CC 2013-01-08_08.c. Comprehensive Annual Financial ReportMEMORANDUM
FROM:
CITY COUNCIL
ANGELA KRAETSCH, DIRECTOR OF ADMINISTRATIVE SERVICE~ TO:
SUBJECT: CONSIDERATION OF ACCEPTANCE OF THE COMPREHENSIVE ANNUAL
FINANCIAL REPORT (CAFR)
DATE: JANUARY 8, 2013
RECOMMENDATION:
It is recommended that the City Council receive and file the Comprehensive Annual
Financial Report (CAFR) for the fiscal year ended June 30, 2012.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
There is no financial impact from this action.
No or minimal future staff time is required.
BACKGROUND:
The firm of Moss, Levy & Hartzheim, LLP was hired to audit the City of Arroyo Grande's
financial records for the fiscal year ended June 30, 2012. Audit services are retained for
two reasons: first, to have an independent review of internal control; and secondly, to
ensure that the resulting financial reports fairly represent the financial position of the City.
The auditors conducted testing of internal controls in May 2012. The procedures for
receiving and disbursing cash, the accounting methodology used to record transactions, the
separation of duties to avert collusion, and asset securities were reviewed. As a result of
this extensive testing, no internal control issues/events were found.
ANALYSIS OF ISSUES:
Generally accepted accounting principles (GAAP) provide the criteria for judging whether a
financial report is fairly presented. In defining the minimum standard of acceptable basic
financial reporting for state and local governments, GAAP mandate a complete set of basic
financial statements, including accompanying note disclosures, as well as the presentation
of certain required supplementary information in connection with the basic financial
statements. GAAP encourages government agencies to present this information within the
broader framework of a CAFR.
Item 8.c. - Page 1
CITY COUNCIL
ACCEPTANCE OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
JANUARY 8, 2013
PAGE 2
The CAFR is a more detailed financial report beyond just the basic financial statements. It
is made up of (at minimum) three basic sections:
• The introductory section, which provides general information on the government's
structure and personnel as well as information useful in assessing the
government's financial condition.
• The financial section contains the basic financial statements. This is the section
that staff has presented to the Council in the past.
• The statistical section provides a broad range of trend data covering key financial
indicators from the past 10 fiscal years.
In Octooer of 2012, an audit was conducted on the 2011-12 financial transactions.
Documentation in support of the assets, liabilities, and fund balance of all the funds in the
City were examined and verified. This process assures an impartial review and
substantiation of the City and the Five Cities Fire Authority's (FCFA) fund balances. The
result of this review is the City's CAFR. The FCFA's financial report was received and filed
at the December 7, 2012 FCFA Board meeting.
There were no new accounting pronouncements that impacted the City's financial
statements for the fiscal year ended June 30, 2012.
For financial reporting purposes, the Local Sales Tax Fund is combined with the General
Fund. The audit of the combined funds, as shown in the table on the following page, reports
revenues and transfers in of $14,940,586, expenditures of $12,986,023, and transfers out of
$2,164,577. This resulted in a decrease ·to the fund balance of $210,014. The combined
fund balance for the General Fund is $5,042,541 or 34% of expenditures (includes transfers
out). However, $642,708 of this balance is considered nonspendable, $631,395 for prepaid
items; $11,313 is reserved for inventory. In addition, $703,355 is assigned to balance the
budget in FY 2012-13. This leaves an unassigned balance of $537,038 and committed for
economic stabilization balance of $2,076,086, which is 18% of the combined expenditures.
Item 8.c. - Page 2
CITY COUNCIL
ACCEPTANCE OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
JANUARY 8, 2013
PAGE 3
General Local Sales
Activit~ Fund Tax Fund
Fund balance, 7/1/2011 $ 3,076,452 $ 2,176,103
Revenues (including transfers in) 13,071,537 1,869,049
Expenses (12,824,233) (161 ,790)
Transfers out (17,903) (2, 146.674)
Excess if revenues over/(under) expenses 229 401 (439.415)
Fund Balance:
Nonspendable for prepaid items 631,395
Nonspendable for inventory 11,313
Committed for capital projects 1,083,354
Committed for economic stabilization 2,076,086
Assigned for budget shortfall 703,355
Unassigned fund balance (116.296) 653 334
Fund balance, 6/30/2012 $ 3,305,853 $ 1,736,688
Combined
Balance
$ 5,252,555
14,940,586
(12,986,023)
(2.164,577)
(210.014)
631,395
11,313
1,083,354
2,076,086
703,355
537 038
$ 5,042,541
Auditors may issue three different types of opinions at the conclusion of an audit: an
unqualified, qualified, or adverse opinion. An unqualified opinion assures the reader that
the financial statements presents fairly, in all material respects, the financial position of the
City. A qualified opinion suggests that the information provided was limited in scope and/or
the organization has not maintained GAAP. An adverse opinion indicates that the
organization's financial statements are misrepresented, misstated, and do not accurately
reflect its financial performance and health. The Administrative Services Department staff is
proud to report that for the fiscal year ended June 30, 2012, the City of Arroyo Grande
received an unqualified opinion.
ALTERNATIVES:
The following alternatives are provided for City Council consideration:
Approve staff recommendations and receive and file the Comprehensive Annual
Financial Report;
Do not approve staff recommendations;
Modify staff recommendations and approve;
Provide direction to staff.
ADVANTAGES:
By receiving and filing the Comprehensive Annual Financial Report, the City will be
accepting the auditors unqualified opinion. As mentioned before, an unqualified opinion
assures the reader that the information presented fairly represents the financial position of
the City.
Item 8.c. - Page 3
CITY COUNCIL
ACCEPTANCE OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
JANUARY 8, 2013
PAGE4
DISADVANTAGES:
There are no disadvantages in relation to the recommended action.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted in front of City Hall on Thursday, January 3, 2013. The Agenda
and report were posted on the City's website on Friday, January 4, 2013. No public
comments were received.
Attachment:
City of Arroyo Grande Comprehensive Annual Financial Report (on file in the
Administrative Services and Legislative and Information Services Departments for
public review, as well as on the City's website at www.arroyogrande.org)
Item 8.c. - Page 4
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The Cover
The 75 th Anniversary Diamond Jubilee ‐ 2012 Arroyo Grande Valley Harvest Festival parade.
Arroyo Grande takes pride in the old ‐fashioned family fun that abounds at local festivals and the Harvest
Festival is prime example of this time ‐honored tradition. Held the last full weekend in September, the
Harvest Festival serves as a tribute to agriculture, the area’s leading in dustr y. Among the many
attractions is a parade, toe ‐tapping entertainment, agricultural exhibits, contests, and an array of food,
game, and arts and crafts booths. This festival focuses on the local non ‐profit organizations that serve
the community.
Since 1937, the people of Arroyo Grande have parti cipated in thi s well ‐loved celebration. The Harvest
Festival is a chance to look back at our history and past traditions.
Picture taken by Vivian Krug – Emotions Greeting Cards and Photography
Item 8.c. - Page 6
CITY OF ARROYO
GRANDE
CALIFORNIA
Comprehensive Annual
Financial Report
For the Fiscal Year Ended June 30, 2012
Prepared by the Department of Administrative Services
Item 8.c. - Page 7
CITY OF ARROYO GRANDE
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Table of Contents
For the Fiscal Year Ended June 30, 2012
i
INTRODUCTORY SECTION
Letter of Transmittal ................................................................................................................................................................ A ‐1
Directory of Officials ................................................................................................................................................................ A ‐6
Organizational Chart ................................................................................................................................................................ A ‐7
FINANCIAL SECTION
Independent Auditors’ Report .................................................................................................................................................. B ‐1
Management’s Discussion and Analysis (unaudited) ............................................................................................................... B ‐3
Basic Financial Statements
Government ‐wide Financial Statements:
Statement of Net Assets ............................................................................................................................................... B ‐13
Statement of Activities .................................................................................................................................................. B ‐14
Fund Financial Statements:
Description of Major Governmental and Proprietary Funds ........................................................................................ B ‐16
Balance Sheet – Governmental Funds .......................................................................................................................... B ‐18
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets .................................... B ‐21
Statement of Reven ues, Expenditures, and Changes in Fund Balances – Governmental Funds .................................. B ‐22
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities ..................................................................... B ‐24
Statement of Net Assets – Proprietary Funds ............................................................................................................... B ‐25
Statement of Reven ues, Expenses, and Changes in Net Assets – Proprietary Funds ................................................... B ‐26
Statement of Cash Flows – Proprietary Funds .............................................................................................................. B ‐27
Statement of Fiduciary Net Assets ................................................................................................................................ B ‐29
Statement of Changes in Fiduciary Net Assets ............................................................................................................. B ‐30
Notes to Basic Financial St atements ................................................................................................................................ B ‐31
REQUIRED SUPPLEMENTARY INF ORMATION SECTION (unaudited)
Budgetary Information – Major Governmental Funds:
General Fund ..................................................................................................................................................................... C ‐1
Transportation Impact Fees Fund ...................................................................................................................................... C ‐3
In ‐Lieu Affordable Housing Fund ....................................................................................................................................... C ‐4
Water Availability Fund ..................................................................................................................................................... C ‐5
Community Development Block Grant (CD BG) Fund ........................................................................................................ C ‐6
Redevelopment Set Aside Fund ......................................................................................................................................... C ‐7
Other Postemployment Benefits – Schedule of Funding Progress ........................................................................................... C ‐8
SUPPLEMENTAL INFORMATION SECTION
Description of Nonmajor Governmental and Fiduciary Funds ................................................................................................ D ‐1
Nonmajor Governmental Funds:
Combining Balance Sheet ................................................................................................................................................. D ‐4
Combining Sta tement of Reve nues, Exp enditures, and Changes in Fund Balances ....................................................... D ‐10
Agency Funds:
Statement of Changes in Assets and Liabilities .............................................................................................................. D ‐16
Item 8.c. - Page 8
CITY OF ARROYO GRANDE
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Table of Contents
For the Fiscal Year Ended June 30, 2012
ii
STATISTICAL SECTION (unaudited)
Net Assets by Component – Last Ten Fiscal Years .................................................................................................................... E ‐2
Change in Net Assets – Last Ten Fiscal Years ............................................................................................................................ E ‐4
Fund Balances of Governmental Funds – Last Ten Fiscal Years ................................................................................................ E ‐8
Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years ........................................................................... E ‐10
General Governmental Tax R evenues by Source – Last Ten Fiscal Years ............................................................................... E ‐12
Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ............................................................... E ‐13
Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years.............................................................. E ‐14
Principal Property Taxpayers – Curre nt Fis c al Year and Nine Fiscal Years Ago ...................................................................... E ‐16
Secured Property Tax Roll Levies and Collections – Last Ten Fiscal Years .............................................................................. E ‐18
Taxable Sales by Category – Last Ten Calendar Years ............................................................................................................ E ‐20
Ratios of Outstanding Debt by Type – Last Te n Fiscal Years ................................................................................................... E ‐22
Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years ..................................................................................... E ‐24
Direct and Overlapping Debt .................................................................................................................................................. E ‐25
Legal Debt Margin Information – Last Ten Fiscal Years .......................................................................................................... E ‐26
Demographic Statistics – Last Ten Calendar Y ears ................................................................................................................. E ‐28
Principal Em ployers – Current Year and Nine Years Ago ........................................................................................................ E ‐29
Full ‐Time Equivalent City Government Employees by Function ............................................................................................. E ‐30
Operating Indicators by Function – Last Ten Fiscal Years ....................................................................................................... E ‐32
Capital Asset Statistics by Function – Last Ten Fiscal Years .................................................................................................... E ‐34
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The independent audit of the financial statemen ts of the City of Arroyo Grande are part
of a broader, federally mandated “Single Audi t” designed to meet the special needs of
federal grantor agencies. The standards go verning Single Audit engagements require
that agencies expending more than $500,000 in federal monies, are required to have the
independent auditor report not only on the fair presentation of the financial statements,
but also on the audited government’s inte rnal controls and compliance with legal
requirements, with special emphasis on in ternal controls and legal requirements
involving the administration of federal award s. The City did not expend the minimum
amount of federal awards and was thus no t subject to a Single Audit Report.
Management has provided a narrative introduction, overview, and analysis to
accompany the basic financial statements in the form of Management’s Discussion and
Analysis (MD&A). This letter of transmitta l is designed to complement the MD&A and
should be read in conjunction with it. The City’s MD&A can be found immediately
following the report of the independent auditors.
Profile of the Government
The City of Arroyo Grande is located five miles inland from the central California
coastline. Incorporated in 1911, the City contai ns acres of agriculturally productive land
in a valley created by the Arroyo Grande Cr eek. The City currently occupies a land area
of 5.45 square miles and serves a population of 17,291.
The City is empowered to levy a property ta x on both real and personal properties
located within its boundaries. It’s also empowered by State st atute to extend its corporate
limits by annexation, which occurs period ically when deemed appropriate by the
governing council.
The City has operated under the council-mana ger form of government since 1911. Policy-
making and legislative authority are vested in a governing council consisting of the
mayor and four other members. The govern ing council is responsible, among other
things, for passing ordinances, adopting th e budget, appointing committees, and hiring
both the City’s manager and attorney. The Ci ty’s manager is responsible for carrying out
the policies and ordinances of the City Counc il, for overseeing the day-to-day operations
of the City, and for appointing the heads of the various departments. The Council is
elected on a non-partisan basis. Council members serve four-year staggered terms and
the mayor is elected to serve a two-year te rm. The mayor and the council members are
elected at large.
The City provides a full range of services, in cluding police protection; the construction
and maintenance of highways, streets, and othe r infrastructure; and recreational activities
and cultural events. Certain sanitation services are provided through the Water and
Sewer Funds, which function as maintenanc e services department of the City.
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The annual budget serves as the foundation fo r the City’s financial planning and control.
All departments/divisions are required to submit requests for appropriations to the City
Manager. These requests are used as the starting point for developing a proposed
budget. The City Manager then presents this proposed budget to the City Council for
review prior to June 1 st . The City Council is required to hold public hearings on the
proposed budget and to adopt a final budget by no later than June 30 th , the close of the
City’s fiscal year. The appropriated budget is prepared by fund, function (e.g. public
works), and department (e.g. automotive shop). Department heads may make transfers
of appropriations within a department. Transfers of appropriations between
departments or changes in appropriations that affect the fund balance, require the
approval of the City Council.
Factors Affecting Financial Condition
The information presented in the financial stat ements is perhaps best understood when it
is considered from the broader perspective of the specific environment within which the
City of Arroyo Grande operates.
Local Economy
The City of Arroyo Grande is slowly recovering from a downward economic
environment and indicators point to a leve ling off period. Although the region’s
unemployment rate of 9.5% (which is slightly higher than the national average of 8.2%)
continues to be high, home prices, which had doubled in previous years, have leveled off
and sales tax revenues are beginning to increase.
Long-Term Financial Planning
Several CIP projects are expected to impr ove the City’s infrastructure, increase the
number of City parks, improv e drainage problems and improve the overall look of the
community. The following list of projec ts approved in the FY 2011-12 & FY 2012-13
Biennial Budget will impact the community.
Parks – The installation of sports lighting at Don Roberts, Ikeda, and Volunteer fields and
various ADA upgrades.
Miscellaneous Projects – There is approxim ately $1.5 million budgeted towards the City’s
Police Department expansion.
Street Projects – The environmental report for the Brisco Road-Halcyon Road/Route 101
Interchange project. In addition, several pa vement rehabilitation projects are scheduled
to improve the City’s streets.
Drainage Projects – The completion of the Newsom Springs Drainage project and various
creek preservation projects.
Water & Sewer Projects – The installation of a new production water well, various
waterline upgrades, lift station No. 3 replacem ent, Water and Sewer Master Plan update
and the upgrade of the Pike sewer lines.
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Cash Management Policies and Practices
Cash temporarily idle during the fiscal year was invested in the Local Agency Investment
Fund (LAIF), a State investment pool. This pool offers the City liquidity, safety, and a
higher rate of interest than could be foun d with local banks. The average yield on
investments was .382% during the past fi scal year. Investment income includes
appreciation in the fair value of LAIF at fisca l year-end. Increases in fair value during the
current fiscal year, however, do not necessarily represent trends that will continue; nor is
it always possible to realize such amounts.
Risk Management
The City joined the California Joint Powers In surance Authority (CJP IA) in July of 2003,
for the purpose of pooling liability risks. The CJPIA was formed under the Joint Powers
Agreement (JPA) provisions of the State law. The Fund is directed by a board of directors
comprised of a representative appointed by th e city council of each member agency. The
Insurance Fund derives its revenues from co ntributions established for each city at the
beginning of each policy year. The contributi ons are established by the board of directors
based on the recommendations of the JPA’s program administrators and actuaries using
recognized insurance experience rating techniques.
In addition, various control techniques, incl uding employee accident prevention training,
have been implemented during the year to mi nimize accident-related losses. The third-
party coverage is currently maintained for in dividual workers’ comp ensation claims in
excess of $350,000, while the City participates in a shared risk pool for liability claims
above $30,000. During FY 2003-04, the City bega n the process of joining the California
Joint Powers Insurance Authority for wo rkers’ compensation coverage.
Pension and Other Postemployment Benefits
The City participates in the defined benefit pension plan administered by the California
Public Retirement Agency (CalPERS) for all full-time employees. Each fiscal year, the
Agency calculates the amount of the annual contribution the City must make to the
pension plan to ensure the plan will be ab le to fully meet its obligation to retired
employees on a timely basis.
The City also provides postretirement health benefits for certain retirees and their
dependents. As of the end of the current fiscal year, there were forty-nine (49) retired
employees receiving these benefits, which are financed on a pay-as-you-go-basis.
Additional information on th e City’s pension arrangements an d postemployment benefits
can be found in NOTE 7 – LONG-T ERM DEBT, NOTE 10 – CITY EMPLOYEES’
RETIREMENT PLAN and NOTE 11 – POSTEMPLO YMENT BENEFITS in the notes to the
basic financial statements.
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CITY OF ARROYO GRANDE
DIRECTORY OF OFFICIALS
June 30, 2012
ELECTED OFFICIALS
Mayor .......................................................................................................................................................... Tony Ferrara
Mayor Pro Tem .............................................................................................................................................. Tim Brown
Council Member .......................................................................................................................................... Joe Costello
Council Member ........................................................................................................................................... Jim Guthrie
Council Member ............................................................................................................................................. Caren Ray
ADMINISTRATIVE PERSONNEL
City Manager ............................................................................................................................................... Steve Adams
City Attorney ................................................................................................................................................. Tim Carmel
Director of Administrative Services ....................................................................................................... An gela Kraetsc h
Legislative and Information Services Director/City Clerk ........................................................................Kelly Wetmore
Community Development Director ......................................................................................................... Teresa McClish
Recreation and Maintenance Services Director........................................................................................... Doug Perrin
Police Chief ............................................................................................................................................... Steve Annibali
A ‐6
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CITY OF ARROYO GRANDE
ORGANIZATIONAL CHART
June 30, 2012
COMMUNITY OF ARROYO GRANDE
CITY
TREASURER
CITY
CLERK
CITY COUNCIL
CITY MANAGER CITY
ATTORNEY
A ‐7
COMMUNITY
DEVELOPMENT
POLICE
ADMINISTRATIVE
SERVICES
RECREATIONAND
MAINTENANCE
LEGISLATIVE AND
INFORMATION
SERVICES
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CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2012
B ‐3
The management’s discussion and analysis of the City of Arroyo Grande provides an overall review of the City’s financial activities for
the fiscal year ended June 30, 2012. The intent of this discussion and analysis is to look at the City’s financial performance as a
whole. Readers should review the discussion and analysis in conjunction with the basic financial statements, as well as, the notes to
the basic financial statements to enhance their understanding of the City’s financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for the fiscal year ended June 30, 2012, are as follows:
• The assets of the City, as a whole, exceeded its liabilities by $91,643,457. This represents a 6% increase from prior
fiscal year. Of this total, $12,428,281 may be used to meet the government’s ongoing obligations to citizens and
creditors.
• The City’s general fund had assets of $6 ,011,150 and a fund balance of $5,042,541. This represents a decrease in fund
balance of $250,251, or 5%, from prior fiscal year. Of the total fund balance, $2,076,086 was set aside for economic
stabilization (reserves), $537,038 was unassigned, and the remaining $2,42 9,417 was either in a nonspendable form or
assigned for a specific purpose.
• The California Supreme Court upheld Assembly Bill 1X 26 that provides for the dissolution of all redevelopment
agencies in the State of California. As a result, the City reported extraordinary losses (in the redevelopment agency
governmental funds) of $2,413,635. There was an additional extraordinary loss of $919,797 reported in the In ‐Lieu
Affordable Housing Fund due to the loan it had with the redevelopment agency.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the
reader can understand the City as a financial whole, an entire operating entity. These statements then proceed to provide an
increasingly detailed look at specific financial activities. This annual report consists of five parts – introductor y section, financ ial
section (of which consists of this discussion and analysis), a required supplementary information section that presents budgetary
and post ‐employment benefit information, an optional supplementary section that presents combining statements for nonmajor
governmental funds and agency funds statement of fiduciary net assets, and a statistical section.
The basic fina ncial statements include two ki nds of statem ents that present different views of the City:
• The first two statements are government ‐wide financial statements that provide both long ‐term and short ‐term
information about the City’s overall financial status.
• The remaining statements are fund financia l statements that focus on ind i vidual parts of the government, reporting the
City’s operations in more detail than the government ‐wide statements .
The financial statements also include notes that explain some of the information in the financial statements and provide more
detailed data.
Government ‐wide Statements
Government ‐wide statements report information abo ut the City as a whole usin g accounting methods similar to those used by
private ‐sector companies. The statement of net assets includes all of the government’s assets and liabilities. All of the current fiscal
year’s revenues and expenses are accounted for in the statement of activities regardless of when the cash is received or paid.
Item 8.c. - Page 22
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2012
B ‐4
The two government ‐wide statements report the City’s net assets and how they have changed. Net assets is the difference between
the City’s assets and liabilities and is one of the ways to measure the City’s financial health or position.
• Over time, increases or decreases in the City’s net assets is an indicator of whether its financial health is improving or
deteriorating, respectively.
• To assess the overall health of the City, yo u need to consider additional non ‐financial factors such as changes in the
City’s tax base, facility condition, required educational programs, and other factors.
The government ‐wide financial statements of the City are divided into tw o categories:
• Governmental activities: Most of the Cit y ’s basic services are included here, such as the general government,
community development, police, recreation services, and maintenance services. Property and sales taxes, user fees,
interest income, franchise fees, and state and federal grants finance these types of activities.
• Business ‐type activities: The City charges a fee to customers to cover all or most of the cost of certain services it
provides. The City’s water and Lopez treatment systems are reported in this category.
Fund Financial Statements
The fund financial statements provide more detailed information about the City’s most significant fund s and not th e City as a whole.
The City’s major governmental funds include the General Fund, Transportation Impact Fees Fund, In ‐Lieu Affordable Housing Fund,
Water Availability Fund, Community Development Block Grant Fund, Redevelopment Set ‐Aside Fund, and the Capital Improvement
Fund. Funds are accounting devices that the City uses to keep track of specific sources of funding and spendi ng for particular
purposes.
• Some fu nds are required by State law and by bond covenants.
• Management establishes other funds to control and manage money for particular purposes or to show that it is
meeting legal r esponsibilities for using certain taxes, gra n ts, and/or other money.
The City has three kinds of funds:
• Governmental funds: Most of the City’s basic services are included in governmental funds which focus on how money
flows into and out of these funds and the balance left at fiscal year ‐end that are available for spending. These fund s
are reported using an acco untin g method called modified accrual accounting, which measures cash and all other
financial assets that can readily be converted to cash. The governmental funds statements provide a detailed short ‐
term view of the City’s general governmental operations and the basic services it provides. Governmental fund
information he lps determine whether there are more or fe w er financial resources that can be spent in the near future
to finance the City’s programs. Because this information does not encompass the additional long ‐term focus of the
government ‐wide statements, additional information is provided in the financial statements that reconciles and
explains the relationship (or differenc es) between th em.
• Proprietary funds: When the City charges customers for the services it provides, these services are generally reported
in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of
Net Assets and the Statement of Revenue s, Expenses, and Changes in Net Assets. In fact, the City’s proprietary funds
are the same as the business ‐type activities reported in the government ‐wide statements but provide more detail and
additional information, such as cash flows. The proprietary fund financial statements provide separate information fo r
the Water and Lopez fund s.
