CC 2021-02-09_08b Acceptance of CAFR 2020_Attachment 1_CAFR
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDING JUNE 30, 2020
CITY OF ARROYO GRANDE,
CALIFORNIA
PREPARED BY THE DEPARTMENT OF
ADMINISTRATIVE SERVICES
City of Arroyo Grande
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Table of Contents
For the Fiscal Year Ended June 30, 2020
i
INTRODUCTORY SECTION
Letter of Transmittal ................................................................................................................................................................ A-1
Directory of Officials ................................................................................................................................................................ A-5
Organization of City Government ............................................................................................................................................ A-6
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 Position ............................................................................................................................................ B-16
Statement of Activities .................................................................................................................................................. B-18
Fund Financial Statements:
Description of Major Governmental Funds .................................................................................................................. B-21
Balance Sheet – Governmental Funds .......................................................................................................................... B-22
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ................................. B-25
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds .................................. B-26
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities ..................................................................... B-28
Description of Major Proprietary Funds ....................................................................................................................... B-29
Statement of Net Position – Proprietary Funds ............................................................................................................ B-30
Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds ................................................ B-31
Statement of Cash Flows – Proprietary Funds .............................................................................................................. B-32
Description of Fiduciary Funds ...................................................................................................................................... B-35
Statement of Fiduciary Net Position ............................................................................................................................. B-36
Statement of Changes in Fiduciary Net Position ........................................................................................................... B-37
Notes to Basic Financial Statements ................................................................................................................................ B-38
Required Supplementary Information (unaudited)
Budgetary Information – Major Governmental Funds:
General Fund ................................................................................................................................................................. B-67
Transportation Impact Fees Fund ................................................................................................................................. B-69
Community Development Block Grant (CDBG) Fund .................................................................................................... B-70
Schedule of Changes in the OPEB Liability and Related Ratios ....................................................................................... B-71
Net Pension Liability – Schedule of Proportionate Share ................................................................................................ B-72
Net Pension Liability – Schedule of Contributions ........................................................................................................... B-73
Supplemental Information
Description of Nonmajor Governmental Funds ............................................................................................................... B-75
Nonmajor Governmental Funds:
Combining Balance Sheet ............................................................................................................................................. B-78
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ..................................................... B-82
Agency Funds:
Statement of Changes in Assets and Liabilities ............................................................................................................. B-86
City of Arroyo Grande
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Table of Contents
For the Fiscal Year Ended June 30, 2020
ii
STATISTICAL SECTION (unaudited)
Net Position by Component – Last Ten Fiscal Years ................................................................................................................. C-2
Changes in Net Position – Last Ten Fiscal Years........................................................................................................................ C-4
Fund Balances of Governmental Funds – Last Ten Fiscal Years ................................................................................................ C-8
Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years ........................................................................... C-10
General Governmental Tax Revenues by Source – Last Ten Fiscal Years ............................................................................... C-12
Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ............................................................... C-13
Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years ............................................................. C-14
Principal Property Taxpayers – Current Fiscal Year and Nine Fiscal Years Ago ...................................................................... C-16
Secured Property Tax Roll Levies and Collections – Last Ten Fiscal Years .............................................................................. C-18
Taxable Sales by Category – Last Ten Calendar Years ............................................................................................................ C-20
Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ................................................................................................... C-22
Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years ..................................................................................... C-24
Direct and Overlapping Debt .................................................................................................................................................. C-25
Legal Debt Margin Information – Last Ten Fiscal Years .......................................................................................................... C-26
Demographic Statistics – Last Ten Calendar Years ................................................................................................................. C-28
Full-Time Equivalent City Government Employees by Function ............................................................................................. C-29
Operating Indicators by Function – Last Ten Fiscal Years ....................................................................................................... C-30
Capital Asset Statistics by Function – Last Ten Fiscal Years .................................................................................................... C-32
Introductory Section
Accounting and financial reporting
standards prescribe that the
introductory section of the CAFR
contains the following: letter of
transmittal, list of principal officials, and
organizational chart.
CITY OF
Arroyo Grande
CALIFORNIA
January 26, 2021
To the Honorable Mayor, Members of the City Council, and the Citizens of the City of Arroyo Grande:
We are pleased to present the City of Arroyo Grande’s (City) Comprehensive Annual Financial Report (CAFR) for the
fiscal year ended June 30, 2020. State law requires that all general-purpose local governments publish within six
months of the close of the fiscal year a complete set of financial statements presented in conformity with accounting
principles generally accepted in the United States of America (GAAP) and audited in accordance with auditing
standards generally accepted in the United States of America by a licensed certified public accountant. Pursuant to
the requirement, we hereby issue this annual financial report of the City of Arroyo Grande for the fiscal year ended
June 30, 2020.
This report consists of management’s representations concerning the finances of the City. Consequently,
management assumes full responsibility for the completeness and reliability of all of the information presented in
this report. To provide a reasonable basis for making these representations, management of the City has established
a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft, or
misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in
conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s
comprehensive framework of internal controls has been designed to provide reasonable rather than absolute
assurance that the financial statements will be free from material misstatement. As management, we assert that,
to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.
The City’s financial statements have been audited by Moss, Levy & Hartzheim LLP, a licensed certified public
accountant firm. The goal of the independent audit was to provide reasonable assurance that the financial
statements of the City for the fiscal year ended June 30, 2020, are free of material misstatements. The independent
audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements; assessing the accounting principles used and significant estimates made by management; and
evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit,
that there was a reasonable basis for rendering an unmodified opinion that the City’s financial statements for the
fiscal year ended June 30, 2020, are fairly presented in conformity with GAAP. The independent auditors’ report is
presented as the first component of the financial section of this report.
GAAP requires that management provide 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 transmittal 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.
ADMINISTRATIVE SERVICES • 300 E. Branch Street • Arroyo Grande, California 93420
Phone: (805) 473-5400 • Fax: (805) 473-0386 • E-mail: agcity@arroyogrande.org • Website: www.arroyogrande.org
A-1
Profile of the Government
The City of Arroyo Grande is located five miles inland from the California coastline. Incorporated in 1911, the City
contains acres of agriculturally productive land in a valley created by the Arroyo Grande Creek. The City currently
occupies a land area of 5.45 square miles and serves a population of approximately 18,131.
The City is empowered to levy a property tax on both real and personal properties located within its boundaries and
collect its own sales, use, and lodging tax. It is also empowered by the state statute to extend its corporate limits by
annexation, which occurs periodically when deemed appropriate by City Council.
The City has operated under the council-manager form of government since 1911. Policy-making and legislative
authority are vested in a governing council consisting of the Mayor and four other council members. The governing
council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees,
and hiring both the City’s manager and attorney. The City Manager is responsible for carrying out the policies and
ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads
of the 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 term. The Mayor and the council members are elected
at large.
The City provides a full range of services including: police protection, the construction and maintenance of streets
and other infrastructure, recreational activities, community development and other administrative services. In
terms of business type activities, the City provides water, wastewater, and sewer services through operation of its
utility enterprises. Fire protection is provided through the Five Cities Fire Authority, Joint Powers Agency.
The annual budget serves as the foundation for the City’s financial planning and control. All departments and
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. The City Council is required to hold public hearings on the proposed budget and to adopt a final
budget by no later than June 30th, the close of the City’s fiscal year. Although the budget enacted by City Council is
at the fund level, the City prepares a line item budget by department (e.g. public works), and division (e.g.
automotive shop) for control at the line item level. Department directors have the authority to make transfers of
appropriations within their department. Transfers of appropriations between departments, funds, or changes in
appropriations that affect overall fund balance require the approval of the City Council.
Factors Affecting Financial Condition
The current COVID-19 public health crisis has had a major impact on the local community and its economy. Record
unemployment rates and mandated business closures have impacted the City’s revenue and it is forecasted to have
an impact on future revenues as well. However, the City of Arroyo Grande continues to maintain a strong financial
position allowing it to weather the impacts of the current pandemic. Conservative budgeting and fiscal policies over
the years have allowed Arroyo Grande to sustain adequate reserves in anticipation of fiscal uncertainties. This fiscal
discipline has allowed Arroyo Grande the financial means to maintain our full range of municipal services, support
our local economy, and help the community.
The information presented in the financial statements is perhaps best understood when it is considered from the
broader perspective of the environment within which the City operates.
A-2
Local Economy
The City is located along the beautiful Central Coast of California, midway between Los Angeles and San Francisco
along the famed Highway 101. The community provides an extraordinary quality of life, welcoming small town
atmosphere, growing diversity, and outstanding Mediterranean climate. The City is located within minutes of the
Pacific Ocean, the Lopez Lake recreation area, and other diverse recreational opportunities.
As in the past, city management and leadership continues to support operations with varying revenues, while debt
has been kept to a minimum. The City’s largest source of general fund revenue is local property taxes and equates
to roughly 39% of the City’s total revenue. The City has approximately 6,600 residential and 360 commercial parcels
contributing to the tax base. Residents enjoy a unique combination of rural and urban qualities, which includes a
range of housing options with the median home price at approximately $750,000. The City’s property tax revenues
continue to grow with a 4.4% increase over the prior year’s. Property taxes and other general fund revenues fund
general governmental operations such as police, fire, streets, parks as well as economic development and
community partnerships. Other top revenue generators are sales & use tax, transient occupancy tax, and other
taxes.
In addition to responding to the current public health emergency, the City of Arroyo Grande began proactively
preparing for the economic impact related to COVID-19 in mid-March of 2020. Prior to the fourth quarter of fiscal
year 2019-20, the City had experienced moderate growth in sales & use tax and transient occupancy tax (TOT).
However, due to mandatory business closures in the final quarter of the fiscal year, the City’s sales & use tax and
TOT revenues declined significantly in that quarter. Expense reductions were immediately identified and
implemented by the City Council in order to offset the expected loss of revenue. As a result of this proactive fiscal
leadership, the City currently maintains a strong financial position and will continue to closely monitor the economic
impacts of COVID-19 as time progresses.
Long-Term Financial Planning
The City completed a 10-year fiscal forecast that acknowledges continued investment in the City’s infrastructure as
an important goal. Numerous Capital Improvement Plan (CIP) projects were completed during the fiscal year to
improve the City’s infrastructure, facilities, and parks, improve drainage problems, and improve the overall look of
the community. The City will continue its practice of seeking federal, state, and local grants and funding to provide
financing for the City’s capital projects. The following list of capital investments, approved as part of the FY 2020-
21 Budget, will have a noteworthy impact within the community.
Street Projects – The Brisco Road-Halcyon Road/Route 101 Interchange project is nearing completion of the
Project Approval and Environmental Determination phase and a preferred alternative has been selected.
The Castillo Del Mar street project is scheduled to begin construction in 2021 and will widen and realign this
street from Arroyo Grande High School to Valley Road. In addition, several pavement rehabilitation projects
are scheduled to improve the City’s streets.
Bridge Projects – Various bridge projects are expected to continue including completion of the Bridge Street
Bridge Rehabilitation project, design of the Traffic Way Bridge Improvement Project, and historic Swinging
Bridge Reinforcement Project.
Water & Sewer Projects – Various waterline upgrades and water main replacements are planned, in addition
to the construction of a new 500,000-gallon steel storage Reservoir No. 7 to serve the City’s Rancho Grande
zone.
A-3
Cash Management Policies and Practices
Cash temporarily idle during the fiscal year was invested in Certificates of Deposit, Agency Bonds, and the Local
Agency Investment Fund (LAIF). The LAIF is a State investment pool fund that offers the City liquidity, safety, and a
higher rate of interest than could typically be found with local banks. The City ended the fiscal year with a portfolio
of investments totaling approximately $20.1 million.
Risk Management
The City joined the California Joint Powers Insurance Authority (CJPIA) 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 the city council of each member
agency. The Insurance Fund derives its revenues from contributions established for each city at the beginning of
each policy year. The contributions 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.
Under this arrangement, the City’s general liability program provides first-dollar coverage with no deductibles or
member retained limits. The program offers $50 million of coverage per occurrence. The primary workers’
compensation program also provides first-dollar coverage with no deductibles or member-retained limit. Several
cost containment programs are in place to reduce the severity of claims and expedite the return of employees to
work. These include a medical provider network, pharmacy management, and return-to-work program specific to
the City and injured workers.
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 able to fully meet its obligation to retired
employees on a timely basis.
The City also provides post-retirement health benefits for certain retirees and their dependents. As of the end of
the current fiscal year, there were fifty-two (52) retired employees receiving these benefits, which are financed on
a pay-as-you-go-basis.
Additional information on the City’s pension arrangements and post-employment benefits can be found in NOTE 8
– LONG-TERM DEBT, NOTE 11 – DEFINED BENEFIT PENSION PLANS and NOTE 12 – POST-EMPLOYMENT BENEFITS
OTHER THAN PENSIONS (OPEB) in the notes to the basic financial statements.
Acknowledgements
We would also like to express our appreciation to all members of the various City departments who assisted and
contributed to the preparation of this report. Credit also must be given to the Mayor and City Council for their
diligent support for maintaining the highest standards of professionalism in the management of the City of Arroyo
Grande’s finances.
Respectfully submitted,
Whitney McDonald Michael Stevens
City Manager Administrative Services Director
A-4
City of Arroyo Grande
DIRECTORY OF OFFICALS - (AS OF JUNE 30, 2020)
ELECTED OFFICIALS
Mayor ................................................................................................................................ Caren Ray Russom
Mayor Pro Tem .......................................................................................................................... Keith Storton
Council Member ............................................................................................................................ Lan George
Council Member ....................................................................................................................... Jimmy Pauling
Council Member .................................................................................................................... Kristen Barneich
ADMINISTRATIVE PERSONNEL
Acting City Manager/Director of Public Works ........................................................................... Bill Robeson
Acting Deputy City Manager/Director of Community Development .............................. Whitney McDonald
City Attorney ...................................................................................................................... Timothy J. Carmel
Director of Administrative Services /City Treasurer ............................................................. Michael Stevens
Director of Legislative and Information Services Director/City Clerk ..................................... Kelly Wetmore
Police Chief.................................................................................................................................... Beau Pryor
Director of Recreation Services .......................................................................................... Sheridan Bohlken
A-5
City of Arroyo Grande
ORGANIZATION OF CITY GOVERNMENT
A-6
Citizens of
Arroyo Grande
City Council
Boards &
Commissions City Manager
Administrative
Services
Finance
Human
Resource
Community
Development
Building & Life
Safety
Engineering
Planning
Legislative &
Information
Services
City Clerk
Information
Techology
Police
Patrol Services
Support
Services
Public Works
Capital
Projects
Maintenance
Services
Utility
Recreation
Services
Chidren in
Motion
Preschool
Special Events
Sports
Leagues
City Attorney
Financial Section
The financial section of the CAFR
includes the following elements: report
of the independent auditor,
management’s discussion and analysis,
basic financial statements (including
notes), required supplementary
information and related notes,
combining statements (nonmajor
funds), and individual fund financial
statements and schedules.
Moss, Levy & Hartzheim LLP
Certified Public Accountants
2400 Professional Parkway, Suite 205 Santa Maria, CA 93455 Tel 805.925.2579 Fax 805.925.2147 mlhcpas.com
BEVERLY HILLS ∙ CULVER CITY ∙ SANTA MARIA
INDEPENDENT AUDITORS’ REPORT
City Council of the City of Arroyo Grande
Arroyo Grande, California
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City of Arroyo Grande (the City), as of and for the fiscal year ended June
30, 2020, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed
in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting
principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether
due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance
with auditing standards generally accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
and reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of
the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of
Arroyo Grande, as of June 30, 2020, and the respective changes in financial position, and cash flows where applicable thereof, for
the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 17 to the basic financial statements in March 2020, the World Health Organization has declared COVID-19 to
constitute a “Public Health Emergency of International Concern.” Given the uncertainty of the situation, the duration of any financial
impact cannot be reasonably estimated at this time. Our opinion is not modified with respect to this matter.
B-1
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on
pages B-3 through B-14, the budgetary comparison information on pages B-67 through B-70, the schedule of changes in the OPEB
liability and related ratios on page B-71, the schedule of proportionate share of net pension liability on page B-72, and the schedule
of pension contributions on page B-73 be presented to supplement the basic financial statements. Such information, although not a
part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquires of management about the methods of
preparing the information and comparing the information for consistency with management’s responses to our inquires, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of
Arroyo Grande’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements,
agency funds financial statements, and statistical section are presented for purposes of additional analysis and are not a required
part of the basic financial statements.
The combining and individual nonmajor fund financial statements and the agency funds financial statements are the responsibility of
management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic
financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our
opinion, the combining and individual nonmajor fund financial statements and agency funds financial statements are fairly stated, in
all material respects, in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 7, 2021, on our consideration of
the City of Arroyo Grande’s internal control over financial reporting and on our tests of its compliance with certain provisions of
laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on
internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Santa Maria, California
January 7, 2021
B-2
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
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, 2020. 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, 2020, are as follows:
The City’s total net position increased by $2.0 million. Revenue for governmental activities increased 6.9% from the prior
year while expenses increased 4.6%, resulting in an increase in net position of $2.4 million. For business-type activities,
revenues exceeded total expenditures by $1.9 million but was offset by a net increase in transfers-out of $2.3 million,
resulting in a decrease in net position of $402,000.
The City finished the fiscal year with General Fund expenditures exceeding revenues by $264,000, however, after
transfers and other financing sources of $876,000, the General Fund ended the year with an increase in fund balance of
$612,000. This fund balance amount exceeded the City’s reserve policy goal of 20% of appropriated General Fund
expenditures.
The Water and Sewer funds both finished the fiscal year with a decrease in net position. However, both funds have
reserves exceeding the policy goal of 90-days of operating expenses, plus a Capital Reserve of $500,000, and a debt
service reserve equal to one year of annual debt service.
The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the
end of fiscal year 2019-20 by $87.8 million (net position). The unrestricted portion of the net position is $351,000 and is
composed of an unrestricted deficit in governmental activities of $5.1 million and a balance of $5.5 million unrestricted
in business-type activities.
The City completed $921,000 in capital improvement projects, including:
o Annual pavement maintenance on the City’s public streets and parking lots.
o Redirection of storm water along Sierra Drive to alleviate flooding.
o Annual repairs and upgrades to sidewalks throughout the City.
o Rehabilitated storm drains and sewer pipes using a trenchless (or no-dig) lining process.
o Emergency repair project for the failed storm drain system on Oak Park Blvd. at El Camino Real.
o Replaced existing 8-inch cast iron force main with 8-inch PVC force main on Lift Station #1.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial
statements are comprised of three components: 1) the government-wide financial statements, 2) fund financial statements, and 3)
notes to the financial statements. This report also contains supplementary information in addition to the basic financial statements.
Government-wide financial statements:
The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner
similar to a private sector business.
The Statement of Net Position presents information on all of the City’s assets, liabilities, and deferred inflows/outflows of resources
with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of
whether the financial position of the City is improving or deteriorating.
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 4
The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All
changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
related cash flows. Thus, some revenues and expenses reported in this statement will result in cash flows in future fiscal periods (e.g.
uncollected taxes and earned but unused paid vacation leave).
Both of the governmental-wide financial statements distinguish functions of the City that are principally supported by taxes and
intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of
their costs through user fees and charges (business-type activities). The governmental activities of the City include functions such as
general government, community development, public safety (police & fire), recreation, and public works. The business-type activities
of the City include water and sewer operations.
REPORTING ON THE CITY’S MOST SIGNIFICANT FUNDS
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities
or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the
City funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
1. Governmental Funds – These funds are used to account for essentially the same functions reported as
governmental-wide financial statements. These funds focus on how money flows in and out of these funds as well
as on balances of spendable resources available at the end of the fiscal year. Governmental fund information helps
users determine whether the financial resources can be spent in the near future to finance the City’s programs.
The City maintains a total of 27 governmental funds. Of these, four (4) are determined by generally accepted
accounting principles (GAAP) to be classified as major funds. They include the General Fund, Transportation Impact
Fee, Community Development Block Grant (CDBG), and Capital Improvement funds. The balances of the other 23
governmental funds are determined to be non-major and are combined within the governmental funds report. They
can also be found listed separately in the non-major governmental funds reporting.
2. Proprietary Funds – The City maintains three (3) major proprietary funds. The City uses proprietary funds to account
for its Water Utility, Sewer, and Lopez Water funds. As determined by GAAP, the Water Utility, Sewer, and Lopez
Water funds meet the criteria of a major fund classification. The City’s proprietary funds are the same as the
business-type activities reported in the government-wide financial statements but provide more detail and
additional information, such as cash flows. The basic propriety fund financial statements can be found on pages B-
30 through B-33.
3. Fiduciary Funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the
government. Fiduciary funds are not reflected in the governmental-wide financial statements because the
resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary
funds is much like that used for propriety funds. The City is a trustee, or fiduciary, for the Sanitation Distribution,
Downtown Parking, San Luis Obispo Tourism Marketing District, and the Successor Agency to the Former Arroyo
Grande Redevelopment Agency funds. The basic fiduciary fund financial statements can be found on pages B-36
through B-37.
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 5
Notes to the financial statements: The notes provide additional information that is essential to a full understanding of
the data provided in the government-wide and fund financial statements. The notes to the financial statements are
part of the basic financial statements.
