PERCENTAGE COUNTY PERCENTAGE PERSONAL PERSONAL UNEMPLOYMENT YEAR POPULATION (1) INCREASE POPULATION (1) INCREASE INCOME (2) INCOME (2) RATE (3) 2002 157,536 2.64% 9,679,212 0.93% 30,828 311,367,020 6.80% 2003 161,744 2.67% 9,756,914 0.80% 31,452 322,272,131 7.00% 2004 163,396 1.02% 9,806,944 0.51% 33,179 338,209,805 6.50% 2005 165,431 1.25% 9,816,153 0.09% 35,188 357,193,633 5.30% 2006 165,243 -0.11% 9,798,609 -0.18% 36,917 385,732,651 4.20% 2007 173,979 5.29% 9,780,808 -0.18% 39,066 402,107,608 2.70% 2008 174,355 0.22% 9,785,474 0.05% 44,727 567,707,000 4.70% 2009 175,103 0.43% 9,801,096 0.16% 43,119 550,832,000 7.70% 2010 176,056 0.54% 9,822,121 0.21% 43,999 565,365,000 7.70% 2011 176,320 0.15% 9,818,605 -0.04% N/A N/A 7.60% 6.00% ' 5.00% 4.00% 3.00% 2.00% YEAR Sources: (1) State of California, Finance Department, as of 4/1/2010 (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) 165 City of Santa Clarita Principal Employers (1) Current Fiscal Year and Three Fiscal Years Ago All Others 14,644 60.13% 17,371 62.83% (1) Largest firms 24,353 100.000/0 27,647 98.19% * As of April 2011 NOTE: (1) Non-governmental employers Source: 2011 Santa Clarita Valley - Real Estate and Economic Outlook 166 2011* 2008 PERCENT PERCENT NUMBER of NUMBER of of TOTAL of TOTAL EMPLOYER EMPLOYEES EMPLOYMENT EMPLOYEES EMPLOYMENT Six Flag Magic Mountain 2,230 9.16% 3,689 13.34% Princess Cruises 1,625 6.67% 2,100 7.60% Henry Mayo Newhall Memorial Hospital 1,356 5.57% 1,212 4.38% Quest Diagnostics (formerly Speciality Laboratories) 850 3.49% 725 2.62% The Master's College 841 3.45% 755 2.73% Woodward HRT (formerly HR Textron) 740 3.04% 845 3.06% Walmart 592 2.43% n/a n/a California Institute of Arts 525 2.16% 500 n/a Pharmavite 480 1.97% n/a n/a Aerospace Dynamics 470 1.93% 450 1.63% Total 9,709 39.87% 10,276 35.36% All Others 14,644 60.13% 17,371 62.83% (1) Largest firms 24,353 100.000/0 27,647 98.19% * As of April 2011 NOTE: (1) Non-governmental employers Source: 2011 Santa Clarita Valley - Real Estate and Economic Outlook 166 City of Santa Clarita Full -Time and Part -Time City Employees by Function Last Ten Fiscal Years FISCAL YEAR Function 10-11 09-10 08-09 07-08 06-07 05-06 04-05 03-04 02-03 01-02 General government 85.75 89.75 95.75 91.75 86.00 96.00 79.00 78.00 78.00 75.00 Public safety (1) - - - - _ - - - - - ' Public works 127.00 128.00 135.50 136.50 133.50 115.00 146.00 138.00 150.00 150.50 Community development 33.00 33.00 36.00 35.00 33.00 36.00 20.00 20.00 20.00 19.00 Parks and Recreation 106.50 110.50 111.50 110.50 108.00 106.00 101.00 99.00 84.00 80.00 Transit 12.00 12.00 14.00 11.00 11.00 8.00 8.00 8.00 7.00 7.00 Totals 364.25 373.25 392.75 384.75 371.50 361.00 354.00 343.00 339.00 331.50 CITY OF SANTA CLARITA - EMPLOYEES Last Ten Fiscal Years 400.00 392.75 390.00 384.75 380.00 371.50 373.25 370.00 361.00 364.25 360.00 354.00 350.00 343.00 340.00 331.50 330.00 1 320.00 310.00 300.00 .,a _�..k >�_ �_ ;, « re� �. �,r.. n,, r, + 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Fiscal Year (I.)' Police and Fire services have been provided by the County Source: City of Santa Clarita, Administrative Services Department - Finance Division t 167 City of Santa Clarita Operating Indicators by Function Last Ten Fiscal Years FISCAL YEAR Function 10-11 09-10 08-09 07-08 06-07 05-06 04-05 03-04 02-03 01-02 Police: Parking citation issued (1) 6,577 5,114 4,126 5,257 4,587 6,042 5,960 5,040 3,893 3,674 Parking