• Fidu ciary funds: The City is the trustee, or fiduciary , for the Downtown Parking Association, Sanitation District, and the
Successor Agency of the Former Redevelopment Agency. The City is responsible for ensuring that the assets reported
in these funds are used for their inte nded purposes. All of the City’s fiduciary activities are reported in a separate
statement of fiduciary net assets. We exclude these activities from the City’s government ‐wide financial statements
because the City cannot use these assets to finance its operations.
Item 8.c. - Page 23
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2012
B ‐5
FINANCIAL ANALYSIS OF THE CITY AS A WHOLE
The City’s combined net assets at June 30, 2012 and 2011 are as follows:
Fiscal Year Ended Fiscal Year Ended Increase/ Total %
June 30, 2012 June 30, 2011 (Decrease) Change
Assets:
Current and other assets $ 23,207,913 $ 27,360,889 $ (4,152,976) (15)%
Capital assets, net 74,670,392 72,831,973 1,838,419 3%
Total assets 97,878,305 100,192,862 (2,314,557) (2)%
Liabilities:
Long ‐term liabilities outstanding 4,327,596 10,668,970 (6,341,374) (59)%
Other liabilities 1,907,252 3,002,736 (1,095,484) (36)%
Total liabilities 6,234,848 13,671,706 (7,436,858) (54)%
Net Assets:
Invested in capital assets, net of related debt 71,993,317 64,070,442 7,922,875 12%
Restricted 7,221,859 8,179,991 (958,132) (12)%
Unrestricted 12,428,281 14,270,723 (1,842,442) (13)%
Total net assets $ 91,643,457 $ 86,521,156 $ 5,122,301 6%
Total net assets for the City, as a whole, increased between fiscal years ending 2012 and 2011, increasing by 6% to $91,643,457.
This increase of $5,122,301 comes from the net income of $1,245,130, plus an extraordinary gain of $2,641,541 (from the
dissolution of the redevelopment agency), and a prior period adjustment of $1,235,6 30 (see note 16), as recorded in the Statement
of Activities. There is a difference between the extraordinary item reported in the statement of activities and the extraordinary item
reported in the fund financial statements and is mainly due to the bonds payable. A complete reconciliation is presented in note 14
of the financial statements.
GOVERNMENT AL ACTIVITIES
The City’s net assets of governmental activities at June 30, 2012 and 2011 are as follows:
Fiscal Year Ended Fiscal Year Ended Increase/ Total %
June 30, 2012 June 30, 2011 (Decrease) Change
Assets
Current and other assets $ 16,832,238 $ 20,410,091 $ (3,577,853) (18)%
Capital assets, net 64,853,708 62,774,230 2,079,478 3%
Total assets 81,685,946 83,184,321 (1,498,375) (2)%
Liabilities
Long ‐term liabilities outstanding 4,203,770 10,554,940 (6,351,170) (60)%
Other liabilities 1,712,814 2,852,265 (1,139,451) (40)%
Total liabilities 5,916,584 13,407,205 (7,490,621) (56)%
Net Assets
Invested in capital assets, net of related debt 62,176,633 54,012,699 8,163,934 15%
Restricted 7,221,859 8,179,991 (958,132) (12)%
Unrestricted 6,370,870 7,584,426 (1,213,556) (16)%
Total net assets $ 75,769,362 $ 69,777,116 $ 5,992,246 9%
Item 8.c. - Page 24
The C
gove r
Reve n
Pr o
C
G
Ge n
P
O
O
T
Expe n
Ge n
Co m
Pu b
Re c
Pa r
Str e
Se w
Int e
T
Reve n
Tran s
Extra
Net a
Prior
Net a
The C
servi c
The c
in th e
was $
gove r
gove r
activi
C ity’s net ass
r nmental activ
n ues
o gram revenu e
C harges for se r
G rants and co n
n eral revenue s
P roperty taxes
O ther taxes
O ther
T otal revenues
n ses
n eral govern m
m munity deve
b lic safety
c reation
r ks and faciliti e
e ets and road s
w er
e rest on long ‐t
T otal expenses
n ues over exp e
s fers from busi
ordinary gain
a ssets at begin n
period adjust m
a ssets at end o f
C ity’s total go v
c es (12%).
c ost of all gov e
e Statement o f
$12,046,695 b
r nments and o
r nmental reve n
ties contribut e
ets from gov e
ities increase i
e s:
r vices
n tributions
s :
m ent
lopment
e s
s
t erm debt
e nses
ness ‐type acti v
n ing of fiscal y e
m ent
f fiscal year
v ernmental ne
e rnmental acti v
f Activities , th e
ecause some o
o rganizations
n ues, includin g
e d $2,070,466
MANA G
For
e rnmental ac t
s as follows:
v ities
e ar
t assets incre a
v ities this fisca
e amount that
o f the cost w a
that subsidiz e
g intergovern m
toward gover n
CITY OF A
G EMENT’S D
the Fiscal Y e
t ivities increa s
Fiscal Y e
June 3
$ 2 ,
2 ,
6 ,
5 ,
1 ,
$ 17 ,
$ 4 ,
1 ,
5 ,
1 ,
2 ,
$ 17 ,
$
2 ,
2 ,
69 ,
1 ,
$ 75 ,
a sed to $75,7 6
l year was $1 7
our taxpayer s
a s paid by tho
e d certain pro
m ental aid and
n mental activi t
A RROYO GR A
D ISCUSSION
e ar Ended J u
B ‐6
s ed by 9% fr o
e ar Ended
0, 2012
,203,415
,326,660
,633,678
,413,017
,107,142
,683,912
,475,869
,578,940
,708,603
674,080
,488,892
,600,752
793,207
318,960
,639,303
44,609
,070,466
,641,541
,777,116
,235,630
,769,362
6 9,362. A sig n
7 ,639,303, a d e
s ultimately fi n
se who direct
grams with g r
fees for servi c
t ies.
A NDE
AND ANAL Y
u ne 30, 201 2
o m $69,777,1
n ificant portio n
e crease of 5%
n anced for the
ly benefited f r
r ants and con
c es, were $17,
Commu n
develop m
9%
Y SIS
2
16 to $75,76 9
n comes from
in comparison
se activities t h
r om the progr
tributions $2,
683,912. Tra n
Property
taxes
38%
Other tax e
31%
Ge n
gove r
2
Public safety
33%
n ity
m ent
9 ,362. Key el e
taxes (69%) a
to last fiscal y
h rough the Cit y
ams $2,203,4 1
326,660. Ov e
n sfers from th e
C
Contri b
& gr
1 3
e s
Othe
6%
n eral
r nment
5%
Recreation
4%
e ments of th e
a nd charges f o
y ear. As show n
y ’s tax revenu e
1 5, or by oth e
e rall, the City’
e business ‐typ e
harges for
services
12%
b utions
ants
3 %
r
Parks and
facilities
8%
Streets and
roads
15%
Sewer
4%
Interest
2%
e
o r
n
e
e r
s
e
Item 8.c. - Page 25
The C
road s
sho w
taxes
Total
asset
gove r
rede v
C ity’s program s
s , and sewer.
w s the financial
, investment i n
resources av a
s at July 1, 2 0
r nmental acti v
v elopment ag e
‐
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
s include gene
Each progra m
burden that w
n come, miscel l
a ilable during
0 11 of $71,0 1
v ity expenses
e ncy of $2,641 ,
General
Government
MANA G
For
ral governme n
m ’s net cost (t o
w as placed on
l aneous inco m
the fiscal yea
1 2,746, progra
during the fis c
,541; thus net
Community
Development
Progr a
CITY OF A
G EMENT’S D
the Fiscal Y e
n t, community
o tal cost less r e
the City’s tax p
m e, and transfe
r to finance g
m revenues o
c al year were
assets were in
Public Safet y
a m Rev e
Program R
A RROYO GR A
D ISCUSSION
e ar Ended J u
B ‐7
development ,
e venues gene r
p ayers by eac h
rs from the b u
g overnmental o
o f $4,530,075,
$17,639,303
creased by $4 ,
y Recreatio n
e nues a n
R evenues
A NDE
AND ANAL Y
u ne 30, 201 2
, public safety,
r ated by the a
h of these fun c
u siness ‐type a c
o perations w e
general reve n
and the extr a
,756,616 to $7
n Parks &
Facilitie s
n d Expe n
Expenses
Y SIS
2
recreation, p a
ctivities) is pr e
c tions. These f
c tivities.
e re $90,767,1 2
n ues and tra n
a ordinary gain
7 5,769,362.
&
s
Streets
Road s
n ses
a rks and facilit
e sented belo w
f unctions wer e
2 4 consisting o
n sfers of $15,2
from the dis s
&
s
Sew e
ies, streets an d
w . The net co s
e subsidized b y
o f restated n e
2 24,303. Tot a
s olution of th e
e r
d
s t
y
e t
a l
e
Item 8.c. - Page 26
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2012
B ‐8
BUSINESS ‐TYPE ACTIVITIES
The net assets of business ‐type activities for the fiscal year ended June 30, 2012 and 2011 are as follows:
Fiscal Year Ended Fiscal Year Ended Increase/ Total %
June 30, 2012 June 30, 2011 (Decrease) Change
Assets
Current and other assets $ 6,375,675 $ 6,950,798 $ (575,123) (8)%
Capital assets, net 9,816,684 10,057,743 (241,059) (2)%
Total assets 16,192,359 17,008,541 (816,182) (5)%
Liabilities
Long ‐term liabilities outstanding 123,826 114,030 9,796 9%
Other liabilities 194,438 150,471 43,967 29%
Total liabilities 318,264 264,501 53,763 20%
Net Assets
Total net assets $ 15,874,095 $ 16,744,040 $ (869,945) (5)%
The City’s net assets from business ‐type activities decreased by 5% from $16,744,040 to $15,874,095. The key elements of this
decrease are as follows:
• Increase in capital improvement costs (transfers out) to the water systems including; Lift Station No. 3 replacement,
upgrading the Water Well No. 11 facilities, the construction of a new water reservoir (No. 6), and the replacement of
the Oro Drive booster pu mp station.
• Operati ng expenses increased primarily as a result of an increase in the Lopez water contract.
Fiscal Year Ended Fiscal Year Ended Increase/ Total %
June 30, 2012 June 30, 2011 (Decrease) Change
Operating revenues $ 5,995,756 $ 5,689,722 $ 306,034 5%
Operating expenses (4,822,020) (4,761,534) 60,486 1%
Operating income 1,173,736 928,188 245,548 26%
Non ‐operating revenues 26,785 34,670 (7,885) (23)%
Income before transfers and contributions 1,200,521 962,858 237,663 25%
Capital contributions 135,071 (135,071) (100)%
Transfers out (2,070,466) (1,888,403) 182,063 10%
Change in net assets (869,945) (790,474) 79,471 10%
Total net assets – beginning of fiscal year 16,744,040 17,534,514 (790,474) (5)%
Total net assets – end of fiscal year $ 15,874,095 $ 16,744,040 $ (869,945) (5)%
The total expense of business ‐type activities the fiscal year was $4,822,020. As shown on the Statement of Activities , and
summarized above, the amounts paid by users of the systems was $5,998,516, net non ‐operating revenues $24,025, and transfers
out of $2,070,466.
Item 8.c. - Page 27
The b
gene r
Total
net a
(busi n
decr e
FINA N
As n o
Gove
outfl o
parti c
end o
decr e
rede v
bala n
spen d
furth e
The G
bala n
to c o
Unas s
year e
b usiness ‐type
r ated by the a c
resources av a
ssets at July 1 ,
n ess ‐type) act i
e ased by $869,
N CIAL ANALYS
o ted earlier, th
rnmental Fun d
o ws, and bala
c ular, unassig n
o f the fiscal y
e ase of $4,28 8
v elopment ag e
n ce , which is a
d able of $688,
e r informatio n
G eneral Fund i
n ce was $537,0
o mpare unass i
s igned fund b a
e nding 2013.
‐
1,000,000
2,000,000
3,000,000
4,000,000
activities incl u
c tivities) is pre
a ilable during t
, 2011 of $16,7
i vity expenses
945 to $15,87 4
IS OF THE CIT Y
e City uses fu n
d s – The focus
nces of spen d
n ed fund bala n
y ear. At fiscal
8 ,147 in com p
e ncy. Of the t
a vailable for s
231 (5%), rest r
n on the defini t
i s the chief o p
0 38, while tot a
i gned fund b a
a lance plus th e
W
MANA G
For
u de the Wate
sented below:
t he fiscal year
7 44,040, prog r
during the fis c
4 ,095.
Y ’S FUNDS
n d accounting t
of the City of
d able resourc e
n ce may serve
year ‐end, th e
p arison with t
otal fund bal a
s pending at t h
r icted of $7,2 6
t ion of the fun d
erating fund o
a l fund balanc e
a lance and th e
e economic st a
W ater Fund
Progr a
CITY OF A
G EMENT’S D
the Fiscal Y e
r fund and t h
to finance pr o
r am revenues o
c al year were $
t o ensure and
Arroyo Grand e
e s. Such inf o
as a useful m
e City’s gover
he prior fisca
a nce, approxi m
h e City’s disc r
6 2,107 (55%), c
d balance clas s
o f the City of A
e reached $5,0
e committed
a bilization rep
a m Rev e
A RROYO GR A
D ISCUSSION
e ar Ended J u
B ‐9
h e Lopez fund .
o prietary fund s
o f $5,998,516
$4,822,020 for
demonstrate c
e ’s governme n
o rmation is us
m easure of a g
nmental fund s
l year. 78% o
m ately 4% of t h
r etion. The r
c ommitted of $
s ification, see n
A rroyo Grand e
0 42,541. As a
fund balance
resents 19% o
Lopez F
e nues a n
A NDE
AND ANAL Y
u ne 30, 201 2
. The two a c
s (business ‐ty p
and general r e
operations a n
c ompliance wi t
n tal funds is to
eful in assess
overnment’s n
s reported a c
o f this decre a
h is total amo u
emaining co m
$3,225,005 (2 5
n ote 1, subsec
e . At the end
measure of th
for economi c
o f total genera
F und
n d Expe n
Y SIS
2
c tivities’ net c o
p e) activities w
e venues of $2 4
n d $2,070,466 f
t h finance ‐rel a
provide infor m
ing the City’s
n et resources a
c ombined fun
a se is attribut e
u nt ($523,633)
m ponents of f u
5 %) and assig n
tion k.
of the curren t
e General Fun
c stabilization
l fund expend i
n ses
o st (total cos t
as $22,766,58
4 ,025. Total p r
f or transfers; t
a ted legal requ
m ation on ne a
financing re q
a vailable for s
d balance of
e d to the dis s
constitutes u n
u nd balance c
n ed of $1,414,7
t fiscal year, u
d’s liquidity, i t
to total fun d
i tures project e
Progr a
Expe n
t less revenue
1; consisting o
r oprietary fun d
t hus Net Asset
irements.
a r ‐term inflow s
q uirements. I n
pending at th e
$13,113,770, a
s olution of th e
n assigned fun d
c onsist of no n
7 94 (11%). F o
nassigned fun d
t may be usef u
d expenditure s
e d for the fisc a
a m Revenues
n ses
s
o f
d
s
s ,
n
e
a
e
d
n ‐
o r
d
u l
s .
a l
Item 8.c. - Page 28
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2012
B ‐10
Proprietary Funds – The City of Arroyo Grande’s proprietary funds provide the same type of information found in the Government ‐
wide Financial Statements under business ‐type activities, but in more detail.
Net assets of the Water Fund at the end of the fiscal year amounted to $12,787,340, and the net assets for the Lopez Fun d
amounted to $3,0 86,755. There was a decrease in the total growth in net assets in the Water and Lopez funds of $387,646 and
$482,299, respectively. Other factors concerning the finances of these two funds have already been addressed in the discussion of
the City of Arroyo Grande’s business ‐type a ctivities.
GENERAL FU ND BUDGETARY HIGHLIGHTS
The City’s budget is prepared according to California law. The most significant budgeted fund is the General Fund. The City’s budget
is a flexible ‐spending plan, which commits resources to the accomplishment of City Council goals and objectives.
City Council’s approval is required for changes impacting fund balances, such as increases to appro priations that are not offset by
matching incr eases to estimated revenue. Approval is also required for all budget transfers between departments/divisions that
alter fund balance. Quarterly Reports are used to keep the City Council informed of key budget issues, forecasts, and required
changes. The budget amendments reported in the quarte rly financial reports fall into th ree categ ories:
• The carryover of appropriations for contracts, equipment, and/or projects approved in the previous fiscal year(s), but
not completed as of fiscal year ‐end.
• Increases or decreases in estimated revenues to reflect actual receipts of major revenues.
• Additional appropriations for unforeseen, but necessary expenses or exp enditures.
The overall difference between the original budget and the final amended budget was a decrease of $25,718 in appropriations. This
can mainly be attributed by the following:
• Increase in appropriations of $13,000 for the membership in the Economic Vitality Corporation, Visitors and
Conference Bureau, and Arro yo Grande Chamb e r of Commerce
• Increase in appropriations of $70,000 for ongoing personnel litigation
• Decrease in appropriations of $40,000 due to OTS ‐AVOID the 14 DUI grant program
• Decrease in appropriations of $60,000 due to salary savings from a vacant public safety position
• Increase in appropriations of $65,000 due to increase in capi tal outlay costs
• Decrease in appropriations of $75,000 due to decrease in debt service costs
CAPITAL ASSETS
The capital assets of the City are those which are used in the performance of the City’s functions, including but not limited to
infrastructure ‐related assets. At June 30, 2012, net capital assets of the governmental activities totaled $64,853,708 and the net
capital assets of the business ‐type activities totaled $9,816,684. Depr eciation on capital assets is recognized in the Government ‐
wide financial statem ents.
The investment in capital assets includes land, buildings and system improvements, machinery and equipment, park facilities, roads,
highways, and bridges. The City’s investment in capital assets for the current fiscal year was 79% of total net assets.
Item 8.c. - Page 29
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2012
B ‐11
Original Accumulated Book
Description Cost Depreciation Value
Capital Assets – Governmental Activities:
Land $ 2,172,584 $ ‐ $ 2,172,584
Infrastructure 6,379,188 6,379,188
Construction in progress 5,515,510 5,515,510
Structures and improvements 7,866,643 1,974,032 5,892,611
Equipment, vehicles, and machinery 5,171,963 3,146,902 2,025,061
Infrastructure 75,104,089 32,235,335 42,868,754
Total $ 102,209,977 $ 37,356,269 $ 64,853,708
Capital Assets – Business ‐Type Activities:
Land $ 56,730 $ ‐ $ 56,730
Building and improvements 222,999 215,214 7,785
Equipment, vehicles, and machinery 572,675 480,301 92,374
Infrastructure 15,873,294 6,213,499 9,659,795
Total $ 16,725,698 $ 6,909,014 $ 9,816,684
Major capital asset events during the fiscal year include the following:
• Completion of the relocation of City Hall offices. Total cost of project: $2.8 million.
• The completion of Newsom Springs drainage project. Total cost of project: $699,310.
• Short Street narrowing and bathroom retrofit: Total cost of project: $238,560
• Majority of co nstruction co mpleted (still reported as “in ‐progress”) of El Camino Real pavement rehabilitation. Total
cost of project at June 30, 2012: $2.3 million.
• Majority of construction completed (still reported as “in ‐progress”) of Le Point Street parking lot. Total costs of project
at June 30, 2012: $6 47,140.
• Purchase of new Sewer vactor truck , totaling $294,077.
At the end of the fiscal year, the City had invested (net of related debt) $71,993,317 in a broad range of capital assets, including land,
building, equipment, and infrastructure.
LONG ‐TERM DEBT
At the end of the current fiscal year, the City had total General Obligation debt outstanding of $1.3 million that is backed by the full
faith and credit of the City. The proceeds of the debt issuance were used for expanding the current fire station in order to
accommodate a full time fire staff. Voters a pproved the gen e ral obligation debt, which is to be repaid through a tax assessment on
property taxes, in November 2002. The City received an “A” rating from Standard & Poor’s for the general obligation debt.
The Redevelopment Agency issued 2007 Tax Allocation bonds of $6.3 million. The RDA Tax Allocation bonds were used to pay off
existing de bt and an y remaining fu nds will be used for future projects. These bonds are backed by the Redevelopment Agency and
are to be repaid with property tax proceeds. However, due to Assembly Bill 1X 26, all redevelopment agencies in the State of
California were dissolved at January 1, 2012 . As a result, this bond payable has been transferred to the Successor Agency of the
Former Redevelopment Agency Trust Fund and is no longer reported in the City’s financial statements.
Compensated absences is the outstanding amount of vacation, sick leave, management annual leave, and comp time earned by
employees as of June 30 , 20 12.
Item 8.c. - Page 30
CITY OF ARROYO GRANDE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2012
B ‐12
The following table summarizes the long ‐term debt of the City:
Fiscal Year Fiscal Year
Ended June Governmental Business ‐Type Ended June 30, 2012
Debt Description 30, 2011 One ‐Year Long ‐Term One ‐Year Long ‐Term One ‐Year Long ‐Term
General obligation $ 1,395,000 $ 85,000 $ 1,230,000 $ ‐ $ ‐ $ 85,000 $ 1,230,000
Tax allocation bonds 6,165,000
Capital lease payable 312,405 59,035 162,105 59,035 162,105
Loan payable 1,354,694 26,420 1,306,274 26,420 1,306,274
Compensated absences 1,017,205 904,994 73,844 978,838
OPEB 424,666 429,942 49,982 479,924
Total $10,668,970 $ 170,455 $ 4,033,315 $ ‐ $ 123,826 $ 170,455 $ 4,157,141
FINANCIAL ISSUES AND CONCERNS
The current global economic crisis continues to have a dramatic impact on the City of Arroyo Grande. The City was able to adopt the
biennial budget for the fiscal 2011 ‐12 and 2012 ‐13 through the use of reserves and concessions from the labor organizations. The
second year of the biennial b udget was adop t ed on June 26, 2012. Major factors affecting the City are:
• A significant decrease in City revenues.
• The loss of the Redevelopment Agency of the City of Arroyo Grande.
• The City’s aging infrastructure.
• The police station that does not meet current ADA requirements.
• Large transportation projects such as; Halcyon Road/Brisco Road /Hi ghway 101 interchange.
The City is continually working on ways to continue to fund on ‐going operations.
CONTACTING THE CITY’S ADMINISTRATIVE SERVICES DEPARTMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the
City’s finances and to demonstrate the City’s accountability for the money it receives. If you have any questions about this report or
need additional financial information, contact Angela Kraetsch, Director of Administrative Services at 30 0 East Branc h Street in
Arroyo Grande, California or by phone at (805) 473 ‐5400.
Item 8.c. - Page 31
CITY OF ARROYO GRANDE
STATEMENT OF NET ASSETS
June 30, 2012
ASSETS
Cash and investments $10,909,285 $3,477,344 $14,386,629
Restricted cash and investments 13,464 13,464
Receivables:
Accounts 697,394 1,118,017 1,815,411
Taxes 1,152,419 1,152,419
Grant 1,316,079 2,760 1,318,839
Loan 2,008,837 2,008,837
Interest 9,464 3,662 13,126
Inventory 28,704 74,722 103,426
Prepaid items 659,527 1,699,170 2,358,697
Deferred charges 37,065 37,065
Capital assets:
Nondepreciable:
Land 2,172,584 56,730 2,229,314
Infrastructure 6,379,188 6,379,188
Construction in progress 5,515,510 5,515,510
Depreciable:
Structures and improvements 7,866,643 222,999 8,089,642
Equipment 5,171,963 572,675 5,744,638
Infrastructure 75,104,089 15,873,294 90,977,383
Accumulated depreciation (37,356,269) (6,909,014) (44,265,283)
Total assets 81,685,946 16,192,359 97,878,305
LIABILITIES
Accounts payable 531,982 62,997 594,979
Accrued wages and benefits 480,961 480,961
Interest payable 40,248 40,248
Deposits payable 222,280 103,109 325,389
Deferred revenue 437,343 28,332 465,675
Noncurrent liabilities:
Due within one year 170,455 170,455
Due in more than one year 4,033,315 123,826 4,157,141
Total liabilities 5,916,584 318,264 6,234,848
NET ASSETS
Invested in capital assets, net of
related debt 62,176,633 9,816,684 71,993,317
Restricted for:
Access programming 75,938 75,938
Debt service 700,447 700,447
Landscape maintenance 412,473 412,473
Park construction 1,008,420 1,008,420
Public improvements 2,142,561 2,142,561
Public safety 219,834 219,834
Streets and roads 511,087 511,087
Water distribution 2,151,099 2,151,099
Unrestricted 6,370,870 6,057,411 12,428,281
Total net assets $75,769,362 $15,874,095 $91,643,457
The notes to the basic financial statements are an integral part of this statement.