Required Supplementary Information: The notes to the basic financial statements are followed by a section of
required supplementary information that further explains and supports the information in the financial statements.
Other Supplementary Information: In addition to the basic financial statements, accompanying notes and required
supplementary information, this report also presents certain other supplementary information including descriptions
of non-major governmental funds and combining fund statements for the City’s non-major special revenue and debt
service funds.
FINANCIAL ANALYSIS OF THE CITY AS A WHOLE
As noted previously, net position may serve, over time, as a useful indicator of a government’s financial positon. The net position of
the City increased $2.0 million from $85.7 million to $87.8 million at the close of the 2020 fiscal year. This overall increase is due to an
increase in governmental activities offset by a smaller decrease in business-type activities. The increase in governmental activities is
largely due to additional Federal Highway Bridge Replacement and Rehabilitation Program funding specific to the Bridge Street Bridge
Project and its associated construction in progress. The largest portion of the City’s net position, $76.3 million, reflects investments in
capital assets net of depreciation (e.g. land, buildings, infrastructure, and machinery & equipment). The City uses these capital assets
to provide services to the public; consequently, these assets are not available for future spending.
The following tables summarize net position and the changes in net position for governmental and business-type activities:
2020 2019 2020 2019 2020 2019
Current & other assets 26,467,436$ 22,712,839$ 8,795,572$ 9,260,779$ 35,263,008$ 31,973,618$
Capital assets, net 43,188,225 42,611,094 34,316,549 34,389,325 77,504,774 77,000,419
Total assets 69,655,661 65,323,933 43,112,121 43,650,104 112,767,782 108,974,037
Deferred Outflows of Resources 9,003,731 8,517,815 1,075,792 1,015,342 10,079,523 9,533,157
Long-term liabilities outstanding 23,899,440 24,707,991 2,559,620 2,688,218 26,459,060 27,396,209
Other liabilities 4,592,067 2,472,400 249,463 345,085 4,841,530 2,817,485
Total liabilities 28,491,507 27,180,391 2,809,083 3,033,303 31,300,590 30,213,694
Deferred Inflows of Resources 3,376,579 2,312,902 402,428 253,510 3,779,007 2,566,412
Net Position:
Net investment in capital assets 42,033,143 41,265,463 34,252,879 34,285,435 76,286,022 75,550,898
Restricted 9,866,579 8,748,114 1,263,656 1,235,610 11,130,235 9,983,724
Unrestricted (5,108,416) (5,665,122) 5,459,867 5,857,588 351,451 192,466
Total net position 46,791,306$ 44,348,455$ 40,976,402$ 41,378,633$ 87,767,708$ 85,727,088$
City of Arroyo Grande - Statement Of Net Position
Business-type Activities Total Primary GovernmentGovernmental Activities
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 6
GOVERNMENTAL ACTIVITIES
Governmental activities increased the City’s net position by $2.4 million. The following are illustrative charts of governmental activities
summarizing expenses and program revenues. The following chart reflects revenue by source for governmental activities.
2020 2019 2020 2019 2020 2019
Revenues
Program revenues:
Charges for services 3,182,202$ 2,918,489$ 7,842,392$ 8,179,421$ 11,024,594$ 11,097,910$
Grants and contributions 2,958,169 1,931,669 - - 2,958,169 1,931,669
General revenues:
Property taxes 7,428,074 7,272,617 - - 7,428,074 7,272,617
Other taxes 8,409,594 8,362,855 - - 8,409,594 8,362,855
Other revenues 856,315 873,548 116,413 161,148 972,728 1,034,696
Total revenues 22,834,354 21,359,178 7,958,805 8,340,569 30,793,159 29,699,747
Expenses:
General government 6,864,094 6,489,527 - - 6,864,094 6,489,527
Community development 1,916,619 1,664,055 - - 1,916,619 1,664,055
Public safety 8,248,552 8,516,528 - - 8,248,552 8,516,528
Recreation 914,091 914,396 - - 914,091 914,396
Public works 2,085,794 1,955,759 - - 2,085,794 1,955,759
Streets and roads 2,651,910 2,129,780 - - 2,651,910 2,129,780
Interest on long-term debt 46,374 55,900 - - 46,374 55,900
Water - - 1,546,284 1,439,083 1,546,284 1,439,083
Lopez - - 3,589,658 3,576,785 3,589,658 3,576,785
Sewer - - 889,163 931,542 889,163 931,542
Total expenses 22,727,434 21,725,945 6,025,105 5,947,410 28,752,539 27,673,355
Income (deficiency) transfers 106,920 (366,767) 1,933,700 2,393,159 2,040,620 2,026,392
Transfers 2,335,931 2,152,172 (2,335,931) (2,152,172) - -
Change in net position 2,442,851 1,785,405 (402,231) 240,987 2,040,620 2,026,392
Net Position - Beginning 44,348,455 42,563,050 41,378,633 41,137,646 85,727,088 83,700,696
Net Position - Ending 46,791,306$ 44,348,455$ 40,976,402$ 41,378,633$ 87,767,708$ 85,727,088$
City of Arroyo Grande - Changes in Net Position
Governmental Activities Business-type Activities Total Primary Government
Sales & use taxes,
28%
Transient lodging
taxes, 5%
Other taxes, 4%
Investment income,
4%
Property taxes, 32%
Charges for service,
14%
Operating grants &
contributions, 6%
Capital grants &
contributions, 7%
Revenue by Source-Governmental Activities
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 7
During the 2019-20 fiscal year, the City’s governmental activity revenue increased by 6.9% to $22.8 million and expenses increased by
4.6% to $22.7 million over the prior year. A significant source of the City’s revenue is derived by property tax, sales & use tax, as well
as a lodging tax more specifically referred to as transient occupancy tax. These tax revenues have seen healthy growth in the past
several fiscal years.
The following chart reflects the increases and decreases in property, sales & use, and lodging taxes for the past ten fiscal years:
During the 2019-20 fiscal year, property tax, sales & use tax, and transient occupancy tax revenues generated $15.0 million out of the
total of $15.8 million in taxes and assessments for governmental funds. These three revenue sources make up 69% of governmental
fund revenue. Combined, these revenues experienced moderate growth of about $161,000 when compared to the 2018-19 fiscal year.
The amount of tax growth in fiscal year 2019-20 was impacted by the COVID-19 pandemic and specifically the shelter-in-place directive
initiated to slow the spread of the virus.
Property tax revenues have steadily increased for the past three fiscal years and are projected to continue a modest but steady
increase in the upcoming years. Property taxes increased in fiscal year 2019-20 by $155,000 or 2.1% over the prior year due to
favorable interest rates and a growing economy for the majority of the year, which has translated into a strong housing market.
Through the first three quarters of fiscal year 2019-20, the City experienced revenue growth in both sales & use tax and transient
occupancy tax. However, that growth was not sustained in the final quarter of fiscal year 2019-20 due to the impacts of COVID-19 and
the subsequent economic downturn. While sales & use tax revenue for the year did increase slightly over the prior year, that growth
was limited to a two percent (2%) increase or $127,000. Transient occupancy tax was $123,000 or 10% less than the prior year’s
revenue and was significantly impacted by the stay-at-home order imposed to stop the spread of the COVID-19 virus. Needless to say,
in a post COVID-19 environment, sales & use tax and transient occupancy tax are expected to grow in the short-term, however, not at
the same growth percentage experienced in previous fiscal years.
The following chart reflects expenses and associated program revenue by governmental activity. Program revenue is specific to the
program and does not include general revenues like property and other taxes.
-
2
4
6
8
10
12
14
16
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Tax Revenue by Source
(In Millions)
Property Taxes Sales & Use Tax Transient Occupancy Tax
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 8
The City collected $3.2 million from users and developers for services provided in the 2019-20 fiscal year, which makes up 13.9% of
governmental revenue for the City. This represents an increase of $264,000 from the prior fiscal year. The Community Development
Department, which includes the Planning, Engineering, and Building divisions, reported service revenue of $1.9 million in the 2019-20
fiscal year compared to $1.7 million in the 2018-19 fiscal year. In addition, the Streets and Roads program received $239,000 in
additional impact fees versus the prior year, whereas the City’s Recreation Department received $217,000 less in recreation fees due
to the impacts of COVID-19.
The cost of all governmental activities in the fiscal year 2019-20 was $22.7 million, an increase of 4.6% in comparison to last fiscal year.
The City is a service oriented organization, therefore, the majority of the fluctuations in expenses from one year to the next can be
attributed to employee-related salary and benefits costs, including pensions and medical costs. Further analysis of the changes in
expenditures by function is presented in the governmental funds section of this report.
As shown in the above chart, public safety represents the City’s highest percentage of expenses incurred at 36%, followed by general
government (which includes the City Clerk, Information Technology, City Council, City Manager, Finance and Human Resources
divisions) at 30%, Streets & Roads at 12%, Public Works (which consists of maintenance of parks and facilities not including public
utilities) at 9%, and Community Development (which includes Planning, Engineering and Building) at 8%. In addition to charges for
service, these functions were subsidized by taxes, investment income, miscellaneous income, and transfers from the business-type
activities.
The City continues to invest heavily in public safety; those activities cost the City $8.2 million in the 2019-20 fiscal year. The City
currently contributes $2.6 million towards the operations of the Five Cities Fire Authority. In July 2020, the City approved a third
amendment to the Joint Exercise of Powers Agreement between the City and Five Cities Fire Authority. Under the terms of the
agreement, costs to the City of Arroyo Grande for fire service will remain the same for fiscal years 2019-20 through 2021-2022.
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
ThousandsExpenses and Program Revenues-Governmental Activities
Expense Revenue
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 9
In addition, the City continues to contribute significantly to streets, roads, and sidewalk renovations, also known as the Streets
Program. Because most road work is repair and/or maintenance, they are recognized as expenditures in the fiscal year incurred. For
the 2019-20 fiscal year, the City spent $2.7 million in street and road costs. Funding for the Streets Program comes from the State’s
gasoline taxes, which contributed $738,000, the local transportation fund, which contributed $420,000, and the Local Sales Tax fund,
which is funded by the one-half cent sales tax the voters approved in 2006 and contributed $894,000. The City continues to prioritize
its road maintenance efforts now and into the future through the City’s Capital Improvement Plan.
The Governmental Accounting Standards Board Statement No. 68 established guidelines regarding how the City reports pension
liability. Pension liability has always existed; however, it has not been required to be reported in the financial statements until the
2014-15 fiscal year. At June 30, 2020, the City reported net pension liability of $16.2 million for governmental activities. Net pension
liability is influenced by several factors, including the long-term rate of return earned by the pension system’s investments as well as
the City’s share of the total pension fund’s assets and can fluctuate significantly from year to year. More information on the long term
pension obligations can be found in the Notes to the Financial Statements and the Required Supplementary Information.
The City continues to utilize revenue from the 2006 Local Sales Tax Measure for the purposes of infrastructure improvements, including
street maintenance, transportation infrastructure improvements, drainage and creek systems, and bridge improvements, in addition
to use for public safety needs. During the 2019-20 fiscal year, the City utilized $894,000 of this funding to improve and maintain streets
and sidewalks, $751,000 to support public safety efforts, $374,000 for storm water and drainage projects, and $48,000 for facilities
upgrades and other capital needs. The Local Sales Tax Measure provides $2.4 million in revenue annually and is critical to the
maintenance and improvement of the City’s infrastructure and public safety throughout the community.
BUSINESS-TYPE ACTIVITIES
The City provides water delivery and wastewater collection services to a population of 18,131 citizens and 6,589 water accounts. The
City has two main sources of water: ground water and surface water from Lopez Reservoir. Water treatment is handled by the County
of San Luis Obispo and wastewater treatment is handled by the South San Luis Obispo County Sanitation District. The following chart
reflects revenue by source for business-type activities.
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 10
The chart above reflects net operating income/loss of business-type funds prior to non-operating income and transfers. Total
operating income for business-type activities was $1.8 million. Reducing the operating income by non-operating revenue/expenses of
$2.2 million contributed to the overall decrease in net position of business-type activities of $402,000.
The City’s current water rate structure includes both a monthly fixed charge (flat amount that does not change per billing cycle) and a
volumetric charge (which is dependent on the actual amount of water usage). The fixed charge generates 37% of the total revenue
with 63% from the variable. Although the City has some level of stability from the fixed charge, changes in consumption of water has
a significant effect on the overall revenues. The City continues to closely monitor revenues and conservation efforts, as these are now
a continuous way of life in California.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As stated earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds – The focus of the City of Arroyo Grande’s governmental funds is to provide information on near-term inflows,
outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular,
unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal
year.
At fiscal year-end, the City’s governmental funds (general, transportation impact fee, CDBG, capital improvement, and other
governmental funds) reported a combined fund balance of $20.9 million, an increase of $1.6 million in comparison with the prior fiscal
year. Of the total fund balance, 28% of this total amount ($5.8 million) constitutes unassigned fund balance, which is available for
spending at the City’s discretion. The remaining components of fund balance consist of non-spendable, restricted, committed and
assigned and are presented in the following table. For further information on the definition of the fund balance classifications, see
Note 1, Subsection K – Fund Balances and Net Position.
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 11
The General Fund is the chief operating fund of the City. The General Fund is comprised of the following specific funds: General Fund,
Local Sales Tax Fund, and Post-Employment Benefits Fund. At the end of the current fiscal year, unassigned fund balance was $5.9
million, while total fund balance reached $10.5 million. As a measure of the General Fund’s liquidity, it may be useful to compare
unassigned fund balance to total fund expenditures. Unassigned fund balance represents 31.3% of total general fund expenditures.
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 also includes a statement of cash flows. Factors concerning the finances
of these three funds (Water, Sewer, Lopez Water) have already been addressed in the discussion of the City of Arroyo Grande’s
business-type activities.
GENERAL FUND 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.
Budget revisions that require supplemental appropriations at the fund level are presented to the City Council for approval and allow
the opportunity for public discussion. The City does allow small intra-department appropriation changes for accounts that are in the
same department and do not change the overall fund balance. Budget amendments that impact the financial reports fall into three
categories:
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 expenditures.
The overall difference in fiscal year 2019-20 between the original General Fund budget and the final amended budget was an increase
of $383,000 in net appropriations. This increase can be attributed to the following: 1) the carryover of uncompleted capital projects
from the prior fiscal year, 2) costs associated with contractual services for the Planning Division that were not spent in the prior year
but carried over into fiscal year 2019-20, and 3) other miscellaneous appropriation adjustments.
For fiscal year 2019-20, the actual net change in fund balance within the General Fund was an increase of $612,000. This was $2.1
million higher than the final budgeted net change in fund balance.
Nonspendable $ 5,152 $ - $ 5,152 0.0%
Restricted - 9,086,851 9,086,851 43.6%
Committed - - - 0.0%
Assigned 4,533,235 1,385,012 5,918,247 28.4%
Unassigned 5,924,363 (81,414) 5,842,949 28.0%
Total $ 10,462,750 $ 10,390,449 $ 20,853,199 100.0%
% of TotalFund Balances Total
All Other
FundsGeneral Fund
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 12
General Fund budgeted revenues, excluding transfers, were budgeted at $18.4 million and actual revenues came in at $18.7, reflecting
an increase over budget by $229,000. Contributing to the favorable revenue variance is additional telecommunication site lease
revenue as well as increased interest earned, which are reflected in the use of money category. Various taxes, as well as license and
permit revenue, came in higher than expected and was offset by an overall reduction in charges for services, mainly related to fewer
recreation services. Recreation services were impacted by the COVID-19 pandemic as restrictions were placed on recreational sports
and activities.
A cautious spending policy, in light of COVID-19, led to a $1.8 million or 9% decrease in actual General Fund expenditures, excluding
transfers, compared to the final budget. At the onset of the COVID-19 pandemic, the City took a proactive approach in an effort to
understand and address the financial impacts due to COVID-19. The City Council approved a number of short-term cost containment
strategies to address anticipated revenue shortfalls.
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. As of June 30, 2020, capital assets, net of related accumulated depreciation, of the governmental
activities totaled $43.2 million and the capital assets, net of related accumulated depreciation, of the business-type activities totaled
$34.3 million. Depreciation on capital assets is recognized in the government-wide financial statements.
The investment in capital assets includes land, buildings and system improvements, machinery and equipment, park facilities, roads,
highways, and bridges. The capital assets are summarized by activity in the following table.
2020 2019 2020 2019 2020 2019
Land 4,236,528$ 4,236,528$ 56,730$ 56,730$ 4,293,258$ 4,293,258$
Infrastructure 6,379,188 6,379,188 - - 6,379,188 6,379,188
Construction in Progress 5,331,903 3,365,856 48,955 112,606 5,380,858 3,478,462
Structures & Improvements 14,022,480 13,970,476 222,999 222,999 14,245,479 14,193,475
Equipment 3,576,223 4,239,315 848,416 848,416 4,424,639 5,087,731
Infrastructure 40,892,026 40,892,026 59,865,064 58,996,364 100,757,090 99,888,390
Accumulated Dep'n (31,250,123) (30,472,295) (26,725,615) (25,847,790) (57,975,738) (56,320,085)
Net Capital Assets 43,188,225$ 42,611,094$ 34,316,549$ 34,389,325$ 77,504,774$ 77,000,419$
Governmental Activities Business-type Activities Total
CAPITAL ASSETS AT YEAR-END
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 13
Major capital additions during fiscal year 2019-20 include:
Bridge St Bridget Rehab/Replacement $1,384,331
Traffic Way Bridge Improvements $126,220
Corrugated Metal Pipe Lining $253,057
Oak Park & ECR Emergency Storm Drain System $136,608
Lift Station #1 Force Main Replacement $781,241
The City remains committed to the upkeep and maintenance of the City’s assets. More detailed information about the City’s capital
assets is presented in Note #4 on pages B-48 through B-49.
LONG-TERM LIABILITIES
The City has traditionally adhered to a conservative debt management policy that carefully controls the amount of outstanding debt.
As a result of a capital improvement budgeting process, the City has been able to maintain and improve its infrastructure while
avoiding unreasonable debt burdens. At the end of the 2019-20 fiscal year, the City had a variety of outstanding long-term liabilities,
totaling $24 million in governmental activities and $2.6 million in business-type activities. The City’s most significant outstanding long-
term liability is its net pension liability. Net pension liability is the difference between the total pension liability (the present value of
projected benefit payments to employees based on their past service) and the assets (mostly investments reported at fair value) set
aside to pay current employees, retirees, and beneficiaries. Overall, net pension liability decreased versus the prior year as the City
made a $3.1 million prepayment in fiscal year 2018-19 to the City’s safety retirement plan to pay down a portion of its unfunded
liability obligation. The City contributed an additional $2 million prepayment in fiscal year 2019-2020, which will be reflected as a
reduction in next year’s actuarial.
Further detail on each liability can be found in Note 8 in the Notes to the Basic Financial Statements section. The following table
summarizes the long-term liabilities of the City:
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES
Prior to the COVID-19 pandemic, the local economy continued to show signs of recovery following the national recession. Overall,
General Fund revenues, excluding transfers, were budgeted to increase in fiscal year 2019-20 by 5.5% over the previous year’s budget.
Unfortunately, in fiscal year 2019-20 the General Fund only realized actual revenue growth of 1.2% over that year’s final budget due
mainly to impacts of COVID-19. However, in response to anticipated lower revenues in the last quarter of fiscal year 2019-20, the City
took immediate action by implementing expense reductions to offset the projected revenue shortfalls. Actual General Fund
expenditures, excluding transfers, were under budget by 8.6% or $1.8 million compared to that year’s budget.
Debt Description FYE 2019 One-Year Long-Term One-Year Long-Term One-Year Long-Term
Compensated absences $ 848,150 $ - $ 789,883 $ - $ 95,615 $ - $ 885,498
Capital lease payable 380,780 82,646 43,178 41,821 21,849 124,467 65,027
Loan payable 1,068,741 40,774 988,484 - - 40,774 988,484
Net pension liability 19,941,392 - 16,176,291 - 1,945,560 - 18,121,851
OPEB liability 5,197,892 - 5,778,184 - 454,775 - 6,232,959
Total $ 27,436,955 $ 123,420 $ 23,776,020 $ 41,821 $ 2,517,799 $ 165,241 $ 26,293,819
Business-Type FYE 2020Governmental
City of Arroyo Grande
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2020
B - 14
As a direct result of the COVID-19 pandemic, the City reduced its fiscal year 2020-21 Adopted Budget General Fund revenue
assumptions by $1.4 million or 7.7% versus the prior year’s budget. In addition, it reduced budgeted expenditures by $1.5 million or
12% versus the prior year’s budget. A large portion of the expenditure decrease between the current and prior year budget was related
to the one-time pre-payment to the City’s unfunded retirement liability budgeted in fiscal year 2019-20.
Recently, the City Council approved a list of Top 10 Priorities for the year. The Top 10 Priorities list is intended to focus the City’s efforts
to meet the community’s needs, while also considering the City’s current resource constraints. The following Top 10 priority list is not
intended to be exhaustive of all the work items that will be undertaken by the City Council or staff in the year.
1. Ongoing response to changes in State and Local COVID-19 orders and regulations, including changes to operations for local
businesses and City functions and enforcement.
2. Continue to ensure fiscal stability for the organization throughout the planning, budgeting, and expenditure processes.