revenue collected $ 323,408 $ 238,478 $ 235,634 $ 288,076 $ 334,927 $ 27,257 $ 10,427 $ 10,324 $ 7,011 $ 6,239 ' Public works: Street resurfacing (miles) 24.0 33.8 14.0 15.4 15.4 16.5 12.5 7.5 6.5 6.5 Parks and Recreation: Number of recreation classes 2,080 2,447 2,284 2,393 2,535 2,357 2,443 2,469 2,267 1,929 Number of facility rentals (times) 10,754 10,239 9,801 9,767 19,645 19,435 17,739 15,005 12,765 11,505 Transit: Number of customers served (2) 3,724,490 3,922,052 4,210,842 3,821,299 3,733,299 3,718,640 3,527,000 3,429,913 3,006,739 2,991,605 ' 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 168 City of Santa Clarita Capital Assets Statistics by Function Last Ten Fiscal Years FISCAL YEAR ' Function 10-11 09-10 08-09 07-08 06-07 05-06 04-05 03-04 02-03 01-02 Public works: Streets (miles) 496 496 496 496 496 496 462 462 452 452 Street lights (1) 14,963 14,939 14,739 14,429 14,000 13,200 13,000 12,000 12,000 11,647 . Traffic signals (City Jurisdiction) 1.70 166 172 176 166 167 165 158 151 141 Traffic signals (Joint-Jurisdiction) 1 6 5 4 4 5 5 4 2 2 Parks and recreation: Number of parks 23 20 20 20 19 18 17 16 16 15 Community centers 1 1 1 1 1 1 - - - - Transit: Stations 4 4 4 4 4 4 4 4 4 4 NOTE: (1) All of the above referred street lights are/were owned and maintained by Edison Company. The Highway Safety Lights (HSL) are the streetlights attached to traffic signals (762) and those are 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 169 City of Santa Clarita Ranking on Effective Buying Income (EBI) Based on Household EBI, Per Capital EBI, and Total Market Value Note: Santa Clarita Standard & Poor's credit rating = AA+, all other municipalities rated AAA. Source: Standard & Poor's 2009 AAA Municipalities 170 .Rank: Gty . Househvl ' EBI ank C�ii'y ". Per C -apita . EBJ4 .� . Rank City,_ Market- 'value 1 Saratoga 285 1 Malibu 296 1 San Jose 124,288,184 2 Manhattan Beach 225 2 Saratoga 291 2 Sunnyvale 24,725,257 3 Malibu 219 3 Manhattan Beach 290 3 Carlsbad 24,400,000 4 Lafayette 216 4 Mill Vy 287 4ft"aJ CI to 2176$ 41`6 5 San Ramon 209 5 Del Mar 285 5 Santa Monica 21,122,724 6 Yorba Linda 202 6 Beverly Hills 277 6 Palo Alto 18,922,488 7 Mill Valley 200 7 Laguna Beach 261 7 Pasadena 18,812,937 8 Del Mar 192 8 Lafayette 250 8 Beverly Hills 18,198,107 9 Palo Alto 190 9 Palo Alto 245 9 San Ramon 14,992,249 10 Mission Viejo 179 10 Santa Monica 212 10 Mountain View 14,216,170 11 Laguna Beach 173 11 San Ramon 201 11 Mission Viejo 13,246,125 12 Beverly Hills 170 12 West Hollywood 191 12 Yorba Linda 10,904,681 13 Carlsbad 164 13 Carlsbad 179 13 Manhattan Beach 10,861,361 14 Sunnyvale 164 14 Mountain View 173 14 Camarillo 9,964,062 15 Fountain Valley 163 15 Yorba Linda 168 15 Laguna Beach 9,752,455 16 Cerritos 162 16 17 18 Sunnyvale Mission Viejo Campbell 161 153 150 16 17 18 Malibu Saratoga West Hollywood 9,295,365 8,755,510 7,245,875 a1Q% �Santi larafa 1'159 18 San Jose 152 19 Mountain View 151 19 Camarillo 142 19 Cerritos 6,824,297 20 Camarillo 149 20 Pasadena 132 20 Fountain Valley 6,594,781 21 Campbell 147 21 Campbell 5,983,519 Santa 41ari"ta 18 22 Santa Monica 123 22 Lafayette 5,373,902 22 Fountain Valley 122 23 Pasadena 112 23 San Jose 117 23 Mill Vy 3,579,870 24 West Hollywood 101. 