Total
Business ‐Type
Activities
Governmental
Activities
B ‐13
Item 8.c. - Page 32
CITY OF ARROYO GRANDE
STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2012
Governmental Activities:
General government $4,475,869 $38,563 $178,891
Community development 1,578,940 403,679 38,282
Public safety 5,708,603 168,502 97,229
Recreation 674,080 650,897
Parks and facilities 1,488,892
Streets and roads 2,600,752 16,561 503,242
Sewer 793,207 925,213
Interest on long ‐term debt 318,960
Total governmental activities 17,639,303 2,203,415 817,644
Business ‐type Activities:
Water 2,142,321 3,443,240 2,760
Lopez 2,679,699 2,552,516
Total business ‐type activities 4,822,020 5,995,756 2,760
Total government $22,461,323 $8,199,171 $820,404
General Revenues
Taxes:
Property taxes
Sales and use taxes
Transient lodging taxes
Franchise taxes
Business license tax
Investment income
Other
Transfers
Total general revenues and transfers
Income/(loss) before extraordinary gain
Extraordinary gain
Change in net assets
Net assets at beginning of fiscal year
Prior period adjustments
Net assets at beginning of fiscal year ‐ restated
Net assets at end of fiscal year
The notes to the basic financial statements are an integral part of this statement.
Program Revenues
B ‐14
Expenses Charges for Services
Operating
Contributions and
Grants
Item 8.c. - Page 33
$‐$(4,258,415) $‐$(4,258,415)
1,391,701 254,722 254,722
117,315 (5,325,557) (5,325,557)
(23,183) (23,183)
(1,488,892) (1,488,892)
(2,080,949) (2,080,949)
132,006 132,006
(318,960) (318,960)
1,509,016 (13,109,228) (13,109,228)
1,303,679 1,303,679
(127,183) (127,183)
1,176,496 1,176,496
$1,509,016 (13,109,228) 1,176,496 (11,932,732)
6,633,678 6,633,678
4,127,541 4,127,541
630,379 630,379
570,172 570,172
84,925 84,925
333,962 24,025 357,987
773,180 773,180
2,070,466 (2,070,466)
15,224,303 (2,046,441) 13,177,862
2,115,075 (869,945) 1,245,130
2,641,541 2,641,541
4,756,616 (869,945) 3,886,671
69,777,116 16,744,040 86,521,156
1,235,630 1,235,630
71,012,746 16,744,040 87,756,786
$75,769,362 $15,874,095 $91,643,457
Net (Expense) Revenue and Changes
in Net Assets
B ‐15
Total
Capital Contributions
and Grants
Governmental
Activities Business ‐type Activities
Item 8.c. - Page 34
CITY OF ARROYO GRANDE
DESCRIPTION OF MAJOR GOVERNMENTAL, PROPRIETARY, AND FIDUCIARY FUNDS
June 30, 2012
Governmental Funds
General Fund – This is the primary operating fund of the City, which accounts for resources and services traditionally
associated with government. The General Fund provides administrative, financial, police protection, fire protection,
community development, recreation, and maintenance services to the community and other funds. The General Fund
accounts for revenues that have unrestricted uses and are not required legally or by co ntractu a l agreement to be
accounted for in another funds.
Transportation Impact Fees Fund – This fund accounts for developer impact fees (AB1600 fees) paid to protect the public
health, safety, and welfare by maintaining the existing level of public services for existing and future residents within the
City of Arroyo Grande.
In ‐Lieu Affordable Housing Fund – This fund accounts for monies paid by developers in meeting the City's mandatory
affordable housing requirements.
Water Availability Fund – This fund accounts for impact fees collected to mitigate future water requirements.
CDBG Fund – This fund accounts for revenues and expenditures related to Community Development Block Grant (CDBG)
Funds.
Redevelopment Set ‐Aside Fund – This fund accounts for the 20% tax increment revenues to be used for low and moderate
housing within the City. Due to State Assembly Bill 1X 26, which calls for the dissolution of all redevelopment agencies in
the State of California on January 31, 2012, only 7 ‐month of activity plus the extraordinary loss is repo rted.
Capital Improv ement Fund – This fund accounts for capital projects constructed within the City. Funding sources are
provided from other City funds through capital transfers; grant revenues from the federal and state governments; and
other miscellaneous sources. These funding sources are used to improve the City parks, drainage systems, streets, sewer
pipelines, and water systems.
Other Governmental Fu nds – This is the aggregate of all the Nonmajor governmental funds.
Proprietary Funds
Water Fund – This fund is used to account for the activities associated with the transmission and distribution of potable
water by the City to its users.
Lopez Fund – This fund is responsible for the purchase of water from Lopez Dam. The City has a 50.55% share of the water
and expense generated by Zone 3 – County of San Luis Obispo’s Flood Control and Water Conservation District.
Fiduciary Funds
Private ‐Purpose Trust Fund:
Successor Agency to the For mer Arroyo Grande Redevelopment Age ncy – This private ‐purpose trust fund was created to
hold the assets of the former redevelopment agency until they are distributed to other units of state and local government
after the payment of enforceable obligations have been made.
B ‐16
Item 8.c. - Page 35
CITY OF ARROYO GRANDE
DESCRIPTION OF MAJOR GOVERNMENTAL AND PROPRIETARY FUNDS
June 30, 2012
Fiduciary Funds – continued
Agency Funds:
Sanitation District Fund – This agency fund accounts for the receipt and remittance of wastewater processing fees on behalf
of the South San Luis Obispo County Sanitation District. The City bills the wastewater processing fee through the utility
bills, collecting the fee from the City's utility customers.
Downtown Parking Fund – This agency fund collects assessments from Arroyo Grande Village merchants for the
maintenance of the Village parking lots for the Downtown Village Merchants Association.
B ‐17
Item 8.c. - Page 36
CITY OF ARROYO GRANDE
GOVERNMENTAL FUNDS
Balance Sheet
June 30, 2012
ASSETS
Cash and investments $3,048,660 $2,089,975 $65,520 $1,732,321
Receivables:
Accounts 514,098
Taxes 1,100,054
Grant 7,642
Loan 1,219,797
Interest 3,703 1,926 45 1,195
Inventory 11,313
Prepaid items 631,395
Due from other funds 694,285
Total assets $6,011,150 $2,091,901 $1,285,362 $1,733,516
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $168,363 $‐$‐$‐
Accrued wages and benefits 480,961
Deposits payable 222,280
Deferred revenue 97,005 1,219,797
Due to other funds
Total liabilities 968,609 1,219,797
Fund Balances:
Nonspendable:
Inventory 11,313
Prepaid items 631,395
Restricted for:
Access programming
Debt service
Landscape maintenance
Park construction
Public improvements 2,091,901
Public safety
Streets and roads
Water production 1,733,516
Committed for:
Affordable housing 65,565
Capital projects 1,083,354
Economic stabilization 2,076,086
Assigned for:
Budget shortfall 703,355
Capital projects
Streets and roads
Utility service
Unassigned 537,038
Total fund balances 5,042,541 2,091,901 65,565 1,733,516
Total liabilities and
fund balances $6,011,150 $2,091,901 $1,285,362 $1,733,516
The notes to the basic financial statements are an integral part of this statement.
Water Availability
Fund General Fund
B ‐18
Transportation
Impact Fees Fund
In ‐Lieu
Affordable
Housing Fund
Item 8.c. - Page 37
$‐$‐$‐$3,986,273 $10,922,749
7,329 175,967 697,394
52,365 1,152,419
8,919 1,299,518 1,316,079
789,040 2,008,837
2,595 9,464
17,391 28,704
28,132 659,527
694,285
$797,959 $‐$1,306,847 $4,262,723 $17,489,458
$‐$‐$341,419 $22,200 $531,982
480,961
222,280
789,164 299,988 40,226 2,446,180
8,795 630,602 54,888 694,285
797,959 1,272,009 117,314 4,375,688
17,391 28,704
28,132 659,527
75,938 75,938
740,695 740,695
412,473 412,473
1,008,420 1,008,420
50,660 2,142,561
219,834 219,834
511,087 511,087
417,583 2,151,099
65,565
1,083,354
2,076,086
703,355
34,838 197 35,035
25,166 25,166
651,238 651,238
(13,405) 523,633
34,838 4,145,409 13,113,770
$797,959 $‐$1,306,847 $4,262,723 $17,489,458
Other
Governmental
Funds
Capital
Improvement
Fund
Redevelopment
Set ‐Aside Fund
B ‐19
Total CDBG Fund
Item 8.c. - Page 38
THIS PAGE IS INTENTIONALLY LEFT BLANK
Item 8.c. - Page 39
CITY OF ARROYO GRANDE
RECONCILIATION OF THE GOVERNMENTAL FUNDS ‐ BALANCE SHEE T
TO THE STATEMENT OF NET ASSETS
For the Fiscal Year Ended June 30, 2012
Total fund balances ‐ governmental funds $13,113,770
Capital assets at historical cost $102,209,977
Accumulated depreciation (37,356,269)
Net capital assets 64,853,708
(40,248)
37,065
2,008,837
Compensated absences $904,994
General obligation bonds 1,315,000
Capital lease payable 221,140
CA energy loan payable 127,512
USDA loan payable 1,178,000
Reimbursement agreement 27,182
Other postemployment benefits 429,942
Total long ‐term liabilities (4,203,770)
Total net assets, governmental activities $75,769,362
The notes to the basic financial statements are an integral part of this statement.
In governmentalfunds,only currentassetsarereported.Inthestatementofnetassets,allassets
are reported, including capital assets and accumulated depreciation.
Ingovernmentalfunds,interestonlong ‐termdebtisnotrecognizeduntiltheperiodinwhichit
maturesandispaid.Inthegovernment ‐widestatementofactivities,itisrecognizedintheperiod
that it is incurred.
Ingovernmentalfunds,debtissuecostsarerecognizedasexpendituresintheperiodtheyare
incurred.Inthegovernment ‐widestatementofactivities,debtissuecostsareamortizedoverthe
life of the debt.
Ingovernmentalfunds,onlycurrentliabilitiesarereported.Inthestatementofnetassets,all
liabilities,includinglong ‐termliabilities,arereported.Long ‐termliabilitiesrelatingto
governmental activities consist of:
B ‐21
Ingovernmentalfunds,certainreceivablesaredeferredbecausetheydonotmeetcurrentfinancial
obligations.However,ingovernment ‐widestatementofactivities,itisrecognizedintheperiod
that it is incurred.
Item 8.c. - Page 40
CITY OF ARROYO GRANDE
GOVERNMENTAL FUNDS
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2012
REVENUES
Taxes and assessments $11,197,971 $48,385 $‐$‐
Licenses and permits 206,319
Fines and penalties 71,605
Use of money and property 289,106 13,203 344 8,196
Intergovernmental revenues 181,484
Charges for services 733,542 25,312 16,400
Other revenue 76,203 3,750
Total revenues 12,756,230 61,588 25,656 28,346
EXPENDITURES
Current:
General government 4,325,776
Community development 961,991 19,132
Public safety 5,337,305
Recreation 720,797
Parks and facilities 1,332,583
Streets and road 42,033
Sewer
Capital outlay 93,310
Debt service:
Principal 160,342
Interest and fiscal agent fees 11,886
Total expenditures 12,986,023 19,132
Excess of revenue over/
(under) expenditures (229,793) 61,588 6,524 28,346
OTHER FINANCING SOURCES (USES)
Proceeds from issuance of debt
Transfers in 2,184,356
Transfers out (2,164,577) (739,974) (21,082)
Total other financing
sources/(uses)19,779 (739,974) (21,082)
Income/(loss) before
extraordinary items (210,014) (678,386) 6,524 7,264
Extraordinary gain/(loss)(919,797)
Net change in fund balances (210,014) (678,386) (913,273) 7,264
Fund balances ‐ July 1, 2011 5,292,792 2,770,287 978,838 1,726,252
Prior period adjustment (40,237)
Fund balances ‐ July 1, 2011, restated5,252,555 2,770,287 978,838 1,726,252
Fund balances ‐ June 30, 2012$5,042,541 $2,091,901 $65,565 $1,733,516
The notes to the basic financial statements are an integral part of this statement.
General Fund
Transportation
Impact Fees Fund
B ‐22
In ‐Lieu
Affordable
Housing Fund
Water Availability
Fund
Item 8.c. - Page 41
$‐$99,099 $‐$824,095 $12,169,550
206,319
71,605
3,772 19,341 333,962
38,282 1,381,208 782,133 2,383,107
22,000 1,128,237 1,925,491
281,532 232,393 593,878
38,282 102,871 1,684,740 2,986,199 17,683,912
33,030 4,358,806
32,251 17,512 239,970 296,427 1,567,283
5,337,305
720,797
18,339 1,350,922
1,115,938 719,862 1,877,833
273,296 273,296
4,093,258 408,374 4,594,942
207,000 367,342
277,521 289,407
32,251 17,512 5,449,166 2,233,849 20,737,933
6,031 85,359 (3,764,426) 752,350 (3,054,021)
69,077 69,077
3,764,426 742,872 6,691,654
(6,031) (185,680) (1,503,844) (4,621,188)
(6,031) (185,680) 3,764,426 (691,895) 2,139,543
(100,321) 60,455 (914,478)
(1,771,740) (641,895) (3,333,432)
(1,872,061) (581,440) (4,247,910)
1,872,061 34,838 4,726,849 17,401,917
(40,237)
1,872,061 34,838 4,726,849 17,361,680
$‐$‐$34,838 $4,145,409 $13,113,770
Other
Governmental
Funds Total
B ‐23
CDBG Fund
Redevelopment
Set ‐Aside Fund
Capital
Improvement
Fund
Item 8.c. - Page 42
CITY OF ARROYO GRANDE
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE OF GOVERNMENTAL FUNDS TO STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2012
Total net change in fund balances ‐ governmental funds $(4,247,910)
2,777,368
(29,553)
298,265
(9,432)
38,659
5,974,973
(45,754)
Change in net assets ‐ governmental activities $4,756,616
The notes to the basic financial statements are an integral part of this statement.
B ‐24
Inthestatementofactivities,postemploymentbenefitsaremeasuredbytheamountsearned
duringthefiscalyear.Ingovernmentalfunds,expendituresfortheseitemsaremeasuredbythe
amountoffinancialresourcesused(essentiallytheamountpaid).Thisfiscalyear,postemployment
benefits earned were more than the amounts used by:
Ingovernmentalfunds,interestonlong ‐termdebtisrecognizedintheperiodthatitbecomesdue.
Inthestatementofactivities,itisrecognizedintheperiodthatitisincurred.Unmaturedinterest
owingattheendoftheperiod,lessmaturedinterestpaidduringbutowingfromthepriorperiod
was:
Ingovernmentalfunds,theissuanceoflong ‐termdebtprovidescurrentfinancialresources.Also,
governmentalfundsreporttheeffectofissuancecosts,premiums,discounts,andsimilaritems
whendebtisfirstissue,whereastheseamountsaredeferredandamortizedinthestatementof
activities.Thisamountistheneteffectofthesedifferencesinthetreatmentoflong ‐termdebtand
related items:
In thestatement of activities,compensatedabsencesaremeasuredbytheamountsearnedduring
thefiscalyear.Ingovernmentalfunds,however,expendituresfortheseitemsaremeasuredbythe
amountoffinancialresourcesused(essentiallytheamountspaid).Forthisfiscalyearended,
vacation used exceeded the amounts earned by:
In governmental funds, proceeds and repayments of long ‐term debt are reported as other financing
sourcesandexpenditures,respectively.Inthegovernment ‐widestatements,proceedsand
repaymentsoflong ‐termdebtarereportedasincreasesordecreasesinliabilities,respectively.
Thisistheamountbywhichproceedsfromissuanceofdebtof$69,077islessthanrepaymentsof
debt of $(367,342) in the period.
Ingovernmentalfunds,capitaloutlaysarereportedasexpenditures.However,inthestatementof
activities,thecostofthoseassetsisallocatedovertheirestimatedusefullivesasdepreciation
expense.Thisistheamountbywhichadditionstocapitaloutlayof$4,550,314ismorethan
depreciation expense $(1,772,946) in the period.
Inthegovernmentalfunds,therewasanextraordinarylossreportedduetothedissolutionofthe
ArroyoGrandeRedevelopmentAgency.Inthestatementofactivities,therewasanextraordinary
gainbecauseofthedifferencesinthebasisofaccounting.Thisamountisthedifferencebetween
the extraordinary loss and the extraordinary gain.
Item 8.c. - Page 43
CITY OF ARROYO GRANDE
PROPRIETARY FUNDS
Statement of Net Assets
June 30, 2012
ASSETS
Current assets:
Cash and investments $1,989,067 $1,488,277 $3,477,344
Receivables:
Accounts, net 691,231 426,786 1,118,017
Grant 2,760 2,760
Interest 2,109 1,553 3,662
Inventory 74,722 74,722
Prepaid items 529,031 1,170,139 1,699,170
Total current assets 3,288,920 3,086,755 6,375,675
Capital assets:
Nondepreciable assets 56,730 56,730
Depreciable assets, net 9,759,954 9,759,954
Total capital assets, net 9,816,684 9,816,684
Total assets 13,105,604 3,086,755 16,192,359
LIABILITIES
Current liabilities:
Accounts payable 62,997 62,997
Deposits payable 103,109 103,109
Deferred revenue 28,332 28,332
Total current liabilities 194,438 194,438
Noncurrent liabilities:
Compensated absences 73,844 73,844
OPEB liability 49,982 49,982
Total noncurrent liabilities 123,826 123,826
Total liabilities 318,264 318,264
NET ASSETS
Invested in capital assets, net of
related debt 9,816,684 9,816,684
Unrestricted 2,970,656 3,086,755 6,057,411
Total net assets $12,787,340 $3,086,755 $15,874,095
The notes to the basic financial statements are an integral part of this statement.
Totals Lopez Fund Water Fund
B ‐25
Item 8.c. - Page 44
CITY OF ARROYO GRANDE
PROPRIETARY FUNDS
Statement of Revenues, Expenses, and Changes in Net Assets
For the Fiscal Year Ended June 30, 2012
OPERATING REVENUES
Sale of water $3,397,161 $2,552,516 $5,949,677
Distribution charges 20,410 20,410
Meter installations 3,773 3,773
Other revenue 21,896 21,896
Total operating revenues 3,443,240 2,552,516 5,995,756
OPERATING EXPENSES
Distribution 554,874 554,874
General 384,999 384,999
Lopez water contract 602,540 2,679,699 3,282,239
Production 345,431 345,431
Depreciation 254,477 254,477
Total operating expenses 2,142,321 2,679,699 4,822,020
Operating income 1,300,919 (127,183) 1,173,736
NON ‐OPERATING REVENUES
Local grant 2,760 2,760
Interest income 13,841 10,184 24,025
Total non ‐operating revenues 16,601 10,184 26,785
Income before transfers 1,317,520 (116,999) 1,200,521
Transfer out (1,705,166) (365,300) (2,070,466)
Change in net assets (387,646) (482,299) (869,945)
Net assets ‐ July 1, 2011 13,174,986 3,569,054 16,744,040
Net assets ‐ June 30, 2012 $12,787,340 $3,086,755 $15,874,095
The notes to the basic financial statements are an integral part of this statement.
Water Fund Lopez Fund Totals
B ‐26
Item 8.c. - Page 45
CITY OF ARROYO GRANDE
PROPRIETARY FUNDS
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $3,281,299 $2,610,353 $5,891,652
Payments to employees and suppliers (2,038,833) (2,480,685) (4,519,518)
Other receipts 21,896 21,896
Net cash provided by operating
activities 1,264,362 129,668 1,394,030
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Purchase of capital assets (13,418) (13,418)
Net cash used by capital and
related financing activities (13,418) (13,418)
CASH FLOWS FROM NONCAPITA L
FINANCING ACTIVITIES
Grant revenue received 4,187 4,187
Transfers to other funds (1,705,166) (365,300) (2,070,466)
Net cash used by noncapital
financing activities (1,700,979) (365,300) (2,066,279)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received 14,471 10,494 24,965
Net cash provided by investing
activities 14,471 10,494 24,965
Net increase (decrease) in cash
and cash equivalents (435,564) (225,138) (660,702)
Cash and cash equivalents ‐ July 1 2,424,631 1,713,415 4,138,046
Cash and cash equivalents ‐ June 30$1,989,067 $1,488,277 $3,477,344
The notes to the basic financial statements are an integral part of this statement.
Water Fund Lopez Fund Totals
B ‐27
Item 8.c. - Page 46
CITY OF ARROYO GRANDE
PROPRIETARY FUNDS
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2012
Reconciliation of operating income to net
cash provided (used) by operating
activities:
Operating income $1,300,919 $(127,183) $1,173,736
Adjustments to reconcile operating
activities:
Depreciation expense 254,477 254,477
Change in assets and liabilities:
Receivables, net (156,521) 57,837 (98,684)
Inventory (13,058) (13,058)
Prepaid items (175,218) 199,014 23,796
Accounts payables 27,491 27,491
Deposits payable 9,290 9,290
Deferred revenue 7,186 7,186
OPEB 9,504 9,504
Compensated absences 292 292
Net cash provided by
operating activities $1,264,362 $129,668 $1,394,030
The notes to the basic financial statements are an integral part of this statement.
B ‐28
Water Fund Lopez Fund Totals
Item 8.c. - Page 47
CITY OF ARROYO GRANDE
STATEMENT OF FIDUCIARY NET ASSETS
June 30, 2012
ASSETS
Cash and investments $2,407,700 $317,752 $2,725,452
Accounts receivable 49,337 49,337
Interest receivable 148 148
Prepaid items 16,340 66 16,406
Inventory ‐ land held for resale 860,928 860,928
Note receivable 503,738 503,738
Bond issuance costs 260,043 260,043
Land 697,890 697,890
Total assets 4,746,639 367,303 5,113,942
LIABILITIES
Accounts payable 479,171 416 479,587
Interest payable 115,416 115,416
Due to other agencies 366,887 366,887
Loans payable 919,797 919,797
Bonds payable 6,060,000 6,060,000
Total liabilities 7,574,384 367,303 7,941,687
NET ASSETS
Held in trust for:
Successor agency to the former
redevelopment agency (2,827,745) (2,827,745)
Total net assets $(2,827,745) $‐$(2,827,745)
The notes to the basic financial statements are an integral part of this statement.
Private ‐Purpose Trust
Fund
Agency Funds Totals
B ‐29
Successor Agency to
the Former
Redevelopment
Agency
Item 8.c. - Page 48
CITY OF ARROYO GRANDE
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
Fiduciary Fund
For the Fiscal Year Ended June 30, 2012
ADDITIONS
Property taxes $464,096
Use of money and property 2,560
Total additions 466,656
DELETIONS
Contract services 20,868
Bond issuance, interest, and fiscal agent fees 148,604
Capital projects 10,493
AB 1484 true ‐up payment 472,895
Total deletions 652,860
Loss before extraordinary items (186,204)
Extraordinary loss (2,641,541)
Net change in net assets (2,827,745)
Net assets ‐ July 1, 2011
Net assets ‐ June 30, 2012 $(2,827,745)
The notes to the basic financial statements are an integral part of this statement.
Successor Agency to
the Former
Redevelopment
Agency
B ‐30
Private ‐Purpose Trust
Fund
Item 8.c. - Page 49
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐31
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Arroyo Grande (City) has been prepared in conformity with accounting principles
generally accepted in the United States of America as applied to governmental units. The Government Accounting Standards Board
(GASB) is the accepted standard ‐setting bod y for establishing governmental acco unting and financial reporting principles. The more
significant City’s accounting policies are described below:
A. Reporting Entity
The City was incorporated in 1911, under the laws of the State of California. The City of Arroyo Grande operates under a
Council ‐Manager form of government, which includes an elected Mayor and a four ‐member council. The accompanying basic
financial statements present the financial activity of the City, which is the primary government, alo ng with the financial activities
of its comp one nt unit, which is an entity for which the City is financially accountable. Although they are separate legal entities,
blended component units are in substance part of the City’s operations and are reported as an integral part of the City’s basic
financial statem ents.
The Arroyo Grande Redevelopment Agency is included as a component unit in the accompanying financial statements. The
financial activities of the foregoing entities have been aggregated and merged (termed “blending”) with those of the City in the
accompanying financial statements, as it meets the criteria for inclusion as set forth in the GASB Statement No. 14 , as amended
by GASB Statem ent No. 39. However, on December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 that
provides for the dissolution of all redevelopment agencies in the State of California on January 31, 2012. As a result, only seven
months of redevelopment ac tivity is reported as a component unit. The remaining five months of activity are reported under a
private ‐purpose trust fund. See Note 14 for further detail.