3. Develop short and long-term economic development goals of the City in light of the adopted Economic Development Element,
and evaluate and allocate SB 1090 funds for programs consistent with these economic development goals.
4. Complete and adopt an updated Housing Element consistent with State law by January 2021.
5. Complete and adopt an amended ADU Ordinance that also addresses Tiny Homes on Wheels, and support the completion of
pre-approved ADU plans that will streamline the ADU process.
6. Complete and adopt an updated Circulation Element.
7. Complete and approve a Water/Wastewater Rate Study in the Spring of 2021.
8. Complete and approve a Central Coast Blue Memorandum of Agreement that builds upon the framework approved by Council
on August 25, 2020.
9. Receive, update and review the future of the Brisco Interchange Project before February 2021.
10. Continue stabilizing and strengthening the organization through recruitment, retention, and structural adjustments, and
develop and implement a Council-adopted goal to promote diversity, equity, and inclusion.
Even though much uncertainty remains at this time regarding the length and extent of the economic impacts caused by COVID-19, the
most recent budget for the 2020-21 fiscal year represents a balanced and responsible approach to meeting the City’s short and long-
term needs in a cost effective manner. This budget will ensure that the City continues to fund the high quality services provided to the
community, and will invest in the future through capital improvements and maintenance activities.
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 the Administrative Services Department at 300 East Branch Street in Arroyo Grande,
California or by phone at (805) 473-5400.
THIS PAGE IS INTENTIONALLY LEFT BLANK
City of Arroyo Grande
STATEMENT OF NET POSITION
June 30, 2020
ASSETS
Cash and investments $21,846,913 $7,300,558 $29,147,471
Receivables:
Accounts 1,808,427 1,409,234 3,217,661
Taxes 1,740,470 1,740,470
Loan 1,031,482 1,031,482
Interest 34,992 14,570 49,562
Inventory 5,152 71,210 76,362
Nondepreciable capital assets:
Land 4,236,528 56,730 4,293,258
Infrastructure 6,379,188 6,379,188
Construction in progress 5,331,903 48,955 5,380,858
Depreciable capital assets:
Structures and improvements 14,022,480 222,999 14,245,479
Equipment 3,576,223 848,416 4,424,639
Infrastructure 40,892,026 59,865,064 100,757,090
Accumulated depreciation (31,250,123) (26,725,615) (57,975,738)
Total assets 69,655,661 43,112,121 112,767,782
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension 8,120,751 976,701 9,097,452
Deferred OPEB 882,980 99,091 982,071
Total deferred outflows of resources 9,003,731 1,075,792 10,079,523
LIABILITIES
Accounts payable 1,513,894 58,470 1,572,364
Accrued wages and benefits 869,307 869,307
Interest payable 9,312 1,241 10,553
Deposits payable 1,890,186 134,070 2,024,256
Unearned revenue 309,368 55,682 365,050
Noncurrent liabilities:
Due within one year 123,420 41,821 165,241
Due in more than one year 23,776,020 2,517,799 26,293,819
Total liabilities 28,491,507 2,809,083 31,300,590
DEFERRED INFLOWS OF RESOURCES
Deferred pension 2,919,201 351,100 3,270,301
Deferred OPEB 457,378 51,328 508,706
Total deferred inflows of resources 3,376,579 402,428 3,779,007
(Continued)
Governmental
Activities
Business-Type
Activities Total
The notes to the basic financial statements are an integral part of this statement.
B-16
City of Arroyo Grande
STATEMENT OF NET POSITION
June 30, 2020
NET POSITION
Net investment in capital assets $42,033,143 $34,252,879 $76,286,022
Restricted for:
Access programming 150,652 150,652
Community development 804,220 804,220
Capital projects 1,263,656 1,263,656
Debt service 60,386 60,386
Landscape maintenance 494,087 494,087
Park construction 1,667,169 1,667,169
Public improvements 2,476,892 2,476,892
Public safety 652,071 652,071
Streets and roads 1,644,754 1,644,754
Water production 1,916,348 1,916,348
Unrestricted (5,108,416) 5,459,867 351,451
Total net position $46,791,306 $40,976,402 $87,767,708
Total
Governmental
Activities
Business-Type
Activities
B-17
City of Arroyo Grande
STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2020
Governmental Activities:
General government $6,864,094 $58,025 $141,905 $-
Community development 1,916,619 1,701,407 1,380,058
Public safety 8,248,552 216,432 160,575 125,169
Recreation services 914,091 858,566
Public works 2,085,794 8,282
Streets and roads 2,651,910 339,490 1,150,462
Interest on long-term debt 46,374
Total governmental activities 22,727,434 3,182,202 1,452,942 1,505,227
Business-type Activities:
Water 1,546,284 6,795,904
Lopez 3,589,658
Sewer 889,163 1,046,488
Total business-type activities 6,025,105 7,842,392
Total government $28,752,539 $11,024,594 $1,452,942 $1,505,227
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
Change in net position
Net position at beginning of fiscal year
Net position at end of fiscal year
Program Revenues
Expenses Charges for Services
Operating
Contributions and
Grants
Capital Contributions
and Grants
The notes to the basic financial statements are an integral part of this statement.
B-18
$(6,664,164) $-$(6,664,164)
1,164,846 1,164,846
(7,746,376) (7,746,376)
(55,525) (55,525)
(2,077,512) (2,077,512)
(1,161,958) (1,161,958)
(46,374) (46,374)
(16,587,063) (16,587,063)
5,249,620 5,249,620
(3,589,658) (3,589,658)
157,325 157,325
1,817,287 1,817,287
(16,587,063) 1,817,287 (14,769,776)
7,428,074 7,428,074
6,507,394 6,507,394
1,112,466 1,112,466
690,145 690,145
99,589 99,589
825,941 116,413 942,354
30,374 30,374
2,335,931 (2,335,931)
19,029,914 (2,219,518) 16,810,396
2,442,851 (402,231) 2,040,620
44,348,455 41,378,633 85,727,088
$46,791,306 $40,976,402 $87,767,708
Net (Expense) Revenue and Changes
in Net Position
Total
Governmental
Activities
Business-type
Activities
B-19
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City of Arroyo Grande
DESCRIPTION OF MAJOR GOVERNMENTAL FUNDS
B-21
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, community
development, public works, and recreation services to the community and other funds. The General Fund
accounts for revenues that have unrestricted uses and are not required legally or by contractual agreement to be
accounted for in another fund.
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.
CDBG Fund
This fund accounts for revenues and expenditures related to Community Development Block Grant (CDBG) Funds.
The program is a flexible program that provides the City with resources to address a wide range of unique
community development needs.
Capital Improvement 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 Funds
This is the aggregate of all the Nonmajor governmental funds.
City of Arroyo Grande
GOVERNMENTAL FUNDS
Balance Sheet
June 30, 2020
ASSETS
Cash and investments $11,264,034 $2,442,373 $70,123
Accounts receivable 501,090 -
Taxes receivable 1,671,415
Loans receivable 789,040
Interest receivable 15,970 4,502
Inventory 5,152
Due from other funds 54,943
Total assets $13,512,604 $2,446,875 $859,163
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable $198,021 $-$-
Accrued wages and benefits 869,307
Deposits payable 1,890,186
Unearned revenue 92,340
Due to other funds 54,943
Total liabilities 3,049,854 54,943
Deferred inflows of resources:
Unavailable revenue 789,040
Total deferred inflows of resources 789,040
Fund Balances:
Nonspendable:
Inventory 5,152
Restricted for:
Access programming
Community development 15,180
Debt service
Landscape maintenance
Park construction
Public improvements 2,446,875
Public safety
Streets and roads
Water production
Assigned for:
Affordable housing
Capital projects 3,737,520
Post employment benefits 795,715
Tourism benefit
Unassigned 5,924,363
Total fund balances 10,462,750 2,446,875 15,180
Total liabilities, deferred inflows of
resources, and fund balances $13,512,604 $2,446,875 $859,163
General Fund
Transportation
Impact Fees Fund CDBG Fund
The notes to the basic financial statements are an integral part of this statement.
B-22
$63,878 $8,006,505 $21,846,913
1,297,083 10,254 1,808,427
69,055 1,740,470
242,442 1,031,482
14,520 34,992
5,152
54,943
$1,360,961 $8,342,776 $26,522,379
$1,265,573 $50,300 $1,513,894
869,307
1,890,186
176,802 40,226 309,368
54,943
1,442,375 90,526 4,637,698
242,442 1,031,482
242,442 1,031,482
5,152
150,652 150,652
15,180
69,698 69,698
494,087 494,087
1,667,169 1,667,169
30,017 2,476,892
652,071 652,071
1,644,754 1,644,754
1,916,348 1,916,348
1,056,731 1,056,731
19,906 3,757,426
795,715
308,375 308,375
(81,414) 5,842,949
(81,414) 8,009,808 20,853,199
$1,360,961 $8,342,776 $26,522,379
Total
Capital Improvement
Fund
Other Governmental
Funds
B-23
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City of Arroyo Grande
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
June 30, 2020
Total fund balances - governmental funds 20,853,199$
In governmental funds, only current assets are reported. In the statement of net position, all assets
are reported, including capital assets and accumulated depreciation.
Capital assets at historical cost 74,438,348$
Accumulated depreciation (31,250,123)
Net capital assets 43,188,225
In governmental funds, interest on long-term debt is not recognized until the period in which
it matures and is paid. In the government-wide statement of activities, it is recognized in the
period that it is incurred (9,312)
In governmental funds, certain receivables are deferred because they do not meet current
financial obligations. However, in government-wide statement of activities, they are recognized
in the period that they are incurred.1,031,482
In governmental funds, pension obligations are deferred because they do not meet current
financial obligations. However, in government-wide statement of activities, deferred
outflows and deferred inflows of resources related to pensions are recorded. The difference
between deferred outflows of resources of $8,120,751 and deferred inflows of resources of
$2,919,201 is:5,201,550
In governmental funds, OPEB obligations are deferred because they do not meet current
financial obligations. However, in government-wide statement of activities, deferred
outflows and deferred inflows of resources related to OPEB are recorded. The difference
between deferred outflows of resources of $882,980 and deferred inflows of resources of
$457,378 is:425,602
In governmental funds, only current liabilities are reported. In the statement of net position,
all liabilities, including long-term liabilities, are reported. Long-term liabilities relating
to governmental activities consist of:
Compensated absences 789,883$
Capital lease payable 125,824
CA Energy loan payable 63,258
USDA loan payable 966,000
Net pension liability 16,176,291
Other post-employment benefits 5,778,184
Total long-term liabilities (23,899,440)
Total net position, governmental activities 46,791,306$
The notes to the basic financial statements are an integral part of this statement
B-25
City of Arroyo Grande
GOVERNMENTAL FUNDS
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2020
REVENUES
Taxes and assessments $15,593,480 $-$-
Licenses and permits 625,944
Fines and penalties 41,117
Use of money and property 665,481 35,915
Intergovernmental revenues 267,601
Charges for services 1,445,738 248,720
Other revenue 30,024
Total revenues 18,669,385 284,635
EXPENDITURES
Current:
General government 6,505,900
Community development 1,795,498
Public safety 7,757,457
Recreation services 899,788
Public works 1,843,101
Streets and road
Capital outlay 1,629
Debt service:
Principal 122,484
Interest and fiscal agent fees 7,856
Total expenditures 18,933,713
Excess of revenue over/(under)
expenditures (264,328) 284,635
OTHER FINANCING SOURCES (USES)
Transfers in 2,416,775
Transfers out (1,540,440) (7,124)
Total other financing sources/(uses)876,335 (7,124)
Net change in fund balances 612,007 277,511
Fund balances - July 1, 2019 9,850,743 2,169,364 15,180
Fund balances - June 30, 2020 $10,462,750 $2,446,875 $15,180
General Fund CDBG Fund
Transportation
Impact Fees Fund
The notes to the basic financial statements are an integral part of this statement.
B-26
$-$244,188 $15,837,668
625,944
41,117
120,508 821,904
1,380,058 1,310,510 2,958,169
820,683 2,515,141
350 30,374
1,380,058 2,496,239 22,830,317
6,740 184,271 6,696,911
98,489 25,783 1,919,770
1,552 7,759,009
16,576 916,364
7,516 100,063 1,950,680
1,190,778 717,490 1,908,268
2,019,002 126,799 2,147,430
68,065 190,549
39,838 47,694
3,322,525 1,280,437 23,536,675
(1,942,467) 1,215,802 (706,358)
1,696,074 459,108 4,571,957
(688,462) (2,236,026)
1,696,074 (229,354) 2,335,931
(246,393) 986,448 1,629,573
164,979 7,023,360 19,223,626
$(81,414) $8,009,808 $20,853,199
Other Governmental
Funds Total
Capital Improvement
Fund
B-27
City of Arroyo Grande
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of
Governmental Funds to the Statement of Activities
June 30, 2020
Total net change in fund balances – governmental funds 1,629,573$
In governmental funds, capital outlays are reported as expenditures. However, in the statement of
activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense.
This is the amount by which additions to capital outlay of $2,019,002 is more than depreciation expense
$(1,417,169) in the period.601,833
In governmental funds, the entire proceeds from disposal of capital assets are reported as revenue.
In the statement of activities, only the resulting gain or loss is reported. The difference between
proceeds from sale of capital assets and the loss on disposal of capital assets is:(24,702)
In governmental funds, certain revenues are deferred because the revenues are not collected within
the prescribed time period afer fiscal year-end. However, on the accrual basis used in the statement
of activities, those revenues are included:4,037
In governmental funds, interest on long-term debt is recognized in the period that it becomes due.
In the statement of activities, it is recognized in the period that it is incurred. Unmatured interest
owing at the end of the period, less matured interest paid during but owing from the prior period was:1,320
In governmental funds, proceeds and repayments of long-term debt are reported as other financing
sources and expenditures, respectively. In the government-wide statements, proceeds and repayments
of long-term debt are reported as increases or decreases in liabilities, respectively. This is the amount
by which proceeds from the issuance of debt of $0 is less than repayments of debt of $(190,549) in
the period.190,549
In the statement of activities, compensated absences are measured by the amounts earned during the
fiscal year. In governmental funds, however, expenditures for these items are measured by the amount
of financial resources used (essentially the amounts paid). For this fiscal year ended, vacation earned
exceeded the amounts used by:(46,648)
In governmental funds, pension costs are recognized when employer contributions are made. In the
statement of activities, pension costs are recognized on the accrual basis. This year, the difference
between accrual-basis pension costs and actual employer contributions was:
246,685
In governmental funds, postemployment healthcare costs are recognized when employer contributions
are made. In the statement of activities, postemployment healthcare costs are recognized on the accrual
basis. This year, the difference between accrual-basis postemployment healthcare costs and actual
employer contributions was:(159,796)
Total net position, governmental activities 2,442,851$
The notes to the basic financial statements are an integral part of this statement
B-28
City of Arroyo Grande
DESCRIPTION OF MAJOR PROPRIETARY FUNDS
B-29
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. This fund also accounts for the accumulation of water facility revenues to be used in capital
improvement projects in the City.
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.
Sewer Fund
This fund is used to account for maintenance of sewer lines connecting City residents to the South San Luis Obispo
County Sanitation District sewer plant. This fund also accounts for the accumulation of sewer facility revenues to
be used in capital improvement projects in the City.
City of Arroyo Grande
PROPRIETARY FUNDS
Statement of Net Position
June 30, 2020
ASSETS
Current assets:
Cash and investments $3,911,976 $1,705,079 $1,683,503 $7,300,558
Receivables:
Accounts, net 1,239,986 169,248 1,409,234
Interest 11,145 3,425 14,570
Inventory 64,039 7,171 71,210
Total current assets 5,227,146 1,705,079 1,863,347 8,795,572
Capital assets:
Nondepreciable assets 104,662 1,023 105,685
Depreciable assets, net 11,168,720 23,042,144 34,210,864
Total capital assets, net 11,273,382 23,043,167 34,316,549
Total assets 16,500,528 1,705,079 24,906,514 43,112,121
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension 917,530 59,171 976,701
Deferred OPEB 99,091 99,091
Total deferred outflows of resources 1,016,621 59,171 1,075,792
LIABILITIES
Current liabilities:
Accounts payable 45,687 12,783 58,470
Deposits payable 134,070 134,070
Interest payable 768 473 1,241
Unearned revenue 46,890 8,792 55,682
Debt due within one year 25,889 15,932 41,821
Total current liabilities 253,304 37,980 291,284
Noncurrent liabilities:
Compensated absences 79,616 15,999 95,615
Leases payable 13,526 8,323 21,849
OPEB liability 454,775 454,775
Net pension liability 1,827,692 117,868 1,945,560
Total noncurrent liabilities 2,375,609 142,190 2,517,799
Total liabilities 2,628,913 180,170 2,809,083
DEFERRED INFLOWS OF RESOURCES
Deferred pension 329,829 21,271 351,100
Deferred OPEB 51,328 51,328
Total deferred inflows of resources 381,157 21,271 402,428
NET POSITION
Net investment in capital assets 11,233,967 23,018,912 34,252,879
Restricted for:
Capital projects 970,740 292,916 1,263,656
Unrestricted 2,302,372 1,705,079 1,452,416 5,459,867
Total net position $14,507,079 $1,705,079 $24,764,244 $40,976,402
TotalsLopez FundWater Fund Sewer Fund
The notes to the basic financial statements are an integral part of this statement.
B-30
City of Arroyo Grande
PROPRIETARY FUNDS
Statement of Revenues, Expenses, and Changes in Net Position
For the Fiscal Year Ended June 30, 2020
OPERATING REVENUES
Charges for services $6,642,394 $- $1,004,775 $7,647,169
Distribution charges 105,507 105,507
Meter installations 22,398 22,398
Other revenue 25,605 41,713 67,318
Total operating revenues 6,795,904 1,046,488 7,842,392
OPERATING EXPENSES
Distribution 698,978 698,978
General 365,468 306,433 671,901
Lopez water contract 3,589,658 3,589,658
Production 181,388 181,388
Depreciation 297,698 580,127 877,825
Total operating expenses 1,543,532 3,589,658 886,560 6,019,750
Operating income (loss)5,252,372 (3,589,658) 159,928 1,822,642
NON-OPERATING REVENUES/(EXPENSES)
Interest income 92,749 201 23,463 116,413
Interest expense (2,752) (2,603) (5,355)
Total non-operating revenues 89,997 201 20,860 111,058
Income (loss) before transfers 5,342,369 (3,589,457) 180,788 1,933,700
Transfer in 3,589,658 3,589,658
Transfer out (5,477,738) (447,851) (5,925,589)
Change in net position (135,369) 201 (267,063) (402,231)
Net position - July 1, 2019 14,642,448 1,704,878 25,031,307 41,378,633
Net position - June 30, 2020 $14,507,079 $1,705,079 $24,764,244 $40,976,402
Water Fund Lopez Fund TotalsSewer Fund
The notes to the basic financial statements are an integral part of this statement.
B-31
City of Arroyo Grande
PROPRIETARY FUNDS
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $6,748,046 $- $1,003,240 $7,751,286
Payments to suppliers (676,394) (3,589,658) (120,067) (4,386,119)
Payments to employees (668,663) (181,517) (850,180)
Other receipts 25,605 41,713 67,318
Net cash provided (used) by operating
activities 5,428,594 (3,589,658) 743,369 2,582,305
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Lease principal payments made (24,898) (15,322) (40,220)
Interest expense payments (2,240) (2,288) (4,528)
Purchase of capital assets (23,808) (781,241) (805,049)
Net cash used by capital and
related financing activities (50,946) (798,851) (849,797)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers from/(to) other funds (5,477,738) 3,589,658 (447,851) (2,335,931)
Net cash provided (used) by noncapital
financing activities (5,477,738) 3,589,658 (447,851) (2,335,931)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received 98,187 201 25,129 123,517
Net cash provided by investing
activities 98,187 201 25,129 123,517
Net increase(decrease) in cash and
cash equivalents (1,903) 201 (478,204) (479,906)
Cash and cash equivalents - July 1, 2019 3,913,879 $1,704,878 $2,161,707 $7,780,464
Cash and cash equivalents - June 30, 2020 $3,911,976 $1,705,079 $1,683,503 $7,300,558
RECONCILIATION TO THE STATEMENT OF NET POSITION
Cash and investments $3,911,976 $1,705,079 $1,683,503 $7,300,558
(Continued)
Water Fund Lopez Fund TotalsSewer Fund
The notes to the basic financial statements are an integral part of this statement.
B-32
City of Arroyo Grande
PROPRIETARY FUNDS
Statement of Cash Flows (Continued)
For the Fiscal Year Ended June 30, 2020
Reconciliation of operating income (loss) to net
cash provided (used) by operating
activities:
Operating income (loss)$5,252,372 $(3,589,658) $159,928 $1,822,642
Adjustments to reconcile operating
activities:
Depreciation expense 297,698 580,127 877,825
Change in assets, deferred outflows of resources,
liabilities and deferred inflows of resources:
Receivables, net (24,125) (1,535) (25,660)
Inventory 2,848 (1,307) 1,541
Prepaid items 2,316 2,316
Deferred outflows for pensions 20,085 1,296 21,381
Deferred outflows for OPEB (81,831) (81,831)
Accounts and other payables (62,911) 5,336 (57,575)
Deposits payable 3,173 3,173
Unearned revenue (1,301) (1,301)
Compensated absences (11,916) 2,616 (9,300)
OPEB liability 75,521 75,521
Pension liability (183,511) (11,834) (195,345)
Deferred inflows for pensions 135,555 8,742 144,297
Deferred inflows for OPEB 4,621 4,621
Net cash provided (used) by
operating activities $5,428,594 $(3,589,658) $743,369 $2,582,305
Water Fund Lopez Fund TotalsSewer Fund
The notes to the basic financial statements are an integral part of this statement.