24 Cerritos 114 24 Del Mar 2,332,913 Note: Santa Clarita Standard & Poor's credit rating = AA+, all other municipalities rated AAA. Source: Standard & Poor's 2009 AAA Municipalities 170 City of Santa Clarita Ranking on Per Capita Market Value General Fund Balance %, & Unreserved Fund Balance% PerCa xta . Market Gen•Fan�l " " Unreserved Rank City Value Rank City Bal % Rank Ci ryFurid=Bal 1 Malibu 681,878 1 Cerritos 235.40 1 Lafayette 176.00 2 Beverly Hills 508,284 2 Lafayette 176.00 2 Yorba Linda 132.20 ' 3 Del Mar 464,664 3 Yorba Linda 168.10 3 West Hollywood 131.30 4 Laguna Beach 383,764 4 West Hollywood 151.80 4 Fountain Valley 118.70 5 Palo Alto 298,617 5 Camarillo 150.90 5 Cerritos 107.10 6 Manhattan Beach 286,451 6 Mountain View 123.20 6 Malibu 105.00 7 Saratoga 271,001 7 Fountain Valley 120.00 7 Camarillo 101.40 8 Mill Vy 265,746 8 Carlsbad 119.10 8 San Ramon 101.20 9 San Ramon 244,821 9 Malibu 106.20 9 Mountain View 95.40 10 Carlsbad 235,043 10 San Ramon 103.00 10 Campbell 81.40 11 Santa Monica 233,171 11 Sunnyvale 100.70 11 Sunnyvale 75.10 12 Lafayette 215,154 Sarna Cla t 94.5 12 Carlsbad 63.50 13 West Hollywood 194,714 13 Campbell 85.00 13 Saratoga 60.10 14 Mountain View 192,287 14 Beverly Hills 64.10 14 Beverly Hills 51.30 15 Sunnyvale 179,770 15 Santa Monica 62.00 15 Mission Viejo 48.40 ' 16 Yorba Linda 161,097 16 Saratoga 60.60a Ea aroma 4456 17 Campbell 154,617 17 Mission Viejo 58.60 17 Laguna Beach 40.90 18 Camarillo 154,573 18 Laguna Beach 54.20 18 Mill Vy 33.30 19 Mission Viejo 138,003 19 San Jose 39.60 19 Pasadena 32.90 20 Cerritos 130,995 20 Pasadena 36.90 20- San Jose 32.70 21 Pasadena 126,657 21 Palo Alto 36.70 21 Manhattan Beach 30.60 22 San Jose 126,142 22 Mill Vy 35.90 22 Santa Monica 28.20 Sa is larta 15, 59 23 Manhattan Beach 34.00 23 Palo Alto 27.10 24 Fountain Valley 116,150 24 Del Mar 25.10 24 Del Mar 24.10 Note: Santa Clarita Standard & Poor's credit rating = AA+, all other municipalities rated AAA. ' Source: Standard & Poor's 2009 AAA Municipalities 171 City of Santa Clarita Ranking on Total Direct Debt, Overall Debt & Overall Debt Per Capita 1 Del Mar 4,493 1 Laguna Beach 0.10 1 Laguna Beach 258 2 Laguna Beach 6,130 2 Mill Vy 0.50 2 Mill Vy 1,185 3 Saratoga 13,890 3 Del Mar 0.60 3 Mission Viejo 1,859 4 Mill Vy 15,957 4 Manhattan Beach 0.70 4 Manhattan Beach 1,960 5 Malibu 18,271 5 Mission Viejo 1.40 5 Camarillo 2,110 6 Carlsbad 18,540 6 Camarillo 1.40 6 Fountain Valley 2,264 7 West Hollywood 20,725 7 Carlsbad 1.70 7 Del Mar 2,874 8 Lafayette 26,160 8 Lafayette 1.90 n CCla-�ia 3JQ64 9 Sunnyvale 44,745 9 Malibu 1.90 9 Lafayette 3,824 10 Manhattan Beach 45,120 10 Fountain Valley 2.00 10 San Jose 3,959 11 Fountain Valley 45,628 11 Palo Alto 2.00 11 Campbell 3,984 12 Campbell 46,985 12 Santa Monica 2.20 12 Carlsbad 4,092 13 Palo Alto 55,768 13 Saratoga 2.40 13 Yorba Linda 4,132 14 Mission Viejo 56,112 14 Cerritos 4,343 SankaC1 ?4 15 Mountain View 80,255 15 Sunnyvale 4,580 15 Mountain View 2.50 16 Camarillo 80,513 16 San Ramon 2.50 16 Mountain View 4,836 17 Yorba Linda 80,939 17 18 19 Campbell Yorba Linda Sunnyvale - 2.60 2.60 2.60 17 18 19 Santa Monica West Hollywood Pasadena 5,028 5,134 5,857 19 San Ramon 103,262 20 Cerritos 182,300 20 West Hollywood 2.60 20 Palo Alto 5,976 21 Santa Monica 198,233 21 Beverly Hills 2.80 21 San Ramon 6,052 22 Beverly Hills 283,830 22 San Jose 3.10 22 Saratoga 6,520 23 Pasadena 649,776 23 Cerritos 3.30 23 Malibu 12,881 24 San Jose 1,334,232 24 Pasadena 4.60 24 Beverly Hills 14,147 Note: Santa Clarita Standard & Poor's credit rating = AA+, all other municipalities rated AAA. Source: Standard & Poor's 2009 AAA Municipalities ' 172 '