B. Basis of Accounting and Presentation
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The
operations of each fund are accounted for with a separate set of self ‐balancing accounts that comprise its assets, liabilities, fund
balances or net assets, revenues, and expenditures or expenses, as approp riate. Gov ernmental resources are allocated to and
accounted for in individual funds based upon the purposes for which the governmental resources are to be spent and the
means by which spending activities are controlled.
The government ‐wide, proprietary funds, and private ‐purpose trust fund financial statements are reported using th e economic
resources measurement fo cus and th e accrual basis of accounting. Revenues are recorded when earned and expenses are
recorded at the time liabilities are incurred , regardless of when the related cash flows take place. Assets equal liabilities and the
measurement of operations is not a focus of the age ncy funds.
Private ‐sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both
the government ‐wide and proprietary fund financial statements to the extent that those standards do not conflict with or
contradict guidance of GASB. Governments also have the option of following subs equent privat e ‐sector guidance for their
business ‐type activities and enterprise funds, subject to the same limitation. The City has elected not to follow subsequent
private ‐sector guidance.
Item 8.c. - Page 50
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐32
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
B. Basis of Accounting and Presentation – continued
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of
accounting. Under this method, revenues are recognized when measurable and available . The City considers all revenues
reported in the governmental funds to be available if the revenues are collected within sixty days after fiscal year ‐end.
Expen ditures are recor ded when the related fund liability is incurred, except for principal and interest on general long ‐term
debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent that they have
matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of long ‐ter m debt and
acquisitions un der ca pital leases are reported as other financing sources .
Non ‐exchange transaction, in which the City gives or receives value without directly receiving or giving equal value in exchange,
include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is re cognized in
the fiscal year for which the ta xes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year
in which all eligibility requirements have been satisfied.
Other revenues susceptible to accrual include other taxes, intergovernmental revenues, interest, and charges for services.
Grant revenues are recognized in the fiscal year in which all eligibility requirement s are met. Under the term s of grant
agreements , the City may fund certain programs with a combination of cost ‐reimbursement grants, categorical block grants,
and general revenues. Thus, either restricted and unrestricted fund balances or net assets may be available to finance program
expenditu res/expenses. The City’s policy is to first apply restricted grant resources to such programs, followed by general
revenues if necessary.
Government ‐wide Statements
The Statement of Net Assets and the Statement of Activities display information about the City. These statements include the
financial activities of the overall City gover nment, except for fiduciary a c tivities. Eliminations have been made to minimize the
double counting or internal activities. Government activities generally are financed through taxes, intergovernmental revenues,
and other non ‐exchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the
City’s governmen tal activities. Direct expenses are those that are specifically associated with a program or function and,
therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods
or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a
particular program, and (c ) fees, grants, and contributions that are restricted to financing the acquisition or construction of
capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements
The fund financial statements provide information about the City’s fu nds, including fiduciary fund s. Separate statements for
each fund category ‐governmental, proprietary and fiduciary ‐are presented. The emphasis of fund financial statements is on
major individual funds, each of which is displayed in a separate column. All remaining governmental funds are aggregated and
reported as non ‐major funds.
Item 8.c. - Page 51
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐33
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
B. Basis of Accounting and Presentation – continued
Proprietary fund financial statements include a Statement of Net Assets, a Statement of Revenues, Expenses, and Changes in
Net Assets, and a Statement of Cash Flows for all proprietary funds. 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
non ‐current) are include d on the Statement of Net Assets. The Statement of Revenues, Expenses, and Changes in Fund 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 ea rned while expenses are re cognize d in the period in which liability is
incurred.
Operating revenues in the proprietary funds are those revenues that are generated from the primary operation of the fund. All
other revenues are reported as non ‐operating revenues. Operating expenses are those expenses that are essential to the
primary operat ions of the fu nd . All other expenses are reported as non ‐operating expenses.
Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private
organization, other governmental units, and/or other funds. The City maintains two agency f unds, Sanitatio n District and
Downtown Parking, and thr ee private ‐purpose trust funds, the Successor Agency to the Former Redevelopment Agency of
Arroyo Grande, Successor Agency to the Former Redevelopment Agency of Arroyo Grande – Housing Function, and
Redevelopment Obligation Retirement Fund.
C. Major Funds
GASB Statement No. 34 defines major funds and requires that the City’s major funds be identified and presented separately in
the fund financial statements. All other funds, called non ‐major funds, are combined and reported in a single column,
regardless of their fund ‐type.
Major funds are defined as funds that hav e assets, liabilities, revenues, or expenditures/expenses equal to or gre ater than ten
percent of their fund ‐type total. The General Fund is always a major fund. The City may also select other funds it believes
should be presented as major funds.
The City reported the following major governmental funds in the accompa nying financ ial statements:
General Fund – This is the pr imary operating fund of the City, which accounts for resources and services traditionally associated
with government. The General Fund provides administrative, financial, police protection, fire protection, community
development, recreation, and maintenance services to the community.
Transportation Impact Fees Fund – This fund ac counts fo r transportatio n impact fees collected.
In ‐Lieu Affordable Housing Fund – This fund accounts for monies paid by developers in meeting the City’s mandatory affordable
housing requirement.
Water Availability Fund – This fund accounts for impact fees collected to mitigate future water requirements.
CDBG Fund – This fund a ccounts for revenues and expend i tures related to Community Development Block Grant (CDBG) funds.
Item 8.c. - Page 52
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐34
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
C. Major Funds – continued
Redevelopment Set ‐Aside Fund – This fund accounts for the 20% tax increment revenues to be used for low and moderate
housing within the City. Due to State Assembly Bill 1X 26, that provides for the dissolution of all redevelopment agencies in the
State of California, only 7 ‐months of activity is presente d.
Capital Improv ement Fund – This fund accounts for capital improvements projects performed by the City and the use of those
revenues.
The City reported the following major proprietary funds:
Water Fund – This fund accounts for the activities of providing water to residents of the City.
Lopez F und – This fund accounts for the activities associated with Lopez Lake and the wa ter contract with the County of San Luis
Obispo.
D. Cash and Investments
The City pools its available cash for investment purposes. The City considers pooled cash and investments, with original
maturities of three months or less, to be cash equivalents.
Certain proceeds of long ‐term debt, including the USDA City Hall loan, as well as certain resources set aside for repayment, are
classified as re stricted assets on the government ‐wide bala nce sheet, because their use is limited by applicable debt covenants.
The City has classified additional assets as restricted to comply with laws and other agreements.
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External
Investment Pools , hig hly liquid market investments with maturities of one year or less at time of purchase are stated at
amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which
market quotations are readily available. The City’s investments with fiscal agent required by bo nd indentures are stated at cost ,
which approximate fair value.
The City participates in an investment pooled 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 subj ect
to credit risk with the full faith and cred it 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.
E. Assets Held for Resale
The City has assets held for resale and is recorded at the lower of cost or market, but not greater than the net realizable value.
F. Capital Assets
Capital assets are defined as costs related to the acquisition or purchase of property, plant, equipment, and infrastructure
(roads, sidewalks, drainage systems, lighting systems, etc.). Capital assets are reported in the applicable governmental or
business ‐type activities columns in the government ‐wide financial statements. All capital assets are valued at historical cost or
estimated historical cost if ac tu a l historical cost is not available. Contributed capital assets are valued at their estimated fair
value on the date contributed. It is City policy to capitalize all capital assets with costs exceeding $50,000 for infrastructure ‐type
assets and $5,000 on all other assets and with usef ul lives exceeding two years.
Item 8.c. - Page 53
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐35
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
F. Capital Assets – continued
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset
are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.
With the implementation of GASB Statement No. 34, the City has reco rded all its pub lic domain (infrastructure) capital assets,
which include roads, bridges, curbs, and gutters, streets and sidewalks, drainage systems, and lighting systems.
The purpose of depreciation is to spread the cost of capital assets equitable among all users over the life of these assets. The
amount charged to de preciation expense eac h fiscal year represents tha t fiscal year’s pro rata share of the cost of capital assets.
GASB Statement No. 34 requires that all capital assets with limited useful lives be depreciated over their estimated useful lives.
Depreciation is provided using the straight line method which means the cost of the asset is divided by its expected usefu l life in
years and the result is charged to expe nse each fiscal year until the asset is fully depreciated. The City has assigned the useful
lives listed below to capital assets:
Structures and improvements 50 years
Equipment 5 – 25 years
Infrastructure 15 – 50 years
G. Interfund Transactions
Interfund transactions are reported as loans, services provided, reimbursements, or transfers. Loans are reported as interfund
receivables and payables, as appropriate, and are subject to elimination upon consolidation. Services provided, deemed to be
at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements occur when one fund
incurs a cost , charges the a ppropriate be nefiting fund, and reduces its related cost as a reimbursement. All other interfund
transactions are treated as transfers. Transfers among governmental funds are netted as part of the reconciliation to the
government ‐wide financial statements.
H. Deferred Revenue
In the government ‐wide financial statements, deferred revenue is recognized for transactions for which revenue has not yet
been earned. A typical transaction recorded as deferred revenue is the prepaid charged for services.
In the governmental fund financial statements, deferred revenue is recorded when transactions have not yet met the revenue
recognition criteria based on the modified accr ual basis of acco un ting. The City records deferred revenue for transactions for
which revenues have not been earned, or for which funds are not available to meet current financial obligations. Typical
transactions for which deferred revenue is recorded are grants received but not yet ear ned or available.
I. Compensate d Absences
In compliance with GASB Statement No. 16, the City has established a liability for accrued sick leave and vacation. All vacation is
accrued when incurred in the government ‐wide and proprietary financial statements. This liability is calculated for current
employees at the current rates of pay. City employees accrue vacation and sick leave that vary in a mounts, base d primarily on
employment st atus and years of service. In the event of termination or retirement, employees are reimbursed for the total
value of their accumulated vacation days and compensatory time. In the event of retirement, employees may choose to be paid
50% of their u nused sick leave, to a maxi mum of 480 hours at the current rate of pay. In addition, unused accumulated sick
leave may be converted to PERS retirement credit per the City’s contract with PERS.
Item 8.c. - Page 54
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐36
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
J. Long ‐term Debt
In the government ‐wide financial statements, proprietary fund, and private ‐purpose trust fund types in the fund financial
statements, long ‐term debt and other long ‐term obligations are reported as liabilities in the applicable governmental activities,
business ‐type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance
costs, are defe rred and amor tized over the life of the bon ds using straight line method. Bonds payable are reported net of the
applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of
the related debt.
In the fund financial stateme nts, governmental fund types recognize bond premiums and discounts, as well as, bond issuance
costs, during the current period. The face amount of the debt issued is reported as other financing resources. Premiums
received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from actual debt proceeds received, are reported as debt service
expenditures.
K. Fund Balances and Net Assets
Fund balance is the difference between the assets and liabilities reported in the governmental funds. In compliance with GASB
Statement No. 54, the City has established the following fund balance types:
Non ‐spendable – The non ‐spendable fund balance classification includes amounts that cannot be spent because they are either
(a) not in spe ndable form or (b ) legally or contractually required to be maintained intact.
Restricted – The restricted fund balance classification includes amounts that reflect constraints placed on the use of resources
(other than non ‐spendable items) that are either (a) externally imposed by creditors (such as through debt covenants), gr antors,
contributors, or laws or regulations of other governments ; or (b) imposed by law through constitutional provisions or enabling
legislation.
Committed – The committed fund balance classification includes amounts that can only be used for specific purposes pursuant
to constraints imposed by formal action of the City Council. Those committed amounts cannot be used for any ot her purpose
unless the government removes or changes the specifi ed use by taking the same type of action (legislation, resolution,
ordinance, etc.) it employed to previously commit those amount. Committed fund balance should also incorporate contractual
obligations to the extent that existing resources in the fund have been s pecifi c ally committed for use in satisfying those
contractual requirements.
Assigned – The assigned fund balance classification includes amounts that are constrained by the government’s intent to be
used for specific purposes, but that are neither restricted nor committed. Such intent is to be established by (a) the City Council
itself or (b) the City Mana ger to which the City Council has delegated th e authorit y to assign amounts to be used for specific
purposes.
Unassigned – The unassigned fund balance classification includes amounts that do not fall into one of the above four categories.
This classification represents fund balance that has not been assigned to other fu nds and that has not been restricted,
committed, or assigned for specific purposes within the General Fund. The General Fund is the only fund that should report this
category of fund balance. However, other governmental funds may report a negative balance in this classification if there is an
over ‐spending for specific pu rp oses for which amounts have been restricted, committed, or assigned.
Item 8.c. - Page 55
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐37
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
K. Fund Balances and Net Assets – continued
Net assets is the difference between the assets and liabilities reported in the governmental ‐wide and proprietary fund financial
statements. Net assets are classified in the following categories:
Invested in Capital Assets, net of Related Debt – The invested in capital assets, net of related debt classification includes
amounts consisting of capital assets net of a ccumulated de preciation and reduced by outstanding debt directly attributed to the
acquisition, construction, or improvement of the assets.
Restricted Net Assets – The restricted net assets classification includes amounts that are restricted by external creditors,
grantors, contributors, laws or regulations of other governments.
Unrestricted Net Assets – The unrestricted net assets classifications is the amount remaining tha t do not fall into one of the
above two categories.
The City’s policy that when an expenditure is incurred for which both restricted and unrestricted fund balances are available,
the restricted fund balance be spent first followed by committed, then assigned, and, if applicable, unassigned.
The City has es tablished a for m al minimum general fund balance policy of 15% of appropriations.
L. Property Taxes
California Constitution Article XIII A limits the combined property tax rate to one percent of a property’s assessed valuation.
Additional taxes may be imposed with voters’ approval. Assessed value is calculated at one hundred percent of a property’s fair
value, as defined by Article XIII A, and may be increased no more th an two perc e nt per year unless a change in ownership
occurs. The State Legislature has determined the method of distributing the one percent tax levy among the various taxing
jurisdictions.
Property tax revenues are recognized in the fiscal year for which taxes have been levied, and collected within sixty day s of fiscal
year end. Property taxes are billed and collected as follow s :
Secured Unsecured
Valuation/Lien Dates January 1 January 1
Levy Dates July 1 July 1
Due Dates November 1 (50%) August 1
February 1 (50%)
Delinquency Dates December 10 (Nov) August 31
April 10 (Feb)
The City adopted an alternative method of property tax distribution (the “Teeter Plan”). Under this method, th e City receives
100% of its secured propert y tax levied in ex change for foregoing any interest and penalties collected on delinquent taxes. The
City receives payments as a series of advances made by the County throughout the fiscal year. The secured property tax levy is
recognized as revenue upon receipt including th e final pay m ent, which generally is received within 60 days after the fiscal year
end.
Item 8.c. - Page 56
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐38
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
M. Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues, expenditures or expenses as appropriate. Actual results could differ from those estimates.
N. New Accounting Pronouncements
Governmental Accounting Standards Board Statement No. 64 – For the fiscal year ended June 30, 2012, the City implemented
GASB Statement No. 64, “Derivative Instruments: Application of Hedge Accounting Termination Provisions – an amendment of
GASB Statement No. 53.” The statement is effective for periods beginning after June 15, 2011. The ob jective of this statement
is to clarify whether an eff ective hedgi ng relationship continues after the replacement of a swap counterparty or a swap
counterparty’s credit support provider. This Statement sets forth criteria that establish when the effective hedging relationship
continues and hedge accounting should continue to be applied. Implementation of GASB St atement No. 64 did not have an
impact on th e City’s financial statements for the fiscal year ended June 30, 2012.
NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Biennial budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for
governmental funds. The tw o ‐year budg et is legally adopted for all funds by the City Council prior to July 1 of odd years. The City
Manager first submits a preliminary budget in April of the odd year, which includes projected expenditures and the means of
financing them, to the City Council. As modified durin g pu blic study sessions, the preliminary budget becomes the proposed budget.
Following public hearings on the proposed budget, the final annual budget is adopted by the City Council in June. After adoption of
the final budget, transfers of appropriations within a general fund department, or within other funds, can be made by the City
Manager. Bud g et modifications to any of the funds, increases or decreases to a fund’s overall budget, and all transfers in and out of
any funds, must be approved by the City Council. Numerous properly authorized amendments are made during the fiscal year.
Budgetary control is enhanced by inte grating the budg et into the general ledger accounts. Encumbrance accounting is employed
(e.g., purchase orders) to avoid expenditures over the budget. Encumbrances outstanding at fiscal year end are automatically
rebudgeted in the following fiscal year.
NOTE 3 – CASH AND INVESTMENTS
The composition of cash and investments as of June 30 , 2012, is as follow s :
Total
Cash in bank and on hand $ 1,589,671
Cash and investments held with fiscal agent 457,998
Investments 15,077,876
Total $ 17,125,545
Cash and investments are classified in the financial statements as shown below, based on whether or not their use is restricted
under the terms of the City’s debt instruments or Agency’s agreements:
Cash and investments, statement of net assets $ 14,386,629
Restricted cash and investments, statement of net assets 13,464
Cash and inves tments, statement of fiduci ary ne t assets 2,725,452
Total $ 17,125,545
Item 8.c. - Page 57
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐39
NOTE 3 – CASH AND INVESTMENTS – continued
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. The table also
identifies certain provisions of the California Government Code that address interest rate risk, credit risk, and concentration of credit
risk.
Maximum Maximum
Maximum Percentage of Investment
Authorized Investment Type Maturity Portfolio in One Issuer
Local Agency Bonds 5 years None None
U.S. Treasury Obligations 5 years 60% None
U.S. Agency Securities 5 years None None
Bankers’ Acceptances 180 days 40% 30%
Commercial Paper 270 days 25% 10%
Negotiable Certificates of Deposit 5 years 20% None
Repurchase Agreements 1 year None None
Reverse R epurc h ase Agreements 92 days 20% of base value None
Medium ‐Term Notes 5 years 30% None
Mutual Funds N/A 20% 10%
Money Market Mutual Funds N/A 20% 10%
Mortgage Pass ‐Through Securities 5 years 20% None
County Pooled Investment Fund N/A None None
Local Agency Investment Fu nd (LAIF) N/A None None
JPA Pools (other investment pools) N/A None None
Guaranteed Investment Contract 15 months None None
Investments Authorized by Debt Agreements
Investments of note proceeds held by note trustees are governed by the 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 fiscal agents. The table also identifies cer ta i n provisions of these debt agreements that
address interest rate risk, credit risk, and concentration of credit risk.
Maximum Maximum
Maximum Percentage of Investment
Authorized Investment Type Maturity Portfolio in One Issuer
Money Market Accounts N/A None None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the
longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways
that the City manages its exposure to inter est rate risk is by purc hasin g 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 flows and liquidity needed for op eratio ns. Information about the sensitivity of the fair values of the
City’s investments to market interest rate fluctuations is provided on the following page that shows the distribution of the City’s
investments by maturity:
Item 8.c. - Page 58
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐40
NOTE 3 – CASH AND INVESTMENTS – continued
Disclosures Relating to Interest Rate Risk – continued
Remaining Maturity (in Months)
Carrying 12 Months or 13 – 24 25 – 60 More than
Investment Type Amount Less Months Months 60 Months
Local Agency Investment Fund $ 13,222,396 $ 13,222,396 $ ‐ $ ‐ $ ‐
Certificates of Deposit 851,053 250,000 100,000 501,053
Money Market Funds 1,004,427 1,004,427
Held by Fiscal Agent:
Money Market Funds 457,998 457,998
Total $ 15,535,874 $ 14,934,821 $ 100,000 $ 501,053 $ ‐
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 rating by a nationally recognized statistical rating organization. Presented below is the minimum
rating required by (where applicable) the California Government Co de, the City’s inv estment policy, or debt agre ements, and the
actual rating as of fiscal year end for each investment type:
Minimum Exempt Rating as of Fiscal Year End
Carrying Legal From
Investment Type Amount Rating Disclosure AAA Aa Not Rated
Local Agency Investment Fund $ 13,222,396 N/A $ ‐ $ ‐ $ ‐ $ 13,222,396
Certificates of Deposit 851,053 N/A 851,053
Money Market Funds 1,004,427 N/A 1,004,427
Held by Fiscal Agent:
Money Market Funds 457,998 N/A 457,998
Total $ 15,535,874 $ ‐ $ ‐ $ ‐ $ 15,535,874
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. There are no investments in any one issuer that represent 5% or more of total City’s
investments.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not
be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The
California Government Code and the City’s investment policy do not contai n legal or policy requirements that would limit the
exposure to custodial credit risk for deposits, other tha n 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 fair 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 secur e the City’s deposits by pled g ing first trust deed mortgage notes having a value of 150%
of the secured public deposits.
Item 8.c. - Page 59
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐41
NOTE 3 – CASH AND INVESTMENTS – continued
Custodial Credit Risk – continued
None of the City’s deposits with financial institutions in excess of the Federal Depository Insurance Corporation’s limits were held in
uncollateralized accounts.
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 col lateral securities that are in the possession of
another part y. 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 investments. With respect to investments, custodial credit risk generally applies
only to direct investments in marketable securities. Custodial credit ris k does not apply to a local government’s indirect investment
in securities through the use of mutual funds or governmental investment pools (such as LAIF).
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code
under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the
accompanying basic financial statements at the amounts based upo n the City’s pro ‐rata share of the fair value provided by LAIF for
the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the
accounting records maintained by LAIF, which are recorded on an amortized cost basis.
NOTE 4 – CAPITAL ASSETS
Capital asset ac tivity for the fiscal year e nded June 30, 2012, is as follows:
Transfers and
Balance Other Re ‐ Balance
July 1, 2011 Additions Deletions classifications June 30, 2012
Governmental Activities
Nondepreciable capital assets
Land $ 2,870,474 $ ‐ $ 697,890 $ ‐ $ 2,172,584
Infrastructure 6,379,188 6,379,188
Construction in progress 5,364,312 4,093,258 (3,942,060) 5,515,510
Total nondepreciable capital
assets 14,613,974 4,093,258 697,890 (3,942,060) 14,067,282
Depreciable capital assets
Structures and improvements 4,832,259 3,034,384 7,866,643
Equipment 4,714,907 457,056 5,171,963
Infrastructure 74,196,413 907,676 75,104,089
Total depreciable capital assets 83,743,579 457,056 3,942,060 88,142,695
Less accumulated depreciation 35,583,323 1,772,946 37,356,269
Net depreciable capital assets 48,160,256 (1,315,890) 3,942,060 50,786,426
Net capital assets $ 62,774,230 $ 2,777,368 $ 697,890 $ ‐ $ 64,853,708
Item 8.c. - Page 60
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐42
NOTE 4 – CAPITAL ASSETS – continued
Transfers and
Balance Other Re ‐ Balance
July 1, 2011 Additions Deletions classifications June 30, 2012
Business ‐type Activities
Nondepreciable capital assets
Land $ 56,730 $ ‐ $ ‐ $ ‐ $ 56,730
Total nondepreciable capital
assets 56,730 56,730
Depreciable capital assets
Structures and improvements 222,999 222,999
Equipment 742,810 13,418 183,553 572,675
Infrastructure 15,873,294 15,873,294
Total depreciable capital assets 16,839,103 13,418 183,553 16,668,968
Less accumulated depreciation 6,838,090 254,477 183,553 6,909,014
Net depreciable capital assets 10,001,013 (241,059) 9,759,954
Net capital assets $ 10,057,743 $ (241,059) $ ‐ $ ‐ $ 9,816,684
Depreciation Allocation
Depreciation expense was charged to function and programs based on their usage of related assets. The amounts allocated to each
function or program is presented below:
Governmental Activities:
General government $ 85,572
Public safety 354,085
Maintenance services 90,220
Streets and roads 721,423
Sewer 521,646
Total depreciation expense – governmental activities $ 1,772,946
Business ‐type Activities:
Water $ 254,477
Total depreciation expense – business ‐type activities $ 254,477
NOTE 5 – LOAN RECEIVABLE
On July 25, 2006, the City entered into a loan agreement with the Redevelopment Agency of Arroyo Grande (RDA) for the purpose of
funding the cost of the acquisition of a vacant lot on the north side of Faeh Street in the amount of $820,130. The loan originally
called for inter est to be accrued equal to the rate earne d by the City’s Local Agency Investment Fund. In the fiscal year 2010, the
loan was amended to no longer accrue interest. Repayment is due when the property is sold. Total loan receivable outstanding
with accrued interest at June 30 , 2012 was $9 19,797.
The City entered into a loan agreement with Courtland Arroyo Grande, LP to construct a 108 ‐unit affordable senior housing complex
in the amount of $412,847. Of this loan amount, $300,000 was provided by the City’s In ‐Lieu Affordable Housing Fund and $112,847
provided by the Arroyo Gra nde Redevelopment Ag enc y. Due to the dissolution of the redevelopment agencies in California, the
$112,847 portion of the loan receivable was transferred to the Successor Agency of the Former Redevelopment Agency of Arroyo
Grande.