B-33
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City of Arroyo Grande
DESCRIPTION OF FIDUCIARY FUNDS
B-35
Private-Purpose Trust Fund
Successor Agency to the Former Arroyo Grande Redevelopment Agency
This private-purpose trust fund was created to hold the assets of the former redevelopment agency of the City of
Arroyo Grande until they are distributed to other units of state and local government after the payment of
enforceable obligations have been made.
Agency Funds
Sanitation Distribution 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.
San Luis Obispo TMD (Tourism Marketing District) Fund
This agency fund collects assessments. The TMD assessment is 1% of taxable rents collected by lodging operators
in the City and is remitted to the County. Lodging operators include hotels, motels, vacation rental properties,
private home vacation rentals, inns, bed & breakfasts, etc. The TMD assessment increases to 1.5% on July 1, 2020.
City of Arroyo Grande
STATEMENT OF FIDUCIARY NET POSITION
June 30, 2020
ASSETS
Cash and investments $337,253 $320,138
Restricted cash and investments 5,467
Accounts receivable 101,589
Interest receivable 4
Inventory - land held for resale 860,928
Note receivable 1,379,417
Total assets 2,583,065 $421,731
LIABILITIES
Accounts payable $15,507
Interest payable 64,090
Unearned revenue 208,708
Due to other agencies 406,224
Bonds payable 4,652,179
Total liabilities 4,924,977 $421,731
NET POSITION
Held in trust for:
Successor agency to the former
redevelopment agency (2,341,912)
Total net position $(2,341,912)
Private-Purpose Trust
Fund
Agency Funds
Successor Agency to
the Former
Redevelopment
Agency
The notes to the basic financial statements are an integral part of this statement.
B-36
City of Arroyo Grande
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
Fiduciary Fund
For the Fiscal Year Ended June 30, 2020
ADDITIONS
Property taxes $382,895
Use of money and property 28,298
Total additions 411,193
DEDUCTIONS
Administration 24,996
Contract services 4,057
Amortization 11,524
Interest and fiscal agent fees 195,183
Total deductions 235,760
Net change in net position 175,433
Net position - July 1, 2019 (2,517,345)
Net position - June 30, 2020 $(2,341,912)
Successor Agency to
the Former
Redevelopment
Agency
Private-Purpose
Trust Fund
The notes to the basic financial statements are an integral part of this statement.
B-37
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-38
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of The City of Arroyo Grande (City) have 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 body for establishing governmental accounting and financial reporting principles. The more
significant of the 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 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, along with the financial activities of its component 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 statements.
There are no component units in this report which meet the criteria of the GASB Statement No. 14, The Financial Reporting Entity,
as amended by GASB Statements No. 39, 61, and 80.
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 position, revenues, and expenditures or expenses, as appropriate. Governmental 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 the economic
resources measurement focus and the 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 agency funds.
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.
Expenditures are recorded 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-term debt and acquisitions under
capital leases are reported as other financing sources.
Non-exchange transactions, 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 recognized in
the fiscal year for the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which
all eligibility requirements have been satisfied.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-39
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
B. Basis of Accounting and Presentation – continued
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 requirements are met. Under the terms 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 position may be available to finance program
expenditures/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 Position and the Statement of Activities display information about the City. These statements include the
financial activities of the overall City government, except for fiduciary activities. Eliminations have been made to minimize the
double counting of 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
governmental 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 funds, including fiduciary funds. 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.
Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in
Net Position, 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 included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position
present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are
recognized in the period in which they are earned while expenses are recognized in the period in which 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
operations of the fund. 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
organizations, other governmental units, and/or other funds. The City maintains three agency funds: the Sanitation Distribution
Fund, the Downtown Parking Fund, and the San Luis Obispo County TMD Assessment Fund and one private-purpose trust fund,
the Successor Agency to the Former Redevelopment Agency of Arroyo Grande.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-40
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
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 have assets, liabilities, revenues, or expenditures/expenses equal to or greater than (a) ten
percent of their fund-type total and (b) five percent of all fund types total combined. 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 accompanying financial statements:
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.
Transportation Impact Fees Fund – This fund accounts for transportation impact fees collected.
CDBG Fund – This fund accounts for revenues and expenditures related to Community Development Block Grant (CDBG) funds.
Capital Improvement 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. This fund also accounts for the
accumulation of water facility revenues to be used in capital improvement projects in the City.
Sewer Fund – This fund is used to account for maintenance of sewer lines connecting City residents to the South San Luis Obispo
County Sanitation District sewer plant. Maintenance costs are funded by user charges. This fund also accounts for the
accumulation of sewer facility revenues to be used in capital improvement projects in the City.
Lopez Fund – This fund accounts for the activities associated with Lopez Lake and the water 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.
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External
Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized
cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market
quotations are readily available. The City’s investments with fiscal agent required by bond indentures are stated at cost, which
approximate fair value.
The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which
has invested a portion of the pool funds in structured notes and asset-backed securities. LAIF’s investments are subject to credit
risk with the full faith and credit of the State of California collateralizing these investments. In addition, these structured notes
and asset-backed securities are subject to market risk as to change in interest rates.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-41
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
E. 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 actual historical cost is not available. Contributed capital assets are valued at their estimated fair value on the
date contributed. It is the City’s policy to capitalize all capital assets with costs exceeding $50,000 for infrastructure-type assets
and $5,000 on all other assets and with useful lives exceeding two years.
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 recorded all its public 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 depreciation expense each fiscal year represents that 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 useful life in
years and the result is charged to expense each fiscal year until the asset is fully depreciated. The City has assigned the useful
lives listed below to capital assets:
Machinery and equipment 5 – 15 years
Structures and improvements 10 – 50 years
Infrastructure 25 – 50 years
F. 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 appropriate benefiting 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.
G. Unearned Revenue
Unearned revenues are recognized for transactions for which revenue has not yet been earned. Typical transactions for which
unearned revenue is recorded are grants received but not yet earned.
H. Deferred Outflows and Inflows of Resources
Pursuant to GASB Statement No. 63, “Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and
Net Position,” and GASB Statement No. 65, “Items Previously Reported as Assets and Liabilities,” the City recognizes deferred
outflows and inflows of resources.
In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources.
A deferred outflow of resources is defined as a consumption of net position by the City that is applicable to a future reporting
period.
In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources.
A deferred inflow of resources is defined as an acquisition of net position by the City that is applicable to a future reporting period.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-42
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
I. Compensated 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 amounts, based primarily on
employment status and years of service. In the event of termination or retirement, employees are reimbursed for the total value
of their accumulated vacation days, annual leave and compensatory time. In the event of retirement, employees may choose to
be paid 50% of their unused sick leave, to a maximum of 450 hours at the current rate of pay. In addition, unused accumulated
sick leave may be converted to retirement credit per the City’s contract with the California Public Employees Retirement System.
J. Long-term Liabilities
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 position.
In the fund financial statements, governmental fund types recognize bond premiums and discounts 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.
K. Fund Balances and Net Position
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 classifications:
Non-spendable – The non-spendable fund balance classification includes amounts that cannot be spent because they are
either (a) not in spendable 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),
grantors, 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
other purpose unless the government removes or changes the specified use by taking the same type of action (legislation,
resolution, ordinance, etc.) it employed to previously commit those amounts. Committed fund balance should also
incorporate contractual obligations to the extent that existing resources in the fund have been specifically 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 Manager to which the City Council has delegated the authority 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 funds 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 purposes for which amounts have been restricted, committed, or
assigned.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-43
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
K. Fund Balances and Net Position – continued
Governmental Accounting Standards Board Statement No. 63 requires that the difference between assets added to the deferred
outflows of resources and liabilities added to the deferred inflows of resources be reported as net position. Net position is
classified in the following categories:
Net Investment in Capital Assets – Net position that is net investment in capital assets consist of capital assets, net of
accumulated depreciation, and reduced by outstanding debt directly attributed to the acquisition, construction, or
improvement of the assets.
Restricted Net Position – The restricted net position is the portion of net position that has external constraints placed on it by
external creditors, grantors, contributors, laws, or regulations of other governments, or through constitutional provisions or
enabling legislation.
Unrestricted Net Position – The unrestricted net position classification is the amount remaining that does not fall into one of
the above two categories.
When an expenditure is incurred for which both restricted and unrestricted fund balances are available, it is the City’s policy that
the restricted fund balance be spent first, followed by committed, then assigned, and, if applicable, unassigned.
The City has established a formal minimum general fund balance policy of 15% of appropriations, with the goal of maintaining
20% 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 by no more than two percent 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 days of fiscal
year end. Property taxes are billed and collected as shown below:
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 has adopted an alternative method of property tax distribution (the “Teeter Plan”). Under this method, the City receives
100% of its secured property tax levied in exchange 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 the final payment, which generally is received within 60 days of the fiscal year end.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-44
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
M. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension
expense, information about the fiduciary net position of the City’s California Public Employees Retirement System (PERS) plan
and additions to or deductions from the PERS plan fiduciary net position have been determined on the same basis as they are
reported by PERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when
due and payable in accordance with the benefit terms. Investments are reported at fair value.
N. Other Postemployment Benefits (OPEB)
For purposes of measuring the OPEB liability and deferred outflows/inflows of resources related to OPEB, and OPEB expense,
information about the fiduciary net position of the City’s plan (OPEB Plan) and addition to/deductions from the Plans’ fiduciary
net position have been determined on the same basis. For this purpose, benefit payments are recognized when due and payable
in accordance with the benefit terms. Investments are reported at fair value.
O. 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.
P. Future Accounting Pronouncements
GASB Statements listed below will be implemented in future financial statements:
Statement No. 84 "Fiduciary Activities" The provisions of this statement are effective
for fiscal years beginning after December 15, 2019.
Statement No. 87 "Leases" The provisions of this statement are effective
for fiscal years beginning after June 15, 2021.
Statement No. 89 "Accounting for Interest Cost Incurred The provisions of this statement are effective
before the End of a Construction for fiscal years beginning after December 15, 2020.
Period"
Statement No. 90 "Majority Equity Interests-an The provisions of this statement are effective
Amendment of GASB Statements No. for fiscal years beginning after December 15, 2019.
14 and No. 61"
Statement No. 91 "Conduit Debt Obligations" The provisions of this statement are effective
for fiscal years beginning after December 15, 2021.
Statement No. 92 "Omnibus 2020" The provisions of this statement are effective
for fiscal years beginning after June 15, 2021.
Statement No. 93 "Replacement of Interbank Offered The provision of this statement except for paragraphs
Rates"11b, 13, and 14 are effective for fiscal years beginning
after June 15, 2020. Paragraph 11b is effective for fiscal
years beginning after December 31, 2021. Paragraphs
13 and 14 are effective for fiscal years beginning after
June 15, 2021.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-45
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
P. Future Accounting Pronouncements (Continued)
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 two-year budget 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 during public 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. Budget
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 integrating the budget into the general ledger accounts. Encumbrance accounting is employed (e.g., purchase orders)
to avoid expenditures over the budget. Encumbrances outstanding at the end of the fiscal year are automatically budgeted in the
following fiscal year.
NOTE 3 – CASH AND INVESTMENTS
The composition of cash and investments as of June 30, 2020, is as follows:
Cash in bank and on hand $ 9,918,200
Cash and investments held with fiscal agent 5,467
Cash in escrow 7,360
Investments 19,879,302
Total $ 29,810,329
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 position $ 29,147,471
Cash and investments, statement of fiduciary net position 657,391
Restricted cash and investments, statement of fiduciary
net position
5,467
Total $ 29,810,329
Statement No. 94 "Public-Private and Public-Public The provisions of this statement are effective
Partnerships and Availability for fiscal years beginning after June 15, 2022.
Payment Arrangements"
Statement No. 96 "Subscription-Based Information The provisions of this statement are effective
Technology Arrangements" for fiscal years beginning after June 15, 2022.
Statement No. 97 "Certain Component Unit Criteria, The provisions of this statement are effective
and Accounting and Financial for fiscal years beginning December 15, 2019.
Reporting for Internal Revenue Code
Section 457 Deferred Compensation
Plans - an amendment of GASB
Statements No. 14 and No. 84, and a
supersession of GASB Statement
No. 32"
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-46
NOTE 3 – CASH AND INVESTMENTS – continued
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting
principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices
in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable
inputs.
The City has the following recurring fair value measurements as of June 30, 2020:
Fair Value Measurements Using
Total
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Investments by Fair Value
U.S. Agency Securities $ 5,527,184 $ 5,527,184 $ - $ -
Local Agency Investment Fund 10,039,245 10,039,245
Total investments by fair value 15,566,429 $ 5,527,184 $ 10,039,245 $ -
Investments measured at Amortized Cost
Certificates of Deposit 4,312,873
Money Market Funds 5,467
Total $ 19,884,769
Investments Authorized by the California Government Code and the City’s Investment Policy
The table on the following page 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 Repurchase 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 Fund (LAIF) N/A None None
JPA Pools (other investment pools) N/A None None
Guaranteed Investment Contract 15 months None None
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-47
NOTE 3 – CASH AND INVESTMENTS – continued
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 certain 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 interest rate risk is by purchasing a combination of shorter term and longer term investments
and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as
necessary to provide the cash flows and liquidity needed for operations. Information about the sensitivity of the fair values of the
City’s investments to market interest rate fluctuations is provided below that shows the distribution of the City’s investments by
maturity:
Remaining Maturity (in Months)
Carrying
Amount
12 Months or
Less
13-24 Months
25-60 Months
More than 60
Months Investment Type
Local Agency Investment Fund $ 10,039,245 $ 10,039,245 $ - $ - $ -
Certificates of Deposit 4,312,873 846,873 992,000 2,474,000
U.S. Agency Securities 5,527,184 5,527,184
Held by Fiscal Agent:
Money Market Funds 5,467 5,467
Total $ 19,884,769 $ 10,891,585 $ 992,000 $ 8,001,184 $ -
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 Code, the City’s investment policy, or debt agreements, 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 $ 10,039,245 N/A $ - $ - $ - $ 10,039,245
Certificates of Deposit 4,312,873 N/A 4,312,873
U.S. Agency Securities 5,527,184 N/A 5,527,184
Held by Fiscal Agent:
Money Market Funds 5,467 N/A 5,467
Total $ 19,884,769 $ - $ 5,527,184 $ - $ 14,357,585
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.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-48
NOTE 3 – CASH AND INVESTMENTS – continued
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not
be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The
California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure
to custodial credit risk for deposits, other than the following provision for deposits: The California Government Code requires that a
financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool
held by a depository regulated under state law (unless so waived by the governmental unit). The 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 secure the City’s deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public
deposits. 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 collateral securities that are in the possession of
another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that
would limit the exposure to custodial credit risk for investments. With respect to investments, custodial credit risk generally applies
only to direct investments in marketable securities. Custodial credit risk 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 upon 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 activity for the fiscal year ended June 30, 2020, is as follows:
Transfers and
Balance Other Re- Balance
July 1, 2019 Additions Deletions classifications June 30, 2020
Governmental Activities
Nondepreciable capital assets
Land $ 4,236,528 $ - $ - $ - $ 4,236,528
Infrastructure 6,379,188 6,379,188
Construction in progress 3,365,856 2,019,002 (951) (52,004) 5,331,903
Total nondepreciable capital
assets 13,981,572 2,019,002 (951) (52,004) 15,947,619
Depreciable capital assets
Structures and improvements 13,970,476 52,004 14,022,480
Equipment 4,239,315 (663,092) 3,576,223
Infrastructure 40,892,026 40,892,026
Total depreciable capital assets 59,101,817 (663,092) 52,004 58,490,729
Less accumulated depreciation 30,472,295 1,417,169 (639,341) 31,250,123
Net depreciable capital assets 28,629,522 (1,417,169) (23,751) 52,004 27,240,606
Net capital assets $ 42,611,094 $ 601,833 $ (24,702) $ - $ 43,188,225
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-49
NOTE 4 – CAPITAL ASSETS – continued
Transfers and
Balance Other Re- Balance
July 1, 2019 Additions Deletions classifications June 30, 2020
Business-type Activities
Nondepreciable capital assets
Land $ 56,730 $ - $ - $ - $ 56,730
Construction in progress 112,606 805,049 (868,700) 48,955
Total nondepreciable capital
assets 169,336 805,049 (868,700) 105,685
Depreciable capital assets
Structures and improvements 222,999 222,999
Equipment 848,416 848,416
Infrastructure 58,996,364 868,700 59,865,064
Total depreciable capital assets 60,067,779 868,700 60,936,479
Less accumulated depreciation 25,847,790 877,825 26,725,615
Net depreciable capital assets 34,219,989 (877,825) 868,700 34,210,864
Net capital assets $ 34,389,325 $ (72,776) $ - $ - $ 34,316,549
Transfers and Other Reclassifications
During the 2019-20 fiscal year, the City completed $920,704 in various capital projects.
Depreciation Allocation
Depreciation expense was charged to functions and programs based on their usage of related assets. The amounts allocated to each
function or program is presented below:
Governmental Activities:
General government $ 171,931
Community development 1,317
Public safety 362,922
Public works 137,677
Streets and roads 743,322
Total depreciation expense – governmental activities $ 1,417,169
Business-type Activities:
Water $ 297,698
Sewer 580,127
Total depreciation expense – business-type activities $ 877,825
NOTE 5 – LOANS RECEIVABLE
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 provided by the CDBG Fund. The note has a
term of 30-years, with no interest bearing. The total amount 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 Street in the amount of $445,000 provided by the CDBG Fund.
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.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-50
NOTE 5 – LOANS RECEIVABLE – continued
On March 28, 2013, the Redevelopment Agency of Arroyo Grande, subsequently the Successor Agency of the Former Redevelopment
Agency of Arroyo Grande, entered into a loan agreement with Courtland Street Apartments, LP for the construction of a 36-unit
affordable housing rental project and related improvements on the property located on the corner of Grand Avenue and Courtland
Avenue. On August 13, 2013, the City approved Amendment No. 1 to the Affordable Housing and Loan Agreement which provides up
to $400,000 of additional In-Lieu Affordable Housing funds towards this project. The total amount outstanding, including accrued
interest at June 30, 2020, was $242,442.
Loans Receivable:
In-Lieu Affordable Housing Fund $ 242,442
CDBG Fund 789,040
Total $ 1,031,482
NOTE 6 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
A. Interfund Transfers
The transfers in and out between funds during the fiscal year ended June 30, 2020, were as follows:
Transfer In Transfer Out
General Fund $ 2,416,775 $ 1,540,440
Transportation Impact Fees Fund 7,124
Capital Improvement Fund 1,696,074
Nonmajor Governmental Funds 459,108 688,462
Water Fund 5,477,738
Lopez Fund 3,589,658
Sewer Fund 447,851
Total $ 8,161,615 $ 8,161,615
B. Interfund Receivable and Payable
The amounts borrowed between funds during the fiscal year ended June 30, 2020, were as follows:
Due from Due to
General Fund $ 54,943 $ -
CDBG Fund 54,943
Total $ 54,943 $ 54,943
NOTE 7 – DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
At June 30, 2020, deferred inflows of resources, reported in the governmental fund financial statements, consisted of the following:
Unavailable Loan Revenue:
In-Lieu Affordable Housing Fund $ 242,442
CDBG Fund 789,040
Total $ 1,031,482
Information on deferred inflows and outflows of resources related to pension and OPEB plans can be found in Note 11 – Defined
Benefit Pension Plans and Note 12 – Postemployment Health Care Benefits (OPEB).
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-51
NOTE 8 – LONG-TERM LIABILITIES
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 current available financial
resources, if any, they are reported as long-term debt on the Statement of Net Position. No expenditure 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, 2020, total $789,883 for governmental activities and $95,615 for business-type activities.
B. Capital Leases Payable
The City is leasing police vehicles with California Nation Bank and public works vehicles and equipment from Community Bank of
Santa Maria under agreements which provide for title to pass upon expiration of the lease period.
The future minimum payment obligation for the capital leases payable are shown below:
Fiscal Year
Ending June 30
Community
Bank of Santa
Maria
2021 $ 129,467
2022 64,469
Total 193,936
Less: amount
representing in interest
4,442
Present value of net
minimum payments
$ 189,494
C. 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 retrofits including equipment, building controls, lighting equipment and lighting
controls, installation of vending 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 recreation services building.