Item 8.c. - Page 61
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐43
NOTE 5 – LOAN RECEIVABLE – continued
On August 13, 1996, the City entered into a loan agreement with C ‐Court Limited Partnership for the purpose of development of a
rental housing development located at 351 South Elm Street in the amount of $344,040. The note has a term of 30 ‐years, with no
interest beari ng. The total a mount of the loan is due at the end of the term.
On August 13, 1996, the City entered into a loan agreement with Oak Forest Association for the purpose of development of a 20 ‐unit
multifamily affordable housing development located at 163 South Elm Str eet in th e amo unt of $445,000. The note had a term of 30 ‐
years, with no interest bearing. The total amount of the loan is due at the end of the term.
Loan Receivable :
In ‐Lieu Affordable Housing Fund $ 1,219,797
CDBG Fund 789,040
Total $ 2,008,837
NOTE 6 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
A. Interfund Transfers
The transfers in and out between funds during the fiscal year ended June 30, 2012, were as follows:
Transfer In Transfer Out
General Fund $ 2,184,356 $ 2,164,577
Transportation Impact Fees Fund 739,974
Water Availability Fund 21,082
CDBG Fund 6,031
Redevelopment Set Aside Fund 185,680
Capital Improvement Fund 3,764,426
Nonmajor Governmental Funds 742,872 1,503,844
Water Fund 1,705,166
Lopez Fund 365,300
Total $ 6,691,654 $ 6,691,654
B. Interfund Loans
The due to and from other funds at June 30, 2012, were as follows:
Due From Due To
General Fund $ 694,285 $ ‐
CDBG Fund 8,795
Capital Improvement Fund 630,602
Nonmajor Governmental Funds 54,888
Total $ 694,285 $ 694,285
Item 8.c. - Page 62
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐44
NOTE 7 – LONG ‐TERM DEBT
A. Compensated Absences
City employees accumulate earned but unused vacation and sick pay benefits, which can be converted to cash at termination of
employment. Since no means exists to reasonably estimate the amounts that might be liquidated with expendable currently
available financial resources, if any, they are reported as long ‐term debt on the Sta tement of Net Assets. No expendit u re is
reported for these amounts in the funds statements. However, in the statement of activities the expenditure is allocated to
each function based on usage. The non ‐current portion of these vested benefits (payable in accordance with various collective
bargaining agreements) at June 30, 20 12, total $904 ,994 for governmental activities and $73,844 for business ‐type activities.
B. General Obligation Bonded Debt
The purpose of the bonds was to finance the expansion, construction, and retrofit of the City’s fire station. The outstanding
general obligation bonded debt of the City at June 30, 2012 is shown below:
Redeemed
Date of Maturity Amount of Outstanding Current Outstanding
Issue Interest Rates Date Original Issue July 1, 2011 Year June 30, 2012
2003 2.00 – 4.45% 2024 $ 1,900,000 $ 1,395,000 $ 80,000 $ 1,315,000
The annual requirements to amortize general obligation bonds payable is as follows:
Fiscal Year
Ending June 30 Principal Interest Total
2013 $ 85,000 $ 53,253 $ 138,253
2014 90,000 49,970 139,970
2015 90,000 46,505 136,505
2016 95,000 42,850 137,850
2017 100,000 38,900 138,900
2018 ‐2022 580,000 125,686 705,686
2023 ‐2024 275,000 12,315 287,315
Total $ 1,315,000 $ 369,479 $ 1,684,479
C. Tax Allocation Bonded Debt
The purpose of the tax allocation bonds were to repay debt and to provide funds for future improvement projects. On
December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26, dissolving California Redevelopment Agencies as
of January 31, 2012. As a result, seven months of activity and the resulting e xtraordinary gain is report ed below:
Redeemed
Date of Interest Maturity Amount of Outstanding Current Extraordinary Outstanding
Issue Rates Date Original Issue July 1, 2011 Year Gain June 30, 2012
2007 5.3 – 5.8% 2037 $ 6,285,000 $ 6,165,000 $ 105,000 $ 6,060,000 $ ‐
Item 8.c. - Page 63
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐45
NOTE 7 – LONG ‐TERM DEBT – continued
D. Capital Leases Payable
The City is leasing police equipment (vehicles, motorcycles, and radars) with Ford Motor Credit under an agreement which
provides for title to pass upon expiration of the lease period.
The City is leasing a platform fire truck with Oshkosh Capital under an agreement which provides for title to pass upon
expiration of th e lease period .
The City is leasing a sewer vactor truck with Kansas State Bank of Manhattan which provides for the title to pass upon expiration
of the lease period.
The future minimum payment obligation for the capital leases payable are as follows:
Fiscal Year Ford Motor Oshkosh Kansas State
Endi ng June 30 Credit Capital Bank Total
2013 $ 11,249 $ 38,478 $ 15,002 $ 64,729
2014 38,478 15,002 53,480
2015 38,478 15,002 53,480
2016 38,479 15,002 53,481
2017 15,002 15,002
Total 11,249 153,913 75,010 240,172
Less: amount representing
in interest (152) (12,947) (5,933) (19,032)
Present value of net minimum
lease payments $ 11,097 $ 140,966 $ 69,077 $ 221,140
E. California Energy Resources Conservation and Development Commission Loan Payable
On July 7, 2010, the City entered into a loan agreement with the California Energy Resources Conservation and Development
Commission (CA Energy). The purpose of the loan was to partially fund the city ‐wide energy savings project. The project
consisted of heating, ventilation, and air conditioning (HVAC) retrofits including equipment, building controls, lighting
equipme nt, and lighting controls, installation of vendin g machine misers, installation of LCD computer monitors, installation of
computer controls, and installation of LED streetlights. Installation occurred at all City owned buildings including city council
chambers, city hall, fire department, community center, corporate yard, Soto Field complex, and parks and recreation building.
The outst andi n g loan payable debt of the City at June 30, 2012 is shown below:
Redeemed
Date of Maturity Amount of Outstanding Current Outstanding
Issue Interest Rates Date Original Issue July 1, 2011 Year June 30, 2012
2011 3.00% 2026 $ 127,512 $ 127,512 $ ‐ $ 127,512
Item 8.c. - Page 64
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐46
NOTE 7 – LONG ‐TERM DEBT – continued
E. California Energy Resources Conservation and Development Commission Loan Payable – continued
The future minimum payment obligation for the loan payable is as follows:
Fiscal Year
Ending June 30 Principal Interest Total
2013 $ 3,420 $ 8,179 $ 11,599
2014 7,936 3,664 11,600
2015 8,176 3,424 11,600
2016 8,414 3,185 11,599
2017 8,677 2,923 11,600
2018 ‐2022 47,475 10,523 57,998
2023 ‐2026 43,414 2,985 46,399
Total $ 127,512 $ 34,883 $ 162,395
F. United States Department of Agriculture Loan Payable
On September 1, 2010, the City entered into a lease ‐purchase agreement with the United States Department of Agriculture
(USDA). The purpose of this loan was to acquire the property and office building for the relocation of the City Hall offices. The
outstanding loan payable debt of the City at June 30 , 2012 is shown bel ow:
Redeeme d
Date of Maturity Amount of Outstanding Current Outstanding
Issue Interest Rates Date Original Issue July 1, 2011 Year June 30, 2012
2011 3.75% 2041 $ 1,200,000 $ 1,200,000 $ 22,000 $ 1,178,000
The future minimum payment obligation for the USDA loan payable is as follows:
Fiscal Year
Ending June 30 Principal Interest Total
2013 $ 23,000 $ 43,744 $ 66,744
2014 24,000 42,862 66,862
2015 25,000 41,944 66,944
2016 26,000 40,988 66,988
2017 27,000 39,994 66,994
2018 ‐2022 150,000 183,750 333,750
2023 ‐2027 180,000 152,962 332,962
2028 ‐2032 217,000 115,856 332,856
2033 ‐2037 260,000 71,250 331,250
2038 ‐2041 246,000 18,900 264,900
Total $ 1,178,000 $ 752,250 $ 1,930,250
Item 8.c. - Page 65
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐47
NOTE 7 – LONG ‐TERM DEBT – continued
G. Reimbursement Agreement
On June 10, 2005, the City entered into a reimbursement agreement with S & S Homes of the Central Coast, Inc (Developer)
whereas the Developer paid for costs of designing, constructing, and installing certain underground utility improvements that
are subject to reimbursement from the City. The City is obligated to reimburse the De veloper in full by the end of seven years
from the time final inspecti on and a pproval of the underground utilities occurred, with simple interest accruing at 5% per
annum.
On March 24, 2009, the City amended to reimbursement agreement with the Developer which reduced the amount to be
reimbursed by $2 0,000.
The outsta nding reimbursement agreement of the City at June 30, 2012 is shown below:
Redeemed
Date of Maturity Amount of Outstanding Current Outstanding
Issue Interest Rate Date Original Issue July 1, 2011 Year June 30, 2012
2007 5.00% 2014 $ 129,293 $ 27,182 $ ‐ $ 27,182
The future minimum obligation for the reimbursement agreement is as follows:
Fiscal Year
Ending June 30 Principal Interest Total
2013 $ ‐ $ ‐ $ ‐
2014 27,182 4,613 31,795
Total $ 27,182 $ 4,613 $ 31,795
H. Other Postemployment Benefits
In 2004, GASB issued Statement No. 45 which required the City to measure and report the liabilities associated with other post ‐
employment benefits (OPEB). The City’s annual OPEB requirement was determined to be $195,647. The City is currently
funding the liability on a pay ‐as ‐you ‐go basis but is working towards fu lly fundin g this liability in the fut ure. See Note 12 for
further detail.
I. Changes in Long ‐Term Liabilities
Long ‐term liability activity for the fiscal year ended June 30, 2012, is as follows:
Balance Extraordinary Balance Due Within
July 1, 2011 Additions Deletions Gain June 30, 2012 One Year
Governmental Activities
Compensated absences $ 943,653 $ 581,522 $ 620,181 $ ‐ $ 904,994 $ ‐
General obligation bonds 1,395,000 80,000 1,315,000 85,000
Tax allocation bonds 6,165,000 105,000 6,060,000
Capital leases payable 312,405 69,077 160,342 221,140 59,035
CA energy loan payable 127,512 127,512 3,420
USDA loan payable 1,200,000 22,000 1 ,178 ,000 23,000
Reimbursement agreement 27,182 27,182
OPEB 384,188 183,908 138,154 429,942
Total $10,554,940 $ 834,507 $ 1,125,677 $ 6,060,000 $ 4,203,770 $ 170,455
Item 8.c. - Page 66
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐48
NOTE 7 – LONG ‐TERM DEBT – continued
I. Changes in Long ‐Term Liabilities – continued
Balance Balance Due Within
July 1, 2011 Additions Deletions June 30, 2012 One Year
Business ‐type Activities
Compensated absences $ 73,552 $ 42,399 $ 42,107 $ 73,844 $ ‐
OPEB 40,478 11,739 2,235 49,982
Total $ 114,030 $ 54,138 $ 44,342 $ 123,826 $ ‐
NOTE 8 – WATER SUPPLY CONTRACT
The City of Arroyo Grande has entered into a Water Supply Contract with the San Luis Obispo County Financing Authority (SLOCFA).
The SLOCFA was created on August 15, 2000, to issue bonds for the purpose of financing part or all of the costs of the purc hase,
construction, expansion, improvement, or rehabilitation of any real or other tangibl e property. The SLOCFA issued $28,905,000
($13,200,000 of General Obligation Bonds and $15,705,000 Revenue Bonds) of Lopez Dam Improvement Bonds on October 1, 2000.
The City of Arroyo Grande is considered a participating agency of SLOCFA. The City’s share of the Water Su pply Co ntract is 50 .55%,
based upon such participating agency’s share of the quantity of water to be distributed by SLOCFA from the Lopez Dam. The City is
obligated to pay for the debt service of SLOCFA based on their water share, as stated above. The City is further obligated to make
contract pa yments un til the fiscal year 2030. The future minimum contract payments for the debt service are shown below:
Fiscal Year Contract
Ending June 30 Payments
2013 $ 535,940
2014 535,965
2015 535,232
2016 536,243
2017 536,622
2018 ‐2022 2,691,537
2023 ‐2027 2,705,032
2028 ‐2030 1,631,856
Total $ 9,708,427
The minimum contract payments only include the City’s portion of the Revenue Bonds. The General Obligation Bonds are not
included in the financial statements, because the SLOCFA collects the property tax revenue and makes the payment on behalf of the
City. However, in the event SLOCFA is disbanded, the City will be obligated to co ntinue to pay its share of th e remaining debt
service.
Item 8.c. - Page 67
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐49
NOTE 9 – JOINT POWERS AUTHORITY
The City of Arroyo Grande is a member of the Five Cities Fire Authority (FCFA), a joint powers authority between the Cities of Arroyo
Grande, Grover Beach, and the Oceano Community Services District. FCFA was formed on July 9, 2010 for the purpose of providing a
more efficient fire protection service within the City limits of Arroyo Grande and Grover Beach, as well as the towns of Ocea no and
Halcyo n, which are unincor porated areas of San Luis Obispo County. Each member contributes its pro rata share of operating costs
to FCFA based on a funding formula, calc ul ated annually. The FCFA governing board consists of one member appointed from each
participating entity as determined by the respective City Council or Board of Directors. All financial decisions are made by this three ‐
member board. The City of Arroyo Grande contributed $1,614,330 to FCFA during the fiscal year ended June 30, 2012 for fire
protection ser v ices. Separate financial statements may be obtained from the Five Cities Fire Authority at 140 Traffic Way in Arroyo
Grande, California.
NOTE 10 – CITY EMPLOYEES’ RETIREMENT PLAN
Plan Description
The City of Arroyo Grande’s defined pension plan, Public Employees’ Retirement System (PERS), provides retirement and disability
benefits, annual cost ‐of ‐living adjustments, and death benefits to plan members and beneficiaries. PERS is part of the Public Agency
portion of the California Public Employees’ Retirement System (CalPERS), an agent multiple ‐employer plan administered by CalP ERS,
which acts as a common inv estment an d administrative agent for participating public employers within the State of California. A
menu of benefit provisions as well as other requirements are established by State statutes with the Public Employees’ Retirement
Law. The City selects optional benefit provisions from the benefit menu by con trac t with CalPERS and adopts th ose benefits through
local ordinance (other local methods). CalPERS issues a separate comprehensive annual financial report. Copies of the CalPERS’
annual financial report may be obtained from the CalPERS Executive Office – 400 P Street – Sacramento, CA 95814.
Funding Policy
The City contributes the employee and employer shares for the Miscellaneous Plan and the Safety Plan. Since the City has less than
100 active members in each plan as of June 30, 2004, it is required to participate in a risk pool. Mandated pooling became effective
for the City of Arroyo Gra nde during the 20 05 ‐06 fiscal year. During the 2010 ‐11 fiscal year, the City contracted fire services to Five
Cities Fire Authority and, as a result, is responsible for the retirement contributions for their employees. This changed the history of
funded status when compared to prior fiscal year’s CAFR. The City of Arroyo Grande is required to con tribut e the actuarially
determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are
those adopted by the CalPERS Board of Administration. The required employer contribution rates for the fiscal year 2011 ‐12, was
19.509% for miscellaneous employees and 42.355% for police safety employees. The contribution requirements of the plan
members are established by the State statutes and the employer contribution rate is established and may be amended by CalPERS.
The City’s contributions to CalPERS for fiscal years ending June 30, 2012, 2011, and 2010, were $1,506,301, $1,3 15 ,871, and
$1,418,323, respectively, and equal 100% of the required contributions for each fiscal year.
NOTE 11 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
Plan Description
The City of Arroyo Grande provides post ‐retirement health benefits, in accordance with State statutes, to all employees retiring from
the City and enrolled in an insurance program under the California Public Employees’ Medical and Hospital Care (PEMHCA). The
CalPERS PEMHCA plan is a defined contribution, multiple employer, and healthcare plan providing benefits to ac tive and retired
employees. Th e healthcare plan is administered by the California Public Employees’ Retirement System. Copies of the CalPERS
annual financial report may be obtained from the Executive Office, 400 P Street, Sacramento, CA 95814.
Item 8.c. - Page 68
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐50
NOTE 11 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS – continued
Funding Policy
The City participates in the CalPERS Health Benefit Program where all employee groups were under the equal contribution option.
The City was required to contribute $108 per month during calendar year 2011 and $112 per month during calendar year 2012
towards the cost of the retiree health insurance, which is the same amount contrib ut e d toward active employee health insurance.
In modifying the current retiree medical agreements, it was agreed that existing employees with a minimum of five (5) years of full ‐
time service at the time of retirement and new employees with a minimum of ten (10) years of service will receive a supplemental
monthly paym ent (amou nt varies depending upon employee group and type of insurance). The remaining balance of the premium
is paid directly by the retirees to CalPERS. The mandatory employer contribution for active and retiree health insurance is increased
annually in accordance with PEMHCA regulation. Beginning on January 1, 20 13, the c ontributio n amount will increase to $115 per
month. During fiscal year 2011 ‐12, expenditures of $140,389 were recognized for post ‐retirement health insurance contributions on
a pay ‐as ‐you ‐go basis.
As required by GASB 45, an actuary will determine the City’s annual required contributions (ARC) at least once every two fiscal years.
The AR C is calc ulated in accor dance with certain parameters, and includes (1) the normal cost for one year, and (2) a component for
amortization of the total unfunded actuarial accrued liability (UAAL) over a period not to exceed 30 years.
GASB 45 does not require pre ‐fundi ng of OPEB be nefits. Therefore, the City’s funding policy is to continue to pay healthcare
premiums for retirees as they fall due. The City has elected not to establish an irrevocable trust at this time; however, the City plans
to begin funding this liability during the 2012 ‐13 fiscal year.
Annual OPE B Cost
For the fiscal year 2011 ‐12, the City’s OPEB cost (expense) of $195,647 was less than the annual required contributions (ARC) of
$202,039 due to interest on OPEB obligations of $21,233 and the amortization adjustment to ARC of $(27,625). The City’s annual
OPEB cost, the annual OPEB cost contributed, the percentage of annual OP EB cost contribute d to the plan, and the net OP EB
obligation of 2011 ‐12, is shown below:
Annual % of Annual
Fiscal Year Annual OPEB Cost OPEB Cost Net OPEB
Ending June 30 OPEB Cost Contributed Contributed Obligation
2008 $ 219,706 $ 64,532 29% $ 155,174
2009 219,706 109,503 50% 110,203
2010 219,706 128,616 59% 91,090
2011 196,673 128,474 65% 68,199
2012 195,647 140,389 72% 55,258
Total $ 1,051,438 $ 571,514 54% $ 479,924
The funded status of the plan as of June 30, 2010, is as follows:
Actuarial accrued liability (AAL) $ 2,053,387
Actuarial value plan assets
Unfunded actuarial accrued liability (UAAL) $ 2,053,387
Funded ratio (actuarial value of plan assets/AAL) 0%
Covered payroll (active plan members) $ 5,055,775
UAAL as a percentage of covered payroll 41%
Item 8.c. - Page 69
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐51
NOTE 11 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS – continued
Annual OPEB Cost – continued
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of
the occurrence of events are far into the future. Examples include assumptions about future employment, mortality, and the
healthcare cost trend. Amounts determined regarding the funded status of the plan and th e annual required cont ributions of the
employer are subjec t to continual revisions as actual results are compared with past expectations and new estimates are made
about the future. The schedule of funding progress, presented as required supplementary information following the notes to the
basic financial statements, presents multiyear trend information that shows whether th e actuarial value of plan ass ets is increasing
or decreasing over time relative to the act uarial accrued liabilities for benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer
and 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 poin t. The actuar ial methods and assumptions used include
techniques that are designed to reduce short ‐term volatility in actuarial accrued liabilities and the actuarial value of assets,
consistent with the long ‐term perspective of the calculations.
The actuarial valuation of plan assets, dated July 1, 2010, used the Projected Un it Cred it cost method. The actuarial assumptions
included a 5.0 percent investment rate of return (net of administrative expenses) and an annual healthcare cost trend rate of 8
percent initially, reduced by decrements to an ultimate rate of 5.0 percent after three years. These assumptions reflect an implicit
3.0 percent ge neral inflation assumption. The City’s unf unded actuarial accrued liability is being amortized as a level dollar amount
on an open basis over 30 years. The remaining amortization period as of June 30, 2010 was 30 years.
NOTE 12 – LIABILITY, PROPERTY, AND WORKERS’ COMPENSATION PROTECTION
A. Description of Self ‐Insurance Pool Pursuant to Joint Power s Agreement
The City of Arroyo Grande is a member of the California Joint Powers Insurance Authority (Cal JPIA). The Cal JPIA is composed
of 107 California public entities and is organized under a joint powers agreement pursuant to California Government Code
6500 et seq. The purpose of the Cal JPIA is to arrange and administer programs for the pooling of self ‐insur ed losses, to
purch ase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other coverage’s. The
Cal JPIA’s pool began covering claims of its members in 1978. Each member government has an elected official as its
representative on the Board of Directors. Th e Board operates through a 9 ‐member Executive Committee.
B. Self ‐Insurance Programs of the Authority
General Liability – Each member government pays a primary deposit to cover estimated losses for a fiscal year (claims year). Six
months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for
each open claims year. Costs are spread to members as f ollows: the first $30 ,000 of each occurrence is charged directly to the
member; costs from $30,001 to $750,000 are pooled based on a member’s share of costs under $30,000; costs from
$750,001 to $15,000,000 are pooled based on payroll. Costs of covered claims about $15,000,000 are currently paid by
reinsurance. Th e protection fo r each member is $5 0,000,000 per occurrence and $50,000,000 annual aggregate.
Item 8.c. - Page 70
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐52
NOTE 12 – LIABILITY, PROPERTY, AND WORKERS’ COMPENSATION PROTECTION – continued
B. Self ‐Insurance Programs of the Authority – continued
Workers’ Compensation – The City of Arroyo Grande also participates in the workers’ compensation pool administered by the
Cal JPIA. Members retain the first $50,000 of each claim. Claims are pooled separately between public safety and non ‐public
safety. Loss development reserves are allocated by pool and by loss layer ($0 to $1 00,000 allocated by re tained amo unt and
$100,000 to $2,000,000 by payroll). Losses from $50,000 to $100,000 and the loss development reserve associated with losses
up to $100,000 are pooled based on the member’s share of losses under $50,000. Losses from $100,000 to $2,000,000 and loss
development reserves associated with loss es from $100 ,000 to $2,000,000 are pooled based on payroll. Costs from $2,000,000
to $50,000,000 are transferred to an excess insurance policy. Costs in excess of $50,000,000 are pooled among the Members
based on payroll. Administrative expenses are paid from the Cal JPIA’s investment earnings.
C. Purchase Insurance
Property Insurance – The City of Arroyo Grande participates in the all ‐risk property protection of the Cal JPIA. Several insurance
companies underwrite this insurance protection. The City’s property is currently insured according to a schedule of covered
property submitted by the City to the Cal JPIA. Total all ‐risk property ins urance coverage is $37,03 3,492. There is a $5,000 per
loss deductible. Premiums for the coverage are paid annually and are not subject to retroactive adjustments.
Fidelity Bonds – The City of Arroyo Grande purchases blanket fidelity bond coverage in the amount of $1,000,000 with $2,500
deductible. The fidelity coverage is provided through Cal JPIA. Premiu ms are paid annuall y and ar e not subject to retroactive
adjustments.
D. Adequacy of Protection
During the past three fiscal (claims) years, none of the above programs have bad settlements or judgments that exceeded
pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in
the prior fiscal year.
NOTE 13 – REVENUE LIMITATIONS IMPOSED BY CALIFORNIA PROPOSITION 21 8
Proposition 218, which was a pproved by the voters in November 1996, will regulate the City’s ability to impose, increase, and extend
taxes, assessments, and fees. Any new, increased, or extended taxes, assessments, and fees subject to the provisions of Proposition
218, require voters’ approval before they can be implemented. Additio nally, Proposition 218 provides th a t these taxes,
assessments, and fees are subject to the voters’ initiative process and may be rescinded in the future years by the voters.
NOTE 14 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY
On December 29, 2011, the California Supreme Court up held Assembly Bill 1X 26 (th e Bill) that provides for the dissolution of all
redevelopment agencies in the State of California. This action impacted the reporting entity of the City that previously had reported
a redevelopment agency within the reporting entity of the City as a blended component unit.
The Bill provides that up on dissolution of a redevelopmen t agency, either the City or another unit of local government will agree to
serve as the “successor agency” to hold the assets until they are distributed to other units of State and local government. On
January 10, 2012, the City Council elected to become the Successor Agen cy for th e former redevelopment agency in accordance with
the Bill as part of the City Resolution No. 4420.
Item 8.c. - Page 71
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐53
NOTE 14 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY – continued
After the enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter
into new projects, obligations or commitments. Subject to the control of a newly established oversight boar d, remaining assets can
only be use d to pa y enforceable obligations in existence at the date of dissolution (including the completion of any unfinished
projects that were subject to legally enforceable contractual commitments).
In future years, successor agencies will only be allocated revenue in the amount that is necessary to pay th e estimated annual
installment pa yments on enf orceable obligations of the former redevelopment agency until all enforceable obligations of the prior
redevelopment agency have been paid in full and all assets have been liquidated.
The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets between
redevelopmen t agencies and other pu blic bod ies 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 tr ansferred to the pu blic bod y designated as the successor agency by the Bill.
Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City
are valid enforceable obligations payable by the successor agency trust under the requirements of the Bill. Th e City’s position on
this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible
that a legal determination may be made at a later date by appropriate judicial authority that would resolve this issue unfavorably to
the City.
Finan cial Re po rting
In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all
redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012.
Prior to that date, the final seven months of activity of th e redevelopment agen cy c ontinued to be reported in the governmental
funds of the City. After the date of dissolution, the assets and activities of the dissolved redevelopment agency are reported in a
fiduciary fund (private ‐purpose trust fund) in the financial statements of the City.
Extraordinary It em s
The transfer of assets and liabilities of the former redevelopment agency as of February 1, 2012 (effectively the same date as
January 31, 2012) from governmental funds of the City to fiduciary funds was reported in the governmental funds as an
extraordinary loss in the governmental fund financial statements. The receipt of thes e assets and liabilities as of Januar y 31 , 2012
was reported in the private ‐purpose trust fund as an extraordinary gain.
Because of the different measurement focus of the governmental funds (current financial resources measurement focus ) and the
measurement focus of the trust funds (economic resources measurement focus ), the extraordinary loss recognized in th e
governmental funds was not the same amount as the extraordinary loss that was recognized in the fiduciary fund financial
statements.
Item 8.c. - Page 72
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐54
NOTE 14 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY – continued
Extraordinary Items – continued
The difference between the extraordinary loss recognized in the fund financial statements and the extraordinary loss recognized in
the fiduciary fund financial statements is reconciled below:
Total extraordinary loss reported in the governmental funds – increase to net assets of the
Successor Agency Trust Fund $ 3,333,432
Bond issuance costs recor ded in the government ‐wide financial statements – increase to net assets
of the Successor Agency Trust Fund 264,377
Fixed assets recorded in the government ‐wide financial statements – increase to net assets of the
Successor Agency Trust Fund 697,890
Accrued bond interest reported in the government ‐wide financial statements – dec rease to net
assets of the Successor Agency Trust Fund (144,270)
Deferred revenue recorded in the fund financial statements eliminated due to change in
accounting principles – decrease to net assets of the Successor Agency Trust Fund (732,970)
Long ‐term debt reported in the government ‐wide financial statements – decre ase to net assets of
the Successor Age ncy Trust Fund (6,060,000)
Net decrease to net assets of the Successor Agency Trust Fund as a result of initial transfers (equal
to amount of extraordinary gain reported in the government ‐wide financial statements of the City) $ (2,641,541)
Cash and Investments
The RDA has pooled its cash and investments with the City in order to achieve a higher return on investment. Certain restricted
funds, which are held and invested by independent outside custodians through contractual agreements, are not pooled. These
restricted funds include cash with fiscal agents. See Note 3 for disclosure related to ca sh and inv e stments pooled with the City and
the related custodial risk categorization.
Cash and investments at June 30, 2012, consisted of the following:
Total
Cash and investments pooled with the City $ 1,949,702
Restricted cash and investments held with fiscal agent 457,998
Total $ 2,407,700
Inventory – Land Held for Resale
On August 11, 2006, the RDA purchased a vacant lot at the corner of Faeh Street and El Camino Real in the amount of $825,129. The
RDA purchased the property because the location is a key site to the City’s economic development strategy and goals and didn’t
want the property to be sol d as individual lots.
Item 8.c. - Page 73
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐55
NOTE 14 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY – continued
Inventory – Land Held for Resale – continued
On June 22, 2010, the RDA transferred $980,000 to the General Fund, in exchange for land located on Pearwood Ave in which the
City purchased for approximately $35,799. The proposed sale and purchase price is based upon an appraisal conducted at the time
the project was proposed.
The RDA is currently holding both proper ties for resale. Inventory is valued at cost wh ich approximates fair value.
Notes Receivable
On September 14, 2004, the City and RDA entered into a loan agreement with Courtland Arroyo Grande, LP to construct a 108 ‐unit
affordable senior housing complex in the amount of $412,847. Of this loan amount, $112,847 was provided by the RDA. At June 30,
2012, accrued interest was $25,391, leaving an outstanding loan receivable bala nce of $138 ,2 38.
On January 11, 2005, the RDA entered into a loan agreement with the Family Care Networks, Inc. for the acquisition and
development of property at 201 South Halcyon Road to be used for affordable housing for low and very low income households in
the amount of $50 ,000. The term of the loan agreeme nt is 55 years and will be considered paid in full as long as the units are
maintained as affordable housing.
On December 9, 2008, the RDA entered into a purchase agreement with the Housing Authority of the City of San Luis Obispo and
purc hased pro p erty utilizing Low and Moderate Set Aside funds. The property was then sold to the Housing Authority for $285,000
in cash, plus $55,500 as a note receivable. This note is to be repaid when the property is sold.
On December 14, 2010, the RDA entered into a loan a greement with Habitat for Human i ty of San Luis Obispo County (Habitat for
Humanity) and purchased property utilizing Low and Moderate Set Aside funds. Under the terms of the agreement, the RDA and
Habitat for Humanity will have to negotiate an affordable housing agreement. If no agreement is executed, Habitat for Humanity
will have the opt i on of repaying the loan or conveying the property to the RDA. The cost of the property purchased was $260,000.
Loans Payable
On July 25, 2006, the RDA entered into a loan agreement with the City for the purpose of funding the cost of the acquisition of a
vacant lot on the north side of Faeh Street in the amount of $820,130. The loan originally called for interest to be accrued equal to
the rate earned by the City ’s Local Agen cy Investment Fund. In the fiscal year 2010, the loan was amended to no longer accrue
interest. Repayment is due when the property is sold. Total loan payable outstanding with accrued interest at June 30, 2012 was
$919,797.
Tax Allocation Bonds Payable
On May 1, 2007, the Arroyo Grande Redevelopment Agency (RDA) issued $6,285,000 of 2007 tax allocation bonds. The purpose of
the tax allocation bonds were to repay debt and to provide funds for future improvement projects. The bonds bears an interest rate
of 5.304% for a term bond of $1,280,000, maturing on Septemb er 1, 20 19 , and an interest rate of 5.800% for a term bond of
$5,005,000, maturing on September 1, 2037. As of June 30, 2012, the principal balance outstanding was $6,060,000
Item 8.c. - Page 74
CITY OF ARROYO GRANDE
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2012
B ‐56
NOTE 14 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY – continued
Tax Allocation Bonds Payable – continued
The future minimum payment obligation for the tax allocation bonds payable is as follows:
Fiscal Year
Ending June 30 Principal Interest Total
2013 $ 110,000 $ 343,330 $ 453,330
2014 115,000 337,363 452,363
2015 120,000 331,131 451,131
2016 130,000 324,501 454,501
2017 135,000 317,473 452,473
2018 ‐2022 785,000 1,468,220 2,253,220
2023 ‐2027 1,035,000 1,209,445 2,244,445
2028 ‐2032 1,375,000 862,025 2,237,025
2033 ‐2037 1,825,000 400,925 2,225,925
2038 430,000 12,470 442,470
Total $ 6,060,000 $ 5,606,883 $ 11,666,883
NOTE 15 – CONTINGENCIES AND COMMITMENTS
The City is involved in various litigations. In the opinion of management and legal council, the disposition of all litigation pending will
not have a material effect on the City’s financial statements.
The City has received State and Federal funds for specific purposes that are subject to review and audit by the grantor ag en c ies.
Although such audits could generate expenditure disallowances under the term of the grants, it is believed that any required
reimbursement will not be material.
NOTE 16 – PRIOR PERIOD ADJUSTMENTS
A prior period adjustment of $(40,237) was made which effects the gove rnmental funds statement of revenues, exp e nditures, and
changes in fund balance and the statement of activities under governmental activities. In prior years, the payroll liability for medical
benefits was understated.
A prior period adjustment of $1,275,867 was made which effects the government ‐wide statement of activities under governmental
activities. The City recor ded outstanding loan receivables of $186 ,827 found during the examination of the dissolution of the
redevelopment agency. Subsequently, these loans were transferred to the successor agency of the redevelopment agency as an
extraordinary loss. The City also recorded outstanding loan receivables of $1,089,040 found during the fiscal year.
Item 8.c. - Page 75
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Item 8.c. - Page 76
CITY OF ARROYO GRANDE
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
General Fund
For the Fiscal Year Ended June 30, 2012
REVENUES
Taxes and assessments $10,715,000 $10,782,973 $11,197,971 $414,998
Licenses and permits 205,150 205,150 206,319 1,169
Fines and penalties 85,000 85,000 71,605 (13,395)
Use of money and property 299,610 294,610 289,106 (5,504)
Intergovernmental revenues 315,000 164,579 181,484 16,905
Charges for services 741,850 743,050 733,542 (9,508)
Other revenue 70,100 70,100 76,203 6,103
Total revenues 12,431,710 12,345,462 12,756,230 410,768
EXPENDITURES
General government
City council 113,550 111,050 95,991 (15,059)
City manager 400,220 487,220 472,919 (14,301)
City attorney 233,250 303,250 326,449 23,199
Legislative services 311,060 333,617 325,940 (7,677)
Information technology 269,130 269,130 252,696 (16,434)
Administrative services 715,920 715,320 701,209 (14,111)
Printing 37,450 37,450 28,873 (8,577)
Non ‐departmental 2,297,750 2,182,750 2,121,699 (61,051)
Community development
Planning 495,840 507,528 461,212 (46,316)
Engineering 306,150 306,950 275,859 (31,091)
Building and life safety 230,590 230,590 224,920 (5,670)
Public safety
Police 5,721,873 5,616,124 5,337,082 (279,042)
Emergency operations center 1,000 1,000 223 (777)
Recreation services
Recreation 142,450 142,450 132,834 (9,616)
General recreation 111,200 111,200 109,972 (1,228)
Preschool program 71,950 71,950 76,157 4,207
Special recreation programs 112,500 113,700 109,670 (4,030)
Children in Motion 242,600 242,600 245,297 2,697
Five Cities Youth Basketball 51,750 51,750 46,867 (4,883)
Parks and facilities
Parks 547,090 547,090 534,244 (12,846)
Soto sports complex 254,650 254,650 252,288 (2,362)
Governmental buildings 172,670 187,670 195,357 7,687
Street & bridge maintenance 50,000 50,000 42,033 (7,967)
Street lighting 235,200 235,200 233,198 (2,002)
Automotive shop 115,030 115,030 117,496 2,466
Capital outlay 63,725 128,611 93,310 (35,301)
Debt service 258,263 183,263 172,228 (11,035)
Total expenditures 13,562,861 13,537,143 12,986,023 (551,120)
Excess of revenue over (under)
expenditures $(1,131,151) $(1,191,681) $(229,793) $961,888
Continued on following page
C ‐1
Variance
Over/(Under)Actual Amounts Original Final
Budget Amounts
Item 8.c. - Page 77
CITY OF ARROYO GRANDE
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
General Fund
For the Fiscal Year Ended June 30, 2012
Continued from previous page
OTHER FINANCING SOURCES (USES)
Transfer in $2,319,200 $2,179,898 $2,184,356 $4,458
Transfer out (1,376,725) (3,286,251) (2,164,577) 1,121,674
Total other financing sources
(uses)942,475 (1,106,353) 19,779 1,126,132
Net change in fund balance (188,676) (2,298,034) (210,014) 2,088,020
Fund balance ‐ July 1, 2011 5,292,792 5,292,792 5,292,792
Prior period adjustment (40,237) (40,237) (40,237)
Fund balance ‐ July 1, 2011, restated5,252,555 5,252,555 5,252,555
Fund balance ‐ June 30, 2012 $5,063,879 $2,954,521 $5,042,541 $2,088,020
C ‐2
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
Item 8.c. - Page 78
CITY OF ARROYO GRANDE
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
Transportation Impact Fees Fund
For the Fiscal Year Ended June 30, 2012
REVENUES
Taxes and assessments $25,000 $38,500 $48,385 $9,885
Use of money and property 15,000 15,000 13,203 (1,797)
Total revenues 40,000 53,500 61,588 8,088
OTHER FINANCING SOURCES (USES)
Transfer out (1,475,165) (739,974) 735,191
Total other financing
sources/(uses)(1,475,165) (739,974) 735,191
Net change in fund balance 40,000 (1,421,665) (678,386) 743,279
Fund balance ‐ July 1, 2011 2,770,287 2,770,287 2,770,287
Fund balance ‐ June 30, 2012 $2,810,287 $1,348,622 $2,091,901 $743,279
C ‐3
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
Item 8.c. - Page 79
CITY OF ARROYO GRANDE
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
In ‐Lieu Affordable Housing Fund
For the Fiscal Year Ended June 30, 2012
REVENUES
Use of money and property $300 $300 $344 $44
Charges for services 25,200 25,312 112
Total revenues 300 25,500 25,656 156
EXPENDITURES
Community development 19,132 19,132
Total expenditures 19,132 19,132
Income/(loss) before
extraordinary items 300 6,368 6,524 156
Extraordinary loss (919,797) (919,797)
Net change in fund balance 300 6,368 (913,273) (919,641)
Fund balance ‐ July 1, 2011 978,838 978,838 978,838
Fund balance ‐ June 30, 2012 $979,138 $985,206 $65,565 $(919,641)
C ‐4
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
Item 8.c. - Page 80
CITY OF ARROYO GRANDE
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
Water Availability Fund
For the Fiscal Year Ended June 30, 2012
REVENUES
Use of money and property $10,000 $10,000 $8,196 $(1,804)
Charges for services 25,000 25,000 16,400 (8,600)
Other revenue 3,750 3,750
Total revenues 35,000 35,000 28,346 (6,654)
OTHER FINANCING SOURCES (USES)
Transfer out (289,579) (21,082) 268,497
Total other financing
sources/(uses)(289,579) (21,082) 268,497
Net change in fund balance 35,000 (254,579) 7,264 261,843
Fund balance ‐ July 1, 2011 1,726,252 1,726,252 1,726,252
Fund balance ‐ June 30, 2012 $1,761,252 $1,471,673 $1,733,516 $261,843
C ‐5
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
Item 8.c. - Page 81
CITY OF ARROYO GRANDE
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
CDBG Fund
For the Fiscal Year Ended June 30, 2012
REVENUES
Intergovernmental revenues $‐$171,063 $38,282 $(132,781)
Total revenues 171,063 38,282 (132,781)
EXPENDITURES
Community development 135,610 32,251 (103,359)
Total expenditures 135,610 32,251 (103,359)
Excess of revenue over (under)
expenditures 35,453 6,031 (29,422)
OTHER FINANCING SOURCES (USES)
Transfer out (35,453) (6,031) 29,422
Total other financing sources
(uses)(35,453) (6,031) 29,422
Net change in fund balance
Fund balance ‐ July 1, 2011
Fund balance ‐ June 30, 2012 $‐$‐$‐$‐
C ‐6
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
Item 8.c. - Page 82
CITY OF ARROYO GRANDE
BUDGETARY INFORMATION ‐ MAJOR GOVERNMENTAL FUNDS
Redevelopment Set ‐Aside Fund
For the Fiscal Year Ended June 30, 2012
REVENUES
Taxes and assessments $345,000 $345,000 $99,099 $(245,901)
Use of money and property 9,000 9,000 3,772 (5,228)
Total revenues 354,000 354,000 102,871 (251,129)
EXPENDITURES
Community development 214,611 944,037 17,512 (926,525)
Total expenditures 214,611 944,037 17,512 (926,525)
Excess of revenue over/
(under) expenditures 139,389 (590,037) 85,359 675,396
OTHER FINANCING SOURCES (USES)
Transfers out (39,700) (185,680) (185,680)
Total other financing
sources/(uses)(39,700) (185,680) (185,680)
Income/(loss) before
extraordinary items 99,689 (775,717) (100,321) 675,396
Extraordinary loss (1,771,740) (1,771,740)
Net change in fund balance 99,689 (775,717) (1,872,061) (1,096,344)
Fund balance ‐ July 1, 2011 1,872,061 1,872,061 1,872,061
Fund balance ‐ June 30, 2012$1,971,750 $1,096,344 $‐$(1,096,344)
C ‐7
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
Item 8.c. - Page 83
CITY OF ARROYO GRANDE
OTHER POSTEMPLOYMENT BENEFITS ‐ SCHEDULE OF FUNDING PROGRESS
For the Fiscal Year Ended June 30, 2012
07/01/10 2,053,287 $ 2,053,287 $ 0%41%5,055,775 $ $‐
Actuarial
Valuation
Date
07/01/07
UAAL as a
Percent ‐
age of
Covered
Payroll
((b ‐a)/c)
C ‐8
$‐1,835,537 $
Actuarial
Accrued
Liability (AAL)
Projected Unit
Cost (b)
1,835,537 $
Actuarial
Valuation of
Assets (a)
31%
Covered Payroll
5,968,881 $
Funded
Ratio (a/b)
0%
Unfunded AAL
(UAAL)(b ‐a)
Item 8.c. - Page 84
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Item 8.c. - Page 85
CITY OF ARROYO GRANDE
DESCRIPTION OF NONMAJOR GOVERNMENTAL
June 30, 2012
Nonmajor Governmental Funds
Special Revenue Funds:
Sewer Fund – This fund is used to account for maintenance of sewer lines connecting City residents to the San Luis Obispo
County Sanitation District sewer plant. Maintenance costs are funded by user charges.
Park Development Fund – This fund accounts for the receipts of park ‐in ‐lieu fees (Quimby) and grant revenues that are
used for construction, park acquisition, and development of park facilities.
Special Gasoline Tax Fund – This fund accounts for receipts and expenditures of money apportioned by the State under
Streets and Highway Code sections 2105, 2106, 2107, and 2107.5. The use of gas tax revenues can only be used to
construct and maintain streets and highways.
Landscape Assessment Fund – This fund accounts for the landscape maintenance of parkways within tow housing tracts. A
special benefit assessment is levied on property owners to pay for landscape maintenance expenditures.
Traffic Signal Fund – This fund accounts for traffic signalization assessment levied against developments for the future cost
of traffic signals.
Construction Fund – This fund accounts for the accumulation of tax revenues levied on construction of residential dwelling
units, mobile home lots, and commercial buildings. Expenditures are restricted to public improvements, including but not
limited to, facilities, fire stations, fire ‐fighting equipment, parks, street improvements, and equipment.
Drainage Fees Fund – This fund accounts for development drainage fees restricted to improving drainage within the City.
Sewer Facility Fund – This fund accounts for the accumulation of sewer facility revenues to be used in capital improvement
projects in the City.
Traffic Circulation Fund – This fund accounts for developer traffic mitigation measure fees charged as a result of an
environmental review.
State COPS Grant Fund – This fund accounts for the receipt and use of monies from the State of California restricted to the
purchase of police equipment and technology for crime prevention.
Parkside Assessment District Fund – This fund accounts for revenue derived from annual assessments, which are used to
pay the cost incurred by the City for landscape maintenance.
Water Neutralization Impact Fund – This fund accounts for mitigation fees collected from developers to neutralize
projected water demand of development projects, above historical usage amounts.
Fire Protection Impact Fees Fund – This fund accounts for impact fees collected from developers for the expansion of the
existing fire station in order to serve future development.
Police Protection Impact Fees Fund – This fund accounts for impact fees collected from developers for the expansion of the
existing police facility in order to serve future development.
D ‐1
Item 8.c. - Page 86
CITY OF ARROYO GRANDE
DESCRIPTION OF NONMAJOR GOVERNMENTAL
June 30, 2012
Nonmajor Governmental Funds – continued
Special Revenue Funds – continued:
Grace Lane Assessment District Fund – This fund accounts for revenue derived from annual assessments, which are used to
pay the cost incurred by the City for landscape maintenance.
Park Improvement Impact Fees Fund – Impact fees collected for park improvements are to be used to maintain the adopted
level of service for neighborhood and community parks of 4.0 acres per thousand population. This fund accounts for the
receipt and use of these monies.
In ‐Lieu Underground Utility Fund – This fund accounts for monies paid by developers in meeting the City's underground
utility requirements.
Recreation Community Center Impact Fees Fund – This fund accounts for impact fees collected and used for recreation
facilities in order to maintain the adopted level of service of recreation/community center facilities of 542 square feet per
thousand population.
Public Access Television Fund – This fund accounts for fees collected from Charter Communications that are restricted for
support of public, education, and government access programming and equipment.
Transportation Fund – This fund accounts for revenues from the Local Transportation Fund (LTF) and the South County Area
Transit (SCAT). Expenditures are restricted to public transportation.
Capital Projects Fund:
Redevelopment Capital Projects Fund – This fund is used to account for tax increment revenue and expenditures relating to
the City’s redevelopment project area in accordance with the California Health and Safety Code. Due to State Assembly Bill
1X 26, which calls for the dissolution of all redevelopment agencies in the State of California on January 31, 2012 , only 7 ‐
months of activity plus th e extraordinary loss is reported.
Debt Service Funds:
Fire Station GO Bond Fund – This fund is used to account for the accumulation of resources and payment of long ‐term debt
principal and interest for general obligation bonds issued by the City to finance the expansion of the City Fire Station.
Redevelopment Debt Service Fund – This fund is used to account for the accumulation of resources and payment of long ‐
term debt principal and interest for tax allocation bonds issued by the RDA to finance the repayment of dept and future
projects. Due to State Assembly Bill 1X 26, which calls for the dissolution of all redevelopment agencies in th e State of
California on Januar y 31, 2012, only 7 ‐months of activity plus the extraordinary loss is reported.
City Hall USDA Debt Service Fund – This fund is used to account for the accumulated resources and payment of long ‐term
debt principal and interest for USDA loan payable issued by the City to finance for the relocation of City Hall.