The outstanding loan payable debt of the City at June 30, 2020 is shown below:
Date of
Issue Interest Rate
Maturity
Date
Amount of
Original Issue
Outstanding
July 1, 2019
Redeemed
Current Year
Outstanding
June 30, 2020
2011 3.00% 2026 $ 127,512 $ 72,741 $ 9,483 $ 63,258
The future minimum payment obligation for the loan payable is as follows:
Fiscal Year
Ending June 30
Principal
Interest
Total
2021 $ 9,774 $ 1,826 $ 11,600
2022 10,070 1,530 11,600
2023 10,374 1,225 11,599
2024 10,686 914 11,600
2025 11,011 589 11,600
2026 11,343 255 11,598
Total $ 63,258 $ 6,339 $ 69,597
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-52
NOTE 8 – LONG-TERM LIABILITIES – continued
D. 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, 2020 is shown below:
Date of
Issue Interest Rates
Maturity
Date
Amount of
Original Issue
Outstanding
July 1, 2019
Redeemed
Current Year
Outstanding
June 30, 2020
2011 3.75% 2041 $ 1,200,000 $ 996,000 $ 30,000 $ 966,000
The future minimum payment obligation for the USDA loan payable is as follows:
Fiscal Year
Ending June 30
Principal
Interest
Total
2021 $ 31,000 $ 35,644 $ 66,644
2022 32,000 34,462 66,462
2023 33,000 33,244 66,244
2024 35,000 31,969 66,969
2025 36,000 30,638 66,638
2026-2030 201,000 131,531 332,531
2031-2035 242,000 90,075 332,075
2036-2040 291,000 40,294 331,294
2041 65,000 1,218 66,218
Total $ 966,000 $ 429,075 $ 1,395,075
E. Net Pension Liability
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension
expense, information about the fiduciary net position of the City of Arroyo Grande’s California Public Employee’s Retirement
System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the
same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are
recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. See Note 11 for
further detail.
F. OPEB Liability
For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB, and OPEB expense,
information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the Plan’s fiduciary
net position have been determined on the same basis. For this purpose, benefit payments are recognized when due and payable
in accordance with the benefit terms. Investments are reported at fair value. See Note 12 for further detail.
G. Changes in Long-Term Liabilities
Long-term liability activity for the fiscal year ended June 30, 2020, is as follows:
Balance
July 1, 2019
Additions
Deletions
Balance
June 30, 2020
Due Within
One Year
Governmental Activities
Compensated absences $ 743,235 $ 662,722 $ 616,074 $ 789,883 $ -
Capital leases payable 276,890 151,066 125,824 82,646
CA Energy loan payable 72,741 9,483 63,258 9,774
USDA loan payable 996,000 30,000 966,000 31,000
Net pension liability 17,800,487 3,588,930 5,213,126 16,176,291
OPEB liability 4,818,638 1,171,328 211,782 5,778,184
Total $ 24,707,991 $ 5,422,980 $ 6,231,531 $ 23,899,440 $ 123,420
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-53
NOTE 8 – LONG-TERM LIABILITIES – continued
G. Changes in Long-Term Liabilities - continued
Balance
July 1, 2019
Additions
Deletions
Balance
June 30, 2020
Due Within
One Year
Business-type Activities
Compensated absences $ 104,915 $ 21,620 $ 30,920 $ 95,615 $ -
Capital leases payable 103,890 40,220 63,670 41,821
Net pension liability 2,140,905 216,812 412,157 1,945,560
OPEB liability 379,254 100,296 24,775 454,775
Total $ 2,728,964 $ 338,728 $ 508,072 $ 2,559,620 $ 41,821
NOTE 9 – WATER SUPPLY CONTRACT
The City 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 purchase, construction, expansion,
improvement, or rehabilitation of any real or other tangible 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 is considered a
participating agency of SLOCFA. The City’s share of the Water Supply Contract 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 payments until the fiscal year 2030.
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 continue to pay its share of the remaining debt service.
The future minimum contract payments for the debt service are shown below:
Fiscal Year
Ending June 30
Contract
Payment
2021 $ 470,974
2022 472,112
2023 472,491
2024 471,316
2025 471,615
2026-2030 2,826,001
Total $ 5,184,509
NOTE 10 – JOINT POWERS AUTHORITY
The City 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 Oceano and Halcyon, which
are unincorporated areas of San Luis Obispo County. Each member contributes its pro rata share of operating costs to FCFA based on
a funding formula, calculated 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 contributed $2,052,061 to FCFA during the fiscal year ended June 30, 2020 for fire protection services. Separate financial
statements may be obtained from the Five Cities Fire Authority at 140 Traffic Way in Arroyo Grande, California 93420.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-54
NOTE 11 – DEFINED BENEFIT PENSION PLANS
A. General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (Police) and
Miscellaneous Employee Pension Plans, cost-sharing multiple employer defined benefit plans administered by the California
Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plans are established by State statue and City
resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit
provisions, assumptions and membership information that can be found on the CalPERS website.
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members,
who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time
employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members
are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death
Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are
applied as specified by the Public Employees’ Retirement Law.
The defined benefit pension plan provisions and benefits at June 30, 2020 are summarized below:
Miscellaneous Employee Plan
Tier I Tier II Tier III (PEPRA)
Hire date
Prior to December
20, 2012
On or after
December 20,
2012*
On or after
January 1, 2013
Benefit formula 2.5% @ 55 2.0% @ 55 2.0% @ 62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service
Benefit payments Monthly for life Monthly for life Monthly for life
Retirement age 55 55 62
Required employee contribution rates 8.000% 7.000% 6.750%
Required employer contribution rates 11.432% 9.680% 6.985%
Required employer payment of unfunded
liability
$1,107,923
$1,029
$778
Safety Employee Plan
Tier I Tier II Tier III (PEPRA)
Hire date
Prior to December
20, 2012
On or after
December 20,
2012*
On or after
January 1, 2013
Benefit formula 3.0% @ 50 3.0% @ 55 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service
Benefit payments Monthly for life Monthly for life Monthly for life
Retirement age 50 55 57
Required employee contribution rates 9.000% 9.000% 12.000%
Required employer contribution rates 22.927% 18.928% 13.034 %
Required employer payment of unfunded
liability
$548,917
$1,043
$487
*After January 1, 2013, second tier will only apply to employees transferring from another CalPERS agency
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-55
NOTE 11 – DEFINED BENEFIT PENSION PLAN – continued
A. General Information about the Pension Plans – continued
Contribution Description – Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer
contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1
following notice of a change in the rate. The total plan contributions are determined through the CalPERS’ annual actuarial
valuation process. For public agency cost-sharing plans covered by either the Miscellaneous or Safety risk pools, the Plans’
actuarially determined rate is based on the estimated amount necessary to pay the Plan’s allocated share of the risk pool’s costs
of benefits earned by employees during the year, and any unfunded accrued liability. The employer is required to contribute the
difference between the actuarially determined rate and the contribution rate of employees. Contributions to the pension plan
from the City during the 2019-20 fiscal year were $1,381,099 for the miscellaneous plan and $2,823,483 for the safety plan.
At June 30, 2020, the City reported a liability of $12,868,961 for the miscellaneous plan and $5,252,890 for the safety plan for its
proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019 and the total pension
liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2018 rolled forward to
June 30, 2019 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of
the City’s long-term share of contributions to the pension plan relative to the projected contributions of all pension plan
participants, actuarially determined. At June 30, 2020, the City’s proportionate share of the net pension liability for each Plan as
of June 30, 2018 and June 30, 2019 was as shown on the following page:
Miscellaneous Safety
Proportion-June 30, 2018 0.32624% 0.13032%
Proportion-June 30, 2019 0.32136% 0.08415%
Adjustment due to differences in proportions -0.00488% -0.04617%
B. Pension Liabilities, Deferred Outflows and Inflows, and Pension Expense Related to Pensions
For the fiscal year ended June 30, 2020, the City recognized pension expense of $2,238,752 for the miscellaneous plan and
$1,689,478 for the safety plan. Pension expense represents the change in the net pension liability during the measurement
period, adjusted for actual contributions and the deferred recognition of changes in investment gains or losses, actuarial gains or
losses, actuarial assumptions or method, and plan benefits.
At June 30, 2020, the City reported deferred outflows and inflows of resources related to pension from the following resources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to measurement date $ 4,204,582 $ -
Differences between expected and actual experience 1,221,924 54,406
Changes in assumptions 828,959 259,551
Net difference between projected and actual earnings on
pension plan investment
297,251
Differences between City contributions and proportionate
share of contributions
2,801,833
Adjustment due to differences in proportions 40,154 2,659,093
Total $ 9,097,452 $ 3,270,301
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-56
NOTE 11 – DEFINED BENEFIT PENSION PLAN – continued
B. Pension Liabilities, Deferred Outflows and Inflows, and Pension Expense Related to Pensions – continued
The reported deferred outflows of resources related to pensions in the amount of $4,204,582 resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the pension liability in the 2020-21 fiscal year. The
additional amounts reported as deferred outflows and inflows of resources related to pensions will be recognized as pension
expense as follows:
Fiscal Year
Ending June 30
Amount
2021 $ 1,410,845
2022 (177,143)
2023 329,341
2024 59,526
Total $ 1,622,569
Actuarial Assumptions – The total pension liability for both the miscellaneous and safety plans in the June 30, 2019 actuarial
valuation was determined using the following actuarial assumptions:
Discount Rate – The discount rate used to measure the total pension liability was 7.15 %. To determine whether the municipal
bond rate should be used in the calculation of a discount rate for public agency plans (including PERF C), CalPERS stress tested
plans that would be most likely resulted in a discount rate that would be different from the actuarially assumed discount rate.
Based on the testing of the plans, the tests revealed the assets would not run out. Therefore, the current 7.15 % discount rate is
appropriate and the use of the municipal bond rate calculation is not deemed necessary. The long-term expected discount rate
of 7.15 % is applied to all plans in the Public Employees Retirement Fund, including PERF C. The stress test results are presented
in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB 68 section.
Miscellaneous and Safety
Valuation Date June 30, 2018
Measurement Date June 30, 2019
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 3%
Projected Salary Increase Varies by Entry Age and Service
Investment Rate of Return 7.00%
Mortality Derived using CalPERS' Membership
Data for all Funds (1)
Post Retirement Benefit Increase Contract COLA up to 2.50% until
Purchasing Power Protection Allowance
Floor on Purchasing Power applies;
2.75% therafter
(1) The mortality table used was developed based on CalPERs' specific data. The table
includes 20 years of mortality improvements using Society of Actuaries Scale BB.
For more details on this table please refer to the 2017 experience study report.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-57
NOTE 11 – DEFINED BENEFIT PENSION PLAN – continued
B. Pension Liabilities, Deferred Outflows and Inflows, and Pension Expense Related to Pensions – continued
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that
is scheduled to be completed in February 2022. Any changes to the discount rate will require Board action and proper stakeholder
outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB No. 67
and No. 68 calculations through at least the 2021-22 fiscal year. CalPERS will continue to check the materiality of the difference
in calculation until such time as they have changed their methodology.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-
estimate ranges of expected future real rates of return (expected returns, net pension plan investment expense and inflation) are
developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return
expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected
compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block
approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits were calculated
for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same
present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of
return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of
one percent.
The table on the following page reflects the long-term expected real rate of return by asset class. The rate of return was calculated
using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return
are net of administrative expenses.
Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following table represents the City’s proportionate
share of the net pension liability calculated using the discount rate of 7.15 %, as well as what the City’s proportionate share of the
net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.15 %) or 1 percentage
point higher (8.15 %) than the current rate:
Asset Class
New
Strategic
Allocation
Real Return
Years 1-10(a)
Real Return
Years 11+(b)
Global Equity 50.0% 4.80% 5.98%
Fixed Income 28.0% 1.00% 2.62%
Inflation Assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Assets 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% -0.92%
Total 100.0%
(a) An expected inflation of 2.00% was used for this period.
(b) An expected inflation of 2.92% was used for this period.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-58
NOTE 11 – DEFINED BENEFIT PENSION PLAN – continued
B. Pension Liabilities, Deferred Outflows and Inflows, and Pension Expense Related to Pensions – continued
Plans’ Net Pension Liability
Discount Rate -1%
(6.15%)
Current Discount
Rate (7.15%)
Discount Rate +1%
(8.15%)
Miscellaneous $ 18,602,305 $ 12,868,961 $ 8,136,491
Safety 9,235,238 5,252,890 1,987,988
Total $ 27,837,543 $ 18,121,851 $ 10,124,479
Pension Plan Fiduciary Net Position – Detailed information about the pension plan’s fiduciary net position is available in the
separately issued CalPERS financial reports.
C. Payable to the Pension Plan
At June 30, 2020, the City had no amount outstanding for contributions to the pension plan required for the 2019-20 fiscal year.
NOTE 12 – POSTEMPLOYMENT HEALTH CARE BENEFITS (OPEB)
A. Plan Description
The City provides postemployment health care benefits through the CalPERS cost-sharing multiple employer health care program
(PEMHCA) to eligible employees. The City pays the greater of $136 per month or the PEMHCA minimum of $139 for fiscal year
2018-2019. To be eligible for postretirement health benefits, employees must complete at least 5 years of continuous service and
be a minimum of 55 years of age. The 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.
As of June 30, 2020, the City has not funded an OPEB trust that meets the criteria in paragraph 4 of GASB Statement No. 75.
B. Employees Covered
As of June 30, 2019, actuarial valuation, the following current and former employees were covered by the benefit terms under
the City’s Plan:
C. Contributions
The City currently finances benefits on a pay-as-you-go basis primarily from the City’s General Fund, Streets Fund and Water Fund.
D. Total OPEB Liability
The City's OPEB Liability was measured as of June 30, 2019 and the total OPEB liability used to calculate the OPEB Liability was
determined by an actuarial valuation as of June 30, 2018 rolled forward to June 30, 2019 using standard update procedures.
Actuarial assumptions. The total OPEB liability was determined using the following actuarial assumptions, applied to all periods
included in the measurement, unless otherwise specified:
Active plan members 70
Inactive plan members or beneficiaries currently receiving benefits 52
Inactive plan members entitled to but not yet receiving benefit payments 36
Total 158
Salary increases 3.00%
Discount rate 3.50%, down from 3.87% in 2019
Healthcare cost trend rate 7.25% decreasing to 4.00% by 2076
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-59
NOTE 12 – POSTEMPLOYMENT HEALTH CARE BENEFITS (OPEB) – continued
D. Total OPEB Liability - continued
Pre-retirement mortality rates were based on the CalPERS 1997-2015 Experience Study, as appropriate, without projection. Post-
retirement mortality rates were based on the mortality projected fully generational with Scale MP-2019. Actuarial assumptions
used in the June 30, 2019 valuation were based on a review of plan experience during the period July 1, 2015 to June 30, 2017.
Discount rate. GASB 75 requires a discount rate that reflects the following:
a) The long-term expected rate of return on OPEB plan investments — to the extent that the OPEB plan's fiduciary net
position (if any) is projected to be sufficient to make projected benefit payments and assets are expected to be
invested using a strategy to achieve that return;
b) A yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or
higher — to the extent that the conditions in (a) are not met.
To determine a resulting single (blended) rate, the amount of the plan's projected fiduciary net position (if any) and the amount
of projected benefit payments is compared in each period of projected benefit payments. The discount rate used to measure the
City's total OPEB liability is based on these requirements and the following information:
E. Changes in the OPEB Liability
Sensitivity of the OPEB liability to changes in the discount rate. The following presents the OPEB liability, as well as what the OPEB
liability would be if it were calculated using a discount rate that is 1 percentage point lower (2.50 percent) or 1 percentage-point
higher (4.50 percent) than the current discount rate:
Long-Term
Expected Return Municipal Bond
of Plan Investments 20 Year High Grade
Reporting Date Measurement Date (if any) Rate Index Discount Rate
June 30, 2019 June 30, 2018 N/A 3.87% 3.87%
June 30, 2020 June 30, 2019 N/A 3.50% 3.50%
Total OPEB
Liability
Balance at June 30, 2019
(Valuation Date June 30, 2019) 5,197,892$
Changes recognized for the measurement period:
Service cost 232,581
Interest 205,606
Changes of assumptions 296,147
Actual vs expected experience 536,046
Benefit payments (235,313)
Administrative expense -
Net Changes 1,035,067
Balance at June 30, 2020
(Measurement Date June 30, 2019) 6,232,959$
1% Decrease Discount Rate 1% Increase
2.50% 3.50% 4.50%
OPEB Liability 7,339,585$ 6,232,959$ 5,367,455$
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-60
NOTE 12 – POSTEMPLOYMENT HEALTH CARE BENEFITS (OPEB) – continued
E. Changes in the OPEB Liability - continued
Sensitivity of the OPEB liability to changes in the healthcare cost trend rates. The following presents the OPEB liability, as well as
what the OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage-point lower (6.25
percent decreasing to 3.0%) or 1 percentage-point higher (8.25 percent decreasing to 5.0%) than the current healthcare cost trend
rates:
F. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the fiscal year ended June 30, 2020, the City recognized OPEB expense of $428,593. As of the fiscal year ended June 30, 2020,
the City reported deferred outflows and deferred inflows of resources related to OPEB from the following sources:
The reported deferred outflows of resources related to OPEB in the amount of $270,486 resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the 2020-21 fiscal year. The
additional amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized as OPEB expense
as follows:
NOTE 13 – LIABILITY, WORKERS’ COMPENSATION, AND PURCHASED INSURANCE
A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement
The City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 118 California
public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The
purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance
or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began
covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of
Directors. The Board operates through a nine-member Executive Committee.
1% Decrease Trend Rate 1% Increase
6.25% decreasing 7.25% decreasing 8.25% decreasing
to 3.0% to 4.0% to 5.0%
OPEB Liability 5,407,062$ 6,232,959$ 7,363,063$
Deferred Outflows Deferred Inflows
of Resources of Resources
Contributions subsequent to measurement date 270,486$ -$
Differences between expected and actual experience 458,358
Changes in assumptions 253,227 508,706
982,071$ 508,706$
Amount
2021 (10,838)$
2022 (10,838)
2023 (10,838)
2024 27,541
2025 99,307
Thereafter 108,545
202,879$
Fiscal year ending June 30,
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-61
NOTE 13 – LIABILITY, PROPERTY, AND WORKERS’ COMPENSATION PROTECTION – continued
B. Self-Insurance Programs of the Authority
Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted
annually thereafter, for coverage years 2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual
retrospective adjustment. The total funding requirement for primary self-insurance programs is based on an actuarial
analysis. Costs are allocated to individual agencies based on payroll and claims history, relative to other members of the risk-
sharing pool.
Primary Liability Program
Claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated
relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the
weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs
up to $30,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3)
The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage
of the pool’s total incurred costs within the second layer. (4) Incurred costs from $750,000 to $50 million, are distributed based
on the outcome of cost allocation within the first and second loss layers.
The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Subsidence losses
have a sub-limit of $40 million per occurrence. The coverage structure includes retained risk that is pooled among members,
reinsurance, and excess insurance. More detailed information about the various layers of coverage is available on the following
website: https://cjpia.org/protection/coverage-programs.
Primary Workers’ Compensation Program
Claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each
member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which
establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes
incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the
first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated
as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $100,000 to statutory limits are
distributed based on the outcome of cost allocation within the first and second loss layers.
For 2019-20 the Authority’s pooled retention is $1 million per occurrence, with reinsurance to statutory limits under California
Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $1 million. Coverage from $1 million to
$5 million is purchased as part of a reinsurance policy, and Employer’s Liability losses from $5 million to $10 million are pooled
among members.
C. Purchase Insurance
Property Insurance – The City participates in the all-risk property protection program of the Authority. This insurance protection
is underwritten by several insurance companies. The City is currently insured according to a schedule of covered property
submitted by The City to the Authority. The City property currently has all-risk property insurance protection in the amount of
$28,396,936. There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance which has a $2,500
deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments.
D. Adequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded
pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2019-20.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-62
NOTE 13 – LIABILITY, PROPERTY, AND WORKERS’ COMPENSATION PROTECTION – continued
E. Self-Insurance
The City retains the risk for workers’ compensation losses incurred prior to joining the Cal JPIA. Several member agencies of the
now dissolved Central Coast Cities Self-Insurance Fund continue to participate in a non-risk sharing arrangement for claims
management and the purchase of excess insurance. The participating agencies share a set of common guidelines and annually
set aside premiums to pay their individual losses within their self-insured retentions. Losses are debited and investment income
is credited to specific member accounts. The City has not incurred any losses in excess of insurance coverage. Claims liabilities in
the governmental funds are generally liquidated by the General Fund.
The last actuarial study to determine the undiscounted outstanding claims liability was completed for the year ended June 30,
2015. The liability was estimated based on the actuarial study and considered claims asserted and paid, and the time limitation
for filing claims. There are no amounts estimated for claims incurred but not reported because the time limit for filing claims has
elapsed. The estimated asset (liability) at June 30, 2020 and the changes in those balances are shown below:
Cash, investments and current assets $ 46,273
Estimated claims liability (49,608)
Unpaid claims asset $ (3,335)
Unpaid claims asset at July 1, 2019 $ (27,316)
Revenues 1,096
Claim payments and related expenditures (5,195)
Change in fair market value 140
Change in estimated claims liability 27,940
Unpaid claims asset at June 30, 2020 $ (3,335)
NOTE 14 – REVENUE LIMITATIONS IMPOSED BY CALIFORNIA PROPOSITION 218
Proposition 218, which was approved 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. Additionally, Proposition 218 provides that these taxes, assessments,
and fees are subject to the voters’ initiative process and may be rescinded in the future years by the voters.
NOTE 15 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (the 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 (RDA) within the reporting entity of the City as a blended component unit.
The Bill provides that upon dissolution of a redevelopment 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 Agency for the former redevelopment agency in accordance with the Bill
as part of the City Resolution No. 4420.
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 board, remaining assets can only
be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that
were subject to legally enforceable contractual commitments).
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-63
NOTE 15 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY – continued
In future years, successor agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual
installment payments on enforceable 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 redevelopment
agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually
committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available
assets to be transferred to the public body designated as the successor agency by 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. The 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.
A. Financial Reporting
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.
As a result, 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.
B. 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 cash and investments pooled with the City
and the related custodial risk categorization.
Cash and investments at June 30, 2020, consisted of the following:
Total
Cash and investments pooled with the City $ 337,253
Restricted cash and investments held with fiscal agent 5,467
Total $ 342,720
C. 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 sold as individual lots.
On June 22, 2010, the RDA transferred $980,000 to the General Fund, in exchange for land located on Pearwood Avenue 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 properties for resale. Inventory is valued at cost which approximates fair value.
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-64
NOTE 15 – SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ARROYO GRANDE REDEVELOPMENT AGENCY – continued
D. Notes Receivable
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 agreement 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
purchased property 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 agreement with Habitat for Humanity of San Luis Obispo County (Habitat for
Humanity) and purchased property utilizing low and moderate set-aside funds in the amount of $260,000. Under the terms of the
agreement, as long as each home is sold to a qualified homebuyer (as defined in the agreement), a portion of the outstanding
balance of the loan shall be forgiven.
On March 28, 2013, the RDA entered into a loan agreement with Courtland Street Apartments, LP for the construction of a 36-
unit affordable housing rental project and related improvements on the property located on the corner of Grand Avenue and
Courtland Avenue in the amount of $930,000 utilizing low and moderate set-aside funds. The term of the loan agreement is 55
years with interest accruing on the outstanding principal balance at the rate of 3% per annum. Repayment of the loan began on
March 1, 2015. Total amount outstanding, including accrued interest at June 30, 2020, was $1,013,917.
E. Tax Allocation Bonds Payable
On May 1, 2007, the 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 were fully defeased by the Taxable Tax Allocation
Refunding Bonds, Series 2018 of $5,305,000 on June 27, 2018 that will mature on September 1, 2037. As a result of the refunding,
the City had a total savings of $841,389 for an economic gain of $415,389. The defeased amount was put into escrow and will
pay off the 2007 Bonds with a payment of $305,000 plus 5.304% interest on September 1, 2019 and $5,005,000 plus 5.800%
interest on September 1, 2037. As of June 30, 2020, the principal balance of the 2018 bonds outstanding was $4,850,000. As a
result of the refunding there was an original issue discount, loss on refunding, and prepaid bond insurance created that is
amortized over the life of the refunded bonds. As of June 30, 2020, these amounts net to $197,821 which reduces the total
amount of bonds payable.
The future minimum payment obligation for the tax allocation bonds payable is as follows:
Fiscal Year
Ending June 30
Principal
Interest
Total
2021 $ 195,000 $ 189,238 $ 384,238
2022 200,000 182,943 382,943
2023 210,000 176,116 386,116
2024 215,000 168,775 383,775
2025 220,000 161,148 381,148
2026-2030 1,235,000 674,077 1,909,077
2031-2035 1,510,000 396,666 1,906,666
2036-2039 1,065,000 70,798 1,135,798
Total $ 4,850,000 $ 2,019,761 $ 6,869,761
City of Arroyo Grande
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30, 2020
B-65
NOTE 16 – CONTINGENCIES AND COMMITMENTS
The City is involved in various litigations. In the opinion of management and legal counsel, 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 agencies.
Although such audits could generate expenditure disallowances under the term of the grants, it is believed that any required
reimbursement will not be material.
The City has the following outstanding contracts listed below for uncompleted projects at June 30, 2020:
Project Name Amount
5608 – Bridge St. Bridge Rehabilitation $ 4,503,472
5638 – Pavement Management Program 46,830
Total $ 4,550,302
NOTE 17 – SUBSEQUENT EVENTS
Subsequent to year-end, the City may be negatively impacted by the effects of the worldwide coronavirus pandemic. The City is closely
monitoring its operations, liquidity, and reserves and is actively working to minimize the current and future impact of this
unprecedented situation. As of the date of issuance of these financial statements, the full impact to the City’s financial position is not
known.
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City of Arroyo Grande
BUDGETARY INFORMATION - MAJOR GOVERNMENTAL FUNDS
General Fund
For the Fiscal Year Ended June 30, 2020
REVENUES
Taxes and assessments $15,414,900 $15,526,100 $15,593,480 $67,380
Licenses and permits 556,800 597,300 625,944 28,644
Fines and penalties 45,000 45,000 41,117 (3,883)
Use of money and property 411,700 461,700 665,481 203,781
Intergovernmental revenues 161,100 179,980 267,601 87,621
Charges for services 1,461,500 1,593,500 1,445,738 (147,762)
Other revenue 28,500 37,067 30,024 (7,043)
Total revenues 18,079,500 18,440,647 18,669,385 228,738
EXPENDITURES
General government
City council 99,200 115,700 105,626 10,074
City manager 644,300 1,057,800 960,893 96,907
City attorney 283,200 283,200 261,270 21,930
City clerk 418,800 450,011 421,873 28,138
Information technology 634,000 661,158 624,683 36,475
Finance and human resources 901,500 1,007,000 844,344 162,656
Non-departmental 3,258,900 3,304,900 3,287,211 17,689
Community development
Planning 685,500 896,141 671,444 224,697
Engineering 729,000 737,567 627,259 110,308
Building and life safety 406,400 496,400 496,795 (395)
Public safety
Administration 1,140,828 1,144,525 1,065,139 79,386
Patrol services 5,680,300 5,679,089 5,753,045 (73,956)
Support services 1,536,000 1,549,300 939,273 610,027
Emergency operations center 600 600 600
Recreation services
Administration 493,400 512,100 410,544 101,556
Preschool program 105,500 105,500 82,074 23,426
Special recreation programs 149,500 149,500 126,139 23,361
Children in Motion 356,100 361,400 281,031 80,369
Public works
Administration 931,712 932,730 831,360 101,370
Park maintenance 419,960 436,625 394,214 42,411
Soto sports complex maintenance 244,000 246,551 233,447 13,104
Building maintenance 233,600 233,600 200,980 32,620
Automotive shop 167,200 167,200 183,100 (15,900)
Capital outlay 1,629 (1,629)
Debt service 166,000 190,100 130,340 59,760
Total expenditures 19,685,500 20,718,697 18,933,713 1,784,984
Excess of revenue over (under)
expenditures (1,606,000) (2,278,050) (264,328) 2,013,722
Continued on following page
Variance
Over/(Under)Actual AmountsOriginalFinal
Budget Amounts
B-67
City of Arroyo Grande
BUDGETARY INFORMATION - MAJOR GOVERNMENTAL FUNDS
General Fund
For the Fiscal Year Ended June 30, 2020
Continued from previous page
OTHER FINANCING SOURCES/(USES)
Proceeds from sale of capital assets $2,000 $2,000 $- $(2,000)
Transfer in 2,390,400 2,388,900 2,416,775 27,875
Transfer out (1,887,600) (1,596,700) (1,540,440) 56,260
Total other financing sources/
(uses)504,800 794,200 876,335 82,135
Net change in fund balance (1,101,200) (1,483,850) 612,007 2,095,857
Fund balance - July 1, 2019 9,850,743 9,850,743 9,850,743
Fund balance - June 30, 2020 $8,749,543 $8,366,893 $10,462,750 $2,095,857
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
B-68
City of Arroyo Grande
BUDGETARY INFORMATION - MAJOR GOVERNMENTAL FUNDS
Transportation Impact Fees Fund
For the Fiscal Year Ended June 30, 2020
REVENUES
Use of money and property $10,000 $10,000 $35,915 $25,915
Charges for services 75,000 75,000 248,720 173,720
Total revenues 85,000 85,000 284,635 199,635
EXPENDITURES
Community development
Total expenditures
Excess of revenue over
expenditures 85,000 85,000 284,635 199,635
OTHER FINANCING USES
Transfer out (7,124) (7,124)
Total other financing uses (7,124) (7,124)
Net change in fund balance 85,000 85,000 277,511 192,511
Fund balance - July 1, 2019 2,169,364 2,169,364 2,169,364
Fund balance - June 30, 2020 $2,254,364 $2,254,364 $2,446,875 $192,511
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
B-69
City of Arroyo Grande
BUDGETARY INFORMATION - MAJOR GOVERNMENTAL FUNDS
Community Development Block Grant Fund
For the Fiscal Year Ended June 30, 2020
REVENUES
Intergovernmental revenues $63,900 $63,900 $- $(63,900)
Total revenues 63,900 63,900 (63,900)
EXPENDITURES
Community development
Total expenditures
Net change in fund balance 63,900 63,900 (63,900)
Fund balance - July 1, 2019 15,180 15,180 15,180
Fund balance - June 30, 2020 $79,080 $79,080 $15,180 $(63,900)
Budget Amounts
Actual Amounts
Variance
Over/(Under)Original Final
B-70
City of Arroyo Grande
SCHEDULE OF CHANGES IN THE OPEB LIABILITY AND RELATED RATIOS
Last 10 Years*
As of June 30, 2020
Measurement Period 2018 2019 2020
Total OPEB Liability
Service cost 287,461$ 243,548$ 232,581$
Interest on the total OPEB liability 164,612 191,291 205,606
Difference between expected and actual experience 536,046
Changes in assumptions (633,250)(234,295)296,147
Changes in benefit terms
Benefit payments (210,020)(204,861)(235,313)
Net change in total OPEB Liability (391,197)(4,317)1,035,067
Total OPEB liability- beginning 5,593,406 5,202,209 5,197,892
Total OPEB liability- ending 5,202,209$ 5,197,892$ 6,232,959$
Covered payroll 6,130,128$ 6,604,604$ 6,975,081$
Total OPEB liability as a percentage
of covered payroll 84.86%78.70%89.36%
(1) Fiscal year 2018 was the 1st year of implementation, therefore only three years are shown.
B-71
City of Arroyo Grande
NET PENSION LIABILITY - SCHEDULE OF PROPORTIONATE SHARE
Last Ten Fiscal Years (1)
As of June 30, 2020
The following table provides required supplementary information regarding the City's Pension Plans.
2020 2019 2018 2017 2016
Proportion of the net pension liability 0.17685%0.20694%0.21613%0.22499%0.25243%
Proportionate share of the net pension liability 18,121,851$ 19,941,392$ 21,434,067$ 19,468,856$ 17,326,688$
Covered payroll 5,822,646$ 5,866,531$ 6,070,014$ 5,912,090$ 5,594,685$
Proportionate share of the net pension liability as
percentage of covered payroll 311.23%339.92%353.11%329.31%309.70%
Plan's total pension liability 41,426,453,489$ 38,944,855,364$ 37,161,348,332$ 33,358,627,624$ 31,771,217,402$
Plan's fiduciary net position 31,179,414,067$ 29,308,589,559$ 27,244,095,376$ 24,705,532,291$ 24,907,305,871$
Plan fiduciary net position as a percentage of the
total pension liability 75.26%75.26%73.31%74.06%78.40%
2015
Proportion of the net pension liability 0.23934%
Proportionate share of the net pension liability 14,892,793$
Covered payroll 5,222,082$
Proportionate share of the net pension liability as
percentage of covered payroll 285.19%
Plan's total pension liability 30,829,966,631$
Plan's fiduciary net position 24,607,502,515$
Plan fiduciary net position as a percentage of the
total pension liability 79.82%
Notes to Schedule:
Changes in assumptions
In 2018, inflation was changed from 2.75 percent to 2.50 percent and individual salary increases and overall payroll growth was reduced
from 3.00 percent to 2.75 percent.
In 2017, as part of the Asset Liability Management review cycle, the discount rate was changed from 7.65% to 7.15%.
In 2016, the discount rate was changed from 7.5% (net of administrative expense) to 7.65% to correct for an adjustment to
exclude administrative expense.
In 2015, amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement ages
of general employees.
(1) The 2014-15 fiscal year was the first year of implementation, therefore only six years are shown.
B-72
City of Arroyo Grande
NET PENSION LIABILITY - SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years (1)
As of June 30, 2020
The following table provides required supplementary information regarding the City's Pension Plan.
2020 2019 2018 2017 2016
Contractually required contribution (actuarially determined)2,204,582$ 2,558,407$ 2,342,517$ 2,191,573$ 2,071,858$
Contribution in relation to the actuarially determined
contributions (4,204,582) (5,625,283) (2,342,517) (2,191,573) (2,071,858)
Contribution deficiency (excess)(2,000,000)$ (3,066,876)$ -$ -$ -$
Covered payroll 5,957,310$ 5,822,646$ 5,866,531$ 6,070,014$ 5,912,090$
Contributions as a percentage of covered payroll 70.58%96.61%39.93%36.10%35.04%
2015
Contractually required contribution (actuarially determined)1,590,307$
Contribution in relation to the actuarially determined
contributions (1,590,307)
Contribution deficiency (excess)-$
Covered payroll 5,594,685$
Contributions as a percentage of covered payroll 28.43%
Notes to Schedule
Valuation date:6/30/2016
The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2019/20 were
derived from the June 30, 2016 funding valuation report.
Actuarial cost method Entry age normal
Asset valuation method/period For details, see the June 30, 2016 funding valuation report.
Inflation 2.50%
Discount rate 7.375%
Salary increases Varies by entry age and service
Investment rate of return 7.00% net of pension plan investment and administrative
expenses; includes inflation
Retirement age/mortality The probabilities of retirement and mortality are based on
the 2010 CalPERS Experience Study for the period from 1997
to 2007. Pre-retirement and post-retirement mortality rates
include 5 years of projected mortality improvement using
Scale AA published by the Society of Actuaries.
Valuation Date:6/30/2018 6/30/2017
Discount Rate 7.15%7.25%
(1) The 2014-15 fiscal year was the first year of implementation, therefore only six years are shown.
B-73
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City of Arroyo Grande
DESCRIPTION OF NONMAJOR GOVERNMENTAL
B-75
Special Revenue Funds
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.
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.
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.
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.
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.
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.
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.
Landscape Assessment Fund
This fund accounts for the landscape maintenance of parkways within two housing tracts. A special benefit
assessment is levied on property owners to pay for landscape maintenance expenditures.
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.
Traffic Signal Fund
This fund accounts for traffic signalization assessment levied against developments for the future cost of traffic
signals.
City of Arroyo Grande
DESCRIPTION OF NONMAJOR GOVERNMENTAL
B-76
Special Revenue Funds – continued
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, roads and highways.
Traffic Circulation Fund
This fund accounts for developer traffic mitigation measure fees charged as a result of an environmental review.
Transportation Fund
This fund accounts for revenues from the Local Transportation Fund (LTF) and the South County Transit (SCT).
Expenditures are restricted to public transportation.
In-Lieu Water Neutralization Fund
The City requires development projects that increase total water consumption in the City to “neutralize” that
demand by reducing water consumption in existing development by an equivalent amount. This fund accounts for
these funds collected by developers and is used towards the City’s water conservation efforts.
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.
In-Lieu Affordable Housing Fund
This fund accounts for monies paid by developers in meeting the City's mandatory affordable housing
requirements.
In-Lieu Underground Utility Fund
This fund accounts for monies paid by developers in meeting the City's underground utility requirements.
Tourism Business Improvement District Fund
The purpose of the Tourism Business Improvement District (TBID) is to provide projects, programs and activities
that benefit lodging businesses located and operating within the City of Arroyo Grande. A two percent (2%)
assessment is levied on all lodging businesses of the rent charged by the operator per occupied room per night for
all transient occupancies. Revenue collected is used to promote the lodging industry within the City.
Water Availability Fund
Pursuant to the provisions of Section 38743 of the Government Code, water availability charges is a “special
charge” which is levied to each parcel of property not served with city water. These charges are restricted for the
sole purpose of expanding water supply such as desalination plant, recycled water, scalping plant, etc.
City of Arroyo Grande
DESCRIPTION OF NONMAJOR GOVERNMENTAL
B-77
Special Revenue Funds – continued
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.
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.
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.