D ‐2
Item 8.c. - Page 87
THIS PAGE IS INTENTIONALLY LEFT BLANK
Item 8.c. - Page 88
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet
June 30, 2012
ASSETS
Cash and investments $150,270 $691,315 $‐$23,677
Receivables:
Accounts 175,967
Taxes 48,439 21
Interest 451 469 3 17
Inventory 17,391
Prepaid items 6,311 13,405
Total assets $350,390 $691,784 $61,847 $23,715
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $6,820 $‐$6,959 $4 5
Deferred revenue 40,226
Due to other funds 54,888
Total liabilities 6,820 40,226 61,847 45
Fund Balances:
Nonspendable:
Inventory 17,391
Prepaid items 6,311 13,405
Restricted for:
Access programming
Debt service
Landscape maintenance 23,670
Park construction 651,558
Public improvements
Public safety
Streets and roads
Water production
Assigned for:
Capital projects
Streets and roads
Utility service 319,868
Unassigned (13,405)
Total fund balances 343,570 651,558 23,670
Total liabilities and
fund balances $350,390 $691,784 $61,847 $23,715
D ‐4
Sewer
Special Gasoline
Tax
Park
Development
Special Revenue Funds
Landscape
Assessment
Item 8.c. - Page 89
$510,740 $3,211 $463 $331,117 $25,148
347 2 253 18
$511,087 $3,213 $463 $331,370 $25,166
$‐$‐$‐$‐$‐
3,213 463
511,087
25,166
331,370
511,087 3,213 463 331,370 25,166
$511,087 $3,213 $463 $331,370 $25,166
Special Revenue Funds
Traffic Circulation Sewer Facility Drainage Fees Construction Traffic Signal
D ‐5
Item 8.c. - Page 90
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet
June 30, 2012
ASSETS
Cash and investments $85,443 $336,582 $420,575 $66,990
Receivables:
Accounts
Taxes 488
Interest 55 229 286 45
Inventory
Prepaid items 6,912 1,504
Total assets $92,410 $337,299 $422,365 $67,035
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $‐$830 $3,278 $‐
Deferred revenue
Due to other funds
Total liabilities 830 3,278
Fund Balances:
Nonspendable:
Inventory
Prepaid items 6,912 1,504
Restricted for:
Access programming
Debt service
Landscape maintenance 336,469
Park construction
Public improvements
Public safety 85,498 67,035
Streets and roads
Water production 417,583
Assigned for:
Capital projects
Streets and roads
Utility service
Unassigned
Total fund balances 92,410 336,469 419,087 67,035
Total liabilities and
fund balances $92,410 $337,299 $422,365 $67,035
Special Revenue Funds
State COPS Grant
Water
Neutralization
Impact
Fire Protection
Impact Fees
Parkside
Assessment
District
D ‐6
Item 8.c. - Page 91
$67,255 $52,079 $356,606 $197 $46,952
327
46 38 256 32
$67,301 $52,444 $356,862 $197 $46,984
$‐$110 $‐$‐$‐
110
52,334
356,862
46,984
67,301
197
67,301 52,334 356,862 197 46,984
$67,301 $52,444 $356,862 $197 $46,984
Special Revenue Funds
Park
Improvement
Impact Fees
In ‐Lieu
Underground
Utility
Community
Center Impact
Fees
Grace Lane
Assessment
District
Police Protection
Impact Fees
D ‐7
Item 8.c. - Page 92
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet
June 30, 2012
ASSETS
Cash and investments $75,890 $4,158 $3,248,668 $‐
Receivables:
Accounts 175,967
Taxes 49,275
Interest 48 2,595
Inventory 17,391
Prepaid items 28,132
Total assets $75,938 $4,158 $3,522,028 $‐
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $‐$4,158 $22,200 $‐
Deferred revenue 40,226
Due to other funds 54,888
Total liabilities 4,158 117,314
Fund Balances:
Nonspendable:
Inventory 17,391
Prepaid items 28,132
Restricted for:
Access programming 75,938 75,938
Debt service
Landscape maintenance 412,473
Park construction 1,008,420
Public improvements 50,660
Public safety 219,834
Streets and roads 511,087
Water production 417,583
Assigned for:
Capital projects 197
Streets and roads 25,166
Utility service 651,238
Unassigned (13,405)
Total fund balances 75,938 3,404,714
Total liabilities and
fund balances $75,938 $4,158 $3,522,028 $‐
Capital Projects
Public Access
TelevisionTransportation
Total Special
Revenue FundsRedevelopment
D ‐8
Special Revenue Funds
Item 8.c. - Page 93
$724,141 $‐$13,464 $737,605 $3,986,273
175,967
3,090 3,090 52,365
2,595
17,391
28,132
$727,231 $‐$13,464 $740,695 $4,262,723
$‐$‐$‐$‐$22,200
40,226
54,888
117,314
17,391
28,132
75,938
727,231 13,464 740,695 740,695
412,473
1,008,420
50,660
219,834
511,087
417,583
197
25,166
651,238
(13,405)
727,231 13,464 740,695 4,145,409
$727,231 $‐$13,464 $740,695 $4,262,723
Total Nonmajor
Governmental
Funds
D ‐9
Fire Station GO
Bonds
Total Debt
Service Funds
City Hall USDA
Debt Service
Redevelopment
Debt Service
Debt Service
Item 8.c. - Page 94
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2012
REVENUES
Taxes and assessments $‐$‐$‐$5,800
Use of money and property 2,128 3,155 5 119
Intergovernmental revenues 503,242
Charges for services 924,111 51,305
Other revenue 231,287 1,106
Total revenues 1,157,526 54,460 504,353 5,919
EXPENDITURES
Current:
General government
Community development
Parks and facilities 4,795
Streets and road 719,862
Sewer 273,296
Capital outlay 294,077
Debt service:
Principal
Interest and fiscal agent fees
Total expenditures 567,373 719,862 4,795
Excess of revenue over /
(under) expenditures 590,153 54,460 (215,509) 1,124
OTHER FINANCING SOURCES/(USES)
Proceeds from issuance of debt 69,077
Transfers in 215,509
Transfers out (739,043) (310) (3,200)
Total other financing
sources/(uses)(669,966) (310) 215,509 (3,200)
Income/(loss) before
extraordinary items (79,813) 54,150 (2,076)
Extraordinary loss
Net change in fund balances (79,813) 54,150 (2,076)
Fund balances ‐ July 1, 2011 423,383 597,408 25,746
Fund balances ‐ June 30, 2012 $343,570 $651,558 $‐$23,670
Landscape
Assessment
Special Gasoline
Tax
Park
Development Sewer
Special Revenue Funds
D ‐10
Item 8.c. - Page 95
$‐$‐$‐$‐$‐
2,365 15 2 1,730 119
16,561 9,920
18,926 15 2 11,650 119
18,926 15 2 11,650 119
(40,418)
(40,418)
18,926 15 2 (28,768) 119
18,926 15 2 (28,768) 119
492,161 3,198 461 360,138 25,047
$511,087 $3,213 $463 $331,370 $25,166
Traffic Signal Drainage Fees Construction Traffic Circulation
Special Revenue Funds
Sewer Facility
D ‐11
Item 8.c. - Page 96
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2012
REVENUES
Taxes and assessments $‐$58,682 $‐$‐
Use of money and property 290 1,441 1,975 270
Intergovernmental revenues 100,000
Charges for services 44,557 22,802
Other revenue
Total revenues 100,290 60,123 46,532 23,072
EXPENDITURES
Current:
General government
Community development 49,209
Parks and facilities 5,751
Streets and road
Sewer
Capital outlay 114,297
Debt service:
Principal
Interest and fiscal agent fees
Total expenditures 114,297 5,751 49,209
Excess of revenue over /
(under) expenditures (14,007) 54,372 (2,677) 23,072
OTHER FINANCING SOURCES/(USES)
Proceeds from issuance of debt
Transfers in
Transfers out (3,200)
Total other financing
sources/(uses)(3,200) ‐
Income/(loss) before
extraordinary items (14,007) 51,172 (2,677) 23,072
Extraordinary loss
Net change in fund balances (14,007) 51,172 (2,677) 23,072
Fund balances ‐ July 1, 2011 106,417 285,297 421,764 43,963
Fund balances ‐ June 30, 2012$92,410 $336,469 $419,087 $67,035
State COPS Grant
Fire Protection
Impact Fees
Parkside
Assessment
District
Water
Neutralization
Impact
Special Revenue Funds
D ‐12
Item 8.c. - Page 97
$‐$9,988 $‐$‐$‐
308 246 1,721 1 218
3,418 27,874 1,623
3,726 10,234 29,595 1 1,841
7,793
7,793 ‐
3,726 2,441 29,595 1 1,841
(20,749)
(20,749)
3,726 2,441 8,846 1 1,841
3,726 2,441 8,846 1 1,841
63,575 49,893 348,016 196 45,143
$67,301 $52,334 $356,862 $197 $46,984
Special Revenue Funds
In ‐Lieu
Underground
Utility
Community
Center Impact
Fees
Park
Improvement
Impact Fees
Police Protection
Impact Fees
Grace Lane
Assessment
District
D ‐13
Item 8.c. - Page 98
CITY OF ARROYO GRANDE
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2012
REVENUES
Taxes and assessments $‐$‐$74,470 $565,455
Use of money and property 326 52 16,486 620
Intergovernmental revenues 178,891 782,133
Charges for services 26,066 1,128,237
Other revenue 232,393
Total revenues 26,392 178,943 2,233,719 566,075
EXPENDITURES
Current:
General government 17,470 15,560 33,030
Community development 49,209 247,218
Parks and facilities 18,339
Streets and road 719,862
Sewer 273,296
Capital outlay 408,374
Debt service:
Principal
Interest and fiscal agent fees
Total expenditures 17,470 15,560 1,502,110 247,218
Excess of revenue over /
(under) expenditures 8,922 163,383 731,609 318,857
OTHER FINANCING SOURCES/(USES)
Proceeds from issuance of debt 69,077
Transfers in 215,509
Transfers out (163,383) (970,303) (533,541)
Total other financing
sources/(uses)(163,383) (685,717) (533,541)
Income/(loss) before
extraordinary items 8,922 45,892 (214,684)
Extraordinary loss (10,793)
Net change in fund balances 8,922 45,892 (225,477)
Fund balances ‐ July 1, 2011 67,016 3,358,822 225,477
Fund balances ‐ June 30, 2012 $75,938 $‐$3,404,714 $‐
D ‐14
Transportation Redevelopment
Total Special
Revenue Funds
Public Access
Television
Capital Projects Special Revenue Funds
Item 8.c. - Page 99
$184,170 $‐$‐$184,170 $824,095
2,205 30 2,235 19,341
782,133
1,128,237
232,393
186,375 30 186,405 2,986,199
33,030
296,427
18,339
719,862
273,296
408,374
80,000 105,000 22,000 207,000 207,000
57,025 175,908 44,588 277,521 277,521
137,025 280,908 66,588 484,521 2,233,849
49,350 (280,878) (66,588) (298,116) 752,350
69,077
454,043 73,320 527,363 742,872
(1,503,844)
454,043 73,320 527,363 (691,895)
49,350 173,165 6,732 229,247 60,455
(631,102) (631,102) (641,895)
49,350 (457,937) 6,732 (401,855) (581,440)
677,881 457,937 6,732 1,142,550 4,726,849
$727,231 $‐$13,464 $740,695 $4,145,409
City Hall USDA
Debt Service
Redevelopment
Debt Service
Fire Station GO
Bonds
D ‐15
Debt Service
Total Nonmajor
Governmental
Funds
Total Debt
Service Funds
Item 8.c. - Page 100
CITY OF ARROYO GRANDE
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
Agency Funds
For the Fiscal Year Ended June 30, 2012
Sanitation District Fund
Cash and investments $136,701 $1,486,626 $1,488,242 $135,085
Accounts receivable 3,410 1,509,387 1,463,460 49,337
Total assets $140,111 $2,996,013 $2,951,702 $184,422
Due to other agencies $140,111 $2,996,013 $2,951,702 $184,422
Total liabilities $140,111 $2,996,013 $2,951,702 $184,422
Downtown Parking Fund
Cash and investments $213,193 $108,551 $139,077 $182,667
Interest receivable 206 148 206 148
Prepaid items 30 53 17 66
Total assets $213,429 $108,752 $139,300 $182,881
Accounts payable $‐$3,541 $3,125 $416
Due to other agencies 213,429 105,211 136,175 182,465
Total liabilities $213,429 $108,752 $139,300 $182,881
Total Agency Funds
Cash and investments $349,894 $1,595,177 $1,627,319 $317,752
Accounts receivable 3,410 1,509,387 1,463,460 49,337
Interest receivable 206 148 206 148
Prepaid items 30 53 17 66
Total assets $353,540 $3,104,765 $3,091,002 $367,303
Accounts payable $‐$3,541 $3,125 $416
Due to other agencies 353,540 3,101,224 3,087,877 366,887
Total liabilities $353,540 $3,104,765 $3,091,002 $367,303
D ‐16
Balance Balance
June 30, 2012 AdditionsDeductions July 1, 2011
Item 8.c. - Page 101
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a
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i
s
t
i
c
a
l
S
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c
t
i
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(
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a
u
d
i
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Item 8.c. - Page 102
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Item 8.c. - Page 103
CITY OF ARROYO GRANDE
NET ASSETS BY COMPONENT
Last Ten Fiscal Years
Governmental Activities
Invested in capital assets, net of
related debt $53,704,820 $55,451,775 $55,951,374 $57,463,427
Restricted 6,329,061 757,172 200,806 294,162
Unrestricted 2,035,617 7,829,450 8,684,890 8,204,641
Total governmental activities
net assets 62,069,498 64,038,397 64,837,070 65,962,230
Business ‐Type Activities
Invested in capital assets, net of
related debt 8,146,356 8,033,971 10,006,833 9,903,095
Unrestricted 6,017,721 5,652,056 4,343,240 5,173,626
Total business ‐type activities
net assets 14,164,077 13,686,027 14,350,073 15,076,721
Primary Government
Invested in capital assets, net of
related debt 61,851,176 63,485,746 65,958,207 67,366,522
Restricted 6,329,061 757,172 200,806 294,162
Unrestricted 8,053,338 13,481,506 13,028,130 13,378,267
Total primary government net
assets $76,233,575 $77,724,424 $79,187,143 $81,038,951
Source: City of Arroyo Grande Annual Financial Report
Fiscal Year
E ‐2
2003 2004 2005 2006
Item 8.c. - Page 104
$51,452,482 $51,506,838 $52,059,524 $52,196,451 $54,012,699 $62,176,633
872,226 916,560 969,659 937,284 8,179,991 7,221,859
13,859,907 15,736,998 15,799,496 15,491,347 7,584,426 6,370,870
66,184,615 68,160,396 68,828,679 68,625,082 69,777,116 75,769,362
9,815,456 9,759,235 9,670,367 9,532,740 10,057,743 9,816,684
5,924,601 6,961,084 7,569,157 7,518,372 6,686,297 6,057,411
15,740,057 16,720,319 17,239,524 17,051,112 16,744,040 15,874,095
61,267,938 61,266,073 61,729,891 61,729,191 64,070,442 71,993,317
872,226 916,560 969,659 937,284 8,179,991 7,221,859
19,784,508 22,698,082 23,368,653 23,009,719 14,270,723 12,428,281
$81,924,672 $84,880,715 $86,068,203 $85,676,194 $86,521,156 $91,643,457
2012
Fiscal Year
E ‐3
2011 2007 2008 2009 2010
Item 8.c. - Page 105
CITY OF ARROYO GRANDE
CHANGES IN NET ASSETS
Last Ten Fiscal Years
Expenses
Governmental activities:
General government $2,200,775 $2,282,682 $3,201,586 $4,855,828
Community development 792,917 974,163 1,100,514 659,125
Public safety 5,000,896 5,679,014 6,333,577 6,792,337
Parks, recreation, and facilities 1,517,289 1,636,072 1,720,296 1,879,511
Streets and roads 2,293,828 2,245,277 2,753,823 1,316,248
Sewer 694,666 729,279 723,144 728,300
Interest on long ‐term debt 43,099 75,523 78,141 74,092
Unallocated depreciation 557,824 47,176
Total governmental activities
expenses 13,101,294 13,669,186 15,911,081 16,305,441
Business ‐type activities:
Water 1,030,381 1,078,898 1,129,392 1,150,492
Lopez 1,363,773 1,519,067 1,448,995 1,681,126
Total business ‐type activities
expenses 2,394,154 2,597,965 2,578,387 2,831,618
Total primary government
expenses $15,495,448 $16,267,151 $18,489,468 $19,137,059
Program Revenues
Governmental activities:
Charges for services:
General government $47,231 $55,081 $75,014 $76,833
Community development 360,882 484,959 440,610 539,819
Public safety 356,567 329,175 445,091 343,219
Recreation 596,729 628,309 769,870 907,846
Streets and roads 195,412 194,754 237,423 116,877
Sewer 611,157 557,833 634,462 724,196
Operating grants and contributions 2,301,994 1,223,544 2,148,549 1,711,173
Capital grants and contributions 1,185,129 1,100,009 1,402,786 807,813
Total governmental activities
program revenues 5,655,101 4,573,664 6,153,805 5,227,776
Business ‐type activities:
Charges for services:
Water 1,793,287 1,820,753 1,880,728 2,192,318
Lopez 1,633,283 1,764,929 1,994,492 2,350,934
Operating grants and contributions
Capital grants and contributions 1,792
Total business ‐type activities
program revenues 3,426,570 3,585,682 3,875,220 4,545,044
Total primary government program
revenues $9,081,671 $8,159,346 $10,029,025 $9,772,820
2004 2005 2006
Fiscal Year
E ‐4
2003
Item 8.c. - Page 106
$4,164,825 $4,240,653 $4,216,918 $4,543,500 $4,786,979 $4,475,869
931,635 861,279 680,610 983,321 3,224,094 1,578,940
7,378,307 7,521,516 8,090,323 7,290,559 5,795,069 5,708,603
1,895,030 1,916,258 1,944,018 1,679,563 1,590,053 2,162,972
2,706,738 3,341,886 2,447,914 3,044,033 1,835,373 2,600,752
761,133 759,438 738,149 858,806 798,287 793,207
163,460 457,271 460,671 462,435 499,825 318,960
18,001,128 19,098,301 18,578,603 18,862,217 18,529,680 17,639,303
1,159,014 1,236,610 1,324,507 1,732,341 2,168,569 2,142,321
2,176,061 2,363,814 2,834,416 2,772,836 2,592,965 2,679,699
3,335,075 3,600,424 4,158,923 4,505,177 4,761,534 4,822,020
$21,336,203 $22,698,725 $22,737,526 $23,367,394 $23,291,214 $22,461,323
$71,054 $614,920 $142,082 $139,111 $50,355 $38,563
337,350 288,672 218,197 292,480 498,223 403,679
428,343 443,302 445,198 384,106 188,407 168,502
850,546 627,707 695,501 675,828 694,090 650,897
109,733 180,317 6,747 52,290 96,409 16,561
684,026 760,618 767,717 788,165 828,302 925,213
1,917,767 2,325,946 1,772,492 2,244,546 2,239,107 817,644
673,932 664,433 577,876 888,102 1,751,549 1,509,016
5,072,751 5,905,915 4,625,810 5,464,628 6,346,442 4,530,075
2,192,075 2,336,545 2,284,127 2,508,136 2,794,504 3,443,240
2,667,329 3,395,713 3,673,952 3,265,221 2,895,218 2,552,516
4,187 2,760
135,071
4,859,404 5,732,258 5,958,079 5,773,357 5,828,980 5,998,516
$9,932,155 $11,638,173 $10,583,889 $11,237,985 $12,175,422 $10,528,591
2009 2010 2007 2008
E ‐5
2011
Fiscal Year
2012
Item 8.c. - Page 107
CITY OF ARROYO GRANDE
CHANGES IN NET ASSETS
Last Ten Fiscal Years
Net revenue (expense)
Governmental activities $(7,446,193) $(9,095,522) $(9,757,276) $(11,077,665)
Business ‐type activities 1,032,416 987,717 1,296,833 1,713,426
Total primary government net
expense $(6,413,777) $(8,107,805) $(8,460,443) $(9,364,239)
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes:
Property taxes $2,770,276 $3,122,123 $3,441,330 $4,572,642
Sales and use taxes 3,201,889 3,315,874 3,460,478 3,674,807
Transient lodging taxes 369,956 399,794 390,670 434,986
Franchise taxes 408,636 515,406 526,792 566,000
Business license tax 61,014 67,887 75,901 79,701
Debt service 238,048
Investment income 329,054 213,420 347,595 476,461
Other revenue 628,384 1,903,644 1,358,260 1,294,708
Gain on sale of capital assets 759,681
Transfers 847,934 1,526,273 716,875 1,103,520
Extraordinary gain
Total governmental activities 9,376,824 11,064,421 10,555,949 12,202,825
Business ‐type activities:
Investment income 92,889 60,506 84,088 116,742
Transfers (847,934) (1,526,273) (716,875) (1,103,520)
Total business ‐type activities
revenues (755,045) (1,465,767) (632,787) (986,778)
Total primary government $8,621,779 $9,598,654 $9,923,162 $11,216,047
Change in Net Assets
Governmental activities $1,930,631 $1,968,899 $798,673 $1,125,160
Business ‐type activities 277,371 (478,050) 664,046 726,648
Total primary government $2,208,002 $1,490,849 $1,462,719 $1,851,808
Source: City of Arroyo Grande Annual Financial Report
2003 2004 2005 2006
E ‐6
Fiscal Year
Item 8.c. - Page 108
$(12,928,377) $(13,192,386) $(13,952,793) $(13,397,589) $(12,183,238) $(13,109,228)
1,524,329 2,131,834 1,799,156 1,268,180 1,067,446 1,176,496
$(11,404,048) $(11,060,552) $(12,153,637) $(12,129,409) $(11,115,792) $(11,932,732)
$5,240,507 $5,295,263 $5,586,348 $5,471,651 $5,379,176 $6,633,678
3,800,667 5,280,813 4,658,777 4,252,903 4,781,774 4,127,541
449,474 437,164 389,067 348,014 390,472 630,379
588,841 621,987 639,776 604,325 539,673 570,172
81,821 80,990 79,111 80,283 79,663 84,925
701,918 893,125 589,734 337,724 389,292 333,962
1,236,158 1,363,029 1,285,769 606,653 479,514 773,180
1,051,376 1,341,156 1,392,494 1,492,439 1,888,403 2,070,466
2,641,541
13,150,762 15,313,527 14,621,076 13,193,992 13,927,967 17,865,844
190,383 199,398 112,543 35,847 30,483 24,025
(1,051,376) (1,341,156) (1,392,494) (1,492,439) (1,888,403) (2,070,466)
(860,993) (1,141,758) (1,279,951) (1,456,592) (1,857,920) (2,046,441)
$12,289,769 $14,171,769 $13,341,125 $11,737,400 $12,070,047 $15,819,403
$222,385 $2,121,141 $668,283 $(203,597) $1,744,729 $4,756,616
663,336 990,076 519,205 (188,412) (790,474) (869,945)
$885,721 $3,111,217 $1,187,488 $(392,009) $954,255 $3,886,671
2007 2008 2009 2010 2011 2012
Fiscal Year
E ‐7
Item 8.c. - Page 109
CITY OF ARROYO GRANDE
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
General Fund
Reserved $5,654 $525,547 $24,468 $1,108,791
Unreserved 2,993,021 1,944,963 2,643,229 1,250,287
Nonspendable
Committed
Assigned
Unassigned
Total general fund $2,998,675 $2,470,510 $2,667,697 $2,359,078
All Other Governmental Funds
Reserved $3,079,549 $1,741,301 $1,104,604 $2,248,940
Unreserved, reported in:
Special revenue funds 6,747,271 7,317,092 8,009,074 7,566,466
Debt service funds (1,687,649) (1,960,331) (1,865,635) (2,616,734)
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total all other governmental funds$8,139,171 $7,098,062 $7,248,043 $7,198,672
Source: City of Arroyo Grande Annual Financial Report
E ‐8
2003
Fiscal Year
The Cityof Arroyo GrandeimplementedGASBStatementNo.54forthefiscalyearendedJune30,2011.
Information prior to the implementation of GASB Statement No. 54 is not available.