City of Arroyo Grande
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet
June 30, 2020
ASSETS
Cash and investments $342,251 $140,091 $62,830 $1,373,028 $331,325 $24,056
Receivables:
Accounts 10,254
Loan
Taxes
Interest 539 307 110 2,510 532 40
Total assets $342,790 $150,652 $62,940 $1,375,538 $331,857 $24,096
LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable $-$-$- $-$-$-
Unearned revenue 40,226
Total liabilities 40,226
Deferred inflows of resources:
Unavailable revenue
Total deferred inflows of resources
Fund Balances:
Restricted for:
Access programming 150,652
Debt service
Landscape maintenance
Park construction 1,335,312 331,857
Public improvements 24,096
Public safety 342,790 62,940
Streets and roads
Water production
Assigned for:
Capital projects
Tourism benefit
Total fund balances 342,790 150,652 62,940 1,335,312 331,857 24,096
Total liabilities, deferred inflows of
resources and fund balances $342,790 $150,652 $62,940 $1,375,538 $331,857 $24,096
Community
Center Impact
Fees
Park
Improvement
Impact Fees
Park
Development
Special Revenue Funds
Fire Protection
Impact Fees
Police
Protection
Impact Fees
Public Access
Television
B-78
$49,559 $1,884 $449,206 $1,077,718 $67,582 $153,181 $321,269
204 47,279
97 5 866 1,998 415 295 363
$49,656 $2,093 $450,072 $1,079,716 $115,276 $153,476 $321,632
$6,110 $798 $826 $-$24,955 $-$391
6,110 798 826 24,955 391
43,546 1,295 449,246
1,079,716 90,321 153,476 321,241
43,546 1,295 449,246 1,079,716 90,321 153,476 321,241
$49,656 $2,093 $450,072 $1,079,716 $115,276 $153,476 $321,632
Grace Lane
Assessment
District
Special Revenue Funds
Traffic Signal
Parkside
Assessment
District
Landscape
Assessment
District
Traffic
Circulation Transportation
Special Gasoline
Tax
B-79
City of Arroyo Grande
NONMAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet (continued)
June 30, 2020
ASSETS
Cash and investments $360,846 $30 $5,891 $1,054,848 $19,867 $286,219
Receivables:
Accounts
Loan 242,442
Taxes 21,572
Interest 636 1,883 39 584
Total assets $361,482 $30 $5,891 $1,299,173 $19,906 $308,375
LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable $1,005 $-$-$-$-$-
Unearned revenue
Total liabilities 1,005
Deferred inflows of resources:
Unavailable revenue 242,442
Total deferred inflows of resources 242,442
Fund Balances:
Restricted for:
Access programming
Debt service
Landscape maintenance
Park construction
Public improvements 30 5,891
Public safety
Streets and roads
Water production 360,477
Assigned for:
Affordable housing 1,056,731
Capital projects 19,906
Tourism benefit 308,375
Total fund balances 360,477 30 5,891 1,056,731 19,906 308,375
Total liabilities, deferred inflows of
resources and fund balances $361,482 $30 $5,891 $1,299,173 $19,906 $308,375
Tourism
Business
Improvement
DistrictDrainage Fees
In-Lieu
Affordable
Housing Fund
In-Lieu
Underground
Utility
In-Lieu Water
Neutralization Construction
Special Revenue Funds
B-80
$1,569,177 $245,949 $7,936,807 $661 $69,037 $69,698 $8,006,505
10,254 10,254
242,442 242,442
69,055 69,055
2,909 392 14,520 14,520
$1,572,086 $246,341 $8,273,078 $661 $69,037 $69,698 $8,342,776
$16,215 $-$50,300 $-$-$-$50,300
40,226 40,226
16,215 90,526 90,526
242,442 242,442
242,442 242,442
150,652 150,652
661 69,037 69,698 69,698
494,087 494,087
1,667,169 1,667,169
30,017 30,017
246,341 652,071 652,071
1,644,754 1,644,754
1,555,871 1,916,348 1,916,348
1,056,731 1,056,731
19,906 19,906
308,375 308,375
1,555,871 246,341 7,940,110 661 69,037 69,698 8,009,808
$1,572,086 $246,341 $8,273,078 $661 $69,037 $69,698 $8,342,776
Total Debt
Service Funds
City Hall USDA
Debt Service
Total Special
Revenue FundsWater Availability
State COPS
Grant
Special Revenue Funds
Fire Station GO
Bonds
Total Nonmajor
Governmental
Funds
Debt Service
B-81
City of Arroyo Grande
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2020
REVENUES
Taxes and assessments $-$-$-$-$-$-
Use of money and property 4,513 2,805 909 20,088 4,340 260
Intergovernmental revenues
Charges for services 99,473 41,142 12,275 138,020 124,003 7,188
Other revenue
Total revenues 103,986 43,947 13,184 158,108 128,343 7,448
EXPENDITURES
Current:
General government 3,514
Community development
Public safety
Recreation services 16,576
Public works
Streets and roads
Capital outlay
Debt service:
Principal
Interest and fiscal agent fees
Total expenditures 3,514 16,576
Excess of revenue over/
(under) expenditures 103,986 40,433 13,184 158,108 111,767 7,448
OTHER FINANCING SOURCES/(USES)
Transfers in
Transfers out (13,168) (1,088)
Total other financing
sources/(uses)(13,168) (1,088)
Net change in fund balances 103,986 40,433 13,184 158,108 98,599 6,360
Fund balances - July 1, 2019 238,804 110,219 49,756 1,177,204 233,258 17,736
Fund balances - June 30, 2020 $342,790 $150,652 $62,940 $1,335,312 $331,857 $24,096
Fire Protection
Impact Fees
Special Revenue Funds
Park
Development
Police
Protection
Impact Fees
Public Access
Television
Park
Improvement
Impact Fees
Community
Center Impact
Fees
B-82
$9,332 $5,472 $43,966 $-$-$- $-
706 38 6,722 15,892 3,608 2,281 3,472
734,370 416,092
90,770
350
10,038 5,510 50,688 106,662 738,328 2,281 419,564
5,729
14,121 3,024 41,752
717,490
1,630
38,065
3,051
14,121 3,024 41,752 760,236 5,729
(4,083) 2,486 8,936 106,662 (21,908) 2,281 413,835
380,304
(3,096) (2,004) (6,096) (396,514) (240,696)
(3,096) (2,004) (6,096) (16,210) (240,696)
(7,179) 482 2,840 106,662 (38,118) 2,281 173,139
50,725 813 446,406 973,054 128,439 151,195 148,102
$43,546 $1,295 $449,246 $1,079,716 $90,321 $153,476 $321,241
Landscape
Assessment
District
Grace Lane
Assessment
District
Special Revenue Funds
Transportation
Traffic
Circulation
Special Gasoline
Tax
Parkside
Assessment
District Traffic Signal
B-83
City of Arroyo Grande
NONMAJOR GOVERNMENTAL FUNDS
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued)
For the Fiscal Year Ended June 30, 2020
REVENUES
Taxes and assessments $-$-$-$-$-$185,414
Use of money and property 5,061 (14) 18,051 296 5,315
Intergovernmental revenues
Charges for services 58,019 123,468
Other revenue
Total revenues 63,080 - (14) 141,519 296 190,729
EXPENDITURES
Current:
General government 175,028
Community development 13,077 12,706
Public safety
Recreation services
Public works
Streets and roads
Capital outlay
Debt service:
Principal
Interest and fiscal agent fees
Total expenditures 13,077 12,706 175,028
Excess of revenue over/
(under) expenditures 50,003 (14) 128,813 296 15,701
OTHER FINANCING SOURCES/(USES)
Transfers in 5,004
Transfers out (3,000)
Total other financing
sources/(uses)2,004
Net change in fund balances 50,003 (14) 128,813 296 17,705
Fund balances - July 1, 2019 310,474 30 5,905 927,918 19,610 290,670
Fund balances - June 30, 2020 $360,477 $30 $5,891 $1,056,731 $19,906 $308,375
Tourism
Business
Improvement
District
Special Revenue Funds
In-Lieu
Affordable
Housing Fund
In-Lieu
Underground
Utility
In-Lieu Water
Neutralization Drainage FeesConstruction
B-84
$-$-$244,184 $4 $-$4 $244,188
22,571 3,596 120,510 (2) (2) 120,508
160,048 1,310,510 1,310,510
126,325 820,683 820,683
350 350
148,896 163,644 2,496,237 2 2 2,496,239
184,271 184,271
25,783 25,783
1,552 1,552 1,552
16,576 16,576
41,166 100,063 100,063
717,490 717,490
125,169 126,799 126,799
38,065 30,000 30,000 68,065
3,051 36,787 36,787 39,838
41,166 126,721 1,213,650 66,787 66,787 1,280,437
107,730 36,923 1,282,587 2 (66,787) (66,785) 1,215,802
385,308 73,800 73,800 459,108
(22,800) (688,462) (688,462)
(22,800) (303,154) 73,800 73,800 (229,354)
107,730 14,123 979,433 2 7,013 7,015 986,448
1,448,141 232,218 6,960,677 659 62,024 62,683 7,023,360
$1,555,871 $246,341 $7,940,110 $661 $69,037 $69,698 $8,009,808
Debt Service
Total Nonmajor
Governmental
Funds
Total Debt
Service Funds
State COPS
Grant
Total Special
Revenue FundsWater Availability
City Hall USDA
Debt Service
Fire Station GO
Bonds
Special Revenue Funds
B-85
City of Arroyo Grande
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
Agency Funds
For the Fiscal Year Ended June 30, 2020
Sanitation Distribution Fund
Cash and investments $255,687 $2,802,006 $2,745,959 $311,734
Accounts receivable 79,130 2,627,264 2,615,695 90,699
Total assets $334,817 $5,429,270 $5,361,654 $402,433
Due to other agencies 334,817 5,429,270 5,361,654 402,433
Total liabilities $334,817 $5,429,270 $5,361,654 $402,433
Downtown Parking Fund
Cash and investments $2,020 $9,912 $8,383 $3,549
Interest receivable 5 4 5 4
Total assets $2,025 $9,916 $8,388 $3,553
Accounts payable $-$4,783 $4,783 $-
Due to other agencies 2,025 5,133 3,605 3,553
Total liabilities $2,025 $9,916 $8,388 $3,553
San Luis Obispo County TMD Assessment Fund
Cash and investments $8,122 $95,189 $98,456 $4,855
Accounts receivable 13,367 10,890 13,367 10,890
Total assets $21,489 $106,079 $111,823 $15,745
Accounts payable $20,061 $93,902 $98,456 $15,507
Due to other agencies 1,428 12,177 13,367 238
Total liabilities $21,489 $106,079 $111,823 $15,745
Total Agency Funds
Cash and investments $265,829 $2,907,107 $2,852,798 $320,138
Accounts receivable 92,497 2,638,154 2,629,062 101,589
Interest receivable 5 4 5 4
Total assets $358,331 $5,545,265 $5,481,865 $421,731
Accounts payable $20,061 $98,685 $103,239 $15,507
Due to other agencies 338,270 5,446,580 5,378,626 406,224
Total liabilities $358,331 $5,545,265 $5,481,865 $421,731
Balance Balance
June 30, 2020AdditionsDeductionsJune 30, 2019
B-86
Statistical Section
The statistical section offers operational,
economic, and historical data that
provide a context for assessing a
government’s economic condition. The
data includes: information on financial
trends, information on revenue capacity,
information on debt capacity,
demographic and economic
information, and operating information.
City of Arroyo Grande
NET POSITION BY COMPONENT
Last Ten Fiscal Years
Governmental Activities
Net investment in capital assets $54,012,699 $62,176,633 $62,107,039 $37,123,166
Restricted 8,179,991 7,221,859 7,374,485 7,580,876
Unrestricted 7,584,426 6,370,870 2,520,322 2,977,346
Total governmental activities
net position 69,777,116 75,769,362 72,001,846 47,681,388
Business-Type Activities
Net investment in capital assets 10,057,743 9,816,684 10,268,542 35,230,778
Restricted 1,196,593
Unrestricted 6,686,297 6,057,411 6,628,074 7,727,871
Total business-type activities
net position 16,744,040 15,874,095 16,896,616 44,155,242
Primary Government
Net investment in capital assets 64,070,442 71,993,317 72,375,581 72,353,944
Restricted 8,179,991 7,221,859 7,374,485 8,777,469
Unrestricted 14,270,723 12,428,281 9,148,396 10,705,217
Total primary government net
position $86,521,156 $91,643,457 $88,898,462 $91,836,630
Source: City of Arroyo Grande Annual Financial Report
Fiscal Year
2011 2012 2013 2014
C-2
$39,466,986 $39,712,230 $41,437,236 $41,836,070 $41,265,463 $42,033,143
8,516,033 5,531,798 8,375,502 8,217,418 8,748,114 9,866,579
(7,576,941) (2,753,544) (2,676,080) (7,490,438) (5,665,122) (5,108,416)
40,406,078 42,490,484 47,136,658 42,563,050 44,348,455 46,791,306
35,100,758 34,768,726 35,236,648 35,013,392 34,285,435 34,252,879
1,158,896 1,737,212 1,737,212 1,737,212 1,235,610 1,263,656
6,487,746 5,696,990 4,424,194 4,387,042 5,857,588 5,459,867
42,747,400 42,202,928 41,398,054 41,137,646 41,378,633 40,976,402
74,567,744 74,295,504 76,673,884 76,849,462 75,550,898 76,286,022
9,674,929 7,269,010 10,112,714 9,954,630 9,983,724 11,130,235
(1,089,195) 3,128,898 1,748,114 (3,103,396) 192,466 351,451
$83,153,478 $84,693,412 $88,534,712 $83,700,696 $85,727,088 $87,767,708
Fiscal Year
2017 20202015201620182019
C-3
City of Arroyo Grande
CHANGES IN NET POSITION
Last Ten Fiscal Years
Expenses
Governmental activities:
General government $4,786,979 $4,475,869 $4,442,707 $4,206,267
Community development 3,224,094 1,578,940 1,934,076 1,596,223
Public safety 5,795,069 5,708,603 5,594,859 5,804,569
Recreation 759,139 723,234 765,563 817,557
Public works 830,914 1,439,738 1,313,371 1,703,736
Streets and roads 1,835,373 2,600,752 2,266,016 2,746,128
Sewer 798,287 793,207 821,609
Interest on long-term debt 499,825 318,960 109,800 111,507
Total governmental activities
expenses 18,529,680 17,639,303 17,248,001 16,985,987
Business-type activities:
Water 2,168,569 2,142,321 2,490,896 2,304,928
Lopez 2,271,238
Sewer 2,592,965 2,679,699 2,215,526 794,673
Total business-type activities
expenses 4,761,534 4,822,020 4,706,422 5,370,839
Total primary government
expenses $23,291,214 $22,461,323 $21,954,423 $22,356,826
Program Revenues
Governmental activities:
Charges for services:
General government $50,355 $38,563 $47,652 $48,931
Community development 498,223 403,679 699,553 507,718
Public safety 188,407 168,502 74,388 39,093
Recreation 694,090 650,897 597,230 735,369
Public works 84,964 86,198 179,908 117,252
Streets and roads 96,409 16,561 44,455 1,024
Sewer 828,302 925,213 1,089,899
Operating grants and contributions 2,154,143 731,446 875,502 1,387,188
Capital grants and contributions 1,751,549 1,509,016 1,066,625 665,453
Total governmental activities
program revenues 6,346,442 4,530,075 4,675,212 3,502,028
Business-type activities:
Charges for services:
Water 2,794,504 3,443,240 4,236,880 4,997,374
Lopez 1,973,699
Sewer 2,895,218 2,552,516 2,252,208 1,150,806
Operating grants and contributions 4,187 2,760
Capital grants and contributions 135,071 690,957
Total business-type activities
program revenues 5,828,980 5,998,516 7,180,045 8,121,879
Total primary government program
revenues $12,175,422 $10,528,591 $11,855,257 $11,623,907
2011 2012 2013 2014
Fiscal Year
C-4
$4,991,206 $5,440,588 $5,659,730 $6,323,149 $6,489,527 $6,864,094
2,017,973 1,850,925 1,604,701 2,339,874 1,664,055 1,916,619
5,905,903 5,652,892 5,075,763 7,205,048 8,516,528 8,248,552
860,010 960,669 705,766 1,108,612 914,396 914,091
1,746,040 1,899,410 1,777,425 2,063,905 1,955,759 2,085,794
2,230,930 2,544,510 2,448,134 2,516,344 2,129,780 2,651,910
56,988 53,546 55,900 46,374
17,752,062 18,348,994 17,328,507 21,610,478 21,725,945 22,727,434
1,306,742 1,317,405 1,677,487 1,737,552 1,439,083 1,546,284
3,170,608 3,296,262 3,359,544 3,419,571 3,576,785 3,589,658
821,584 690,809 869,807 953,702 931,542 889,163
5,298,934 5,304,476 5,906,838 6,110,825 5,947,410 6,025,105
$23,050,996 $23,653,470 $23,235,345 $27,721,303 $27,673,355 $28,752,539
$22,615 $12,666 $52,734 $37,178 $83,416 $58,025
894,495 690,152 1,218,957 926,624 1,483,826 1,701,407
135,134 122,158 227,920 152,481 168,457 216,432
743,589 706,229 746,467 843,584 1,075,413 858,566
418,772 86,378 420,095 2,112 6,400 8,282
97,696 305,797 497,796 180,458 100,977 339,490
1,499,188 1,191,800 989,341 1,289,808 1,353,910 1,452,942
233,549 463,235 933,698 599,092 577,759 1,505,227
4,045,038 3,578,415 5,087,008 4,031,337 4,850,158 6,140,371
6,497,466 5,804,415 6,202,191 7,033,290 7,127,921 6,795,904
1,581 81
1,066,815 881,889 977,250 1,024,751 1,051,500 1,046,488
7,564,281 6,687,885 7,179,441 8,058,122 8,179,421 7,842,392
$11,609,319 $10,266,300 $12,266,449 $12,089,459 $13,029,579 $13,982,763
Fiscal Year
2017 20202015201620182019
C-5
City of Arroyo Grande
CHANGES IN NET POSITION (continued)
Last Ten Fiscal Years
Net revenue (expense)
Governmental activities $(12,183,238) $(13,109,228) $(12,572,789) $(13,483,959)
Business-type activities 1,067,446 1,176,496 2,473,623 2,751,040
Total primary government net
expense $(11,115,792) $(11,932,732) $(10,099,166) $(10,732,919)
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes $5,379,176 $6,633,678 $6,232,026 $6,564,035
Sales and use taxes 4,781,774 4,127,541 4,269,905 4,583,049
Transient lodging taxes 390,472 630,379 746,333 840,602
Franchise taxes 539,673 570,172 575,495 595,161
Business license tax 79,663 84,925 85,078 85,625
Investment income 389,292 333,962 330,551 375,843
Other revenue 479,514 773,180 565,018 626,840
Transfers 1,888,403 2,070,466 1,468,937 (23,434,931)
Extraordinary gain 2,641,541
Total governmental activities 13,927,967 17,865,844 14,273,343 (9,763,776)
Business-type activities:
Investment income 30,483 24,025 17,835 33,627
Other revenue
Transfers (1,888,403) (2,070,466) (1,468,937) 23,434,931
Total business-type activities
revenues (1,857,920) (2,046,441) (1,451,102) 23,468,558
Total primary government $12,070,047 $15,819,403 $12,822,241 $13,704,782
Change in Net Position
Governmental activities $1,744,729 $4,756,616 $1,700,554 $(23,247,735)
Business-type activities (790,474) (869,945) 1,022,521 26,219,598
Total primary government $954,255 $3,886,671 $2,723,075 $2,971,863
Source: City of Arroyo Grande Annual Financial Report
2011 2012 2013 2014
Fiscal Year
C-6
$(13,707,024) $(14,770,579) $(12,241,499) $(17,579,141) $(16,875,787) $(16,587,063)
2,265,347 1,383,409 1,272,603 1,947,297 2,232,011 1,817,287
$(11,441,677) $(13,387,170) $(10,968,896) $(15,631,844) $(14,643,776) $(14,769,776)
$6,832,769 $7,133,641 $6,494,953 $6,838,615 $7,272,617 $7,428,074
4,634,828 5,213,844 5,835,213 6,174,833 6,381,702 6,507,394
1,124,486 1,159,458 1,160,087 1,153,959 1,235,407 1,112,466
612,261 613,715 610,820 609,182 642,952 690,145
90,108 86,947 93,544 87,649 102,794 99,589
426,084 486,526 547,492 553,645 760,895 825,941
949,606 123,376 36,779 218,499 112,653 30,374
2,297,653 2,037,478 2,108,785 1,968,873 2,152,172 2,335,931
16,967,795 16,854,985 16,887,673 17,605,255 18,661,192 19,029,914
84,005 109,597 31,308 42,793 161,148 116,413
15,271
(2,297,653) (2,037,478) (2,108,785) (1,968,873) (2,152,172) (2,335,931)
(2,213,648) (1,927,881) (2,077,477) (1,910,809) (1,991,024) (2,219,518)
$14,754,147 $14,927,104 $14,810,196 $15,694,446 $16,670,168 $16,810,396
$3,260,771 $2,084,406 $4,646,174 $26,114 $1,785,405 $2,442,851
51,699 (544,472) (804,874) 36,488 240,987 (402,231)
$3,312,470 $1,539,934 $3,841,300 $62,602 $2,026,392 $2,040,620
Fiscal Year
2015 2016 2017 202020182019
C-7
City of Arroyo Grande
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
General Fund
Nonspendable $595,268 $642,708 $773,416 $56,938
Committed 3,159,440 4,276,484 4,206,637
Assigned 350,000 703,355 458,549 1,356,870
Unassigned 4,256,808 537,038 149,944 1,154,882
Total general fund $5,202,076 $5,042,541 $5,658,393 $6,775,327
All Other Governmental Funds
Nonspendable $73,782 $45,523 $24,110 $-
Restricted 8,513,465 7,262,107 7,412,863 7,673,231
Committed 65,565
Assigned 3,529,431 711,439 1,208,489 84,341
Unassigned 83,163 (13,405) (10,060)
Total all other governmental funds $12,199,841 $8,071,229 $8,635,402 $7,757,572
Source: City of Arroyo Grande Annual Financial Report
Fiscal Year
The City of Arroyo Grande implemented GASB Statement No. 54 for the fiscal year ended June 30, 2011. Information
prior to the implementation of GASB Statement No. 54 is not available.
2011 2012 2013 2014
C-8
$130,822 $998,035 $1,071,000 $40,379 $54,670 $5,152
3,825,974
1,284,047 530,460 1,986,271 3,193,183 2,241,553 4,533,235
2,463,910 6,061,702 6,327,625 7,083,569 7,554,520 5,924,363
$7,704,753 $7,590,197 $9,384,896 $10,317,131 $9,850,743 $10,462,750
$49,547 $49,547 $- $- $- $-
7,762,037 5,564,688 7,600,388 7,437,987 7,969,706 9,086,851
327,809 3,967,671 546,365 956,670 1,403,177 1,385,012
(18,547) (184,584) (81,414)
$8,120,846 $9,397,322 $8,146,753 $8,394,657 $9,372,883 $10,390,449
Fiscal Year
2017 20202015201620182019
C-9
City of Arroyo Grande
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Revenues
Taxes and assessments $12,745,313 $12,169,550 $11,965,499 $12,875,650
Licenses and permits 194,743 206,319 259,153 262,929
Fines and penalties 66,724 71,605 52,299 45,012
Use of money and property 389,292 333,962 312,551 364,460
Intergovernmental revenues 2,755,945 2,372,614 1,258,892 2,052,641
Charges for services 2,095,895 1,925,491 2,733,085 1,449,387
Other revenue 138,094 604,371 151,312 111,723
Total revenues 18,386,006 17,683,912 16,732,791 17,161,802
Expenditures
Current:
General government 4,920,805 4,358,806 4,664,317 4,469,132
Community development 1,592,094 1,567,283 1,241,020 1,595,790
Public safety 5,248,185 5,337,305 5,136,154 5,329,649
Recreation 759,139 720,797 758,822 808,823
Parks and facilities 778,575 1,350,922 1,288,515 1,558,905
Streets and road 1,090,471 1,877,833 1,544,570 1,947,648
Sewer 273,818 273,296 257,073
Capital outlay 7,667,405 4,594,942 2,115,032 2,484,378
Debt service:
Principal 1,135,709 367,342 242,294 358,308
Interest and fiscal agent fees 491,151 289,407 111,670 111,623
Total expenditures 23,957,352 20,737,933 17,359,467 18,664,256
Excess of revenue over (under)
expenditures (5,571,346) (3,054,021) (626,676) (1,502,454)
Other Financing Sources (Uses)
Proceeds from issuance of debt 2,253,119 69,077 275,595 448,512
Proceeds from sale of capital assets 849,000 62,169 35,343
Transfer in 6,239,127 6,691,654 4,532,700 5,254,550
Transfer out (4,350,724) (4,621,188) (3,063,763) (2,957,819)
Extraordinary loss (3,333,432)
Total other financing sources
(uses)4,990,522 (1,193,889) 1,806,701 2,780,586
Net Change in Fund Balances $(580,824) $(4,247,910) $1,180,025 $1,278,132
Debt service as a percentage of non-
capital expenditures 11.09%4.24%2.38%2.99%
Source: City of Arroyo Grande Annual Financial Report
Fiscal Year
2011 2012 2013 2014
C-10
$13,352,062 $14,207,605 $14,194,617 $14,864,238 $15,635,472 $15,837,668
340,265 269,932 515,087 420,387 616,702 625,944
43,764 46,534 38,255 51,402 44,160 41,117
424,326 590,820 564,151 827,397 962,892 821,904
1,732,737 1,655,035 1,923,039 1,888,900 1,931,669 2,958,169
1,870,662 1,606,914 2,610,627 1,670,648 2,257,627 2,515,141
368,312 88,385 18,559 167,929 77,653 30,374
18,132,128 18,465,225 19,864,335 19,890,901 21,526,175 22,830,317
4,786,049 5,256,955 5,835,396 5,982,128 6,557,925 6,696,911
1,684,674 1,849,608 1,844,250 2,169,203 1,879,372 1,919,770
5,356,518 5,879,489 5,672,186 6,279,983 9,176,844 7,759,009
866,808 960,669 1,025,778 1,015,189 1,026,345 916,364
1,663,621 1,804,644 1,863,718 1,816,847 2,020,033 1,950,680
1,474,872 1,760,289 1,805,170 1,707,213 1,449,203 1,908,268
4,333,128 1,546,294 2,460,561 1,727,935 797,518 2,147,430
329,291 395,065 1,146,751 296,071 239,392 190,549
104,060 132,374 75,952 57,863 54,877 47,694
20,599,021 19,585,387 21,729,762 21,052,432 23,201,509 23,536,675
(2,466,893) (1,120,162) (1,865,427) (1,161,531) (1,675,334) (706,358)
209,613 282,552 322,227
838,806 34,991 18,220 50,570 35,000
7,523,254 8,777,226 4,970,305 4,848,407 3,856,368 4,571,957
(4,602,467) (6,739,748) (2,861,520) (2,879,534) (1,704,196) (2,236,026)
3,759,593 2,282,082 2,409,557 2,341,670 2,187,172 2,335,931
$1,292,700 $1,161,920 $544,130 $1,180,139 $511,838 $1,629,573
2.74%3.01%6.78%1.87%1.33%1.13%
Fiscal Year
20192017 2020201520162018
C-11
City of Arroyo Grande
GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE
Last Ten Fiscal Years
2011 5,313,261$ 4,781,774$ 390,472$ 79,663$ 539,673$ 65,915$ 11,170,758$
2012 6,563,217 4,127,541 630,379 84,925 570,172 70,461 12,046,695
2013 6,150,672 4,269,905 746,333 85,078 575,495 81,354 11,908,837
2014 6,564,035 4,583,049 840,602 85,625 595,161 105,396 12,773,868
2015 6,724,240 4,634,828 1,124,486 90,108 612,261 108,529 13,294,452
2016 7,005,656 5,213,844 1,159,458 86,947 613,715 127,985 14,207,605
2017 6,384,175 5,835,213 1,160,087 93,544 610,820 110,778 14,194,617
2018 6,687,106 6,174,833 1,153,959 87,649 609,182 151,509 14,864,238
2019 7,152,037 6,381,702 1,235,407 102,794 642,952 120,580 15,635,472
2020 7,310,481 6,507,394 1,112,466 99,589 690,145 117,593 15,837,668
Includes all governmental fund types (i.e. general fund, special revenue funds, capital project funds, and debt service funds).