2004 2005 2006
Item 8.c. - Page 110
$778,455 $794,186 $725,546 $679,140 $‐$‐
1,116,751 2,272,789 2,726,035 4,321,286
595,268 642,708
3,159,440
350,000 703,355
4,256,808 537,038
$1,895,206 $3,066,975 $3,451,581 $5,000,426 $5,202,076 $5,042,541
$2,641,882 $2,814,009 $2,919,758 $2,896,080 $‐$‐
10,984,987 11,656,498 11,367,715 10,181,391
397,041 528,838 530,905 (95,156)
73,782 45,523
8,513,465 7,262,107
65,565
3,529,431 711,439
83,163 (13,405)
$14,023,910 $14,999,345 $14,818,378 $12,982,315 $12,199,841 $8,071,229
2012
Fiscal Year
2007 2008 2009 2010 2011
E ‐9
Item 8.c. - Page 111
CITY OF ARROYO GRANDE
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Revenues
Taxes and assessments $7,142,416 $8,212,366 $8,609,480 $11,004,014
Licenses and permits 326,938 288,931 316,499 321,112
Fines and penalties 147,311 138,372 128,181 119,993
Use of money and property 329,057 213,420 347,595 476,461
Intergovernmental revenues 2,987,737 2,683,961 3,078,703 1,516,844
Charges for services 1,862,471 2,124,631 2,704,696 2,353,582
Other revenue 628,384 450,131 789,668 536,868
Total revenues 13,424,314 14,111,812 15,974,822 16,328,874
Expenditures
Current:
General government 2,015,056 2,214,920 3,128,497 4,792,777
Community development 771,434 966,162 1,092,513 654,154
Public safety 4,811,438 5,500,539 6,056,680 6,500,678
Recreation
Parks and facilities
Parks, recreation, and facilities 1,465,179 1,592,374 1,675,641 1,836,832
Streets and road 1,730,009 1,766,639 1,850,713 1,113,395
Sewer 190,464 228,754 222,150 228,243
Capital outlay 2,524,327 4,841,957 4,259,607 2,497,186
Debt service:
Principal 189,628 24,627 90,497 96,396
Interest and fiscal agent fees 19,240 71,387 74,772 70,723
Total expenditures 13,716,775 17,207,359 18,451,070 17,790,384
Excess of revenue over (under)
expenditures (292,461) (3,095,547) (2,476,248) (1,461,510)
Other Financing Sources (Uses)
Cost of issuance (67,390)
Proceeds from issuance of debt 2,029,870
Proceeds from sale of capital assets 794,607
Transfer in 1,931,284 4,907,167 5,036,622 3,687,453
Transfer out (1,083,350) (3,380,894) (2,213,206) (2,583,933)
Extraordinary loss
Total other financing sources
(uses)3,605,021 1,526,273 2,823,416 1,103,520
Net Change in Fund Balances $3,312,560 $(1,569,274) $347,168 $(357,990)
Debt service as a percentage of non ‐
capital expenditures 1.90%0.78%1.18%1.10%
Source: City of Arroyo Grande Annual Financial Report
E ‐10
Fiscal Year
2003 2004 2005 2006
Item 8.c. - Page 112
$12,023,398 $13,266,750 $12,703,434 $12,156,062 $12,745,313 $12,169,550
251,710 197,526 175,202 207,801 194,743 206,319
120,693 116,999 104,320 77,145 66,724 71,605
701,918 893,126 589,738 337,724 389,292 333,962
1,388,559 2,230,140 1,175,605 2,053,958 2,755,945 2,372,614
2,177,104 2,320,190 1,987,517 2,105,522 2,095,895 1,925,491
508,756 853,555 633,781 227,969 138,094 604,371
17,172,138 19,878,286 17,369,597 17,166,181 18,386,006 17,683,912
4,067,238 4,166,466 4,075,286 4,432,039 4,920,805 4,358,806
929,196 858,840 682,609 983,321 1,592,094 1,567,283
7,040,983 7,194,758 7,035,372 6,965,253 5,248,185 5,337,305
720,797
1,350,922
1,846,854 1,865,175 1,892,237 1,631,204 1,537,714
1,157,235 1,114,181 1,110,200 1,162,452 1,090,471 1,877,833
261,076 248,806 224,587 267,933 273,818 273,296
2,333,001 3,214,579 3,379,483 2,855,174 7,667,405 4,594,942
97,329 84,024 194,775 199,775 1,135,709 367,342
102,185 382,013 448,702 448,835 491,151 289,407
17,835,097 19,128,842 19,043,251 18,945,986 23,957,352 20,737,933
(662,959) 749,444 (1,673,654) (1,779,805) (5,571,346) (3,054,021)
(312,051)
6,285,000 484,799 2,253,119 69,077
849,000
3,440,859 4,752,885 5,116,137 5,825,184 6,239,127 6,691,654
(2,389,483) (3,355,125) (3,723,643) (4,332,745) (4,350,724) (4,621,188)
(3,333,432)
7,024,325 1,397,760 1,877,293 1,492,439 4,990,522 (1,193,889)
$6,361,366 $2,147,204 $203,639 $(287,366) $(580,824) $(4,247,910)
1.30%3.02%4.28%4.20%11.09%4.24%
2011 2012
Fiscal Year
2007 2008 2009 2010
E ‐11
Item 8.c. - Page 113
CITY OF ARROYO GRANDE
GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE
Last Ten Fiscal Years
20032,640,126 $ 3,201,889 $ 369,956 $ 61,014 $ 408,636 $ 130,150 $ 6,811,771 $
20043,122,124 3,315,874 399,794 67,887 515,406 128,704 7,549,789
20053,534,079 3,460,478 390,670 75,901 526,792 150,563 8,138,483
20064,192,636 3,674,807 434,986 79,701 566,000 151,874 9,100,004
20075,240,507 3,800,667 449,474 81,821 588,841 109,182 10,270,492
20085,201,904 5,280,813 437,164 80,990 621,987 93,359 11,716,217
20095,518,824 4,658,777 389,067 79,111 639,776 67,524 11,353,079
20105,408,201 4,252,903 348,014 80,283 604,325 63,450 10,757,176
20115,313,261 4,781,774 390,472 79,663 539,673 65,915 11,170,758
20126,563,217 4,127,541 630,379 84,925 570,172 70,461 12,046,695
Source: City of Arroyo Grande Annual Financial Report
E ‐12
Includes all governmental fund types (i.e. general fund, special revenue funds, capital project funds, and debt service funds).
Fiscal
Year Total
Property
Taxes
Sales & Use
Tax
Transient
Occupancy
Tax
Business
Licenses
Franchise
Revenues
Property Tax
Transfer
Item 8.c. - Page 114
CITY OF ARROYO GRANDE
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
Last Ten Fiscal Years
2003 100%
20041,544,938,583 39,202,838 1,584,141,42127,451,140 1,556,690,281 100%
20051,705,009,381 37,532,227 1,742,541,60827,317,728 1,715,223,880 100%
20061,854,194,694 45,169,815 1,899,364,50926,909,137 1,872,455,372 100%
20072,051,896,464 41,436,924 2,093,333,38826,740,180 2,066,593,208 100%
20082,196,091,386 41,592,228 2,237,683,61426,977,685 2,210,705,929 100%
20092,291,770,614 45,964,735 2,337,735,34927,218,700 2,310,516,649 100%
20102,245,531,517 44,455,451 2,289,986,96827,131,700 2,262,855,268 100%
20112,242,734,120 41,864,014 2,284,598,13426,925,209 2,257,672,925 100%
20122,195,793,943 41,107,547 2,236,901,49026,926,650 2,209,974,840 100%
Source: San Luis Obispo County Auditor ‐Controller
E ‐13
Assessed
to
Property
For comparisonpurposes,gross assessedvaluationsincludehomeownersandotherexemptions.Althoughtheseexemptions
reducepropertytaxcollections,therevenuelossisreimbursedbytheStateofCalifornia.Assuch,grossassessedvaluationisthe
revenue base used in establishing property tax ‐related revenues.
Fiscal Year
Secured Gross
Assessed Value
Unsecured Gross
Assessed Value
Total Gross
Assessed ValueExemptions
Net Taxable
Value
1,394,050,860 $ 1,430,216,153 $ 36,165,293 $ 26,967,524 $ 1,403,248,629 $
Item 8.c. - Page 115
CITY OF ARROYO GRANDE
PROPERTY TAX RATES ‐ DIRECT AND OVERLAPPING GOVERNMENTS
Last Ten Fiscal Years
20031.000000.002300.013800.019100.000001.03520
20041.000000.002300.012110.015190.013041.04264
20051.000000.002230.032450.013840.013041.06156
20061.000000.002220.020180.011090.011001.04449
20071.000000.002210.019340.010170.009641.04136
20081.000000.002200.028540.009670.008911.04932
20091.000000.002200.028540.009670.008201.04861
20101.000000.002200.028540.009670.008171.04858
20111.000000.002900.029140.009720.008171.04993
20121.000000.003000.029840.009720.008171.05073
Source: HDL Coren & Cone, San Luis Obispo County Assessor
E ‐14
ValuationsareestablishedbytheCountyAssessoroftheCountyofSanLuisObispo,exceptforpropertyownedbyprivate
utilitycompanies,whichisvaluedbytheStateofCalifornia.UndertheprovisionsofArticleXIIAoftheStateConstitution
(Proposition13adoptedbythevotersonJune6,1978)propertiesareassessedat100%offullvalueandsubsequently
increasedatamaximumrateof2%peryear.TheCountycollectspropertytaxesanddistributestheappropriateamount
toeachcity.Each$1.00ofpropertytaxisdistributedtovariouslocalgovernmentagenciesbaseduponfixedallocation
factors.
San Luis
Obispo
County Tax
Rate
State Water
Project Tax
Unified/High
Bond Lease
Lopez Dam
BondsFire Bonds
Total Tax
Rate Fiscal Year
Item 8.c. - Page 116
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Item 8.c. - Page 117
CITY OF ARROYO GRANDE
PRINCIPAL PROPERTY TAXPAYERS
Current Fiscal Year and Nine Fiscal Years Ago
Rank
ESJ Centers LLC $42,206,844 11.89%
MSB Properties Inc.15,581,595 20.70%
Sunrise Terrace Associates 11,644,369 30.52%
Grand and Elm Properties LP 10,352,952 40.46%
Manfred G Freutel Trust 9,318,563 50.42%
EPT Arroyo Inc.6,923,883 60.31%
NKT Holdings LLC 6,890,493 70.31%
Ray B. Bunnell 6,778,267 80.30%
Orradre Ranch A California LP 5,986,081 90.27%
Deblauw Properties LLC 5,827,177 100.26%
Berry Gardens LLC
Signature Real Estate Equities
Castlerock Development Corp.
Yates Family Partnership LP
Juanita D McMullen Trust
Totals $121,510,224 5.44%
Source: HDL Coren & Cone, San Luis Obispo County Assessor
E ‐16
Taxpayer
Commercial
Commercial
Residential
Type of Business
Institutional
Residential
Recreational
Vacant
Commercial
Commercial
Vacant
Residential
Recreational
Residential
Commercial
Percentage of
Total Taxable
Assessed
Valuation
Assessed
Valuation
2011 ‐12
Commercial
Item 8.c. - Page 118
Rank
$35,460,601 12.48%
4,978,778 90.35%
9,469,477 20.66%
8,128,932 40.57%
5,942,100 70.42%
8,693,691 30.61%
6,471,946 50.45%
5,971,826 60.42%
5,191,362 80.36%
4,665,392 100.33%
$94,974,105 6.65%
E ‐17
2002 ‐03
Percentage of
Total Taxable
Assessed
Valuation
Assessed
Valuation
Item 8.c. - Page 119
CITY OF ARROYO GRANDE
SECURED PROPERTY TAX ROLL LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Fiscal Year
Total Secured
Tax Levy
Current Tax
Collections
Percent of Levy
Collected
Current Year
Delinquencies
Percent
Delinquent
2002 2,318,552 $ 2,318,552 $ 100%**
2004 2,582,790 2,582,790 100%**
2005 2,852,686 2,852,686 100%**
2006 3,120,935 3,120,935 100%**
2007 3,452,422 3,452,422 100%**
2008 3,696,974 3,696,974 100%**
2009 3,855,626 3,855,626 100%**
2010 3,782,238 3,782,238 100%**
2011 3,777,302 3,777,302 100%**
2012 3,696,711 3,696,711 100%**
Source: San Luis Obispo County Auditor ‐Controller
TheCityhaselectedtheTeeterPlanmethodofpropertytaxcollection,wherebytheCountyremits100%oftaxeslevied
and pursues collection and retains any delinquent taxes and related penalties and interest.
E ‐18
Item 8.c. - Page 120
THIS PAGE IS INTENTIONALLY LEFT BLANK
Item 8.c. - Page 121
CITY OF ARROYO GRANDE
TAXABLE SALES BY CATEGORY
Last Ten Calendar Years
(in thousands of dollars)
Apparel Stores $9,114 $9,290 $9,872 $10,203
General Merchandise 56,500 57,073 58,949 60,052
Food Stores 17,226 18,306 18,304 19,962
Eating and Drinking Places 24,013 25,829 27,101 25,521
Building Materials 22,950 24,979 27,107 29,713
Auto Dealers and Supplies 51,684 48,904 48,959 51,966
Service Stations 27,561 32,041 39,591 43,145
Other Retail Stores 42,502 45,544 46,072 48,600
All Other Outlets 53,968 54,289 62,632 66,969
Total $305,518 $316,255 $338,587 $356,131
Source: State of California Board of Equalization and the Hdl Companies.
E ‐20
Duetoconfidentialityissues,thenamesofthetenlargestrevenuepayersarenotavailable.Thecategoriespresentedare
intended to provide alternative information regarding the sources of the City's revenue.
2002 2003 2004 2005
Item 8.c. - Page 122
$10,162 $10,190 $9,953 $10,437 $10,537 $10,139
61,516 61,639 62,296 63,243 62,156 60,259
21,133 18,642 17,998 16,970 15,587 15,424
26,827 28,733 30,777 29,792 29,868 32,633
27,485 24,672 22,119 18,727 18,222 19,366
44,185 37,242 26,433 21,824 24,270 30,154
43,564 43,952 48,542 34,454 36,520 42,684
46,049 45,906 40,525 39,167 38,901 41,801
69,044 59,650 50,709 44,338 48,385 49,334
$349,965 $330,626 $309,352 $278,952 $284,446 $301,794
E ‐21
2010 2011 2006 2007 2008 2009
Item 8.c. - Page 123
CITY OF ARROYO GRANDE
RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Fiscal Year
2003$1,900,000 $‐$117,873 $‐$‐
2004 1,900,000 93,247
2005 1,835,000 67,750
2006 1,765,000 41,353
2007 1,695,000 6,285,000 14,024
2008 1,625,000 6,285,000
2009 1,550,000 6,275,000 375,023
2010 1,475,000 6,265,000 260,396
2011 1,395,000 6,165,000 312,405 1,327,512 27,182
2012 1,315,000 221,140 1,305,512 27,182
Source: City of Arroyo Grande Annual Financial Report
E ‐22
Governmental Activities
General
Obligation
Bonds
Tax Allocation
BondsCapital LeasesLoan Payable
Reimburse ‐
ment
Agreement
Item 8.c. - Page 124
$578,630 $41,415 $2,637,918 0.19%159.65
496,164 32,761 2,522,172 0.16%152.10
408,557 23,803 2,335,110 0.14%141.21
315,488 14,529 2,136,370 0.11%128.70
216,617 4,927 8,215,568 0.36%490.22
111,582 8,021,582 0.34%470.86
8,200,023 0.37%480.10
8,000,396 0.35%466.63
9,227,099 0.40%531.36
2,868,834 0.13%165.91
E ‐23
Outstanding
Debt per
Capita Safe Water LoanCapital Leases
Total Primary
Government
Business ‐Type Activities
Percent of
Estimated
Actual Value
of Taxable
Property
Item 8.c. - Page 125
CITY OF ARROYO GRANDE
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
Last Ten Fiscal Years
2003$1,900,000 $1,836,100 $63,900 $1,403,248,6290.00%16,523 3.87
20041,900,000 456,260 1,443,740 1,556,690,281 0.09%16,582 87.07
20051,835,000 229,673 1,605,327 1,715,223,880 0.09%16,537 97.07
20061,765,000 323,029 1,441,971 1,872,455,3720.08%16,599 86.87
20071,695,000 415,430 1,279,570 2,066,593,2080.06%16,759 76.35
20081,625,000 499,891 1,125,109 2,210,705,9290.05%17,036 66.04
20091,550,000 568,811 981,189 2,310,516,649 0.04%17,080 57.45
20101,475,000 625,638 849,362 2,289,986,9680.04%17,145 49.54
20111,395,000 677,881 717,119 2,284,598,1340.03%17,365 41.30
2012 1,315,000 727,231 587,769 2,236,901,490 0.03%17,291 33.99
Source: San Luis Obispo County Tax Assessor Rolls ‐ California Department of Finance
E ‐24
Net General
Bonded Debt
Ratio of
Net
Bonded
Debt to
Assessed Population
Net
Bonded
Debt Per
Capita
Fire General Obligation Bond
Fiscal
Year
Estimated Actual
Taxable Value of
Property
General
Bonded Debt
Less: Amount
Available in
Debt Service
Funds
Item 8.c. - Page 126
CITY OF ARROYO GRANDE
DIRECT AND OVERLAPPING DEBT
June 30, 2012
$10,245,000 32.741%$3,354,315
Lucia Mar Unified School District 35,215,110 20.211%7,117,326
City of Arroyo Grande 1,315,000 100.000%1,315,000
San Luis Obispo County Certificates of Participation 33,945,000 5.565%1,889,039
San Luis Obispo Pension Obligations 119,429,398 5.565%6,646,246
31,080,000 5.544%1,723,075
9,720,000 20.211%1,964,509
Combined Total Debt $240,949,508 $24,009,510
Ratio to Assessed Valuation:
Direct Debt 0.06%
Total Direct and Overlapping Tax and Assessment Debt 0.53%
Combined Total Debt 1.14%
Assessed Valuation Calculation:
Net Taxable Value $2,236,901,490
Less: Redevelopment Agency Tax Increment (139,772,458)
Total Assessed Valuation $2,097,129,032
Source: California Municipal Statistics
Percentage
Applicable to
the City
Amount Applicable
to the City
E ‐25
Jurisdiction
San Luis Obispo County Flood Control and Water
Conservation District, Zone No. 3
San Luis Obispo Community College District Certificates of
Participation
Lucia Mar Unified School District Certificates of
Participation
Net Debt
Outstanding
Item 8.c. - Page 127
CITY OF ARROYO GRANDE
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
Debt Limit $53,633,106 $59,405,303 $65,345,348 $71,226,169
Total net debt applicable to limit
Legal debt margin $53,633,106 $59,405,303 $65,345,348 $71,226,169
0%0%0%0%
Source: San Luis Obispo County
E ‐26
Totalnetdebtapplicabletothelimitasa
percentage of debt limit
Fiscal Year
2003 2004 2005 2006
Item 8.c. - Page 128
$70,520,002 $76,003,136 $79,840,076 $79,151,950 $76,912,430 $81,390,806
$70,520,002 $76,003,136 $79,840,076 $79,151,950 $76,912,430 $81,390,806
10%9%9%9%10%3%
Legal Debt Margin Calculation for Fiscal Year 2012
Assessed value $2,236,901,490
Debt limit ‐ 3.75% of total assessed value 83,883,806
Amount of debt applicable to limit (2,493,000)
Legal debt margin $81,390,806
E ‐27
2011 2012
Section43605ofCaliforniaGovernmentCodeestablishesalegaldebtlimitof15%ofgrossassessedvaluationfor
municipalities.However,thisprovisionwasenactedwhenassessedvaluationwasestablishedbasedon25%ofmarket
value.EffectivewithFY1981 ‐82,taxablepropertyisassessedat100%ofmarketvalue.Althoughthedebtlimitprovision
hasnotbeenamendedbytheStatesincethischange,thepercentagehasbeenproportionatelymodifiedto3.75%forthe
purposes of this calculation for consistency with the original intent of the State’s limit.
Fiscal Year
2007 2008 2009 2010
Item 8.c. - Page 129
CITY OF ARROYO GRANDE
DEMOGRAPHIC STATISTICS
Last Ten Calendar Years
Fiscal Year Population
2002 16,315 409,691 $ 25,111 $ 4.1%
2003 16,521 428,844 25,957 4.1%
2004 16,629 460,956 27,720 4.0%
2005 16,602 488,426 29,420 4.4%
2006 16,645 531,728 31,945 4.0%
2007 16,834 566,021 33,624 4.4%
2008 16,990 577,858 34,012 5.9%
2009 17,110 561,131 32,796 9.2%
2010 17,145 547,714 31,946 10.4%
2011 17,291 554,159 32,049 9.5%
Source: HDL Coren & Cone
E ‐28
Personal Income
(in thousands)
Per Capita
Personal Income
Unemployment
Rate
Item 8.c. - Page 130
CITY OF ARROYO GRANDE
PRINCIPAL EMPLOYERS
Current Fiscal Year and Nine Years Ago
Rank Rank
Lucia Mar Unified School District 900111%***
Arroyo Grande Community Hospital 38025%***
Wal ‐Mart 22333%***
City of Arroyo Grande 16542%***
Albertson's 13052%***
K ‐Mart 10061%***
Chili's 7171%***
Trader Joes 6781%***
Applebees 6291%***
Regal Cinemas 50101%***
* ‐ Data not available
Source: City of Arroyo Grande Business License records
Employer Employees Employees
E ‐29
2011 ‐12 2002 ‐03
Percentage of
Total City
Employment
Percentage of
Total City
Employment
Item 8.c. - Page 131
CITY OF ARROYO GRANDE
FULL ‐TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
Last Ten Fiscal Years
2003200420052006200720082009201020112012
General government **10.8 10.8 10.7 10.5 10.6 10.6 10.7 10.5
Community development**19.0 15.8 17.0 16.2 13.4 10.8 10.5 9.2
Police **46.8 44.6 45.1 43.2 38.0 38.5 38.5 39.6
Recreation **20.7 20.0 19.0 18.8 18.9 16.5 11.9 11.4
Parks and facilities **12.0 11.2 10.5 10.3 10.0 10.1 11.1 10.9
Streets and roads **8.2 7.1 6.8 5.8 6.1 6.0 6.4 6.1
Sewer **1.4 1.3 2.6 3.8 4.4 3.2 2.0 1.9
Water **7.8 7.1 7.4 7.3 7.4 6.5 6.6 6.6
Total **126.7117.9119.1115.9108.8102.2 97.7 96.2
* ‐ Data on the number of hours worked is unavailable
Source: City of Arroyo Grande payroll records
Fiscal Year
Function
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Item 8.c. - Page 133
CITY OF ARROYO GRANDE
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
20032004200520062007
General Government
Number of business licenses *1,320 *1,935 1,900
Number of minutes transcribed 36 33 36 31 34
Number of agenda items processed 280 312 320 297 320
Number of recruitments 29 29 29 29 33
Police
Number of officers 26 26 27 27 27
Incidents recorded 17,194 16,582 17,300 14,448 12,456
Major crimes 395 437 480 510 500
Traffic collisions 230 280 300 442 479
Traffic enforcement activities 7,064 4,957 6,000 4,149 3,029
Arrests 788 696 780 584 697
Engineering/Streets
Miles of streets maintained 65 65 70 70 70
Miles of sewer maintained 62 63 64 65 66
Number of vehicles maintained 86 87 88 89 90
Pieces of equipment maintained 385 385 386 385 389
In ‐house capital projects constructed 6 3 2 3 3
Capital projects constructed 9 6 8 6 7
CIP studies initiated 2 2 *2 *
CIP studies completed 3 1 1 1 1
Plan and map checks completed 100 100 28 13 8
Street service request 480 500 510 550 560
Community Development
Number of planning commission agendas 23 29 29 26 20
Number of planning commission staff reports 69 79 80 80 58
Number of ARC agendas 17 **15 13
Building permits issued 414 509 540 550 560
Building inspections conducted 4,000 4,435 4,500 3,400 4,500
Parks and Recreation
Number of street trees maintained 1,350 1,360 1,000 1,060 1,091
Registrations 11,650 11,500 11,650 11,500 11,650
Participants in City recreation sports 2,968 2,870 3,090 3,136 3,132
Number of programs/events/classes 73 72 73 72 73
Number of teams 279 272 281 294 301
Children in Motion enrollment 1,100 1,050 1,100 1,050 1,050
Water
Water customer accounts 6,035 6,053 6,117 6,208 6,422
Acre feet of water consumed 3,458 3,490 3,204 3,037 3,245
Miles of water lines maintained 65 66 67 68 69
* ‐ Data not available
Source: City of Arroyo Grande budget records
Fiscal Year
E ‐32
Item 8.c. - Page 134
20082009201020112012
1,713 1,705 1,622 1,654 1,654
24 35 30 44 30
302 275 297 295 246
51 31 19 18 10
27 27 26 26 26
12,518 14,150 17,072 16,145 17,250
498 395 478 444 313
325 450 429 432 410
4,646 4,616 4,863 4,013 4,295
609 364 631 605 574
70 70 70 70 70
66 66 66 66 69
70 90 89 90 86
385 389 385 389 350
3 3 3 2 3
6 7 6 10 7
2 ‐ 2 4 3
1 1 1 2 1
8 8 13 12 13
560 560 550 560 263
17 20 18 19 14
37 58 36 43 35
12 13 12 13 11
530 540 530 421 376
3,508 4,500 3,400 3,019 1,601
1,141 1,200 1,200 1,200 1,200
11,000 11,650 11,500 11,650 11,750
3,144 2,200 2,290 2,200 2,260
114 91 72 91 108
306 281 255 281 336
1,200 1,250 1,200 800 840
6,449 6,457 6,304 6,312 6,525
3,343 3,177 2,918 2,746 2,868
69 69 69 69 87
Fiscal Year
E ‐33
Item 8.c. - Page 135
CITY OF ARROYO GRANDE
CAPITAL ASSET STATISTICS BY FUNCTION
Last Ten Fiscal Years
2003200420052006200720082009201020112012
Police
Stations 1 1 1 1 1 1 1 1 1 1
Patrol units 10 10 10 10 10 10 10 10 10 10
Motorcycles 2 2 2 2 2 2 2 2 2 2
Engineering/Streets
Streets (miles)65 65 70 70 70 70 70 70 70 70
Parks & Recreation
Parks 18 18 18 18 19 19 19 19 19 19
Acreage of parks 150.3 150.7 150.9150.9151.6151.6151.6151.6 151.6151.6
Community centers 2 2 2 2 2 2 2 2 2 2
Water
Water mains (miles)68 68 68 68 68 68 69 69 69 87
Water capacity**5.0 5.0 5.0 6.5 6.5 6.5 6.5 6.5 6.5 6.7
** ‐ In millions of gallons
Source: CBIZ GASB Statement No. 34 Infrastructure Inventory and Valuation City records
Fiscal Year
Function
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Item 8.c. - Page 136