Source: City of Arroyo Grande Annual Financial Report
Total
Transient
Occupancy Tax
Property Tax
Transfer
Fiscal
Year Property Taxes
Sales & Use
Tax
Business
Licenses
Franchise
Revenues
C-12
City of Arroyo Grande
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
Last Ten Fiscal Years
2011 2,242,734,120$ 41,864,014$ 2,284,598,134$ 26,925,209$ 2,257,672,925$ 100%
2012 2,195,793,943 41,107,547 2,236,901,490 26,926,650 2,209,974,840 100%
2013 2,204,645,960 42,637,641 2,247,283,601 26,788,183 2,220,495,418 100%
2014 2,300,046,365 45,362,799 2,345,409,164 26,614,912 2,318,794,252 100%
2015 2,468,055,741 50,263,602 2,518,319,343 26,368,700 2,491,950,643 100%
2016 2,581,058,076 45,395,240 2,626,453,316 26,777,282 2,599,676,034 100%
2017 2,707,856,604 45,043,543 2,752,900,147 26,612,159 2,726,287,988 100%
2018 2,841,199,531 45,708,217 2,886,907,748 26,406,810 2,860,500,938 100%
2019 3,009,154,915 49,746,409 3,058,901,324 26,484,388 3,032,416,936 100%
2020 3,167,429,736 54,503,879 3,221,933,615 26,483,170 3,195,450,445 100%
Source: San Luis Obispo County Auditor-Controller
For comparison purposes,gross assessed valuations include homeowners and other exemptions.Although these exemptions reduce property tax
collections,the revenue loss is reimbursed by the State of California.As such,gross assessed valuation is the revenue base used in establishing property
tax-related revenues.
Assessed to
Property
ValueFiscal Year
Secured Gross
Assessed Value
Unsecured Gross
Assessed Value
Total Gross Assessed
Value Exemptions Net Taxable Value
C-13
City of Arroyo Grande
PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS
Last Ten Fiscal Years
2011 1.00000 0.00290 0.00000 0.00972 0.00817 0.02914 1.04993
2012 1.00000 0.00300 0.00000 0.00972 0.00817 0.02984 1.05073
2013 1.00000 0.00400 0.00000 0.00992 0.00817 0.03954 1.06163
2014 1.00000 0.00400 0.00000 0.00992 0.00817 0.03994 1.06203
2015 1.00000 0.00400 0.00000 0.00992 0.00606 0.04094 1.06092
2016 1.00000 0.00374 0.01925 0.00982 0.00556 0.04094 1.07931
2017 1.00000 0.00400 0.01925 0.00882 0.00000 0.03994 1.07201
2018 1.00000 0.00400 0.01925 0.00732 0.00000 0.08194 1.11251
2019 1.00000 0.00400 0.01925 0.00489 0.00000 0.08094 1.10908
2020 1.00000 0.00400 0.01925 0.00489 0.00000 0.07234 1.10048
Source: HDL Coren & Cone, San Luis Obispo County Assessor
Fiscal Year
Valuations are established by the County Assessor of the County of San Luis Obispo,except for property owned by private utility
companies,which is valued by the State of California.Under the provisions of Article XIIA of the State Constitution (Proposition
13 adopted by the voters on June 6,1978)properties are assessed at 100%of full value and subsequently increased at a
maximum rate of 2%per year.The County collects property taxes and distributes the appropriate amount to each city.Each
dollar of property tax is distributed to various local government agencies based upon fixed allocation factors.
San Luis
Obispo
County
Tax Rate
State
Water
Project
Tax
Cuest Jr.
College
Lopez
Dam
Bonds
Fire
Bonds Total Tax Rate
Lucia Mar
Unified
C-14
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City of Arroyo Grande
PRINCIPAL PROPERTY TAXPAYERS
Current Fiscal Year and Nine Fiscal Years Ago
Rank
Sphear Investments LLC Commercial $62,855,086 1 1.97%
Grand and Elm Properties LP Commercial 15,721,822 2 0.49%
Sunrise Terrace Associates Residential 13,356,455 3 0.42%
Manfred G Freutel Trust Residential 10,702,389 4 0.33%
Bolsa Chica Mobile Estates Inc Residential 10,590,560 5 0.33%
1400 West Branch LLC Commerical 9,376,771 6 0.29%
Triple P LLC Vacant 8,472,548 7 0.27%
Melvin H Johnson Vacant 8,437,507 8 0.26%
Kent and Joan Sather Commercial 8,180,400 9 0.26%
EPT Arroyo Inc Recreational 7,952,100 10 0.25%
PEDP Inc.Commercial
Ray B. Bunnell Trust Commercial
Deblauw Properties LLC Commercial
ESJ Centers LLC Commercial
MSB Properties Inc Commercial
NKT Commerial LLC Commercial
In-N-Out Burgers Recreational
Orrardre Ranch A California LP Commercial
Totals $155,645,638 4.87%
Source: HDL Coren & Cone
Taxpayer
2019-20
Percentage of
Total Taxable
Assessed
ValuationType of Business Assessed Valuation
C-16
Rank
$---
11,096,546 3 0.49%
9,248,922 5 0.40%
10,275,582 4 0.46%
6,731,196 8 0.30%
6,733,706 7 0.30%
41,891,408 1 1.86%
15,465,187 2 0.69%
6,636,738 9 0.29%
7,553,772 6 0.33%
5,941,343 10 0.26%
$121,574,400 5.38%
2010-11
Percentage of
Total Taxable
Assessed
ValuationAssessed Valuation
C-17
City of Arroyo Grande
SECURED PROPERTY TAX ROLL LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Fiscal Year
Total Secured Tax
Levy
Current Tax
Collections
Percent of Levy
Collected
Current Year
Delinquencies
Percent
Delinquent
2011 3,777,302$ 3,777,302$ 100%**
2012 3,696,711 3,696,711 100%**
2013 3,715,390 3,715,390 100%**
2014 3,874,384 3,874,384 100%**
2015 4,164,044 4,164,044 100%**
2016 4,345,982 4,345,982 100%**
2017 4,578,200 4,578,200 100%**
2018 4,819,065 4,819,065 100%**
2019 5,167,326 5,167,326 100%**
2020 5,310,940 5,310,940 100%**
Source: San Luis Obispo County Auditor-Controller
*The City has elected the Teeter Plan method of property tax collection,whereby the County remits 100%of taxes levied and
pursues collection and retains any delinquent taxes and related penalties and interest.
C-18
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City of Arroyo Grande
TAXABLE SALES BY CATEGORY
Last Ten Calendar Years
(in thousands of dollars)
Food Stores $15,773 $15,564 $16,098 $17,705
Eating and Drinking Places 29,949 32,738 37,136 36,314
Building Materials 18,676 19,806 20,429 22,848
Auto Dealers and Supplies 24,753 30,056 33,789 40,123
Service Stations 36,817 42,795 45,431 43,831
Other Retail Stores 112,340 113,172 115,587 119,916
All Other Outlets 46,231 47,300 46,302 50,130
Total $284,539 $301,431 $314,772 $330,867
Source: State of California Board of Equalization and the Hdl Companies.
2013
Due to confidentiality issues,the names of the ten largest revenue payers are not available.The categories
presented are intended to provide alternative information regarding the sources of the City's revenue.
2010 2011 2012
C-20
$18,047 $15,955 $9,489 $12,659 $13,900 $14,898
42,140 46,885 49,848 52,748 54,210 55,952
25,855 29,882 31,555 34,972 35,773 34,529
41,161 42,048 47,866 55,963 52,923 51,938
42,938 39,520 34,411 38,604 43,168 44,696
118,561 119,822 120,281 119,427 117,893 115,705
54,064 63,468 70,977 77,015 88,176 91,987
$342,766 $357,580 $364,427 $391,388 $406,043 $409,705
201920152016201720182014
C-21
City of Arroyo Grande
RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Fiscal Year
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
2013 1,230,000 365,861 1,279,092 27,182
2014 1,140,000 550,653 1,247,156
2015 1,050,000 344,538 1,213,980
2016 955,000 288,500 1,179,566
2017 414,978 1,143,889
2018 478,073 1,106,950
2019 276,890 1,068,741
2020 125,824 1,029,258
Source: City of Arroyo Grande Annual Financial Report
General
Obligation Bonds
Tax Allocation
Bonds Capital Leases Loan Payable
Reimbursement
Agreement
Governmental Activities
C-22
$- $- $9,227,099 0.40%531.36
2,868,834 0.13%165.91
2,902,135 0.13%166.84
122,007 3,059,816 0.13%176.52
82,167 2,690,685 0.11%155.58
41,604 2,464,670 0.09%139.00
1,558,867 0.06%87.89
143,589 1,728,612 0.06%96.68
103,890 1,449,521 0.05%80.14
63,670 1,218,752 0.04%67.22
Outstanding
Debt per CapitaSafe Water Loan Capital Leases
Total Primary
Government
Percent of
Estimated
Actual Value of
Taxable
Property
Business-Type Activities
C-23
City of Arroyo Grande
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
Last Ten Fiscal Years
2011 $1,395,000 $677,881 $717,119 $2,284,598,134 0.03%17,365 41.30
2012 1,315,000 727,231 587,769 2,236,901,490 0.03%17,291 33.99
2013 1,230,000 818,400 411,600 2,247,283,601 0.02%17,395 23.66
2014 1,140,000 873,044 266,956 2,345,409,164 0.01%17,334 15.40
2015 1,050,000 895,403 154,597 2,518,319,343 0.01%17,295 8.94
2016 955,000 906,890 48,110 2,626,453,316 0.00%17,731 2.71
2017 - 230 (230) 2,753,005,173 0.00%17,736 (0.01)
2018 - 596 (596) 2,886,907,748 0.00%17,880 (0.03)
2019 - 659 (659) 3,058,901,324 0.00%18,087 (0.04)
2020 - 661 (661) 3,221,933,615 0.00%18,131 (0.04)
Source: San Luis Obispo County Tax Assessor Rolls - California Department of Finance
Fiscal
Year
Fire General Obligation Bond
General Bonded
Debt
Less: Amount
Available in
Debt Service
Funds
Net General
Bonded Debt
Estimated Actual
Taxable Value of
Property
Ratio of Net
Bonded
Debt to
Assessed
Value Population
Net Bonded
Debt Per
Capita
C-24
City of Arroyo Grande
DIRECT AND OVERLAPPING DEBT
June 30, 2020
$7,025,000 32.666%$2,294,787
San Luis Obispo County Community College District 118,610,000 5.668%6,722,815
Lucia Mar Unified School District 55,861,576 20.518%11,461,678
San Luis Obispo County Certificates of Participation 24,120,000 5.691%1,372,669
San Luis Obispo Pension Obligations 86,764,398 5.691%4,937,762
Lucia Mar Unified School District Certificates of Participation 6,545,000 20.518%1,342,903
Redevelopment Successor Agency 4,850,000 100.000%4,850,000
Combined Total Debt $303,775,974 $32,982,614
Ratio to Assessed Valuation:
Direct Debt 0.00%
Total Direct and Overlapping Tax and Assessment Debt 0.75%
Combined Total Debt 1.30%
Ratio to Redevelopment Successor Agency Incremental Valuation:2.59%
Assessed Valuation Calculation:
Net Taxable Value $3,195,450,445
Less: Redevelopment Agency Tax Increment (204,861,378)
Total Assessed Valuation $2,990,589,067
Source: California Municipal Statistics
Net Debt Outstanding
Percentage
Applicable to the
City
Amount Applicable to
the CityJurisdiction
San Luis Obispo County Flood Control and Water Conservation
District, Zone No. 3
C-25
City of Arroyo Grande
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
Debt Limit $85,672,430 $82,874,057 $83,268,578 $87,952,844
Total net debt applicable to limit (7,560,000) (1,315,000) (1,230,000) (1,140,000)
Legal debt margin $78,112,430 $81,559,057 $82,038,578 $86,812,844
9%2%1%1%
Source: San Luis Obispo County
Fiscal Year
Total net debt applicable to the limit as a
percentage of debt limit
2011 2012 2013 2014
C-26
$94,436,975 $98,491,999 $103,237,694 $108,259,041 $113,715,635 $119,829,392
(1,050,000) (955,000)
$93,386,975 $97,536,999 $103,237,694 $108,259,041 $113,715,635 $119,829,392
1%1%0%0%0%0%
Legal Debt Margin Calculation for Fiscal Year 2020
Assessed value $3,195,450,445
Debt limit - 3.75% of total assessed value 119,829,392
Amount of debt applicable to limit
Legal debt margin $119,829,392
Section 43605 of California Government Code establishes a legal debt limit of 15% of gross assessed valuation for municipalities. However,
this provision was enacted when assessed valuation was established based on 25% of market value. Effective with FY 1981-82, taxable
property is assessed at 100% of market value. Although the debt limit provision has not been amended by the State since this change, the
percentage has been proportionately modified to 3.75% for the purposes of this calculation for consistency with the original intent of the
State’s limit.
2018 20202015201620172019
Fiscal Year
C-27
City of Arroyo Grande
DEMOGRAPHIC STATISTICS
Last Ten Calendar Years
Year Population
2011 17,365 554,159$ 31,912$ 9.5%
2012 17,291 590,856 34,171 6.2%
2013 17,395 555,104 31,912 5.3%
2014 17,334 580,593 33,494 4.9%
2015 17,295 567,314 32,802 4.0%
2016 17,731 580,593 32,745 4.9%
2017 17,736 601,429 33,910 3.7%
2018 17,880 629,380 35,200 3.0%
2019 18,087 709,825 39,245 3.0%
2020 18,131 707,937 39,046 2.5%
Source: California Department of Finance & US Census Bureau
Personal Income
(in thousands)
Per Capita
Personal Income
Unemployment
Rate
C-28
City of Arroyo Grande
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
Last Ten Fiscal Years
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
General government 10.7 10.5 10.4 10.5 9.8 12.8 12.8 12.8 12.8 11.8
Community development 10.5 9.2 9.7 9.1 10.0 11.5 11.5 11.7 10.5 10.5
Police 38.5 39.6 38.4 37.5 32.8 34.7 34.7 33.6 31.9 31.9
Recreation 11.9 11.4 11.5 11.9 13.1 13.7 13.7 14.4 14.4 14.4
Public works 11.1 10.9 9.8 9.8 11.2 14.1 14.1 13.7 11.7 11.7
Streets and roads 6.4 6.1 5.6 5.2 4.8 4.8 4.8 3.9 3.5 3.5
Sewer 2.0 1.9 1.0 0.5 2.1 2.3 2.3 2.7 2.7 2.7
Water 6.6 6.6 6.1 6.8 5.1 6.3 6.3 6.7 6.7 6.7
Total 97.7 96.2 92.5 91.3 88.9 100.2 100.2 99.5 94.2 93.2
Source: City of Arroyo Grande payroll records
Fiscal Year
Function
C-29
City of Arroyo Grande
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
2011 2012 2013 2014 2015
General Government
Number of business licenses 1,654 1,654 1,690 1,775 1,760
Number of minutes transcribed 44 30 33 23 41
Number of agenda items processed 295 246 231 296 340
Number of recruitments 18 10 14 18 15
Police
Number of officers 26 26 24 27 23
Incidents recorded 16,145 17,250 18,275 18,809 17,203
Major crimes 444 313 458 508 500
Traffic collisions 432 410 253 378 340
Traffic enforcement activities 4,013 4,295 4,058 3,758 2,967
Arrests 605 574 695 568 675
Public Works
Miles of streets maintained 70 70 70 70 70
Miles of sewer maintained 66 69 70 70 70
Number of vehicles maintained 90 86 67 60 55
Pieces of equipment maintained 389 350 300 295 285
Number of street trees maintained 1,200 1,200 1,200 1,210 1,218
Street service request 560 263 352 376 423
Water customer accounts 6,312 6,525 6,545 6,578 6,384
Acre feet of water consumed 2,746 2,868 2,862 2,868 2,481
Miles of water lines maintained 69 87 87 87 87
In-house capital projects constructed 2 3 2 1
Capital projects constructed 10 7 8 13 8
CIP studies initiated 4 3 4
CIP studies completed 2 1
Community Development
Number of planning commission agendas 19 14 20 18 16
Number of planning commission staff reports 43 35 60 53 55
Number of ARC agendas 13 11 15 21 18
Plan and map checks completed 12 13 9 6 17
Building permits issued 421 376 360 450 505
Building inspections conducted 3,019 1,601 2,183 2,390 2,414
Recreation Services
Registrations 11,650 11,750 11,880 12,000 12,130
Participants in City recreation sports 2,200 2,260 2,285 2,235 2,255
Number of programs/events/classes 91 108 115 120 125
Number of teams 281 336 325 320 324
Children in Motion enrollment 800 840 959 1,009 1,083
Source: City of Arroyo Grande budget records
Fiscal Year
C-30
2016 2017 2018 2019 2020
1,863 1,844 1,844 1,924 1,966
36 32 30 22 32
325 287 280 245 234
23 17 35 27 21
22 20 23 26 26
17,140 17,925 17,242 18,689 18,427
508 403 435 215 324
349 288 331 359 285
1,934 2,956 2,144 2,596 3,059
716 870 738 701 579
70 66 66 66 66
70 71 75 70 70
59 50 70 70 67
291 282 285 285 280
1,233 1,244 1,244 1,244 1,246
423 426 426 426 437
6,410 6,433 6,502 6,593 6,589
1,965 1,823 2,213 2,087 2,179
87 88 87 90 90
2 1 2 2 4
17 16 8 9 7
3 1 3 1 1
3 2 2 1
19 18 18 17 9
53 57 64 26 21
22 18 15 14 11
14 39 31 30 30
534 537 430 484 580
2,154 2,241 2,911 2,519 2,264
12,280 8,619 9,095 9,035 7,214
2,080 1,872 1,423 1,512 1,203
142 392 234 215 344
289 115 113 95 79
1,058 1,023 1,109 1,287 824
Fiscal Year
C-31
City of Arroyo Grande
CAPITAL ASSET STATISTICS BY FUNCTION
Last Ten Fiscal Years
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Police
Stations 1 1 1 1 1 1 1 1 1 1
Patrol units 10 10 10 10 10 10 10 10 10 9
Motorcycles 2 2 2 2 2 2 2 2 2 2
Engineering/Streets
Streets (miles)70 70 70 70 70 70 70 70 70 70
Parks & Recreation
Parks 19 19 19 19 19 19 19 19 19 19
Acreage of parks 151.6 151.6 151.6 151.6 151.6 151.6 151.6 151.6 151.6 151.6
Community centers 2 2 2 2 2 2 2 2 2 2
Water
Water mains (miles)69 87 87 87 87 87 87 87 90 90
Water capacity**6.5 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7
** - In millions of gallons
Source: CBIZ GASB Statement No. 34 Infrastructure Inventory and Valuation City records
Fiscal Year
Function
C-32